Voya 2014 Annual Report Download - page 86

• Market conditions determine the availability and cost of the reinsurance protection we purchase and
may result in additional expenses for reinsurance or an inability to obtain sufficient reinsurance on
acceptable terms, which could adversely affect the profitability of future business and the availability
of capital to support new sales.
• Hedging instruments we use to manage product and other risks might not perform as intended or
expected, which could result in higher realized losses and unanticipated cash needs to collateralize or
settle such transactions. Adverse market conditions can limit the availability and increase the costs of
hedging instruments, and such costs may not be recovered in the pricing of the underlying products
being hedged. In addition, hedging counterparties may fail to perform their obligations resulting in
unhedged exposures and losses on positions that are not collateralized.
• Regardless of market conditions, certain investments we hold, including privately placed fixed income
investments, investments in private equity funds and commercial mortgages, are relatively illiquid. If
we need to sell these investments, we may have difficulty selling them in a timely manner or at a price
equal to what we could otherwise realize by holding the investment to maturity.
• We are exposed to interest rate and equity risk based upon the discount rate and expected long-term
rate of return assumptions associated with our pension and other retirement benefit obligations.
Sustained declines in long-term interest rates or equity returns could have a negative effect on the
funded status of these plans and/or increase our future funding costs.
• Fluctuations in our operating results and our investment portfolio may impact our tax profile, our
ability to optimally utilize tax attributes and our deferred income tax assets. See “—Our ability to use
beneficial U.S. tax attributes is subject to limitations.”
• A default by any financial institution or by a sovereign could lead to additional defaults by other
market participants. The failure of a sufficiently large and influential institution could disrupt securities
markets or clearance and settlement systems and lead to a chain of defaults, because the commercial
and financial soundness of many financial institutions may be closely related as a result of credit,
trading, clearing or other relationships. Even the perceived lack of creditworthiness of a counterparty
may lead to market-wide liquidity problems and losses or defaults by us or by other institutions. This
risk is sometimes referred to as “systemic risk” and may adversely affect financial intermediaries, such
as clearing agencies, clearing houses, banks, securities firms and exchanges with which we interact on
a daily basis. Systemic risk could have a material adverse effect on our ability to raise new funding and
on our business, results of operations, financial condition, liquidity and/or business prospects. In
addition, such a failure could impact future product sales as a potential result of reduced confidence in
the financial services industry. Regulatory changes implemented to address systemic risk could also
cause market participants to curtail their participation in certain market activities, which could decrease
market liquidity and increase trading and other costs.
• Widening credit spreads, if not offset by equal or greater declines in the risk-free interest rate, would
also cause the total interest rate payable on newly issued securities to increase, and thus would have the
same effect as an increase in underlying interest rates with respect to the valuation of our current
portfolio.
Continuing market turmoil has resulted in, and may continue to raise the possibility of, legislative,
regulatory and governmental actions. We cannot predict whether or when such actions may occur, or what
impact, if any, such actions could have on our business, results of operations and financial condition.
Adverse capital and credit market conditions may impact our ability to access liquidity and capital, as well as
the cost of credit and capital.
Adverse capital market conditions may affect the availability and cost of borrowed funds, thereby impacting
our ability to support or grow our businesses. We need liquidity to pay our operating expenses, interest on our
debt and dividends on our capital stock, maintain our securities lending activities and replace certain maturing
liabilities. Without sufficient liquidity, we will be forced to curtail our operations and our business will suffer. As
a holding company with no direct operations, our principal assets are the capital stock of our subsidiaries.
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