Voya 2013 Annual Report Download - page 244

ING U.S., Inc.
Notes to the Consolidated Financial Statements
(Dollar amounts in millions, unless otherwise stated)
Significant Accounting Policies
Estimates and Assumptions
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and
expenses during the reporting period. Those estimates are inherently subject to change and actual results could
differ from those estimates.
The Company has identified the following accounts and policies as the most significant in that they involve a
higher degree of judgment, are subject to a significant degree of variability and/or contain significant accounting
estimates:
Reserves for future policy benefits, deferred policy acquisition costs (“DAC”), value of business
acquired (“VOBA”) and other intangibles, valuation of investments and derivatives, impairments,
income taxes, contingencies and employee benefit plans.
Fair Value Measurement
The Company measures the fair value of its financial assets and liabilities based on assumptions used by market
participants in pricing the asset or liability, which may include inherent risk, restrictions on the sale or use of an
asset or nonperformance risk, which is the risk that the issuing subsidiary will not fulfill its obligation. The
estimate of an exchange price is the price in an orderly transaction between market participants to sell the asset or
transfer the liability (“exit price”) in the principal market, or the most advantageous market in the absence of a
principal market, for that asset or liability. The Company utilizes a number of valuation sources to determine the
fair values of its financial assets and liabilities, including quoted market prices, third-party commercial pricing
services, third-party brokers, industry-standard, vendor-provided software that models the value based on market
observable inputs and other internal modeling techniques based on projected cash flows.
Investments
The accounting policies for the Company’s principal investments are as follows:
Fixed Maturities and Equity Securities: The Company’s fixed maturities and equity securities are currently
designated as available-for-sale, except those accounted for using the fair value option (“FVO”). Available-for-
sale securities are reported at fair value and unrealized capital gains (losses) on these securities are recorded
directly in Accumulated other comprehensive income (loss) (“AOCI”) and presented net of related changes in
DAC/VOBA and other intangibles and deferred income taxes. In addition, certain fixed maturities have
embedded derivatives, which are reported with the host contract on the Consolidated Balance Sheets.
The Company has elected the FVO for certain of its fixed maturities to better match the measurement of assets
and liabilities in the Consolidated Statements of Operations. Certain collateralized mortgage obligations
(“CMOs”), primarily interest-only and principal-only strips, are accounted for as hybrid instruments and valued
at fair value with changes in the fair value recorded in Other net realized capital gains (losses) in the
Consolidated Statements of Operations.
Purchases and sales of fixed maturities and equity securities, excluding private placements, are recorded on the
trade date. Purchases and sales of private placements and mortgage loans are recorded on the closing date.
Investment gains and losses on sales of securities are generally determined on a first-in-first-out basis.
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