Voya 2014 Annual Report Download - page 265

Voya Financial, Inc.
Notes to the Consolidated Financial Statements
(Dollar amounts in millions, unless otherwise stated)
a member of the FHLB system and is required to own a certain amount of stock based on the level of borrowings
and other factors; the Company may invest in additional amounts. FHLB stock is carried at cost, classified as a
restricted security and periodically evaluated for impairment based on ultimate recovery of par value.
Securities Lending: The Company engages in securities lending whereby certain securities from its portfolio are
loaned to other institutions for short periods of time. Initial collateral, primarily cash, is required at a rate of
102% of the market value of the loaned securities. For certain transactions, a lending agent may be used, and the
agent may retain some or all of the collateral deposited by the borrower and transfer the remaining collateral to
the Company. Collateral retained by the agent is invested in liquid assets on behalf of the Company. The market
value of the loaned securities is monitored on a daily basis with additional collateral obtained or refunded as the
market value of the loaned securities fluctuates.
Corporate Loans: Corporate loans held by consolidated collateralized loan obligations (“CLO” or “CLO
entities”) are reported in Corporate loans, at fair value using the fair value option, on the Consolidated Balance
Sheets. Changes in the fair value of the loans are recorded in Changes in fair value related to collateralized loan
obligations in the Consolidated Statements of Operations. The fair values for corporate loans are determined
using independent commercial pricing services. In the event that the third-party pricing source is unable to price
an investment (which occurs in less than 2% of the loans), other relevant factors are considered including:
• Information relating to the market for the asset, including price quotations for and trading in the asset
or in similar investments and the market environment and investor attitudes towards the asset and
interests in similar investments;
• The characteristics of and fundamental analytical data relating to the investment, including the cost,
current interest rate, period until next interest rate reset, maturity and base lending rate, the terms and
conditions of the corporate loan and any related agreements and the position of the corporate loan in
the borrower’s debt structure;
• The nature, adequacy and value of the corporate loan’s collateral, including the CLO’s rights, remedies
and interests with respect to the collateral;
• The creditworthiness of the borrower, based on an evaluation of its financial condition, financial
statements and information about the business, cash flows, capital structure and future prospects;
• The reputation and financial condition of the agent and any intermediate participants in the corporate
loan; and
• General economic and market conditions affecting the fair value of the corporate loan.
Impairments
The Company evaluates its available-for-sale general account investments quarterly to determine whether there
has been an other-than-temporary decline in fair value below the amortized cost basis. Factors considered in this
analysis include, but are not limited to, the length of time and the extent to which the fair value has been less than
amortized cost, the issuer’s financial condition and near-term prospects, future economic conditions and market
forecasts, interest rate changes and changes in ratings of the security. An extended and severe unrealized loss
position on a fixed maturity may not have any impact on: (a) the ability of the issuer to service all scheduled
interest and principal payments and (b) the evaluation of recoverability of all contractual cash flows or the ability
to recover an amount at least equal to its amortized cost based on the present value of the expected future cash
flows to be collected. In contrast, for certain equity securities, the Company gives greater weight and
consideration to a decline in market value and the likelihood such market value decline will recover.
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