Voya 2014 Annual Report Download - page 93

AUM because of market volatility or other factors negatively impacts our revenues and income. Global economic
conditions, changes in the equity markets, currency exchange rates, interest rates, inflation rates, the yield curve,
defaults by derivative counterparties and other factors that are difficult to predict affect the mix, market values
and levels of our AUM. The funds we manage may be subject to an unanticipated large number of redemptions
as a result of such events, causing the funds to sell securities they hold, possibly at a loss, or draw on any
available lines of credit to obtain cash, or use securities held in the applicable fund, to settle these redemptions.
We may, in our discretion, also provide financial support to a fund to enable it to maintain sufficient liquidity in
such an event. Additionally, changing market conditions may cause a shift in our asset mix towards fixed-income
products and a related decline in our revenue and income, as we generally derive higher fee revenues and income
from equity products than from fixed-income products we manage. Any decrease in the level of our AUM
resulting from price declines, interest rate volatility or uncertainty, increased redemptions or other factors could
negatively impact our revenues and income.
From time to time we invest our capital to seed a particular investment strategy or investment portfolio. We
may also co-invest in funds or take an equity ownership interest in certain structured finance/investment vehicles
that we manage for our customers. Any decrease in the value of such investments could negatively affect our
revenues and income.
Our investment performance is critical to the success of our investment management and related services
business, as well as to the profitability of our insurance, annuity and retirement products. Poor investment
performance as compared to third-party benchmarks or competitor products could lead to a decrease in sales of
investment products we manage and lead to redemptions from existing products, generally lowering the overall
level of AUM and reducing the management fees we earn. We cannot assure you that past or present investment
performance in the investment products we manage will be indicative of future performance. Any poor
investment performance may negatively impact our revenues and income.
Some of our investments are relatively illiquid and are in asset classes that have been experiencing significant
market valuation fluctuations.
We hold certain assets that may lack liquidity, such as privately placed fixed income securities, commercial
mortgage loans, policy loans and limited partnership interests. These asset classes represented 29.8% of the
carrying value of our total cash and invested assets as of December 31, 2014. If we require significant amounts of
cash on short notice in excess of normal cash requirements or are required to post or return collateral in
connection with our investment portfolio, derivatives transactions or securities lending activities, we may have
difficulty selling these investments in a timely manner, be forced to sell them for less than we otherwise would
have been able to realize, or both.
The reported values of our relatively illiquid types of investments do not necessarily reflect the current
market price for the asset. If we were forced to sell certain of our assets in the current market, there can be no
assurance that we would be able to sell them for the prices at which we have recorded them and we might be
forced to sell them at significantly lower prices.
We invest a portion of our invested assets in investment funds, many of which make private equity
investments. The amount and timing of income from such investment funds tends to be uneven as a result of the
performance of the underlying investments, including private equity investments. The timing of distributions
from the funds, which depends on particular events relating to the underlying investments, as well as the funds’
schedules for making distributions and their needs for cash, can be difficult to predict. As a result, the amount of
income that we record from these investments can vary substantially from quarter to quarter. Recent equity and
credit market volatility may reduce investment income for these types of investments.
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