Voya 2013 Annual Report Download - page 55

Change of Control. State insurance holding company regulations generally provide that no person,
corporation or other entity may acquire control of an insurance company, or a controlling interest in any parent
company of an insurance company, without the prior approval of such insurance company’s domiciliary state
insurance regulator. Under the laws of each of the domiciliary states of our insurance subsidiaries, any person
acquiring, directly or indirectly, 10% or more of the voting securities of an insurance company is presumed to
have acquired “control” of the company. This statutory presumption of control may be rebutted by a showing that
control does not exist in fact. The state insurance regulators, however, may find that “control” exists in
circumstances in which a person owns or controls less than 10% of voting securities.
To obtain approval of any change in control, the proposed acquirer must file with the applicable insurance
regulator an application disclosing, among other information, its background, financial condition, the financial
condition of its affiliates, the source and amount of funds by which it will effect the acquisition, the criteria used
in determining the nature and amount of consideration to be paid for the acquisition, proposed changes in the
management and operations of the insurance company and other related matters. In considering an application to
acquire control of an insurer, the insurance commissioner generally will consider such factors as the experience,
competence and financial strength of the applicant, the integrity of the applicant’s Board of Directors and
executive officers, the acquirer’s plans for the management and operation of the insurer and any anti-competitive
results that may arise from the acquisition.
In addition, many state insurance laws require prior notification of state insurance regulators of a change in
control of a non-domiciliary insurance company doing business in that state. While these pre-notification statutes
do not authorize the state insurance regulators to disapprove the change in control, they authorize regulatory
action in the affected state if particular conditions exist such as undue market concentration. Any future
transactions that would constitute a change in control of our insurance subsidiaries may require prior notification
in those states that have adopted pre-acquisition notification laws.
Any purchaser of shares of common stock representing 10% or more of the voting power of our capital
stock will be presumed to have acquired control of our insurance subsidiaries unless, following application by
that purchaser in each insurance subsidiary’s state of domicile, the relevant insurance commissioner determines
otherwise.
The licensing orders governing our captive reinsurance subsidiaries provide that any change of control
requires the approval of such company’s domiciliary state insurance regulator. For our Arizona captive, a change
of control requires the approval of the ADOI. Although our captive reinsurance subsidiaries and our Arizona
captive are not subject to insurance holding company laws, their domiciliary state insurance regulators may use
all or a part of the holding company law framework described above in determining whether to approve a
proposed change of control.
The laws and regulations regarding change of control transactions may discourage potential acquisition
proposals and may delay, deter or prevent a change of control involving us, including through unsolicited
transactions that some of our stockholders might consider to be desirable.
Recent Actions by the NAIC. The NAIC recently adopted significant changes to the insurance holding
company act and regulations (the “NAIC Amendments”).The NAIC Amendments are designed to respond to
perceived gaps in the regulation of insurance holding company systems in the United States.One of the major
changes is a requirement that an insurance holding company system’s ultimate controlling person submit
annually to its lead state insurance regulator an “enterprise risk report” that identifies activities, circumstances or
events involving one or more affiliates of an insurer that, if not remedied properly, are likely to have a material
adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as
a whole.Other changes include requiring a controlling person to submit prior notice to its domiciliary insurance
regulator of a divestiture of control, detailed minimum requirements for cost sharing and management
agreements between an insurer and its affiliates and expansion of the agreements between an insurer and its
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