Voya 2013 Annual Report Download - page 143

The following table summarizes a rollforward of AUM for our Annuities segment for the periods indicated:
Years Ended December 31,
($ in millions) 2013 2012 2011
Balance at beginning of period ................. $26,101.1 $27,690.2 $27,849.3
Deposits ............................... 2,632.0 2,353.8 2,716.8
Surrenders, benefits and product charges ..... (3,528.9) (5,086.1) (3,935.1)
Net flows .......................... (896.9) (2,732.3) (1,218.3)
Interest credited and investment
performance .......................... 1,442.5 1,143.2 1,059.2
Balance as of end of period .................... $26,646.7 $26,101.1 $27,690.2
Annuities—Year Ended December 31, 2013 Compared to Year Ended December 31, 2012
Operating revenues
Net investment income and net realized gains (losses) decreased $73.4 million from $1,223.3 million to
$1,149.9 million primarily due to lower general account assets and lower investment income on the CMO-B
portfolio. General account assets decreased as a result of MYGAs lapsing at the end of their initial terms, largely
due to lower renewal crediting rates, which reflect the lower interest rate environment compared to the crediting
rates during their initial term. In addition, investment income on the CMO-B portfolio was lower due to market
conditions in the current period and portfolio restructuring in the prior period. These decreases were partially
offset by $20.3 million of net investment income from Lehman Recovery/LIHTC, higher prepayment fee income
and higher income on alternative investments, as the prior period included a loss on the sale of certain alternative
assets.
Fee income increased $9.6 million from $35.5 million to $45.1 million due to growth in assets of mutual
fund custodial products, which are sold by the annuity distribution force as an alternative retirement product.
Average assets of the mutual fund custodial product increased 38% from $2.1 billion in 2012 to $2.9 billion in
2013 due to positive net flows and market performance.
Operating benefits and expenses
Interest credited and other benefits to contract owners/policyholders decreased $123.2 million from
$854.1 million to $730.9 million primarily due to lower option costs of FIAs, a decrease in average crediting
rates on MYGA renewals and lower average account values due to the continuing run-off of MYGAs. Favorable
mortality on annuities with life contingencies also contributed to the decrease.
Net amortization of DAC/VOBA decreased $132.6 million from $225.5 million to $92.9 million primarily
due to favorable changes in unlocking of DAC/VOBA due to prospective assumption changes compared to
unfavorable unlocking in the prior period. Favorable unlocking in the current period was primarily as a result of
updated margin projections for fixed rate annuities. In the prior period, unlocking was primarily due to a decrease
in the projected margins on MYGA policies. Partially offsetting the decrease was higher amortization due to
higher gross profits in the current period.
Operating earnings before income taxes
Operating earnings before taxes increased $191.6 million from $102.2 million to $293.8 million as a result
of several factors including improved margins related to MYGA run-off, favorable changes in DAC/VOBA and
other intangibles unlocking, a Net gain from Lehman Recovery/LIHTC and the loss on the sale of certain
alternative investments in the prior period. Partially offsetting these increases was a decline in investment income
on the CMO-B portfolio.
133