Voya 2014 Annual Report Download - page 87

Payments of dividends and advances or repayment of funds to us by our insurance subsidiaries are restricted by
the applicable laws and regulations of their respective jurisdictions, including laws establishing minimum
solvency and liquidity thresholds.
For our insurance and other subsidiaries, the principal sources of liquidity are insurance premiums and fees,
annuity deposits and cash flow from investments and assets. At the holding company level, sources of liquidity in
normal markets also include a variety of short-term liquid investments and short-and long-term instruments,
including credit facilities, equity securities and medium-and long-term debt.
In the event current resources do not satisfy our needs, we may have to seek additional financing. The
availability of additional financing will depend on a variety of factors such as market conditions, the general
availability of credit, the volume of trading activities, the overall availability of credit to the financial services
industry and our credit ratings and credit capacity, as well as the possibility that customers or lenders could
develop a negative perception of our long- or short-term financial prospects. Similarly, our access to funds may
be limited if regulatory authorities or rating agencies take negative actions against us. If our internal sources of
liquidity prove to be insufficient, there is a risk that we may not be able to successfully obtain additional
financing on favorable terms, or at all. Any actions we might take to access financing may cause rating agencies
to reevaluate our ratings.
Disruptions, uncertainty or volatility in the capital and credit markets, such as that experienced over the past
few years, may also limit our access to capital. Such market conditions may in the future limit our ability to raise
additional capital to support business growth, or to counter-balance the consequences of losses or increased
regulatory reserves and rating agency capital requirements. This could force us to (1) delay raising capital,
(2) reduce, cancel or postpone interest payments on our debt or reduce or eliminate dividends paid on our capital
stock, (3) issue capital of different types or under different terms than we would otherwise or (4) incur a higher
cost of capital than in a more stable market environment. This would have the potential to decrease both our
profitability and our financial flexibility. Our results of operations, financial condition, liquidity, statutory capital
and rating agency capital position could be materially and adversely affected by disruptions in the financial
markets.
The level of interest rates may adversely affect our profitability, particularly in the event of a continuation of
the current low interest rate environment or a period of rapidly increasing interest rates.
Changes in prevailing interest rates may negatively affect our business including the level of net interest
margin we earn. In a period of changing interest rates, interest expense may increase and interest credited to
policyholders may change at different rates than the interest earned on assets. Accordingly, changes in interest
rates could decrease net interest margin. Changes in interest rates may negatively affect the value of our assets
and our ability to realize gains or avoid losses from the sale of those assets, all of which also ultimately affect
earnings. In addition, our insurance and annuity products and certain of our retirement and investment products
are sensitive to inflation rate fluctuations. A sustained increase in the inflation rate in our principal markets may
also negatively affect our business, financial condition and results of operation. For example, a sustained increase
in the inflation rate may result in an increase in nominal market interest rates. A failure to accurately anticipate
higher inflation and factor it into our product pricing assumptions may result in mispricing of our products,
which could materially and adversely impact our results of operations.
During periods of declining interest rates or a prolonged period of low interest rates, life insurance and
annuity products may be relatively more attractive to consumers due to minimum guarantees that are frequently
mandated by regulators, resulting in increased premium payments on products with flexible premium features
and a higher percentage of insurance and annuity contracts remaining in force from year-to-year than we
anticipated in our pricing, potentially resulting in greater claims costs than we expected and asset/liability cash
flow mismatches. A decrease in interest rates or a prolonged period of low interest rates may also require
additional provisions for guarantees included in life insurance and annuity contracts, as the guarantees become
more valuable to policyholders. During a period of decreasing interest rates or a prolonged period of low interest
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