Voya 2014 Annual Report Download - page 321

Voya Financial, Inc.
Notes to the Consolidated Financial Statements
(Dollar amounts in millions, unless otherwise stated)
Changes in fund correlations may increase or decrease the fair value depending on the direction of the movement
and the mix of funds. Changes in partial withdrawals may increase or decrease the fair value depending on the
timing and magnitude of withdrawals.
Generally, the following will cause an increase (decrease) in the FIA embedded derivative fair value liability:
• A decrease (increase) in nonperformance risk
• A decrease (increase) in lapses
Generally, the following will cause an increase (decrease) in the derivative and embedded derivative fair value
liabilities related to Stabilizer and MCG contracts:
• An increase (decrease) in interest rate implied volatility
• A decrease (increase) in nonperformance risk
• A decrease (increase) in lapses
• A decrease (increase) in policyholder deposits
The Company notes the following interrelationships:
• Higher long-term equity implied volatility is often correlated with lower equity returns, which will
result in higher in-the-moneyness, which in turn, results in lower lapses due to the dynamic lapse
component reducing the lapses. This increases the projected number of policies that are available to use
the GMWBL benefit and may also increase the fair value of the GMWBL.
• Generally, an increase (decrease) in benefit utilization will decrease (increase) lapses for GMWB and
GMWBL.
• Generally, an increase (decrease) in interest rate volatility will increase (decrease) lapses of Stabilizer
and MCG contracts due to dynamic participant behavior.
298