Voya 2014 Annual Report Download - page 175

The following table presents a rollforward of AUM for our CBVA segment for the periods indicated:
Year Ended December 31,
($ in millions) 2014 2013 2012
Balance as of beginning of period ............... $44,788.2 $42,590.6 $42,231.7
Deposits ............................... 170.4 270.6 262.6
Surrenders, benefits and product charges ..... (5,593.7) (4,502.7) (3,957.0)
Net flows .......................... (5,423.3) (4,232.1) (3,694.4)
Interest credited and investment
performance .......................... 1,767.1 6,429.7 4,053.3
Balance as of end of period .................... 41,132.0 44,788.2 42,590.6
End of period contracts in payout status .......... 2,082.2 910.8 607.8
Total balance as of end of period*............... $43,214.2 $45,699.0 $43,198.4
* Includes products in accumulation and payout phase, policy loans and life insurance business.
Closed Block Variable Annuity—Year Ended December 31, 2014 Compared to Year Ended December 31,
2013
Loss before income taxes decreased $954.1 million from $1,209.3 million to $255.2 million. Annual
assumption changes and revisions to projection model inputs implemented during the current period resulted in a
gain of $102.3 million (excluding a gain of $37.9 million due to changes in the technique used to estimate
nonperformance risk). This $102.3 million gain included a favorable $170.2 million resulting from policyholder
behavior assumption changes partially offset by an unfavorable $40.5 million resulting from change to mortality
assumptions. The gain from policyholder behavior assumption changes was primarily due to an update to the
utilization assumption on Guaranteed Minimum Withdrawal Benefit for Life (“GMWBL”) contracts, partially
offset by an unfavorable result from an update to lapse assumptions. The prior period result included a loss of
$185.3 million (excluding a gain of $144.6 million due to changes in the technique used to estimate
nonperformance risk) due to annual assumption changes. This $185.3 million loss included an unfavorable
$117.9 million resulting from changes to mortality assumptions and an unfavorable $85.5 million resulting from
policyholder behavior assumption changes.
Including the impacts of assumption changes described above, the loss before income taxes decreased
$954.1 million as a result of several factors. The change in the fair value of guaranteed benefit derivatives related
to nonperformance risk resulted in a favorable variance of $828.2 million, from a loss of $494.5 million in the
prior period to a gain of $333.7 million in the current period, including the effects of changes in the technique
used to estimate nonperformance risk. Net losses related to the incurred guaranteed benefits and our guarantee
hedge program and CHO program decreased to a loss of $1,597.3 million in the current period compared to a loss
of $1,674.3 million in the prior period. The $77.0 million favorable variance was primarily due to lower equity
market returns, as our guarantee hedges backing reserves are more sensitive to changes in equity markets than
those reserves, as well as favorable impacts of assumption changes, mentioned above, partially offset by an
unfavorable variance due to declining interest rates in the current period. The focus in managing our CBVA
segment continues to be on protecting regulatory and rating agency capital, and our hedging program is primarily
designed to mitigate the impacts of market scenarios on capital resources, rather than mitigating earnings
volatility. DAC/VOBA and other intangibles unlocking improved by $39.1 million, from a loss of $4.7 million in
the prior period to a gain of $34.4 million in the current period, mainly due to favorable impacts of assumption
changes mentioned above.
In addition, Net investment income increased primarily due to a higher earned rate, partially offset by lower
Fee income as a result of lower average separate account AUM, and lower gains on the sale of securities. Higher
premiums associated with the annuitization of life contingent contracts are offset by a reserve increase in the
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