Voya 2013 Annual Report Download - page 306

ING U.S., Inc.
Notes to the Consolidated Financial Statements
(Dollar amounts in millions, unless otherwise stated)
include coverage for spouses. Most versions of the withdrawal benefit included reset and/or step-up features that
may increase the guaranteed withdrawal amount in certain conditions. Earlier versions of the withdrawal benefit
guarantee that annual withdrawals of up to 7.0% of eligible premiums may be made until eligible premiums
previously paid by the contract owner are returned, regardless of account value performance. Asset allocation
requirements apply at all times where withdrawals are guaranteed for life.
Guaranteed Minimum Accumulation Benefit (GMAB). Guarantees that the account value will be at least 100% of
the eligible premiums paid by the customer after 10 years, adjusted for withdrawals. We offered an alternative
design that guaranteed the account value to be at least 200% of the eligible premiums paid by contract owners
after 20 years.
The following assumptions and methodologies were used to determine the guaranteed reserves for retail variable
annuity contracts at December 31, 2013 and 2012:
Area Assumptions/Basis for Assumptions
Data used Based on 1,000 investment performance scenarios.
Mean investment
performance
GMDB: The mean investment performance varies by fund group. In general, the
Company groups all separate account returns into 6 fund groups, and generate
stochastic returns for each of these fund groups. The overall blended mean separate
account return is 8.1%. The general account fixed portion is a small percentage of
the overall total.
GMIB: the overall blended mean is 8.1% based on a single fund group
GMAB/GMWB/GMWBL: Zero rate curve
Volatility GMDB: 15.8% for 2013 and 2012
GMIB: 15.8% for 2013 and 2012
GMAB/GMWB/GMWBL: Implied volatilities through the first 5 years and then a
blend of implied and historical thereafter.
Mortality Depending on the type of benefit and gender, the Company uses the Annuity 2000
basic table with mortality improvement through 2013, further adjusted for company
experience.
Lapse rates Vary by contract type, share class, time remaining in the surrender charge period and
in-the-moneyness.
Discount rates GMDB/GMIB: 5.5% for 2013 and 2012.
GMAB/GMWB/GMWBL: Zero rate curve plus adjustment for nonperformance risk.
Variable annuity contracts containing guaranteed minimum death and living benefits expose the Company to
equity risk. With a decline in the equity markets, the Company has exposure to increasing claims due to the
guaranteed minimum benefits. On the other hand, with an increase in the equity markets, the Company’s
exposure to risks associated with the guaranteed minimum benefits generally decreases. In order to mitigate the
risk associated with guaranteed death and living benefits, the Company enters into reinsurance agreements and
derivative positions on various public market indices chosen to closely replicate contract owner variable fund
returns.
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