Voya 2014 Annual Report Download - page 192

under the agreement is based on the assets of the subsidiaries and their particular cash requirements. As of
December 31, 2014, no amounts were borrowed from subsidiaries. As of that same date, we lent $169.0 million
to subsidiaries.
Collateral—Derivative Contracts
Under the terms of our over-the-counter (“OTC”) Derivative ISDA agreements, we may receive from, or
deliver to, counterparties, collateral to assure that the terms of the International Swaps and Derivatives
Association, Inc. (“ISDA”) agreements will be met with regard to the Credit Support Annex (“CSA”). The terms
of the CSA call for us to pay interest on any cash received equal to the Federal Funds rate. To the extent cash
collateral is received and delivered, it is included in Payables under securities loan agreements, including
collateral held and Short-term investments under securities loan agreements, including collateral delivered,
respectively, on the Consolidated Balance Sheets and is reinvested in short-term investments. Collateral held is
used in accordance with the CSA to satisfy any obligations. Investment grade bonds owned by us are the source
of noncash collateral posted, which is reported in Securities pledged on the Consolidated Balance Sheets. As of
December 31, 2014, we held $515.8 million and $119.1 million of net cash collateral related to OTC derivative
contracts and cleared derivative contracts, respectively. As of December 31, 2013, we held $214.7 million and
$18.8 million of net cash collateral related to OTC derivative contracts and cleared derivative contracts,
respectively. In addition, as of December 31, 2014, we delivered $638.7 million of securities and held $159.3
million of securities as collateral. As of December 31, 2013, we delivered $1.0 billion of securities and held
$51.3 million of securities as collateral.
Ratings
Our access to funding and our related cost of borrowing, requirements for derivatives collateral posting and
the attractiveness of certain of our products to customers are affected by our credit ratings and insurance financial
strength ratings, which are periodically reviewed by the rating agencies. Financial strength ratings and credit
ratings are important factors affecting public confidence in an insurer and its competitive position in marketing
products. The credit ratings are also important for the ability to raise capital through the issuance of debt and for
the cost of such financing.
A downgrade in our credit ratings or the credit or financial strength ratings of our rated subsidiaries could
potentially, among other things, limit our ability to market products, reduce our competitiveness, increase the
number or value of policy surrenders and withdrawals, increase our borrowing costs and potentially make it more
difficult to borrow funds, adversely affect the availability of financial guarantees or LOCs, cause additional
collateral requirements or other required payments under certain agreements, allow counterparties to terminate
derivative agreements and/or hurt our relationships with creditors, distributors or trading counterparties thereby
potentially negatively affecting our profitability, liquidity and/or capital. In addition, we consider
nonperformance risk in determining the fair value of our liabilities. Therefore, changes in our credit or financial
strength ratings may affect the fair value of our liabilities.
Additionally, ratings of certain of our securities guaranteed by ING Group could be influenced by ING
Group’s ratings. A downgrade of the credit ratings of ING Group could result in downgrades of these securities.
Financial strength ratings represent the opinions of rating agencies regarding the financial ability of an
insurance company to meet its obligations under an insurance policy. Credit ratings represent the opinions of
rating agencies regarding an entity’s ability to repay its indebtedness. These ratings are not a recommendation to
buy or hold any of our securities and they may be revised or revoked at any time at the sole discretion of the
rating organization.
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