Voya 2014 Annual Report Download - page 150

Interest expense increased $4.9 million from $184.8 million to $189.7 million primarily due to a change in
debt structure over the course of the prior period. See a description of the change in debt structure under
“Liquidity and Capital Resources—Debt Securities.”
Income (loss) before income taxes increased $27.1 million from $758.1 million to $785.2 million as a result
of several factors. Lower losses related to the incurred guaranteed benefits and guarantee hedge program in our
CBVA segment, including changes in the fair value of guaranteed benefit derivatives related to nonperformance
risk and a favorable variance related to the impact of prospective assumption changes, contributed to the
increase. Higher sales and improved loss ratios in our Employee Benefits segment, improved margins in our
Annuities and Investment Management segments, as well as an increase in fees in our Retirement, Annuities, and
Investment Management segments associated with higher AUM also contributed to the improvement. In
addition, higher prepayment income, as well as higher income (loss) attributable to noncontrolling interests
improved the overall result. These increases were partially offset by higher Operating expenses, including higher
expenses related to the immediate recognition of actuarial gains (losses) related to pension and post retirement
plans as well as a termination fee related to the Term Life Coinsurance Agreement. Also offsetting the overall
improvement were the Net gain from Lehman Recovery/LIHTC in the prior period that did not recur at the same
level, and an unfavorable variance in DAC/VOBA and other intangibles unlocking related to the impact of
prospective assumption changes in our Ongoing Business, in addition to the impact of the continued low interest
rate environment on reinvestment rates.
Income tax benefit increased $1,719.7 million from $32.5 million to $1,752.2 million. The primary driver of
the increase was related to the change in the amount of the valuation allowance released of approximately $1.76
billion. In the prior year, the valuation allowance release of $86.6 million was related to income generation. In
the current year, the valuation allowance release of $1.85 billion is related to income generation and significant
positive evidence overcoming historical negative evidence, which allowed previously established valuation
allowances to be released.
Operating Earnings before Income Taxes
Operating earnings before income taxes decreased $38.0 million from $1,268.6 million to $1,230.6 million
as a result of several factors, including the Net gain from Lehman Recovery/LIHTC in the prior period that did
not recur at the same level and an unfavorable variance in DAC/VOBA and other intangibles unlocking related to
the impact of prospective assumption changes. Excluding these items, Operating earnings before income taxes
increased due to higher prepayment income, higher sales and improved loss ratios in our Employee Benefits
segment, improved margins in our Annuities and Investment Management segments, and an increase in fees
associated with higher AUM. Reducing the improvements were unfavorable mortality changes, net of
reinsurance on the universal life blocks due to an aging block, partially offset by favorable changes in reserves
from lower term sales in our Individual Life segment, the impact of the continued low interest rate environment
on reinvestment rates across multiple segments, and higher Operating expenses.
Adjustments from Income (Loss) before Income Taxes to Operating Earnings before Income Taxes
Closed Block Variable Annuity is discussed in Results of Operations-Segment by Segment-CBVA in Part II,
Item 7. of this Annual Report on Form 10-K.
Net investment gains (losses) and related charges and adjustments increased $3.0 million from $212.1
million to $215.1 million as a result of several factors which largely offset. Changes in fair value adjustments on
our CMO-B portfolio were offset by unfavorable derivative mark to market adjustments due to interest rate
movements as well as lower gains on the sale of securities. Total investment gains were partially offset by higher
DAC/VOBA and other intangibles amortization related to realized gains in our Retirement Solutions business, as
well as lower favorable DAC/VOBA and other intangibles unlocking primarily related to assumption changes in
our Retirement segment.
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