Voya 2014 Annual Report Download - page 301

Voya Financial, Inc.
Notes to the Consolidated Financial Statements
(Dollar amounts in millions, unless otherwise stated)
Net realized capital gains (losses) were as follows for the periods indicated:
Year Ended December 31,
2014 2013 2012
Fixed maturities, available-for-sale, including
securities pledged ............................ $ 63.6 $ 85.0 $ 391.7
Fixed maturities, at fair value option ............... (177.3) (449.4) (278.8)
Equity securities, available-for-sale ................ 17.9 (2.8) 4.2
Derivatives ................................... 12.7 (3,152.9) (1,712.4)
Embedded derivatives—fixed maturities ............ (10.6) (107.5) (15.7)
Embedded derivatives—product guarantees ......... (820.4) 1,094.7 337.3
Other investments .............................. 19.7 (1.9) (7.1)
Net realized capital gains (losses) ................. $(894.4) $(2,534.8) $(1,280.8)
After-tax net realized capital gains (losses) .......... $(527.9) $(1,693.2) $ (715.8)
Proceeds from the sale of fixed maturities and equity securities, available-for-sale and the related gross realized
gains and losses, before tax, were as follows for the periods indicated:
Year Ended December 31,
2014 2013 2012
Proceeds on sales ............................. $8,580.8 $10,559.8 $11,185.9
Gross gains ................................. 188.6 185.2 484.2
Gross losses ................................. 96.6 77.7 44.8
3. Derivative Financial Instruments
The Company enters into the following types of derivatives:
Interest rate caps: The Company uses interest rate cap contracts to hedge the interest rate exposure arising from
duration mismatches between assets and liabilities. Interest rate caps are also used to hedge interest rate exposure
if rates rise above a specified level. Such increases in rates will require the Company to incur additional
expenses. The future payout from the interest rate caps fund this increased exposure. The Company pays an
upfront premium to purchase these caps. The Company utilizes these contracts in non-qualifying hedging
relationships.
Interest rate swaps: Interest rate swaps are used by the Company primarily to reduce market risks from changes
in interest rates and to alter interest rate exposure arising from mismatches between assets and/or liabilities.
Interest rate swaps are also used to hedge the interest rate risk associated with the value of assets it owns or in an
anticipation of acquiring them. Using interest rate swaps, the Company agrees with another party to exchange, at
specified intervals, the difference between fixed rate and floating rate interest payments, calculated by reference
to an agreed upon notional principal amount. These transactions are entered into pursuant to master agreements
that provide for a single net payment to be made to/from the counterparty at each due date. The Company utilizes
these contracts in qualifying hedging relationships as well as non-qualifying hedging relationships.
Foreign exchange swaps: The Company uses foreign exchange or currency swaps to reduce the risk of change in
the value, yield or cash flows associated with certain foreign denominated invested assets. Foreign exchange
swaps represent contracts that require the exchange of foreign currency cash flows against U.S. dollar cash flows
at regular periods, typically quarterly or semi-annually. The Company utilizes these contracts in qualifying
hedging relationships as well as non-qualifying hedging relationships.
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