Voya 2013 Annual Report Download - page 100

application of any heightened supervisory requirements and prudential standards with respect to the Company
until past December 31, 2016 (the date by which ING Group is required to fully divest the Company under the
terms of its restructuring plan with the EC). There is no guarantee, however, that the Federal Reserve would grant
these requests.
Our insurance businesses are heavily regulated, and changes in regulation in the United States, enforcement
actions and regulatory investigations may reduce profitability.
Our insurance operations are subject to comprehensive regulation and supervision throughout the United
States. State insurance laws regulate most aspects of our insurance businesses, and our insurance subsidiaries are
regulated by the insurance departments of the states in which they are domiciled and the states in which they are
licensed. The primary purpose of state regulation is to protect policyholders, and not necessarily to protect
creditors and investors. See “Item 1. Business—Regulation—Insurance Regulation”.
State insurance guaranty associations have the right to assess insurance companies doing business in their
state in order to help pay the obligations of insolvent insurance companies to policyholders and claimants.
Because the amount and timing of an assessment is beyond our control, liabilities we have currently established
for these potential assessments may not be adequate.
State insurance regulators, the NAIC and other regulatory agencies regularly reexamine existing laws and
regulations applicable to insurance companies and their products. Changes in these laws and regulations, or in
interpretations thereof, are often made for the benefit of the consumer at the expense of the insurer and could
materially and adversely affect our business, results of operations or financial condition. We currently use
captive reinsurance subsidiaries primarily to reinsure term life insurance, universal life insurance with secondary
guarantees, and stable value annuity business. We also use our Arizona captive primarily to reinsure life
insurance and annuity business from our insurance subsidiaries. In October 2011, the NAIC established a
subgroup to study insurers’ use of captive reinsurance companies and special purpose vehicles to transfer
insurance risk in relation to existing state laws and regulations, and to establish appropriate regulatory
requirements to address concerns identified in the study. Additionally, in June 2013, the NYDFS released a
report critical of certain captive reinsurance structures and calling, in part, for other state regulators to adopt a
moratorium on approving such structures pending further review by state and federal regulators. Also, in
December 2013, the FIO issued a report on how to modernize and improve the system of insurance regulation in
the United States, recommending, in part, that states develop a uniform and transparent solvency oversight
regime for the transfer of risk to reinsurance captives and adopt a uniform capital requirement for reinsurance
captives, including a prohibition on transactions that do not constitute legitimate risk transfer. We cannot predict
what actions and regulatory changes will result from the NAIC study, the NYDFS report or the FIO report. Any
regulatory action that prohibits or limits our use of or materially increases our cost of using captive reinsurance
companies, either retroactively or prospectively, could have a material adverse effect on our financial condition
or results of operations. For more detail see “Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Liquidity and Capital Resources—Statutory Capital and Risk-Based
Capital of Principal Insurance Subsidiaries—Captive Reinsurance Subsidiaries.”
Insurance regulators have implemented, or begun to implement significant changes in the way in which
insurers must determine statutory reserves and capital, particularly for products with contractual guarantees such
as variable annuities and universal life policies, and are considering further potentially significant changes in
these requirements. The NAIC is currently working on comprehensive reforms related to life insurance reserves
and the accounting for such reserves. The timing and extent of further changes to statutory reserves and reporting
requirements are uncertain.
In addition, state insurance regulators are becoming more active in adopting and enforcing suitability
standards with respect to sales of fixed, indexed and variable annuities. In particular, the NAIC has adopted a
revised SAT, which will, if enacted by the states, place new responsibilities upon issuing insurance companies
90