Voya 2014 Annual Report Download - page 114

under various laws, including the Bank Holding Company Act of 1956, as amended (“BHCA”), and the
International Banking Act of 1978, and we may be subject to the same limitations (including restrictions on
acquisitions) if we were deemed to be “controlled” by ING Group. As a result, we could be required to incur
material compliance, reporting or other costs or to forego certain types of material revenues or could otherwise
be confronted with consequences that are material and adverse to us.
The BHCA would provide ING Group, ING Bank and us a two-year period in which to comply with certain
of the BHCA activity restrictions, with the possibility of our obtaining up to three one-year extensions. There is
no guarantee, however, that the Federal Reserve would grant these requests.
Our insurance businesses are heavily regulated, and changes in regulation in the United States, enforcement
actions and regulatory investigations may reduce profitability.
Our insurance operations are subject to comprehensive regulation and supervision throughout the United
States. State insurance laws regulate most aspects of our insurance businesses, and our insurance subsidiaries are
regulated by the insurance departments of the states in which they are domiciled and the states in which they are
licensed. The primary purpose of state regulation is to protect policyholders, and not necessarily to protect
creditors and investors. See “Item 1. Business—Regulation—Insurance Regulation”.
State insurance guaranty associations have the right to assess insurance companies doing business in their
state in order to help pay the obligations of insolvent insurance companies to policyholders and claimants.
Because the amount and timing of an assessment is beyond our control, liabilities we have currently established
for these potential assessments may not be adequate.
State insurance regulators, the NAIC and other regulatory bodies regularly reexamine existing laws and
regulations applicable to insurance companies and their products. Changes in these laws and regulations, or in
interpretations thereof, are often made for the benefit of the consumer at the expense of the insurer and could
materially and adversely affect our business, results of operations or financial condition. We currently use
captive reinsurance subsidiaries primarily to reinsure term life insurance, universal life insurance with secondary
guarantees, and stable value annuity business. We also use our Arizona captive primarily to reinsure life
insurance and annuity business from our insurance subsidiaries. In October 2011, the NAIC established a
subgroup to study insurers’ use of captive reinsurance companies 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 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 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. FIO reiterated its
recommendations for captives reform in its 2014 annual report. During 2014, the NAIC advanced two captives
proposals. In June 2014, the NAIC adopted a new regulatory framework set out in the Rector Report for captives
assuming XXX and AXXX business. In December 2014, the NAIC adopted AG48 which established a new
regulatory requirement applicable to XXX and AXXX reserves ceded to reinsurers, including affiliated
reinsurers, as the first step in implementing the framework set out in the Rector Report. As adopted, AG48 limits
the type of assets that may be used as collateral to back the XXX and AXXX statutory reserves. The new
guidance will apply prospectively to existing reinsurance transactions that reinsure policies issued on or after
January 1, 2015 and new reinsurance transactions entered into on or after January 1, 2015. The NAIC has
charged multiple working groups with the responsibility to address other aspects of the Rector framework. In
March 2014, the NAIC considered a proposal to require states to apply NAIC accreditation standards, applicable
to traditional insurers, to captive reinsurers. In November 2014, NAIC staff were directed to prepare a new
accreditation proposal relating to captives, and on February 24, 2015, the NAIC F Committee exposed for public
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