Voya 2014 Annual Report Download - page 89

Our ratings could be downgraded at any time and without notice by any rating agency. For a description of
material rating actions that have occurred from the end of 2013 through the date of this Annual Report on Form
10-K, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—
Liquidity and Capital Resources—Ratings”.
A downgrade of the financial strength rating of one of our Principal Insurance Subsidiaries could affect our
competitive position by making it more difficult for us to market our products as potential customers may select
companies with higher financial strength ratings and by leading to increased withdrawals by current customers
seeking companies with higher financial strength ratings. This could lead to a decrease in AUM and result in
lower fee income. Furthermore, sales of assets to meet customer withdrawal demands could also result in losses,
depending on market conditions. In addition, a downgrade in either our financial strength or credit ratings could
potentially, among other things, increase our borrowing costs and make it more difficult to access financing;
adversely affect the availability of LOCs and other financial guarantees; result in additional collateral
requirements, or other required payments or termination rights under derivative contracts or other agreements;
and/or impair, or cause the termination of, our relationships with creditors, broker-dealers, distributors, reinsurers
or trading counterparties, which could potentially negatively affect our profitability, liquidity and/or capital. In
addition, we use assumptions of market participants in estimating the fair value of our liabilities, including
insurance liabilities that are classified as embedded derivatives under U.S. GAAP. These assumptions include our
nonperformance risk (i.e., the risk that the obligations will not be fulfilled). Therefore, changes in our credit or
financial strength ratings may affect the fair value of our liabilities.
As rating agencies continue to evaluate the financial services industry, it is possible that rating agencies will
heighten the level of scrutiny that they apply to financial institutions, increase the frequency and scope of their
credit reviews, request additional information from the companies that they rate and potentially adjust upward the
capital and other requirements employed in the rating agency models for maintenance of certain ratings levels. It
is possible that the outcome of any such review of us would have additional adverse ratings consequences, which
could have a material adverse effect on our results of operations, financial condition and liquidity. We may need
to take actions in response to changing standards or capital requirements set by any of the rating agencies which
could cause our business and operations to suffer. We cannot predict what additional actions rating agencies may
take, or what actions we may take in response to the actions of rating agencies.
We receive an explicit guarantee of our liabilities under one International Swaps and Derivatives
Association, Inc. (“ISDA”) master agreement from NN Group N.V. (“NN Group”), a subsidiary of ING Group.
NN Group is successor to ING V which was previously our indirect parent. Additionally, certain of our securities
are guaranteed by our shareholder, ING Group. A downgrade of the credit ratings of ING Group could result in
downgrades of these securities and a downgrade in the credit ratings of NN Group could result in the need to post
additional collateral under the ISDA master agreement. For information on additional collateral requirements in
case of a downgrade of our, ING Group’s or NN Group’s ratings, see “Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Potential Impact
of a Ratings Downgrade”.
Because we operate in highly competitive markets, we may not be able to increase or maintain our market
share, which may have an adverse effect on our results of operations.
In each of our businesses we face intense competition, including from domestic and foreign insurance
companies, broker-dealers, financial advisors, asset managers and diversified financial institutions, both for the
ultimate customers for our products and for distribution through independent distribution channels. We compete
based on a number of factors including brand recognition, reputation, quality of service, quality of investment
advice, investment performance of our products, product features, scope of distribution, price, perceived financial
strength and credit ratings. A decline in our competitive position as to one or more of these factors could
adversely affect our profitability. In addition, we may in the future sacrifice our competitive or market position in
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