Voya 2014 Annual Report Download - page 66

Insurance Regulation
Our U.S. insurance subsidiaries are subject to comprehensive regulation and supervision under U.S. state
and federal laws. Each U.S. state, the District of Columbia and U.S. territories and possessions have insurance
laws that apply to companies licensed to carry on an insurance business in the jurisdiction. The primary regulator
of an insurance company, however, is located in its state of domicile. Each of our U.S. insurance subsidiaries is
licensed and regulated in each state where it conducts insurance business.
State insurance regulators have broad administrative powers with respect to all aspects of the insurance
business including: licensing to transact business, licensing agents, admittance of assets to statutory surplus,
regulating premium rates for certain insurance products, approving policy forms, regulating unfair trade and
claims practices, establishing reserve requirements and solvency standards, establishing credit for reinsurance
requirements, fixing maximum interest rates on life insurance policy loans and minimum accumulation or
surrender values and other matters. State insurance laws and regulations include numerous provisions governing
the marketplace conduct of insurers, including provisions governing the form and content of disclosures to
consumers, product illustrations, advertising, product replacement, suitability, sales and underwriting practices,
complaint handling and claims handling. State regulators enforce these provisions through periodic market
conduct examinations. State insurance laws and regulations regulating inter-party transactions, the payment of
dividends, the types, amounts and valuations of permitted investments and change of control transactions are
discussed in greater detail below.
Our four principal insurance subsidiaries (SLD, VRIAC, VIAC and RLI, and collectively, the “Principal
Insurance Subsidiaries”) are domiciled in Colorado, Connecticut, Iowa and Minnesota, respectively. Our other
U.S. insurance subsidiaries are domiciled in Indiana and New York. Our insurance subsidiaries domiciled in
Colorado, Connecticut, Indiana, Iowa, Minnesota and New York are collectively referred to as “our insurance
subsidiaries” in this Annual Report on Form 10-K for purposes of discussions of U.S. insurance regulatory
matters. In addition, we have special purpose life reinsurance captive insurance company subsidiaries domiciled
in Missouri that provide reinsurance to our U.S. insurance subsidiaries in order to facilitate the financing of
statutory reserve requirements associated with NAIC Model Regulation entitled “Valuation of Life Insurance
Policies” (commonly known as “Regulation XXX” or “XXX”), or NAIC Actuarial Guideline 38 (“AG38”) and
to fund statutory Stable Value reserves in excess of the economic reserve level. Our special purpose life
reinsurance captive insurance company subsidiaries domiciled in Missouri are collectively referred to as “captive
reinsurance subsidiaries” in this Annual Report on Form 10-K. For more information on our use of captive
reinsurance structures, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations—Liquidity and Capital Resources—Credit Facilities and Subsidiary Credit Support
Arrangements”. We also have a captive reinsurance subsidiary domiciled in Arizona that primarily provides
reinsurance to our insurance subsidiaries. Our captive reinsurance subsidiary domiciled in Arizona is referred to
as “our Arizona captive” in this Annual Report on Form 10-K.
State insurance laws and regulations require our insurance subsidiaries to file financial statements with state
insurance regulators everywhere they are licensed and the operations of our insurance subsidiaries and accounts
are subject to examination by those regulators at any time. Our insurance subsidiaries prepare statutory financial
statements in accordance with accounting practices and procedures prescribed or permitted by these regulators.
The National Association of Insurance Commissioners (the “NAIC”) has approved a series of uniform statutory
accounting principles (“SAP”) that have been adopted, in some cases with minor modifications, by all state
insurance regulators.
As a basis of accounting, SAP was developed to monitor and regulate the solvency of insurance companies.
In developing SAP, insurance regulators were primarily concerned with assuring an insurer’s ability to pay all its
current and future obligations to policyholders. As a result, statutory accounting focuses on conservatively
valuing the assets and liabilities of insurers, generally in accordance with standards specified by the insurer’s
domiciliary state. The values for assets, liabilities and equity reflected in financial statements prepared in
accordance with U.S. GAAP are usually different from those reflected in financial statements prepared under
SAP.
43