Voya 2014 Annual Report Download - page 85

Even in the absence of a market downturn, our insurance, annuity, retirement and investment products, as
well as our investment returns and our access to and cost of financing, are sensitive to equity, fixed income, real
estate and other market fluctuations and general economic and political conditions. These fluctuations and
conditions could materially and adversely affect our results of operations, financial condition and liquidity,
including in the following respects:
• We provide a number of insurance, annuity, retirement and investment products that expose us to risks
associated with fluctuations in interest rates, market indices, securities prices, default rates, the value of
real estate assets, currency exchange rates and credit spreads. The profitability of many of our
insurance, annuity, retirement and investment products depends in part on the value of the general
accounts and separate accounts supporting them, which may fluctuate substantially depending on the
foregoing conditions.
• Volatility or downturns in the equity markets can cause a reduction in fee income we earn from
managing investment portfolios for third parties and fee income on certain annuity, retirement and
investment products. Because these products and services generate fees related primarily to the value
of AUM, a decline in the equity markets could reduce our revenues because of the reduction in the
value of the investments we manage.
• A change in market conditions, including prolonged periods of high or low inflation or interest rates,
could cause a change in consumer sentiment and adversely affect sales and could cause the actual
persistency of these products to vary from their anticipated persistency (the probability that a product
will remain in force from one period to the next) and adversely affect profitability. Changing economic
conditions or adverse public perception of financial institutions can influence customer behavior,
which can result in, among other things, an increase or decrease in claims, lapses, withdrawals,
deposits or surrenders in certain products, any of which could adversely affect profitability.
• An equity market decline, decreases in prevailing interest rates, or a prolonged period of low interest
rates could result in the value of guaranteed minimum benefits contained in certain of our life
insurance, annuity and retirement products being higher than current account values or higher than
anticipated in our pricing assumptions, requiring us to materially increase reserves for such products,
and may result in a decrease in customer lapses, thereby increasing the cost to us. In addition, such a
scenario could lead to increased amortization and/or unfavorable unlocking of DAC and value of
business acquired (“VOBA”).
• Reductions in employment levels of our existing employer customers may result in a reduction in
underlying employee participation levels, contributions, deposits and premium income for certain of
our retirement products. Participants within the retirement plans for which we provide certain services
may elect to effect withdrawals from these plans, or reduce or stop their payroll deferrals to these
plans, which would reduce assets under management or administration and our revenues.
• We have significant investment and derivative portfolios that include, among other investments,
corporate securities, ABS, equities and commercial mortgages. Economic conditions as well as adverse
capital market and credit conditions, interest rate changes, changes in mortgage prepayment behavior
or declines in the value of underlying collateral will impact the credit quality, liquidity and value of our
investment and derivative portfolios, potentially resulting in higher capital charges and unrealized or
realized losses and decreased investment income. The value of our investments and derivative
portfolios may also be impacted by reductions in price transparency, changes in the assumptions or
methodology we use to estimate fair value and changes in investor confidence or preferences, which
could potentially result in higher realized or unrealized losses and have a material adverse effect on our
results of operations or financial condition. Market volatility may also make it difficult to value certain
of our securities if trading becomes less frequent.
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