Voya 2014 Annual Report Download - page 173

Closed Blocks—Year Ended December 31, 2014 Compared to Year Ended December 31, 2013
Closed Block Institutional Spread Products
Operating earnings before income taxes decreased $16.4 million from $35.9 million to $19.5 million
primarily due to lower earnings resulting from declines in the block size as well as accretion income on impaired
assets, partially offset by an increase in prepayment income. In addition, costs related to the accelerated
recognition of deferred interest costs associated with early terminations of FHLB funding agreements, which
occurred in both periods, declined slightly. The average block size based on AUM declined approximately 42%
from $3.6 billion in 2013 to $2.1 billion in 2014, causing both Net investment income and Interest credited and
other benefits to contract owners/policyholders to decrease.
Closed Block Other
Operating earnings before income taxes decreased $9.5 million from $14.7 million to $5.2 million primarily
due to less favorable reserve development in the retained portion of the group reinsurance business compared to
the prior period and investment income from Lehman Recovery/LIHTC in the prior period that did not
reoccur. This is partially offset by higher premiums in the current period due to a true-up of estimated premiums
due to us from a third party administrator for the group reinsurance business.
Closed Blocks—Year Ended December 31, 2013 Compared to Year Ended December 31, 2012
Closed Block Institutional Spread Products
Operating earnings before income taxes decreased $9.8 million from $45.7 million to $35.9 million
primarily as a result of lower earnings resulting from a decrease in block size and the accelerated recognition of
deferred interest costs associated with early termination of certain FHLB funding agreements offset by a loss on
sale of certain alternative investments in the prior period. The average block size based on AUM declined
approximately 24% from $4.7 billion in 2012 to $3.6 billion in 2013. As a result, both Net investment income
and Interest credited and other benefits to contract owners/policyholders decreased.
Closed Block Other
Operating earnings before income taxes decreased $49.3 million from $64.0 million to $14.7 million
primarily as a result of lower operating expenses in the prior period due to a $22.0 million reimbursement of
expenses from ING Group during the prior period as well as a contingency accrual in the current period. In
addition, reserve changes for the group reinsurance business and a reduction in revenue resulting from the
continuing run-off of this segment contributed to the decrease.
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