Voya 2013 Annual Report Download - page 54

corporate governance and internal control over financial reporting. The adopted revisions require that we file
reports with state insurance regulators regarding our assessment of internal control over financial reporting.
State insurance laws and regulations governing our captive reinsurance subsidiaries require such entities to
file financial statements with the Missouri Insurance Department, including statutory financial statements. State
insurance laws and regulations governing our Arizona captive require that entity to file financial statements with
the Arizona Department of Insurance (“ADOI”) and permit the filing of such financial statements on either a
statutory basis or a U.S. GAAP basis. The ADOI has agreed to permit our Arizona captive to prepare its financial
statements on a U.S. GAAP basis, modified for certain prescribed practices outlined in the Arizona insurance
statutes. In addition, our Arizona captive obtained approval from the ADOI for certain permitted practices,
including taking reinsurance credit for certain ceded reserves where the trust assets backing the liabilities are held
by one of our wholly-owned insurance companies. Our Arizona captive has recorded a receivable for these assets
held in trust by its affiliate.
State insurance regulators conduct periodic financial examinations of the books, records, accounts and
business practices of insurers domiciled in their states, generally every three to five years. Financial examinations
are generally carried out in cooperation with the insurance regulators of other states under guidelines
promulgated by the NAIC. State and federal insurance and securities regulatory authorities and other state law
enforcement agencies and attorneys general also from time to time make inquiries and conduct examinations or
investigations regarding the compliance by our company, as well as other companies in our industry, with,
among other things, insurance laws and securities laws.
Our captive reinsurance subsidiaries and our Arizona captive are subject to periodic financial examinations
by their respective domiciliary state insurance regulators.
State insurance regulators, the NAIC and other regulatory agencies are also investigating the use of
affiliated captive reinsurers and offshore entities to reinsure insurance risks. In October 2011, the NAIC
established a subgroup to study insurers’ use of captives and special purpose vehicles to transfer insurance risk in
relation to existing state laws and regulations, and to establish appropriate regulatory requirements to address
concerns identified in the study. Additionally, in June 2013, the New York Department of Financial Services
(“NYDFS”) released a report critical of certain captive reinsurance structures and calling, in part, for other state
regulators to adopt a moratorium on approving such structures pending further review by state and federal
regulators. Also, in December 2013, the United States Treasury Department’s Federal Insurance Office (“FIO”)
issued a report on how to modernize and improve the system of insurance regulation in the United States,
recommending, in part, that states develop a uniform and transparent solvency oversight regime for the transfer
of risk to reinsurance captives and adopt a uniform capital requirement for reinsurance captives, including a
prohibition on transactions that do not constitute legitimate risk transfer. We cannot predict what actions and
regulatory changes will result from the NAIC study, the NYDFS report or the FIO report and what impact such
changes will have on our financial condition and results of operation. Like many life insurance companies, we
utilize captive reinsurers to satisfy certain reserve requirements related to certain of our policies. If state
insurance regulators determine to restrict our use of captive reinsurers, it could require us to increase statutory
reserves, incur higher operating and/or tax costs or reduce sales.
Insurance Holding Company Regulation
ING U.S., Inc. and our insurance subsidiaries are subject to the insurance holding companies laws of the
states in which such insurance subsidiaries are domiciled. These laws generally require each insurance company
directly or indirectly owned by the holding company to register with the insurance regulator in the insurance
company’s state of domicile and to furnish annually financial and other information about the operations of
companies within the holding company system. Generally, all transactions affecting the insurers in the holding
company system must be fair and reasonable and, if material, require prior notice and approval or non-
disapproval by the state’s insurance regulator. Our captive reinsurance subsidiaries and our Arizona captive are
not subject to insurance holding company laws.
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