Voya 2013 Annual Report Download - page 56

affiliates to be filed with its domiciliary insurance regulator.The NAIC Amendments must be adopted by the
individual state legislatures and insurance regulators in order to be effective.Each of Indiana, Connecticut and
New York adopted its version of the NAIC Amendments. We cannot predict whether the NAIC Amendments
will be adopted in whole or in part by other states or the impact, if any, these changes will have on our business,
financial condition or results of operations.
In addition, the NAIC has proposed a “Solvency Modernization Initiative”. The Solvency Modernization
Initiative focuses on the entire U.S. financial regulatory system and all aspects of financial regulation affecting
insurance companies. Though broad in scope, the NAIC has stated that the Solvency Modernization Initiative
will focus on: (1) capital requirements; (2) corporate governance and risk management; (3) group supervision;
(4) statutory accounting and financial reporting; and (5) reinsurance.We cannot predict the effect of these
initiatives on us at this time.
Dividend Payment Restrictions. As a holding company with no significant business operations of our own,
we will depend on dividends and other distributions from our subsidiaries as the principal source of cash to meet
our obligations, including the payment of interest on, and repayment of principal of, our outstanding debt
obligations.The states in which our insurance subsidiaries are domiciled impose certain restrictions on such
subsidiaries’ ability to pay dividends to us.These restrictions are based in part on the prior year’s statutory
income and surplus.In general, dividends up to specified levels are considered ordinary and may be paid without
prior approval.Dividends in larger amounts, or extraordinary dividends, are subject to approval by the insurance
commissioner of the state of domicile of the insurance subsidiary proposing to pay the dividend.
Under the insurance laws applicable to our insurance subsidiaries domiciled in Colorado, Connecticut,
Indiana, Iowa and Minnesota, an extraordinary dividend or distribution is defined as a dividend or distribution
that, together with other dividends and distributions made within the preceding twelve months, exceeds the
greater of (1) 10% of the insurer’s policyholder surplus as of the preceding December 31 or (2) the insurer’s net
gain from operations for the twelve-month period ended the preceding December 31, in each case determined in
accordance with statutory accounting principles.New York has similar restrictions, except that New York’s
statutory definition of extraordinary dividend or distribution is an aggregate amount in any calendar year that
exceeds the lesser of (1) 10% of policyholder’s surplus as of the preceding December 31 or (2) the insurer’s net
gain from operations for the twelve-month period ended the preceding December 31, not including realized
capital gains. In addition, under the insurance laws of the states of domicile of our Principal Insurance
Subsidiaries, no dividend or other distribution exceeding an amount equal to an insurance company’s earned
surplus may be paid without the domiciliary insurance regulator’s prior approval.
Indiana law also requires the Indiana Department of Insurance to review, at least one (1) time each year, the
ordinary shareholder dividends paid by each domestic insurer to determine whether dividends paid by the insurer
meet certain standards, including whether the dividends paid by the insurer are reasonable in relation to the
adequacy of the level of policyholder surplus of the insurer remaining after the payment of dividends.The
Indiana Department of Insurance is also required to issue an order to a domestic insurer to limit the payment of
ordinary shareholder dividends by the insurer if the Department determines that the policyholder surplus of the
insurer does not meet certain standards, including that such surplus is not reasonable in relation to the
outstanding liabilities of the insurer.
Our captive reinsurance subsidiaries may not declare or pay dividends in any form to us other than in
accordance with their respective insurance securitization transaction agreements and their respective governing
licensing orders. Likewise, our Arizona captive may not declare or pay dividends in any form to us other than in
accordance with its annual capital and dividend plan as approved by the ADOI which includes a minimum capital
requirement. In addition, in no event may the dividends decrease the capital of the captive below the minimum
capital requirement applicable to it, and, after giving effect to the dividends, the assets of the captive paying the
dividend must be sufficient to satisfy its domiciliary insurance regulator that it can meet its obligations. Approval
by a captive’s domiciliary insurance regulator of an ongoing plan for the payment of
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