Voya 2014 Annual Report Download - page 327

Voya Financial, Inc.
Notes to the Consolidated Financial Statements
(Dollar amounts in millions, unless otherwise stated)
Guaranteed Minimum Accumulation Benefit (GMAB): Guarantees that the account value will be at least 100% of
the eligible premiums paid by the customer after 10 years, adjusted for withdrawals. The Company offered an
alternative design that guaranteed the account value to be at least 200% of the eligible premiums paid by contract
owners after 20 years.
The following assumptions and methodologies were used to determine the guaranteed reserves for retail variable
annuity contracts as of December 31, 2014 and 2013:
Area Assumptions/Basis for Assumptions
Data used Based on 1,000 investment performance scenarios.
Mean investment
performance
GMDB: The mean investment performance varies by fund group. In general, the
Company groups separate account returns into 6 fund groups, and generate
stochastic returns for each of these fund groups. The overall blended mean separate
account return is 8.1%. The general account fixed portion is a small percentage of
the overall total.
GMIB: The overall blended mean is 8.1% based on a single fund group.
GMAB/GMWB/GMWBL: Zero rate curve.
Volatility GMDB: 15.8% for 2014 and 2013.
GMIB: 15.8% for 2014 and 2013.
GMAB/GMWB/GMWBL: Implied volatilities through the first 5 years and then a
blend of implied and historical thereafter.
Mortality Depending on the type of benefit and gender, the Company uses the Annuity 2000
basic table with mortality improvement through 2014, further adjusted for company
experience.
Lapse rates Vary by contract type, share class, time remaining in the surrender charge period and
in-the-moneyness.
Discount rates GMDB/GMIB: 5.5% for 2014 and 2013.
GMAB/GMWB/GMWBL: Zero rate curve plus adjustment for nonperformance risk.
Variable annuity contracts containing guaranteed minimum death and living benefits expose the Company to
equity risk. With a decline in the equity markets, the Company has exposure to increasing claims due to the
guaranteed minimum benefits. On the other hand, with an increase in the equity markets, the Company’s
exposure to risks associated with the guaranteed minimum benefits generally decreases. In order to mitigate the
risk associated with guaranteed death and living benefits, the Company enters into reinsurance agreements and
derivative positions on various public market indices chosen to closely replicate contract owner variable fund
returns.
The calculation of the GMDB, GMIB, GMAB, GMWB and GMWBL liabilities assumes dynamic surrenders and
dynamic utilization of the guaranteed living benefit feature.
The liabilities for UL and VUL contracts, as well as variable annuity contracts containing guaranteed minimum
death and living benefits, are recorded in separate account liabilities as follows as of December 31, 2014 and
2013. The separate account liabilities may include more than one type of guarantee. These liabilities are subject
to the requirements for additional reserve liabilities under ASC Topic 944, which are recorded on the
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