Voya 2014 Annual Report Download - page 115

comment such a proposal, in the form of a revised preamble to the NAIC accreditation standards. The proposal
would require states to apply the NAIC accreditation standards to captive reinsurers that assume (i) XXX/AXXX
policies issued on or after January 1, 2015, or issued prior to January 1, 2015 and that were not part of a
reinsurance arrangement as of December 31, 2014, (ii) variable annuities, and (iii) long term care insurance. As
drafted, it appears that the proposal would apply to our Arizona captive. We cannot predict what revisions, if any,
will be made to the proposal as a result of the public comment or other NAIC deliberations, whether this or other
proposals will be adopted by the NAIC, or what additional actions and regulatory changes will result from the
continued captives scrutiny and reform efforts by the NAIC and other regulatory bodies. Any regulatory action
that prohibits or limits our use of or materially increases our cost of using captive reinsurance companies, either
retroactively or prospectively, including, if adopted as proposed, without grandfathering provisions for existing
captive variable annuity reinsurance entities, the February 2015 NAIC accreditation proposal, could have a
material adverse effect on our financial condition or results of operations. For more detail see “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital
Resources—Statutory Capital and Risk-Based Capital of Principal Insurance Subsidiaries—Captive Reinsurance
Subsidiaries.”
Insurance regulators have implemented, or begun to implement significant changes in the way in which
insurers must determine statutory reserves and capital, particularly for products with contractual guarantees such
as variable annuities and universal life policies, and are considering further potentially significant changes in
these requirements. The NAIC is currently working on comprehensive reforms related to life insurance reserves
and the accounting for such reserves. The timing and extent of further changes to statutory reserves and reporting
requirements are uncertain.
In addition, state insurance regulators are becoming more active in adopting and enforcing suitability
standards with respect to sales of fixed, indexed and variable annuities. In particular, the NAIC has adopted a
revised SAT, which will, if enacted by the states, place new responsibilities upon issuing insurance companies
with respect to the suitability of annuity sales, including responsibilities for training agents. Several states have
already enacted laws based on the SAT.
In addition to the foregoing risks, the financial services industry is the focus of increased regulatory scrutiny
as various state and federal governmental agencies and self-regulatory organizations conduct inquiries and
investigations into the products and practices of the financial services industries. For a description of certain
regulatory inquiries affecting the Company, see the Litigation and Regulatory Matters section of the
Commitments and Contingencies Note in our Consolidated Financial Statements in Part II, Item 8. in this Annual
Report on Form 10-K. It is possible that future regulatory inquiries or investigations involving the insurance
industry generally, or the Company specifically, could materially and adversely affect our business, results of
operations or financial condition.
In some cases, this regulatory scrutiny has led to legislation and regulation, or proposed legislation and
regulation that could significantly affect the financial services industry, or has resulted in regulatory penalties,
settlements and litigation. New laws, regulations and other regulatory actions aimed at the business practices
under scrutiny could materially and adversely affect our business, results of operations or financial condition.
The adoption of new laws and regulations, enforcement actions, or litigation, whether or not involving us, could
influence the manner in which we distribute our products, result in negative coverage of the industry by the
media, cause significant harm to our reputation and materially and adversely affect our business, results of
operations or financial condition.
Our products are subject to extensive regulation and failure to meet any of the complex product requirements
may reduce profitability.
Our insurance, annuity, retirement and investment products are subject to a complex and extensive array of
state and federal tax, securities, insurance and employee benefit plan laws and regulations, which are administered
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