Voya 2013 Annual Report Download - page 106

The result of those potential challenges, as well as the inability to obtain acceptable collateral, could require us to
increase statutory reserves, incur higher operating and/or tax costs or reduce sales.
Certain of the reserve financing facilities we have put in place will mature prior to the run off of the
liabilities they support. As a result, we cannot provide assurance that we will be able to continue to implement
actions either to mitigate the impact of XXX and AG38 on future sales of term and universal life insurance
products or maintain collateral support related to our captives or existing third party reinsurance arrangements to
which one of our captive reinsurance subsidiaries is a party. If we are unable to continue to implement those
actions or maintain existing collateral support, we may be required to increase statutory reserves or incur higher
operating costs than we currently anticipate. Because term and universal life insurance are particularly price-
sensitive products, any increase in premiums charged on these products to compensate us for the increased
statutory reserve requirements or higher costs of reinsurance may result in a significant loss of volume and
materially and adversely affect our life insurance business.
Changes in tax laws and interpretations of existing tax law could increase our tax costs, impact the ability of
our insurance company subsidiaries to make distributions to ING U.S., Inc. or make our insurance, annuity
and investment products less attractive to customers.
Changes in tax laws could increase our taxes and our effective tax rates. For example, the Obama
Administration has proposed modifying the dividends received deduction for life insurance company separate
accounts, and such a modification could significantly reduce the dividends received deduction that we are able to
claim for dividends received in separate accounts. As such, the dividend received deduction is a significant
component of the difference between our actual tax expense and the expected tax expense determined using the
federal statutory income tax rate of 35%. Also, interpretation and enforcement of existing tax law could change
and could be applied to us as part of an IRS examination and increase our tax costs. In the course of such
examinations, we have also entered into agreements with the IRS to resolve issues related to tax accounting
matters, such as whether certain derivative transactions qualify for hedge treatment, the proper treatment of valid
tax hedge gains and losses and “other than temporary impairment” losses. These agreements may be superseded
by future enacted laws, regulations or public guidance that increases our taxes and our effective tax rates.
Further, changes in tax rates could affect the amount of our deferred tax assets and deferred tax liabilities. One
such change relates to the current debate over corporate tax reform and corporate tax rates. A reduction in the top
federal tax rate would result in lower statutory deferred tax assets. Such a reduction in the statutory deferred tax
asset may impact the ability of the affected insurance subsidiaries to make distributions to us and consequently
could negatively impact our ability to pay dividends to our stockholders and to service our debt.
Changes in tax laws could make some of our insurance, annuity and investment products less attractive to
customers. Current U.S. federal income tax law permits tax-deferred accumulation of income earned under life
insurance and annuity products, and permits exclusion from taxation of death benefits paid under life insurance
contracts. Changes in tax laws that restrict these tax benefits could make some of our products less attractive to
customers. Reductions in individual income tax rates or estate tax rates could also make some of our products
less advantageous to customers. Changes in federal tax laws that reduce the amount an individual can contribute
on a pre-tax basis to an employer-provided, tax-deferred product (either directly by reducing current limits or
indirectly by changing the tax treatment of such contributions from exclusions to deductions) or changes that
would limit an individual’s aggregate amount of tax-deferred savings could make our retirement products less
attractive to consumers.
The American Taxpayer Relief Act of 2012 made permanent the current marginal income tax rates for
individuals, as well as the estate tax threshold and applicable rate. The Bipartisan Budget Act signed into law in
December 2013 provided a short-term compromise on spending levels, which was recently extended until March
2015. Congress may pursue the reduction or elimination of tax preferences associated with our industry and
products yet this year or in 2015 if it pursues comprehensive tax reform premised on the notion of reducing
corporate and personal rates by broadening the taxable income base and reducing tax preferences. We also
believe that states that stand to lose tax revenue of their own will exert pressure on the federal government not to
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