Voya 2014 Annual Report Download - page 280

Voya Financial, Inc.
Notes to the Consolidated Financial Statements
(Dollar amounts in millions, unless otherwise stated)
VOEs: For entities determined not to be VIEs, the Company consolidates entities in which it has an equity
investment of greater than 50% and has control over significant operating, financial and investing decisions
of the entity. Additionally, the Company consolidates entities in which the Company is a substantive,
controlling general partner, and the limited partners have no substantive rights to impact ongoing
governance and operating activities of the partnership.
The Company provides investment management services to, and has transactions with, various CLO entities,
private equity funds, real estate funds, funds-of-hedge funds, single strategy hedge funds, insurance entities,
securitizations and other investment entities in the normal course of business. In certain instances, the Company
serves as the investment manager, making day-to-day investment decisions concerning the assets of these
entities. These entities are considered to be either VIEs or VOEs, and the Company evaluates its involvement
with each entity to determine whether consolidation is required. Investment management fees and contingent
performance fees are recorded in Fee income in the Consolidated Statements of Operations.
For certain investment funds after January 1, 2010, and all entities prior to January 1, 2010, the determination is
based on previous consolidation guidelines that require an analysis to determine whether (a) an entity in which
the Company holds a variable interest is a VIE and (b) the Company’s involvement, through holding interests
directly or indirectly in the entity or contractually through other variable interests (e.g., management fees), would
be expected to absorb a majority of the entity’s expected losses or receive a majority of residual returns in the
entity, or both.
The determination of whether an entity in which the Company holds a variable interest is a VIE requires
judgments, which include (1) determining whether the equity investment at risk is sufficient to permit the entity
to finance its activities without additional subordinated financial support; (2) evaluating whether the equity
holders, as a group, can make decisions that have a significant effect on the success of the entity; (3) determining
whether two or more parties’ equity interests should be aggregated; and (4) determining whether the equity
investors have proportionate voting rights to their obligations to absorb losses or rights to receive returns from an
entity. The Company determines whether it is the primary beneficiary of a VIE at the time it becomes involved
with a VIE. Consolidation conclusions are reviewed quarterly to identify whether any reconsideration events
have occurred, which would require detailed reassessment of the VIE status.
The Company has elected to apply the FVO for financial assets and financial liabilities held by consolidated CLO
entities and continues to measure these assets (primarily senior bank and corporate loans) and liabilities (debt
obligations issued by CLO entities) at fair value in subsequent periods. The Company has elected the FVO to
more closely align its accounting with the economics of its transactions. This election allows the Company to
more effectively align changes in the fair value of CLO assets with a commensurate change in the fair value of
CLO liabilities.
Noncontrolling interest represents the interests of shareholders, other than the Company, in consolidated entities.
In the Consolidated Statements of Operations, Net income (loss) attributable to noncontrolling interest represents
such shareholders’ interests in the earnings and losses of those entities, or the attribution of results from
consolidated VIEs or VOEs to which the Company is not economically entitled.
Contingencies
A loss contingency is an existing condition, situation or set of circumstances involving uncertainty as to possible
loss that will ultimately be resolved when one or more future events occur or fail to occur. Examples of loss
contingencies include pending or threatened adverse litigation, threat of expropriation of assets and actual or
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