Voya 2013 Annual Report Download - page 181

The following table summarizes the statutory capital and surplus of our Principal Insurance Subsidiaries as
of the dates indicated:
As of December 31,
($ in millions) 2013 2012
Subsidiary Name (State of domicile):
ING USA Annuity and Life Insurance Company (IA) .... $1,941.6 $2,174.1
ING Life Insurance and Annuity Company (CT) ........ 2,010.8 1,921.8
Security Life of Denver Insurance Company (CO) ...... 1,034.0 1,459.9
ReliaStar Life Insurance Company (MN) .............. 1,942.5 2,278.6
We monitor the ratio of our insurance subsidiaries’ TAC to company action level risk-based capital
(“CAL”). A ratio in excess of 125% indicates that the insurance subsidiary is not required to take any corrective
actions to increase capital levels at the direction of the applicable state of domicile.
The following table summarizes the ratio of TAC to CAL on a combined basis for our Principal Insurance
Subsidiaries (ING USA, ILIAC, SLD and RLI) as of the dates indicated below:
($ in millions)
As of December 31, 2013 As of December 31, 2012
CAL TAC Ratio CAL TAC Ratio
$1,406.3 $7,068.4 503% $1,497.4 $7,871.9 526%
Statutory reserves established for variable annuity contracts and riders are sensitive to changes in the equity
markets and are affected by the level of account values relative to the level of any guarantees, product design and
reinsurance arrangements. As a result, the relationship between reserve changes and equity market performance
is non-linear during any given reporting period. Market conditions greatly influence the ultimate capital required
due to its effect on the valuation of reserves and derivative assets hedging these reserves.
The sensitivity of our insurance subsidiaries’ statutory reserves and surplus established for variable annuity
contracts and certain minimum interest rate guarantees to changes in the interest rates, credit spreads and equity
markets will vary depending on the magnitude of the decline. The sensitivity will be affected by the level of
account values, the level of guaranteed amounts and product design. Should statutory reserves increase, this
could result in future reductions in our insurance subsidiaries’ surplus, which may also impact RBC. Adverse
changes in interest rates and the continued widening of credit spreads may result in an increase in the reserves for
product guarantees which adversely impact statutory surplus, which may also impact RBC.
RBC is also affected by the product mix of the in force book of business (i.e., the amount of business
without guarantees is not subject to the same level of reserves as the business with guarantees). RBC is an
important factor in the determination of the credit and financial strength ratings of ING U.S., Inc. and our
insurance subsidiaries.
In June 2012, in conjunction with a limited scope examination of ING USA’s AG43 variable annuity
reserves, we agreed with the Iowa Insurance Division that by December 31, 2012 we would implement a revised
prudent margin (i.e., provision for adverse deviation) to the assumed mortality for our block of GMIB and
GMWBL liabilities ceded from ING USA to SLDI. This revision did not alter our best estimate mortality
assumption used in our U.S. GAAP financial statements. This revised prudent margin increased our gross AG43
reserves before ceded reinsurance. As of December 31, 2012, the impact of this implementation to ING USA’s
gross AG43 reserves was an increase of $174.7 million and the related reserve ceded to SLDI was increased by
$188.0 million. Thus, the net reserve impact to statutory reserves at ING USA was $13.0 million favorable and
SLDI was required to increase collateral in support of ceded reserves (i.e., qualifying assets in trust or approved
letters of credit) in the amount of $188.0 million.
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