Voya 2013 Annual Report Download - page 80

Our operations are complex and a failure to properly perform services could have an adverse effect on our
revenues and income.
Our operations include, among other things, retirement plan administration, policy administration, portfolio
management, investment advice, retail and wholesale brokerage, fund administration, shareholder services,
benefits processing and servicing, contract and sales and servicing, transfer agency, underwriting, distribution,
custodial, trustee and other fiduciary services. In order to be competitive, we must properly perform our
administrative and related responsibilities, including recordkeeping and accounting, regulatory compliance,
security pricing, corporate actions, compliance with investment restrictions, daily net asset value computations,
account reconciliations and required distributions to fund shareholders. Further, certain of our investment
management subsidiaries may act as general partner for various investment partnerships, which may subject them
to liability for the partnerships’ liabilities. If we fail to properly perform and monitor our operations, our business
could suffer and our revenues and income could be adversely affected.
Our products and services are complex and are frequently sold through intermediaries, and a failure to
properly perform services or the misrepresentation of our products or services could have an adverse effect on
our revenues and income.
Many of our products and services are complex and are frequently sold through intermediaries. In particular,
our insurance businesses are reliant on intermediaries to describe and explain their products to potential
customers. The intentional or unintentional misrepresentation of our products and services in advertising
materials or other external communications, or inappropriate activities by our personnel or an intermediary, could
adversely affect our reputation and business prospects, as well as lead to potential regulatory actions or litigation.
Revenues, earnings and income from our investment management business operations could be adversely
affected if the terms of our asset management agreements are significantly altered or the agreements are
terminated.
Our revenues from our investment management business operations are dependent on fees earned
under asset management and related services agreements that we have with the clients and funds we advise.
Operating revenues for this segment were $607.7 million for the year ended December 31, 2013, $545.5 million
for the year ended December 31, 2012 and $491.9 million for the year ended December 31, 2011, and could be
adversely affected if these agreements are altered significantly or terminated. The decline in revenue that might
result from alteration or termination of our asset management services agreements could have a material adverse
impact on our results of operations or financial condition. Operating earnings before income taxes was $178.1
million for the year ended December 31, 2013, $134.5 million for the year ended December 31, 2012 and $87.5
million for the year ended December 31, 2011. In addition, under certain laws, most notably the Investment
Company Act and the Investment Advisers Act, advisory contracts may require approval or consent from clients
or fund shareholders in the event of an assignment of the contract or a change in control of the investment
adviser. Were a transaction to result in an assignment or change in control, the inability to obtain consent or
approval from clients or shareholders of mutual funds or other investment funds could result in a significant
reduction in advisory fees.
The valuation of many of our financial instruments includes methodologies, estimations and assumptions that
are subject to differing interpretations and could result in changes to investment valuations that may
materially and adversely affect our results of operations and financial condition.
The following financial instruments are carried at fair value in our financial statements: fixed income
securities, equity securities, derivatives, embedded derivatives, assets and liabilities related to consolidated
investment entities, and separate account assets. We have categorized these instruments into a three-level
hierarchy, based on the priority of the inputs to the respective valuation technique. The fair value hierarchy gives
the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest
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