Voya 2013 Annual Report Download - page 144

Annuities—Year Ended December 31, 2012 Compared to Year Ended December 31, 2011
Operating revenues
Net investment income and net realized gains (losses) decreased $98.6 million from $1,321.9 million to
$1,223.3 million primarily due to lower general account assets and the $18.0 million loss on sale of certain
alternative investments. General account assets decreased as a result of MYGAs lapsing at the end of their initial
terms, largely due to crediting rates that were lower than the crediting rates during their initial term.
Fee income increased $5.7 million from $29.8 million to $35.5 million due to growth in assets of mutual
fund products which are sold by the annuity distribution force as an alternative retirement product. The balance
of assets increased from $1.8 billion to $2.4 billion.
Operating benefits and expenses
Interest credited and other benefits to contract owners/policyholders decreased $123.9 million from
$978.0 million to $854.1 million. The decrease was primarily due to lapses of MYGAs which resulted in a
decrease to average account values, crediting MYGAs. Lower option costs of FIAs also contributed to the
decrease. This decline in Interest credited and other benefits to contract owners/policyholders was partially
offset by higher amortization on sales inducements.
Net amortization of DAC/VOBA increased $317.0 million from $(91.5) million to $225.5 million primarily
due to changes in unlocking of DAC/VOBA that were partially offset by a lower amortization rate of DAC/
VOBA. The unfavorable unlocking of DAC/VOBA in 2012 was primarily due to a decrease in projected margins
on the MYGA policies. The favorable unlocking of DAC/VOBA in 2011 resulted primarily from prospective
assumption changes related to investment margins on FIAs, or anticipated earned investment income less
credited interest. Excluding unlocking, the decrease in DAC/VOBA amortization was due to a decrease in the
amortization rate partially offset by higher amortization due to higher gross profits in 2012.
Operating earnings before income taxes
Operating earnings before income taxes decreased $285.4 million from $387.6 million to $102.2 million
primarily driven by changes in DAC/VOBA and other intangibles unlocking and a decline in net investment
income, which were partially offset by lower Interest credited and other benefits to contract owners/
policyholders.
Investment Management
The following table summarizes Operating earnings before income taxes of our Investment Management
segment for the periods indicated:
Years Ended December 31,
($ in millions) 2013 2012 2011
Operating revenues:
Net investment income and net realized gains (losses) . . $ 37.0 $ 41.6 $ 8.8
Fee income .................................... 530.8 474.7 469.3
Other revenue .................................. 39.9 29.2 13.8
Total operating revenues ............................. 607.7 545.5 491.9
Operating benefits and expenses:
Operating expenses ............................. 429.6 411.0 404.4
Total operating benefits and expenses ................... 429.6 411.0 404.4
Operating earnings before income taxes ............... $178.1 $134.5 $ 87.5
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