Voya 2013 Annual Report Download - page 173

On January 14, 2014, the $15.0 million LOC was cancelled and the corresponding guarantee obligation of
ING V was extinguished.
Securities Lending
We engage in securities lending for cash or cash equivalents, on a direct basis, or through an agent, whereby
certain securities from our portfolio are loaned to other institutions for short periods of time. Initial collateral,
primarily cash, is required at a rate of 102% of the market value of the loaned securities. For certain transactions,
a lending agent may be used and the agent may retain some or all of the collateral deposited by the borrower and
transfer the remaining collateral to us. Collateral retained by the agent is invested in liquid assets on our behalf.
The market value of the loaned securities is monitored on a daily basis with additional collateral obtained or
refunded as the market value of the loaned securities fluctuates. As of December 31, 2013 and 2012, the fair
value of loaned securities was $435.4 million and $601.8 million, respectively, and is included in Securities
pledged on the Consolidated Balance Sheets. As of December 31, 2013 and 2012, collateral retained by the
lending agent and invested in liquid assets on our behalf was $451.0 million and $619.5 million, respectively, and
is recorded in Short-term investments under securities loan agreement, including collateral delivered on the
Consolidated Balance Sheets. Cash collateral received by us is included in Cash and cash equivalents or Invested
assets to the extent it is reinvested. As of December 31, 2013 and 2012, liabilities to return collateral of $451.0
million and $619.5 million, respectively, are included in Payables under securities loan agreement, including
collateral held on the Consolidated Balance Sheets.
Repurchase Agreements
We engage in dollar repurchase agreements with mortgage-backed securities (“dollar rolls”) and repurchase
agreements with other collateral types to increase our return on investments and improve liquidity. Such
arrangements meet the requirements to be accounted for as financing arrangements. We enter into dollar roll
transactions by selling existing MBS and concurrently entering into an agreement to repurchase similar securities
within a short time frame at a lower price. Under repurchase agreements, we borrow cash from a counterparty at an
agreed upon interest rate for an agreed upon time frame and pledge collateral in the form of securities. At the end of
the agreement, the counterparty returns the collateral to us, and we, in turn, repay the loan amount along with the
additional agreed upon interest. We require that at all times during the term of the dollar roll and repurchase
agreements that cash or other collateral types obtained is sufficient to allow us to fund substantially all of the cost of
purchasing replacement assets. Cash received is invested in short-term investments, with the offsetting obligation to
repay the loan included as a liability on the Consolidated Balance Sheets. As per the terms of the agreements, the
market value of the loaned securities is monitored with additional collateral obtained or refunded as the market
value of the loaned securities fluctuates due to changes in interest rates, spreads and other risk factors.
The carrying value of the securities pledged in dollar rolls and repurchase agreement transactions and the
related repurchase obligation are included in Securities pledged and Short-term debt, respectively, on the
Consolidated Balance Sheets. As of December 31, 2013 and 2012, we did not have any securities pledged in
dollar rolls and repurchase agreement transactions.
We also enter into reverse repurchase agreements. These transactions involve a purchase of securities and an
agreement to sell substantially the same securities as those purchased. We require that, at all times during the
term of the reverse repurchase agreements, cash or other collateral types provided is sufficient to allow the
counterparty to fund substantially all of the cost of purchasing the replacement assets. As of December 31, 2013
and 2012, we did not have any securities pledged under reverse repurchase agreements.
The primary risk associated with short-term collateralized borrowings is that the counterparty will be unable to
perform under the terms of the contract. Our exposure is limited to the excess of the net replacement cost of the
securities over the value of the short-term investments. We believe the counterparties to the dollar rolls, repurchase
and reverse repurchase agreements are financially responsible and that the counterparty risk is minimal.
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