Voya 2013 Annual Report Download - page 112

The ability of our insurance subsidiaries to pay dividends and other distributions to ING U.S., Inc. and Lion
Holdings is further limited by state insurance laws, and our insurance subsidiaries may not generate sufficient
statutory earnings or have sufficient statutory surplus to enable them to pay ordinary dividends.
The payment of dividends and other distributions to ING U.S., Inc. and Lion Holdings by our insurance
subsidiaries is regulated by state insurance laws and regulations.
The jurisdictions in which our insurance subsidiaries are domiciled impose certain restrictions on the ability
to pay dividends to their respective parents. These restrictions are based, in part, on the prior year’s statutory
income and surplus. In general, dividends up to specified levels are considered ordinary and may be paid without
prior regulatory approval. Dividends in larger amounts, or extraordinary dividends, are subject to approval by the
insurance commissioner of the relevant state of domicile. Under the insurance laws applicable to our insurance
subsidiaries domiciled in Colorado, Connecticut, Indiana, Iowa and Minnesota, an extraordinary dividend or
distribution is defined as a dividend or distribution that, together with other dividends and distributions made
within the preceding twelve months, exceeds the greater of (1) 10% of the insurer’s policyholder surplus as of the
preceding December 31 or (2) the insurer’s net gain from operations for the twelve-month period ended the
preceding December 31, in each case determined in accordance with statutory accounting principles. New York
has similar restrictions, except that New York’s statutory definition of extraordinary dividend or distribution is an
aggregate amount in any calendar year that exceeds the lesser of (1) 10% of policyholder’s surplus as of the
preceding December 31 or (2) the insurer’s net gain from operations for the twelve-month period ended the
preceding December 31, not including realized capital gains. In addition, under the insurance laws of the states of
domicile of our principal insurance subsidiaries, no dividend or other distribution exceeding an amount equal to
an insurance company’s earned surplus may be paid without the domiciliary insurance regulator’s prior approval.
From time to time, the NAIC and various state insurance regulators have considered, and may in the future
consider, proposals to further limit dividend payments that an insurance company may make without regulatory
approval. No assurance is given that more stringent restrictions will not be adopted from time to time by
jurisdictions in which our insurance subsidiaries are domiciled, and such restrictions could have the effect, under
certain circumstances, of significantly reducing dividends or other amounts payable to ING U.S., Inc. or Lion
Holdings by our insurance subsidiaries without prior approval by regulatory authorities. In addition, in the future,
we may become subject to debt instruments or other agreements that limit the ability of our insurance
subsidiaries to pay dividends or make other distributions. The ability of our insurance subsidiaries to pay
dividends or make other distributions is also limited by our need to maintain the financial strength ratings
assigned to such subsidiaries by the rating agencies. These ratings depend to a large extent on the capitalization
levels of our insurance subsidiaries.
Prior to our initial public offering, our Principal Insurance Subsidiaries domiciled in Colorado, Iowa and
Minnesota each had negative earned surplus accounts, and therefore had no ordinary dividend capacity. In order to
obtain dividends or distributions from these insurance companies, we historically obtained approval from the
insurance companies’ respective state regulators, which could be granted or withheld in the regulators’ discretion,
for extraordinary dividends or distributions. On May 8, 2013, following the completion of our IPO and payment of
$1,434.0 million of extraordinary distributions, these insurance companies each reset, on a one-time basis, their
respective negative unassigned funds account as of December 31, 2012 (as reported in their respective 2012
statutory annual statements) to zero (with an offsetting reduction in gross paid-in capital and contributed surplus).
These resets were made pursuant to permitted practices in accordance with statutory accounting practices granted by
their respective domiciliary insurance regulators. A detailed description of the permitted practices is included in
“Item 1. Business—Regulation—Insurance Regulation—Insurance Holding Company Regulation”.
This reset allows our Principal Insurance Subsidiaries domiciled in Colorado, Iowa and Minnesota to build
up ordinary dividend capacity to the extent their operating results subsequent to December 31, 2012 generate
positive earned surplus. Under applicable domiciliary insurance regulations, our Principal Insurance Subsidiaries
must deduct any extraordinary distributions or dividends paid in the preceding twelve months in calculating
dividend capacity. We expect that these insurance subsidiaries will have ordinary dividend capacity only after
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