Voya 2013 Annual Report Download - page 133

Higher losses in the current period are partially offset by gains from changes in fair value of guaranteed
benefit derivatives in our CBVA segment. Gains on guaranteed benefit derivatives, excluding nonperformance
risk in our CBVA segment increased $923.6 million, from $833.9 million to $1,757.5 million, driven by higher
equity market growth, rising interest rates and favorable changes in volatility in the current period compared to
the prior period.
Other revenue increased $54.5 million from $378.5 million to $433.0 million primarily due to higher
income earned by our Retirement segment’s broker dealers for sales on non-proprietary products, which is
partially offset by the corresponding higher broker-dealer expenses within Operating expenses. Changes in
market value adjustments related to retirement plan sponsors upon surrender and an increase in production and
performance related fees earned by our Investment Management segment also contributed to the increase.
Interest credited and other benefits to contract owners/policyholders decreased $363.8 million from
$4,861.6 million to $4,497.8 million primarily due to a decrease in reserves in our CBVA segment and a decline
in the funds withheld reserve with business reinsured resulting from market value changes in the related assets,
the latter of which is entirely offset by a corresponding amount recorded in Net realized capital gains (losses). A
decline in guaranteed benefit reserves in our CBVA segment driven by more favorable fund returns in the current
period compared to the prior period is partially offset by an increase in reserves associated with the annuitization
of life contingent contracts in our CBVA segment, which corresponds to the increase in Premiums described
above. In addition, decreases in interest credited in our Annuities segment due to declining reserves for MYGAs
and lower crediting rates, favorable reserve changes and intangible unlocking in our Individual Life segment, and
declining contract owner account balances for the Closed Block Institutional Spread Products segment
contributed to the decrease.
Operating expenses decreased $468.3 million from $3,155.0 million to $2,686.7 million primarily due to
lower pension expenses in the current period related to the immediate recognition of actuarial gains, compared to
losses in the prior period, largely due to changes in equity markets and interest rates as well as a curtailment in
the third quarter of 2012. Additionally, lower LOC costs in the current period for our CBVA segment and for our
Individual Life segment, lower sales related expenses in our Individual Life segment in the current period, and
lower costs in the current period related to the divestment of the Company by ING Group all contributed to a
decrease in Operating expenses. These decreases were offset by higher expenses in our Closed Block Other
segment as a result of a reimbursement of expenses by ING Group during the prior period, higher broker-dealer
and other asset-based expenses in our Retirement segment, higher commission expenses in our CBVA segment
associated with higher AUM, an increase in variable expenses in our Investment Management segment and
higher variable compensation costs in the current period compared to the prior period.
Net amortization of DAC/VOBA decreased $279.5 million from $722.3 million to $442.8 million. The
decrease is primarily driven by favorable unlocking in the current period compared to the prior period as a result
of prospective assumption changes in our Retirement and Annuities segments, as well as lower amortization
associated with a decline in net realized investment gains in the current period compared to the prior period.
Interest expense increased $31.1 million from $153.7 million to $184.8 million primarily due to additional
interest and debt issuance costs associated as a result of changes in debt structure. See a description of the
changes in debt structure under “Liquidity and Capital Resources—Debt Securities.”
Income (loss) before income taxes increased $152.1 million from $606.0 million to $758.1 million driven
primarily by the immediate recognition of actuarial gains on pensions in the current period compared to losses in
the prior period, Net gain from Lehman Recovery/LIHTC in the current period and the loss on the sale of certain
alternative investments in the prior period, lower amortization of DAC/VOBA, and higher Fee income. This was
partially offset by higher losses related to the incurred guaranteed benefits and guarantee hedge program in our
CBVA segment and changes in the fair value of guaranteed benefit derivatives due to nonperformance risk, a
decline in net investment gains and lower investment income on the CMO-B and alternative investment
portfolios as a result of portfolio restructuring in the prior period.
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