Voya 2014 Annual Report Download - page 69

The licensing orders governing our captive reinsurance subsidiaries provide that any change of control
requires the approval of such company’s domiciliary state insurance regulator. For our Arizona captive, a change
of control requires the approval of the ADOI. Although our captive reinsurance subsidiaries and our Arizona
captive are not subject to insurance holding company laws, their domiciliary state insurance regulators may use
all or a part of the holding company law framework described above in determining whether to approve a
proposed change of control.
The laws and regulations regarding change of control transactions may discourage potential acquisition
proposals and may delay, deter or prevent a change of control involving us, including through unsolicited
transactions that some of our stockholders might consider to be desirable.
NAIC Amendments. In 2010, the NAIC adopted significant changes to the insurance holding company act
and regulations (the “NAIC Amendments”).The NAIC Amendments are designed to respond to perceived gaps
in the regulation of insurance holding company systems in the United States .One of the major changes is a
requirement that an insurance holding company system’s ultimate controlling person submit annually to its lead
state insurance regulator an “enterprise risk report” that identifies activities, circumstances or events involving
one or more affiliates of an insurer that, if not remedied properly, are likely to have a material adverse effect
upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole.Other
changes include requiring a controlling person to submit prior notice to its domiciliary insurance regulator of a
divestiture of control, detailed minimum requirements for cost sharing and management agreements between an
insurer and its affiliates and expansion of the agreements between an insurer and its affiliates to be filed with its
domiciliary insurance regulator.The NAIC Amendments must be adopted by the individual state legislatures and
insurance regulators in order to be effective.Each of the states of domicile for our insurance subsidiaries has
adopted its version of the NAIC Amendments.
In addition, the NAIC has proposed a “Solvency Modernization Initiative”. The Solvency Modernization
Initiative focuses on the entire U.S. financial regulatory system and all aspects of financial regulation affecting
insurance companies. Though broad in scope, the NAIC has stated that the Solvency Modernization Initiative
will focus on: (1) capital requirements; (2) corporate governance and risk management; (3) group supervision;
(4) statutory accounting and financial reporting; and (5) reinsurance.This initiative has resulted in the adoption
by the NAIC in September 2012 of the Risk Management and Own Risk and Solvency Assessment Model Act
(“ORSA”), which has been enacted by our insurance subsidiaries’ domiciliary states. ORSA requires that
insurers maintain a risk management framework and conduct an internal own risk and solvency assessment of the
insurer’s material risks in normal and stressed environments. The assessment must be documented in a
confidential annual summary report, a copy of which must be made available to regulators as required or upon
request. Voya Financial’s first ORSA summary report, which will be submitted on behalf of the enterprise, must
be prepared beginning in 2015.
Dividend Payment Restrictions. As a holding company with no significant business operations of our own,
we will depend on dividends and other distributions from our subsidiaries as the principal source of cash to meet
our obligations, including the payment of interest on, and repayment of principal of, our outstanding debt
obligations.The states in which our insurance subsidiaries are domiciled impose certain restrictions on such
subsidiaries’ ability to pay dividends to us.These restrictions are based in part on the prior year’s statutory
income and surplus.In general, dividends up to specified levels are considered ordinary and may be paid without
prior approval.Dividends in larger amounts, or extraordinary dividends, are subject to approval by the insurance
commissioner of the state of domicile of the insurance subsidiary proposing to pay the dividend.
Under the insurance laws applicable to our insurance subsidiaries domiciled in Connecticut, Indiana, Iowa
and Minnesota, an extraordinary dividend or distribution is defined as a dividend or distribution that, together
with other dividends and distributions made within the preceding twelve months, exceeds the greater of (1) 10%
of the insurer’s policyholder surplus as of the preceding December 31 or (2) the insurer’s net gain from
operations for the twelve-month period ended the preceding December 31, in each case determined in accordance
with statutory accounting principles.Under Colorado insurance law, an extraordinary dividend or distribution is
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