Voya 2014 Annual Report Download - page 137

Employee Benefits
• The first quarters tend to have the highest Group Life loss ratio. There are a number of factors that
might contribute to this trend, such as delayed claims filings during the end of calendar year holiday
season. Sales for Group Life and Stop Loss also tend to be the highest in the first quarters, as most of
our contracts have January start dates in alignment with the start of our clients’ fiscal years.
• The third quarters tend to have the second highest Group Life and Stop Loss sales, as a large number of
our contracts have July start dates in alignment with the start of of our clients’ fiscal years.
In addition to these seasonal factors, our results are impacted by the annual review of assumptions related to
policyholder liabilities and DAC/VOBA and other intangibles, which we generally complete in the third quarter
of each year, and annual remeasurement related to our employee benefit plans, which we generally complete in
the fourth quarter of each year. See Critical Accounting Judgments and Estimates in Part II, Item 7. of this
Annual Report on Form 10-K for further information.
Operating Measures
This MD&A includes discussion of Operating earnings before income taxes and Operating revenues, each
of which is a measure that is not determined in accordance with U.S. GAAP, because our management uses these
measures to manage our businesses and allocate our resources. We generally use these measures to provide our
investors with useful information regarding our financial performance. In particular, these measures facilitate a
comparison of period-to-period results without the effect of the volatility created by certain changes in the
financial markets that affect our financial results as reported under U.S. GAAP. Other companies may use
similarly titled non-U.S. GAAP financial measures that are calculated differently from the way we calculate such
measures, and accordingly, our non-U.S. GAAP financial measures may not be comparable to similar measures
used by other companies.
We also discuss certain operating measures, described below, as well as Operating earnings before income
taxes and Operating revenues, which provide useful information about our businesses and the operational factors
underlying our financial performance. See the Segments Note in our Consolidated Financial Statements in Part II,
Item 8. of this Annual Report on Form 10-K for a description of the adjustments made to reconcile Income (loss)
before income taxes to Total operating earnings before income taxes and the adjustments made to reconcile Total
revenues to Total operating revenues.
Operating Earnings before Income Taxes
Operating earnings before income taxes is an internal measure we use to evaluate segment performance. We
use the same accounting policies and procedures to measure segment Operating earnings before income taxes as
we do for consolidated Net income (loss). Operating earnings before income taxes does not replace Net income
(loss) as the U.S. GAAP measure of our consolidated results of operations. However, we believe that the
definitions of Operating earnings before income taxes provide users with a more valuable measure of its business
and segment performances and enhance the understanding of our performance by highlighting performance
drivers. Each segment’s Operating earnings before income taxes is calculated by adjusting Income (loss) before
income taxes to exclude the following items:
• Net investment gains (losses), net of related amortization of deferred policy acquisition costs (“DAC”),
value of business acquired (“VOBA”), sales inducements and unearned revenue. Net investment gains
(losses) include gains (losses) on the sale of securities, impairments, changes in the fair value of
investments using the fair value option (“FVO”) unrelated to the implied loan-backed security income
recognition for certain mortgage-backed obligations and changes in the fair value of derivative
instruments, excluding realized gains (losses) associated with swap settlements and accrued interest;
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