Voya 2014 Annual Report Download - page 213

structured securities include, but are not limited to: the quality of underlying collateral; expected
prepayment speeds; loan-to-value ratio; debt service coverage ratios; current and forecasted loss
severity; consideration of the payment terms of the underlying assets backing a particular security; and
the payment priority within the tranche structure of the security.
• When determining the amount of the credit loss for U.S. and foreign corporate securities, foreign
government securities and state and political subdivision securities, we consider the estimated fair
value as the recovery value when available information does not indicate that another value is more
appropriate. When information is identified that indicates a recovery value other than estimated fair
value, we consider in the determination of recovery value the same considerations utilized in its overall
impairment evaluation process, which incorporates available information and our best estimate of
scenario-based outcomes regarding the specific security and issuer; possible corporate restructurings or
asset sales by the issuer; the quality and amount of any credit enhancements; the security’s position
within the capital structure of the issuer; fundamentals of the industry and geographic area in which the
security issuer operates; and the overall macroeconomic conditions.
• We perform a discounted cash flow analysis comparing the current amortized cost of a security to the
present value of future cash flows expected to be received, including estimated defaults and
prepayments. The discount rate is generally the effective interest rate of the fixed maturity prior to
impairment.
Mortgage loans on real estate are all commercial mortgage loans. If a mortgage loan is determined to be
impaired (i.e., when it is probable that we will be unable to collect all amounts due according to the contractual
terms of the loan agreement), the carrying value of the mortgage loan is reduced to the lower of either the present
value of expected cash flows from the loan, discounted on the loan’s original purchase yield, or the fair value of
the collateral. For those mortgages that are determined to require foreclosure, the carrying value is reduced to the
fair value of the underlying collateral, net of estimated costs to obtain and sell at the point of foreclosure.
Impairment analysis of the investment portfolio involves considerable judgment, is subject to considerable
variability, is established using management’s best estimate and is revised as additional information becomes
available. As such, changes in, or deviations from, the assumptions used in such analysis can have a significant
effect on the results of operations.
For additional information regarding the evaluation process for impairments, see the Investments (excluding
Consolidated Investment Entities) Note in our Consolidated Financial Statements in Part II, Item 8. of this
Annual Report on Form 10-K.
Income Taxes
Valuation Allowances
We use certain assumptions and estimates in determining the income taxes payable or refundable for the
current year, the deferred income tax liabilities and assets for items recognized differently in our Consolidated
Financial Statements from amounts shown on our income tax returns and the federal income tax expense.
Determining these amounts requires analysis and interpretation of current tax laws and regulations, including the
loss limitation rules associated with change in control. We exercise considerable judgment in evaluating the
amount and timing of recognition of the resulting income tax liabilities and assets. These judgments and
estimates are reevaluated on a periodic basis. We will continue to evaluate as regulatory and business factors
change.
Deferred tax assets represent the tax benefit of future deductible temporary differences, net operating loss
carryforwards and tax credit carryforwards. We evaluate and test the recoverability of deferred tax assets.
Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence, it is more likely
than not that some portion, or all, of the deferred tax assets will not be realized. Considerable judgment and the
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