Voya 2013 Annual Report Download - page 40

and may increase over time based on a number of factors, including a rollup percentage (mainly 7% or
6% depending on the version of the benefit) and ratchet frequency subject to maximum caps which
vary by product version (200%, 250% or 300% of initial premium).
•Guaranteed Minimum Withdrawal Benefit and Guaranteed Minimum Withdrawal Benefit for Life
(GMWB/GMWBL) Guarantees an annual withdrawal amount for a specified period of time (GMWB) or
life (GMWBL) that is calculated as a percentage of the benefit base that equals premium paid at the
time of product issue and may increase over time based on a number of factors, including a rollup
percentage (mainly 7%, 6% or 0%, depending on versions of the benefit) and ratchet frequency
(primarily annually or quarterly, depending on versions). The percentage used to determine the
guaranteed annual withdrawal amount may vary by age at first withdrawal and depends on versions of
the benefit. A joint life-time withdrawal benefit option was available to 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.
Reserves for Future Policy Benefits
We establish and carry actuarially-determined reserves that are calculated to meet our future obligations.
The principal assumptions used to establish liabilities for future policy benefits are based on our experience and
periodically reviewed against industry standards. These assumptions include mortality, policy lapse, investment
returns, inflation, benefit utilization and expenses. Changes in, or deviations from, the assumptions used can
significantly affect our reserve levels and related future operations.
The determination of future policy benefit reserves is dependent on actuarial assumptions set by us in
determining policyholder behavior, as described above.
Reserves for variable annuity GMDB and GMIB are determined by estimating the value of expected
benefits in excess of the projected account balance and recognizing the excess ratably over the accumulation
period based on total expected assessments. Expected assessments are based on a range of scenarios. The reserve
for the GMIB guarantee incorporates an assumption for the percentage of the contracts that will annuitize. In
general, we assume that GMIB annuitization rates will be higher for policies with more valuable (more “in the
money”) guarantees. We periodically evaluate estimates used and adjust the additional liability balance, with a
related charge or credit to benefit expense, if actual experience or other evidence suggests that earlier
assumptions should be revised. Changes in reserves for GMDB and GMIB are reported in Policyholder benefits
in the Consolidated Statements of Operations.
Variable annuity GMAB, GMWB, and GMWBL are considered embedded derivatives, which are measured
at estimated fair value separately from the host annuity contract, along with attributed fees collected or payments
made, reported in Other net realized capital gains (losses) in the Consolidated Statements of Operations.
At inception of the GMAB, GMWB, and GMWBL contracts, we project fees to be attributed to the
embedded derivative portion of the guarantee equal to the present value of projected future guaranteed benefits.
Any excess or deficient fee is attributed to the host contract and reported in Fee income in the Consolidated
Statements of Operations.
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