Voya 2013 Annual Report Download - page 153

change in debt structure. See a description of the change in debt structure under “Liquidity and Capital Resources—
Debt Securities.” The increase in Operating expenses, primarily resulting from higher variable compensation costs
in the current period compared to the prior period, was offset by lower LOC expenses in the current period due to
the termination of the contingent capital letter of credit facility supporting our CBVA segment.
Corporate—Year Ended December 31, 2012 Compared to Year Ended December 31, 2011
Operating earnings before income taxes increased $47.9 million from $(230.2) million to $(182.3) million
primarily driven by the 2011 charge of $68.9 million, net of associated DAC, to increase reserves in connection
with our use of the SSDMF as described below. In addition, interest costs decreased $57.9 million as a result of
several factors. Lower swap interest expenses as well as a reduction in interest costs due to a $2.7 billion and a
$1.3 billion debt-to-equity conversion in the second quarter and fourth quarter of 2011, respectively, were only
partially offset by additional interest expense and debt issuance costs associated with the $5.0 billion revolving
credit facility entered into in the second quarter of 2012 and the $850.0 million unsecured Senior Notes entered
into in the third quarter of 2012. Lower interest costs were mostly offset by increased expenses, primarily driven
by $56.7 million in letter of credit costs in 2012 related to the $1.5 billion contingent capital letter of credit
facility issued at the end of 2011 to support our Closed Block Variable Annuity segment, as well as lower
compensation expenses during 2011, which resulted primarily from payments in 2011 related to 2010
performance which were less than estimated in 2010.
Closed Blocks
The following table summarizes Operating earnings before income taxes of our Closed Blocks for the
periods indicated:
Years Ended December 31,
($ in millions) 2013 2012 2011
Closed Block Institutional Spread Products ................ $35.9 $ 45.7 $ 83.2
Closed Block Other ................................... 14.7 64.0 (13.0)
Operating earnings before income taxes ................... $50.6 $109.7 $ 70.2
The following table presents Operating earnings before income taxes of our Closed Block Institutional
Spread Products segment for the periods indicated:
Years Ended December 31,
($ in millions) 2013 2012 2011
Operating revenues:
Net investment income and net realized gains (losses) . . $107.9 $126.3 $188.8
Fee income .................................... — 0.1 0.1
Premiums ..................................... 2.4 2.3 2.3
Other revenue .................................. (1.2) (1.5) (3.1)
Total operating revenues ............................. 109.1 127.2 188.1
Operating benefits and expenses:
Interest credited and other benefits to contract owners/
policyholders ................................ 62.7 67.5 89.0
Operating expenses ............................. 10.1 11.5 11.3
Net amortization of DAC/VOBA ................... 0.4 0.6 0.6
Interest expense ................................ — 1.9 4.0
Total operating benefits and expenses ................... 73.2 81.5 104.9
Operating earnings before income taxes ............... $ 35.9 $ 45.7 $ 83.2
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