Voya 2014 Annual Report Download - page 68

We cannot predict what revisions, if any, will be made to the proposal as a result of the public comment or
other NAIC deliberations, whether this or other proposals will be adopted by the NAIC, or what additional
actions and regulatory changes will result from the continued captives scrutiny and reform efforts by the NAIC
and other regulatory bodies. Like many life insurance companies, we utilize captive reinsurers to satisfy certain
reserve requirements related to certain of our policies. If state insurance regulators determine to restrict our use
of captive reinsurers, it could require us to increase statutory reserves, incur higher operating or tax costs or
reduce sales. See “Item 1A. Risk Factors—Risks Related to Regulation—Our insurance businesses are heavily
regulated, and changes in regulation in the United States, enforcement actions and regulatory investigations may
reduce profitability”.
Insurance Holding Company Regulation
Voya Financial, Inc. and our insurance subsidiaries are subject to the insurance holding companies laws of
the states in which such insurance subsidiaries are domiciled. These laws generally require each insurance
company directly or indirectly owned by the holding company to register with the insurance regulator in the
insurance company’s state of domicile and to furnish annually financial and other information about the
operations of companies within the holding company system. Generally, all transactions affecting the insurers in
the holding company system must be fair and reasonable and, if material, require prior notice and approval or
non-disapproval by the state’s insurance regulator. Our captive reinsurance subsidiaries and our Arizona captive
are not subject to insurance holding company laws.
Change of Control. State insurance holding company regulations generally provide that no person,
corporation or other entity may acquire control of an insurance company, or a controlling interest in any parent
company of an insurance company, without the prior approval of such insurance company’s domiciliary state
insurance regulator. Under the laws of each of the domiciliary states of our insurance subsidiaries, any person
acquiring, directly or indirectly, 10% or more of the voting securities of an insurance company is presumed to
have acquired “control” of the company. This statutory presumption of control may be rebutted by a showing that
control does not exist in fact. The state insurance regulators, however, may find that “control” exists in
circumstances in which a person owns or controls less than 10% of voting securities.
To obtain approval of any change in control, the proposed acquirer must file with the applicable insurance
regulator an application disclosing, among other information, its background, financial condition, the financial
condition of its affiliates, the source and amount of funds by which it will effect the acquisition, the criteria used
in determining the nature and amount of consideration to be paid for the acquisition, proposed changes in the
management and operations of the insurance company and other related matters. In considering an application to
acquire control of an insurer, the insurance commissioner generally will consider such factors as the experience,
competence and financial strength of the applicant, the integrity of the applicant’s Board of Directors and
executive officers, the acquirer’s plans for the management and operation of the insurer and any anti-competitive
results that may arise from the acquisition.
In addition, many state insurance laws require prior notification of state insurance regulators of a change in
control of a non-domiciliary insurance company doing business in that state. While these pre-notification statutes
do not authorize the state insurance regulators to disapprove the change in control, they authorize regulatory
action in the affected state if particular conditions exist such as undue market concentration. Any future
transactions that would constitute a change in control of our insurance subsidiaries may require prior notification
in those states that have adopted pre-acquisition notification laws.
Any purchaser of shares of common stock representing 10% or more of the voting power of our capital
stock will be presumed to have acquired control of our insurance subsidiaries unless, following application by
that purchaser in each insurance subsidiary’s state of domicile, the relevant insurance commissioner determines
otherwise.
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