Voya 2014 Annual Report Download - page 388

Voya Financial, Inc.
Notes to the Consolidated Financial Statements
(Dollar amounts in millions, unless otherwise stated)
In the case of direct investments or co-investments in private equity companies, the Company initially recognizes
investments at cost and subsequently adjusts investments to fair value. On a quarterly basis, the Company
reviews the general partner or lead investor’s valuation of the investee company, taking into account other
available information, such as indications of a market value through subsequent issues of capital or transactions
between third parties, performance of the investee company during the period and public, comparable
companies’ analysis, where appropriate.
Investments in these funds typically may not be fully redeemed at NAV within 90 days because of inherent
restriction on near term redemptions. Therefore, these investments are classified within Level 3 of the fair value
hierarchy.
As of December 31, 2014 and 2013, certain private equity funds maintained revolving lines of credit of $550.0
and $400.0, respectively, which renew annually and bear interest at LIBOR/EURIBOR plus 160 and 220 bps,
respectively. The lines of credit are used for funding transactions before capital is called from investors, as well
as for the financing of certain purchases. The private equity funds generally may borrow an amount that does not
exceed the lesser of a certain percentage of the funds’ undrawn commitments or a certain percentage of the
funds’ undrawn commitments plus 250% and 350% asset coverage from the invested assets of the funds as of
December 31, 2014 and 2013, respectively. As of December 31, 2014 and 2013, outstanding borrowings amount
to $261.4 and $212.2, respectively. The borrowings are reflected in Liabilities related to consolidated investment
entities—Other liabilities on the Consolidated Balance Sheets. The borrowings are carried at an amount equal to
the unpaid principal balance.
Single Strategy Hedge Funds
As of December 31, 2014 and 2013, the Company acts as investment manager of a certain single strategy hedge
fund (the “Fund”) that seeks to achieve its investment objective by investing in many forms of U.S. residential
mortgage-backed securities, government securities and related derivative instruments, including without
limitation, U.S. Treasury debt, government sponsored enterprise (“Agency”) backed securities and fixed or
adjustable rate collateralized mortgage obligations and Real Estate Mortgage Investment Conduits (“REMICs”).
The Fund may also enter into repurchase and reverse repurchase agreements.
Investments in this Fund are priced in accordance with the Fund’s pricing hierarchy process in which prices are
obtained from a primary vendor and, if that vendor is unable to provide the price, the next vendor in the hierarchy
is contacted until a price is obtained or it is determined that a price cannot be obtained from a commercial pricing
service. When a price cannot be obtained from a commercial pricing service, independent broker quotes are
solicited. Securities that rely upon a vendor supplied price are classified as Level 2. Securities priced using
independent broker quotes are classified as Level 3.
As of December 31, 2014 and 2013, this Fund sold securities under an agreement to repurchase at a specified
future date. Securities sold under an agreement to repurchase are not de-recognized on the Consolidated Balance
Sheets, as the single strategy hedge fund retains substantially all the risks and rewards of ownership. The
obligation to repay the corresponding cash received is recognized in the Consolidated Balance Sheets in
Liabilities related to consolidated investment entities—Other liabilities. As of December 31, 2014 and 2013,
outstanding financings amount to $417.1 and $147.5, respectively.
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