Voya 2013 Annual Report Download - page 355

ING U.S., Inc.
Notes to the Consolidated Financial Statements
(Dollar amounts in millions, unless otherwise stated)
Affiliated Financing Agreements
The Company previously borrowed funds from time to time from ING V under a facility loan agreement (the
“Facility Loan Agreement”). The borrowings under the Facility Loan Agreement were made at varying rates of
interest and had varying maturity dates. The Company incurred no interest for the years ended December 31,
2013 and 2012. The Company incurred interest of $32.1 for the year ended December 31, 2011.
During 2011, the Company made an additional $263.0 of borrowings under the Facility Loan Agreement.
Subsequently, during 2011, ING V contributed to the Company all borrowings under the Facility Loan
Agreement. The debt outstanding under the Facility Loan Agreement was immediately extinguished as a result of
the contribution. The borrowings contributed had a book value and fair value of $4.0 billion.
In 2007 the Company entered into a $500.0 par floating rate loan agreement with ING V pursuant to which the
Company pays a variable rate of interest based on three month LIBOR. This note originally was to have matured
on August 10, 2012. Effective April 13, 2012, however, the term of the note was extended to April 29, 2016 (the
“2.54% Lion Connecticut Holdings Inc. Floating Rate Note, due 2016”). As of December 31, 2012, the Company
had debt of $500.0 related to this loan agreement. On July 5, 2013, the outstanding balance of $150.0 for this
note was paid in full to ING V. The Company incurred interest of $5.6, $12.5 and $1.8 for the years ended
December 31, 2013, 2012 and 2011, respectively.
Derivatives
The Company is party to several derivative contracts with ING V and ING Bank and one or more of ING Bank’s
subsidiaries. Each of these contracts were entered into as a result of a competitive bid, which included
unaffiliated counterparties. The Company is exposed to various risks relating to its ongoing business operations,
including but not limited to interest rate risk, foreign currency risk and equity market risk. To manage these risks,
the Company uses various strategies, including derivatives contracts, certain of which are with related parties,
such as interest rate swaps, equity options and currency forwards.
As of December 31, 2013 and 2012, the outstanding notional amounts were $518.9 (consisting of interest rate
swaps of $328.8 and equity options of $190.1) and $2.1 billion (consisting of interest rate swaps of $1.9 billion
and equity options of $265.7), respectively. As of December 31, 2013 and 2012, the market values for these
contracts were $10.5 and $15.6, respectively. For the years ended December 31, 2013, 2012 and 2011, the
Company recorded net realized capital gains (losses) of $1.7, $20.1 and $376.4, respectively, with ING Bank and
ING V.
The Company has sold protection under certain credit default swap derivative contracts that were previously
supported by a guarantee provided by ING V. During 2013, the guarantee provided by ING V on the sold
protection was replaced with guarantees provided by ING U.S., Inc. The Company purchased protection under
one credit default swap derivative contract that is supported by the ING V guarantee with the potential exposure
limited to swap premiums to be paid. As of December 31, 2013 and 2012, the maximum potential future
exposure to the Company on credit default swaps supported by the ING V guarantee was $43.5 million and
$1.0 billion, respectively.
Operating Agreements
ING Investment Management LLC (“IIM”), a wholly owned subsidiary of the Company, has certain operating
agreements whereby it generates revenues and incurs expenses with affiliated entities. As of December 31, 2013,
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