Voya 2013 Annual Report Download - page 273

ING U.S., Inc.
Notes to the Consolidated Financial Statements
(Dollar amounts in millions, unless otherwise stated)
the trust structure. Where the assessment continues to project full recovery of principal and interest on schedule,
the Company has not recorded an impairment. Unrealized losses on below investment grade securities are
principally related to RMBS (primarily Alt-A RMBS), and ABS (primarily subprime RMBS) largely due to
economic and market uncertainties including concerns over unemployment levels, lower interest rate
environment on floating rate securities requiring higher risk premiums since purchase and valuations on
residential real estate supporting non-agency RMBS. Based on this analysis, the Company determined that the
remaining investments in an unrealized loss position were not other-than-temporarily impaired and therefore no
further other-than-temporary impairment was necessary.
Troubled Debt Restructuring
The Company invests in high quality, well performing portfolios of commercial mortgage loans and private
placements. Under certain circumstances, modifications are granted to these contracts. Each modification is
evaluated as to whether a troubled debt restructuring has occurred. A modification is a troubled debt restructuring
when the borrower is in financial difficulty and the creditor makes concessions. Generally, the types of
concessions may include reducing the face amount or maturity amount of the debt as originally stated, reducing
the contractual interest rate, extending the maturity date at an interest rate lower than current market interest rates
and/or reducing accrued interest. The Company considers the amount, timing and extent of the concession
granted in determining any impairment or changes in the specific valuation allowance recorded in connection
with the troubled debt restructuring. A valuation allowance may have been recorded prior to the quarter when the
loan is modified in a troubled debt restructuring. Accordingly, the carrying value (net of the specific valuation
allowance) before and after modification through a troubled debt restructuring may not change significantly, or
may increase if the expected recovery is higher than the pre-modification recovery assessment. As of
December 31, 2013, the Company had no new private placement troubled debt restructurings and had 21 new
commercial mortgage loan troubled debt restructurings with a pre-modification and post modification carrying
value of $91.0. Of these 21 commercial mortgage loans, 20 comprise a portfolio of cross-defaulted, cross-
collateralized individual loans, which are owned by the same sponsor. Between the date of the troubled debt
restructurings and December 31, 2013, these loans have repaid $4.2 in principal. As of December 31, 2012, the
Company had one private placement troubled debt restructuring with a pre-modification carrying value of $1.2,
which was written down to zero and no commercial mortgage loan troubled debt restructurings.
As of December 31, 2013 and 2012, the Company did not have any commercial mortgage loans or private
placements modified in a troubled debt restructuring with a subsequent payment default.
Mortgage Loans on Real Estate
The Company’s mortgage loans on real estate are all commercial mortgage loans held for investment, which are
reported at amortized cost, less impairment write-downs and allowance for losses. The Company diversifies its
commercial mortgage loan portfolio by geographic region and property type to reduce concentration risk. The
Company manages risk when originating commercial mortgage loans by generally lending only up to 75% of the
estimated fair value of the underlying real estate. Subsequently, the Company continuously evaluates all
mortgage loans based on relevant current information including a review of loan-specific credit quality, property
characteristics and market trends. Loan performance is monitored on a loan specific basis through the review of
submitted appraisals, operating statements, rent revenues and annual inspection reports, among other items. This
review ensures properties are performing at a consistent and acceptable level to secure the debt. The components
to evaluate debt service coverage are received and reviewed at least annually to determine the level of risk.
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