Voya 2013 Annual Report Download - page 102

financial markets generally, or impact our business, ratings, results of operations, financial condition or liquidity.
Key aspects we have identified to date of the Dodd-Frank Act’s potential impact on us include:
• If designated by the FSOC as a nonbank financial company subject to supervision by the Federal
Reserve, we would become subject to a comprehensive system of prudential regulation, including,
among other matters, minimum capital requirements, liquidity standards, credit exposure requirements,
overall risk management requirements, management interlock prohibitions, a requirement to maintain a
plan for rapid and orderly dissolution in the event of severe financial distress, stress testing, additional
fees and assessments and restrictions on proprietary trading and certain investments. The exact scope
and consequences of these standards are subject to ongoing rulemaking activity by various federal
banking regulators and therefore are currently unclear. However, this comprehensive system of
prudential regulation, if applied to us, would significantly impact the manner in which we operate and
could materially and adversely impact the profitability of one or more of our business lines or the level
of capital required to support our activities. In designating non-bank financial companies for
heightened prudential regulation by the Federal Reserve, the FSOC considers, among other matters,
their size and potential impact on the financial stability of the United States. As long as the Company
continues to be controlled by ING Group, the FSOC may consider the Company together with ING
Group’s other operations in the United States for purposes of making this determination. Therefore,
while we believe it is unlikely that the Company, either on a standalone basis or together with ING
Group’s other operations in the United States, will ultimately receive this designation, there is a greater
likelihood of such a designation being made for as long as we are controlled by ING Group.
• Title II of the Dodd-Frank Act provides that a financial company, such as us, may be subject to a
special orderly liquidation process outside the federal bankruptcy code, administered by the Federal
Deposit Insurance Corporation as receiver, upon a determination that it is in default or in danger of
default and presents a systemic risk to U.S. financial stability. We cannot predict how rating agencies,
or creditors of us or our subsidiaries, will evaluate this potential or whether it will impact our financing
or hedging costs.
• Title VII of the Dodd-Frank Act creates a new framework for regulation of the OTC derivatives
markets. New margin and capital requirements on market participants that will be contained in final
regulations to be adopted by the SEC and the CFTC could substantially increase the cost of hedging
and related operations, affect the profitability of our products or their attractiveness to our customers,
or cause us to alter our hedging strategy or change the composition of the risks we do not hedge.
• Pursuant to requirements of the Dodd-Frank Act, the SEC and CFTC are currently considering whether
stable value contracts should be regulated as “swap” derivative contracts. In the event that stable value
contracts become subject to such regulation, certain aspects of our business could be adversely
impacted, including issuance of stable value contracts and management of assets pursuant to stable
value mandates.
• The Dodd-Frank Act establishes the FIO within the Treasury Department to be headed by a director
appointed by the Secretary of the Treasury. While not having a general supervisory or regulatory
authority over the business of insurance, the director of this office performs various functions with
respect to insurance, including participating in the FSOC’s decisions regarding insurers to be
designated for stricter regulation by the Federal Reserve. The Dodd-Frank Act also required the
director of FIO to conduct a study on how to modernize and improve the system of insurance
regulation in the United States, including by increasing national uniformity by federal involvement or
effective action by the states. The director issued that report in December 2013, recommending, in part,
increased federal involvement in certain areas of insurance regulation to improve uniformity, and
setting out recommendations in areas of near-term reform for the states, including prudential and
marketplace oversight. The report also recommended, 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
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