Voya 2013 Annual Report Download - page 87

Our statutory reserve financings may be subject to cost increases and new financings may be subject to limited
market capacity.
We have financing facilities in place for our previously written business and have remaining capacity in
existing facilities to support writings through the end of 2014 or later. However certain of these facilities mature
prior to the run off of the reserve liability so that we are subject to cost increases or unavailability of capacity
upon the refinancing. If we are unable to refinance such facilities, or if the cost of such facilities were to
significantly increase, we would be required to increase statutory reserves or incur higher operating or tax costs.
For more details, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Liquidity and Capital Resources—Credit Facilities and Subsidiary Credit Support Arrangements.”
A significant portion of our institutional funding originates from two Federal Home Loan Banks, which
subjects us to liquidity risks associated with sourcing a large concentration of our funding from two
counterparties.
A significant portion of our institutional funding agreements originates from the Federal Home Loan Bank
of Topeka and the Federal Home Loan Bank of Des Moines (each an “FHLB”), which primarily serve as sources
of funding for our Closed Block Institutional Spread Products segment. As of December 31, 2013 and 2012, we
had issued $1.8 billion and $2.6 billion, respectively, of non-putable funding agreements and obtained a $265
million LOC in exchange for eligible collateral in the form of cash, mortgage backed securities and U.S.
Treasury securities. Should the FHLBs choose to change their definition of eligible collateral, or if the market
value of the pledged collateral decreases in value due to changes in interest rates or credit ratings, we may be
required to post additional amounts of collateral in the form of cash or other eligible collateral. Additionally, we
may be required to find other sources to replace this funding if we lose access to FHLB funding. This could occur
if our creditworthiness falls below either of the FHLB’s requirements or if legislative or other political actions
cause changes to the FHLBs’ mandate or to the eligibility of life insurance companies to be members of the
FHLB system.
Any failure to protect the confidentiality of customer information could adversely affect our reputation and
have a material adverse effect on our business, financial condition and results of operation.
Our businesses and relationships with customers are dependent upon our ability to maintain the
confidentiality of our and our customers’ trade secrets and confidential information (including customer
transactional data and personal data about our employees, our customers and the employees and customers of our
customers). Pursuant to federal laws, various federal regulatory and law enforcement agencies have established
rules protecting the privacy and security of personal information. In addition, most states have enacted laws,
which vary significantly from jurisdiction to jurisdiction, to safeguard the privacy and security of personal
information. Certain of our employees and contractors and many representatives of our broker-dealer subsidiaries
have access to and routinely process personal information of customers through a variety of media, including the
internet and software applications. We rely on various internal processes and controls to protect the
confidentiality of customer information that is accessible to, or in the possession of, us, our employees,
contractors and sales representatives. It is possible that an employee, contractor or sales representative could,
intentionally or unintentionally, disclose or misappropriate confidential customer information. If we fail to
maintain adequate internal controls, including any failure to implement newly-required additional controls, or if
our employees, contractors or sales representatives fail to comply with our policies and procedures,
misappropriation or intentional or unintentional inappropriate disclosure or misuse of customer information could
occur. Such internal control inadequacies or non-compliance could materially damage our reputation, result in
regulatory action or lead to civil or criminal penalties, which, in turn, could have a material adverse effect on our
business, results of operations and financial condition.
77