Voya 2014 Annual Report Download - page 202

policies issued on or after January 1, 2015, or issued prior to January 1, 2015 and that were not part of a
reinsurance arrangement as of December 31, 2014, (ii) variable annuities, and (iii) long term care insurance. As
drafted, it appears that the proposal would apply to our Arizona captive. We cannot predict what revisions, if any,
will be made to the proposal as a result of the public comment or other NAIC deliberations, whether this or other
proposals will be adopted by the NAIC, or what additional actions and regulatory changes will result from the
continued captives scrutiny and reform efforts by the NAIC and other regulatory bodies.
Although we do not believe it to be likely, a potential outcome of the continued captives scrutiny and reform
efforts by the NAIC and other regulatory bodies is that we will be prohibited from continuing our use of captive
reinsurance subsidiaries, retroactively or prospectively. The expected effect of such a prohibition would depend
on the specific changes to state regulations that are adopted, including whether the PBR framework adopted by
the NAIC in December 2012 is ultimately effective and whether current captive reinsurance companies would be
allowed to continue in existence and if so, under what terms; or, if not, the method and timing of their
dissolution, as well as the cost and availability of alternative financing, see “Item 1. Business—Regulation—
Financial Regulation—Recent Actions by the NAIC.” The February 2015 NAIC accreditation proposal, if
adopted as proposed without grandfathering provisions for existing captive variable annuity reinsurance entities,
could also limit our ability to use reinsurance structures involving our Arizona captive. Given the uncertainty
around these matters, we are unable to estimate the expected effects on our consolidated operations and financial
position of the discontinuance or limitation of the use of captive reinsurance subsidiaries and our Arizona captive
to finance statutory reserves subject to Regulations XXX and AG38 and statutory reserves associated with our
reinsured annuity business. If we were to discontinue our use of captive reinsurance subsidiaries and our Arizona
captive on a retroactive basis, the reasonably likely impacts would include early termination fees payable with
respect to certain financing structures, higher operating or tax costs, an increase in statutory reserves and
diminished capital position. On a prospective basis, discontinuing the use of captive reinsurance subsidiaries
could impact the types, amounts and pricing of products we offer and could result in potential reductions in or
discontinuance of new term or UL insurance sales, any of which could adversely impact our consolidated results
of operations and financial condition. In addition, we cannot be certain that affordable alternative financing
would be available.
Off-Balance Sheet Arrangements
Through the normal course of investment operations, we commit to either purchase or sell securities,
mortgage loans, or money market instruments, at a specified future date and at a specified price or yield. The
inability of counterparties to honor these commitments may result in either a higher or lower replacement cost.
Also, there is likely to be a change in the value of the securities underlying the commitments.
At December 31, 2014 and 2013, we had off-balance sheet commitments to purchase investments equal to
their fair value of $887.4 million and $1.2 billion, respectively, of which $297.0 million and $321.3 million,
respectively, relates to consolidated investment entities.
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