Voya Financial, Inc. (Form: 10-K, Received: 02/22/2019 16:46:23)

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

——————————————————————

FORM 10-K



(Mark One)
ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2018



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _ to _

Commission File Number: _001-35897______________________________________

Voya Financial, Inc.

(Exact name of registrant as specified in its charter)



Delaware (State or other jurisdiction of incorporation or organization)	52-1222820 (IRS Employer Identification No.)



230 Park Avenue New York, New York (Address of principal executive offices)	10169 (Zip Code)

(212) 309-8200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Name on each exchange on which registered
Common Stock, $.01 Par Value	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. x Yes o No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o Yes x No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer x	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)	Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

As of June 30, 2018, the aggregate market value of the common stock of the registrant held by non-affiliates of the registrant was approximately $7.6 billion.

As of February 15, 2019, there were 145,936,197 shares of the registrant's common stock outstanding.

Documents incorporated by reference: Portions of Voya Financial, Inc.'s Proxy Statement for its 2019 Annual Meeting of Shareholders are incorporated by reference in the Annual Report on Form 10-K in response to Part III, Items 10, 11, 12, 13 and 14.



	1

Voya Financial, Inc.

Form 10-K for the period ended December 31, 2018

Table of Contents

ITEM NUMBER		PAGE
	PART I.

Item 1.	Business	4

Item 1A.	Risk Factors	28

Item 1B.	Unresolved Staff Comments	52

Item 2.	Properties	52

Item 3.	Legal Proceedings	52

Item 4.	Mine Safety Disclosures	52

	PART II.

Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	53

Item 6.	Selected Financial Data	54

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	57

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	130

Item 8.	Financial Statements and Supplementary Data	138

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	295

Item 9A.	Controls and Procedures	295

	PART III.

Item 10.	Directors, Executive Officers and Corporate Governance	297

Item 11.	Executive Compensation	297

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	297

Item 13.	Certain Relationships and Related Transactions, and Director Independence	297

Item 14.	Principal Accounting Fees and Services	297

	PART IV.

Item 15.	Exhibits, Financial Statement Schedules	298

Exhibit Index		299

Signatures		305



	2

Table of Contents

For the purposes of the discussion in this Annual Report on Form 10-K, the term Voya Financial, Inc. refers to Voya Financial, Inc. and the terms "Company," "we," "our," and "us" refer to Voya Financial, Inc. and its subsidiaries.

NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K, including "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Business," contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements relating to future developments in our business or expectations for our future financial performance and any statement not involving a historical fact. Forward-looking statements use words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," and other words and terms of similar meaning in connection with a discussion of future operating or financial performance. Actual results, performance or events may differ materially from those projected in any forward-looking statement due to, among other things, (i) general economic conditions, particularly economic conditions in our core markets, (ii) performance of financial markets, including emerging markets, (iii) the frequency and severity of insured loss events, (iv) mortality and morbidity levels, (v) persistency and lapse levels, (vi) interest rates, (vii) currency exchange rates, (viii) general competitive factors, (ix) changes in laws and regulations, (x) changes in the policies of governments and/or regulatory authorities, (xi) our ability to successfully manage the separation of the fixed and variable annuities businesses that we sold to VA Capital LLC on June 1, 2018, including the transition services on the expected timeline and economic terms, and (xii) other factors described in the section "Item 1A. Risk Factors."

The risks included here are not exhaustive. Current reports on Form 8-K and other documents filed with the Securities and Exchange Commission ("SEC") include additional factors that could affect our businesses and financial performance. Moreover, we operate in a rapidly changing and competitive environment. New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors.

MARKET DATA

In this Annual Report on Form 10-K, we present certain market and industry data and statistics. This information is based on third-party sources which we believe to be reliable, such as LIMRA, an insurance and financial services industry organization (for Retirement and Employee Benefits market leadership positions), Morningstar fund data and eVestment institutional composites (for Investment Management market leadership positions) and industry recognized publications and websites such as Pensions & Investments (for Retirement and Investment Management), InvestmentNews.com (for Retirement and Investment Management) and MyHealthGuide (for Employee Benefits). Market ranking information is generally based on industry surveys and therefore the reported rankings reflect the rankings only of those companies who voluntarily participate in these surveys. Accordingly, our market ranking among all competitors may be lower than the market ranking set forth in such surveys. In some cases, we have supplemented these third-party survey rankings with our own information, such as where we believe we know the market ranking of particular companies who do not participate in the surveys.

In this Annual Report on Form 10-K, the term "customers" refers to retirement plan sponsors, retirement plan participants, institutional investment clients, retail investors, corporations or professional groups offering employee benefits solutions, insurance policyholders, annuity contract holders, individuals with contractual relationships with financial advisors and holders of Individual Retirement Accounts ("IRAs") or other individual retirement, investment or insurance products sold by us.



	3

Table of Contents

PART I

Item 1. Business

For the purposes of this discussion, the term Voya Financial, Inc. refers to Voya Financial, Inc. and the terms "Company," "we," "our," and "us" refer to Voya Financial, Inc. and its subsidiaries.

We are a leading retirement, investment and employee benefits company providing complementary solutions to improve the financial outcomes of approximately 13.8 million individual customers, workplace participants and institutions in the United States as of December 31, 2018. Our vision is to be America’s Retirement Company™. Our approximately 6,000 employees (as of December 31, 2018) are focused on executing our mission to make a secure financial future possible—one person, one family and one institution at a time. Through our complementary set of businesses, we help our customers save, grow, protect and enjoy their wealth to and through retirement. We offer our products and services through a broad group of financial intermediaries, independent producers, affiliated advisors and dedicated sales specialists throughout the United States.

Our extensive scale and breadth of product offerings are designed to help Americans achieve their retirement savings, investment income and protection goals. Our strategy is centered on preparing customers for financial wellness—being emotionally and economically secure and ready for their retirement. We believe that the aging of the U.S. population, weakening of traditional social safety nets, shifting of responsibility for retirement planning from institutions to individuals and growth in total retirement account assets will drive significant demand for our products and services going forward. We believe that we are well positioned to deliver on this Retirement Readiness need.

We believe that we help our customers achieve three essential financial goals, as they plan for, invest for and protect their retirement years:

We provide our products and services principally through four segments: Retirement, Investment Management, Employee Benefits and Individual Life. In October 2018, we concluded a strategic review of our Individual Life business and announced that we would cease new individual life insurance sales and while retaining our in-force block of individual life policies. Applications for individual life insurance policies were accepted through the end of 2018, resulting in some placement of policies in the first quarter of 2019. Our pivot away from the individual life insurance market aligns with our strategic focus on higher-growth, higher-return, capital-light businesses, centered on workplace and institutional clients.

Activities not related to our business segments such as our corporate operations, corporate-level assets and financial obligations are included in Corporate.



	4

Table of Contents

The following table presents a summary of our key individual and institutional markets, how we define those markets, and the key products we sell in such markets:

Our Segments

Voya is committed to being America's Retirement Company, and is focused on high-growth, high-return, capital light businesses that provide complementary solutions to workplaces and institutions.

As of December 31, 2018, on a consolidated basis, we had $467.3 billion in total AUM and AUA and total shareholders' equity, excluding accumulated other comprehensive income/loss ("AOCI") and noncontrolling interests, of $7.6 billion.

For the year ended December 31, 2018, we generated $610 million of Income (loss) from continuing operations before income taxes, and $802 million of Adjusted operating earnings before income taxes. Adjusted operating earnings before income taxes is a non-GAAP financial measure. For a reconciliation of Adjusted operating earnings before income taxes to Income (loss) before income taxes, see "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations— Company Consolidated."

ORGANIZATIONAL HISTORY AND STRUCTURE

Our History

Prior to our initial public offering in May 2013, we were a wholly owned subsidiary of ING Groep N.V. ("ING Group"), a global financial institution based in the Netherlands.



	5

Table of Contents

Through ING Group, we entered the United States life insurance market in 1975 with the acquisition of Wisconsin National Life Insurance Company, followed in 1976 with ING Group's acquisition of Midwestern United Life Insurance Company and Security Life of Denver Insurance Company in 1977. ING Group significantly expanded its presence in the United States in the late 1990s and 2000s with the acquisitions of Equitable Life Insurance Company of Iowa (1997), Furman Selz, an investment advisory company (1997), ReliaStar Life Insurance Company (including Pilgrim Capital Corporation) (2000), Aetna Life Insurance and Annuity Company (including Aeltus Investment Management) (2000) and CitiStreet (2008). ING Group completely divested its ownership of Voya Financial, Inc. common stock between 2013 and 2015, and, as of March 2018, ING Group has also divested its remaining interest in warrants to acquire additional shares of our common stock, which it acquired in connection with our IPO.

Our Organizational Structure

We are a holding company incorporated in Delaware in April 1999. We operate our businesses through a number of direct and indirect subsidiaries. The following organizational chart presents the ownership and jurisdiction of incorporation of our principal subsidiaries as of December 31, 2018:

The chart above includes:


•	Voya Financial, Inc.


•	Our principal intermediate holding company, Voya Holdings, which is the direct parent of a number of our insurance and non-insurance operating entities.


•	Our principal operating entities that are the primary sources of cash distributions to Voya Financial, Inc. Specifically, these entities are our principal insurance operating companies (VRIAC, SLD and RLI) and Voya Investment Management LLC, the holding company for entities that operate our Investment Management segment.


•	SLDI, our Arizona captive.

CBVA and Annuity Transaction

On June 1, 2018, we consummated a series of transactions (collectively, the "Transaction") pursuant to a Master Transaction Agreement dated December 20, 2017 (the "MTA") with VA Capital Company LLC, a newly formed Delaware limited liability company ("VA Capital"), and Athene Holding Ltd., a Bermuda limited company ("Athene"), pursuant to which VA Capital's wholly owned subsidiary Venerable Holdings Inc. ("Venerable") acquired certain of our assets, including all of the shares of the capital stock of Voya Insurance and Annuity Company ("VIAC"), our Iowa-domiciled insurance subsidiary, and all of the membership interests of Directed Services LLC, an indirect broker-dealer subsidiary ("DSL"). This transaction resulted in our disposition of substantially all of our variable annuity and fixed and fixed indexed annuity businesses and related assets.

VA Capital is a holding company formed by affiliates of Apollo Global Management LLC ("Apollo") and Athene (collectively, the "Sponsors"). In connection with the Transaction, we also acquired a 9.99% equity interest in VA Capital. In addition, our other insurance subsidiaries continue to own surplus notes issued by VIAC in aggregate principal amount of $350 million.



	6

Table of Contents

Following its acquisition of VIAC, Venerable holds substantially all of the variable annuity business that was previously reported as our Closed Block Variable Annuity ("CBVA") segment, with an aggregate account value of approximately $35 billion based on June 30, 2017 balances. We separated CBVA from our other operations in 2009 and 2010, placing them in run-off as part of a strategic decision to stop actively writing new retail variable annuity products with substantial guarantee features. Accordingly, this segment was classified as a closed block and was managed separately from our other segments.

Concurrently with the sale of VIAC, VIAC reinsured to Athene its individual fixed and fixed indexed annuities policies, and we also reinsured to Athene the fixed annuities policies of RLI, our Minnesota-domiciled insurance subsidiary. With approximately $19 billion of account value as of June 30, 2017, the VIAC and RLI policies reinsured to Athene represented a significant majority of our fixed and fixed indexed annuities business. We ceased manufacturing non-retirement-focused annuities after the Transaction closed. Following the Transaction, VIAC or one of Venerable's other affiliates became responsible for administering most of the variable, fixed and fixed indexed annuities included in the Transaction, subject to some exceptions and arrangements under which we provide some transitional services to Venerable for a limited time. Certain businesses in our former Annuities segment were not part of the Transaction, including approximately $6 billion in investment-only products (primarily Select Advantage) written by our other insurance affiliates that were retained by us.

As part of the Transaction, Voya IM or its affiliated advisors entered into agreements to perform asset management services for Venerable and to serve as the preferred asset management partner for Venerable. Under these agreements, subject to certain criteria, Voya IM or its affiliated advisors manage specified assets of Venerable for a minimum of five years following the closing of the Transaction.

OUR BUSINESSES

Retirement

Our Retirement segment is focused on meeting the needs of individuals in preparing for and sustaining a secure retirement through employer-sponsored plans and services, as well as through individual account rollover plans and comprehensive financial product offerings and planning and advisory services. We are well positioned in the marketplace, with our industry-leading Institutional Retirement Plans business and our Retail Wealth Management business having a combined $316.5 billion of AUM and AUA as of December 31, 2018, of which $67.0 billion were in proprietary assets.

Our Institutional Retirement Plans business offers tax-deferred employer-sponsored retirement savings plan and administrative services to corporations of all sizes, public and private school systems, higher education institutions, hospitals and healthcare facilities, not-for-profit organizations and state and local governments. We also offer stable value products to institutional plan sponsors. This broad-based institutional business is diversified across many sectors of the economy. In the defined contribution market, we provide services to more than 49,000 plan sponsors covering approximately 5.1 million plan participant accounts as of December 31, 2018.

Our Retail Wealth Management business, with AUM and AUA of $9.1 billion as of December 31, 2018, focuses on the rapidly expanding retiree market as well as on pre-retirees within our defined contribution plans. This business offers retail financial products and comprehensive financial planning and advisory services to help individuals manage their retirement savings and income needs.

Our Retirement segment earns revenue principally from asset and participant-based advisory and recordkeeping fees. Retirement generated Adjusted operating earnings before income taxes of $701 million for the year ended December 31, 2018. Our Investment Management segment also earns market-based fees from the management of the general account and mutual fund assets supporting Institutional Retirement Plans and certain Retail Wealth Management rollover products and advisory solutions. Distribution of Investment Management products and services using the Retirement segment continues to present a growth opportunity for our Retirement and Investment Management segments.

We will continue to focus on growing our retirement platform through focused sales and retention efforts in our Institutional Retirement Plans business and by leveraging our financial wellness offerings and Retail Wealth Management business to deepen relationships with our Institutional Retirement Plan participants. We will also continue to place a strong emphasis on capital and cost management while also growing our distribution platform, achieving a diversified retirement product mix and focusing on innovation efforts that make it easy to do business with us and drive positive outcomes for customers.



	7

Table of Contents

An important element of our Retirement strategy is to leverage the extensive customer base to which we have access through our Institutional Retirement Plans business in order to grow our Retail Wealth Management and Investment Management businesses. We are therefore focused on building long-term relationships with our plan participants, especially when initiated through service touch points such as plan enrollments and rollovers, which will enable us to offer such participant's individual retirement and investment management solutions both during and after the term of their plan participation.

Institutional Retirement Plans

Products and Services

We are one of only a few providers that offer tax-deferred institutional retirement savings plans, services and support to the full spectrum of businesses, ranging from small to mega-sized plans and across all markets and code sections. These plans may either be offered as full service options or recordkeeping services products. We also offer stable value investment options to institutional clients.

Full-service retirement products provide recordkeeping and plan administration services, tailored participant communications and education programs, award-winning myOrangeMoney^® digital capabilities for sponsors and plan participants (plus mobile capabilities for participants), trustee services and institutional and retail investments. Offerings include a wide variety of investment and administrative products for defined contribution plans for tax-advantaged retirement savings, as well as nonqualified executive benefit plans and employer stock option plans. Plan sponsors may select from a variety of investment structures and products, such as general account, separate account, mutual funds, stable value or collective investment trusts and a variety of underlying asset types (including their own employer stock) to best meet the needs of their employees. A broad selection of funds is available for our products in all asset categories from over 180 fund families, including the Voya family of mutual funds managed by our Investment Management segment. Our full-service retirement plan offerings are also supported by financial planning and investment advisory services offered through our Retail Wealth Management business or through third parties (e.g., Morningstar) to help prepare individuals for retirement through customer-focused personalized and objective investment advice.

Recordkeeping service products provide recordkeeping and plan administration support for a sponsor base that includes multi-employer corporate plans, large-mega corporations and state and local governments. Our recordkeeping retirement plan offerings are also supported by participant communications and education programs, award-winning myOrangeMoney^® digital capabilities for sponsors and plan participants (plus mobile capabilities for participants), as well as financial planning and investment advisory services offered through our Retail Wealth Management business and Voya Retirement Advisors (our registered investment advisor group serving in-plan participants with the in-plan advisory services program).

Stable value investment options may be offered within our full service institutional plans, or as investment-only options within our recordkeeping services plans or within other vendor plans. Our product offering includes both separate account guaranteed investment contracts ("GICs") and synthetic GICs managed by either proprietary or outside investment managers.

Pension risk transfer group annuity solutions were previously offered to institutional plan sponsors who needed to transfer their defined benefit plan obligations to us. We discontinued sales of these solutions in late 2016 to better align our business activities to our strategic priorities, but continue to manage existing policies and assets.



	8

Table of Contents

The following chart presents our Institutional Retirement Plans product/service models and corresponding AUM and AUA, key markets in which we compete, primary defined contribution plan Internal Revenue Code sections and core products offered for each market segment.



Product/Service Model	AUM/AUA (as of December 31, 2018)	Key Market Segments/Product Lines	Primary Internal Revenue Code section	Core Products*
Full Service Plans	$119.2 billion	Small-Mid Corporate	401(k)	Voya MAP Select, Voya Framework
		K-12 Education	403(b)	Voya Custom Choice II, Voya Retirement Choice II, Voya Framework
		Higher Education	403(b)	Voya Retirement Choice II, Voya Retirement Plus II, Voya Framework
		Healthcare & Other Non-Profits	403(b)	Voya Retirement Choice II, Voya Retirement Plus II, Voya Framework
		Government (local and state)	457	RetireFlex-SA, RetireFlex-MF, Voya Health Reserve Account, Voya Framework
Recordkeeping Business	$152.8 billion	Small-Mid Corporate	401(k)	**
Recordkeeping Business		Large-Mega Corporate	401(k)	**
		Government (local and state)	457	**
Stable Value/Other	$35.3 billion***	Stable Value	****	Separate Account and Synthetic GICs

* Core products actively being sold today.

** Offerings include administration services and investment options such as mutual funds, commingled trusts and separate accounts.

***Assets include a small block of pension risk transfer business which is no longer an active offering as well as assets in our Lifeline retained asset account designed as a death claim payment option (among other Voya options) to beneficiaries of any Voya insurance policy or contract.

**** Sold across all market segments and various tax codes with a strong focus on Large Corporate 401(k) plans.

In 2017, we launched an enhanced version of our Voya Framework product that can be sold across both full service corporate and tax-exempt markets. It is a mutual fund program offered to fund qualified retirement plans, and it gives plan advisors and third party administrators who work with us a uniform and consistent product experience across multiple plan markets. The product is distinguished by its flexible recordkeeping platform and contains over 300 funds from well-known fund families for smaller plans or can be provided as an open architecture investment platform for larger plans (which offers most funds for which trades are cleared through the National Securities Clearing Corporation). This product also includes our general account and various stable value investment options.

In addition to Voya Framework, we offer products customized to each of the full service corporate market and the full service tax exempt market.

For plans in the full service corporate market, we offer Voya MAP Select, a group funding agreement/group annuity contract to fund qualified retirement plans. Voya MAP Select contains over 300 funds from well-known fund families for smaller plans or can be provided as an open architecture investment platform for larger plans (which offers most funds for which trades are cleared through the National Securities Clearing Corporation). This product also includes our general account and various stable value investment options.



	9

Table of Contents

For plans in the full service tax-exempt market, we offer a variety of products that include the following:


•	Voya Retirement Choice II and RetireFlex-MF, mutual fund products which provide flexible funding vehicles and are designed to provide a diversified menu of mutual funds in addition to a guaranteed option (available through a group fixed annuity contract or stable value product).


•	Voya Retirement Plus II and Voya Custom Choice II, registered group annuity products featuring variable investment options held in a variable annuity separate account and a fixed investment option held in the general account.


•	RetireFlex-SA, an unregistered group annuity product which features variable investment options held in a variable annuity separate account and a guaranteed option (available through a group fixed annuity contract or stable value product).

Markets and Distribution

Our Institutional Retirement Plans business can be categorized into two primary markets: Corporate and Tax Exempt. Both markets utilize our award-winning myOrangeMoney^® participant-facing digital capabilities as a centerpiece to help shift the mindset of plan participants from focusing only on accumulation to focusing on both accumulation and adequate income in retirement. Additionally, a broad suite of financial wellness offerings, including retirement and financial planning, guidance and advisory products, tools and services are offered to help our plan participants in all markets reach their retirement goals. A brief description of each market, including sub segments and areas of particular focus, are as follows:

Corporate Markets:

•

Small-Mid Corporate Market. In this market, we offer full service solutions to defined contribution plans of small-mid-sized corporations (i.e., typically less than 1,000 employees). Our product offerings include an open architecture investment platform, comprehensive fiduciary solutions, dedicated and proactive service teams and product and service innovations leveraged from our expertise across multiple market segments (all sizes of plans as well as code sections). Furthermore, we offer a unique enrollment experience through our myOrangeMoney^® digital capabilities that helps engage and inform plan participants with retirement savings and income goals.

•

Large-Mega Corporate Market. In this market we offer recordkeeping services to defined contribution plans of large to mega-sized corporations (i.e., typically more than 1,000 employees). Our solutions and capabilities support the most complex retirement plans with a special focus on client relationship management, tailored communication campaigns and education and enrollment support to help employers prepare their employees for retirement. We are dedicated to providing engaging information through innovative award-winning technology-based tools and print materials to help plan participants achieve a secure and dignified retirement.

Tax Exempt Markets:

•

Education Market. We offer comprehensive full service solutions to both public and private K-12 educational entities as well as public and private higher education institutions. In the United States, we rank fourth in both the K-12 and higher education markets by assets as of September 30, 2018. Our support to plan sponsors, including solutions to reduce administrative burden, deep technical and regulatory expertise, and strong on-site service teams, plus advisor support and a broad suite of financial wellness products, tools, and services for participants, continue to strengthen our position as one of the top providers in this market.

•

Healthcare/Other Non Profits Market. In this market we service hospitals, healthcare organizations and not-for-profit entities by offering full service solutions for a variety of plan types. We offer services that reduce sponsors' administrative burdens and provide them with deep technical and fiduciary expertise. Additionally, we offer on-site service teams to assist plan sponsors with their plans and to assist their employees with understanding and taking advantage of their plan benefits. We also provide tailored communications, education and enrollment support plus a broad suite of financial wellness products, tools and services in order to better prepare plan participants for retirement.

•

Government Market. We provide both full service and recordkeeping services offerings to small and large governmental entities (e.g., state and local government) with a client base that spans all 50 states plus US territories. For large governmental sponsors, we offer recordkeeping services that meet the most complex of needs, while also offering extensive participant communication and retirement education support, including a broad suite of financial wellness products, tools and services. We also offer a broad range of proprietary, non-proprietary and stable value investment options. Our flexibility



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and expertise help make us the third ranked provider in the government market in the United States based on AUM and AUA as of September 30, 2018.

Products for Institutional Retirement Plans are distributed nationally through multiple unaffiliated channels supported by our employee wholesale field force and dedicated sales teams and via other affiliated distribution through our owned broker-dealer, Voya Financial Advisors ("VFA"). We offer localized support to distribution partners and their clients during and after the sales process as well as a broad selection of investment options with flexibility of choice and comprehensive fiduciary solutions to help their clients meet or exceed plan guidelines and responsibilities.

Unaffiliated Distribution:


•	Independent Sales Agents. As of December 31, 2018, we work with more than 4,000 sales agents who primarily sell fixed annuity products from multiple vendors in the education market. Activities by these representatives are centered on increasing participant enrollments and deferral amounts in our existing K-12 education segment plans.

•

Brokers and Advisors. Nearly 12,000 wirehouse and independent regional and local brokers, specialty retirement plan advisors plus registered investment advisors (as of December 31, 2018) are the primary distributors of our small-mid corporate market products, and they also distribute products to the education, healthcare and government markets. These producers typically present their clients (i.e., employers seeking a defined contribution plan for their employees) with plan options from multiple vendors for comparison and may also help with employee enrollment and education.

•

Third Party Administrators ("TPAs"). As of December 31, 2018, we have long-standing relationships with over 1,200 TPAs who work with a variety of retirement plan providers and are selling and/or service partners for our small-mid corporate markets and select tax exempt market plans. While TPAs typically focus on providing plan services only (such as administration and compliance testing), some also initiate and complete the sales process. TPAs also play a vital role as the connecting point between our wholesale team and unaffiliated producers who seek references for determining which providers they should recommend to their clients.

Affiliated Distribution:

•

Voya Financial Advisors ("VFA"). Our owned broker-dealer is one of the top quartile broker-dealers in the United States as determined by the total number of licensed and producing representatives and by gross revenue. As of December 31, 2018, VFA provided licensing and operational support to approximately 1,700 field and phone-based representatives. The field based financial planning and advisory representatives support sales of products, financial planning and advisory services for the Retirement segment. A closely affiliated sub-set of the field-based channel focuses primarily on driving enrollment and contribution activity within our education, healthcare and government market institutional plans. They also provide in-plan education and guidance plus retail sold-financial advisory services to help individuals in these markets meet their retirement savings and income goals. The home office phone-based representatives focus on providing education, guidance and rollover support services to our institutional plan participants.


•	Wholesale Field Force. Locally based employee wholesalers focus on expanding and strengthening relationships with unaffiliated distribution partners and third party administrators who sell and service our institutional plan offerings to employers across the nation.


•	Dedicated Voya Sales Teams. Our employee sales teams work with more than 90 different pension/specialty consulting firms that represent employers in corporate and tax-exempt markets seeking large-mega institutional plans and/or stable value solutions. Additionally, we have salaried phone-based sales teams that focus on supporting our institutional plan participants across all markets.



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Competition

Our Institutional Retirement Plans business competes with other large, well-established insurance companies, asset managers, record keepers and diversified financial institutions. Competition varies in all market segments as few institutions are able to compete across all markets as we do. The following chart presents a summary of the current competitive landscape in the markets where we offer our Institutional Retirement Plans and stable value solutions:



Market/Product Segment	Competitive Landscape	Select Competitors

Small-Mid Corporate	Primary competitors are mutual fund companies and insurance-based providers with third-party administration relationships	Empower Fidelity

K-12 Education	Primary competitors are insurance-based providers that focus on school districts across the nation	AXA VALIC

Higher Education	Competitors are 403(b) plan providers, asset managers and some insurance-based providers	TIAA Fidelity

Healthcare & Other Non-Profits	Competition varies across 403(b) plan providers, asset managers and some insurance-based providers	Fidelity TIAA

Government	Competitors are primarily insurance-based providers, but also include asset managers and 457 providers	Empower Nationwide

Recordkeeping	Competitors are primarily asset managers and business consulting services firms, but also include payroll firms and insurance-based providers	Fidelity Empower

Stable Value	Competitors are primarily select insurance companies who are also dedicated to the Stable value market, but also include certain banking institutions	Prudential MetLife

In addition, we also compete more generally in the Institutional Retirement Plans business against companies such as Principal Financial, MassMutual, John Hancock, Lincoln Financial and Transamerica.

Our Institutional Retirement Plans business competes primarily based on pricing for value delivered with a strong focus on an excellent customer experience. Our full-service business also competes on the breadth of our service and investment offerings, technical/regulatory expertise, industry experience, local enrollment and education support, investment flexibility and our ability to offer industry tailored product features to meet the financial wellness and retirement income needs of our clients. We have seen industry concentration in the large plan recordkeeping business, as providers seek to increase scale, improve cost efficiencies and enter new market segments. We emphasize our strong sponsor relationships, flexible value-added services, ability to customize recordkeeping and administration services to match client needs, and technical and regulatory expertise as our competitive strengths. Additionally, we compete with our broad suite of products and financial wellness tools and services, including our award-winning myOrangeMoney^® retirement income focused digital and mobile capabilities, to help employers support the retirement preparedness and financial needs of their employees. Our long standing experience in the retirement market underscored by strong stable value expertise allows us to effectively compete against existing and new providers.

Underwriting and Pricing

We price our institutional retirement products based on long-term assumptions that include investment returns, mortality, persistency and operating costs. We establish target returns for each product based upon these factors and the expected amount of regulatory and rating agency capital that we must hold to support these contracts over their projected lifetime. We monitor and manage pricing and sales mix to achieve target returns. It may take new business several years before it is profitable, depending on the nature and life of the product, and returns are subject to variability as actual results may differ from pricing assumptions. We seek to mitigate



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investment risk by actively managing market and credit risks associated with investments and through asset/liability matching portfolio management.

Retail Wealth Management

Products and Services

Our Retail Wealth Management business offers a variety of investments and protection products, along with holistic advice and guidance delivered through field-based financial planning and advisory representatives and home office phone-based representatives. Our current investment solutions include a variety of mutual fund custodial IRA products, managed accounts and advisory programs, and brokerage accounts.

We also continue to offer certain tax-qualified mutual fund custodial products that were retained from the Annuities business we divested in the Transaction.

While the primary focus of our Retirement segment is to serve over 5.1 million defined contribution plan participants (as of December 31, 2018), we also seek to capitalize on our access to these individuals by utilizing our Retail Wealth Management business to deepen our relationships with them for the long-term. We believe that our ability to offer an integrated approach to an individual customer’s entire financial picture, while saving for or living in retirement, presents a compelling reason for our Institutional Retirement Plans participants to use us as their principal investment and retirement plan provider. Through our broad range of advisory programs, our financial advisers have access to a wide set of solutions for our customers for building investment portfolios, including stocks, bonds and mutual funds, as well as managed accounts. These experienced advisers work with customers to select a program to meet their financial needs that takes into consideration each individual’s time horizon, goals and attitudes towards risk.

Markets and Distribution

Retail Wealth Management products, financial planning and advisory services are primarily sold through our group of nearly 1,700 representatives licensed through VFA, our broker-dealer. These VFA representatives help provide cohesiveness between our Institutional Retirement Plans and Retail Wealth Management businesses and are grouped into two primary categories: field-based and home office phone-based representatives. Field-based representatives are registered sales and investment advisory representatives that drive both fee-based and commissioned sales. They provide face-to-face interaction with individuals seeking retail investment products (e.g., IRA products) as well as financial planning and advisory solutions. Home office phone-based representatives focus on assisting participants in our institutional retirement plans, primarily for our large recordkeeping plans. While these representatives offer more simplified rollover products and advisory services than offered by the field-based representatives, they are highly trained in providing financial advice that helps customers transition through life stage and job-related changes.

In an effort to develop a path for our VFA representatives to offer holistic retirement planning solutions to participants in our Institutional Retirement Plans, we partner with our institutional clients to engage, educate, advise and motivate their employees to take action that will better prepare them for successful retirement outcomes.

Competition

Our Retail Wealth Management advisory services and product solutions compete for rollover and other asset consolidation opportunities against integrated financial services companies and independent broker-dealers who also offer individual retirement products, all of which currently have more market share than insurance-based providers in this space. Primary competitors to our Retail Wealth Management business are, in the phone-based channel, Fidelity, Schwab, and Vanguard, and in the field-based channel, LPL Financial, Ameriprise, Commonwealth, Cambridge, Cetera, and Bank of America Merrill Lynch.

Our Retail Wealth Management advisory services and product solutions are competitively priced and compete based on our consultative approach, simplicity of design and a fund and investment selection process that includes proprietary and non-proprietary investment options. The advisory services and product solutions are targeted towards existing institutional plan participants, which allow us to benefit from our extensive relationships with large corporate and tax-exempt plan sponsors, our small and mid-corporate market plan sponsors and other qualified plan segments in healthcare, higher education and K-12 education.



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Underwriting and Pricing

We price our individual retirement products based on long-term assumptions that include investment returns and operating costs. We establish target returns for each product based upon these factors and the expected amount of regulatory and rating agency capital, to the extent any is required, that we must hold to support these contracts and investment products over their projected lifetime. We monitor and manage pricing and sales mix to achieve target returns. It may take new business several years before it is profitable, depending on the nature and life of the product, and returns are subject to variability as actual results may differ from pricing assumptions. Where we bear investment risk, we seek to mitigate such risk by actively managing both market and credit risks associated with investments and through asset/liability matching portfolio management.

Investment Management

We offer domestic and international fixed income, equity, multi-asset and alternatives products and solutions across market sectors, investment styles and capitalization spectrums through our actively managed, full-service investment management business. Multiple investment platforms are backed by a fully integrated business support infrastructure that lowers expense and creates operating efficiencies and business leverage and scalability at low marginal cost. As of December 31, 2018, our Investment Management segment managed $122.2 billion for third-party institutional and individual investors, $24.9 billion in separate account assets for our other businesses (including variable annuity-sourced assets) and $56.3 billion in general account assets. Upon closing of the Transaction, our general account AUM declined by approximately $28 billion, which was offset by approximately $10 billion of additional third-party AUM associated with our management of Venerable's general account assets. See "–Organizational History and Structure–CBVA and Annuity Transaction". We also offer a range of specialty asset solutions across fixed income and alternative investment products with AUM of $66.4 billion for such specialty products.

We are committed to reliable and responsible investing and delivering research-driven, risk-adjusted, specialty and retirement client-oriented investment strategies and solutions and advisory services across asset classes, geographies and investment styles. Through our institutional distribution channel and our Voya-affiliate businesses, we serve a variety of institutional clients, including public, corporate and Taft-Hartley Act defined benefit and defined contribution retirement plans, endowments and foundations, and insurance companies. We also serve individual investors by offering our mutual funds and separately managed accounts through an intermediary-focused distribution platform or through affiliate and third-party retirement platforms.

Investment Management’s primary source of revenue is management fees collected on the assets we manage. These fees are typically based upon a percentage of AUM. In certain investment management fee arrangements, we may also receive performance-based incentive fees when the return on AUM exceeds certain benchmark returns or other performance hurdles. In addition, and to a lesser extent, Investment Management collects administrative fees on outside managed assets that are administered by our mutual fund platform, and distributed primarily by our Retirement segment. Investment Management also receives fees as the primary investment manager of our general account, which is managed on a market-based pricing basis. Finally, Investment Management generates revenues from a portfolio of capital investments. Investment Management generated Adjusted operating earnings before income taxes of $205 million for the year ended December 31, 2018.

The success of our platform begins with providing our clients continued strong investment performance. In addition to investment performance, our focus is on client "solutions" and income and outcome-oriented products which include target date funds. We expect that both our traditional and specialty capabilities, leveraging strong investment performance combined with superior client service, will result in AUM growth.

We are also focused on capitalizing on the Retirement segment's leading market position and have established dedicated retirement resources within our Investment Management intermediary-focused distribution team to work with Retirement and have enhanced our MASS investment platform (which we describe below) to increase focus on retirement products such as our target date and target risk portfolios, which we believe will help us to capture an increased proportion of retirement flows.

Other key strategic initiatives for growth include continued focus on higher margin specialty capabilities: improved distribution productivity, sub-advisory mandates for Investment Management capabilities on client platforms; leveraging partnerships with financial intermediaries and consultants; opportunistic launching of capital markets products such as collateralized loan obligations ("CLOs") and Closed End Mutual Funds; and prudent expansion of our private equity business.

Products and Services

Investment Management delivers products and services that are manufactured by traditional and specialty investment platforms. The traditional platforms are fixed income, equities and MASS. Our specialty capabilities include investment strategies such as



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senior bank loans, CLOs, private equity and certain fixed income strategies such as private credit, mortgage derivatives and commercial mortgage loans.

Fixed Income. Investment Management’s fixed income platform manages assets for our general account, as well as for domestic and international institutional and retail investors. As of December 31, 2018, there were $116.3 billion in AUM on the fixed income platform, of which $56.3 billion were general account assets. Through the fixed income platform clients have access to money market funds, investment-grade corporate debt, government bonds, residential mortgage-backed securities ("RMBS"), commercial mortgage-backed securities ("CMBS"), asset-backed securities ("ABS"), high yield bonds, private and syndicated debt instruments, unconstrained fixed income, commercial mortgages and preferred securities. Each sector within the platform is managed by seasoned investment professionals supported by significant credit, quantitative and macro research and risk management capabilities.

Equities. The equities platform is a multi-cap and multi-style research-driven platform comprising both fundamental and quantitative equity strategies for institutional and retail investors. As of December 31, 2018, there were $51.0 billion in AUM on the equities platform covering both domestic and international markets including Real Estate. Our fundamental equity capabilities are bottom-up and research driven, and cover growth, value, and core strategies in the large, mid and small cap spaces. Our quantitative equity capabilities are used to create quantitative and enhanced indexed strategies, support other fundamental equity analysis, and create extension products.

MASS. Investment Management’s MASS platform offers a variety of investment products and strategies that combine multiple asset classes using asset allocation techniques. The objective of the MASS platform is to develop customized solutions that meet specific, and often unique, goals of investors and that dynamically change over time in response to changing markets and client needs. Utilizing core capabilities in asset allocation, manager selection, asset/liability modeling, risk management and financial engineering, the MASS team has developed a suite of target date and target risk funds that are distributed through our Retirement segment and to institutional and retail investors. These funds can incorporate multi-manager funds. The MASS team also provides pension risk management, strategic and tactical asset allocation, liability-driven investing solutions and investment strategies that hedge out specific market exposures (e.g., portable alpha) for clients.

Senior Bank Loans. Investment Management’s senior bank loan group is an experienced manager of below-investment grade floating-rate loans, actively managing diversified portfolios of loans made by major banks around the world to non-investment grade corporate borrowers. Senior in the capital structure, these loans have a first lien on the borrower’s assets, typically giving them stronger credit support than unsecured corporate bonds. The platform offers institutional, retail and structured products (e.g., CLOs), including on-shore and off-shore vehicles with assets of $25.5 billion as of December 31, 2018.

Alternatives. Investment Management’s primary alternatives platform is Pomona Capital. Pomona Capital specializes in investing in private equity funds in three ways: by purchasing secondary interests in existing partnerships; by investing in new partnerships; and by co-investing alongside buyout funds in individual companies. As of December 31, 2018, Pomona Capital managed assets totaling $8.6 billion across a suite of limited partnerships and the Pomona Investment Fund, a registered investment fund launched in May, 2015 that is available to accredited investors. In addition, Investment Management offers select alternative and hedge funds leveraging our core debt and equity investment capabilities.



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The following chart presents asset and net flow data as of December 31, 2018, broken out by Investment Management’s five investment platforms as well as by major client segment:



	AUM			Net Flows
	As of			Year Ended
	December 31, 2018			December 31, 2018
	$ in billions			$ in millions
Investment Platform
Fixed income	$	116.3		$	2,998
Equities	51.0			(6,027		)
Senior Bank Loans	25.5			(722		)
Alternatives	10.7			2,174
Total	$	203.5	⁽¹⁾	$	(1,577	)
MASS ⁽¹⁾	25.8			36

Client Segment
Retail	$	61.3		$	(5,044	)
Institutional	85.9			3,391
General Account	56.3		⁽²⁾	N/A
Mutual Funds Manager Re-assignments	N/A			76
Total	$	203.5		$	(1,577	)
Voya Financial affiliate sourced, excluding variable annuity	$	34.4		$	(1,917	)
Variable Annuity ⁽³⁾	27.2			(2,519		)


⁽¹⁾	$19.6 billion of MASS assets are included in the fixed income, equity and senior bank loan AUM figures presented above. The balance of MASS assets, $6.2 billion, is managed by third parties and we earn only a modest, market-rate fee on the assets.

⁽²⁾ Upon closing of the Transaction, our general account AUM declined by approximately $28 billion, which was offset by approximately $10 billion of additional third-party AUM associated with our management of the general account assets of Venerable. See "–Organizational History and Structure–CBVA and Annuity Transaction".

Markets and Distribution

We serve our institutional clients through a dedicated sales and service platform and for certain international regions, through selling agreements with a former affiliated party and for sponsored structured products through the arranger. We serve individual investors through an intermediary-focused distribution platform, consisting of business development and wholesale forces that partner with banks, broker-dealers and independent financial advisers, as well as our affiliate and third-party retirement platforms.

With the exception of Pomona Capital and structured products, the different products and strategies associated with our investment platforms are distributed and serviced by these Retail and Institutional client-focused segments as follows:


•	Retail client segment: Open- and closed-end funds through affiliate and third-party distribution platforms, including wirehouses, brokerage firms, and independent and regional broker-dealers. As of December 31, 2018, total AUM from these channels was $61.3 billion. Included in our retail client segment is $15.9 billion of AUM managed on behalf of Venerable as of December 31, 2018.

•

Institutional client segment: Individual and pooled accounts, targeting defined benefit, defined contribution recordkeeping and retirement plans, Taft Hartley and endowments and foundations. As of December 31, 2018, Investment Management had approximately 342 institutional clients, representing $85.9 billion of AUM primarily in separately managed accounts and collective investment trusts. As a result of the Transaction, we now manage $11.3 billion of AUM for Venerable as an institutional client.

Investment Management manages a variety of variable portfolio, mutual fund and stable value assets, sold through our Retirement and Employee Benefits segments, together with assets that were previously sold through our Individual Life and remaining Annuities businesses. As of December 31, 2018, total AUM from these channels and the divested variable annuity business was 61.6 billion with the majority of the assets gathered through our Retirement segment.



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As described above under "–Organizational History and Structure–CBVA and Annuity Transaction" as a result of the Transaction, Voya IM or its affiliated advisors entered agreements to serve as the preferred asset management partner for Venerable.

Competition

Investment Management competes with a wide array of asset managers and institutions in the highly fragmented U.S. investment management industry. In our key market segments, Investment Management competes on the basis of, among other things, investment performance, investment philosophy and process, product features and structure and client service. Our principal competitors include insurance-owned asset managers such as Principal Global Investors (Principal Financial Group), Prudential and Ameriprise, bank-owned asset managers such as J.P. Morgan Asset Management, as well as "pure-play" asset managers including Invesco, Legg Mason, T. Rowe Price, and Franklin Templeton.

Employee Benefits

Our Employee Benefits segment provides group insurance products to mid-size and large corporate employers and professional associations. In addition, our Employee Benefits segment serves the voluntary worksite market by providing individual and payroll-deduction products to employees of our clients. Our Employee Benefits segment is among the largest writers of stop loss coverage in the United States, currently ranking sixth on a premium basis with approximately $969 million of in-force premiums. We also have a fast growing voluntary benefits offering and are a top provider of group life. As of December 31, 2018, Employee Benefits total in-force premiums were $1.9 billion.

The Employee Benefits segment generates revenue from premiums, investment income, mortality and morbidity income and policy and other charges. Profits are driven by the spread between investment income and credited rates to policyholders on voluntary universal life and whole life products, along with the difference between premiums and mortality charges collected and benefits and expenses paid for group life, stop loss and voluntary health benefits. Our Employee Benefits segment generated Adjusted operating earnings before income taxes of $160 million for the year ended December 31, 2018.

We believe that our Employee Benefits segment offers attractive growth opportunities. For example, we believe there are significant opportunities through expansion in the voluntary benefits market as employers shift benefits costs to their employees. We have a number of new products and initiatives that we believe will help us drive growth in this market. While expanding these lines, we also intend to continue to focus on profitability in our well established group life and stop loss product lines, by adding profitable new business to our in-force block, improving our persistency by retaining more of our best performing groups, and managing our overall loss ratios to below 74%.

Products and Services

Our Employee Benefits segment offers stop loss insurance, voluntary benefits, and group life and disability products. These offerings are designed to meet the financial needs of both employers and employees by helping employers attract and retain employees and control costs, as well as provide ease of administration and valuable protection for employees.

Stop Loss. Our stop loss insurance provides coverage for mid-sized to large employers that self-insure their medical claims. These employers provide a health plan to their employees and generally pay all plan-related claims and administrative expenses. Our stop loss product helps these employers contain their health expenses by reimbursing specified claim amounts above certain deductibles and by reimbursing claims that exceed a specified limit. We offer this product via two types of protection—individual stop loss insurance and aggregate stop loss insurance. The primary difference between these two types is a varying deductible; both coverages are re-priced and renewable annually.

Voluntary Benefits. Our voluntary benefits business involves the sale of universal life insurance, whole life insurance, critical illness, accident and hospital indemnity insurance. This product lineup is mostly employee-paid through payroll deduction. New products have been introduced that focus on group-like structures that address the cost-shifting trend.

Group Life. Group life products span basic and supplemental term life insurance as well as accidental death and dismemberment for mid-sized to large employers. These products offer employees guaranteed issue coverage, convenient payroll deduction, affordable rates and conversion options.



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Group Disability. Group disability includes group long term disability, short term disability, telephonic short term disability, voluntary long term disability and voluntary short term disability products for mid-sized to large employers. This product offering is typically packaged for sale with group life products, especially in the middle-market.

The following chart presents the key employee benefits products we offer, along with data on annualized in-force premiums for each product:



($ in millions)	Annualized In-Force Premiums
Employee Benefits Products	Year Ended December 31, 2018
Stop Loss	$	969
Voluntary Benefits	317
Group Life	524
Group Disability	129

Markets and Distribution

Our Employee Benefits segment works primarily with national and regional benefits consultants, brokers, TPAs, enrollment firms and technology partners. Our tenured distribution organization provides local sales and account management support to offer customized solutions to mid-sized to large employers backed by a national accounts team. We offer innovative and flexible solutions to meet the varying and changing needs of our customers and distribution partners. We have many years of experience providing unique stop loss solutions and products for our customers. In addition, we are an experienced multi-line employee benefits insurance carrier (group life, disability, stop loss and elective benefits).

We primarily use three distribution channels to market and sell our employee benefits products. Our largest channel works through hundreds of brokers and consultant firms nationwide and markets our entire product portfolio. Our Voluntary sales team focuses on marketing elective benefits to complement an employer’s overall benefit package. In addition, we market stop-loss coverage to employer sponsors of self-funded employee health benefit plans. Our breadth of distribution gives us access to employers and their employees and the products to meet their needs. When combined with distribution channels used by our Individual Life segment, we are able to provide complete access to our products through worksite-based sales.

The following chart presents our Employee Benefits distribution, by channel:



($ in millions)	Sales		% of Sales
Channel	Year Ended December 31, 2018		Year Ended December 31, 2018
Brokerage (Commissions Paid)	$	295	66.0	%
Benefits Consulting Firms (Fee Based Consulting)	144		32.3	%
Worksite Sales	7		1.7	%

Competition

The group insurance market is mature and, due to the large number of participants in this segment, price and service are important competitive drivers. Our principal competitors include Tokio Marine HCC (formerly Houston Casualty), Symetra and Sun Life in Stop Loss; Unum, Allstate and Transamerica in voluntary benefits and MetLife, Prudential and Minnesota Life in group life.

For group life insurance products, rate guarantees have become the industry norm, with rate guarantee duration periods trending upward in general. Technology is also a competitive driver, as employers and employees expect technology solutions to streamline their administrative costs.

Underwriting and Pricing

Group insurance and disability pricing reflects the employer group’s claims experience and the risk characteristics of each employer group. The employer’s group claims experience is reviewed at time of policy issuance and periodically thereafter, resulting in ongoing pricing adjustments. The key pricing and underwriting criteria are morbidity and mortality assumptions, the employer group’s demographic composition, the industry, geographic location, regional and national economic trends, plan design and prior claims experience.



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Stop loss insurance pricing reflects the risk characteristics and claims experience for each employer group. The product is annually renewable and the underwriting information is reviewed annually as a result. The key pricing and underwriting criteria are medical cost trends, morbidity assumptions, the employer group’s demographic composition, the industry, geographic location, plan design and prior claims experience. Pricing in the stop loss insurance market is generally cyclical.

Reinsurance

Our Employee Benefits reinsurance strategy seeks to limit our exposure to any one individual which will help limit and control risk. Group Life, which includes Accidental Death and Dismemberment, cedes the excess over $750,000 of each coverage to a reinsurer. Group Long Term Disability cedes substantially all of the risk including the claims servicing, to a TPA and reinsurer. As of January 1, 2018, Excess Stop Loss has a reinsurance program in place that limits our exposure on any one specific claim to $3 million, with aggregate stop loss reinsurance that limits our exposure to $3 million over the Policyholder's Aggregate Excess Retention. For policies issued in 2017 and 2016, the limits on any one specific claim are $2.25 million and $2 million, respectively. . For both 2017 and 2016 circumstances, there is aggregate stop loss reinsurance that limits our exposure to $2 million over the Policyholders Aggregate Excess Retention. See "Item 7A. Quantitative and Qualitative Disclosures About Market Risk—Risk Management". We also use an annually renewable reinsurance transaction which lowers required capital of the Employee Benefits segment.

Individual Life

In October 2018, we concluded a strategic review of our Individual Life business and announced that we would cease new individual life insurance sales while retaining our in-force block of individual life policies. Applications for individual life insurance products were accepted through the end of 2018, resulting in some placement of policies in the first quarter of 2019. As of December 31, 2018, Individual Life’s in-force book comprised nearly 800 thousand policies and gross premiums and deposits for the year ended December 31, 2018 were approximately $1.8 billion.

The Individual Life segment generates revenue on its products from premiums, investment income, expense load, mortality charges and other policy charges, along with some asset-based fees. Profits are driven by the spread between investment income earned and interest credited to policyholders, plus the difference between premiums and mortality charges collected and benefits and expenses paid. Our Individual Life segment generated Adjusted operating earnings before income taxes of $(33) million for the year ended December 31, 2018.

Because we have ceased new sales, future earnings in our Individual Life segment will be driven by effectively managing our in-force block to meet our profitability and capital management objectives, improving our investment margins, and consolidating and simplifying our administrative systems in order to continue to reduce costs. In addition, we will continue to utilize reinsurance to actively manage our risk and capital profile with the goal of controlling exposure to losses, reducing volatility and protecting capital. We aim to maximize earnings and capital efficiency in part by relieving the reserve strain for certain of our term and universal life products by means of reinsurance arrangements and other financing transactions. We also look for opportunities to transfer certain blocks of business through reinsurance in order to more effectively manage our capital. For example, in 2015 and 2014 we reinsured two in-force blocks comprising approximately 325,000 term life insurance policies, representing approximately $190 billion of life insurance in-force and backed by approximately $2.7 billion in statutory reserves, to a third-party reinsurer.

Products and Services

Although new sales have ceased, our Individual Life segment will continue to offer certain permanent products for conversion of existing in-force term policies. We have historically offered products that included indexed universal life, ("IUL"), universal life ("UL"), and variable universal life ("VUL") insurance.



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The following chart presents data on our remaining in-force face amount and total gross premiums and deposits received by product:



	In-Force Face		Total gross premiums
($ in millions)	Amount		and deposits
	As of		Year Ended
Individual Life Product	December 31, 2018		December 31, 2018
Term Life	$	231,865	$	520
Indexed Universal Life	25,364		465
Other Universal Life	56,970		684
Variable Universal Life	20,146		138

Reinsurance

In general, our reinsurance strategy is designed to limit our mortality risk and effectively manage capital. We partner with highly rated, well regarded reinsurers and set up pools to share our excess mortality risk.

As of January 1, 2013, for term business, we retain the first $3 million of risk and the excess risk is shared among a pool of reinsurers. For most of our universal life product portfolio, we retain the first $5 million of risk and reinsure 100% of the excess over $5 million among a pool of reinsurers. For policies sold to foreign nationals, we retain 20% of risk and the remaining 80% of risk is shared among a pool of reinsurers. Our maximum overall retained risk on any one life is $5 million. Prior to January 1, 2013, our retention limits for most of the universal life product portfolio and the maximum overall retained risk on any one life were higher than the current limits.

Since 2006, reinsurance for new business was on a monthly renewable term basis, which only transfers mortality risk and limits our counterparty risk exposure. See "Item 7A. Quantitative and Qualitative Disclosures About Market Risk—Risk Management".

CBVA and Annuities Businesses

As described under "–Organizational History and Structure–CBVA and Annuity Transaction", on June 1, 2018, we completed a transaction to dispose of substantially all of our CBVA and Fixed and Fixed Indexed Annuities businesses and related assets. Certain investment-only products in our former Annuities segment were retained by us and are managed in our Retirement segment, and we retained a small amount of existing variable and fixed annuities businesses, which is managed in Corporate. See also Overview in the Management's Discussion and Analyses section in Part II, Item 7. of this Annual Report on Form 10-K for further information.

Employees

As of December 31, 2018, we had approximately 6,000 employees, with most working in one of our ten major sites in nine states.

REGULATION

Our operations and businesses are subject to a significant number of Federal and state laws, regulations, and administrative determinations. Following is a description of certain legal and regulatory frameworks to which we or our subsidiaries are or may be subject.

Voya Financial, Inc. is a holding company for all of our business operations, which we conduct through our subsidiaries. Voya Financial, Inc. is not licensed as an insurer, investment advisor or broker-dealer but, because we own regulated insurers, we are subject to regulation as an insurance holding company.

Insurance Regulation

Our insurance subsidiaries are subject to comprehensive regulation and supervision under U.S. state and federal laws. Each U.S. state, the District of Columbia and U.S. territories and possessions have insurance laws that apply to companies licensed to carry on an insurance business in the jurisdiction. The primary regulator of an insurance company, however, is located in its state of domicile. Each of our insurance subsidiaries is licensed and regulated in each state where it conducts insurance business.



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State insurance regulators have broad administrative powers with respect to all aspects of the insurance business including: licensing to transact business, licensing agents, admittance of assets to statutory surplus, regulating premium rates for certain insurance products, approving policy forms, regulating unfair trade and claims practices, establishing reserve requirements and solvency standards, establishing credit for reinsurance requirements, fixing maximum interest rates on life insurance policy loans and minimum accumulation or surrender values and other matters. State insurance laws and regulations include numerous provisions governing the marketplace conduct of insurers, including provisions governing the form and content of disclosures to consumers, product illustrations, advertising, product replacement, suitability, sales and underwriting practices, complaint handling and claims handling. State regulators enforce these provisions through periodic market conduct examinations. State insurance laws and regulations regulating affiliate transactions, the payment of dividends and change of control transactions are discussed in greater detail below.

Our three principal insurance subsidiaries, SLD, VRIAC, and RLI (which we refer to collectively as our "Principal Insurance Subsidiaries") are domiciled in Colorado, Connecticut and Minnesota, respectively. Our other U.S. insurance subsidiaries are domiciled in Indiana and New York. Our insurance subsidiaries domiciled in Colorado, Connecticut, Indiana, Minnesota and New York are collectively referred to as "our insurance subsidiaries" in this Annual Report on Form 10-K for purposes of discussions of U.S. insurance regulatory matters. In addition, we have special purpose life reinsurance captive insurance company subsidiaries domiciled in Missouri that provide reinsurance to our insurance subsidiaries in order to facilitate the financing of statutory reserve requirements associated with the National Association of Insurance Commissioners ("NAIC") Model Regulation entitled "Valuation of Life Insurance Policies" (commonly known as "Regulation XXX" or "XXX"), or NAIC Actuarial Guideline 38 (commonly known as "AG38" or "AXXX"). Our special purpose life reinsurance captive insurance company subsidiaries domiciled in Missouri are collectively referred to as our "Missouri captives" in this Annual Report on Form 10-K. We also have captive reinsurance subsidiaries domiciled in Arizona that provide reinsurance to our insurance subsidiaries for specific blocks of business. Our captive reinsurance subsidiaries domiciled in Arizona are referred to as our "Arizona captives" in this Annual Report on Form 10-K. We refer to our Missouri captives and our Arizona captives collectively as our "captive reinsurance subsidiaries. For more information on our use of captive reinsurance structures, see "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Credit Facilities and Subsidiary Credit Support Arrangements".

State insurance laws and regulations require our insurance subsidiaries to file financial statements with state insurance regulators everywhere they are licensed and the operations of our insurance subsidiaries and accounts are subject to examination by those regulators at any time. Our insurance subsidiaries prepare statutory financial statements in accordance with accounting practices and procedures developed by regulators to monitor and regulate the solvency of insurance companies and their ability to pay current and future policyholder obligations. The NAIC has approved these uniform statutory accounting principles ("SAP") which have in turn been adopted, in some cases with minor modifications, by all state insurance regulators.

Our Missouri captives are required to file financial statements with the Missouri Insurance Department, including statutory financial statements. Our Arizona captives are required to file financial statements with the Arizona Department of Insurance ("ADOI") on either a statutory basis or a U.S. GAAP basis, and our Arizona captives have received permission to prepare their financial statements on a U.S. GAAP basis, modified for certain prescribed practices outlined in the Arizona insurance statutes. In addition, our Arizona captives have obtained approval from the ADOI for certain permitted practices, including, for SLDI, taking reinsurance credit for certain ceded reserves where the trust assets backing the liabilities are held by one of our wholly owned insurance companies. SLDI has recorded a receivable for these assets held in trust by its affiliate.

Our insurance subsidiaries, including our captive reinsurance subsidiaries are subject to periodic financial examinations and other inquiries and investigations by their respective domiciliary state insurance regulators and other state law enforcement agencies and attorneys general.

Captive Reinsurer Regulation

State insurance regulators, the NAIC and other regulatory bodies have been investigating the use of affiliated captive reinsurers and offshore entities to reinsure insurance risks, and the NAIC has made recent advances in captives reform.

In 2014, the NAIC considered a proposal to require states to apply NAIC accreditation standards, applicable to traditional insurers, to captive reinsurers. In 2015, the NAIC adopted such a proposal, in the form of a revised preamble to the NAIC accreditation standards (the "Standard"), with an effective date of January 1, 2016 for application of the Standard to captives that assume XXX or AXXX business. Under the Standard, a state will be deemed in compliance as it relates to XXX or AXXX captives if the applicable reinsurance transaction satisfies the NAIC's Actuarial Guideline 48 ("AG48"), which limits the type of assets that may be used as collateral to cover the XXX and AG38 statutory reserves. The Standard applies prospectively, so that XXX or AXXX



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captives will not be subject to the Standard if reinsured policies were issued prior to January 1, 2015 and ceded so that they were part of a reinsurance arrangement as of December 31, 2014. The NAIC left for future action application of the Standard to captives that assume variable annuity business.

Insurance Holding Company Regulation

Voya Financial, Inc. and our insurance subsidiaries are subject to the insurance holding companies laws of the states in which such insurance subsidiaries are domiciled. These laws generally require each insurance company directly or indirectly owned by the holding company to register with the insurance regulator in the insurance company’s state of domicile and to furnish annually financial and other information about the operations of companies within the holding company system. Generally, all transactions affecting the insurers in the holding company system must be fair and reasonable and, if material, require prior notice and approval or non-disapproval by the state’s insurance regulator. Our captive reinsurance subsidiaries are not subject to insurance holding company laws.

Change of Control. State insurance holding company regulations generally provide that no person, corporation or other entity may acquire control of an insurance company, or a controlling interest in any parent company of an insurance company, without the prior approval of such insurance company's domiciliary state insurance regulator. Under the laws of each of the domiciliary states of our insurance subsidiaries, any person acquiring, directly or indirectly, 10% or more of the voting securities of an insurance company is presumed to have acquired "control" of the company. This statutory presumption of control may be rebutted by a showing that control does not exist in fact. The state insurance regulators, however, may find that "control" exists in circumstances in which a person owns or controls less than 10% of voting securities.

To obtain approval of any change in control, the proposed acquirer must file with the applicable insurance regulator an application disclosing, among other information, its background, financial condition, the financial condition of its affiliates, the source and amount of funds by which it will effect the acquisition, the criteria used in determining the nature and amount of consideration to be paid for the acquisition, proposed changes in the management and operations of the insurance company and other related matters.

Any purchaser of shares of common stock representing 10% or more of the voting power of our capital stock will be presumed to have acquired control of our insurance subsidiaries unless, following application by that purchaser in each insurance subsidiary's state of domicile, the relevant insurance commissioner determines otherwise.

The licensing orders governing our captive reinsurance subsidiaries provide that any change of control requires the approval of such company’s domiciliary state insurance regulator. Although our captive reinsurance subsidiaries are not subject to insurance holding company laws, their domiciliary state insurance regulators may use all or a part of the holding company law framework described above in determining whether to approve a proposed change of control.

NAIC Regulations. The current insurance holding company model act and regulations (the "NAIC Regulations"), versions of which have been adopted by our insurance subsidiaries' domicile states, include a requirement that an insurance holding company system’s ultimate controlling person submit annually to its lead state insurance regulator an "enterprise risk report" that identifies activities, circumstances or events involving one or more affiliates of an insurer that, if not remedied properly, are likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole. The NAIC Regulations also include a provision requiring a controlling person to submit prior notice to its domiciliary insurance regulator of a divestiture of control. Each of the states of domicile for our insurance subsidiaries has adopted its version of the NAIC Regulations.

The NAIC's "Solvency Modernization Initiative" focuses on: (1) capital requirements; (2) corporate governance and risk management; (3) group supervision; (4) statutory accounting and financial reporting; and (5) reinsurance. This initiative resulted in the adoption by the NAIC, and our insurance subsidiaries' domicile states, of the Risk Management and Own Risk and Solvency Assessment Model Act ("ORSA"). ORSA requires that insurers maintain a risk management framework and conduct an internal own risk and solvency assessment of the insurer's material risks in normal and stressed environments. The assessment must be documented in a confidential annual summary report, a copy of which must be made available to regulators as required or upon request. In accordance with statutory requirements, Voya Financial regularly prepares and submits ORSA summary reports. This initiative also resulted in the adoption by the NAIC and several of our insurance subsidiary domiciliary regulators of the Corporate Governance Annual Filing Model Act, which requires insurers, including Voya Financial, to make an annual confidential filing regarding their corporate governance policies.



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Dividend Payment Restrictions. As a holding company with no significant business operations of our own, we depend on dividends and other distributions from our subsidiaries as the principal source of cash to meet our obligations, including the payment of interest on, and repayment of principal of, our outstanding debt obligations. The states in which our insurance subsidiaries are domiciled impose certain restrictions on such subsidiaries’ ability to pay dividends to us. These restrictions are based in part on the prior year’s statutory income and surplus. In general, dividends up to specified levels are considered ordinary and may be paid without prior approval. Dividends in larger amounts, or extraordinary dividends, are subject to approval by the insurance commissioner of the state of domicile of the insurance subsidiary proposing to pay the dividend.

Our Missouri captives may not declare or pay dividends in any form to us other than in accordance with their respective insurance securitization transaction agreements and their respective governing license orders. Likewise, our Arizona captives may not declare or pay dividends in any form to us other than in accordance with their annual capital and dividend plans as approved by the ADOI which include minimum capital requirements.

Approval by a captive's domiciliary insurance regulator of an ongoing plan for the payment of dividends or other distribution is conditioned upon the retention, at the time of each payment, of capital or surplus equal to or in excess of amounts specified by, or determined in accordance with formulas approved for the captive by its domiciliary insurance regulator.

Financial Regulation

Policy and Contract Reserve Sufficiency Analysis. Under the laws and regulations of their states of domicile, our insurance subsidiaries are required to conduct annual analyses of the sufficiency of their statutory reserves. Other jurisdictions in which these subsidiaries are licensed may have certain reserve requirements that differ from those of their domiciliary jurisdictions. In each case, a qualified actuary must submit an opinion that states that the aggregate statutory reserves, when considered in light of the assets held with respect to such reserves, are sufficient to meet the insurer’s contractual obligations and related expenses. If such an opinion cannot be rendered, the affected insurer must set up additional statutory reserves by moving funds from available statutory surplus. Our insurance subsidiaries submit these opinions annually to applicable insurance regulatory authorities.

Surplus and Capital Requirements. Insurance regulators have the discretionary authority, in connection with the ongoing licensing of our insurance subsidiaries, to limit or prohibit the ability of an insurer to issue new policies if, in the regulators' judgment, the insurer is not maintaining a minimum amount of surplus or is in hazardous financial condition. Insurance regulators may also limit the ability of an insurer to issue new life insurance policies and annuity contracts above an amount based upon the face amount and premiums of policies of a similar type issued in the prior year. We do not currently believe that the current or anticipated levels of statutory surplus of our insurance subsidiaries present a material risk that any such regulator would limit the amount of new policies that our Principal Insurance Subsidiaries may issue.

Risk-Based Capital. The NAIC has adopted RBC requirements for life, health and property and casualty insurance companies. The requirements provide a method for analyzing the minimum amount of adjusted capital (statutory capital and surplus plus other adjustments) appropriate for an insurance company to support its overall business operations, taking into account the risk characteristics of the company’s assets, liabilities and certain off-balance sheet items. State insurance regulators use the RBC requirements as an early warning tool to identify possibly inadequately capitalized insurers. An insurance company found to have insufficient statutory capital based on its RBC ratio may be subject to varying levels of additional regulatory oversight depending on the level of capital inadequacy. As of December 31, 2018, the RBC of each of our insurance subsidiaries exceeded statutory minimum RBC levels that would require any regulatory or corrective action.

As a result of the federal tax legislation signed into law on December 22, 2017 ("Tax Reform"), the NAIC updated the factors affecting RBC requirements, including ours, to reflect the lowering of the top corporate tax rate from 35% to 21%. Adjusting these factors in light of Tax Reform resulted in an increase in the amount of capital we are required to maintain to satisfy our RBC requirements.

The NAIC is currently working with the American Academy of Actuaries as they consider possible updates to the asset factors that are used to calculate the RBC requirements for investment portfolio assets. The NAIC review may lead to an expansion in the number of NAIC asset class categories for factor-based RBC requirements and the adoption of new factors, which could increase capital requirements on some securities and decrease capital requirements on others. We cannot predict what, if any,



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changes may result from this review or their potential impact on the RBC ratios of our insurance subsidiaries that are subject to RBC requirements. We will continue to monitor developments in this area.

IRIS Tests. The NAIC has developed a set of financial relationships or tests known as the Insurance Regulatory Information System ("IRIS") to assist state regulators in monitoring the financial condition of U.S. insurance companies and identifying companies requiring special attention or action. For IRIS ratio purposes, our Principal Insurance Subsidiaries submit data to the NAIC on an annual basis. The NAIC analyzes this data using prescribed financial data ratios. A ratio falling outside the prescribed "usual range" is not considered a failing result. Rather, unusual values are viewed as part of the regulatory early monitoring system. In many cases, it is not unusual for financially sound companies to have one or more ratios that fall outside the usual range.

Regulators typically investigate or monitor an insurance company if its IRIS ratios fall outside the prescribed usual range for four or more of the ratios, but each state has the right to inquire about any ratios falling outside the usual range. The inquiries made by state insurance regulators into an insurance company’s IRIS ratios can take various forms.

We do not anticipate regulatory action as a result of our 2018 IRIS ratio results. In all instances in prior years, regulators have been satisfied upon follow-up that no regulatory action was required.

Insurance Guaranty Associations. Each state has insurance guaranty association laws that require insurance companies doing business in the state to participate in various types of guaranty associations or other similar arrangements. The laws are designed to protect policyholders from losses under insurance policies issued by insurance companies that become impaired or insolvent. Typically, these associations levy assessments, up to prescribed limits, on member insurers on the basis of the member insurer’s proportionate share of the business in the relevant jurisdiction in the lines of business in which the impaired or insolvent insurer is engaged. Some jurisdictions permit member insurers to recover assessments that they paid through full or partial premium tax offsets, usually over a period of years.

Cybersecurity Regulatory Activity

The NAIC, numerous state and federal regulatory bodies and self-regulatory organizations like FINRA are focused on cybersecurity standards both for the financial services industry and for all companies that collect personal information, and have proposed and enacted legislation and regulations, and issued guidance regarding cybersecurity standards and protocols. For example, in February 2017, the New York Department of Financial Services ("NYDFS") issued final Cybersecurity Requirements for Financial Services Companies that required banks, insurance companies, and other financial services institutions regulated by the NYDFS, including us, to establish and maintain a cybersecurity program "designed to protect consumers and ensure the safety and soundness of New York State's financial services industry". In 2018, South Carolina, Ohio and Michigan adopted versions of the NAIC Insurance Data Security Model Law. These laws, with effective dates ranging from January 1, 2019 to January 20, 2021, ensure that licensees of the Departments of Insurance in these states have strong and aggressive cybersecurity programs to protect the personal data of their customers. During 2019, we expect cybersecurity risk management, prioritization and reporting to continue to be an area of significant focus by governments, regulatory bodies and self-regulatory organizations at all levels.

Securities Regulation Affecting Insurance Operations

Certain of our insurance subsidiaries sell variable life insurance and group variable annuities that are registered with and regulated by the SEC as securities under the Securities Act of 1933, as amended (the "Securities Act"). These products are issued through separate accounts that are registered as investment companies under the Investment Company Act, and are regulated by state law. Each separate account is generally divided into sub-accounts, each of which invests in an underlying mutual fund which is itself a registered investment company under the Investment Company Act of 1940, as amended (the "Investment Company Act"). Our mutual funds, and in certain states, our variable life insurance and variable annuity products, are subject to filing and other requirements under state securities laws. Federal and state securities laws and regulations are primarily intended to protect investors and generally grant broad rulemaking and enforcement powers to regulatory agencies.

In April 2018, the SEC published a proposed rule that would, among other things, apply a heightened "best interest" standard to broker-dealers and their associated persons when they make securities investment recommendations to retail customers. If the SEC finalizes this rule, other federal regulators and state regulators may follow with their own rules applicable to investment recommendations relating to other separate or overlapping investment products and accounts, such as insurance products and retirement accounts.



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Federal Initiatives Affecting Insurance Operations

The U.S. federal government generally does not directly regulate the insurance business. Federal legislation and administrative policies in several areas can significantly affect insurance companies. These areas include federal pension regulation, financial services regulation, federal tax laws relating to life insurance companies and their products and the USA PATRIOT Act of 2001 (the "Patriot Act") requiring, among other things, the establishment of anti-money laundering monitoring programs.

Regulation of Investment and Retirement Products and Services

Our investment, asset management and retirement products and services are subject to federal and state tax, securities, fiduciary (including the Employment Retirement Income Security Act ("ERISA")), insurance and other laws and regulations. The SEC, the Financial Industry Regulatory Authority ("FINRA"), the U.S. Commodities Futures Trading Commission ("CFTC"), state securities commissions, state banking and insurance departments and the Department of Labor ("DOL") and the Treasury Department are the principal regulators that regulate these products and services.

Federal and state securities laws and regulations are primarily intended to protect investors in the securities markets and generally grant regulatory agencies broad enforcement and rulemaking powers, including the power to limit or restrict the conduct of business in the event of non-compliance with such laws and regulations. Federal and state securities regulatory authorities and FINRA from time to time make inquiries and conduct examinations regarding compliance by us and our subsidiaries with securities and other laws and regulations.

Securities Regulation with Respect to Certain Insurance and Investment Products and Services

Our variable life insurance and mutual fund products, and certain of our group variable annuities, are generally "securities" within the meaning of, and registered under, the federal securities laws, and are subject to regulation by the SEC and FINRA. Our mutual funds, and in certain states our variable life insurance and certain group variable annuity products, are also "securities" within the meaning of state securities laws. As securities, these products are subject to filing and certain other requirements. Sales activities with respect to these products are generally subject to state securities regulation, which may affect investment advice, sales and related activities for these products.

Broker-Dealers and Investment Advisers

Our securities operations, principally conducted by a number of SEC-registered broker-dealers, are subject to federal and state securities, commodities and related laws, and are regulated principally by the SEC, the CFTC, state securities authorities, FINRA, the Municipal Securities Rulemaking Board and similar authorities. Agents and employees registered or associated with any of our broker-dealer subsidiaries are subject to the Securities Exchange Act of 1934, as amended (the "Exchange Act") and to regulation and examination by the SEC, FINRA and state securities commissioners. The SEC and other governmental agencies and self-regulatory organizations, as well as state securities commissions in the United States, have the power to conduct administrative proceedings that can result in censure, fines, cease-and-desist orders or suspension, termination or limitation of the activities of the regulated entity or its employees.

Broker-dealers are subject to regulations that cover many aspects of the securities business, including, among other things, sales methods and trading practices, the suitability of investments for individual customers, the use and safekeeping of customers’ funds and securities, capital adequacy, recordkeeping, financial reporting and the conduct of directors, officers and employees. The federal securities laws may also require, upon a change in control, re-approval by shareholders in registered investment companies of the investment advisory contracts governing management of those investment companies, including mutual funds included in annuity products. Investment advisory clients may also need to approve, or consent to, investment advisory agreements upon a change in control. In addition, broker-dealers are required to make certain monthly and annual filings with FINRA, including monthly FOCUS reports (which include, among other things, financial results and net capital calculations) and annual audited financial statements prepared in accordance with U.S. GAAP.

As registered broker-dealers and members of various self-regulatory organizations, our registered broker-dealer subsidiaries are subject to the SEC’s Net Capital Rule, which specifies the minimum level of net capital a broker-dealer is required to maintain and requires a minimum part of its assets to be kept in relatively liquid form. These net capital requirements are designed to measure the financial soundness and liquidity of broker-dealers. The net capital rule imposes certain requirements that may have the effect of preventing a broker-dealer from distributing or withdrawing capital and may require that prior notice to the regulators be provided prior to making capital withdrawals. Compliance with net capital requirements could limit operations that require the intensive



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use of capital, such as trading activities and underwriting, and may limit the ability of our broker-dealer subsidiaries to pay dividends to us.

Some of our subsidiaries are registered as investment advisers under the Investment Advisers Act of 1940, as amended (the "Investment Advisers Act") and provide advice to registered investment companies, including mutual funds used in our annuity products, as well as an array of other institutional and retail clients. The Investment Advisers Act and Investment Company Act may require that fund shareholders be asked to approve new investment advisory contracts with respect to those registered investment companies upon a change in control of a fund’s adviser. Likewise, the Investment Advisers Act may require that other clients consent to the continuance of the advisory contract upon a change in control of the adviser.

The commodity futures and commodity options industry in the United States is subject to regulation under the Commodity Exchange Act of 1936, as amended (the "Commodity Exchange Act"). The CFTC is charged with the administration of the Commodity Exchange Act and the regulations adopted under that Act. Some of our subsidiaries are registered with the CFTC as commodity pool operators and commodity trading advisors. Our futures business is also regulated by the National Futures Association.

Employee Retirement Income Security Act Considerations

ERISA is a comprehensive federal statute that applies to U.S. employee benefit plans sponsored by private employers and labor unions. Plans subject to ERISA include pension and profit sharing plans and welfare plans, including health, life and disability plans. Among other things, ERISA imposes reporting and disclosure obligations, prescribes standards of conduct that apply to plan fiduciaries and prohibits transactions known as "prohibited transactions," such as conflict-of-interest transactions, self-dealing and certain transactions between a benefit plan and a party in interest. ERISA also provides for a scheme of civil and criminal penalties and enforcement. Our insurance, investment management and retirement businesses provide services to employee benefit plans subject to ERISA, including limited services under specific contracts where we may act as an ERISA fiduciary. We are also subject to ERISA’s prohibited transaction rules for transactions with ERISA plans, which may affect our ability to, or the terms upon which we may, enter into transactions with those plans, even in businesses unrelated to those giving rise to party in interest status. The applicable provisions of ERISA and the Internal Revenue Code are subject to enforcement by the DOL, the U.S. Internal Revenue Service ("IRS") and the U.S. Pension Benefit Guaranty Corporation ("PBGC").

Trust Activities Regulation

Voya Institutional Trust Company ("VITC"), our wholly owned subsidiary, was formed in 2014 as a trust bank chartered by the Connecticut Department of Banking and is subject to regulation, supervision and examination by the Connecticut Department of Banking. VITC is not permitted to, and does not, accept deposits (other than incidental to its trust and custodial activities). VITC’s activities are primarily to serve as trustee or custodian for retirement plans or IRAs.

Voya Investment Trust Co., our wholly owned subsidiary, is a limited purpose trust company chartered with the Connecticut Department of Banking. Voya Investment Trust Co. is not permitted to, and does not, accept deposits (other than incidental to its trust activities). Voya Investment Trust Co.'s activities are primarily to serve as trustee for and manage various collective and common trust funds. Voya Investment Trust Co. is subject to regulation, supervision and examination by the Connecticut Banking Commissioner and is subject to state fiduciary duty laws. In addition, the collective trust funds managed by Voya Investment Trust Co. are generally subject to ERISA.



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Other Laws and Regulations

Dodd-Frank Wall Street Reform and Consumer Protection Act

The Dodd-Frank Act creates a framework for regulating over-the-counter ("OTC") derivatives which has transformed derivatives markets and trading in significant ways. Under the new regulatory regime and subject to certain exceptions, certain standardized OTC interest rate and credit derivatives must now be cleared through a centralized clearinghouse and executed on a centralized exchange or execution facility, and the CFTC and the SEC may designate additional types of OTC derivatives for mandatory clearing and trade execution requirements in the future. In addition to mandatory central clearing of certain derivatives products, non-centrally cleared OTC derivatives which have been excluded from the clearing mandate and which are used by market participants like us are now subject to additional regulatory reporting and margin requirements. Specifically, both the CFTC and federal banking regulators issued final rules in 2015, which became effective in 2017, establishing minimum margin requirements for OTC derivatives traded by either (non-bank) swap dealers or banks which qualify as swaps entities. Nearly all of the counterparties we trade with are either swap dealers or swap entities subject to these rules. Both the CFTC and prudential regulator margin rules require mandatory exchange of variation margin for most OTC derivatives transacted by us and will require exchange of initial margin commencing in 2020. As a result of the transition to central clearing and the new margin requirements for OTC derivatives, we will be required to hold more cash and highly liquid securities resulting in lower yields in order to satisfy the projected increase in margin required. In addition, increased capital charges imposed by regulators on non-cash collateral held by bank counterparties and central clearinghouses is expected to result in higher hedging costs, causing a reduction in income from investments. We are also observing an increasing reluctance from counterparties to accept certain non-cash collateral from us due to higher capital or operational costs associated with such asset classes that we typically hold in abundance. These developments present potentially significant business, liquidity and operational risk for us which could materially and adversely impact both the cost and our ability to effectively hedge various risks, including equity, interest rate, currency and duration risks within many of our insurance and annuity products and investment portfolios. In addition, inconsistencies between U.S. rules and regulations and parallel regimes in other jurisdictions, such as the EU, may further increase costs of hedging or inhibit our ability to access market liquidity in those other jurisdictions.

USA Patriot Act

The Patriot Act contains anti-money laundering and financial transparency laws applicable to broker-dealers and other financial services companies, including insurance companies. The Patriot Act seeks to promote cooperation among financial institutions, regulators and law enforcement entities in identifying parties that may be involved in terrorism or money laundering. Anti-money laundering laws outside of the United States contain provisions that may be different, conflicting or more rigorous. Internal practices, procedures and controls are required to meet the increased obligations of financial institutions to identify their customers, watch for and report suspicious transactions, respond to requests for information by regulatory authorities and law enforcement agencies and share information with other financial institutions.

We are also required to follow certain economic and trade sanctions programs administered by the Office of Foreign Asset Control that prohibit or restrict transactions with suspected countries, their governments and, in certain circumstances, their nationals. We are also subject to regulations governing bribery and other anti-corruption measures.

Privacy Laws and Regulation

U.S. federal and state laws and regulations require all companies generally, and financial institutions, including insurance companies in particular, to protect the security and confidentiality of personal information and to notify consumers about their policies and practices relating to their collection, use, and disclosure of consumer information and the protection of the security and confidentiality of that information. The collection, use, disclosure and security of protected health information is also governed by federal and state laws. Federal and state laws also require notice to affected individuals, law enforcement, regulators and others if there is a breach of the security of certain personal information, including social security numbers, and require holders of certain personal information to protect the security of the data. Federal regulations require financial institutions to implement effective programs to detect, prevent and mitigate identity theft. Federal and state laws and regulations regulate the ability of financial institutions to make telemarketing calls and to send unsolicited e-mail or fax messages to consumers and customers. Federal laws and regulations also regulate the permissible uses of certain types of personal information, including consumer report information. Federal and state governments and regulatory bodies may consider additional or more detailed regulation regarding these subjects. Numerous state regulatory bodies are focused on privacy requirements for all companies that collect personal information and have proposed and enacted legislation and regulations regarding privacy standards and protocols. For example, on June 28, 2018, California enacted the California Consumer Privacy Act, which will take effect on January 1, 2020. We continue to evaluate this



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legislation and its potential impact on our operations, but depending on its implementation, we and other covered businesses may be required to incur significant expense in order to meet its requirements.

Environmental Considerations

Our ownership and operation of real property and properties within our commercial mortgage loan portfolio is subject to federal, state and local environmental laws and regulations. Risks of hidden environmental liabilities and the costs of any required clean-up are inherent in owning and operating real property. Under the laws of certain states, contamination of a property may give rise to a lien on the property to secure recovery of the costs of clean-up, which could adversely affect the valuation of, and increase the liabilities associated with, the commercial mortgage loans we hold. In several states, this lien has priority over the lien of an existing mortgage against such property. In addition, we may be liable, in certain circumstances, as an "owner" or "operator," for costs of cleaning-up releases or threatened releases of hazardous substances at a property mortgaged to us under the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 and the laws of certain states. Application of various other federal and state environmental laws could also result in the imposition of liability on us for costs associated with environmental hazards.

We routinely conduct environmental assessments prior to closing any new commercial mortgage loans or to taking title to real estate. Although unexpected environmental liabilities can always arise, we seek to minimize this risk by undertaking these environmental assessments and complying with our internal environmental policies and procedures.

Health Care Reform

In March 2010, President Obama signed into Law the Patient Protection and Affordable Care Act, which was subsequently amended by the Health Care and Education Reconciliation Act of 2010 (together, the "Health Care Act"). The Health Care Act regulates coverage that must be provided under employer-sponsored health care plans, which in turn affects the coverage we provide on our Excess Risk Insurance products. There is significant uncertainty surrounding the current administration's efforts to repeal and replace the Health Care Act. Future changes to, or de-funding of, the Health Care Act could result in increased insurance regulatory activity at the state level, which could negatively affect our Employee Benefits segment.

AVAILABLE INFORMATION

We file periodic and current reports, proxy statements and other information with the SEC. Such reports, proxy statements and other information may be obtained through the SEC's website (www.sec.gov) or by visiting the Public Reference Room of the SEC at 100 F Street, N.E., Washington D.C. 20549 or calling the SEC at 1-800-SEC-0330.

You may also access our press releases, financial information and reports filed with the SEC (for example, our Annual Report on Form 10-K, our Proxy Statement, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and any amendments to those Forms) online at investors.voya.com. Copies of any documents on our website are available without charge, and reports filed with or furnished to the SEC will be available as soon as reasonably practicable after they are filed with or furnished to the SEC. The information found on our website is not part of this or any other report filed with or furnished to the SEC.

Item 1A. Risk Factors

We face a variety of risks that are substantial and inherent in our business, including market, liquidity, credit, operational, legal, regulatory and reputational risks. The following are some of the more important factors that could affect our business.

Risks Related to Our Business—General

Conditions in the global capital markets and the economy generally have affected and may continue to affect our business and results of operations.

Our business and results of operations are materially affected by conditions in the global capital markets and the economy generally. Ongoing changes in monetary policies among the world's large central banks and fiscal policies enacted by various governments could create economic disruption, decrease asset prices, increase market volatility and potentially affect the availability and cost of credit.

Although we carry out business almost exclusively in the United States, we are affected by both domestic and international macroeconomic developments. Volatility and disruptions in financial markets, including global capital markets, can have an adverse



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effect on our investment portfolio, and our liabilities are sensitive to changing market factors. Factors including interest rates, credit spreads, equity prices, derivative prices and availability, real estate markets, exchange rates, the volatility and strength of the capital markets, and deflation and inflation, all affect our financial condition. Disruptions in one market or asset class can also spread to other markets or asset classes. Upheavals in the financial markets can also affect our financial condition (including our liquidity and capital levels) as a result of impacts, including diverging impacts, on the value of our assets and our liabilities.

In recent years, political events have had significant effects on global financial markets. These events include confrontations over trade between the United States and its traditional allies in North America and Europe, and between the United States and China, and the pending withdrawal by the United Kingdom from its membership in the European Union, commonly referred to as "Brexit". Adverse consequences from these or other events could include deterioration in global economic conditions, instability in global financial markets, political uncertainty, volatility in credit, equity, foreign exchange and derivatives markets, or other adverse changes.

More generally, the international system has in recent years faced heightened geopolitical risk, most notably in Eastern Europe and the Middle East, but also in Africa and Southeast Asia, and events in any one of these regions could give rise to an increase in market volatility or a decrease in global economic output.

Even in the absence of a market downturn, our retirement, investment and insurance 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 retirement and investment products, and continue to hold a number of insurance contracts 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 retirement and investment products, and insurance contracts 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 our products (the probability that a product will remain in force from one period to the next) to vary from their anticipated persistency 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 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 make 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



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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.


•	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 our business and the availability of capital.

•

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 results of operations and realized and unrealized gains and losses on our investment and derivative 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.

To the extent that any of the foregoing risks were to emerge in a manner that adversely affected general economic conditions, financial markets, or the markets for our products and services, our financial condition, liquidity, and results of operations could be materially adversely affected.

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, to carry out any share repurchases that we may undertake, to maintain our securities lending activities, to collateralize certain obligations with respect to our indebtedness, and to 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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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.

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. For our subsidiaries, the principal sources of liquidity are fees and insurance premiums, and cash flow from investments and assets.

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. Any impairment of our ability to access credit markets or other forms of liquidity could have a material adverse effect on our results of operations and financial condition.

The level of interest rates may adversely affect our profitability, particularly in the event of a continuation of the low interest rate environment or a period of rapidly increasing interest rates.

The Federal Reserve has actively sought to normalize interest rates over the past few years. However, interest rates remain below historic averages. Supportive monetary policy continues in developed markets globally, but the extent of accommodation has receded. The unwind of extraordinary monetary accommodation by global central banks may lead to increased interest rate volatility.

During a period of decreasing interest rates or a prolonged period of low interest rates, our investment earnings may decrease because the interest earnings on our recently purchased fixed income investments will likely have declined in tandem with market interest rates. In addition, a prolonged low interest rate period may result in higher costs for certain derivative instruments that may be used to hedge certain of our product risks. RMBS and callable fixed income securities in our investment portfolios will be more likely to be prepaid or redeemed as borrowers seek to borrow at lower interest rates. Consequently, we may be required to reinvest the proceeds in securities bearing lower interest rates. Accordingly, during periods of declining interest rates, our profitability may suffer as the result of a decrease in the spread between interest rates credited to policyholders and contract owners and returns on our investment portfolios. An extended period of declining or prolonged low interest rates or a prolonged period of low interest rates may also coincide with a change to our long-term view of the interest rates. Such a change in our view would cause us to change the long-term interest rate assumptions in our calculation of insurance assets and liabilities under U.S. GAAP. Any future revision would result in increased reserves, accelerated amortization of DAC and other unfavorable consequences, which would be incremental to those consequences recorded in connection with the most recent revision. In addition, certain statutory capital and reserve requirements are based on formulas or models that consider interest rates, and an extended period of low interest rates may increase the statutory capital we are required to hold and the amount of assets we must maintain to support statutory reserves. We believe a continuation of the low interest rate environment would negatively affect our financial performance.

Conversely, in periods of rapidly increasing interest rates, policy loans, withdrawals from, and/or surrenders of, life insurance and annuity contracts and certain GICs may increase as policyholders choose to seek higher investment returns. Obtaining cash to satisfy these obligations may require us to liquidate fixed income investments at a time when market prices for those assets are lower because of increases in interest rates. This may result in realized investment losses. Regardless of whether we realize an investment loss, such cash payments would result in a decrease in total invested assets and may decrease our net income and capitalization levels. Premature withdrawals may also cause us to accelerate amortization of DAC, which would also reduce our net income. An increase in market interest rates could also have a material adverse effect on the value of our investment portfolio by, for example, decreasing the estimated fair values of the fixed income securities within our investment portfolio. An increase in market interest rates could also create increased collateral posting requirements associated with our interest rate hedge programs and Federal Home Loan Bank funding agreements, which could materially and adversely affect liquidity. In addition, an increase in market interest rates could require us to pay higher interest rates on debt securities we may issue in the financial markets from time to time to finance our operations, which would increase our interest expense and reduce our results of operations.

Lastly, certain statutory reserve requirements are based on formulas or models that consider forward interest rates and an increase in forward interest rates may increase the statutory reserves we are required to hold thereby reducing statutory capital. 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



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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.

A downgrade or a potential downgrade in our financial strength or credit ratings could result in a loss of business and adversely affect our results of operations and financial condition.

Ratings are important to our business. Credit ratings represent the opinions of rating agencies regarding an entity's ability to repay its indebtedness. Our credit ratings are important to our ability to raise capital through the issuance of debt and to the cost of such financing. Financial strength ratings, which are sometimes referred to as "claims-paying" ratings, represent the opinions of rating agencies regarding the financial ability of an insurance company to meet its obligations under an insurance policy. Financial strength ratings are important factors affecting public confidence in insurers, including our insurance company subsidiaries. The financial strength ratings of our insurance subsidiaries are important to our ability to sell our products and services to our customers. Ratings are not recommendations to buy our securities. Each of the rating agencies reviews its ratings periodically, and our current ratings may not be maintained in the future.

Our ratings could be downgraded at any time and without notice by any rating agency. In addition, we could take actions that could cause one or more rating agencies to cease rating our securities or providing financial strength ratings for our insurance subsidiaries. For a description of material rating actions that have occurred from the end of 2017 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 or discontinuation 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 or discontinuation 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.

Certain of our securities continue to be guaranteed by ING Group. A downgrade of the credit ratings of ING Group could result in downgrades of these securities, as occurred during the second quarter of 2015, when Moody's downgraded these guaranteed securities from A3 to Baa1.

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, banks, technology companies and start-up financial services providers, 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



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ratings, scale and level of customer service. A decline in our competitive position as to one or more of these factors could adversely affect our profitability. Many of our competitors are large and well-established and some have greater market share or breadth of distribution, offer a broader range of products, services or features, assume a greater level of risk, have greater financial resources, or have higher claims-paying or credit ratings than we do. Furthermore, the preferences of the end consumers for our products and services may shift, including as a result of technological innovations affecting the marketplaces in which we operate. To the extent our competitors are more successful than we are at adopting new technology and adapting to the changing preferences of the marketplace, our competitiveness may decline.

In recent years, there has been substantial consolidation among companies in the financial services industry resulting in increased competition from large, well-capitalized financial services firms. Many of our competitors also have been able to increase their distribution systems through mergers, acquisitions, partnerships or other contractual arrangements. Furthermore, larger competitors may have lower operating costs and have an ability to absorb greater risk, while maintaining financial strength ratings, allowing them to price products more competitively. These competitive pressures could result in increased pressure on the pricing of certain of our products and services, and could harm our ability to maintain or increase profitability. In addition, if our financial strength and credit ratings are lower than our competitors, we may experience increased surrenders and/or a significant decline in sales. Due to the competitive nature of the financial services industry, there can be no assurance that we will continue to effectively compete within the industry or that competition will not have a material adverse impact on our business, results of operations and financial condition.

Our risk management policies and procedures, including hedging programs, may prove inadequate for the risks we face, which could negatively affect our business and financial condition or result in losses.

We have developed risk management policies and procedures, including hedging programs, that utilize derivative financial instruments, and expect to continue to do so in the future. Nonetheless, our policies and procedures to identify, monitor and manage risks may not be fully effective, particularly during turbulent economic conditions. Many of our methods of managing risk and exposures are based upon observed historical market behavior or statistics based on historical models. As a result, these methods may not predict future exposures, which could be significantly greater than historical measures indicate. Other risk management methods depend on the evaluation of information regarding markets, customers, catastrophe occurrence or other matters that is publicly available or otherwise accessible to us. This information may not always be accurate, complete, up-to-date or properly evaluated. Management of operational, legal and regulatory risks requires, among other things, policies and procedures to record and verify large numbers of transactions and events. These policies and procedures may not be fully effective.

We employ various strategies, including hedging and reinsurance, with the objective of mitigating risks inherent in our business and operations. These risks include current or future changes in the fair value of our assets and liabilities, current or future changes in cash flows, the effect of interest rates, equity markets and credit spread changes, the occurrence of credit defaults, currency fluctuations and changes in mortality and longevity. We seek to control these risks by, among other things, entering into reinsurance contracts and derivative instruments, such as swaps, options, futures and forward contracts. See "—Reinsurance subjects us to the credit risk of reinsurers and may not be available, affordable or adequate to protect us against losses" for a description of risks associated with our use of reinsurance. Developing an effective strategy for dealing with these risks is complex, and no strategy can completely insulate us from such risks. Our hedging strategies also rely on assumptions and projections regarding our assets, liabilities, general market factors, and the creditworthiness of our counterparties that may prove to be incorrect or prove to be inadequate. Our hedging strategies and the derivatives that we use, or may use in the future, may not adequately mitigate or offset the hedged risk and our hedging transactions may result in losses.

Past or future misconduct by our employees, agents, intermediaries, representatives of our broker-dealer subsidiaries or employees of our vendors could result in violations of law by us or our subsidiaries, regulatory sanctions and/or serious reputational or financial harm, and the precautions we take to prevent and detect this activity may not be effective in all cases. Although we employ controls and procedures designed to monitor associates' business decisions and to prevent us from taking excessive or inappropriate risks, associates may take such risks regardless of such controls and procedures. Our compensation policies and practices are reviewed by us as part of our overall risk management program, but it is possible that such compensation policies and practices could inadvertently incentivize excessive or inappropriate risk taking. If our associates take excessive or inappropriate risks, those risks could harm our reputation and have a material adverse effect on our results of operations and financial condition.

The inability of counterparties to meet their financial obligations could have an adverse effect on our results of operations.

Third parties that owe us money, securities or other assets may not pay or perform under their obligations. These parties include the issuers or guarantors of securities we hold, customers, reinsurers, trading counterparties, securities lending and repurchase counterparties, counterparties under swaps, credit default and other derivative contracts, clearing agents, exchanges, clearing houses and other financial intermediaries. Defaults by one or more of these parties on their obligations to us due to bankruptcy, lack of



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liquidity, downturns in the economy or real estate values, operational failure or other factors, or even rumors about potential defaults by one or more of these parties, could have a material adverse effect on our results of operations, financial condition and liquidity.

We routinely execute a high volume of transactions such as unsecured debt instruments, derivative transactions and equity investments with counterparties and customers in the financial services industry, including broker-dealers, commercial and investment banks, mutual and hedge funds, institutional clients, futures clearing merchants, swap dealers, insurance companies and other institutions, resulting in large periodic settlement amounts which may result in our having significant credit exposure to one or more of such counterparties or customers. Many of these transactions comprise derivative instruments with a number of counterparties in order to hedge various risks, including equity and interest rate market risk features within many of our insurance and annuity products. Our obligations under our products are not changed by our hedging activities and we are liable for our obligations even if our derivative counterparties do not pay us. As a result, we face concentration risk with respect to liabilities or amounts we expect to collect from specific counterparties and customers. A default by, or even concerns about the creditworthiness of, one or more of these counterparties or customers could have an adverse effect on our results of operations or liquidity. There is no assurance that losses on, or impairments to the carrying value of, these assets due to counterparty credit risk would not materially and adversely affect our business, results of operations or financial condition.

We are also subject to the risk that our rights against third parties may not be enforceable in all circumstances. The deterioration or perceived deterioration in the credit quality of third parties whose securities or obligations we hold could result in losses and/or adversely affect our ability to rehypothecate or otherwise use those securities or obligations for liquidity purposes. While in many cases we are permitted to require additional collateral from counterparties that experience financial difficulty, disputes may arise as to the amount of collateral we are entitled to receive and the value of pledged assets. Our credit risk may also be exacerbated when the collateral we hold cannot be realized or is liquidated at prices not sufficient to recover the full amount of the loan or derivative exposure that is due to us, which is most likely to occur during periods of illiquidity and depressed asset valuations, such as those experienced during the financial crisis of 2008-09. The termination of contracts and the foreclosure on collateral may subject us to claims for the improper exercise of rights under the contracts. Bankruptcies, downgrades and disputes with counterparties as to the valuation of collateral tend to increase in times of market stress and illiquidity.

Requirements to post collateral or make payments related to changes in market value of specified assets may adversely affect liquidity.

The amount of collateral we may be required to post under short-term financing agreements and derivative transactions may increase under certain circumstances. Pursuant to the terms of some transactions, we could be required to make payment to our counterparties related to any change in the market value of the specified collateral assets. Such requirements could have an adverse effect on liquidity. Furthermore, with respect to any such payments, we may have unsecured risk to the counterparty as these amounts may not be required to be segregated from the counterparty's other funds, may not be held in a third-party custodial account and may not be required to be paid to us by the counterparty until the termination of the transaction.

Our investment portfolio is subject to several risks that may diminish the value of our invested assets and the investment returns credited to customers, which could reduce our sales, revenues, AUM and results of operations.

Fixed income securities represent a significant portion of our investment portfolio. We are subject to the risk that the issuers, or guarantors, of fixed income securities we own may default on principal and interest payments they owe us. We are also subject to the risk that the underlying collateral within asset-backed securities, including mortgage-backed securities, may default on principal and interest payments causing an adverse change in cash flows. The occurrence of a major economic downturn, acts of corporate malfeasance, widening mortgage or credit spreads, or other events that adversely affect the issuers, guarantors or underlying collateral of these securities could cause the estimated fair value of our fixed income securities portfolio and our earnings to decline and the default rate of the fixed income securities in our investment portfolio to increase. A ratings downgrade affecting issuers or guarantors of securities in our investment portfolio, or similar trends that could worsen the credit quality of such issuers, or guarantors could also have a similar effect. Similarly, a ratings downgrade affecting a security we hold could indicate the credit quality of that security has deteriorated and could increase the capital we must hold to support that security to maintain our RBC ratio. See "A decrease in the RBC ratio (as a result of a reduction in statutory surplus and/or increase in RBC requirements) of our insurance subsidiaries could result in increased scrutiny by insurance regulators and rating agencies and have a material adverse effect on our business, results of operations and financial condition." We are also subject to the risk that cash flows resulting from the payments on pools of mortgages or other obligations that serve as collateral underlying the mortgage- or asset-backed securities we own may differ from our expectations in timing or size. Cash flow variability arising from an unexpected acceleration in mortgage prepayment behavior can be significant, and could cause a decline in the estimated fair value of certain "interest-only" securities within our mortgage-backed securities portfolio. Any event reducing the estimated fair value of these securities, other than on a temporary basis, could have a material adverse effect on our business, results of operations and financial condition.



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We derive operating revenues from providing investment management and related services. Our revenues depend largely on the value and mix of AUM. Our investment management related revenues are derived primarily from fees based on a percentage of the value of AUM. Any decrease in the value or amount of our 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 shape of 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. In some cases, these interests may be leveraged with third-party debt financing. Any decrease in the value of such investments could negatively affect our revenues and income or subject us to losses.

Our investment performance is critical to the success of our investment management and related services business, as well as to the profitability of our retirement and insurance 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 of existing assets, 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 in some cases 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 34.8% of the carrying value of our total Cash and cash equivalents and Total investments as of December 31, 2018. 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.

Our CMO-B portfolio exposes us to market and behavior risks.

We manage a portfolio of various collateralized mortgage obligation ("CMO") tranches in combination with financial derivatives as part of a proprietary strategy we refer to as "CMO-B," as described under "Investments—CMO-B Portfolio." As of December 31, 2018, our CMO-B portfolio had $3.2 billion in total assets, consisting of notional or principal securities backed by mortgages secured by single-family residential real estate, and including interest-only securities, principal-only securities, inverse-floating rate (principal) securities, inverse interest-only securities and Agency Credit Risk Transfer securities. The CMO-B portfolio is subject to a number of market and behavior risks, including interest rate risk, prepayment risk, and delinquency and default risk associated with Agency mortgage borrowers. Interest rate risk represents the potential for adverse changes in portfolio value resulting from changes in the general level of interest rates. Prepayment risk represents the potential for adverse changes in portfolio value resulting from changes in residential mortgage prepayment speed, which in turn depends on a number of factors, including conditions in both credit markets and housing markets. As of December 31, 2018, December 31, 2017 and December 31, 2016,



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approximately 41.6%, 43.2%, and 46.4%, respectively, of the Company's total CMO holdings were invested in those types of CMOs, such as interest-only or principal-only strips, which are subject to more prepayment and extension risk than traditional CMOs. In addition, government policy changes affecting residential housing and residential housing finance, such as government agency reform and government sponsored refinancing programs, and Federal Reserve Bank purchases of agency mortgage securities could alter prepayment behavior and result in adverse changes to portfolio values. While we actively monitor our exposure to these and other risks inherent in this strategy, we cannot assure you that our hedging and risk management strategies will be effective; any failure to manage these risks effectively could materially and adversely affect our results of operations and financial condition. In addition, although our CMO-B portfolio performed well for a number of years, and particularly well since the financial crisis of 2008-09, primarily due to persistently low levels of short-term interest rates and mortgage prepayments in an atmosphere of tightened housing-related credit availability, this portfolio may not continue to perform as well in the future. A rise in home prices, the concern over further introduction of or changes to government policies aimed at altering prepayment behavior, and an increased availability of housing-related credit could combine to increase expected or actual prepayment speeds, which would likely lower interest only ("IO") and inverse IO valuations. Under these circumstances, the results of our CMO-B portfolio would likely underperform those of recent periods.

Our operations are complex and a failure to properly perform services could have an adverse effect on our revenues and income.

Our operations include, among other things, retirement plan administration, policy administration, portfolio management, investment advice, retail and wholesale brokerage, fund administration, shareholder services, benefits processing and servicing, contract and sales and servicing, transfer agency, underwriting, distribution, custodial, trustee and other fiduciary services. In order to be competitive, we must properly perform our administrative and related responsibilities, including recordkeeping and accounting, regulatory compliance, security pricing, corporate actions, compliance with investment restrictions, daily net asset value computations, account reconciliations and required distributions to fund shareholders. Further, certain of our investment management subsidiaries may act as general partner for various investment partnerships, which may subject them to liability for the partnerships' liabilities. If we fail to properly perform and monitor our operations, our business could suffer and our revenues and income could be adversely affected.

Our products and services are complex and are frequently sold through intermediaries, and a failure to properly perform services or the misrepresentation of our products or services could have an adverse effect on our revenues and income.

Many of our products and services are complex and are frequently sold through intermediaries. In particular, our insurance businesses are reliant on intermediaries to describe and explain their products to potential customers. The intentional or unintentional misrepresentation of our products and services in advertising materials or other external communications, or inappropriate activities by our personnel or an intermediary, could adversely affect our reputation and business prospects, as well as lead to potential regulatory actions or litigation.

Revenues, earnings and income from our Investment Management business operations could be adversely affected if the terms of our asset management agreements are significantly altered or the agreements are terminated, or if certain performance hurdles are not realized.

Our revenues from our investment management business operations are dependent on fees earned under asset management and related services agreements that we have with the clients and funds we advise. Adjusted operating revenues for this segment were $683 million for the year ended December 31, 2018, $731 million for the year ended December 31, 2017, and $627 million for the year ended December 31, 2016 and could be adversely affected if these agreements are altered significantly or terminated in the future. The decline in revenue that might result from alteration or termination of our asset management services agreements could have a material adverse impact on our results of operations or financial condition. Adjusted operating earnings before income taxes for this segment were $205 million for the year ended December 31, 2018, $248 million for the year ended December 31, 2017, and $171 million for the year ended December 31, 2016. In addition, under certain laws, most notably the Investment Company Act and the Investment Advisers Act, advisory contracts may require approval or consent from clients or fund shareholders in the event of an assignment of the contract or a change in control of the investment adviser. Were a transaction to result in an assignment or change in control, the inability to obtain consent or approval from clients or shareholders of mutual funds or other investment funds could result in a significant reduction in advisory fees.

As investment manager for certain private equity funds that we sponsor, we earn both a fixed management fee and performance-based capital allocations, or "carried interest." Our receipt of carried interest is dependent on the fund exceeding a specified investment return hurdle over the life of the fund. The profitability of our investment management activities with respect to these funds depends to a significant extent on our ability to exceed the hurdle rates and receive carried interest. To the extent that we exceed the investment hurdle during the life of the fund, we may receive or accrue carried interest, which is reported as Net investment income and net realized gains (losses) within our Investment Management segment during the period such fees are



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first earned. If the investment return of a fund were to subsequently decline so that the cumulative return of a fund falls below its specified investment return hurdle, we may have to reverse previously reported carried interest, which would result in a reduction to Net investment income and net realized gains (losses) during the period in which such reversal becomes due. Consequently, a decline in fund performance could require us to reverse previously reported carried interest, which could create volatility in the results we report in our Investment Management segment, and the adverse effects of any such reversals could be material to our results for the period in which they occur. We experienced such losses in the first and second quarters of 2016, for example. As of December 31, 2018, approximately $79 million of previously accrued carried interest would be subject to full or partial reversal in future periods if cumulative fund performance hurdles are not maintained throughout the remaining life of the affected funds.

The valuation of many of our financial instruments includes methodologies, estimations and assumptions that are subject to differing interpretations and could result in changes to investment valuations that may materially and adversely affect our results of operations and financial condition.

The following financial instruments are carried at fair value in our financial statements: fixed income securities, equity securities, derivatives, embedded derivatives, assets and liabilities related to consolidated investment entities, and separate account assets. We have categorized these instruments into a three-level hierarchy, based on the priority of the inputs to the respective valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3), while quoted prices in markets that are not active or valuation techniques requiring inputs that are observable for substantially the full term of the asset or liability are Level 2.

Factors considered in estimating fair values of securities, and derivatives and embedded derivatives related to our securities include coupon rate, maturity, principal paydown including prepayments, estimated duration, call provisions, sinking fund requirements, credit rating, industry sector of the issuer and quoted market prices of comparable securities. Factors considered in estimating the fair values of embedded derivatives and derivatives related to product guarantees and index-crediting features (collectively, "guaranteed benefit derivatives") include risk-free interest rates, long-term equity implied volatility, interest rate implied volatility, correlations among mutual funds associated with variable annuity contracts, correlations between interest rates and equity funds and actuarial assumptions such as mortality rates, lapse rates and benefit utilization, as well as the amount and timing of policyholder deposits and partial withdrawals. The impact of our risk of nonperformance is also reflected in the estimated fair value of guaranteed benefit derivatives. Changes in the estimated fair value of embedded derivatives guarantees due to nonperformance risk have had a material effect on our results of operations in past periods. In many situations, inputs used to measure the fair value of an asset or liability may fall into different levels of the fair value hierarchy. In these situations, we will determine the level in which the fair value falls based upon the lowest level input that is significant to the determination of the fair value.

The determinations of fair values are made at a specific point in time, based on available market information and judgments about financial instruments, including estimates of the timing and amounts of expected future cash flows and the credit standing of the issuer or counterparty. The use of different methodologies and assumptions may have a material effect on the estimated fair value amounts.

During periods of market disruption, including periods of rapidly changing credit spreads or illiquidity, it has been in the past and likely would be in the future difficult to value certain of our securities, such as certain mortgage-backed securities, if trading becomes less frequent and/or market data becomes less observable. There may be certain asset classes that, although currently in active markets with significant observable data, could become illiquid in a difficult financial environment. In such cases, more securities may fall to Level 3 and thus require more subjectivity and management judgment in determining fair value. As such, valuations may include inputs and assumptions that are less observable or require greater estimation, thereby resulting in values that may differ materially from the value at which the investments may be ultimately sold. Further, rapidly changing and unprecedented credit and equity market conditions could materially impact the valuation of securities as reported within the financial statements, and the period-to-period changes in value could vary significantly. Decreases in value could have a material adverse effect on our results of operations and financial condition. As of December 31, 2018, 4%, 92% and 4% of our available-for-sale securities were considered to be Level 1, 2 and 3, respectively.

The determination of the amount of allowances and impairments taken on our investments is subjective and could materially and adversely impact our results of operations or financial condition. Gross unrealized losses may be realized or result in future impairments, resulting in a reduction in net income.

We evaluate investment securities held by us for impairment on a quarterly basis. This review is subjective and requires a high degree of judgment. For fixed income securities held, an impairment loss is recognized if the fair value of the debt security is less than the carrying value and we no longer have the intent to hold the debt security; if it is more likely than not that we will be required to sell the debt security before recovery of the amortized cost basis; or if a credit loss has occurred.



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When we do not intend to sell a security in an unrealized loss position, potential credit related other-than-temporary impairments ("OTTI") are considered using a variety of factors, including the length of time and extent to which the fair value has been less than cost, adverse conditions specifically related to the industry, geographic area in which the issuer conducts business, financial condition of the issuer or underlying collateral of a security, payment structure of the security, changes in credit rating of the security by the rating agencies, volatility of the fair value changes and other events that adversely affect the issuer. In addition, we take into account relevant broad market and economic data in making impairment decisions.

As part of the impairment review process, we utilize a variety of assumptions and estimates to make a judgment on how fixed income securities will perform in the future. It is possible that securities in our fixed income portfolio will perform worse than our expectations. There is an ongoing risk that further declines in fair value may occur and additional OTTI may be recorded in future periods, which could materially and adversely affect our results of operations and financial condition. Furthermore, historical trends may not be indicative of future impairments or allowances.

Fixed maturity securities classified as available-for-sale are reported at their estimated fair value. Unrealized gains or losses on available-for-sale securities are recognized as a component of other comprehensive income (loss) and are therefore excluded from net income (loss). The accumulated change in estimated fair value of these available-for-sale securities is recognized in net income (loss) when the gain or loss is realized upon the sale of the security or in the event that the decline in estimated fair value is determined to be other-than-temporary and an impairment charge to earnings is taken. Such realized losses or impairments may have a material adverse effect on our net income (loss) in a particular interim or annual period. For example, we recorded OTTI of $29 million, $21 million, and $34 million in net realized capital losses for the years ended December 31, 2018, 2017 and 2016, respectively.

Our participation in a securities lending program and a repurchase program subjects us to potential liquidity and other risks.

We engage in a securities lending program whereby certain securities from our portfolio are loaned to other institutions for short periods of time. Initial collateral, primarily cash, is required at a rate of 102% of the market value of the loaned securities. For certain transactions, a lending agent may be used and the agent may retain some or all of the collateral deposited by the borrower and transfer the remaining collateral to us. Collateral retained by the agent is invested in liquid assets on our behalf. The market value of the loaned securities is monitored on a daily basis with additional collateral obtained or refunded as the market value of the loaned securities fluctuates.

We also participate in a repurchase agreement program whereby we sell fixed income securities to a third party, primarily major brokerage firms or commercial banks, with a concurrent agreement to repurchase those same securities at a determined future date. During the term of the repurchase agreements, cash or other types of permitted collateral provided to us is sufficient to allow us to fund substantially all of the cost of purchasing replacement assets in the event of counterparty default (i.e., the sold securities are not returned to us on the scheduled repurchase date). Cash proceeds received by us under the repurchase program are typically invested in fixed income securities but may in certain circumstances be available to us for liquidity or other purposes prior to the scheduled repurchase date. The repurchase of securities or our inability to enter into new repurchase agreements would reduce the amount of such cash collateral available to us. Market conditions on or after the repurchase date may limit our ability to enter into new agreements at a time when we need access to additional cash collateral for investment or liquidity purposes.

For both securities lending and repurchase transactions, in some cases, the maturity of the securities held as invested collateral (i.e., securities that we have purchased with cash collateral received) may exceed the term of the related securities on loan and the estimated fair value may fall below the amount of cash received as collateral and invested. If we are required to return significant amounts of cash collateral on short notice and we are forced to sell securities to meet the return obligation, we may have difficulty selling such collateral that is invested in securities in a timely manner, be forced to sell securities in a volatile or illiquid market for less than we otherwise would have been able to realize under normal market conditions, or both. In addition, under adverse capital market and economic conditions, liquidity may broadly deteriorate, which would further restrict our ability to sell securities. If we decrease the amount of our securities lending and repurchase activities over time, the amount of net investment income generated by these activities will also likely decline. See "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Securities Lending."

Differences between actual claims experience and reserving assumptions may adversely affect our results of operations or financial condition.

We establish and hold reserves to pay future policy benefits and claims. Our reserves do not represent an exact calculation of liability, but rather are actuarial or statistical estimates based on data and models that include many assumptions and projections, which are inherently uncertain and involve the exercise of significant judgment, including assumptions as to the levels and/or timing of receipt or payment of premiums, benefits, claims, expenses, interest credits, investment results (including equity market



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returns), retirement, mortality, morbidity and persistency. We periodically review the adequacy of reserves and the underlying assumptions. We cannot, however, determine with precision the amounts that we will pay for, or the timing of payment of, actual benefits, claims and expenses or whether the assets supporting our policy liabilities, together with future premiums, will grow to the level assumed prior to payment of benefits or claims. If actual experience differs significantly from assumptions or estimates, reserves may not be adequate. If we conclude that our reserves, together with future premiums, are insufficient to cover future policy benefits and claims, we would be required to increase our reserves and incur income statement charges for the period in which we make the determination, which could materially and adversely affect our results of operations and financial condition.

We may face significant losses if mortality rates, morbidity rates, persistency rates or other underwriting assumptions differ significantly from our pricing expectations.

We set prices for many of our employee benefits and insurance products based upon expected claims and payment patterns, using assumptions for mortality rates, or likelihood of death, and morbidity rates, or likelihood of sickness, of our policyholders. In addition to the potential effect of natural or man-made disasters, significant changes in mortality or morbidity could emerge gradually over time due to changes in the natural environment, the health habits of the insured population, technologies and treatments for disease or disability, the economic environment, or other factors. The long-term profitability of such products depends upon how our actual mortality rates, and to a lesser extent actual morbidity rates, compare to our pricing assumptions. In addition, prolonged or severe adverse mortality or morbidity experience could result in increased reinsurance costs, and ultimately, reinsurers might not offer coverage at all. If we are unable to maintain our current level of reinsurance or purchase new reinsurance protection in amounts that we consider sufficient, we would have to accept an increase in our net risk exposures, revise our pricing to reflect higher reinsurance premiums, or otherwise modify our product offering.

Pricing of our employee benefits and insurance products is also based in part upon expected persistency of these products, which is the probability that a policy will remain in force from one period to the next. Actual persistency that is lower than our persistency assumptions could have an adverse effect on profitability, especially in the early years of a policy, primarily because we would be required to accelerate the amortization of expenses we defer in connection with the acquisition of the policy. Actual persistency that is higher than our persistency assumptions could have an adverse effect on profitability in the later years of a block of business because the anticipated claims experience is higher in these later years. If actual persistency is significantly different from that assumed in our current reserving assumptions, our reserves for future policy benefits may prove to be inadequate. Although some of our products permit us to increase premiums or adjust other charges and credits during the life of the policy, the adjustments permitted under the terms of the policies may not be sufficient to maintain profitability. Many of our products, however, do not permit us to increase premiums or adjust charges and credits during the life of the policy or during the initial guarantee term of the policy. Even if permitted under the policy, we may not be able or willing to raise premiums or adjust other charges for regulatory or competitive reasons.

Pricing of our products is also based on long-term assumptions regarding interest rates, investment returns and operating costs. Management establishes target returns for each product based upon these factors, the other underwriting assumptions noted above and the average amount of regulatory and rating agency capital that we must hold to support in-force contracts. We monitor and manage pricing and sales to achieve target returns. Profitability from new business emerges over a period of years, depending on the nature and life of the product, and is subject to variability as actual results may differ from pricing assumptions. Our profitability depends on multiple factors, including the comparison of actual mortality, morbidity and persistency rates and policyholder behavior to our assumptions; the adequacy of investment margins; our management of market and credit risks associated with investments; our ability to maintain premiums and contract charges at a level adequate to cover mortality, benefits and contract administration expenses; the adequacy of contract charges and availability of revenue from providers of investment options offered in variable contracts to cover the cost of product features and other expenses; and management of operating costs and expenses.

Unfavorable developments in interest rates, credit spreads and policyholder behavior can result in adverse financial consequences related to our stable value products, and our hedge program and risk mitigation features may not successfully offset these consequences.

We offer stable value products primarily as a fixed rate, liquid asset allocation option for employees of our plan sponsor customers within the defined contribution funding plans offered by our Retirement business. Although a majority of these products do not provide for a guaranteed minimum credited rate, a portion of this book of business provides a guaranteed annual credited rate (currently up to three percent) on the invested assets in addition to enabling participants the right to withdraw and transfer funds at book value.

The sensitivity of our statutory reserves and surplus established for the stable value products to changes in interest rates, credit spreads and policyholder behavior will vary depending on the magnitude of these changes, as well as on the book value of assets, the market value of assets, the guaranteed credited rates available to customers and other product features. Realization or re-



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measurement of these risks may result in an increase in the reserves for stable value products, and could materially and adversely affect our financial position or results of operations. In particular, in extended low interest rate environments, we bear exposure to the risk that reserves must be added to fund book value withdrawals and transfers when guaranteed annual credited rates exceed the earned rate on invested assets. In a rising interest rate environment, we are exposed to the risk of financial disintermediation through a potential increase in the level of book value withdrawals.

Although we maintain a hedge program and other risk mitigating features to offset these risks, such program and features may not operate as intended or may not be fully effective, and we may remain exposed to such risks.

We may be required to accelerate the amortization of DAC, deferred sales inducements ("DSI") and/or VOBA, any of which could adversely affect our results of operations or financial condition.

DAC represents policy acquisition costs that have been capitalized. DSI represents benefits paid to contract owners for a specified period that are incremental to the amounts we credit on similar contracts without sales inducements and are higher than the contract's expected ongoing crediting rates for periods after the inducement. VOBA represents outstanding value of in-force business acquired. Capitalized costs associated with DAC, DSI and VOBA are amortized in proportion to actual and estimated gross profits, gross premiums or gross revenues depending on the type of contract. On an ongoing basis, we test the DAC, DSI and VOBA recorded on our balance sheets to determine if these amounts are recoverable under current assumptions. In addition, we regularly review the estimates and assumptions underlying DAC, DSI and VOBA. The projection of estimated gross profits, gross premiums or gross revenues requires the use of certain assumptions, principally related to separate account fund returns in excess of amounts credited to policyholders, policyholder behavior such as surrender, lapse and annuitization rates, interest margin, expense margin, mortality, future impairments and hedging costs. Estimating future gross profits, gross premiums or gross revenues is a complex process requiring considerable judgment and the forecasting of events well into the future. If these assumptions prove to be inaccurate, if an estimation technique used to estimate future gross profits, gross premiums or gross revenues is changed, or if significant or sustained equity market declines occur and/or persist, we could be required to accelerate the amortization of DAC, DSI and VOBA, which would result in a charge to earnings. Such adjustments could have a material adverse effect on our results of operations and financial condition.

Our financial results are affected by actuarial assumptions that may not be accurate and that may change in the future.

Our financial results are subject to risks around actuarial assumptions, including those related to mortality and the future behavior of policyholders, such as lapse rates and future claims payment patterns. These assumptions, which we use to determine our liabilities for future policy benefits, may not reflect future experience. Changes to these actuarial assumptions in the future could require increases to our reserves or result in decreases in the carrying value of DAC/VOBA and other intangibles, in each case in amounts that could be material. Any adverse changes to reserves or DAC/VOBA and other intangibles balances could require us to make material additional capital contributions to one or more of our insurance company subsidiaries or could otherwise be material and adverse to the results of operations or financial condition of the Company. We generally update these actuarial assumptions in the third quarter of each year. For further information, see Results of Operations and Critical Accounting Judgments and Estimates of Part II. Item 7. of this Annual Report on Form 10-K.

Reinsurance subjects us to the credit risk of reinsurers and may not be available, affordable or adequate to protect us against losses.

We cede life insurance policies and annuity contracts or certain risks related to life insurance policies and annuity contracts to other insurance companies using various forms of reinsurance, including coinsurance, modified coinsurance, funds withheld, monthly renewable term and yearly renewable term. However, we remain liable to the underlying policyholders, even if the reinsurer defaults on its obligations with respect to the ceded business. If a reinsurer fails to meet its obligations under the reinsurance contract, we will be forced to bear the entire liability for claims on the reinsured policies. In addition, a reinsurer insolvency may cause us to lose our reserve credits on the ceded business, in which case we would be required to establish additional statutory reserves.



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In addition, if a reinsurer does not have accredited reinsurer status, or if a currently accredited reinsurer loses that status, in any state where we are licensed to do business, we are not entitled to take credit for reinsurance in that state if the reinsurer does not post sufficient qualifying collateral (either qualifying assets in a qualifying trust or qualifying LOCs). In this event, we would be required to establish additional statutory reserves. Similarly, the credit for reinsurance taken by our insurance subsidiaries under reinsurance agreements with affiliated and unaffiliated non-accredited reinsurers is, under certain conditions, dependent upon the non-accredited reinsurer's ability to obtain and provide sufficient qualifying assets in a qualifying trust or qualifying LOCs issued by qualifying lending banks. In order to control expenses associated with LOCs, some of our affiliated reinsurers have established and will continue to pursue alternative sources for qualifying reinsurance collateral. If these steps are unsuccessful, or if unaffiliated non-accredited reinsurers that have reinsured business from our insurance subsidiaries are unsuccessful in obtaining sources of qualifying reinsurance collateral, our insurance subsidiaries might not be able to obtain full statutory reserve credit. Loss of reserve credit by an insurance subsidiary would require it to establish additional statutory reserves and would result in a decrease in the level of its capital, which could have a material adverse effect on our profitability, results of operations and financial condition.

Our reinsurance recoverable balances are periodically assessed for uncollectability. There were no significant allowances for uncollectible reinsurance as of December 31, 2018 and December 31, 2017. The collectability of reinsurance recoverables is subject to uncertainty arising from a number of factors, including whether the insured losses meet the qualifying conditions of the reinsurance contract, whether reinsurers or their affiliates have the financial capacity and willingness to make payments under the terms of the reinsurance contract, and the degree to which our reinsurance balances are secured by sufficient qualifying assets in qualifying trusts or qualifying LOCs issued by qualifying lender banks. Although a substantial portion of our reinsurance exposure is secured by assets held in trusts or LOCs, the inability to collect a material recovery from a reinsurer could have a material adverse effect on our profitability, results of operations and financial condition. For additional information regarding our unsecured reinsurance recoverable balances, see "Item 7A. Quantitative and Qualitative Disclosures about Market Risk—Market Risk Related to Credit Risk" in Part II of this Annual Report on Form 10-K.

The premium rates and other fees that we charge are based, in part, on the assumption that reinsurance will be available at a certain cost. Some of our reinsurance contracts contain provisions that limit the reinsurer’s ability to increase rates on in-force business; however, some do not. If a reinsurer raises the rates that it charges on a block of in-force business, in some instances, we will not be able to pass the increased costs onto our customers and our profitability will be negatively impacted. Additionally, such a rate increase could result in our recapturing of the business, which may result in a need to maintain additional reserves, reduce reinsurance receivables and expose us to greater risks. In recent years, we have faced a number of rate increase actions on in-force business, which have in some instances adversely affected our financial results, and there can be no assurance that the outcome of future rate increase actions would not have a material effect on our results of operations or financial condition. In addition, if reinsurers raise the rates that they charge on new business, we may be forced to raise our premiums, which could have a negative impact on our competitive position.

A decrease in the RBC ratio (as a result of a reduction in statutory surplus and/or increase in RBC requirements) of our insurance subsidiaries could result in increased scrutiny by insurance regulators and rating agencies and have a material adverse effect on our business, results of operations and financial condition.

The NAIC has established regulations that provide minimum capitalization requirements based on RBC formulas for insurance companies. The RBC formula for life insurance companies establishes capital requirements relating to asset, insurance, interest rate and business risks, including equity, interest rate and expense recovery risks associated with variable annuities and group annuities that contain guaranteed minimum death and living benefits. Each of our insurance subsidiaries is subject to RBC standards and/or other minimum statutory capital and surplus requirements imposed under the laws of its respective jurisdiction of domicile. For additional discussion of how the NAIC calculates RBC ratios, see "Item 1. Business— Regulation —Regulation Affecting Voya Financial, Inc.—Financial Regulation—Risk-Based Capital."

In any particular year, statutory surplus amounts and RBC ratios may increase or decrease depending on a variety of factors, including the amount of statutory income or losses generated by the insurance subsidiary (which itself is sensitive to equity market and credit market conditions), the amount of additional capital such insurer must hold to support business growth, changes in equity market levels, the value and credit ratings of certain fixed-income and equity securities in its investment portfolio, the value of certain derivative instruments that do not receive hedge accounting and changes in interest rates, as well as changes to the RBC formulas and the interpretation of the NAIC’s instructions with respect to RBC calculation methodologies. As a result of Tax Reform, the NAIC updated the factors affecting RBC requirements, including ours, to reflect the lowering of the top corporate tax rate from 35% to 21%. Adjusting these factors in light of Tax Reform has resulted in an increase in the amount of capital we are required to maintain to satisfy our RBC requirements. Many of these factors are outside of our control. Our financial strength and credit ratings are significantly influenced by statutory surplus amounts and RBC ratios. In addition, rating agencies may implement changes to their own internal models, which differ from the RBC capital model, that have the effect of increasing or decreasing the amount of statutory capital we or our insurance subsidiaries should hold relative to the rating agencies' expectations. To the



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extent that an insurance subsidiary's RBC ratios are deemed to be insufficient, we may seek to take actions either to increase the capitalization of the insurer or to reduce the capitalization requirements. If we were unable to accomplish such actions, the rating agencies may view this as a reason for a ratings downgrade.

The failure of any of our insurance subsidiaries to meet its applicable RBC requirements or minimum capital and surplus requirements could subject it to further examination or corrective action imposed by insurance regulators, including limitations on its ability to write additional business, supervision by regulators or seizure or liquidation. Any corrective action imposed could have a material adverse effect on our business, results of operations and financial condition. A decline in RBC ratios, whether or not it results in a failure to meet applicable RBC requirements, may still limit the ability of an insurance subsidiary to make dividends or distributions to us, could result in a loss of customers or new business, and could be a factor in causing ratings agencies to downgrade the insurer’s financial strength ratings, each of which could have a material adverse effect on our business, results of operations and financial condition.

The CBVA and Annuity Transaction, including managing the transition services on the terms or timing currently contemplated could have negative impacts on us.

As further described under "Item 1–Business–Organizational History and Structure–CBVA and Annuity Transaction", on June 1, 2018, we completed the Transaction with VA Capital and Athene, pursuant to which VA Capital acquired certain of our assets, including all of the shares of the capital stock of VIAC, our Iowa-domiciled insurance subsidiary, and all of the membership interest of DSL, a broker-dealer subsidiary, and which resulted in the disposition of substantially all of our variable annuity and fixed and fixed indexed annuity businesses and related assets. In connection with the Transaction, VIAC rebranded to "Venerable".

Although we believe the Transaction to have been successful to date, it is possible that we may not achieve certain of the benefits that we expect to obtain in connection with the Transaction. For example, it is possible that expected revenues from the appointment of Voya IM or its affiliated advisors as the preferred asset management partner for Venerable may not fully materialize, that our equity investment in Venerable may lose value, or that the ultimate Transaction value to us is less than we anticipated. The Transaction also requires us to provide certain transition services to Venerable, and has created the need to eliminate certain stranded costs, each of which creates additional operational complexity for our business. In addition, as provided for in the MTA governing the Transaction, we and VA Capital are currently involved in discussions concerning the final true-up payment for the businesses we sold, and have not yet reached agreement on the amount. See Overview in the Management's Discussion and Analysis section in Part II, Item 7. of this Annual Report on Form 10-K for further information. Should the Transaction ultimately prove to be less beneficial that we anticipated, or should the transition services, stranded cost elimination, or other Transaction effects create difficulties for our business, our results of operations and financial condition could be adversely affected, possibly in a material way.

Our statutory reserve financings may be subject to cost increases and new financings may be subject to limited market capacity.

We have financing facilities in place for our previously written business and have remaining capacity in existing facilities to support writings through the end of 2019 or later. However certain of these facilities mature prior to the run off of the reserve liability so that we are subject to cost increases or unavailability of capacity upon the refinancing. If we are unable to refinance such facilities, or if the cost of such facilities were to significantly increase, we could be required to obtain other forms of equity or debt financing in order to prevent a reduction in our statutory capitalization. We could incur higher operating or tax costs if the cost of these facilities were to significantly increase or if the cost of replacement financing were significantly higher. For more details, see "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Credit Facilities and Subsidiary Credit Support Arrangements."

A significant portion of our institutional funding originates from two Federal Home Loan Banks, which subjects us to liquidity risks associated with sourcing a large concentration of our funding from two counterparties.

A significant portion of our institutional funding agreements originates from the Federal Home Loan Bank of Boston and the Federal Home Loan Bank of Topeka (each an "FHLB"). As of December 31, 2018 and 2017, for our continuing operations, we had $1,209 million and $501 million of non-putable funding agreements in force, respectively, in exchange for eligible collateral in the form of cash, mortgage backed securities, commercial real estate and U.S. Treasury securities.

Should the FHLBs choose to change their definition of eligible collateral, change the lendable value against such collateral or if the market value of the pledged collateral decreases in value due to changes in interest rates or credit ratings, we may be required to post additional amounts of collateral in the form of cash or other eligible collateral. Additionally, we may be required to find other sources to replace this funding if we lose access to FHLB funding. This could occur if our creditworthiness falls below either



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of the FHLB's requirements or if legislative or other political actions cause changes to the FHLBs' mandate or to the eligibility of life insurance companies to be members of the FHLB system.

Any failure to protect the confidentiality of customer information could adversely affect our reputation and have a material adverse effect on our business, financial condition and results of operation.

Our businesses and relationships with customers are dependent upon our ability to maintain the security and confidentiality of our and our customers’ personal information, trade secrets and other confidential information (including customer transactional data and personal information about our customers, the employees and customers of our customers, and our own employees). We are also subject to numerous federal and state laws regarding the privacy and security of personal information, which laws vary significantly from jurisdiction to jurisdiction. Many of our employees and contractors and the representatives of our broker-dealer subsidiaries have access to and routinely process personal information in computerized, paper and other forms. We rely on various internal policies, procedures and controls to protect the security and confidentiality of personal and confidential information that is accessible to, or in the possession of, us or our employees, contractors and representatives. It is possible that an employee, contractor or representative could, intentionally or unintentionally, disclose or misappropriate personal information or other confidential information. In 2018, we entered into a consent decree with the SEC in which the SEC alleged that VFA, our broker-dealer subsidiary, failed to maintain adequate policies and procedures to protect certain customer information that was the subject of an April 2016 intrusion into VFA's systems. Although we did not admit or deny wrongdoing, we agreed to pay the SEC a $1 million fine and consented to an independent review of VFA's compliance with SEC rules concerning protection of customer information and identity theft. If we fail in the future to maintain adequate internal controls, including any failure to implement newly-required additional controls, or if our employees, contractors or representatives fail to comply with our policies and procedures, misappropriation or intentional or unintentional inappropriate disclosure or misuse of personal information or confidential customer information could occur. Such internal control inadequacies or non-compliance could materially damage our reputation, result in regulatory action or lead to civil or criminal penalties, which, in turn, could have a material adverse effect on our business, reputation, results of operations and financial condition. For additional risks related to our potential failure to protect confidential information, see "—Interruption or other operational failures in telecommunication, information technology, and other operational systems, including as a result of human error, could harm our business," and "—A failure to maintain the security, integrity, confidentiality or privacy of our telecommunication, information technology or other operational systems, or the sensitive data residing on such systems, could harm our business."

Interruption or other operational failures in telecommunication, information technology and other operational systems, including as a result of human error, could harm our business.

We are highly dependent on automated and information technology systems to record and process both our internal transactions and transactions involving our customers, as well as to calculate reserves, value invested assets and complete certain other components of our U.S. GAAP and statutory financial statements. Despite the implementation of security and back-up measures, our information technology systems may remain vulnerable to disruptions. We may also be subject to disruptions of any of these systems arising from events that are wholly or partially beyond our control (for example, natural disasters, acts of terrorism, epidemics, computer viruses and electrical/telecommunications outages). All of these risks are also applicable where we rely on outside vendors to provide services to us and our customers and third party service providers, including those to whom we outsource certain of our functions. The failure of any one of these systems for any reason, or errors made by our employees or agents, could in each case cause significant interruptions to our operations, which could harm our reputation, adversely affect our internal control over financial reporting, or have a material adverse effect on our business, results of operations and financial condition.

A failure to maintain the security, integrity, confidentiality or privacy of our telecommunication, information technology and other operational systems, or the sensitive data residing on such systems, could harm our business.

We are highly dependent on automated telecommunications, information technology and other operational systems to record and process our internal transactions and transactions involving our customers. Despite the implementation of security and back-up measures, our information technology systems may be vulnerable to physical or electronic intrusions, viruses or other attacks, programming errors, and similar disruptions. Businesses in the United States and in other countries have increasingly become the targets of "cyberattacks," "hacking" or similar illegal or unauthorized intrusions into computer systems and networks. Such events are often highly publicized, can result in the theft of significant amounts of information and funds from online financial accounts, and can cause extensive damage to the reputation of the targeted business, in addition to leading to significant expenses associated with investigation, remediation and customer protection measures. Like others in our industry, we are subject to cyber incidents in the ordinary course of our business. Although we seek to limit our vulnerability to such events through technological and other means, it is not possible to anticipate or prevent all potential forms of cyberattack or to guarantee our ability to fully defend against all such attacks. In addition, due to the sensitive nature of much of the financial and other personal information we maintain, we may be at particular risk for targeting. In 2018, we entered into a consent decree with the SEC in which the SEC alleged that VFA,



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our broker-dealer subsidiary, failed to maintain adequate policies and procedures to protect certain customer information that was the subject of an April 2016 intrusion into VFA's systems. Although we did not admit or deny wrongdoing, we agreed to pay the SEC a $1 million fine and consented to an independent review of VFA's compliance with SEC rules concerning protection of customer information and identity theft.

We retain personal and confidential information and financial accounts in our information technology systems, and we rely on industry standard commercial technologies to maintain the security of those systems. Anyone who is able to circumvent our security measures and penetrate our information technology systems could access, view, misappropriate, alter, or delete information in the systems, including personal information and proprietary business information, and misappropriate funds from online financial accounts. Information security risks also exist with respect to the use of portable electronic devices, such as laptops, which are particularly vulnerable to loss and theft. The laws of most states require that individuals be notified if a security breach compromises the security or confidentiality of their personal information. Any attack or other breach of the security of our information technology systems that compromises personal information or that otherwise results in unauthorized disclosure or use of personal information, could damage our reputation in the marketplace, deter purchases of our products, subject us to heightened regulatory scrutiny, sanctions, significant civil and criminal liability or other adverse legal consequences and require us to incur significant technical, legal and other expenses. Numerous state regulatory bodies are focused on privacy requirements for all companies that collect personal information and have proposed and enacted legislation and regulations regarding privacy standards and protocols. For example, on June 28, 2018, California enacted the California Consumer Privacy Act, which will take effect on January 1, 2020. We continue to evaluate this legislation and its potential impact on our operations, but depending on its implementation, we and other covered businesses may be required to incur significant expense in order to meet its requirements.

Our third party service providers, including third parties to whom we outsource certain of our functions are also subject to the risks outlined above, any one of which could result in our incurring substantial costs and other negative consequences, including a material adverse effect on our business, results of operations and financial condition.

The NAIC, numerous state and federal regulatory bodies and self-regulatory organizations like FINRA are focused on cybersecurity standards both for the financial services industry and for all companies that collect personal information, and have proposed and enacted legislation and regulations, and issued guidance regarding cybersecurity standards and protocols. For example, in February 2017, the NYDFS issued final Cybersecurity Requirements for Financial Services Companies that required banks, insurance companies, and other financial services institutions regulated by the NYDFS, including us, to establish and maintain a cybersecurity program "designed to protect consumers and ensure the safety and soundness of New York State’s financial services industry." In 2018, South Carolina, Ohio and Michigan adopted versions of the NAIC Insurance Data Security Model Law. These laws, with effective dates ranging from January 1, 2019 to January 20, 2021, ensure that licensees of the Departments of Insurance in these states have strong and aggressive cybersecurity programs to protect the personal data of their customers. During 2019, we expect cybersecurity risk management, prioritization and reporting to continue to be an area of significant focus by governments, regulatory bodies and self-regulatory organizations at all levels.

Changes in accounting standards could adversely impact our reported results of operations and our reported financial condition.

Our financial statements are subject to the application of U.S. GAAP, which is periodically revised or expanded. Accordingly, from time to time we are required to adopt new or revised accounting standards issued by recognized authoritative bodies, including the Financial Accounting Standards Board ("FASB"). It is possible that future accounting standards we are required to adopt could change the current accounting treatment that we apply to our consolidated financial statements and that such changes could have a material adverse effect on our results of operations and financial condition.

For example, during 2018 FASB issued ASU 2018-12, which will require significant changes to the manner in which we account for our insurance contracts once adopted. This, and other changes to U.S. GAAP could not only affect the way we account for and report significant areas of our business, but could impose special demands on us in the areas of governance, employee training, internal controls and disclosure and may affect how we manage our business.

We may be required to reduce the carrying value of our deferred income tax asset or establish an additional valuation allowance against the deferred income tax asset if: (i) there are significant changes to federal tax policy, (ii) our business does not generate sufficient taxable income; (iii) there is a significant decline in the fair market value of our investment portfolio; or (iv) our tax planning strategies are not feasible. Reductions in the carrying value of our deferred income tax asset or increases in the deferred tax valuation allowance could have a material adverse effect on our results of operations and financial condition.

Deferred income tax represents the tax effect of the differences between the book and tax basis of assets and liabilities. Deferred tax assets represent the tax benefit of future deductible temporary differences, operating loss carryforwards and tax credits carryforward. We periodically evaluate and test our ability to realize our deferred tax assets. Deferred tax assets are reduced by a



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valuation allowance if, based on the weight of evidence, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. In assessing the more likely than not criteria, we consider future taxable income as well as prudent tax planning strategies. In 2017, Tax Reform resulted in a reduction of an estimated $679 million in our net deferred tax asset position as of December 31, 2017, excluding amounts that were associated with assets held for sale, and that amount was reflected in income from continuing operations for that year. That reduction was substantially all due to the reduction in the U.S. federal corporate tax rate from 35% to 21%. Tax Reform also resulted in a reduction in the combined statutory deferred tax asset of our insurance companies, reducing their RBC ratio.

Future changes in facts, circumstances, tax law, including a further reduction in federal corporate tax rates may result in a reduction in the carrying value of our deferred income tax asset and the RBC ratios of our insurance subsidiaries, or an increase in the valuation allowance. A reduction in the carrying value of our deferred income tax asset or the RBC ratios of our insurance subsidiaries, or an increase in the valuation allowance could have a material adverse effect on our results of operations and financial condition.

As of December 31, 2018, we have an estimated net deferred tax asset balance of $1.2 billion. Recognition of this asset has been based on projections of future taxable income and on tax planning related to unrealized gains on investment assets. To the extent that our estimates of future taxable income decrease or if actual future taxable income is less than the projected amounts, the recognition of the deferred tax asset may be reduced. Also, to the extent unrealized gains decrease, the tax benefit may be reduced. Any reduction, including a reduction associated with a decrease in tax rate, in the deferred tax asset may be recorded as a tax expense.

Our ability to use certain beneficial U.S. tax attributes is subject to limitations.

Section 382 and Section 383 of the U.S. Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), operate as anti-abuse rules, the general purpose of which is to prevent trafficking in tax losses and credits, but which can apply without regard to whether a "loss trafficking" transaction occurs or is intended. These rules are triggered by the occurrence of an ownership change—generally defined as when the ownership of a company, or its parent, changes by more than 50% (measured by value) on a cumulative basis in any three year period ("Section 382 event"). If triggered, the amount of the taxable income for any post-change year which may be offset by a pre-change loss is subject to an annual limitation. Generally speaking, this limitation is derived by multiplying the fair market value of the Company immediately before the date of the Section 382 event by the applicable federal long-term tax-exempt rate. If the company were to experience a Section 382 event, this could impact our ability to obtain tax benefits from existing tax attributes as well as future losses and deductions.

Our business may be negatively affected by adverse publicity or increased governmental and regulatory actions with respect to us, other well-known companies or the financial services industry in general.

Governmental scrutiny with respect to matters relating to compensation, compliance with regulatory and tax requirements and other business practices in the financial services industry has increased dramatically in the past several years and has resulted in more aggressive and intense regulatory supervision and the application and enforcement of more stringent standards. Press coverage and other public statements that assert some form of wrongdoing, regardless of the factual basis for the assertions being made, could result in some type of inquiry or investigation by regulators, legislators and/or law enforcement officials or in lawsuits. Responding to these inquiries, investigations and lawsuits, regardless of the ultimate outcome of the proceeding, is time-consuming and expensive and can divert the time and effort of our senior management from its business. Future legislation or regulation or governmental views on compensation may result in us altering compensation practices in ways that could adversely affect our ability to attract and retain talented employees. Adverse publicity, governmental scrutiny, pending or future investigations by regulators or law enforcement agencies and/or legal proceedings involving us or our affiliates, could also have a negative impact on our reputation and on the morale and performance of employees, and on business retention and new sales, which could adversely affect our businesses and results of operations.

Litigation may adversely affect our profitability and financial condition.

We are, and may be in the future, subject to legal actions in the ordinary course of insurance, investment management and other business operations. Some of these legal proceedings may be brought on behalf of a class. Plaintiffs may seek large or indeterminate amounts of damage, including compensatory, liquidated, treble and/or punitive damages. Our reserves for litigation may prove to be inadequate and insurance coverage may not be available or may be declined for certain matters. It is possible that our results of operations or cash flows in a particular interim or annual period could be materially affected by an ultimate unfavorable resolution of pending litigation depending, in part, upon the results of operations or cash flows for such period. Given the large or indeterminate amounts sometimes sought, and the inherent unpredictability of litigation, it is also possible that in certain cases an ultimate unfavorable resolution of one or more pending litigation matters could have a material adverse effect on our financial condition.



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A loss of, or significant change in, key product distribution relationships could materially affect sales.

We distribute certain products under agreements with affiliated distributors and other members of the financial services industry that are not affiliated with us. We compete with other financial institutions to attract and retain commercial relationships in each of these channels, and our success in competing for sales through these distribution intermediaries depends upon factors such as the amount of sales commissions and fees we pay, the breadth of our product offerings, the strength of our brand, our perceived stability and financial strength ratings, and the marketing and services we provide to, and the strength of the relationships we maintain with, individual distributors. An interruption or significant change in certain key relationships could materially affect our ability to market our products and could have a material adverse effect on our business, results of operations and financial condition. Distributors may elect to alter, reduce or terminate their distribution relationships with us, including for such reasons as changes in our distribution strategy, adverse developments in our business, adverse rating agency actions or concerns about market-related risks. Alternatively, we may terminate one or more distribution agreements due to, for example, a loss of confidence in, or a change in control of, one of the distributors, which could reduce sales.

We are also at risk that key distribution partners may merge or change their business models in ways that affect how our products are sold, either in response to changing business priorities or as a result of shifts in regulatory supervision or potential changes in state and federal laws and regulations regarding standards of conduct applicable to distributors when providing investment advice to retail and other customers.

The occurrence of natural or man-made disasters may adversely affect our results of operations and financial condition.

We are exposed to various risks arising from natural disasters, including hurricanes, climate change, floods, earthquakes, tornadoes and pandemic disease, as well as man-made disasters and core infrastructure failures, including acts of terrorism, military actions, power grid and telephone/internet infrastructure failures, which may adversely affect AUM, results of operations and financial condition by causing, among other things:


•	losses in our investment portfolio due to significant volatility in global financial markets or the failure of counterparties to perform;


•	changes in the rate of mortality, claims, withdrawals, lapses and surrenders of existing policies and contracts, as well as sales of new policies and contracts; and


•	disruption of our normal business operations due to catastrophic property damage, loss of life, or disruption of public and private infrastructure, including communications and financial services.

There can be no assurance that our business continuation and crisis management plan or insurance coverages would be effective in mitigating any negative effects on operations or profitability in the event of a disaster, nor can we provide assurance that the business continuation and crisis management plans of the independent distributors and outside vendors on whom we rely for certain services and products would be effective in mitigating any negative effects on the provision of such services and products in the event of a disaster.

Claims resulting from a catastrophic event could also materially harm the financial condition of our reinsurers, which would increase the probability of default on reinsurance recoveries. Our ability to write new business could also be adversely affected.

In addition, the jurisdictions in which our insurance subsidiaries are admitted to transact business require life insurers doing business within the jurisdiction to participate in guaranty associations, which raise funds to pay contractual benefits owed pursuant to insurance policies issued by impaired, insolvent or failed insurers. It is possible that a catastrophic event could require extraordinary assessments on our insurance companies, which may have a material adverse effect on our business, results of operations and financial condition.

If we experience difficulties arising from outsourcing relationships, our ability to conduct business may be compromised, which may have an adverse effect on our business and results of operations.

As we continue to focus on reducing the expense necessary to support our operations, we have increasingly used outsourcing strategies for a significant portion of our information technology and business functions. If third-party providers experience disruptions or do not perform as anticipated, or we experience problems with a transition, we may experience system failures, disruptions, or other operational difficulties, an inability to meet obligations, including, but not limited to, obligations to policyholders, customers, business partners and distribution partners, increased costs and a loss of business, and such events may



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have a material adverse effect on our business and results of operations. For other risks associated with our outsourcing of certain functions, see "—Interruption or other operational failures in telecommunication, information technology, and other operational systems, including as a result of human error, could harm our business," and "—A failure to maintain the security, integrity, confidentiality or privacy of our telecommunication, information technology or other operational systems, or the sensitive data residing on such systems, could harm our business."

We may incur further liabilities in respect of our defined benefit retirement plans for our employees if the value of plan assets is not sufficient to cover potential obligations, including as a result of differences between results underlying actuarial assumptions and models.

We operate various defined benefit retirement plans covering a significant number of our employees. The liability recognized in our consolidated balance sheet in respect of our defined benefit plans is the present value of the defined benefit obligations at the balance sheet date, less the fair value of each plan’s assets. We determine our defined benefit plan obligations based on external actuarial models and calculations using the projected unit credit method. Inherent in these actuarial models are assumptions including discount rates, rates of increase in future salary and benefit levels, mortality rates, consumer price index and the expected return on plan assets. These assumptions are updated annually based on available market data and the expected performance of plan assets. Nevertheless, the actuarial assumptions may differ significantly from actual results due to changes in market conditions, economic and mortality trends and other assumptions. Any changes in these assumptions could have a significant impact on our present and future liabilities to and costs associated with our defined benefit retirement plans and may result in increased expenses and reduce our profitability.

When contributing to our qualified retirement plans, we will take into consideration the minimum and maximum amounts required by ERISA, the attained funding target percentage of the plan, the variable-rate premiums that may be required by the PBGC, and any funding relief that might be enacted by Congress. These factors could lead to increased PBGC variable-rate premiums and/or increases in plan funding in future years.

Risks Related to Regulation

Our businesses and those of our affiliates are heavily regulated and changes in regulation or the application of regulation may reduce our profitability.

We are subject to detailed insurance, asset management and other financial services laws and government regulation. In addition to the insurance, asset management and other regulations and laws specific to the industries in which we operate, regulatory agencies have broad administrative power over many aspects of our business, which may include ethical issues, money laundering, privacy, recordkeeping and marketing and sales practices. Also, bank regulators and other supervisory authorities in the United States and elsewhere continue to scrutinize payment processing and other transactions under regulations governing such matters as money-laundering, prohibited transactions with countries subject to sanctions, and bribery or other anti-corruption measures.

Compliance with applicable laws and regulations is time consuming and personnel-intensive, and changes in laws and regulations may materially increase the cost of compliance and other expenses of doing business. There are a number of risks that may arise where applicable regulations may be unclear, subject to multiple interpretations or under development or where regulations may conflict with one another, where regulators revise their previous guidance or courts overturn previous rulings, which could result in our failure to meet applicable standards. Regulators and other authorities have the power to bring administrative or judicial proceedings against us, which could result, among other things, in suspension or revocation of our licenses, cease and desist orders, fines, civil penalties, criminal penalties or other disciplinary action which could materially harm our results of operations and financial condition. If we fail to address, or appear to fail to address, appropriately any of these matters, our reputation could be harmed and we could be subject to additional legal risk, which could increase the size and number of claims and damages asserted against us or subject us to enforcement actions, fines and penalties. See "Item 1. Business—Regulation" for further discussion of the impact of regulations on our businesses.

Our insurance businesses are heavily regulated, and changes in regulation in the United States, enforcement actions and regulatory investigations may reduce profitability.

Our insurance operations are subject to comprehensive regulation and supervision throughout the United States. State insurance laws regulate most aspects of our insurance businesses, and our insurance subsidiaries are regulated by the insurance departments of the states in which they are domiciled and the states in which they are licensed. The primary purpose of state regulation is to protect policyholders, and not necessarily to protect creditors or investors. See "Item 1. Business—Regulation—Insurance Regulation."



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State insurance regulators, the NAIC and other regulatory bodies regularly reexamine existing laws and regulations applicable to insurance companies and their products. Changes in these laws and regulations, or in interpretations thereof, are often made for the benefit of the consumer at the expense of the insurer and could materially and adversely affect our business, results of operations or financial condition. We currently use captive reinsurance subsidiaries primarily to reinsure term life insurance, universal life insurance with secondary guarantees, and stable value annuity business. Our continued use of captive reinsurance subsidiaries and is subject to to potential regulatory changes. In 2014, the NAIC considered a proposal to require states to apply NAIC accreditation standards, applicable to traditional insurers, to captive reinsurers. In 2015, the NAIC adopted such a proposal, in the form of a revised preamble to the NAIC accreditation standards (the "Standard"), with an effective date of January 1, 2016 for application of the Standard to captives that assume XXX and AXXX business. Under the Standard, a state will be deemed in compliance as it relates to XXX and AXXX captives if the applicable reinsurance transaction satisfies AG48. The Standard applies only prospectively, so that XXX/AXXX captives will not be subject to the Standard if reinsured policies were issued prior to January 1, 2015 and ceded so that they were part of a reinsurance arrangement as of December 31, 2014.

Any regulatory action that limits our ability to achieve desired benefits from the use of or materially increases our cost of using captive reinsurance companies, either retroactively or prospectively could have a material adverse effect on our financial condition or results of operations. For more detail see "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Statutory Capital and Risk-Based Capital of Principal Insurance Subsidiaries—Captive Reinsurance Subsidiaries."

Insurance regulators have implemented, or begun to implement significant changes in the way in which insurers must determine statutory reserves and capital, particularly for products with contractual guarantees such as universal life policies, and are considering further potentially significant changes in these requirements.

In addition to the foregoing risks, the financial services industry is the focus of increased regulatory scrutiny as various state and federal governmental agencies and self-regulatory organizations conduct inquiries and investigations into the products and practices of the financial services industries. For a description of certain regulatory inquiries affecting the Company, see the Litigation and Regulatory Matters section of the Commitments and Contingencies Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K. It is possible that future regulatory inquiries or investigations involving the insurance industry generally, or the Company specifically, could materially and adversely affect our business, results of operations or financial condition.

In some cases, this regulatory scrutiny has led to legislation and regulation, or proposed legislation and regulation that could significantly affect the financial services industry, or has resulted in regulatory penalties, settlements and litigation. New laws, regulations and other regulatory actions aimed at the business practices under scrutiny could materially and adversely affect our business, results of operations or financial condition. The adoption of new laws and regulations, enforcement actions, or litigation, whether or not involving us, could influence the manner in which we distribute our products, result in negative coverage of the industry by the media, cause significant harm to our reputation and materially and adversely affect our business, results of operations or financial condition.

Our products are subject to extensive regulation and failure to meet any of the complex product requirements may reduce profitability.

Our retirement and investment, and remaining insurance and annuity products are subject to a complex and extensive array of state and federal tax, securities, insurance and employee benefit plan laws and regulations, which are administered and enforced by a number of different governmental and self-regulatory authorities, including state insurance regulators, state securities administrators, state banking authorities, the SEC, FINRA, the DOL and the IRS.

For example, U.S. federal income tax law imposes requirements relating to insurance and annuity product design, administration and investments that are conditions for beneficial tax treatment of such products under the Internal Revenue Code. Additionally, state and federal securities and insurance laws impose requirements relating to insurance and annuity product design, offering and distribution and administration. Failure to administer product features in accordance with contract provisions or applicable law, or to meet any of these complex tax, securities, or insurance requirements could subject us to administrative penalties imposed by a particular governmental or self-regulatory authority, unanticipated costs associated with remedying such failure or other claims, harm to our reputation, interruption of our operations or adversely impact profitability.



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The Dodd-Frank Act over-the-counter derivatives regulations could have adverse consequences for us, and/or materially affect our results of operations, financial condition or liquidity.

Changes to federal regulations could adversely affect our distribution model by restricting our ability to provide customers with advice.

We may not be able to mitigate the reserve strain associated with Regulation XXX and AG38, potentially resulting in a negative impact on our capital position.

Regulation XXX requires insurers to establish additional statutory reserves for certain term life insurance policies with long-term premium guarantees and for certain universal life policies with secondary guarantees. In addition, AG38 clarifies the application of Regulation XXX with respect to certain universal life insurance policies with secondary guarantees. While we no longer issue these products, certain of our existing term insurance products and a number of our universal life insurance products are affected by Regulation XXX and AG38, respectively. The application of both Regulation XXX and AG38 involves numerous interpretations. At times, there may be differences of opinion between management and state insurance departments regarding the application of these and other actuarial standards. Such differences of opinion may lead to a state insurance regulator requiring greater reserves to support insurance liabilities than management estimated.

We have implemented reinsurance and capital management actions to mitigate the capital impact of Regulation XXX and AG38, including the use of LOCs and the implementation of other transactions that provide acceptable collateral to support the reinsurance of the liabilities to wholly owned reinsurance captives or to third-party reinsurers. These arrangements are subject to review and approval by state insurance regulators and review by rating agencies. State insurance regulators, the NAIC and other regulatory bodies are also investigating the use of wholly owned reinsurance captives to reinsure these liabilities and the NAIC has made recent advances in captives reform. During 2014, 2015, and 2016, the NAIC adopted captives proposals applicable to captives that assume Regulation XXX and AG38 reserves. See "Our insurance businesses are heavily regulated, and changes in regulation in the United States, enforcement actions and regulatory investigations may reduce profitability" above and "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Statutory Capital and Risk-Based Capital of Principal Insurance Subsidiaries—Captive Reinsurance Subsidiaries." Rating agencies may include a portion of these LOCs or other collateral in their leverage calculations, which could increase their assessment of our leverage ratios and potentially impact our ratings. We cannot provide assurance that our ability to use captive reinsurance companies to achieve



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the desired benefit from financing statutory reserves will not be limited or that there will not be regulatory or rating agency challenges to the reinsurance and capital management actions we have taken to date or that acceptable collateral obtained through such transactions will continue to be available or available on a cost-effective basis.

The result of these potential challenges, as well as the inability to obtain acceptable collateral, could require us to increase statutory reserves, incur higher operating and/or tax costs.

Certain of the reserve financing facilities we have put in place will mature prior to the run off of the liabilities they support. As a result, we cannot provide assurance that we will be able to continue to maintain collateral support related to our captive reinsurance subsidiaries or our Arizona captives. If we are unable to continue to maintain collateral support related to our captive reinsurance subsidiaries or our Arizona captives, we may be required to increase statutory reserves or incur higher operating and/or tax costs than we currently anticipate.

Changes in tax laws and interpretations of existing tax law could increase our tax costs, impact the ability of our insurance company subsidiaries to make distributions to Voya Financial, Inc. or make our products less attractive to customers.

In addition to its effect on our balance sheet, Tax Reform has had, and will continue to have other financial and economic impacts on the Company. While the change in the federal corporate tax rate from 35% to 21% is expected to have a beneficial economic impact on the Company, there are a number of changes enacted in Tax Reform that could increase the Company's tax costs, including:


•	Changes to the dividends received deduction ("DRD");


•	Changes to the capitalization period and rates of DAC for tax purposes;


•	Changes to the calculation of life insurance reserves for tax purposes; and


•	Changes to the rules on deductibility of executive compensation.

It is possible that, as a result of, among other things, future clarifications or guidance from the IRS, other agencies, or the courts, Tax Reform could have adverse impacts, including materially adverse impacts, that we cannot anticipate or predict at this time. Moreover, U.S. states that stand to lose tax revenue as a consequence of Tax Reform may enact measures that increase our tax costs. In addition, there could be other changes in tax law, as well as changes in interpretation and enforcement of existing tax laws that could increase tax costs.

Tax Reform also resulted in a reduction in the combined statutory deferred tax assets of our insurance subsidiaries, reducing their combined RBC ratio. Future changes or clarifications in tax law could cause further reductions to the statutory deferred tax assets and RBC ratios of our insurance subsidiaries. A reduction in the statutory deferred tax assets or RBC ratios may impact the ability of the affected insurance subsidiaries to make distributions to us and consequently could negatively impact our ability to pay dividends to our stockholders and to service our debt.

Current U.S. federal income tax law permits tax-deferred accumulation of income earned under life insurance and annuity products, and permits exclusion from taxation of death benefits paid under life insurance contracts. Changes in tax laws that restrict these tax benefits could make some of our products less attractive to customers. Reductions in individual income tax rates or estate tax rates could also make some of our products less advantageous to customers. Changes in federal tax laws that reduce the amount an individual can contribute on a pre-tax basis to an employer-provided, tax-deferred product (either directly by reducing current limits or indirectly by changing the tax treatment of such contributions from exclusions to deductions) or changes that would limit an individual’s aggregate amount of tax-deferred savings could make our retirement products less attractive to customers. In addition, any measures that may be enacted in U.S. states in response to Tax Reform, or otherwise, could make our products less attractive to our customers. Furthermore, as a result of Tax Reform's recent adoption and significant scope, its impact on our products, including their attractiveness relative to competitors, cannot yet be known and may be adverse, perhaps materially.

Risks Related to Our Holding Company Structure

As holding companies, Voya Financial, Inc. and Voya Holdings depend on the ability of their subsidiaries to transfer funds to them to meet their obligations.

Voya Financial, Inc. is the holding company for all our operations, and dividends, returns of capital and interest income on intercompany indebtedness from Voya Financial, Inc.’s subsidiaries are the principal sources of funds available to Voya Financial,



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Inc. to pay principal and interest on its outstanding indebtedness, to pay corporate operating expenses, to pay any stockholder dividends, to repurchase any stock, and to meet its other obligations. The subsidiaries of Voya Financial, Inc. are legally distinct from Voya Financial, Inc. and, except in the case of Voya Holdings Inc., which is the guarantor of certain of our outstanding indebtedness, have no obligation to pay amounts due on the debt of Voya Financial, Inc. or to make funds available to Voya Financial, Inc. for such payments. The ability of our subsidiaries to pay dividends or other distributions to Voya Financial, Inc. in the future will depend on their earnings, tax considerations, covenants contained in any financing or other agreements and applicable regulatory restrictions. In addition, such payments may be limited as a result of claims against our subsidiaries by their creditors, including suppliers, vendors, lessors and employees. The ability of our insurance subsidiaries to pay dividends and make other distributions to Voya Financial, Inc. will further depend on their ability to meet applicable regulatory standards and receive regulatory approvals, as discussed below under "—The ability of our insurance subsidiaries to pay dividends and other distributions to Voya Financial, Inc. and Voya Holdings is further limited by state insurance laws, and our insurance subsidiaries may not generate sufficient statutory earnings or have sufficient statutory surplus to enable them to pay ordinary dividends."

Voya Holdings is wholly owned by Voya Financial, Inc. and is also a holding company, and accordingly its ability to make payments under its guarantees of our indebtedness or on the debt for which it is the primary obligor is subject to restrictions and limitations similar to those applicable to Voya Financial, Inc. Neither Voya Financial, Inc., nor Voya Holdings, has significant sources of cash flows other than from our subsidiaries that do not guarantee such indebtedness.

If the ability of our insurance or non-insurance subsidiaries to pay dividends or make other distributions or payments to Voya Financial, Inc. and Voya Holdings is materially restricted by regulatory requirements, other cash needs, bankruptcy or insolvency, or our need to maintain the financial strength ratings of our insurance subsidiaries, or is limited due to results of operations or other factors, we may be required to raise cash through the incurrence of debt, the issuance of equity or the sale of assets. However, there is no assurance that we would be able to raise cash by these means. This could materially and adversely affect the ability of Voya Financial, Inc. and Voya Holdings to pay their obligations.

The ability of our insurance subsidiaries to pay dividends and other distributions to Voya Financial, Inc. and Voya Holdings Inc. is limited by state insurance laws, and our insurance subsidiaries may not generate sufficient statutory earnings or have sufficient statutory surplus to enable them to pay ordinary dividends.

The payment of dividends and other distributions to Voya Financial, Inc. and Voya Holdings Inc.by our insurance subsidiaries is regulated by state insurance laws and regulations.

The jurisdictions in which our insurance subsidiaries are domiciled impose certain restrictions on the ability to pay dividends to their respective parents. These restrictions are based, in part, on the prior year’s statutory income and surplus. In general, dividends up to specified levels are considered ordinary and may be paid without prior regulatory approval. Dividends in larger amounts, or extraordinary dividends, are subject to approval by the insurance commissioner of the relevant state of domicile. In addition, under the insurance laws applicable to our insurance subsidiaries domiciled in Connecticut and Minnesota, no dividend or other distribution exceeding an amount equal to an insurance company's earned surplus may be paid without the domiciliary insurance regulator’s prior approval (the "positive earned surplus requirement"). Under applicable domiciliary insurance regulations, our Principal Insurance Subsidiaries must deduct any distributions or dividends paid in the preceding twelve months in calculating dividend capacity. From time to time, the NAIC and various state insurance regulators have considered, and may in the future consider, proposals to further limit dividend payments that an insurance company may make without regulatory approval. More stringent restrictions on dividend payments may be adopted from time to time by jurisdictions in which our insurance subsidiaries are domiciled, and such restrictions could have the effect, under certain circumstances, of significantly reducing dividends or other amounts payable to Voya Financial, Inc. or Voya Holdings by our insurance subsidiaries without prior approval by regulatory authorities. We may also choose to change the domicile of one or more of our insurance subsidiaries or captive insurance subsidiaries, in which case we would be subject to the restrictions imposed under the laws of that new domicile, which could be more restrictive than those to which we are currently subject. In addition, in the future, we may become subject to debt instruments or other agreements that limit the ability of our insurance subsidiaries to pay dividends or make other distributions. The ability of our insurance subsidiaries to pay dividends or make other distributions is also limited by our need to maintain the financial strength ratings assigned to such subsidiaries by the rating agencies. These ratings depend to a large extent on the capitalization levels of our insurance subsidiaries.

For a summary of ordinary dividends and extraordinary distributions paid by each of our Principal Insurance Subsidiaries to Voya Financial or Voya Holdings in 2017 and 2018, and a discussion of ordinary dividend capacity for 2019, see "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-Restrictions on Dividends and Returns of Capital from Subsidiaries." Our Principal Insurance Subsidiary domiciled in Connecticut has ordinary dividend capacity for 2019. However, as a result of the extraordinary dividends it paid in 2015 , 2016, and 2017 together with statutory losses incurred in connection with the recapture and cession to one of our Arizona captives of certain term life business



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in the fourth quarter of 2016, our Principal Insurance Subsidiary domiciled in Minnesota currently has negative earned surplus. In addition, primarily as a result of statutory losses incurred in connection with the retrocession of our Principal Insurance Subsidiary domiciled in Minnesota of certain life insurance business in the fourth quarter of 2018, our Principal Insurance Subsidiary domiciled in Colorado has a net loss from operations for the twelve-month period ending the preceding December 31. Therefore neither our Minnesota or Colorado Principal Insurance Subsidiaries have the capacity at this time to make ordinary dividend payments to Voya Holdings and cannot make an extraordinary dividend payment to Voya Holdings Inc. without domiciliary regulatory approval, which can be granted or withheld in the discretion of the regulator.

If any of our Principal Insurance Subsidiaries subject to the positive earned surplus requirement do not succeed in building up sufficient positive earned surplus to have ordinary dividend capacity in future years, such subsidiary would be unable to pay dividends or distributions to our holding companies absent prior approval of its domiciliary insurance regulator, which can be granted or withheld in the discretion of the regulator. In addition, if our Principal Insurance Subsidiaries generate capital in excess of our target combined estimated RBC ratio of 400% and our individual insurance company ordinary dividend limits in future years, then we may also seek extraordinary dividends or distributions. There can be no assurance that our Principal Insurance Subsidiaries will receive approval for extraordinary distribution payments in the future.

The payment of dividends by our captive reinsurance subsidiaries is regulated by their respective governing licensing orders and restrictions in their respective insurance securitization agreements. Generally, our captive reinsurance subsidiaries may not declare or pay dividends in any form to their parent companies other than in accordance with their respective insurance securitization transaction agreements and their respective governing licensing orders, and in no event may the dividends decrease the capital of the captive below the minimum capital requirement applicable to it, and, after giving effect to the dividends, the assets of the captive paying the dividend must be sufficient to satisfy its domiciliary insurance regulator that it can meet its obligations. Likewise, our Arizona captives may not declare or pay dividends in any form to us other than in accordance with their annual capital and dividend plans as approved by the ADOI, which include minimum capital requirements.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

As of December 31, 2018, we owned or leased 66 locations totaling approximately 1.8 million square feet, of which approximately 0.8 million square feet was owned properties and approximately 1.0 million square feet was leased properties throughout the United States.

Item 3. Legal Proceedings

See the Litigation and Regulatory Matters section of the Commitments and Contingencies Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K for a description of our material legal proceedings.

Item 4. Mine Safety Disclosures

Not Applicable.



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PART II


Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Issuer Common Equity

Voya Financial, Inc.'s common stock, par value $0.01 per share, began trading on the NYSE under the symbol "VOYA" on May 2, 2013.

The declaration and payment of dividends is subject to the discretion of our Board of Directors and depends on Voya Financial, Inc.'s financial condition, results of operations, cash requirements, future prospects, regulatory restrictions on the payment of dividends by Voya Financial, Inc.'s other insurance subsidiaries and other factors deemed relevant by the Board. The payment of dividends is also subject to restrictions under the terms of our junior subordinated debentures in the event we should choose to defer interest payments on those debentures. Additionally, our ability to declare or pay dividends on shares of our common stock will be substantially restricted in the event that we do not declare and pay (or set aside) dividends on the Series A Preferred Stock for the last preceding dividend period. See Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources in Part II, Item 7. of this Annual Report on Form 10-K for further information regarding common stock dividends.

At February 15, 2019, there were eight stockholders of record of common stock, which are different from the number of beneficial owners of the Company’s common stock.

Purchases of Equity Securities by the Issuer

The following table summarizes Voya Financial, Inc.'s repurchases of its common stock for the three months ended December 31, 2018:



Period	Total Number of Shares Purchased⁽¹⁾	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs ⁽²⁾
					_{(in millions)}
October 1, 2018 - October 31, 2018	1,785,973	$	47.68	1,781,082	$	676
November 1, 2018 - November 30, 2018	2,610,513	44.34		2,587,967	561
December 1, 2018 - December 31, 2018	1,800,628	41.61		1,800,414	486
Total	6,197,114	$	44.51	6,169,463	N/A

⁽¹⁾ In connection with exercise of vesting of equity-based compensation awards, employees may remit to Voya Financial, Inc., or Voya Financial, Inc. may withhold into treasury stock, shares of common stock in respect to tax withholding obligations and option exercise cost associated with such exercise or vesting. For the three months ended December 31, 2018, there were 27,651 Treasury share increases in connection with such withholding activities.

⁽²⁾ On October 25, 2018, the Board of Directors provided its most recent share repurchase authorization, increasing the aggregate amount of the Company's common stock authorized for repurchase by $500. The current share repurchase authorization expires on December 31, 2019 (unless extended), and does not obligate the Company to purchase any shares. The authorization for share repurchase program may be terminated, increased or decreased by the Board of Directors at any time.

Refer to the Share-based Incentive Compensation Plans Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K and to Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters for equity compensation information.



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Item 6. Selected Financial Data

The following selected financial data has been derived from the Company's Consolidated Financial Statements. The Statement of Operations data for the years ended December 31, 2018, 2017 and 2016 and the Balance Sheet data as of December 31, 2018 and 2017 have been derived from the Company's Consolidated Financial Statements included elsewhere herein. The Statement of Operations data for the years ended December 31, 2015 and 2014 and the Balance Sheet data as of December 31, 2016, 2015 and 2014 have been derived from the Company's audited Consolidated Financial Statements not included herein. Certain prior year amounts have been reclassified to reflect the presentation of discontinued operations and assets and liabilities of businesses held for sale. The selected financial data set forth below should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7. of this Annual Report on Form 10-K and the Financial Statements and Supplementary Data in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K.



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	Year Ended December 31,
	2018			2017			2016			2015			2014
	($ in millions, except per share amounts)
Statement of Operations Data:
Revenues
Net investment income	$	3,307		$	3,294		$	3,354		$	3,343		$	3,357
Fee income	2,708			2,627			2,471			2,470			2,462
Premiums	2,159			2,121			2,795			2,554			2,006
Net realized capital gains (losses)	(399		)	(227		)	(363		)	(560		)	(105		)
Total revenues	8,514			8,618			8,788			8,716			8,780
Benefits and expenses:
Interest credited and other benefits to contract owners/policyholders	4,575			4,636			5,314			4,698			4,410
Operating expenses	2,691			2,654			2,655			2,684			3,088
Net amortization of Deferred policy acquisition costs and Value of business acquired	368			529			415			377			240
Interest expense	221			184			288			197			190
Total benefits and expenses	7,904			8,090			8,778			8,240			8,145
Income (loss) from continuing operations before income taxes	610			528			10			476			635
Income tax expense (benefit)	55			740			(29		)	84			(1,731		)
Income (loss) from continuing operations	555			(212		)	39			392			2,366
Income (loss) from discontinued operations, net of tax	457			(2,580		)	(337		)	146			167
Net income (loss)	1,012			(2,792		)	(298		)	538			2,533
Less: Net income (loss) attributable to noncontrolling interest	137			200			29			130			238
Net income (loss) available to Voya Financial, Inc.	875			(2,992		)	(327		)	408			2,295

Earnings Per Share
Basic
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders	$	2.56		$	(2.24	)	$	0.05		$	1.16		$	8.41
Income (loss) from discontinued operations, net of taxes available to Voya Financial, Inc.'s common shareholders	$	2.80		$	(14.01	)	$	(1.68	)	$	0.65		$	0.66
Income (loss) available to Voya Financial, Inc.'s common shareholders	$	5.36		$	(16.25	)	$	(1.63	)	$	1.81		$	9.07

Diluted
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders	$	2.48		$	(2.24	)	$	0.05		$	1.15		$	8.34
Income (loss) from discontinued operations, net of taxes available to Voya Financial, Inc.'s common shareholders	$	2.72		$	(14.01	)	$	(1.66	)	$	0.65		$	0.66
Income (loss) available to Voya Financial, Inc.'s common shareholders	$	5.20		$	(16.25	)	$	(1.61	)	$	1.80		$	9.00

Cash dividends declared per common share	$	0.04		$	0.04		$	0.04		$	0.04		$	0.04



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	As of December 31,
	2018		2017		2016		2015		2014
	($ in millions)
Balance Sheet Data:
Total investments	$	63,566	$	66,087	$	63,783	$	60,939	$	64,170
Assets held in separate accounts	71,228		77,605		66,185		63,159		67,460
Assets held for sale	—		59,052		62,709		63,887		67,627
Total assets	154,682		222,532		214,585		218,574		227,252
Future policy benefits and contract owner account balances	65,489		65,805		64,848		63,173		61,542
Short-term debt	1		337		—		—		—
Long-term debt	3,136		3,123		3,550		3,460		3,487
Liabilities related to separate accounts	71,228		77,605		66,185		63,159		67,460
Liabilities held for sale	—		58,277		59,576		59,695		63,098
Total Voya Financial, Inc. shareholders' equity, excluding AOCI⁽¹⁾	7,606		7,278		11,074		12,012		13,042
Total Voya Financial, Inc. shareholders' equity	8,213		10,009		12,995		13,437		16,146

⁽¹⁾ Shareholders'equity, excluding AOCI, is derived by subtracting AOCI from Voya Financial, Inc. shareholders’ equity—both components of which are presented in the respective Consolidated Balance Sheets. For a description of AOCI, see the Accumulated Other Comprehensive Income (Loss) Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K. We provide shareholders’ equity, excluding AOCI, because it is a common measure used by insurance analysts and investment professionals in their evaluations.



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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis presents a review of our results of operations for the years ended December 31, 2018, 2017 and 2016 and financial condition as of December 31, 2018 and 2017. This item should be read in its entirety and in conjunction with the Consolidated Financial Statements and related notes contained in Part II, Item 8. of this Annual Report on Form 10-K.

In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Actual results may differ materially from those discussed in the forward-looking statements as a result of various factors. See the "Note Concerning Forward-Looking Statements."

Overview

We provide our principal products and services through four segments: Retirement, Investment Management, Employee Benefits and Individual Life. Corporate includes activities not directly related to our segments, results of the Retained Business (defined below) and certain run-off activities that are not meaningful to our business strategy. See the Segments Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K for further information on our segments.

In general, our primary sources of revenue include fee income from managing investment portfolios for clients as well as asset management and administrative fees from certain insurance and investment products; investment income on our general account and other funds; and from insurance premiums. Our fee income derives from asset- and participant-based advisory and recordkeeping fees on our retirement products, from management and administrative fees we earn from managing client assets, from the distribution, servicing and management of mutual funds, as well as from other fees such as surrender charges from policy withdrawals. We generate investment income on the assets in our general account, primarily fixed income assets, that back our liabilities and surplus. We earn premiums on insurance policies, including stop-loss, group life, voluntary and disability products as well as individual life insurance and retirement contracts. Our expenses principally consist of general business expenses, commissions and other costs of selling and servicing our products, interest credited on general account liabilities as well as insurance claims and benefits including changes in the reserves we are required to hold for anticipated future insurance benefits.

Because our fee income is generally tied to account values, our profitability is determined in part by the amount of assets we have under management or administration, which in turn depends on sales volumes to new and existing clients, net deposits from retirement plan participants, and changes in the market value of account assets. Our profitability also depends on the difference between the investment income we earn on our general account assets, or our portfolio yield, and crediting rates on client accounts. Underwriting income, principally dependent on our ability to price our insurance products at a level that enables us to earn a margin over the costs associated with providing benefits and administering those products, and to effectively manage actuarial and policyholder behavior factors, is another component of our profitability.

Profitability also depends on our ability to effectively deploy capital and utilize our tax assets. Furthermore, profitability depends on our ability to manage expenses to acquire new business, such as commissions and distribution expenses, as well as other operating costs.



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The following represents segment percentage contributions to total Adjusted operating revenues and Adjusted operating earnings before income taxes for the year ended December 31, 2018:



	Year Ended December 31, 2018
percent of total	Adjusted Operating Revenues		Adjusted Operating Earnings before Income Taxes
Retirement	33.2	%	87.4	%
Investment Management	8.3	%	25.6	%
Employee Benefits	22.5	%	20.0	%
Individual Life	31.3	%	(4.1	)%
Corporate	4.7	%	(28.8	)%

Discontinued Operations

On June 1, 2018, we consummated a series of transactions (collectively, the "Transaction") pursuant to a Master Transaction Agreement dated December 20, 2017 ("MTA") with VA Capital Company LLC ("VA Capital") and Athene Holding Ltd ("Athene"). As part of the Transaction, Venerable Holdings, Inc. ("Venerable"), a wholly owned subsidiary of VA Capital, acquired two of our subsidiaries, Voya Insurance and Annuity Company ("VIAC") and Directed Services, LLC ("DSL"), and VIAC and other Voya subsidiaries reinsured to Athene substantially all of their fixed and fixed indexed annuities business. In connection with the Transaction, VIAC and another Voya subsidiary engaged in a series of reinsurance arrangements pursuant to which Voya and its subsidiaries other than VIAC retained VIAC’s businesses other than variable annuities and fixed and fixed indexed annuities. The Transaction resulted in the disposition of substantially all of our Closed Block Variable Annuity ("CBVA") and Annuities businesses. We have determined that the CBVA and Annuities businesses disposed of meet the discontinued operations criteria and that the sale represents a strategic shift that has a major effect on our operations. Accordingly, the results of operations of the businesses sold have been presented as discontinued operations and segregated for all periods presented, and the assets and liabilities of the businesses sold were classified as held for sale in the Consolidated Balance Sheet as of December 31, 2017. As of December 31, 2017, we recorded an estimated loss on sale, net of tax of $2,423 million which included estimated transactions costs of $31 million as well as the loss of $692 million of deferred tax assets to write down the assets related to our discontinued operations to fair value, which was based on the estimated sales price in the Transaction, less cost to sell as of December 31, 2017. Income (loss) from discontinued operations, net of tax for the year ended December 31, 2018 includes a favorable adjustment to the loss on sale of $505 million, net of tax. As required by the MTA, VA Capital provided us with its proposed purchase price adjustments in December 2018. By way of a dispute notice provided to VA Capital in January 2019, we have formally objected to each of these proposed adjustments. The MTA requires the parties to attempt to resolve these differences in an informal manner prior to entering a formal arbitration phase. Whether or not arbitration is required, we expect this matter to be resolved during the first or second quarter of 2019. Applicable accounting principles require us to estimate and disclose any reasonably possible loss associated with VA Capital’s purchase price adjustment claims, even in a circumstance where we believe that we will prevail on the merits. Solely for this purpose, we estimate that this reasonably possible loss is in a range between $0 and $100 million.

Pursuant to the terms of the Transaction, we have retained a small number of CBVA and Annuities policies that are not included in the disposed businesses described above as "Retained Business". We have evaluated our segment presentation and have determined that, because the Retained Business is insignificant, its results are reported in Corporate.



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The following table summarizes the components of Income (loss) from discontinued operations, net of tax for the years ended December 31, 2018, 2017 and 2016:



	Year Ended December 31,
	2018 ⁽¹⁾			2017			2016
Revenues:
Net investment income	$	510		$	1,266		$	1,288
Fee income	295			801			889
Premiums	(50		)	190			720
Total net realized capital gains (losses)	(345		)	(1,234		)	(900		)
Other revenue	10			19			19
Total revenues	420			1,042			2,016
Benefits and expenses:
Interest credited and other benefits to contract owners/policyholders	442			978			2,199
Operating expenses	(14		)	250			283
Net amortization of Deferred policy acquisition costs and Value of business acquired	49			127			136
Interest expense	10			22			22
Total benefits and expenses	487			1,377			2,640
Income (loss) from discontinued operations before income taxes	(67		)	(335		)	(624		)
Income tax expense (benefit)	(19		)	(178		)	(287		)
Loss on sale, net of tax	505			(2,423		)	—
Income (loss) from discontinued operations, net of tax	$	457		$	(2,580	)	$	(337	)

⁽¹⁾ Reflects Income (loss) from discontinued operations, net of tax for the five months ended May 31, 2018 (the Transaction closed on June 1, 2018).

Trends and Uncertainties

Throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"), we discuss a number of trends and uncertainties that we believe may materially affect our future liquidity, financial condition or results of operations. Where these trends or uncertainties are specific to a particular aspect of our business, we often include such a discussion under the relevant caption of this MD&A, as part of our broader analysis of that area of our business. In addition, the following factors represent some of the key general trends and uncertainties that have influenced the development of our business and our historical financial performance and that we believe will continue to influence our continuing business operations and financial performance in the future.

Market Conditions

While extraordinary monetary accommodation has suppressed volatility in rate, credit and domestic equity markets for an extended period, global capital markets are now past peak accommodation as the U.S. Federal Reserve continues its gradual pace of policy normalization. As global monetary policy becomes less accommodative, an increase in market volatility could affect our business, including through effects on the rate and spread component of yields we earn on invested assets, changes in required reserves and capital, and fluctuations in the value of our assets under management ("AUM") or administration ("AUA"). These effects could be exacerbated by uncertainty about future fiscal policy, changes in tax policy, the scope of potential deregulation, levels of global trade, and geopolitical risk. In the short- to medium-term, the potential for increased volatility, coupled with prevailing interest rates below historical averages, can pressure sales and reduce demand as consumers hesitate to make financial decisions. In addition, this environment could make it difficult to manufacture products that are consistently both attractive to customers and profitable. Financial performance can be adversely affected by market volatility as fees driven by AUM fluctuate, hedging costs increase and revenue declines due to reduced sales and increased outflows. As a company with strong retirement, investment management and insurance capabilities, however, we believe the market conditions noted above may, over the long term, enhance the attractiveness of our broad portfolio of products and services. We will need to continue to monitor the behavior of our customers and other factors, including mortality rates, morbidity rates, and lapse rates, which adjust in response to changes in market conditions in order to ensure that our products and services remain attractive as well as profitable. For additional information on our sensitivity to interest rates and equity market prices, see Quantitative and Qualitative Disclosures About Market Risk in Part II, Item 7A. of this Annual Report on Form 10-K.



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Interest Rate Environment

In the fourth quarter of 2018, the term structure of interest rates featured lower rates. While domestic economic conditions spurred an increase in the Fed Funds rate in December 2018 - the eighth increase in less than two years - rates across the term structure rallied in the fourth quarter on a weakening economic outlook. Intermediate parts of the yield curve inverted - with some intermediate Treasury maturities offering lower yields than shorter-dated maturities - as the market began to price in lower future policy rates. The Federal Reserve has begun execution of its plan for gradually reducing its holdings of Treasury and agency securities. The timing and impact of any further increases in the Federal Funds rate, or deviations in the expected pace of Federal Reserve balance sheet normalization are uncertain and dependent on the Federal Reserve Board's assessment of economic growth, labor market developments, inflation outlook, fiscal policy developments and other risks that will impact the level and volatility of rates.

The continued low interest rate environment has affected and may continue to affect the demand for our products in various ways. While interest rates remain low by historical standards, we may experience lower sales and reduced demand as it is more difficult to manufacture products that are consistently both attractive to customers and our economic targets. Our financial performance may be adversely affected by the current low interest rate environment, or by rapidly increasing rates.

We believe the interest rate environment will continue to influence our business and financial performance in the future for several reasons, including the following:

•

Our continuing business general account investment portfolio, which was approximately $62 billion as of December 31, 2018, consists predominantly of fixed income investments and had an annualized earned yield of approximately 5.2% in the fourth quarter of 2018. In the near term and absent further material change in yields available on fixed income investments, we expect the yield we earn on new investments will be lower than the yields we earn on maturing investments, which were generally purchased in environments where interest rates were higher than current levels. We currently anticipate that proceeds that are reinvested in fixed income investments during 2019 will earn an average yield below the prevailing portfolio yield. If interest rates were to rise, we expect the yield on our new money investments would also rise and gradually converge toward the yield of those maturing assets. In addition, while less material to financial results than new money investment rates, movements in prevailing interest rates also influence the prices of fixed income investments that we sell on the secondary market rather than holding until maturity or repayment, with rising interest rates generally leading to lower prices in the secondary market, and falling interest rates generally leading to higher prices.

•

Certain of our products pay guaranteed minimum rates. For example, fixed accounts and a portion of the stable value accounts included within defined contribution retirement plans and universal life ("UL") policies. We are required to pay these guaranteed minimum rates even if earnings on our investment portfolio decline, with the resulting investment margin compression negatively impacting earnings. In addition, we expect more policyholders to hold policies (lower lapses) with comparatively high guaranteed rates longer in a low interest rate environment. Conversely, a rise in average yield on our investment portfolio would positively impact earnings if the average interest rate we pay on our products does not rise correspondingly. Similarly, we expect policyholders would be less likely to hold policies (higher lapses) with existing guarantees as interest rates rise.

For additional information on the impact of the continued low interest rate environment, see Risk Factors - 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 in Part I, Item 1A. of this Annual Report on Form 10-K. Also, for additional information on our sensitivity to interest rates, see Quantitative and Qualitative Disclosures About Market Risk in Part II, Item 7A. of this Annual Report on Form 10-K.



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Seasonality and Other Matters

Our business results can vary from quarter to quarter as a result of seasonal factors. For all of our segments, the first quarter of each year typically has elevated operating expenses, reflecting higher payroll taxes, equity compensation grants, and certain other expenses that tend to be concentrated in the first quarters. Additionally, alternative investment income tends to be lower in the first quarters. Other seasonal factors that affect our business include:

Retirement

•

The first quarters tend to have the highest level of recurring deposits in Corporate Markets, due to the increase in participant contributions from the receipt of annual bonus award payments or annual lump sum matches and profit sharing contributions made by many employers. Corporate Market withdrawals also tend to increase in the first quarters as departing sponsors change providers at the start of a new year.


•	In the third quarters, education tax-exempt markets typically have the lowest recurring deposits, due to the timing of vacation schedules in the academic calendar.

•

The fourth quarters tend to have the highest level of single/transfer deposits due to new Corporate Market plan sales as sponsors transfer from other providers when contracts expire at the fiscal or calendar year-end. Recurring deposits in the Corporate Market may be lower in the fourth quarters as higher paid participants scale back or halt their contributions upon reaching the annual maximums allowed for the year. Finally, Corporate Market withdrawals tend to increase in the fourth quarters, as in the first quarters, due to departing sponsors.

Investment Management


•	In the fourth quarters, performance fees are typically higher due to certain performance fees being associated with calendar-year performance against established benchmarks and hurdle rates.

Employee Benefits


•	The first quarters tend to have the highest Group Life loss ratio. Sales for Group Life and Stop Loss also tend to be the highest in the first quarters, as most of our contracts have January start dates in alignment with the start of our clients' fiscal years.


•	The third quarters tend to have the second highest Group Life and Stop Loss sales, as a large number of our contracts have July start dates in alignment with the start of our clients' fiscal years.

Individual Life


•	The first and fourth quarters tend to have the highest levels of net underwriting income.

In addition to these seasonal factors, our results are impacted by the annual review of assumptions related to future policy benefits and deferred policy acquisition costs ("DAC"), value of business acquired ("VOBA") (collectively, "DAC/VOBA") and other intangibles, which we generally complete in the third quarter of each year, and annual remeasurement related to our employee benefit plans, which we generally complete in the fourth quarter of each year. See Critical Accounting Judgments and Estimates in Part II, Item 7. of this Annual Report on Form 10-K for further information.

Stranded Costs

As a result of the Transaction, the historical revenues and certain expenses of our CBVA and Annuities businesses have been classified as discontinued operations. Expenses classified within discontinued operations include only direct operating expenses incurred by these businesses, and then only to the extent that the nature of such expenses was such that we would cease to incur such expenses upon the close of the Transaction. Certain other direct costs of these businesses, including those which relate to activities for which we have agreed to provide transitional services and for which we are reimbursed under a transition services agreement, are reported within continuing operations. Additionally, indirect costs, such as those related to corporate and shared service functions that were previously allocated to the businesses sold, are reported within continuing operations. These costs reported within continuing operations ("Stranded Costs") are recorded in Corporate and are included in Adjusted operating earnings before income taxes and Income (loss) from continuing operations for all periods presented. We are addressing Stranded Costs



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through a cost reduction strategy. Refer to Restructuring in Part II, Item 7 of this Annual Report on Form 10-K for more information on this program.

Carried Interest

Net investment income and net realized gains (losses), within our Investment Management segment, includes, for the current and previous periods, performance-based capital allocations related to sponsored private equity funds ("carried interest") that are subject to later reversal based on subsequent fund performance, to the extent that cumulative rates of investment return fall below specified investment hurdle rates. Any such reversal could be fully or partially recovered in subsequent periods if cumulative fund performance later exceeds applicable hurdles. For the year ended December 31, 2018, our carried interest total net results were a gain of $13 million, including the recovery of $1 million in previously reversed accrued carried interest related to a private equity fund which experienced an improvement in fund performance during 2017. For the year ended December 31, 2017, our carried interest total net results were a gain of $35 million, including the recovery of $25 million in previously reversed accrued carried interest related to a private equity fund which experienced an increase in fund performance during 2017. For additional information on carried interest, see Risk Factors - Revenues, earnings and income from our Investment Management business operations could be adversely affected if the terms of our asset management agreements are significantly altered or the agreements are terminated, or if certain performance hurdles are not realized in Part I, Item 1A. of this Annual Report on Form 10-K.

Restructuring

Organizational Restructuring

As a result of the closing of the Transaction, we are undertaking further restructuring efforts to execute the transition and reduce stranded expenses associated with our CBVA and fixed and fixed indexed annuities businesses, as well as our corporate and shared services functions ("Organizational Restructuring").

In October 2018, we announced our decision to cease new sales following the strategic review of our Individual Life business. See the Business, Basis of Presentation and Significant Accounting Policies Note in Part II, Item 8. of this Annual Report on Form 10-K for additional information.

In November 2018, we announced that we are targeting an additional $100 million of cost savings by the end of 2020, which is in addition to savings previously announced of $110 to $130 million by the middle of 2019 and $20 million of expected savings from ceasing Individual Life sales referenced above. These savings initiatives will improve operational efficiency, strengthen technology capabilities and centralize certain sales, operations and investment management activities. The restructuring charges in connection with these initiatives are not reflected in our run-rate cost savings estimates.

The Organizational Restructuring initiatives described above have resulted in recognition of severance and organizational transition costs and are reflected in Operating expenses in the Consolidated Statements of Operations, but excluded from Adjusted operating earnings before income taxes. For the year ended December 31, 2018, we incurred Organizational Restructuring expenses of $49 million associated with continuing operations.

The aggregate amount of additional Organizational Restructuring expenses we expect to incur is in the range of $200 to $300 million. We anticipate that these costs, which will include severance, organizational transition costs incurred to reorganize operations and other costs such as contract terminations and asset write-offs, will occur at least through the end of 2020.

Restructuring expenses that were directly related to the preparation for and execution of the Transaction are included in Income (loss) from discontinued operations, net of tax, in the Consolidated Statements of Operations. For the year ended December 31, 2018, we incurred Organizational Restructuring expenses as a result of the Transaction of $6 million of severance and organizational transition costs, which are reflected in discontinued operations.

2016 Restructuring

In 2016, we began implementing a series of initiatives designed to make us a simpler, more agile company able to deliver an enhanced customer experience ("2016 Restructuring"). These initiatives include an increasing emphasis on less capital-intensive products and the achievement of operational synergies.

Substantially all of the initiatives associated with the 2016 Restructuring program concluded at the end of 2018. However, we expect to incur approximately $10 to $20 million of additional restructuring costs associated with the completion of the information technology transition agreement entered into during 2017.



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For the years ended December 31, 2018, 2017 and 2016, the total of all initiatives in the 2016 Restructuring program resulted in restructuring expenses of $30 million, $82 million and $34 million, respectively, which are reflected in Operating expenses in the Consolidated Statements of Operations, but are excluded from Adjusted operating earnings before income taxes. These expenses are classified as a component of Other adjustments to Income (loss) from continuing operations before income taxes and consequently are not included in the adjusted operating results of our segments.

Results of Operations

Operating Measures

In this MD&A, we discuss Adjusted operating earnings before income taxes and Adjusted operating revenues, each of which is a measure used by management to evaluate segment performance. We provide more information on each measure below.

Adjusted Operating Earnings before Income Taxes

Adjusted operating earnings before income taxes. We believe that Adjusted operating earnings before income taxes provides a meaningful measure of our business and segment performance and enhances the understanding of our financial results by focusing on the operating performance and trends of the underlying business segments and excluding items that tend to be highly variable from period to period based on capital market conditions or other factors. We use the same accounting policies and procedures to measure segment Adjusted operating earnings before income taxes as we do for the directly comparable U.S. GAAP measure, which is Income (loss) from continuing operations before income taxes. Adjusted operating earnings before income taxes does not replace Income (loss) from continuing operations before income taxes as a measure of our consolidated results of operations. Therefore, we believe that it is useful to evaluate both Income (loss) from continuing operations before income taxes and Adjusted operating earnings before income taxes when reviewing our financial and operating performance. Each segment’s Adjusted operating earnings before income taxes is calculated by adjusting Income (loss) from continuing operations before income taxes for the following items:

•

Net investment gains (losses), net of related amortization of DAC, VOBA, sales inducements and unearned revenue, which are significantly influenced by economic and market conditions, including interest rates and credit spreads, and are not indicative of normal operations. Net investment gains (losses) include gains (losses) on the sale of securities, impairments, changes in the fair value of investments using the fair value option ("FVO") unrelated to the implied loan-backed security income recognition for certain mortgage-backed obligations and changes in the fair value of derivative instruments, excluding realized gains (losses) associated with swap settlements and accrued interest;

•

Net guaranteed benefit hedging gains (losses), which are significantly influenced by economic and market conditions and are not indicative of normal operations, include changes in the fair value of derivatives related to guaranteed benefits, net of related reserve increases (decreases) and net of related amortization of DAC, VOBA and sales inducements, less the estimated cost of these benefits. The estimated cost, which is reflected in adjusted operating earnings, reflects the expected cost of these benefits if markets perform in line with our long-term expectations and includes the cost of hedging. Other derivative and reserve changes related to guaranteed benefits are excluded from adjusted operating earnings, including the impacts related to changes in our nonperformance spread;

•

Income (loss) related to businesses exited through reinsurance or divestment that do not qualify as discontinued operations, which includes gains and (losses) associated with transactions to exit blocks of business (including net investment gains (losses) on securities sold and expenses directly related to these transactions) and residual run-off activity; these gains and (losses) are often related to infrequent events and do not reflect performance of operating segments. Excluding this activity better reveals trends in our core business, which would be obscured by including the effects of business exited, and more closely aligns Adjusted operating earnings before income taxes with how we manage our segments;

•

Income (loss) attributable to noncontrolling interest; which represents the interest of shareholders, other than Voya Financial, Inc., in consolidated entities. Income (loss) attributable to noncontrolling interest represents such shareholders' interests in the gains and losses of those entities, or the attribution of results from consolidated variable interest entities ("VIEs") or voting interest entities ("VOEs") to which we are not economically entitled;


•	Income (loss) related to early extinguishment of debt; which includes losses incurred as a part of transactions where we repurchase outstanding principal amounts of debt; these losses are excluded from Adjusted operating earnings before income taxes since the outcome of decisions to restructure debt are infrequent and not indicative of normal operations;



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•	Impairment of goodwill, value of management contract rights and value of customer relationships acquired, which includes losses as a result of impairment analysis; these represent losses related to infrequent events and do not reflect normal, cash-settled expenses;

•

Immediate recognition of net actuarial gains (losses) related to our pension and other postretirement benefit obligations and gains (losses) from plan amendments and curtailments, which includes actuarial gains and losses as a result of differences between actual and expected experience on pension plan assets or projected benefit obligation during a given period. We immediately recognize actuarial gains and losses related to pension and other postretirement benefit obligations gains and losses from plan adjustments and curtailments. These amounts do not reflect normal, cash-settled expenses and are not indicative of current Operating expense fundamentals; and

•

Other items not indicative of normal operations or performance of our segments or related to events such as capital or organizational restructurings undertaken to achieve long-term economic benefits, including certain costs related to debt and equity offerings and severance and other third-party expenses associated with such activities. These items vary widely in timing, scope and frequency between periods as well as between companies to which we are compared. Accordingly, we adjust for these items as our management believes that these items distort the ability to make a meaningful evaluation of the current and future performance of our segments.

The most directly comparable U.S. GAAP measure to Adjusted operating earnings before income taxes is Income (loss) from continuing operations before income taxes. For a reconciliation of Income (loss) from continuing operations before income taxes to Adjusted operating earnings before income taxes, see Results of Operations—Company Consolidated below.

Adjusted Operating Revenues

Adjusted operating revenues is a measure of our segment revenues. Each segment's Adjusted operating revenues are calculated by adjusting Total revenues to exclude the following items:

•

Net investment gains (losses) and related charges and adjustments, which are significantly influenced by economic and market conditions, including interest rates and credit spreads, and are not indicative of normal operations. Net investment gains (losses) include gains (losses) on the sale of securities, impairments, changes in the fair value of investments using the FVO unrelated to the implied loan-backed security income recognition for certain mortgage-backed obligations and changes in the fair value of derivative instruments, excluding realized gains (losses) associated with swap settlements and accrued interest. These are net of related amortization of unearned revenue;

•

Gain (loss) on change in fair value of derivatives related to guaranteed benefits, which is significantly influenced by economic and market conditions and not indicative of normal operations, includes changes in the fair value of derivatives related to guaranteed benefits, less the estimated cost of these benefits. The estimated cost, which is reflected in adjusted operating revenues, reflects the expected cost of these benefits if markets perform in line with our long-term expectations and includes the cost of hedging. Other derivative and reserve changes related to guaranteed benefits are excluded from Adjusted operating revenues, including the impacts related to changes in our nonperformance spread;

•

Revenues related to businesses exited through reinsurance or divestment that do not qualify as discontinued operations, which includes revenues associated with transactions to exit blocks of business (including net investment gains (losses) on securities sold related to these transactions) and residual run-off activity; these gains and (losses) are often related to infrequent events and do not reflect performance of operating segments. Excluding this activity better reveals trends in our core business, which would be obscured by including the effects of business exited, and more closely aligns Adjusted operating revenues with how we manage our segments;

•

Revenues attributable to noncontrolling interest; which represents the interests of shareholders, other than Voya Financial, Inc., in consolidated entities. Income (loss) attributable to noncontrolling interest represents such shareholders' interests in the gains and losses of those entities, or the attribution of results from consolidated VIEs or VOEs to which we are not economically entitled; and


•	Other adjustments to Total revenues primarily reflect fee income earned by our broker-dealers for sales of non-proprietary products, which are reflected net of commission expense in our segments’ operating revenues, other items where the income is passed on to third parties and the elimination of intercompany investment expenses included in Adjusted operating revenues.



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The most directly comparable U.S. GAAP measure to Adjusted operating revenues is Total revenues. For a reconciliation of Total revenues to Adjusted operating revenues, see Results of Operations—Company Consolidated below.

AUM and AUA

A substantial portion of our fees, other charges and margins are based on AUM. AUM represents on-balance sheet assets supporting customer account values/liabilities and surplus as well as off-balance sheet institutional/mutual funds. Customer account values reflect the amount of policyholder equity that has accumulated within retirement, annuity and universal-life type products. AUM includes general account assets managed by our Investment Management segment in which we bear the investment risk, separate account assets in which the contract owner bears the investment risk and institutional/mutual funds, which are excluded from our balance sheets. AUM-based revenues increase or decrease with a rise or fall in the amount of AUM, whether caused by changes in capital markets or by net flows.

AUM is principally affected by net deposits (i.e., new deposits, less surrenders and other outflows) and investment performance (i.e., interest credited to contract owner accounts for assets that earn a fixed return or market performance for assets that earn a variable return). Separate account AUM and institutional/mutual fund AUM include assets managed by our Investment Management segment, as well as assets managed by third-party investment managers. Our Investment Management segment reflects the revenues earned for managing affiliated assets for our other segments as well as assets managed for third parties.

AUA represents accumulated assets on contracts pursuant to which we either provide administrative services or product guarantees for assets managed by third parties. These contracts are not insurance contracts and the assets are excluded from the Consolidated Financial Statements. Fees earned on AUA are generally based on the number of participants, asset levels and/or the level of services or product guarantees that are provided.

Our consolidated AUM/AUA includes eliminations of AUM/AUA managed by our Investment Management segment that is also reflected in other segments’ AUM/AUA and adjustments for AUM not reflected in any segments.

Sales Statistics

In our discussion of our segment results under Results of Operations—Segment by Segment, we sometimes refer to sales activity for various products. The term "sales" is used differently for different products, as described more fully below. These sales statistics do not correspond to revenues under U.S. GAAP and are used by us as operating statistics underlying our financial performance.

Net flows are deposits less redemptions (including benefits and other product charges).

Sales for Individual Life products are based on a calculation of weighted average annual premiums ("WAP"). Sales for Employee Benefits products are based on a calculation of annual premiums, which represent regular premiums on new policies, plus a portion of new single premiums.

WAP is defined as the amount of premium for a policy’s first year that is eligible for the highest first year commission rate, plus a varying portion of any premium in excess of this base amount, depending on the product. WAP is a key measure of recent sales performance of our products and is an indicator of the general growth or decline in certain lines of business. WAP is not equal to premium revenue under U.S. GAAP. Renewal premiums on existing policies are included in U.S. GAAP premium revenue in addition to first year premiums and thus changes in persistency of existing in-force business can potentially offset growth from current year sales.

Total gross premiums and deposits are defined as premium revenue and deposits for policies written and assumed. This measure provides information as to growth and persistency trends related to premium and deposits.

Other Measures

Total annualized in-force premiums are defined as a full year of premium at the rate in effect at the end of the period. This measure provides information as to the growth and persistency trends in premium revenue.

Interest adjusted loss ratios are defined as the ratio of benefits expense to premium revenue exclusive of the discount component in the change in benefit reserve. This measure reports the loss ratio related to mortality on life products and morbidity on health products.



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In-force face amount is defined as the total life insurance coverage in effect as of the end of the period presented for business written and assumed. This measure provides information as to changes in policy growth and persistency with respect to death benefit coverage.

In-force policy count is defined as the number of policies written and assumed with coverage in effect as of the end of the period. This measure provides information as to policy growth and persistency.

New business policy count (paid) is defined as the number of policies issued during the period for which initial premiums have been paid by the policyholder. This measure provides information as to policy growth from sales during the period.

Results of Operations - Company Consolidated

The following table presents the consolidated financial information for the periods indicated:



	Year Ended December 31,
($ in millions)	2018			2017			2016
Revenues:
Net investment income	$	3,307		$	3,294		$	3,354
Fee income	2,708			2,627			2,471
Premiums	2,159			2,121			2,795
Net realized capital gains (losses)	(399		)	(227		)	(363		)
Other revenue	447			371			342
Income (loss) related to consolidated investment entities	292			432			189
Total revenues	8,514			8,618			8,788
Benefits and expenses:
Interest credited and other benefits to contract owners/policyholders	4,575			4,636			5,314
Operating expenses	2,691			2,654			2,655
Net amortization of Deferred policy acquisition costs and Value of business acquired	368			529			415
Interest expense	221			184			288
Operating expenses related to consolidated investment entities	49			87			106
Total benefits and expenses	7,904			8,090			8,778
Income (loss) from continuing operations before income taxes	610			528			10
Income tax expense (benefit)	55			740			(29		)
Income (loss) from continuing operations	555			(212		)	39
Income (loss) from discontinued operations, net of tax	457			(2,580		)	(337		)
Net Income (loss)	1,012			(2,792		)	(298		)
Less: Net income (loss) attributable to noncontrolling interest	137			200			29
Net income (loss) available to Voya Financial, Inc.	$	875		$	(2,992	)	$	(327	)



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The following table presents information about our Operating expenses for the periods indicated:



	Year Ended December 31,
($ in millions)	2018			2017			2016
Operating expenses:
Commissions	$	677		$	695		$	747
General and administrative expenses:
Net actuarial (gains)/losses related to pension and other postretirement benefit obligations	47			16			55
Restructuring expenses	79			82			34
Strategic Investment Program ⁽¹⁾	—			80			117
Other general and administrative expenses	2,104			2,023			1,966
Total general and administrative expenses	2,230			2,201			2,172
Total operating expenses, before DAC/VOBA deferrals	2,907			2,896			2,919
DAC/VOBA deferrals	(216		)	(242		)	(264		)
Total operating expenses	$	2,691		$	2,654		$	2,655

⁽¹⁾Beginning in 2018, remaining costs of our Strategic Investment Program related to IT simplification, digital and analytics are insignificant and have been allocated to our reportable segments within Other general and administrative expenses.

The following table presents AUM and AUA as of the dates indicated:



	As of December 31,
($ in millions)	2018			2017			2016
AUM and AUA:
Retirement	$	316,475		$	382,708		$	316,849
Investment Management	250,468			274,304			260,691
Employee Benefits	1,788			1,829			1,791
Individual Life	15,287			15,633			15,221
Eliminations/Other	(116,753		)	(119,958		)	(110,199		)
Total AUM and AUA⁽¹⁾	$	467,265		$	554,516		$	484,353

AUM	$	281,380		$	307,980		$	287,109
AUA	185,885			246,536			197,244
Total AUM and AUA⁽¹⁾	$	467,265		$	554,516		$	484,353

⁽¹⁾Includes AUM and AUA related to the Transaction, for which a substantial portion of the assets continue to be managed by our Investment Management segment.



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The following table presents a reconciliation of Income (loss) from continuing operations to Adjusted operating earnings before income taxes and the relative contributions of each segment to Adjusted operating earnings before income taxes for the periods indicated:



	Year Ended December 31,
($ in millions)	2018			2017			2016
Income (loss) from continuing operations before income taxes	$	610		$	528		$	10
Less Adjustments⁽¹⁾:
Net investment gains (losses) and related charges and adjustments	(127		)	(84		)	(108		)
Net guaranteed benefit hedging gains (losses) and related charges and adjustments	40			46			4
Loss related to businesses exited through reinsurance or divestment	(76		)	(45		)	(14		)
Income (loss) attributable to noncontrolling interests	137			200			29
Loss related to early extinguishment of debt	(40		)	(4		)	(104		)
Immediate recognition of net actuarial gains (losses) related to pension and other postretirement benefit obligations and gains (losses) from plan amendments and curtailments	(47		)	(16		)	(55		)
Other adjustments	(79		)	(97		)	(71		)
Total adjustments to income (loss) from continuing operations before income taxes	$	(192	)	$	—		$	(319	)

Adjusted operating earnings before income taxes by segment:
Retirement	$	701		$	456		$	450
Investment Management	205			248			171
Employee Benefits	160			127			126
Individual Life	(33		)	92			59
Corporate⁽²⁾	(231		)	(395		)	(477		)
Total adjusted operating earnings before income taxes	$	802		$	528		$	329

⁽¹⁾Refer to the Segments Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K for a description of these items.

⁽²⁾Adjusted operating earnings before income taxes for Corporate includes Net investment gains (losses) and Net guaranteed benefit hedging gains (losses) associated with the Retained Business. These amounts are insignificant and do not distort the ability to make a meaningful evaluation of the trends of Corporate activities.



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The following table presents a reconciliation of Total revenues to Adjusted operating revenues and the relative contributions of each segment to Adjusted operating revenues for the periods indicated:



	Year Ended December 31,
($ in millions)	2018			2017			2016
Total revenues	$	8,514		$	8,618		$	8,788
Adjustments⁽¹⁾:
Net realized investment gains (losses) and related charges and adjustments	(170		)	(100		)	(112		)
Gain (loss) on change in fair value of derivatives related to guaranteed benefits	54			52			9
Revenues related to businesses exited through reinsurance or divestment	(32		)	122			96
Revenues attributable to noncontrolling interests	186			286			133
Other adjustments	259			212			183
Total adjustments to revenues	$	297		$	572		$	309

Adjusted operating revenues by segment:
Retirement	$	2,727		$	2,538		$	3,257
Investment Management	683			731			627
Employee Benefits	1,849			1,767			1,616
Individual Life	2,575			2,563			2,528
Corporate ⁽²⁾	383			447			451
Total adjusted operating revenues	$	8,217		$	8,046		$	8,479

⁽¹⁾Refer to the Segments Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K for a description of these items.

⁽²⁾Adjusted operating revenues for Corporate includes Net investment gains (losses) and Gains (losses) on change in fair value of derivatives related to guaranteed benefits associated with the Retained Business. These amounts are insignificant and do not distort the ability to make a meaningful evaluation of the trends of Corporate activities.

The following tables describe the components of the reconciliation between Adjusted operating earnings before income taxes and Income (loss) from continuing operations before income taxes related to Net investment gains (losses) and Net guaranteed benefits hedging gains (losses) and related charges and adjustments.

The following table presents the adjustment to Income (loss) from continuing operations before income taxes related to Total investment gains (losses) and the related Net amortization of DAC/VOBA and other intangibles for the periods indicated:



	Year Ended December 31,
($ in millions)	2018			2017			2016
Other-than-temporary impairments	$	(30	)	$	(22	)	$	(34	)
CMO-B fair value adjustments⁽¹⁾	(115		)	(86		)	(43		)
Gains (losses) on the sale of securities	(24		)	18			(65		)
Other, including changes in the fair value of derivatives	11			(10		)	31
Total investment gains (losses)	(158		)	(100		)	(111		)
Net amortization of DAC/VOBA and other intangibles on above	31			16			3
Net investment gains (losses)	$	(127	)	$	(84	)	$	(108	)

⁽¹⁾ For a description of our CMO-B portfolio, see Investments - CMO-B Portfolio in Part II, Item 7. of this Annual Report on Form 10-K.



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The following table presents the adjustment to Income (loss) from continuing operations before income taxes related to Guaranteed benefit hedging gains (losses) net of DAC/VOBA and other intangibles amortization for the periods indicated:



	Year Ended December 31,
($ in millions)	2018			2017			2016
Gain (loss), excluding nonperformance risk	$	51		$	63		$	(3	)
Gain (loss) due to nonperformance risk⁽¹⁾	(11		)	(17		)	7
Net gain (loss) prior to related amortization of DAC/VOBA and sales inducements	40			46			4
Net amortization of DAC/VOBA and sales inducements	—			—			—
Net guaranteed benefit hedging gains (losses) and related charges and adjustments	$	40		$	46		$	4

⁽¹⁾Refer to Critical Accounting Judgments and Estimates in Part II, Item 7. of this Annual Report on Form 10-K for further detail.

The following table presents significant items included in Income (loss) from discontinued operations, net of tax for the periods indicated:



	Year Ended December 31,
($ in millions)	2018			2017			2016
Adjustment to loss on sale, net of tax excluding costs to sell	$	507		$	(2,392	)	$	—
Transaction costs	(2		)	(31		)	—
Net results of discontinued operations, excluding notable items	339			1,072			868
Income tax benefit (expense)	19			178			287
Notable items in CBVA results:
Net gains (losses) related to incurred guaranteed benefits and CBVA hedge program, excluding nonperformance risk	(409		)	(1,136		)	(1,470		)
Gain (loss) due to nonperformance risk	4			(284		)	74
DAC/VOBA and other intangibles unlocking	(1		)	13			(96		)
Income (loss) from discontinued operations, net of tax⁽¹⁾	$	457		$	(2,580	)	$	(337	)

⁽¹⁾Refer to the Discontinued Operations Note in Part II, Item 8. of this Annual Report on Form 10-K for further detail.

Notable Items

The tables below highlight notable items that are included in Adjusted operating earnings before income taxes from the following categories: (1) large gains (losses) that are not indicative of performance in the period; and (2) items that typically recur but can be volatile from period to period (e.g., DAC/VOBA and other intangibles unlocking).

Each quarter, we update our DAC/VOBA and other intangibles based on actual historical gross profits and projections of estimated gross profits. During the third quarter of 2018, 2017, and 2016, we completed our annual review of the assumptions, including projection model inputs, in each of our segments (except for the Investment Management segment, for which assumption reviews are not relevant). As a result of these reviews, we have made a number of changes to our assumptions resulting in net unfavorable impacts to segment Adjusted operating earnings before income taxes for the years ended December 31, 2018, 2017, and 2016 of $153 million, $189 million, and $191 million, respectively. These unfavorable impacts are included in the table below as components of DAC/VOBA and other intangibles unlocking. For information about the impacts of the annual review of assumptions on DAC/VOBA and other intangibles and Adjusted operating earnings before income taxes related to our segments, see Results of Operations - Segment by Segment in Part II, Item 7. of this Annual Report on Form 10-K.

In 2017, we began soliciting customer consents to execute a change to reduce the guaranteed minimum interest rate ("GMIR initiative") applicable to future deposits and transfers into fixed investment options for certain retirement plan contracts with above-market GMIRs. This change reduces our interest rate exposure on new deposits, transfers and in certain plans existing fixed account assets. Because the GMIR initiative for 2017 is classified as a contract modification under insurance accounting, it requires an acceleration of DAC/VOBA amortization resulting in unfavorable unlocking for the Retirement segment and will favorably impact the DAC/VOBA amortization rate and Adjusted operating earnings in the future. During 2018, we have updated our assumptions related to the GMIR initiative to reflect higher expected consents based on company experience. The unfavorable unlocking, which amounted to $51 million for 2018 included $8 million reflected in the annual assumption updates described above. The unfavorable unlocking,



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which amounted to $220 million for 2017 included $92 million reflected in the annual assumption updates described above. The GMIR initiative unlocking was recorded in Net amortization of DAC/VOBA and was determined based on legally binding consent acceptances received from customers and expected future acceptances of consents from customers we began soliciting in 2017 as well as for customers that will be solicited as part of the GMIR initiative.

During 2016, we received distributions of cash in the amount of $16 million, in conjunction with a Lehman Brothers bankruptcy settlement ("Lehman Recovery") which was recognized in Net investment income.

Collectively, the Lehman Recovery and LIHTC losses, net of DAC/VOBA and other intangibles impacts, are referred to as "Net gain from Lehman Recovery/LIHTC" and presented in the table below:



	Year Ended December 31,
($ in millions)	2018			2017			2016
DAC/VOBA and other intangibles unlocking ⁽¹⁾⁽²⁾	$	(278	)	$	(299	)	$	(213	)
Net gain from Lehman Recovery/LIHTC⁽³⁾	—			—			16

⁽¹⁾DAC/VOBA and other intangibles unlocking are included in Fee income, Interest credited and other benefits to contract owners/policyholders and Net amortization of DAC/VOBA and includes the impact of the annual review of the assumptions. See DAC/VOBA and Other Intangibles Unlocking in Part II, Item 7. of this Annual Report on Form 10-K for further description.

⁽²⁾Unlocking related to the Net gain from Lehman Recovery is excluded from DAC/VOBA and other intangibles unlocking for the year ended December 31, 2016 (and included in Net gain from Lehman Recovery/LIHTC).

⁽³⁾Net gain (loss) from Lehman Recovery/LIHTC is included in segment Adjusted operating earnings before income taxes in 2016.

The following table presents the net impact to Adjusted operating earnings before income taxes of the Net gain from Lehman Recovery and the related amortization and unlocking of DAC/VOBA and other intangibles by segment for 2016:



	Year Ended December 31, 2016
($ in millions)	Net investment income (loss)		DAC/VOBA and other intangibles amortization⁽¹⁾			DAC/VOBA and other intangibles unlocking⁽¹⁾		Net gain from Lehman Recovery
Retirement	$	5	$	(1	)	$	—	$	4
Investment Management	3		—			—		3
Employee Benefits	1		—			—		1
Individual Life	9		(3		)	2		8
Net gain (loss) included in Adjusted operating earnings before income taxes	$	18	$	(4	)	$	2	$	16

⁽¹⁾DAC/VOBA and other intangibles amortization and DAC/VOBA and other intangibles unlocking are included in Fee income, Interest credited and other benefits to contract owners/policyholders and Net amortization of DAC/VOBA. See DAC/VOBA and Other Intangibles Unlocking in Part II, Item 7. of this Annual Report on Form 10-K for further description.

The following table presents the impact on segment Adjusted operating earnings before income taxes of the annual assumption updates for the periods indicated:



	Year Ended December 31,
($ in millions)	2018			2017			2016
Retirement	$	48		$	(47	)	$	(83	)
Employee Benefits	1			—			1
Individual Life	(207		)	(142		)	(109		)
Corporate	5			—			—
Total	$	(153	)	$	(189	)	$	(191	)

Terminology Definitions

Net realized capital gains (losses), net realized investment gains (losses) and related charges and adjustments and Net guaranteed benefit hedging losses and related charges and adjustments include changes in the fair value of derivatives. Increases in the fair value of derivative assets or decreases in the fair value of derivative liabilities result in "gains." Decreases in the fair value of derivative assets or increases in the fair value of derivative liabilities result in "losses."



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In addition, we have certain products that contain guarantees that are embedded derivatives related to guaranteed benefits and index-crediting features, while other products contain such guarantees that are considered derivatives (collectively "guaranteed benefit derivatives").

Consolidated - Year Ended December 31, 2018 Compared to Year Ended December 31, 2017

Net Income (Loss)

Net investment income increased $13 million from $3,294 million to $3,307 million primarily due to:


•	higher alternative investment income.

The increase was partially offset by:


•	a recovery of previously reversed carried interest in the prior period in our Investment Management segment; and


•	lower investment income in our runoff blocks of business.

Fee income increased $81 million from $2,627 million to $2,708 million primarily due to:


•	an increase in separate account and institutional/mutual fund AUM in our Retirement segment driven by market improvements and the cumulative impact of positive net flows resulting in higher full service fees;


•	an increase in recordkeeping fees in our Retirement segment; and


•	higher management and administrative fees earned in our Investment Management segment.

The increase was partially offset by:


•	an unfavorable variance driven by annual assumption updates and amortization of unearned revenue in our Individual Life segment; and


•	a shift in the business mix in our Retirement segment.

Premiums increased $38 million from $2,121 million to $2,159 million primarily due to:


•	higher premiums driven by growth of the voluntary and group life business partially offset by a decline in stop loss premiums in our Employee Benefits segment.

The increase was partially offset by:


•	lower considerations of life contingent contracts resulting in lower Premiums which corresponds to a decrease in Interest credited and other benefits to contract owners/policyholders in the Retained Business; and


•	a decline in premiums in our Individual Life segment due to discontinued sales.

Net realized capital losses increased $172 million from $227 million to $399 million primarily due to:


•	unfavorable market value changes associated with business reinsured;


•	higher Net realized investment losses as a result of losses on the sale of securities, greater losses in CMO-B fair value adjustments, and higher impairments partially offset by gains due to changes in the fair value of derivatives; and


•	lower gains in the fair value of net guaranteed benefit derivatives, excluding nonperformance risk due to changes in interest rates.

The losses were partially offset by:


•	lower losses in the fair value of net guaranteed benefit derivatives due to nonperformance risk.

Other revenue increased $76 million from $371 million to $447 million primarily due to:


•	higher broker-dealer revenues in our Retirement segment;


•	revenue resulting from a transition services agreement;


•	favorable market value adjustments on separate accounts in our Retirement segment; and



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•	revised projection of the deferred loss amortization associated with a closed block of business.

The increase was partially offset by:


•	lower performance fees in our Investment Management segment.

Interest credited and other benefits to contract owners/policyholders decreased $61 million from $4,636 million to $4,575 million primarily due to:


•	market value impacts and changes in the reinsurance deposit asset associated with business reinsured;


•	lower annuitization of life contingent contracts which corresponds to a decrease in Premiums;


•	favorable changes in reserves in our Retained Business driven by a reserve refinement; and


•	improvement as a result of a certain block of funding agreements in run-off during 2017.

The decrease was partially offset by:


•	reserve changes as a result of adverse net mortality and unfavorable intangibles unlocking due to annual assumption updates and unfavorable net mortality in our Individual Life segment; and


•	higher loss ratio on group life and voluntary benefits partially offset by lower benefits incurred on stop loss in our Employee Benefits segment.

Operating expenses increased $37 million from $2,654 million to $2,691 million primarily due to:


•	higher litigation reserves related to a divested business. See the Commitments and Contingencies Note in Part II, Item 8. of this Annual Report on Form 10-K;


•	higher net actuarial losses related to our pension and other postretirement benefit obligations;


•	higher recordkeeping expenses in our Retirement segment; and


•	higher broker-dealer expenses.

The increase was partially offset by:


•	a decline in expenses associated with our Strategic Investment Program;


•	lower expenses related to net compensation adjustments;


•	lower financing costs in our Individual Life segment;


•	a decrease in compliance-related expenses in the current period; and


•	lower restructuring charges in the current period.

Net amortization of DAC/VOBA decreased $161 million from $529 million to $368 million primarily due to:


•	favorable impact of annual assumption updates in our Retirement segment, excluding GMIR, and a lower net unfavorable impact in our Individual Life segment;


•	lower unfavorable unlocking in the current period driven by an update to the assumptions related the GMIR initiatives in our Retirement segment; and


•	lower amortization as a result of the GMIR initiatives referenced above.

The decrease was partially offset by:


•	net unfavorable amortization on our business reinsured.

Interest expense increased $37 million from $184 million to $221 million primarily due to:


•	debt extinguishment in connection with repurchased debt. See Liquidity and Capital Resources - Debt Securities in Part II, Item 7. of this Annual Report on Form 10-K for further description.

Income (loss) from continuing operations before income taxes increased $82 million from $528 million to $610 million primarily due to:


•	higher Adjusted operating earnings before income taxes, discussed below; and


•	favorable changes in Other adjustments due to lower restructuring charges in the current period.



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The increase was partially offset by:


•	lower Income attributable to noncontrolling interest;


•	higher Net investment losses and related charges and adjustments, discussed below;


•	higher expenses related to early extinguishment of debt;


•	higher Immediate recognition of net actuarial losses related to pension and other postretirement benefit obligations and losses from plan adjustments and curtailments, discussed below; and


•	higher Loss related to business exited through reinsurance or divestment, discussed below.

Income tax expense decreased by $685 million from an expense of $740 million to an expense of $55 million due to:


•	a decrease in the federal income tax rate from 35% to 21%;


•	an increase in the dividends received deduction; and


•	a large Tax Reform-related expense associated with revaluing deferred tax assets in 2017 that did not recur in 2018.

The decrease was partially offset by:


•	an increase in income before income taxes; and


•	an increase in non-deductible expenses.

Income (loss) from discontinued operations, net of tax improved $3,037 million from a loss of $2,580 million to income of $457 million primarily due to:


•	a favorable Adjustment to the loss on sale, net of tax excluding costs to sell in the current period; and


•	a decrease in Net losses related to incurred guaranteed benefits and CBVA hedge program, excluding nonperformance risk in businesses held for sale.

The increase was partially offset by:


•	a decrease in Net results of discontinued operations, excluding notable items, primarily due to the unfavorable impact of equity market movements compared to the prior period.

Adjusted Operating Earnings before Income Taxes

Adjusted operating earnings before income taxes increased $274 million from $528 million to $802 million primarily due to:


•	favorable net DAC/VOBA unlocking due to annual assumption updates as described above and lower unfavorable impact of GMIR initiatives in our Retirement segment;


•	excluding the impact of a nonrecurring positive reserve refinement in the prior period as noted below, favorable net impact of premium and benefits incurred in the stop loss and voluntary blocks partially offset by net unfavorable result in the group life block in our Employee Benefits segment;


•	higher net investment income primarily due to higher alternative investment income;


•	higher Corporate earnings primarily due to lower net compensation adjustments, Stranded costs and compliance related expenses;


•	a decline in expenses associated with our Strategic Investment Program;


•	an increase in separate account and institutional/mutual fund AUM driven by equity market improvements resulting in higher full service fees in our Retirement segment; and


•	an increase in average AUM driven by market improvements and the cumulative impact of positive net flows resulting in higher management and administrative fees earned in our Investment Management segment.

The increase was partially offset by:


•	higher net unfavorable DAC/VOBA and other intangibles unlocking, mostly driven by the impact of annual assumption updates as well as unfavorable net mortality and lower underwriting gains, net of DAC/VOBA and other intangibles amortization, partially offset by lower financing costs and favorable reserve changes in our Individual Life segment;


•	positive reserve refinement in the prior period that did not reoccur in our Employee Benefits segment; and


•	a recovery of accrued carried interest in the prior period in our Investment Management segment.



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Adjustments from Income (Loss) from Continuing Operations before Income Taxes to Adjusted Operating Earnings before Income Taxes

Net investment gains (losses) and related charges and adjustments changed by $43 million from a loss of $84 million to a loss of $127 million primarily due to:


•	losses on the sale of securities in the current period;


•	greater losses on CMO-B fair value adjustments; and


•	higher impairments in the current period.

The change was partially offset by:

•gains due to changes in the fair value of derivatives in the current period; and


•	favorable changes in DAC/VOBA and other intangibles unlocking related to net investment gains and losses.

Net guaranteed benefit hedging gains (losses) and related charges and adjustments decreased $6 million from $46 million to $40 million primarily due to:


•	lower gains in the fair value of net guaranteed benefit derivatives, excluding nonperformance risk due to changes in interest rates partially offset by favorable changes related to nonperformance risk.

Loss related to businesses exited through reinsurance or divestment increased $31 million from $45 million to $76 million primarily due to:


•	higher litigation reserves related to a divested business.

Loss related to early extinguishment of debt increased $36 million from $4 million to $40 million primarily due to:


•	Losses in connection with repurchased debt. See the Financing Agreements Note in Part II, Item 8. of this Annual Report on Form 10-K for further information.

Immediate recognition of net actuarial gains (losses) related to pension and other postretirement benefit obligations and gains (losses) from plan adjustments and curtailments changed $31 million. See Critical Accounting Judgments and Estimates - Employee Benefits Plans in Part II, Item 7. of this Annual Report on Form 10-K for further information.

Other adjustments changed $18 million from a loss of $97 million to a loss of $79 million primarily due to:


•	lower costs recorded in the current period related to restructuring. See the Restructuring Note in Part II, Item 8. of this Annual Report on Form 10-K for further information; and


•	rebranding costs incurred in the prior period.

Consolidated - Year Ended December 31, 2017 Compared to Year Ended December 31, 2016

Net Income (Loss)

Net investment income decreased $60 million from $3,354 million to $3,294 million primarily due to:


•	the consolidation of investment entities as a result of higher income earned in underlying consolidated investments;


•	the impact of the continued low interest rate environment on reinvestment rates;


•	decline related to a certain block of GICs and funding agreements as a result of continued run-off;


•	lower prepayment fee income; and


•	the net gain from Lehman recovery in the prior period.

The decrease was partially offset by:


•	higher alternative investment income across segments driven by favorable equity market performance in the current period, including the recovery of previously reversed carried interest in our Investment Management segment; and


•	growth in general account assets.



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Fee income increased $156 million from $2,471 million to $2,627 million primarily due to:


•	an increase in separate account and institutional/mutual fund AUM in our Retirement segment driven by market improvements and the cumulative impact of positive net flows resulting in higher full service fees;


•	a favorable variance due to annual assumption updates and amortization of unearned revenue reserve due to higher gross profits on our universal life blocks in our Individual Life segment (refer to Results of Operations - Segment by Segment for further description); and


•	an increase in average AUM in our Investment Management segment, driven by market improvements and the cumulative impact of positive net flows resulting in higher management and administrative fees earned.

Premiums decreased $(674) million from $2,795 million to $2,121 million primarily due to:


•	lower sales for pension risk transfer contracts in our Retirement segment as this business was closed to new sales at the end of 2016.

The decrease was partially offset by:


•	higher Premiums driven by stop loss and voluntary block growth in our Employee Benefits segment.

Net realized capital losses decreased $136 million from $363 million to $227 million primarily due to:


•	a favorable variance in net guaranteed benefit derivatives, excluding nonperformance risk due to changes in interest rates;


•	lower Net realized investment losses primarily as a result of lower impairments and gains on the sale of securities, partially offset by unfavorable changes in CMO-Bs and the fair value of derivatives; and


•	favorable market value changes associated with business reinsured.

The decrease was partially offset by:

•unfavorable changes in the fair value of guaranteed benefit derivatives due to nonperformance risk.

Other revenue increased $29 million from $342 million to $371 million primarily due to:


•	higher broker-dealer revenues in our Retirement segment.

The increase was partially offset by:

•lower performance fees in our Investment Management segment; and


•	higher amortization of the deferred loss associated with a closed block of business due to an annual update of the amortization schedules.

Interest credited and other benefits to contract owners/policyholders decreased $678 million from $5,314 million to $4,636 million as a result of the following:


•	the discontinuation of sales of pension risk transfer contracts in our Retirement Segment at the end of 2016;


•	favorable changes in reserves related to unlocking on universal life blocks and the run-off of the term block in our Individual Life segment;


•	recognition of deferred prepayment penalties associated with the early termination of certain Federal Home Loan Bank ("FHLB") funding agreements in the prior period; and


•	decline related to a certain block of GICs and funding agreements as a result of continued run-off.

The decrease was partially offset by:


•	higher benefits incurred due to a higher loss ratio on stop loss and growth of the business in our Employee Benefits segment;


•	growth in general account liabilities in our Retirement segment;


•	loss recognition in the Retained Business resulting from the re-definition of our contract groupings for premium deficiency testing purposes, driven by the decision to dispose of substantially all of our Annuities businesses;


•	market value impacts and changes in the reinsurance deposit asset associated with business reinsured; and


•	unfavorable net mortality in our Individual Life segment.



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Operating expenses decreased $1 million from $2,655 million to $2,654 million primarily due to:


•	lower net actuarial losses related to our pension and other postretirement benefit obligations;


•	a decrease in costs associated with our Strategic Investment Program;


•	the impact of continued expense management efforts and favorable accrual developments in the current period;


•	lower net financing costs in our Individual Life segment; and


•	release of contingency accruals in the current period.

The decrease was partially offset by:


•	higher restructuring charges in the current period;


•	higher expenses for net compensation and benefit adjustments;


•	higher compensation related expenses in our Investment Management segment primarily associated with higher earnings in the current period;


•	higher volume-related expenses associated with growth of the business in our Employee Benefits segment;


•	higher broker-dealer expenses; and


•	an increase in compliance-related expenses in the current period.

Net amortization of DAC/VOBA increased $114 million from $415 million to $529 million primarily due to:


•	unfavorable changes in DAC/VOBA unlocking associated with changes in terms related to GMIR provisions for certain retirement plan contracts with fixed investment options in our Retirement segment; and


•	unfavorable impact of annual assumption updates in our Individual Life segment (refer to Results of Operations - Segment by Segment for further description).

The increase was partially offset by:


•	favorable DAC/VOBA unlocking in our Retirement segment, primarily due to the impact of annual assumption updates, excluding GMIR; and


•	favorable changes in unlocking on net investment gains (losses).

Interest expense decreased $(104) million from $288 million to $184 million primarily due to:


•	debt extinguishment in connection with repurchased debt in 2016. See Liquidity and Capital Resources - Debt Securities in Part II, Item 7. of our Annual Report on Form 10-K for further description.

Income (loss) from continuing operations before income taxes increased $518 million from income of $10 million to income of $528 million primarily due to:


•	higher Adjusted operating earnings before income taxes, excluding DAC/VOBA and other intangible unlocking, discussed below;


•	a favorable variance attributable to noncontrolling interest;


•	lower expenses related to early extinguishment of debt;


•	higher Net guaranteed benefit hedging gains and related charges and adjustments, discussed below;


•	lower Immediate recognition of net actuarial losses related to pension and other postretirement benefit obligations and losses from plan adjustments and


•	curtailments, discussed below; and


•	lower Net investment losses and related charges and adjustments, discussed below.

The increase was partially offset by:


•	unfavorable changes in DAC/VOBA and other intangibles unlocking primarily due to changes in terms related to GMIR provisions for certain retirement;


•	plan contracts with fixed investment options in our Retirement segment and the impact of annual assumption updates on our Individual Life segment;


•	an increase in restructuring charges in the current period; and


•	an increase in Loss related to businesses exited through reinsurance or divestment, discussed below.



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Income tax expense (benefit) increased by $769 million from a benefit of $29 million to an expense of $740 million primarily due to:


•	a net expense associated with revaluing of the deferred tax balance impacted by the federal rate change; and


•	an increase in income before income taxes.

Income (loss) from discontinued operations, net of tax changed $2,243 million from a loss of $337 million to a loss of $2,580 million primarily due to:


•	the estimated Loss on sale, net of tax excluding costs to sell in the current period;


•	losses due to changes in the fair value of guaranteed benefit derivatives related to nonperformance risk in businesses held for sale; and


•	estimated costs to sell, which will be incurred through and upon closing of the Transaction.

The increase was partially offset by:


•	a decrease in net losses related to incurred guaranteed benefits and CBVA hedge program, excluding nonperformance risk in businesses held for sale; and


•	unfavorable DAC/VOBA unlocking in businesses held for sale in the prior period as a result of loss recognition.

Adjusted Operating Earnings before Income Taxes

Adjusted operating earnings before income taxes decreased $200.2 million from $329 million to $528 million primarily due to:


•	higher alternative investment income across segments driven by favorable equity market performance and the recovery of carried interest in the current period, partially offset by the Net gain from Lehman Recovery in the prior period;


•	higher fee based margin due to market improvement and the cumulative impact of positive net flows;


•	lower Operating expenses, primarily due to continued expense management efforts and a decrease in costs associated with our Strategic Investment Program;


•	increase in recognition of deferred prepayment penalties associated with the early termination of certain FHLB funding agreements in the prior period; and


•	higher underwriting gains in our Individual Life segment, net of DAC/VOBA and other intangibles amortization, primarily driven by lower net financing costs and favorable net mortality.

The increase was partially offset by:


•	unfavorable changes in DAC/VOBA and other intangibles unlocking primarily due to changes in terms related to GMIR provisions for certain retirement plan contracts with fixed investment options in our Retirement segment partially offset by the net impact of other annual assumption updates;


•	lower prepayment fee income; and


•	the impact of the continued low interest rate environment on reinvestment rates.

Adjustments from Income (Loss) from Continuing Operations before Income Taxes to Adjusted Operating Earnings before Income Taxes

Net investment gains (losses) and related charges and adjustments changed $57.6 million from a loss of $108 million to a loss of $84 million primarily due to:


•	gains on the sales of securities in the current period;


•	favorable changes in DAC/VOBA and other intangibles unlocking related to net investment gains and losses; and


•	lower impairments in the current period.

The improvement was partially offset by:


•	unfavorable changes in CMO-B fair value adjustments; and


•	unfavorable changes in the fair value of derivatives.



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Net guaranteed benefit hedging gains (losses) and related charges and adjustments increased $12.2 million from a loss of $4 million to a gain of $46 million primarily due to:


•	favorable changes in fair value of guaranteed benefit derivatives related to nonperformance risk.

Losses related to businesses exited through reinsurance or divestment decreased $155.8 million from $14 million to $45 million primarily due to:


•	loss recognition in the Retained Business resulting from the re-definition of our contract groupings for premium deficiency testing purposes, driven by the decision to dispose of substantially all of our Annuities businesses and therefore is not indicative of future results.

Loss related to early extinguishment of debt of $4 million in the current period was primarily due to:


•	losses on early debt extinguishment in connection with repurchased debt in 2016. See the Financing Agreements Note in Part II, Item 8. of this Annual Report on Form 10-K for further information.

Immediate recognition of net actuarial gains (losses) related to pension and other postretirement benefit obligations and gains (losses) from plan adjustments and curtailments changed $39 million from a loss of $55 million to a loss of $16 million. See Critical Accounting Judgments and Estimates - Employee Benefits Plans in Part II, Item 7. of this Annual Report on Form 10-K for further information.

Other adjustments changed $13.4 million from a loss of $71 million to a loss of $97 million primarily due to:


•	higher costs recorded in the current period related to our 2016 Restructuring.

The unfavorable change was partially offset by:


•	lower rebranding costs in the current period.



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Results of Operations - Segment by Segment

Retirement

The following table presents Adjusted operating earnings before income taxes of our Retirement segment for the periods indicated:



	Year Ended December 31,
($ in millions)	2018		2017		2016
Adjusted operating revenues:
Net investment income and net realized gains (losses)	$	1,758	$	1,703	$	1,674
Fee income⁽¹⁾	844		744		687
Premiums	7		6		824
Other revenue	118		85		72
Total adjusted operating revenues	2,727		2,538		3,257
Operating benefits and expenses:
Interest credited and other benefits to contract owners/policyholders	956		958		1,744
Operating expenses	959		850		854
Net amortization of DAC/VOBA	111		274		209
Total operating benefits and expenses	2,026		2,082		2,807
Adjusted operating earnings before income taxes	$	701	$	456	$	450

⁽¹⁾ The prior periods exclude investment-only products, which were transfered from Corporate during the twelve months ended December 31, 2018.

The following table presents certain notable items that represented the volatility in Adjusted operating earnings before income taxes for the periods indicated:



	Year Ended December 31,
($ in millions)	2018			2017			2016
DAC/VOBA and other intangibles unlocking⁽¹⁾	$	(1	)	$	(137	)	$	(66	)
Net gain from Lehman Recovery	—			—			4

⁽¹⁾ Includes the impacts of the annual review of assumptions and assumption updates related to GMIR initiatives. See DAC/VOBA and Other Intangibles Unlocking in Part II, Item 7. of this Annual Report on Form 10-K for further description.

The DAC/VOBA and other intangibles unlocking in the table above includes the net impact of the annual review of the assumptions, completed in the third quarter 2018, 2017 and 2016, of $48 million, $(47) million and $(83) million, respectively, which was included in Net amortization of DAC/VOBA. The net favorable unlocking in 2018 reflects changes in equity market assumptions partially offset by an unfavorable adjustment related to the GMIR initiatives. The net unfavorable unlocking in 2017 reflects $220 million related to the GMIR initiative. Excluding the GMIR-related unlocking, the favorable DAC/VOBA unlocking from the annual review of assumptions was primarily driven by favorable liability and expense assumption changes. The unlocking in 2016 was primarily driven by changes in portfolio yields and expectations for future contract changes.



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The following tables present AUM and AUA for our Retirement segment as of the dates indicated:



	As of December 31,
($ in millions)	2018		2017		2016
Corporate markets	$	58,705	$	60,495	$	49,921
Tax exempt markets	60,514		62,070		55,497
Total full service plans	119,219		122,565		105,418
Stable value⁽¹⁾and pension risk transfer	10,815		11,982		12,505
Retail wealth management	9,099		3,644		3,485
Total AUM	139,133		138,191		121,408
AUA	177,342		244,517		195,441
Total AUM and AUA	$	316,475	$	382,708	$	316,849

⁽¹⁾ Where Voya is the Investment Manager. Stable Value assets move from AUM to AUA when Voya no longer serves as Investment Manager but continues to provide a book value guarantee.



	As of December 31,
($ in millions)	2018		2017		2016
General Account	$	33,006	$	32,571	$	32,469
Separate Account	65,417		71,233		60,074
Mutual Fund/Institutional Funds	40,710		34,387		28,865
AUA	177,342		244,517		195,441
Total AUM and AUA	$	316,475	$	382,708	$	316,849

The following table presents a rollforward of AUM for our Retirement segment for the periods indicated:



	Year Ended December 31,
($ in millions)	2018			2017			2016
Balance as of beginning of period	$	138,191		$	121,408		$	110,807
Transfers / Adjustments⁽¹⁾	6,212			—			—
Deposits	19,474			18,014			17,071
Surrenders, benefits and product charges	(19,439		)	(16,509		)	(13,137		)
Net flows	35			1,505			3,934
Interest credited and investment performance	(5,305		)	15,278			6,667
Balance as of end of period	$	139,133		$	138,191		$	121,408

⁽¹⁾ Reflects investment-only products which were transferred from Corporate effective January 1, 2018 and an adjustment in the three months ended June 30, 2018 to include certain Stable Value assets previously reported as AUA.

Retirement - Year Ended December 31, 2018 Compared to Year Ended December 31, 2017

Adjusted operating earnings before income taxes increased $245 million from $456 million to $701 million primarily due to:


•	favorable net DAC/VOBA unlocking due to annual assumption updates as described above and lower unfavorable impact of GMIR initiatives;


•	an increase in separate account and institutional/mutual fund AUM driven by equity market improvements resulting in higher full service fees;


•	an increase in alternative investment income;


•	lower amortization due to changes related to the GMIR initiatives;


•	higher investment spread income; and


•	higher other revenue primarily driven by favorable market value adjustments on separate accounts.



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The increase was partially offset by:


•	higher expenses primarily resulting from change in allocation of strategic investment spend.

Retirement - Year Ended December 31, 2017 Compared to Year Ended December 31, 2016

Adjusted operating earnings before income taxes increased $6 million from $450 million to $456 million primarily due to:


•	favorable changes in DAC/VOBA unlocking primarily due to annual assumption updates;


•	an increase in separate account and institutional/mutual fund AUM driven by equity market improvements and the cumulative impact of positive net flows resulting in higher full service fees;


•	growth in general account assets resulting from the cumulative impact of participants' transfers from variable investment options into fixed investment options;


•	an increase in alternative investment income primarily driven by market performance; and


•	the impact of expense management efforts partially offset by higher expenses due to the growth in business.

The increase was partially offset by:


•	unfavorable DAC/VOBA unlocking due to the GMIR initiative which reduces our interest rate exposure on new deposits, transfers and in certain plans existing fixed account assets;


•	lower investment yields, including the impact of the continued low interest rate environment;


•	lower prepayment fee income; and


•	the shift in the business mix from participants' transfers from variable investment options into fixed investment options.

Investment Management

The following table presents Adjusted operating earnings before income taxes of our Investment Management segment for the periods indicated:



	Year Ended December 31,
($ in millions)	2018		2017		2016
Adjusted operating revenues:
Net investment income and net realized gains (losses)	$	29	$	57	$	(8	)
Fee income	635		632		582
Other revenue	19		42		53
Total adjusted operating revenues	683		731		627
Operating benefits and expenses:
Operating expenses	478		483		456
Total operating benefits and expenses	478		483		456
Adjusted operating earnings before income taxes	$	205	$	248	$	171

Our Investment Management operating segment revenues include the following intersegment revenues, primarily consisting of asset-based management and administration fees.



	Year Ended December 31,
($ in millions)	2018		2017		2016
Investment Management intersegment revenues	$	118	$	118	$	114



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The following table presents certain notable items that resulted in volatility in Adjusted operating earnings before income taxes for the periods indicated:



	Year Ended December 31,
($ in millions)	2018		2017		2016
Net gain from Lehman Recovery	$	—	$	—	$	3

The following table presents AUM and AUA for our Investment Management segment as of the dates indicated:



	As of December 31,
($ in millions)	2018		2017		2016
Assets under Management
External clients:
Investment Management sourced	$	85,573	$	85,804	$	73,992
Affiliate sourced⁽¹⁾	34,372		56,476		54,254
Variable annuities⁽²⁾	27,231		—		—
Total external clients	147,176		142,280		128,246
General account	56,288		82,006		82,760
Total AUM	203,464		224,286		211,006
Assets under Administration⁽³⁾	47,004		50,018		49,685
Total AUM and AUA	$	250,468	$	274,304	$	260,691

⁽¹⁾ Affiliate sourced AUM includes assets sourced by other segments and also reported as AUM or AUA by such other segments.

⁽²⁾Reflects AUM associated with the businesses divested as part of the Transaction.

⁽³⁾ AUA includes assets sourced by other segments and also reported as AUA or AUM by such other segments.

The following table presents net flows for our Investment Management segment for the periods indicated:



	Year Ended December 31,
($ in millions)	2018			2017			2016
Net Flows:
Investment Management sourced	$	2,860		$	5,017		$	2,739
Affiliate sourced	(1,917		)	(121		)	202
Variable annuities⁽¹⁾	(2,519		)	(4,505		)	(3,073		)
Total	$	(1,576	)	$	391		$	(132	)

⁽¹⁾ Reflects net flows associated with the businesses divested as part of the Transaction.

Investment Management - Year Ended December 31, 2018 Compared to Year Ended December 31, 2017

Adjusted operating earnings before income taxes decreased $43 million from $248 million to $205 million primarily due to:


•	lower alternative investment income primarily driven by the recovery of accrued carried interest in the prior period related to a sponsored private equity fund;


•	lower average general account AUM driven by the impact of the Transaction; and


•	lower Other revenue primarily due to higher performance and production fees earned in the prior period.

The decrease was partially offset by:


•	an increase in average AUM driven by market improvements and the cumulative impact of positive net flows resulting in higher management and administrative fees earned; and


•	lower non-volume operating expenses.



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Investment Management - Year Ended December 31, 2017 Compared to Year Ended December 31, 2016

Adjusted operating earnings before income taxes increased $77 million from $171 million to $248 million primarily due to:


•	higher alternative investment income primarily driven by the recovery of accrued carried interest previously reversed in the prior period related to a sponsored private equity fund that experienced market value improvements in the current period; and


•	an increase in average AUM driven by market improvements and the cumulative impact of positive net flows resulting in higher management and administrative fees earned.

The increase was partially offset by:


•	higher operating expenses including higher compensation related expenses primarily associated with higher operating earnings; and


•	lower Other revenue related to performance fees earned in the current period.

Employee Benefits

The following table presents Adjusted operating earnings before income taxes of the Employee Benefits segment for the periods indicated:



	Year Ended December 31,
($ in millions)	2018			2017			2016
Adjusted operating revenues:
Net investment income and net realized gains (losses)	$	114		$	109		$	111
Fee income	69			63			62
Premiums	1,672			1,600			1,447
Other revenue	(6		)	(5		)	(4		)
Total adjusted operating revenues	1,849			1,767			1,616
Operating benefits and expenses:
Interest credited and other benefits to contract owners/policyholders	1,317			1,293			1,169
Operating expenses	355			336			306
Net amortization of DAC/VOBA	17			11			15
Total operating benefits and expenses	1,689			1,640			1,490
Adjusted operating earnings before income taxes	$	160		$	127		$	126

The following table presents certain notable items that resulted in volatility in Adjusted operating earnings before income taxes for the periods indicated:



	Year Ended December 31,
($ in millions)	2018			2017			2016
DAC/VOBA and other intangibles unlocking⁽¹⁾	$	(1	)	$	(2	)	$	(4	)
Net gain from Lehman Recovery	—			—			1

⁽¹⁾DAC/VOBA and other intangibles unlocking are included in Fee income, Interest credited and other benefits to contract owners/policyholders and Net amortization of DAC/VOBA and includes the impact of the review of the assumptions. See DAC/VOBA and Other Intangibles Unlocking in Part II, Item 7. of this Annual Report on Form 10-K for further description.

The DAC/VOBA and other intangibles unlocking in the table above includes the impact of the annual review of the assumptions, completed in the third quarter 2018 and 2016 of $1 million and $1 million, respectively. The Company had immaterial unlocking in the third quarter 2017. The unlocking in 2016 was driven primarily by in-force assumption updates.



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The following table presents the impact of the annual review of assumptions by line item for the periods indicated:



	Year Ended December 31,
($ in millions)	2018			2017		2016
Fee income	$	7		$	—	$	—
Net amortization of DAC/VOBA	(6		)	—		1
Total	$	1		$	—	$	1

The following table presents sales, gross premiums and in-force for our Employee Benefits segment for the periods indicated:



	Year Ended December 31,
($ in millions)	2018			2017			2016
Sales by Product Line:
Group life and Disability	$	99		$	85		$	96
Stop loss	255			286			237
Total group products	354			371			333
Voluntary products	94			70			56
Total sales by product line	$	448		$	441		$	389

Total gross premiums and deposits	$	1,872		$	1,806		$	1,643

Group life and Disability	659			623			627
Stop loss	969			969			874
Voluntary	311			257			213
Total annualized in-force premiums	$	1,939		$	1,849		$	1,714

Loss Ratios:
Group life (interest adjusted)	79.5		%	76.0		%	77.2		%
Stop loss	79.1		%	82.7		%	78.4		%
Total Loss Ratio	72.5		%	74.0		%	73.3		%

Employee Benefits - Year Ended December 31, 2018 Compared to Year Ended December 31, 2017

Adjusted operating earnings before income taxes increased $33 million from $127 million to $160 million primarily due to:

•higher premiums driven by growth of the voluntary and group life blocks; and

•favorable stop loss experience as a result of pricing actions taken to improve the loss ratio.

The increase was partially offset by:

•higher benefits incurred due to a higher loss ratio on group life and growth of the business;

•higher reserves on voluntary due to a positive reserve refinement in prior period that did not recur;

•lower stop loss sales in the current period as a result of pricing actions taken to improve the loss ratio; and

•higher distribution expenses and commissions to support increased volume.

Employee Benefits - Year Ended December 31, 2017 Compared to Year Ended December 31, 2016

Adjusted operating earnings before income taxes increased $1 million from $126 million to $127 million primarily due to:


•	higher premiums driven by growth of the stop loss and voluntary business;


•	favorable group life and voluntary experience;


•	a favorable reserve refinement related to expired claims on the stop loss block; excluding the effect of this refinement, the loss ratio for stop loss is 83.7% for the current period; and



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•	the current and prior periods both benefited from favorable voluntary reserve refinements.

The increase was partially offset by:


•	higher benefits incurred due to a higher loss ratio on stop loss and growth of the business; and


•	higher volume related expenses associated with growth of the stop loss and voluntary business.

Individual Life

The following table presents Adjusted operating earnings before income taxes of our Individual Life segment for the periods indicated:



	Year Ended December 31,
($ in millions)	2018			2017		2016
Adjusted operating revenues:
Net investment income and net realized gains (losses)	$	903		$	860	$	857
Fee income	1,245			1,259		1,209
Premiums	413			428		446
Other revenue	14			16		16
Total adjusted operating revenues	2,575			2,563		2,528
Operating benefits and expenses:
Interest credited and other benefits to contract owners/policyholders	2,096			1,935		1,973
Operating expenses	277			275		330
Net amortization of DAC/VOBA	235			261		166
Total operating benefits and expenses	2,608			2,471		2,469
Adjusted operating earnings before income taxes	$	(33	)	$	92	$	59

The following table presents certain notable items that resulted in volatility in Adjusted operating earnings before income taxes for the periods indicated:



	Year Ended December 31,
($ in millions)	2018			2017			2016
DAC/VOBA and other intangibles unlocking⁽¹⁾⁽²⁾	$	(281	)	$	(160	)	$	(143	)
Net gain from Lehman Recovery	—			—			8

⁽¹⁾Includes the impacts of the annual review of assumptions. See DAC/VOBA and Other Intangibles Unlocking in Part II, Item 7. of this Annual Report on Form 10-K for further description.

The DAC/VOBA and other intangibles unlocking in the table above includes the net unfavorable impact of the annual review of the assumptions, completed in the third quarter 2018, 2017, and 2016, of $207 million, $142 million and $109 million, respectively. The net unfavorable unlocking in 2018 was driven primarily by reinsurer rate increases. The net unfavorable unlocking in 2017 was driven primarily by reinsurer rate increases, changes in portfolio yields and expense assumptions. The net unfavorable unlocking in 2016 was driven primarily by changes in portfolio yields and reinsurer rate increases. During the fourth quarter of 2018, our Individual Life segment recognized $24 million of unfavorable DAC/VOBA and other intangibles unlocking related to prospective assumption updates on cost of reinsurance. The unfavorable unlocking is a refinement to the unlocking reflected in the third quarter of 2018.



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The following table presents the impact of the annual review of assumptions by line item for the periods indicated:



	Year Ended December 31,
($ in millions)	2018			2017			2016
Fee income	$	14		$	35		$	9
Interest credited and other benefits to contract owners/policyholders	(170		)	(97		)	(106		)
Net amortization of DAC/VOBA	(51		)	(80		)	(12		)
Total	$	(207	)	$	(142	)	$	(109	)

The following table presents sales, gross premiums, in-force and policy count for our Individual Life segment for the periods indicated:



	Year Ended December 31,
($ in millions)	2018		2017		2016
Sales by Product Line:
Universal life:
Indexed	$	75	$	73	$	80
Accumulation	4		4		5
Total universal life	79		77		85
Variable life	2		3		3
Term	—		2		12
Total sales by product line	$	81	$	82	$	100

Total gross premiums	$	1,807	$	1,806	$	1,798
End of period:
In-force face amount	$	334,345	$	328,120	$	347,070
In-force policy count (in whole numbers)	812,669		831,936		886,357
New business policy count (paid)	4,695		6,532		15,124

Individual Life - Year Ended December 31, 2018 Compared to Year Ended December 31, 2017

Adjusted operating earnings before income taxes decreased $125 million from a gain of $92 million to a loss of $33 million primarily due to:


•	higher net unfavorable DAC/VOBA and other intangibles unlocking, mostly driven by the impact of annual assumption updates as well as unfavorable net mortality, described below;


•	lower underwriting gains, net of DAC/VOBA and other intangibles amortization, primarily driven by adverse net mortality on the interest sensitive block, partially offset by lower financing costs and favorable reserve changes; and


•	higher expenses due to our Strategic Investment Program as the expense is allocated to our segments beginning in the first quarter of 2018.

The decrease was partially offset by:


•	higher fixed investment income from higher volumes; and


•	higher alternative investment income.

Individual Life - Year Ended December 31, 2017 Compared to Year Ended December 31, 2016

Adjusted operating earnings before income taxes increased $33 million from $59 million to $92 million primarily due to:


•	lower expenses primarily driven by actions taken to simplify the organization;


•	higher alternative investment income driven by changes in equity markets, partially offset by the Net gain from Lehman recovery in the prior period; and



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•	higher underwriting gains net of DAC/VOBA and other intangibles amortization primarily driven by lower overall financing costs and favorable reserve changes related to the run-off of the term block, partially offset by unfavorable net mortality mostly within the non-interest sensitive block.

The increase was partially offset by:


•	higher net unfavorable DAC/VOBA and other intangibles unlocking primarily due to annual assumption updates; and


•	lower prepayment fee income.

Corporate

The following table presents Adjusted operating earnings before income taxes of Corporate for the periods indicated:



	Year Ended December 31,
($ in millions)	2018			2017			2016
Adjusted operating revenues:
Net investment income and net realized gains (losses)	$	249		$	246		$	277
Fee income⁽¹⁾	43			110			100
Premiums	59			82			72
Other revenue	32			9			2
Total adjusted operating revenues	383			447			451
Operating benefits and expenses:
Interest credited and other benefits to contract owners/policyholders	227			249			307
Operating expenses	197			396			417
Net amortization of DAC/VOBA	6			11			17
Interest Expense	184			186			187
Total operating benefits and expenses	614			842			928
Adjusted operating earnings before income taxes⁽²⁾	$	(231	)	$	(395	)	$	(477	)

⁽¹⁾The prior periods include investment-only products, which were transferred to our Retirement segment during the three months ended March 31, 2018.

⁽²⁾The prior periods include insignificant amounts related to net investment gains (losses) and changes in fair value of derivatives related to guaranteed benefits associated with the Retained Business.

The following table presents information about our Operating expenses of Corporate for the periods indicated:



	Year Ended December 31,
($ in millions)	2018		2017		2016
Strategic Investment Program⁽¹⁾	$	—	$	80	$	117
Amortization of intangibles	36		35		36
Other⁽²⁾	161		281		264
Total Operating expenses	$	197	$	396	$	417

⁽¹⁾In 2018, Strategic Investment Program costs are insignificant and reflected in our reportable segments.

⁽²⁾Includes expense from corporate operations, Retained Business and other closed blocks, and expense not allocated to our segments, including Stranded Costs.

Corporate - Year Ended December 31, 2018 Compared to Year Ended December 31, 2017

Adjusted operating earnings before income taxes increased $164 million from a loss of $395 million to a loss of $231 million primarily due to:


•	decline in expenses associated with our Strategic Investment Program as the expense is allocated to our segments beginning in the first quarter of 2018;


•	residual activity from Retained Business, which will have volatility due to the nature of the block;


•	lower net compensation adjustments;


•	lower Stranded costs; and



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•	a decrease in compliance-related expenses in the current period.

Corporate - Year Ended December 31, 2017 Compared to Year Ended December 31, 2016

Adjusted operating earnings before income taxes increased $82 million from a loss of $477 million to a loss of $395 million primarily related to:


•	lower spending in our Strategic Investment Program;


•	residual activity from Retained Business, which will have volatility due to the nature of the block;


•	lower legal costs primarily due to lower reserves with respect to several litigation and regulatory matters; and


•	lower losses in our run-off block of business primarily due to recognition of deferred prepayment penalties associated with the early termination of certain FHLB funding agreements in the prior period.

The increase was partially offset by:


•	higher net compensation adjustments.

Alternative Investment Income

Investment income on certain alternative investments can be volatile due to changes in market conditions. The following table presents the amount of investment income (loss) on certain alternative investments that is included in segment Adjusted operating earnings before income taxes and the average level of assets in each segment, prior to intercompany eliminations. These alternative investments are carried at fair value, which is estimated based on the net asset value ("NAV") of these funds. The investment income on alternative investments shown below for the periods stated excludes the net investment income from Lehman Recovery/LIHTC.

While investment income on these assets can be volatile, based on current plans, we expect to earn 9.0% on these assets over the long-term.

The following table presents the investment income for the years ended December 31, 2018, 2017 and 2016, respectively, and the average assets of alternative investments as of the dates indicated:



	Year Ended December 31,
($ in millions)	2018		2017		2016
Retirement:
Alternative investment income	$	99	$	62	$	16
Average alternative investments	595		517		438
Investment Management:
Alternative investment income⁽¹⁾	28		57		(11		)
Average alternative investments	232		229		181
Employee Benefits:
Alternative investment income	10		6		2
Average alternative investments	57		49		42
Individual Life:
Alternative investment income	58		30		8
Average alternative investments	365		259		188

⁽¹⁾ Includes the recoveries of $1 million and $25 million in 2018 and 2017, respectively, of previously reversed accrued carried interest related to a private equity fund which experienced an increase in fund performance. Includes the reversal of $30 million in 2016 of previously accrued carried interest related to a private equity fund which experienced significant declines in the market value of its investment portfolio.



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DAC/VOBA and Other Intangibles Unlocking

Adjusted operating earnings before income taxes and Net income (loss) include amortization of DAC, VOBA, deferred sales inducements ("DSI"), and unearned revenue ("URR") (collectively, "DAC/VOBA and other intangibles"). Adjusted operating earnings before income taxes in our Individual Life segment and Net income (loss) also include the effect of increases and decreases in amortization of net cost of reinsurance, as well as changes in reserves associated with UL and variable universal life ("VUL") secondary guarantees and paid-up guarantees. Unlocking, described below, related to DAC, VOBA, DSI and URR, as well as amortization of net cost of reinsurance and reserve adjustments associated with UL and VUL secondary guarantees and paid-up guarantees are referred to as "DAC/VOBA and other intangibles unlocking." See the "Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles," "Reinsurance," and "Future Policy Benefits and Contract Owner Account Balances" sections in the Business, Basis of Presentation and Significant Accounting Policies Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K for more information.

We amortize DAC/VOBA and other intangibles related to universal life-type contracts and fixed and variable deferred annuity contracts over the estimated lives of the contracts in relation to the emergence of estimated gross profits. Net cost of reinsurance is amortized in a similar manner. Assumptions as to mortality, persistency, interest crediting rates, returns associated with separate account performance, impact of hedge performance, expenses to administer the business and certain economic variables, such as inflation, are based on our experience and our overall short-term and long-term future expectations for returns available in the capital markets. At each valuation date, estimated gross profits are updated with actual gross profits and the assumptions underlying future estimated gross profits are evaluated for continued reasonableness. Adjustments to estimated gross profits require that amortization rates be revised retroactively to the date of the contract issuance, which is referred to as unlocking. As a result of this process, the cumulative balances of DAC/VOBA and other intangibles and net cost of reinsurance are adjusted with an offsetting benefit or charge to income to reflect changes in the period of the revision. An unlocking event that results in a benefit to income ("favorable unlocking") generally occurs as a result of actual experience or future expectations being favorable compared to previous estimates. Changes in DAC/VOBA and other intangibles and net cost of reinsurance due to contract changes or contract terminations higher than estimated are also included in "unlocking." An unlocking event that results in a charge to income ("unfavorable unlocking") generally occurs as a result of actual experience or future expectations being unfavorable compared to previous estimates. As a result of unlocking, the amortization schedules for future periods are also adjusted.

Reserves for UL and VUL secondary guarantees and paid-up guarantees are calculated by estimating the expected value of death benefits payable and recognizing those benefits ratably over the accumulation period based on total expected assessments. The reserve for such products recognizes the portion of contract assessments received in early years used to compensate us for benefits provided in later years. Assumptions used, such as the interest rate, lapse rate and mortality, are consistent with assumptions used in estimating gross profits for purposes of amortizing DAC. At each valuation date, we evaluate these assumptions and, if actual experience or other evidence suggests that earlier assumptions should be revised, we adjust the reserve balance, with a related charge or credit to Policyholder benefits. These reserve adjustments are included in unlocking associated with all our segments.

We also review the estimated gross profits for each of our blocks of business to determine recoverability of DAC, VOBA and DSI balances each period. If these assets are deemed to be unrecoverable, a write-down is recorded that is referred to as loss recognition. During the year ended December 31, 2018, there was no loss recognition. During the year ended December 31, 2017, our reviews resulted in loss recognition related to the re-definition of our contract groupings for premium deficiency testing purposes in the Retained Business of $43 million, which is excluded from Adjusted operating earnings before income taxes because it was driven by the decision to dispose of substantially all of our Annuities businesses and therefore is not indicative of future results. During the year ended December 31, 2016, our reviews resulted in loss recognition in CBVA of $313 million, before income taxes, included in Income (loss) from discontinued operations, net of tax, of which $78 million and $19 million related to DAC/VOBA and DSI, respectively. The loss recognition also included the establishment of $216 million premium deficiency reserve. For our continued operations, our reviews resulted in loss recognition of $8 million, before income taxes, of which $7 million was related to DAC/VOBA. The remaining loss recognition of $1 million was related to the establishment of premium deficiency reserves. Refer to Critical Accounting Judgments and Estimates in Part II, Item 7. of this Annual Report on Form 10-K for more information.

During the third quarter of 2018, we completed our annual review of the assumptions, including projection model inputs, in each of our segments (except for Investment Management segment and Corporate, for which assumption reviews are not relevant). As a result of this review, we made a number of changes to our assumptions resulting in a net unfavorable impact of $153 million to Adjusted operating earnings before income taxes in the current period, compared to an unfavorable impact of $189 million in the third quarter of 2017 and an unfavorable impact of $191 million in the third quarter of 2016. These are included in the DAC/VOBA and other intangibles unlocking. Results of Operations - Segment by Segment in Part II, Item 7. of this Annual Report on Form 10-K.



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The following table presents the amount of DAC/VOBA and other intangibles unlocking that is included in segment Adjusted operating earnings before income taxes for the periods indicated:



	Year Ended December 31,
($ in millions)	2018			2017			2016
Retirement ⁽¹⁾	$	(1	)	$	(137	)	$	(66	)
Employee Benefits	(1		)	(2		)	(4		)
Individual Life ⁽²⁾	(281		)	(160		)	(143		)
Corporate	5			—			—
Total DAC/VOBA and other intangibles unlocking⁽³⁾	$	(278	)	$	(299	)	$	(213	)

⁽¹⁾ Amounts for the Retirement segment include unlocking associated with the changes in contract terms of certain fixed option retirement plans related to GMIR initiatives.

⁽²⁾ Includes unlocking related to cost of reinsurance and secondary and paid-up guarantees.

⁽³⁾Unlocking related to the Net gain from Lehman Recovery is excluded from DAC/VOBA and other intangibles unlocking for the year ended December 31, 2016.

Liquidity and Capital Resources

Liquidity refers to our ability to access sufficient sources of cash to meet the requirements of our operating, investing and financing activities. Capital refers to our long-term financial resources available to support business operations and future growth. Our ability to generate and maintain sufficient liquidity and capital depends on the profitability of the businesses, timing of cash flows on investments and products, general economic conditions and access to the capital markets and the other sources of liquidity and capital described herein.

Consolidated Sources and Uses of Liquidity and Capital

Our principal available sources of liquidity are product charges, investment income, proceeds from the maturity and sale of investments, proceeds from debt issuance and borrowing facilities, equity securities issuance, repurchase agreements, contract deposits and securities lending. Primary uses of these funds are payments of policyholder benefits, commissions and operating expenses, interest credits, share repurchases, investment purchases and contract maturities, withdrawals and surrenders.

Parent Company Sources and Uses of Liquidity

Voya Financial, Inc. is largely dependent on cash flows from its operating subsidiaries to meet its obligations. The principal sources of funds available to Voya Financial, Inc. include dividends and returns of capital from its operating subsidiaries, as well as cash and short-term investments, and proceeds from debt issuances, borrowing facilities and equity securities issuances. These sources of funds include the $750 million revolving credit sublimit of our Second Amended and Restated Credit Agreement and reciprocal borrowing facilities maintained with Voya Financial, Inc's subsidiaries as well as alternate sources of liquidity described below.



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Voya Financial, Inc.'s primary sources and uses of cash for the periods indicated are presented in the following table:



	Year Ended December 31,
($ in millions)	2018			2017			2016
Beginning cash and cash equivalents balance	$	244		$	257		$	377
Sources:
Proceeds from loans from subsidiaries, net of repayments	—			408			11
Dividends and returns of capital from subsidiaries	1,207			1,093			977
Repayment of loans to subsidiaries, net of new issuances	111			87			52
Proceeds from 2026 Notes offering	—			—			499
Proceeds from 2046 Notes offering	—			—			300
Proceeds from 2024 Notes offering	—			399			—
Proceeds from 2048 Notes offering	350			—			—
Proceeds from issuance of preferred stock, net	319			—			—
Amounts received from subsidiaries under tax sharing agreements, net	63			—			—
Refund of income taxes, net	—			154			—
Sale of short-term investments	212			—			—
Other, net	—			—			6
Total sources	2,262			2,141			1,845
Uses:
Repurchase of Senior Notes	266			490			660
Premium paid and other fees related to debt extinguishment	20			4			84
Payment of interest expense	152			138			156
Capital provided to subsidiaries	55			467			215
Repayments of loans from subsidiaries, net of new issuances	414			—			—
Amounts paid to subsidiaries under tax sharing arrangements, net	—			104			68
Payment of income taxes, net	1			—			64
Debt issuance costs	6			3			16
Common stock acquired - Share repurchase	1,025			923			687
Share-based compensation	14			8			7
Dividends paid on common stock	6			8			8
Payment of principal on 2018 Notes at maturity	337			—			—
Other, net	1			9			—
Total uses	2,297			2,154			1,965
Net decrease in cash and cash equivalents	(35		)	(13		)	(120		)
Ending cash and cash equivalents balance	$	209		$	244		$	257

Share Repurchase Program and Dividends to Shareholders

On March 13, 2014, our Board of Directors authorized a share repurchase program, pursuant to which we may, from time to time, purchase shares of our common shares through various means, including, without limitation, open market transactions, privately negotiated transactions, forward, derivative, or accelerated repurchase, or automatic repurchase transactions, including 10b5-1 plans, or tender offers.

Since 2014, our Board of Directors has periodically renewed our authority to repurchase our shares. As of December 31, 2018, we were authorized to repurchase shares up to an aggregate purchase price of $486 million, with such authorization expiring (unless subsequently extended) December 31, 2019. The authorization for the share repurchase program may be terminated, increased or decreased by the Board of Directors at any time.



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most recent share repurchase authorization, increasing the aggregate amount of the Company's common stock authorized for repurchase by $500 million. The additional share repurchase authorization does not obligate the Company to purchase any shares.

During the year ended December 31, 2016, we repurchased 11,313,031 shares of our common stock in open market repurchases for an aggregate purchase price of $337 million and 5,690,254 shares of our common stock under an accelerated share repurchase arrangement for an aggregate purchase price of $150 million. In addition, on November 3, 2016, we entered into a further share repurchase arrangement with a third-party financial institution, pursuant to which we made an up-front payment of $200 million during the fourth quarter of 2016, and received delivery of 5,216,025 shares during the first quarter of 2017.

During the year ended December 31, 2017, we repurchased 7,437,994 shares of our common stock in open market repurchases for an aggregate purchase price of $273 million and 3,986,647 shares of our common stock under a share repurchase arrangement with a third-party financial institution for an aggregate purchase price of $150 million. In addition, on December 26, 2017, we entered into a further share repurchase arrangement with a third-party financial institution, pursuant to which we made an up-front payment of $500 million and received initial delivery of 7,821,666 shares during the fourth quarter of 2017. This arrangement closed on March 26, 2018 and an additional 1,947,413 shares at a per-share repurchase price of $51.35 were delivered.

During the year ended December 31, 2018, we repurchased 20,843,047 shares of our common stock in open market repurchases for an aggregate purchase price of $1,025 million.

On January 3, 2019, we entered into a share repurchase agreement with a third-party financial institution, pursuant to which we made an upfront payment of $250 million and received initial delivery of 5,059,449 shares. This arrangement is scheduled to terminate no later than the beginning of the second quarter of 2019, at which time we will settle any outstanding positive or negative share balance based on the daily volume-weighted average price of our common stock.

The following table summarizes our payment of common dividends and repurchases of common share:



($ in millions)	Year Ended December 31,
	2018		2017		2016
Dividends paid on common shares	$	6	$	8	$	8
Repurchases of common shares (at cost)	1,125		1,023		487
Total	$	1,131	$	1,031	$	495

Liquidity

We manage liquidity through access to substantial investment portfolios as well as a variety of other sources of liquidity including committed credit facilities, securities lending and repurchase agreements. Our asset-liability management ("ALM") process takes into account the expected maturity of investments and expected benefit payments as well as the specific nature and risk profile of the liabilities. As part of our liquidity management process, we model different scenarios to determine whether existing assets are adequate to meet projected cash flows.

Capitalization

The primary components of our capital structure consist of debt and equity securities. Our capital position is supported by cash flows within our operating subsidiaries, the availability of borrowed funds under liquidity facilities, and any additional capital we raise to invest in the growth of the business and for general corporate purposes. We manage our capital position based on a variety of factors including, but not limited to, our financial strength, the credit rating of Voya Financial, Inc. and of its insurance company subsidiaries and general macroeconomic conditions.

As of December 31, 2018, we had $1 million short-term debt borrowings outstanding consisting entirely of current portion of long-term debt.



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The following table summarizes our borrowing activities for the year ended December 31, 2018:



($ in millions)	Beginning Balance		Issuance		Maturities and Repayment			Other Changes			Ending Balance
Long-Term Debt:
Debt securities	$	3,455	$	350	$	(672	)	$	(1	)	$	3,132
Windsor property loan	5		—		—			—			5
Subtotal	3,460		350		(672		)	(1		)	3,137
Less: Current portion of long-term debt	337		—		(337		)	1			1
Total long-term debt	$	3,123	$	350	$	(335	)	$	(2	)	$	3,136

As of December 31, 2017, we had $337 million short-term debt borrowings outstanding consisting entirely of current portion of long-term debt. The following table summarizes our borrowing activities for the year ended December 31, 2017:



($ in millions)	Beginning Balance		Issuance		Maturities and Repayment			Other Changes			Ending Balance
Long-Term Debt:
Debt securities	$	3,545	$	400	$	(490	)	$	—		$	3,455
Windsor property loan	5		—		—			—			5
Subtotal	3,550		400		(490		)	—			3,460
Less: Current portion of long-term debt	—		—		(490		)	827			337
Total long-term debt	$	3,550	$	400	$	—		$	(827	)	$	3,123

As of December 31, 2018, we were in compliance with our debt covenants.

Preferred Stock

On September 12, 2018, we issued 325,000 shares of 6.125% Fixed-Rate Reset Non-Cumulative Preferred Stock, Series A, with a $0.01 par value per share and a liquidation preference of $1,000 per share, for aggregate net proceeds of $319 million. Our ability to declare or pay dividends on, or purchase, redeem or otherwise acquire, shares of our common stock will be substantially restricted in the event that we do not declare and pay (or set aside) dividends on the Series A Preferred Stock for the last preceding dividend period. See the Shareholders' Equity Note in Part II, Item 8. of this Annual Report on Form 10-K for further information.

Senior Notes

As of December 31, 2018 and 2017, Voya Financial, Inc. had five and six series of senior notes (collectively, the "Senior Notes") with aggregate outstanding principal amount of $1.7 billion and $2.3 billion, respectively. The Senior Notes are guaranteed by Voya Holdings. We are permitted to redeem all or any portion of the Senior Notes at any time at a redemption price equal to the principal amount redeemed, or, if greater, a "make-whole redemption price," plus, in each case accrued and unpaid interest.

Junior Subordinated Notes

On January 23, 2018, Voya Financial, Inc. completed an offering of $350 million aggregate principal amount of 4.7% Fixed-to-Floating Rate Junior Subordinated Notes due 2048 (the "2048 Notes"). The 2048 Notes are guaranteed on an unsecured, junior subordinated basis by Voya Holdings. We used the net proceeds from the offering to repay at maturity our 2018 Notes and to pay accrued interest thereon. The remaining proceeds after the repayment of the 2018 Notes were used for general corporate purposes.

Interest is paid on the 2048 Notes semi-annually, in arrears, on each January 23 and July 23, at a fixed rate of 4.7% until January 23, 2028. From January 23, 2028, the 2048 Notes bear interest at an annual rate equal to three-month LIBOR plus 2.084% payable quarterly, in arrears, on January 23, April 23, July 23 and October 23. So long as no event of default with respect to the 2048 Notes has occurred and is continuing, we have the right on one or more occasions, to defer the payment of interest on the 2048 Notes for one or more consecutive interest periods for up to five years. During the deferral period, interest will continue to accrue at the then-applicable rate and deferred interest will bear additional interest at the then-applicable rate.



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At any time following notice of our plan to defer interest and during the period interest is deferred, we and our subsidiaries generally, with certain exceptions, may not make payments on or redeem or purchase any shares of our common or preferred stock or any of the debt securities or guarantees that rank in liquidation on a parity with or are junior to the 2048 Notes.

We may elect to redeem the 2048 Notes (i) in whole at any time or in part on or after January 23, 2028 at a redemption price equal to the principal amount plus accrued and unpaid interest; or (ii) in whole, but not in part, at any time prior to January 23, 2028 within 90 days after the occurrence of a "tax event", a "rating agency event" or a "regulatory capital event", as defined in the indenture governing the 2048 Notes, at a redemption price equal to (a) with respect to a "rating agency event" 102% of their principal amount and (ii) with respect to a "tax event" or a "regulatory capital event", their principal amount, in each case plus accrued and unpaid interest.

As of December 31, 2018 and 2017, Voya Financial, Inc. had two and one series of junior subordinated notes (collectively, the "Junior Subordinated Notes") with aggregate outstanding principal amount of $1.1 billion and $750 million, respectively. The Junior Subordinated Notes are guaranteed on an unsecured, junior subordinated basis by Voya Holdings.

Aetna Notes

As of December 31, 2018 and 2017, Voya Holdings was the obligor under three series of debentures (collectively, the "Aetna Notes") with aggregate outstanding principal amount of $358 million and $426 million, respectively, which were issued by a predecessor of Voya Holdings and assumed in connection with our acquisition of Aetna’s life insurance and related businesses. In addition, Equitable of Iowa Capital Trust II, a limited purpose trust subsidiary, has outstanding $13 million principal amount of 8.42% Series B Capital Securities due April 1, 2027 (the "Equitable Notes"). ING Group, our previous corporate parent, guarantees the Aetna Notes. The Equitable Notes are also guaranteed by Voya Financial, Inc.

Concurrent with the completion of our Initial Public Offering ("IPO"), we entered into a shareholder agreement with ING Group that governs certain aspects of our continuing relationship. Pursuant to that agreement, we are obligated to reduce the aggregate outstanding principal amount of Aetna Notes to no more than $100 million as of December 31, 2018 and zero as of December 31, 2019, or otherwise to make provision for ING Group's guarantee of any outstanding Aetna Notes in excess of such amounts.

Our obligation to ING Group with respect to the Aetna Notes can be met, at our option, through redemptions, repurchases or by posting collateral with a third-party collateral agent, for the benefit of ING Group.

If we fail to meet these obligations to ING Group, we have agreed to pay a prescribed quarterly fee (1.25% per quarter for 2019) to ING Group based on the outstanding principal amount of Aetna Notes for which provision has not been made, in excess of the limits set forth above.

As of December 31, 2018 and 2017, the amounts of collateral required to avoid the payment of a fee to ING Group were $258 million and $226 million, respectively.

Put Option Agreement for Senior Debt Issuance

On March 17, 2015, we entered into an off-balance sheet ten-year put option agreement with a Delaware trust that we formed, in connection with the completion of the sale by the trust of $500 million aggregate amount of pre-capitalized trust securities redeemable February 15, 2025 ("P-Caps") in a Rule 144A private placement. The trust invested the proceeds from the sale of the P-Caps in a portfolio of principal and interest strips of U.S. Treasury securities. The put option agreement provides Voya Financial, Inc. the right to sell to the trust at any time up to $500 million principal amount of its 3.976% Senior Notes due 2025 ("3.976% Senior Notes") and receive in exchange a corresponding principal amount of the U.S. Treasury securities held by the trust. The 3.976% Senior Notes will not be issued unless and until the put option is exercised. In return, we pay a semi-annual put premium to the trust at a rate of 1.875% per annum applied to the unexercised portion of the put option, and reimburse the trust for its expenses. The put premium and expense reimbursements are recorded in Operating expenses in the Consolidated Statements of Operations. If and when issued, the 3.976% Senior Notes will be guaranteed by Voya Holdings. Our obligations under the put option agreement and the expense reimbursement agreement with the trust are also guaranteed by Voya Holdings.

The put option described above will be exercised automatically in full if we fail to make certain payments to the trust, including any failure to pay the put option premium or expense reimbursements when due, if such failure is not cured within 30 days, and upon certain bankruptcy event involving us or Voya Holdings. We are also required to exercise the put option in full: (i) if we reasonably believe that our consolidated shareholders’ equity, calculated in accordance with U.S. GAAP but excluding Accumulated other comprehensive income (loss) and Noncontrolling interest, has fallen below $3.0 billion, subject to adjustment in certain



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cases; (ii) upon the occurrence of an event of default under the 3.976% Senior Notes; and (iii) upon certain events relating to the trust’s status as an "investment company" under the Investment Company Act of 1940.

We have a one-time right to unwind a prior voluntary exercise of the put option by exchanging all of the 3.976% Senior Notes then held by the trust for U.S. Treasury securities. If the put option has been fully exercised, the 3.976% Senior Notes issued may be redeemed by us prior to their maturity at par or, if greater, at a make-whole redemption price, in each case plus accrued and unpaid interest to the date of redemption. The P-Caps are to be redeemed by the trust on February 15, 2025 or upon any early redemption of the 3.976% Senior Notes.

Senior Unsecured Credit Facility

We have a $1.0 billion senior unsecured credit facility which expires on May 6, 2021. The facility provides $1.0 billion of committed capacity for issuing letters of credit and also includes a revolving credit borrowing sublimit of $750 million. As of December 31, 2018, there were no amounts outstanding as revolving credit borrowings and no amounts of LOCs outstanding under the senior unsecured credit facility. Under the terms of the facility, Voya Financial, Inc. is required to maintain a minimum net worth of $6.6 billion, which may increase upon any future equity issuances by us.

Other Credit Facilities

We use credit facilities to provide collateral required primarily under our affiliated reinsurance transactions with captive insurance subsidiaries. We also issue guarantees and enter into financing arrangements in connection with these credit facilities. These arrangements are designed to facilitate the financing of statutory reserve requirements.

The following table summarizes our credit facilities as of December 31, 2018:

($ in millions)

Obligor / Applicant

Business Supported

Secured/ Unsecured

Committed/ Uncommitted

Expiration

Capacity

Utilization

Unused Commitment

Voya Financial, Inc.

Other

Unsecured

Committed

05/06/2021

1,000

—

1,000

Voya Financial, Inc.

Other

Unsecured

Uncommitted

Various

—

Voya Financial, Inc.

Other

Secured

Uncommitted

Various

—

Voya Financial, Inc. / SLDI

Other

Unsecured

Uncommitted

09/28/2019

300

—

Voya Financial, Inc. / SLDI

Retirement

Unsecured

Committed

01/24/2021

195

—

Voya Financial, Inc. / SLDI

Individual Life

Unsecured

Committed

12/31/2025

475

—

Voya Financial, Inc. / SLDI

Individual Life

Unsecured

Committed

07/01/2037

1,525

1,356

169

Voya Financial, Inc. / Roaring River LLC

Individual Life

Unsecured

Committed

10/01/2025

425

364

Voya Financial, Inc. / Roaring River IV, LLC

Individual Life

Unsecured

Committed

12/31/2028

565

312

253

Voya Financial, Inc.

Individual Life

Unsecured

Committed

12/09/2021

195

173

Voya Financial, Inc.

Individual Life/Retirement/Other

Unsecured

Committed

02/11/2022

300

—

SLDI

Hannover Re⁽¹⁾

Unsecured

Committed

10/29/2023

—

Voya Financial, Inc.

Hannover Re⁽¹⁾

Unsecured

Uncommitted

04/27/2021

156

—

Total

5,208

3,439

1,505

⁽¹⁾Individual Life Reinsurance business acquired by Hannover Re in 2009 via indemnity reinsurance, see "Reinsurance" below for further information.

Total fees associated with credit facilities for the years ended December 31, 2018, 2017 and 2016 were $34 million, $50 million and $46 million, respectively.



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Voya Financial, Inc. Credit Support of Subsidiaries

In addition to our Senior Unsecured Credit Facility, Voya Financial, Inc. maintains credit facilities with third-party banks to support the reinsurance obligations of our captive reinsurance subsidiaries in which Voya Financial is either a primary obligor or provides a financial guarantee. As of December 31, 2018, such facilities provided for up to $4.1 billion of capacity, of which $3.3 billion was utilized.

We also provide credit support to our Roaring River IV, LLC ("Roaring River IV") captive reinsurance subsidiary through a surplus maintenance agreement with a third-party bank in connection with a financing arrangement involving $565 million of statutory reserves which matures December 31, 2028. The reimbursement agreement requires Voya Financial, Inc. to cause capital to be maintained in Roaring River IV Holding LLC, the intermediate holding company of Roaring River IV, and in Roaring River IV. These amounts will vary over time based on a percentage of Roaring River IV in force life insurance.

In addition, we provide guarantees to certain of our subsidiaries to support various business requirements:

•

Under the Buyer Facility Agreement put into place by Hannover Re, Voya Financial, Inc. and SLDI have contingent reimbursement obligations and Voya Financial, Inc. has guarantee obligations, up to the full $2.9 billion principal amount of the note issued pursuant to the agreement, if SLD or SLDI were to direct the sale or liquidation of the note other than as permitted by the Buyer Facility Agreement, or fail to return reinsurance collateral (including the note) upon termination of the Buyer Facility Agreement or as otherwise required by the Buyer Facility Agreement. In addition, Voya Financial, Inc. has agreed to indemnify Hannover Re for any losses it incurs in the event that SLD or SLDI were to exercise offset rights unrelated to the Hannover Re block.


•	Voya Financial, Inc. has also entered into a corporate guarantee agreement with a third-party ceding insurer where it guarantees the reinsurance obligations of our subsidiary, SLD, assumed under a reinsurance agreement with the third-party cedent for the amount of the statutory reserves assumed by SLD. The current amount of reserves outstanding as of December 31, 2018 is $14 million.


•	Voya Financial, Inc. guarantees the obligations of Voya Holdings under the $13 million principal amount Equitable Notes maturing in 2027, and provides a back-to-back guarantee to ING Group in respect of its guarantee of $358 million combined principal amount of Aetna Notes. For more information see "Capitalization- Aetna Notes" above.

•

Voya Financial, Inc. and Voya Holdings provide a guarantee to certain Voya insurance subsidiaries of VIAC’s payment obligations to those subsidiaries under certain VIAC surplus notes held by those subsidiaries. The agreement provides for Voya and Voya Holdings to reimburse the applicable subsidiary to the extent that any interest on, principal of, or any redemption payment with respect to such surplus note is unpaid by VIAC on its scheduled date.

We did not recognize any asset or liability as of December 31, 2018 and 2017 in relation to intercompany indemnifications, guarantees or support agreements. As of December 31, 2018 and 2017, no circumstances existed in which we were required to currently perform under these arrangements.



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Securities Lending

We engage in securities lending whereby certain securities from our portfolio are loaned to other institutions for short periods of time. We have the right to approve any institution with whom the lending agent transacts on our behalf. Initial collateral, primarily cash, is required at a rate of 102% of the market value of the loaned securities. The lending agent retains the collateral and invests it in short-term liquid assets on our behalf. The market value of the loaned securities is monitored on a daily basis with additional collateral obtained or refunded as the market value of the loaned securities fluctuates. The lending agent indemnifies us against losses resulting from the failure of a counterparty to return securities pledged where collateral is insufficient to cover the loss. As of December 31, 2018 and 2017, the fair value of loaned securities was $1,635 million and $1,854 million, respectively, and is included in Securities pledged on the Consolidated Balance Sheets. As of December 31, 2018 and 2017, collateral retained by the lending agent and invested in liquid assets on our behalf was $1,581 million and $1,589 million, respectively, and is recorded in Short-term investments under securities loan agreements, including collateral delivered on the Consolidated Balance Sheets. As of December 31, 2018 and 2017, liabilities to return collateral of $1,581 million and $1,589 million, respectively, are included in Payables under securities loan and repurchase agreements, including collateral held on the Consolidated Balance Sheets.

Repurchase Agreements

We engage in dollar repurchase agreements with mortgage-backed securities ("dollar rolls") and repurchase agreements with other collateral types to increase our return on investments and improve liquidity. Such arrangements meet the requirements to be accounted for as financing arrangements. We enter into dollar roll transactions by selling existing mortgage-backed securities ("MBS") and concurrently entering into an agreement to repurchase similar securities within a short time frame at a lower price. Under repurchase agreements, we borrow cash from a counterparty at an agreed upon interest rate for an agreed upon time frame and pledge collateral in the form of securities. At the end of the agreement, the counterparty returns the collateral to us, and we, in turn, repay the loan amount along with the additional agreed upon interest. We require that, at all times during the term of the dollar roll and repurchase agreements, cash or other collateral types obtained is sufficient to allow us to fund substantially all of the cost of purchasing replacement assets. Cash received is generally invested in short-term investments, with the offsetting obligation to repay the loan included within Payables under securities loan and repurchase agreements, including collateral held on the Consolidated Balance Sheets. As per the terms of the agreements, the market value of the loaned securities is monitored with additional collateral obtained or refunded as the market value of the loaned securities fluctuates due to changes in interest rates, spreads and other risk factors.

The carrying value of the securities pledged in dollar rolls and repurchase agreement transactions is included in Securities pledged on the Consolidated Balance Sheets. As of December 31, 2018, the carrying value of securities pledged and obligation to repay loans related to repurchase agreement transactions was $45 million and $46 million, respectively. As of December 31, 2017, we did not have any securities pledged in repurchase agreement transactions. As of December 31, 2018 and 2017, we did not have any securities pledged in dollar rolls.

We also enter into reverse repurchase agreements. These transactions involve a purchase of securities and an agreement to sell substantially the same securities as those purchased. We require that, at all times during the term of the reverse repurchase agreements, cash or other collateral types provided is sufficient to allow the counterparty to fund substantially all of the cost of purchasing the replacement assets. As of December 31, 2018 and 2017, we did not have any securities pledged under reverse repurchase agreements.

The primary risk associated with short-term collateralized borrowings is that the counterparty will be unable to perform under the terms of the contract. Our exposure is limited to the excess of the net replacement cost of the securities over the value of the short-term investments. We believe the counterparties to the dollar rolls, repurchase and reverse repurchase agreements are financially responsible and that the counterparty risk is minimal.

FHLB

We are currently a member of the FHLB of Boston, the FHLB of Topeka and the FHLB of Des Moines. We are required to maintain a collateral deposit to back any funding agreements issued by the FHLB. We have the ability to obtain funding from the FHLBs based on a percentage of the value of our assets and subject to the availability of eligible collateral. The limits across all programs are up to 40% of the total assets of the general accounts of SLD based on credit approval from the FHLB Topeka, an amount that corresponds to the lending value of assets that can be pledged to the FHLB Boston limited 5% of total general account assets in VRIAC, and 30% of the total assets of the general and separate accounts of RLI. Furthermore, collateral is pledged based on the outstanding balances of FHLB funding agreements. The amount varies based on the type, rating and maturity of the collateral posted to the FHLB. Generally, mortgage securities, commercial real estate and U.S. treasury securities are pledged to the FHLBs.



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Market value fluctuations resulting from changes in interest rates, spreads and other risk factors for each type of assets are monitored and additional collateral is either pledged or released as needed.

Our maximum borrowing capacity under these credit facilities was $13 billion as of December 31, 2018, and does not have an expiration date as long as we maintain a satisfactory level of creditworthiness based on the FHLBs' credit assessment. As of December 31, 2018 and 2017, we had $1,209 million and $501 million in non-putable FHLB funding agreements, respectively, which are included in Contract owner account balances on the Consolidated Balance Sheets. As of December 31, 2018 and 2017, we had assets with a market value of approximately $1,472 million and $602 million, respectively, which collateralized the FHLB funding agreements.

Borrowings from Subsidiaries

We maintain revolving reciprocal loan agreements with a number of our life and non-life insurance subsidiaries that are used to fund short-term cash requirements that arise in the ordinary course of business. Under these agreements, either party may borrow up to the maximum allowable under the agreement for a term not more than 270 days. For life insurance subsidiaries, the amounts that either party may borrow from the other under the agreement vary and are between 2% and 5% of the insurance subsidiary's statutory net admitted assets (excluding separate accounts) as of the previous year end depending on the state of domicile. As of December 31, 2018, the aggregate amount that may be borrowed or lent under agreements with life insurance subsidiaries was $1.8 billion. For non-life insurance subsidiaries, the maximum allowable under the agreement is based on the assets of the subsidiaries and their particular cash requirements. As of December 31, 2018, Voya Financial, Inc. had $4 million in outstanding borrowings from subsidiaries and had loaned $79 million to its subsidiaries.

Collateral - Derivative Contracts

Under the terms of our over-the-counter ("OTC") Derivative ISDA agreements, we may receive from, or deliver to, counterparties, collateral to assure that the terms of the International Swaps and Derivatives Association, Inc. ("ISDA") agreements will be met with regard to the Credit Support Annex ("CSA"). The terms of the CSA call for us to pay interest on any cash received equal to the Federal Funds rate. To the extent cash collateral is received and delivered, it is included in Payables under securities loan and repurchase agreements, including collateral held and Short-term investments under securities loan agreements, including collateral delivered, respectively, on the Consolidated Balance Sheets and is reinvested in short-term investments. Collateral held is used in accordance with the CSA to satisfy any obligations. Investment grade bonds owned by us are the source of noncash collateral posted, which is reported in Securities pledged on the Consolidated Balance Sheets. As of December 31, 2018, we held $91 million and $16 million of net cash collateral related to OTC derivative contracts and cleared derivative contracts, respectively. As of December 31, 2017, we held $174 million and $73 million of net cash collateral related to OTC derivative contracts and cleared derivative contracts, respectively. In addition, as of December 31, 2018, we delivered $187 million of securities and held $11 million of securities as collateral. As of December 31, 2017, we delivered $233 million of securities and held $38 million of securities as collateral.

Ratings

Our access to funding and our related cost of borrowing, collateral requirements for derivative instruments and the attractiveness of certain of our products to customers are affected by our credit ratings and insurance financial strength ratings, which are periodically reviewed by the rating agencies. Financial strength ratings and credit ratings are important factors affecting public confidence in an insurer and its competitive position in marketing products. Credit ratings are also important to our ability to raise capital through the issuance of debt and for the cost of such financing.

A downgrade in our credit ratings or the credit or financial strength ratings of our rated subsidiaries could have a material adverse effect on our results of operations and financial condition. See Risk Factors- A downgrade or a potential downgrade in our financial strength or credit ratings could result in a loss of business and adversely affect our results of operations and financial condition in Part I, Item 1A. of this Annual Report on Form 10-K.

With respect to our credit facility and derivative agreements, based on the amount of credit outstanding as of December 31, 2018, a one-notch or two-notch downgrade in Voya Financial, Inc.’s credit ratings by S&P or Moody's would not have resulted in an additional increase in our collateral requirements.

With respect to our reinsurance agreements, based on the amount of reinsurance outstanding as of December 31, 2018 and December 31, 2017, a two-notch downgrade of our insurance subsidiaries would have resulted in an estimated increase in our collateral requirements by approximately $14 million and $21 million, respectively. The nature of the collateral that we may be required to post is principally in the form of cash, highly rated securities or LOC.



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Financial strength ratings represent the opinions of rating agencies regarding the financial ability of an insurance company to meet its obligations under an insurance policy. Credit ratings represent the opinions of rating agencies regarding an entity's ability to repay its indebtedness. These ratings are not a recommendation to buy or hold any of our securities and they may be revised or revoked at any time at the sole discretion of the rating organization.

The financial strength and credit ratings of Voya Financial, Inc. and its principal subsidiaries as of the date of this Annual Report on Form 10-K are summarized in the following table.



	Rating Agency
	A.M. Best	Fitch, Inc.	Moody's Investors Service, Inc.	Standard & Poor's
	("A.M. Best") ⁽¹⁾	("Fitch") ⁽²⁾	("Moody's") ⁽³⁾	("S&P") ⁽⁴⁾
Long-term Issuer Credit Rating/Outlook:
Voya Financial, Inc.	bbb+/stable	BBB+/negative	Baa2/stable	BBB/positive

Financial Strength Rating/Outlook:	A/stable	A/stable	A2/stable	A/positive
Voya Retirement Insurance and Annuity Company
ReliaStar Life Insurance Company
Security Life of Denver Insurance Company
ReliaStar Life Insurance Company of New York

⁽¹⁾ A.M. Best's financial strength ratings for insurance companies range from "A++ (superior)" to "s (suspended)." Long-term credit ratings range from "aaa (exceptional)" to "s (suspended)."

⁽²⁾ Fitch's financial strength ratings for insurance companies range from "AAA (exceptionally strong)" to "C (distressed)." Long-term credit ratings range from "AAA (highest credit quality)," which denotes exceptionally strong capacity for timely payment of financial commitments, to "D (default)."

⁽³⁾ Moody’s financial strength ratings for insurance companies range from "Aaa (exceptional)" to "C (lowest)." Numeric modifiers are used to refer to the ranking within the group- with 1 being the highest and 3 being the lowest. These modifiers are used to indicate relative strength within a category. Long-term credit ratings range from "Aaa (highest)" to "C (default)."

⁽⁴⁾ S&P's financial strength ratings for insurance companies range from "AAA (extremely strong)" to "D (default)." Long-term credit ratings range from "AAA (extremely strong)" to "D (default)."

Rating agencies use an "outlook" statement for both industry sectors and individual companies. For an industry sector, a stable outlook generally implies that over the next 12 to 18 months the rating agency expects ratings to remain unchanged among companies in the sector. For a particular company, an outlook generally indicates a medium- or long-term trend in credit fundamentals, which if continued, may lead to a rating change.

Ratings actions and outlook changes by A.M. Best, Fitch, Moody's and S&P from December 31, 2017 through December 31, 2018 and subsequently through the date of this Annual Report on Form 10-K are as follows:

•

On June 4, 2018, A.M. Best removed the insurance financial strength ratings of Voya Retirement Insurance and Annuity Company ("VRIAC"), SLD, ReliaStar Life Insurance Company ("RLI") and ReliaStar Life Insurance Company of New York ("RNY") from under review with developing implications and instead, affirmed the financial strength rating of these insurance subsidiaries with a stable outlook. At the same time, A.M. Best removed from under review with developing implications and affirmed the long-term issuer credit rating and debt credit ratings of Voya Financial, Inc.

Reinsurance

We have reinsurance treaties covering a portion of the mortality risks and guaranteed death and living benefits under our life insurance contracts. We remain liable to the extent our reinsurers do not meet their obligations under the reinsurance agreements.

We reinsure our business through a diversified group of well capitalized, highly rated reinsurers. We monitor trends in arbitration and any litigation outcomes with our reinsurers. Collectability of reinsurance balances are evaluated by monitoring ratings and evaluating the financial strength of our reinsurers. Large reinsurance recoverable balances with offshore or other non-accredited reinsurers are secured through various forms of collateral, including secured trusts, funds withheld accounts and irrevocable LOCs.

The S&P financial strength rating of our reinsurers with the two largest reinsurance recoverable balances are AA- rated or better. These reinsurers are (i) Lincoln National Life Insurance Company and Lincoln Life & Annuity Company of New York, subsidiaries



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of Lincoln National Corporation ("Lincoln") and (ii) Hannover Re. Only those reinsurance recoverable balances where recovery is deemed probable are recognized as assets on our Consolidated Balance Sheets.

In 1998, in order to divest of a block of individual life business, we entered into an indemnity reinsurance agreement with a subsidiary of Lincoln, which established a trust to secure its obligations to us under the reinsurance transaction. Of the Premium receivable and reinsurance recoverable on the Consolidated Balance Sheets, $1.4 billion and $1.5 billion as of December 31, 2018 and 2017, respectively, is related to the reinsurance recoverable from the subsidiary of Lincoln under this reinsurance agreement.

On December 31, 2004, we reinsured the individual life reinsurance business (and sold certain systems and operating assets used in the individual life reinsurance business) to Scottish Re on a 100% coinsurance basis (the "2004 Transaction") through our wholly owned subsidiaries, SLD and SLDI. As part of the 2004 Transaction, the ceding commission (net of taxes), along with other reserve assets, was placed in trust for our benefit to secure Scottish Re's obligations as reinsurers of the acquired business.

On November 19, 2008, an existing reinsurance agreement between SRUS and Ballantyne Re, concerning a portion of the business that was originally ceded to Scottish Re as part of the 2004 Transaction, was novated with the result that we were substituted for SRUS as the ceding company to Ballantyne Re and made the sole beneficiary of trust assets connected with the Ballantyne Re facility. The trust assets support the reserve requirements of the business transferred from SLD to Ballantyne Re. As of December 31, 2018, trust assets with a market value of $1.3 billion supported reserves of $236 million.

Effective January 1, 2009, we entered into the MPA with Scottish Re and Hannover Re such that Hannover Re acquired the individual life reinsurance business from Scottish Re. Of the Premium receivable and reinsurance recoverable on the Consolidated Balance Sheets, $2.4 billion and $2.9 billion as of December 31, 2018 and 2017, respectively, is related to the reinsurance recoverable from Hannover Re under this reinsurance agreement. As of December 31, 2018, the premium deficiency reserve established in 2017 related to the business assumed was $0.3 billion and had no impact on the Consolidated Statements of Operations as the business is 100% reinsured.

Pursuant to the terms of the MTA and prior to the closing of the Transaction, VIAC undertook certain restructuring transactions, including reinsurance with several affiliates in order to transfer business and assets into and out of VIAC from and to the Company's affiliates. See the Reinsurance Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K for further information.

For additional information regarding our reinsurance recoverable balances, see Quantitative and Qualitative Disclosures About Market Risk in Part II, Item 7A. of this Annual Report on Form 10-K.

Pension and Postretirement Plans

When contributing to our qualified retirement plans we will take into consideration the minimum and maximum amounts required by ERISA, the attained funding target percentage of the plan, the variable-rate premiums that may be required by the Pension Benefit Guaranty Corporation ("PBGC") and any funding relief that might be enacted by Congress. Contributions to our nonqualified plans and other postretirement and post-employment plans are funded from general assets of the respective sponsoring subsidiary company as benefits are paid.

For additional information on our pension and postretirement plan arrangements, see the Employee Benefit Arrangements Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K.



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Restrictions on Dividends and Returns of Capital from Subsidiaries

Our business is conducted through operating subsidiaries. U.S. insurance laws and regulations regulate the payment of dividends and other distributions by our U.S. insurance subsidiaries to their respective parents. These restrictions are based in part on the prior year's statutory income and surplus. In general, dividends up to specified levels are considered ordinary and may be paid without prior approval. Dividends in larger amounts, or "extraordinary" dividends, are subject to approval by the insurance commissioner of the state of domicile of the insurance subsidiary proposing to pay the dividend. In addition, under the insurance laws of our principal insurance subsidiaries domiciled in Connecticut and Minnesota (these insurance subsidiaries, together with our insurance subsidiary domiciled in Colorado, are referred to collectively, as our "principal insurance subsidiaries"), no dividend or other distribution exceeding an amount equal to an insurance company's earned surplus may be paid without the domiciliary insurance regulator's prior approval. Our Principal Insurance Subsidiary domiciled in Connecticut has ordinary dividend capacity for 2019. However, as a result of the extraordinary dividends it paid in 2015, 2016 and 2017, together with statutory losses incurred in connection with the recapture and cession to one of our Arizona captives of certain term life business in the fourth quarter of 2016, our Principal Insurance Subsidiary domiciled in Minnesota currently has negative earned surplus. In addition, primarily as a result of statutory losses incurred in connection with the retrocession of our Principal Insurance Subsidiary domiciled in Minnesota of certain life insurance business in the fourth quarter of 2018, our Principal Insurance Subsidiary domiciled in Colorado has a net loss from operations for the twelve-month period ending the preceding December 31. Therefore, neither our Minnesota nor Colorado Principal Insurance Subsidiaries have the capacity at this time to make ordinary dividend payments. Any extraordinary dividend payment would be subject to domiciliary insurance regulatory approval, which can be granted or withheld at the discretion of the regulator.

For a summary of applicable laws and regulations governing dividends, see the Insurance Subsidiaries Dividend Restrictions section of the Insurance Subsidiaries Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K.

The following table summarizes dividends permitted to be paid by our principal insurance subsidiaries to Voya Financial, Inc. or Voya Holdings without the need for insurance regulatory approval and dividends and extraordinary distributions paid by each of our principal insurance subsidiaries (and for 2017, VIAC, which we sold in 2018 in connection with the Transaction) to its parent for the periods indicated:



	Dividends Permitted without Approval				Dividends Paid				Extraordinary Distributions Paid
					Year Ended December 31,				Year Ended December 31,
($ in millions)	2019		2018		2018		2017		2018		2017
Subsidiary Name (State of domicile):
Voya Retirement Insurance and Annuity Company (CT)	$	396	$	158	$	126	$	265	$	—	$	—
Security Life of Denver Insurance Company (CO)	—		53		52		73		—		—
ReliaStar Life Insurance Company (MN)	—		—		—		—		—		231
Voya Insurance and Annuity Company (IA)⁽¹⁾	N/A		208		—		278		—		250

⁽¹⁾ On June 1, 2018, VIAC was sold as part of the Transaction.

N/A - Not Applicable

Other Subsidiaries - Dividends, Returns of Capital, and Capital Contributions

We may receive dividends from or contribute capital to our wholly owned non-life insurance subsidiaries such as broker-dealers, investment management entities and intermediate holding companies. For the years ended December 31, 2018 and 2017, dividends net of capital contributions received by Voya Financial, Inc. and Voya Holdings from non-life subsidiaries were $114 million and $112 million, respectively.

On February 26, 2018, as a result of our unwind/recapture of the Langhorne I reinsurance transaction, Langhorne I paid a dividend of $210 million to Voya Holdings, which in turn paid a dividend in that same amount to Voya Financial, Inc.

On June 29, 2018, RRII paid a dividend of $270 million to SLDI, which in turn paid a dividend of $425 million to Voya Financial.



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Statutory Capital and Risk-Based Capital of Principal Insurance Subsidiaries

Each of our wholly owned principal insurance subsidiaries is subject to minimum risk based capital ("RBC") requirements established by the insurance departments of their applicable state of domicile. The formulas for determining the amount of RBC specify various weighting factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. Regulatory compliance is determined by a ratio of total adjusted capital ("TAC"), as defined by the NAIC, to RBC requirements, as defined by the NAIC. Each of our U.S. insurance subsidiaries exceeded the minimum RBC requirements that would require regulatory or corrective action for all periods presented herein. Our estimated RBC ratio on a combined basis for our principal insurance subsidiaries, with adjustments for certain intercompany transactions, was approximately 478% as of December 31, 2018. As a result of Tax Reform, the NAIC updated the factors affecting RBC requirements, including ours, to reflect the lowering of the top corporate tax rate from 35% to 21%. Adjusting these factors in light of Tax Reform resulted in an increase in the amount of capital we are required to maintain to satisfy our RBC requirements. During the fourth quarter of 2018, we also established a new RBC target of 400%.

Our wholly owned insurance subsidiaries are required to prepare statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the insurance department of the state of domicile of the respective insurance subsidiary. Statutory accounting practices primarily differ from U.S. GAAP by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities using different actuarial assumptions as well as valuing investments and certain assets and accounting for deferred taxes on a different basis. Certain assets that are not admitted under statutory accounting principles are charged directly to surplus. Depending on the regulations of the insurance department of the state of domicile, the entire amount or a portion of an asset balance can be non-admitted depending on specific rules regarding admissibility. The most significant non-admitted assets are typically a portion of deferred tax assets in excess of prescribed thresholds.

For a summary of statutory capital and surplus of our principal insurance subsidiaries, see the Insurance Subsidiaries Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K.

We monitor the ratio of our insurance subsidiaries' TAC to Company Action Level Risk-Based Capital ("CAL"). A ratio in excess of 125% indicates that the insurance subsidiary is not required to take any corrective actions to increase capital levels at the direction of the applicable state of domicile.

The following table summarizes the ratio of TAC to CAL on a combined basis primarily for our principal insurance subsidiaries, with adjustments for certain intercompany transactions, as of the dates indicated below:



_{($ in millions)}						_{($ in millions)}
As of December 31, 2018						As of December 31, 2017 ⁽¹⁾
CAL		TAC		Ratio		CAL		TAC		Ratio
$	1,072	$	5,129	478	%	$	1,374	$	6,538	476	%

⁽¹⁾ VIAC is included in CAL and TAC as well as the Ratio.

For additional information regarding RBC, see Business-Regulation-Insurance Regulation in Part I, Item 1. of this Annual Report on Form 10-K.

Captive Reinsurance Subsidiaries

Uncertainties associated with our continued use of affiliated captive reinsurance subsidiaries are primarily related to potential regulatory changes. In 2014, the NAIC considered a proposal to require states to apply NAIC accreditation standards, applicable to traditional insurers, to captive reinsurers. In 2015, the NAIC adopted such a proposal, in the form of a revised preamble to the NAIC accreditation standards (the "Standard"), with an effective date of January 1, 2016 for application of the Standard to captives that assume XXX or AXXX business. Under the Standard, a state will be deemed in compliance as it relates to XXX or AXXX captives if the applicable reinsurance transaction satisfies the NAIC's Actuarial Guideline 48 ("AG48"), which limits the type of assets that may be used as collateral to cover the XXX and AG38 statutory reserves. The Standard applies prospectively, so that XXX or AXXX captives will not be subject to the Standard if reinsured policies were issued prior to January 1, 2015 and ceded so that they were part of a reinsurance arrangement as of December 31, 2014. The NAIC left for future action application of the Standard to captives that assume variable annuity business.



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Off-Balance Sheet Arrangements and Aggregate Contractual Obligations

As of December 31, 2018, the following table presents our on- and off- balance sheet contractual obligations due in various periods. The payments reflected in this table are based on our estimates and assumptions about these obligations. Because these estimates and assumptions are necessarily subjective, the actual cash outflows in future periods will vary, possibly materially, from those presented in the table.



($ in millions)	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Contractual Obligations:
Purchase obligations⁽¹⁾	$	1,421	$	1,387	$	34	$	—	$	—
Reserves for insurance obligations⁽²⁾⁽³⁾	94,386		4,289		7,271		7,404		75,422
Retirement and other plans⁽⁴⁾	1,683		147		308		326		902
Short-term and long-term debt obligations⁽⁵⁾	6,926		160		320		564		5,882
Operating leases⁽⁶⁾	152		28		54		45		25
Securities lending, repurchase agreements and collateral held⁽⁷⁾	1,943		1,897		—		—		46
Total⁽⁸⁾	$	106,511	$	7,908	$	7,987	$	8,339	$	82,277

⁽¹⁾Purchase obligations consist primarily of outstanding commitments under alternative investments that may occur any time within the terms of the partnership and private loans. The exact timing, however, of funding these commitments related to partnerships and private loans cannot be estimated. Therefore, the amount of the commitments related to partnerships and private loans is included in the category "Less than 1 Year."

⁽²⁾Reserves for insurance obligations consist of amounts required to meet our future obligations for future policy benefits and contract owner account balances. Amounts presented in the table represent estimated cash payments under such contracts, including significant assumptions related to the receipt of future premiums, mortality, morbidity, lapse, renewal, retirement, disability and annuitization comparable with actual experience. These assumptions also include market growth and interest crediting consistent with assumptions used in amortizing DAC. Estimated cash payments are undiscounted for the time value of money. Accordingly, the sum of cash flows presented of $94.4 billion significantly exceeds the sum of Future policy benefits and Contract owner account balances of $65.5 billion recorded on our Consolidated Balance Sheets as of December 31, 2018. Estimated cash payments are also presented gross of reinsurance. Due to the significance of the assumptions used, the amounts presented could materially differ from actual results.

⁽³⁾Contractual obligations related to certain closed blocks, with reserves in the amount of $4.6 billion, have been excluded from the table because the blocks were divested through reinsurance contracts and collateral is provided by third parties that is accessible by us. Although we are not relieved of legal liability to the contract holder for these closed blocks, third-party collateral of $7.7 billion has been provided for the payment of the related insurance obligations. The sufficiency of collateral held for any individual block may vary.

⁽⁴⁾Includes estimated benefit payments under our qualified and non-qualified pension plans, estimated benefit payments under our other postretirement benefit plans, and estimated payments of deferred compensation based on participant elections and an average retirement age.

⁽⁵⁾The estimated payments due by period for long-term debt reflects the contractual maturities of principal, as well as estimated future interest payments. The payment of principal and estimated future interest for short-term debt are reflected in estimated payments due in less than one year. See the Financing Agreements Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K for additional information concerning the short-term and long-term debt obligations.

⁽⁶⁾Operating leases consist primarily of outstanding commitments for office space, equipment and automobiles.

⁽⁷⁾ Securities loan, repurchase agreements, and collateral held represent the liability to return collateral received from counterparties under securities lending agreements, OTC derivative and cleared derivative contracts as well as the obligations related to borrowings under repurchase agreements. Securities lending agreements include provisions which permit us to call back securities with minimal notice and accordingly, the payable is classified as having a term of less than 1 year. Additionally, Securities lending agreements and collateral held include off-balance sheet non-cash collateral of $111 million and $11 million, respectively.

⁽⁸⁾Unrecognized tax benefits are excluded from the table due to immateriality. In addition, in 2015 we entered into a put option agreement with a Delaware trust that gives Voya Financial, Inc. the right, at any time over a 10-year period, to issue up to $500 million of senior notes to the trust in return for principal and interest strips of U.S. Treasury securities that are held by the trust. See Liquidity-Put Option Agreement for Senior Debt Issuance for more information on this agreement.

Critical Accounting Judgments and Estimates

General

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Critical estimates and assumptions are evaluated on an on-going basis based on historical developments, market conditions, industry trends and other information that is reasonable under the circumstances. There can be no assurance that actual results will conform to estimates and assumptions and that reported results of operations will not be materially affected by the need to make future accounting adjustments to reflect changes in these estimates and assumptions from time to time.



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We have identified the following accounting judgments and estimates as critical in that they involve a higher degree of judgment and are subject to a significant degree of variability:


•	Estimated loss on businesses held for sale;


•	Reserves for future policy benefits;


•	DAC, VOBA and other intangibles (collectively, "DAC/VOBA and other intangibles");


•	Valuation of investments and derivatives;


•	Impairments;


•	Income taxes;


•	Contingencies; and


•	Employee benefit plans.

In developing these accounting estimates, we make subjective and complex judgments that are inherently uncertain and subject to material changes as facts and circumstances develop. Although variability is inherent in these estimates, we believe the amounts provided are appropriate based on the facts available upon preparation of the Consolidated Financial Statements.

The above critical accounting estimates are described in the Business, Basis of Presentation and Significant Accounting Policies Note and the Discontinued Operations Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K.

Estimated loss on sale of business

On June 1, 2018, we consummated the Transaction pursuant to the MTA with VA Capital and Athene. As part of the Transaction, Venerable, a wholly owned subsidiary of VA Capital, acquired two of our subsidiaries, VIAC and DSL. The Transaction resulted in the disposition of substantially all of our Closed Block Variable Annuity and Annuities businesses. We recorded an estimated loss on sale, net of tax, as of December 31, 2018 of $1,918, which includes the loss of $460 of deferred tax assets. The estimated loss on sale represents the excess of the carrying value, immediately prior to the sale, of the businesses classified as discontinued operations over the purchase price, which approximates fair value, less cost to sell. The estimated loss on sale is subject to a final true-up process with the buyers that we expect to conclude in the first or second quarter of 2019. See Overview in the Management's Discussion and Analysis section in Part II, Item 7. of this Annual Report on Form 10-K for further information.

Reserves for Future Policy Benefits

The determination of future policy benefit reserves is dependent on actuarial assumptions. The principal assumptions used to establish liabilities for future policy benefits are based on our experience and periodically reviewed against industry standards. These assumptions include mortality, morbidity, policy lapse, contract renewal, payment of subsequent premiums or deposits by the contract owner, retirement, investment returns, inflation, benefit utilization and expenses. The assumptions used require considerable judgments. Changes in, or deviations from, the assumptions used can significantly affect our reserve levels and related results of operations.


•	Mortality is the incidence of death among policyholders triggering the payment of underlying insurance coverage by the insurer. In addition, mortality also refers to the ceasing of payments on life-contingent annuities due to the death of the annuitant. We utilize a combination of actual and industry experience when setting our mortality assumptions.


•	A lapse rate is the percentage of in-force policies surrendered by the policyholder or canceled by us due to non-payment of premiums.

See the Reserves for Future Policy Benefits and Contract Owner Account Balances Note and the Guaranteed Benefit Features Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K for further information on our reserves for future policy benefits, contract owner account balances and product guarantees.

Insurance and Other Reserves

Reserves for traditional life insurance contracts (term insurance, participating and non-participating whole life insurance and traditional group life insurance) and accident and health insurance represent the present value of future benefits to be paid to or on behalf of contract owners and related expenses, less the present value of future net premiums. Assumptions as to interest rates, mortality, expenses and persistency are based on our estimates of anticipated experience at the period the policy is sold or acquired, including a provision for adverse deviation. Interest rates used to calculate the present value of these reserves ranged from 2.3% to 7.7%.



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Reserves for payout contracts with life contingencies are equal to the present value of expected future payments. Assumptions as to interest rates, mortality and expenses are based on our estimates of anticipated experience at the period the policy is sold or acquired, including a provision for adverse deviation. Such assumptions generally vary by annuity plan type, year of issue and policy duration. Interest rates used to calculate the present value of future benefits ranged from 2.7% to 8.0%.

Although assumptions are "locked-in" upon the issuance of traditional life insurance contracts, certain accident and health insurance contracts and payout contracts with life contingencies, significant changes in experience or assumptions may require us to provide for expected future losses on a product by establishing premium deficiency reserves. Premium deficiency reserves are determined based on best estimate assumptions that exist at the time the premium deficiency reserve is established and do not include a provision for adverse deviation. See "Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles" below for premium deficiency reserves established during 2018 and 2017.

Product Guarantees and Index-crediting Features

The assumptions used to establish the liabilities for our product guarantees require considerable judgment and are established as management's best estimate of future outcomes. We periodically review these assumptions and, if necessary, update them based on additional information that becomes available. Changes in, or deviations from, the assumptions used can significantly affect our reserve levels and related results of operations.

IUL, Stabilizer and MCG: We also issue certain products that contain embedded derivatives that are measured at estimated fair value separately from the host contracts. These products include IUL, and stabilizer ("Stabilizer") contracts. The managed custody guarantee product ("MCG") is a stand-alone derivative and is measured in its entirety at estimated fair value.

The estimated fair value of the embedded derivative in the IUL contracts is based on the present value of the excess of interest payments to the contract owners over the growth in the minimum guaranteed account value. The excess interest payments are determined as the excess of projected index driven benefits over the projected guaranteed benefits. The projection horizon is over the current indexed term of the related contracts, which takes into account best estimate actuarial assumptions, such as partial withdrawals, full surrenders, deaths and maturities.

The estimated fair value of the Stabilizer embedded derivative and MCG stand-alone derivative is determined based on the present value of projected future claims, minus the present value of future guaranteed premiums. At inception of the contract, we project a guaranteed premium to be equal to the present value of the projected future claims. The income associated with the contracts is projected using actuarial and capital market assumptions, including benefits and related contract charges, over the anticipated life of the related contracts. The cash flow estimates are projected under multiple capital market scenarios using observable risk-free rates and other best estimate assumptions.

The liabilities for the IUL and Stabilizer embedded derivatives and the MCG stand-alone derivative include a risk margin to capture uncertainties related to policyholder behavior assumptions. The margin represents additional compensation a market participant would require to assume these risks.

The discount rate used to determine the fair value of the liabilities for our IUL and Stabilizer embedded derivatives and the MCG stand-alone derivative includes an adjustment to reflect the risk that these obligations will not be fulfilled ("nonperformance risk"). Our nonperformance risk adjustment is based on a blend of observable, similarly rated peer holding company credit spreads, adjusted to reflect the credit quality of our individual insurance subsidiary that issued the guarantee, as well as an adjustment to reflect the non-default spreads and the priority and recovery rates of policyholder claims.

Universal and Variable Universal Life: Reserves for UL and variable universal life ("VUL") secondary guarantees and paid-up guarantees are calculated by estimating the expected value of death benefits payable and recognizing those benefits ratably over the accumulation period based on total expected assessments. The reserve for such products recognizes the portion of contract assessments received in early years used to compensate us for benefits provided in later years. Assumptions used, such as the interest rate, lapse rate and mortality, are consistent with assumptions used in estimating gross profits for purposes of amortizing DAC.

See Quantitative and Qualitative Disclosures About Market Risk in Part II, Item 7A. of this Annual Report on Form 10-K for additional information regarding specific hedging strategies we utilize to mitigate risk for the product guarantees, as well as sensitivities of the embedded derivative and stand-alone derivative liabilities to changes in certain capital markets assumptions.



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Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles

DAC represents policy acquisition costs that have been capitalized and are subject to amortization and interest.VOBA represents the outstanding value of in-force business acquired and is subject to amortization and interest. DSI represents benefits paid to contract owners for a specified period that are incremental to the amounts we credit on similar contracts without sales inducements and are higher than the contract's expected ongoing crediting rates for periods after the inducement. URR relates to UL and VUL products and represents policy charges for benefits or services to be provided in future periods.

Collectively, we refer to DAC, VOBA, DSI and URR as "DAC/VOBA and other intangibles". See the Deferred Policy Acquisition Costs and Value of Business Acquired Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K for additional information on DAC/VOBA and other intangibles.

Amortization Methodologies

We amortize DAC and VOBA related to certain traditional life insurance contracts and certain accident and health insurance contracts over the premium payment period in proportion to the present value of expected gross premiums. Assumptions as to mortality, morbidity, persistency and interest rates, which include provisions for adverse deviation, are consistent with the assumptions used to calculate reserves for future policy benefits.

These assumptions are "locked-in" at issue and not revised unless the DAC or VOBA balance is deemed to be unrecoverable from future expected profits. Recoverability testing is performed for current issue year products to determine if gross premiums are sufficient to cover DAC or VOBA, estimated benefits and related expenses. In subsequent periods, the recoverability of DAC and VOBA is determined by assessing whether future gross premiums are sufficient to amortize DAC or VOBA, as well as provide for expected future benefits and related expenses. If a premium deficiency is deemed to be present, charges will be applied against the DAC and VOBA balances before an additional reserve is established. Absent such a premium deficiency, variability in amortization after policy issuance or acquisition relates only to variability in premium volumes.

We amortize DAC and VOBA related to universal life-type contracts and fixed and variable deferred annuity contracts over the estimated lives of the contracts in relation to the emergence of estimated gross profits. Assumptions as to mortality, persistency, interest crediting rates, fee income, returns associated with separate account performance, impact of hedge performance, expenses to administer the business and certain economic variables, such as inflation, are based on our experience and overall capital markets. At each valuation date, estimated gross profits are updated with actual gross profits, and the assumptions underlying future estimated gross profits are evaluated for continued reasonableness. Adjustments to estimated gross profits require that amortization rates be revised retroactively to the date of the contract issuance ("unlocking"). If the update of assumptions causes estimated gross profits to increase, DAC and VOBA amortization will decrease, resulting in a current period increase to earnings. The opposite result occurs when the assumption update causes estimated gross profits to decrease. We amortize the DSI and URR over the estimated lives of the related contracts using the same methodology and assumptions used to amortize DAC.

For universal life-type contracts and fixed and variable deferred annuity contracts, recoverability testing is performed for current issue year products to determine if gross profits are sufficient to cover DAC/VOBA and other intangibles, estimated benefits and related expenses. In subsequent periods, we perform testing to assess the recoverability of DAC/VOBA and other intangibles on an annual basis, or more frequently if circumstances indicate a potential loss recognition issue exists. If DAC/VOBA or other intangibles are not deemed recoverable from future gross profits, charges will be applied against the DAC/VOBA or other intangible balances before an additional reserve is established.

During the year ended December 31, 2017, as a result of the held for sale classification of substantially all of the Annuities and CBVA businesses discussed above, we have evaluated and redefined our contract groupings for loss recognition testing in those businesses. This has resulted in the establishment of premium deficiency reserves of $43 million, which was recorded as an increase in Policyholder benefits in the Consolidated Statements of Operations, with a corresponding increase to Future policy benefits on the Consolidated Balance Sheets.

Assumptions and Periodic Review

Changes in assumptions can have a significant impact on DAC/VOBA and other intangibles balances, amortization rates, reserve levels, and results of operations. Assumptions are management's best estimates of future outcome. We periodically review these assumptions against actual experience and, based on additional information that becomes available, update our assumptions. Deviation of emerging experience from our assumptions could have a significant effect on our DAC/VOBA and other intangibles, reserves, and the related results of operations.



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•

One significant assumption is the assumed return associated with the variable account performance, which has historically had a greater impact on variable annuity than VUL products. To reflect the volatility in the equity markets, this assumption involves a combination of near-term expectations and long-term assumptions regarding market performance. The overall return on the variable account is dependent on multiple factors, including the relative mix of the underlying sub-accounts among bond funds and equity funds, as well as equity sector weightings. We use a reversion to the mean approach, which assumes that the market returns over the entire mean reversion period are consistent with a long-term level of equity market appreciation. We monitor market events and only change the assumption when sustained deviations are expected. This methodology incorporates a 9% long-term equity return assumption, a 14% cap and a five-year look-forward period.


•	Another significant assumption used in the estimation of gross profits for certain products is mortality. We utilize a combination of actual and industry experience when setting our mortality assumptions, which are consistent with the assumptions used to calculate reserves for future policy benefits.


•	Assumptions related to interest rate spreads and credit losses also impact estimated gross profits for applicable products with credited rates. These assumptions are based on the current investment portfolio yields and credit quality, estimated future crediting rates, capital markets, and estimates of future interest rates and defaults.

•

Other significant assumptions include estimated policyholder behavior assumptions, such as surrender, lapse, and annuitization rates. We use a combination of actual and industry experience when setting and updating our policyholder behavior assumptions, and such assumptions require considerable judgment. Estimated gross revenues and gross profits for our variable annuity contracts are particularly sensitive to these assumptions.

We include the impact of the change in value of the embedded derivative associated with the IUL contracts in gross profits for purposes of determining DAC amortization.

During the third quarter of 2018, 2017 and 2016, we conducted our annual review of assumptions, including projection model inputs, and made a number of changes to our assumptions which impacted the results of our segments reflected in Income (loss). The following are the impacts of assumption changes during 2018, 2017 and 2016.

During the third quarter of 2018, we updated our assumptions to reflect, among other changes, an estimate for increases in future reinsurance premium or recapture of certain ceded business. The impact of assumption changes in the current period resulted in a loss of $153 million, all of which was included in Adjusted operating earnings before income taxes and reflects net unfavorable DAC/VOBA and other intangibles unlocking.

During the third quarter of 2017, the impact of assumption changes on our results from continuing operations resulted in a loss of $189 million, all of which was included in Adjusted operating earnings before income taxes and reflects net unfavorable DAC/VOBA and other intangibles unlocking.

During the third quarter of 2016, the impact of assumption changes on our results from continuing operations were a loss of $228 million, of which $191 million was included in Adjusted operating earnings before income taxes and reflected net unfavorable DAC/VOBA and other intangibles unlocking. The remaining loss of $37 million mainly reflects unfavorable DAC/VOBA and other intangibles unlocking associated with realized investment gains and losses, including derivatives, as well as assumption updates for guaranteed benefit derivatives.

Sensitivity

We perform sensitivity analyses to assess the impact that certain assumptions have on DAC/VOBA and other intangibles, as well as certain reserves. The following table presents the estimated instantaneous net impact to income from continuing and discontinued operations of various assumption changes on our DAC/VOBA and other intangible balances and the impact on related reserves for future policy benefits and reinsurance. The effects are not representative of the aggregate impacts that could result if a combination of such changes to equity markets, interest rates and other assumptions occurred.



($ in millions)	As of December 31, 2018
Decrease in long-term equity rate of return assumption by 100 basis points	$	(35	)
A change to the long-term interest rate assumption of -50 basis points	(53		)
A change to the long-term interest rate assumption of +50 basis points	27
An assumed increase in future mortality by 1%	(18		)



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We generally assume that the rate of return on fixed income investments backing CBVA contracts moves in a manner correlated with changes to our assumed long-term rate of return. Furthermore, assumptions regarding shifts in market factors may be overly simplistic and not indicative of actual market behavior in stress scenarios.

Lower assumed equity rates of return, lower assumed interest rates, increased assumed future mortality and decreased equity market values generally decrease DAC/VOBA and other intangibles and increase future policy benefits, thus decreasing income before income taxes. Higher assumed interest rates generally increase DAC/VOBA and other intangibles and decrease future policy benefits, thus increasing income before income taxes.

Valuation of Investments and Derivatives

Our investment portfolio consists of public and private fixed maturity securities, commercial mortgage and other loans, equity securities, short-term investments, other invested assets and derivative financial instruments. We enter into interest rate, equity market, credit default and currency contracts, including swaps, futures, forwards, caps, floors and options, to reduce and manage various risks associated with changes in value, yield, price, cash flow or exchange rates of assets or liabilities held or intended to be held, or to assume or reduce credit exposure associated with a referenced asset, index or pool. We also utilize options and futures on equity indices to reduce and manage risks associated with our universal-life type and annuity products.

See the Investments (excluding Consolidated Investment Entities) Note and the Derivative Financial Instruments Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K for further information.

Investments

We measure the fair value of our financial assets and liabilities based on assumptions used by market participants in pricing the asset or liability, which may include inherent risk, restrictions on the sale or use of an asset, or nonperformance risk, including our own credit risk. The estimate of fair value is the price that would be received to sell an asset or transfer a liability ("exit price") in an orderly transaction between market participants in the principal market, or the most advantageous market in the absence of a principal market, for that asset or liability. We use a number of valuation sources to determine the fair values of our financial assets and liabilities, including quoted market prices, third-party commercial pricing services, third-party brokers, industry-standard, vendor-provided software that models the value based on market observable inputs, and other internal modeling techniques based on projected cash flows.

We categorize our financial instruments into a three-level hierarchy based on the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument.

When available, the estimated fair value of securities is based on quoted prices in active markets that are readily and regularly obtainable. When quoted prices in active markets are not available, the determination of estimated fair value is based on market standard valuation methodologies, including discounted cash flows, matrix pricing or other similar techniques. Inputs to these methodologies include, but are not limited to, market observable inputs such as benchmark yields, credit quality, issuer spreads, bids, offers and cash flow characteristics of the security. For privately placed bonds, we also consider such factors as the net worth of the borrower, value of the collateral, the capital structure of the borrower, the presence of guarantees, and the borrower's ability to compete in its relevant market. Valuations are reviewed and validated monthly by an internal valuation committee using price variance reports, comparisons to internal pricing models, back testing of recent trades, and monitoring of trading volumes, as appropriate.

The valuation of financial assets and liabilities involves considerable judgment, is subject to considerable variability, is established using management's best estimate, and is revised as additional information becomes available. As such, changes in, or deviations from, the assumptions used in such valuations can significantly affect our results of operations. Financial markets are subject to significant movements in valuation and liquidity, which can impact our ability to liquidate and the selling price that can be realized for our securities.



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Derivatives

Derivatives are carried at fair value, which is determined by using observable key financial data, such as yield curves, exchange rates, S&P 500 prices, LIBOR and Overnight Index Swap Rates ("OIS") or through values established by third-party sources, such as brokers. Valuations for our futures contracts are based on unadjusted quoted prices from an active exchange. Counterparty credit risk is considered and incorporated in our valuation process through counterparty credit rating requirements and monitoring of overall exposure. Our own credit risk is also considered and incorporated in our valuation process.

We have certain CDS and options that are priced by third party vendors or by using models that primarily use market observable inputs, but contain inputs that are not observable to market participants.

We also have investments in certain fixed maturities and have issued certain universal life-type and annuity products that contain embedded derivatives for which fair value is at least partially determined by levels of or changes in domestic and/or foreign interest rates (short-term or long-term), exchange rates, prepayment rates, equity markets, or credit ratings/spreads. The fair values of these embedded derivatives are determined using prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. For additional information regarding the valuation of and significant assumptions associated with embedded derivatives and stand-alone derivatives associated with certain universal life-type and annuity contracts, see "Reserves for Future Policy Benefits" above.

In addition, we have entered into coinsurance with funds withheld reinsurance arrangements that contain embedded derivatives. The fair value of the embedded derivatives is based on the change in the fair value of the underlying assets held in the trust using the valuation methods and assumptions described for our investments held.

The valuation of derivatives involves considerable judgment, is subject to considerable variability, is established using management's best estimate and is revised as additional information becomes available. As such, changes in, or deviations from, these assumptions used in such valuations can have a significant effect on the results of operations.

For additional information regarding the fair value of our investments and derivatives, see the Fair Value Measurements (excluding Consolidated Investment Entities) Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K.

Impairments

We evaluate our available-for-sale investments quarterly to determine whether there has been an other-than-temporary decline in fair value below the amortized cost basis. This evaluation process entails considerable judgment and estimation. Factors considered in this analysis include, but are not limited to, the length of time and the extent to which the fair value has been less than amortized cost, the issuer's financial condition and near-term prospects, future economic conditions and market forecasts, interest rate changes and changes in ratings of the security. An extended and severe unrealized loss position on a fixed maturity may not have any impact on: (a) the ability of the issuer to service all scheduled interest and principal payments and (b) the evaluation of recoverability of all contractual cash flows or the ability to recover an amount at least equal to its amortized cost based on the present value of the expected future cash flows to be collected. In contrast, for certain equity securities, we give greater weight and consideration to a decline in market value and the likelihood such market value decline will recover.

When assessing our intent to sell a security, or if it is more likely than not we will be required to sell a security before recovery of its amortized cost basis, we evaluate facts and circumstances such as, but not limited to, decisions to rebalance the investment portfolio and sales of investments to meet cash flow or capital needs.

We use the following methodology and significant inputs to determine the amount of the OTTI credit loss:

•

When determining collectability and the period over which the value is expected to recover for U.S. and foreign corporate securities, foreign government securities and state and political subdivision securities, we apply the same considerations utilized in our overall impairment evaluation process, which incorporates information regarding the specific security, the industry and geographic area in which the issuer operates and overall macroeconomic conditions. Projected future cash flows are estimated using assumptions derived from our best estimates of likely scenario-based outcomes, after giving consideration to a variety of variables that includes, but is not limited to: general payment terms of the security; the likelihood that the issuer can service the scheduled interest and principal payments; the quality and amount of any credit



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enhancements; the security's position within the capital structure of the issuer; possible corporate restructurings or asset sales by the issuer; and changes to the rating of the security or the issuer by rating agencies.

•

Additional considerations are made when assessing the unique features that apply to certain structured securities, such as subprime, Alt-A, non-agency RMBS, CMBS and ABS. These additional factors for structured securities include, but are not limited to: the quality of underlying collateral; expected prepayment speeds; loan-to-value ratio; debt service coverage ratios; current and forecasted loss severity; consideration of the payment terms of the underlying assets backing a particular security; and the payment priority within the tranche structure of the security.

•

When determining the amount of the credit loss for U.S. and foreign corporate securities, foreign government securities and state and political subdivision securities, we consider the estimated fair value as the recovery value when available information does not indicate that another value is more appropriate. When information is identified that indicates a recovery value other than estimated fair value, we consider in the determination of recovery value the same considerations utilized in its overall impairment evaluation process, which incorporates available information and our best estimate of scenario-based outcomes regarding the specific security and issuer; possible corporate restructurings or asset sales by the issuer; the quality and amount of any credit enhancements; the security's position within the capital structure of the issuer; fundamentals of the industry and geographic area in which the security issuer operates; and the overall macroeconomic conditions.


•	We perform a discounted cash flow analysis comparing the current amortized cost of a security to the present value of future cash flows expected to be received, including estimated defaults and prepayments. The discount rate is generally the effective interest rate of the fixed maturity prior to impairment.

Mortgage loans on real estate are all commercial mortgage loans. If a mortgage loan is determined to be impaired (i.e., when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement), the carrying value of the mortgage loan is reduced to the lower of either the present value of expected cash flows from the loan, discounted at the loan's original purchase yield, or the fair value of the collateral. For those mortgages that are determined to require foreclosure, the carrying value is reduced to the fair value of the underlying collateral, net of estimated costs to obtain and sell at the point of foreclosure.

Impairment analysis of the investment portfolio involves considerable judgment, is subject to considerable variability, is established using management's best estimate and is revised as additional information becomes available. As such, changes in, or deviations from, the assumptions used in such analysis can have a significant effect on the results of operations.

For additional information regarding the evaluation process for impairments, see the Investments (excluding Consolidated Investment Entities) Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K.

Income Taxes

Valuation Allowances

We use certain assumptions and estimates in determining the income taxes payable or refundable for the current year, the deferred income tax liabilities and assets for items recognized differently in our Consolidated Financial Statements from amounts shown on our income tax returns and the federal income tax expense. Determining these amounts requires analysis and interpretation of current tax laws and regulations, including the loss limitation rules associated with change in control. We exercise considerable judgment in evaluating the amount and timing of recognition of the resulting income tax liabilities and assets. These judgments and estimates are reevaluated on a periodic basis and as regulatory and business factors change.

Deferred tax assets represent the tax benefit of future deductible temporary differences, net operating loss carryforwards and tax credit carryforwards. We evaluate and test the recoverability of deferred tax assets. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. Considerable judgment and the use of estimates are required in determining whether a valuation allowance is necessary and, if so, the amount of such valuation allowance. In evaluating the need for a valuation allowance, we consider many factors, including:


•	The nature, frequency and severity of book income or losses in recent years;


•	The nature and character of the deferred tax assets and liabilities;


•	The nature and character of income by life and non-life subgroups;


•	The recent cumulative book income (loss) position after adjustment for permanent differences;


•	Taxable income in prior carryback years;


•	Projected future taxable income, exclusive of reversing temporary differences and carryforwards;



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•	Projected future reversals of existing temporary differences;


•	The length of time carryforwards can be utilized;


•	Prudent and feasible tax planning strategies we would employ to avoid a tax benefit from expiring unused; and


•	Tax rules that would impact the utilization of the deferred tax assets.

We have assessed whether it is more likely than not that the deferred tax assets will be realized in the future. In making this assessment, we considered the available sources of income and positive and negative evidence regarding our ability to generate sufficient taxable income to realize our deferred tax assets, which include net operating loss carryforwards ("NOLs"), capital loss carryforwards and tax credit carryforwards.

Positive evidence includes a recent history of earnings, projected earnings attributable to our insurance and investment businesses, plans or the ability to sell certain assets and streams of revenues, plans to reduce future projected losses by reduction of sales of certain products and predictable patterns of loss and income recognition. Negative evidence includes operating losses in certain years in certain life businesses, large losses in the non-life business and the potential unpredictability of certain components of future projected taxable income.

We use judgment in considering the relative impact of negative and positive evidence. The weight given to the potential effect of negative and positive evidence is commensurate with the extent to which it can be objectively verified. The more negative evidence that exists, (a) the more positive evidence is necessary and (b) the more difficult it is to support a conclusion that a valuation allowance is not needed for some portion of or the entire deferred tax asset.

The deferred tax valuation allowance was approximately $638 million and $653 million as of December 31, 2018 and 2017, respectively. Pursuant to U.S. GAAP, we do not specifically identify the valuation allowance with individual categories. However, we estimate that balances of approximately $445 million as of December 31, 2018 and $453 million as of December 31, 2017 were related to federal net operating and capital losses. The remaining balances were attributable to various items, including state taxes and other deferred tax assets.

As of December 31, 2018, we have recognized $19 million of deferred tax assets based on tax planning strategies related to unrealized gains on investment assets. These tax planning strategies support recognition of deferred tax assets, which have been provided on deductible temporary differences. Future changes, such as interest rate movements, could adversely impact such tax planning strategies. To the extent unrealized gains decrease or to the extent loss utilization is limited, the tax benefit will likely be reduced by increasing the tax valuation allowance.

In December 2014, we entered into an Issue Resolution Agreement ("IA") with the IRS relating to the Internal Revenue Code Section 382 calculation of the annual limitation on the use of certain of the Company’s federal tax attributes that will apply as a consequence of the Section 382 event experienced by the Company in March 2014. We do not expect the annual limitation to impact our ability to utilize the losses or credits. As of December 31, 2018, we had approximately $10.0 billion of federal net operating loss carryforwards and no capital loss carryforwards.

For further information on our income taxes see the Income Taxes Note to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.

Tax Contingencies

In establishing unrecognized tax benefits, we determine whether a tax position is more likely than not to be sustained under examination by the appropriate taxing authority. We also consider positions which have been reviewed and agreed to as part of an examination by the appropriate taxing authority. Tax positions that do not meet the more likely than not standard are not recognized. Tax positions that meet this standard are recognized in our Consolidated Financial Statements. We measure the tax position as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate resolution with the taxing authority that has full knowledge of all relevant information.

Changes in Law

Certain changes or future events, such as changes in tax legislation, geographic mix of earnings, completion of tax audits, planning opportunities and expectations about future outcomes could have an impact on our estimates of valuation allowances, deferred taxes, tax provisions and effective tax rates.



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Tax Reform made broad changes to U.S. federal tax law. The SEC staff issued Staff Accounting Bulletin No. 118 ("SAB 118") to address situations where a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting under ASC Topic 740 for certain income tax effects of Tax Reform for the reporting period of enactment. SAB 118 allowed us to provide a provisional estimate of the impacts of Tax Reform during a measurement period similar to the measurement period used when accounting for business combinations. Adjustments to the provisional estimate and additional impacts from Tax Reform were recorded during the measurement period as provided for in SAB 118.

We relied on SAB 118 to determine the net impact of Tax Reform on our net deferred tax asset position as of December 31, 2017 and finalized the impact of Tax Reform on our current taxes and net deferred tax position during the measurement period in 2018. Deferred income tax represents the tax effect of the differences between the book and tax basis of assets and liabilities. Deferred tax assets represent the tax benefit of future deductible temporary differences, operating loss carryforwards and tax credits carryforward. We periodically evaluate and test our ability to realize our deferred tax assets. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. In assessing the more likely than not criteria, we consider future taxable income as well as prudent tax planning strategies.

Pursuant to SAB 118, we estimated that Tax Reform resulted in a one-time reduction in our net deferred tax asset position of $679 million as of December 31, 2017. This reduction was substantially due to the remeasurement of our deferred tax assets and liabilities at 21%, the new federal corporate income tax rate at which the deferred tax assets and liabilities are expected to reverse in the future. This estimate included the effect of a reduction in our deferred tax liability associated with accumulated other comprehensive income ("AOCI"). Exclusive of the AOCI amount, the reduction in our deferred tax asset position was $1.0 billion. The FASB issued guidance in February 2018 that allows reclassification of the reduction in the deferred tax liability associated with AOCI from retained earnings to AOCI. We will adopt this new guidance effective January 1, 2019. For additional information, see the Business, Basis of Presentation and Significant Accounting Policies Note, Future Adoption of Accounting Pronouncements section, to our accompanying Consolidated Financial Statements.

Contingencies

For information regarding our contingencies, see the Commitments and Contingencies Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K.

Employee Benefits Plans

We sponsor defined benefit pension and other postretirement benefit plans covering eligible employees, sales representatives and other individuals. The net periodic benefit cost and projected benefit obligations are calculated based on assumptions, such as discount rate, expected rate of return on plan assets, rate of future compensation increases and health care cost trend rates. These assumptions require considerable judgment, are subject to considerable variability and are established using our best estimate. Actual results could vary significantly from assumptions based on changes, such as economic and market conditions, demographics of participants in the plans and amendments to benefits provided under the plans. Differences between the expected return and the actual return on plan assets and other actuarial changes, which could be significant, are immediately recognized in the Consolidated Statements of Operations, generally in the fourth quarter.

The table below summarizes the components of the net actuarial (gains) losses related to pension obligations recognized within Operating expenses in our Consolidated Statements of Operations for the periods presented:



(Gain)/Loss Recognized ($ in millions)	2018			2017			2016
Discount Rate	$	(160	)	$	196		$	69
Asset Returns	207			(142		)	24
Mortality Table Assumptions	(6		)	(14		)	(22		)
Demographic Data and other	9			(25		)	(13		)
Total Net Actuarial (Gain)/Loss Recognized	$	50		$	14		$	57

For the year ended December 31, 2018, we increased our pension plans discount rate by 0.61% resulting in a decrease in our benefit obligations and a corresponding actuarial gain of $160 million. This increase in the discount rate was driven by an increase in the 30-year Treasury and corporate AA yields. For the year ended December 31, 2017, we decreased our pension plans discount rate by 0.70%, resulting in an increase in our benefit obligations and a corresponding actuarial loss of $196 million. This decrease in



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the discount rate was driven by a decrease in corporate AA and 30-year Treasury yields. For the year ended December 31, 2016, we decreased our pension plans discount rate by 0.26%, resulting in an increase in our benefit obligations and a corresponding actuarial loss of $69 million. This decrease in discount rate was driven by a decrease in corporate AA yields, partially offset by an increase in 30-year Treasury yields.

Our expected long-term rate of return on our Voya Retirement Plan (the "Retirement Plan") assets was 7.5% for 2018 and 2017. Our expected return on plan assets is calculated using 30-year forward looking assumptions based on the long-term target asset allocation. In 2018, the actual return on our Retirement Plan assets was approximately (4.1)%, resulting in an actuarial loss of $207 million. In 2017, the actual return on our Retirement Plan assets was approximately 17.4%, resulting in an actuarial gain of $142 million. In 2016, the actual return on our Retirement Plan assets was approximately 6.8%, resulting in an actuarial loss of $24 million.

On an annual basis, the Society of Actuaries ("SOA") releases new mortality improvement projection scales. This projection scale is applied to the base table (RP-2006), which can be used in the valuations of pension plans. During calendar year 2018, the SOA released new mortality improvement projection scales (MP-2018) that projected a lower rate of mortality improvement than what was issued in 2017. This change lowered our total benefit liability by approximately 0.2% in 2018 and 0.7% in 2017. Changes in mortality assumptions in 2018, 2017 and 2016 contributed $(6) million, $(14) million and $22 million, respectively, to the net actuarial loss.

The Retirement Plan is a tax qualified defined benefit plan, the benefits of which are guaranteed (within certain specified legal limits) by the Pension Benefit Guaranty Corporation ("PBGC"). Beginning January 1, 2012, the Retirement Plan adopted a cash balance pension formula instead of a final average pay ("FAP") formula, allowing all eligible employees to participate in the Retirement Plan. Participants earn an annual credit equal to 4% of eligible compensation. Interest is credited monthly based on a 30-year U.S. Treasury securities bond rate published by the IRS in the preceding August of each year. The accrued vested cash pension balance benefit is portable; participants can take it if they leave us.

Sensitivity

The discount rate and expected rate of return assumptions relating to our defined benefit pension plans have historically had the most significant effect on our net periodic benefit costs and the projected and accumulated projected benefit obligations associated with these plans.

The discount rates are based on current market information provided by plan actuaries. The discount rate modeling process involves selecting a portfolio of high quality, non-callable bonds that will match the cash flows of the defined benefit pension plans. The weighted average discount rate in 2018 for the net periodic benefit cost was 3.85% for defined benefit pension plans. The discount rate in 2018 for the benefit obligation of our pension plans was 4.46%.

As of December 31, 2018, the sensitivities of the effect of a change in the discount rate are as presented below:



($ in millions)	Increase (Decrease) in Net Periodic Benefit Cost-Pension Plans⁽¹⁾
Increase in discount rate by 100 basis points	$	(221	)
Decrease in discount rate by 100 basis points	275

⁽¹⁾ Represents the estimate of actuarial gains (losses) that would be recognized immediately through operating expenses.



($ in millions)	Increase (Decrease) in Pension Benefit Obligation
Increase in discount rate by 100 basis points	$	(221	)
Decrease in discount rate by 100 basis points	275

The expected rate of return considers the asset allocation, historical returns on the types of assets held and current economic environment. Based on these factors, we expect that the assets will earn an average percentage per year over the long term. This estimation is based on an active return on a compound basis, with a reduction for administrative expenses and manager fees paid to non-affiliated companies from the assets. For estimation purposes, we assume the long-term asset mix will be consistent with



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the current mix. Changes in the asset mix could impact the amount of recorded pension income or expense, the funded status of the Retirement Plan and the need for future cash contributions.

The expected rate of return for 2018 was 7.5%, net of expenses, for the Retirement Plan. The expected rate of return assumption is only applicable to the Retirement Plan as assets are not held by any of the other pension and other postretirement plans.

As of December 31, 2018, the effect of a change in the actual rate of return on the net periodic benefit cost is presented in the table below:



($ in millions)	Increase (Decrease) in Net Periodic Benefit Cost-Pension Plans⁽¹⁾
Increase in actual rate of return by 100 basis points	$	(17	)
Decrease in actual rate of return by 100 basis points	17

⁽¹⁾ Represents the estimate of actuarial gains (losses) that would be recognized immediately through operating expenses.

The expected rate of return for 2019 is 6.75%, net of expenses, for the Retirement Plan, reflecting a change in asset allocation from equity securities to fixed maturities. The estimated impact of this change as well as the actuarial loss experienced on plan assets in 2018 is expected to increase our net periodic benefit cost by approximately $25 million.

For more information related to our employee benefit plans, see the Employee Benefit Arrangements Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K.

Impact of New Accounting Pronouncements

For information regarding the impact of new accounting pronouncements, see the Business, Basis of Presentation and Significant Accounting Policies Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K.



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INVESTMENTS

(excluding Consolidated Investment Entities)

Investments for our general account are managed by our wholly owned asset manager, Voya Investment Management LLC, pursuant to investment advisory agreements with affiliates. In addition, our internal treasury group manages our holding company liquidity investments, primarily money market funds.

Investment Strategy

Our investment strategy seeks to achieve sustainable risk-adjusted returns by focusing on principal preservation, disciplined matching of asset characteristics with liability requirements and the diversification of risks. Investment activities are undertaken according to investment policy statements that contain internally established guidelines and risk tolerances and are required to comply with applicable laws and insurance regulations. Risk tolerances are established for credit risk, credit spread risk, market risk, liquidity risk and concentration risk across issuers, sectors and asset types that seek to mitigate the impact of cash flow variability arising from these risks.

Segmented portfolios are established for groups of products with similar liability characteristics. Our investment portfolio consists largely of high quality fixed maturities and short-term investments, investments in commercial mortgage loans, alternative investments and other instruments, including a small amount of equity holdings. Fixed maturities include publicly issued corporate bonds, government bonds, privately placed notes and bonds, bonds issued by states and municipalities, ABS, traditional MBS and various CMO tranches managed in combination with financial derivatives as part of a proprietary strategy known as CMO-B.

We use derivatives for hedging purposes to reduce our exposure to the cash flow variability of assets and liabilities, interest rate risk, credit risk and market risk. In addition, we use credit derivatives to replicate exposure to individual securities or pools of securities as a means of achieving credit exposure similar to bonds of the underlying issuer(s) more efficiently.

See the Investments (excluding Consolidated Investment Entities) Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K.

Portfolio Composition

The following table presents the investment portfolio as of the dates indicated:



	December 31, 2018				December 31, 2017
($ in millions)	Carrying Value		%		Carrying Value		%
Fixed maturities, available-for-sale, excluding securities pledged	$	46,298	72.9	%	$	48,329	73.1	%
Fixed maturities, at fair value using the fair value option	2,956		4.7	%	3,018		4.6	%
Equity securities, available-for-sale	273		0.4	%	380		0.6	%
Short-term investments⁽¹⁾	168		0.3	%	471		0.7	%
Mortgage loans on real estate	8,676		13.6	%	8,686		13.0	%
Policy loans	1,833		2.9	%	1,888		2.9	%
Limited partnerships/corporations	1,158		1.8	%	784		1.2	%
Derivatives	247		0.4	%	397		0.6	%
Other investments	90		0.1	%	47		0.1	%
Securities pledged	1,867		2.9	%	2,087		3.2	%
Total investments	$	63,566	100.0	%	$	66,087	100.0	%

⁽¹⁾ Short-term investments include investments with remaining maturities of one year or less, but greater than 3 months, at the time of purchase.



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Fixed Maturities

The following tables present total fixed maturities, including securities pledged, by market sector, as of the dates indicated:



	December 31, 2018
($ in millions)	Amortized Cost		% of Total		Fair Value		% of Total
Fixed maturities:
U.S. Treasuries	$	1,937	3.9	%	$	2,295	4.5	%
U.S. Government agencies and authorities	204		0.4	%	242		0.5	%
State, municipalities and political subdivisions	1,652		3.3	%	1,659		3.2	%
U.S. corporate public securities	19,210		38.4	%	19,848		38.7	%
U.S. corporate private securities	6,264		12.5	%	6,232		12.2	%
Foreign corporate public securities and foreign governments⁽¹⁾	5,429		10.9	%	5,455		10.7	%
Foreign corporate private securities⁽¹⁾	5,176		10.3	%	5,094		10.0	%
Residential mortgage-backed securities	4,616		9.2	%	4,803		9.4	%
Commercial mortgage-backed securities	3,438		6.9	%	3,416		6.7	%
Other asset-backed securities	2,095		4.2	%	2,077		4.1	%
Total fixed maturities, including securities pledged	$	50,021	100.0	%	$	51,121	100.0	%

⁽¹⁾ Primarily U.S. dollar denominated.



	December 31, 2017
($ in millions)	Amortized Cost		% of Total		Fair Value		% of Total
Fixed maturities:
U.S. Treasuries	$	2,047	4.2	%	$	2,522	4.7	%
U.S. Government agencies and authorities	223		0.5	%	275		0.5	%
State, municipalities and political subdivisions	1,856		3.8	%	1,913		3.6	%
U.S. corporate public securities	20,857		42.3	%	23,258		43.4	%
U.S. corporate private securities	5,628		11.4	%	5,833		10.9	%
Foreign corporate public securities and foreign governments⁽¹⁾	5,241		10.7	%	5,716		10.7	%
Foreign corporate private securities⁽¹⁾	4,974		10.1	%	5,161		9.7	%
Residential mortgage-backed securities	4,247		8.6	%	4,524		8.5	%
Commercial mortgage-backed securities	2,646		5.4	%	2,704		5.1	%
Other asset-backed securities	1,488		3.0	%	1,528		2.9	%
Total fixed maturities, including securities pledged	$	49,207	100.0	%	$	53,434	100.0	%

⁽¹⁾ Primarily U.S. dollar denominated.

As of December 31, 2018, the average duration of our fixed maturities portfolio, including securities pledged, is between 8.0 and 8.5 years.

Fixed Maturities Credit Quality - Ratings

The Securities Valuation Office ("SVO") of the NAIC evaluates the fixed maturity security investments of insurers for regulatory reporting and capital assessment purposes and assigns securities to one of six credit quality categories called "NAIC designations." An internally developed rating is used as permitted by the NAIC if no rating is available. These designations are generally similar to the credit quality designations of the NAIC acceptable rating organizations ("ARO") for marketable fixed maturity securities, called rating agency designations except for certain structured securities as described below. NAIC designations of "1," highest quality and "2," high quality, include fixed maturity securities generally considered investment grade by such rating organizations.



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NAIC designations 3 through 6 include fixed maturity securities generally considered below investment grade by such rating organizations.

The NAIC designations for structured securities, including subprime and Alt-A RMBS, are based upon a comparison of the bond's amortized cost to the NAIC's loss expectation for each security. Securities where modeling results in no expected loss in each scenario are considered to have the highest designation of NAIC 1. A large percentage of our RMBS securities carry the NAIC 1 designation while the ARO rating indicates below investment grade. This is primarily due to the credit and intent impairments recorded by us that reduced the amortized cost on these securities to a level resulting in no expected loss in any scenario, which corresponds to the NAIC 1 designation. The methodology reduces regulatory reliance on rating agencies and allows for greater regulatory input into the assumptions used to estimate expected losses from such structured securities. In the tables below, we present the rating of structured securities based on ratings from the NAIC methodologies described above (which may not correspond to rating agency designations). NAIC designations (e.g., NAIC 1-6) are based on the NAIC methodologies.

As a result of time lags between the funding of investments, the finalization of legal documents and the completion of the SVO filing process, the fixed maturity portfolio generally includes securities, that have not yet been rated by the SVO as of each balance sheet date, such as private placements. Pending receipt of SVO ratings, the categorization of these securities by NAIC designation is based on the expected ratings indicated by internal analysis.

Information about certain of our fixed maturity securities holdings by the NAIC designation is set forth in the following tables. Corresponding rating agency designation does not directly translate into NAIC designation, but represents our best estimate of comparable ratings from rating agencies, including Moody's, S&P and Fitch. If no rating is available from a rating agency, then an internally developed rating is used. As of December 31, 2018 and 2017, the weighted average NAIC quality rating of our fixed maturities portfolio was 1.5.

The fixed maturities in our portfolio are generally rated by external rating agencies and, if not externally rated, are rated by us on a basis similar to that used by the rating agencies. As of December 31, 2018 and 2017, the weighted average quality rating of our fixed maturities portfolio was A. Ratings are derived from three ARO ratings and are applied as follows, based on the number of agency ratings received:

• when three ratings are received then the middle rating is applied;

• when two ratings are received then the lower rating is applied;

• when a single rating is received, the ARO rating is applied; and

• when ratings are unavailable then an internal rating is applied.



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The following tables present credit quality of fixed maturities, including securities pledged, using NAIC designations as of the dates indicated:



($ in millions)	December 31, 2018
NAIC Quality Designation	1			2			3			4			5			6			Total Fair Value
U.S. Treasuries	$	2,295		$	—		$	—		$	—		$	—		$	—		$	2,295
U.S. Government agencies and authorities	242			—			—			—			—			—			242
State, municipalities and political subdivisions	1,524			133			—			—			—			2			1,659
U.S. corporate public securities	9,062			9,653			924			193			16			—			19,848
U.S. corporate private securities	2,510			3,376			149			175			19			3			6,232
Foreign corporate public securities and foreign governments⁽¹⁾	2,265			2,804			331			52			1			2			5,455
Foreign corporate private securities⁽¹⁾	693			3,984			301			73			42			1			5,094
Residential mortgage-backed securities	4,678			27			40			2			10			46			4,803
Commercial mortgage-backed securities	3,317			79			20			—			—			—			3,416
Other asset-backed securities	1,819			160			33			9			32			24			2,077
Total fixed maturities	$	28,405		$	20,216		$	1,798		$	504		$	120		$	78		$	51,121
% of Fair Value	55.6		%	39.5		%	3.5		%	1.0		%	0.2		%	0.2		%	100.0		%

⁽¹⁾ Primarily U.S. dollar denominated.



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($ in millions)	December 31, 2017
NAIC Quality Designation	1			2			3			4			5			6			Total Fair Value
U.S. Treasuries	$	2,522		$	—		$	—		$	—		$	—		$	—		$	2,522
U.S. Government agencies and authorities	275			—			—			—			—			—			275
State, municipalities and political subdivisions	1,764			146			1			—			—			2			1,913
U.S. corporate public securities	12,241			9,923			793			297			4			—			23,258
U.S. corporate private securities	2,531			3,027			145			130			—			—			5,833
Foreign corporate public securities and foreign governments⁽¹⁾	2,391			2,819			445			48			13			—			5,716
Foreign corporate private securities⁽¹⁾	831			3,822			474			27			3			4			5,161
Residential mortgage-backed securities	4,385			33			13			7			13			73			4,524
Commercial mortgage-backed securities	2,676			28			—			—			—			—			2,704
Other asset-backed securities	1,326			149			18			3			—			32			1,528
Total fixed maturities	$	30,942		$	19,947		$	1,889		$	512		$	33		$	111		$	53,434
% of Fair Value	57.9		%	37.3		%	3.5		%	1.0		%	0.1		%	0.2		%	100.0		%

⁽¹⁾ Primarily U.S. dollar denominated.

The following tables present credit quality of fixed maturities, including securities pledged, using ARO ratings as of the dates indicated:



($ in millions)	December 31, 2018
ARO Quality Ratings	AAA			AA			A			BBB			BB and Below			Total Fair Value
U.S. Treasuries	$	2,295		$	—		$	—		$	—		$	—		$	2,295
U.S. Government agencies and authorities	234			8			—			—			—			242
State, municipalities and political subdivisions	112			920			492			133			2			1,659
U.S. corporate public securities	220			1,118			7,684			9,739			1,087			19,848
U.S. corporate private securities	166			273			2,221			3,230			342			6,232
Foreign corporate public securities and foreign governments⁽¹⁾	45			533			1,725			2,767			385			5,455
Foreign corporate private securities⁽¹⁾	—			—			698			4,137			259			5,094
Residential mortgage-backed securities	3,394			74			64			188			1,083			4,803
Commercial mortgage-backed securities	1,822			390			596			447			161			3,416
Other asset-backed securities	824			210			633			185			225			2,077
Total fixed maturities	$	9,112		$	3,526		$	14,113		$	20,826		$	3,544		$	51,121
% of Fair Value	17.8		%	6.9		%	27.7		%	40.7		%	6.9		%	100.0		%

⁽¹⁾ Primarily U.S. dollar denominated.



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($ in millions)	December 31, 2017
ARO Quality Ratings	AAA			AA			A			BBB			BB and Below			Total Fair Value
U.S. Treasuries	$	2,522		$	—		$	—		$	—		$	—		$	2,522
U.S. Government agencies and authorities	266			9			—			—			—			275
State, municipalities and political subdivisions	169			1,095			500			146			3			1,913
U.S. corporate public securities	307			1,378			10,556			9,924			1,093			23,258
U.S. corporate private securities	189			273			2,206			2,843			322			5,833
Foreign corporate public securities and foreign governments⁽¹⁾	77			476			1,838			2,819			506			5,716
Foreign corporate private securities⁽¹⁾	—			—			826			4,107			228			5,161
Residential mortgage-backed securities	3,240			20			76			40			1,148			4,524
Commercial mortgage-backed securities	2,069			217			217			140			61			2,704
Other asset-backed securities	863			143			110			185			227			1,528
Total fixed maturities	$	9,702		$	3,611		$	16,329		$	20,204		$	3,588		$	53,434
% of Fair Value	18.2		%	6.8		%	30.6		%	37.7		%	6.7		%	100.0		%

⁽¹⁾ Primarily U.S. dollar denominated.

Fixed maturities rated BB and below may have speculative characteristics and changes in economic conditions or other circumstances that are more likely to lead to a weakened capacity of the issuer to make principal and interest payments than is the case with higher rated fixed maturities.

Unrealized Capital Losses

Gross unrealized capital losses on fixed maturities, including securities pledged, increased $841 million from $243 million to $1,084 million for the year ended December 31, 2018. The increase in gross unrealized capital losses was primarily due to rising interest rates and widening credit spreads. Gross unrealized losses on fixed maturities, including securities pledged, decreased $287 million from $530 million to $243 million for the year ended December 31, 2017. The decrease in gross unrealized capital losses was primarily due to narrowing credit spreads.

As of December 31, 2018, we held three fixed maturities with unrealized capital losses in excess of $10 million. The unrealized capital losses on these fixed maturities equaled $49 million, or 4.5% of the total unrealized losses. As of December 31, 2017, we held four fixed maturities with unrealized capital losses in excess of $10 million. The unrealized capital losses on these fixed maturities equaled $56 million, or 23.0% of the total unrealized losses.

As of December 31, 2018, we held $4.1 billion of energy sector fixed maturity securities, constituting 8.0% of the total fixed maturities portfolio, with gross unrealized capital losses of $143 million, including one energy sector fixed maturity security with unrealized capital losses in excess of $10 million. The unrealized capital losses on this fixed maturity security equaled $22 million. As of December 31, 2018, our fixed maturity exposure to the energy sector is comprised of 87.6% investment grade securities.

As of December 31, 2017, we held $4.7 billion of energy sector fixed maturity securities, constituting 8.8% of the total fixed maturities portfolio, with gross unrealized capital losses of $45 million including one energy sector fixed maturity security with unrealized capital losses in excess of $10 million. The unrealized capital losses on this fixed maturity security equaled $15 million. As of December 31, 2017, our fixed maturity exposure to the energy sector is comprised of 87.4% investment grade securities.



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The following table presents the U.S. and foreign corporate securities within our energy holdings by sector as of the dates indicated:



($ in millions)	December 31, 2018						December 31, 2017
Sector Type	Amortized Cost		Fair Value		% Fair Value		Amortized Cost		Fair Value		% Fair Value
Midstream	$	1,545	$	1,596	39.0	%	$	1,517	$	1,698	36.2	%
Integrated Energy	817		837		20.5	%	1,027		1,114		23.8	%
Independent Energy	923		931		22.8	%	912		1,002		21.4	%
Oil Field Services	472		428		10.5	%	527		528		11.3	%
Refining	277		293		7.2	%	285		340		7.3	%
Total	$	4,034	$	4,085	100.0	%	$	4,268	$	4,682	100.0	%

See the Investments (excluding Consolidated Investment Entities) Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K for further information on unrealized capital losses.

CMO-B Portfolio

As part of our broadly diversified investment portfolio, we have a core holding in a proprietary mortgage derivatives strategy known as CMO-B, which invests in a variety of CMO securities in combination with interest rate derivatives in targeting a specific type of exposure to the U.S. residential mortgage market. Because of their relative complexity and generally small natural buyer base, we believe certain types of CMO securities are consistently priced below their intrinsic value, thereby providing a source of potential return for investors in this strategy.

The CMO securities that are part of our CMO-B portfolio are either notional or principal securities, backed by the interest and principal components, respectively, of mortgages secured by single-family residential real estate. There are many variations of these two types of securities including interest only and principal only securities, as well as inverse-floating rate (principal) securities and inverse interest only securities, all of which are part of our CMO-B portfolio. This strategy has been in place for nearly two decades and thus far has been a significant source of investment income while exhibiting relatively low volatility and correlation compared to the other asset types in the investment portfolio, although we cannot predict whether favorable returns will continue in future periods.

To protect against the potential for credit loss associated with financially troubled borrowers, investments in our CMO-B portfolio are primarily in CMO securities backed by one of the government sponsored entities: the Federal National Mortgage Association ("Fannie Mae"), the Federal Home Loan Mortgage Corporation ("Freddie Mac") or Government National Mortgage Association ("Ginnie Mae").

Because the timing of the receipt of the underlying cash flow is highly dependent on the level and direction of interest rates, our CMO-B portfolio also has exposure to both interest rate and convexity risk. The exposure to interest rate risk-the potential for changes in value that results from changes in the general level of interest rates-is managed to a defined target duration using interest rate swaps and interest rate futures. The exposure to convexity risk-the potential for changes in value that result from changes in duration caused by changes in interest rates-is dynamically hedged using interest rate swaps and at times, interest rate swaptions.

Prepayment risk represents the potential for adverse changes in portfolio value resulting from changes in residential mortgage prepayment speed (actual and projected), which in turn depends on a number of factors, including conditions in both credit markets and housing markets. Changes in the prepayment behavior of homeowners represent both a risk and potential source of return for our CMO-B portfolio. As a result, we seek to invest in securities that are broadly diversified by collateral type to take advantage of the uncorrelated prepayment experiences of homeowners with unique characteristics that influence their ability or desire to prepay their mortgage. We choose collateral types and individual securities based on an in-depth quantitative analysis of prepayment incentives across available borrower types.



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The following table presents fixed maturities balances held in the CMO-B portfolio by NAIC quality rating as of the dates indicated:



($ in millions)	December 31, 2018						December 31, 2017
NAIC Quality Designation	Amortized Cost		Fair Value		% Fair Value		Amortized Cost		Fair Value		% Fair Value
1	$	2,951	$	3,101	97.0	%	$	2,624	$	2,851	96.0	%
2	17		16		0.5	%	20		20		0.7	%
3	14		25		0.8	%	10		11		0.4	%
4	—		—		—	%	—		—		—	%
5	5		9		0.3	%	7		13		0.4	%
6	30		46		1.4	%	50		74		2.5	%
Total	$	3,017	$	3,197	100.0	%	$	2,711	$	2,969	100.0	%

For CMO securities where we elected the FVO, amortized cost represents the market values. For details on the NAIC designation methodology, please see "Fixed Maturities Credit Quality-Ratings" above.

The following table presents the notional amounts and fair values of interest rate derivatives used in our CMO-B portfolio as of the dates indicated:



	December 31, 2018						December 31, 2017
($ in millions)	Notional Amount		Asset Fair Value		Liability Fair Value		Notional Amount		Asset Fair Value		Liability Fair Value
Derivatives non-qualifying for hedge accounting:
Interest Rate Contracts	$	15,081	$	32	$	80	$	15,630	$	67	$	36

The Company utilizes interest rate futures and interest rate swaps as a part of the CMO-B portfolio to hedge interest rate risk.

The following table presents our CMO-B fixed maturity securities balances and tranche type as of the dates indicated:



($ in millions)	December 31, 2018						December 31, 2017
Tranche Type	Amortized Cost		Fair Value		% Fair Value		Amortized Cost		Fair Value		% Fair Value
Inverse Floater	$	399	$	487	15.2	%	$	439	$	563	19.0	%
Interest Only (IO)	167		181		5.7	%	185		191		6.4	%
Inverse IO	1,335		1,393		43.5	%	1,176		1,255		42.2	%
Principal Only (PO)	249		252		7.9	%	270		275		9.3	%
Floater	16		16		0.5	%	13		12		0.4	%
Agency Credit Risk Transfer	849		865		27.1	%	626		670		22.6	%
Other	2		3		0.1	%	2		3		0.1	%
Total	$	3,017	$	3,197	100.0	%	$	2,711	$	2,969	100.0	%

For the year ended December 31, 2018, the market value of our CMO-B portfolio increased due to new purchase activity exceeding paydowns and maturities. Valuation of the securities within our CMO-B portfolio have been pressured by the higher interest rate environment during 2018 offset by general prepayment risk remaining muted, resulting in continued positive relative performance for the strategy. Yields within the CMO-B portfolio continue to decline as higher yielding historical CMO-B assets paydown or mature and are replaced with lower yielding new assets.



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The following table presents returns for our CMO-B portfolio for the periods indicated:



	Year Ended December 31,
_{($ in millions)}	2018			2017			2016
Net investment income	$	461		$	499		$	555
Net realized capital gains (losses)⁽¹⁾	(344		)	(345		)	(341		)
Income (loss) from continuing operations before income taxes	$	117		$	154		$	214

⁽¹⁾ Net realized capital gains (losses) also include derivatives interest settlements, mark to market adjustments and realized gains (losses) on standalone derivatives contracts that are in the CMO-B portfolio.

In defining the Adjusted operating earnings before income taxes for our CMO-B portfolio, certain recharacterizations are recognized. The net coupon settlement on interest rate swaps hedging CMO-B securities that is included in Net realized capital gains (losses) is reflected as Adjusted operating earnings before income taxes in the table below. In addition, the premium amortization and change in fair value for securities designated under the FVO are included in Net realized capital gains (losses), whereas the coupon for these securities is included in Net investment income. In order to present the economics of these fair value securities in a similar manner to those of an available for sale security, the premium amortization is reclassified from Net realized capital gains (losses) to Adjusted operating earnings before income taxes.

After adjusting for the two items referenced immediately above, the following table presents a reconciliation of Income (loss) from continuing operations before income taxes from our CMO-B portfolio to Adjusted operating earnings before income taxes from our CMO-B portfolio for the periods indicated:



	Year Ended December 31,
($ in millions)	2018			2017		2016
Income (loss) from continuing operations before income taxes	$	117		$	154	$	214
Realized gains/(losses) including OTTI	(2		)	—		(5		)
Fair value adjustments	115			86		43
Total adjustments to income (loss) from continuing operations	113			86		38
Adjusted operating earnings before income taxes	$	230		$	240	$	252

Structured Securities

Residential mortgage-backed securities

The following tables present our residential mortgage-backed securities as of December 31, 2018 and 2017:



	December 31, 2018
($ in millions)	Amortized Cost		Gross Unrealized Capital Gains		Gross Unrealized Capital Losses		Embedded Derivatives		Fair Value
Prime Agency	$	2,916	$	138	$	34	$	14	$	3,034
Prime Non-Agency	1,509		56		17		3		1,551
Alt-A	164		19		—		8		191
Sub-Prime⁽¹⁾	151		26		1		—		176
Total RMBS	$	4,740	$	239	$	52	$	25	$	4,952
⁽¹⁾ Includes subprime other asset backed securities.

	December 31, 2017
($ in millions)	Amortized Cost		Gross Unrealized Capital Gains		Gross Unrealized Capital Losses		Embedded Derivatives		Fair Value
Prime Agency	$	2,990	$	164	$	30	$	21	$	3,145
Prime Non-Agency	1,038		89		2		6		1,131
Alt-A	189		20		1		11		219
Sub-Prime⁽¹⁾	181		32		1		—		212
Total RMBS	$	4,398	$	305	$	34	$	38	$	4,707

⁽¹⁾ Includes subprime other asset backed securities.



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Commercial Mortgage-backed

The following tables present our commercial mortgage-backed securities as of December 31, 2018 and 2017:



	December 31, 2018
($ in millions)	AAA				AA				A				BBB				BB and Below				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
2012 and prior	$	63	$	63	$	11	$	11	$	29	$	29	$	38	$	43	$	12	$	12	$	153	$	158
2013	388		399		54		54		52		51		50		50		10		10		554		564
2014	368		373		40		39		43		42		29		29		37		37		517		520
2015	382		377		148		148		66		66		123		122		30		30		749		743
2016	119		114		18		18		38		37		53		52		8		7		236		228
2017	343		326		91		90		97		95		45		44		34		34		610		589
2018	171		170		30		30		278		276		109		107		31		31		619		614
Total CMBS	$	1,834	$	1,822	$	392	$	390	$	603	$	596	$	447	$	447	$	162	$	161	$	3,438	$	3,416

	December 31, 2017
($ in millions)	AAA				AA				A				BBB				BB and Below				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
2012 and prior	$	78	$	79	$	7	$	6	$	39	$	40	$	24	$	30	$	24	$	24	$	172	$	179
2013	418		446		14		14		30		29		23		23		9		9		494		521
2014	450		469		30		30		34		34		3		3		—		—		517		536
2015	435		442		54		54		40		40		52		52		15		14		596		602
2016	156		154		3		3		15		15		8		8		7		7		189		187
2017	478		479		110		110		60		60		24		24		6		6		678		679
2018	—		—		—		—		—		—		—		—		—		—		—		—
Total CMBS	$	2,015	$	2,069	$	218	$	217	$	218	$	218	$	134	$	140	$	61	$	60	$	2,646	$	2,704

As of December 31, 2018, 97.1% and 2.3% of CMBS investments were designated as NAIC-1 and NAIC-2, respectively. As of December 31, 2017, 99.0% and 1.0% of CMBS investments were designated as NAIC-1 and NAIC-2, respectively.



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Other Asset-backed Securities

The following tables present our other asset-backed securities as of December 31, 2018 and 2017:



	December 31, 2018
($ in millions)	AAA				AA				A				BBB				BB and Below				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Collateralized Obligation	$	708	$	699	$	119	$	116	$	444	$	425	$	29	$	27	$	83	$	75	$	1,383	$	1,342
Auto-Loans	22		21		10		10		9		9		—		—		—		—		41		40
Student Loans	14		14		80		81		99		98		—		—		—		—		193		193
Credit Card loans	21		21		—		—		—		—		—		—		—		—		21		21
Other Loans	68		68		2		2		99		99		160		158		5		5		334		332
Total Other ABS⁽¹⁾	$	833	$	823	$	211	$	209	$	651	$	631	$	189	$	185	$	88	$	80	$	1,972	$	1,928
⁽¹⁾ Excludes subprime other asset backed securities.

	December 31, 2017
($ in millions)	AAA				AA				A				BBB				BB and Below				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Collateralized Obligation	$	546	$	549	$	108	$	108	$	39	$	39	$	10	$	11	$	42	$	42	$	745	$	749
Auto-Loans	187		187		—		—		9		9		—		—		—		—		196		196
Student Loans	13		13		24		24		48		47		3		3		—		—		88		87
Credit Card loans	74		74		—		—		—		—		—		—		—		—		74		74
Other Loans	40		40		10		10		13		13		166		170		5		6		234		239
Total Other ABS⁽¹⁾	$	860	$	863	$	142	$	142	$	109	$	108	$	179	$	184	$	47	$	48	$	1,337	$	1,345

⁽¹⁾ Excludes subprime other asset backed securities.

As of December 31, 2018, 87.0% and 8.0% of Other ABS investments were designated as NAIC-1 and NAIC-2, respectively. As of December 31, 2017, 85.9% and 10.6% of Other ABS investments were designated as NAIC-1 and NAIC-2, respectively.

Mortgage Loans on Real Estate

We rate commercial mortgages to quantify the level of risk. We place those loans with higher risk on a watch list and closely monitor these loans for collateral deficiency or other credit events that may lead to a potential loss of principal and/or interest. If we determine the value of any mortgage loan to be OTTI (i.e., when it is probable that we will be unable to collect on amounts due according to the contractual terms of the loan agreement), the carrying value of the mortgage loan is reduced to either the present value of expected cash flows from the loan, discounted at the loan's effective interest rate, or fair value of the collateral. For those mortgages that are determined to require foreclosure, the carrying value is reduced to the fair value of the underlying collateral, net of estimated costs to obtain and sell at the point of foreclosure. The carrying value of the impaired loans is reduced by establishing an other-than-temporary write-down recorded in Net realized capital gains (losses) in the Consolidated Statements of Operations.

Loan-to-value ("LTV") and debt service coverage ("DSC") ratios are measures commonly used to assess the risk and quality of commercial mortgage loans. The LTV ratio, calculated at time of origination, is expressed as a percentage of the amount of the loan relative to the value of the underlying property. An LTV ratio in excess of 100% indicates the unpaid loan amount exceeds the value of the underlying collateral. The DSC ratio, based upon the most recently received financial statements, is expressed as a percentage of the amount of a property's Net income (loss) to its debt service payments. A DSC ratio of less than 1.0 indicates that property's operations do not generate sufficient income to cover debt payments. These ratios are utilized as part of the review process described above.



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As of December 31, 2018 and 2017, our mortgage loans on real estate portfolio had a weighted average DSC of 2.2 times, and a weighted average LTV ratio of 61.4% and 60.9%, respectively. See the Investments (excluding Consolidated Investment Entities) Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K for further information on mortgage loans on real estate.

Other-Than-Temporary Impairments

We evaluate available-for-sale fixed maturities and equity securities for impairment on a regular basis. The assessment of whether impairments have occurred is based on a case-by-case evaluation of the underlying reasons for the decline in estimated fair value. See the Business, Basis of Presentation and Significant Accounting Policies Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K for the policy used to evaluate whether the investments are other-than-temporarily impaired.

For the year ended December 31, 2018, we recorded $18 million of credit related OTTI. See the Investments (excluding Consolidated Investment Entities) Note in our Consolidated Financial Statements of Part II, Item 8. in this Annual Report on Form 10-K for further information on OTTI.

Derivatives

We use derivatives for a variety of hedging purposes. We also have embedded derivatives within fixed maturities instruments and certain product features. See the Business, Basis of Presentation and Significant Accounting Policies Note and the Derivatives Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K for further information.

European Exposures

We quantify and allocate our exposure to the region by attempting to identify aspects of the region or country risk to which we are exposed. Among the factors we consider are the nationality of the issuer, the nationality of the issuer's ultimate parent, the corporate and economic relationship between the issuer and its parent, as well as the political, legal and economic environment in which each functions. By undertaking this assessment, we believe that we develop a more accurate assessment of the actual geographic risk, with a more integrated understanding of contributing factors to the full risk profile of the issuer.

In the normal course of our ongoing risk and portfolio management process, we closely monitor compliance with a credit limit hierarchy designed to minimize overly concentrated risk exposures by geography, sector and issuer. This framework takes into account various factors such as internal and external ratings, capital efficiency and liquidity and is overseen by a combination of Investment and Corporate Risk Management, as well as insurance portfolio managers focused specifically on managing the investment risk embedded in our portfolio.

While financial conditions in Europe have broadly improved, the possibility of capital market volatility spreading through a highly integrated and interdependent banking system remains. Despite signs of continuous improvement in the region, we continue to closely monitor our exposure to the region.

For the year ended December 31, 2018, the Company's total European exposure had an amortized cost and fair value of $5,145 million and $5,120 million, respectively. European exposure with a primary focus on Greece, Ireland, Italy, Portugal and Spain (which we refer to as "peripheral Europe") amounts to $529 million, which includes non-financial institutions exposure in Ireland of $164 million, in Italy of $176 million, in Portugal of $10 million and in Spain of $121 million. We also had financial institutions exposure in Ireland of $20 million, in Italy of $9 million and in Spain of $29 million. We did not have any exposure to Greece.

Among the remaining $4,591 million of total non-peripheral European exposure, we had a portfolio of credit-related assets similarly diversified by country and sector across developed and developing Europe. As of December 31, 2018, our non-peripheral sovereign exposure was $185 million, which consisted of fixed maturities and derivative assets. We also had $721 million in net exposure to non-peripheral financial institutions, with a concentration in Switzerland of $164 million and the United Kingdom of $355 million. The balance of $3,685 million was invested across non-peripheral, non-financial institutions.

Some of the major country level exposures were in the United Kingdom of $2,257 million, in The Netherlands of $516 million, in Belgium of $272 million, in France of $274 million, in Germany of $366 million, in Switzerland of $408 million, and in Russia of $92 million. We believe the primary risk results from market value fluctuations resulting from spread volatility and the secondary risk is default risk, dependent upon the strength of continued recovery of economic conditions in Europe.



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Consolidated Investment Entities

We provide investment management services to, and have transactions with, various collateralized loan obligations ("CLO entities"), private equity funds, hedge funds, registered investment companies, insurance entities, securitizations and other investment entities in the normal course of business. In certain instances, we serve as the investment manager, making day-to-day investment decisions concerning the assets of these entities. These entities are considered to be either variable interest entities ("VIEs") or voting interest entities ("VOEs"), and we evaluate our involvement with each entity to determine whether consolidation is required.

Certain investment entities are consolidated under consolidation guidance. We consolidate certain entities under the VIE guidance when it is determined that we are the primary beneficiary. We consolidate certain entities under the VOE guidance when we act as the controlling general partner and the limited partners have no substantive rights to impact ongoing governance and operating activities of the entity, or when we otherwise have control through voting rights. In February 2015, the FASB issued ASU 2015-02, "Consolidation (ASC Topic 810): Amendments to the Consolidation Analysis" ("ASU 2015-02"), which significantly amends the consolidation analysis required under current consolidation guidance. We adopted the provisions of ASU 2015-02 on January 1, 2016 using the modified retrospective approach. See Consolidation and Noncontrolling Interests in the Business, Basis of Presentation and Significant Accounting Policies Note to our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K.

We have no right to the benefits from, nor do we bear the risks associated with these investments beyond our direct debt or equity investments in and management fees generated from these entities. Such direct investments amounted to approximately $354 million and $442 million as of December 31, 2018 and 2017, respectively. If we were to liquidate, the assets held by consolidated investment entities would not be available to our general creditors as a result of the liquidation.

Fair Value Measurement

Upon consolidation of CLO entities, we elected to apply the FVO for financial assets and financial liabilities held by these entities and have continued to measure these assets (primarily corporate loans) and liabilities (debt obligations issued by CLO entities) at fair value in subsequent periods. We have elected the FVO to more closely align the accounting with the economics of the transactions and allow us to more effectively reflect changes in the fair value of CLO assets with a commensurate change in the fair value of CLO liabilities.

Investments held by consolidated private equity funds and hedge funds are reported in our Consolidated Financial Statements. Changes in the fair value of consolidated investment entities are recorded as a separate line item within Income (loss) related to consolidated investment entities in our Consolidated Financial Statements.

The methodology for measuring the fair value and fair value hierarchy classification of financial assets and liabilities of consolidated investment entities is consistent with the methodology and fair value hierarchy rules that we apply to our investment portfolio. See Fair Value Measurement in the Business, Basis of Presentation and Significant Accounting Policies Note to our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K.

Nonconsolidated VIEs

We also hold variable interest in certain CLO entities that we do not consolidate because we have determined that we are not the primary beneficiary. With these CLO entities, we serve as the investment manager and receive investment management fees and contingent performance fees. Generally, we do not hold any interest in the nonconsolidated CLO entities, but if we do, such ownership has been deemed to be insignificant. We have not provided and are not obligated to provide any financial or other support to these entities.

We manage or hold investments in certain private equity funds and hedge funds. With these entities, we serve as the investment manager and are entitled to receive investment management fees and contingent performance fees that are generally expected to be insignificant. Although we have the power to direct the activities that significantly impact the economic performance of the funds, we do not hold a significant variable interest in any of these funds and, as such, do not have the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the entity. Accordingly, we are not considered the primary beneficiary and did not consolidate any of these investment funds.



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In addition, we do not consolidate funds in which our involvement takes the form of a limited partner interest and is restricted to a role of a passive investor, as a limited partner's interest does not provide us with any substantive kick-out or participating rights, which would overcome the presumption of control by the general partner. See the Consolidated Investment Entities Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K for more information.

Securitizations

We invest in various tranches of securitization entities, including RMBS, CMBS and ABS. Through our investments, we are not obligated to provide any financial or other support to these entities. Each of the RMBS, CMBS and ABS entities are thinly capitalized by design and considered VIEs. Our involvement with these entities is limited to that of a passive investor. We have no unilateral right to appoint or remove the servicer, special servicer or investment manager, which are generally viewed to have the power to direct the activities that most significantly impact the securitization entities' economic performance, in any of these entities, nor do we function in any of these roles. We, through our investments or other arrangements, do not have the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the entity. Therefore, we are not the primary beneficiary and do not consolidate any of the RMBS, CMBS and ABS entities in which we hold investments. These investments are accounted for as investments available-for-sale as described in the Fair Value Measurements (excluding Consolidated Investment Entities) Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K and unrealized capital gains (losses) on these securities are recorded directly in AOCI, except for certain RMBS which are accounted for under the FVO whose change in fair value is reflected in Other net realized gains (losses) in the Consolidated Statements of Operations. Our maximum exposure to loss on these structured investments is limited to the amount of our investment. Refer to the Investments (excluding Consolidated Investment Entities) Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K for details regarding the carrying amounts and classifications of these assets.



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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk that our consolidated financial position and results of operations will be affected by fluctuations in the value of financial instruments. We have significant holdings in financial instruments and are naturally exposed to a variety of market risks. The main market risks we are exposed to include interest rate risk, equity market price risk, and credit risk. We do not have material market risk exposure to "trading" activities in our Consolidated Financial Statements.

Risk Management

As a financial services company active in retirement, investment management and insurance products and services, taking measured risks is part of our business. As part of our effort to ensure measured risk taking, we have integrated risk management in our daily business activities and strategic planning.

We place a high priority on risk management and risk control. We have comprehensive risk management and control procedures in place at all levels and have established a dedicated risk management function with responsibility for the formulation of our risk appetite, strategies, policies and limits. The risk management function is also responsible for monitoring our overall market risk exposures and provides review, oversight and support functions on risk-related issues.

Our risk appetite is aligned with how our businesses are managed and anticipates future regulatory developments. In particular, our risk appetite is aligned with regulatory capital requirements applicable to our regulated insurance subsidiaries as well as metrics that are aligned with various ratings agency models.

Our risk governance and control systems enable us to identify, control, monitor and aggregate risks and provide assurance that risks are being measured, monitored and reported adequately and effectively. To promote measured risk taking, we have integrated risk management with our business activities and strategic planning.

Each risk that is managed has been mapped for oversight by the Board of Directors or appropriate Board Committees. The Chief Risk Officer ("CRO") reports to the Chief Executive Officer and has direct access to the Board on a regular basis. The Company’s Board of Directors and Board Committees are directly involved within the risk framework.

The CRO heads the risk management function and each of the businesses, as well as corporate, has a similar function that reports to the CRO. This functional approach is designed to promote consistent application of guidelines and procedures, regular reporting and appropriate communication through the risk management function, as well as to provide ongoing support for the business. The scope, roles, responsibilities and authorities of the risk management function at different levels are described in a Risk Management Policy to which our businesses must adhere.

Our Risk Committee discusses and approves all risk policies and reviews and approves risks associated with our activities. This includes volatility (affecting earnings and value), exposure (required capital and market risk) and insurance risks. Each business has a Committee that reviews business specific risks and is governed by the Risk Committee.

We have implemented several limit structures to manage risk. Examples include, but are not limited to, the following:


•	At-risk limits on sensitivities of earnings and regulatory capital;


•	Duration and convexity mismatch limits;


•	Credit risk limits;


•	Liquidity limits;


•	Mortality concentration limits;


•	Catastrophe and mortality exposure retention limits for our insurance risk; and


•	Investment and derivative guidelines.

We manage our risk appetite based on several key risk metrics, including:


•	At-risk metrics on sensitivities of earnings and regulatory capital;


•	Stress scenario results: forecasted results under stress events covering the impact of changes in interest rates, equity markets, mortality rates, credit default and spread levels, and combined impacts; and


•	Economic capital: the amount of capital required to cover extreme scenarios.



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We are also subject to cash flow stress testing pursuant to regulatory requirements. This analysis measures the effect of changes in interest rate assumptions on asset and liability cash flows. The analysis includes the effects of:


•	the timing and amount of redemptions and prepayments in our asset portfolio;


•	our derivative portfolio;


•	death benefits and other claims payable under the terms of our insurance products;


•	lapses and surrenders in our insurance products;


•	minimum interest guarantees in our insurance products; and


•	book value guarantees in our insurance products.

We evaluate any shortfalls that our cash flow testing reveals and if needed increase statutory reserves or adjust portfolio management strategies.

Derivatives are financial instruments whose values are derived from interest rates, foreign currency exchange rates, financial indices, or other prices of securities or commodities. Derivatives include swaps, futures, options and forward contracts. Under U.S. insurance statutes, our insurance subsidiaries may use derivatives to hedge market values or cash flows of assets or liabilities; to replicate cash market instruments; and for certain limited income generating activities. Our insurance subsidiaries are generally prohibited from using derivatives for speculative purposes. References below to hedging and hedge programs refer to our process of reducing exposure to various risks. This does not mean that the process necessarily results in hedge accounting treatment for the respective derivative instruments. To qualify for hedge accounting treatment, a derivative must be highly effective in mitigating the designated risk of the hedged item and meet other specific requirements. Effectiveness of the hedge is assessed at inception and throughout the life of the hedging relationship. Even if a derivative qualifies for hedge accounting treatment, there may be an element of ineffectiveness of the hedge. The ineffective portion of a hedging relationship subject to hedge accounting is recognized in Net realized capital gains (losses) in the Consolidated Statements of Operations.

Market Risk Related to Interest Rates

We define interest rate risk as the risk of an economic loss due to adverse changes in interest rates. This risk arises from our holdings in interest sensitive assets and liabilities, primarily as a result of investing life insurance premiums, fixed annuity and guaranteed investment contract deposits received in interest-sensitive assets and carrying these funds as interest-sensitive liabilities. We are also subject to interest rate risk on our variable annuity business, stable value contracts and secondary guarantee universal life contracts. A sustained decline in interest rates or a prolonged period of low interest rates may subject us to higher cost of guaranteed benefits and increased hedging costs on those products that are being hedged. In a rising interest rate environment, we are exposed to the risk of financial disintermediation through a potential increase in the level of book value withdrawals on certain stable value contracts. Conversely, a steady increase in interest rates would tend to improve financial results due to reduced hedging costs, lower costs of guaranteed benefits and improvement to fixed margins.

We use product design, pricing and ALM strategies to reduce the adverse effects of interest rate movement. Product design and pricing strategies can include the use of surrender charges, withdrawal restrictions and the ability to reset credited interest rates. ALM strategies can include the use of derivatives and duration and convexity mismatch limits. See Risk Factors-Risks Related to Our Business-General-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 in Part I, Item 1A. of this Annual Report on Form 10-K.

Derivatives strategies include the following:


•	Guaranteed Minimum Contract Value Guarantees. For certain liability contracts, we provide the contract holder a guaranteed minimum contract value. These contracts include certain life insurance and annuity products. We purchase interest rate swaps and interest rate options to reduce risk associated with these liability guarantees.


•	Book Value Guarantees in Stable Value Contracts. For certain stable value contracts, the contract holder and participants may surrender the contract for the account value even if the market value of the asset portfolio is in an unrealized loss position. We purchase derivatives including interest rate swaps and interest rate options to reduce the risk associated with this type of guarantee.

•

Other Market Value and Cash Flow Hedges. We also use derivatives in general to hedge present or future changes in cash flows or market value changes in our assets and liabilities. We use derivatives such as interest rate swaps to specifically hedge interest rate risks associated with our CMO-B portfolio; see Management’s Discussion and Analysis of Financial Condition and Results of Operations-Investments-CMO-B Portfolio in Part II, Item 7. of this Annual Report on Form 10-K.



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We assess interest rate exposures for financial assets, liabilities and derivatives using hypothetical test scenarios that assume either increasing or decreasing 100 basis point parallel shifts in the yield curve. The following tables summarize the net estimated potential change in fair value from hypothetical 100 basis point upward and downward shifts in interest rates as of December 31, 2018 and 2017. In calculating these amounts, we exclude gains and losses on separate account fixed income securities related to products for which the investment risk is borne primarily by the separate account contract holder rather than by us. While the test scenarios are for illustrative purposes only and do not reflect our expectations regarding future interest rates or the performance of fixed-income markets, they are a near-term, reasonably possible hypothetical change that illustrates the potential impact of such events. These tests do not measure the change in value that could result from non-parallel shifts in the yield curve. As a result, the actual change in fair value from a 100 basis point change in interest rates could be different from that indicated by these calculations.



	As of December 31, 2018
					Hypothetical Change in Fair Value⁽²⁾
($ in millions)	Notional		Fair Value⁽¹⁾		+ 100 Basis Points Yield Curve Shift			- 100 Basis Points Yield Curve Shift
Financial assets with interest rate risk:
Fixed maturity securities, including securities pledged	$	—	$	51,121	$	(3,904	)	$	4,296
Commercial mortgage and other loans	—		8,811		(468		)	516
Derivatives:
Interest rate contracts	24,129		31		164			(167		)
Notes Receivable	—		—		—			—
Financial liabilities with interest rate risk:
Investment contracts:
Funding agreements without fixed maturities and deferred annuities⁽³⁾	—		37,052		(2,321		)	3,052
Funding agreements with fixed maturities	—		1,197		(40		)	42
Supplementary contracts and immediate annuities	—		960		(39		)	44
Long-term debt	—		3,112		(216		)	246
Embedded derivatives on reinsurance	—		21		103			(120		)
Guaranteed benefit derivatives⁽³⁾:
IUL	—		82		7			(7		)
Stabilizer and MCGs	—		5		(5		)	39
Other⁽⁴⁾	—		39		(7		)	9


⁽¹⁾	Separate account assets and liabilities which are interest sensitive are not included herein as any interest rate risk is borne by the holder of separate account.


⁽²⁾	(Decreases) in assets or (decreases) in liabilities are presented in parentheses. Increases in assets or increases in liabilities are presented without parentheses.


⁽³⁾	Certain amounts included in Funding agreements without fixed maturities and deferred annuities section are also reflected within the Guaranteed benefit derivatives section of the tables above.


⁽⁴⁾	Includes GMWBL, GMWB, and FIA products.



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	As of December 31, 2017
					Hypothetical Change in Fair Value⁽²⁾
($ in millions)	Notional		Fair Value⁽¹⁾		+ 100 Basis Points Yield Curve Shift			- 100 Basis Points Yield Curve Shift
Financial assets with interest rate risk:
Fixed maturity securities, including securities pledged	$	—	$	53,434	$	(4,275	)	$	4,805
Commercial mortgage and other loans	—		8,748		(478		)	527
Derivatives:
Interest rate contracts	27,538		115		98			(124		)
Notes Receivable⁽³⁾	—		445		(46		)	53
Financial liabilities with interest rate risk:
Investment contracts:
Funding agreements without fixed maturities and deferred annuities⁽⁴⁾	—		38,553		(2,762		)	3,441
Funding agreements with fixed maturities	—		501		(23		)	25
Supplementary contracts and immediate annuities	—		1,285		(52		)	59
Long-term debt	—		3,478		(260		)	298
Embedded derivatives on reinsurance	—		129		132			(156		)
Guaranteed benefit derivatives⁽⁴⁾:
IUL	—		159		8			(8		)
Stabilizer and MCGs	—		97		(59		)	104
Other⁽⁵⁾	—		50		(7		)	9


⁽¹⁾	Separate account assets and liabilities which are interest sensitive are not included herein as any interest rate risk is borne by the holder of separate account.


⁽²⁾	(Decreases) in assets or (decreases) in liabilities are presented in parentheses. Increases in assets or increases in liabilities are presented without parentheses.

⁽³⁾ Reflects surplus notes that will continue to be receivable from VIAC upon closing of the Transaction, see the Discontinued Operations Note for further information.

⁽⁴⁾Certain amounts included in Funding agreements without fixed maturities and deferred annuities section are also reflected within the Guaranteed benefit derivatives section of the tables above.


⁽⁵⁾	Includes GMWBL, GMWB, and FIA products.

For certain liability contracts, we provide the contract holder a guaranteed minimum interest rate ("GMIR"). These contracts include fixed annuities and other insurance liabilities. We are required to pay these guaranteed minimum rates even if earnings on our investment portfolio decline, with a resulting investment margin compression negatively impacting earnings. Credited rates are set either quarterly or annually. See the Guaranteed Benefit Features Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K.



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The following table summarizes detail on the differences between the interest rate being credited to contract holders as of December 31, 2018, and the respective GMIRs for our continuing operations:



	Account Value⁽¹⁾
	Excess of crediting rate over GMIR
($ in millions)	At GMIR			Up to .50% Above GMIR			0.51% - 1.00% Above GMIR			1.01% - 1.50% Above GMIR			1.51% - 2.00% Above GMIR			More than 2.00% Above GMIR			Total
Guaranteed minimum interest rate
Up to 1.00%	$	3,339		$	1,643		$	1,598		$	446		$	1,451		$	642		$	9,119
1.01% - 2.00%	1,245			111			58			5			10			68			1,497
2.01% - 3.00%	14,549			301			301			180			21			—			15,352
3.01% - 4.00%	12,360			764			449			—			—			—			13,573
4.01% and Above	2,517			100			—			—			—			—			2,617
Renewable beyond 12 months (MYGA)⁽²⁾	453			—			—			—			—			—			453
Total discretionary rate setting products	$	34,463		$	2,919		$	2,406		$	631		$	1,482		$	710		$	42,611
Percentage of Total	80.9		%	6.8		%	5.6		%	1.5		%	3.5		%	1.7		%	100.0		%


⁽¹⁾	Includes only the account values for investment spread products with GMIRs and discretionary crediting rates, net of policy loans. Excludes Stabilizer products, which are fee based. Also, excludes the portion of the account value of FIA products for which the crediting rate is based on market indexed strategies.

⁽²⁾Represents MYGA contracts with renewal dates after December 31, 2019 on which we are required to credit interest above the contractual GMIR for at least the next twelve months.

Market Risk Related to Equity Market Prices

Our indexed universal life ("IUL") insurance products and general account equity securities are significantly influenced by global equity markets. Increases or decreases in equity markets impact certain assets and liabilities related to our variable products and our earnings derived from those products.

We assess equity risk exposures for financial assets, liabilities and derivatives using hypothetical test scenarios that assume either an increase or decrease of 10% in all equity market benchmark levels. The following tables summarize the net estimated potential change in fair value from an instantaneous increase and decrease in all equity market benchmark levels of 10% as of December 31, 2018 and 2017. In calculating these amounts, we exclude gains and losses on separate account equity securities related to products for which the investment risk is borne primarily by the separate account contract holder rather than by us. While the test scenarios are for illustrative purposes only and do not reflect our expectations regarding the future performance of equity markets, they are near-term, reasonably possible hypothetical changes that illustrate the potential impact of such events. These scenarios consider only the direct effect on the fair value of market instruments corresponding to declines or increases in equity benchmark market levels and not changes in asset-based fees recognized as revenue, changes in our estimates of total gross profits used as a basis for amortizing DAC/VOBA, other intangibles and other costs, or changes in any other assumptions such as market volatility or mortality, utilization or persistency rates in variable contracts that could also impact the fair value of our living benefits features. In addition, these scenarios do not reflect the effect of basis risk, such as potential differences in the performance of the investment funds underlying the variable annuity products relative to the equity market benchmark we use as a basis for developing our hedging strategy. The impact of basis risk could result in larger differences between the change in fair value of the equity-based derivatives and the related living benefit features, in comparison to the hypothetical test scenarios.



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	As of December 31, 2018
					Hypothetical Change in Fair Value⁽¹⁾
($ in millions)	Notional		Fair Value		+ 10% Equity Shock			-10% Equity Shock
Financial assets with equity market risk:
Equity securities, available-for-sale	$	—	$	273	$	25		$	(25	)
Limited liability partnerships/corporations	—		1,158		71			(71		)
Derivatives:
Equity futures and total return swaps	151		—		(15		)	15
Equity options	1,605		89		63			(42		)
Financial liabilities with equity market risk:
Guaranteed benefit derivatives:
IUL	—		82		58			(38		)
Other⁽²⁾	—		39		(3		)	4

⁽¹⁾ (Decreases) in assets or (decreases) in liabilities are presented in parentheses. Increases in assets or increases in liabilities are presented without parentheses.


⁽²⁾	Includes GMWBL, GMWB, and FIA products.



	As of December 31, 2017
					Hypothetical Change in Fair Value⁽¹⁾
($ in millions)	Notional		Fair Value		+ 10% Equity Shock			-10% Equity Shock
Financial assets with equity market risk:
Equity securities, available-for-sale	$	—	$	380	$	35		$	(35	)
Limited liability partnerships/corporations	—		784		49			(49		)
Derivatives:
Equity futures and total return swaps	161		—		(19		)	19
Equity options	1,365		179		68			(70		)
Financial liabilities with equity market risk:
Guaranteed benefit derivatives:
IUL	—		159		60			(62		)
Other⁽²⁾	—		50		(1		)	2

⁽¹⁾ (Decreases) in assets or (decreases) in liabilities are presented in parentheses. Increases in assets or increases in liabilities are presented without parentheses.


⁽²⁾	Includes GMWBL, GMWB, and FIA products.

Hedging of IUL Benefits

We mitigate IUL market risk exposures through a combination of capital market hedging and product design. For IULs, these risks stem from the interest credits paid to policy owners based on exposure to various stock market indices.The minimum guarantees, interest rate and equity market exposures, are strongly dependent on capital markets and, to a lesser degree, policyholder behavior.

These hedge programs are limited to the current policy term of the liabilities, based on current participation rates and index caps. Future returns, which may be reflected in IUL credited rates beyond the current policy term, are not hedged until such time that policyholder selections of future crediting strategies have been made.

Equity options are used to hedge against an increase in various equity indices. An increase in various equity indices may result in increased payments to contract holders of IUL contracts. The equity options offset this increased expense.

Interest rate options are used to hedge against an increase in the interest rate benchmark. The interest rate options offset this increased expense.



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Market Risk Related to Credit Risk

Credit risk is primarily embedded in the general account portfolio. The carrying value of our fixed maturity, including securities pledged, and equity portfolio totaled $51.4 billion and $53.8 billion as of December 31, 2018 and 2017, respectively. Our credit risk materializes primarily as impairment losses and/or credit risk related trading losses. We are exposed to occasional cyclical economic downturns, during which impairment losses may be significantly higher than the long-term historical average. This is offset by years where we expect the actual impairment losses to be substantially lower than the long-term average.

Credit risk in the portfolio can also materialize as increased capital requirements caused by rating down-grades. The effect of rating migration on our capital requirements is also dependent on the economic cycle and increased asset impairment levels may go hand in hand with increased asset related capital requirements.

We manage the risk of default and rating migration by applying disciplined credit evaluation and underwriting standards and prudently limiting allocations to lower quality, higher risk investments. In addition, we diversify our exposure by issuer and country, using rating based issuer and country limits, as well as by industry segment, using specific investment constraints. Limit compliance is monitored on a daily, monthly or quarterly basis. Limit violations are reported to senior management and we are actively involved in decisions around curing such limit violations.

We also have credit risk related to the ability of our derivatives and reinsurance counterparties to honor their obligations to pay the contract amounts under various agreements. In order to minimize the risk of credit loss on such contracts, we diversify our exposures among several counterparties and limit the amount of exposure to each based on credit rating. For most counterparties, we have collateral agreements in place that would substantially limit our credit losses in case of a counterparty default. We also generally limit our selection of counterparties that we do new transactions with to those with an "A-" credit rating or above. When exceptions are made to that principle, we ensure that we obtain collateral to mitigate our risk of loss. For derivatives counterparty risk exposures (which includes reverse repurchase and securities lending transactions), we measure and monitor our risks on a market value basis daily. Refer to the Derivative Financial Instruments Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K for further details of these items.

In the normal course of business, certain reinsurance recoverables are subject to reviews by the reinsurers. We are not aware of any material disputes arising from these reviews or other communications with the counterparties that would affect collectability, and, therefore, as of December 31, 2018, no allowance for uncollectible amounts was recorded.



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The following table summarizes our reinsurance recoverable balances, including collateral received and credit and financial strength ratings for our 10 largest reinsurance recoverable balances as of December 31, 2018:

($ in millions)

Financial Strength Rating

Credit Rating

Reinsurance Recoverable

% Collateralized⁽¹⁾

S&P

Moody's

S&P

Moody's

Parent Company/Principal Reinsurers

Hannover RE Group

2,398

23%

AA-

NR⁽²⁾

Hannover Life Reassurance Co of America

AA-

NR⁽²⁾

Hannover Life Reassurance Company of America (Bermuda)

AA-

NR⁽²⁾

Lincoln National Corp

1,439

95%

A-

Baa1

Lincoln Life & Annuity Company of New York

AA-

Lincoln National Life Insurance Co

AA-

Reinsurance Group of America Inc

1,256

91%

Baa1

RGA Reinsurance Company

AA-

Prudential Plc (U.K.)

463

62%

Jackson National Life Insurance Co

AA-

Ballantyne Re Plc

236

100%

NR⁽²⁾

Ballantyne Re Plc

NR⁽²⁾

Sun Life Financial Inc

233

Baa1

Sun Life & Health Insurance Co

AA-

Sun Life Assurance Co of Canada (US)

AA-

Sun Life Assurance Company of Canada

AA-

Sun Life Assurance Company of Canada USB

AA-

Swiss Re Ltd

203

AA-

Aa3

Swiss Re Life & Health America Inc

AA-

Aa3

Westport Insurance Corp

AA-

Aa3

Enstar Group Limited

152

BBB

NR⁽²⁾

Fitzwilliam Insurance Ltd

NR⁽²⁾

Aegon N.V.

A-

Transamerica Financial Life Insurance Co

AA-

Transamerica Life Insurance Co

AA-

Munich Re Group

AA-

Aa3

Munich American Reassurance Co

AA-

NR⁽²⁾

All Other Reinsurers

300

20%

Total reinsurance recoverable

6,802

54%

⁽¹⁾Collateral includes LOCs, assets held in trust and funds withheld. Percent collateralized is based on the total of individual contractual exposures aggregated at the reinsurer Parent Company level, which may differ for each individual contractual exposure.


⁽²⁾	Not rated.



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Item 8. Financial Statements and Supplementary Data



		Page
	Financial Statements as of December 31, 2018 and 2017 and for the years ended December 31, 2018, 2017 and 2016:	139

	Consolidated Balance Sheets as of December 31, 2018 and 2017	140

	Consolidated Statements of Operations for the years ended December 31, 2018, 2017 and 2016	142

	Consolidated Statements of Comprehensive Income for the years ended December 31, 2018, 2017 and 2016	143

	Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2018, 2017 and 2016	144

	Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016	145

	Notes to Consolidated Financial Statements:	146
	1. Business, Basis of Presentation and Significant Accounting Policies	147
	2. Discontinued Operations	170
	3. Investments (excluding Consolidated Investment Entities)	173
	4. Derivative Financial Instruments	189
	5. Fair Value Measurements (excluding Consolidated Investment Entities)	194
	6. Deferred Policy Acquisition Costs and Value of Business Acquired	207
	7. Reserves for Future Policy Benefits and Contract Owner Account Balances	208
	8. Guaranteed Benefit Features	208
	9. Reinsurance	210
	10. Goodwill and Other Intangible Assets	213
	11. Share-based Incentive Compensation Plans	214
	12. Shareholders' Equity	217
	13. Earnings per Common Share	220
	14. Insurance Subsidiaries	221
	15. Employee Benefit Arrangements	223
	16. Accumulated Other Comprehensive Income (Loss)	232
	17. Income Taxes	235
	18. Financing Agreements	239
	19. Commitments and Contingencies	243
	20. Consolidated Investment Entities	246
	21. Restructuring	258
	22. Segments	260
	23. Condensed Consolidating Financial Information	264
	24. Selected Consolidated Unaudited Quarterly Financial Data	280

	Financial Statement Schedules as of December 31, 2018 and 2017 and for the years ended December 31, 2018, 2017 and 2016:	281
	Schedule I - Summary of Investments Other than Investments in Affiliates	282
	Schedule II - Condensed Financial Information of Parent	283
	Schedule III - Supplementary Insurance Information	291
	Schedule IV - Reinsurance	293
	Schedule V - Valuation and Qualifying Accounts	294



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Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of

Voya Financial, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Voya Financial, Inc. (the Company) as of December 31, 2018 and 2017, the related consolidated statements of operations, comprehensive income, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 2018, and the related notes and financial statement schedules listed in the Index at item 15(a) (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2018 and 2017, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 22, 2019 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2001.

Boston, Massachusetts

February 22, 2019



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Voya Financial, Inc.

Consolidated Balance Sheets

December 31, 2018 and 2017

(In millions, except share and per share data)



	As of December 31,
	2018		2017
Assets:
Investments:
Fixed maturities, available-for-sale, at fair value (amortized cost of $45,241 as of 2018 and $44,366 as of 2017)	$	46,298	$	48,329
Fixed maturities, at fair value using the fair value option	2,956		3,018
Equity securities, at fair value (cost of $255 as of 2018 and $353 as of 2017)	273		380
Short-term investments	168		471
Mortgage loans on real estate, net of valuation allowance of $2 as of 2018 and $3 as of 2017	8,676		8,686
Policy loans	1,833		1,888
Limited partnerships/corporations	1,158		784
Derivatives	247		397
Other investments	90		47
Securities pledged (amortized cost of $1,824 as of 2018 and $1,823 as of 2017)	1,867		2,087
Total investments	63,566		66,087
Cash and cash equivalents	1,538		1,218
Short-term investments under securities loan agreements, including collateral delivered	1,684		1,626
Accrued investment income	650		667
Premium receivable and reinsurance recoverable	6,860		7,632
Deferred policy acquisition costs and Value of business acquired	4,116		3,374
Current income taxes	237		4
Deferred income taxes	1,157		781
Other assets	1,336		1,310
Assets related to consolidated investment entities:
Limited partnerships/corporations, at fair value	1,421		1,795
Cash and cash equivalents	331		217
Corporate loans, at fair value using the fair value option	542		1,089
Other assets	16		75
Assets held in separate accounts	71,228		77,605
Assets held for sale	—		59,052
Total assets	$	154,682	$	222,532

The accompanying notes are an integral part of these Consolidated Financial Statements.



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Voya Financial, Inc.

Consolidated Balance Sheets

December 31, 2018 and 2017

(In millions, except share and per share data)



	As of December 31,
	2018			2017

Liabilities and Shareholders' Equity:
Future policy benefits	$	14,488		$	15,647
Contract owner account balances	51,001			50,158
Payables under securities loan and repurchase agreements, including collateral held	1,821			1,866
Short-term debt	1			337
Long-term debt	3,136			3,123
Derivatives	139			149
Pension and other postretirement provisions	551			550
Other liabilities	2,148			2,076
Liabilities related to consolidated investment entities:
Collateralized loan obligations notes, at fair value using the fair value option	540			1,047
Other liabilities	688			658
Liabilities related to separate accounts	71,228			77,605
Liabilities held for sale	—			58,277
Total liabilities	145,741			211,493

Commitments and Contingencies (Note 19)

Shareholders' equity:
Preferred stock ($0.01 par value per share; 325,000 shares authorized as of 2018; 325,000 shares issued and outstanding as of 2018; $325 aggregate liquidation preference)	—			—
Common stock ($0.01 par value per share; 900,000,000 shares authorized; 272,431,745 and 270,078,294 shares issued as of 2018 and 2017, respectively; 150,978,184 and 171,982,673 shares outstanding as of 2018 and 2017, respectively)	3			3
Treasury stock (at cost; 121,453,561 and 98,095,621 shares as of 2018 and 2017, respectively)	(4,981		)	(3,827		)
Additional paid-in capital	24,316			23,821
Accumulated other comprehensive income (loss)	607			2,731
Retained earnings (deficit):
Appropriated-consolidated investment entities	—			—
Unappropriated	(11,732		)	(12,719		)
Total Voya Financial, Inc. shareholders' equity	8,213			10,009
Noncontrolling interest	728			1,030
Total shareholders' equity	8,941			11,039
Total liabilities and shareholders' equity	$	154,682		$	222,532

The accompanying notes are an integral part of these Consolidated Financial Statements.



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Voya Financial, Inc.

Consolidated Statements of Operations

For the Years Ended December 31, 2018, 2017 and 2016

(In millions, except per share data)



	Year Ended December 31,
	2018			2017			2016
Revenues:
Net investment income	$	3,307		$	3,294		$	3,354
Fee income	2,708			2,627			2,471
Premiums	2,159			2,121			2,795
Net realized capital gains (losses):
Total other-than-temporary impairments	(28		)	(30		)	(32		)
Less: Portion of other-than-temporary impairments recognized in Other comprehensive income (loss)	1			(9		)	2
Net other-than-temporary impairments recognized in earnings	(29		)	(21		)	(34		)
Other net realized capital gains (losses)	(370		)	(206		)	(329		)
Total net realized capital gains (losses)	(399		)	(227		)	(363		)
Other revenue	447			371			342
Income (loss) related to consolidated investment entities:
Net investment income	292			432			189
Total revenues	8,514			8,618			8,788
Benefits and expenses:
Policyholder benefits	3,045			3,030			3,710
Interest credited to contract owner account balances	1,530			1,606			1,604
Operating expenses	2,691			2,654			2,655
Net amortization of Deferred policy acquisition costs and Value of business acquired	368			529			415
Interest expense	221			184			288
Operating expenses related to consolidated investment entities:
Interest expense	41			80			102
Other expense	8			7			4
Total benefits and expenses	7,904			8,090			8,778
Income (loss) from continuing operations before income taxes	610			528			10
Income tax expense (benefit)	55			740			(29		)
Income (loss) from continuing operations	555			(212		)	39
Income (loss) from discontinued operations, net of tax	457			(2,580		)	(337		)
Net income (loss)	1,012			(2,792		)	(298		)
Less: Net income (loss) attributable to noncontrolling interest	137			200			29
Net income (loss) available to Voya Financial, Inc.	$	875		$	(2,992	)	$	(327	)

Net income (loss) per common share:
Basic
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders	$	2.56		$	(2.24	)	$	0.05
Income (loss) available to Voya Financial, Inc.'s common shareholders	$	5.36		$	(16.25	)	$	(1.63	)

Diluted
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders	$	2.48		$	(2.24	)	$	0.05
Income (loss) available to Voya Financial, Inc.'s common shareholders	$	5.20		$	(16.25	)	$	(1.61	)

Cash dividends declared per share of common stock	$	0.04		$	0.04		$	0.04

The accompanying notes are an integral part of these Consolidated Financial Statements.



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Voya Financial, Inc.

Consolidated Statements of Comprehensive Income

For the Years Ended December 31, 2018, 2017 and 2016

(In millions)



	Year Ended December 31,
	2018			2017			2016
Net income (loss)	$	1,012		$	(2,792	)	$	(298	)
Other comprehensive income (loss), before tax:
Unrealized gains (losses) on securities	(2,810		)	1,191			749
Other-than-temporary impairments	32			(2		)	24
Pension and other postretirement benefits liability	(11		)	(15		)	(10		)
Other comprehensive income (loss), before tax	(2,789		)	1,174			763
Income tax expense (benefit) related to items of other comprehensive income (loss)	(693		)	364			267
Other comprehensive income (loss), after tax	(2,096		)	810			496
Comprehensive income (loss)	(1,084		)	(1,982		)	198
Less: Comprehensive income (loss) attributable to noncontrolling interest	137			200			29
Comprehensive income (loss) attributable to Voya Financial, Inc.	$	(1,221	)	$	(2,182	)	$	169

The accompanying notes are an integral part of these Consolidated Financial Statements.



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Voya Financial, Inc.

Consolidated Statements of Changes in Shareholders' Equity

For the Years Ended December 31, 2018, 2017 and 2016

(In millions)



	Preferred Stock		Common Stock		Treasury Stock			Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings (Deficit)						Total Voya Financial, Inc. Shareholders' Equity			Noncontrolling Interest			Total Shareholders' Equity
														Appropriated			Unappropriated
Balance at January 1, 2016	$	—	$	3	$	(2,302	)	$	23,717		$	1,425		$	9		$	(9,415	)	$	13,437		$	2,840		$	16,277
Cumulative effect of changes in accounting:
Adjustment for adoption of ASU 2015-02	—		—		—			—			—			9			—			9			(1,601		)	(1,592		)
Adjustment for adoption of ASU 2014-13	—		—		—			—			—			(18		)	—			(18		)	—			(18		)
Balance at January 1, 2016 - As adjusted	—		3		(2,302		)	23,717			1,425			—			(9,415		)	13,428			1,239			14,667
Comprehensive income (loss):
Net income (loss)	—		—		—			—			—			—			(327		)	(327		)	29			(298		)
Other comprehensive income (loss), after tax	—		—		—			—			496			—			—			496			—			496
Total comprehensive income (loss)																				169			29			198
Net consolidation (deconsolidation) of consolidated investment entities	—		—		—			—			—			—			—			—			(70		)	(70		)
Common stock issuance	—		—		—			1			—			—			—			1			—			1
Common stock acquired - Share repurchase	—		—		(487		)	(200		)	—			—			—			(687		)	—			(687		)
Dividends on common stock	—		—		—			(8		)	—			—			—			(8		)	—			(8		)
Share-based compensation	—		—		(7		)	99			—			—			—			92			—			92
Contributions from (Distributions to) noncontrolling interest, net	—		—		—			—			—			—			—			—			(225		)	(225		)
Balance at December 31, 2016- As previously filed	—		3		(2,796		)	23,609			1,921			—			(9,742		)	12,995			973			13,968

Cumulative effect of changes in accounting:
Adjustment for adoption of ASU 2016-09	—		—		—			—			—			—			15			15			—			15
Balance at January 1, 2017 - As adjusted	—		3		(2,796		)	23,609			1,921			—			(9,727		)	13,010			973			13,983
Comprehensive income (loss):
Net income (loss)	—		—		—			—			—			—			(2,992		)	(2,992		)	200			(2,792		)
Other comprehensive income (loss), after tax	—		—		—			—			810			—			—			810			—			810
Total comprehensive income (loss)																				(2,182		)	200			(1,982		)
Net consolidation (deconsolidation) of consolidated investment entities	—		—		—			—			—			—			—			—			38			38
Common stock issuance	—		—		—			3			—			—			—			3			—			3
Common stock acquired - Share repurchase	—		—		(1,023		)	100			—			—			—			(923		)	—			(923		)
Dividends on common stock	—		—		—			(8		)	—			—			—			(8		)	—			(8		)
Share-based compensation	—		—		(8		)	117			—			—			—			109			—			109
Contributions from (Distributions to) noncontrolling interest, net	—		—		—			—			—			—			—			—			(181		)	(181		)
Balance as of December 31, 2017- As previously filed	—		3		(3,827		)	23,821			2,731			—			(12,719		)	10,009			1,030			11,039

Cumulative effect of changes in accounting:
Adjustment for adoption of ASU 2014-09	—		—		—			—			—			—			84			84			—			84
Adjustment for adoption of ASU 2016-01	—		—		—			—			(28		)	—			28			—			—			—
Balance at January 1, 2018 - As adjusted	—		3		(3,827		)	23,821			2,703			—			(12,607		)	10,093			1,030			11,123
Comprehensive income (loss):
Net income (loss)	—		—		—			—			—			—			875			875			137			1,012
Reversal of Other Comprehensive Income (Loss) due to Sale of Annuity and CBVA	—		—		—			—			(79		)	—			—			(79		)	—			(79		)
Other comprehensive income (loss), after tax	—		—		—			—			(2,017		)	—			—			(2,017		)	—			(2,017		)
Total comprehensive income (loss)																				(1,221		)	137			(1,084		)
Effect of transaction for entities under common control	—		—		—			(31		)	—			—			—			(31		)	—			(31		)
Net consolidations (deconsolidations) of consolidated investment entities	—		—		—			—			—			—			—			—			(33		)	(33		)
Preferred stock issuance	—		—		—			319			—			—			—			319			—			319
Common stock issuance	—		—		—			3			—			—			—			3			—			3
Common stock acquired - Share repurchase	—		—		(1,125		)	100			—			—			—			(1,025		)	—			(1,025		)
Dividends on common stock	—		—		—			(6		)	—			—			—			(6		)	—			(6		)
Share-based compensation	—		—		(29		)	110			—			—			—			81			—			81
Contributions from (Distributions to) noncontrolling interest, net	—		—		—			—			—			—			—			—			(406		)	(406		)
Balance as of December 31, 2018	$	—	$	3	$	(4,981	)	$	24,316		$	607		$	—		$	(11,732	)	$	8,213		$	728		$	8,941

The accompanying notes are an integral part of these Consolidated Financial Statements.



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Voya Financial, Inc. Consolidated Statements of Cash Flows For the Years Ended December 31, 2018, 2017 and 2016 (In millions)

	Year Ended December 31,
	2018			2017			2016
Cash Flows from Operating Activities:
Net income (loss)	$	1,012		$	(2,792	)	$	(298	)
Adjustments to reconcile Net income (loss) to Net cash provided by operating activities:
(Income) loss from discontinued operations, net of tax	(457		)	2,580			337
Capitalization of deferred policy acquisition costs, value of business acquired and sales inducements	(217		)	(243		)	(264		)
Net amortization of deferred policy acquisition costs, value of business acquired and sales inducements	370			534			420
Future policy benefits, claims reserves and interest credited	(492		)	899			1,298
Deferred income tax expense (benefit)	1			862			(151		)
Net realized capital losses	399			227			363
Share-based compensation	96			117			99
(Gains) losses on consolidated investment entities	(256		)	(343		)	(57		)
(Gains) losses on limited partnerships/corporations	(42		)	(31		)	(29		)
Change in:
Premiums receivable and reinsurance recoverable	773			(345		)	363
Other receivables and assets accruals	(524		)	298			(18		)
Other payables and accruals	(185		)	(41		)	(190		)
(Increase) decrease in cash held by consolidated investment entities	(305		)	(557		)	(260		)
Other, net	233			6			145
Net cash provided by operating activities - discontinued operations	1,462			411			1,934
Net cash provided by operating activities	1,868			1,582			3,692
Cash Flows from Investing Activities:
Proceeds from the sale, maturity, disposal or redemption of:
Fixed maturities	7,749			8,325			8,112
Equity securities, available-for-sale	152			54			104
Mortgage loans on real estate	999			955			747
Limited partnerships/corporations	338			236			306
Acquisition of:
Fixed maturities	(8,946		)	(8,719		)	(9,839		)
Equity securities, available-for-sale	(69		)	(47		)	(47		)
Mortgage loans on real estate	(875		)	(1,638		)	(1,481		)
Limited partnerships/corporations	(381		)	(332		)	(367		)
Short-term investments, net	337			(80		)	31
Derivatives, net	97			213			(24		)
Sales from consolidated investment entities	1,365			2,047			2,304
Purchases within consolidated investment entities	(994		)	(2,036		)	(1,727		)
Collateral (delivered) received, net	(103		)	(148		)	(22		)
Other, net	15			3			20
Net cash provided by (used in) investing activities - discontinued operations	34			(1,261		)	(1,800		)
Net cash used in investing activities	(282		)	(2,428		)	(3,683		)



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Voya Financial, Inc. Consolidated Statements of Cash Flows For the Years Ended December 31, 2018, 2017 and 2016 (In millions)

	Year Ended December 31,
	2018			2017			2016
Cash Flows from Financing Activities:
Deposits received for investment contracts	6,096			5,061			5,891
Maturities and withdrawals from investment contracts	(5,503		)	(5,372		)	(5,412		)
Settlements on deposit contracts	(10		)	—			—
Proceeds from issuance of debt with maturities of more than three months	350			399			798
Repayment of debt with maturities of more than three months	(710		)	(494		)	(809		)
Debt issuance costs	(6		)	(3		)	(16		)
Borrowings of consolidated investment entities	773			967			126
Repayments of borrowings of consolidated investment entities	(656		)	(804		)	(455		)
Contributions from (distributions to) participants in consolidated investment entities	(166		)	449			51
Proceeds from issuance of common stock, net	3			3			1
Proceeds from issuance of preferred stock, net	319			—			—
Share-based compensation	(14		)	(8		)	(7		)
Common stock acquired - Share repurchase	(1,025		)	(923		)	(687		)
Dividends paid	(6		)	(8		)	(8		)
Net cash provided by financing activities - discontinued operations	(1,209		)	384			916
Net cash (used in) provided by financing activities	(1,764		)	(349		)	389
Net (decrease) increase in cash and cash equivalents	(178		)	(1,195		)	398
Cash and cash equivalents, beginning of period	1,716			2,911			2,513
Cash and cash equivalents, end of period	1,538			1,716			2,911
Less: Cash and cash equivalents of discontinued operations, end of period	—			498			815
Cash and cash equivalents of continuing operations, end of period	$	1,538		$	1,218		$	2,096
Supplemental cash flow information:
Income taxes (received) paid, net	$	1		$	(154	)	$	69
Interest paid	180			174			190
Non-cash investing and financing activities:
Decrease of assets due to deconsolidation of consolidated investment entities	$	—		$	—		$	7,497
Decrease of liabilities due to deconsolidation of consolidated investment entities	—			—			5,905
Decrease of equity due to deconsolidation of consolidated investment entities	—			—			1,592
Elimination of appropriated retained earnings	—			—			18

The accompanying notes are an integral part of these Consolidated Financial Statements.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

1. Business, Basis of Presentation and Significant Accounting Policies

Business

Voya Financial, Inc. and its subsidiaries (collectively the "Company") is a financial services organization in the United States that offers a broad range of retirement services, investment management services, mutual funds, group insurance and supplemental health products.

The Company provides its principal products and services through four segments: Retirement, Investment Management, Employee Benefits and Individual Life. In addition, the Company includes in Corporate activities not directly related to its segments, results of the Retained Business (defined below) and certain run-off activities that are not meaningful to the Company's business strategy. See the Segments Note to these Consolidated Financial Statements.

After conducting a strategic review of the Individual Life business, in October 2018, the Company announced that it would retain the in-force block of individual life policies and cease new individual life insurance sales, effective December 31, 2018. Applications for individual life insurance policies were accepted through the end of 2018, resulting in some placement of policies in the first quarter of 2019. The Company will continue to manage its existing in-force Individual Life business as a separate segment, with results included in the Company's Adjusted operating earnings before income taxes.

On June 1, 2018, the Company consummated a series of transactions (collectively, the "Transaction") pursuant to a Master Transaction Agreement dated December 20, 2017 (the "MTA") with VA Capital Company LLC ("VA Capital") and Athene Holding Ltd. ("Athene"). As part of the Transaction, Venerable Holdings, Inc. ("Venerable"), a wholly owned subsidiary of VA Capital, acquired two of the Company's subsidiaries, Voya Insurance and Annuity Company ("VIAC") and Directed Services, LLC ("DSL"), and VIAC and other Voya subsidiaries reinsured to Athene substantially all of their fixed and fixed indexed annuities business. In connection with the Transaction, VIAC and another Voya subsidiary engaged in a series of reinsurance arrangements pursuant to which Voya and its subsidiaries other than VIAC retained VIAC’s businesses other than variable annuities and fixed and fixed indexed annuities.

The Transaction resulted in the disposition of substantially all of the Company's Closed Block Variable Annuity ("CBVA") and Annuities businesses. The assets and liabilities related to the businesses sold were classified as held for sale in the Consolidated Balance Sheet as of December 31, 2017. The results of operations and cash flows of the businesses sold were classified as discontinued operations in the accompanying Consolidated Statements of Operations and the Consolidated Statements of Cash Flows, respectively and are reported separately for all periods presented. See the Discontinued Operations Note to these Consolidated Financial Statements.

As a result of the Transaction, the Company no longer considers its CBVA and Annuities businesses as reportable segments. Additionally, the Company evaluated its segment presentation and determined that the retained CBVA and Annuities policies that are not included in the disposed businesses described above ("Retained Business") are insignificant. As such, the Company reported the results of the Retained Business in Corporate.

Prior to May 2013, the Company was an indirect, wholly-owned subsidiary of ING Groep N.V. ("ING Group" or "ING"), a global financial services holding company based in The Netherlands. In May 2013, Voya Financial Inc. completed its initial public offering ("IPO") of common stock, including the issuance and sale of common stock by Voya Financial, Inc. and the sale of shares of common stock owned indirectly by ING Group. Between October 2013 and March 2015, ING Group completed the sale of its remaining shares of common stock of Voya Financial, Inc. in a series of registered public offerings.

Basis of Presentation

The accompanying Consolidated Financial Statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP").

The Consolidated Financial Statements include the accounts of Voya Financial, Inc. and its subsidiaries, as well as other (voting interest entities ("VOEs")) and variable interest entities ("VIEs") in which the Company has a controlling financial interest. See the Consolidated Investment Entities Note to these Consolidated Financial Statements. Intercompany transactions and balances have been eliminated.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Significant Accounting Policies

Estimates and Assumptions

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Those estimates are inherently subject to change and actual results could differ from those estimates.

The Company has identified the following accounts and policies as the most significant in that they involve a higher degree of judgment, are subject to a significant degree of variability and/or contain significant accounting estimates:


•	Reserves for future policy benefits;


•	Deferred policy acquisition costs ("DAC"), value of business acquired ("VOBA") and other intangibles (collectively, "DAC/VOBA and other intangibles");


•	Valuation of investments and derivatives;


•	Impairments;


•	Income taxes;


•	Contingencies; and


•	Employee benefit plans.

Fair Value Measurement

The Company measures the fair value of its financial assets and liabilities based on assumptions used by market participants in pricing the asset or liability, which may include inherent risk, restrictions on the sale or use of an asset, or nonperformance risk, including the Company's own credit risk. The estimate of fair value is the price that would be received to sell an asset or transfer a liability ("exit price") in an orderly transaction between market participants in the principal market, or the most advantageous market in the absence of a principal market, for that asset or liability. The Company uses a number of valuation sources to determine the fair values of its financial assets and liabilities, including quoted market prices, third-party commercial pricing services, third-party brokers, industry-standard, vendor-provided software that models the value based on market observable inputs, and other internal modeling techniques based on projected cash flows.

Investments

The accounting policies for the Company's principal investments are as follows:

Fixed Maturities and Equity Securities: Effective January 1, 2018, the Company adopted Accounting Standards Update ("ASU") 2016-01 "Financial Instruments-Overall (ASC Subtopic 825-10):Recognition and Measurement of Financial Assets and Financial Liabilities" ("ASU 2016-01") (See the Adoption of New Pronouncements section below). As a result, the Company measures its equity securities at fair value and recognizes any changes in fair value in net income. Prior to adoption, equity securities were designated as available-for-sale and reported at fair value with unrealized capital gains (losses) recorded in Accumulated other comprehensive income (loss) ("AOCI").

The Company's fixed maturities are currently designated as available-for-sale, except those accounted for using the fair value option ("FVO"). Available-for-sale securities are reported at fair value and unrealized capital gains (losses) on these securities are recorded directly in AOCI and presented net of related changes in DAC/VOBA and other intangibles and Deferred income taxes. In addition, certain fixed maturities have embedded derivatives, which are reported with the host contract on the Consolidated Balance Sheets.

The Company has elected the FVO for certain of its fixed maturities to better match the measurement of assets and liabilities in the Consolidated Statements of Operations. Certain collateralized mortgage obligations ("CMOs"), primarily interest-only and principal-only strips, are accounted for as hybrid instruments and valued at fair value with changes in the fair value recorded in Other net realized capital gains (losses) in the Consolidated Statements of Operations.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Purchases and sales of fixed maturities and equity securities, excluding private placements, are recorded on the trade date. Purchases and sales of private placements and mortgage loans are recorded on the closing date. Investment gains and losses on sales of securities are generally determined on a first-in-first-out ("FIFO") basis.

Interest income on fixed maturities is recorded when earned using an effective yield method, giving effect to amortization of premiums and accretion of discounts. Dividends on equity securities are recorded when declared. Such dividends and interest income are recorded in Net investment income in the Consolidated Statements of Operations.

Included within fixed maturities are loan-backed securities, including residential mortgage-backed securities ("RMBS"), commercial mortgage-backed securities ("CMBS") and asset-backed securities ("ABS"). Amortization of the premium or discount from the purchase of these securities considers the estimated timing and amount of prepayments of the underlying loans. Actual prepayment experience is periodically reviewed and effective yields are recalculated when differences arise between the prepayments originally anticipated and the actual prepayments received and currently anticipated. Prepayment assumptions for single-class and multi-class mortgage-backed securities ("MBS") and ABS are estimated by management using inputs obtained from third-party specialists, including broker-dealers, and based on management's knowledge of the current market. For prepayment-sensitive securities such as interest-only and principal-only strips, inverse floaters and credit-sensitive MBS and ABS securities, which represent beneficial interests in securitized financial assets that are not of high credit quality or that have been credit impaired, the effective yield is recalculated on a prospective basis. For all other MBS and ABS, the effective yield is recalculated on a retrospective basis.

Short-term Investments: Short-term investments include investments with remaining maturities of one year or less, but greater than three months, at the time of purchase. These investments are stated at fair value.

Assets Held in Separate Accounts: Assets held in separate accounts are reported at the fair values of the underlying investments in the separate accounts. The underlying investments include mutual funds, short-term investments, cash and fixed maturities.

Mortgage Loans on Real Estate: The Company's mortgage loans on real estate are all commercial mortgage loans, which are reported at amortized cost, less impairment write-downs and allowance for losses. If a mortgage loan is determined to be impaired (i.e., when it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement), the carrying value of the mortgage loan is reduced to the lower of either the present value of expected cash flows from the loan, discounted at the loan's original purchase yield, or fair value of the collateral. For those mortgages that are determined to require foreclosure, the carrying value is reduced to the fair value of the underlying collateral, net of estimated costs to obtain and sell at the point of foreclosure. The carrying value of the impaired loans is reduced by establishing a permanent write-down recorded in Other net realized capital gains (losses) in the Consolidated Statements of Operations. Property obtained from foreclosed mortgage loans is recorded in Other investments on the Consolidated Balance Sheets.

Mortgage loans are evaluated by the Company's investment professionals, including an appraisal of loan-specific credit quality, property characteristics and market trends. Loan performance is continuously monitored on a loan-specific basis throughout the year. The Company's review includes submitted appraisals, operating statements, rent revenues and annual inspection reports, among other items. This review evaluates whether the properties are performing at a consistent and acceptable level to secure the debt.

Mortgages are rated for the purpose of quantifying the level of risk. Those loans with higher risk are placed on a watch list and are closely monitored for collateral deficiency or other credit events that may lead to a potential loss of principal or interest. The Company defines delinquent mortgage loans consistent with industry practice as 60 days past due.

Commercial loans are placed on non-accrual status when 90 days in arrears if the Company has concerns regarding the collectability of future payments, or if a loan has matured without being paid off or extended. Factors considered may include conversations with the borrower, loss of major tenant, bankruptcy of borrower or major tenant, decreased property cash flow, number of days past due, or various other circumstances. Based on an assessment as to the collectability of the principal, a determination is made either to apply against the book value or apply according to the contractual terms of the loan. Funds recovered in excess of book value would then be applied to recover expenses, impairments, and then interest. Accrual of interest resumes after factors resulting in doubts about collectability have improved.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The Company records an allowance for probable losses incurred on non-impaired loans on an aggregate basis, rather than specifically identified probable losses incurred by individual loan.

Policy Loans: Policy loans are carried at an amount equal to the unpaid balance. Interest income on such loans is recorded as earned in Net investment income using the contractually agreed upon interest rate. Generally, interest is capitalized on the policy's anniversary date. Valuation allowances are not established for policy loans, as these loans are collateralized by the cash surrender value of the associated insurance contracts. Any unpaid principal or interest on the loan is deducted from the account value or the death benefit prior to settlement of the policy.

Limited Partnerships/Corporations: The Company uses the equity method of accounting for investments in limited partnership interests that are not consolidated, which primarily consist of investments in private equity funds, hedge funds and other VIEs for which the Company is not the primary beneficiary. Generally, the Company records its share of earnings using a lag methodology, relying on the most recent financial information available, generally not to exceed three months. The Company's earnings from limited partnership interests accounted for under the equity method are recorded in Net investment income.

Other Investments: Other investments are comprised primarily of Federal Home Loan Bank ("FHLB") stock and property obtained from foreclosed mortgage loans, as well as other miscellaneous investments. The Company is a member of the FHLB system and is required to own a certain amount of FHLB stock based on the level of borrowings and other factors. FHLB stock is carried at cost, classified as a restricted security and periodically evaluated for impairment based on ultimate recovery of par value.

Securities Lending: The Company engages in securities lending whereby certain securities from its portfolio are loaned to other institutions, through a lending agent, for short periods of time. The Company has the right to approve any institution with whom the lending agent transacts on its behalf. Initial collateral, primarily cash, is required at a rate of 102% of the market value of the loaned securities. The lending agent retains the collateral and invests it in short-term liquid assets on behalf of the Company. The market value of the loaned securities is monitored on a daily basis with additional collateral obtained or refunded as the market value of the loaned securities fluctuates. The lending agent indemnifies the Company against losses resulting from the failure of a counterparty to return securities pledged where collateral is insufficient to cover the loss.

Impairments

The Company evaluates its available-for-sale investments quarterly to determine whether there has been an other-than-temporary decline in fair value below the amortized cost basis. This evaluation process entails considerable judgment and estimation. Factors considered in this analysis include, but are not limited to, the length of time and the extent to which the fair value has been less than amortized cost, the issuer's financial condition and near-term prospects, future economic conditions and market forecasts, interest rate changes and changes in ratings of the security. An extended and severe unrealized loss position on a fixed maturity may not have any impact on: (a) the ability of the issuer to service all scheduled interest and principal payments and (b) the evaluation of recoverability of all contractual cash flows or the ability to recover an amount at least equal to its amortized cost based on the present value of the expected future cash flows to be collected.

When assessing the Company's intent to sell a security, or if it is more likely than not it will be required to sell a security before recovery of its amortized cost basis, management evaluates facts and circumstances such as, but not limited to, decisions to rebalance the investment portfolio and sales of investments to meet cash flow or capital needs.

When the Company has determined it has the intent to sell, or if it is more likely than not that the Company will be required to sell a security before recovery of its amortized cost basis, and the fair value has declined below amortized cost ("intent impairment"), the individual security is written down from amortized cost to fair value, and a corresponding charge is recorded in Net realized capital gains (losses) in the Consolidated Statements of Operations as an other-than-temporary impairment ("OTTI"). If the Company does not intend to sell the security, and it is not more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, but the Company has determined that there has been an other-than-temporary decline in fair value below the amortized cost basis, the OTTI is bifurcated into the amount representing the present value of the decrease in cash flows expected to be collected ("credit impairment") and the amount related to other factors ("noncredit impairment"). The credit impairment is recorded in Net realized capital gains (losses) in the Consolidated Statements of Operations. The noncredit impairment is recorded in Other comprehensive income (loss).



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The Company uses the following methodology and significant inputs to determine the amount of the OTTI credit loss:

•

When determining collectability and the period over which the value is expected to recover for U.S. and foreign corporate securities, foreign government securities and state and political subdivision securities, the Company applies the same considerations utilized in its overall impairment evaluation process, which incorporates information regarding the specific security, the industry and geographic area in which the issuer operates and overall macroeconomic conditions. Projected future cash flows are estimated using assumptions derived from the Company's best estimates of likely scenario-based outcomes, after giving consideration to a variety of variables that includes, but is not limited to: general payment terms of the security; the likelihood that the issuer can service the scheduled interest and principal payments; the quality and amount of any credit enhancements; the security's position within the capital structure of the issuer; possible corporate restructurings or asset sales by the issuer; and changes to the rating of the security or the issuer by rating agencies.

•

Additional considerations are made when assessing the unique features that apply to certain structured securities, such as subprime, Alt-A, non-agency RMBS, CMBS and ABS. These additional factors for structured securities include, but are not limited to: the quality of underlying collateral; expected prepayment speeds; loan-to-value ratios; debt service coverage ratios; current and forecasted loss severity; consideration of the payment terms of the underlying assets backing a particular security; and the payment priority within the tranche structure of the security.

•

When determining the amount of the credit loss for U.S. and foreign corporate securities, foreign government securities and state and political subdivision securities, the Company considers the estimated fair value as the recovery value when available information does not indicate that another value is more appropriate. When information is identified that indicates a recovery value other than estimated fair value, the Company considers in the determination of recovery value the same considerations utilized in its overall impairment evaluation process, which incorporates available information and the Company's best estimate of scenario-based outcomes regarding the specific security and issuer; possible corporate restructurings or asset sales by the issuer; the quality and amount of any credit enhancements; the security's position within the capital structure of the issuer; fundamentals of the industry and geographic area in which the security issuer operates; and the overall macroeconomic conditions.


•	The Company performs a discounted cash flow analysis comparing the current amortized cost of a security to the present value of future cash flows expected to be received, including estimated defaults and prepayments. The discount rate is generally the effective interest rate of the fixed maturity prior to impairment.

In periods subsequent to the recognition of the credit related impairment components of OTTI on a fixed maturity, the Company accounts for the impaired security as if it had been purchased on the measurement date of the impairment. Accordingly, the discount (or reduced premium) based on the new cost basis is accreted into Net investment income over the remaining term of the fixed maturity in a prospective manner based on the amount and timing of estimated future cash flows.

Derivatives

The Company's use of derivatives is limited mainly to economic hedging to reduce the Company's exposure to cash flow variability of assets and liabilities, interest rate risk, credit risk, exchange rate risk and market risk. It is the Company's policy not to offset amounts recognized for derivative instruments and amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral arising from derivative instruments executed with the same counterparty under a master netting arrangement.

The Company enters into interest rate, equity market, credit default and currency contracts, including swaps, futures, forwards, caps, floors and options, to reduce and manage various risks associated with changes in value, yield, price, cash flow or exchange rates of assets or liabilities held or intended to be held, or to assume or reduce credit exposure associated with a referenced asset, index or pool. The Company also utilizes options and futures on equity indices to reduce and manage risks associated with its universal life-type and annuity products. Derivative contracts are reported as Derivatives assets or liabilities on the Consolidated Balance Sheets at fair value. Changes in the fair value of derivatives are recorded in Other net realized capital gains (losses) in the Consolidated Statements of Operations.

To qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge as either (a) a hedge of the exposure to changes in the estimated fair value of a recognized asset or liability or an identified portion thereof that is attributable to a particular risk ("fair value hedge") or (b) a hedge of a forecasted transaction or of the variability of cash flows that is attributable to interest rate risk to be received or paid related to a recognized asset or liability ("cash flow hedge"). In this documentation, the Company sets forth how the hedging instrument is expected to hedge the designated risks related to the hedged item and sets forth



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

the method that will be used to retrospectively and prospectively assess the hedging instrument's effectiveness and the method that will be used to measure ineffectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and periodically throughout the life of the designated hedging relationship.


•	Fair Value Hedge: For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument, as well as the hedged item, to the extent of the risk being hedged, are recognized in Other net realized capital gains (losses) in the Consolidated Statements of Operations.

•

Cash Flow Hedge: For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is reported as a component of AOCI and reclassified into earnings in the same periods during which the hedged transaction impacts earnings in the same line item associated with the forecasted transaction. The ineffective portion of the derivative's change in value, if any, along with any of the derivative's change in value that is excluded from the assessment of hedge effectiveness, are recorded in Other net realized capital gains (losses) in the Consolidated Statements of Operations.

When hedge accounting is discontinued because it is determined that the derivative is no longer expected to be highly effective in offsetting changes in the estimated fair value or cash flows of a hedged item, the derivative continues to be carried on the Consolidated Balance Sheets at its estimated fair value, with subsequent changes in estimated fair value recognized currently in Other net realized capital gains (losses). The carrying value of the hedged asset or liability under a fair value hedge is no longer adjusted for changes in its estimated fair value due to the hedged risk, and the cumulative adjustment to its carrying value is amortized into income over the remaining life of the hedged item. Provided the hedged forecasted transaction is still probable of occurrence, the changes in estimated fair value of derivatives recorded in Other comprehensive income (loss) related to discontinued cash flow hedges are released into the Consolidated Statements of Operations when the Company's earnings are affected by the variability in cash flows of the hedged item.

When hedge accounting is discontinued because it is no longer probable that the forecasted transactions will occur on the anticipated date, or within two months of that date, the derivative continues to be carried on the Consolidated Balance Sheets at its estimated fair value, with changes in estimated fair value recognized currently in Other net realized capital gains (losses). Derivative gains and losses recorded in Other comprehensive income (loss) pursuant to the discontinued cash flow hedge of a forecasted transaction that is no longer probable are recognized immediately in Other net realized capital gains (losses).

The Company also has investments in certain fixed maturities and has issued certain universal life-type and annuity products that contain embedded derivatives for which fair value is at least partially determined by levels of or changes in domestic and/or foreign interest rates (short-term or long-term), exchange rates, prepayment rates, equity markets or credit ratings/spreads. Embedded derivatives within fixed maturities are included with the host contract on the Consolidated Balance Sheets, and changes in the fair value of the embedded derivatives are recorded in Other net realized capital gains (losses) in the Consolidated Statements of Operations. Embedded derivatives within certain universal life-type and annuity products are included in Future policy benefits on the Consolidated Balance Sheets, and changes in the fair value of the embedded derivatives are recorded in Other net realized capital gains (losses) in the Consolidated Statements of Operations.

In addition, the Company has entered into coinsurance with funds withheld reinsurance arrangements that contain embedded derivatives, the fair value of which is based on the change in the fair value of the underlying assets held in trust. The embedded derivatives within coinsurance with funds withheld reinsurance arrangements are reported with the host contract in Other liabilities on the Consolidated Balance Sheets, and changes in the fair value of embedded derivatives are recorded in Policyholder benefits in the Consolidated Statements of Operations.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, amounts due from banks and other highly liquid investments, such as money market instruments and debt instruments with maturities of three months or less at the time of purchase. Cash and cash equivalents are stated at fair value. Cash and cash equivalents of VIEs and VOEs are not available for general use by the Company.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles

DAC represents policy acquisition costs that have been capitalized and are subject to amortization and interest. Capitalized costs are incremental, direct costs of contract acquisition and certain other costs related directly to successful acquisition activities. Such costs consist principally of commissions, underwriting, sales and contract issuance and processing expenses directly related to the successful acquisition of new and renewal business. Indirect or unsuccessful acquisition costs, maintenance, product development and overhead expenses are charged to expense as incurred. VOBA represents the outstanding value of in-force business acquired and is subject to amortization and interest. The value is based on the present value of estimated net cash flows embedded in the insurance contracts at the time of the acquisition and increased for subsequent deferrable expenses on purchased policies.

Collectively, the Company refers to DAC, VOBA, deferred sales inducements ("DSI") and unearned revenue ("URR") as "DAC/VOBA and other intangibles." (See respective "Sales Inducements" and "Recognition of Insurance Revenue and Related Benefits" sections below). DAC/VOBA and other intangibles are adjusted for the impact of unrealized capital gains (losses) on investments, as if such gains (losses) have been realized, with corresponding adjustments included in AOCI.

Amortization Methodologies

The Company amortizes DAC and VOBA related to certain traditional life insurance contracts and certain accident and health insurance contracts over the premium payment period in proportion to the present value of expected gross premiums. Assumptions as to mortality, morbidity, persistency and interest rates, which include provisions for adverse deviation, are consistent with the assumptions used to calculate reserves for future policy benefits.

These assumptions are "locked-in" at issue and not revised unless the DAC or VOBA balance is deemed to be unrecoverable from future expected profits. Recoverability testing is performed for current issue year products to determine if gross premiums are sufficient to cover DAC or VOBA, estimated benefits and related expenses. In subsequent periods, the recoverability of DAC or VOBA is determined by assessing whether future gross premiums are sufficient to amortize DAC or VOBA, as well as provide for expected future benefits and related expenses. If a premium deficiency is deemed to be present, charges will be applied against the DAC and VOBA balances before an additional reserve is established. Absent such a premium deficiency, variability in amortization after policy issuance or acquisition relates only to variability in premium volumes.

The Company amortizes DAC and VOBA related to universal life-type contracts and fixed and variable deferred annuity contracts over the estimated lives of the contracts in relation to the emergence of estimated gross profits. Assumptions as to mortality, persistency, interest crediting rates, fee income, returns associated with separate account performance, impact of hedge performance, expenses to administer the business and certain economic variables, such as inflation, are based on the Company's experience and overall capital markets. At each valuation date, estimated gross profits are updated with actual gross profits, and the assumptions underlying future estimated gross profits are evaluated for continued reasonableness. Adjustments to estimated gross profits require that amortization rates be revised retroactively to the date of the contract issuance ("unlocking").

For universal life-type contracts and fixed and variable deferred annuity contracts, recoverability testing is performed for current issue year products to determine if gross profits are sufficient to cover DAC/VOBA and other intangibles, estimated benefits and related expenses. In subsequent years, the Company performs testing to assess the recoverability of DAC/VOBA and other intangibles on an annual basis, or more frequently if circumstances indicate a potential loss recognition issue exists. If DAC/VOBA or other intangibles are not deemed recoverable from future gross profits, charges will be applied against the DAC/VOBA or other intangible balances before an additional reserve is established.

Internal Replacements

Contract owners may periodically exchange one contract for another, or make modifications to an existing contract. These transactions are identified as internal replacements. Internal replacements that are determined to result in substantially unchanged contracts are accounted for as continuations of the replaced contracts. Any costs associated with the issuance of the new contracts are considered maintenance costs and expensed as incurred. Unamortized DAC/VOBA and other intangibles related to the replaced contracts continue to be deferred and amortized in connection with the new contracts. Internal replacements that are determined to result in contracts that are substantially changed are accounted for as extinguishments of the replaced contracts, and any unamortized DAC/VOBA and other intangibles related to the replaced contracts are written off to the same account in which amortization is reported in the Consolidated Statements of Operations.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Assumptions

Changes in assumptions can have a significant impact on DAC/VOBA and other intangible balances, amortization rates, reserve levels, and results of operations. Assumptions are management’s best estimate of future outcome.

Several assumptions are considered significant in the estimation of gross profits associated with the Company's variable products. One significant assumption is the assumed return associated with the variable account performance. To reflect the volatility in the equity markets, this assumption involves a combination of near-term expectations and long-term assumptions regarding market performance. The overall return on the variable account is dependent on multiple factors, including the relative mix of the underlying sub-accounts among bond funds and equity funds, as well as equity sector weightings. The Company uses a reversion to the mean approach, which assumes that the market returns over the entire mean reversion period are consistent with a long-term level of equity market appreciation. The Company monitors market events and only changes the assumption when sustained deviations are expected. This methodology incorporates a 9% long-term equity return assumption, a 14% cap and a five-year look-forward period.

Other significant assumptions used in the estimation of gross profits include mortality, and for products with credited rates include interest rate spreads and credit losses. Estimated gross revenues and gross profits of variable annuity contracts are sensitive to mortality and estimated policyholder behavior assumptions, such as surrender, lapse and annuitization rates.

Contract Costs Associated with Certain Financial Services Contracts

Contract cost assets represent costs incurred to obtain or fulfill a non-insurance financial services contract that are expected to be recovered and, thus, have been capitalized and are subject to amortization. Capitalized contract costs include incremental costs of obtaining a contract and fulfillment costs that relate directly to a contract and generate or enhance resources of the Company that are used to satisfy performance obligations.

The Company defers (1) incremental commissions and variable compensation paid to the Company's direct sales force, consultant channel, and intermediary partners, as a result of obtaining certain financial services contracts and (2) account set-up expenses on certain recordkeeping contracts. The Company expenses as incurred deferrable contract costs for which the amortization period would be one year or less and other contract-related costs. The Company periodically reviews contract cost assets for impairment. Capitalized contract costs are included in Other assets on the Consolidated Balance Sheets, and costs expensed as incurred are included in Operating expenses in the Consolidated Statements of Operations.

As of December 31, 2018, contract cost assets were $108. Capitalized contract costs are amortized on a straight-line basis over the estimated lives of the contracts, which typically range from 5 to 15 years. This method is consistent with the transfer of services to which the assets relate. For the year ended December 31, 2018, amortization expense of $24 was recorded in Operating expenses in the Consolidated Statement of Operations. There was no impairment loss in relation to the contract costs capitalized.

Future Policy Benefits and Contract Owner Account Balances

Future Policy Benefits

The Company establishes and carries actuarially-determined reserves that are calculated to meet its future obligations, including estimates of unpaid claims and claims that the Company believes have been incurred but have not yet been reported as of the balance sheet date. The principal assumptions used to establish liabilities for future policy benefits are based on Company experience and periodically reviewed against industry standards. These assumptions include mortality, morbidity, policy lapse, contract renewal, payment of subsequent premiums or deposits by the contract owner, retirement, investment returns, inflation, benefit utilization and expenses. Changes in, or deviations from, the assumptions used can significantly affect the Company's reserve levels and related results of operations.

•

Reserves for traditional life insurance contracts (term insurance, participating and non-participating whole life insurance and traditional group life insurance) and accident and health insurance represent the present value of future benefits to be paid to or on behalf of contract owners and related expenses, less the present value of future net premiums. Assumptions as to interest rates, mortality, expenses and persistency are based on the Company's estimates of anticipated experience at the period the policy is sold or acquired, including a provision for adverse deviation. Interest rates used to calculate the present value of these reserves ranged from 2.3% to 7.7%.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

•

Reserves for payout contracts with life contingencies are equal to the present value of expected future payments. Assumptions as to interest rates, mortality and expenses are based on the Company's estimates of anticipated experience at the period the policy is sold or acquired, including a provision for adverse deviation. Such assumptions generally vary by annuity plan type, year of issue and policy duration. Interest rates used to calculate the present value of future benefits ranged from 2.7% to 8.0%.

Although assumptions are "locked-in" upon the issuance of traditional life insurance contracts, certain accident and health insurance contracts and payout contracts with life contingencies, significant changes in experience or assumptions may require the Company to provide for expected future losses on a product by establishing premium deficiency reserves. Premium deficiency reserves are determined based on best estimate assumptions that exist at the time the premium deficiency reserve is established and do not include a provision for adverse deviation.

During the year ended December 31, 2017, as a result of the held for sale classification of substantially all of the Annuities and CBVA businesses discussed above, the Company has evaluated and redefined its contract groupings for loss recognition testing in those businesses. This has resulted in the establishment of premium deficiency reserves for the Retained Business of $43, which was recorded as an increase in Policyholder benefits in the Consolidated Statement of Operations, with a corresponding increase to Future policy benefits on the Consolidated Balance Sheet.

Contract Owner Account Balances

Contract owner account balances relate to universal life-type and investment-type contracts, as follows:


•	Account balances for funding agreements with fixed maturities are calculated using the amount deposited with the Company, less withdrawals, plus interest accrued to the ending valuation date. Interest on these contracts is accrued by a predetermined index, plus a spread or a fixed rate, established at the issue date of the contract.


•	Account balances for universal life-type contracts, including variable universal life ("VUL") contracts, are equal to cumulative deposits, less charges, withdrawals and account values released upon death, plus credited interest thereon.

•

Account balances for fixed annuities and payout contracts without life contingencies are equal to cumulative deposits, less charges and withdrawals, plus credited interest thereon. Credited interest rates vary by product and ranged up to 7.5% for the years 2018, 2017 and 2016. Account balances for group immediate annuities without life contingent payouts are equal to the discounted value of the payment at the implied break-even rate.


•	For fixed-indexed annuity ("FIA") and indexed universal life ("IUL") contracts, the aggregate initial liability is equal to the deposit received, plus a bonus, if applicable, and is split into a host component and an embedded derivative component. Thereafter, the host liability accumulates at a set interest rate, and the embedded derivative liability is recognized at fair value.

Product Guarantees and Additional Reserves

The Company calculates additional reserve liabilities for certain universal life-type products, certain variable annuity guaranteed benefits and variable funding products. The Company periodically evaluates its estimates and adjusts the additional liability balance, with a related charge or credit to benefit expense, if actual experience or other evidence suggests that earlier assumptions should be revised. Changes in, or deviations from, the assumptions used can significantly affect the Company's reserve levels and related results of operations.

Universal and Variable Life: Reserves for universal life ("UL") and VUL secondary guarantees and paid-up guarantees are calculated by estimating the expected value of death benefits payable and recognizing those benefits ratably over the accumulation period based on total expected assessments. The reserve for such products recognizes the portion of contract assessments received in early years used to compensate the Company for benefits provided in later years. Assumptions used, such as the interest rate, lapse rate and mortality, are consistent with assumptions used in estimating gross profits for purposes of amortizing DAC. Reserves for UL and VUL secondary guarantees and paid-up guarantees are recorded in Future policy benefits on the Consolidated Balance Sheets.

The Company also calculates a benefit ratio for each block of business that meets the requirements for additional reserves and calculates an additional reserve by accumulating amounts equal to the benefit ratio multiplied by the assessments for each period, reduced by excess benefits during the period. The additional reserve is accumulated at interest rates consistent with the DAC model for the period. The calculated reserve includes provisions for UL contracts that produce expected gains from the insurance benefit



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

function followed by losses from that function in later years. Additional reserves are recorded in Future policy benefits on the Consolidated Balance Sheets.

URR relates to UL and VUL products and represents policy charges for benefits or services to be provided in future periods (see "Recognition of Insurance Revenue and Related Benefits" below). The URR balance is recorded in Contract owner account balances on the Consolidated Balance Sheets.

GMDB and GMIB: Reserves for annuity guaranteed minimum death benefits ("GMDB") and guaranteed minimum income benefits ("GMIB") are determined by estimating the value of expected benefits in excess of the projected account balance and recognizing the excess ratably over the accumulation period based on total expected assessments. Expected experience is based on a range of scenarios. Assumptions used, such as the long-term equity market return, lapse rate and mortality, are consistent with assumptions used in estimating gross revenues for the purpose of amortizing DAC. The assumptions of investment performance and volatility are consistent with the historical experience of the appropriate underlying equity index, such as the Standard & Poor's ("S&P") 500 Index. In addition, the reserve for the GMIB incorporates assumptions for the likelihood and timing of the potential annuitizations that may be elected by the contract owner. In general, the Company assumes that GMIB annuitization rates will be higher for policies with more valuable ("in the money") guarantees, where the notional benefit amount is in excess of the account value. Reserves for GMDB and GMIB are recorded in Future policy benefits. Changes in reserves for GMDB and GMIB are reported in Policyholder benefits.

GMWBL, GMWB, FIA and IUL: The Company issues certain products that contain embedded derivatives that are measured at estimated fair value separately from the host contracts. These products include deferred variable annuity contracts containing guaranteed minimum withdrawal benefits with life payouts ("GMWBL") and guaranteed minimum withdrawal benefits without life contingencies ("GMWB") features and FIA and IUL contracts. Embedded derivatives associated with GMWB and GMWBL are recorded in Future policy benefits. Embedded derivatives associated with FIA and IUL contracts are recorded in Contract owner account balances. Changes in estimated fair value, that are not related to attributed fees or premiums collected or payments made, are reported in Other net realized capital gains (losses).

At inception of the contracts containing the GMWBL and GMWB features, the Company projects a fee to be attributed to the embedded derivative portion of the guarantee equal to the present value of projected future guaranteed benefits. After inception, the estimated fair value of the GMWBL and GMWB embedded derivatives is determined based on the present value of projected future guaranteed benefits, minus the present value of projected attributed fees. A risk neutral valuation methodology is used under which the cash flows from the guarantees are projected under multiple capital market scenarios using observable risk free rates. The projection of future guaranteed benefits and future attributed fees requires the use of assumptions for capital markets (e.g., implied volatilities, correlation among indices, risk-free swap curve, etc.) and policyholder behavior (e.g., lapse, benefit utilization, mortality, etc.).

The estimated fair value of the embedded derivative in the FIA contracts is based on the present value of the excess of interest payments to the contract owners over the growth in the minimum guaranteed contract value. The excess interest payments are determined as the excess of projected index driven benefits over the projected guaranteed benefits. The projection horizon is over the anticipated life of the related contracts, which takes into account best estimate actuarial assumptions, such as partial withdrawals, full surrenders, deaths, annuitizations and maturities.

The estimated fair value of the embedded derivative in the IUL contracts is based on the present value of the excess of interest payments to the contract owners over the growth in the minimum guaranteed account value. The excess interest payments are determined as the excess of projected index driven benefits over the projected guaranteed benefits. The projection horizon is over the current index term of the related contracts, which takes into account best estimate actuarial assumptions, such as partial withdrawals, full surrenders, deaths and maturities.

Stabilizer and MCG: Guaranteed credited rates give rise to an embedded derivative in the Stabilizer products and a stand-alone derivative for managed custody guarantee products ("MCG"). These derivatives are measured at estimated fair value and recorded in Contract owner account balances on the Consolidated Balance Sheets. Changes in estimated fair value, that are not related to attributed fees collected or payments made, are reported in Other net realized capital gains (losses) in the Consolidated Statements of Operations.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The estimated fair value of the Stabilizer embedded derivative and MCG stand-alone derivative is determined based on the present value of projected future claims, minus the present value of future guaranteed premiums. At inception of the contract, the Company projects a guaranteed premium to be equal to the present value of the projected future claims. The income associated with the contracts is projected using actuarial and capital market assumptions, including benefits and related contract charges, over the anticipated life of the related contracts. The cash flow estimates are projected under multiple capital market scenarios using observable risk-free rates and other best estimate assumptions.

The liabilities for the GMWBL, GMWB, FIA, IUL and Stabilizer embedded derivatives and the MCG stand-alone derivative (collectively, "guaranteed benefit derivatives") include a risk margin to capture uncertainties related to policyholder behavior assumptions. The margin represents additional compensation a market participant would require to assume these risks.

The discount rate used to determine the fair value of the liabilities for the GMWBL, GMWB, FIA, IUL and Stabilizer embedded derivatives and the MCG stand-alone derivative includes an adjustment to reflect the risk that these obligations will not be fulfilled ("nonperformance risk").

Separate Accounts

Separate account assets and liabilities generally represent funds maintained to meet specific investment objectives of contract owners or participants who bear the investment risk, subject, in limited cases, to minimum guaranteed rates. Investment income and investment gains and losses generally accrue directly to such contract owners. The assets of each account are legally segregated and are not subject to claims that arise out of any other business of the Company.

Separate account assets supporting variable options under variable annuity contracts are invested, as designated by the contract owner or participant under a contract, in shares of mutual funds that are managed by the Company or in other selected mutual funds not managed by the Company.

The Company reports separately, as assets and liabilities, investments held in the separate accounts and liabilities of separate accounts if:


•	Such separate accounts are legally recognized;


•	Assets supporting the contract liabilities are legally insulated from the Company's general account liabilities;


•	Investments are directed by the contract owner or participant; and


•	All investment performance, net of contract fees and assessments, is passed through to the contract owner.

The Company reports separate account assets that meet the above criteria at fair value on the Consolidated Balance Sheets based on the fair value of the underlying investments. Separate account liabilities equal separate account assets. Investment income and net realized and unrealized capital gains (losses) of the separate accounts, however, are not reflected in the Consolidated Statements of Operations, and the Consolidated Statements of Cash Flows do not reflect investment activity of the separate accounts.

Short-term and Long-term Debt

Short-term and long-term debt are carried on the Consolidated Balance Sheets at an amount equal to the unpaid principal balance, net of any remaining unamortized discount or premium and any direct and incremental costs attributable to issuance. Discounts, premiums and direct and incremental costs are amortized as a component of Interest expense in the Consolidated Statements of Operations over the life of the debt using the effective interest method of amortization.

Repurchase Agreements

The Company engages in dollar repurchase agreements with MBS ("dollar rolls") and repurchase agreements with other collateral types to increase its return on investments and improve liquidity. Such arrangements meet the requirements to be accounted for as financing arrangements.

The Company enters into dollar roll transactions by selling existing MBS and concurrently entering into an agreement to repurchase similar securities within a short time frame at a lower price. Under repurchase agreements, the Company borrows cash from a counterparty at an agreed upon interest rate for an agreed upon time frame and pledges collateral in the form of securities. At the



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

end of the agreement, the counterparty returns the collateral to the Company, and the Company, in turn, repays the loan amount along with the additional agreed upon interest.

The Company's policy requires that at all times during the term of the dollar roll and repurchase agreements that cash or other collateral types obtained is sufficient to allow the Company to fund substantially all of the cost of purchasing replacement assets. Cash received is generally invested in Short-term investments, with the offsetting obligation to repay the loan included within Payables under securities loan and repurchase agreements, including collateral held on the Consolidated Balance Sheets. The carrying value of the securities pledged in dollar rolls and repurchase agreement transactions is included in Securities pledged on the Consolidated Balance Sheets.

The primary risk associated with short-term collateralized borrowings is that the counterparty will be unable to perform under the terms of the contract. The Company's exposure is limited to the excess of the net replacement cost of the securities over the value of the short-term investments. The Company believes the counterparties to the dollar rolls and repurchase agreements are financially responsible and that the counterparty risk is minimal.

Recognition of Revenue

Insurance Revenue and Related Benefits

Premiums related to traditional life insurance contracts and payout contracts with life contingencies are recognized in Premiums in the Consolidated Statements of Operations when due from the contract owner. When premiums are due over a significantly shorter period than the period over which benefits are provided, any gross premium in excess of the net premium (i.e., the portion of the gross premium required to provide for expected future benefits and expenses) is deferred and recognized into revenue in a constant relationship to insurance in force. Benefits are recorded in Policyholder benefits in the Consolidated Statements of Operations when incurred.

Amounts received as payment for investment-type, universal life-type, fixed annuities, payout contracts without life contingencies and FIA contracts are reported as deposits to contract owner account balances. Revenues from these contracts consist primarily of fees assessed against the contract owner account balance for mortality and policy administration charges and are reported in Fee income. Surrender charges are reported in Other revenue. In addition, the Company earns investment income from the investment of contract deposits in the Company's general account portfolio, which is reported in Net investment income in the Consolidated Statements of Operations. Fees assessed that represent compensation to the Company for services to be provided in future periods and certain other fees are established as a URR liability and amortized into revenue over the expected life of the related contracts in proportion to estimated gross profits in a manner consistent with DAC for these contracts. URR is reported in Contract owner account balances and amortized into Fee income. Benefits and expenses for these products include claims in excess of related account balances, expenses of contract administration and interest credited to contract owner account balances.

Performance-based Capital Allocations on Private Equity Funds

Under asset management arrangements for certain of its sponsored private equity funds, the Company, as General Partner, is entitled to receive performance-based capital allocations ("carried interest") when the return on assets under management for such funds exceeds prescribed investment return hurdles or other performance targets. Carried interest is accrued quarterly based on measuring cumulative fund performance against the stated performance hurdle, as if the fund was liquidated at its estimated fair value as of the applicable balance sheet date.

Carried interest is subject to adjustment to the extent that subsequent fund performance causes the fund’s cumulative investment return to fall below specified investment return hurdles. In such a circumstance, some or all of the previously accrued carried interest is reversed to the extent that the Company is no longer entitled to the performance-based capital allocation and, if such allocations have been distributed to the Company but are subject to recoupment by the fund, a liability is established for the potential repayment obligation.

Financial Services Revenue

Revenue for various financial services is measured based on consideration specified in a contract with a customer and excludes any amounts collected on behalf of third parties. For advisory, asset management, and recordkeeping and administration services, the Company recognizes revenue as services are provided, generally over time. In addition, the Company may arrange for sub-advisory services for a customer under certain contracts. Revenue is recognized when the Company has satisfied a performance



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

obligation by transferring control of a service to a customer. Contract terms are typically less than one year, and consideration is generally variable and due as services are rendered.

For distribution and shareholder servicing revenue, the Company provides distribution services at a point in time and shareholder services over time. Such revenue is recognized when the Company has satisfied a performance obligation and related consideration is received. Contract terms are less than one year, and consideration is variable. For distribution services, revenue may be recognized in periods subsequent to when the Company has satisfied a performance obligation, as a component of related consideration is constrained under certain contracts.

For a description of principal activities by reportable segment from which the Company generates revenue, see the Segments Note in these Consolidated Financial Statements for further information.

Revenue for various financial services is recorded in Fee income or Other revenue in the Consolidated Statements of Operations.

Financial services revenue is disaggregated by type of service in the following tables. For the year ended December 31, 2018, such revenue represents approximately 28.4% of total Retirement revenue, all of Investment Management revenue, and 17.3% of Corporate revenue. Such revenue is immaterial for Employee Benefits and Individual Life. For the year ended December 31, 2018, a portion of the revenue recognized in the current period from distribution services is related to performance obligations satisfied in previous periods.



	Year Ended December 31, 2018
	Reportable Segments
	Retirement		Investment Management		Corporate
Service Line
Advisory	$	224	$	556	$	—
Asset management	—		159		—
Recordkeeping & administration	339		141		7
Distribution & shareholder servicing	260		178		31
Total financial services revenue	$	823	$	1,034	$	38

Receivables of $237 are included in Other assets on the Consolidated Balance Sheet as of December 31, 2018.

Income Taxes

The Company files a consolidated federal income tax return, which includes many of its subsidiaries, in accordance with the Internal Revenue Code of 1986, as amended.

Items required by tax regulations to be included in the tax return may differ from the items reflected in the financial statements. As a result, the effective tax rate reflected in the financial statements may be different than the actual rate applied on the tax return. Some of these differences are permanent, such as the dividends received deduction which is estimated using information from the prior period and current year results. Other differences are temporary, reversing over time, such as the valuation of insurance reserves, and create deferred tax assets and liabilities.

The Company's deferred tax assets and liabilities resulting from temporary differences between financial reporting and tax bases of assets and liabilities are measured at the balance sheet date using enacted tax rates expected to apply to taxable income in the years the temporary differences are expected to reverse.

Deferred tax assets represent the tax benefit of future deductible temporary differences, net operating loss carryforwards and tax credit carryforwards. The Company evaluates and tests the recoverability of its deferred tax assets. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. Considerable judgment and the use of estimates are required in determining whether a valuation



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

allowance is necessary and, if so, the amount of such valuation allowance. In evaluating the need for a valuation allowance, the Company considers many factors, including:


•	The nature, frequency and severity of book income or losses in recent years;


•	The nature and character of the deferred tax assets and liabilities;


•	The nature and character of income by life and non-life subgroups;


•	The recent cumulative book income (loss) position after adjustment for permanent differences;


•	Taxable income in prior carryback years;


•	Projected future taxable income, exclusive of reversing temporary differences and carryforwards;


•	Projected future reversals of existing temporary differences;


•	The length of time carryforwards can be utilized;


•	Prudent and feasible tax planning strategies the Company would employ to avoid a tax benefit from expiring unused; and


•	Tax rules that would impact the utilization of the deferred tax assets.

In establishing unrecognized tax benefits, the Company determines whether a tax position is more likely than not to be sustained under examination by the appropriate taxing authority. The Company also considers positions that have been reviewed and agreed to as part of an examination by the appropriate taxing authority. Tax positions that do not meet the more likely than not standard are not recognized in the Consolidated Financial Statements. Tax positions that meet this standard are recognized in the Consolidated Financial Statements. The Company measures the tax position as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate resolution with the tax authority that has full knowledge of all relevant information.

Reinsurance

The Company utilizes reinsurance agreements in most aspects of its insurance business to reduce its exposure to large losses. Such reinsurance permits recovery of a portion of losses from reinsurers, although it does not discharge the primary liability of the Company as direct insurer of the risks reinsured.

For each of its reinsurance agreements, the Company determines whether the agreement provides indemnification against loss or liability relating to insurance risk. The Company reviews contractual features, particularly those that may limit the amount of insurance risk to which the reinsurer is subject or features that delay the timely reimbursement of claims. The assumptions used to account for both long and short-duration reinsurance agreements are consistent with those used for the underlying contracts. Ceded Future policy benefits and Contract owner account balances are reported gross on the Consolidated Balance Sheets.

Long-duration: For reinsurance of long-duration contracts that transfer significant insurance risk, the difference, if any, between the amounts paid and benefits received related to the underlying contracts is included in the expected net cost of reinsurance, which is recorded as a component of the reinsurance asset or liability. Any difference between actual and expected net cost of reinsurance is recognized in the current period and included as a component of profits used to amortize DAC.

Short-duration: For prospective reinsurance of short-duration contracts that meet the criteria for reinsurance accounting, amounts paid are recorded as ceded premiums and ceded unearned premiums and are reflected as a component of Premiums in the Consolidated Statements of Operations and Other assets on the Consolidated Balance Sheets, respectively. Ceded unearned premiums are amortized through premiums over the remaining contract period in proportion to the amount of protection provided.

For retroactive reinsurance of short-duration contracts that meet the criteria for reinsurance accounting, amounts paid in excess of the related insurance liabilities ceded are recognized immediately as a loss. Any gains on such retroactive agreements are deferred in Other liabilities and amortized over the remaining life of the underlying contracts.

Accounting for reinsurance requires use of assumptions and estimates, particularly related to the future performance of the underlying business and the potential impact of counterparty credit risks. The Company periodically reviews actual and anticipated experience compared to the assumptions used to establish assets and liabilities relating to ceded and assumed reinsurance. The Company also evaluates the financial strength of potential reinsurers and continually monitors the financial condition of reinsurers. The S&P ratings for the Company's reinsurers with the largest reinsurance recoverable balances are A-rated or better, including Lincoln National Corporation ("Lincoln"), Hannover Life Reassurance Company of America ("Hannover US") and Hannover Re (Ireland) Limited ("HLRI") (collectively, "Hannover Re") and various subsidiaries of Reinsurance Group of America Incorporated (collectively, "RGA").



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Only those reinsurance recoverable balances deemed probable of recovery are recognized as assets on the Company's Consolidated Balance Sheets and are stated net of allowances for uncollectible reinsurance. Amounts currently recoverable and payable under reinsurance agreements are included in Premium receivable and reinsurance recoverable. Such assets and liabilities relating to reinsurance agreements with the same reinsurer are recorded net on the Consolidated Balance Sheets if a right of offset exists within the reinsurance agreement. Premiums, Fee income and Policyholder benefits are reported net of reinsurance ceded. Amounts received from reinsurers for policy administration are reported in Other revenue.

The Company has entered into coinsurance funds withheld reinsurance arrangements that contain embedded derivatives for which carrying value is estimated based on the change in the fair value of the assets supporting the funds withheld payable under the agreements.

Employee Benefits Plans

The Company sponsors and/or administers various plans that provide defined benefit pension and other postretirement benefit plans covering eligible employees, sales representatives and other individuals. The plans are generally funded through payments, determined by periodic actuarial calculations, to trustee-administered funds.

A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee will receive upon retirement, usually dependent on one or more factors such as age, years of service and compensation. The liability recognized in respect of defined benefit pension plans is the present value of the projected pension benefit obligation ("PBO") at the balance sheet date, less the fair value of plan assets, together with adjustments for unrecognized past service costs. This liability is included in Pension and other postretirement provisions on the Consolidated Balance Sheets. The PBO is defined as the actuarially calculated present value of vested and non-vested pension benefits accrued based on future salary levels. The Company recognizes the funded status of the PBO for pension plans and the accumulated postretirement benefit obligation ("APBO") for other postretirement plans on the Consolidated Balance Sheets.

Net periodic benefit cost is determined using management estimates and actuarial assumptions to derive service cost, interest cost and expected return on plan assets for a particular year. The obligations and expenses associated with these plans require use of assumptions, such as discount rate, expected rate of return on plan assets, rate of future compensation increases and healthcare cost trend rates, as well as assumptions regarding participant demographics, such as age of retirements, withdrawal rates and mortality. Management determines these assumptions based on a variety of factors, such as historical performance of the plan and its assets, currently available market and industry data and expected benefit payout streams. Actual results could vary significantly from assumptions based on changes, such as economic and market conditions, demographics of participants in the plans and amendments to benefits provided under the plans. These differences may have a significant effect on the Company's Consolidated Financial Statements and liquidity. Differences between the expected return and the actual return on plan assets and actuarial gains (losses) are immediately recognized in Operating expenses in the Consolidated Statements of Operations.

For postretirement healthcare and other benefits to retirees, the entitlement to these benefits is usually conditional on the employee remaining in service up to retirement age and the completion of a minimum service period. The expected costs of these benefits are accrued in Pension and other postretirement provisions over the period of employment using an accounting methodology similar to that for defined benefit pension plans. Actuarial gains (losses) are immediately recognized in Operating expenses in the Consolidated Statements of Operations.

Share-based Compensation

The Company grants certain employees and directors share-based compensation awards under various plans. Share-based compensation plans are subject to certain vesting conditions. The Company measures the cost of its share-based awards at their grant date fair value, which in the case of restricted stock units ("RSUs ") and performance share units ("PSUs") is based upon the market value of the Company's common stock on the date of grant. The Company grants certain PSU awards, which are subject to attainment of specified total shareholder return ("TSR") targets relative to a specified peer group. The number of TSR-based PSU awards expected to be earned, based on achievement of the market condition, is factored into the grant date Monte Carlo valuation for the award. Fair value of stock options is determined using a Black-Scholes options valuation methodology. Compensation expense is principally related to the granting of performance share units, restricted stock units and stock options



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

and is recognized in Operating expenses in the Consolidated Statements of Operations over the requisite service period. The majority of awards granted are provided in the first quarter of each year.

The liability related to cash-settled awards is recorded within Other liabilities on the Consolidated Balance Sheets. Unlike equity-settled awards, which have a fixed grant-date fair value, the fair value of unvested cash-settled awards is remeasured at the end of each reporting period until the awards vest.

Excess tax benefits recorded in Additional paid-in capital in 2016 and prior years are accounted for in a single pool available to all share-based compensation awards. Excess tax benefits in Additional paid-in capital are not recognized until the benefits result in a reduction in taxes payable. The Company uses tax law ordering when determining when excess tax benefits have been realized.

On a prospective basis from January 1, 2017, all excess tax benefits and tax deficiencies related to share-based compensation are reported in Net income (loss), rather than Additional paid-in capital.

Earnings per Common Share

Basic earnings per common share ("EPS") is computed by dividing earnings available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS is computed assuming the issuance of nonvested shares, restricted stock units, stock options, performance share units and warrants using the treasury stock method. Basic and diluted earnings per share are calculated using unrounded, actual amounts. Under the treasury stock method, the Company utilizes the average market price to determine the amount of cash that would be available to repurchase shares if the common shares vested. The net incremental share count issued represents the potential dilutive or anti-dilutive securities.

For any period where a loss from earnings available to common shareholders is experienced, shares used in the diluted EPS calculation represent basic shares, as using diluted shares would be anti-dilutive to the calculation.

Consolidation and Noncontrolling Interests

As of January 1, 2016, the Company changed its method for determining whether consolidation is required for VIEs and VOEs upon the adoption of Accounting Standards Update ("ASU") 2015-02, "Consolidation (Accounting Standards Codification ("ASC") Topic 810): Amendments to the Consolidation Analysis" ("ASU 2015-02").

In the normal course of business, the Company invests in, provides investment management services to, and has transactions with, various CLO entities, private equity funds, real estate funds, funds-of-hedge funds, single strategy hedge funds, insurance entities, securitizations and other investment entities. In certain instances, the Company serves as the investment manager, making day-to-day investment decisions concerning the assets of these entities. These entities are considered to be either VIEs or VOEs, and the consolidation guidance requires an assessment involving judgments and analysis to determine (a) whether an entity in which the Company holds a variable interest is a VIE and (b) whether the Company's involvement, through holding interests directly or indirectly in the entity or contractually through other variable interests (e.g., management and performance related fees), would give it a controlling financial interest.

The Company consolidates entities in which it, directly or indirectly, is determined to have a controlling financial interest. Consolidation conclusions are reviewed quarterly to identify whether any reconsideration events have occurred.

VIEs: The Company consolidates VIEs for which it is the primary beneficiary at the time it becomes involved with a VIE. An entity is a VIE if it has equity investors who, as a group, lack the characteristics of a controlling financial interest or it does not have sufficient equity at risk to finance its expected activities without additional subordinated financial support from other parties. The primary beneficiary (a) has the power to direct the activities of the entity that most significantly impact the entity's economic performance and (b) has the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the entity.

VOEs: For entities determined not to be VIEs, the Company consolidates entities in which it holds greater than 50% of the voting interest, or, for limited partnerships, when the Company owns a majority of the limited partnership's kick-out rights through voting interests.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Noncontrolling interest represents the interests of shareholders, other than the Company, in consolidated entities. In the Consolidated Statements of Operations, Net income (loss) attributable to noncontrolling interest represents such shareholders' interests in the earnings and losses of those entities, or the attribution of results from consolidated VIEs or VOEs to which the Company is not economically entitled.

Contingencies

A loss contingency is an existing condition, situation or set of circumstances involving uncertainty as to possible loss that will ultimately be resolved when one or more future events occur or fail to occur. Examples of loss contingencies include pending or threatened adverse litigation, threat of expropriation of assets and actual or possible claims and assessments. Amounts related to loss contingencies are accrued and recorded in Other liabilities on the Consolidated Balance Sheets if it is probable that a loss has been incurred and the amount can be reasonably estimated, based on the Company's best estimate of the ultimate outcome.

Adoption of New Pronouncements

The following table provides a description of the Company's adoption of new ASUs issued by the Financial Accounting Standards Board and the impact of the adoption on the Company's financial statements.



Standard	Description of Requirements	Effective date and method of adoption	Effect on the financial statements or other significant matters
ASU 2017-07, Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost	This standard, issued in March 2017, requires employers to report the service cost component of net periodic pension cost and net periodic postretirement benefit cost in the same line item as other compensation costs arising from services rendered by employees during the period. Other components of net benefit costs are required to be presented in the statement of operations separately from service costs. In addition, only service costs are eligible for capitalization in assets, when applicable.	January 1, 2018 using the retrospective method for the presentation of service costs and other components in the statement of operations, and using the prospective method for the capitalization of service costs in assets.	The adoption had no effect on the Company's financial condition, results of operations, or cash flows.
ASU 2017-05, Derecognition of Nonfinancial Assets	This standard, issued in February 2017, requires entities to apply certain recognition and measurement principles in ASU 2014-09, "Revenue from Contracts with Customers (ASC Topic 606)" (see Revenue from Contracts with Customers below) when they derecognize nonfinancial assets and in substance nonfinancial assets through sale or transfer, and the counterparty is not a customer.	January 1, 2018 using the modified retrospective method	The adoption had no effect on the Company's financial condition, results of operations, or cash flows.
ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments	This standard, issued in August 2016, addresses diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments provide guidance on eight specific cash flow issues.	January 1, 2018 using the retrospective method	Adoption of the ASU did not have a material impact on the Consolidated Statements of Cash Flows and had no effect on the Company's financial condition or results of operations.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)



Standard	Description of Requirements	Effective date and method of adoption	Effect on the financial statements or other significant matters
ASU 2016-09, Improvements to Employee Share-Based Payment Accounting	This standard, issued in March 2016, simplifies the accounting for share-based payment award transactions with respect to: • The income tax consequences of awards, • The impact of forfeitures on the recognition of expense for awards, • Classification of awards as either equity or liabilities, and • Classification on the statement of cash flows.	January 1, 2017 using the transition method prescribed for each applicable provision	The guidance was adopted using the various transition methods as prescribed by the ASU and did not have a material impact on the Company's financial condition, results of operations, or cash flows.
ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities	This standard, issued in January 2016, addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments, including requiring: • Equity investments (except those consolidated or accounted for under the equity method) to be measured at fair value with changes in fair value recognized in net income. • Elimination of the disclosure of methods and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost.	January 1, 2018 using the modified retrospective method, except for certain provisions that were required to be applied using the prospective method.	The impact to the January 1, 2018 Consolidated Balance Sheet was a $28 increase, net of tax, to Unappropriated retained earnings with a corresponding decrease of $28, net of tax, to Accumulated other comprehensive income to recognize the unrealized gain associated with Equity securities. The provisions that required prospective adoption had no effect on the Company's financial condition, results of operations, or cash flows. Under previous guidance, prior to January 1, 2018, Equity securities were classified as available for sale with changes in fair value recognized in Other comprehensive income.
ASU 2014-09, Revenue from Contracts with Customers	This standard, issued in May 2014, requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Revenue is recognized when, or as, the entity satisfies a performance obligation under the contract. ASU 2014-09 also updated the accounting for certain costs associated with obtaining and fulfilling contracts with customers and requires disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In addition, the FASB issued various amendments during 2016 to clarify the provisions and implementation guidance of ASU 2014-09. Revenue recognition for insurance contracts and financial instruments is explicitly scoped out of the guidance.	January 1, 2018 using the modified retrospective method.	The adoption had no impact on revenue recognition. However, the adoption resulted in a $106 increase in Other assets to capitalize costs to obtain and fulfill certain financial services contracts in the Retirement segment and Corporate. This adjustment was offset by a related $22 decrease in Deferred income taxes, resulting in a net $84 increase to Retained earnings (deficit) on the Consolidated Balance Sheet as of January 1, 2018. In addition, disclosures have been updated to reflect accounting policy changes made as a result of the implementation of ASU 2014-09. (See the Significant Accounting Policies section.) Comparative information has not been adjusted and continues to be reported under previous revenue recognition guidance. As of December 31, 2018, the adoption of ASU 2014-09 resulted in a $108 increase in Other assets, reduced by a related $23 decrease in Deferred income taxes, resulting in a net $85 increase to Retained earnings (deficit) on the Consolidated Balance Sheet. For the year ended December 31, 2018 , the adoption resulted in a $2 increase in Operating expenses on the Consolidated Statement of Operations and had no impact on Net cash provided by operating activities.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Future Adoption of Accounting Pronouncements

Long-Duration Contracts

In August 2018, the FASB issued ASU 2018-12, "Financial Services - Insurance (Topic 944) Targeted Improvements to the Accounting for Long-Duration Contracts" ("ASU 2018-12"), which changes the measurement and disclosures of insurance liabilities and deferred acquisition costs for long-duration contracts issued by insurers. The provisions of ASU 2018-12 are effective for fiscal years beginning after December 15, 2020, including interim periods, with early adoption permitted. The Company is currently in the process of evaluating the provisions of ASU 2018-12. While it is not possible to estimate the expected impact of adoption at this time, the Company believes there is a reasonable possibility that implementation of ASU 2018-12 may result in a significant impact on Shareholders’ equity and future earnings patterns.

In addition to requiring significantly expanded interim and annual disclosures regarding long-duration insurance contract assets and liabilities, ASU 2018-12's provisions include modifications to the accounting for such contracts in the following areas:



ASU 2018-12 Subject Area	Description of Requirements	Transition Provisions	Effect on the financial statements or other significant matters
Assumptions used to measure the liability for future policy benefits for nonparticipating traditional and limited payment insurance contracts	Requires insurers to review and, if necessary, update cash flow assumptions at least annually. The effect of updating cash flow assumptions will be measured on a retrospective catch-up basis and presented in the Statement of operations in the period in which the update is made. The rate used to discount the liability for future policy benefits will be required to be updated quarterly, with related changes in the liability recorded in Accumulated other comprehensive income. The discount rate will be based on an upper-medium grade fixed-income corporate instrument yield reflecting the duration characteristics of the relevant liabilities.	Initial adoption is required to be reported using either a full retrospective or modified retrospective approach. Under either method, upon adoption the liability for future policy benefits will be remeasured using current discount rates as of the beginning of the earliest period presented with the impact recorded as a cumulative effect adjustment to AOCI.	The application of periodic assumption updates for nonparticipating traditional and limited payment insurance contracts is significantly different from the current accounting approach for such liabilities, which is based on assumptions that are locked in at contract inception unless a premium deficiency occurs. Under the current accounting guidance, the liability discount rate is based on expected yields on the underlying investment portfolio held by the insurer. The implications of these requirements, including transition options, and related potential financial statement impacts are currently being evaluated.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)



ASU 2018-12 Subject Area	Description of Requirements	Transition Provisions	Effect on the financial statements or other significant matters
Measurement of market risk benefits	Creates a new category of benefit features called market risk benefits, defined as features that protect contract holders from capital market risk and expose the insurers to that risk. Market risk benefits will be required to be measured at fair value, with changes in fair value recognized in the Statement of operations, except for changes in fair value attributable to changes in the instrument-specific credit risk, which will be recorded in Accumulated other comprehensive income.	Full retrospective application is required. Upon adoption, any difference between the fair value and pre-adoption carrying value of market risk benefits not currently measured at fair value will be recorded to retained earnings. In addition, the cumulative effect of changes in instrument-specific credit risk will be reclassified from retained earnings to AOCI.	Under the current accounting guidance, certain features that are expected to meet the definition of market risk benefits are accounted for as either insurance liabilities (for example, GMDB and GMIB) or embedded derivatives (for example, GMWBL and GMWB). The implications of these requirements and related potential financial statement impacts are currently being evaluated.
Amortization of DAC and other balances	Requires DAC (and other balances that refer to the DAC model, such as deferred sales inducement costs and unearned revenue liabilities) for all long-duration contracts to be measured on a constant level basis over the expected life of the contract.	Initial adoption is required to be reported using either a full retrospective or modified retrospective approach. The method of transition applied for DAC and other balances must be consistent with the transition method selected for future policy benefit liabilities, as described above.	This approach is intended to approximate straight-line amortization and cannot be based on revenue or profits as it is under the current accounting model. Related amounts in AOCI will be eliminated upon adoption. ASU 2018-12 did not change the existing accounting guidance related to VOBA and net cost of reinsurance, which allows, but does not require, insurers to amortize such balances on a basis consistent with DAC. The implications of these requirements, including transition options, and related potential financial statement impacts are currently being evaluated.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The following table provides a description of future adoptions of other new accounting standards that may have an impact on the Company's financial statements when adopted:



Standard	Description of Requirements	Effective date and transition provisions	Effect on the financial statements or other significant matters
ASU 2018-15, Implementation costs incurred in a cloud computing arrangement that is a service contract	This standard, issued in August 2018, requires a customer in a hosting arrangement that is a service contract to follow the guidance for internal-use software projects to determine which implementation costs to capitalize as an asset. Capitalized implementation costs are required to be expensed over the term of the hosting arrangement. In addition, a customer is required to apply the impairment and abandonment guidance for long-lived assets to the capitalized implementation costs. Balances related to capitalized implementation costs must be presented in the same financial statement line items as other hosting arrangement balances, and additional disclosures are required.	January 1, 2020 with early adoption permitted. Initial adoption of ASU 2018-15 may be reported either on a prospective or retrospective basis.	The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2018-15.
ASU 2018-14, Changes to the Disclosure Requirements for Defined Benefit Plans	This standard, issued in August 2018, eliminates certain disclosure requirements that are no longer considered cost beneficial and requires new disclosures that are considered relevant.	January 1, 2021 with early adoption permitted. Initial adoption of ASU 2018-14 is required to be reported on a retrospective basis for all periods presented.	The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2018-14.
ASU 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement	This standard, issued in August 2018, simplifies certain disclosure requirements for fair value measurement.	January 1, 2020, including interim periods, with early adoption permitted. The transition method varies by provision.	The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2018-13.
ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income	This standard, issued in February 2018, permits a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 ("Tax Reform"). Stranded tax effects arise because U.S. GAAP requires that the impact of a change in tax laws or rates on deferred tax liabilities and assets be reported in net income, even if related to items recognized within accumulated other comprehensive income. The amount of the reclassification would be based on the difference between the historical corporate income tax rate and the newly enacted 21% corporate income tax rate, applied to deferred tax liabilities and assets reported within accumulated other comprehensive income.	January 1, 2019 with early adoption permitted. Initial adoption of ASU 2018-02 may be reported either in the period of adoption or on a retrospective basis in each period in which the effect of the change in the U.S. federal corporate income tax rate resulting from Tax Reform is recognized.	The Company intends to adopt ASU 2018-02 as of January 1, 2019. Adoption is expected to result in an increase to Accumulated other comprehensive income of approximately $343, with a corresponding decrease in Retained earnings.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)



Standard	Description of Requirements	Effective date and transition provisions	Effect on the financial statements or other significant matters
ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities	This standard, issued in August 2017, enables entities to better portray risk management activities in their financial statements, as follows: • Expands an entity's ability to hedge nonfinancial and financial risk components and reduces complexity in accounting for fair value hedges of interest rate risk, • Eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item, • Eases certain documentation and assessment requirements and modifies the accounting for components excluded from the assessment of hedge effectiveness, and modifies required disclosures. In October 2018, the FASB issued an amendment which expands the list of U.S. benchmark interest rates permitted in the application of hedge accounting.	January 1, 2019, including interim periods, with early adoption permitted. Initial adoption of ASU 2017-12 is required to be reported using a modified retrospective approach, with the exception of the presentation and disclosure requirements which are required to be applied prospectively.	The Company does not expect ASU 2017-12 to have material impact on the Company's financial condition, results of operations, or cash flows.
ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities	This standard, issued in March 2017, shortens the amortization period for certain callable debt securities held at a premium by requiring the premium to be amortized to the earliest call date.	January 1, 2019, including interim periods, with early adoption permitted. Initial adoption of ASU 2017-08 is required to be reported using a modified retrospective approach.	The Company does not expect ASU 2017-08 to have material impact on the Company's financial condition, results of operations, or cash flows.
ASU 2016-13, Measurement of Credit Losses on Financial Instruments	This standard, issued in June 2016: • Introduces a new current expected credit loss ("CECL") model to measure impairment on certain types of financial instruments, • Requires an entity to estimate lifetime expected credit losses, under the new CECL model, based on relevant information about historical events, current conditions, and reasonable and supportable forecasts, • Modifies the impairment model for available-for-sale debt securities, and • Provides a simplified accounting model for purchased financial assets with credit deterioration since their origination.	January 1, 2020, including interim periods, with early adoption permitted. Initial adoption of ASU 2016-13 is required to be reported on a modified retrospective basis, with a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption, except for certain provisions that are required to be applied prospectively.	The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2016-13.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)



Standard	Description of Requirements	Effective date and transition provisions	Effect on the financial statements or other significant matters
ASU 2016-02, Leases	This standard, issued in February 2016, requires lessees to recognize a right-of-use asset and a lease liability for all leases with terms of more than 12 months. The lease liability will be measured as the present value of the lease payments, and the asset will be based on the liability. For income statement purposes, expense recognition will depend on the lessee's classification of the lease as either finance, with a front-loaded amortization expense pattern similar to current capital leases, or operating, with a straight-line expense pattern similar to current operating leases. Lessor accounting will be similar to the current model, and lessors will be required to classify leases as operating, direct financing, or sales-type. ASU 2016-02 also replaces the sale-leaseback guidance to align with the new revenue recognition standard, addresses statement of operation and statement of cash flow classification, and requires additional disclosures for all leases. In addition, the FASB issued various amendments during 2018 to clarify and simplify the provisions and implementation guidance of ASU 2016-02.	January 1, 2019, including interim periods, on a modified retrospective basis and with early adoption permitted. In July 2018, the FASB issued an amendment that adds an optional transition method to apply the guidance on a modified retrospective basis at the adoption date, which is January 1, 2019.	The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2016-02. Upon adoption, the Company expects to apply the optional transition method and record a right-of-use asset and lease liability on the Consolidated Balance Sheet related to existing operating leases. The Company currently estimates that the amount of the right-of-use asset and lease liability recorded upon adoption will be less than $150. Any new lease arrangements and/or significant modifications entered into subsequent to the adoption date will be accounted for in accordance with the new standard.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

2. Discontinued Operations

As noted in the Business, Basis of Presentation and Significant Accounting Policies Note, on June 1, 2018, the Company closed the transaction with VA Capital and Athene (the "Buyers") pursuant to which Venerable acquired two of the Company’s subsidiaries, VIAC and DSL. The transaction resulted in the disposition of substantially all of the Company’s CBVA and Annuities businesses.

The purchase price for VIAC was equal to the difference between the Required Adjusted Book Value (as defined in the MTA) and the Statutory capital in VIAC at closing, after giving effect to certain restructuring and other pre-sale transactions, including the reinsurance of the fixed and fixed indexed annuity business of VIAC to affiliates in Athene. Following the closing of the Transaction, the Company, through its other insurance subsidiaries, continues to own surplus notes issued by VIAC in an aggregate principal amount of $350 and acquired a 9.99% equity interest in VA Capital. The investment in surplus notes is reported in Fixed maturities, available-for-sale on the Company's Consolidated Balance Sheet as of December, 31, 2018. In the summary of major categories of assets and liabilities related to discontinued operations as of December 31, 2017 presented below, VIAC's corresponding liability for the surplus notes is included in Notes payable.

Pursuant to the terms of the MTA and prior to the closing of the Transaction, VIAC undertook certain restructuring transactions, including reinsurance, with several affiliates in order to transfer business and assets into and out of VIAC from and to the Company's affiliates. See the Reinsurance Note to the Consolidated Financial Statements for further information.

In connection with the closing, Voya Investment Management Co., LLC ("Voya IM") or its affiliated advisors, entered into one or more agreements to perform asset management and ancillary services for Venerable as part of the transaction. As part of the agreements, Voya IM will serve as the preferred asset management partner for Venerable. Under the agreements, subject to certain criteria, Voya IM will manage and service certain assets, including, for at least five years following the closing of the transaction, certain general account assets. The Company and Voya IM also agreed to provide certain transitional services to Venerable following the closing of the Transaction. The length of each service varies depending on the type of service provided.

The Company has determined that the CBVA and Annuities businesses disposed of in the Transaction meet the criteria to be classified as discontinued operations and that the sale represents a strategic shift that has a major effect on the Company’s operations. Accordingly, the results of operations of the businesses sold have been presented as discontinued operations in the accompanying Consolidated Statements of Operations and Consolidated Statements of Cash Flows for all periods presented, and the assets and liabilities of the businesses sold were classified as held for sale in the Consolidated Balance Sheet as of December 31,2017.

The results of discontinued operations are reported in "Income (loss) from discontinued operations, net of tax" in the accompanying Consolidated Statements of Operations for all periods presented. As of December 31, 2017, the Company recorded an estimated loss on sale, net of tax of $2,423 which included estimated transaction costs of $31 as well as the loss of $692 of deferred tax assets to write down the assets of the business sold to fair value less the cost to sell as of December 31, 2017. Income (loss) from discontinued operations, net of tax, for the year ended December 31, 2018 includes a favorable adjustment to the estimated loss on sale of $505, net of tax.The loss on sale, net of tax, as of December 31, 2018 of $1,918, which includes the loss of $460 of deferred tax assets, represents the excess of the estimated carrying value, immediately prior to the sale of the businesses classified as discontinued operations over the purchase price, which approximates fair value, less cost to sell. Additionally, in connection with the Transaction, the Company reversed $79 of other comprehensive income, net of tax that was previously recorded and related to the Annuity and CBVA businesses sold.

As required by the MTA, VA Capital provided the Company with its proposed purchase price adjustments in December 2018. By way of a dispute notice provided to VA Capital in January 2019, the Company has formally objected to each of these proposed adjustments. The MTA requires the parties to attempt to resolve these differences in an informal manner prior to entering a formal arbitration phase. Whether or not arbitration is required, the Company expects this matter to be resolved during the first or second quarter of 2019. Applicable accounting principles require the Company to estimate and disclose any reasonably possible loss associated with VA Capital’s purchase price adjustment claims, even in a circumstance where the Company believes that it will prevail on the merits. Solely for this purpose, the Company estimates that this reasonably possible loss is in a range between $0 and $100.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The following table summarizes the major categories of assets and liabilities disposed of in the Transaction and classified as held for sale in the accompanying Consolidated Balance Sheet as of December 31, 2017:



	December 31, 2017
Assets:
Total investments	$	29,809
Cash and cash equivalents	498
Short-term investments under securities loan agreements, including collateral delivered	473
Deferred policy acquisition costs, Value of business acquired and Sales inducements	1,001
Deferred income taxes	404
Other assets⁽¹⁾	396
Assets held in separate accounts	28,894
Write-down of businesses held for sale to fair value less cost to sell	(2,423		)
Total assets held for sale	$	59,052

Liabilities:
Future policy benefits and contract owner account balances	$	27,065
Payables under securities loan and repurchase agreements, including collateral held	1,152
Derivatives	782
Notes payable	350
Other liabilities	34
Liabilities related to separate accounts	28,894
Total liabilities held for sale	$	58,277

⁽¹⁾ Includes Other assets, Accrued investment income, Premium receivable and reinsurance recoverable.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The following table summarizes the components of Income (loss) from discontinued operations, net of tax for the years ended December 31, 2018, 2017 and 2016:



	Year Ended December 31,
	2018 ⁽¹⁾			2017			2016
Revenues:
Net investment income	$	510		$	1,266		$	1,288
Fee income	295			801			889
Premiums	(50		)	190			720
Total net realized capital losses	(345		)	(1,234		)	(900		)
Other revenue	10			19			19
Total revenues	420			1,042			2,016
Benefits and expenses:
Interest credited and other benefits to contract owners/policyholders	442			978			2,199
Operating expenses	(14		)	250			283
Net amortization of Deferred policy acquisition costs and Value of business acquired	49			127			136
Interest expense	10			22			22
Total benefits and expenses	487			1,377			2,640
Income (loss) from discontinued operations before income taxes	(67		)	(335		)	(624		)
Income tax expense (benefit)	(19		)	(178		)	(287		)
Loss on sale, net of tax	505			(2,423		)	—
Income (loss) from discontinued operations, net of tax	$	457		$	(2,580	)	$	(337	)

⁽¹⁾ Reflects Income (loss) from discontinued operations, net of tax for the five months ended May 31, 2018 (the Transaction closed on June 1, 2018).



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

3. Investments (excluding Consolidated Investment Entities)

Fixed Maturities and Equity Securities

Available-for-sale and FVO fixed maturities were as follows as of December 31, 2018:



	Amortized Cost		Gross Unrealized Capital Gains		Gross Unrealized Capital Losses		Embedded Derivatives⁽²⁾		Fair Value		OTTI⁽³⁾⁽⁴⁾
Fixed maturities:
U.S. Treasuries	$	1,937	$	360	$	2	$	—	$	2,295	$	—
U.S. Government agencies and authorities	204		38		—		—		242		—
State, municipalities and political subdivisions	1,652		29		22		—		1,659		—
U.S. corporate public securities	19,210		1,053		415		—		19,848		—
U.S. corporate private securities	6,264		138		170		—		6,232		—
Foreign corporate public securities and foreign governments⁽¹⁾	5,429		193		167		—		5,455		—
Foreign corporate private securities⁽¹⁾	5,176		70		152		—		5,094		—
Residential mortgage-backed securities:
Agency	2,916		138		34		14		3,034		—
Non-Agency	1,700		76		19		12		1,769		11
Total Residential mortgage-backed securities	4,616		214		53		26		4,803		11
Commercial mortgage-backed securities	3,438		33		55		—		3,416		—
Other asset-backed securities	2,095		30		48		—		2,077		2
Total fixed maturities, including securities pledged	50,021		2,158		1,084		26		51,121		13
Less: Securities pledged	1,824		107		64		—		1,867		—
Total fixed maturities	$	48,197	$	2,051	$	1,020	$	26	$	49,254	$	13

⁽¹⁾ Primarily U.S. dollar denominated.

⁽²⁾ Embedded derivatives within fixed maturity securities are reported with the host investment. The changes in fair value of embedded derivatives are reported in Other net realized capital gains (losses) in the Consolidated Statements of Operations.

⁽³⁾ Represents OTTI reported as a component of Other comprehensive income (loss).

⁽⁴⁾ Amount excludes $300 of net unrealized gains on impaired available-for-sale securities.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Available-for-sale and FVO fixed maturities and equity securities were as follows as of December 31, 2017:



	Amortized Cost		Gross Unrealized Capital Gains		Gross Unrealized Capital Losses		Embedded Derivatives⁽²⁾		Fair Value		OTTI⁽³⁾⁽⁴⁾
Fixed maturities:
U.S. Treasuries	$	2,047	$	477	$	2	$	—	$	2,522	$	—
U.S. Government agencies and authorities	223		52		—		—		275		—
State, municipalities and political subdivisions	1,856		68		11		—		1,913		—
U.S. corporate public securities	20,857		2,451		50		—		23,258		—
U.S. corporate private securities	5,628		255		50		—		5,833		—
Foreign corporate public securities and foreign governments⁽¹⁾	5,241		493		18		—		5,716		—
Foreign corporate private securities⁽¹⁾	4,974		251		64		—		5,161		10

Residential mortgage-backed securities:
Agency	2,990		164		30		21		3,145		—
Non-Agency	1,257		110		4		16		1,379		16
Total Residential mortgage-backed securities	4,247		274		34		37		4,524		16
Commercial mortgage-backed securities	2,646		69		11		—		2,704		—
Other asset-backed securities	1,488		43		3		—		1,528		3

Total fixed maturities, including securities pledged	49,207		4,433		243		37		53,434		29
Less: Securities pledged	1,823		284		20		—		2,087		—
Total fixed maturities	47,384		4,149		223		37		51,347		29

Equity securities:
Common stock	272		1		—		—		273		—
Preferred stock	81		26		—		—		107		—
Total equity securities	353		27		—		—		380		—

Total fixed maturities and equity securities investments	$	47,737	$	4,176	$	223	$	37	$	51,727	$	29

⁽¹⁾ Primarily U.S. dollar denominated.

⁽³⁾ Represents OTTI reported as a component of Other comprehensive income (loss).

⁽⁴⁾ Amount excludes $441 of net unrealized gains on impaired available-for-sale securities.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The amortized cost and fair value of fixed maturities, including securities pledged, as of December 31, 2018, are shown below by contractual maturity. Actual maturities may differ from contractual maturities as securities may be restructured, called or prepaid. MBS and Other ABS are shown separately because they are not due at a single maturity date.



	Amortized Cost		Fair Value
Due to mature:
One year or less	$	1,081	$	1,089
After one year through five years	7,371		7,406
After five years through ten years	9,814		9,715
After ten years	21,606		22,615
Mortgage-backed securities	8,054		8,219
Other asset-backed securities	2,095		2,077
Fixed maturities, including securities pledged	$	50,021	$	51,121

The investment portfolio is monitored to maintain a diversified portfolio on an ongoing basis. Credit risk is mitigated by monitoring concentrations by issuer, sector and geographic stratification and limiting exposure to any one issuer.

As of December 31, 2018 and 2017, the Company did not have any investments in a single issuer, other than obligations of the U.S. Government and government agencies, with a carrying value in excess of 10% of the Company’s Total shareholders' equity.

The following tables present the composition of the U.S. and foreign corporate securities within the fixed maturity portfolio by industry category as of the dates indicated:



	Amortized Cost		Gross Unrealized Capital Gains		Gross Unrealized Capital Losses		Fair Value
December 31, 2018
Communications	$	2,554	$	162	$	35	$	2,681
Financial	5,200		293		90		5,403
Industrial and other companies	15,591		487		422		15,656
Energy	4,034		194		143		4,085
Utilities	6,560		253		158		6,655
Transportation	1,281		47		32		1,296
Total	$	35,220	$	1,436	$	880	$	35,776

December 31, 2017
Communications	$	2,587	$	341	$	4	$	2,924
Financial	5,094		487		5		5,576
Industrial and other companies	16,478		1,391		98		17,771
Energy	4,268		459		45		4,682
Utilities	6,243		607		22		6,828
Transportation	1,295		121		4		1,412
Total	$	35,965	$	3,406	$	178	$	39,193



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Fixed Maturities

The Company invests in various categories of CMOs, including CMOs that are not agency-backed, that are subject to different degrees of risk from changes in interest rates and defaults. The principal risks inherent in holding CMOs are prepayment and extension risks related to significant decreases and increases in interest rates resulting in the prepayment of principal from the underlying mortgages, either earlier or later than originally anticipated. As of December 31, 2018 and 2017, approximately 41.6% and 43.2%, respectively, of the Company's CMO holdings, were invested in the above mentioned types of CMOs such as interest-only or principal-only strips, that are subject to more prepayment and extension risk than traditional CMOs.

Public corporate fixed maturity securities are distinguished from private corporate fixed maturity securities based upon the manner in which they are transacted. Public corporate fixed maturity securities are issued initially through market intermediaries on a registered basis or pursuant to Rule 144A under the Securities Act of 1933 (the "Securities Act") and are traded on the secondary market through brokers acting as principal. Private corporate fixed maturity securities are originally issued by borrowers directly to investors pursuant to Section 4(a)(2) of the Securities Act, and are traded in the secondary market directly with counterparties, either without the participation of a broker or in agency transactions.

Repurchase Agreements

As of December 31, 2018 and 2017, the Company did not have any securities pledged in dollar rolls or reverse repurchase agreements. As of December 31, 2018, the carrying value of securities pledged and obligation to repay loans related to repurchase agreement transactions was $45 and $46, respectively, and included in Securities pledged and Payables under securities loan and repurchase agreements, including collateral held, respectively, on the Consolidated Balance Sheets. Securities pledged related to repurchase agreements are comprised of other asset-backed securities. As of December 31, 2017, the Company did not have any securities pledged in repurchase agreement transactions.

Securities Lending

As of December 31, 2018 and 2017, the fair value of loaned securities was $1,635 and $1,854, respectively, and is included in Securities pledged on the Consolidated Balance Sheets.

If cash is received as collateral, the lending agent retains the cash collateral and invests it in short-term liquid assets on behalf of the Company.As of December 31, 2018 and 2017, cash collateral retained by the lending agent and invested in short-term liquid assets on the Company's behalf was $1,581 and $1,589, respectively, and is recorded in Short-term investments under securities loan agreements, including collateral delivered on the Consolidated Balance Sheets. As of December 31, 2018 and 2017, liabilities to return collateral of $1,581 and $1,589, respectively, are included in Payables under securities loan and repurchase agreements, including collateral held on the Consolidated Balance Sheets.

The Company accepts non-cash collateral in the form of securities. The securities retained as collateral by the lending agent may not be sold or re-pledged, except in the event of default, and are not reflected on the Company’s Consolidated Balance Sheets. This collateral generally consists of U.S. Treasury, U.S. Government agency securities and MBS pools. As of December 31, 2018 and 2017, the fair value of securities retained as collateral by the lending agent on the Company’s behalf was $111 and $308, respectively.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The following table presents borrowings under securities lending transactions by asset class pledged for the dates indicated:



	December 31, 2018 ⁽¹⁾⁽²⁾		December 31, 2017 ⁽¹⁾⁽²⁾
U.S. Treasuries	$	337	$	587
U.S. Government agencies and authorities	7		5
U.S. corporate public securities	992		967
Equity Securities	1		—
Foreign corporate public securities and foreign governments	355		338
Payables under securities loan agreements	$	1,692	$	1,897

⁽¹⁾ As of December 31, 2018 and 2017, borrowings under securities lending transactions include cash collateral of $1,581 and $1,589, respectively.

⁽²⁾ As of December 31, 2018 and 2017, borrowings under securities lending transactions include non-cash collateral of $111 and $308, respectively.

The Company's securities lending activities are conducted on an overnight basis, and all securities loaned can be recalled at any time. The Company does not offset assets and liabilities associated with its securities lending program.

Unrealized Capital Losses

Unrealized capital losses (including noncredit impairments), along with the fair value of fixed maturity securities, including securities pledged, by market sector and duration were as follows as of December 31, 2018:



	Six Months or Less Below Amortized Cost				More Than Six Months and Twelve Months or Less Below Amortized Cost				More Than Twelve Months Below Amortized Cost				Total
	Fair Value		Unrealized Capital Losses		Fair Value		Unrealized Capital Losses		Fair Value		Unrealized Capital Losses		Fair Value		Unrealized Capital Losses
U.S. Treasuries	$	—	$	—	$	24	$	—	$	94	$	2	$	118	$	2
State, municipalities and political subdivisions	140		1		383		9		241		12		764		22
U.S. corporate public securities	2,701		81		3,843		224		972		110		7,516		415
U.S. corporate private securities	951		21		1,397		47		888		102		3,236		170
Foreign corporate public securities and foreign governments	992		28		1,387		91		314		48		2,693		167
Foreign corporate private securities	859		14		1,271		99		403		39		2,533		152
Residential mortgage-backed	500		9		397		9		602		35		1,499		53
Commercial mortgage-backed	854		13		701		20		550		22		2,105		55
Other asset-backed	834		21		602		25		98		2		1,534		48
Total	$	7,831	$	188	$	10,005	$	524	$	4,162	$	372	$	21,998	$	1,084

*Less than $1.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)



	Six Months or Less Below Amortized Cost				More Than Six Months and Twelve Months or Less Below Amortized Cost					More Than Twelve Months Below Amortized Cost					Total
	Fair Value		Unrealized Capital Losses		Fair Value		Unrealized Capital Losses			Fair Value		Unrealized Capital Losses			Fair Value		Unrealized Capital Losses
U.S. Treasuries	$	166	$	2	$	—	$	—		$	15	$	—	*	$	181	$	2
State, municipalities and political subdivisions	356		9		6		—			35		2			397		11
U.S. corporate public securities	1,399		47		8		—			114		3			1,521		50
U.S. corporate private securities	1,068		46		—		—			84		4			1,152		50
Foreign corporate public securities and foreign governments	463		17		6		—			26		1			495		18
Foreign corporate private securities	493		64		9		—			8		—			510		64
Residential mortgage-backed	967		32		6		—			81		2			1,054		34
Commercial mortgage-backed	756		10		18		—			86		1			860		11
Other asset-backed	374		3		4		—		*	27		—			405		3
Total	$	6,042	$	230	$	57	$	—		$	476	$	13		$	6,575	$	243

*Less than $1.

Of the unrealized capital losses aged more than twelve months, the average market value of the related fixed maturities was 91.8% and 97.3% of the average book value as of December 31, 2018 and 2017, respectively.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Unrealized capital losses (including noncredit impairments) in fixed maturities, including securities pledged, for instances in which fair value declined below amortized cost by greater than or less than 20% for consecutive months as indicated in the tables below, were as follows as of the dates indicated:



	Amortized Cost				Unrealized Capital Losses				Number of Securities
	< 20%		> 20%		< 20%		> 20%		< 20%	> 20%
December 31, 2018
Six months or less below amortized cost	$	8,131	$	197	$	204	$	50	1,023	30
More than six months and twelve months or less below amortized cost	10,364		117		473		44		1,314	9
More than twelve months below amortized cost	4,154		119		271		42		702	11
Total	$	22,649	$	433	$	948	$	136	3,039	50

December 31, 2017
Six months or less below amortized cost	$	6,126	$	196	$	148	$	82	1,098	38
More than six months and twelve months or less below amortized cost	48		—		1		—		14	—
More than twelve months below amortized cost	448		—		12		—		87	—
Total	$	6,622	$	196	$	161	$	82	1,199	38



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Unrealized capital losses (including noncredit impairments) in fixed maturities, including securities pledged, by market sector for instances in which fair value declined below amortized cost by greater than or less than 20% were as follows as of the dates indicated:



	Amortized Cost				Unrealized Capital Losses				Number of Securities
	< 20%		> 20%		< 20%		> 20%		< 20%	> 20%
December 31, 2018
U.S. Treasuries	$	120	$	—	$	2	$	—	24	—
State, municipalities and political subdivisions	786		—		22		—		146	—
U.S. corporate public securities	7,807		124		376		39		1,053	10
U.S. corporate private securities	3,312		94		139		31		253	2
Foreign corporate public securities and foreign governments	2,750		110		139		28		376	10
Foreign corporate private securities	2,590		95		117		35		160	6
Residential mortgage-backed	1,551		1		52		1		414	16
Commercial mortgage-backed	2,160		—		55		—		320	1
Other asset-backed	1,573		9		46		2		293	5
Total	$	22,649	$	433	$	948	$	136	3,039	50

December 31, 2017
U.S. Treasuries	$	183	$	—	$	2	$	—	29	—
State, municipalities and political subdivisions	408		—		11		—		103	—
U.S. corporate public securities	1,553		18		45		5		232	2
U.S. corporate private securities	1,129		73		28		22		73	2
Foreign corporate public securities and foreign governments	506		7		16		2		84	1
Foreign corporate private securities	490		84		16		48		35	6
Residential mortgage-backed	1,075		13		29		5		334	25
Commercial mortgage-backed	871		—		11		—		164	—
Other asset-backed	407		1		3		—		145	2
Total	$	6,622	$	196	$	161	$	82	1,199	38



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The following tables summarize loan-to-value, credit enhancement and fixed floating rate details for RMBS and Other ABS in a gross unrealized loss position as of the dates indicated:



	Loan-to-Value Ratio
	Amortized Cost				Unrealized Capital Losses
December 31, 2018	< 20%		> 20%		< 20%		> 20%
RMBS and Other ABS⁽¹⁾
Non-agency RMBS > 100%	$	—	$	—	$	—	$	—
Non-agency RMBS > 90% - 100%	—		—		—		—
Non-agency RMBS 80% - 90%	—		—		—		—
Non-agency RMBS < 80%	759		—		19		—
Agency RMBS	806		1		33		1
Other ABS (Non-RMBS)	1,559		9		46		2
Total RMBS and Other ABS	$	3,124	$	10	$	98	$	3

	Credit Enhancement Percentage
	Amortized Cost				Unrealized Capital Losses
December 31, 2018	< 20%		> 20%		< 20%		> 20%
RMBS and Other ABS⁽¹⁾
Non-agency RMBS 10% +	$	332	$	—	$	8	$	—
Non-agency RMBS > 5% - 10%	10		—		—		—
Non-agency RMBS > 0% - 5%	376		—		9		—
Non-agency RMBS 0%	41		—		2		—
Agency RMBS	806		1		33		1
Other ABS (Non-RMBS)	1,559		9		46		2
Total RMBS and Other ABS	$	3,124	$	10	$	98	$	3

	Fixed Rate/Floating Rate
	Amortized Cost				Unrealized Capital Losses
December 31, 2018	< 20%		> 20%		< 20%		> 20%
Fixed Rate	$	1,179	$	9	$	36	$	3
Floating Rate	1,945		1		62		—
Total	$	3,124	$	10	$	98	$	3

⁽¹⁾ For purposes of this table, subprime mortgages are included in Non-agency RMBS categories.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)



	Loan-to-Value Ratio
	Amortized Cost				Unrealized Capital Losses
December 31, 2017	< 20%		> 20%		< 20%		> 20%
RMBS and Other ABS⁽¹⁾
Non-agency RMBS > 100%	$	—	$	—	$	—	$	—
Non-agency RMBS > 90% - 100%	—		—		—		—
Non-agency RMBS 80% - 90%	13		—		—		—
Non-agency RMBS < 80%	211		1		4		—
Agency RMBS	878		12		26		4
Other ABS (Non-RMBS)	380		1		2		1
Total RMBS and Other ABS	$	1,482	$	14	$	32	$	5

	Credit Enhancement Percentage
	Amortized Cost				Unrealized Capital Losses
December 31, 2017	< 20%		> 20%		< 20%		> 20%
RMBS and Other ABS⁽¹⁾
Non-agency RMBS 10% +	$	162	$	—	$	2	$	—
Non-agency RMBS > 5% - 10%	11		—		—		—
Non-agency RMBS > 0% - 5%	25		1		1		—
Non-agency RMBS 0%	26		—		1		—
Agency RMBS	878		12		26		4
Other ABS (Non-RMBS)	380		1		2		1
Total RMBS and Other ABS	$	1,482	$	14	$	32	$	5

	Fixed Rate/Floating Rate
	Amortized Cost				Unrealized Capital Losses
December 31, 2017	< 20%		> 20%		< 20%		> 20%
Fixed Rate	$	1,104	$	6	$	20	$	2
Floating Rate	378		8		12		3
Total	$	1,482	$	14	$	32	$	5

⁽¹⁾ For purposes of this table, subprime mortgages are included in Non-agency RMBS categories.

Investments with fair values less than amortized cost are included in the Company's other-than-temporary impairments analysis. Impairments were recognized as disclosed in the "Evaluating Securities for Other-Than-Temporary Impairments" section below. The Company evaluates non-agency RMBS and ABS for "other-than-temporary impairments" each quarter based on actual and projected cash flows, after considering the quality and updated loan-to-value ratios reflecting current home prices of underlying collateral, forecasted loss severity, the payment priority within the tranche structure of the security and amount of any credit enhancements. The Company's assessment of current levels of cash flows compared to estimated cash flows at the time the securities were acquired (typically pre-2008) indicates the amount and the pace of projected cash flows from the underlying collateral has generally been lower and slower, respectively. However, since cash flows are typically projected at a trust level, the impairment review incorporates the security's position within the trust structure as well as credit enhancement remaining in the trust to determine whether an impairment is warranted. Therefore, while lower and slower cash flows will impact the trust, the effect on the valuation of a particular security within the trust will also be dependent upon the trust structure. Where the assessment continues to project full recovery of principal and interest on schedule, the Company has not recorded an impairment. Based on this analysis, the Company determined that the remaining investments in an unrealized loss position were not other-than-temporarily impaired and therefore no further other-than-temporary impairment was necessary.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Troubled Debt Restructuring

The Company invests in high quality, well performing portfolios of commercial mortgage loans and private placements. Under certain circumstances, modifications are granted to these contracts. Each modification is evaluated as to whether a troubled debt restructuring has occurred. A modification is a troubled debt restructuring when the borrower is in financial difficulty and the creditor makes concessions. Generally, the types of concessions may include reducing the face amount or maturity amount of the debt as originally stated, reducing the contractual interest rate, extending the maturity date at an interest rate lower than current market interest rates and/or reducing accrued interest. The Company considers the amount, timing and extent of the concession granted in determining any impairment or changes in the specific valuation allowance recorded in connection with the troubled debt restructuring. A valuation allowance may have been recorded prior to the quarter when the loan is modified in a troubled debt restructuring. Accordingly, the carrying value (net of the specific valuation allowance) before and after modification through a troubled debt restructuring may not change significantly, or may increase if the expected recovery is higher than the pre-modification recovery assessment. For the year ended December 31, 2018, the Company did not have any new commercial mortgage loan or private placement troubled debt restructuring. For the year ended December 31, 2017, the Company did not have any new commercial mortgage loan troubled debt restructuring and had one private placement troubled debt restructuring with a pre-modification and post-modification carrying value of $22.

As of December 31, 2018 and 2017, the Company did not have any commercial mortgage loans or private placements modified in a troubled debt restructuring with a subsequent payment default.

Mortgage Loans on Real Estate

The Company diversifies its commercial mortgage loan portfolio by geographic region and property type to reduce concentration risk. The Company manages risk when originating commercial mortgage loans by generally lending only up to 75% of the estimated fair value of the underlying real estate. Subsequently, the Company continuously evaluates mortgage loans based on relevant current information including a review of loan-specific credit quality, property characteristics and market trends. The components to evaluate debt service coverage are received and reviewed at least annually to determine the level of risk.

The following table summarizes the Company's investment in mortgage loans as of the dates indicated:



	December 31, 2018								December 31, 2017
	Impaired		Non Impaired			Total			Impaired		Non Impaired			Total
Commercial mortgage loans	$	4	$	8,674		$	8,678		$	4	$	8,685		$	8,689
Collective valuation allowance for losses	N/A		(2		)	(2		)	N/A		(3		)	(3		)
Total net commercial mortgage loans	$	4	$	8,672		$	8,676		$	4	$	8,682		$	8,686

N/A - Not Applicable

There were no impairments taken on the mortgage loan portfolio for the years ended December 31, 2018 and 2017.

The following table summarizes the activity in the allowance for losses for commercial mortgage loans for the periods indicated:



	December 31, 2018			December 31, 2017
Collective valuation allowance for losses, balance at January 1	$	3		$	3
Addition to (reduction of) allowance for losses	(1		)	—
Collective valuation allowance for losses, end of period	$	2		$	3



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The carrying values and unpaid principal balances of impaired mortgage loans were as follows as of the dates indicated:



	December 31, 2018		December 31, 2017
Impaired loans without allowances for losses	$	4	$	4
Less: Allowances for losses on impaired loans	—		—
Impaired loans, net	$	4	$	4
Unpaid principal balance of impaired loans	$	5	$	6

For the years ended December 31, 2018 and 2017, the Company did not have any impaired loans with allowances for losses.

There were no mortgage loans in the Company's portfolio in process of foreclosure as of December 31, 2018 and 2017.

There was one loan 60 days or less in arrears, with respect to principal and interest as of December 31, 2018, with a total amortized cost of $8. There were no loans in arrears, with respect to principal and interest as of December 31, 2017.

The following table presents information on the average investment during the period in impaired loans and interest income recognized on impaired and troubled debt restructured loans for the periods indicated:



	Year Ended December 31,
	2018		2017		2016
Impaired loans, average investment during the period (amortized cost)⁽¹⁾	$	4	$	4	$	11
Interest income recognized on impaired loans, on an accrual basis⁽¹⁾	—		—		—
Interest income recognized on impaired loans, on a cash basis⁽¹⁾	—		—		—
Interest income recognized on troubled debt restructured loans, on an accrual basis	—		—		—

⁽¹⁾ Includes amounts for Troubled debt restructured loans.

Loan-to-value ("LTV") and debt service coverage ("DSC") ratios are measures commonly used to assess the risk and quality of mortgage loans. The LTV ratio, calculated at time of origination, is expressed as a percentage of the amount of the loan relative to the value of the underlying property. A LTV ratio in excess of 100% indicates the unpaid loan amount exceeds the underlying collateral. The DSC ratio, based upon the most recently received financial statements, is expressed as a percentage of the amount of a property’s net income to its debt service payments. A DSC ratio of less than 1.0 indicates that a property’s operations do not generate sufficient income to cover debt payments. These ratios are utilized as part of the review process described above.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The following table presents the LTV and DSC ratios as of the dates indicated:



	Recorded Investment
	Debt Service Coverage Ratios
	> 1.5x		>1.25x - 1.5x		>1.0x - 1.25x		< 1.0x		Commercial mortgage loans secured by land or construction loans		Total		% of Total
December 31, 2018⁽¹⁾
Loan-to-Value Ratios:
0% - 50%	$	724	$	53	$	25	$	2	$	—	$	804	9.3	%
>50% - 60%	1,889		61		51		6		—		2,007		23.1	%
>60% - 70%	3,767		520		716		63		39		5,105		58.8	%
>70% - 80%	402		160		102		24		6		694		8.0	%
>80% and above	18		7		11		8		24		68		0.8	%
Total	$	6,800	$	801	$	905	$	103	$	69	$	8,678	100.0	%

	Recorded Investment
	Debt Service Coverage Ratios
	> 1.5x		>1.25x - 1.5x		>1.0x - 1.25x		< 1.0x		Commercial mortgage loans secured by land or construction loans		Total		% of Total
December 31, 2017⁽¹⁾
Loan-to-Value Ratios:
0% - 50%	$	772	$	61	$	—	$	16	$	—	$	849	9.8	%
>50% - 60%	1,984		58		70		8		5		2,125		24.5	%
>60% - 70%	3,940		391		739		70		4		5,144		59.2	%
>70% - 80%	313		145		83		2		8		551		6.3	%
>80% and above	4		—		1		9		6		20		0.2	%
Total	$	7,013	$	655	$	893	$	105	$	23	$	8,689	100.0	%

⁽¹⁾Balances do not include collective valuation allowance for losses.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Properties collateralizing mortgage loans are geographically dispersed throughout the United States, as well as diversified by property type, as reflected in the following tables as of the dates indicated:



	December 31, 2018⁽¹⁾			December 31, 2017⁽¹⁾
	Gross Carrying Value		% of Total	Gross Carrying Value		% of Total
Commercial Mortgage Loans by U.S. Region:
Pacific	$	2,078	23.8	$	2,024	23.4	%
South Atlantic	1,771		20.4	1,716		19.7	%
Middle Atlantic	1,525		17.6	1,612		18.5	%
West South Central	952		11.0	959		11.0	%
Mountain	892		10.3	859		9.9	%
East North Central	833		9.6	884		10.2	%
New England	154		1.8	161		1.8	%
West North Central	390		4.5	391		4.5	%
East South Central	83		1.0	83		1.0	%
Total Commercial mortgage loans	$	8,678	100.0	$	8,689	100.0	%

⁽¹⁾ Balances do not include collective valuation allowance for losses.



	December 31, 2018⁽¹⁾			December 31, 2017⁽¹⁾
	Gross Carrying Value		% of Total	Gross Carrying Value		% of Total
Commercial Mortgage Loans by Property Type:
Retail	$	2,482	28.6	$	2,587	29.7	%
Industrial	2,074		23.9	2,108		24.3	%
Apartments	2,110		24.3	1,849		21.3	%
Office	1,316		15.2	1,384		15.9	%
Hotel/Motel	210		2.4	309		3.6	%
Other	411		4.7	364		4.2	%
Mixed Use	75		0.9	88		1.0	%
Total Commercial mortgage loans	$	8,678	100.0	$	8,689	100.0	%

⁽¹⁾ Balances do not include collective valuation allowance for losses.

The following table presents mortgages by year of origination as of the dates indicated:



	December 31, 2018⁽¹⁾		December 31, 2017⁽¹⁾
Year of Origination:
2018	$	741	$	—
2017	1,517		1,525
2016	1,446		1,428
2015	1,077		1,250
2014	1,215		1,303
2013	1,157		1,287
2012 and prior	1,525		1,896
Total Commercial mortgage loans	$	8,678	$	8,689

⁽¹⁾ Balances do not include collective valuation allowance for losses.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Evaluating Securities for Other-Than-Temporary Impairments

The Company performs a regular evaluation, on a security-by-security basis, of its available-for-sale securities holdings, including fixed maturity securities in accordance with its impairment policy in order to evaluate whether such investments are other-than-temporarily impaired.

The following table identifies the Company's credit-related and intent-related impairments included in the Consolidated Statements of Operations, excluding impairments included in Other comprehensive income (loss) by type for the periods indicated:



	Year Ended December 31,
	2018				2017				2016
	Impairment			No. of Securities	Impairment			No. of Securities	Impairment			No. of Securities
State, municipalities and political subdivisions	$	—		—	$	1		3	$	—	*	2
U.S. corporate public securities	6			2	1			3	8			3
Foreign corporate public securities and foreign governments⁽¹⁾	2			3	2			3	17			4
Foreign corporate private securities⁽¹⁾	15			1	15			2	2			2
Residential mortgage-backed	6			68	2			47	7			80
Other	—		*	2	—		*	3	—		*	1
Total	$	29		76	$	21		61	$	34		92

⁽¹⁾ Primarily U.S. dollar denominated.

* Less than $1

The above tables include $18, $19 and $8 of write-downs related to credit impairments for the years ended December 31, 2018, 2017 and 2016, respectively, in Other-than-temporary impairments, which are recognized in the Consolidated Statements of Operations. The remaining $11, $2 and $26 in write-downs for the years ended December 31, 2018, 2017 and 2016, respectively, are related to intent impairments.

The following table summarizes these intent impairments, which are also recognized in earnings, by type for the periods indicated:



	Year Ended December 31,
	2018				2017				2016
	Impairment			No. of Securities	Impairment			No. of Securities	Impairment			No. of Securities
U.S. corporate public securities	$	6		2	$	1		3	$	7		2
Foreign corporate public securities and foreign governments⁽¹⁾	—			—	—			—	16			3
Residential mortgage-backed	5			25	1			12	3			20
Other	—		*	1	—		*	3	—		*	1
Total	$	11		28	$	2		18	$	26		26

⁽¹⁾ Primarily U.S. dollar denominated.

* Less than $1

The Company may sell securities during the period in which fair value has declined below amortized cost for fixed maturities. In certain situations, new factors, including changes in the business environment, can change the Company’s previous intent to continue holding a security. Accordingly, these factors may lead the Company to record additional intent related capital losses.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The following table presents the amount of credit impairments on fixed maturities for which a portion of the OTTI loss was recognized in Other comprehensive income (loss) and the corresponding changes in such amounts for the periods indicated:



	Year Ended December 31,
	2018		2017		2016
Balance at January 1	$	40	$	33	$	46
Additional credit impairments:
On securities not previously impaired	—		15		—
On securities previously impaired	3		1		2
Reductions:
Increase in cash flows	—		1		—
Securities sold, matured, prepaid or paid down	21		8		15
Balance at December 31	$	22	$	40	$	33

Net Investment Income

The following table summarizes Net investment income for the periods indicated:



	Year Ended December 31,
	2018		2017		2016
Fixed maturities	$	2,714	$	2,698	$	2,860
Equity securities	14		9		11
Mortgage loans on real estate	398		388		372
Policy loans	99		100		108
Short-term investments and cash equivalents	15		10		5
Other	150		145		62
Gross investment income	3,390		3,350		3,418
Less: investment expenses	83		56		64
Net investment income	$	3,307	$	3,294	$	3,354

As of December 31, 2018 and 2017, the Company had $5 of investments in fixed maturities that did not produce net investment income. Fixed maturities are moved to a non-accrual status when the investment defaults.

Interest income on fixed maturities is recorded when earned using an effective yield method, giving effect to amortization of premiums and accretion of discounts. Such interest income is recorded in Net investment income in the Consolidated Statements of Operations.

Net Realized Capital Gains (Losses)

Net realized capital gains (losses) comprise the difference between the amortized cost of investments and proceeds from sale and redemption, as well as losses incurred due to the credit-related and intent-related other-than-temporary impairment of investments. Realized investment gains and losses are also primarily generated from changes in fair value of embedded derivatives within products and fixed maturities, changes in fair value of fixed maturities recorded at FVO and changes in fair value including accruals on derivative instruments, except for effective cash flow hedges. Upon the adoption of ASU 2016-01 as of January 1, 2018, realized capital gains (losses) also include changes in fair value of equity securities.The cost of the investments on disposal is generally determined based on FIFO methodology.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Net realized capital gains (losses) were as follows for the periods indicated:



	Year Ended December 31,
	2018			2017			2016
Fixed maturities, available-for-sale, including securities pledged	$	(62	)	$	7		$	(98	)
Fixed maturities, at fair value option	(417		)	(282		)	(296		)
Equity securities	(10		)	(1		)	1
Derivatives	(88		)	98			32
Embedded derivatives - fixed maturities	(12		)	(18		)	(19		)
Guaranteed benefit derivatives	161			(22		)	9
Other investments	29			(9		)	8
Net realized capital gains (losses)	$	(399	)	$	(227	)	$	(363	)

For the year ended December 31, 2018, the change in the fair value of equity securities still held as of December 31, 2018 was $(10).

Proceeds from the sale of fixed maturities and equity securities, available-for-sale and the related gross realized gains and losses, before tax, were as follows for the periods indicated:



	Year Ended December 31,
	2018		2017		2016
Proceeds on sales	$	5,303	$	4,905	$	4,742
Gross gains	51		93		91
Gross losses	100		56		157

4. Derivative Financial Instruments

The Company enters into the following types of derivatives:

Interest rate caps and floors: The Company uses interest rate cap contracts to hedge the interest rate exposure arising from duration mismatches between assets and liabilities. Interest rate caps are also used to hedge interest rate exposure if rates rise above a specified level. The Company uses interest rate floor contracts to hedge interest rate exposure if rates decrease below a specified level. The Company pays an upfront premium to purchase these caps and floors. The Company utilizes these contracts in non-qualifying hedging relationships.

Interest rate swaps: Interest rate swaps are used by the Company primarily to reduce market risks from changes in interest rates and to alter interest rate exposure arising from mismatches between assets and/or liabilities. Interest rate swaps are also used to hedge the interest rate risk associated with the value of assets it owns or in an anticipation of acquiring them. Using interest rate swaps, the Company agrees with another party to exchange, at specified intervals, the difference between fixed rate and floating rate interest payments, calculated by reference to an agreed upon notional principal amount. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made to/from the counterparty at each due date. The Company utilizes these contracts in qualifying hedging relationships as well as non-qualifying hedging relationships.

Foreign exchange swaps: The Company uses foreign exchange or currency swaps to reduce the risk of change in the value, yield or cash flows associated with certain foreign denominated invested assets. Foreign exchange swaps represent contracts that require the exchange of foreign currency cash flows against U.S. dollar cash flows at regular periods, typically quarterly or semi-annually. The Company utilizes these contracts in qualifying hedging relationships as well as non-qualifying hedging relationships.

Credit default swaps: Credit default swaps are used to reduce credit loss exposure with respect to certain assets that the Company owns or to assume credit exposure on certain assets that the Company does not own. Payments are made to, or received from, the counterparty at specified intervals. In the event of a default on the underlying credit exposure, the Company will either receive a



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

payment (purchased credit protection) or will be required to make a payment (sold credit protection) equal to the par minus recovery value of the swap contract. The Company utilizes these contracts in non-qualifying hedging relationships.

Total return swaps: The Company uses total return swaps as a hedge against a decrease in variable annuity account values, which are invested in certain indices. Using total return swaps, the Company agrees with another party to exchange, at specified intervals, the difference between the economic risk and reward of assets or a market index and the LIBOR rate, calculated by reference to an agreed upon notional principal amount. No cash is exchanged at the onset of the contracts. Cash is paid and received over the life of the contract based upon the terms of the swaps. The Company utilizes these contracts in non-qualifying hedging relationships.

Currency forwards: The Company utilizes currency forward contracts to hedge currency exposure related to its invested assets. The Company utilizes these contracts in non-qualifying hedging relationships.

Forwards: The Company uses forward contracts to hedge certain invested assets against movement in interest rates, particularly mortgage rates. The Company uses To Be Announced mortgage-backed securities as an economic hedge against rate movements. The Company utilizes forward contracts in non-qualifying hedging relationships.

Futures: Futures contracts are used to hedge against a decrease in certain equity indices. Such decreases may correlate to a decrease in variable annuity account values which would increase the possibility of the Company incurring an expense for guaranteed benefits in excess of account values. The Company also uses interest rate futures contracts to hedge its exposure to market risks due to changes in interest rates. The Company enters into exchange traded futures with regulated futures commissions that are members of the exchange. The Company also posts initial and variation margins, with the exchange, on a daily basis. The Company utilizes exchange-traded futures in non-qualifying hedging relationships. The Company may also use futures contracts as a hedge against an increase in certain equity indices. Such increases may result in increased payments to the holders of fixed index annuity ("FIA") contracts.

Swaptions: A swaption is an option to enter into a swap with a forward starting effective date. The Company uses swaptions to hedge the interest rate exposure associated with the minimum crediting rate and book value guarantees embedded in the retirement products that the Company offers. Increases in interest rates will generate losses on assets that are backing such liabilities. In certain instances, the Company locks in the economic impact of existing purchased swaptions by entering into offsetting written swaptions. The Company pays a premium when it purchases the swaption. The Company utilizes these contracts in non-qualifying hedging relationships.

Options: The Company uses equity options to hedge against an increase in various equity indices, and interest rate options to hedge against an increase in the interest rate benchmarked crediting strategies within FIA contracts. Such increases may result in increased payments to the holders of the FIA and IUL contracts. The Company pays an upfront premium to purchase these options. The Company utilizes these options in non-qualifying hedging relationships.

Currency Options: The Company uses currency option contracts to hedge currency exposure related to its invested assets. The Company utilizes these contracts in non-qualifying hedging relationships.

Managed custody guarantees ("MCGs"): The Company issues certain credited rate guarantees on variable fixed income portfolios that represent stand-alone derivatives. The market value is partially determined by, among other things, levels of or changes in interest rates, prepayment rates and credit ratings/spreads.

Embedded derivatives: The Company also invests in certain fixed maturity instruments and has issued certain products that contain embedded derivatives for which market value is at least partially determined by, among other things, levels of or changes in domestic and/or foreign interest rates (short-term or long-term), exchange rates, prepayment rates, equity rates or credit ratings/spreads. In addition, the Company has entered into coinsurance with funds withheld arrangements, which contain embedded derivatives.

The Company's use of derivatives is limited mainly to economic hedging to reduce the Company's exposure to cash flow variability of assets and liabilities, interest rate risk, credit risk, exchange rate risk and equity market risk. It is the Company's policy not to offset amounts recognized for derivative instruments and amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral arising from derivative instruments executed with the same counterparty under a master netting arrangement, which provides the Company with the legal right of offset. However, in accordance with the Chicago Mercantile Exchange ("CME")



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

rule changes related to the variation margin payments, effective the first quarter of 2017, the Company is required to adjust the derivative balances with the variation margin payments related to its cleared derivatives executed through CME.

The notional amounts and fair values of derivatives were as follows as of the dates indicated:



	December 31, 2018						December 31, 2017
	Notional Amount		Asset Fair Value		Liability Fair Value		Notional Amount		Asset Fair Value		Liability Fair Value
Derivatives: Qualifying for hedge accounting ⁽¹⁾
Cash flow hedges:
Interest rate contracts	$	44	$	—	$	—	$	56	$	—	$	—
Foreign exchange contracts	744		14		23		625		—		60
Derivatives: Non-qualifying for hedge accounting ⁽¹⁾
Interest rate contracts	24,085		140		109		27,482		173		58
Foreign exchange contracts	30		—		—		85		—		2
Equity contracts	1,756		93		4		1,526		198		19
Credit contracts	281		—		3		1,983		26		10
Embedded derivatives and Managed custody guarantees:
Within fixed maturity investments	N/A		26		—		N/A		37		—
Within products	N/A		—		126		N/A		—		306
Within reinsurance agreements	N/A		—		21		N/A		—		129
Total			$	273	$	286			$	434	$	584

⁽¹⁾ Open derivative contracts are reported as Derivatives assets or liabilities on the Consolidated Balance Sheets at fair value.

N/A - Not Applicable

Based on the notional amounts, a substantial portion of the Company’s derivative positions was not designated or did not qualify for hedge accounting as part of a hedging relationship as of December 31, 2018 and 2017. The Company utilizes derivative contracts mainly to hedge exposure to variability in cash flows, interest rate risk, credit risk, foreign exchange risk and equity market risk. The majority of derivatives used by the Company are designated as product hedges, which hedge the exposure arising from insurance liabilities or guarantees embedded in the contracts the Company offers through various product lines. These derivatives do not qualify for hedge accounting as they do not meet the criteria of being "highly effective" as outlined in ASC Topic 815, but do provide an economic hedge, which is in line with the Company’s risk management objectives. The Company also uses derivatives contracts to hedge its exposure to various risks associated with the investment portfolio. The Company does not seek hedge accounting treatment for certain of these derivatives as they generally do not qualify for hedge accounting due to the criteria required under the portfolio hedging rules outlined in ASC Topic 815. The Company also uses credit default swaps coupled with other investments in order to produce the investment characteristics of otherwise permissible investments that do not qualify as effective accounting hedges under ASC Topic 815.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Although the Company has not elected to net its derivative exposures, the notional amounts and fair values of Over-The-Counter ("OTC") and cleared derivatives excluding exchange traded contracts and forward contracts (To Be Announced mortgage-backed securities) are presented in the tables below as of the dates indicated:



	December 31, 2018
	Notional Amount		Asset Fair Value			Liability Fair Value
Credit contracts	$	281	$	—		$	3
Equity contracts	1,616		93			3
Foreign exchange contracts	774		14			23
Interest rate contracts	21,575		140			109
			247			138
Counterparty netting⁽¹⁾			(113		)	(113		)
Cash collateral netting⁽¹⁾			(112		)	(9		)
Securities collateral netting⁽¹⁾			(11		)	(15		)
Net receivables/payables			$	11		$	1

⁽¹⁾Represents the netting of receivable balances with payable balances, net of collateral, for the same counterparty under eligible netting agreements.



	December 31, 2017
	Notional Amount		Asset Fair Value			Liability Fair Value
Credit contracts	$	1,983	$	26		$	10
Equity contracts	1,382		197			19
Foreign exchange contracts	710		—			62
Interest rate contracts	24,490		173			57
			396			148
Counterparty netting⁽¹⁾			(100		)	(100		)
Cash collateral netting⁽¹⁾			(251		)	—
Securities collateral netting⁽¹⁾			(37		)	(40		)
Net receivables/payables			$	8		$	8

⁽¹⁾Represents the netting of receivable balances with payable balances, net of collateral, for the same counterparty under eligible netting agreements.

Collateral

Under the terms of the OTC Derivative International Swaps and Derivatives Association, Inc. ("ISDA") agreements, the Company may receive from, or deliver to, counterparties collateral to assure that terms of the ISDA agreements will be met with regard to the Credit Support Annex ("CSA"). The terms of the CSA call for the Company to pay interest on any cash received equal to the Federal Funds rate. To the extent cash collateral is received and delivered, it is included in Payables under securities loan and repurchase agreements, including collateral held and Short-term investments under securities loan agreements, including collateral delivered, respectively, on the Consolidated Balance Sheets and is reinvested in short-term investments. Collateral held is used in accordance with the CSA to satisfy any obligations. Investment grade bonds owned by the Company are the source of noncash collateral posted, which is reported in Securities pledged on the Consolidated Balance Sheets. As of December 31, 2018, the Company held $91 and $16 of net cash collateral related to OTC derivative contracts and cleared derivative contracts, respectively. As of December 31, 2017, the Company held $174 and $73 of net cash collateral related to OTC derivative contracts and cleared derivative contracts, respectively. In addition, as of December 31, 2018, the Company delivered $187 of securities and held $11 of securities as collateral. As of December 31, 2017, the Company delivered $233 of securities and held $38 of securities as collateral.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Net realized gains (losses) on derivatives were as follows for the periods indicated:



	Year Ended December 31,
	2018			2017			2016
Derivatives: Qualifying for hedge accounting⁽¹⁾
Cash flow hedges:
Interest rate contracts	$	—		$	1		$	1
Foreign exchange contracts	9			26			2
Fair value hedges:
Interest rate contracts	—			—			(3		)
Derivatives: Non-qualifying for hedge accounting⁽²⁾
Interest rate contracts	(34		)	1			35
Foreign exchange contracts	5			(8		)	(4		)
Equity contracts	(66		)	61			(11		)
Credit contracts	(2		)	17			12
Embedded derivatives and Managed custody guarantees:
Within fixed maturity investments⁽²⁾	(12		)	(18		)	(19		)
Within products⁽²⁾	161			(22		)	9
Within reinsurance agreements⁽³⁾	116			(57		)	(25		)
Total	$	177		$	1		$	(3	)

⁽¹⁾ Changes in value for effective fair value hedges are recorded in Other net realized capital gains (losses). Changes in fair value upon disposal for effective cash flow hedges are amortized through Net investment income and the ineffective portion is recorded in Other net realized capital gains (losses) in the Consolidated Statements of Operations. For the years ended December 31, 2018, 2017 and 2016, ineffective amounts were immaterial.

⁽²⁾ Changes in value are included in Other net realized capital gains (losses) in the Consolidated Statements of Operations.

⁽³⁾ Changes in value are included in Policyholder benefits in the Consolidated Statements of Operations.

Credit Default Swaps

The Company has entered into various credit default swaps. When credit default swaps are sold, the Company assumes credit exposure to certain assets that it does not own. Credit default swaps may also be purchased to reduce credit exposure in the Company’s portfolio. Credit default swaps involve a transfer of credit risk from one party to another in exchange for periodic payments. As of December 31, 2018, the fair value of credit default swaps of $3 was included in Derivatives liabilities on the Consolidated Balance Sheets. As of December 31, 2017, the fair values of credit default swaps of $26 and $10 were included in Derivatives assets and Derivatives liabilities, respectively, on the Consolidated Balance Sheets. As of December 31, 2018, the maximum potential future net exposure to the Company was $5 on credit default swap protection sold. As of December 31, 2017, the maximum potential future net exposure to the Company was $1.5 billion on credit default swap protection sold. These instruments are typically written for a maturity period of 5 years and contain no recourse provisions. If the Company's current debt and claims paying ratings were downgraded in the future, the terms in the Company's derivative agreements may be triggered, which could negatively impact overall liquidity.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

5. Fair Value Measurements (excluding Consolidated Investment Entities)

Fair Value Measurement

The Company categorizes its financial instruments into a three-level hierarchy based on the priority of the inputs to the valuation technique. If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument. Financial assets and liabilities recorded at fair value on the Consolidated Balance Sheets are categorized as follows:


•	Level 1 - Unadjusted quoted prices for identical assets or liabilities in an active market. The Company defines an active market as a market in which transactions take place with sufficient frequency and volume to provide pricing information on an ongoing basis.


•	Level 2 - Quoted prices in markets that are not active or valuation techniques that require inputs that are observable either directly or indirectly for substantially the full term of the asset or liability.


•	Level 3 - Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These valuations, whether derived internally or obtained from a third party, use critical assumptions that are not widely available to estimate market participant expectations in valuing the asset or liability.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of December 31, 2018:



	Level 1			Level 2			Level 3			Total
Assets:
Fixed maturities, including securities pledged:
U.S. Treasuries	$	1,753		$	542		$	—		$	2,295
U.S. Government agencies and authorities	—			242			—			242
State, municipalities and political subdivisions	—			1,659			—			1,659
U.S. corporate public securities	—			19,804			44			19,848
U.S. corporate private securities	—			4,839			1,393			6,232
Foreign corporate public securities and foreign governments⁽¹⁾	—			5,444			11			5,455
Foreign corporate private securities⁽¹⁾	—			4,843			251			5,094
Residential mortgage-backed securities	—			4,775			28			4,803
Commercial mortgage-backed securities	—			3,402			14			3,416
Other asset-backed securities	—			1,939			138			2,077
Total fixed maturities, including securities pledged	1,753			47,489			1,879			51,121
Equity securities	144			—			129			273
Derivatives:
Interest rate contracts	—			140			—			140
Foreign exchange contracts	—			14			—			14
Equity contracts	—			10			83			93
Credit contracts	—			—			—			—
Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements	3,362			28			—			3,390
Assets held in separate accounts	65,361			5,805			62			71,228
Total assets	$	70,620		$	53,486		$	2,153		$	126,259
Percentage of Level to total	56		%	42		%	2		%	100		%
Liabilities:
Derivatives:
Guaranteed benefit derivatives:
IUL	$	—		$	—		$	82		$	82
Stabilizer and MCGs	—			—			5			5
Other⁽²⁾	—			—			39			39
Other derivatives:
Interest rate contracts	—			109			—			109
Foreign exchange contracts	—			23			—			23
Equity contracts	1			3			—			4
Credit contracts	—			3			—			3
Embedded derivative on reinsurance	—			21			—			21
Total liabilities	$	1		$	159		$	126		$	286

⁽¹⁾Primarily U.S. dollar denominated.

⁽²⁾Includes GMWBL, GMWB and FIA.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of December 31, 2017:



	Level 1			Level 2			Level 3			Total
Assets:
Fixed maturities, including securities pledged:
U.S. Treasuries	$	1,921		$	601		$	—		$	2,522
U.S. Government agencies and authorities	—			275			—			275
State, municipalities and political subdivisions	—			1,913			—			1,913
U.S. corporate public securities	—			23,201			57			23,258
U.S. corporate private securities	—			4,706			1,127			5,833
Foreign corporate public securities and foreign governments⁽¹⁾	—			5,705			11			5,716
Foreign corporate private securities⁽¹⁾	—			4,992			169			5,161
Residential mortgage-backed securities	—			4,482			42			4,524
Commercial mortgage-backed securities	—			2,687			17			2,704
Other asset-backed securities	—			1,436			92			1,528
Total fixed maturities, including securities pledged	1,921			49,998			1,515			53,434
Equity securities, available-for-sale	278			—			102			380
Derivatives:
Interest rate contracts	—			173			—			173
Equity contracts	—			44			154			198
Credit contracts	—			21			5			26
Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements	3,277			38			—			3,315
Assets held in separate accounts	72,535			5,059			11			77,605
Total assets	$	78,011		$	55,333		$	1,787		$	135,131
Percentage of Level to total	58		%	41		%	1		%	100		%
Liabilities:
Derivatives:
Guaranteed benefit derivatives:
IUL	$	—		$	—		$	159		$	159
Stabilizer and MCGs	—			—			97			97
Other⁽²⁾	—			—			50			50
Other derivatives:
Interest rate contracts	—			58			—			58
Foreign exchange contracts	—			62			—			62
Equity contracts	—			19			—			19
Credit contracts	—			10			—			10
Embedded derivative on reinsurance	—			129			—			129
Total liabilities	$	—		$	278		$	306		$	584

⁽¹⁾ Primarily U.S. dollar denominated.

⁽²⁾Includes GMWBL, GMWB and FIA.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Valuation of Financial Assets and Liabilities at Fair Value

Certain assets and liabilities are measured at estimated fair value on the Company’s Consolidated Balance Sheets. The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The exit price and the transaction (or entry) price will be the same at initial recognition in many circumstances. However, in certain cases, the transaction price may not represent fair value. The fair value of a liability is based on the amount that would be paid to transfer a liability to a third party with an equal credit standing. Fair value is required to be a market-based measurement that is determined based on a hypothetical transaction at the measurement date, from a market participant’s perspective. The Company considers three broad valuation approaches when a quoted price is unavailable: (i) the market approach, (ii) the income approach and (iii) the cost approach. The Company determines the most appropriate valuation technique to use, given the instrument being measured and the availability of sufficient inputs. The Company prioritizes the inputs to fair valuation approaches and allows for the use of unobservable inputs to the extent that observable inputs are not available.

The Company utilizes a number of valuation methodologies to determine the fair values of its financial assets and liabilities in conformity with the concepts of exit price and the fair value hierarchy as prescribed in ASC Topic 820. Valuations are obtained from third-party commercial pricing services, brokers and industry-standard, vendor-provided software that models the value based on market observable inputs. The valuations obtained from third-party commercial pricing services are non-binding. The Company reviews the assumptions and inputs used by third-party commercial pricing services for each reporting period in order to determine an appropriate fair value hierarchy level. The documentation and analysis obtained from third-party commercial pricing services are reviewed by the Company, including in-depth validation procedures confirming the observability of inputs. The valuations are reviewed and validated monthly through the internal valuation committee price variance review, comparisons to internal pricing models, back testing to recent trades or monitoring of trading volumes.

Fixed maturities: The fair values for actively traded marketable bonds are determined based upon the quoted market prices and are classified as Level 1 assets. Assets in this category primarily include certain U.S. Treasury securities.

For fixed maturities classified as Level 2 assets, fair values are determined using a matrix-based market approach, based on prices obtained from third-party commercial pricing services and the Company’s matrix and analytics-based pricing models, which in each case incorporate a variety of market observable information as valuation inputs. The market observable inputs used for these fair value measurements, by fixed maturity asset class, are as follows:

U.S. Treasuries: Fair value is determined using third-party commercial pricing services, with the primary inputs being stripped interest and principal U.S. Treasury yield curves that represent a U.S. Treasury zero-coupon curve.

U.S. government agencies and authorities, State, municipalities and political subdivisions: Fair value is determined using third-party commercial pricing services, with the primary inputs being U.S. Treasury yield curves, trades of comparable securities, credit spreads off benchmark yields and issuer ratings.

U.S. corporate public securities, Foreign corporate public securities and foreign governments: Fair value is determined using third-party commercial pricing services, with the primary inputs being benchmark yields, trades of comparable securities, issuer ratings, bids and credit spreads off benchmark yields.

U.S. corporate private securities and Foreign corporate private securities: Fair values are determined using a matrix and analytics-based pricing model. The model incorporates the current level of risk-free interest rates, current corporate credit spreads, credit quality of the issuer and cash flow characteristics of the security. The model also considers a liquidity spread, the value of any collateral, the capital structure of the issuer, the presence of guarantees, and prices and quotes for comparably rated publicly traded securities.

RMBS, CMBS and ABS: Fair value is determined using third-party commercial pricing services, with the primary inputs being credit spreads off benchmark yields, prepayment speed assumptions, current and forecasted loss severity, debt service coverage ratios, collateral type, payment priority within tranche and the vintage of the loans underlying the security.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Generally, the Company does not obtain more than one vendor price from pricing services per instrument. The Company uses a hierarchy process in which prices are obtained from a primary vendor and, if that vendor is unable to provide the price, the next vendor in the hierarchy is contacted until a price is obtained or it is determined that a price cannot be obtained from a commercial pricing service. When a price cannot be obtained from a commercial pricing service, independent broker quotes are solicited. Securities priced using independent broker quotes are classified as Level 3.

Broker quotes and prices obtained from pricing services are reviewed and validated through an internal valuation committee price variance review, comparisons to internal pricing models, back testing to recent trades or monitoring of trading volumes.

Fair values of privately placed bonds are determined primarily using a matrix-based pricing model and are generally classified as Level 2 assets. The model considers the current level of risk-free interest rates, current corporate spreads, the credit quality of the issuer and cash flow characteristics of the security. Also considered are factors such as the net worth of the borrower, the value of collateral, the capital structure of the borrower, the presence of guarantees and the Company’s evaluation of the borrower’s ability to compete in its relevant market. Using this data, the model generates estimated market values, which the Company considers reflective of the fair value of each privately placed bond.

Equity securities: Fair values of publicly traded equity securities are based upon quoted market price and are classified as Level 1 assets. Other equity securities, typically private equities or equity securities not traded on an exchange, are valued by other sources such as analytics or brokers and are classified as Level 2 or Level 3 assets.

Derivatives: Derivatives are carried at fair value, which is determined using the Company’s derivative accounting system in conjunction with observable key financial data from third-party sources, such as yield curves, exchange rates, S&P 500 Index prices, London Interbank Offered Rates ("LIBOR") and Overnight Index Swap ("OIS") rates.The Company uses OIS for valuations of collateralized interest rate derivatives, which are obtained from third-party sources. For those derivatives that are unable to be valued by the accounting system, the Company typically utilizes values established by third-party brokers. Counterparty credit risk is considered and incorporated in the Company’s valuation process through counterparty credit rating requirements and monitoring of overall exposure. It is the Company’s policy to transact only with investment grade counterparties with a credit rating of A- or better. The Company’s nonperformance risk is also considered and incorporated in the Company’s valuation process. Valuations for the Company’s futures and interest rate forward contracts are based on unadjusted quoted prices from an active exchange and, therefore, are classified as Level 1. The Company also has certain credit default swaps and options that are priced by third party vendors or by using models that primarily use market observable inputs, but contain inputs that are not observable to market participants, which have been classified as Level 3. The remaining derivative instruments are valued based on market observable inputs and are classified as Level 2.

Cash and cash equivalents, Short-term investments and Short-term investments under securities loan agreement: The carrying amounts for cash reflect the assets’ fair values. The fair values for cash equivalents and most short-term investments are determined based on quoted market prices. These assets are classified as Level 1. Other short-term investments are valued and classified in the fair value hierarchy consistent with the policies described herein, depending on investment type.

Assets held in separate accounts: Assets held in separate accounts are reported at the quoted fair values of the underlying investments in the separate accounts. The underlying investments include mutual funds, short-term investments and cash, the valuations of which are based upon a quoted market price and are included in Level 1. Fixed maturity valuations are obtained from third-party commercial pricing services and brokers and are classified in the fair value hierarchy consistent with the policy described above for fixed maturities.

Guaranteed benefit derivatives: The Company records reserves for annuity contracts containing GMWBL and GMWB riders. The guarantee is an embedded derivative and is required to be accounted for separately from the host variable annuity contract. The fair value of the obligation is calculated based on actuarial and capital market assumptions related to the projected cash flows, including benefits and related contract charges, over the anticipated life of the related contracts. The cash flow estimates are produced by using stochastic techniques under a variety of market return scenarios and other market implied assumptions. These derivatives are classified as Level 3 liabilities in the fair value hierarchy.

The index-crediting feature in the Company's FIA and IUL contracts is an embedded derivative that is required to be accounted for separately from the host contract. The fair value of the obligation is calculated based on actuarial and capital market assumptions related to the projected cash flows, including benefits and related contract charges, over the anticipated life of the related contracts



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

for FIAs and over the current indexed term for IULs. The cash flow estimates are produced by market implied assumptions. These derivatives are classified as Level 3 liabilities in the fair value hierarchy.

The Company records reserves for Stabilizer and MCG contracts containing guaranteed credited rates. The guarantee is treated as an embedded derivative or a stand-alone derivative (depending on the underlying product) and is required to be reported at fair value. The estimated fair value is determined based on the present value of projected future claims, minus the present value of future guaranteed premiums. At inception of the contract, the Company projects a guaranteed premium to be equal to the present value of the projected future claims. The income associated with the contracts is projected using relevant actuarial and capital market assumptions, including benefits and related contract charges, over the anticipated life of the related contracts. The cash flow estimates are produced by using stochastic techniques under a variety of risk neutral scenarios and other market implied assumptions. These derivatives are classified as Level 3 liabilities.

The discount rate used to determine the fair value of the Company's GMWBL, GMWB, FIA, IUL and Stabilizer embedded derivative liabilities and the stand-alone derivative for MCG includes an adjustment to reflect the risk that these obligations will not be fulfilled ("nonperformance risk"). The nonperformance risk adjustment incorporates a blend of observable, similarly rated peer holding company credit spreads, adjusted to reflect the credit quality of the individual insurance subsidiary that issued the guarantee, as well as an adjustment to reflect the non-default spreads and the priority and recovery rates of policyholder claims.

The Company's valuation actuaries are responsible for the policies and procedures for valuing the embedded derivatives, reflecting the capital markets and actuarial valuation inputs and nonperformance risk in the estimate of the fair value of the embedded derivatives. The actuarial and capital market assumptions for each liability are approved by each product's Chief Risk Officer ("CRO"), including an independent annual review by the CRO. Models used to value the embedded derivatives must comply with the Company's governance policies.

Quarterly, an attribution analysis is performed to quantify changes in fair value measurements and a sensitivity analysis is used to analyze the changes. The changes in fair value measurements are also compared to corresponding movements in the hedge target to assess the validity of the attributions. The results of the attribution analysis are reviewed by the valuation actuaries, responsible CFOs, Controllers, CROs and/or others as nominated by management.

Embedded derivatives on reinsurance: The carrying value of embedded derivatives is estimated based upon the change in the fair value of the assets supporting the funds withheld payable under reinsurance agreements. The fair value of the embedded derivative is based on market observable inputs and is classified as Level 2.

Transfers in and out of Level 1 and 2

There were no securities transferred between Level 1 and Level 2 for the years ended December 31, 2018 and 2017. The Company's policy is to recognize transfers in and transfers out as of the beginning of the reporting period.

Level 3 Financial Instruments

The fair values of certain assets and liabilities are determined using prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement (i.e., Level 3 as defined by ASC Topic 820), including but not limited to liquidity spreads for investments within markets deemed not currently active. These valuations, whether derived internally or obtained from a third-party, use critical assumptions that are not widely available to estimate market participant expectations in valuing the asset or liability. In addition, the Company has determined, for certain financial instruments, an active market is such a significant input to determine fair value that the presence of an inactive market may lead to classification in Level 3. In light of the methodologies employed to obtain the fair values of financial assets and liabilities classified as Level 3, additional information is presented below.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The following table summarizes the change in fair value of the Company's Level 3 assets and liabilities and transfers in and out of Level 3 for the period indicated:



	Year Ended December 31, 2018
	Fair Value as of January 1			Total Realized/Unrealized Gains (Losses) Included in:						Purchases		Issuances			Sales			Settlements			Transfers into Level 3⁽³⁾		Transfers out of Level 3⁽³⁾			Fair Value as of December 31			Change In Unrealized Gains (Losses) Included in Earnings⁽⁴⁾
				Net Income			OCI
Fixed maturities, including securities pledged:
U.S. corporate public securities	$	57		$	—		$	(1	)	$	28	$	—		$	(13	)	$	—		$	—	$	(27	)	$	44		$	—
U.S. corporate private securities	1,127			7			(59		)	392		—			(8		)	(93		)	39		(12		)	1,393			—
Foreign corporate public securities and foreign governments⁽¹⁾	11			—			—			—		—			—			—			—		—			11			—
Foreign corporate private securities⁽¹⁾	169			(6		)	8			173		—			(71		)	(22		)	—		—			251			(13		)
Residential mortgage-backed securities	42			(9		)	—			4		—			—			—			—		(9		)	28			(9		)
Commercial mortgage-backed securities	17			—			—			15		—			—			(1		)	—		(17		)	14			—
Other asset-backed securities	92			—			(4		)	67		—			—			(6		)	35		(46		)	138			—
Total fixed maturities including securities pledged	1,515			(8		)	(56		)	679		—			(92		)	(122		)	74		(111		)	1,879			(22		)
Equity securities	102			(8		)	—			37		—			(2		)	—			—		—			129			(8		)
Derivatives:
Guaranteed benefit derivatives:
IUL⁽²⁾	(159		)	69			—			—		(53		)	—			61			—		—			(82		)	—
Stabilizer and MCGs⁽²⁾	(97		)	95			—			—		(3		)	—			—			—		—			(5		)	—
Other ⁽²⁾⁽⁶⁾	(50		)	(3		)	—			—		(2		)	—			16			—		—			(39		)	—
Other derivatives, net	159			(66		)	—			42		—			—			(52		)	—		—			83			(76		)
Assets held in separate accounts⁽⁵⁾	11			1			—			67		—			(6		)	—			—		(11		)	62			—

⁽¹⁾Primarily U.S. dollar denominated.

⁽²⁾ All gains and losses on Level 3 liabilities are classified as realized gains (losses) for the purpose of this disclosure because it is impracticable to track realized and unrealized gains (losses) separately on a contract-by contract basis. These amounts are included in Other net realized gains (losses) in the Consolidated Statements of Operations.

⁽³⁾ The Company's policy is to recognize transfers in and transfers out as of the beginning of the reporting period.

⁽⁴⁾ For financial instruments still held as of December 31 amounts are included in Net investment income and Total net realized capital gains (losses) in the Consolidated Statements of Operations.

⁽⁵⁾ The investment income and realized gains (losses) and change in unrealized gains (losses) included in net income for separate account assets are offset by an equal amount for separate account liabilities, which results in a net zero impact on Net income (loss) for the Company.

⁽⁶⁾ Includes GMWBL, GMWB, and FIA.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The following table summarizes the change in fair value of the Company’s Level 3 assets and liabilities and transfers in and out of Level 3 for the period indicated:



	Year Ended December 31, 2017
	Fair Value as of January 1			Total Realized/Unrealized Gains (Losses) Included in:						Purchases		Issuances			Sales			Settlements			Transfers into Level 3⁽³⁾		Transfers out of Level 3⁽³⁾			Fair Value as of December 31			Change In Unrealized Gains (Losses) Included in Earnings⁽⁴⁾
				Net Income			OCI
Fixed maturities, including securities pledged:
U.S. corporate public securities	$	12		$	—		$	—		$	29	$	—		$	—		$	(2	)	$	18	$	—		$	57		$	—
U.S. corporate private securities	913			—			16			128		—			(5		)	(40		)	130		(15		)	1,127			—
Foreign corporate public securities and foreign governments⁽¹⁾	12			—			(1		)	—		—			—			—			—		—			11			—
Foreign corporate private securities⁽¹⁾	305			(14		)	(46		)	57		—			(1		)	(44		)	—		(88		)	169			(14		)
Residential mortgage-backed securities	57			(14		)	1			5		—			(8		)	(1		)	2		—			42			(14		)
Commercial mortgage-backed securities	16			—			—			17		—			—			—			—		(16		)	17			—
Other asset-backed securities	53			—			1			72		—			—			(3		)	—		(31		)	92			—
Total fixed maturities including securities pledged	1,368			(28		)	(29		)	308		—			(14		)	(90		)	150		(150		)	1,515			(28		)
Equity securities, available-for-sale	94			—			2			8		—			(2		)	—			—		—			102			—
Derivatives:
Guaranteed benefit derivatives:
IUL⁽²⁾	(81		)	(87		)	—			—		(35		)	—			44			—		—			(159		)	—
Stabilizer and MCGs⁽²⁾	(150		)	57			—			—		(4		)	—			—			—		—			(97		)	—
Other ⁽²⁾⁽⁶⁾	(60		)	8			—			—		(3		)	—			5			—		—			(50		)	—
Other derivatives, net	72			78			—			31		—			—			(22		)	—		—			159			87
Assets held in separate accounts⁽⁵⁾	5			—			—			18		—			(3		)	—			2		(11		)	11			—

⁽¹⁾Primarily U.S. dollar denominated.

⁽³⁾ The Company's policy is to recognize transfers in and transfers out as of the beginning of the reporting period.

⁽⁶⁾ Includes GMWBL, GMWB, and FIA.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

For the years ended December 31, 2018 and 2017, the transfers in and out of Level 3 for fixed maturities and separate accounts were due to the variation in inputs relied upon for valuation each quarter. Securities that are primarily valued using independent broker quotes when prices are not available from one of the commercial pricing services are reflected as transfers into Level 3. When securities are valued using more widely available information, the securities are transferred out of Level 3 and into Level 1 or 2, as appropriate.

Significant Unobservable Inputs

The Company's Level 3 fair value measurements of its fixed maturities, equity securities and equity and credit derivative contracts are primarily based on broker quotes for which the quantitative detail of the unobservable inputs is neither provided nor reasonably corroborated, thus negating the ability to perform a sensitivity analysis. The Company performs a review of broker quotes by performing a monthly price variance comparison and back tests broker quotes to recent trade prices.

Quantitative information about the significant unobservable inputs used in the Company's Level 3 fair value measurements of its guaranteed benefit derivatives is presented in the following sections and table.

Significant unobservable inputs used in the fair value measurements of IULs include nonperformance risk and policyholder behavior assumptions, such as lapses.

The significant unobservable inputs used in the fair value measurement of the Stabilizer embedded derivatives and MCG derivative are interest rate implied volatility, nonperformance risk, lapses and policyholder deposits. Such inputs are monitored quarterly.

Following is a description of selected inputs:

Interest Rate Volatility: A term-structure model is used to approximate implied volatility for the swap rates for the Stabilizer and MCG fair value measurements. Where no implied volatility is readily available in the market, an alternative approach is applied based on historical volatility.

Nonperformance Risk: For the estimate of the fair value of embedded derivatives associated with the Company's product guarantees, the Company uses a blend of observable, similarly rated peer holding company credit spreads, adjusted to reflect the credit quality of the individual insurance company subsidiary that issued the guarantee as well as an adjustment to reflect the non-default spreads and the priority and recovery rates of policyholder claims.

Actuarial Assumptions: Management regularly reviews actuarial assumptions, which are based on the Company's experience and periodically reviewed against industry standards. Industry standards and Company experience may be limited on certain products.

The following table presents the unobservable inputs for Level 3 fair value measurements as of December 31, 2018:



	Range⁽¹⁾
Unobservable Input	IUL		Stabilizer/MCGs
Interest rate implied volatility	—		0.1% to 6.5%
Nonperformance risk	0.38% to 0.84%		0.38% to 1.2%
Actuarial Assumptions:
Lapses	2% to 10%		0% to 50%	(2)
Policyholder Deposits⁽³⁾	—		0% to 50%	(2)
Mortality	—	(4)	—


⁽¹⁾	Represents the range of reasonable assumptions that management has used in its fair value calculations.


⁽²⁾	Stabilizer contracts with recordkeeping agreements have a different range of lapse and policyholder deposit assumptions from Stabilizer (Investment only) and MCG contracts as shown below:



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)



	Percentage of Plans		Overall Range of Lapse Rates	Range of Lapse Rates for 85% of Plans	Overall Range of Policyholder Deposits	Range of Policyholder Deposits for 85% of Plans
Stabilizer (Investment Only) and MCG Contracts	92	%	0-25%	0-15%	0-30%	0-15%
Stabilizer with Recordkeeping Agreements	8	%	0-50%	0-30%	0-50%	0-25%
Aggregate of all plans	100	%	0-50%	0-30%	0-50%	0-25%


⁽³⁾	Measured as a percentage of assets under management or assets under administration.

⁽⁴⁾The mortality rate, along with the associated cost of insurance charges, are based on the 2001 Commissioner's Standard Ordinary table with mortality improvements.

The following table presents the unobservable inputs for Level 3 fair value measurements as of December 31, 2017:



	Range⁽¹⁾
Unobservable Input	IUL		Stabilizer/MCGs
Interest rate implied volatility	—		0.1% to 6.3%
Nonperformance risk	0.02% to 0.54%		0.02% to 1.1%
Actuarial Assumptions:
Lapses	2% to 10%		0% to 50%	⁽²⁾
Policyholder Deposits⁽³⁾	—		0% to 50%	⁽²⁾
Mortality	—	⁽⁴⁾	—


⁽¹⁾	Represents the range of reasonable assumptions that management has used in its fair value calculations.


⁽²⁾	Stabilizer contracts with recordkeeping agreements have a different range of lapse and policyholder deposit assumptions from Stabilizer (Investment only) and MCG contracts as shown below:



	Percentage of Plans		Overall Range of Lapse Rates	Range of Lapse Rates for 85% of Plans	Overall Range of Policyholder Deposits	Range of Policyholder Deposits for 85% of Plans
Stabilizer (Investment Only) and MCG Contracts	92	%	0-25%	0-15%	0-30%	0-15%
Stabilizer with Recordkeeping Agreements	8	%	0-50%	0-30%	0-50%	0-25%
Aggregate of all plans	100	%	0-50%	0-30%	0-50%	0-25%


⁽³⁾	Measured as a percentage of assets under management or assets under administration.


⁽⁴⁾	The mortality rate, along with the associated cost of insurance charges, are based on the 2001 Commissioner's Standard Ordinary table with mortality improvements.

Generally, the following will cause an increase (decrease) in the IUL embedded derivative fair value liabilities:


•	A decrease (increase) in nonperformance risk


•	A decrease (increase) in lapses

Generally, the following will cause an increase (decrease) in the derivative and embedded derivative fair value liabilities related to Stabilizer and MCG contracts:


•	An increase (decrease) in interest rate implied volatility


•	A decrease (increase) in nonperformance risk


•	A decrease (increase) in lapses


•	A decrease (increase) in policyholder deposits



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The Company notes the following interrelationships:


•	Generally, an increase (decrease) in interest rate volatility will increase (decrease) lapses of Stabilizer and MCG contracts due to dynamic participant behavior.

Other Financial Instruments

The following disclosures are made in accordance with the requirements of ASC Topic 825 which requires disclosure of fair value information about financial instruments, whether or not recognized at fair value on the Consolidated Balance Sheets.

ASC Topic 825 excludes certain financial instruments, including insurance contracts and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The following table presents the carrying values and estimated fair values of the Company's financial instruments as of the dates indicated:



	December 31, 2018				December 31, 2017
	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Fixed maturities, including securities pledged	$	51,121	$	51,121	$	53,434	$	53,434
Equity securities	273		273		380		380
Mortgage loans on real estate	8,676		8,811		8,686		8,748
Policy loans	1,833		1,833		1,888		1,888
Cash, cash equivalents, short-term investments and short-term investments under securities loan agreements	3,390		3,390		3,315		3,315
Derivatives	247		247		397		397
Notes receivable⁽¹⁾	—		—		350		445
Other investments	90		92		47		55
Assets held in separate accounts	71,228		71,228		77,605		77,605
Liabilities:
Investment contract liabilities:
Funding agreements without fixed maturities and deferred annuities⁽²⁾	34,053		37,052		33,986		38,553
Funding agreements with fixed maturities	1,209		1,197		501		501
Supplementary contracts, immediate annuities and other	976		960		1,275		1,285
Derivatives:
Guaranteed benefit derivatives:
IUL	82		82		159		159
Stabilizer and MCGs	5		5		97		97
Other ⁽³⁾	39		39		50		50
Other derivatives	139		139		149		149
Short-term debt	1		1		337		337
Long-term debt	3,136		3,112		3,123		3,478
Embedded derivative on reinsurance	21		21		129		129

⁽¹⁾ Included in Other assets on the Consolidated Balance Sheets.

⁽²⁾ Certain amounts included in Funding agreements without fixed maturities and deferred annuities are also reflected within the Guaranteed benefit derivatives section of the table above.

⁽³⁾Includes GMWBL, GMWB and FIA.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The following table presents the classifications of financial instruments which are not carried at fair value on the Consolidated Balance Sheets:



Financial Instrument	Classification
Mortgage loans on real estate	Level 3
Policy loans	Level 2
Notes receivable	Level 2
Other investments	Level 2
Funding agreements without fixed maturities and deferred annuities	Level 3
Funding agreements with fixed maturities	Level 2
Supplementary contracts and immediate annuities	Level 3
Short-term debt and Long-term debt	Level 2



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

6. Deferred Policy Acquisition Costs and Value of Business Acquired

The following table presents a rollforward of DAC and VOBA for the periods indicated:



	DAC			VOBA				Total
Balance at January 1, 2016	$	3,424		$	997			$	4,421
Deferrals of commissions and expenses	255			9				264
Amortization:
Amortization, excluding unlocking	(384		)	(144		)		(528		)
Unlocking⁽¹⁾	(78		)	(78		)		(156		)
Interest accrued	193			76			⁽²⁾	269
Net amortization included in Consolidated Statements of Operations	(269		)	(146		)		(415		)
Change in unrealized capital gains/losses on available-for-sale securities	(224		)	(49		)		(273		)
Balance at December 31, 2016	3,186			811				3,997
Deferrals of commissions and expenses	234			8				242
Amortization:
Amortization, excluding unlocking	(418		)	(152		)		(570		)
Unlocking⁽¹⁾	(123		)	(89		)		(212		)
Interest accrued	188			65			⁽²⁾	253
Net amortization included in Consolidated Statements of Operations	(353		)	(176		)		(529		)
Change in unrealized capital gains/losses on available-for-sale securities	(249		)	(87		)		(336		)
Balance as of December 31, 2017	2,818			556				3,374
Deferrals of commissions and expenses	207			9				216
Amortization:
Amortization, excluding unlocking	(397		)	(103		)		(500		)
Unlocking⁽¹⁾	(97		)	(10		)		(107		)
Interest accrued	181			58			⁽²⁾	239
Net amortization included in Consolidated Statements of Operations	(313		)	(55		)		(368		)
Change in unrealized capital gains/losses on available-for-sale securities	586			308				894
Balance as of December 31, 2018	$	3,298		$	818			$	4,116

⁽¹⁾

There was no loss recognition for DAC and VOBA during 2018 and 2017. There was loss recognition of DAC and VOBA of $3 and $4, respectively, during 2016. Additionally, the 2018 amounts include unfavorable unlocking for DAC and VOBA of $25 and $26, respectively, associated with an update to assumptions related to customer consents of changes to guaranteed minimum interest rate provisions. The 2017 amounts include unfavorable unlocking for DAC and VOBA of $80 and $140, respectively, associated with consent acceptances received from customers and expected future acceptances of customer consents to changes related to guaranteed minimum interest rate provisions of certain retirement plan contracts with fixed investment options.


⁽²⁾	Interest accrued at the following rates for VOBA: 3.5% to 7.4% during 2018, 4.0% to 7.4% during 2017 and 4.1% to 7.5% during 2016.

The estimated amount of VOBA amortization expense, net of interest, during the next five years is presented in the following table. Actual amortization incurred during these years may vary as assumptions are modified to incorporate actual results and/or changes in best estimates of future results.



Year	Amount
2019	$	54
2020	39
2021	41
2022	39
2023	39



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

7. Reserves for Future Policy Benefits and Contract Owner Account Balances

Future policy benefits and contract owner account balances were as follows as of December 31, 2018 and 2017:



	2018		2017
Future policy benefits:
Individual and group life insurance contracts	$	8,202	$	8,857
Product guarantees on universal life and deferred annuity contracts, and payout contracts with life contingencies	5,470		5,941
Accident and health	816		849
Total	$	14,488	$	15,647

Contract owner account balances:
Universal life-type contracts	$	14,568	$	14,561
Fixed annuities and payout contracts without life contingencies	35,124		34,949
Funding agreements and other	1,309		648
Total	$	51,001	$	50,158

8. Guaranteed Benefit Features

The Company issues UL and VUL contracts where the Company contractually guarantees to the contract owner a death benefit even when there is insufficient value to cover monthly mortality and expense charges, whereas otherwise the contract would typically lapse ("no lapse guarantee"), and other provisions that would produce expected gains from the insurance benefit function followed by losses from that function in later years.

In addition, the Company’s Stabilizer and MCG products have guaranteed credited rates. Credited rates are set either quarterly or annually. Most contracts have a zero percent minimum credited rate guarantee, although some contracts have minimum credited rate guarantees up to 3% and allow the contract holder to select either the market value of the account or the book value of the account at termination. The book value of the account is equal to deposits plus interest, less any withdrawals. The fair value is estimated using the income approach.

We have a small number of retained variable annuity policies that contain living benefit riders such as Guaranteed Minimum Withdrawal Benefit and Guaranteed Minimum Withdrawal Benefit for Life (GMWB/GMWBL) and Guaranteed Minimum Income Benefit (GMIB) and death benefit riders such as Guaranteed Minimum Death Benefits (GMDB). These products include separate account options and guarantee the contract owner a return or withdrawal amount payable in conjunction with a specified event (ex. death, annuitization).

The Company’s major source of income from guaranteed benefit features is the base contract mortality, expense and guaranteed death and living benefit rider fees charged to the contract owner, less the costs of administering the product and providing for the guaranteed death and living benefits.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The liabilities for UL contracts are recorded in the general account. The liabilities for VUL contracts are recorded in separate account liabilities. The separate account liabilities may include more than one type of guarantee. These liabilities are subject to the requirements for additional reserve liabilities under ASC Topic 944, which are recorded on the Consolidated Balance Sheets in Future policy benefits and Contract owner account balances. The paid and incurred amounts were as follows for the years ended December 31, 2018, 2017 and 2016:



	UL and VUL⁽¹⁾			Stabilizer and MCGs⁽²⁾			Other⁽³⁾
Separate account liability at December 31, 2018	$	434		$	37,155		$	1,863
Separate account liability at December 31, 2017	$	519		$	37,219		$	2,308
Additional liability balance:
Balance at January 1, 2016	$	1,197		$	161		$	70
Incurred guaranteed benefits	614			(11		)	5
Paid guaranteed benefits	(496		)	—			(2		)
Balance at December 31, 2016	1,315			150			73
Incurred guaranteed benefits	101			(53		)	(28		)
Paid guaranteed benefits	(235		)	—			(1		)
Balance at December 31, 2017	1,181			97			44
Incurred guaranteed benefits	451			(92		)	2
Paid guaranteed benefits	(293		)	—			(2		)
Balance at December 31, 2018	$	1,339		$	5		$	44

⁽¹⁾The additional liability balances as of December 31, 2018, 2017, 2016 and as of January 1, 2016 are presented net of reinsurance of $1,225, $1,304, $1,006 and $935, respectively.

⁽²⁾The Separate account liability at December 31, 2018 and 2017 includes $29.0 billion and $30.0 billion, respectively, of externally managed assets, which are not reported on the Company's Consolidated Balance Sheets.

⁽³⁾Includes GMDB/GMWBL/GMWB/GMIB related to the retained business.

The net amount at risk for the secondary guarantees is equal to the current death benefit in excess of the account values. The general and separate account values, net amount at risk, net of reinsurance and the weighted average attained age of contract owners by type of minimum guaranteed benefit for UL and VUL contracts were as follows as of December 31, 2018 and 2017:



	December 31, 2018				December 31, 2017
	Secondary Guarantees		Paid-up Guarantees		Secondary Guarantees		Paid-up Guarantees
UL and VUL Contracts:
Account value (general and separate account)	$	3,133	$	—	$	3,234	$	—
Net amount at risk, net of reinsurance	15,461		—		16,485		—
Weighted average attained age	65		—		64		—



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Account balances of contracts with guarantees invested in variable separate accounts were as follows as of December 31, 2018 and 2017:



	December 31, 2018		December 31, 2017
Equity securities (including mutual funds):
Equity funds	$	1,850	$	2,262
Bond funds	201		243
Balanced funds	333		403
Money market funds	53		60
Other	12		15
Total	$	2,449	$	2,983

In addition, the aggregate fair value of fixed income securities supporting separate accounts with Stabilizer benefits as of December 31, 2018 and 2017 was $8.0 billion.

9. Reinsurance

The Company has reinsurance treaties covering a portion of the mortality risks and guaranteed death and living benefits under its life insurance contracts. The Company remains liable to the extent its reinsurers do not meet their obligations under the reinsurance agreements.

The Company reinsures its business through a diversified group of reinsurers. The Company monitors trends in arbitration and any litigation outcomes with its reinsurers. Collectability of reinsurance balances are evaluated by monitoring ratings and evaluating the financial strength of its reinsurers. Large reinsurance recoverable balances with offshore or other non-accredited reinsurers are secured through various forms of collateral, including secured trusts, funds withheld accounts and irrevocable letters of credit ("LOC").



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Information regarding the effect of reinsurance on the Consolidated Balance Sheets is as follows as of the periods indicated:



	December 31, 2018
	Direct		Assumed		Ceded			Total, Net of Reinsurance
Assets
Premiums receivable	$	124	$	321	$	(387	)	$	58
Reinsurance recoverable	—		—		6,802			6,802
Total	$	124	$	321	$	6,415		$	6,860

Liabilities
Future policy benefits and contract owner account balances	$	61,492	$	3,997	$	(6,802	)	$	58,687
Liability for funds withheld under reinsurance agreements	694		—		—			694
Total	$	62,186	$	3,997	$	(6,802	)	$	59,381

	December 31, 2017
	Direct		Assumed		Ceded			Total, Net of Reinsurance
Assets
Premiums receivable	$	110	$	405	$	(449	)	$	66
Reinsurance recoverable	—		—		7,566			7,566
Total	$	110	$	405	$	7,117		$	7,632

Liabilities
Future policy benefits and contract owner account balances	$	62,005	$	3,800	$	(7,566	)	$	58,239
Liability for funds withheld under reinsurance agreements	791		—		—			791
Total	$	62,796	$	3,800	$	(7,566	)	$	59,030



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Information regarding the effect of reinsurance on the Consolidated Statement of Operations is as follows for the periods indicated:



	Year ended December 31,
	2018			2017			2016
Premiums:
Direct premiums	$	2,614		$	2,606		$	3,284
Reinsurance assumed	996			1,192			1,222
Reinsurance ceded	(1,451		)	(1,677		)	(1,711		)
Net premiums	$	2,159		$	2,121		$	2,795

Fee income:
Gross fee income	$	2,709		$	2,628		$	2,472
Reinsurance ceded	(1		)	(1		)	(1		)
Net fee income	$	2,708		$	2,627		$	2,471

Interest credited and other benefits to contract owners / policyholders:
Direct interest credited and other benefits to contract owners / policyholders	$	5,050		$	5,124		$	5,859
Reinsurance assumed	1,209			1,929			1,213
Reinsurance ceded⁽¹⁾	(1,684		)	(2,417		)	(1,758		)
Net interest credited and other benefits to contract owners / policyholders	$	4,575		$	4,636		$	5,314

⁽¹⁾ Includes $496, $491 and $482 for amounts paid to reinsurers in connection with the Company's UL contracts for the years ended December 31, 2018, 2017 and 2016, respectively.

Effective October 1, 1998, the Company disposed of a block of its individual life insurance business under an indemnity reinsurance arrangement with a subsidiary of Lincoln National Corporation ("Lincoln") for $1.0 billion. Under the agreement, Lincoln contractually assumed from the Company certain policyholder liabilities and obligations, although the Company remains obligated to contract owners. The Lincoln subsidiary established a trust to secure its obligations to the Company under the reinsurance transaction. Of the Premium receivable and reinsurance recoverable on the Consolidated Balance Sheets, $1.4 billion and $1.5 billion as of December 31, 2018 and 2017, respectively, is related to the reinsurance recoverable from the subsidiary of Lincoln under this reinsurance agreement.

In 2009, the Company ceded its individual reinsurance business to Hannover Re on an indemnity reinsurance basis. Prior to 2015, the Company was obligated to maintain collateral for the statutory reserve requirements on the business transferred for reinsurance between Security Life of Denver Insurance Company ("SLD") and Security Life of Denver International Limited ("SLDI"). On September 24, 2015, the Company entered into a Hannover Re Buyer Facility Agreement with Hannover Life Reassurance Company of America, Hannover Re (Ireland) Limited, Hannover Ruck SE and SLDI ("Buyer Facility Agreement"). Under the Buyer Facility Agreement, the existing collateral, provided by SLDI supporting reserves on the Hannover Re block, was replaced by a $2.9 billion senior unsecured floating rate note issued by Hannover Ruck SE and deposited into a reserve credit trust established by SLDI for the benefit of SLD. Of the Premium receivable and reinsurance recoverable on the Consolidated Balance Sheets, $2.4 billion and $2.9 billion as of December 31, 2018 and 2017, respectively, is related to the reinsurance recoverable from Hannover Re under the MPA.

Pursuant to the terms of the MTA disclosed in the Business, Basis of Presentation and Significant Accounting Policies Note to the accompanying Consolidated Financial Statements and prior to the closing of the Transaction, the Company entered into the following reinsurance transactions:


•	VIAC recaptured from the Company the CBVA business previously assumed by Roaring River II, Inc., a subsidiary of the Company.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

•

The Company, through one of its subsidiaries ceded, under modified coinsurance agreements, fixed and fixed indexed annuity reserves of $451 to Athene Annuity & Life Assurance Company ("AADE") and Athene Life Re, Ltd. ("ALRe"). Under the terms of the agreements, AADE and ALRe contractually assumed from the Company the policyholder liabilities and obligations related to the policies, although the Company remains obligated to the policyholders. Upon the consummation of the agreements, the Company recognized no gain or loss in the Consolidated Statements of Operations.


•	The Company, through one of its subsidiaries, assumed, under coinsurance and modified coinsurance agreements, certain individual life and deferred annuity policies from VIAC. Upon the consummation of the agreements, the Company recognized no gain or loss in the Consolidated Statements of Operations. As of December 31, 2018, assumed reserves related to these agreements were $837.

10. Goodwill and Other Intangible Assets

Goodwill

Goodwill is the excess of cost over the estimated fair value of net assets acquired. As of December 31, 2018 and 2017, the Company had $48 and $31 in goodwill, respectively, which was related to the Investment Management and Retirement segments. There is no accumulated impairment balance associated with goodwill. The Company performs a goodwill impairment analysis annually as of October 1 and more frequently if facts and circumstances indicate that goodwill may be impaired.

Other Intangible Assets

The following table presents other intangible assets as of the dates indicated:



	Weighted Average Amortization Lives	December 31, 2018						December 31, 2017
	Weighted Average Amortization Lives	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Management contract rights	20 years	$	550	$	504	$	46	$	550	$	477	$	73
Customer relationship lists	20 years	120		83		37		116		76		40
Computer software	3 years	404		366		38		382		340		42
Total intangible assets		$	1,074	$	953	$	121	$	1,048	$	893	$	155

Amortization expense related to intangible assets was $61, $62 and $63 for the years ended December 31, 2018, 2017 and 2016, respectively.

The estimated amortization of intangible assets are as follows:



Year	Amount
2019	$	58
2020	34
2021	11
2022	7
2023	4

Amortization of intangible assets is included in the Consolidated Statements of Operations in Operating expenses.

The Company does not have any indefinite-lived intangibles other than goodwill.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

11. Share-based Incentive Compensation Plans

ING U.S., Inc. 2013 Omnibus Employee Incentive Plan and Voya Financial, Inc. 2014 Omnibus Employee Incentive Plan

The Company has provided equity-based compensation awards to its employees under the ING U.S., Inc. 2013 Omnibus Employee Incentive Plan (the "2013 Omnibus Plan") and the Voya Financial, Inc. 2014 Omnibus Employee Incentive Plan (the "2014 Omnibus Plan"). At inception of the 2013 Omnibus Plan, a total of 7,650,000 shares of Company common stock were reserved and available for issuance under the plan. As of December 31, 2018, common stock reserved and available for issuance under the 2013 Omnibus Plan was 347,663 shares. The 2013 Omnibus Plan is no longer actively used for new grants of equity-based compensation awards.

The 2014 Omnibus Plan was adopted by the Company's Board of Directors and approved by shareholders in 2014, and has substantially the same terms as the 2013 Omnibus Plan, except for certain changes intended to allow certain performance-based compensation awards to comply with the criteria for tax deductibility set forth in Section 162(m) of the Internal Revenue Code. The 2014 Omnibus Plan provides for 17,800,000 shares of common stock to be available for issuance as equity-based compensation awards. As of December 31, 2018, common stock reserved and available for issuance under the 2014 Omnibus Plan was 6,331,601 shares.

The 2013 Omnibus Plan and the 2014 Omnibus Plan (together, the "Omnibus Plans") each permit the granting of a wide range of equity-based awards, including RSUs, which represent the right to receive a number of shares of Company common stock upon vesting; restricted stock, which are shares of Company stock that are issued subject to sale and transfer restrictions until the vesting conditions are met; PSUs, which are RSUs subject to certain performance-based vesting conditions, and under which the number of shares of common stock delivered upon vesting varies with the level of achievement of performance criteria; and stock options. Grants of equity-based awards under the Omnibus Plans are approved in advance by the Compensation and Benefits Committee (the "Committee") of the Board of Directors of the Company, and are subject to such terms and conditions as the Committee may determine, including in respect of vesting and forfeiture, subject to certain limitations provided in the Omnibus Plans. Equity-based awards under the Omnibus Plans may carry dividend equivalent rights, pursuant to which notional dividends accumulate on unvested equity awards and are paid, in cash, upon vesting. Except for stock option awards made during 2015, awards made under the Omnibus Plans, to date, have included dividend equivalent rights. Dividend equivalents are credited to the recipient and are paid only to the extent the applicable performance criteria and service conditions are met.

During each of the years ended December 31, 2018, 2017 and 2016 the Company awarded RSUs and PSUs to its employees under the Omnibus Plans. The PSU awards entitle recipients to receive, upon vesting, a number of shares of common stock that ranges from 0% to 150% of the number of PSUs awarded, depending on the level of achievement of the specified performance conditions. The establishment and the achievement of performance objectives are determined and approved by the Committee. Except under certain termination conditions, RSUs and PSUs generally vest no earlier than one year from the date of the award and no later than three years from the date of the award. In the case of retirement (eligibility for which is based on the employee's age and years of service as provided in the relevant award agreement), awards vest in full, but subject to the satisfaction of any applicable performance criteria.

In December 2015, the Company also awarded contingent stock options under the 2014 Omnibus Plan. These options are subject to vesting conditions based on the achievement of specified performance measures, and generally become exercisable one year following satisfaction of the relevant vesting condition. The options have a term of ten years from the grant date. During the year ended December 31, 2017, all outstanding options vested as the necessary performance conditions were satisfied. The vested options are generally subject to a one year holding period from the dates of vesting and have an exercise price of $37.60 per share

If an award under the Omnibus Plans is forfeited, expired, terminated or otherwise lapses, the shares of Company common stock underlying that award will again become available for issuance. Shares withheld by the Company to pay employee taxes, or which are withheld by or tendered to the Company to pay the exercise price of stock options (or are repurchased from an option holder by the Company with proceeds from the exercise of stock options) are not available for reissuance.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Voya Financial, Inc. 2013 Omnibus Non-Employee Director Incentive Plan

The Company offers equity-based awards to Voya Financial, Inc. non-employee directors under the Voya Financial, Inc. 2013 Omnibus Non-Employee Director Incentive Plan ("2013 Director Plan”), which the Company adopted in connection with the IPO. A total of 288,000 shares of Company common stock may be issued under the 2013 Director Plan. The material terms of the 2013 Director Plan are substantially consistent with the material terms of the 2013 Omnibus Plan described above.

During the years ended December 31, 2018, 2017, and 2016, the Company granted 22,637, 27,261 and 34,758 RSUs, respectively, to certain of its non-employee directors. The awards granted in 2018 and 2017 vest in full on the first anniversary of the grant date, and the awards granted in 2016 vest one-third on each of the first, second and third anniversary of the grant date, in each case provided that the grantee remains a director of the Company on the relevant vesting date; however, no shares are delivered in connection with the RSUs until such time as the director's service on the Board is terminated.

Compensation Cost

The fair value of stock options was estimated using the Black-Scholes option pricing model. The following is a summary of the assumptions used in this model for the stock options granted during 2015:



Expected volatility	28.6		%
Expected term (in years)	6.02
Strike price	$	37.60
Risk-free interest rate	2.1		%
Expected dividend yield	0.11		%
Weighted average estimated fair value	$	11.89

The vesting of the stock options was contingent on the satisfaction of performance conditions on or before December 31, 2018; the Company assumed for purposes of the award's fair value that such conditions would be met in full prior to such date. The Company utilized the Simplified Method for the Expected term calculations. At the time of grant, the Company did not have historical exercises on which to base its own estimate. Additionally, exercise data relating to employees of comparable companies was not easily obtainable. Furthermore, because the Company did not have historical stock prices for a period at least equal to the expected term, the Company estimated volatility using a weighted-average consisting 70% of historical peer group volatility and 30% of the historical volatility of the Company common stock. The contractual term for exercising the options is ten years.

The fair value of the TSR component of the PSU awards was estimated using a Monte Carlo simulation. The following is a summary of the significant assumptions used to calculate the fair value of the TSR component of the PSU awards granted during the periods indicated:



	2018		2017		2016
Expected volatility of the Company's common stock	28.58	%	26.67	%	24.37	%
Average expected volatility of peer companies	26.76	%	27.43	%	25.63	%
Expected term (in years)	2.86		2.86		2.82
Risk-free interest rate	2.40	%	1.45	%	1.05	%
Expected dividend yield	—	%	—	%	—	%
Average correlation coefficient of peer companies	67	%	68	%	61	%



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The following table summarizes share-based compensation expense, which includes expenses related to awards granted under the Omnibus Plans and Director Plan for the periods indicated:



	Year Ended December 31,
	2018		2017		2016
RSUs	$	49	$	57	$	62
PSU awards	43		44		32
Stock options	5		16		14
Other ⁽¹⁾	—		1		2
Total	97		118		110
Income tax benefit	18		39		38
Share-based compensation	$	79	$	79	$	72

⁽¹⁾ Includes compensation cost for legacy plans, under which no new awards are being issued.



	RSUs		PSU Awards		Stock Options
Unrecognized compensation cost	$	28	$	33	$	—
Expected remaining weighted-average period of expense recognition (in years)	1.8		1.6		0.0

Awards Outstanding

The following table summarizes RSU and PSU awards activity under the Omnibus Plans for the periods indicated:



	RSU Awards				PSU Awards
_{(awards in millions)}	Number of Awards		Weighted Average Grant Date Fair Value		Number of Awards			Weighted Average Grant Date Fair Value
Outstanding at January 1, 2018	3.0		$	38.42	2.2			$	35.53
Adjusted for PSU performance factor	N/A		N/A		—		*	—
Granted	1.0		50.55		0.8			53.21
Vested	(1.5	)	38.48		(0.4	)		40.40
Forfeited	(0.1	)	42.70		(0.1	)		41.51
Outstanding at December 31, 2018	2.4		$	43.36	2.5			$	40.21

Awards expected to vest as of December 31, 2018	2.4		$	43.36	2.5			$	40.21

* Less than 0.1.

The weighted-average grant date fair value for RSU awards granted during the year ended December 31, 2018, 2017 and 2016 was $50.55, $42.30 and $31.68, respectively. The weighted-average grant date fair value for PSU awards granted during the years ended December 31, 2018, 2017 and 2016 was $53.21, $42.32 and $28.83, respectively.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The following table summarizes the number of options under the Omnibus Plans for the periods indicated:



	Stock Options
_{(awards in millions)}	Number of Awards			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding as of January 1, 2018	3.0			$	37.60	7.96	$	—
Granted	—			—
Exercised	(0.4	)		37.60
Forfeited	—		*	37.60
Outstanding as of December 31, 2018	2.6			$	37.60	6.96	$	6.6
Vested, exercisable, as of December 31, 2018	2.6			37.60		6.96	6.6

* Less than 0.1.

The total intrinsic value of options exercised during the years ended December 31, 2018 was $5. No options were exercised in 2017 and 2016.

The total grant date fair value of shares vested for the years ended December 31, 2018, 2017, and 2016 was $99, $102 and $97, respectively.

12. Shareholders' Equity

Common Shares

The following table presents the rollforward of common shares used in calculating the weighted average shares utilized in the basic earnings per common share calculation for the periods indicated:



	Common Shares
_{(shares in millions)}	Issued		Held in Treasury	Outstanding
Balance, January 1, 2016	265.3		56.2	209.1
Common Shares issued	—	*	—	—		*
Common Shares acquired - share repurchase	—		17.0	(17.0	)
Share-based compensation programs	2.7		0.2	2.5
Balance, December 31, 2016	268.0		73.4	194.6
Common Shares issued	—	*	—	—		*
Common Shares acquired - share repurchase	—		24.4	(24.4	)
Share-based compensation programs	2.0		0.2	1.8
Balance, December 31, 2017	270.0		98.0	172.0
Common Shares issued	—		—	—
Common Shares acquired - share repurchase	—		22.8	(22.8	)
Share-based compensation programs	2.4		0.6	1.8
Balance, December 31, 2018	272.4		121.4	151.0

* Less than 0.1.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Share Repurchase Program

From time to time, the Company's Board of Directors authorizes the Company to repurchase shares of its common stock. These authorizations permit stock repurchases up to a prescribed dollar amount and generally may be accomplished through various means, including, without limitation, open market transactions, privately negotiated transactions, forward, derivative, or accelerated repurchase, or automatic repurchase transactions, including 10b5-1 plans, or tender offers. Share repurchase authorizations typically expire if unused by a prescribed date.

On February 1, 2018, the Board of Directors provided share repurchase authorization, increasing the aggregate amount of the Company's common stock authorized for repurchase by $500. On October 25, 2018, the Board of Directors provided its most recent share repurchase authorization, increasing the aggregate amount of the Company's common stock authorized for repurchase by $500. The current share repurchase authorization expires on December 31, 2019 (unless extended), and does not obligate the Company to purchase any shares. The authorization for the share repurchase program may be terminated, increased or decreased by the Board of Directors at any time.

On January 3, 2019, the Company entered into a share repurchase agreement with a third-party financial institution, pursuant to which the Company made an upfront payment of of $250 and received initial delivery of 5,059,449 shares. This arrangement is scheduled to terminate no later than the beginning of the second quarter of 2019, at which time the Company will settle any outstanding positive or negative share balances based on the daily volume-weighted average price of the Company's common stock.

On December 26, 2017, the Company entered into a share repurchase arrangement with a third-party financial institution, pursuant to which the Company made an up-front payment of $500 and received initial delivery of 7,821,666 shares during the fourth quarter of 2017. This arrangement closed on March 31, 2018 and an additional 1,947,413 shares were delivered.

On March 9, 2017, the Company entered into a share repurchase arrangement with a third-party financial institution, pursuant to which the Company made an up-front payment of $150 and received delivery of 3,986,647 shares during the second quarter of 2017.

On November 3, 2016, the Company entered into a share repurchase arrangement with a third-party financial institution, pursuant to which the Company made an up-front payment of $200 during the fourth quarter of 2016 and received delivery of 5,216,025 shares during the first quarter of 2017.

On June 16, 2016, the Company entered into a share repurchase arrangement with a third-party financial institution, pursuant to which the Company made an up-front payment of $150 and received delivery of 5,690,254 shares during the third quarter of 2016.

Warrants

On May 7, 2013, the Company issued to ING Group warrants to purchase up to 26,050,846 shares of the Company's common stock equal in the aggregate to 9.99% of the issued and outstanding shares of common stock at that date. The current exercise price of the warrants is $48.75 per share of common stock, subject to adjustments, including for stock dividends, cash dividends in excess of $0.01 per share a quarter, subdivisions, combinations, reclassifications and non-cash distributions. The warrants also provide for, upon the occurrence of certain change of control events affecting the Company, an increase in the number of shares to which a warrant holder will be entitled upon payment of the aggregate exercise price of the warrant. The warrants became exercisable to ING Group and its affiliates on January 1, 2017 and to all other holders starting on the first anniversary of the completion of the IPO (May 7, 2014). The warrants expire on the tenth anniversary of the completion of the IPO (May 7, 2023). The warrants are net share settled, which means that no cash will be payable by a warrant holder in respect of the exercise price of a warrant upon exercise, and are classified as permanent equity. They have been recorded at their fair value determined on the issuance date of May 7, 2013 in the amount of $94 as an addition and reduction to Additional-paid-in-capital. Warrant holders are not entitled to receive dividends. On March 12, 2018, ING Group sold its remaining interests in the warrants and no longer owns any warrants. As of December 31, 2018, no warrants have been exercised.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Preferred Stock

On September 12, 2018, the Company issued 325,000 shares of 6.125% Fixed-Rate Reset Non-Cumulative Preferred Stock, Series A, with a $0.01 par value per share and a liquidation preference of $1,000 per share, for aggregate net proceeds of $319. The ability of the Company to declare or pay dividends on, or purchase, redeem or otherwise acquire, shares of its common stock will be substantially restricted in the event that the Company does not declare and pay (or set aside) dividends on the Series A Preferred Stock for the last preceding dividend period.

The preferred stock is not subject to any mandatory redemption, sinking fund, retirement fund, purchase fund or similar provisions. The Company may, at its option, redeem the preferred stock, (a) in whole but not in part, at any time, within 90 days after the occurrence of a "rating agency event," at a redemption price equal to $1,020 per share, plus an amount equal to any dividends per share of preferred stock that have accrued but not been declared and paid for the then-current dividend period to, but excluding, the redemption date or (b) (i) in whole but not in part, at any time within 90 days after the occurrence of a "regulatory capital event" or (ii) in whole or in part, from time to time, on September 15, 2023 or any subsequent "reset date," in each case, at a redemption price equal to $1,000 per share of preferred stock, plus an amount equal to any dividends per share of preferred stock that have accrued but not been declared and paid for the then-current dividend period to, but excluding, such redemption date.

A "rating agency event" means that any nationally recognized statistical rating organization that then publishes a rating for the Company amends, clarifies or changes the criteria it uses to assign equity credit to securities like the preferred stock, which results in the lowering of the equity credit assigned to the preferred stock, as applicable, or shortens the length of time that the preferred stock is assigned a particular level of equity credit.

A "regulatory capital event" means that the Company becomes subject to capital adequacy supervision by a capital regulator and the capital adequacy guidelines that apply to the Company as a result of being so subject set forth criteria pursuant to which the preferred stock would not qualify as capital under such capital adequacy guidelines, as the Company may determine at any time, in its sole discretion.

As of December 31, 2018, there were no preferred stock dividends in arrears.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

13. Earnings per Common Share

The following table presents a reconciliation of Net income (loss) and shares used in calculating basic and diluted net income (loss) per common share for the periods indicated:



_{(in millions, except for per share data)}	Year Ended December 31,
Earnings	2018		2017			2016
Net income (loss) available to common shareholders
Income (loss) from continuing operations	$	555	$	(212	)	$	39
Less: Net income (loss) attributable to noncontrolling interest	137		200			29
Income (loss) from continuing operations available to common shareholders	418		(412		)	10
Income (loss) from discontinued operations, net of tax	457		(2,580		)	(337		)
Net income (loss) available to common shareholders	$	875	$	(2,992	)	$	(327	)

Weighted-average common shares outstanding
Basic	163.2		184.1			200.8
Dilutive Effects:⁽¹⁾
Warrants⁽²⁾	0.8		—			—
RSUs⁽³⁾	1.7		—			1.7
PSU awards⁽³⁾	1.9		—			0.2
Stock Options⁽⁴⁾	0.6		—			—
Diluted	168.2		184.1			202.7

Basic
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders	$	2.56	$	(2.24	)	$	0.05
Income (loss) from discontinued operations, net of taxes available to Voya Financial, Inc.'s common shareholders	$	2.80	$	(14.01	)	$	(1.68	)
Income (loss) available to Voya Financial, Inc.'s common shareholders	$	5.36	$	(16.25	)	$	(1.63	)
Diluted
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders	$	2.48	$	(2.24	)	$	0.05
Income (loss) from discontinued operations, net of taxes available to Voya Financial, Inc.'s common shareholders	$	2.72	$	(14.01	)	$	(1.66	)
Income (loss) available to Voya Financial, Inc.'s common shareholders	$	5.20	$	(16.25	)	$	(1.61	)

⁽¹⁾For the year ended December 31, 2017, weighted average shares used for calculating earnings per share excludes the dilutive impact of the forward contract related to the share repurchase agreement entered into on December 26, 2017, as the inclusion of this instrument would be antidilutive to the earnings per share calculation. For more information on the share repurchase agreement, see the Shareholders' Equity Note to these Consolidated Financial Statements.

⁽²⁾ For the years ended December 31, 2017 and 2016, weighted average shares used for calculating earnings per share excludes the dilutive impact of warrants, as the inclusion of this equity instrument would be antidilutive to the earnings per share calculation due to "out of the moneyness" in the periods presented. For more information on warrants, see the Shareholders' Equity Note to these Consolidated Financial Statements.

⁽³⁾ For the year ended December 31, 2017, weighted average shares used for calculating basic and diluted earnings per share are the same, as the inclusion of 1.9 and 0.8 shares for stock compensation plans of RSU and PSU awards, respectively, would be antidilutive to the earnings per share calculation due to the net loss from continuing operations during the period.

⁽⁴⁾ For the year ended December 31, 2017, weighted average shares used for calculating basic and diluted earnings per share excludes the dilutive impact of stock options, as the inclusion of this equity instrument would be antidilutive to the earnings per share calculation due to the average share price for the periods presented. For more information on stock options, see the Share-based Incentive Compensation Plans Note to these Consolidated Financial Statements.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

14. Insurance Subsidiaries

Principal Insurance Subsidiaries Statutory Equity and Income

Each of Voya Financial, Inc.'s three principal insurance subsidiaries (the "Principal Insurance Subsidiaries") is subject to minimum risk-based capital ("RBC") requirements established by the insurance departments of their respective states of domicile. The formulas for determining the amount of RBC specify various weighting factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. Regulatory compliance is determined by a ratio of total adjusted capital ("TAC"), as defined by the National Association of Insurance Commissioners ("NAIC"), to authorized control level RBC, as defined by the NAIC. Each of the Company's Principal Insurance Subsidiaries exceeded the minimum RBC requirements that would require any regulatory or corrective action for all periods presented herein.

The Company's Principal Insurance Subsidiaries are each required to prepare statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the insurance department of its respective state of domicile. Such statutory accounting practices primarily differ from U.S. GAAP by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities and contract owner account balances using different actuarial assumptions as well as valuing investments and certain assets and accounting for deferred taxes on a different basis. Certain assets that are not admitted under statutory accounting principles are charged directly to surplus. Depending on the regulations of the insurance department of an insurance company’s state of domicile, the entire amount or a portion of an insurance company’s asset balance can be non-admitted based on the specific rules regarding admissibility. For the years ended December 31, 2018, 2017 and 2016, the Principal Insurance Subsidiaries have no prescribed or permitted practices that materially impact total capital and surplus.

Statutory Net income (loss) for the years ended December 31, 2018, 2017 and 2016 and statutory capital and surplus as of December 31, 2018 and 2017 of the Company's Principal Insurance Subsidiaries (and for 2017, VIAC, which the Company sold in 2018 in connection with the Transaction) are as follows:



	Statutory Net Income (Loss)								Statutory Capital and Surplus
	2018			2017		2016			2018		2017
Subsidiary Name (State of Domicile):
Voya Retirement Insurance and Annuity Company ("VRIAC") (CT)	$	377		$	195	$	266		$	2,000	$	1,793
Security Life of Denver Insurance Company (CO)	(62		)	58		93			965		950
ReliaStar Life Insurance Company ("RLI") (MN)	101			234		(507		)	1,633		1,483
Voya Insurance and Annuity Company ("VIAC") (IA)⁽¹⁾	N/A			514		232			N/A		1,835

⁽¹⁾On June 1, 2018, VIAC was sold as part of the Transaction.

N/A - Not Applicable

All of the Company's Principal Insurance Subsidiaries have capital and surplus levels that exceed their respective regulatory minimum requirements.

Insurance Subsidiaries Dividend Restrictions

The states in which the insurance subsidiaries of Voya Financial, Inc. are domiciled impose certain restrictions on the subsidiaries' ability to pay dividends to their parent. These restrictions are based in part on the prior year's statutory income and surplus. In general, dividends up to specified levels are considered ordinary and may be paid without prior approval. Dividends in larger amounts, or "extraordinary" dividends, are subject to approval by the insurance commissioner of the state of domicile of the insurance subsidiary proposing to pay the dividend.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Under the insurance laws applicable to Voya Financial, Inc.'s insurance subsidiaries domiciled in Connecticut and Minnesota, an "extraordinary" dividend or distribution is defined as a dividend or distribution that, together with other dividends and distributions made within the preceding twelve months, exceeds the greater of (i) 10% of the insurer's policyholder surplus as of the preceding December 31, or (ii) the insurer's net gain from operations for the twelve-month period ending the preceding December 31, in each case determined in accordance with statutory accounting principles. Under Colorado insurance law, an "extraordinary dividend" or distribution is defined as a dividend or distribution that, together with other dividends and distributions made within the preceding twelve months, exceeds the lesser of (i) 10% of the insurer's policyholder surplus as of the preceding December 31, or (ii) the insurer's net gain from operations for the twelve-month period ending the preceding December 31, in each case determined in accordance with statutory accounting principles. In addition, under the insurance laws of Connecticut and Minnesota, no dividend or other distribution exceeding an amount equal to a domestic insurance company's earned surplus may be paid without the domiciliary insurance regulator's prior approval. The Company also has special purpose life reinsurance captive insurance company subsidiaries domiciled in Missouri that are collectively referred to as the Company's "Missouri captives"as well as captive reinsurance subsidiaries domiciled in Arizona that provide reinsurance to the Company's insurance subsidiaries for specific blocks of business. The Company's captive reinsurance subsidiaries domiciled in Arizona are referred to as the Company's "Arizona captives." The Company refers to its Missouri captives and its Arizona captives collectively as the Company's "captive reinsurance subsidiaries. The Company's Principal Insurance Subsidiary domiciled in Connecticut has ordinary dividend capacity for 2019. However, as a result of the extraordinary dividends it paid in 2015, 2016 and 2017, together with statutory losses incurred in connection with the recapture and cession to one of the Company's Arizona captives of certain term life insurance business in the fourth quarter of 2016, the Company's Principal Insurance Subsidiary domiciled in Minnesota currently has negative earned surplus. In addition, primarily as a result of statutory losses incurred in connection with the retrocession of the Company’s Principal Insurance Subsidiary domiciled in Minnesota of certain life insurance business in the fourth quarter of 2018, the Company’s principal insurance subsidiary domiciled in Colorado has a net loss from operations for the twelve-month period ending the preceding December 31. Therefore, neither the Company's Minnesota nor Colorado Principal Insurance Subsidiaries have the capacity at this time to make ordinary dividend payments to Voya Holdings Inc. ("Voya Holdings"), a wholly owned subsidiary of Voya Financial, Inc., and cannot make an extraordinary dividend payment without domiciliary insurance regulatory approval, which can be granted or withheld at the discretion of the regulator.

Principal Insurance Subsidiaries - Dividends and Return of Capital

The following table summarizes dividends permitted to be paid by the Company's Principal Insurance Subsidiaries to Voya Financial, Inc. or Voya Holdings without the need for insurance regulatory approval and dividends and extraordinary distributions paid by each of the Company's Principal Insurance Subsidiaries (and for 2017, VIAC, which the Company sold in 2018 in connection with the Transaction) to its parent for the periods indicated:



	Dividends Permitted without Approval				Dividends Paid				Extraordinary Distributions Paid
					Year Ended December 31,				Year Ended December 31,
	2019		2018		2018		2017		2018		2017
Subsidiary Name (State of domicile):
Voya Retirement Insurance and Annuity Company (CT)	$	396	$	158	$	126	$	265	$	—	$	—
Security Life of Denver Insurance Company (CO)	—		53		52		73		—		—
ReliaStar Life Insurance Company (MN)	—		—		—		—		—		231
Voya Insurance and Annuity Company (IA)⁽¹⁾	N/A		208		—		278		—		250

⁽¹⁾On June 1, 2018, VIAC was sold as part of the Transaction.

N/A - Not Applicable

Captive Reinsurance Subsidiaries

Voya Financial, Inc.'s captive reinsurance subsidiaries, provide reinsurance to the Company’s insurance subsidiaries in order to facilitate the financing of statutory reserves including those associated with Regulation XXX or AG38 and to fund certain statutory annuity reserve requirements. Each of the Company's Missouri captives, are subject to specific minimum capital requirements set forth in the insurance statutes of Missouri, and are required to prepare statutory financial statements in accordance with statutory



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

accounting practices prescribed in the Missouri insurance statutes or permitted by the Missouri insurance department. There are no prescribed practices material to the Missouri captive reinsurance subsidiaries, except that certain of these subsidiaries have included the value of LOCs and trust notes as admitted assets supporting the statutory reserves ceded to such subsidiaries. The effect of these prescribed practices was to increase statutory capital and surplus by $676 and $623 as of December 31, 2018 and 2017, respectively. The aggregate statutory capital and surplus, including the aforementioned prescribed practices, was $156 and $398 as of December 31, 2018 and 2017, respectively.

The Company's Arizona captives, SLDI and its wholly owned subsidiary RRII, provide reinsurance to the Company's insurance subsidiaries in order to facilitate the financing of statutory reserves including those associated with Regulation XXX or AG38 and to fund certain statutory annuity reserve requirements. Prior to the Transaction disclosed in the Discontinued Operations Note to these Consolidated Financial Statements, this included reinsurance to RRII of the living benefit guarantees under the Company's CBVA business. In conjunction with the Transaction, the reinsurance treaty assumed by RRII was recaptured in 2018. Arizona state insurance statutes and regulations require the Company's Arizona captives to file financial statements with the Arizona Department of Insurance ("ADOI") and allow the filing of such financial statements on a U.S. GAAP basis modified for certain prescribed practices outlined in the Arizona insurance statutes that are applicable to U.S. GAAP filers. These prescribed practices had no impact on Company's Arizona captives Shareholder's equity as of December 31, 2018 and 2017. In addition, the Arizona captives have obtained approval from the ADOI for certain permitted practices, including, for SLDI, taking reinsurance credit for certain ceded reserves where the assets backing the liabilities are held by a wholly owned Principal Insurance Subsidiary of Voya Financial, Inc. SLDI has recorded a receivable for these assets. The effect of the permitted practice was to increase SLDI's Shareholder's equity by $431 and $451 as of December 31, 2018 and 2017, respectively, but has no effect on the Company's consolidated Total shareholders' equity. In the unlikely event that the permitted practice is suspended in the future, the Company has various alternatives which could be executed to allow the reinsurance credit for these ceded reserves. Additionally, RRII obtained approval from the ADOI to present the U.S. GAAP deferred liability resulting from its assumption of CBVA business, net of related federal income taxes, as a separate component of Shareholder's equity. The effect of the permitted practice was to increase RRII's Shareholder's equity by $2,761 as of December 31, 2017, but had no effect on SLDI or the Company's Consolidated total shareholders' equity. Due to the recapture of the treaty, the associated liability was released through RRII net income, which impact was eliminated through consolidation of RRII with its parent SLDI and the permitted practice was no longer in effect as of December 31, 2018.

The Missouri captives may not declare or pay any dividends other than in accordance with their respective insurance reserve financing transaction agreements and their respective governing licensing orders. Likewise, the Company's Arizona captives may not declare or pay dividends other than in accordance with their annual capital and dividend plans as approved by the ADOI, which include minimum capital requirements. During 2018, RRII paid a dividend of $270 to SLDI and SLDI paid a dividend of $425 to the Company.

15. Employee Benefit Arrangements

Pension, Other Postretirement Benefit Plans and Other Benefit Plans

Voya Financial, Inc.'s subsidiaries maintain both qualified and non-qualified defined benefit pension plans (the "Plans"). These plans generally cover all employees and certain sales representatives who meet specified eligibility requirements. Pension benefits are based on a formula using compensation and length of service. Annual contributions are paid to the Plans at a rate necessary to adequately fund the accrued liabilities of the Plans calculated in accordance with legal requirements. The Plans comply with applicable regulations concerning investments and funding levels.

The Voya Retirement Plan (the "Retirement Plan") is a tax qualified defined benefit plan, the benefits of which are guaranteed (within certain specified legal limits) by the Pension Benefit Guaranty Corporation ("PBGC"). Beginning January 1, 2012, the Retirement Plan adopted a cash balance pension formula instead of a final average pay ("FAP") formula, allowing all eligible employees to participate in the Retirement Plan. Participants earn an annual credit equal to 4% of eligible compensation. Interest is credited monthly based on a 30-year U.S. Treasury securities bond rate published by the Internal Revenue Service in the preceding August of each year. The accrued vested cash pension balance benefit is portable; participants can take it if they leave the Company.

In addition to providing qualified retirement benefit plans, the Company provides certain supplemental retirement benefits to eligible employees, non-qualified pension plans for insurance sales representatives who have entered into a career agent agreement



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

and certain other individuals. These plans are non-qualified defined benefit plans, which means all benefits are payable from the general assets of the sponsoring company.

The Company also offers deferred compensation plans for eligible employees, including eligible career agents and certain other individuals who meet the eligibility criteria. The Company’s deferred compensation commitment for employees is recorded on the Consolidated Balance Sheets in Other liabilities and totaled $278 and $305 as of December 31, 2018 and 2017, respectively.

Voya Financial, Inc.'s subsidiaries also provide other postretirement and post-employment benefits to certain employees. These are primarily postretirement healthcare and life insurance benefits to retired employees and other eligible dependents and post-employment/pre-retirement plans provided to employees and former employees. The Company's other postretirement benefit obligation and unfunded status totaled $16 and $20 as of December 31, 2018 and 2017, respectively. Additionally, net periodic benefit for other postretirement benefits totaled $6, $2 and $4 for the years ended December 31, 2018, 2017 and 2016, respectively.

Obligations, Funded Status and Net Periodic Benefit Costs

The Company's Retirement Plan was fully funded in compliance with Employee Retirement Income Security Act ("ERISA") guidelines as of December 31, 2017, which is tested annually subsequent to this filing. The following tables summarize a reconciliation of beginning and ending balances of the benefit obligation and fair value of plan assets, as well as the funded status of the Company's Plans for the years ended December 31, 2018 and 2017:



	2018			2017
Change in benefit obligation:
Benefit obligations, January 1	$	2,294		$	2,116
Service cost	25			24
Interest cost	86			93
Net actuarial (gains) losses	(157		)	156
Benefits paid	(108		)	(98		)
(Gain) loss recognized due to curtailment	—			3
Benefit obligations, December 31	2,140			2,294

Change in plan assets:
Fair value of plan net assets, January 1	1,764			1,463
Actual return on plan assets	(78		)	257
Employer contributions	27			142
Benefits paid	(108		)	(98		)
Fair value of plan net assets, December 31	1,605			1,764
Unfunded status at end of year ⁽¹⁾	$	(535	)	$	(530	)

⁽¹⁾ Funded status is not indicative of the Company's ability to pay ongoing pension benefits or of its obligation to fund retirement trusts. Required pension funding for qualified plans is determined in accordance with ERISA regulations.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The following table summarizes amounts related to the Plans recognized on the Consolidated Balance Sheets and in AOCI as of December 31, 2018 and 2017:



	2018			2017
Amounts recognized in the Consolidated Balance Sheets consist of:
Accrued benefit cost	$	(535	)	$	(530	)
Net amount recognized	$	(535	)	$	(530	)

Accumulated other comprehensive (income) loss:
Prior service cost (credit)	$	(1	)	$	(10	)
Tax effect	—			4
Accumulated other comprehensive (income) loss, net of tax	$	(1	)	$	(6	)

The following table summarizes information for the Plans with a projected benefit obligation and an accumulated benefit obligation in excess of plan assets as of December 31, 2018 and 2017:



	2018		2017
Projected benefit obligation	$	2,140	$	2,294
Accumulated benefit obligation	2,134		2,290
Fair value of plan assets	1,605		1,764

Components of Periodic Net Benefit Cost

Net periodic pension cost and net periodic other postretirement benefit plan cost consist of the following:


▪	Service Cost: Service cost represents the increase in the projected benefit obligation as a result of benefits payable to employees on service rendered during the current year.


▪	Interest Cost (on the Liability): Interest cost represents the increase in the amount of projected benefit obligation at the end of each year due to the time value adjustment.


▪	Expected Return on Plan Assets: Expected return on plan assets represents the anticipated return earned by the pension fund assets in a given year.


▪	Net Loss (Gain) Recognition: Actuarial gains and losses occur as a result of differences between actual and expected experience on pension plan assets or projected benefit obligation during a given period. The Company immediately recognizes actuarial losses (gains) on the qualified and nonqualified retirement plans as well as the other postretirement benefit plans.

▪

Amortization of Prior Service Cost: This cost represents the recognition of increases or decreases in Pension and other postretirement provisions on the Consolidated Balance Sheets as a result of changes in plans or initiation of new plans. The increases or decreases in obligation are recognized in AOCI at the time of the particular amendment. The costs are then amortized to Operating expenses in the Consolidated Statements of Operations over the expected service years of the covered employees.


▪	(Gain) Loss Recognized due to Curtailment: Curtailment gains and losses occur as a result of events that significantly reduce the expected years of future service of present employees or eliminates for a significant number of employees the accrual of defined benefits for some or all of their future services.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The components of net periodic benefit costs recognized in Operating expenses in the Consolidated Statements of Operations and other changes in plan assets and benefit obligations recognized in Other comprehensive income (loss) related to the Plans were as follows for the years ended December 31, 2018, 2017 and 2016:



	2018			2017			2016
Net Periodic (Benefit) Costs Recognized in Consolidated Statements of Operations:
Service cost	$	25		$	24		$	25
Interest cost	86			93			96
Expected return on plan assets	(129		)	(115		)	(104		)
Amortization of prior service cost (credit)	(9		)	(10		)	(10		)
(Gain) loss recognized due to curtailment	—			1			—
Net (gain) loss recognition	50			14			57
Net periodic (benefit) costs	23			7			64

Other Changes in Plan Assets and Benefit Obligations Recognized in AOCI:
Amortization of prior service (credit) cost	9			10			10
(Credit) cost recognized due to curtailment	—			2			—
Total recognized in AOCI	9			12			10
Total recognized in net periodic (benefit) costs and AOCI	$	32		$	19		$	74

The table below summarizes the components of the net actuarial (gains) losses related to the Plans reported within Operating expenses in the Consolidated Statements of Operations for the periods presented:



(Gain)/Loss Recognized	2018			2017			2016
Discount Rate	$	(160	)	$	196		$	69
Asset Returns	207			(142		)	24
Mortality Table Assumptions	(6		)	(14		)	(22		)
Demographic Data and other	9			(25		)	(13		)
Total Net Actuarial (Gain)/Loss Recognized	$	50		$	14		$	57

The estimated prior service cost related to the Plans expected to be amortized from AOCI into net periodic (benefit) cost in 2019 is $(1).

Assumptions

The discount rates used in determining pension benefit obligations as of December 31, 2018 and 2017 were as follows:



	2018		2017
Discount rate	4.46	%	3.85	%

In determining the discount rate assumption, the Company utilizes current market information provided by its plan actuaries including discounted cash flow analyses of the Company’s pension and general movements in the current market environment. The discount rate modeling process involves selecting a portfolio of high quality, noncallable bonds that will match the cash flows of the pension plans.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The weighted-average assumptions used in determining net benefit cost of the Plans for the years ended December 31, 2018, 2017 and 2016 were as follows:



	2018		2017		2016
Discount rate	3.85	%	4.55	%	4.81	%
Expected rate of return on plan assets	7.50	%	7.50	%	7.50	%

The expected return on plan assets is updated at least annually using the calculated value approach, taking into consideration the Retirement Plan’s asset allocation, historical returns on the types of assets held in the Retirement Plan's portfolio of assets ("the Fund") and the current economic environment. Based on these factors, it is expected that the Fund’s assets will earn an average percentage per year over the long term. This estimation is based on an active return on a compound basis, with a reduction for administrative expenses and non-Voya investment manager fees paid from the Fund. For estimation purposes, it is assumed the long-term asset mix will be consistent with the current mix. Changes in the asset mix could impact the amount of recorded pension income or expense, the funded status of the Plan, and the need for future cash contributions.

Plan Assets

The Retirement Plan is the only defined benefit plan with plan assets in a trust. The primary financial objective of the Retirement Plan is to secure participant retirement benefits. As such, the key objective in the Retirement Plan’s financial management is to promote stability and, to the extent appropriate, growth in funded status (i.e. the ratio of market value of assets to liabilities). The investment strategy for the Fund balances the requirement to generate returns with the need to control risk. The asset mix is recognized as the primary mechanism to influence the reward and risk structure of the Fund in an effort to accomplish the Retirement Plan’s funding objectives. Desirable target allocations amongst identified asset classes are set and, within each asset class, careful consideration is given to balancing the portfolio among industry sectors, geographies, interest rate sensitivity, economic growth, currency and other factors affecting investment returns. The assets are managed by professional investment firms. They are bound by mandates and are measured against benchmarks. Consideration is given to balancing security concentration, investment style and reliance on particular active investment strategies, among other factors. The Company reviews its asset mix of the Fund on a regular basis. Generally, the pension committee of the Company will rebalance the Fund's asset mix to the target mix as individual portfolios approach their minimum or maximum levels. However, the Company has the discretion to deviate from these ranges or to manage investment performance using different criteria.

Derivative contracts may be used for hedging purposes to reduce the Retirement Plan’s exposure to interest rate risk. Treasury futures are used to manage the interest rate risk in the Retirement Plan’s fixed maturity portfolio. The derivatives do not qualify for hedge accounting.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The following table summarizes the Company's pension plan’s target allocation range and actual asset allocation by asset category as of December 31, 2018 and 2017:



	Actual Asset Allocation
	2018		2017
Equity securities:
Target allocation range	37%-65%		37%-65%
Large-cap domestic	23.0	%	25.3	%
Small/Mid-cap domestic	6.1	%	6.9	%
International commingled funds	11.7	%	12.5	%
Limited Partnerships	1.8	%	2.5	%
Total equity securities	42.6	%	47.2	%
Fixed maturities:
Target allocation range	30%-50%		30%-50%
U.S. Treasuries, short term investments, cash and futures	3.0	%	8.0	%
U.S. Government agencies and authorities	8.2	%	4.1	%
U.S. corporate, state and municipalities	31.6	%	27.4	%
Foreign securities	4.1	%	4.1	%
Other fixed maturities	—	%	0.1	%
Total fixed maturities	46.9	%	43.7	%
Other investments:
Target allocation range	6%-14%		6%-14%
Hedge funds	4.8	%	4.2	%
Real estate	5.7	%	4.9	%
Total other investments	10.5	%	9.1	%
Total	100.0	%	100.0	%



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The following table summarizes the fair values of the pension plan assets by asset class as of December 31, 2018:



	Level 1		Level 2		Level 3		NAV		Total
Assets
Fixed maturities, short-term investments and cash:
Cash and cash equivalents	$	—	$	—	$	—	$	—	$	—
Short-term investment fund⁽¹⁾	—		—		—		48		48
U.S. Government securities	131		—		—		—		131
U.S. corporate, state and municipalities	1		498		7		—		506
Foreign securities	—		66		—		—		66
Other fixed maturities	—		1		—		—		1
Total fixed maturities	132		565		7		48		752

Equity securities:
Large-cap domestic	369		—		—		—		369
Small/Mid-cap domestic	98		—		—		—		98
International commingled funds⁽²⁾	—		—		—		188		188
Limited partnerships⁽³⁾	—		—		—		29		29
Total equity securities	467		—		—		217		684

Other investments:
Real estate⁽⁴⁾	—		—		—		92		92
Limited partnerships⁽⁵⁾	—		—		—		75		75
Other	2		—		—		—		2
Total other investments	2		—		—		167		169
Net, total pension assets	$	601	$	565	$	7	$	432	$	1,605

⁽¹⁾ This category includes common collective trust funds invested in the EB Temporary Investment Fund of The Bank of New York Mellon ("Short-term Investment Fund"). The Short-term Investment Fund is designed to provide a rate of return by investing in a full range of high-quality, short-term money market securities. Participant's redemptions in the Short-term Investment Fund may be requested by 2 p.m. eastern standard time and are processed by the following day.

⁽²⁾

International Commingled funds are comprised of two assets that use NAV to calculate fair value. Baillie Gifford Funds has a balance of $94 and uses a bottom up approach to stock picking. In determining the potential of a company, the fund manager analyzes industry background, competitive advantage, management attitudes and financial strength and valuation. There are no redemption restrictions in the Baillie Gifford Funds. Silchester has a fund balance of $94 that has an investment objective to achieve long-term growth primarily by investing in a diversified portfolio of equity securities of companies located in any country other than the United States. Silchester clients may contribute to and redeem monies from the funds on a monthly basis as of the last business day of each month. Clients must notify Silchester at least six business days before the month-end to make a redemption request. Baillie Gifford and Silchester, as a normal course of business, enter into contracts (commitments) that contain indemnifications or warranties. The funds' maximum exposure under these arrangements is unknown, as this would involve future claims that have not yet occurred. Baillie Gifford and Silchester have no unfunded commitments.

⁽³⁾ Limited partnerships are comprised of two assets that use NAV to calculate fair value. Pantheon Europe has a balance of $4 and Pantheon USA has a balance of $25. Their strategy is to create a portfolio of high quality private equity funds, operating across Europe and diversified by stage, sector, geography, manager and vintage year. For the year ended December 31, 2018, Pantheon Europe and Pantheon USA have unfunded commitments of $1 and $5, respectively, and there were no significant redemption restrictions.

⁽⁴⁾UBS Trumbull Property Fund ("UBS") uses NAV to calculate fair value. UBS has a balance of $92 and is an actively managed core portfolio of equity real estate. The Fund has both relative and real return objectives. Its relative performance objective is to outperform the National Council of Real Estate investment Fiduciaries Open-End Diversified Core ("NFI_ODCE") index over any given three-to-five-year period. The Fund's real return performance objective is to achieve at least a 5.0% real rate of return (i.e., inflation-adjusted return), before advisory fees, over any given three-to-five-year period. Investors may request redemptions of all or a portion of their units as of the end of a calendar quarter by delivering written notice to the Fund at least sixty days prior to the end of the quarter.

⁽⁵⁾Magnitude Institutional, Ltd. ("MIL") has a balance of $75 and is designed to realize appreciation in value primarily through the allocation of capital directly and indirectly among investment funds and accounts. There are significant redemption restrictions in the MIL fund.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The following table summarizes the fair values of the pension plan assets by asset class as of December 31, 2017:



	Level 1		Level 2		Level 3		NAV		Total
Assets
Fixed maturities, short term investments and cash:
Cash and cash equivalents	$	7	$	—	$	—	$	—	$	7
Short-term investment fund⁽¹⁾	—		—		—		136		136
U.S. Government securities	73		—		—		—		73
U.S. corporate, state and municipalities	—		476		7		—		483
Foreign securities	—		72		—		—		72
Other fixed maturities	—		1		—		—		1
Total fixed maturities	80		549		7		136		772

Equity securities:
Large-cap domestic	446		—		—		—		446
Small/Mid-cap domestic	121		—		—		—		121
International commingled funds⁽²⁾	—		—		—		220		220
Limited partnerships⁽³⁾	—		—		—		43		43
Total equity securities	567		—		—		263		830

Other investments:
Real estate⁽⁴⁾	—		—		—		86		86
Limited partnerships⁽⁵⁾	—		—		—		75		75
Other	1		—		—		—		1
Total other investments	1		—		—		161		162
Net, total pension assets	$	648	$	549	$	7	$	560	$	1,764

⁽¹⁾ This category includes common collective trust funds invested in the Short-term Investment Fund. The Short-term Investment Fund is designed to provide a rate of return by investing in a full range of high-quality, short-term money market securities. Participant's redemptions in the Short-term Investment Fund may be requested by 2 p.m. eastern standard time and are processed by the following day.

⁽²⁾ International Commingled funds are comprised of two assets that use NAV to calculate fair value. Baillie Gifford Funds has a balance of $111 and uses a bottom up approach to stock picking. In determining the potential of a company, the fund manager analyzes industry background, competitive advantage, management attitudes and financial strength and valuation. There are no redemption restrictions in the Baillie Gifford Funds. Silchester has a fund balance of $109 that has an investment objective to achieve long-term growth primarily by investing in a diversified portfolio of equity securities of companies located in any country other than the United States. Silchester clients may contribute to and redeem moneys from the funds on a monthly basis as of the last business day of each month. Clients must notify Silchester at least six business days before the month-end to make a redemption request. Baillie Gifford and Silchester, as a normal course of business, enter into contracts (commitments) that contain indemnifications or warranties. The funds' maximum exposure under these arrangements is unknown, as this would involve future claims that have not yet occurred. Baillie Gifford and Silchester have no unfunded commitments.

⁽³⁾ Limited partnerships are comprised of two assets that use NAV to calculate fair value. Pantheon Europe has a balance of $6 and Pantheon USA has a balance of $37. Their strategy is to create a portfolio of high quality private equity funds, operating across Europe and diversified by stage, sector, geography, manager and vintage year. For the year ended December 31, 2017, Pantheon Europe and Pantheon USA have unfunded commitments of $1 and $5, respectively, and there were no significant redemption restrictions.

⁽⁴⁾UBS uses NAV to calculate fair value. UBS has a balance of $86 and is an actively managed core portfolio of equity real estate. The Fund has both relative and real return objectives. Its relative performance objective is to outperform the NFI_ODCE index over any given three-to-five-year period. The Fund's real return performance objective is to achieve at least a 5.0% real rate of return (i.e., inflation-adjusted return), before advisory fees, over any given three-to-five-year period. Investors may request redemptions of all or a portion of their units as of the end of a calendar quarter by delivering written notice to the Fund at least sixty days prior to the end of the quarter.

⁽⁵⁾MIL has a balance of $75 and is designed to realize appreciation in value primarily through the allocation of capital directly and indirectly among investment funds and accounts. There are significant redemption restrictions in the MIL fund.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

As described in the Fair Value Measurements (excluding Consolidated Investment Entities) Note to these Consolidated Financial Statements, pension plan assets are categorized into a three-level fair value hierarchy based upon the inputs available in evaluating each of the assets. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets (Level 1) and the lowest priority to unobservable inputs (Level 3). Certain investments are measured at fair value using the NAV per share as a practical expedient and have not been classified in the fair value hierarchy. The leveling hierarchy is applied to the pension plans assets as follows:

Cash and cash equivalents: The carrying amounts for cash and cash equivalents reflect the assets' fair value. The fair values for cash and cash equivalents are determined based on quoted market prices. These assets are classified as Level 1.

Short-term Investment Funds: Short term investment funds are estimated at NAV. See subscript (1) in Fair Value Hierarchy table footnotes for a description of the fund's redemption policies.

U.S. Government securities, corporate bonds and notes and foreign securities: Fair values for actively traded marketable bonds are determined based upon quoted market prices and are classified as Level 1 assets. Corporate bonds, ABS, U.S. agency bonds, and foreign securities use observable pricing method such as matrix pricing, market corroborated pricing or inputs such as yield curves and indices. These investments are classified as Level 2.

International Commingled Funds: Commingled funds are estimated at NAV per share. See subscript (2) in Fair Value Hierarchy table footnotes for description of the fund's redemption policies.

Equity securities: Fair values are based upon a quoted market price determined in an active market and are included in Level 1.

Real estate: Real estate is estimated at NAV. See subscript (4) in Fair Value Hierarchy table footnotes for more information on real estate.

Limited partnerships: Limited partnerships are estimated at NAV. See subscripts (3) and (5) in Fair Value Hierarchy table footnotes for more information on limited partnerships.

Expected Future Contributions and Benefit Payments

The following table summarizes the expected benefit payments for the Company's pension plans to be paid for the years indicated:



2019	$	121
2020	126
2021	130
2022	135
2023	137
2024-2028	710

The Company expects that it will make a cash contribution of approximately $84 to the Plans in 2019.

Defined Contribution Plans

Certain of the Company’s subsidiaries sponsor defined contribution plans. The largest defined contribution plan is the Voya 401(k) Savings Plan (the "Savings Plan"). The assets of the Savings Plan are held in independently administered funds. Substantially all employees of the Company are eligible to participate, other than the Company’s agents. The Savings Plan is a tax qualified defined contribution plan. Savings Plan benefits are not guaranteed by the PBGC. The Savings Plan allows eligible participants to defer into the Savings Plan a specified percentage of eligible compensation on a pretax basis. The Company matches such pretax contributions, up to a maximum of 6% of eligible compensation, subject to IRS limits. Matching contributions are subject to a 4-year graded vesting schedule. Contributions made to the Savings Plan are subject to certain limits imposed by applicable law. These plans do not give rise to balance sheet provisions, other than relating to short-term timing differences included in Other



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

liabilities. The amount of cost recognized for the defined contribution pension plans for the years ended December 31, 2018, 2017 and 2016 was $35, $39 and $38, respectively, and is recorded in Operating expenses in the Consolidated Statements of Operations.

16. Accumulated Other Comprehensive Income (Loss)

Shareholders' equity included the following components of Accumulated Other Comprehensive Income ("AOCI") as of the dates indicated:



	December 31,
	2018			2017			2016
Fixed maturities, net of OTTI	$	1,074		$	5,351		$	3,413
Equity securities	—			35			33
Derivatives	170			127			258
DAC/VOBA adjustment on available-for-sale securities	(380		)	(1,471		)	(1,083		)
Premium deficiency reserve	(57		)	(190		)	(54		)
Sales inducements and other intangibles adjustment on available-for-sale securities	(64		)	(278		)	(169		)
Other	—			(18		)	(31		)
Unrealized capital gains (losses), before tax	743			3,556			2,367
Deferred income tax asset (liability)	(143		)	(840		)	(472		)
Net unrealized capital gains (losses)	600			2,716			1,895
Pension and other postretirement benefits liability, net of tax	7			15			26
AOCI	$	607		$	2,731		$	1,921



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Changes in AOCI, including the reclassification adjustments recognized in the Consolidated Statements of Operations were as follows for the periods indicated:



	December 31, 2018
	Before-Tax Amount				Income Tax			After-Tax Amount
Available-for-sale securities:
Fixed maturities	$	(4,379	)		$	1,079		$	(3,300	)
Equity securities	—			⁽¹⁾	—			—
Other	18				(8		)	10
OTTI	32				(9		)	23
Adjustments for amounts recognized in Net realized capital gains (losses) in the Consolidated Statements of Operations	70				(18		)	52
DAC/VOBA	1,091			⁽²⁾	(255		)	836
Premium deficiency reserve	133				(28		)	105
Sales inducements and other intangibles	214				(59		)	155
Change in unrealized gains/losses on available-for-sale securities	(2,821		)		702			(2,119		)

Derivatives:
Derivatives	69			⁽³⁾	(19		)	50
Adjustments related to effective cash flow hedges for amounts recognized in Net investment income in the Consolidated Statements of Operations	(26		)		7			(19		)
Change in unrealized gains/losses on derivatives	43				(12		)	31

Pension and other postretirement benefits liability:
Amortization of prior service cost recognized in Operating expenses in the Consolidated Statements of Operations	(11		)	⁽⁴⁾	3			(8		)
Change in pension and other postretirement benefits liability	(11		)		3			(8		)
Change in Accumulated other comprehensive income (loss)	$	(2,789	)		$	693		$	(2,096	)

⁽¹⁾Balance reclassified to Retained earnings due to adoption of ASU 2016-01.

⁽²⁾ See the Deferred Policy Acquisition Costs and Value of Business Acquired Note to these Consolidated Financial Statements for additional information.

⁽³⁾ See the Derivative Financial Instruments Note to these Consolidated Financial Statements for additional information.

⁽⁴⁾ See the Employee Benefit Arrangements Note to these Consolidated Financial Statements for amounts reported in Net Periodic (Benefit) Costs.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)



	December 31, 2017
	Before-Tax Amount				Income Tax			After-Tax Amount
Available-for-sale securities:
Fixed maturities	$	1,943			$	(647	)	$	1,296
Equity securities	2				(1		)	1
Other	13				(5		)	8
OTTI	(2		)		1			(1		)
Adjustments for amounts recognized in Net realized capital gains (losses) in the Consolidated Statements of Operations	(3		)		1			(2		)
DAC/VOBA	(388		)	⁽¹⁾	150			(238		)
Premium deficiency reserve	(136		)		48			(88		)
Sales inducements	(109		)		39			(70		)
Change in unrealized gains/losses on available-for-sale securities	1,320				(414		)	906

Derivatives:
Derivatives	(106		)	⁽²⁾	37			(69		)
Adjustments related to effective cash flow hedges for amounts recognized in Net investment income in the Consolidated Statements of Operations	(25		)		9			(16		)
Change in unrealized gains/losses on derivatives	(131		)		46			(85		)

Pension and other postretirement benefits liability:
Amortization of prior service cost recognized in Operating expenses in the Consolidated Statements of Operations	(15		)	⁽³⁾	4			(11		)
Change in pension and other postretirement benefits liability	(15		)		4			(11		)
Change in Accumulated other comprehensive income (loss)	$	1,174			$	(364	)	$	810

⁽¹⁾ See the Deferred Policy Acquisition Costs and Value of Business Acquired Note to these Consolidated Financial Statements for additional information.

⁽²⁾ See the Derivative Financial Instruments Note to these Consolidated Financial Statements for additional information.

⁽³⁾ See the Employee Benefit Arrangements Note to these Consolidated Financial Statements for amounts reported in Net Periodic (Benefit) Costs.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)



	December 31, 2016
	Before-Tax Amount				Income Tax			After-Tax Amount
Available-for-sale securities:
Fixed maturities	$	1,168			$	(408	)	$	760
Equity securities	2				(1		)	1
Other	—				—			—
OTTI	24				(8		)	16
Adjustments for amounts recognized in Net realized capital gains (losses) in the Consolidated Statements of Operations	98				(34		)	64
DAC/VOBA	(318		)	⁽¹⁾	111			(207		)
Premium deficiency reserve	(54		)		20			(34		)
Sales inducements	(146		)		50			(96		)
Change in unrealized gains/losses on available-for-sale securities	774				(270		)	504

Derivatives:
Derivatives	19			⁽²⁾	(7		)	12
Adjustments related to effective cash flow hedges for amounts recognized in Net investment income in the Consolidated Statements of Operations	(20		)		7			(13		)
Change in unrealized gains/losses on derivatives	(1		)		—			(1		)

Pension and other postretirement benefits liability:
Amortization of prior service cost recognized in Operating expenses in the Consolidated Statements of Operations	(10		)	⁽³⁾	3			(7		)
Change in pension and other postretirement benefits liability	(10		)		3			(7		)
Change in Accumulated other comprehensive income (loss)	$	763			$	(267	)	$	496

⁽¹⁾ See the Deferred Policy Acquisition Costs and Value of Business Acquired Note to these Consolidated Financial Statements for additional information.

⁽²⁾ See the Derivative Financial Instruments Note to these Consolidated Financial Statements for additional information.

⁽³⁾ See the Employee Benefit Arrangements Note to these Consolidated Financial Statements for amounts reported in Net Periodic (Benefit) Costs.

17. Income Taxes

Income tax expense (benefit) consisted of the following for the periods indicated:



	Year Ended December 31,
	2018			2017			2016
Current tax expense (benefit):
Federal	$	56		$	(122	)	$	122
State	(2		)	—			—
Total current tax expense (benefit)	54			(122		)	122
Deferred tax expense (benefit):
Federal	1			859			(152		)
State	—			3			1
Total deferred tax expense (benefit)	1			862			(151		)
Total income tax expense (benefit)	$	55		$	740		$	(29	)



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Income taxes were different from the amount computed by applying the federal income tax rate to Income (loss) before income taxes for the following reasons for the periods indicated:



	Year Ended December 31,
	2018			2017				2016
Income (loss) before income taxes	$	610		$	528			$	10
Tax Rate	21.0		%	35.0		%		35.0		%
Income tax expense (benefit) at federal statutory rate	128			185				4
Tax effect of:
Valuation allowance	(15		)	(28		)		1
Dividend received deduction	(50		)	(43		)		(37		)
Audit settlement	—			—				—
State tax expense (benefit)	10			4				(16		)
Noncontrolling interest	(29		)	(70		)		(10		)
Tax credits	—			14				10
Nondeductible expenses	4			2				2
Expirations of federal tax capital loss carryforward	—			2				17
Effect of Tax Reform	8			679			^*	—
Other	(1		)	(5		)		—
Income tax expense (benefit)	$	55		$	740			$	(29	)
Effective tax rate	9.0		%	140.2		%		(290.0		)%

*Effect of Tax Reform includes a tax benefit of $283 related to change in valuation allowance

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act ("Tax Reform"). Tax Reform made broad changes to U.S. federal tax law, including, but not limited to (1) reducing the U.S. federal corporate tax rate from 35% to 21%; (2) changing the computations of the dividends received deduction, tax reserves, and deferred acquisition costs; (3) further limiting deductibility of executive compensation; (4) eliminating the net operating loss ("NOL") carryback and limiting the NOL carryforward deduction to 80% of taxable income for losses arising in taxable years beginning after December 31, 2017; and (5) changing how alternative minimum tax (AMT) credits can be realized. Tax Reform eliminated the corporate AMT and allows the AMT credit carryforward to be refunded over the next 4 years. Any refundable corporate AMT credit is not subject to the sequestration requirements of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended.

The SEC staff issued Staff Accounting Bulletin No. 118 ("SAB 118") to address situations where a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting under ASC Topic 740 for certain income tax effects of Tax Reform for the reporting period of enactment. SAB 118 allowed the Company to provide a provisional estimate of the impacts of Tax Reform during a measurement period similar to the measurement period used when accounting for business combinations. Adjustments to the provisional estimate and additional impacts from Tax Reform were recorded during the measurement period as provided for in SAB 118.

In reliance on SAB 118, in 2017 the Company provisionally remeasured its deferred tax assets and liabilities based on the 21% tax rate at which they were expected to reverse in the future and recorded an estimate related to the calculation of tax reserves and the deductibility of executive compensation. In 2018, the Company finalized the impact of Tax Reform, recording an additional income tax expense of $8.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Temporary Differences

The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities were as follows as of the dates indicated:



	December 31,
	2018			2017
Deferred tax assets
Federal and state loss carryforwards	$	2,201		$	1,030
Investments	337			1,440
Compensation and benefits	301			369
Other assets	86			330
Total gross assets before valuation allowance	2,925			3,169
Less: Valuation allowance	638			653
Assets, net of valuation allowance	2,287			2,516

Deferred tax liabilities
Net unrealized investment gains	(236		)	(824		)
Insurance reserves	(214		)	(342		)
Deferred policy acquisition costs	(663		)	(556		)
Other liabilities	(17		)	(13		)
Total gross liabilities	(1,130		)	(1,735		)
Net deferred income tax asset (liability)	$	1,157		$	781

The following table sets forth the federal, state and capital loss carryforwards for tax purposes as of the dates indicated:



	December 31,
	2018			2017
Federal net operating loss carryforward	$	10,032	⁽¹⁾	$	4,410
State net operating loss carryforward	2,244		⁽¹⁾	2,228
Federal tax capital loss carryforward	—			30
Credit carryforward	34		⁽²⁾	254

⁽¹⁾Expire between 2019 and 2038.

⁽²⁾ Expire between 2019 and 2035.

Valuation allowances are provided when it is considered more likely than not that some portion or all of the deferred tax assets will not be realized. As of December 31, 2018 and 2017, the Company had a total valuation allowance of $638 and $653, respectively. As of December 31, 2018 and 2017, $992 and $1,007, respectively, of this valuation allowance was allocated to continuing operations, and $(354) was allocated to Other comprehensive income (loss) related to realized and unrealized capital losses at the end of each period.

For the year ended December 31, 2018, the decrease in the valuation allowance was $15, all of which was allocated to continuing operations. The net decrease in the valuation allowance was a result of the utilization of certain capital losses subject to a valuation allowance as well as state apportionment changes for certain state deferred tax assets subject to a valuation allowance.

For the year ended December 31, 2017, the decrease in the valuation allowance was $311, all of which was allocated to continuing operations. The net decrease in the valuation allowance was primarily related to the reduction in the U.S. federal corporate tax rate from 35% to 21%, and expiration of foreign tax credits subject to a valuation allowance.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

For the year ended December 31, 2016, the decrease in the valuation allowance was $1, of which an increase of $6 was allocated to continuing operations, and a decrease of $5 was related to additional paid-in-capital. The net increase in the valuation allowance was a result of the generation and expiration of certain capital losses and expiration of foreign tax credits subject to a valuation allowance as well as state apportionment changes for certain state deferred tax assets subject to a valuation allowance.

Unrecognized Tax Benefits

Reconciliations of the change in the unrecognized income tax benefits were as follows for the periods indicated:



	Year Ended December 31,
	2018			2017			2016
Balance at beginning of period	$	37		$	36		$	45
Additions for tax positions related to current year	2			2			3
Additions for tax positions related to prior years	1			—			—
Reductions for tax positions related to prior years	(1		)	—			(7		)
Reductions for settlements with taxing authorities	(6		)	—			(1		)
Reductions for expiring statutes	—			(1		)	(4		)
Balance at end of period	$	33		$	37		$	36

The Company had $1 of unrecognized tax benefits as of December 31, 2018 and $8 of unrecognized tax benefits as of December 31, 2017 and 2016, which would affect the Company's effective rate if recognized.

Interest and Penalties

The Company recognizes interest expense and penalties, if applicable, related to unrecognized tax benefits in tax expense net of federal income tax. The total amounts of gross accrued interest and penalties on the Company's Consolidated Balance Sheets as of December 31, 2018 and 2017 was less than $1 and $1, respectively. The Company recognized no gross interest (benefit) related to unrecognized tax in its Consolidated Statements of Operations for the years ended December 31, 2018, 2017 and 2016.

The timing of the payment of the remaining accrued interest and penalties cannot be reasonably estimated.

Tax Regulatory Matters

For the tax years 2016 through 2019, the Company participates in the IRS Compliance Assurance Process (CAP), which is a continuous audit program provided by the IRS. The IRS finalized the audit of the Company for the period ended December 31, 2016. The Company is under examination for the periods ended December 31, 2017 and December 31, 2018. For the period ended December 31, 2017, the Company expects the examination to be finalized within the next twelve months.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

18. Financing Agreements

Short-term Debt

As of December 31, 2018 and 2017, the Company had $1 and $337, respectively, of short-term borrowings outstanding consisting entirely of the current portion of long-term debt.

Long-term Debt

The following table summarizes the carrying value of the Company’s long-term debt securities issued and outstanding as of December 31, 2018 and 2017:



	Issuer	Maturity	2018		2017
2.9% Senior Notes, due 2018⁽²⁾⁽³⁾	Voya Financial, Inc.	02/15/2018	$	—	$	337
5.5% Senior Notes, due 2022⁽²⁾⁽³⁾	Voya Financial, Inc.	07/15/2022	96		361
3.125% Senior Notes, due 2024⁽²⁾⁽³⁾	Voya Financial, Inc.	07/15/2024	396		396
3.65% Senior Notes, due 2026⁽²⁾⁽³⁾	Voya Financial, Inc.	06/15/2026	496		495
5.7% Senior Notes, due 2043⁽²⁾⁽³⁾	Voya Financial, Inc.	07/15/2043	395		395
4.8% Senior Notes, due 2046⁽²⁾⁽³⁾	Voya Financial, Inc.	06/15/2046	297		296
4.7% Fixed-to-Floating Rate Junior Subordinated Notes, due 2048⁽⁴⁾	Voya Financial, Inc.	01/23/2048	344		—
5.65% Fixed-to-Floating Rate Junior Subordinated Notes, due 2053⁽⁴⁾	Voya Financial, Inc.	05/15/2053	739		738
7.25% Voya Holdings Inc. debentures, due 2023⁽¹⁾	Voya Holdings Inc.	08/15/2023	138		143
7.63% Voya Holdings Inc. debentures, due 2026⁽¹⁾	Voya Holdings Inc.	08/15/2026	138		186
6.97% Voya Holdings Inc. debentures, due 2036⁽¹⁾	Voya Holdings Inc.	08/15/2036	79		94
8.42% Equitable of Iowa Companies Capital Trust II Notes, due 2027	Equitable of Iowa Capital Trust II	04/01/2027	14		14
1.00% Windsor Property Loan	Voya Retirement Insurance and Annuity Company	06/14/2027	5		5
Subtotal			3,137		3,460
Less: Current portion of long-term debt			1		337
Total			$	3,136	$	3,123

⁽¹⁾ Guaranteed by ING Group.

⁽²⁾Interest is paid semi-annually in arrears.

⁽³⁾Guaranteed by Voya Holdings.

⁽⁴⁾See the Junior Subordinated Notes section below.

Unsecured senior debt, which consists of senior fixed rate notes and guarantees of fixed rate notes, ranks highest in priority, followed by subordinated debt, which consists of junior subordinated debt securities.

The aggregate amounts of future principal payments of long-term debt issued by the Company at December 31, 2018 for the next five years and thereafter are $1 in 2019, $1 in 2020, $1 in 2021, $97 in 2022, $141 in 2023 and $2,932 thereafter.

The aggregate amounts of future principal payments of long-term debt issued by Voya Financial, Inc. at December 31, 2018 for the next five years and thereafter are $0 in 2019, $0 in 2020, $0 in 2021, $97 in 2022, $0 in 2023 and $2,700 thereafter.

Loss on Debt Extinguishment

The Company incurred a loss on debt extinguishment of $40, $4 and $105 for the years ended December 31, 2018, 2017 and 2016, respectively, which was recorded in Interest expense in the Consolidated Statements of Operations.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Senior Notes

On July 5, 2017, Voya Financial, Inc. issued $400 of unsecured 3.125% Senior Notes due July 15, 2024 (the "2024 Notes") in a registered public offering. The 2024 Notes are guaranteed by Voya Holdings. Interest is paid semi-annually, in arrears on each January 15 and July 15.

On February 15, 2018, the remaining 2.9% Senior Notes due 2018 (the "2018 Notes") matured and Voya Financial, Inc. paid the principal and interest due.

During the year ended December 31, 2018, Voya Financial, Inc. repurchased $141 and redeemed $125 in aggregate principal amounts of the outstanding 5.5% Senior Notes due July 13, 2022 (the "2022 Notes"), following which, $97 aggregate principal amount of the 2022 Notes remains outstanding. During the year ended December 31, 2017, Voya Financial, Inc. repurchased $90 and redeemed $400 in aggregate principal amounts of the outstanding 2018 Notes.

Junior Subordinated Notes

Outstanding junior subordinated notes were as follows as of December 31, 2018:

Issuer

Issue Date

Interest Rate⁽¹⁾

Scheduled Redemption Date

Interest Rate Subsequent to Scheduled Redemption Date⁽²⁾

Final Maturity Date

Face Value

Voya Financial, Inc.

05/16/2013

5.65

05/15/2023

LIBOR

3.58%

05/15/2053

(3)

750

Voya Financial, Inc.

01/23/2018

4.70

01/23/2028

LIBOR

2.084%

01/23/2048

(4)

350

⁽¹⁾ Prior to the scheduled redemption date, interest is paid semi-annually, in arrears.

⁽²⁾ In the event the securities are not redeemed on or before the scheduled redemption date, interest will accrue after such date at an annual rate of three month LIBOR plus the indicated margin, payable quarterly in arrears.

⁽³⁾ The 5.65% Fixed-to-Floating Rate Junior Subordinated Notes due 2053 (the "2053 Notes") are guaranteed on a junior subordinated basis by Voya Holdings.

⁽⁴⁾ The 4.70% Fixed-to-Floating Rate Junior Subordinated Notes due 2048 (the "2048 Notes") are guaranteed on an unsecured, junior subordinated basis by Voya Holdings.

The Company has the right to defer interest payments on the Junior Subordinated Notes for one or more consecutive interest periods for up to five years, without resulting in a default, during which time interest will be compounded. On or after the optional redemption dates, Voya Financial, Inc. may redeem the Junior Subordinated Notes in whole or in part for the principal amount being redeemed plus accrued and unpaid interest. Prior to the optional redemption dates, the Company may elect to redeem the Junior Subordinated Notes for the principal amount being redeemed upon the occurrence of certain events as defined in the indentures governing the Junior Subordinated Notes, plus accrued and unpaid interest.

At any time following notice of the Company's plan to defer interest and during the period interest is deferred, the Company and its subsidiaries generally, with certain exceptions, may not make payments on or redeem or purchase any shares of the Company's common or preferred stock or any of the debt securities or guarantees that rank in liquidation on a parity with or are junior to the Junior Subordinated Notes.

Aetna Notes

ING Group guarantees various debentures of Voya Holdings that were assumed by Voya Holdings in connection with the Company’s acquisition of Aetna’s life insurance and related businesses in 2000 (the "Aetna Notes"). Concurrent with the completion of the Company’s IPO, the Company entered into a shareholder agreement with ING Group that governs certain aspects of the Company’s continuing relationship. Pursuant to that agreement, the Company is obligated to reduce the aggregate outstanding principal amount of Aetna Notes to no more than $100 and zero as of December 31, 2018 and December 31, 2019, respectively, or otherwise to make provision for ING Group's guarantee of any outstanding Aetna Notes in excess of such amounts.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The Company's obligation to ING Group with respect to the Aetna Notes can be met, at the Company’s option, through redemptions, repurchases or by posting collateral with a third-party collateral agent, for the benefit of ING Group.

If the Company fails to meet these obligations to ING Group, the Company has agreed to pay a prescribed quarterly fee (1.25% per quarter for 2019) to ING Group based on the outstanding principal amount of Aetna Notes for which provision has not been made, in excess of the limits set forth above.

During the year ended December 31, 2018, Voya Holdings repurchased $5, $48, and $15 in aggregate principal amounts of the 7.25% Debentures due August 15, 2023, 7.63% Debentures due August 15, 2026, and 6.97% Debentures due August 15, 2036, respectively.

As of December 31, 2018 and 2017, the outstanding principal amounts of the Aetna Notes were $358 and $426, respectively. As of December 31, 2018 and 2017, the amounts of collateral required to avoid the payment of a fee to ING Group were $258 and $226, respectively. During the years ended December 31, 2018 and 2017, the Company deposited $36 and $104 of collateral, respectively, increasing the remaining collateral balance to $267 and $231, respectively.

Windsor Property Loan

On June 16, 2007, the State of Connecticut acting on behalf of the Department of Economic and Community Development ("DECD") loaned VRIAC $10 (the "DECD Loan") in connection with the development of a corporate office facility located at One Orange Way, Windsor, Connecticut that serves as the principal executive offices of the Company (the "Windsor Property"). As of December 31, 2018 and 2017, the amount of the loan outstanding was $5, which is reflected in Long-term debt on the Consolidated Balance Sheets.

In August 2017 the loan agreement between VRIAC and the DECD was amended and $5 in cash was transferred into the cash deposit account as cash collateral. VRIAC’s monthly payments of principal and interest are processed out of the cash deposit account.

Put Option Agreement for Senior Debt Issuance

During 2015, the Company entered into an off-balance sheet 10-year put option agreement with a Delaware trust that provides Voya Financial, Inc. the right, at any time over a 10-year period, to issue up to $500 principal amount of its 3.976% Senior Notes due 2025 ("3.976% Senior Notes") to the trust and receive in exchange a corresponding principal amount of U.S. Treasury securities that are held by the trust. The 3.976% Senior Notes will not be issued unless and until the put option is exercised. In return, the Company pays a semi-annual put premium to the trust at a rate of 1.875% per annum applied to the unexercised portion of the put option, and reimburses the trust for its expenses. The put premium and expense reimbursements are recorded in Operating expenses in the Consolidated Statements of Operations. If and when issued, the 3.976% Senior Notes will be guaranteed by Voya Holdings.

Upon an event of default, the put option will be exercised automatically in full. The Company has a one-time right to unwind a prior voluntary exercise of the put option by repurchasing all of the 3.976% Senior Notes then held by the trust for U.S. Treasury securities. If the put option has been fully exercised, the 3.976% Senior Notes issued may be redeemed by the Company prior to their maturity at par or, if greater, at a make-whole redemption price, in each case plus accrued and unpaid interest to the date of redemption. The P-Caps are to be redeemed by the trust on February 15, 2025 or upon any early redemption of the 3.976% Senior Notes.

Credit Facilities

The Company uses credit facilities to provide collateral required primarily under its affiliated reinsurance transactions with captive insurance subsidiaries. Total fees associated with credit facilities for the years ended 2018, 2017 and 2016 were $34, $50 and $46, respectively.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The following table outlines the Company's credit facilities as of December 31, 2018:



	Secured/ Unsecured	Committed/ Uncommitted	Expiration	Capacity		Utilization		Unused Commitment
Obligor / Applicant
Voya Financial, Inc.	Unsecured	Committed	05/06/2021	$	1,000	$	—	$	1,000
Voya Financial, Inc. / Security Life of Denver International Limited	Unsecured	Committed	01/24/2021	195		195		—
Security Life of Denver International Limited	Unsecured	Committed	10/29/2023	61		61		—
Voya Financial, Inc. / Security Life of Denver International Limited	Unsecured	Committed	12/31/2025	475		475		—
Voya Financial, Inc. / Security Life of Denver International Limited	Unsecured	Committed	07/01/2037	1,525		1,356		169
Voya Financial, Inc.	Unsecured	Committed	02/11/2022	300		300		—
Voya Financial, Inc.	Unsecured	Uncommitted	Various	1		1		—
Voya Financial, Inc.	Secured	Uncommitted	Various	10		1		—
Voya Financial, Inc. / Roaring River LLC	Unsecured	Committed	10/01/2025	425		364		61
Voya Financial, Inc. / Roaring River IV, LLC	Unsecured	Committed	12/31/2028	565		312		253
Voya Financial, Inc. / Security Life of Denver International Limited	Unsecured	Uncommitted	09/28/2019	300		45		—
Voya Financial, Inc.	Unsecured	Committed	12/09/2021	195		173		22
Voya Financial, Inc.	Unsecured	Uncommitted	04/27/2021	156		156		—
Total				$	5,208	$	3,439	$	1,505

Senior Unsecured Credit Facility

The Company is a party to a Second Amended and Restated Revolving Credit Agreement ("Second Amended and Restated Credit Agreement"), which has been amended from time to time, with a syndicate of banks, which currently expires on May 6, 2021 and requires the Company to maintain a minimum net worth of $6.6 billion. The minimum net worth amount may increase upon any future equity issuances by the Company. There is a $750 sublimit available for direct borrowings.

As of December 31, 2018, there were no amounts outstanding as revolving credit borrowings and no LOCs outstanding under the senior unsecured credit facility.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

19. Commitments and Contingencies

Leases

The Company leases its office space and certain equipment under operating leases, the longest term of which expires in 2027.

For the year December 31, 2018 rent expense for leases was $29. For the years ended December 31, 2017 and 2016 rent expense for leases was $34. The future net minimum payments under non-cancelable leases are as follows as of December 31, 2018:



2019	$	28
2020	28
2021	26
2022	26
2023	20
Thereafter	24
Total minimum lease payments	$	152

Commitments

Through the normal course of investment operations, the Company commits to either purchase or sell securities, mortgage loans, or money market instruments, at a specified future date and at a specified price or yield. The inability of counterparties to honor these commitments may result in either a higher or lower replacement cost. Also, there is likely to be a change in the value of the securities underlying the commitments.

As of December 31, 2018, the Company had off-balance sheet commitments to acquire mortgage loans of $89 and purchase limited partnerships and private placement investments of $1,332, of which $384 related to consolidated investment entities.

Insurance Company Guaranty Fund Assessments

Insurance companies are assessed on the costs of funding the insolvencies of other insurance companies by the various state guaranty associations, generally based on the amount of premiums companies collect in that state.

The Company accrues the cost of future guaranty fund assessments based on estimates of insurance company insolvencies provided by the National Organization of Life and Health Insurance Guaranty Associations and the amount of premiums written in each state. The Company has estimated this undiscounted liability, which is included in Other liabilities on the Consolidated Balance Sheets, to be $2 and $6 as of December 31, 2018 and 2017, respectively. The Company has also recorded an asset, in Other assets on the Consolidated Balance Sheets of $15 and $19 as of December 31, 2018 and 2017, respectively, for future credits to premium taxes. The Company estimates its liabilities for future assessments under state insurance guaranty association laws. The Company believes the reserves established are adequate for future assessments relating to insurance companies that are currently subject to insolvency proceedings.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Restricted Assets

The Company is required to maintain assets on deposit with various regulatory authorities to support its insurance operations. The Company may also post collateral in connection with certain securities lending, repurchase agreements, funding agreements, credit facilities and derivative transactions. The components of the fair value of the restricted assets were as follows as of December 31, 2018 and 2017:



	2018		2017
Fixed maturity collateral pledged to FHLB⁽¹⁾	$	1,472	$	602
FHLB restricted stock⁽²⁾	75		67
Other fixed maturities-state deposits	129		175
Cash & cash equivalents	13		13
Securities pledged⁽³⁾	1,867		2,087
Total restricted assets	$	3,556	$	2,944

⁽¹⁾Included in Fixed maturities, available-for-sale, at fair value on the Consolidated Balance Sheets.

⁽²⁾Included in Other investments on the Consolidated Balance Sheets.

⁽³⁾Includes the fair value of loaned securities of $1,635 and $1,854 as of December 31, 2018 and 2017, respectively. In addition, as of December 31, 2018 and 2017, the Company delivered securities as collateral of $232 and $233, respectively. Loaned securities and securities delivered as collateral are included in Securities pledged on the Consolidated Balance Sheets.

Federal Home Loan Bank Funding Agreements

The Company is a member of the FHLB of Des Moines, the FHLB of Boston, and the FHLB of Topeka and is required to pledge collateral to back funding agreements issued to the FHLB. As of December 31, 2018 and 2017, the Company had $1,209 and $501, respectively, in non-putable funding agreements, which are included in Contract owner account balances on the Consolidated Balance Sheets. As of December 31, 2018 and 2017, assets with a market value of approximately $1,472 and $602, respectively, collateralized the FHLB funding agreements. Assets pledged to the FHLB are included in Fixed maturities, available-for-sale, at fair value on the Consolidated Balance Sheets.

Litigation, Regulatory Matters and Loss Contingencies

Litigation, regulatory and other loss contingencies arise in connection with the Company's activities as a diversified financial services firm. The Company is a defendant in a number of litigation matters arising from the conduct of its business, both in the ordinary course and otherwise. In some of these matters, claimants seek to recover very large or indeterminate amounts, including compensatory, punitive, treble and exemplary damages. Modern pleading practice in the U.S. permits considerable variation in the assertion of monetary damages and other relief. Claimants are not always required to specify the monetary damages they seek or they may be required only to state an amount sufficient to meet a court's jurisdictional requirements. Moreover, some jurisdictions allow claimants to allege monetary damages that far exceed any reasonably possible verdict. The variability in pleading requirements and past experience demonstrates that the monetary and other relief that may be requested in a lawsuit or claim often bears little relevance to the merits or potential value of a claim. Litigation against the Company includes a variety of claims including negligence, breach of contract, fraud, violation of regulation or statute, breach of fiduciary duty, negligent misrepresentation, failure to supervise, elder abuse and other torts.

As with other financial services companies, the Company periodically receives informal and formal requests for information from various state and federal governmental agencies and self-regulatory organizations in connection with inquiries and investigations of the products and practices of the Company or the financial services industry. It is the practice of the Company to cooperate fully in these matters.

The outcome of a litigation or regulatory matter is difficult to predict and the amount or range of potential losses associated with these or other loss contingencies requires significant management judgment. It is not possible to predict the ultimate outcome or to provide reasonably possible losses or ranges of losses for all pending regulatory matters, litigation and other loss contingencies.

While it is possible that an adverse outcome in certain cases could have a material adverse effect upon the Company's financial position, based on information currently known, management believes that neither the outcome of pending litigation and regulatory



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

matters, nor potential liabilities associated with other loss contingencies, are likely to have such an effect. However, given the large and indeterminate amounts sought in certain litigation and the inherent unpredictability of all such matters, it is possible that an adverse outcome in certain of the Company's litigation or regulatory matters, or liabilities arising from other loss contingencies, could, from time to time, have a material adverse effect upon the Company's results of operations or cash flows in a particular quarterly or annual period.

For some matters, the Company is able to estimate a possible range of loss. For such matters in which a loss is probable, an accrual has been made. For matters where the Company, however, believes a loss is reasonably possible, but not probable, no accrual is required. For matters for which an accrual has been made, but there remains a reasonably possible range of loss in excess of the amounts accrued or for matters where no accrual is required, the Company develops an estimate of the unaccrued amounts of the reasonably possible range of losses. As of December 31, 2018, the Company estimates the aggregate range of reasonably possible losses, in excess of any amounts accrued for these matters as of such date, to be up to approximately $50.

For other matters, the Company is currently not able to estimate the reasonably possible loss or range of loss. The Company is often unable to estimate the possible loss or range of loss until developments in such matters have provided sufficient information to support an assessment of the range of possible loss, such as quantification of a damage demand from plaintiffs, discovery from plaintiffs and other parties, investigation of factual allegations, rulings by a court on motions or appeals, analysis by experts and the progress of settlement discussions. On a quarterly and annual basis, the Company reviews relevant information with respect to litigation and regulatory contingencies and updates the Company's accruals, disclosures and reasonably possible losses or ranges of loss based on such reviews.

Litigation includes Goetz v. Voya Financial and Voya Retirement Insurance and Annuity Company (USDC District of Delaware, No. 1:17-cv-1289) (filed September 8, 2017), a putative class action in which plaintiff, a participant in a 401(k) plan, seeks to represent other participants in the plan as well as a class of similarly situated plans that "contract with [Voya] for recordkeeping and other services." Plaintiff alleges that "Voya" breached its fiduciary duty to the plan and other plan participants by charging unreasonable and excessive recordkeeping fees, and that "Voya" distributed materially false and misleading 404a-5 administrative and fund fee disclosures to conceal its excessive fees. The Company denies the allegations, which it believes are without merit, and intends to defend the case vigorously. Plaintiff filed an amended complaint on January 4, 2018, and the Company filed a motion to dismiss the amended complaint on February 8, 2018.

Litigation also includes Henkel of America v. ReliaStar Life Insurance Company (USDC District of Connecticut, No. 1:18-cv-00965) (filed June 8, 2018). Plaintiff alleges that ReliaStar breached the terms of a stop loss policy it issued to Plaintiff by refusing to reimburse Plaintiff for more than $47 in claims incurred by participants in prior years and submitted for coverage under the stop loss policy. Plaintiff alleges a breach of contract claim or, in the alternative, that the stop loss policy be declared to cover the submitted claims, and also asserts that ReliaStar engaged in unfair trade practices and unfair insurance practices in violation of state statutes, and did so willfully and intentionally to warrant an award of punitive damages under state law. The Company denies the allegations, which it believes are without merit, and intends to defend the case vigorously. The Company filed its answer with affirmative defenses on July 5, 2018, and its response to Plaintiff's motion for judgment on the pleadings on September 6, 2018.

Finally, industry wide, life insurers continue to be exposed to class action litigation related to the cost of insurance rates and periodic deductions from cash value. Common allegations include that insurance companies have breached the terms of their universal life insurance policies by establishing or increasing the cost of insurance rates using cost factors not permitted by the contract, thereby unjustly enriching themselves. This litigation is generally known as cost of insurance litigation.

Cost of insurance litigation for the Company includes Cutler v. Voya Financial, Inc. and ReliaStar Life Insurance Company (USDC S.D. Florida, No. 1:18-cv-20723) (filed February 23, 2018), in which the plaintiff alleges that his insurance policy only permitted the Company to rely upon his expected future mortality experience to establish and increase his cost of insurance, but the Company instead relied upon other, non-disclosed factors to do so. Plaintiff alleges breach of contract, unjust enrichment, conversion and fraud claims against the Company. The Company denies the allegations in the complaint, believes the complaint to be without merit, and intends to defend the matter vigorously. On November 8, 2018, plaintiff filed an amended complaint, and on November 26, 2018, the Company filed a motion to dismiss fraud claims from the amended complaint. A response and reply have been filed by the parties, who now await the court’s decision.

Cost of insurance litigation also includes Barnes v. Security Life of Denver (USDC District of Colorado, No. 1:18-cv-00718) (filed March 27, 2018), a putative class action in which the plaintiff alleges that his insurance policy only permitted the Company to rely



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

upon his expected future mortality experience to establish and increase his cost of insurance, but the Company instead relied upon other, non-disclosed factors to do so. Plaintiff alleges breach of contract and conversion claims against the Company and also seeks declaratory relief. The Company denies the allegations in the complaint, believes the complaint to be without merit, and intends to defend the matter vigorously. On May 15, 2018, the Company moved to dismiss the conversion claim from the complaint. Plaintiff has opposed the motion. The parties await the court’s decision.

Cost of insurance litigation for the Company includes Advance Trust & Life Escrow Services, LTA v. Security Life of Denver (USDC District of Colorado, No. 1:18-cv-01897) (filed July 26, 2018), a putative class action in which Plaintiff alleges that two specific types of universal life insurance policies only permitted the Company to rely upon the policyholder’s expected future mortality experience to establish and increase the cost of insurance, but the Company instead relied upon other, non-disclosed factors not only in the administration of the policies over time, but also in the decision to increase insurance costs beginning in approximately October 2015. Plaintiff alleges a breach of contract and seeks class certification. The Company denies the allegations in the complaint, believes the complaint to be without merit, and intends to defend the lawsuit vigorously. On August 28, 2018, the Company filed its answer to the complaint with affirmative defenses.

On October 6, 2018, the Company received Advance Trust & Life Escrow Services, LTA v. ReliaStar Life Insurance Company (USDC District of Minnesota, No. 1:18-cv-02863) (filed October 5, 2018), a putative class action in which Plaintiff alleges that the Company’s universal life insurance policies only permitted the Company to rely upon the policyholders’ expected future mortality experience to establish the cost of insurance, and that as projected mortality experience improved, the policy language required the Company to decrease the cost of insurance. Plaintiff alleges that the Company did not decrease the cost of insurance as required, thereby breaching its contract with its policyholders, and seeks class certification. The Company denies the allegations in the complaint, believes the complaint to be without merit, and will defend the lawsuit vigorously.

Contingencies related to Performance-based Capital Allocations on Private Equity Funds

Certain performance-based capital allocations related to sponsored private equity funds ("carried interest") are not final until the conclusion of an investment term specified in the relevant asset management contract. As a result, such carried interest, if accrued or paid to the Company during such term, is subject to later adjustment based on subsequent fund performance. If the fund’s cumulative investment return falls below specified investment return hurdles, some or all of the previously accrued carried interest is reversed to the extent that the Company is no longer entitled to the performance-based capital allocation. Should the fund’s cumulative investment return subsequently increase above specified investment return hurdles in future periods, previous reversals could be fully or partially recovered.

As of December 31, 2018, approximately $79 of previously accrued carried interest would be subject to full or partial reversal in future periods if cumulative fund performance hurdles are not maintained throughout the remaining life of the affected funds.

Contingencies related to Venerable Transaction

For loss contingencies related to the Venerable transaction, see the Discontinued Operations Note in the Company's Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K.

20. Consolidated Investment Entities

In the normal course of business, the Company provides investment management services to, invests in and has transactions with, various types of investment entities which may be considered VIEs or VOEs. The Company evaluates its involvement with each entity to determine whether consolidation is required.

The Company holds variable interests in certain investment entities in the form of debt or equity investments, as well as the right to receive management fees, performance fees, and carried interest. The Company consolidates certain entities under the VIE guidance when it is determined that the Company is the primary beneficiary. Alternatively, certain entities are consolidated under the VOE guidance when control is obtained through voting rights.

The Company has no right to the benefits from, nor does it bear the risks associated with consolidated investment entities beyond the Company’s direct equity and debt investments in and management fees generated from these entities. Such direct investments amounted to approximately $354 and $442 as of December 31, 2018 and 2017, respectively. If the Company were to liquidate, the



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

assets held by consolidated investment entities would not be available to the general creditors of the Company as a result of the liquidation.

Consolidated VIEs and VOEs

Collateral Loan Obligations Entities ("CLOs")

The Company is involved in the design, creation, and the ongoing management of CLOs. These entities are created for the purpose of acquiring diversified portfolios of senior secured floating rate leveraged loans, and securitizing these assets by issuing multiple tranches of collateralized debt; thereby providing investors with a broad array of risk and return profiles. Also known as collateralized financing entities under Topic 810, CLOs are variable interest entities by definition.

In return for providing collateral management services, the Company earns investment management fees and contingent performance fees. In addition to earning fee income, the Company often holds an investment in certain of the CLOs it manages, generally within the unrated and most subordinated tranche of each CLO. The fee income earned and investments held are included in the Company's ongoing consolidation assessment for each CLO. The Company was the primary beneficiary of 2 and 4 CLOs as of December 31, 2018 and 2017, respectively.

Limited Partnerships ("LPs")

The Company invests in and manages various limited partnerships, including private equity funds and hedge funds. These entities have been evaluated by the Company and are determined to be VIEs due to the equity holders, as a group, lacking the characteristics of a controlling financial interest.

In return for serving as the general partner of and providing investment management services to these entities, the Company earns management fees and carried interest in the normal course of business. Additionally, the Company often holds an investment in each limited partnership it manages, generally in the form of general partner and limited partner interests. The fee income, carried interest, and investments held are included in the Company’s ongoing consolidation analysis for each limited partnership. The Company consolidated 12 and 14 funds, which were structured as partnerships, as of December 31, 2018 and 2017, respectively.

Registered Investment Companies

The Company consolidated one sponsored investment fund accounted for as a VOE as of December 31, 2018 and 2017, because it is the majority investor in the fund, and as such, has a controlling financial interest in the fund.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The following table summarizes the components of the consolidated investment entities as of the dates indicated:



	December 31, 2018		December 31, 2017
Assets of Consolidated Investment Entities
VIEs
Cash and cash equivalents	$	331	$	216
Corporate loans, at fair value using the fair value option	542		1,089
Limited partnerships/corporations, at fair value	1,313		1,714
Other assets	15		75
Total VIE assets	2,201		3,094
VOEs
Cash and cash equivalents	—		1
Limited partnerships/corporations, at fair value	108		81
Other assets	1		—
Total VOE assets	109		82
Total assets of consolidated investment entities	$	2,310	$	3,176

Liabilities of Consolidated Investment Entities
VIEs
CLO notes, at fair value using the fair value option	$	540	$	1,047
Other liabilities	681		649
Total VIE liabilities	1,221		1,696
VOEs
Other liabilities	7		9
Total VOE liabilities	7		9
Total liabilities of consolidated investment entities	$	1,228	$	1,705



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The following tables summarize the impact of consolidation of investment entities into the Consolidated Balance Sheets as of the dates indicated:



	Before Consolidation⁽¹⁾		CLOs		LPs and VOEs		CLOs Adjustments⁽²⁾			LPs and VOEs Adjustments⁽²⁾			Total
December 31, 2018
Total investments and cash	$	65,458	$	—	$	—	$	(7	)	$	(347	)	$	65,104
Other assets	16,041		—		—		—			(1		)	16,040
Assets held in consolidated investment entities	—		589		1,721		—			—			2,310
Assets held in separate accounts	71,228		—		—		—			—			71,228
Assets held for sale	—		—		—		—			—			—
Total assets	$	152,727	$	589	$	1,721	$	(7	)	$	(348	)	$	154,682

Future policy benefits and contract owner account balances	$	65,489	$	—	$	—	$	—		$	—		$	65,489
Other liabilities	7,796		—		—		—			—			7,796
Liabilities held in consolidated investment entities	1		589		646		(7		)	(1		)	1,228
Liabilities related to separate accounts	71,228		—		—		—			—			71,228
Liabilities held for sale	—		—		—		—			—			—
Total liabilities	144,514		589		646		(7		)	(1		)	145,741
Equity attributable to common shareholders	8,213		—		1,075		—			(1,075		)	8,213
Equity attributable to noncontrolling interest in consolidated investment entities	—		—		—		—			728			728
Total liabilities and equity	$	152,727	$	589	$	1,721	$	(7	)	$	(348	)	$	154,682

⁽¹⁾ The Before Consolidation column includes the Company's direct investments in CIEs prior to consolidation,which are accounted for using the equity method or fair value option.

⁽²⁾Adjustments include the elimination of intercompany transactions between the Company and CIEs. This consists primarily of the Company’s direct investments in CIEs, but may also contain intercompany receivables or payables. The Company’s direct investments are eliminated against CIE liabilities in the case of CLOs, or the net assets of consolidated private equity and other funds.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)



	Before Consolidation⁽¹⁾		CLOs		LPs and VOEs		CLOs Adjustments⁽²⁾			LPs and VOEs Adjustments⁽²⁾			Total
December 31, 2017
Total investments and cash	$	67,709	$	—	$	—	$	(8	)	$	(396	)	$	67,305
Other assets	15,431		—		—		(36		)	(1		)	15,394
Assets held in consolidated investment entities	—		1,163		2,013		—			—			3,176
Assets held in separate accounts	77,605		—		—		—			—			77,605
Assets held for sale	59,052		—		—		—			—			59,052
Total assets	$	219,797	$	1,163	$	2,013	$	(44	)	$	(397	)	$	222,532

Future policy benefits and contract owner account balances	$	65,805	$	—	$	—	$	—		$	—		$	65,805
Other liabilities	8,101		—		—		—			—			8,101
Liabilities held in consolidated investment entities	—		1,163		587		(44		)	(1		)	1,705
Liabilities related to separate accounts	77,605		—		—		—			—			77,605
Liabilities held for sale	58,277		—		—		—			—			58,277
Total liabilities	209,788		1,163		587		(44		)	(1		)	211,493
Equity attributable to common shareholders	10,009		—		1,426		—			(1,426		)	10,009
Equity attributable to noncontrolling interest in consolidated investment entities	—		—		—		—			1,030			1,030
Total liabilities and equity	$	219,797	$	1,163	$	2,013	$	(44	)	$	(397	)	$	222,532

⁽¹⁾ The Before Consolidation column includes the Company's direct investments in CIEs prior to consolidation, which are accounted for using the equity method or fair value option.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The following tables summarize the impact of consolidation of investment entities into the Consolidated Statements of Operations for the periods indicated:



	Before Consolidation⁽¹⁾			CLOs		LPs and VOEs		CLOs Adjustments⁽²⁾			LPs and VOEs Adjustments⁽²⁾			Total
December 31, 2018
Revenues:
Net investment income	$	3,362		$	—	$	—	$	(1	)	$	(54	)	$	3,307
Fee income	2,759			—		—		(3		)	(48		)	2,708
Premiums	2,159			—		—		—			—			2,159
Net realized capital losses	(399		)	—		—		—			—			(399		)
Other income	447			—		—		—			—			447
Income related to consolidated investment entities	—			28		264		—			—			292
Total revenues	8,328			28		264		(4		)	(102		)	8,514
Benefits and expenses:
Policyholder benefits and Interest credited and other benefits to contract owners	4,575			—		—		—			—			4,575
Other expense	3,280			—		—		—			—			3,280
Operating expenses related to consolidated investment entities	—			28		73		(4		)	(48		)	49
Total benefits and expenses	7,855			28		73		(4		)	(48		)	7,904
Income (loss) before income taxes	473			—		191		—			(54		)	610
Income tax expense (benefit)	55			—		—		—			—			55
Income (loss) from continuing operations	418			—		191		—			(54		)	555
Income (loss) from discontinued operations, net of tax	457			—		—		—			—			457
Net income (loss)	875			—		191		—			(54		)	1,012
Less: Net income (loss) attributable to noncontrolling interest	—			—		—		—			137			137
Net income (loss) available to Voya Financial, Inc.'s common shareholders	$	875		$	—	$	191	$	—		$	(191	)	$	875

⁽¹⁾The Before Consolidation column includes the net investment income and fee income earned from CIEs prior to consolidation.

⁽²⁾Adjustments include the elimination of intercompany transactions between the Company and CIE's, primarily the elimination of management fees expensed by the funds and recorded as fee income by the Company prior to consolidation.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)



	Before Consolidation⁽¹⁾			CLOs		LPs and VOEs		CLOs Adjustments⁽²⁾			LPs and VOEs Adjustments⁽²⁾			Total
December 31, 2017
Revenues:
Net investment income	$	3,391		$	—	$	—	$	(2	)	$	(95	)	$	3,294
Fee income	2,675			—		—		(9		)	(39		)	2,627
Premiums	2,121			—		—		—			—			2,121
Net realized capital losses	(227		)	—		—		—			—			(227		)
Other income	371			—		—		—			—			371
Income related to consolidated investment entities	—			82		350		—			—			432
Total revenues	8,331			82		350		(11		)	(134		)	8,618
Benefits and expenses:
Policyholder benefits and Interest credited and other benefits to contract owners	4,636			—		—		—			—			4,636
Other expense	3,367			—		—		—			—			3,367
Operating expenses related to consolidated investment entities	—			82		55		(11		)	(39		)	87
Total benefits and expenses	8,003			82		55		(11		)	(39		)	8,090
Income (loss) before income taxes	328			—		295		—			(95		)	528
Income tax expense (benefit)	740			—		—		—			—			740
Income (loss) from continuing operations	(412		)	—		295		—			(95		)	(212		)
Income (loss) from discontinued operations, net of tax	(2,580		)	—		—		—			—			(2,580		)
Net income (loss)	(2,992		)	—		295		—			(95		)	(2,792		)
Less: Net income (loss) attributable to noncontrolling interest	—			—		—		—			200			200
Net income (loss) available to Voya Financial, Inc.'s common shareholders	$	(2,992	)	$	—	$	295	$	—		$	(295	)	$	(2,992	)

⁽¹⁾The Before Consolidation column includes the net investment income and fee income earned from CIEs prior to consolidation.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)



	Before Consolidation⁽¹⁾			CLOs		LPs and VOEs		CLOs Adjustments⁽²⁾			LPs and VOEs Adjustments⁽²⁾			Total
December 31, 2016
Revenues:
Net investment income	$	3,359		$	—	$	—	$	(7	)	$	2		$	3,354
Fee income	2,520			—		—		(17		)	(32		)	2,471
Premiums	2,795			—		—		—			—			2,795
Net realized capital losses	(363		)	—		—		—			—			(363		)
Other income	342			—		—		—			—			342
Income related to consolidated investment entities	—			118		71		—			—			189
Total revenues	8,653			118		71		(24		)	(30		)	8,788
Benefits and expenses:
Policyholder benefits and Interest credited and other benefits to contract owners	5,314			—		—		—			—			5,314
Other expense	3,358			—		—		—			—			3,358
Operating expenses related to consolidated investment entities	—			118		44		(24		)	(32		)	106
Total benefits and expenses	8,672			118		44		(24		)	(32		)	8,778
Income (loss) before income taxes	(19		)	—		27		—			2			10
Income tax expense (benefit)	(29		)	—		—		—			—			(29		)
Income (loss) from continuing operations	10			—		27		—			2			39
Income (loss) from discontinued operations, net of tax	(337		)	—		—		—			—			(337		)
Net income (loss)	(327		)	—		27		—			2			(298		)
Less: Net income (loss) attributable to noncontrolling interest	—			—		—		—			29			29
Net income (loss) available to Voya Financial, Inc.'s common shareholders	$	(327	)	$	—	$	27	$	—		$	(27	)	$	(327	)

⁽¹⁾The Before Consolidation column includes the net investment income and fee income earned from CIEs prior to consolidation.

Fair Value Measurement

Upon consolidation, the Company elected to apply the FVO for financial assets and financial liabilities held by CLOs and continued to measure these assets (primarily corporate loans) and liabilities (debt obligations issued by CLOs) at fair value in subsequent periods. The Company has elected the FVO to more closely align its accounting with the economics of its transactions and allows the Company to more effectively align changes in the fair value of CLO assets with a commensurate change in the fair value of CLO liabilities.

Investments held by consolidated private equity funds are measured and reported at fair value in the Company's Consolidated Financial Statements. Changes in the fair value of consolidated investment entities are recorded as a separate line item within Income (loss) related to consolidated investment entities in the Company's Consolidated Statements of Operations.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The methodology for measuring the fair value of financial assets and liabilities of consolidated investment entities, and the classification of these measurements in the fair value hierarchy is consistent with the methodology and classification applied by the Company to its investment portfolio.

As discussed in more detail below, the Company utilizes valuations obtained from third-party commercial pricing services, brokers and investment sponsors or third-party administrators that supply NAV (or its equivalent) per share used as a practical expedient. The valuations obtained from brokers and third-party commercial pricing services are non-binding. These valuations are reviewed on a monthly or quarterly basis depending on the entity and its underlying investments. Procedures include, but are not limited to, a review of underlying fund investor reports, review of top and worst performing funds requiring further scrutiny, review of variance from prior periods and review of variance from benchmarks, where applicable. In addition, the Company considers both macro and fund specific events that may impact the latest NAV supplied and determines if further adjustments of value should be made. Such changes, if any, are subject to senior management review.

When a price cannot be obtained from a commercial pricing service, independent broker quotes are solicited. Securities priced using independent broker quotes are classified as Level 3. Broker quotes and prices obtained from pricing services are reviewed and validated through an internal valuation committee price variance review, comparisons to internal pricing models, back testing to recent trades or monitoring of trading volumes.

Cash and Cash Equivalents

The carrying amounts for cash reflect the assets’ fair values. The fair value for cash equivalents is determined based on quoted market prices. These assets are classified as Level 1.

CLOs

Corporate loans: Corporate loan investments, which comprise the majority of consolidated CLO portfolio collateral, are senior secured corporate loans maturing at various dates between 2018 and 2026, paying interest at LIBOR , EURIBOR or PRIME plus a spread of up to 11.0%. As of December 31, 2018 and 2017, the unpaid principal balance exceeded the fair value of the corporate loans by approximately $13 and $17, respectively. Less than 1.0% of the collateral assets were in default as of December 31, 2018 and 2017.

The fair values for corporate loans are determined using independent commercial pricing services. Fair value measurement based on pricing services may be classified in Level 2 or Level 3 depending on the type, complexity, observability and liquidity of the asset being measured. The inputs used by independent commercial pricing services, such as benchmark yields and credit risk adjustments, are those that are derived principally from, or corroborated by, observable market data. Hence, the fair value measurement of corporate loans priced by independent pricing service providers is classified within Level 2 of the fair value hierarchy. In addition, there are assets held with CLO portfolios that represent senior level debt of other third party CLOs. These CLO investments are classified within Level 3 of the fair value hierarchy. See description of fair value process for CLO notes below.

CLO notes: The CLO notes are backed by a diversified loan portfolio consisting primarily of senior secured floating rate leveraged loans. Repayment risk is segmented into tranches with credit ratings of these tranches reflecting both the credit quality of underlying collateral as well as how much protection a given tranche is afforded by tranches that are subordinate to it. The most subordinated tranche bears the first loss and receives the residual payments, if any. The interest rates are generally variable rates based on LIBOR plus a pre-defined spread, which varies from 1.4% for the more senior tranches to 5.4% for the more subordinated tranches. CLO notes mature in 2026 and have a weighted average maturity of 7.6 years as of December 31, 2018. The investors in this debt are not affiliated with the Company and have no recourse to the general credit of the Company for this debt.

The fair values of the CLO notes are measured based on the fair value of the CLO's corporate loans, as the Company uses the measurement alternative available under ASU 2014-13 and determined that the inputs for measuring financial assets are more observable. The CLO notes are classified within Level 2 of the fair value hierarchy, consistent with the classification of the majority of the CLO financial assets.

The Company reviews the detailed prices, including comparisons to prior periods, for reasonableness. The Company utilizes a formal pricing challenge process to request a review of any price during which time the vendor examines its assumptions and relevant market inputs to determine if a price change is warranted.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The following narrative indicates the sensitivity of inputs:


•	Default Rate: An increase (decrease) in the expected default rate would likely increase (decrease) the discount margin (increase risk premium) used to value the CLO investments and CLO notes and, as a result, would potentially decrease the value of the CLO investments and CLO notes.


•	Recovery Rate: A decrease (increase) in the expected recovery of defaulted assets would potentially decrease (increase) the valuation of CLO investments and CLO notes.


•	Prepayment Rate: A decrease (increase) in the expected rate of collateral prepayments would potentially decrease (increase) the valuation of CLO investments and CLO notes as the expected weighted average life ("WAL") would increase (decrease).


•	Discount Margin (spread over LIBOR): An increase (decrease) in the discount margin used to value the CLO investments and CLO notes and would decrease (increase) the value of the CLO investments and CLO notes.

Private Equity Funds

As prescribed in ASC Topic 820, the unit of account for these investments is the interest in the investee fund. The Company owns an undivided interest in the fund portfolio and does not have the ability to dispose of individual assets and liabilities in the fund portfolio. Rather, the Company would be required to redeem or dispose of its entire interest in the investee fund. There is no current active market for interests in underlying private equity funds.

Valuation is generally based on the valuations provided by the fund's general partner or investment manager. The valuations typically reflect the fair value of the Company's capital account balance of each fund investment, including unrealized capital gains (losses), as reported in the financial statements of the respective investee fund as of the respective year end or the latest available date. In circumstances where fair values are not provided, the Company seeks to determine the fair value of fund investments based upon other information provided by the fund's general partner or investment manager or from other sources.

The fair value of securities received in-kind from fund investments is determined based on the restrictions around the securities.


•	Unrestricted, publicly traded securities are valued at the closing public market price on the reporting date;


•	Restricted, publicly traded securities may be valued at a discount from the closing public market price on the reporting date, depending on the circumstances; and


•	Privately held securities are valued by the directors/general partner of the investee fund, based on a variety of factors, including the price of recent transactions in the company's securities and the company's earnings, revenue and book value.

In the case of direct investments or co-investments in private equity companies, the Company initially recognizes investments at cost and subsequently adjusts investments to fair value. On a quarterly basis, the Company reviews the general partner or lead investor's valuation of the investee company, taking into account other available information, such as indications of a market value through subsequent issues of capital or transactions between third parties, performance of the investee company during the period and public, comparable companies' analysis, where appropriate.

Investments in these funds typically may not be fully redeemed at NAV within 90 days because of inherent restriction on near term redemptions.

As of December 31, 2018 and 2017, certain private equity funds maintained term loans and revolving lines of credit of $753 and $688, respectively. The term loans renew every three years and the revolving lines of credit renew annually; all loans bear interest at LIBOR/EURIBOR plus 150 - 155 bps. The lines of credit are used for funding transactions before capital is called from investors, as well as for the financing of certain purchases. As of December 31, 2018 and 2017, outstanding borrowings amount to $584 and $505, respectively. The borrowings are reflected in Liabilities related to consolidated investment entities - other liabilities on the Company's Consolidated Balance Sheets. The borrowings are carried at an amount equal to the unpaid principal balance.

On February 1, 2018, Pomona Investment Fund entered into a three-year revolving credit agreement with Credit Suisse. The size of the facility is $25; the loan bears interest at LIBOR plus 325 bps and has a commitment fee of 160 bps. There was $2 of outstanding borrowings as of December 31, 2018.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The following table summarizes the fair value hierarchy levels of consolidated investment entities as of December 31, 2018:



	Level 1		Level 2		Level 3		NAV		Total
Assets
VIEs
Cash and cash equivalents	$	331	$	—	$	—	$	—	$	331
Corporate loans, at fair value using the fair value option	—		542		—		—		542
Limited partnerships/corporations, at fair value	—		—		—		1,313		1,313
VOEs
Limited partnerships/corporations, at fair value	—		—		—		108		108
Total assets, at fair value	$	331	$	542	$	—	$	1,421	$	2,294
Liabilities
VIEs
CLO notes, at fair value using the fair value option	$	—	$	540	$	—	$	—	$	540
Total liabilities, at fair value	$	—	$	540	$	—	$	—	$	540

The following table summarizes the fair value hierarchy levels of consolidated investment entities as of December 31, 2017:



	Level 1		Level 2		Level 3		NAV		Total
Assets
VIEs
Cash and cash equivalents	$	216	$	—	$	—	$	—	$	216
Corporate loans, at fair value using the fair value option	—		1,089		—		—		1,089
Limited partnerships/corporations, at fair value	—		—		—		1,714		1,714
VOEs
Cash and cash equivalents	1		—		—		—		1
Limited partnerships/corporations, at fair value	—		—		—		81		81
Total assets, at fair value	$	217	$	1,089	$	—	$	1,795	$	3,101
Liabilities
VIEs
CLO notes, at fair value using the fair value option	$	—	$	1,047	$	—	$	—	$	1,047
Total liabilities, at fair value	$	—	$	1,047	$	—	$	—	$	1,047

Transfers of investments out of Level 3 and into Level 2 or Level 1, if any, are recorded as of the beginning of the period in which the transfer occurred. For the years ended December 31, 2018 and 2017, there were no transfers in or out of Level 3 or transfers between Level 1 and Level 2.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Deconsolidation of Certain Investment Entities

During December 31, 2018 the Company determined it was no longer the primary beneficiary of three previously consolidated CLOs due to a reduction in the Company’s investment in each CLO. This caused a reduction in the Company's obligation to absorb losses and rights to receive benefits of the CLOs that could potentially be significant to the CLOs. As a result of these determinations, the Company deconsolidated three investment entities during the year ended December 31, 2018. The Company deconsolidated four investment entities during the year ended December 31, 2017.

Nonconsolidated VIEs

CLOs

In addition to the consolidated CLOs, the Company also holds variable interest in certain CLOs that are not consolidated as it has been determined that the Company is not the primary beneficiary. With these CLOs , the Company serves as the investment manager and receives investment management fees and contingent performance fees. Generally, the Company does not hold any interest in the nonconsolidated CLOs but if it does, such ownership has been deemed to be insignificant. The Company has not provided, and is not obligated to provide, any financial or other support to these entities.

The Company reviews its assumptions on a periodic basis to determine if conditions have changed such that the projection of these contingent fees becomes significant enough to reconsider the Company's consolidation status as variable interest holder. As of December 31, 2018 and 2017, the Company held $525 and $321 ownership interests, respectively, in unconsolidated CLOs.

Limited Partnerships

The Company manages or holds investments in certain private equity funds and hedge funds. With these entities, the Company serves as the investment manager and is entitled to receive at-market investment management fees and at-market contingent performance fees. The Company does not consolidate any of these investment funds for which it is not considered to be the primary beneficiary.

In addition, the Company does not consolidate the funds in which its involvement takes a form of a limited partner interest and is restricted to a role of a passive investor, as a limited partner's interest does not provide the Company with any substantive kick-out or participating rights, nor does it provide the Company with power to direct the activities of the fund.

The following table presents the carrying amounts of the variable interests in VIEs in which the Company concluded that it holds a variable interest, but is not the primary beneficiary as of the dates indicated. The Company determines its maximum exposure to loss to be: (i) the amount invested in the debt or equity of the VIE and (ii) other commitments and guarantees to the VIE.



Variable Interests on the Consolidated Balance Sheet
	December 31, 2018				December 31, 2017
	Carrying Amount		Maximum exposure to loss		Carrying Amount		Maximum exposure to loss
Fixed maturities, available for sale	$	523	$	523	$	321	$	321
Limited partnership/corporations	1,158		1,158		784		784



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Securitizations

The Company invests in various tranches of securitization entities, including RMBS, CMBS and ABS. Through its investments, the Company is not obligated to provide any financial or other support to these entities. Each of the RMBS, CMBS and ABS entities are thinly capitalized by design and considered VIEs. The Company's involvement with these entities is limited to that of a passive investor. The Company has no unilateral right to appoint or remove the servicer, special servicer, or investment manager, which are generally viewed to have the power to direct the activities that most significantly impact the securitization entities' economic performance, in any of these entities, nor does the Company function in any of these roles. The Company, through its investments or other arrangements, does not have the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the entity. Therefore, the Company is not the primary beneficiary and does not consolidate any of the RMBS, CMBS and ABS entities in which it holds investments. These investments are accounted for as investments available-for-sale as described in the Fair Value Measurements (excluding Consolidated Investment Entities) Note to these Consolidated Financial Statements and unrealized capital gains (losses) on these securities are recorded directly in AOCI, except for certain RMBS which are accounted for under the FVO whose change in fair value is reflected in Other net realized gains (losses) in the Consolidated Statements of Operations. The Company’s maximum exposure to loss on these structured investments is limited to the amount of its investment. Refer to the Investments (excluding Consolidated Investment Entities) Note to these Consolidated Financial Statements for details regarding the carrying amounts and classifications of these assets.

21. Restructuring

Organizational Restructuring

As a result of the closing of the Transaction, the decision to cease new sales following the strategic review of the Company’s Individual Life business and the recently announced additional cost savings targets, the Company is undertaking further restructuring efforts to execute the Transaction, reduce stranded expenses, as well as improve operational efficiency, strengthen technology capabilities and centralize certain sales, operations and investment management activities ("Organizational Restructuring").

These activities have resulted in recognition of severance and organizational transition costs and are reflected in Operating expenses in the Consolidated Statements of Operations, but excluded from Adjusted operating earnings before income taxes. These expenses are classified as a component of Other adjustments to Income (loss) from continuing operations before income taxes and consequently are not included in the adjusted operating results of the Company's segments. For the year ended December 31, 2018, the Company has incurred Organizational Restructuring expenses of $49 associated with continuing operations.

The summary below presents Organizational Restructuring expenses, pre-tax, by type of costs incurred, for the periods indicated:



	Year Ended December 31,		Year Ended December 31,		Cumulative Amounts Incurred to Date
	2018		2017		Cumulative Amounts Incurred to Date
Severance benefits	$	15	$	4	$	19
Organizational transition costs	40		—		40
Total restructuring expenses	$	55	$	4	$	59

The aggregate amount of additional Organizational Restructuring expenses expected is in the range of $200 to$300. The Company anticipates that these costs, which will include severance, organizational transition costs incurred to reorganize operations and other costs such as contract terminations and asset write-offs, will occur at least through the end of 2020.

Restructuring expenses that were directly related to the preparation for and execution of the Transaction are included in Income (loss) from discontinued operations, net of tax, in the Consolidated Statements of Operations. For the year ended December 31, 2018, the Company incurred Organizational Restructuring expenses as a result of the Transaction of $6 of severance and organizational transition costs, which are reflected in discontinued operations.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The following table presents the accrued liability associated with Organizational Restructuring expenses as of December 31, 2018:



	Severance Benefits			Organizational Transition Costs			Total
Accrued liability as of January 1, 2018	$	4		$	—		$	4
Provision	17			40			57
Payments	(7		)	(31		)	(38		)
Other adjustments⁽¹⁾	(2		)	—			(2		)
Accrued liability as of December 31, 2018	$	12		$	9		$	21

⁽¹⁾Represents net write-downs of accruals, not associated with payments.

2016 Restructuring

In 2016, the Company began implementing a series of initiatives designed to make it a simpler, more agile company able to deliver an enhanced customer experience ("2016 Restructuring"). These initiatives include an increasing emphasis on less capital-intensive products and the achievement of operational synergies.

Substantially all of the initiatives associated with the 2016 Restructuring program concluded at the end of 2018. However, the Company expects to incur approximately $10 to $20 of additional restructuring costs associated with the completion of the information technology transition agreement entered into during 2017.

Total 2016 Restructuring expenses are reflected in Operating expenses in the Consolidated Statements of Operations, but excluded from Adjusted operating earnings before income taxes. These expenses are classified as a component of Other adjustments to Income (loss) from continuing operations before income taxes and consequently are not included in the adjusted operating results of the Company's segments.

The summary below presents restructuring expense, pre-tax, by type of costs incurred, for the periods indicated:



	Year Ended December 31,						Cumulative Amounts Incurred to Date
	2018		2017		2016		Cumulative Amounts Incurred to Date
Severance benefits	$	9	$	34	$	26	$	69
Asset write-off costs	1		16		—		17
Transition costs	7		17		—		24
Other costs	13		15		8		36
Total restructuring expenses	$	30	$	82	$	34	$	146

The following table presents the accrued liability associated with restructuring expenses as of December 31, 2018:



	Severance Benefits			Transition Costs			Other Costs				Total
Accrued liability as of January 1, 2018	$	30		$	17		$	3			$	50
Provision	13			7			13				33
Payments	(32		)	(10		)	(14		)		(56		)
Other adjustments⁽¹⁾	(3		)	—			—				(3		)
Accrued liability as of December 31, 2018	$	8		$	14		$	2		⁽²⁾	$	24

⁽¹⁾Represents net write-downs of accruals, not associated with payments.

⁽²⁾Represents services performed but not yet paid.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

22. Segments

Pursuant to the Transaction disclosed in the Discontinued Operations Note, which resulted in the disposition of substantially all of the Company's CBVA and Annuities businesses, the Company evaluated its segments and determined that the retained CBVA and Annuities policies ("Retained Business") that are not components of the disposed businesses under the Transaction are insignificant. As such, the Company will no longer report its CBVA and Annuities businesses as segments and will include the results of the Retained Business in Corporate. The Company revised prior period information to conform to current period presentation.

The Company provides its principal products and services through four segments: Retirement, Investment Management, Employee Benefits and Individual Life. These segments reflect the manner by which the Company’s chief operating decision maker views and manages the business. A brief description of these segments follows.

The Retirement segment provides tax-deferred, employer-sponsored retirement savings plans and administrative services to corporate, education, healthcare, other non-profit and government entities, and stable value products to institutional clients where the Company may or may not be providing defined contribution products and services, as well as individual retirement accounts ("IRAs"), other retail financial products and comprehensive financial services to individual customers.

The Investment Management segment provides investment products and retirement solutions across a broad range of geographies, market sectors, investment styles and capitalization spectrums. Products and services are offered to institutional clients, including public, corporate and union retirement plans, endowments and foundations and insurance companies, as well as individual investors and general accounts of the Company's insurance subsidiaries and are distributed through the Company's direct sales force, consultant channel and intermediary partners (such as banks, broker-dealers and independent financial advisers).

The Employee Benefits segment provides stop loss, group life, voluntary employee-paid and disability products to mid-sized and large businesses.

The Individual Life segment provides wealth protection and transfer opportunities through universal and variable life products, distributed through a network of independent general agents and managing directors, to meet the needs of a broad range of customers from the middle market through affluent market segments.

The Company includes in Corporate the following corporate and business activities:

•

corporate operations, corporate level assets and financial obligations; financing and interest expenses, and other items not allocated or directly related to the Company's segments, including items such as expenses of its Strategic Investment Program described below, certain expenses and liabilities of employee benefit plans, certain adjustments to short-term and long-term incentive accruals and intercompany eliminations;


•	investment income on assets backing surplus in excess of amounts held at the segment level;


•	revenues and expenses related to a run-off block of guaranteed investment contracts ("GICs") and funding agreements as well as residual activity on other closed or divested businesses;


•	certain revenues and expenses of the Retained Business; and


•	certain expenses previously allocated to the CBVA and Annuities businesses held for sale.

Measurement

Adjusted operating earnings before income taxes. The Company believes that Adjusted operating earnings before income taxes provides a meaningful measure of its business and segment performance and enhances the understanding of the Company’s financial results by focusing on the operating performance and trends of the underlying business segments and excluding items that tend to be highly variable from period to period based on capital market conditions or other factors. The Company uses the same accounting policies and procedures to measure segment Adjusted operating earnings before income taxes as it does for the directly comparable U.S. GAAP measure, which is Income (loss) from continuing operations before income taxes. Adjusted operating earnings before



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

income taxes does not replace Income (loss) from continuing operations before income taxes as a measure of the Company’s consolidated results of operations. Therefore, the Company believes that it is useful to evaluate both Income (loss) from continuing operations before income taxes and Adjusted operating earnings before income taxes when reviewing the Company’s financial and operating performance. Each segment’s Adjusted operating earnings before income taxes is calculated by adjusting Income (loss) from continuing operations before income taxes for the following items:

•

Net investment gains (losses), net of related amortization of DAC, VOBA, sales inducements and unearned revenue, which are significantly influenced by economic and market conditions, including interest rates and credit spreads, and are not indicative of normal operations. Net investment gains (losses) include gains (losses) on the sale of securities, impairments, changes in the fair value of investments using the FVO unrelated to the implied loan-backed security income recognition for certain mortgage-backed obligations and changes in the fair value of derivative instruments, excluding realized gains (losses) associated with swap settlements and accrued interest;

•

Net guaranteed benefit hedging gains (losses), which are significantly influenced by economic and market conditions and are not indicative of normal operations, include changes in the fair value of derivatives related to guaranteed benefits, net of related reserve increases (decreases) and net of related amortization of DAC, VOBA and sales inducements, less the estimated cost of these benefits. The estimated cost, which is reflected in adjusted operating earnings, reflects the expected cost of these benefits if markets perform in line with the Company's long-term expectations and includes the cost of hedging. Other derivative and reserve changes related to guaranteed benefits are excluded from adjusted operating earnings, including the impacts related to changes in the Company's nonperformance spread;

•

Income (loss) related to businesses exited through reinsurance or divestment that do not qualify as discontinued operations, which includes gains and (losses) associated with transactions to exit blocks of business (including net investment gains (losses) on securities sold and expenses directly related to these transactions) and residual run-off activity; these gains and (losses) are often related to infrequent events and do not reflect performance of operating segments. Excluding this activity better reveals trends in the Company's core business, which would be obscured by including the effects of business exited, and more closely aligns Adjusted operating earnings before income taxes with how the Company manages its segments;

•

Income (loss) attributable to noncontrolling interest, which represents the interest of shareholders, other than the Company, in consolidated entities. Income (loss) attributable to noncontrolling interest represents such shareholders' interests in the gains and (losses) of those entities, or the attribution of results from consolidated VIEs or VOEs to which the Company is not economically entitled;


•	Income (loss) related to early extinguishment of debt, which includes losses incurred as a result of transactions where the Company repurchases outstanding principal amounts of debt; these losses are excluded from Adjusted operating earnings before income taxes since the outcome of decisions to restructure debt are not indicative of normal operations;


•	Impairment of goodwill, value of management contract rights and value of customer relationships acquired, which includes losses as a result of impairment analysis; these represent losses related to infrequent events and do not reflect normal, cash-settled expenses;

•

Immediate recognition of net actuarial gains (losses) related to the Company's pension and other postretirement benefit obligations and gains (losses) from plan amendments and curtailments, which includes actuarial gains and losses as a result of differences between actual and expected experience on pension plan assets or projected benefit obligation during a given period. The Company immediately recognizes actuarial gains and (losses) related to pension and other postretirement benefit obligations and gains and losses from plan adjustments and curtailments. These amounts do not reflect normal, cash-settled expenses and are not indicative of current Operating expense fundamentals; and

•

Other items not indicative of normal operations or performance of the Company's segments or related to events such as capital or organizational restructurings undertaken to achieve long-term economic benefits, including certain costs related to debt and equity offerings and severance and other expenses associated with such activities. These items vary widely in timing, scope and frequency between periods as well as between companies to which the Company is compared. Accordingly, the Company adjusts for these items as management believes that these items distort the ability to make a meaningful evaluation of the current and future performance of the Company's segments.



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The summary below reconciles Adjusted operating earnings before income taxes for the segments to Income (loss) from continuing operations before income taxes for the periods indicated:



	Year Ended December 31,
	2018			2017			2016
Income (loss) from continuing operations before income taxes	$	610		$	528		$	10
Less Adjustments:
Net investment gains (losses) and related charges and adjustments	(127		)	(84		)	(108		)
Net guaranteed benefit hedging gains (losses) and related charges and adjustments	40			46			4
Income (loss) related to businesses exited through reinsurance or divestment	(76		)	(45		)	(14		)
Income (loss) attributable to noncontrolling interest	137			200			29
Loss related to early extinguishment of debt	(40		)	(4		)	(104		)
Immediate recognition of net actuarial gains (losses) related to pension and other postretirement benefit obligations and gains (losses) from plan amendments and curtailments	(47		)	(16		)	(55		)
Other adjustments	(79		)	(97		)	(71		)
Total adjustments to income (loss) from continuing operations	(192		)	—			(319		)

Adjusted operating earnings before income taxes by segment:
Retirement	$	701		$	456		$	450
Investment Management	205			248			171
Employee Benefits	160			127			126
Individual Life	(33		)	92			59
Corporate⁽¹⁾	(231		)	(395		)	(477		)
Total	$	802		$	528		$	329

⁽¹⁾Adjusted operating earnings before income taxes for Corporate includes Net investment gains (losses) and Net guaranteed benefit hedging gains (losses) associated with the Retained Business. These amounts are insignificant and do not distort the ability to make a meaningful evaluation of the trends of Corporate activities.

Adjusted operating revenues is a measure of the Company's segment revenues. Each segment's Adjusted operating revenues are calculated by adjusting Total revenues to exclude the following items:

•

Gain (loss) on change in fair value of derivatives related to guaranteed benefits, which is significantly influenced by economic and market conditions and not indicative of normal operations, includes changes in the fair value of derivatives related to guaranteed benefits, less the estimated cost of these benefits. The estimated cost, which is reflected in Adjusted operating revenues, reflects the expected cost of these benefits if markets perform in line with the Company's long-term expectations and includes the cost of hedging. Other derivative and reserve changes related to guaranteed benefits are excluded from Adjusted operating revenues, including the impacts related to changes in the Company's nonperformance spread;



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

•

Revenues related to businesses exited through reinsurance or divestment that do not qualify as discontinued operations, which includes revenues associated with transactions to exit blocks of business (including net investment gains (losses) on securities sold related to these transactions) and residual run-off activity; these gains and (losses) are often related to infrequent events and do not reflect performance of operating segments. Excluding this activity better reveals trends in the Company's core business, which would be obscured by including the effects of business exited, and more closely aligns Operating revenues with how the Company manages its segments;


•	Revenues attributable to noncontrolling interest, which represents the interests of shareholders, other than the Company, in consolidated entities. Revenues attributable to noncontrolling interest represents such shareholders' interests in the gains and losses of those entities, or the attribution of results from consolidated VIEs or VOEs to which the Company is not economically entitled; and


•	Other adjustments to Total revenues primarily reflect fee income earned by the Company's broker-dealers for sales of non-proprietary products, which are reflected net of commission expense in the Company's segments’ operating revenues, other items where the income is passed on to third parties and the elimination of intercompany investment expenses included in operating revenues.

The summary below reconciles Adjusted operating revenues for the segments to Total revenues for the periods indicated:



	Year Ended December 31,
	2018			2017			2016
Total revenues	$	8,514		$	8,618		$	8,788

Adjustments:
Net realized investment gains (losses) and related charges and adjustments	(170		)	(100		)	(112		)
Gain (loss) on change in fair value of derivatives related to guaranteed benefits	54			52			9
Revenues related to businesses exited through reinsurance or divestment	(32		)	122			96
Revenues attributable to noncontrolling interest	186			286			133
Other adjustments	259			212			183
Total adjustments to revenues	297			572			309

Adjusted operating revenues by segment:
Retirement	$	2,727		$	2,538		$	3,257
Investment Management	683			731			627
Employee Benefits	1,849			1,767			1,616
Individual Life	2,575			2,563			2,528
Corporate⁽¹⁾	383			447			451
Total	$	8,217		$	8,046		$	8,479

⁽¹⁾ Adjusted operating revenues for Corporate includes Net investment gains (losses) and Gains (losses) on change in fair value of derivatives related to guaranteed benefits associated with the Retained Business. These amounts are insignificant and do not distort the ability to make a meaningful evaluation of the trends of Corporate activities.

Other Segment Information

The Investment Management segment revenues include the following intersegment revenues, primarily consisting of asset-based management and administration fees for the periods indicated:



	Year Ended December 31,
	2018		2017		2016
Investment management intersegment revenues	$	118	$	118	$	114



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

The summary below presents Total assets for the Company’s segments as of the dates indicated:



	December 31, 2018		December 31, 2017
Retirement	$	104,995	$	111,476
Investment Management	690		626
Employee Benefits	2,560		2,657
Individual Life	26,431		27,301
Corporate	18,051		18,685
Total assets, before consolidation⁽¹⁾	152,727		160,745
Consolidation of investment entities	1,955		2,735
Total assets, excluding assets held for sale	154,682		163,480
Assets held for sale	—		59,052
Total assets	$	154,682	$	222,532

⁽¹⁾Total assets, before consolidation includes the Company's direct investments in CIEs prior to consolidation, which are accounted for using the equity method or fair value option.

23. Condensed Consolidating Financial Information

The accompanying condensed consolidating financial information has been prepared and presented pursuant to SEC Regulation S-X, Rule 3-10, "Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered" ("Rule 3-10"). The condensed consolidating financial information presents the financial position of Voya Financial, Inc. ("Parent Issuer"), Voya Holdings ("Subsidiary Guarantor") and all other subsidiaries ("Non-Guarantor Subsidiaries") of the Company as of December 31, 2018 and 2017, and their results of operations, comprehensive income and cash flows for the years ended December 31, 2018, 2017 and 2016.

The 5.5% senior notes due 2022, the 5.7% senior notes due 2043, the 3.65% senior notes due 2026, the 4.8% senior notes due 2046, the 3.125% senior notes due 2024 (collectively, the "Senior Notes"), the 5.65% fixed-to-floating rate junior subordinated notes due 2053 and the 4.7% fixed-to-floating junior subordinated notes due 2048 (collectively, the "Junior Subordinated Notes"), each issued by Parent Issuer, are fully and unconditionally guaranteed by Subsidiary Guarantor, a 100% owned subsidiary of Parent Issuer. No other subsidiary of Parent Issuer guarantees the Senior Notes or the Junior Subordinated Notes. Rule 3-10(h) provides that a guarantee is full and unconditional if, when the issuer of a guaranteed security has failed to make a scheduled payment, the guarantor is obligated to make the scheduled payment immediately and, if it does not, any holder of the guaranteed security may immediately bring suit directly against the guarantor for payment of amounts due and payable. In the event that Parent Issuer does not fulfill the guaranteed obligations, any holder of the Senior Notes or the Junior Subordinated Notes may immediately bring a claim against Subsidiary Guarantor for amounts due and payable.

The following condensed consolidating financial information is presented in conformance with the components of the Consolidated Financial Statements. Investments in subsidiaries are accounted for using the equity method for purposes of illustrating the consolidating presentation. Equity in the subsidiaries is therefore reflected in the Parent Issuer's and Subsidiary Guarantor's Investment in subsidiaries and Equity in earnings of subsidiaries. Non-Guarantor Subsidiaries represent all other subsidiaries on a combined basis. The consolidating adjustments presented herein eliminate investments in subsidiaries and intercompany balances and transactions.



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Balance Sheet

December 31, 2018



	Parent Issuer			Subsidiary Guarantor		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
Assets:
Investments:
Fixed maturities, available-for-sale, at fair value	$	—		$	—	$	46,313	$	(15	)	$	46,298
Fixed maturities, at fair value using the fair value option	—			—		2,956		—			2,956
Equity securities, at fair value	99			—		174		—			273
Short-term investments	—			—		168		—			168
Mortgage loans on real estate, net of valuation allowance	—			—		8,676		—			8,676
Policy loans	—			—		1,833		—			1,833
Limited partnerships/corporations	—			—		1,158		—			1,158
Derivatives	39			—		286		(78		)	247
Investments in subsidiaries	10,099			7,060		—		(17,159		)	—
Other investments	—			—		90		—			90
Securities pledged	—			—		1,867		—			1,867
Total investments	10,237			7,060		63,521		(17,252		)	63,566
Cash and cash equivalents	209			2		1,327		—			1,538
Short-term investments under securities loan agreements, including collateral delivered	11			—		1,673		—			1,684
Accrued investment income	—			—		650		—			650
Premium receivable and reinsurance recoverable	—			—		6,860		—			6,860
Deferred policy acquisition costs and Value of business acquired	—			—		4,116		—			4,116
Current income taxes	(37		)	26		248		—			237
Deferred income taxes	553			22		582		—			1,157
Loans to subsidiaries and affiliates	79			—		4		(83		)	—
Due from subsidiaries and affiliates	2			—		3		(5		)	—
Other assets	13			—		1,323		—			1,336
Assets related to consolidated investment entities:
Limited partnerships/corporations, at fair value	—			—		1,421		—			1,421
Cash and cash equivalents	—			—		331		—			331
Corporate loans, at fair value using the fair value option	—			—		542		—			542
Other assets	—			—		16		—			16
Assets held in separate accounts	—			—		71,228		—			71,228
Total assets	$	11,067		$	7,110	$	153,845	$	(17,340	)	$	154,682



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Balance Sheet (Continued)

December 31, 2018



	Parent Issuer		Subsidiary Guarantor		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
Liabilities and Shareholders' Equity:
Future policy benefits	$	—	$	—	$	14,488	$	—		$	14,488
Contract owner account balances	—		—		51,001		—			51,001
Payables under securities loan and repurchase agreements, including collateral held	—		—		1,821		—			1,821
Short-term debt	4		—		80		(83		)	1
Long-term debt	2,763		371		17		(15		)	3,136
Derivatives	39		—		178		(78		)	139
Pension and other postretirement provisions	—		—		551		—			551
Due to subsidiaries and affiliates	1		—		2		(3		)	—
Other liabilities	47		55		2,048		(2		)	2,148
Liabilities related to consolidated investment entities:
Collateralized loan obligations notes, at fair value using the fair value option	—		—		540		—			540
Other liabilities	—		—		688		—			688
Liabilities related to separate accounts	—		—		71,228		—			71,228
Total liabilities	2,854		426		142,642		(181		)	145,741
Shareholders' equity:
Total Voya Financial, Inc. shareholders' equity	8,213		6,684		10,475		(17,159		)	8,213
Noncontrolling interest	—		—		728		—			728
Total shareholders' equity	8,213		6,684		11,203		(17,159		)	8,941
Total liabilities and shareholders' equity	$	11,067	$	7,110	$	153,845	$	(17,340	)	$	154,682



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Balance Sheet

December 31, 2017



	Parent Issuer		Subsidiary Guarantor		Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Assets:
Investments:
Fixed maturities, available-for-sale, at fair value	$	—	$	—	$	48,344		$	(15	)	$	48,329
Fixed maturities, at fair value using the fair value option	—		—		3,018			—			3,018
Equity securities, available-for-sale, at fair value	115		—		265			—			380
Short-term investments	212		—		259			—			471
Mortgage loans on real estate, net of valuation allowance	—		—		8,686			—			8,686
Policy loans	—		—		1,888			—			1,888
Limited partnerships/corporations	—		—		784			—			784
Derivatives	49		—		445			(97		)	397
Investments in subsidiaries	12,293		7,618		—			(19,911		)	—
Other investments	—		1		46			—			47
Securities pledged	—		—		2,087			—			2,087
Total investments	12,669		7,619		65,822			(20,023		)	66,087
Cash and cash equivalents	244		1		973			—			1,218
Short-term investments under securities loan agreements, including collateral delivered	11		—		1,615			—			1,626
Accrued investment income	—		—		667			—			667
Premium receivable and reinsurance recoverable	—		—		7,632			—			7,632
Deferred policy acquisition costs and Value of business acquired	—		—		3,374			—			3,374
Current income taxes	—		6		(2		)	—			4
Deferred income taxes	406		22		353			—			781
Loans to subsidiaries and affiliates	191		—		418			(609		)	—
Due from subsidiaries and affiliates	2		—		3			(5		)	—
Other assets	16		—		1,294			—			1,310
Assets related to consolidated investment entities:
Limited partnerships/corporations, at fair value	—		—		1,795			—			1,795
Cash and cash equivalents	—		—		217			—			217
Corporate loans, at fair value using the fair value option	—		—		1,089			—			1,089
Other assets	—		—		75			—			75
Assets held in separate accounts	—		—		77,605			—			77,605
Assets held for sale	—		—		59,052			—			59,052
Total assets	$	13,539	$	7,648	$	221,982		$	(20,637	)	$	222,532



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Balance Sheet (Continued)

December 31, 2017



	Parent Issuer		Subsidiary Guarantor		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
Liabilities and Shareholders' Equity:
Future policy benefits	$	—	$	—	$	15,647	$	—		$	15,647
Contract owner account balances	—		—		50,158		—			50,158
Payables under securities loan and repurchase agreements, including collateral held	—		—		1,866		—			1,866
Short-term debt	755		68		123		(609		)	337
Long-term debt	2,681		438		19		(15		)	3,123
Derivatives	49		—		197		(97		)	149
Pension and other postretirement provisions	—		—		550		—			550
Due to subsidiaries and affiliates	1		—		2		(3		)	—
Other liabilities	44		12		2,022		(2		)	2,076
Liabilities related to consolidated investment entities:
Collateralized loan obligations notes, at fair value using the fair value option	—		—		1,047		—			1,047
Other liabilities	—		—		658		—			658
Liabilities related to separate accounts	—		—		77,605		—			77,605
Liabilities held for sale	—		—		58,277		—			58,277
Total liabilities	3,530		518		208,171		(726		)	211,493
Shareholders' equity:
Total Voya Financial, Inc. shareholders' equity	10,009		7,130		12,781		(19,911		)	10,009
Noncontrolling interest	—		—		1,030		—			1,030
Total shareholders' equity	10,009		7,130		13,811		(19,911		)	11,039
Total liabilities and shareholders' equity	$	13,539	$	7,648	$	221,982	$	(20,637	)	$	222,532



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Operations

For the Year Ended December 31, 2018



	Parent Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Revenues:
Net investment income	$	1		$	1		$	3,314		$	(9	)	$	3,307
Fee income	—			—			2,708			—			2,708
Premiums	—			—			2,159			—			2,159
Net realized capital gains (losses):
Total other-than-temporary impairments	—			—			(28		)	—			(28		)
Less: Portion of other-than-temporary impairments recognized in Other comprehensive income (loss)	—			—			1			—			1
Net other-than-temporary impairments recognized in earnings	—			—			(29		)	—			(29		)
Other net realized capital gains (losses)	—			—			(370		)	—			(370		)
Total net realized capital gains (losses)	—			—			(399		)	—			(399		)
Other revenue	(5		)	—			452			—			447
Income (loss) related to consolidated investment entities:
Net investment income	—			—			292			—			292
Total revenues	(4		)	1			8,526			(9		)	8,514
Benefits and expenses:
Policyholder benefits	—			—			3,045			—			3,045
Interest credited to contract owner account balances	—			—			1,530			—			1,530
Operating expenses	11			—			2,680			—			2,691
Net amortization of Deferred policy acquisition costs and Value of business acquired	—			—			368			—			368
Interest expense	175			53			2			(9		)	221
Operating expenses related to consolidated investment entities:
Interest expense	—			—			41			—			41
Other expense	—			—			8			—			8
Total benefits and expenses	186			53			7,674			(9		)	7,904
Income (loss) from continuing operations before income taxes	(190		)	(52		)	852			—			610
Income tax expense (benefit)	—			(24		)	418			(339		)	55
Income (loss) from continuing operations	(190		)	(28		)	434			339			555
Income (loss) from discontinued operations, net of tax	—			—			457			—			457
Net income (loss) before equity in earnings (losses) of unconsolidated affiliates	(190		)	(28		)	891			339			1,012
Equity in earnings (losses) of subsidiaries, net of tax	1,065			1,615			—			(2,680		)	—
Net income (loss) including noncontrolling interest	875			1,587			891			(2,341		)	1,012
Less: Net income (loss) attributable to noncontrolling interest	—			—			137			—			137
Net income (loss) available to Voya Financial, Inc.	$	875		$	1,587		$	754		$	(2,341	)	$	875



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Operations

For the Year Ended December 31, 2017



	Parent Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Revenues:
Net investment income	$	33		$	—		$	3,274		$	(13	)	$	3,294
Fee income	—			—			2,627			—			2,627
Premiums	—			—			2,121			—			2,121
Net realized capital gains (losses):
Total other-than-temporary impairments	—			—			(30		)	—			(30		)
Less: Portion of other-than-temporary impairments recognized in Other comprehensive income (loss)	—			—			(9		)	—			(9		)
Net other-than-temporary impairments recognized in earnings	—			—			(21		)	—			(21		)
Other net realized capital gains (losses)	—			—			(206		)	—			(206		)
Total net realized capital gains (losses)	—			—			(227		)	—			(227		)
Other revenue	8			1			362			—			371
Income (loss) related to consolidated investment entities:
Net investment income	—			—			432			—			432
Total revenues	41			1			8,589			(13		)	8,618
Benefits and expenses:
Policyholder benefits	—			—			3,030			—			3,030
Interest credited to contract owner account balances	—			—			1,606			—			1,606
Operating expenses	9			—			2,645			—			2,654
Net amortization of Deferred policy acquisition costs and Value of business acquired	—			—			529			—			529
Interest expense	155			37			5			(13		)	184
Operating expenses related to consolidated investment entities:
Interest expense	—			—			80			—			80
Other expense	—			—			7			—			7
Total benefits and expenses	164			37			7,902			(13		)	8,090
Income (loss) from continuing operations before income taxes	(123		)	(36		)	687			—			528
Income tax expense (benefit)	113			3			624			—			740
Income (loss) from continuing operations	(236		)	(39		)	63			—			(212		)
Income (loss) from discontinued operations, net of tax	—			—			(2,580		)	—			(2,580		)
Net income (loss) before equity in earnings (losses) of unconsolidated affiliates	(236		)	(39		)	(2,517		)	—			(2,792		)
Equity in earnings (losses) of subsidiaries, net of tax	(2,756		)	(2,623		)	—			5,379			—
Net income (loss) including noncontrolling interest	(2,992		)	(2,662		)	(2,517		)	5,379			(2,792		)
Less: Net income (loss) attributable to noncontrolling interest	—			—			200			—			200
Net income (loss) available to Voya Financial, Inc.'s common shareholders	$	(2,992	)	$	(2,662	)	$	(2,717	)	$	5,379		$	(2,992	)



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Operations

For the Year Ended December 31, 2016



	Parent Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Revenues:
Net investment income	$	19		$	—		$	3,347		$	(12	)	$	3,354
Fee income	—			—			2,471			—			2,471
Premiums	—			—			2,795			—			2,795
Net realized capital gains (losses):
Total other-than-temporary impairments	—			—			(32		)	—			(32		)
Less: Portion of other-than-temporary impairments recognized in Other comprehensive income (loss)	—			—			2			—			2
Net other-than-temporary impairments recognized in earnings	—			—			(34		)	—			(34		)
Other net realized capital gains (losses)	1			—			(330		)	—			(329		)
Total net realized capital gains (losses)	1			—			(364		)	—			(363		)
Other revenue	1			—			341			—			342
Income (loss) related to consolidated investment entities:
Net investment income	—			—			189			—			189
Total revenues	21			—			8,779			(12		)	8,788
Benefits and expenses:
Policyholder benefits	—			—			3,710			—			3,710
Interest credited to contract owner account balances	—			—			1,604			—			1,604
Operating expenses	9			—			2,646			—			2,655
Net amortization of Deferred policy acquisition costs and Value of business acquired	—			—			415			—			415
Interest expense	238			57			5			(12		)	288
Operating expenses related to consolidated investment entities:
Interest expense	—			—			102			—			102
Other expense	—			—			4			—			4
Total benefits and expenses	247			57			8,486			(12		)	8,778
Income (loss) from continuing operations before income taxes	(226		)	(57		)	293			—			10
Income tax expense (benefit)	(90		)	(26		)	70			17			(29		)
Income (loss) from continuing operations	(136		)	(31		)	223			(17		)	39
Income (loss) from discontinued operations, net of tax	—			—			(337		)	—			(337		)
Net income (loss) before equity in earnings (losses) of unconsolidated affiliates	(136		)	(31		)	(114		)	(17		)	(298		)
Equity in earnings (losses) of subsidiaries, net of tax	(191		)	317			—			(126		)	—
Net income (loss) including noncontrolling interest	(327		)	286			(114		)	(143		)	(298		)
Less: Net income (loss) attributable to noncontrolling interest	—			—			29			—			29
Net income (loss) available to Voya Financial, Inc.'s common shareholders	$	(327	)	$	286		$	(143	)	$	(143	)	$	(327	)



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Comprehensive Income

For the Year Ended December 31, 2018



	Parent Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income (loss) including noncontrolling interest	$	875		$	1,587		$	891		$	(2,341	)	$	1,012
Other comprehensive income (loss), before tax:
Unrealized gains (losses) on securities	(2,810		)	(2,143		)	(2,810		)	4,953			(2,810		)
Other-than-temporary impairments	32			30			32			(62		)	32
Pension and other postretirement benefits liability	(11		)	(2		)	(11		)	13			(11		)
Other comprehensive income (loss), before tax	(2,789		)	(2,115		)	(2,789		)	4,904			(2,789		)
Income tax expense (benefit) related to items of other comprehensive income (loss)	(693		)	(412		)	(694		)	1,106			(693		)
Other comprehensive income (loss), after tax	(2,096		)	(1,703		)	(2,095		)	3,798			(2,096		)
Comprehensive income (loss)	(1,221		)	(116		)	(1,204		)	1,457			(1,084		)
Less: Comprehensive income (loss) attributable to noncontrolling interest	—			—			137			—			137
Comprehensive income (loss) attributable to Voya Financial, Inc.	$	(1,221	)	$	(116	)	$	(1,341	)	$	1,457		$	(1,221	)

Condensed Consolidating Statement of Comprehensive Income

For the Year Ended December 31, 2017



	Parent Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income (loss) including noncontrolling interest	$	(2,992	)	$	(2,662	)	$	(2,517	)	$	5,379		$	(2,792	)
Other comprehensive income (loss), before tax:
Unrealized gains (losses) on securities	1,191			813			1,191			(2,004		)	1,191
Other-than-temporary impairments	(2		)	(5		)	(2		)	7			(2		)
Pension and other postretirement benefits liability	(15		)	(3		)	(15		)	18			(15		)
Other comprehensive income (loss), before tax	1,174			805			1,174			(1,979		)	1,174
Income tax expense (benefit) related to items of other comprehensive income (loss)	364			258			364			(622		)	364
Other comprehensive income (loss), after tax	810			547			810			(1,357		)	810
Comprehensive income (loss)	(2,182		)	(2,115		)	(1,707		)	4,022			(1,982		)
Less: Comprehensive income (loss) attributable to noncontrolling interest	—			—			200			—			200
Comprehensive income (loss) attributable to Voya Financial, Inc.'s common shareholders	$	(2,182	)	$	(2,115	)	$	(1,907	)	$	4,022		$	(2,182	)



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Comprehensive Income

For the Year Ended December 31, 2016



	Parent Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income (loss) including noncontrolling interest	$	(327	)	$	286		$	(114	)	$	(143	)	$	(298	)
Other comprehensive income (loss), before tax:
Unrealized gains (losses) on securities	749			593			749			(1,342		)	749
Other-than-temporary impairments	24			20			24			(44		)	24
Pension and other postretirement benefits liability	(10		)	(2		)	(10		)	12			(10		)
Other comprehensive income (loss), before tax	763			611			763			(1,374		)	763
Income tax expense (benefit) related to items of other comprehensive income (loss)	267			214			284			(498		)	267
Other comprehensive income (loss), after tax	496			397			479			(876		)	496
Comprehensive income (loss)	169			683			365			(1,019		)	198
Less: Comprehensive income (loss) attributable to noncontrolling interest	—			—			29			—			29
Comprehensive income (loss) attributable to Voya Financial, Inc.'s common shareholders	$	169		$	683		$	336		$	(1,019	)	$	169



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Cash Flows For the Year Ended December 31, 2018

	Parent Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net cash (used in) provided by operating activities	$	(27	)	$	311		$	1,978		$	(394	)	$	1,868
Cash Flows from Investing Activities:
Proceeds from the sale, maturity, disposal or redemption of:
Fixed maturities	—			—			7,749			—			7,749
Equity securities	34			—			118			—			152
Mortgage loans on real estate	—			—			999			—			999
Limited partnerships/corporations	—			—			338			—			338
Acquisition of:
Fixed maturities	—			—			(8,946		)	—			(8,946		)
Equity securities	(36		)	—			(33		)	—			(69		)
Mortgage loans on real estate	—			—			(875		)	—			(875		)
Limited partnerships/corporations	—			—			(381		)	—			(381		)
Short-term investments, net	212			—			125			—			337
Derivatives, net	—			—			97			—			97
Sales from consolidated investment entities	—			—			1,365			—			1,365
Purchases within consolidated investment entities	—			—			(994		)	—			(994		)
Maturity (issuance) of short-term intercompany loans, net	111			—			414			(525		)	—
Return of capital contributions and dividends from subsidiaries	1,155			151			—			(1,306		)	—
Capital contributions to subsidiaries	(55		)	(55		)	—			110			—
Collateral received (delivered), net	—			—			(103		)	—			(103		)
Other, net	(13		)	1			27			—			15
Net cash provided by (used in) investing activities - discontinued operations	—			331			(297		)	—			34
Net cash provided by (used in) investing activities	1,408			428			(397		)	(1,721		)	(282		)

Condensed Consolidating Statement of Cash Flows (Continued) For the Year Ended December 31, 2018

	Parent Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Cash Flows from Financing Activities:
Deposits received for investment contracts	—			—			6,096			—			6,096
Maturities and withdrawals from investment contracts	—			—			(5,503		)	—			(5,503		)
Settlements on deposit contracts	—			—			(10		)	—			(10		)
Proceeds from issuance of debt with maturities of more than three months	350			—			—			—			350
Repayment of debt with maturities of more than three months	(623		)	(87		)	—			—			(710		)
Debt issuance costs	(6		)	—			—			—			(6		)
Net (repayments of) proceeds from short-term intercompany loans	(414		)	(68		)	(43		)	525			—
Return of capital contributions and dividends to parent	—			(638		)	(1,062		)	1,700			—
Contributions of capital from parent	—			55			55			(110		)	—
Borrowings of consolidated investment entities	—			—			773			—			773
Repayments of borrowings of consolidated investment entities	—			—			(656		)	—			(656		)
Contributions from (distributions to) participants in consolidated investment entities	—			—			(166		)	—			(166		)
Proceeds from issuance of common stock, net	3			—			—			—			3
Proceeds from issuance of preferred stock, net	319			—			—			—			319
Share-based compensation	(14		)	—			—			—			(14		)
Common stock acquired - Share repurchase	(1,025		)	—			—			—			(1,025		)
Dividends paid on common stock	(6		)	—			—			—			(6		)
Net cash used in financing activities - discontinued operations	—			—			(1,209		)	—			(1,209		)
Net cash (used in) provided by financing activities	(1,416		)	(738		)	(1,725		)	2,115			(1,764		)
Net (decrease) increase in cash and cash equivalents	(35		)	1			(144		)	—			(178		)
Cash and cash equivalents, beginning of period	244			1			1,471			—			1,716
Cash and cash equivalents, end of period	209			2			1,327			—			1,538
Less: Cash and cash equivalents of discontinued operations, end of period	—			—			—			—			—
Cash and cash equivalents of continuing operations, end of period	$	209		$	2		$	1,327		$	—		$	1,538



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Cash Flows For the Year Ended December 31, 2017

	Parent Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net cash (used in) provided by operating activities	$	(18	)	$	138		$	1,694		$	(232	)	$	1,582
Cash Flows from Investing Activities:
Proceeds from the sale, maturity, disposal or redemption of:
Fixed maturities	—			—			8,325			—			8,325
Equity securities, available-for-sale	25			—			29			—			54
Mortgage loans on real estate	—			—			955			—			955
Limited partnerships/corporations	—			—			236			—			236
Acquisition of:
Fixed maturities	—			—			(8,719		)	—			(8,719		)
Equity securities, available-for-sale	(34		)	—			(13		)	—			(47		)
Mortgage loans on real estate	—			—			(1,638		)	—			(1,638		)
Limited partnerships/corporations	—			—			(332		)	—			(332		)
Short-term investments, net	—			—			(80		)	—			(80		)
Derivatives, net	—			—			213			—			213
Sales from consolidated investments entities	—			—			2,047			—			2,047
Purchases within consolidated investment entities	—			—			(2,036		)	—			(2,036		)
Issuance of intercompany loans with maturities more than three months	(34		)	—			—			34			—
Maturity of Intercompany loans with maturities more than three months	34			—			—			(34		)	—
Maturity (issuance) of short-term intercompany loans, net	87			—			(408		)	321			—
Return of capital contributions and dividends from subsidiaries	1,020			1,024			—			(2,044		)	—
Capital contributions to subsidiaries	(467		)	(47		)	—			514			—
Collateral (delivered) received, net	—			—			(148		)	—			(148		)
Other, net	—			—			3			—			3
Net cash used in investing activities - discontinued operations	—			—			(1,261		)	—			(1,261		)
Net cash provided by (used in) investing activities	631			977			(2,827		)	(1,209		)	(2,428		)



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Cash Flows (Continued) For the Year Ended December 31, 2017

	Parent Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated

Cash Flows from Financing Activities:
Deposits received for investment contracts	—			—			5,061			—			5,061
Maturities and withdrawals from investment contracts	—			—			(5,372		)	—			(5,372		)
Proceeds from issuance of debt with maturities of more than three months	399			—			—			—			399
Repayment of debt with maturities of more than three months	(494		)	—			—			—			(494		)
Debt issuance costs	(3		)	—			—			—			(3		)
Repayments of intercompany loans with maturities more than three months	—			—			(34		)	34			—
Proceeds of intercompany loans with maturities of more than three months	—			—			34			(34		)	—
Net (repayments of) proceeds from short-term intercompany loans	408			(143		)	56			(321		)	—
Return of capital contributions and dividends to parent	—			(1,020		)	(1,256		)	2,276			—
Contributions of capital from parent	—			47			467			(514		)	—
Borrowings of consolidated investment entities	—			—			967			—			967
Repayments of borrowings of consolidated investment entities	—			—			(804		)	—			(804		)
Contributions from (distributions to) participants in consolidated investment entities	—			—			449			—			449
Proceeds from issuance of common stock, net	3			—			—			—			3
Share-based compensation	(8		)	—			—			—			(8		)
Common stock acquired - Share repurchase	(923		)	—			—			—			(923		)
Dividends paid	(8		)	—			—			—			(8		)
Net cash provided by financing activities - discontinued operations	—			—			384			—			384
Net cash (used in) provided by financing activities	(626		)	(1,116		)	(48		)	1,441			(349		)
Net (decrease) increase in cash and cash equivalents	(13		)	(1		)	(1,181		)	—			(1,195		)
Cash and cash equivalents, beginning of period	257			2			2,652			—			2,911
Cash and cash equivalents, end of period	244			1			1,471			—			1,716
Less: Cash and cash equivalents of discontinued operations, end of period	—			—			498			—			498
Cash and cash equivalents of continuing operations, end of period	$	244		$	1		$	973		$	—		$	1,218



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Voya Financial, Inc.

Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Cash Flows For the Year Ended December 31, 2016

	Parent Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net cash (used in) provided by operating activities	$	(224	)	$	190		$	3,996		$	(270	)	$	3,692
Cash Flows from Investing Activities:
Proceeds from the sale, maturity, disposal or redemption of:
Fixed maturities	—			—			8,112			—			8,112
Equity securities, available-for-sale	18			—			86			—			104
Mortgage loans on real estate	—			—			747			—			747
Limited partnerships/corporations	—			—			306			—			306
Acquisition of:
Fixed maturities	—			—			(9,839		)	—			(9,839		)
Equity securities, available-for-sale	(23		)	—			(24		)	—			(47		)
Mortgage loans on real estate	—			—			(1,481		)	—			(1,481		)
Limited partnerships/corporations	—			—			(367		)	—			(367		)
Short-term investments, net	—			—			31			—			31
Derivatives, net	1			—			(25		)	—			(24		)
Sales from consolidated investments entities	—			—			2,304			—			2,304
Purchases within consolidated investment entities	—			—			(1,727		)	—			(1,727		)
Maturity (issuance) of short-term intercompany loans, net	52			—			(11		)	(41		)	—
Return of capital contributions and dividends from subsidiaries	922			760			—			(1,682		)	—
Capital contributions to subsidiaries	(215		)	(64		)	—			279			—
Collateral (delivered) received, net	—			—			(22		)	—			(22		)
Other, net	—			—			20			—			20
Net cash used in investing activities - discontinued operations	—			—			(1,800		)	—			(1,800		)
Net cash provided by (used in) investing activities	755			696			(3,690		)	(1,444		)	(3,683		)



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Cash Flows (Continued) For the Year Ended December 31, 2016

	Parent Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Cash Flows from Financing Activities:
Deposits received for investment contracts	—			—			5,891			—			5,891
Maturities and withdrawals from investment contracts	—			—			(5,412		)	—			(5,412		)
Proceeds from issuance of debt with maturities of more than three months	798			—			—			—			798
Repayment of debt with maturities of more than three months	(744		)	(65		)	—			—			(809		)
Debt issuance costs	(16		)	—			—			—			(16		)
Net proceeds from (repayments of) short-term intercompany loans	11			5			(57		)	41			—
Return of capital contributions and dividends to parent	—			(892		)	(1,060		)	1,952			—
Contributions of capital from parent	—			50			229			(279		)	—
Borrowings of consolidated investment entities	—			—			126			—			126
Repayments of borrowings of consolidated investment entities	—			—			(455		)	—			(455		)
Contributions from (distributions to) participants in consolidated investment entities	—			—			51			—			51
Proceeds from issuance of common stock, net	1			—			—			—			1
Share-based compensation	(7		)	—			—			—			(7		)
Common stock acquired - Share repurchase	(687		)	—			—			—			(687		)
Dividends paid	(8		)	—			—			—			(8		)
Net cash provided by financing activities - discontinued operations	—			—			916			—			916
Net cash (used in) provided by financing activities	(652		)	(902		)	229			1,714			389
Net (decrease) increase in cash and cash equivalents	(121		)	(16		)	535			—			398
Cash and cash equivalents, beginning of period	378			18			2,117			—			2,513
Cash and cash equivalents, end of period	257			2			2,652			—			2,911
Less: Cash and cash equivalents of discontinued operations, end of period	—			—			815			—			815
Cash and cash equivalents of continuing operations, end of period	$	257		$	2		$	1,837		$	—		$	2,096



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)

24. Selected Consolidated Unaudited Quarterly Financial Data

The unaudited quarterly results of operations for 2018 and 2017 are summarized in the table below:



	Three Months Ended,
	March 31,		June 30,		September 30,		December 31,
	($ in millions, except per share amounts)
2018
Total revenues	$	1,967	$	2,113	$	2,252	$	2,182
Total benefits and expenses	1,946		1,872		2,066		2,020
Income (loss) from continuing operations before income taxes	21		241		186		162
Income (loss) from discontinued operations, net of tax	429		28		—		—
Net income (loss)	446		224		165		177
Less: Net income (loss) attributable to noncontrolling interest	—		58		23		56
Net income (loss) available to Voya Financial, Inc.	446		166		142		121
Earnings Per Share
Basic
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders	$	0.10	$	0.83	$	0.89	$	0.78
Income (loss) from discontinued operations, net of taxes available to Voya Financial, Inc.'s common shareholders	$	2.49	$	0.17	$	—	$	—
Income (loss) available to Voya Financial, Inc.'s common shareholders	$	2.59	$	1.00	$	0.89	$	0.78
Diluted
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders	$	0.10	$	0.80	$	0.87	$	0.76
Income (loss) from discontinued operations, net of taxes available to Voya Financial, Inc.'s common shareholders	$	2.40	$	0.16	$	—	$	—
Income (loss) available to Voya Financial, Inc.'s common shareholders	$	2.50	$	0.96	$	0.87	$	0.76



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Notes to the Consolidated Financial Statements

(Dollar amounts in millions, unless otherwise stated)



	Three Months Ended,
	March 31,			June 30,		September 30,		December 31,
	($ in millions, except per share amounts)
2017
Total revenues	$	2,057		$	2,191	$	2,184	$	2,186
Total benefits and expenses	1,944			2,036		2,144		1,966
Income (loss) from continuing operations before income taxes	113			155		40		220
Income (loss) from discontinued operations, net of tax	(162		)	64		134		(2,616		)
Net income (loss)	(142		)	219		214		(3,083		)
Less: Net income (loss) attributable to noncontrolling interest	1			52		65		82
Net income (loss) available to Voya Financial, Inc.'s common shareholders	(143		)	167		149		(3,165		)
Earnings Per Share
Basic
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders	$	0.10		$	0.56	$	0.08	$	(3.06	)
Income (loss) from discontinuing operations, net of taxes available to Voya Financial, Inc.'s common shareholders	$	(0.85	)	$	0.34	$	0.75	$	(14.58	)
Income (loss) available to Voya Financial, Inc.'s common shareholders	$	(0.75	)	$	0.90	$	0.83	$	(17.64	)
Diluted⁽¹⁾
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders	$	0.10		$	0.55	$	0.08	$	(3.06	)
Income (loss) from discontinuing operations, net of taxes available to Voya Financial, Inc.'s common shareholders	$	(0.84	)	$	0.34	$	0.73	$	(14.58	)
Income (loss) available to Voya Financial, Inc.'s common shareholders	$	(0.74	)	$	0.89	$	0.81	$	(17.64	)

⁽¹⁾For the three months ended December 31, 2017, weighted average shares used for calculating basic and diluted earnings per share are the same, as the inclusion of the 3.5 shares for stock compensation plans would be antidilutive to the earnings per share calculation due to the net loss from continuing operations in the period.



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Schedule I

Summary of Investments Other than Investments in Affiliates

As of December 31, 2018

(In millions)



Type of Investments	Cost		Fair Value		Amount Shown on Consolidated Balance Sheet
Fixed maturities:
U.S. Treasuries	$	1,937	$	2,295	$	2,295
U.S. Government agencies and authorities	204		242		242
State, municipalities, and political subdivisions	1,652		1,659		1,659
U.S. corporate public securities	19,210		19,848		19,848
U.S. corporate private securities	6,264		6,232		6,232
Foreign corporate public securities and foreign governments⁽¹⁾	5,429		5,455		5,455
Foreign corporate private securities⁽¹⁾	5,176		5,094		5,094
Residential mortgage-backed securities	4,616		4,803		4,803
Commercial mortgage-backed securities	3,438		3,416		3,416
Other asset-backed securities	2,095		2,077		2,077
Total fixed maturities, including securities pledged	50,021		51,121		51,121
Equity securities, available-for-sale	255		273		273
Short-term investments	168		168		168
Mortgage loans on real estate	8,676		8,811		8,676
Policy loans	1,833		1,833		1,833
Limited partnerships/corporations	1,158		1,158		1,158
Derivatives	169		247		247
Other investments	90		92		90
Total investments	$	62,370	$	63,703	$	63,566

⁽¹⁾ Primarily U.S. dollar denominated.



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Schedule II

Condensed Financial Information of Parent

Balance Sheets

December 31, 2018 and 2017

(In millions, except share and per share data)



	As of December 31,
	2018			2017
Assets
Investments:
Equity securities, at fair value (cost of $99 as of 2018 and $115 as of 2017)	$	99		$	115
Short-term investments	—			212
Derivatives	39			49
Investments in subsidiaries	10,099			12,293
Total investments	10,237			12,669
Cash and cash equivalents	209			244
Short-term investments under securities loan agreements, including collateral delivered	11			11
Loans to subsidiaries and affiliates	79			191
Due from subsidiaries and affiliates	2			2
Deferred income taxes	553			406
Other assets	13			16
Total assets	$	11,104		$	13,539

Liabilities and Shareholders' Equity
Short-term debt	$	4		$	755
Long-term debt	2,763			2,681
Derivatives	39			49
Due to subsidiaries and affiliates	1			1
Current income taxes	37			—
Other liabilities	47			44
Total liabilities	2,891			3,530

Shareholders' equity:
Preferred stock ($0.01 par value per share; 325,000 shares authorized as of 2018; 325,000 shares issued and outstanding as of 2018; $325 aggregate liquidation preference)	—			—
Common stock ($0.01 par value per share; 900,000,000 shares authorized; 272,431,745 and 270,078,294 shares issued as of 2018 and 2017, respectively; 150,978,184 and 171,982,673 shares outstanding as of 2018 and 2017, respectively)	3			3
Treasury stock (at cost; 121,453,561 and 98,095,621 shares as of 2018 and 2017, respectively)	(4,981		)	(3,827		)
Additional paid-in capital	24,316			23,821
Accumulated other comprehensive income (loss)	607			2,731
Retained earnings (deficit):
Unappropriated	(11,732		)	(12,719		)
Total Voya Financial, Inc. shareholders' equity	8,213			10,009
Total liabilities and shareholders' equity	$	11,104		$	13,539

The accompanying notes are an integral part of this Condensed Financial Information.



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Schedule II

Condensed Financial Information of Parent

Statements of Operations

For the Years Ended December 31, 2018, 2017 and 2016

(In millions)



	Year Ended December 31,
	2018			2017			2016
Revenues:
Net investment income	$	1		$	33		$	19
Net realized capital gains (losses)	—			—			1
Other revenue	(5		)	8			1
Total revenues	(4		)	41			21

Expenses:
Interest expense	175			155			238
Other expenses	11			9			9
Total expenses	186			164			247
Income (loss) before income taxes and equity in earnings (losses) of subsidiaries	(190		)	(123		)	(226		)
Income tax expense (benefit)	—			113			(90		)
Net income (loss) before equity in earnings (losses) of subsidiaries	(190		)	(236		)	(136		)
Equity in earnings (losses) of subsidiaries, net of tax	1,065			(2,756		)	(191		)
Net income (loss) available to Voya Financial, Inc.	$	875		$	(2,992	)	$	(327	)

The accompanying notes are an integral part of this Condensed Financial Information.



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Schedule II

Condensed Financial Information of Parent

Statements of Comprehensive Income

For the Years Ended December 31, 2018, 2017 and 2016

(In millions)



	Year Ended December 31,
	2018			2017			2016
Net income (loss) available to Voya Financial, Inc.	$	875		$	(2,992	)	$	(327	)
Other comprehensive income (loss), after tax	(2,096		)	810			496
Comprehensive income (loss) attributable to Voya Financial, Inc.	$	(1,221	)	$	(2,182	)	$	169

The accompanying notes are an integral part of this Condensed Financial Information.



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Schedule II

Condensed Financial Information of Parent

Statements of Cash Flows

For the Years Ended December 31, 2018, 2017 and 2016

(In millions)



	Year Ended December 31,
	2018			2017			2016
Cash Flows from Operating Activities:
Net income (loss) available to Voya Financial, Inc.	$	875		$	(2,992	)	$	(327	)
Adjustments to reconcile Net income (loss) available to Voya Financial, Inc. to Net cash used in operating activities:
Equity in (earnings) losses of subsidiaries	(1,065		)	2,756			191
Dividends from subsidiaries	52			73			55
Deferred income tax expense (benefit)	25			131			(122		)
Net realized capital gains	—			—			(1		)
Share-based compensation	3			—			—
Change in:
Other receivables and asset accruals	40			32			(102		)
Due from subsidiaries and affiliates	—			1			3
Due to subsidiaries and affiliates	—			1			—
Other payables and accruals	(3		)	(18		)	(16		)
Other, net	46			(2		)	95
Net cash used in operating activities	(27		)	(18		)	(224		)

Cash Flows from Investing Activities:
Proceeds from the sale, maturity, disposal or redemption of equity securities, available-for-sale	34			25			18
Acquisition of equity securities, available-for-sale	(36		)	(34		)	(23		)
Short-term investments, net	212			—			—
Derivatives, net	—			—			1
Issuance of intercompany loans with maturities more than three months	—			(34		)	—
Maturity of intercompany loans issued to subsidiaries with maturities more than three months	—			34			—
Maturity of short-term intercompany loans, net	111			87			52
Return of capital contributions and dividends from subsidiaries	1,155			1,020			922
Capital contributions to subsidiaries	(55		)	(467		)	(215		)
Other, net	(13		)	—			—
Net cash provided by investing activities	1,408			631			755

The accompanying notes are an integral part of this Condensed Financial Information.



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Voya Financial, Inc. Schedule II Condensed Financial Information of Parent Statements of Cash Flows (Continued) For the Years Ended December 31, 2018, 2017 and 2016 (In millions)

	Year Ended December 31,
	2018			2017			2016
Cash Flows from Financing Activities:
Proceeds from issuance of debt with maturities of more than three months	350			399			798
Repayment of debt with maturities of more than three months	(623		)	(494		)	(744		)
Debt issuance costs	(6		)	(3		)	(16		)
Net (repayments of) proceeds from short-term loans to subsidiaries	(414		)	408			11
Proceeds from issuance of common stock, net	3			3			1
Proceeds from issuance of preferred stock, net	319			—			—
Share-based compensation	(14		)	(8		)	(7		)
Common stock acquired - Share repurchase	(1,025		)	(923		)	(687		)
Dividends paid	(6		)	(8		)	(8		)
Net cash used in financing activities	(1,416		)	(626		)	(652		)
Net decrease in cash and cash equivalents	(35		)	(13		)	(121		)
Cash and cash equivalents, beginning of period	244			257			378
Cash and cash equivalents, end of period	$	209		$	244		$	257

Supplemental cash flow information:
Income taxes paid (received), net	$	1		$	(154	)	$	64
Interest paid	152			138			156

The accompanying notes are an integral part of this Condensed Financial Information.



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Schedule II

Notes to Condensed Financial Information of Parent

(Dollar amounts in millions, unless otherwise stated)

1. Business and Basis of Presentation

The condensed financial information of Voya Financial, Inc. should be read in conjunction with the consolidated financial statements of Voya Financial, Inc. and its subsidiaries (collectively the "Company") and the notes thereto (the "Consolidated Financial Statements").

The accompanying financial information reflects the results of operations, financial position and cash flows for Voya Financial, Inc. The financial information is in conformity with accounting principles generally accepted in the United States, which require management to adopt accounting policies and make certain estimates and assumptions. Investments in subsidiaries are accounted for using the equity method of accounting.

2. Loans to Subsidiaries

Voya Financial, Inc. maintains reciprocal loan agreements with subsidiaries to facilitate unanticipated short-term cash requirements that arise in the ordinary course of business.

The following table summarizes the carrying value of Voya Financial, Inc.'s loans to subsidiaries for the periods indicated:



				As of December 31,
Subsidiaries	Rate		Maturity Date	2018		2017
Voya Alternative Asset Management LLC	(1.95	)%	06/30/2019	$	2	$	2
Voya Institutional Plan Services, LLC	2.42	%	01/02/2018	—		20
Voya Institutional Plan Services, LLC	2.45	%	01/03/2018	—		34
Voya Institutional Plan Services, LLC	2.46	%	01/04/2018	—		5
Voya Institutional Plan Services, LLC	2.52	%	01/09/2018	—		1
Voya Institutional Plan Services, LLC	2.53	%	01/11/2018	—		5
Voya Institutional Plan Services, LLC	2.53	%	01/12/2018	—		4
Voya Capital	3.39	%	01/02/2019	4		1
Voya Investment Management, LLC	3.51	%	01/25/2019	51		51
Voya Payroll Management, Inc.	3.39	%	01/02/2019	6		—
Voya Holdings Inc.	2.57	%	01/29/2018	—		68
Security Life of Denver International Limited	3.42	%	01/03/2019	16		—
Total				$	79	$	191

Interest income earned on loans to subsidiaries was $5, $8 and $9 for the years ended December 31, 2018, 2017 and 2016, respectively. Interest income is included in Net investment income in the Condensed Statements of Operations.

3. Financing Agreements

Debt Securities

The following table summarizes Voya Financial, Inc.'s short-term debt borrowings for the periods indicated:



	As of December 31,
	2018		2017
Intercompany financing - Subsidiaries	$	4	$	418
Current portion of long-term debt	—		337
Total	$	4	$	755



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Schedule II

Notes to Condensed Financial Information of Parent

(Dollar amounts in millions, unless otherwise stated)

Intercompany financing

Under the reciprocal loan agreements with subsidiaries, interest is charged at the prevailing market interest rate for similar third-party borrowings for securities.

As of December 31, 2018 and 2017, Voya Financial, Inc. was in compliance with its debt covenants.

See Financing Agreements Note to these Consolidated Financial Statements for further information regarding long-term debt and the five-year maturities of long-term debt.

Credit Facilities

Voya Financial, Inc. uses credit facilities to provide collateral required primarily under its affiliated reinsurance transactions with captive insurance subsidiaries. As of December 31, 2018, unsecured and uncommitted credit facilities totaled $457, and unsecured and committed facilities totaled $4.7 billion. Voya Financial, Inc. additionally has $10 of secured facilities. Of the aggregate $5.1 billion capacity available, Voya Financial, Inc. utilized $3.4 billion in credit facilities outstanding as of December 31, 2018. Total fees associated with credit facilities in 2018, 2017 and 2016 totaled $28, $39 and $38, respectively.

Guarantees

In the normal course of business, Voya Financial, Inc. enters into indemnification agreements with financial institutions that issue surety bonds on behalf of Voya Financial, Inc. or its subsidiaries in connection with litigation matters.

Voya Financial, Inc. provides credit support to its Roaring River IV, LLC ("Roaring River IV") captive reinsurance subsidiary through a surplus maintenance agreement with a third-party bank in connection with a financing arrangement involving $565 of statutory reserve which matures December 31, 2028. The reimbursement agreement requires Voya Financial, Inc. to cause capital to be maintained in Roaring River IV Holding LLC, the intermediate holding company of Roaring River IV, and in Roaring River IV. These amounts will vary over time based on a percentage of Roaring River IV in force life insurance.

In addition, Voya Financial, Inc. provides guarantees to certain of our subsidiaries to support various business requirements:

•


•	Voya Financial, Inc. has also entered into a corporate guarantee agreement with a third-party ceding insurer where it guarantees the reinsurance obligations of its subsidiary, SLD, assumed under a reinsurance agreement with the third-party cedent for the amount of the statutory reserves assumed by SLD. The current amount of reserves outstanding as of December 31, 2018 is $14.


•	Voya Financial, Inc. guarantees the obligations of Voya Holdings under the $13 principal amount Equitable Notes maturing in 2027, and provides a back-to-back guarantee to ING Group in respect of its guarantee of $358 combined principal amount of Aetna Notes.

•



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Schedule II

Notes to Condensed Financial Information of Parent

(Dollar amounts in millions, unless otherwise stated)

There were no assets or liabilities recognized by Voya Financial, Inc. as of December 31, 2018 and 2017 in relation to these intercompany indemnifications, guarantees or support agreements. As of December 31, 2018 and 2017, no circumstances existed in which Voya Financial, Inc. was required to currently perform under these arrangements.

4. Returns of Capital and Dividends

Voya Financial, Inc. received returns of capital and dividends from the following subsidiaries for the periods indicated:



	Years Ended December 31,
	2018		2017		2016
Voya Holdings Inc. ⁽¹⁾	$	708	$	1,020	$	916
Security Life of Denver International Ltd	425		—		30
Security Life of Denver Insurance Company	52		73		54
Voya Insurance Management (Bermuda), Ltd ⁽²⁾	—		—		1
Voya Financial Products Company, Inc.	12		—		—
Voya Services Company ⁽³⁾	85		—		—
Total	$	1,282	$	1,093	$	1,001

⁽¹⁾ The years ended December 31, 2018 and 2016 include $70 and $24 of non-cash activities, respectively.

⁽²⁾ The entity was dissolved in 2016.

⁽³⁾ The year ended December 31, 2018 includes $5 of non-cash activity.

5. Income Taxes

As of December 31, 2018 and 2017, Voya Financial, Inc. held deferred tax assets related to loss and credit carryforwards, some of which have not been realized by its subsidiaries but have been reimbursed to the subsidiaries by Voya Financial, Inc. pursuant to the intercompany tax sharing agreement. The total deferred tax assets were primarily comprised of federal net operating loss, state net operating loss and credit carryforwards.

Valuation allowances have been applied to these deferred tax assets as of December 31, 2018 and 2017. Character, amount and estimated expiration date of the carryforwards and the related allowances are disclosed in the Income Taxes Note to the Consolidated Financial Statements.

As of December 31, 2018 and 2017, Voya Financial, Inc. has recognized deferred tax assets of $553 and $406, respectively, primarily related to federal net operating loss carryforwards in 2018 and federal net operating loss carryforwards and AMT credit carryforwards in 2017.

Tax Sharing Agreement

Voya Financial, Inc. has entered into a federal tax sharing agreement with members of an affiliated group as defined in Section 1504 of the Internal Revenue Code of 1986, as amended. The agreement provides for the manner of calculation and the amounts/timing of the payments between the parties as well as other related matters in connection with the filing of consolidated federal income tax returns. The federal tax sharing agreement provides that Voya Financial, Inc. will pay its subsidiaries for the tax benefits of ordinary and capital losses only in the event that the consolidated tax group actually uses the tax benefit of losses generated.

Voya Financial, Inc. has also entered into a state tax sharing agreement with each of the specific subsidiaries that are parties to the agreement. The state tax agreement applies to situations in which Voya Financial, Inc. and all or some of the subsidiaries join in the filing of a state or local franchise, income tax, or other tax return on a consolidated, combined or unitary basis.



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Schedule III

Supplementary Insurance Information

As of December 31, 2018 and 2017

(In millions)



Segment	DAC and VOBA		Future Policy Benefits and Contract Owner Account Balances		Unearned Premiums⁽¹⁾
2018
Retirement	$	1,271	$	34,147	$	—
Investment Management	1		—		—
Employee Benefits	99		2,109		(1		)
Individual Life	2,679		19,645		—
Corporate	66		9,588		—
Total	$	4,116	$	65,489	$	(1	)

2017
Retirement	$	882	$	33,884	$	—
Investment Management	1		—		—
Employee Benefits	84		2,146		(1		)
Individual Life	2,366		19,801		—
Corporate	41		9,974		—
Total	$	3,374	$	65,805	$	(1	)

⁽¹⁾ Represents unearned premiums associated with short-duration products of the Company's accident and health business.



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Schedule III

Supplementary Insurance Information

Years Ended December 31, 2018, 2017 and 2016

(In millions)



Segment	Net Investment Income ⁽¹⁾⁽²⁾			Premiums and Fee Income⁽¹⁾⁽²⁾			Interest Credited and Other Benefits to Contract Owners		Amortization of DAC and VOBA		Other Operating Expenses⁽¹⁾⁽²⁾		Premiums Written (Excluding Life)
2018
Retirement	$	1,971		$	879		$	908	$	117	$	1,284	$	—
Investment Management	(27		)	663			—		3		555		—
Employee Benefits	113			1,741			1,317		17		356		1,187
Individual Life	908			1,659			2,125		227		275		—
Corporate	342			(75		)	225		4		221		—
Total	$	3,307		$	4,867		$	4,575	$	368	$	2,691	$	1,187
2017
Retirement	$	1,918		$	750		$	1,043	$	238	$	1,140	$	—
Investment Management	(33		)	675			—		3		558		—
Employee Benefits	108			1,663			1,293		11		336		1,155
Individual Life	866			1,695			1,963		266		272		—
Corporate	435			(35		)	337		11		348		—
Total	$	3,294		$	4,748		$	4,636	$	529	$	2,654	$	1,155
2016
Retirement	$	1,907		$	1,512		$	1,797	$	198	$	1,122	$	—
Investment Management	(5		)	627			—		3		529		—
Employee Benefits	110			1,509			1,169		16		306		974
Individual Life	875			1,663			2,001		181		324		—
Corporate	467			(45		)	347		17		374		—
Total	$	3,354		$	5,266		$	5,314	$	415	$	2,655	$	974

⁽¹⁾Includes the elimination of certain intersegment revenues and expenses, primarily consisting of asset-based management and administration fees, which have been charged by Investment Management and eliminated in Corporate.

⁽²⁾Includes the elimination of intercompany transactions between the Company and its consolidated investment entities, primarily the elimination of the Company's management fees expensed by the funds, recorded as operating revenues before the Company's consolidation of its consolidated investment entities and eliminated in the Investment Management segment.



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Schedule IV

Reinsurance

Years Ended December 31, 2018, 2017 and 2016

(In millions)



	Gross		Ceded		Assumed			Net		Percentage of Assumed to Net
2018
Life insurance in force	$	760,429	$	527,493	$	252,502		$	485,438	52.0	%

Premiums:
Life insurance	$	1,274	$	1,313	$	995		$	956	104.1	%
Accident and health insurance	1,275		138		1			1,138		0.1	%
Annuity contracts	65		—		—			65		—	%
Total premiums	$	2,614	$	1,451	$	996		$	2,159	46.1	%

2017
Life insurance in force	$	761,946	$	575,495	$	296,751		$	483,202	61.4	%

Premiums:
Life insurance	$	1,280	$	1,535	$	1,191		$	936	127.2	%
Accident and health insurance	1,051		142		1			910		0.1	%
Annuity contracts	275		—		—			275		—	%
Total premiums	$	2,606	$	1,677	$	1,192		$	2,121	56.2	%

2016
Life insurance in force	$	790,570	$	612,356	$	318,443		$	496,657	64.1	%

Premiums:
Life insurance	$	1,335	$	1,583	$	1,221		$	973	125.5	%
Accident and health insurance	1,056		128		1			929		0.1	%
Annuity contracts	893		—		—		*	893		—	%
Total premiums	$	3,284	$	1,711	$	1,222		$	2,795	43.7	%

*Less than $1.



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Voya Financial, Inc.

Schedule V

Valuation and Qualifying Accounts

Years Ended December 31, 2018, 2017 and 2016

(In millions)



	Balance at January 1,		Charged to Costs and Expenses			Write-offs/ Payments/ Other			Balance at December 31,
2018
Valuation allowance on deferred tax assets	$	653	$	(15	)	$	—		$	638
Allowance for losses on commercial mortgage loans	3		(1		)	—			2
2017
Valuation allowance on deferred tax assets	$	964	$	(311	)	$	—		$	653
Allowance for losses on commercial mortgage loans	3		—			—			3
2016
Valuation allowance on deferred tax assets	$	963	$	6		$	(5	)	$	964
Allowance for losses on commercial mortgage loans	3		—			—			3



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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company carried out an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended ("Exchange Act")) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company's current disclosure controls and procedures are effective in ensuring that material information relating to the Company required to be disclosed in the Company's periodic filings with the U.S. Securities and Exchange Commission ("SEC") is made known to them in a timely manner.

Management's Annual Report on Internal Control Over Financial Reporting

Management of Voya Financial, Inc. and subsidiaries is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) for the Company. The Company's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements of the Company in accordance with U.S. generally accepted accounting principles. The Company's internal control over financial reporting includes those policies and procedures that:


•	pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;


▪	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles and that receipts and expenditures are being made only in accordance with authorizations of the Company's management and directors; and


▪	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management has assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2018 pertaining to financial reporting in accordance with the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In the opinion of management, Voya Financial, Inc. has maintained effective internal control over financial reporting as of December 31, 2018.

Attestation Report of the Company's Registered Public Accounting Firm

The Company's independent registered public accounting firm, Ernst & Young LLP, has issued their attestation report on management's internal control over financial reporting which is set forth below.

Changes in Internal Control Over Financial Reporting

There were no changes to the Company's internal control over financial reporting as defined in Exchange Act Rule 13a-15(f) during the quarter ended December 31, 2018 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.



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Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of

Voya Financial, Inc.

Opinion on Internal Control over Financial Reporting

We have audited Voya Financial, Inc.'s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), (the COSO criteria). In our opinion, Voya Financial, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Voya Financial, Inc. as of December 31, 2018 and 2017, and the related consolidated statements of operations, comprehensive income, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2018, and the related notes and schedules and our report dated February 22, 2019 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

/s/ Ernst & Young LLP

Boston, Massachusetts

February 22, 2019



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PART III

Item 10. Directors, Executive Officers, and Corporate Governance

The information required by this Item is omitted pursuant to General Instruction G to Form 10-K. Such information is incorporated by reference from the definitive Proxy Statement relating to the Company's 2019 Annual Meeting of Shareholders, which will be filed with the SEC within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

Item 11. Executive Compensation

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table provides information as of December 31, 2018, regarding securities authorized for issuance under our equity compensation plans. All outstanding awards relate to our Common Stock. For additional information about our equity compensation plans, see the Share-based Incentive Compensation Plans Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K.



_{(shares in millions)}	2014 Omnibus Plan		2013 Omnibus Plan
Authorized for issuance	$	17.8	$	7.7
Issued and reserved for issuance of outstanding:
RSUs	5.1		3.1
RSUs - Deal incentive awards	—		2.0
PSU awards ⁽¹⁾	3.4		2.3
Stock options	3.0		—
Shares available for issuance	$	6.3	$	0.3

⁽¹⁾ PSUs awarded under the Omnibus Plans entitle recipients to receive, upon vesting, a number of shares of common stock that ranges from 0% to 150% of the number of PSUs awarded, depending on the level of achievement of the specified performance conditions.

The information required by this Item is omitted pursuant to General Instruction G to Form 10-K. Such information is incorporated by reference to the definitive Proxy Statement relating to the Company's 2019 Annual Meeting of Shareholders, which will be filed with the SEC within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Item 14. Principal Accounting Fees and Services



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Part IV

Item 15. Exhibits, Financial Statement Schedules

a. Documents filed as part of this report

1. Financial Statements (See Item 8. Financial Statements and Supplementary Data)

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Shareholders' Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Independent Auditor's Report

2. Schedule I - Summary of Investments Other than Investments in Affiliates

Schedule II - Condensed Financial Information of Parent

Schedule III - Supplementary Insurance Information

Schedule IV - Reinsurance

Schedule V - Valuation and Qualifying Accounts

All other provisions for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.

3. Exhibits



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Voya Financial, Inc.



Exhibit Index



Exhibit No.		Description of Exhibit
2.1		Master Transaction Agreement by and among Voya Financial, Inc., VA Capital Company LLC and Athene Holding Ltd., Dated as of December 20, 2017 (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K (File No. 001-35897) filed on December 21, 2017)
3.1		Amended and Restated Certificate of Incorporation of Voya Finacial, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-3 (File No. 333-196883) filed on June 18, 2014)
3.2		Amended and Restated By -Laws of Voya Financial, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-35897) filed on May 7, 2013)
3.3		Certificate of Designations with respect to the Series A Preferred Stock of the Company, dated September 12, 2018 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K (File No. 001-35897 filed on September 12, 2018)
4.01		Form of Common Stock Certificate (incorporated by reference to Exhibit 4.2 to Amendment No. 4 to the Company’s Registration Statement on Form S-1 (File No. 333-184847), filed on April 16, 2013)
4.02		Indenture, dated as of July 13, 2012, among ING U.S., Inc., Lion Connecticut Holdings Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 10.1 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
4.03		First Supplemental Indenture, dated as of July 13, 2012, among ING U.S., Inc., Lion Connecticut Holdings Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 10.2 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
4.04		Second Supplemental Indenture, dated as of February 11, 2013, among ING U.S., Inc., Lion Connecticut Holdings Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 10.74 to the Company’s Amendment No. 2 to Registration Statement on Form S-1 (File No. 333-184847) filed on March 19, 2013)
4.05		Third Supplemental Indenture, dated as of July 26, 2013, among ING U.S., Inc., Lion Connecticut Holdings Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 10.01 to the Company’s Current Report on Form 8-K (File No. 001-35897) filed on July 26, 2013)
4.06		Fifth Supplemental Indenture, dated as of June 13, 2016, among Voya Financial, Inc., Voya Holdings Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K (File No. 001-35897) filed on June 14, 2016)
4.07		Sixth Supplemental Indenture, dated as of June 13, 2016, among Voya Financial, Inc., Voya Holdings Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K (File No. 001-35897) filed on June 14, 2016)
4.08		Seventh Supplemental Indenture, dated as of July 5, 2017, by and among Voya Financial, Inc., Voya Holdings Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 001-35897) filed on July 5, 2017)
4.09		Junior Subordinated Indenture, dated as of May 16, 2013, among ING U.S., Inc., Lion Connecticut Holdings Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 10.15 to the Company’s Quarterly Report on Form 10-Q (File No. 001-35897) filed on May 23, 2013)
4.10		First Supplemental Indenture, dated as of May 16, 2013, among ING U.S., Inc., Lion Connecticut Holdings Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 10.16 to the Company’s Quarterly Report on Form 10-Q (File No. 001-35897) filed on May 23, 2013)
4.11		Second Supplemental Indenture, dated as of January 23, 2018, among Voya Financial, Inc., Voya Holdings Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K (File No. 001-35897) filed on January 23, 2018)
10.01		Warrant Agreement, dated as of May 7, 2013, among ING U.S., Inc., Computershare Inc. and Computershare Trust Company, N.A. (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K (File No. 001-35897) filed on May 7, 2013)
10.02		Amendment No. 1 to Warrant Agreement, dated as of May 22, 2017, among Voya Financial, Inc., ING Groep, N.V. and Computershare Inc. (incorporated by reference to Exhibit 4.16 to the Company’s Registration Statement on Form S-3 (No. 333-218956) filed on June 23, 2017)
10.03		Amendment No. 2 to Warrant Agreement, dated as of November 10, 2017, among Voya Financial, ING Groep, N.V. and Computershare Inc. (incorporated by reference to Exhibit 10.05 to the Company's Annual Report on Form 10-K (File No. 001-35897) filed on February 23, 2018)



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Exhibit No.		Description of Exhibit
10.04		Indenture, dated as of August 1, 1993, between Aetna Life and Casualty Company and State Street Bank and Trust Company of Connecticut, National Association, as trustee (incorporated by reference to Exhibit 10.4 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.05		First Indenture Supplement, dated as of August 1, 1996 between Aetna Services, Inc. (F/K/A Aetna Life and Casualty Company) and State Street Bank and Trust Company of Connecticut, National Association, as trustee (incorporated by reference to Exhibit 10.5 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.06		Second Indenture Supplement, dated as of October 30, 2000, among Aetna Services, Inc. (F/K/A Aetna Life and Casualty Company), Aetna Inc. and State Street Bank and Trust Company of Connecticut, National Association, as trustee (incorporated by reference to Exhibit 10.6 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.07		Third Indenture Supplement, dated as of December 13, 2000, among Aetna, Inc., ING Groep N.V. and State Street Bank and Trust Company of Connecticut, National Association, as trustee (incorporated by reference to Exhibit 10.7 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.08		Indenture, dated as of July 1, 1996, among Aetna Life and Casualty Company, Aetna, Inc. and State Street Bank and Trust Company of Connecticut, National Association, as trustee (incorporated by reference to Exhibit 10.8 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.09		First Indenture Supplement dated as of October 30, 2000 among Aetna Services, Inc. (F/K/A Aetna Life and Casualty Company), Aetna Inc. and State Street Bank and Trust Company of Connecticut, National Association, as trustee (incorporated by reference to Exhibit 10.9 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.10		Second Indenture Supplement dated as of December 13, 2000, between Lion Connecticut Holdings, Inc. (as successor to Aetna, Inc., Aetna Services, Inc. and Aetna Life and Casualty Company) and State Street Bank and Trust Company of Connecticut, National Association, as trustee (incorporated by reference to Exhibit 10.10 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333- 184847) filed on January 23, 2013)
10.11		Term Loan Agreement, dated as of April 20, 2012, among Bank of America, N.A. and the other parties thereto (incorporated by reference to Exhibit 10.12 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.12		Second Amended and Restated Revolving Credit Agreement dated as of May 6, 2016, among Voya Financial, Inc., Bank of America, N.A. and the other parties thereto (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 001-35897) filed on May 6, 2016)
10.13		Amendment to the Second Amended and Restated Revolving Credit Agreement, dated as of March 30, 2017, among Voya Financial, Inc., Bank of America, N.A. and the other parties thereto (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q (File No. 001-35897) filed on May 3, 2017)
10.14		Second Amendment to the Second Amended and Restated Revolving Credit Agreement, dated as of January 24, 2018, among Voya Financial, Inc., Bank of America, N.A., and the other parties thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-35897) filed on January 30, 2018
10.15		Deposit Agreement, dated as of May 15, 2000 between the Federal Home Loan Bank of Topeka and Security Life of Denver Insurance Company (incorporated by reference to Exhibit 10.16 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.16		Advance, Pledge and Security Agreement, dated as of August 30, 2004, by and between the Federal Home Loan Bank of Topeka and Security Life of Denver Insurance Company (incorporated by reference to Exhibit 10.17 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.17		Amended and Restated Institutional Custody Agreement, dated as of May 12, 2004, by and between Security Life of Denver Insurance Company and the Federal Home Loan Bank of Topeka (incorporated by reference to Exhibit 10.18 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.18		Account Control Agreement, dated as of February 8, 2018, by and between Voya Retirement Insurance and Annuity Company, Federal Home Loan Bank of Boston, and The Bank of New York Mellon (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the Quarter Ended March 31, 2018 (File No. 001-35897) filed on May 2, 2018)



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Exhibit No.		Description of Exhibit
10.19		Advances, Collateral Pledge and Security Agreement, dated as of February 8, 2018, by and between Voya Retirement Insurance and Annuity Company and the Federal Home Loan Bank of Boston (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the Quarter Ended March 31, 2018 (File No. 001-35897) filed on May 2, 2018)
10.20		Master Asset Purchase Agreement, dated as of January 22, 2009, by and among Scottish Re Group Limited, Scottish Holdings, Inc., Scottish Re (U.S.), Inc., Scottish Re Life (Bermuda) Limited, Scottish Re (Dublin) Limited, Hannover Life Reassurance Company of America, Hannover Life Reassurance (Ireland) Limited, Security Life of Denver Insurance Company, Security Life of Denver International Limited (incorporated by reference to Exhibit 10.19 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.21		Reinsurance Agreement, effective as of January 1, 2009, between Security Life of Denver Insurance Company and Hannover Life Reassurance Company of America (incorporated by reference to Exhibit 10.20 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.22		Reinsurance Agreement, effective as of July 1, 2011, between Security Life of Denver International Limited and Hannover Life Reassurance (Ireland) Limited (incorporated by reference to Exhibit 10.21 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.23		Reinsurance Agreement, effective as of July 1, 2011, between Security Life of Denver International Limited and Hannover Life Reassurance (Ireland) Limited (incorporated by reference to Exhibit 10.22 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.24		Reinsurance Agreement, effective as of July 1, 2011, between Security Life of Denver International Limited and Hannover Life Reassurance (Ireland) Limited (incorporated by reference to Exhibit 10.23 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.25		Coinsurance Agreement, dated as of October 1, 1998, between Aetna Life Insurance and Annuity Company and The Lincoln National Life Insurance Company (incorporated by reference to Exhibit 10.24 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.26		Modified Coinsurance Agreement, dated as of October 1, 1998, between Aetna Life Insurance and Annuity Company and The Lincoln National Life Insurance Company (incorporated by reference to Exhibit 10.25 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.27		Coinsurance Agreement, dated as of October 1, 1998, between Aetna Life Insurance and Annuity Company and Lincoln Life & Annuity Company of New York (incorporated by reference to Exhibit 10.26 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.28		Amendment No. 1 to Coinsurance Agreement, effective March 1, 2007 between ING Life Insurance and Annuity Company (F/K/A Aetna Life Insurance and Annuity Company) and Lincoln Life & Annuity Company of New York (incorporated by reference to Exhibit 10.27 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.29		Modified Coinsurance Agreement, dated as of October 1, 1998, between Aetna Life Insurance and Annuity Company and Lincoln Life & Annuity Company of New York (incorporated by reference to Exhibit 10.28 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.30		Tax Sharing Agreement by and between ING America Insurance Holdings, Inc. and various subsidiaries with respect to federal taxes (incorporated by reference to Exhibit 10.30 to the Company’s Amendment No. 2 to Registration Statement on Form S-1 (File No. 333-184847) filed on March 19, 2013)
10.31		Tax Sharing Agreement by and between ING America Insurance Holdings, Inc. and various subsidiaries with respect to state taxes (incorporated by reference to Exhibit 10.31 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.32		Equity Administration Agreement between ING U.S., Inc. and ING Groep N.V. dated as of May 7, 2013 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (File No. 001-35897) filed on May 7, 2013)
10.33		Master Claim Agreement, dated April 17, 2012, between ING Groep N.V., ING America Insurance Holdings, Inc. and ING Insurance Eurasia N.V. (incorporated by reference to Exhibit 10.35 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333- 184847) filed on January 23, 2013)
10.34		Form of Director Indemnification Agreement (incorporated by reference to Exhibit 10.37 to the Company’s Amendment No. 3 to Registration Statement on Form S-1 (File No. 333-184847) filed on April 5, 2013)
10.35		Employment Agreement, dated December 11, 2014, of Rodney O. Martin, Jr. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-35897) filed on December 16, 2014)



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Exhibit No.		Description of Exhibit
10.36+		Amended Agreement with Rodney O. Martin, Jr., dated September 18, 2017 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-35897) filed on September 21, 2017)
10.37+		Amendment Agreement with Rodney O. Martin, Jr. dated September 27, 2018 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q (File No. 001-35897) filed on November 1, 2018)
10.38+		Amended and Restated Offer Letter of Alain M. Karaoglan, (incorporated by reference to Exhibit 10.02 to the Company’s Current Report on Form 8-K (File No. 001-35897) filed on July 31, 2013)
10.39+		ING Group Incentive Compensation Plan (incorporated by reference to Exhibit 10.52 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.40+		Form of ING Group Grant of Deferred Shares (incorporated by reference to Exhibit 10.55 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.41+		ING Group Long-Term Equity Ownership Plan (incorporated by reference to Exhibit 10.56 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.42+		Form of ING Group Long-Term Equity Ownership Plan Grant (incorporated by reference to Exhibit 10.57 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.43+		ING Group Standard Share Option Plan (incorporated by reference to Exhibit 10.58 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013).
10.44+		ING Americas Supplemental Executive Retirement Plan (Amended/Restated December 2011) (incorporated by reference to Exhibit 10.59 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No.333-184847) filed on January 23, 2013)
10.45+*		Amended and Restated Voya Retirement Plan, effective January 1, 2018
10.46+		ING Insurance Americas 409A Deferred Compensation Savings Plan (incorporated by reference to Exhibit 10.61 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.47+		Amendment No. 1 to ING Insurance Americas 409A Deferred Compensation Savings Plan (Amended/Restated January 1, 2010) (incorporated by reference to Exhibit 10.62 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.48+		ING Americas Severance Pay Plan (As Amended and Restated Effective as of January 1, 2008) (incorporated by reference to Exhibit 10.63 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.49+		Amendment No. 1 to ING Americas Severance Pay Plan (Amended/Restated October 1, 2008) (incorporated by reference to Exhibit 10.64 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.50+		Amendment No. 2 to ING Americas Severance Pay Plan (Amended/Restated June 22, 2009) (incorporated by reference to Exhibit 10.65 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.51+		Amendment No. 3 to ING Americas Severance Pay Plan (Amended/Restated October 1, 2009) (incorporated by reference to Exhibit 10.66 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.52+		Amendment No. 4 to ING Americas Severance Pay Plan (Amended/Restated December 1, 2010) (incorporated by reference to Exhibit 10.67 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.53+		Form of Voya Financial, Inc. Severance Plan for Senior Managers (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q (File No. 001-35897) filed on May 5, 2016)
10.54+		ING Investment Management—Retention Participation Plan (incorporated by reference to Exhibit 10.68 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.55+		ING Investment Management, LLC Annual Incentive Plan (incorporated by reference to Exhibit 10.69 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.56+		ING Investment Management—Deferred Compensation Plan (incorporated by reference to Exhibit 10.70 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.57+		ING Americas Insurance Holdings, Inc. Equity Compensation Plan (incorporated by reference to Exhibit 10.71 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)



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Exhibit No.		Description of Exhibit
10.58+		ING Directors’ Pension Scheme (incorporated by reference to Exhibit 10.72 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-184847) filed on January 23, 2013)
10.59+		Form of ING U.S., Inc. 2013 Omnibus Employee Incentive Plan (incorporated by reference to Exhibit 10.79 to the Company’s Amendment No. 4 to Registration Statement on Form S-1 (File No. 333-184847) filed on April 16, 2013)
10.60+		Voya Financial, Inc. Amended and Restated 2013 Omnibus Non-Employee Director Incentive Plan (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q (File No. 001-35897) filed on August 7, 2014)
10.61+		Form of 2013 Converted Award Agreement under the ING U.S., Inc. 2013 Omnibus Employee Incentive Plan related to the conversion of deferred shares granted in 2013 as mandatory partial deferrals of 2012 long term incentive awards to "Identified Staff" (as defined by the European Union’s Capital Requirements Directive) pursuant to the ING Group Long-Term Sustainable Performance Plan (incorporated by reference to Exhibit 10.10 to Amendment No. 1 of the Company’s Quarterly Report on Form 10-Q/A (File No. 001-35897) filed on June 20, 2013)
10.62+		Form of 2013 Converted Award Agreement under the ING U.S., Inc. 2013 Omnibus Employee Incentive Plan related to the conversion of deferred shares and performance shares granted in 2013 to non-"Identified Staff" (as defined by the European Union’s Capital Requirements Directive) pursuant to the ING Group Long-Term Sustainable Performance Plan (incorporated by reference to Exhibit 10.11 to Amendment No. 1 to the Company’s Quarterly Report on Form 10-Q/A (File No. 001-35897) filed on June 20, 2013)
10.63+		Form of 2013 Converted Award Agreement under the ING U.S., Inc. 2013 Omnibus Employee Incentive Plan related to the conversion of performance shares granted in 2013 to non-"Identified Staff" (as defined by the European Union’s Capital Requirements Directive) pursuant to the ING Group Long-Term Sustainable Performance Plan (incorporated by reference to Exhibit 10.12 to Amendment No. 1 to the Company’s Quarterly Report on Form 10-Q/A (File No. 001-35897) filed on June 20, 2013)
10.64+		Notice of conversion of restricted stock units granted in 2013 under the ING America Insurance Holdings, Inc. Equity Compensation Plan, as amended, into restricted stock units of ING U.S., Inc. under the 2013 Omnibus Employee Incentive Plan (incorporated by reference to Exhibit 10.13 to Amendment No. 1 to the Company’s Quarterly Report on Form 10-Q/A (File No. 001-35897) filed on June 20, 2013)
10.65+		Form of ING U.S., Inc. 2013 Omnibus Non-Employee Director Incentive Plan Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.94 to the Company’s Registration Statement on Form S-1 (File No. 333-191163) filed on September 13, 2013)
10.66+		Form of ING U.S., Inc. 2013 Omnibus Employee Incentive Plan Award Supplement Providing for Dividend Equivalent Rights (incorporated by reference to Exhibit 10.95 to the Company’s Registration Statement on Form S-1 (File No. 333-191163) filed on September 13, 2013)
10.67+		Form of 2014 Restricted Stock Unit Award Agreement under the Voya Financial, Inc. 2013 Omnibus Employee Incentive Plan (incorporated by reference to Exhibit 10.95 to the Company’s Annual Report on Form 10-K (File No. 001-35897) filed on March 10, 2014)
10.68		Master Outsourcing Services Agreement between ING North America Insurance Corporation and Milliman, Inc. dated as of June 2, 2014 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 2, 2014)
10.69+		Voya Financial, Inc. 2014 Omnibus Employee Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (File No. 001-35897) filed on August 7, 2014)
10.70+		Form of 2015 Award Agreement under the Voya Financial, Inc. 2014 Omnibus Employee Incentive Plan (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q (File No. 001-35897) filed on May 8, 2015)
10.71+		Form of Chief Executive Officer 2015 Award Agreement under the Voya Financial, Inc. 2014 Omnibus Employee Incentive Plan (incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q (File No. 001-35897) filed on May 8, 2015)
10.72+		Form of Option Plan Grant Agreement under the Voya Financial, Inc. 2014 Omnibus Employee Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 001-35897) filed on December 18, 2015)
10.73+		Form of 2016 Award Agreement under the Voya Financial, Inc. 2014 Omnibus Employee Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q (File No. 001-35897) filed on May 6, 2016)
10.74+		Form of Chief Executive Officer 2016 Award Agreement under the Voya Financial, Inc. 2014 Omnibus Employee Incentive Plan (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q (File No. 001-35897) filed on May 5, 2016)



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Exhibit No.		Description of Exhibit
10.75+		Form of 2017 Award Agreement under the Voya Financial, Inc. 2014 Omnibus Employee Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 001-35897) filed May 3, 2017)
10.76+		Form of Chief Executive Officer 2017 Award Agreement under the Voya Financial, Inc. 2014 Omnibus Employee Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (File No. 001-35897) filed May 3, 2017)
10.77+		Form of Chief Financial Officer Grant Award under the Voya Financial Inc. 2014 Omnibus Employee Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 001-35897) filed on October 28, 2016)
10.78		Hannover Re Buyer Facility Agreement Dated as of September 24, 2015 Among Security Life of Denver International Limited, Voya Financial, Inc., Hannover Life Reassurance Company of America, Hannover Re (Ireland) Limited and Hannover Rück SE (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q (File No. 001-35897) filed on November 6, 2015)
10.79+		Offer Letter of Charles P. Nelson, dated April 7, 2015 (incorporated by reference to Exhibit 10.102 to the Company’s Annual Report on Form 10-K (File No. 001-35897) filed on February 25, 2016)
10.80+		Offer Letter of Christine Hurtsellers, dated September 24, 2004 (incorporated by reference to Exhibit 10.98 to the Company's Annual Report on Form 10-K (File No. 001-35897) filed on February 23, 2017)
10.81+		Promotion and Compensation Memorandum of Christine Hurtsellers, dated February 12, 2009 (incorporated by reference to Exhibit 10.99 to the Company's Annual Report on Form 10-K (File No. 001-35897) filed on February 23, 2017)
10.82**		Master Agreement for Outsourced Services between Voya Services Company and Cognizant Worldwide Limited dated as of July 31, 2017 (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (File No. 001-35897) filed on November 1, 2017)
10.83+*		Offer Letter of Patricia J. Walsh, dated August 6, 2015
21.1*		List of Subsidiaries of Voya Financial, Inc.
23.1*		Consent of Ernst & Young LLP
24.1		Power of Attorney (included on signature pages)
31.1*		Rule 13a-14(a)/15d-14(a) Certification of Rodney O. Martin, Chief Executive Officer
31.2*		Rule 13a-14(a)/15d-14(a) Certification of Michael S. Smith, Chief Financial Officer
32.1*		Section 1350 Certification of Rodney O. Martin, Chief Executive Officer
32.2*		Section 1350 Certification of Michael S. Smith, Chief Financial Officer
101.INS*		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*		XBRL Taxonomy Extension Schema
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase
101.DEF*		XBRL Taxonomy Extension Definition Linkbase
101.LAB*		XBRL Taxonomy Extension Label Linkbase
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase

* Filed herewith.

+ This exhibit is a management contract or compensatory plan or arrangement

** Confidential portions of this exhibit have been omitted and filed separately with the SEC pursuant to a request for confidential treatment



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Table of Contents

SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



February 22, 2019	Voya Financial, Inc.
(Date)	(Registrant)


	By: /s/	Michael S. Smith
		Michael S. Smith
		Executive Vice President and
		Chief Financial Officer
		(Duly Authorized Officer and Principal Financial Officer)



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Table of Contents

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature below constitutes and appoints Rodney O. Martin, Jr., Michael S. Smith and Patricia J. Walsh as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this Annual Report on Form 10-K, and all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitutes or substitute, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



	306

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Signatures	Title	Date

/s/ Rodney O. Martin, Jr.	Chairman and Chief Executive Officer(Principal Executive Officer)	February 22, 2019
Rodney O. Martin, Jr.

/s/ Curtis Arledge	Director	February 22, 2019
Curtis Arledge

/s/ Lynne Biggar	Director	February 22, 2019
Lynne Biggar

/s/ Jane P. Chwick	Director	February 22, 2019
Jane P. Chwick

/s/ Ruth Ann M. Gillis	Director	February 22, 2019
Ruth Ann M. Gillis

/s/ J. Barry Griswell	Director	February 22, 2019
J. Barry Griswell

/s/ Byron H. Pollitt, Jr.	Director	February 22, 2019
Byron H. Pollitt, Jr.

/s/ Joseph V. Tripodi	Director	February 22, 2019
Joseph V. Tripodi

/s/ David Zwiener	Director	February 22, 2019
David Zwiener

/s/ Michael S. Smith	Chief Financial Officer (Principal Financial Officer)	February 22, 2019
Michael S. Smith

/s/ C. Landon Cobb, Jr.	Chief Accounting Officer (Principal Accounting Officer)	February 22, 2019
C. Landon Cobb, Jr.



	307

Exhibit 10.45

VOYA RETIREMENT PLAN

Amended and Restated

Effective January 1, 2018

VOYA RETIREMENT PLAN

As amended and restated effective as of January 1, 2018

Introduction

ING North America Insurance Corporation (now known as Voya Services Company) (the “Company”) assumed sponsorship of the ING Retirement Plan for Employees of Equitable Life Insurance Company of Iowa, as amended and restated as of January 1, 2000, effective on or about December 14, 2001. Equitable Life Insurance Company of Iowa, a subsidiary of the Company, established the Equitable Life Insurance Company of Iowa Employees Retirement Plan, effective January 1, 1937. The name was changed to the ING Retirement Plan for Employees of Equitable Life Insurance Company of Iowa, effective January 1, 2000 (the “Plan”). The Plan was subsequently renamed the ING Americas Retirement Plan coincident with the Company assuming sponsorship of the Plan. The Plan has been amended several times since January 1, 2000. Throughout its history, the Plan has been maintained in compliance with applicable laws as in existence from time to time. Effective December 18, 2013, the Plan was renamed the “ING U.S. Retirement Plan,” and, effective September 1, 2014, further renamed the “Voya Retirement Plan.”

Effective as of December 31, 2001, each of the following plans was merged into the Plan:


•	ING Retirement Plan for Aetna Financial Services & Aetna International Employees (AFS Plan);


•	ING Retirement Plan for Employees of Life Insurance Company of Georgia and Its Affiliates (LOG Plan);


•	ING Retirement Plan for Employees of Security Life of Denver Insurance Company (SLD Plan);


•	Retirement Plan for Employees of ReliaStar Financial Corp. and Its Subsidiaries (ReliaStar Plan); and


•	Lexington Management Corporation Retirement Plan (Lexington Plan).

Effective as of January 1, 2004, employees of ING Financial Services LLC on December 31, 2003, who became employees of ING Investment Management LLC on January 1, 2004 and who were participants in the ING Financial Services LLC Retirement Plan (“Financial Services Plan”) on December 31, 2003, became fully Vested participants in the Plan.

Throughout the text, these plans together with other unnamed plans that were previously merged into one of the plans named above, are referred to, collectively, as the “Prior Plans” and, individually, as a “Prior Plan.”

The Plan was last restated effective September 15, 2017. The Plan is hereby amended and restated to incorporate a plan amendment dated December 20, 2017 and to make certain technical clarifications effective January 1, 2018.

Table of Contents

Page

ARTICLE 1 DEFINITIONS 1

1.1 Account 1

1.2 Account Balance 1

1.3 Accrued Benefit 1

1.4 Actuarial Equivalent or Actuarial Equivalence 1

1.5 Aeltus Participant 2

1.6 Affiliate 2

1.7 AFS Minimum Benefit 2

1.8 AFS Non-Specified Transition Participant 2

1.9 AFS Plan 2

1.10 AFS Specified Transition Participant 2

1.11 AFS Transition Participant 3

1.12 Applicable Interest Rate 3

1.13 Applicable Mortality Table 3

1.14 Benefit Commencement Date 3

1.15 Beneficiary 4

1.16 Benefit Service 4

1.17 Board 4

1.18 Break in Service 4

1.19 Cash Balance Pension Formula 5

1.20 Cash Balance Pension Formula Accrued Benefit 5

1.21 Cash Balance Transition Date 5

1.22 Citigroup 5

1.23 CitiStreet 5

1.24 Code 5

1.25 Committee or Committees 5

1.26 Company 5

1.27 Compensation 5

1.28 Controlled Group 7

1.29 Controlled Group Member 7

1.30 Covered Compensation 7

1.31 Delayed Retirement Date 7

1.32 Disability or Disabled 7

1.33 Domestic Partner 8

1.34 Disabled Vested Participant 8

1.35 Earliest Retirement Date 8

1.36 Early Retirement Date 8

1.37 Effective Date 8

1.38 EIC Plan 8

1.39 Eligible Employee 8

1.40 Employee 9

1.41 Employer 9

1.42 Employment 9

1.43 ERISA 9

1.44 Final Average Compensation 9

1.45 Final Average Pay Pension Formula 12

1.46 Final Average Pay Pension Formula Accrued Benefit 12

1.47 Financial Services Plan 12

1.48 Five-Year Break 12

1.49 Hours of Service 12

1.50 Immediate Annuity 14

1.51 Insurance Company 14

1.52 Insurance Contract 14

1.53 Interest Credit 14

1.54 Interest Credit Percentage 14

1.55 Leased Employee 14

1.56 Lexington Plan 14

1.57 LOG Field Force Plan 14

1.58 LOG Plan 14

1.59 Mergers 15

1.60 Net ING Benefit 15

1.61 Normal Form 15

1.62 Normal Retirement Age 15

1.63 Normal Retirement Date 15

1.64 Northern Plan 15

1.65 One-Year Break 15

1.66 Optional Form 15

1.67 Participant 15

1.68 Pay Credit 16

1.69 Plan 16

1.70 Plan Administrative Committee or PAC 16

1.71 Plan Administrator 16

1.72 Plan Investment Committee or PIC 16

1.73 Plan Year 16

1.74 Post-2001 Benefit 16

1.75 Prior Plan 16

1.76 Prior Plan Account Balance 16

1.77 Prior Plan Benefit 16

1.78 QPSA 16

1.79 ReliaStar Plan 16

1.80 Security-Connecticut Plan 16

1.81 SLD Plan 16

1.82 Social Security Retirement Age 16

1.83 Southland Plan 17

1.84 Spouse 17

1.85 State Street 17

1.86 Statutory Employee 17

1.87 Termination Date 17

1.88 TNIC Plan 17

1.89 Transferred CitiStreet Employee 17

1.90 Trust or Trust Fund 17

1.91 Trustee 18

1.92 USERRA 18

1.93 USLICO Plan 18

1.94 Vested 18

1.95 Vesting Service 18

1.96 Years of Benefit Service or Benefit Service 18

1.97 Years of Vesting Service or Vesting Service 20

ARTICLE 2 ELIGIBILITY 22

2.1 Eligibility 22

2.2 Participation Upon Reemployment 22

2.3 Leased Employees and Independent Contractors 23

2.4 Adoption of the Plan by an Affiliate 23

2.5 Transfers Among Affiliates 23

2.6 Transfers Between Statutory Employee and Employee Status 24

2.7 Participation Freeze 25

ARTICLE 3 RETIREMENT DATES AND BENEFITS 26

3.1 Normal Retirement 26

3.2 Delayed Retirement 29

3.3 Termination After Earliest Retirement Date 31

3.4 Termination Before Earliest Retirement Date 34

3.5 Disability Retirement 35

3.6 Benefits Upon Rehire 38

3.7 Cost-of-Living Increase 39

3.8 No Duplication of Benefits 39

3.9 Cash Balance Accounts; Pay and Interest Credits 40

ARTICLE 4 PAYMENT OF BENEFITS 42

4.1 Forms of Payment 42

4.2 Opportunity to Cash Out Annuity Benefit 46

4.3 Election Procedures 46

4.4 Effect of Death on Forms of Payment 47

4.5 Required Distribution Rules 48

4.6 Direct Rollover of Eligible Payments 48

4.7 Payment on Participant’s Behalf 49

4.8 Unclaimed Benefits 50

iii

4.9 Correction of Mistakes 50

4.10 Retroactive Benefit Commencement Date 50

ARTICLE 5 PRERETIREMENT DEATH BENEFITS 52

5.1 Participant with Spouse or Domestic Partner 52

5.2 Unmarried Participant Without Domestic Partner 54

5.3 USERRA 55

ARTICLE 6 LIMITATIONS ON BENEFIT AMOUNTS AND TOP HEAVY PROVISIONS 56

6.1 Code Section 415 Limits 56

6.2 Restrictions on Benefits of Twenty-Five Highest-Paid Participants 60

6.3 Funding-Based Limitations 61

6.4 Top Heavy Rules 67

ARTICLE 7 CONTRIBUTIONS 70

7.1 Employer Contributions 70

7.2 Participant Contributions 70

7.3 Return of Contributions to the Employers 70

7.4 Actuarial Gains 70

ARTICLE 8 AMENDMENT, TERMINATION, MERGER 71

8.1 Amendment 71

8.2 Termination of the Plan 72

8.3 Merger 73

ARTICLE 9 ADMINISTRATION 74

9.1 Voya Financial Plan Administrative Committee and Voya Financial Plan Investment Committee 74

9.2 Duties and Powers of the PAC 74

9.3 Duties and Powers of the PIC 77

9.4 Functioning of the Committees 78

9.5 Allocation and Delegation of Duties 78

9.6 Deemed Delegation of Duties and Powers 79

9.7 Payment of Expenses 79

9.8 Plan Expenses 79

9.9 Information to be supplied by a Participating Employer 79

9.10 Actuarial Determinations 80

9.11 Funding Policy 80

9.12 Electronic Communications 80

9.13 Indemnification 80

9.14 Trustees 80

9.15 Claims Procedure 81

ARTICLE 10 MEDICAL BENEFITS ACCOUNT 83

10.1 Establishment of Medical Benefits Account 83

10.2 No Qualified Transfers 84

10.3 Definitions 84

ARTICLE 11 MISCELLANEOUS 85

11.1 Headings; References 85

11.2 Construction 85

11.3 Qualification for Continued Tax-Exempt Status 85

11.4 Nonalienation 85

11.5 No Employment Rights 85

11.6 No Enlargement of Rights 85

11.7 Withholding for Taxes 85

ARTICLE 1

DEFINITIONS

As used in the Plan, the following words and phrases and any derivatives thereof will have the meanings set forth below unless the context clearly indicates otherwise. Definitions of other words and phrases are set forth in each of the applicable Appendices. Section references indicate sections of the main text of the Plan unless otherwise stated. The singular includes the plural and the plural the singular, whenever applicable.


1.1	Account means the Participant’s “cash balance account” established under Section 3.9 plus any similar account established under an applicable Appendix.


1.2	Account Balance means the balance, if any, credited under the terms of the Plan to the Participant’s Account as of the date of determination under the Plan.

1.3

Accrued Benefit means the monthly retirement benefit that the Participant has earned as of the date of determination, calculated under Article 3, which will be payable as of his or her Normal Retirement Date in the form of a single life annuity. For the Participant who remains in employment after his or her Normal Retirement Date, the Accrued Benefit is the amount calculated for him or her under Section 3.2(b) and/or (c). An Accrued Benefit may be either a Final Average Pay Pension Formula Accrued Benefit or a Cash Balance Pension Formula Accrued Benefit or, for a Participant who is employed with an Employer both before and after his or her Cash Balance Transition Date or has both a Final Average Pay Pension Formula Accrued Benefit and a Prior Plan Account Balance, the sum of his or her Final Average Pay Pension Formula Accrued Benefit and Cash Balance Pension Formula Accrued Benefit.


1.4	Actuarial Equivalent or Actuarial Equivalence means a benefit of equal value to other forms of benefit, using the following actuarial bases:


(a)	Lump Sums and Annuity Conversion. Actuarial Equivalence is computed on the basis of the Applicable Mortality Table and the Applicable Interest Rate for the Benefit Commencement Date (or other determination date) for the following purposes:


(i)	Calculating a lump-sum or lump-sum value of an Accrued Benefit;


(ii)	Converting an Account Balance to any annuity form of payment; and


(iii)	Converting a single life annuity into any other annuity form of payment.

The assumptions described in this Section 1.4(a) shall be applied to make any calculations described in this Section for benefits paid on or after January 1, 2012, without regard to when a Participant’s employment terminated.

For a Participant who has an Accrued Benefit under the Plan as of December 31, 2011, the retirement benefit paid in any optional payment form will not be less than the single life annuity calculated based solely on his or her Accrued Benefit in Appendix 1.4(a). Further, for a Participant who has a Prior Plan Benefit, if the actuarial assumptions under the applicable Prior Plan as described in Appendix 1.4(a) are different from the actuarial assumptions in this Section 1.4(a), the Plan will pay the larger of (1) the Participant’s Prior Plan Benefit converted to such optional form using the actuarial assumptions in effect as of December 31, 2001 to make such conversion under such Prior Plan, or (2) his or her Prior Plan Benefit converted to such optional form using the assumptions of this Section 1.4(a).

Notwithstanding any contrary provision, for distributions made after August 17, 2006, the present value of that portion of the Accrued Benefit for any Participant attributable to the Participant’s Account Balance is equal to that Participant’s Account Balance.


(b)	Determining Offset. For purposes of determining the offset for benefits paid under other plans under Section 3.1(d), the 1994 Group Annuity Mortality Static Table for Males for both a Participant and Beneficiary and an interest rate of 5.5% will apply.


(c)	Other Actuarial Equivalent Adjustments. For all other purposes, Actuarial Equivalence will be based on the 1994 Group Annuity Mortality Static Table for Males for both Participant and Beneficiary and an interest rate of 7.0%.


1.5	Aeltus Participant means each AFS Transition Participant who was employed by Aeltus Investment Management, Inc. and participated in the Financial Services Plan.


1.6	Affiliate means the Company and each Controlled Group Member. For purposes of the provisions for subsidiaries adopting the Plan under Section 2.4, Affiliate includes any corporation whose voting stock is at least 50% owned, directly or indirectly, by the Company or by another Affiliate.


1.7	AFS Minimum Benefit means for each AFS Transition Participant, the AFS Minimum Benefit described in Appendix 3.1(e).


1.8	AFS Non-Specified Transition Participant means an AFS Transition Participant who is other than an AFS Specified Transition Participant.


1.9	AFS Plan means the ING Retirement Plan for Aetna Financial Services & Aetna International Employees as in effect immediately prior to its merger into this Plan effective as of December 31, 2001.


1.10	AFS Specified Transition Participant means an AFS Transition Participant who on December 31, 2000 (1) had at least nine years of service (calculated as eight years and 22 weeks of service) and is less than 50 years of age, or (2) had at least five years of service (calculated as four years and 22 weeks of service) and is at least 50 years old and less than 62 years old.

1.11

AFS Transition Participant means each individual who (a) was an active participant in the Retirement Plan for Employees of Aetna Services, Inc. on December 31, 1998 and was not in pay status; (b) continued to be an active participant in the Retirement Plan for Employees of Aetna Services, Inc. on January 1, 1999; and (c) became an active participant in the AFS Plan on December 14, 2000 in accordance with the requirements set forth in Section 3.03 of the Employee Benefits Agreement between Aetna, Inc. and Aetna Healthcare, Inc. dated as of December 13, 2000. If an AFS Transition Participant terminates Employment and is subsequently reemployed as an Employee, he or she will not be an AFS Transition Participant for the period of service after reemployment. The term “active participant” means a participant (a) in active employment with an employer covered under the plan (a “covered employer”), (b) on an authorized leave of absence from a covered employer, (c) receiving benefits after December 31, 1976 under a long- term disability plan maintained by a covered employer, or (d) receiving 13 week salary continuation benefits from a covered employer or other periodic severance and salary continuation benefits.


1.12	Applicable Interest Rate means the applicable interest rate structure established by the Internal Revenue Service under Code Section 417(e)(3) in effect during August (the “lookback month”) before the beginning of the Plan Year that includes the Benefit Commencement Date or other determination date.


1.13	Applicable Mortality Table means the applicable mortality table established by the Internal Revenue Service from time to time under Code Section 417(e)(3) for the Plan Year that includes the Benefit Commencement Date or other determination date.

1.14

Benefit Commencement Date means for a benefit payable as an annuity, the first day of the first month for which a retirement benefit is payable as an annuity to the Participant under Articles 3 and 4, or a preretirement death benefit is payable as an annuity to the surviving Spouse or Domestic Partner under Article 5. If the benefit is payable in a lump sum, the Benefit Commencement Date is the first day of the calendar month in which payment will be made. A Participant or surviving Spouse or Domestic Partner may have more than one Benefit Commencement Date. A Participant (or surviving Spouse or Domestic Partner) may select their Benefit Commencement Dates as follows:


(a)	Cash Balance Pension Formula Accrued Benefit (Account Balance). A Participant (other than with respect to his or her Prior Plan Account Balance attributable to the AFS Plan, if any) may elect to receive his or her Account Balance in a lump-sum payment or an available annuity form determined as of the first day of any calendar month after his or her Termination Date. See Appendix

4.1(b) for provisions affecting a Participant’s entitlement to a limited lump-sum payment from his or her Prior Plan Account Balance attributable to the AFS Plan. See Section 4.1 regarding the forms of annuity available to a Participant prior to and after his or her Earliest Retirement Date (as described in the first paragraph of Section 1.35).

(b)

Final Average Pay Pension Formula Accrued Benefit. The Participant may elect to receive the benefit attributable to the Final Average Pay Pension Formula or after his or her Earliest Retirement Date (as described in the first paragraph of Section 1.35). If he or she elects early retirement, the Plan will apply the early commencement reduction factors described in Section 3.3(b) or Section 3.4(b), as applicable, to his or her Final Average Pay Pension Formula Accrued Benefit.

(c)

Effect on QPSA. The Benefit Commencement Date is the ending date for entitlement to the QPSA or other preretirement survivor benefit, and the beginning date for entitlement to the postretirement survivor benefit. The surviving Spouse or Domestic Partner of the Participant who received his or her Account Balance in a lump sum or annuity and died before the Benefit Commencement Date for his or her Final Average Pay Pension Formula Accrued Benefit, will receive a QPSA based on the Final Average Pay Pension Formula Accrued Benefit under Section 5.1. The surviving Spouse’s or Domestic Partner’s right to select a Benefit Commencement Date for the QPSA is described in Section 5.1(d).

(d)

Prior Plan Benefit, AFS Minimum and Net ING Benefit. Each Participant who was a participant in a Prior Plan may elect to receive his or her Vested Prior Plan Benefit or AFS Minimum Benefit at any time such benefit was available to such Participant under the applicable Prior Plan to the extent required by law. See Appendix 3.3(a) for a description of Earliest Retirement Dates under Prior Plans. If the Participant has reached his or her Earliest Retirement Date (as described in the first paragraph of Section 1.35), the Net ING Benefit must be paid at the same time as his or her Prior Plan Benefit or AFS Minimum Benefit excluding any portion that has been paid as a lump-sum payment or if his or her Prior Plan Benefit or AFS Minimum Benefit is paid before attaining age 55, at his or her Earliest Retirement Date (as described in the first paragraph of Section 1.35).

1.15

Beneficiary means the Participant’s surviving Spouse or Domestic Partner on the date of death. If a Participant does not have a Spouse or Domestic Partner or the Participant’s Spouse has consented to another Beneficiary for an optional form of benefit that permits a non-Spouse beneficiary, his or her Beneficiary is the person designated as such on the most recent beneficiary designation form or benefit election form, as applicable, or if no such person or persons has been named, his or her Beneficiary shall be his or her estate. To be effective, the designation of a non-Spouse/non-Domestic Partner beneficiary must be on file with the Plan Administrator on the date of death. A Participant may not change his or her Beneficiary after his or her Benefit Commencement Date. A Participant may

designate a non-Domestic Partner Beneficiary without the consent of his or her Domestic Partner.


1.16	Benefit Service is defined in Section 1.96.


1.17	Board means the Board of Directors of the Company.


1.18	Break in Service See Section 1.48 Five-Year Break and Section 1.65 One-Year Break.


1.19	Cash Balance Pension Formula means the pension formula that derives an Accrued Benefit (or portion thereof) by reference to the Participant’s Account.

1.20

Cash Balance Pension Formula Accrued Benefit means the retirement benefit attributable to the Cash Balance Pension Formula, when expressed as a single life annuity starting as of the Participant’s Normal Retirement Date (or as of the first day of the month following the determination date if the determination date is after the Participant’s Normal Retirement Date), calculated under Section 3.1(c) or an applicable Appendix.


1.21	Cash Balance Transition Date means, with respect to any Participant who is accruing a benefit under the Final Average Pay Pension Formula as of December 31, 2011, and continues as an Eligible Employee after such date, whichever of (a) or (b) produces the greater Accrued Benefit for the Participant:


(a)	December 31, 2011; or


(b)	The earlier of December 31, 2013, or the date the Participant ceases to be an Eligible Employee (if on or after January 1, 2012 and prior to January 1, 2014).

With respect to any Participant who accrued a benefit under the Final Average Pay Pension Formula prior to January 1, 2012, but who was not accruing a benefit as of December 31, 2011, because he or she was not then an Eligible Employee, and who again becomes an Eligible Employee on or after January 1, 2012, his or her Cash Balance Transition Date is the date he or she ceased to accrue any additional benefit under the Final Average Pay Pension Formula prior to January 1, 2012.


1.22	Citigroup means Citigroup LLC.


1.23	CitiStreet means CitiStreet LLC, which was acquired by Lion Connecticut Holdings Inc. on July 1, 2008.


1.24	Code means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder, or any successor statute and, if an amendment to the Code renumbers a section of the Code referred to in this Plan, any such reference to such section automatically shall become a reference to such section as renumbered.


1.25	Committee or Committees means either or both of the Plan Administrative Committee and the Plan Investment Committee, as the context may require.


1.26	Company means Voya Services Company, a Delaware corporation, and any successor in interest thereto. Prior to September 1, 2014, the name of the Company was ING North America Insurance Corporation.


1.27	Compensation.

(a)

Accrued Benefit and Pay Credits. For purposes of calculating each Participant’s Accrued Benefit (including for purposes of calculating Pay Credits her base pay, overtime, commissions, sales bonuses or commissions, short-term incentive awards, performance-based spot bonuses, shift differential, any paid time off (PTO) payment included in a Participant’s paycheck for his or her last pay period of active employment, and education or training related bonuses (such as Life Office Management Association or actuarial bonuses) paid by an Employer and any deferrals excluded from his or her income under Code Sections 125, 132(f)(4) and 401(k) and that is paid through the Employer’s payroll system. All other items of compensation are excluded including, but not limited to, any compensation deferred under a nonqualified deferred compensation plan either at the time deferred or at the time it is paid, stock-based compensation, business allowances (except as specifically described in the preceding sentences of this definition), stay bonuses, sign-on bonuses, temporary cost of living adjustments, long-term incentive awards, employer contributions to any retirement or welfare plan, and any severance or salary continuation payments or benefits, and compensation not paid through the Company’s U.S. payroll system.

(b)

Military Service. For the Participant who resumes Employment after a period of unpaid military leave covered by the USERRA, the Plan will impute Compensation in the amount he or she would have received if he or she had remained in active Employment, based on his or her base rate of pay in effect when he or she began his or her leave and taking into account any salary adjustment and/or promotion he or she would have received during the period of military leave, or if that pay rate cannot be determined with certainty, the Plan will treat him or her as having Compensation equal to the amount he or she received during the 12-month period immediately preceding his or her leave, or during the entire period of his or her Employment if shorter than 12 months.

Effective January 1, 2009, a Participant receiving a differential wage payment (as described in Code Section 414(u)(12)) shall be treated as an Employee of the Employer making the differential wage payment for purposes of this Plan and the differential wage payment shall be treated as Compensation.


(c)	Statutory Limit. Beginning with the 2002 Plan Year, each Participant’s Compensation will be limited to $200,000 (as indexed under Code Section 401(a)(l7)) for each Plan Year for all purposes under the Plan.


(d)	Compensation from Affiliate. Compensation paid by an Affiliate or other entity that is not an Employer or paid by an Affiliate before the Affiliate adopted this Plan will not be treated as Compensation. Also excluded is any compensation that is not paid through the Company’s U.S. payroll system.

(e)

Transferred CitiStreet Employees. Effective July 1, 2008, a Transferred CitiStreet Employee who is a Participant in the Plan shall have his or her Compensation for 2008 determined by taking into account the compensation paid for the period July 1, 2008 through December 31, 2008, irrespective of whether such amount was paid through the transition payroll services provided by Citigroup for the period July 1, 2008 through September 31, 2008, or by the Company’s payroll administrator. Amounts paid prior to July 1, 2008 by Citigroup or State Street to Transferred CitiStreet Employees shall be disregarded for all purposes of the Plan. Subsequent to December 31, 2008, a Transferred CitiStreet Employee’s Compensation shall be determined pursuant to the foregoing provisions of this Section 1.27.


1.28	Controlled Group means all of the Employers and the Controlled Group Members.

1.29

Controlled Group Member means with respect to an Employer (a) each member of the group of corporations under at least 80% common control by or with the Employer, within the meaning of Code Section 414(b); (b) each incorporated or unincorporated trade or business under common control with the Employer, within the meaning of Code Section 414(c); (c) each organization that is within an affiliated service group with the Employer, within the meaning of Code Section 414(m); and (d) any entity required to be aggregated with the Employer under Code Section 414(o).

1.30

Covered Compensation means the average of the contribution and benefit bases in effect under Section 230 of the Social Security Act for each year in the 35-year period ending with the year in which the Participant reaches Social Security Retirement Age, except that (a) for the Participant who terminates Employment before Social Security Retirement Age, Covered Compensation will be determined by assuming no increases in the contribution and benefit basis after the most recent calendar year of the applicable averaging period used in determining his or her Final Average Compensation, and (b) for the Participant who terminates Employment after Social Security Retirement Age, Covered Compensation will be frozen in the year in which he or she reached Social Security Retirement Age. Covered Compensation before the beginning of the 35 year period is the Social Security Wage Base for the Plan Year. For a Participant who is a nonresident alien described in Section 1.39(d)(ii), Covered Compensation will mean the Covered Compensation he or she would have had if he or she were covered under the Social Security Act. For a Participant whose Final Average Compensation is calculated and frozen as of his or her Cash Balance Transition Date, Covered Compensation also will be calculated and frozen as of such date.


1.31	Delayed Retirement Date means the first day of the month on or after the date a Participant who continues Employment after his or her Normal Retirement Date actually terminates his or her Employment.

1.32

Disability or Disabled means a medically determinable physical or mental impairment that prevents the Participant from engaging in any substantial gainful activity, is reasonably expected to result in death or to be of long continued and indefinite duration, and has qualified him or her for long-term disability benefits under his or her Employer’s group long-term disability plan (or would qualify him or her for such benefits if he or she were covered under his or her Employer’s group long-term disability plan). For purposes of this Plan, the date of a Participant’s Disability shall be his or her Termination Date resulting from such Disability (and not the date on which the determination of Disability is made). However, if an Eligible Employee is on a short-term disability leave as of December 31, 2011 and is continuously on such leave until he or she has a Termination Date on or after January 1, 2012 resulting from the same Disability, the date of his or her Disability is deemed to occur prior to January 1, 2012 for purposes of Section 3.5.


1.33	Domestic Partner means an individual who is not a Spouse and who is identified by the Participant either on a form provided for this purpose by a Participating Employer or under a State registration program as his or her partner. Such designation must be on file with the Plan Administrator or the State at the time of the Participant's death to be effective.


1.34	Disabled Vested Participant means a Participant who incurs a Disability after December 31, 2001 (or after December 31, 1999 for participants in the LOG Plan (other than the Field Force, as defined in the LOG Plan), the SLD Plan or this Plan), and prior to January 1, 2012, provided that he or she is Vested.


1.35	Earliest Retirement Date means for each Participant the first day of the month coincident with or following the month in which the Participant has reached age 55, completed sufficient Vesting Service to be Vested and has incurred a Termination Date.

Notwithstanding the foregoing, a Participant’s earliest retirement date for his Prior Plan Benefit is his earliest retirement date as determined under the terms of the applicable Prior Plan in effect on December 31, 2001. See Appendix 3.3(a) for special timing rules for Prior Plan Benefits.


1.36	Early Retirement Date means for each Participant the first day of the month on or after his or her Earliest Retirement Date and before his or her Normal Retirement Date on which he or she actually commences his or her benefit payments under the Plan.


1.37	Effective Date means for purposes of the original effective date of the Plan, January 1, 1937 and for purposes of this amendment and restatement January 1, 2018, unless otherwise specifically noted. The rights of any Employee who terminated before the effective dates of the various amended provisions set forth in this document will be

determined under the provisions of the Plan or the applicable Prior Plan as in effect on the Employee’s Termination Date, except as expressly set forth herein.


1.38	EIC Plan means this Plan as in effect immediately prior to the merger of the AFS Plan, the Lexington Plan, the LOG Plan, the ReliaStar Plan, and the SLD Plan into this Plan effective as of December 31, 2001.

1.39

Eligible Employee means each Employee other than an Employee who is (a) a member of a unit of employees covered by a collective bargaining agreement between an employee representative and an Employer, unless otherwise provided in the agreement or agreed to by the Employer and the union, (b) an individual who is classified on the payroll of an Employer as a “temporary” employee, (c) prior to January 1, 2012, a part-time Employee who is not credited with at least 1,000 Hours of Service per year, (d) a nonresident alien receiving no earned income for the performance of services from an Employer or a Controlled Group Member that constitutes earned income from sources within the United States, unless (i) a certificate of coverage has been filed with the Social Security Administration on behalf of the individual under Section 233 of the Social Security Act, or (ii) the Employee has been designated as an Eligible Employee by an Employer and is paid through the U.S. payroll of the Employer, (e) an employee whose principal worksite is outside the U.S., unless the Employee is paid through the U.S. payroll of an Employer, (f) an Employee of a Controlled Group Member who is seconded to an Employer and is not paid through a U.S. payroll of an Employer, and (g) Statutory Employees.

An individual is not an Eligible Employee after his or her Termination Date. However, a Disabled Vested Participant will be deemed to continue as an Eligible Employee for so long as he or she remains Disabled, or until his or her Early Retirement Date or Normal Retirement Date, if earlier.


1.40	Employee means an individual who (a) is regularly employed by an Employer as a common-law employee, and (b) has FICA taxes withheld by an Employer.

Under no circumstances will the following individuals be treated as an Employee even if such individuals are treated as “employees” of an Employer as a result of common law principles or the Leased Employee rules under Code Section 414(n): an individual who performs services for an Employer, but who is not classified as an employee on the payroll of such Employer and with respect to whom no FICA taxes are withheld by such Employer, for example, a Leased Employee. Further, if an individual performing services for an Employer is retroactively reclassified as a “common law employee” of an Employer for any reason (except voluntarily by the Employer to correct an inadvertent payroll classification error), such reclassified individual shall not be treated as an Employee for any period prior to the actual date (and not the effective date) of such reclassification.


1.41	Employer means the Company and each Affiliate that adopts the Plan.


1.42	Employment means the period during which an Employee is employed by an Employer.


1.43	ERISA means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder, or any successor statute and, if an amendment to ERISA renumbers a section of ERISA referred to in this Plan, any such reference to such section automatically shall become a reference to such section as renumbered.


1.44	Final Average Compensation. The Plan will calculate Final Average Compensation as follows:

(a)

Five Whole Calendar Years of Benefit Service. For the Participant who completes an Hour of Service with the Company on or after January 1, 2009 and has completed five whole calendar years of Benefit Service, Final Average Compensation is the average of his or her Compensation for the five consecutive whole calendar year period of Benefit Service during his or her final consecutive whole calendar years of Benefit Service (through his or her Cash Balance Transition Date) that produces the highest average, up to a maximum of 20 years; provided, however, that for Participants who do not complete an Hour of Service with the Company on or after January 1, 2009, his or her Final Average Compensation shall be determined by using Final Average Compensation as defined in the Plan as in effect at the Participant’s Termination Date. If the Participant has not completed at least the number of consecutive whole calendar years of Benefit Service as then in effect, the largest number of consecutive whole calendar years of Benefit Service will be substituted for the number of years (up to 20) in the first sentence of this Section 1.44(a). For purposes of determining the number of years to be used to determine a Participant’s Final Average Compensation, beginning on January 1, 2009, one year shall be added to the number ten until the number reaches 20, with ten years being used for any Participant retiring during the 2009 Plan Year. No additional years shall be added to ten pursuant to the prior sentence for any period after the Participant’s Cash Balance Transition Date. By way of example only, a Participant retiring in 2009 shall have his or her Final Average Compensation determined as the highest five consecutive years out of the past ten years; a Participant retiring in 2010 shall have his or her Final Average Compensation determined as the highest five consecutive calendar years out of the past 11 years, and for a Participant retiring in 2011, his or her Final Average Compensation shall be determined using the highest five consecutive calendar years out of the past 12 years.


(b)	Less Than Five Whole Calendar Years of Benefit Service. For the Participant who has completed at least one but has not completed five whole calendar Years of Benefit Service (through his or her Cash Balance Transition Date), Final Average Compensation is the average of his or her Compensation for the largest number of consecutive whole calendar years of Benefit Service.


(c)	With No Whole Calendar Years of Benefit Service. For a Participant who has not completed at least one whole calendar Year of Benefit Service (through his or her Cash Balance Transition Date), Final Average Compensation is the average of his or her Compensation (actual, not annualized) for the largest number of consecutive Years of Benefit Service.

(d)

Whole Calendar Year. Except as provided in Section 1.44(c), a Participant must be an Employee for the entire calendar year in order to have that calendar year taken into account for purposes of Final Average Compensation. The year in which a Participant terminates employment shall be considered a complete calendar year if the Termination Date is December 31 (or the last business day of the year if December 31 falls on a Saturday, Sunday or holiday).


(e)	Termination and Rehire. The Plan will calculate and freeze each Participant’s Final Average Compensation as of his or her Termination Date.


(i)	If a terminated Participant (whether Vested or nonvested) is rehired before January 1, 2009, and before incurring a One-Year Break, the Plan will compute his or her Final Average Compensation as if the termination had not occurred.


(ii)	If a Vested terminated Participant is rehired before January 1, 2009 and after a One-Year Break, the Plan will not recalculate his or her Final Average Compensation until he or she has completed five consecutive Years of Benefit Service following his or her rehire date.

(iii)

If a non-Vested terminated Participant is rehired before January 1, 2009, after a One-Year Break and before a Five-Year Break, the Plan will not recalculate his or her Final Average Compensation until he or she has completed five consecutive Years of Benefit Service following his or her rehire date. The Final Average Compensation shall be based on his or her largest number (not in excess of five) of completed whole calendar years of Benefit Service (whether or not consecutive) completed prior to his or her termination.


(iv)	If a non-Vested terminated Participant is rehired before January 1, 2009 and after a Five-Year Break, the Plan will treat the Participant as a new employee as of his or her rehire date in accordance with Section 2.2(b)(ii).


(v)	If a terminated Participant (whether Vested or non-Vested) is rehired after December 31, 2011, he or she will participate in the Cash Balance Pension Formula following rehire, and no adjustment will be made to his or her Final Average Compensation used to calculate his or her Final Average Pay Pension Formula Accrued Benefit for Benefit Service prior to January 1, 2012.

(f)

Retroactive Application of EGTRRA Limits. The limitations of Code Section 401(a)(17) as amended by the Economic Growth Tax Relief and Reconciliation Act of 2001 (“EGTRRA”) (as adjusted for cost-of-living increases in accordance with Code Section 401(a)(17)(B)) will be applied to years prior to 2002 for purposes of determining Final Average Compensation only for those Participants who complete an Hour of Service as an Eligible Employee after December 31, 2001. However, the average compensation used in determining any frozen grandfathered benefit accrued prior to 2002 will not be recalculated except as described in this Section 1.44(f). If a Participant’s benefit is indexed based on a ratio of his or her Final Average Compensation in some prior year and his or her Final Average Compensation as of his or her Termination Date which is after 2001, the numerator of the ratio will be determined by applying the limitation in Code Section 401(a)(17) as amended by EGTRRA ($200,000) retroactively, but the denominator of the ratio will be limited based on Code Section 401(a)(17) limitations as in effect for such prior year.

(g)

After Cash Balance Transition Date. Notwithstanding any contrary provision, if a Participant accrued a retirement benefit under the Final Average Pay Pension Formula prior to January 1, 2012, the Plan will calculate and freeze his or her Final Average Compensation as of his or her Cash Balance Transition Date (the Participant will cease to be credited with Benefit Service under the Final Average Pay Pension Formula for periods after his or her Cash Balance Transition Date), and no adjustments will be made to any Participant’s Final Average Compensation under this Section 1.44 after his or her Cash Balance Transition Date.


1.45	Final Average Pay Pension Formula means the pension formula that derives an Accrued Benefit (or portion thereof) by reference to the Participant’s Final Average Compensation, Benefit Service and other variables as described in Section 3.1(b), including his or her Prior Plan Benefit to the extent based on a pension formula other than a Cash Balance Pension Formula.

1.46

Final Average Pay Pension Formula Accrued Benefit means the retirement benefit attributable to the Final Average Pay Pension Formula, when expressed as a single life annuity starting as of the Participant’s Normal Retirement Date (or as of the first day of the month following the determination date if the determination date is after the Participant’s Normal Retirement Date), calculated under Section 3.1(b) or an applicable Appendix.

1.47

Financial Services Plan means the ING Financial Services LLC Retirement Plan as in effect prior to (a) January 1, 2003, for those Participants who were employees of Aeltus Investment Management, Inc., who participated in the AFS Plan prior to January 1, 2002 and who became Participants in this Plan as of January 1, 2003, or (b) January 1, 2004 for those Participants who were employees of ING Financial Services LLC and who became Participants in this Plan as of January 1, 2004.


1.48	Five-Year Break means five consecutive One-Year Breaks.


1.49	Hours of Service means the following hours that are credited for vesting purposes, eligibility purposes prior to January 1, 2012, and benefit accrual under the Final Average Pay Pension Formula.


(a)	Periods of Credit. Hours of Service will be credited for the following:


(i)	Working Time. Each hour for which the Employee is paid or entitled to payment by an Employer for the performance of duties.


(ii)	Paid Time Off. Each hour for which the Employee is paid or is entitled to payment by an Employer on account of a period of time during which no duties are performed due to vacation, holiday, illness, incapacity, layoff, jury duty, military duty, or leave of absence, whether or not his or her Employment has terminated.


(iii)	Back Pay. Each hour for which back pay, without regard to mitigation of damages, is either awarded or agreed to by an Employer.


(iv)	Disability. Each hour for which the Employee is Disabled.


(b)	Periods of No Credit. Hours of Service will not be credited for the following:

(i)

Unpaid Time Off. Periods during which the Employee is neither paid nor entitled to payment from his or her Employer, except that the Plan will credit up to 501 hours for a single continuous period during which no duties are performed because of a parental or Family and Medical Leave Act of 1993 (“FMLA”) leave described in Section 1.49(d), or an approved leave described in Section 1.97(f) relating to Vesting Service.


(ii)	Statutory Payments. Hours for which payment is made or due under a plan maintained solely for the purpose of complying with workers compensation, unemployment compensation, or disability insurance laws.


(iii)	Double Back Pay. Back pay where credit has already been given for the hours to which the back pay relates.


(iv)	Medical Expenses. A payment that solely reimburses an Employee for medical or medically related expenses incurred by him or her.


(v)	Paid Time Off. An Employee will not receive credit for Compensation paid for unused paid time off accrued as of his or her Termination Date unless it is included in his or her last paycheck from his or her Employer as an active Employee.

(c)

Crediting Hours of Service. Hours of Service will be credited to the Plan Year in which the duties to which they relate are performed, or the period when no duties are performed, as applicable. The Plan will use payroll records to determine Hours of Service for each Employee for whom the Employer records actual hours worked. For the Employee for whom the Employer does not record actual hours worked, the Plan will credit the hours for each payroll period in which he or she works at least one Hour of Service or for which he or she receives any Compensation in accordance with the following based on the payroll schedule of the Employee: 45 Hours of Service for each weekly payroll period; and 95 Hours of Service for each semi-monthly payroll period.

(d)

Parental or FMLA Leave. The Plan will treat as Hours of Service periods during which an Employee is absent from work by reason of a parental leave (caused by pregnancy, child birth, child adoption, and/or child care immediately following birth or adoption) or a leave protected under the FMLA. The number of Hours of Service credited to the Employee will be the number of hours that would have been credited if the absence had not occurred, or if such number cannot be determined, then eight Hours of Service will be credited for each day of the absence, but in no event will the total number of such Hours of Service exceed 501. Such Hours of Service will be credited to the Plan Year in which the absence begins only to the extent that credit is necessary to achieve 1,000 Hours of Service in that Plan Year; otherwise, credit will be given in the immediately following Plan Year provided the leave extends into that Plan Year. No credit will be given under this Section unless the Employee timely provides to the Plan Administrator all information reasonably required to establish that the absence is for a reason described in this Section, and the number of days of absence attributable to such reason.


(e)	Transfers. The Plan will grant Hours of Service for vesting credit only to each Employee for a period of service with any nonparticipating Controlled Group Member in accordance with Section 2.5 while he or she was performing service for that Controlled Group Member.


(f)	Leased Employees. Leased Employees will be treated as Employees to the extent required under Code Section 414(n), and if a Leased Employee becomes an Employee, the Plan will give him or her vesting credit for Hours of Service for the period when he or she worked as a Leased Employee, as if he or she had been an Employee during that period as described in Section 2.3.


1.50	Immediate Annuity means an annuity payable in the Normal Form as of a Benefit Commencement Date that precedes the Participant’s Earliest Retirement Date.


1.51	Insurance Company means one or more insurance carriers that the Company may select from time to time to administer any Insurance Contracts that are part of the Trust.


1.52	Insurance Contract means any group term life insurance policy or any other contract or policy (including riders, endorsements and supplemental agreements) issued by an Insurance Company, in which Plan assets are invested.


1.53	Interest Credit means the amount credited to the Participant’s Account for each Plan Year, as described in Section 3.9(c) or Appendix 3.1(b)(ii).


1.54	Interest Credit Percentage means the interest rate used to calculate Interest Credits for each Plan Year, which rate is the annual rate of interest on 30-year U.S. Treasury constant maturity securities as published in the Federal Reserve Statistical Release H.15 for the month of August preceding the applicable Plan Year.

1.55

Leased Employee means any person (other than an employee of the recipient) who pursuant to an agreement between the recipient and any other person has performed services for the recipient (or for the recipient and related persons determined in accordance with Code Section 414(n)(6)) on a substantially full-time basis for a period of at least one year, and such services are performed under the recipient’s primary direction or control.


1.56	Lexington Plan means the Lexington Management Corporation Retirement Plan as in effect immediately prior to its merger into this Plan effective as of December 31, 2001.


1.57	LOG Field Force Plan means that part of the LOG Plan that provided benefits to Field Force personnel.


1.58	LOG Plan means the ING Retirement Plan for Employees of Life Insurance Company of Georgia and Its Affiliates as in effect immediately prior to its merger into this Plan effective as of December 31, 2001.


1.59	Mergers means the merger of the AFS Plan, the Lexington Plan, the LOG Plan, the ReliaStar Plan, and the SLD Plan with and into this Plan effective as of December 31, 2001.


1.60	Net ING Benefit means, for an AFS Transition Participant, the amount determined under the following formula:

Net ING Benefit = (A+B) - (the greater of B or C) where


A =	That portion of a Participant’s Final Average Pay Pension Formula Accrued Benefit attributable to his or her Post-2001 Benefit;


B =	That portion of a Participant’s Cash Balance Pension Formula Accrued Benefit attributable to his or her Prior Plan Account Balance; and


C =	The Participant’s AFS Minimum Benefit Comparison Annuity (as defined in Appendix 3.1(e)).

The Net ING Benefit cannot be less than zero.


1.61	Normal Form means the normal form of benefit described in Section 4.1(a).


1.62	Normal Retirement Age is age 65.


1.63	Normal Retirement Date is the first day of the month on or next following the date on which the Participant reaches Normal Retirement Age, irrespective of whether or not he or she retires on that date.


1.64	Northern Plan means the Retirement Plan for the Employees of Northern Life Insurance Company in effect immediately before its merger into the ReliaStar Plan effective as of December 31, 1994.

1.65

One-Year Break means a Plan Year during which the Participant earns fewer than 501 Hours of Service. For purposes of determining whether an Employee has had a One- Year Break, the Plan Administrator will treat a leave protected under the FMLA, or USERRA but only if he or she retains statutory reemployment rights and resumes employment as required by law within the time period prescribed by law, as a period of active Employment.


1.66	Optional Form means the optional forms of benefit described in Section 4.1(b).


1.67	Participant means an Eligible Employee who participates in this Plan under Article 2. The term Participant is sometimes used to include active, Vested terminated and/or retired Participants. Where the context indicates, the term Participant includes persons claiming benefits accrued by a Participant.


1.68	Pay Credit means the amount credited to the Participant’s Account for a Plan Year under Section 3.9(b).


1.69	Plan means the Voya Retirement Plan, as amended from time to time.


1.70	Plan Administrative Committee or PAC means the Voya Financial Plan Administrative Committee as described in Article 9.


1.71	Plan Administrator means the Plan Administrative Committee.


1.72	Plan Investment Committee or PIC means the Voya Financial Plan Investment Committee as described in Article 9.


1.73	Plan Year means the calendar year.


1.74	Post-2001 Benefit means the benefit accrued by a Participant after the 2001 Plan Year and prior to his or her Cash Balance Transition Date as provided for in Section 3.1(b)(i).

1.75

Prior Plan means (a) unless used in the context of a Participant, any of the following plans: AFS Plan, EIC Plan, Lexington Plan, LOG Plan, ReliaStar Plan, SLD Plan or Financial Services Plan, and (b) where used in the context of a particular Participant, one (and only one) of the plans described in (a) in which he or she was a participant immediately prior to the Mergers. If a Participant was a participant in more than one such plan immediately prior to the Mergers, the Prior Plan is the plan that most recently covered the Participant as an active participant.


1.76	Prior Plan Account Balance means that portion of a Participant’s Account Balance that was credited under the AFS Plan, including Interest Credits thereon under this Plan, as described in Appendix 3.1(e).


1.77	Prior Plan Benefit means the benefit described in Appendix 3.1(b)(ii).


1.78	QPSA means a qualified preretirement survivor annuity as provided for in Article 5.


1.79	ReliaStar Plan means the Retirement Plan for Employees of ReliaStar Financial Corp. and its Subsidiaries as in effect immediately prior to its merger into this Plan effective as of December 31, 2001.


1.80	Security-Connecticut Plan means the Security-Connecticut Corporation Employees’ Retirement Plan as in effect immediately before its merger into the ReliaStar Plan effective as of January 1, 1998.


1.81	SLD Plan means the ING Retirement Plan for Employees of Security Life of Denver Insurance Company as in effect immediately prior to its merger into this Plan effective as of December 31, 2001.


1.82	Social Security Retirement Age means the age used as the Participant’s retirement age under Section 216(l) of the Social Security Act, without regard to the monthly age increase factor, and treating early retirement age as if it were age 62. Each Participant’s Social Security Retirement Age will be the following age that relates to his or her year of birth:

Year of Birth Social Security

Retirement Age

Before 1938 65 years

1938 – 1954 66 years

After 1954 67 years


1.83	Southland Plan means the Retirement Plan for Employees of Southland Life Insurance Company as in effect immediately before its merger into the LOG Plan effective as of December 31, 1989.

1.84

Spouse means the individual to whom the Participant is legally married on the earlier of his or her date of death or his or her Benefit Commencement Date. An individual will be deemed to be legally married, regardless of state of domicile, if the person is recognized by the laws of the state or country where the relationship is formed as being legally joined with the Participant in marriage. This may include a common-law marriage in those states that recognize common-law marriage if the Participant has provided acceptable proof to the Company, but it does not include a domestic partnership or civil union.


1.85	State Street means State Street Bank and Trust Company.


1.86	Statutory Employee means an individual who is treated as a statutory employee under Code Section 7701(a)(20), including, but not limited to, a field agent, an account representative or similar commission-based statutory employee.


1.87	Termination Date means the date the Employee ends his or her employment with all Employers and Controlled Group Members, for any reason.


1.88	TNIC Plan means The Netherlands Insurance Company Retirement Plan as in effect immediately before its merger into the LOG Plan.

1.89

Transferred CitiStreet Employee means an employee who (a) was employed by State Street or Citigroup; (b) was assigned to work at CitiStreet, (c) was an active employee on June 30, 2008 (or was on an approved leave on that date) with State Street or Citigroup, and (d) became an active employee of the Company or a then participating Employer on July 1, 2008 (or the date the employee’s leave of absence expired, if later) by completing at least an Hour of Service on that date.


1.90	Trust or Trust Fund means the fund maintained under the trust agreement executed in connection with the Plan, as amended from time to time, which constitutes a part of this Plan.


1.91	Trustee means the corporation(s), individual(s) or other entity(ies) appointed to administer the Trust, as provided in Article 9.


1.92	USERRA means the Uniformed Services Employment and Reemployment Rights Act of 1994, and regulations and rulings issued thereunder.


1.93	USLICO Plan means the Retirement Plan for Employees of USLICO Corporation and Its Subsidiaries as in effect immediately before its merger into the ReliaStar Plan effective as of January 1, 1996.

1.94

Vested means that, for any Participant who earns any Hours of Service after the 1988 Plan Year, he or she will become fully Vested in his or her Accrued Benefit as of the earliest of (a) the date he or she completes five years of Vesting Service (or, starting January 1, 2012, three years of Vesting Service in the case of a Participant who has any Hours of Service after December 31, 2011), (b) the date the Participant attains his or her Normal Retirement Age while actively employed by an Employer or a Controlled Group Member, (c) the date the Participant dies while actively employed by an Employer or a Controlled Group Member, (d) for a Disability that occurs after December 31, 2011, the date the Participant becomes Disabled, or (e) the date the Participant became Vested under a Prior Plan vesting schedule described in Appendix 3.4(a).


1.95	Vesting Service is defined in Section 1.97.


1.96	Years of Benefit Service or Benefit Service means the Participant’s whole Years of Vesting Service completed after December 31, 2001 and up to (but not beyond) his or her Cash Balance Transition Date, subject to the following rules and exclusions:


(a)	Exclusions. The following periods will be excluded from determining a Participant’s Benefit Service and Years of Benefit Service:


(i)	Periods during which the Participant is not an Eligible Employee covered under this Plan (or while covered under a benefit formula applicable only to Field Force employees of Life Insurance Company of Georgia) other than periods during which Hours of Service are credited under Section 1.49(e);


(ii)	Periods during which the Participant accrued vested benefits under another qualified defined benefit plan formula to which an Employer contributed, except as provided in Section 1.96(b);


(iii)	Periods before January 1, 2002;


(iv)	Periods during which the Employee (or former Employee) is absent from employment due to a Disability if either (i) such Disability occurred after December 31, 2011, or (ii) the Employee was not Vested before he or she terminated active employment due to Disability; and


(v)	Periods during which the Participant was treated as a Statutory Employee, even if later determined to be a common law employee (for example, while the Participant was a field agent, account representative or similar commission-based statutory employee).


(b)	Service Before an Employer Adopted the Plan. The Board will determine any Benefit Service to be credited for periods of service with an employer before it that employer. In the event the Board grants retroactive Benefit Service, the Plan

will offset any benefits previously accrued under the Employer’s qualified defined benefit plan(s).

(c)

Five-Year Break. A non-Vested Participant who incurs a Five-Year Break prior to January 1, 2012 will lose credit for all Benefit Service completed before the Five-Year Break. A Vested Participant, or a non-Vested Participant who has not incurred a Five-Year Break prior to January 1, 2012, will retain credit for all Benefit Service completed before a Break in Service regardless of the number of his or her One-Year Breaks; provided the Participant was Vested before such Break in Service.


(d)	Military Service. Each Participant will receive credit for Benefit Service as if his or her active Employment had continued during the period of his or her military service covered by USERRA, but only if he or she retains statutory reemployment rights and resumes employment as required by law within the time period prescribed by law.


(e)	Temporary International Transfer. Benefit Service will be credited for periods of an Employee’s temporary service with a foreign Affiliate so long as the Employee remains on U.S. payroll of an Employer and does not participate in a retirement plan of the foreign Affiliate.

(f)

Transferred CitiStreet Employees. Effective July 1, 2008, each Transferred CitiStreet Employee who is credited with at least 1,000 Hours of Service shall receive one Year of Benefit Service under the Plan. Notwithstanding the foregoing, the Company shall credit a Transferred CitiStreet Employee with a Year of Benefit Service for 2008 if, on December 31, 2008, such Transferred CitiStreet Employee was an active employee with the Company or an Employer and was a full-time employee regularly scheduled to work a 40 hour work week. For purposes of this Section 1.96, service with Citigroup or State Street shall not be taken into account for purposes of determining a Participant’s Years of Benefit Service.

(g)

Rehired Employees. An Employee who had accrued a benefit in the Plan prior to his or her Termination Date and who is rehired by an Employer and is credited with an Hour of Service on or after January 1, 2009, shall not have any Hours of Service credited on or after January 1, 2009 counted for purposes of determining Benefit Service; provided, however, if a Participant with an Accrued Benefit incurs a Termination Date due to a qualified termination as defined in the Voya Severance Pay Plan, as in effect from time to time, and is rehired by the Company or an Employer prior to January 1, 2012, and within six months of his or her Termination Date, he or she shall once again become a Participant in the Plan and have his or her Hours of Service credited for periods of service on and after January 1, 2009 and counted for purposes of determining his or her Benefit Service.


1.97	Years of Vesting Service or Vesting Service means each period in which the Participant receives credit for Hours of Service and with respect to Years of Vesting Service, each Plan Year for which the Employee earns at least 1,000 Hours of Service, subject to the following rules:


(a)	Service With a Controlled Group Member. Each Employee will receive credit for Vesting Service for the period when he or she was employed by any Controlled Group Member, whether or not it has adopted the Plan, as if that Controlled Group Member was an Employer, beginning on the date the member became part of the Controlled Group.

(b)

Service With Entity Before It Became a Controlled Group Member. An Employee will not receive credit for Vesting Service for any service with a Controlled Group Member before it became part of the Controlled Group except to the extent required by law. The Board will determine any Vesting Service to be credited for periods of service with an entity before it became a Controlled Group Member, to the extent credit is not required under law. Such credit will be described in the applicable Appendix for that Employer.

(c)

Five-Year Break. The non-Vested Employee who incurs a Five-Year Break prior to January 1, 2012 will lose credit for all Vesting Service completed before the Five-Year Break. The Vested Employee, or the non-Vested Employee who has not incurred a Five-Year Break prior to January 1, 2012, will retain credit for all Vesting Service completed before a Break in Service regardless of the number of his or her One-Year Breaks.


(d)	Transfers and Leased Employees. The Plan will grant Vesting Service to each Employee for any period of service with any nonparticipating Affiliate in accordance with Section 2.5. Additionally, the Plan will grant Vesting Service credit to each Employee for service as a Leased Employee as described in Section 2.3.


(e)	Military Service. Each Employee will receive credit for Vesting Service as if his or her active Employment had continued during the period of his or her military service covered by USERRA, but only if he or she retains statutory reemployment rights and resumes employment as provided for by USERRA.


(f)	Leaves of Absence. Vesting Service will include up to 501 Hours of Service in a Plan Year during a period of unpaid absence that is approved under the Employer’s standard, uniformly-applied personnel policies including, but not limited to, a leave of absence under the FMLA, as described in Section 1.49(d).


(g)	Service before 2002. A Participant who was a participant in a Prior Plan will be given Vesting Service credit for his or her vesting service completed before January 1, 2002 equal to his or her whole years of vesting service completed under his or her Prior Plan as of December 31, 2001. If a Participant was covered

under a Prior Plan that used the elapsed time method of crediting service, the Participant will receive an additional year of Vesting Service for the period beginning on the day after the 2001 anniversary of his or her date of employment and ending December 31, 2001 provided he or she completes at least one Hour of Service during that period.

(h)

Transferred CitiStreet Employees. Effective July 1, 2008, for each Transferred CitiStreet Employee who becomes a Participant in the Plan, his or her Years of Vesting Service shall include the years of vesting service such Participant had been credited with in the Citigroup 401(k) Plan and/or the State Street Salary Savings Plan (as provided by Citigroup or State Street to the Company in connection with the acquisition of CitiStreet effective July 1, 2008). A Transferred CitiStreet Employee who becomes a Participant in the Plan shall be credited with a Year of Vesting Service for the 2008 Plan Year if he or she is credited with 1,000 Hours of Service or more for the period the Participant is actively employed by the Company or an Employer on or after July 1, 2008. Notwithstanding the foregoing, the Company shall credit a Transferred CitiStreet Employee with a Year of Vesting Service for 2008 if, on December 31, 2008, such Transferred CitiStreet Employee is actively employed by the Company or an Employer, and is a full-time employee regularly scheduled to work a 40 hour work week. For purposes of this Section 1.97, Hours of Service credited for periods of employment with Citigroup, State Street, the Company or an Employer during the 2008 Plan Year shall be counted only one time, either under the applicable Citigroup or State Street plan or the Plan.

(i)

Rehired Employees. An Employee who had accrued a benefit in the Plan prior to his or her Termination Date and who is rehired by an Employer and in either case is credited with an Hour of Service on or after January 1, 2009, shall have his or her Hours of Service credited on or after January 1, 2009 counted for purposes of determining Vesting Service, provided such rehired or transferred Employee was Vested or had not incurred a Five-Year Break on the date he or she is rehired and is first credited with an Hour of Service after such rehire (or by December 31, 2011, if earlier).

ARTICLE 2

ELIGIBILITY


2.1	Eligibility. Each Eligible Employee will begin participating in the Plan as of the following date:

(a)

Current Eligible Employees as of January 1, 2018. The Employee who was an Eligible Employee and participating in the Plan on January 1, 2018, will continue as a Participant on and after January 2, 2018, provided he or she is an Eligible Employee. The Employee who was not an Eligible Employee on January 1, 2018 under the rules then in effect will become and continue as a Participant on and after January 2, 2018, provided he or she is an Eligible Employee.


(b)	New Hires or Rehires on or After January 2, 2018. In the case of an Employee who is first hired or rehired by an Employer on or after January 2, 2018, he or she will begin participating in the Plan as of his or her date of hire or rehire, provided he or she is an Eligible Employee.


2.2	Participation Upon Reemployment.


(a)	Vested Participants. The Vested terminated Participant who resumes Employment as an Eligible Employee before January 1, 2012, will resume participation as of the date he or she so resumes Employment.


(b)	Nonvested Participants.


(i)	Before Five-Year Break. The non-Vested terminated Participant who resumes Employment as an Eligible Employee before January 1, 2012, and before he or she incurs a Five-Year Break will resume participation as of the date he or she resumes Employment.


(ii)	After Five-Year Break. The non-Vested terminated Participant who resumes Employment as an Eligible Employee before January 1, 2012, and after he or she has incurred a Five-Year Break will be treated as a new Employee and his or her service completed before such Five-Year Break will be completely disregarded.


(c)	Nonparticipating Employees.


(i)	Before Five-Year Break. The nonparticipating terminated Employee who resumes Employment as an Eligible Employee before January 1, 2012, and before he or she incurs a Five-Year Break will retain credit for his or her Employment before his or her Termination Date for purposes of determining his or her eligibility to begin participating under Section 2.1.

If he or she met the eligibility requirements under Section 2.1 as of his or her Termination Date, he or she will begin participating as of the date he or she resumes Employment as an Eligible Employee.


(ii)	After Five-Year Break. The nonparticipating terminated Employee who resumes Employment as an Eligible Employee before January 1, 2012, and after he or she has incurred a Five-Year Break will be treated as a new Employee under Section 2.1.


(d)	Rules Applicable Starting January 1, 2012. The terminated Participant (whether Vested or nonvested) who resumes Employment as an Eligible Employee on or after January 1, 2012, will resume participation as of the date he or she so resumes Employment in accordance with Section 2.1(b).

2.3

Leased Employees and Independent Contractors. Leased Employees will be treated as employees to the extent required under Code Section 414(n), but will not be eligible to participate in this Plan. If a Leased Employee becomes an employee of the Company or any Controlled Group Member, the Plan will give him or her credit for Years of Vesting Service for the period when he or she worked as a Leased Employee, under the rules described in Sections 1.97 and 2.1 applied as if he or she had been an employee during that period. However, the Plan will not give such credit if (a) the Leased Employee was covered by a money purchase plan sponsored by the leasing organization, with 10% contributions and immediate participation and vesting, and (b) Leased Employees constitute no more than 20% of the Controlled Group’s nonhighly compensated employees. If an individual who has worked for an employer as an independent contractor becomes a common-law employee, or if a court or administrative agency determines that an individual whom an employer has designated as an independent contractor is in fact a common-law employee, he or she will not receive credit for any purpose under the Plan until the date when an employer designates him or her as a common-law employee.


2.4	Adoption of the Plan by an Affiliate. An Affiliate may adopt the Plan by appropriate action of its board of directors or authorized officer(s) or representative(s), subject to approval of the Board. A list of adopting Affiliates is attached hereto as Appendix 2.4.

Prior to January 1, 2012, the Company may permit entities designated as “Affiliates,” that are related to the Company but that may not be Controlled Group Members, to adopt the Plan. In Plan Years when any Affiliate that is not a Controlled Group Member participates in the Plan as an adopting Employer, the Plan will be a multiple employer plan within the meaning of Code Section 413(c), unless the Affiliate limits participation to individuals who participated in the Plan before the Affiliate adopted the Plan.


2.5	Transfers Among Affiliates.


(a)	Transfer from Affiliate. An Employee who has transferred from employment with one or more Affiliates in which he or she was not covered by this Plan will receive Hours of Service credit for Vesting Service for his or her period of service

with the Affiliate(s), under the same rules that would have applied if each such Affiliate had been an adopting Employer; provided such Affiliate was a Controlled Group Member with an Employer while the employee was performing services for that Affiliate. An employee who transfers from a position with one or more Affiliates in which he or she was not covered by this Plan will not receive Benefit Service for any period when he or she was not actually an Eligible Employee covered under this Plan, except as provided in Section 1.96 for benefit service under a Prior Plan or in Section 2.6.

(b)

Transfer to Affiliate. An Employee who transfers from an Employer to an Affiliate that is a Controlled Group Member with an Employer but is not an adopting Employer will continue to receive Hours of Service credit for Vesting Service for his or her period of service with the Affiliate, under the same rules that would apply if the Affiliate were an adopting Employer; provided such Affiliate is a Controlled Group Member while the employee is performing service for that Affiliate. The employee will not receive Benefit Service or Pay Credits for any period after his or her transfer when he or she is not actually an Eligible Employee covered under this Plan document, except as provided in Section 2.6. The Plan will not make any payment to the transferred Participant while he or she is employed by any Affiliate.


2.6	Transfers Between Statutory Employee and Employee Status. This Section 2.6 sets forth provisions that apply to those individuals who transfer between Statutory Employee status and Employee status.

(a)

Credit for Vesting Service. A Statutory Employee who transfers to Employee status will receive credit for Vesting Service under Section 1.97 for his or her period of service as a Statutory Employee of a Controlled Group Member prior to such transfer under the same rules that would have applied if such service had been completed as an Employee. An Employee who transfers to Statutory Employee status will retain any Vesting Service he or she earned under Section 1.97 prior to his or her transfer and will continue to earn such Vesting Service credit for his or her period of service as a Statutory Employee of a Controlled Group Member after such transfer under the same rules that would have applied if such service as a Statutory Employee had been completed as an Employee.

(b)

Credit for Benefit Service. A Statutory Employee will not earn any Benefit Service under this Plan, as described in Section 1.96(a)(v). A Statutory Employee who transfers to Employee status will not accrue any credit for Benefit Service under this Plan for his or her period of service as a Statutory Employee of a Controlled Group Member prior to such transfer, but shall begin to accrue Benefit Service under Section 1.96 only after he or she becomes a Participant under this Plan. If a Participant who is an Employee transfers to Statutory Employee status, he or she will not accrue any credit for Benefit Service under this Plan after his or her transfer occurs, but he or she will retain any Benefit Service he or she earned

under this Plan prior to his or her transfer. If such individual subsequently transfers back to Employee status, he or she will resume accruing Benefit Service under this Plan as of his or her transfer date. No Benefit Service shall be credited for any period of time during which an individual is a Statutory Employee.

(c)

Accrued Benefit. If a Statutory Employee who is a participant in a defined benefit plan of a Controlled Group Member transfers to Employee status, he or she shall retain his or her Accrued Benefit under such defined benefit plan to the extent provided therein, but shall not accrue a benefit under this Plan until he or she becomes a Participant in accordance with Section 2.1. If a Participant who is an Employee transfers to Statutory Employee status, he or she shall retain his or her Accrued Benefit under this Plan, and shall not accrue any additional benefit under this Plan unless and until he or she transfers back to Employee status.

2.7

Participation Freeze. Effective January 1, 2009, the Plan was frozen such that anyone hired or rehired by the Company or an Employer on or after January 1, 2009 (other than as a result of a transfer to an Employer from a Controlled Group Member that was not an Employer), would not be eligible to become a Participant in the Plan and did not accrue a benefit hereunder for any Hours of Service credited on or after that date. A rehired Employee who was Vested or who has not incurred a Five-Year Break on the date he or she was first credited with an Hour of Service after such rehire, would become a Participant in the Plan solely for purposes of being credited with additional Vesting Service. Notwithstanding the foregoing, if a Participant incurred a Termination Date due to a qualified termination as defined in the Voya Severance Pay Plan, as in effect from time to time, and was rehired by the Company or an Employer within six months of his or her Termination Date, he or she once again became a Participant in the Plan and was treated, for purposes of the Plan, as if such Termination Date had not occurred. Effective January 1, 2012, this participation freeze is lifted and anyone hired or rehired by an Employer on or after that date will become a Participant in accordance with Section 2.1 and will participate in the Cash Balance Pension Formula.

ARTICLE 3

RETIREMENT DATES AND BENEFITS


3.1	Normal Retirement.

(a)

Normal Retirement Date. A Participant will become fully Vested in his or her Accrued Benefit on the date he or she reaches Normal Retirement Age while employed with the Employer or any Controlled Group Member. See Appendix 3.1(a) for Normal Retirement Dates under Prior Plans. A Participant’s retirement benefit on his or her Normal Retirement Date will equal the sum of the amounts included under Sections 3.1(b) and (c), as applicable.


(b)	Amount of Normal Retirement Benefit Attributable to Final Average Pay Pension Formula Accrued Benefit. Each Participant who earns any Years of Benefit Service after the 2001 Plan Year and prior to his or her Cash Balance Transition Date will have a Final Average Pay Pension Formula Accrued Benefit equal to the sum of (i) and (ii) (subject to the minimums set forth in Section 3.1(e)), where:


(i)	is the Participant’s Post-2001 Benefit, which is the sum of (A) and (B), multiplied by (C) below, payable as of his or her Normal Retirement Date in the form of a single life annuity, where


(A)	is 1.2% of the Participant’s Final Average Compensation;


(B)	is 0.5% of the Participant’s Final Average Compensation in excess of Covered Compensation; and


(C)	is the Participant’s Years of Benefit Service earned after December 31, 2001 and through (but not beyond) his or her Cash Balance Transition Date; and


(ii)	is the Participant’s Prior Plan Benefit attributable to a Final Average Pay Pension Formula Accrued Benefit, if any, payable as of his or her Normal Retirement Date in the form of a single life annuity.

(c)

Amount of Normal Retirement Benefit Attributable to Cash Balance Pension Formula Accrued Benefit. A Participant’s Account will be used to derive the lump-sum benefit payable to a Participant as a retirement benefit under the Plan. The Account also will be used to derive the Participant’s Cash Balance Pension Formula Accrued Benefit expressed as a single life annuity starting on the Participant’s Normal Retirement Date. Prior to the Participant’s Normal Retirement Date, the Cash Balance Pension Formula Accrued Benefit will be derived by projecting the Participant’s Account Balance to his or her Normal Retirement Date with assumed future Interest Credits at the Interest Credit

Percentage in effect as of the determination date, but with no assumed future Pay Credits) and converting such balance into a single life annuity using the Applicable Interest Rate and Applicable Mortality Table in effect under the Plan as of the determination date. At the Participant’s Normal Retirement Date, the Cash Balance Pension Formula Accrued Benefit (when expressed as a single life annuity) will be derived by converting his or her Account Balance into a single life annuity using the Applicable Interest Rate and Applicable Mortality Table in effect under the Plan on the Normal Retirement Date.

(d)

Offset for Other Pensions. If the Participant is receiving, or upon application would be eligible to receive, an employer-provided benefit under any other qualified defined benefit plan maintained by any Affiliate, that he or she accrued during the same period as he or she earned Benefit Service or Pay Credits under this Plan or benefit service under a Prior Plan, this Plan will reduce his or her monthly benefit amount by the Actuarial Equivalent of the employer-provided benefit he or she is receiving or could receive under such other plan, as calculated on a monthly basis, and to the extent attributable to the period when he or she earned Benefit Service or Pay Credits under this Plan or benefit service under a Prior Plan.


(e)	Minimum Benefits and Adjustments. Notwithstanding any contrary provision, in the case of a Participant who has a Prior Plan Benefit, the following minimums and adjustments shall apply:


(i)	For an AFS Transition Participant:


(A)	If his or her AFS Minimum Benefit Comparison Annuity (as defined in Appendix 3.1(e)) is greater than the sum of:


(1)	that portion of his or her Final Average Pay Pension Formula Accrued Benefit attributable to his or her Post- 2001 Benefit; plus


(2)	that portion of his or her Cash Balance Pension Formula Accrued Benefit attributable to his or her Prior Plan Account Balance;

with each of the above amounts determined as of the Participant’s Termination Date, then the Participant shall be entitled to a retirement benefit based on his or her AFS Minimum Benefit as described in Appendix 3.1(e) in lieu of his or her Final Average Pay Pension Formula Accrued Benefit described in Section 3.1(b) and that portion of his or her Cash Balance Pension Formula Accrued Benefit described in Section 3.1(c) attributable to his or her Prior Plan Account Balance. (For clarity, the Participant also shall remain entitled to a retirement benefit based on his or her

Cash Balance Pension Formula Accrued Benefit described in Section 3.1(c), calculated by disregarding the portion thereof attributable to his or her Prior Plan Account Balance.)


(B)	If his or her AFS Minimum Benefit Comparison Annuity (as defined in Appendix 3.1(e)) is less than the sum of the amounts specified in Section 3.1(e)(i)(A)(1) and (2), above, but greater than the amount specified in Section 3.1(e)(i)(A)(2), above, then the Participant shall be entitled to:


(1)	his or her Net ING Benefit; plus


(2)	his or her AFS Minimum Benefit as described in Appendix 3.1(e);

in lieu of a retirement benefit based on his or her Final Average Pay Pension Formula Accrued Benefit described in Section 3.1(b) and that portion of his or her Cash Balance Pension Formula Accrued Benefit described in Section 3.1(c) attributable to his or her Prior Plan Account Balance. (For clarity, the Participant also shall remain entitled to a retirement benefit based on his or her Cash Balance Pension Formula Accrued Benefit described in Section 3.1(c), calculated by disregarding the portion thereof attributable to his or her Prior Plan Account Balance.)


(C)	Otherwise, no minimums or adjustments shall apply under this Section 3.1(e)(i).


(ii)	For any other Participant with a Prior Plan Benefit, his or her Final Average Pay Pension Formula Accrued Benefit will not be less than his or her Prior Plan Benefit attributable to a Final Average Pay Pension Formula.

In addition, notwithstanding any contrary provision, in no event will the Participant’s Final Average Pay Pension Formula Accrued Benefit be less than the greatest amount he or she could have received as an early retirement benefit under Section 3.3 attributable to his or her Final Average Pay Pension Formula Accrued Benefit at any time between his or her Earliest Retirement Date and his or her Normal Retirement Date. Notwithstanding the foregoing, nothing herein is intended to change the methodology for calculating the amount of the annuity benefit payable before Normal Retirement Date that is attributable to the Account Balance accumulated under the AFS Plan.


(f)	Benefit Commencement Date. The normal retirement benefit will be payable as of the Participant’s Normal Retirement Date.


(g)	Adjustment for Form of Payment. The normal retirement benefit payable to the Participant who receives a form of payment other than the single life annuity will be adjusted as described in Section 4.1.


3.2	Delayed Retirement.


(a)	Delayed Retirement Date. A Participant who continues Employment after his or her Normal Retirement Date will be entitled to receive his or her benefit on his or her Delayed Retirement Date. A Participant’s retirement benefit on his or her Delayed Retirement Date will equal the sum of the amounts included under Sections 3.2(b) and (c), as applicable.


(b)	Amount of Delayed Retirement Benefit Attributable to Final Average Pay Pension Formula Accrued Benefit.


(i)	The Participant who has a Delayed Retirement Date will receive the monthly benefit amount calculated under Section 3.1(b) on the basis of his or her Final Average Compensation, Years of Benefit Service, and Covered Compensation as of his or her Delayed Retirement Date or Cash Balance Transition Date, if earlier (subject to the minimums set forth in Section 3.2(e)).


(ii)	The Participant who continues active Employment after age 70½ will receive the greater of:


(A)	the benefit calculated in accordance with Section 3.2(b)(i) as of his or her Delayed Retirement Date; or


(B)	an Actuarial Equivalent increase in his or her Final Average Pay Pension Formula Accrued Benefit for the period between April 1 following the calendar year in which he or she reaches age 70½ and his or her Delayed Retirement Date.

For purposes of this Section 3.2(b)(ii), “benefit” means the Final Average Pay Pension Formula Accrued Benefit determined under Section 3.2(b)(i) as if benefits had commenced to the Participant on April 1 of the year following the calendar year in which he or she reached age 70½ and any benefits accrued after that date.

(c)

Amount of Delayed Retirement Benefit Attributable to Cash Balance Pension Formula Accrued Benefit. The Participant who has a Delayed Retirement Date will have his or her Account credited with Pay Credits (if applicable) and Interest Credits in accordance with Section 3.9 through the Delayed Retirement Date. At the Participant’s Delayed Retirement Date, the Cash Balance Pension Formula Accrued Benefit (when expressed as a single life annuity starting as of the Participant’s Delayed Retirement Date) will be derived by converting his or her

Account Balance as of the Delayed Retirement Date into a single life annuity using the Applicable Interest Rate and Applicable Mortality Table in effect under the Plan as of the Delayed Retirement Date. Notwithstanding anything in this Section 3.2(c) or the Plan to the contrary, a Participant who continues active Employment after age 70 ½ will receive the greater of:


(i)	his or her Account credited with Pay Credits (if applicable) and Interest Credits in accordance with Section 3.9 through his or her Delayed Retirement Date; or


(ii)	the actuarial equivalent of his or her Account as of the April 1 following the calendar year in which he or she reaches age 70 ½ (plus any cash balance benefits accrued thereafter) as of his or her Delayed Retirement Date.

For purposes of Section 3.2(c)(ii), “actuarial equivalent” for each Plan Year will be determined using only the highest segment rate prescribed by the Internal Revenue Service for purposes of determining lump-sum payments under Code Section 417(e)(3) for the lookback month (as provided in Section 1.12). Mortality or survivorship will not be considered for this purpose.


(d)	Commencement of Delayed Benefit Payments.


(i)	Delayed Benefit Commencement Date. The delayed retirement benefit will be payable on the first day of each month beginning on the Participant’s Delayed Retirement Date.

(ii)

Notice to Participants Who Delay Retirement. The Plan Administrator will provide to each Participant who has a Final Average Pay Pension Formula Accrued Benefit and who delays retirement, no later than one month after his or her Normal Retirement Date, a written notice containing (A) a statement that he or she will not receive any benefit payments until he or she actually retires, but will receive an Actuarial Equivalent increase in his or her Final Average Pay Pension Formula Accrued Benefit for any month between his or her Normal Retirement Date and his or her actual retirement date when he or she earns fewer than 40 Hours of Service, and for any month of active Employment after April 1 following the calendar year in which he or she reaches age 70½, with an offset for the value of his or her continued accruals; (B) an explanation that his or her benefit payments are being suspended because he or she is continuing to earn Compensation; (C) a general description of this provision for delayed retirement and a photocopy of this Plan Section; (D) a statement that applicable Department of Labor Regulations may be found in Section 2530.203-3 of the Code of Federal Regulations; and (E) a statement that the Participant may seek review of his or her benefit suspension by

invoking the claims procedures described in Section 9.15. If the Plan Administrator fails to timely provide this notice to any Participant, his or her Final Average Pay Pension Formula Accrued Benefit will be increased actuarially using the factors described in Section 1.4(c), for the period between his or her Normal Retirement Date and the earlier of the date the notice is given and his or her Termination Date.


(iii)	The Participant’s retirement benefit on his or her Delayed Retirement Date (including the portion thereof attributable to the Participant’s Cash Balance Pension Formula Accrued Benefit, if any) will not be less than the minimum benefit described in Section 3.1(e).


(e)	Minimum Benefit. A Participant’s retirement benefit shall be subject to the minimums and adjustments described in Section 3.1(e).


(f)	Adjustment for Form of Payment. The delayed retirement benefit payable to the Participant who receives a form of payment other than the single life annuity will be adjusted as described in Section 4.1.


3.3	Termination After Earliest Retirement Date.

(a)

Early Retirement Date. A Vested Participant shall be eligible to receive his or her benefit on his or her Earliest Retirement Date (as described in the first paragraph of Section 1.35), provided he or she has incurred a Termination Date on or after attaining his or her Earliest Retirement Date. A Participant’s retirement benefit on his or her Earliest Retirement Date will equal the sum of the amounts included under Sections 3.3(b) and (e), as applicable.


(b)	Amount of Early Retirement Benefit Attributable to Final Average Pay Pension Formula Accrued Benefit. Subject to the minimums and adjustments specified in Section 3.3(h), the amount of the benefit attributable to the Participant’s Final Average Pay Pension Formula Accrued Benefit payable at the Participant’s Early Retirement Date will equal the greater of:


(i)	the Participant’s total Final Average Pay Pension Formula Accrued Benefit (Prior Plan Benefit and Post-2001 Benefit) reduced in accordance with the early retirement reduction factors described in Section 3.3(c) or (d) below, as applicable; or


(ii)	the Participant’s Prior Plan Benefit attributable to a Final Average Pay Pension Formula Accrued Benefit reduced in accordance with the reduction factors described in Appendix 3.3(b)(ii).


(c)	Early Retirement Reduction Factors for Benefits Accrued Between January 1, 2002 and December 31, 2008. For benefits accrued on and after January 1, 2002 and on or before December 31, 2008, a Participant’s Post-2001 Benefit shall

be determined by taking the Participant’s Final Average Compensation on his or her Termination Date, and Years of Benefit Service credited to the Participant for the period January 1, 2002 through and including December 31, 2008, and reducing this benefit by 5/12 of 1% for each whole month by which his or her Benefit Commencement Date precedes the first day of the calendar month on or next following his or her 62nd birthday. This adjustment also shall apply as the adjustment to the Net ING Benefit under Section 3.3(h)(ii)(A) (regardless of when such benefits accrued).

(d)

Early Retirement Reduction Factors for Benefits Accrued On and After January 1, 2009. For benefits accrued on and after January 1, 2009, a Participant’s benefit shall be determined by taking the Participant’s Final Average Compensation on his or her Termination Date and applying the benefit formula as in effect on that date but reflecting only Years of Benefit Service credited to the Participant for the period beginning on or after January 1, 2009 through the Participant’s Termination Date and reducing the benefit by the following reduction factors for a Benefit Commencement Date occurring before the Participant’s Normal Retirement Age, with such reduction factor being based on the Participant’s age, in whole years on the Benefit Commencement Date:

Age Reduction Factor

55 61.20%

56 57.67%

57 53.74%

58 49.38%

59 44.53%

60 33.24%

61 23.14%

62 14.41%

63 7.41%

64 2.46%

65 0.00%

A Participant who has a Benefit Commencement Date that includes whole months shall have the reduction factor applied as follows: (X/12 times the factor from the foregoing chart) times (the factor at the older age plus Y/12 times the factor at the younger age). X equals the number of months remaining to attainment of the next older age, and Y equals the number of months past the most recent attained age. This method is referred to as the “interpolation method” and by way of example only, a person retiring at age 62-3/12 would have his or her reduction factor determined as follows: (3/12 x .0741) + (9/12 x .1441) or .1266.

The benefit determined using this formula shall be added to the benefit determined under Section 3.3(c) to determine the Participant’s total benefit

attributable to the Participant’s Final Average Pay Pension Formula Accrued Benefit payable on his or her Early Retirement Date.

(e)

Amount of Early Retirement Benefit Attributable to Cash Balance Pension Formula Accrued Benefit. The Participant who has an Early Retirement Date will continue to have his or her Account credited with Interest Credits and, if applicable, Pay Credits in accordance with Section 3.9 through his or her Early Retirement Date. The amount of a single life annuity that would be payable to the Participant as of his or her Early Retirement Date is derived by converting his or her Account Balance as of the Early Retirement Date into a single life annuity using the Applicable Interest Rate and Applicable Mortality Table in effect under the Plan as of his or her Early Retirement Date.

(f)

No Change in Methodology. Notwithstanding the foregoing, (i) nothing herein is intended to change (A) the methodology for calculating the amount of the annuity benefit payable before Normal Retirement Date that is attributable to a Prior Plan Account Balance accumulated under the AFS Plan, or (B) a Participant’s frozen benefit under the Reliastar Plan or the Lexington Plan, and (ii) a Participant’s Early Retirement Benefit will not be less than the Participant’s benefit accrued under the applicable Prior Plan as of the earliest of (A) the Participant’s Termination Date, (B) the date as of which benefits were frozen under the applicable Prior Plan, or (C) December 31, 2001 and in any case based on the applicable Prior Plan’s benefit formula and early commencement reduction factors then in effect as described in the applicable Appendix.

(g)

Benefit Commencement Date. The Accrued Benefit of the Participant who retires early will be payable as of the first day of each month beginning on his or her Normal Retirement Date, unless he or she elects to begin payments earlier on the first day of any month on or after his or her Earliest Retirement Date (as described in the first paragraph of Section 1.35). Section 1.14 describes the Participant’s rights to select separate Benefit Commencement Dates for his or her Final Average Pay Pension Formula Accrued Benefit and Cash Balance Pension Formula Accrued Benefit.


(h)	Minimum Benefit. A Participant’s retirement benefit shall be subject to the minimums and adjustments described in Section 3.1(e). An AFS Transition Participant who is entitled to minimum benefit under Section 3.1(e) shall be entitled to the following:

(i)

In the case of an AFS Transition Participant who is entitled to a minimum benefit under Section 3.1(e)(i) in lieu of his or her Final Average Pay Pension Formula described in Section 3.1(b) and that portion of his or her Cash Balance Pension Formula Accrued Benefit described in Section 3.1(c) attributable to his or her Prior Plan Account Balance, his or her AFS Minimum Benefit as described in Appendix 3.1(e).


(ii)	In the case of an AFS Transition Participant who is entitled to a minimum benefit under Section 3.1(e)(ii) in lieu of his or her Final Average Pay Pension Formula described in Section 3.1(b) and that portion of his or her Cash Balance Pension Formula Accrued Benefit described in Section 3.1(c) attributable to his or her Prior Plan Account Balance, the sum of:


(A)	his or her Net ING Benefit reduced for early commencement in accordance with the early retirement reduction factors described in Section 3.3(c) above; plus


(B)	his or her AFS Minimum Benefit as described in Appendix 3.1(e).

(For clarity, the Participant also shall remain entitled to a retirement benefit based on his or her Cash Balance Pension Formula Accrued Benefit described in Section 3.1(c), calculated by disregarding the portion thereof attributable to his or her Prior Plan Account Balance.)


(i)	Adjustment for Form of Payment. The early retirement benefit payable to the Participant who receives a form of payment other than the single life annuity will be adjusted as described in Section 4.1.


3.4	Termination Before Earliest Retirement Date.


(a)	Eligibility for Benefits

(i)

Termination Prior to Becoming Vested. The Participant who incurs a Termination Date before he or she becomes Vested will not receive any benefits under this Plan unless he or she resumes employment with an Employer or Controlled Group Member and becomes Vested after resumption of employment with an Employer or Controlled Group Member. Further, the Accrued Benefit of the terminated non-Vested Participant will be forfeited upon his or her incurring a Termination Date, but shall be restored (and any forfeited Account Balance will be restored with Interest Credits) upon resumption of Employment with an Employer or Controlled Group Member before a Five-Year Break or after December 31, 2011.


(ii)	Termination After Becoming Vested. The Participant who incurs a Termination Date after he or she has become Vested, for any reason other than retirement or death, will be entitled to the monthly Vested termination benefit described in Sections 3.4(b) and (c), as applicable.


(b)	Amount of Vested Termination Benefit Attributable to Final Average Pay Pension Formula Accrued Benefit. The Participant who is Vested and who incurs a Termination Date prior to attaining his or her Earliest Retirement Date (as described in the first paragraph of Section 1.35) will be eligible to receive a

Vested termination benefit starting on or after attaining such Earliest Retirement Date based upon his or her Final Average Pay Pension Formula Accrued Benefit, if any, with monthly payments (when paid as a single life annuity) equal to the Participant’s Final Average Pay Pension Formula Accrued Benefit reduced for early payment in accordance with this Section 3.4(b) if he or she commences benefit payments prior to attaining his or her Normal Retirement Date. His or her Post-2001 Benefit shall be reduced by the factors in Section l.4(c). If he or she receives his or her Final Average Plan Pension Formula Accrued Benefit as an annuity, it will be reduced to an Actuarial Equivalent annuity benefit commencing as of the applicable Benefit Commencement Date. Notwithstanding the foregoing, a Participant’s Vested termination benefit will not be less than the greater of (A) the Participant’s Final Average Pay Pension Formula Accrued Benefit (including any associated Net ING Benefit) accrued as of December 31, 2004 reduced by the early retirement factors described in Section 3.3(b), or (B) the Participant’s benefit accrued under the applicable Prior Plan as of the earliest of (i) the Participant’s Termination Date, (ii) the date as of which benefits were frozen under the applicable Prior Plan, or (iii) December 31, 2001, and in any case based on the applicable Prior Plan’s benefit formula and early commencement reduction factors then in effect as described in Appendix 3.3(b)(ii).

(c)

Amount of Vested Termination Benefit Attributable to Cash Balance Pension Formula Accrued Benefit. The Participant who is Vested and who incurs a Termination Date prior to attaining his or her Earliest Retirement Date (as described in the first paragraph of Section 1.35) will be eligible to receive a Vested termination benefit starting on the first day of the month next following his or her Termination Date, or the first day of any later month (but not later than his or her Normal Retirement Date) based upon his or her Cash Balance Pension Formula Accrued Benefit. The Participant will continue to have his or her Account credited with Interest Credits and, if applicable, Pay Credits in accordance with Section 3.9 through his or her Benefit Commencement Date. The amount of a single life annuity that would be payable to the Participant as of any Benefit Commencement Date is derived by converting his or her Account Balance as of the Benefit Commencement Date into a single life annuity using the Applicable Interest Rate and Applicable Mortality Table in effect under the Plan as of the Benefit Commencement Date.

(d)

Benefit Commencement Date. The Accrued Benefit of the Participant who incurs a Termination Date after completing sufficient Vesting Service to be Vested will be payable as of the first day of each month beginning on his or her Normal Retirement Date, unless he or she elects to begin receiving his or her benefit attributable to his or her Final Average Pay Pension Formula Accrued Benefit or Cash Balance Pension Formula Accrued Benefit early. Section 1.14 describes the Participant’s rights to select separate Benefit Commencement Dates for his or her

Final Average Pay Pension Formula Accrued Benefit and Cash Balance Pension Formula Accrued Benefit.


(e)	Adjustment for Form of Payment. The retirement benefit payable to the Vested terminated Participant who receives a form of payment other than the single life annuity will be adjusted as described in Section 4.1.

3.5

Disability Retirement. This Section will apply to a Participant who incurs a Disability after December 31, 2001 (or after December 31, 1999 for Participants in the LOG Plan (other than the Field Force, as defined in the LOG Plan), the SLD Plan or this Plan) and prior to January 1, 2012. For a Participant who incurs a Disability on or after January 1, 2012, a retirement benefit will not be payable under this Section 3.5, but such Participant will become Vested under Section 1.94 as a result of such Disability and may be entitled to a retirement benefit under Sections 3.1, 3.3, or 3.4, as applicable. In the case of a Participant who incurs a Disability, ceases to be Disabled, and then again incurs a subsequent Disability (whether or not related to the prior Disability), the most recent date of Disability will be considered in determining whether this Section 3.5 applies to the Participant.


(a)	Eligibility.

(i)

Disabled Vested Participant. A Disabled Vested Participant will be entitled to the Final Average Pay Pension Formula Accrued Benefit described in Section 3.1(b)(i) or Cash Balance Pension Formula Accrued Benefit under Section 3.1(b)(ii) so long as he or she continues to be Disabled until the earlier of (A) his or her death, (B) his or her Benefit Commencement Date, or (C) his or her Cash Balance Transition Date. If he or she ceases to be Disabled before his or her Earliest Retirement Date (as described in the first paragraph of Section 1.35), his or her entitlement to imputed benefit accruals is conditioned upon his or her meeting the requirements described in Section 3.5(d).

(ii)

Disabled Non-Vested Participant. The Participant who incurs a Disability before he or she has completed sufficient Vesting Service to be Vested, will continue to receive credit for Vesting Service, for the sole purpose of vesting in his or her Accrued Benefit determined as of his or her Termination Date by reason of the Disability, so long as he or she continues to be Disabled. Once such Participant is Vested, he or she thereafter will be treated as a terminated Vested Participant in accordance with Section 3.4. If the Participant ceases to be Disabled prior to completing sufficient Vesting Service to be Vested and fails to return to employment with an Employer or Controlled Group Member after ceasing to be Disabled, the Participant’s benefit shall be determined pursuant to Section 3.5(d).


(b)	Amount of Retirement Benefit. The Disabled Vested Participant will receive a benefit based on both the Final Average Pay Pension Formula and his or her Account Balance.

(i)

Final Average Pay Pension Formula. If the Disabled Vested Participant has a Disability that continues until his or her Normal Retirement Date, he or she will receive a monthly benefit in the amount he or she would have received as a normal retirement benefit under the Post-2001 Benefit, calculated as if (A) his or her Employment had continued for purposes of Benefit Service until the earliest of (i) his or her Normal Retirement Date, (ii) his or her Benefit Commencement Date, or (iii) his or her Cash Balance Transition Date, and (B) his or her Final Average Compensation and Covered Compensation is determined as of the date his or her Employment terminated by reason of Disability (or his or her Cash Balance Transition Date, if earlier). However, if the sum of the Disabled Vested Participant’s benefit under this Section 3.5(b)(i) (projected to be paid as of his or her Normal Retirement Date) and his or her Prior Plan Benefit described in Section 3.1(b)(ii) is less than his or her AFS Minimum Benefit described in Section 3.1(e), such Disabled Vested Participant shall not be entitled to a benefit under this Section 3.5(b)(i), but instead shall be entitled to his or her AFS Minimum Benefit described in Section 3.1(e). The Disabled Vested Participant may elect to begin receiving his or her benefits described in this Section 3.5(b)(i) early as of the first day of any month on or after he or she reaches his or her Earliest Retirement Date, and his or her benefit will be reduced for early payment under Section 3.3(b).

(ii)

Account Balance. After a Disabled Vested Participant reaches his or her Cash Balance Transition Date, he or she shall be entitled to Pay Credits under Section 3.9 so long as he or she remains eligible under Section 3.5(a)(i). For purposes of determining Pay Credits, a Participant’s Compensation for a given month while he or she remains Disabled shall be deemed to be equal to 1/12 of his or her Final Average Compensation determined as of his or her Termination Date. The Disabled Vested Participant may elect to receive his or her Account Balance in a lump-sum payment, or he or she may elect to receive an annuity form of payment for his or her Account Balance as described in Section 3.4 following the earlier of the date he or she ceases to be Disabled or his or her Normal Retirement Date. Notwithstanding the foregoing, a Disabled Vested Participant whose Prior Plan was the AFS Plan shall not be entitled to a lump-sum payment of the entire Account Balance, but shall be limited to the lump-sum payment described in Appendix 4.1(b).


(iii)	Prior Plan Benefit. A Disabled Vested Participant may elect to receive his or her Prior Plan Benefit on or after his or her Earliest Retirement Date

under such Prior Plan and, if so, the benefit described in Section 3.5(b)(i) will be paid at the later of the same time as the Prior Plan Benefit or his or her Earliest Retirement Date (as described in the first paragraph of Section 1.35).

(c)

Benefit Commencement Date. The retirement benefit will be payable to the Disabled Vested Participant on the first day of each month beginning on his or her Normal Retirement Date, unless he or she is eligible for and elects to begin receiving benefits earlier following his or her Termination Date. Section 1.14 describes the Participant’s rights to select separate Benefit Commencement Dates for his or her Account Balance and for his or her Final Average Pay Pension Formula Accrued Benefit. His or her Final Average Pay Pension Formula Accrued Benefit shall be reduced by the factors in Section 3.3 or Section 3.4, as applicable, if he or she commences benefit payments prior to attaining his or her Normal Retirement Date. If he or she receives the Account Balance as an annuity, such annuity shall be derived by converting his or her Account Balance as of the Benefit Commencement Date into an annuity using the Applicable Interest Rate and Applicable Mortality Table in effect under the Plan as of the Benefit Commencement Date.


(d)	Recovery Without Resumption of Employment.

(i)

Timely Notice of Recovery. The Disabled Vested Participant who recovers from a Disability before his or her Normal Retirement Date, notifies his or her Employer within 30 days after his or her recovery date and offers to immediately resume Employment, but does not resume Employment because his or her Employer does not have a suitable position available (as determined by the Plan Administrator in its sole discretion), will be treated as if he or she earned Benefit Service until his or her recovery date. The recovered Disabled Vested Participant will be entitled to receive the benefit described in Section 3.3 or Section 3.4, as applicable, based on his or her Years of Benefit Service as of his or her recovery date and his or her Final Average Compensation and Covered Compensation as of his or her Termination Date as a result of Disability.


(ii)	Failure to Timely Notify. The Disabled Vested Participant who recovers and either fails to notify his or her Employer within 30 days after his or her recovery date, or refuses to immediately resume Employment, will be treated as if his or her Termination Date occurred on his or her Disability commencement date.

(e)

Forfeiture of Disability Status. The Disabled Vested Participant will not be entitled to the benefits described in this Section 3.5 if his or her Disability results from any of the following: (1) continuing abuse of drugs or alcohol that is not protected under the Americans with Disabilities Act of 1990; (2) injury or disease sustained while willfully participating in acts of violence, riots, civil insurrections

or while committing a felony; (3) injury or disease sustained while serving in any armed forces or as the result of warfare (except to the extent prohibited under USERRA); (4) injury or disease sustained after his or her Termination Date; (5) injury or disease sustained while working for anyone other than an Employer, that is directly attributable to such employment; or (6) intentional, self-inflicted injury.


3.6	Benefits Upon Rehire.

(a)

Suspension of Benefits on Rehire. If an individual is receiving monthly benefit payments from the Plan, and he or she is rehired by an Employer prior to January 1, 2012, and is credited with Benefit Service on or after his or her rehire date, he or she shall have his or her monthly benefit payments suspended as of the first day of the Plan Year immediately following the Plan Year in which the rehired Employee first completes 1,000 Hours of Service. There shall be no suspension of benefits for any individual who is receiving monthly payments at the time he or she is rehired by an Employer if he or she is rehired after December 31, 2011, or if he or she is not credited with Benefit Service subsequent to the rehire date. When the rehired Participant retires again, the Plan will first calculate his or her gross monthly benefit under applicable provisions of the Plan by aggregating all of his or her Years of Benefit Service and based on his or her Final Average Compensation as of his or her subsequent Benefit Commencement Date. For Participants whose benefits first commence or who are reemployed on or after August 1, 2005, that gross monthly benefit shall be reduced by the actuarial equivalent value (determined as of his or her subsequent Benefit Commencement Date) of the retirement payments previously made to him or her; provided, however, that the monthly benefit payable in the form of a single life annuity at the subsequent Benefit Commencement Date will in no event be less than the monthly benefit payable in the form of a single life annuity at the immediately preceding Benefit Commencement Date. Actuarial Equivalence for this purpose is based on interest only using the same rate as used for the Interest Credit Percentage, but not more than 7.0%. If the initial Benefit Commencement Date was before the Participant’s Normal Retirement Date, he or she will be permitted to elect a different form of payment after his or her subsequent retirement; otherwise he or she will not. The retired Participant who becomes a common-law employee of an Affiliate will be treated as if he or she had resumed Employment.


(b)	No Repayment of Account Balance. The Participant who terminates Employment for any reason, receives a cash out of his or her Account Balance and resumes Employment with an Employer, will not be permitted to repay his or her cash out. He or she will resume Employment with a zero Account Balance.


(c)	Notice to Participants Whose Payments are Suspended. The Plan Administrator will provide to each Participant who retires, begins receiving monthly retirement benefits, and then resumes Employment and has his or her payments suspended under Section 3.6(a), no later than one month after the

suspension date, a written notice containing (1) a statement that he or she will not resume benefit payments until he or she again incurs a Termination Date, but will receive an Actuarial Equivalent increase in his or her Final Average Pay Pension Formula Accrued Benefit for any month between his or her Normal Retirement Date and his or her actual retirement date when he or she earns fewer than 40 Hours of Service, and for any month of active Employment after April 1 following the calendar year in which he or she reaches age 70½, with an offset for the value of his or her continued accruals; (2) an explanation that his or her benefit payments are being suspended because he or she is continuing to earn Benefit Service; (3) a general description and a photocopy of Section 3.6; (4) a statement that applicable Department of Labor Regulations may be found in Section 2530.203-3 of the Code of Federal Regulations; and (5) a statement that the Participant may seek review of his or her benefit suspension by invoking the claims procedures described in Section 9.15. If the Plan Administrator fails to timely provide this notice to any Participant, his or her Final Average Pay Pension Formula Accrued Benefit will be increased actuarially, using the factors described in Section 1.4(c), for the period between his or her suspension date and the earlier of the date the notice is given and his or her Termination Date.


3.7	Cost-of-Living Increase. The Plan will not make post-retirement adjustments to benefits accrued after December 31, 2001 except as described in Appendix 3.7.

3.8

No Duplication of Benefits. A Participant shall not be entitled to earn a benefit under this Plan and a benefit under another retirement plan (“Other Benefit Plan”) maintained or sponsored by a Controlled Group Member (“Other Controlled Group Plan”) for the same period of employment, except for a retirement benefit based solely on contributions made by the Participant to the Other Controlled Group Plan by way of salary deferral. If a Participant accrues a benefit under an Other Benefit Plan for any period of service for which he or she is entitled to a benefit under this Plan, the Accrued Benefit determined under this Article 3 shall be reduced by the amount of such other benefit. For purposes of determining the amount of the reduction, the Accrued Benefit under this Plan shall be reduced by the single life annuity benefit payable at the same time to the Participant under any Other Benefit Plan, and if the benefit under the Other Benefit Plan is not payable in the single life annuity form or at the same time, it shall be converted to a single life annuity benefit payable at the same time as the benefit under this Plan using the actuarial equivalence factors in Section 1.4(a). If a reduction in benefits is also called for in such Other Benefit Plan or Plans, the reduction shall be made in the order in which the Participant participated in such plans, with the reduction being made first in the plan in which the Participant participated last before his or her retirement and there will be no reduction to the benefit payable under the first plan in which the Participant participated.


3.9	Cash Balance Accounts; Pay and Interest Credits.


(a)	Cash Balance Account. A notional Account will be maintained for each Participant who is an Eligible Employee after December 31, 2011, as an

accounting device used to determine his or her Cash Balance Pension Formula Accrued Benefit, the retirement benefit payable to such Participant, and the survivor benefit payable to his or her Beneficiary.

A Participant’s Account will have a balance of zero dollars plus, if applicable, the balance of his or her Prior Plan Account Balance when it is first established on behalf of the Participant. Thereafter, the Account of a Participant who is an Eligible Employee will be credited with Pay Credits in accordance with (b), below, and the Account of any Participant (regardless of whether he or she is then an Employee or Eligible Employee) will be credited with Interest Credits in accordance with (c), below. For the avoidance of doubt, effective January 1, 2017, the Participant’s Account as of the Participant’s Benefit Commencement Date used to derive the lump-sum benefit and Cash Balance Pension Formula Accrued Benefit shall be no less than the sum of the Pay Credits to such Participant’s Account, reduced to reflect the value of any prior distributions and any other amounts to the extent that such amounts may be disregarded pursuant to Treas. Reg. Section 1.411(b)(5)-1(d)(2).

When a Participant receives (or starts to receive or is deemed to have received) payment of a retirement benefit attributable to his or her Cash Balance Pension Formula Accrued Benefit, then the balance of his or her Account will be reduced to zero dollars.

(b)

Pay Credits. The Account of a Participant who was an Eligible Employee and participating under the Final Average Pay Pension Formula on December 31, 2011, will be credited for each month beginning after his or her Cash Balance Transition Date during which he or she is an Eligible Employee for all or a portion of such month with an amount (called a “Pay Credit”) equal to 4% of the Compensation paid to him or her during that month. The Account of any other Participant who becomes (or again becomes) an Eligible Employee after December 31, 2011 will be credited each month during which he or she is an Eligible Employee for all or a portion of such month with a Pay Credit equal to 4% of the Compensation paid to him or her during that month. Pay Credits will be added to the Participant’s Account as of the last day of the month.

(c)

Interest Credits. The Account of any Participant (regardless of whether he or she is then an Employee or Eligible Employee) will be credited with interest (called an “Interest Credit”) as of the last day of each calendar month at a rate equal to 1/12 of the Interest Credit Percentage in effect for the Plan Year rounded to the nearest six decimal places (with the resulting Account Balance then rounded to the nearest two decimal places). Notwithstanding the above, the interest rate used to calculate the Interest Credit on the Prior Plan Account Balance attributable to the AFS Plan shall not be less than 1/12 of the annual rate specified in Appendix 3.1(b)(ii). The Interest Credit will be calculated on the balance of the Account as of the first day of the month (which includes the Pay Credit for the prior month,

but not the Pay Credit for the current month). Except in the case of a Prior Plan Account, interest will not be credited prior to a Participant’s Cash Balance Transition Date.

ARTICLE 4
PAYMENT OF BENEFITS


4.1	Forms of Payment. The forms of payment provided by the Plan are described below.

(a)

Normal Form. The Normal Form of benefit payable to the unmarried Participant will be the single life annuity described in Section 4.1(b)(i). The Normal Form of benefit payable to the married Participant will be the qualified joint and survivor annuity, which is the 50% joint and survivor annuity described in Section 4.1(b)(ii) with the Spouse as the Beneficiary. If a benefit is payable as a monthly annuity and the Participant’s Benefit Commencement Date precedes his or her Earliest Retirement Date (as described in the first paragraph of Section 1.35), the only form available is the Normal Form, except as otherwise provided in Section 4.1(b)(ii). A Participant whose Benefit Commencement Date is on or after his or her Earliest Retirement Date (as described in the first paragraph of Section 1.35), may select an Optional Form described in Section 4.1(b). A Participant whose Benefit Commencement Date precedes his or her Earliest Retirement Date and who has a Spouse or Domestic Partner may select an Optional Form that is a joint and survivor annuity with a survivor percentage of 50% or 75% as described in Section 4.1(b)(ii). Unless the Participant is eligible to and elects one of the Optional Forms described in Section 4.1(b), the Plan will pay his or her Accrued Benefit in his or her Normal Form. See Appendix 4.1(a) for special rules.

(b)

Optional Forms. Except as otherwise provided below, the following Optional Forms of payment are available only if the Participant’s Benefit Commencement Date is on or after his or her Earliest Retirement Date (as described in the first paragraph of Section 1.35). An eligible Participant may elect an Optional Form only in accordance with the procedures described in Section 4.3. A Participant may separately elect from the Optional Forms described in this Section 4.1(b), using the procedures described in Section 4.3 for his or her (i) entire Accrued Benefit, (ii) Final Average Pay Pension Formula Accrued Benefit, or (iii) Cash Balance Pension Formula Accrued Benefit. Further, a Participant who was a Participant in a Prior Plan may separately elect from the Optional Forms described in this Section 4.1(b), using the procedures described in Section 4.3 for his or her (i) entire Accrued Benefit, (ii) Prior Plan Benefit or AFS Minimum Benefit, (iii) Prior Plan Account Balance, or (iv) Net ING Benefit. A Participant who was a Participant in a Prior Plan may elect from the applicable optional forms described in Appendix 4.1(b), using the procedures described in Section 4.3, for his or her Prior Plan Benefit only. The Joint and Survivor Annuity and the Term Certain and Life Annuity will be the Actuarial Equivalent (based on the factors in Section 1.4(a)) of the benefit payable to the Participant as single life annuity as of the Benefit Commencement Date.


(i)	Single Life Annuity. The single life annuity attributable to the Final Average Pay Pension Formula Accrued Benefit is a monthly benefit in the

amount determined under the applicable provisions of Article 3, beginning on the Participant’s Benefit Commencement Date and payable throughout his or her lifetime, ending with the last payment due on the first day of the month in which his or her death occurs.

The single life annuity attributable to the Cash Balance Pension Formula Accrued Benefit is a monthly benefit in an amount determined by converting the Participant’s Account Balance as of the Benefit Commencement Date into a single life annuity using the Applicable Interest Rate and Applicable Mortality Table in effect under the Plan as of the Benefit Commencement Date.

(ii)

Joint and Survivor Annuity. The joint and survivor annuity is a reduced monthly benefit beginning on the Participant’s Benefit Commencement Date and payable throughout his or her lifetime, with either 50%, 66 2/3%, 75% or 100%, as elected by the Participant, of that monthly amount continuing for life to his or her surviving Spouse or Domestic Partner beginning on the first day of the month following the month in which the Participant’s death occurs. A Participant with a Spouse or Domestic Partner may elect a joint and survivor annuity with a 50% or 75% survivor percentage with his or her Spouse or Domestic Partner as the Beneficiary even if his or her Benefit Commencement Date precedes his or her Earliest Retirement Date. A married Participant may not select a Beneficiary other than his or her Spouse.

(iii)

Term Certain and Life Annuity. The term certain and life annuity is a reduced monthly benefit beginning on the Participant’s Benefit Commencement Date and payable throughout his or her lifetime, ending with the last payment due on the first day of the month preceding the month in which his or her death occurs. If the Participant dies within the period certain that he or she elected (five years or ten years) following his or her Benefit Commencement Date, payments will continue to his or her Beneficiary for the remainder of the guaranteed period. If the Participant named multiple Beneficiaries, the Plan will pay the Actuarial Equivalent of the remaining monthly payments in lump-sum payments to the surviving Beneficiary(ies), in the amounts or percentages designated by the Participant. If there is a single Beneficiary and he or she dies within the guaranteed payment period, the Plan will pay the Actuarial Equivalent of the remaining monthly payments in a lump sum to the Participant’s surviving contingent beneficiary if any, or if none then to the Beneficiary’s surviving named beneficiary if any, or if none then to the Beneficiary’s estate. If the Beneficiary is not a natural person, for example, a trust or an estate, the Actuarial Equivalent lump-sum value of the remaining payments due to such Beneficiary, using the factors in Section 1.4(a), will be paid to the Beneficiary in a lump sum.

(iv)

Elective Lump Sum for Account Balance and Immediate Annuity. A Vested Participant (other than with respect to a Prior Plan Account Balance attributable to the AFS Plan) may elect to receive his or her Account Balance in a single lump-sum payment or in monthly annuity payments as of the Benefit Commencement Date described in Section 1.14(a), regardless of its value and his or her age on his or her Termination Date. Additionally, if a Participant is entitled to and does elect to receive his or her entire Account Balance in a lump sum and the Actuarial Equivalent lump-sum value of the Participant’s Final Average Pay Pension Formula Accrued Benefit is $5,000 or less, the Participant may elect to receive his or her entire Accrued Benefit in an Actuarial Equivalent lump sum or in an Immediate Annuity as of the first day of any month after his or her Termination Date. Except as provided in this Section 4.1(b)(iv), Section 4.1(b)(v), Section 4.1(c), and Section 4.2, the Plan will pay the Final Average Pay Pension Formula portion of a Participant’s Accrued Benefit in an annuity form.


(v)	Limited Lump Sum for AFS Minimum Benefit or AFS Prior Plan Account Balance, and Immediate Annuity. A Participant whose Prior Plan was the AFS Plan shall have a limited lump-sum option with respect to his or her AFS Minimum Benefit or Prior Plan Account attributable to the AFS Plan as described in Appendix 4.1(b).

(vi)

Full Lump Sum for Certain Former USLICO Plan Participants. A Participant who is a former employee of the International Trust Company of Liberia or its subsidiaries, whose Prior Plan Benefit includes benefits under the USLICO Plan and who is a Liberian citizen and resides in Liberia at the time of his or her Benefit Commencement Date may elect to receive his or her entire Vested Accrued Benefit in a single lump-sum payment or an Immediate Annuity as of the first day of any month after his or her Termination Date.


(c)	Automatic Lump Sum.


(i)	Not Over $5,000. If a Participant’s vested Accrued Benefit has a lump-sum Actuarial Equivalent value not greater than $5,000 after his or her Termination Date, the Plan will pay his or her entire benefit in the form of a lump-sum payment, made as soon as administratively practicable after the Termination Date, as follows:


(A)	If the Participant makes an affirmative election to receive a distribution, the distribution will be paid in cash to the Participant;


(B)	If the Participant makes an affirmative election of a direct rollover under Section 4.6, the distribution will be paid in cash to the eligible retirement plan or Roth IRA designated by the Participant

(a direct rollover may be in the form of an electronic transfer of funds to the eligible retirement plan or Roth IRA, or a check made payable to such eligible retirement plan or Roth IRA but delivered to the Participant); or


(C)	If the Participant fails to make an affirmative election to receive a distribution or a direct rollover, then:


(1)	If the Participant has attained his/her Normal Retirement Age, or if the cash-out value of his/her Accrued Benefit does not exceed $1,000 (regardless of the age of Participant), the distribution will be paid in cash to the Participant.


(2)	Otherwise, the distribution will be paid in cash to an individual retirement account or annuity established for the benefit of the Participant with a financial institution designated for this purpose by the Plan Administrator in accordance with the requirements of Code Section 401(a)(31)(B).

If the cash-out value of the Participant’s Accrued Benefit exceeds $5,000 at the Participant’s Termination Date, but subsequently falls below such amount prior to Benefit Commencement Date (for example, because of a change in the Applicable Interest Rate or the Applicable Mortality Table then in effect), the Plan Administrator may then direct that a direct rollover be made pursuant to paragraph (1) or (2), as applicable.

Notwithstanding anything in the Plan or the applicable Appendix to the contrary, this Section 4.1(c)(i) applies to all Participants, regardless of whether such Participant’s benefits are determined under the terms of this Plan, a prior version of this plan or a prior plan that merged into this Plan.

In the event benefit payments have begun to a Participant or surviving Spouse, and the Accrued Benefit had a lump-sum Actuarial Equivalent value no greater than $5,000 as of the Benefit Commencement Date, the Plan Administrator will cash out the remaining benefit only if the Participant and his or her Spouse, or his or her surviving Spouse if the Participant is deceased, consent in writing. The Plan Administrator need not obtain consent from a non-Spouse Beneficiary.

(ii)

Constructive Cash Out. Regardless of the present value of his or her Accrued Benefit, each non-Vested Participant will be treated as having received a constructive cash out of his or her entire Accrued Benefit as of his or her Termination Date. In the case of a Participant who has not incurred a Five-Year Break prior to January 1, 2012 and resumes Employment, he or she will be treated as having repaid his or her constructive cash out as of the date he or she resumes Employment.

4.2

Opportunity to Cash Out Annuity Benefit. A Participant who was employed by the Bank of Liberia, is a Liberian citizen, currently resides in Liberia, and who immediately before the effective date of this Section 4.2 was receiving his or her benefits in an annuity form of payment may elect (with the consent of his or her Spouse, if any) to receive a lump-sum payment in lieu of the remainder of such annuity payments. The lump sum shall be paid as soon as practicable after the election is received and the amount payable shall be equal to the Actuarial Equivalent (determined as of the date as of which such lump sum is paid) of the remainder of the annuity payable to such Participant and any survivor benefits associated with that annuity form of payment. The Participant shall be provided with an explanation of the lump-sum benefit and his or her right to waive the remainder of the annuity payments containing the same information required to be provided under Section 4.3(a) and (b).

4.3

Election Procedures. Subject to the Spousal consent requirements described below, the Participant may elect, or revoke a previous election and make a new election, within the 90-day period ending on his or her Benefit Commencement Date, to receive his or her benefit in the Normal Form described in Section 4.1(a) or in one of the Optional Forms described in Section 4.1(b). A Participant may make a separate election for his or her (i) entire Accrued Benefit, (ii) Final Average Pay Pension Formula Accrued Benefit, or (iii) Cash Balance Pension Formula Accrued Benefit. Further, a Participant who has a Prior Plan Benefit may make a separate benefit election with respect to the components of his or her Accrued Benefit as follows: (1) his or her entire Accrued Benefit, (2) his or her Account Balance and his or her Final Average Pay Pension Formula Accrued Benefit, (3) his or her Prior Plan Benefit (including his or her Prior Plan Account Balance) and his or her Net ING Benefit, or (4) his or her Account Balance, his or her Prior Plan Benefit attributable to the Final Average Pay Pension Formula and his or her Net ING Benefit. No Participant will receive more than one annuity form of payment unless he or she has both a Final Average Pay Pension Formula Accrued Benefit and Cash Balance Pension Formula Accrued Benefit and he or she elects a different payment form for each, or he or she has a Prior Plan Benefit and elects an annuity form with respect to that Prior Plan Benefit or his or her Prior Plan Account Balance. The election cannot be changed after the Benefit Commencement Date. Each election must be in writing on a form prescribed by the Plan Administrator. If the Beneficiary is not the Participant’s Spouse, the Participant may not elect any option unless the present value of the payments expected to be made to him or her complies with the incidental death benefit rule under Code Section 401(a)(9)(G).

(a)

Explanation of Normal Form Annuity. The Plan Administrator will provide to each Participant a written explanation of the Normal Form annuity and in the case of a married Participant, the joint and 50% survivor annuity and the joint and 75% survivor annuity, no more than 90 days nor less than 30 days before his or her intended retirement date. The written communication will explain (1) the terms and conditions of each annuity; (2) the Participant’s right to waive, and the effect of an election to waive the annuity; (3) the right of the Participant’s Spouse (if any) to refuse to consent to a waiver of the annuity; and (4) the right to revoke an election to waive the annuity, and the effect of a revocation of such election and such other information as is required to be provided under the applicable regulations.

(b)

Waiver of the Normal Form Annuity. The Participant may elect to waive the Normal Form annuity, and may revoke any such election, during the election period. Each election must be in writing and (1) must be signed by the Participant, and his or her Spouse (if any); (2) the Spouse’s consent must acknowledge the effect of the election and that he or she cannot later revoke the waiver; (3) the Spouse’s consent must specifically approve each named Beneficiary and each elected optional form of payment; and (4) the Spouse’s consent must be witnessed by a notary public or Plan representative. Spousal consent will not be required if the Participant provides the Plan Administrator with a decree of abandonment or legal separation, or with evidence satisfactory to the Plan Administrator in its sole discretion that he or she cannot obtain consent because he or she has been unable to locate his or her Spouse after reasonable effort. If the Spouse is incompetent, the Spouse’s legal guardian may give consent, even if the guardian is the Participant. If the Participant does not submit a valid waiver by the end of his or her election period, the Plan will pay his or her benefit in his or her Normal Form.


(c)	Election Period. The election period required by Code Section 417 for waiving the Normal Form will begin on the date the Participant receives the written explanation required under Section 4.3(a) and will end on his or her Benefit Commencement Date. The Participant and Spouse, if any, may affirmatively waive the 30-day election period but must have an election period of at least seven days.


(d)	Effect of Election of a Joint and Survivor Annuity of at Least 50%. The married Participant who elects to receive a joint and survivor annuity with his or her Spouse as his or her joint annuitant with a survivor percentage of 50% or more will not be required to have his or her Spouse’s notarized, written consent to make the election.


4.4	Effect of Death on Forms of Payment.

(a)

Death of Participant Before Benefits Begin. If the Participant’s benefit is payable in any form with a survivor benefit and he or she dies before his or her Benefit Commencement Date, his or her Spouse, Domestic Partner or other Beneficiary will not be entitled to any benefits under any such form. His or her surviving Spouse or Domestic Partner will be entitled only to the preretirement death benefit payable under Article 5. However, if the Participant elected a joint and survivor annuity with his or her Spouse or Domestic Partner as joint annuitant and a survivor percentage of 50% or more but died before his or her Benefit Commencement Date and, effective January 1, 2008, within 90 days after he or she submitted his or her election, the Plan will pay the elected survivor benefit to the surviving Spouse or Domestic Partner.


(b)	Death of Participant After Benefits Begin. If the Participant dies after his or her benefits have begun, no death benefit will be payable except to the extent provided under the form of benefit he or she was receiving at the time of his or her death.

(c)

Death of Spouse or Beneficiary Before Benefits Begin. If the Participant’s benefit is payable in any form with a survivor benefit and his or her Spouse or designated Beneficiary dies before his or her Benefit Commencement Date, the survivor form of payment will not become effective, and he or she will instead receive his or her retirement benefit as a single life annuity unless he or she properly elects another form before his or her Benefit Commencement Date.


(d)	Death of Spouse or Beneficiary After Benefits Begin. If the Participant’s benefit has begun in any form with a survivor benefit and his or her Spouse or other Beneficiary dies before he or she does, he or she will continue to receive his or her benefit in the same form.


4.5	Required Distribution Rules. All distributions will be subject to the requirements of Appendix 4.5, Minimum Required Distributions.

4.6

Direct Rollover of Eligible Payments. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee’s election under this Section 4.6, a distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan or to an individual retirement plan described in Code Section 408(A)(b) (a “Roth IRA”) specified by the distributee in a direct rollover. The distributee must timely provide in writing all information required to effect the transfer. The PAC or its administrative delegate will provide timely notice of the right to make a direct rollover. However, any lump-sum payment less than $200 will not be eligible for direct rollover.

(a)

Eligible Rollover Distribution. An eligible rollover distribution is any distribution or withdrawal of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: (1) any payment that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee’s designated beneficiary, or for a specified period of ten years or more; (2) any payment to the extent such payment is required under Code Section 401(a)(9); (3) the portion of any payment that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities); and (4) any amount that is distributed on account of hardship. A portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax employee contributions which are not includible in gross income. However, effective January 1, 2007, such portion may be transferred only to an individual retirement account or annuity described in Code Sections 408(a) or (b), to a Roth IRA or to a qualified defined contribution plan described in Code Section 401(a) or 403(a) or an annuity contract described in Code Section 403(b) that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible.

(b)

Eligible Retirement Plan. An eligible retirement plan is (1) an individual retirement account described in Code Section 408(a), (2) an individual retirement annuity described in Code Section 408(b), (3) an annuity plan described in Code Section 403(a), (4) a qualified trust described in Code Section 401(a), (5) an annuity contract described in Code Section 403(b) and (6) an eligible plan under Code Section 457(b) which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this Plan. The definition of eligible retirement plan shall also apply in the case of a distribution to a surviving Spouse, or to a Spouse or former Spouse who is the alternate payee under a qualified domestic relation order, as defined in Code Section 414(p). For a Beneficiary who is not the Participant’s Spouse or former Spouse, an eligible retirement plan is an individual retirement account described in Code Section 408(a) or an individual retirement annuity described in Code Section 408(b), each of which is established for the purpose of receiving such distribution on behalf of such Beneficiary and is treated as an inherited individual retirement account or individual retirement annuity (within the meaning of Code Section 408(d)(3)(C)) for purposes of Code Section 402(c)(11).


(c)	Distributee. A distributee includes an Employee or former Employee, the Employee’s or former Employee’s surviving Spouse and any Beneficiary.


(d)	Direct Rollover. A direct rollover is a payment by the Plan to the eligible retirement plan or Roth IRA specified by the distributee.


4.7	Payment on Participant’s Behalf.

(a)

Payment to the Participant’s Representative. If the Participant is incompetent to handle his or her affairs on his or her Benefit Commencement Date or thereafter, or cannot be located after reasonable effort, the Plan Administrator will make payments to his or her court-appointed personal representative, or if none is appointed, the Plan Administrator may in its sole discretion make payments to his or her next-of-kin or the person the Plan Administrator reasonably believes to be handling the financial affairs of the incompetent Participant. All such payments shall be in full satisfaction of the Plan’s obligations to the Participant.

(b)

Payment to Minor or Incompetent Beneficiaries. In the event the deceased Participant’s Beneficiary is a minor, or is legally incompetent, or cannot be located, the Plan Administrator will make payment to the court-appointed guardian or representative of such Beneficiary, or to a trust established for the benefit of such Beneficiary, as applicable. If no guardian or representative is appointed, and no trust is established, the Plan will defer payment until the Beneficiary reaches majority or becomes legally competent under applicable State law.


(c)	Judicial Determination. In the event the Plan Administrator considers it necessary, it may have a court of applicable jurisdiction determine to whom payments should be made, in which event all expenses incurred in obtaining the determination may be charged against the payee.

4.8

Unclaimed Benefits. In the event the Plan Administrator cannot locate any person entitled to receive the Participant’s Vested Accrued Benefit, with reasonable effort and after a period of five years, his or her interest will be canceled but will be reinstated within 60 days after the date he or she is located by the Plan Administrator, as required under Treas. Reg. Section 1.401(a)-14(d) or any other applicable law. The Plan Administrator will pay any required retroactive payment in accordance with Section 4.10.

4.9

Correction of Mistakes. In the event the Plan Administrator discovers that a mistake has been made in the calculation of the benefit amount payable to any Participant or other payee, it will correct the mistake as soon as practicable such that all future payments are in the correct amount. If an overpayment in monthly payments has been made, the Plan Administrator may take such action as it deems appropriate to recover the overpayment including reducing future monthly benefit payments to the extent necessary to recover the overpayment within a reasonable period of time. If an underpayment in monthly payments has been made, the Plan Administrator either will pay the Actuarial Equivalent lump-sum value of the underpayment in a single sum, or will increase future monthly benefit payments to the extent necessary to pay the Actuarial Equivalent value of the

underpayment within a reasonable period of time. If an underpayment has been made in a lump sum, the Plan Administrator will pay the Actuarial Equivalent value of the underpayment in a single sum. However, if the Plan Administrator determines that the burden or expense of seeking recovery of any overpayment would be greater than the potential recovery warrants, either to the Plan or to the payee, the Plan Administrator may, in its sole discretion, forego recovery efforts.

4.10

Retroactive Benefit Commencement Date. In the event a Participant has notified the Company of his or her intent to retire and commence benefit payments prior to the Benefit Commencement Date elected by the Participant, or the Participant is involuntarily terminated by the Company for any reason at a time when he or she is eligible to retire under the Plan on his or her Termination Date, and in either case the Plan Administrator is unable to provide the Participant with the qualified joint and survivor explanation required under Code Section 417(e)(3) prior to the Benefit Commencement Date elected by the Participant, the Participant may elect a retroactive annuity starting date; provided, however, such retroactive annuity starting date election must satisfy all of the following requirements: (a) such retroactive annuity starting date is not earlier than the earliest date on which the Participant could otherwise have started receiving benefits under the terms of the Plan, (b) the spousal consent requirements of Code Section 417(e) are satisfied, (c) the retroactive annuity starting date is substituted for the annuity starting date for all purposes of determining the benefit payable to the Participant, and (d) the distribution and benefit election otherwise satisfies all requirements of Code Section 417(e) and the regulations promulgated thereunder.

ARTICLE 5
PRERETIREMENT DEATH BENEFITS


5.1	Participant with Spouse or Domestic Partner. The surviving Spouse or Domestic Partner of a Participant who dies before his or her Benefit Commencement Date will receive the preretirement death benefit as described in this Section.

(a)

Coverage for Surviving Spouse or Domestic Partner. The preretirement death benefit coverage will become effective on the later of (1) the date the Participant becomes Vested, or (2) the date he or she becomes married or has a Domestic Partner relationship. Each non-Vested Participant or Employee who dies while employed with the Employer or a Controlled Group Member will become fully Vested as of his or her date of death. The coverage will remain in effect until the earliest of (1) the date the Participant is no longer married or has a Domestic Partner, (2) the Participant’s date of death, or (3) the Participant’s Benefit Commencement Date, which, as described in Section 1.14, may be different for his or her Final Average Pay Pension Formula Accrued Benefit and Cash Balance Pension Formula Accrued Benefit. The surviving Spouse or Domestic Partner of the Participant who receives his or her Account Balance in a lump sum or annuity and dies before the Benefit Commencement Date for his or her Final Average Pay Pension Formula Accrued Benefit, will receive that benefit as described in Section 5.1(b)(i). The coverage will remain in effect whether or not the Participant continues in Employment. The Plan will provide the death benefit without reduction in the benefit payable to the Participant or surviving Spouse or Domestic Partner to account for the cost of coverage.


(b)	Amount of Preretirement Death Benefit. A surviving Spouse or Domestic Partner who is entitled to a benefit under this Section 5.1 will be entitled to the following:

(i)

With respect to a Participant’s Final Average Pay Pension Formula Accrued Benefit, the surviving Spouse or Domestic Partner will be entitled to an annuity for his or her life that is the Actuarial Equivalent of the annuity that would have been paid as a survivor annuity under the 50% joint and survivor annuity based on the Participant’s Final Average Pay Pension Formula Accrued Benefit as of the earlier of his or her Termination Date or date of death, commencing as of the Benefit Commencement Date specified in Section 5.1(d). However, if the Participant elected a joint and survivor annuity with his or her Spouse or Domestic Partner as joint annuitant and a survivor percentage of 50% or more, but died before his or her Benefit Commencement Date and within 90 days of such election, the surviving Spouse or Domestic Partner will be eligible to receive the survivor portion of the annuity as elected, calculated as though the Participant had retired on his or her date of death and died immediately thereafter.

In lieu of the annuity described above, the surviving Spouse or Domestic Partner may elect to receive a lump-sum payment of the full preretirement benefit attributable to the Participant’s Final Average Pay Pension Formula Accrued Benefit, which lump sum shall be the Actuarial Equivalent of the annuity benefit described above starting as of the same Benefit Commencement Date.

(ii)

With respect to a Participant’s Cash Balance Pension Formula Accrued Benefit, the surviving Spouse or Domestic Partner will be entitled to an annuity for his or her life with a monthly benefit in an amount determined by converting the Participant’s Account Balance as of the Benefit Commencement Date specified in Section 5.1(d) into a single life annuity using the Applicable Interest Rate and Applicable Mortality Table in effect under the Plan as of such Benefit Commencement Date.

In lieu of such annuity, the surviving Spouse or Domestic Partner may elect to receive a lump-sum payment of the full preretirement death benefit attributable to the Participant’s Cash Balance Pension Formula Accrued Benefit, which lump sum shall equal the Participant’s Account Balance. Notwithstanding the foregoing, for the surviving Spouse or Domestic Partner of a Participant whose Prior Plan is the AFS Plan, this lump-sum option shall be limited to that portion of the Participant’s Prior Plan Account Balance that the Participant (had he or she survived) could have received as a lump sum (this is, it will not include that portion of his or her Prior Plan Account Balance that was not available as a lump-sum distribution under Appendix 4.1(b)).

If so permitted of Participants by the Company, a Participant who has a Spouse or Domestic Partner may designate a different Beneficiary to receive all or a portion of the preretirement death benefit attributable to his or her Cash Balance Pension Formula Accrued Benefit, in which case such portion of the death benefit shall be paid as provided in Section 5.2(b) in lieu of such portion of the benefit being paid under this Section 5.1(b)(ii). In the case of a married Participant, appropriate consent of his or her Spouse is required in accordance with Code Section 417 in order to designate a different Beneficiary.

The Plan will apply the Code Section 415 limitations described in Section 6.1 to the Spouse’s benefit, as if the Spouse were the Participant.

(c)

Cash Out of Small Benefits. If the lump-sum value of the preretirement death benefit described in Section 5.1(b) (combining the benefit attributable to the Final Average Pay Pension Formula Accrued Benefit and Cash Balance Pension Formula Accrued Benefit, as applicable) is not greater than $5,000 (or such other dollar amount as may be specified in Code Section 411(a)(11)(A)), the preretirement death benefit will be paid to the surviving Spouse or Domestic

Partner in a lump sum as soon as practicable after the Plan Administrator has received proof of death and the identity and whereabouts of the surviving Spouse or Domestic Partner are known to the Plan Administrator. From time to time, the Plan Administrator may recalculate the present values of the benefits of Vested surviving Spouses or Domestic Partners whose benefits are not in pay status, based on the Applicable Interest Rate and the Applicable Mortality Table then in effect, and make lump-sum payments of those that are not over $5,000.

(d)

Benefit Commencement Date for Preretirement Death Benefit. Subject to Section 5.1(c), the preretirement death benefit normally will be payable to the surviving Spouse or Domestic Partner as of the Participant’s Normal Retirement Date (or the first day of the month following the Participant’s death if he or she dies on or after his or her Normal Retirement Date). However, the surviving Spouse or Domestic Partner may elect to receive the preretirement death benefit as of the following earlier date:

(i)

With respect to the preretirement death benefit attributable to the Participant’s Final Average Pay Pension Formula Accrued Benefit, the first day of any month following the later of (A) the date of the Participant’s death, or (B) the Participant’s Earliest Retirement Date, but not later than Participant’s Normal Retirement Date if he or she dies prior to such date. If the surviving Spouse or Domestic Partner elects to start the preretirement death benefit prior to the Participant’s Normal Retirement Date, the 50% joint and survivor annuity that is used to derive the preretirement death benefit shall be that which would have been paid had the Participant elected to start his or her retirement benefit early, with early commencement reduction factors determined under Sections 3.3 or 3.4, as applicable.


(ii)	With respect to the preretirement death benefit attributable to the Participant’s Cash Balance Pension Formula Accrued Benefit, the first day of any month after the date of the Participant’s death, but not later than the Participant’s Normal Retirement Date if he or she dies prior to such date.

5.2

Unmarried Participant Without Domestic Partner. The Beneficiary of the Participant (a) who completes at least one Hour of Service in Employment with an Employer after December 31, 2001, (b) who is in active Employment with an Employer or is Vested, (c) who dies before his or her Benefit Commencement Date, and (d) who does not have a Spouse or Domestic Partner on his or her date of death, will be entitled to the following:


(a)	With respect to a Participant’s Final Average Pay Pension Formula Accrued Benefit, the Beneficiary will be entitled to a lump-sum payment that is the Actuarial Equivalent of the life annuity that would have been payable to a surviving Spouse or Domestic Partner under Section 5.1(b)(i), assuming a surviving Spouse or Domestic Partner that is the same age as the Beneficiary (or,

if the Beneficiary is not a natural person, assuming a surviving Spouse or Domestic Partner that is the same age as the Participant).

(b)

With respect to a Participant’s Cash Balance Pension Formula Accrued Benefit, the Beneficiary will be entitled to a lump-sum payment equal to the Participant’s Account Balance. Notwithstanding the foregoing, for the surviving Spouse or Domestic Partner of a Participant whose Prior Plan is the AFS Plan, this lump-sum option shall be limited to that portion of the Participant’s Prior Plan Account Balance that the Participant (had he or she survived) could have received as a lump sum (this is, it will not include that portion of his or her Prior Plan Account Balance that was not available for lump-sum payment under Appendix 4.1(b)).

If the Actuarial Equivalent lump-sum value of the preretirement death benefit is not greater than $5,000 (or such other dollar amount as may be specified in Code Section 411(a)(11)(A)), the Plan will pay the entire benefit to the Beneficiary in a lump sum as soon as practicable after the Plan Administrator has received proof of death and the identity and whereabouts of the Beneficiary are known to the Plan Administrator. From time to time, the Plan Administrator may recalculate the Actuarial Equivalent lump-sum value that are not in pay status, based on the Applicable Interest Rate and the Applicable Mortality Table then in effect, and make lump-sum payments of those that are not over $5,000. Otherwise, payment to a Beneficiary who is not a surviving Spouse or Domestic Partner will be made at the earliest time payment could be made to a surviving Spouse or Domestic Partner under Section 5.1(d)(i) or (ii), as applicable.

5.3

USERRA. Effective January 1, 2007, in the case of a Participant who, had he lived would have had reemployment rights with an Employer under Chapter 43 of Title 38, United States Code, dies while performing qualified military service (as defined in Code Section 414(u)), the Beneficiary of such Participant shall be entitled to any additional benefits (other than benefit accruals relating to the period of qualified military service) provided under the Plan had the Participant resumed and then terminated employment on account of death.

ARTICLE 6

LIMITATIONS ON BENEFIT AMOUNTS AND TOP HEAVY PROVISIONS


6.1	Code Section 415 Limits.

(a)

General and Effective Date. In no event will the annual benefits accrued, distributed, or otherwise payable in any optional form (including the Normal Form) to any Participant, exceed the Code Section 415 Limit described in this Section 6.1 and the regulations under Code Section 415. The provisions of this Section 6.1 will apply to Participants who have an Hour of Service after December 31, 2007 for Limitation Years beginning on or after July 1, 2007. Subject to Section 6.1(d)(i), the Accrued Benefit of (1) each Participant whose Benefit Commencement Date was on or before December 31, 2007 (to the extent of the benefit accrued before January 1, 2008), and (2) each Participant who does not complete an Hour of Service after December 31, 2007 (without regard to whether his or her Benefit Commencement Date is after December 31, 2007) will be determined by applying the terms of Section 6.1, Code Section 415 Limits, as in effect on December 31, 2007 as if the limitations of Code Section 415 continued to include the limitations of Code Section 415 as in effect on December 31, 2007. If a Participant described in clause (1) above is reemployed after December 31, 2007, the limitations of Section 6.1 as applicable to Participants who complete an Hour of Service after December 31, 2007 will apply to his or her recalculated benefit. Notwithstanding the first sentence of this Section 6.1, benefits accrued or payable as of December 31, 2007 will satisfy this Section 6.1; provided that such benefits satisfied the Code Section 415 Limits as in effect on December 31, 2007.


(b)	Applicable Definitions. For purposes of this Section, the following terms will have the meanings set forth below.


(i)	Adjusted Accrued Benefit means the Participant’s Accrued Benefit after the adjustments described in Section 6.1(c), which is the amount to which the Code Section 415 Limit will be applied.


(ii)	Code Section 415 Limits means, for each Participant, the least of:


(A)	The Dollar Limit, which is $160,000 (as adjusted, as of the first day of each Limitation Year in accordance with Code Section 415 (d)), with the indexed limit for each Limitation Year applied to benefits that first commence in such year;


(B)	The Percentage Limit, which is 100% of his or her average Compensation, as defined below, for the three consecutive calendar years when his or her Compensation was highest; or


(C)	Other. Such limitations as may be set forth in Treasury Regulations from time to time.

(iii)

Compensation means, for purposes of the Participant’s Code Section 415 Limit, for each calendar year all amounts received from the Employer for his or her performance of services and reported as taxable income on his or her Form W-2, within the meaning of Treas. Regs. Section 1.415(c)- 2(d)(4), for such year and will also include salary reduction amounts under Code Sections 125, 132(f) and 401(k) for such year, but such compensation shall not exceed the limitation under Code Section 401(a)(l7) that applies to such year.

Amounts received after severance from employment with the Employer are taken into account only to the extent required by Treas. Reg. Section 1.415(c)-2(e).

Effective for years beginning after December 31, 2008, a Participant receiving a differential wage payment (as described in Code Section 414(u)(12)) shall be treated as an employee of the Employer making the differential wage payment for purposes of this Plan and the differential wage payment shall be treated as Compensation.


(iv)	Controlled Group has the same meaning as in Section 1.28, except that “50%” is substituted for “80%” with respect to the definition of “Controlled Group Member.” For purposes of the Code Section 415 Limit, all Controlled Group Members will be considered to be a single Employer.


(v)	Limitation Year means the Plan Year.


(c)	Calculation of the Adjusted Accrued Benefit. Before application of the Code Section 415 Limit, each Participant’s Accrued Benefit will be adjusted as follows:


(i)	Reduction for Early Retirement. If the Participant begins receiving benefit payments before age 62, the amount of his or her annual payments will be multiplied by the early retirement reduction factor described in Section 3.3(b).


(ii)	Aggregation of Benefits. If the Participant has participated in any other qualified defined benefit plan maintained by an Employer or a Controlled Group Member, his or her accrued benefit under each such plan will be aggregated with his or her Accrued Benefit under this Plan.


(iii)	Other Factors. The calculation of the Participant’s Adjusted Accrued Benefit will include any other relevant provision in the Plan, or requirement of law, in effect from time to time.


(iv)	Adjusted Accrued Benefit. The product of the steps in Section 6.1(c)(i), (ii) and (iii) will be the Participant’s Adjusted Accrued Benefit for purposes of applying the Code Section 415 Limit.


(d)	Adjustments to the Code Section 415 Limits. The Participant’s Code Section 415 Limit, which will be applied to reduce his or her Adjusted Accrued Benefit, if necessary, will be adjusted by any of the following circumstances that apply to him or her.


(i)	Grandfathered Code Section 415 Limit. For benefits the Participant accrued under any qualified plan maintained by an Employer or Controlled Group Member before the 1987 Plan Year, his or her Section 415 Limit will not be less than the following amount(s):


(A)	Pre-1983 Accrued Benefit. If, before 1983, the Participant had participated in one or more qualified defined benefit plans to which an Employer or Controlled Group Member contributed, his or her Code Section 415 limit will not be reduced to an amount less than his or her aggregate accrued benefit under such plan(s) as of the first day of the 1982 limitation year under such plan(s).


(B)	Pre-1987 Accrued Benefit. If, before 1987, the Participant had participated in one or more qualified defined benefit plans to which an Employer or Controlled Group Member contributed, his or her Code Section 415 Limit will not be reduced to an amount less than his or her aggregate accrued benefit under such plan(s) as of the first day of the 1986 limitation year under such plan(s).

(ii)

Form of Payment. The Code Section 415 Limit is determined by reference to benefits payable in the form of the single life annuity or the Spousal joint and survivor annuity (as described in Treas. Reg. Section 1.415(b)-1(c)(4)(i)(A)). If benefits are paid in any other form (other than a form to which Code Section 417(e)(3) applies), the Participant’s Code Section 415 Limit will be adjusted such that it is the greater of:


(A)	the actuarial equivalent single life annuity commencing at the same Benefit Commencement Date as the form of benefit payable to the Participant using the Plan’s factors for determining Actuarial Equivalence in Section 1.4(a); or


(B)	the actuarial equivalent single life annuity commencing at the same Benefit Commencement Date as the form of benefit payable to the Participant using an interest rate of 5% and the Applicable Mortality Table for that Benefit Commencement Date.

If the benefit is payable in a form to which Code Section 417(e)(3) applies, the actuarially equivalent single life annuity benefit is the greatest of:


(A)	The annual amount of the single life annuity commencing at the Benefit Commencement Date that has the same actuarial present value as the particular form of benefit payable, computed using the Plan’s factors for Actuarial Equivalence in Section 1.4(a);


(B)	The annual amount of the single life annuity commencing at the Benefit Commencement Date that has the same actuarial present value as the particular form of benefit payable, computed using a 5.5% interest assumption and the Applicable Mortality Table; or


(C)	The annual amount of the single life annuity commencing at the Benefit Commencement Date that has the same actuarial present value as the particular form of benefit payable (computed using the Applicable Interest Rate and Applicable Mortality Table, divided by 1.05).

(iii)

Reduced Limit for Early Retirement. If the Participant begins benefit payments before age 62, his or her Code Section 415 Dollar Limit will be the lesser of: (A) the Code Section 415 Dollar Limit multiplied by the ratio of the annual amount of the single life annuity commencing at his or her Benefit Commencement Date, over the annual amount of the single life annuity commencing at age 62 (both determined without regard to the Code Section 415 limits), or (B) an actuarial equivalent reduction from age 62 to his or her age as of his or her Benefit Commencement Date, using a 5% interest rate assumption and the Applicable Mortality Table for the Benefit Commencement Date.

No adjustment will be made to reflect the probability of a Participant’s death after the Benefit Commencement Date and before age 62.

(iv)

Increased Limit for Late Retirement. For a Participant whose Benefit Commencement Date is after his or her attainment of age 65, the Code Section 415 Dollar Limit will be the lesser of: (A) the Code Section 415 Dollar Limit multiplied by the ratio of the annual amount of the immediately commencing single life annuity payable to the Participant (ignoring accruals after age 65) using the actuarial adjustments in Section 1.4(c) over the annual amount of the single life annuity that would have been payable at age 65, or (B) the Code Section 415 Dollar Limit actuarially increased using a 5% interest rate assumption and the Applicable Mortality Table for that Benefit Commencement Date. For these purposes, mortality between age 65 and the age at which benefits commence shall be ignored.


(v)	Reduced Limit for Fewer Than 10 Years of Participation.


(A)	Dollar Limit. The Dollar Limit for the Participant who has fewer than ten years of participation in the Plan will be computed by multiplying the limit described in Section 6.1(b)(ii)(A) (as adjusted) by a fraction, the numerator of which is the number of his or her whole and partial years of participation and the denominator of which is ten.


(B)	Percentage Limit. The Percentage Limit for the Participant who has earned fewer than ten Years of Vesting Service, will be computed by multiplying the amount of his or her average Compensation for his or her three highest years by a fraction, the numerator of which is the number of his or her whole and partial Years of Vesting Service and the denominator of which is ten.

(vi)

Special Rules for an Adjusted Accrued Benefit Not in Excess of $10,000. If the Participant’s Adjusted Accrued Benefit is not greater than $10,000, the full amount may be paid whether or not that amount exceeds his or her Percentage Limit, but only if (A) his or her annual benefit has not exceeded $10,000 in any previous Plan Year, and (B) he or she has never participated in a defined contribution plan maintained by the Employer. If he or she elects a form of payment other than the single life annuity or Spousal joint and survivor annuity, his or her Adjusted Accrued Benefit will not be reduced by the Actuarial Equivalent factor for his or her elected form of payment described in Section 4.1.

(e)

Combining of Plans. For purposes of applying the limitations described in this Section, all defined benefit plans maintained by any Employer or a Controlled Group Member (whether or not terminated) will be treated as one defined benefit plan. The Percentage Limit will be applied separately to each defined benefit plan and will be applied under each plan by using the same period of consecutive calendar years (not more than three) as the period when the Participant’s Compensation was greatest.


(f)	Compliance With Code Section 415. The intent of this Section 6.1 is that the maximum benefit payable to each Participant will be exactly equal to the maximum amount permitted under Code Section 415. If there is any discrepancy between this Section 6.1 and Code Section 415, then Code Section 415 will prevail.


6.2	Restrictions on Benefits of Twenty-Five Highest-Paid Participants.


(a)	Restricted Participants. In each Plan Year, the total number of Participants whose benefit payments are restricted under this Section 6.2 is limited to the 25 highly compensated employees and former employees (within the meaning of

Code Section 414(q)) with the greatest Compensation in the current or any prior Plan Year (the restricted Participants).

(b)

Restricted Amount. For each Plan Year, the amount of benefits payable to each restricted Participant will be limited to the annual amount that would be payable in the single life annuity form, unless either: (1) the value of Plan assets remaining after payment to such Participant is at least 110% of the value of current liabilities, or (2) the value of benefits paid to such Participant is less than 1% of the value of current liabilities.


(c)	Security for Restricted Amount. In lieu of the restrictions described in this Section 6.2, and to the extent permitted by applicable law, the Plan may permit each restricted Participant to provide security for any payments that exceed the annual amount that would have been payable as a single life annuity.


(d)	Restriction Upon Plan Termination. In the event the Plan terminates, the benefits payable to the restricted Participants will be limited to an amount that is not discriminatory under Code Section 401(a)(4).


6.3	Funding-Based Limitations.

(a)

Limitations Applicable If the Plan’s Adjusted Funding Target Attainment Percentage Is Less Than 80 Percent, But Not Less Than 60 Percent. Notwithstanding any other provisions of the Plan, if the Plan’s adjusted funding target attainment percentage for a Plan Year is less than 80% (or would be less than 80% to the extent described in Section 6.3(a)(ii) below) but is not less than 60%, then the limitations set forth in this Section 6.3(a) apply.

(i)

50 Percent Limitation on Single Sum Payments, Other Accelerated Forms of Distribution, and Other Prohibited Payments. A participant or beneficiary is not permitted to elect, and the Plan shall not pay, a single sum payment or other optional form of benefit that includes a prohibited payment with an annuity starting date on or after the applicable section 436 measurement date, and the Plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits or any other payment or transfer that is a prohibited payment, unless the present value of the portion of the benefit that is being paid in a prohibited payment does not exceed the lesser of: (A) 50% of the present value of the benefit payable in the optional form of benefit that includes the prohibited payment; or (B) 100% of the PBGC maximum benefit guarantee amount (as defined in Treas. Regs. Section 1.436-1(d)(3)(iii)(C)).

The limitation set forth in this Section 6.3(a)(i) does not apply to any payment of a benefit which under Code Section 411(a)(11) may be immediately distributed without the consent of the participant. If an optional form of benefit that is otherwise available under the terms of the

Plan is not available to a participant or beneficiary as of the annuity starting date because of the application of the requirements of this Section 6.3(a)(i), the participant or beneficiary is permitted to elect to bifurcate the benefit into unrestricted and restricted portions (as described in Treas. Regs. Section 1.436-1(d)(3)(iii)(D)). The participant or beneficiary may also elect any other optional form of benefit otherwise available under the Plan at that annuity starting date that would satisfy the 50%/PBGC maximum benefit guarantee amount limitation described in this Section 6.3(a)(i), or may elect to defer the benefit in accordance with any general right to defer commencement of benefits under the Plan.

(ii)

Plan Amendments Increasing Liability for Benefits. No amendment to the Plan that has the effect of increasing liabilities of the Plan by reason of increases in benefits, establishment of new benefits, changing the rate of benefit accrual, or changing the rate at which benefits become nonforfeitable shall take effect in a Plan Year if the adjusted funding target attainment percentage for the Plan Year is: (A) Less than 80%; or (B) 80% or more, but would be less than 80% if the benefits attributable to the amendment were taken into account in determining the adjusted funding target attainment percentage.

The limitation set forth in this Section 6.3(a)(ii) does not apply to any amendment to the Plan that provides a benefit increase under a Plan formula that is not based on compensation, provided that the rate of such increase does not exceed the contemporaneous rate of increase in the average wages of participants covered by the amendment.


(b)	Limitations Applicable If the Plan’s Adjusted Funding Target Attainment Percentage Is Less Than 60 Percent. Notwithstanding any other provisions of the Plan, if the Plan’s adjusted funding target attainment percentage for a Plan Year is less than 60%, then the limitations in this Section 6.3(b) apply.

(i)

Single Sums, Other Accelerated Forms of Distribution, and Other Prohibited Payments Not Permitted. A participant or beneficiary is not permitted to elect, and the Plan shall not pay, a single sum payment or other optional form of benefit that includes a prohibited payment with an annuity starting date on or after the applicable section 436 measurement date, and the Plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits or any other payment or transfer that is a prohibited payment. The limitation set forth in this Section 6.3(b)(i) does not apply to any payment of a benefit which under Code Section 411(a)(11) may be immediately distributed without the consent of the participant.


(ii)	Benefit Accruals Frozen. Benefit accruals under the Plan shall cease as of the applicable section 436 measurement date. In addition, if the Plan is

required to cease benefit accruals under this Section 6.3(b)(ii), then the Plan is not permitted to be amended in a manner that would increase the liabilities of the Plan by reason of an increase in benefits or establishment of new benefits.

(c)

Limitations Applicable If the Plan Sponsor Is In Bankruptcy. Notwithstanding any other provisions of the Plan, a participant or beneficiary is not permitted to elect, and the Plan shall not pay, a single sum payment or other optional form of benefit that includes a prohibited payment with an annuity starting date that occurs during any period in which the Plan Sponsor is a debtor in a case under title 11, United States Code, or similar Federal or State law, except for payments made within a Plan Year with an annuity starting date that occurs on or after the date on which the Plan’s enrolled actuary certifies that the Plan’s adjusted funding target attainment percentage, determined, for Plan Years beginning on or after January 1, 2015, without regard to Code Section 430(h)(2)(C)(iv), for that Plan Year is not less than 100%. In addition, during such period in which the Plan Sponsor is a debtor, the Plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits or any other payment or transfer that is a prohibited payment, except for payments that occur on a date within a Plan Year that is on or after the date on which the Plan’s enrolled actuary certifies that the Plan’s adjusted funding target attainment percentage, determined, for Plan Years beginning on or after January 1, 2015, without regard to Code Section 430(h)(2)(C)(iv), for that Plan Year is not less than 100%. The limitation set forth in this Section 6.3(c) does not apply to any payment of a benefit which under Code Section 411(a)(11) may be immediately distributed without the consent of the participant.


(d)	Provisions Applicable After Limitations Cease to Apply.

(i)

Resumption of Prohibited Payments. If a limitation on prohibited payments under Section 6.3(a)(i), Section 6.3(b)(i), or Section 6.3(c) applied to the Plan as of a section 436 measurement date, but that limit no longer applies to the Plan as of a later section 436 measurement date, then that limitation does not apply to benefits with annuity starting dates that are on or after that later section 436 measurement date.

(ii)

Resumption of Benefit Accruals. If a limitation on benefit accruals under Section 6.3(b)(ii) applied to the Plan as of a section 436 measurement date, but that limitation no longer applies to the Plan as of a later section 436 measurement date, then benefit accruals shall resume prospectively and that limitation does not apply to benefit accruals that are based on service on or after that later section 436 measurement date, except as otherwise provided under the Plan. The Plan shall comply with the rules relating to partial years of participation and the prohibition on

double proration under Department of Labor regulation 29 CFR Section 2530.204-2(c) and (d).

(iii)

Treatment of Plan Amendments That Do Not Take Effect. If a Plan amendment does not take effect as of the effective date of the amendment because of the limitation of Section 6.3(a)(ii) or Section 6.3(b)(ii), but is permitted to take effect later in the same Plan Year (as a result of additional contributions or pursuant to the enrolled actuary’s certification of the adjusted funding target attainment percentage for the Plan Year that meets the requirements of Treas. Regs. Section 1.436- 1(g)(5)(ii)(C)), then the Plan amendment must automatically take effect as of the first day of the Plan Year (or, if later, the original effective date of the amendment). If the Plan amendment cannot take effect during the same Plan Year, then it shall be treated as if it were never adopted, unless the Plan amendment provides otherwise.


(e)	Notice Requirement. See Section 101(j) of ERISA for rules requiring the Plan administrator of a single employer defined benefit pension Plan to provide a written notice to participants and beneficiaries within 30 days after certain specified dates if the Plan has become subject to a limitation described in Section 6.3(a)(i), Section 6.3(b), or Section 6.3(c).

(f)

Methods to Avoid or Terminate Benefit Limitations. See Code Sections 436(b)(2), (c)(2), (e)(2), and (f) and Treas. Regs. Section 1.436-1(f) for rules relating to employer contributions and other methods to avoid or terminate the application of the limitations set forth in Sections 6.3(a) through 6.3(b) for a Plan Year. In general, the methods a Plan Sponsor may use to avoid or terminate one or more of the benefit limitations under Sections 6.3(a) through 6.3(b) for a Plan Year include employer contributions and elections to increase the amount of Plan assets which are taken into account in determining the adjusted funding target attainment percentage, making an employer contribution that is specifically designated as a current year contribution that is made to avoid or terminate application of certain of the benefit limitations, or providing security to the Plan.


(g)	Special Rules.


(i)	Rules of Operation for Periods Prior to and After Certification of Plan’s Adjusted Funding Target Attainment Percentage.

(A)

In General. Code Section 436(h) and Treas. Regs. Section 1.436- 1(h) set forth a series of presumptions that apply (1) before the Plan’s enrolled actuary issues a certification of the Plan’s adjusted funding target attainment percentage for the Plan Year; and (2) if the Plan’s enrolled actuary does not issue a certification of the Plan’s adjusted funding target attainment percentage for the Plan Year before the first day of the 10th month of the Plan Year (or if

the Plan’s enrolled actuary issues a range certification for the Plan Year pursuant to Treas. Regs. Section 1.436-1(h)(4)(ii) but does not issue a certification of the specific adjusted funding target attainment percentage for the Plan by the last day of the Plan Year). For any period during which a presumption under Code Section 436(h) and Treas. Regs. Section 1.436-1(h) applies to the Plan, the limitations under Sections 6.3(a) through 6.3(c) are applied to the Plan as if the adjusted funding target attainment percentage for the Plan Year were the presumed adjusted funding target attainment percentage determined under the rules of Code Section 436(h) and Treas. Regs. Section 1.436-1(h)(1), (2), or (3). These presumptions are set forth in Section 6.3(g)(i)(B) through (D).

(B)

Presumption of Continued Underfunding Beginning First Day of Plan Year. If a limitation under Section 6.3(a), (b) or (c) applied to the Plan on the last day of the preceding Plan Year, then, commencing on the first day of the current Plan Year and continuing until the Plan’s enrolled actuary issues a certification of the adjusted funding target attainment percentage for the Plan for the current Plan Year, or, if earlier, the date Section 6.3(g)(i)(C) or Section 6.3(g)(i)(D) applies to the Plan: (1) The adjusted funding target attainment percentage of the Plan for the current Plan Year is presumed to be the adjusted funding target attainment percentage in effect on the last day of the preceding Plan Year; and (2) The first day of the current Plan Year is a section 436 measurement date.

(C)

Presumption of Underfunding Beginning First Day of Fourth Month. If the Plan’s enrolled actuary has not issued a certification of the adjusted funding target attainment percentage for the Plan Year before the first day of the fourth month of the Plan Year and the Plan’s adjusted funding target attainment percentage for the preceding Plan Year was either at least 60% but less than 70% or at least 80% but less than 90%, or is described in Treas. Regs. Section 1.436-1(h)(2)(ii), then, commencing on the first day of the fourth month of the current Plan Year and continuing until the Plan’s enrolled actuary issues a certification of the adjusted funding target attainment percentage for the Plan for the current Plan Year, or, if earlier, the date Section 6.3(g)(i)(D) applies to the Plan: (1) The adjusted funding target attainment percentage of the Plan for the current Plan Year is presumed to be the Plan’s adjusted funding target attainment percentage for the preceding Plan Year reduced by 10 percentage points; and (2) The first day of the fourth month of the current Plan Year is a section 436 measurement date.

(D)

Presumption of Underfunding On and After First Day of Tenth Month. If the Plan’s enrolled actuary has not issued a certification of the adjusted funding target attainment percentage for the Plan Year before the first day of the tenth month of the Plan Year (or if the Plan’s enrolled actuary has issued a range certification for the Plan Year pursuant to Treas. Regs. Section 1.436-1(h)(4)(ii) but has not issued a certification of the specific adjusted funding target attainment percentage for the Plan by the last day of the Plan Year), then, commencing on the first day of the tenth month of the current Plan Year and continuing through the end of the Plan Year: (1) The adjusted funding target attainment percentage of the Plan for the current Plan Year is presumed to be less than 60 percent; and (2) The first day of the tenth month of the current Plan Year is a section 436 measurement date.


(ii)	Plan Termination, Certain Frozen Plans, and Other Special Rules.


(A)	Plan Termination. The limitations on prohibited payments in Section 6.3(a)(i), Section 6.3(b)(i), and Section 6.3(c) do not apply to prohibited payments that are made to carry out the termination of the Plan in accordance with applicable law. Any other limitations under this section of the Plan do not cease to apply as a result of termination of the Plan.

(B)

Exception to Limitations on Prohibited Payments Under Certain Frozen Plans. The limitations on prohibited payments set forth in Sections 6.3(a)(i), 6.3(b)(i), and 6.3(c) do not apply for a Plan Year if the terms of the Plan, as in effect for the period beginning on September 1, 2005, and continuing through the end of the Plan Year, provide for no benefit accruals with respect to any participants. This Section 6.3(g)(ii)(B) shall cease to apply as of the date any benefits accrue under the Plan or the date on which a Plan amendment that increases benefits takes effect.


(iii)	Special Rules Under PRA 2010.

(A)

Payments Under Social Security Leveling Options. For purposes of determining whether the limitations under Section 6.3(a)(i) or 6.3(b)(i) apply to payments under a social security leveling option, within the meaning of Code Section 436(j)(3)(C), the adjusted funding target attainment percentage for a plan year shall be determined in accordance with the “Special Rule for Certain Years” under Code Section 436(j)(3) and any Treasury Regulations or other published guidance thereunder issued by the Internal Revenue Service.

(B)

Limitation on Benefit Accruals. For purposes of determining whether the accrual limitation under Section 2(c) applies to the Plan, the adjusted funding target attainment percentage for a Plan Year shall be determined in accordance with the “Special Rule for Certain Years” under Code Section 436(j)(3) (except as provided under section 203(b) of the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010, if applicable).


(iv)	Interpretation of Provisions. The limitations imposed by this section of the Plan shall be interpreted and administered in accordance with Code Section 436 and Treas. Regs. Section 1.436-1.

(h)

Definitions. The definitions in the following Treasury Regulations apply for purposes of Sections 6.3(a) through 6.7(g): Section 1.436-1(j)(1) defining adjusted funding target attainment percentage; Section 1.436-1(j)(2) defining annuity starting date; Section 1.436-1(j)(6) defining prohibited payment; Section 1.436-1(j)(8) defining section 436 measurement date; and Section 1.436-1(j)(9) defining an unpredictable contingent event and an unpredictable contingent event benefit.


6.4	Top Heavy Rules.

(a)

Determination. The Plan Administrator, as of each December 31 (the “determination date”), will determine whether the Plan is “top heavy”. If the sum of the present value of the Accrued Benefits of “key employees” (as defined in Code Section 416(i)(1)) exceeds 60% of the sum of the present value of the Accrued Benefits of all Employees under this Plan as of such determination date (all as determined in accordance with the rules of Code Section 416), this Plan will be “top heavy” for the Plan Year that begins on the immediately following January 1. The present value of the Accrued Benefit of an Employee shall be determined using the actuarial assumptions specified in Section 1.4(c) and shall equal, as of any determination date, the sum of:


(i)	the present value of such Employee’s cumulative Accrued Benefit under this Plan (determined, for this purpose, as of the most recent valuation date used for computing plan cost under Code Section 412 which falls within the 12-month period ending on such determination date) plus any distributions made during the lookback period (as defined below) ending on such determination date; and


(ii)	the present value of such Employee’s accrued benefit, if any (determined as of the valuation date which coincides with or precedes the determination date for such plan) under:


(A)	each other qualified plan (as described in Code Section 401(a)) maintained by a member of the Controlled Group (i) in which a “key employee” is a participant, or (ii) which enables the Plan to meet the requirements of Code Section 401(a)(4) or Code Section 410, and


(B)	each other qualified plan maintained by a member of the Controlled Group (other than a plan described in clause (A)) that may be aggregated with this Plan and the plans described in clause (A), provided such aggregated group (including a plan described in this clause (B)) continues to meet the requirements of Code Section 401(a)(4) and Code Section 410,

plus any distributions made from such plans during the lookback period ending on such determination date. The accrued benefit of an Employee shall be disregarded for purposes of making the determination called for under this Section 6.4 if such Employee has not performed any services for any Employer at any time during the 1-year period ending on the date as of which such determination is made.

The “lookback period” for this purpose means the one year period ending on the determination date. Distributions under a terminated plan which, had it not been terminated, would have been aggregated with the Plan under Code Section 416(g)(2)(A)(i) made during the lookback period also are taken into account. In the case of a distribution made for a reason other than severance from employment, death, or disability, this provision shall be applied by substituting “five-year period” for “one-year period”.


(b)	Special Top Heavy Plan Rules. If the Plan Administrator determines that this Plan is “top heavy” for any Plan Year, the special rules set forth in this Section 6.4(b) shall apply for such Plan Year notwithstanding any other rules to the contrary set forth elsewhere in this Plan.

(i)

Minimum Benefits. The Accrued Benefit of each Participant who is not a “key employee” and who completes at least 1,000 Hours of Service during such Plan Year shall not, in the aggregate, be less than the product of (A) 2% of the Participant’s average compensation (as defined under Code Section 415) for the five consecutive years beginning after December 31, 1984 during which the Participant had the highest aggregate compensation from a Controlled Group Member (excluding compensation for years after the last year for which the Plan is “top heavy”), and (B) the Participant’s total years of service, not to exceed ten, completed after December 31, 1984 (excluding years in which the Plan is not “top heavy”). Accruals required under this Section 6.4(b)(i) by reason of this Plan being “top heavy” shall be offset by the Actuarial Equivalent value of the

contributions and forfeitures, if any, allocated on behalf of the Participant under any defined contribution plan (which is taken into account under this Section 6.4) solely by reason of such plan being “top heavy.” No accruals shall be permitted under this Section 6.4(b)(i) for any Plan Year in which the contributions and forfeitures allocated on behalf of the Participant under any such defined contribution plan equal at least 5% of the Participant’s compensation.

For purposes of satisfying the minimum benefit requirement of Code Section 416(c)(1) and this Plan, in determining years of service with a Controlled Group Member, any service with a Controlled Group Member shall be disregarded to the extent that such service occurs during a Plan Year when this Plan benefits (within the meaning of Code Section 410(b)) no key employee or former key employee.


(ii)	Vesting. A Participant’s nonforfeitable interest in his or her Accrued Benefit under this Plan shall be determined under the following schedule:

Completed Years Nonforfeitable
of Service Interest

Less than 2 0

2 20%

3 40%

4 60%

5 or more 100%

However, the vesting schedule set forth in this Section 6.4(b)(ii) shall not apply to any Participant who does not have an Hour of Service after the date as of which this Plan becomes “top heavy.” In the event that this Plan later ceases to be “top heavy,” the vesting rules in Section 6.4 shall once again apply; provided, however, that


(A)	the nonforfeitable portion of a Participant’s Accrued Benefit shall not thereafter be less than the nonforfeitable portion of the Participant’s Accrued Benefit before the Plan ceased to be “top heavy,” and


(B)	the nonforfeitable portion of the Accrued Benefit of any Participant who has completed at least three years of Vesting Service with a Controlled Group Member on the date the Plan ceases to be “top heavy” shall continue to be determined under the vesting schedule set forth in this Section 6.4(b)(ii) if such vesting schedule is more favorable to the Participant.

ARTICLE 7

CONTRIBUTIONS

7.1

Employer Contributions. The Company and/or the Employers will make contributions in the amounts determined by the Company to be necessary to provide benefits under the Plan, based on the recommendations of the Plan’s actuary. Company and/or Employer contributions will be irrevocable and will be used only for the benefit of Participants and Beneficiaries, except as provided in Sections 7.3 and 8.2. The Company reserves the right to establish and to change from time to time the method for funding benefits, either through the use of one or more trust agreements or one or more group annuity contracts or other forms of insurance contracts or agreements with one or more insurance companies.


7.2	Participant Contributions. Participants will neither be required nor permitted to make contributions to the Plan.


7.3	Return of Contributions to the Employers. Contributions will be returned to the Company or affected Employer(s) under the following circumstances:


(a)	Mistake of Fact. Any contribution made by mistake of fact will be returned to the Company or affected Employer(s) within one year after the contribution is made.


(b)	Nondeductible. All contributions are conditioned upon their deductibility under Code Section 404 and will be returned to the Company or affected Employer(s) within one year after any disallowance.


7.4	Actuarial Gains. Actuarial gains arising from any cause whatsoever will not be applied to increase the benefits any Participant would otherwise receive at any time before termination of the Plan, but will be applied to reduce Company and/or Employer contributions for the current or subsequent Plan Years.

ARTICLE 8

AMENDMENT, TERMINATION, MERGER


8.1	Amendment.


(a)	Procedure. The Company reserves the right to amend the Plan from time to time, as it determines appropriate.


(b)	Prohibited Amendments. No amendment will have the effect of any of the following:


(i)	Exclusive Benefit. No amendment will permit any part of the Trust Fund to be used for purposes other than the exclusive benefit of Participants or the payment of Plan and Trust Fund expenses as provided for in Section 9.8.


(ii)	Nonreversion. No amendment will revest in the Company or any Employer any portion of the Trust Fund, except such amount as may remain after termination of the Plan and satisfaction of all liabilities.


(iii)	Accrued Benefit. No amendment will eliminate or reduce any Participant’s Accrued Benefit determined as of the effective date of the amendment, except as permitted under the Code.


(iv)	Forms of Payment. No amendment will eliminate any optional form of benefit described in Section 4.1, with respect to benefits accrued before the amendment, except as permitted under Code Section 411(d)(6) and applicable regulations.


(v)	Retirement Subsidy. No amendment will eliminate or reduce any retirement subsidy or retirement-type subsidy with respect to benefits accrued before the amendment, for Participants who either before or after the amendment meet the requirements for the subsidy, except as permitted under the Code and applicable regulations.


(c)	Limited to Active Participants. Except as specifically stated in the amendment, no amendment that improves benefits will apply to any Employee whose Termination Date occurred before the effective date of the amendment or who otherwise does not receive credit for an Hour of Service on or after the effective date of such amendment.


(d)	Administrative Changes Without Plan Amendment. The Company reserves authority to make administrative changes to this Plan document that do not alter either the minimum qualification requirements or the Plan’s funding and expense provisions, without formal amendment to the Plan. The Company will affect such

changes by substituting pages in the Plan document with corrected pages. Administrative changes include, but are not limited to, corrections of typographical errors and similar errors, conforming provisions for administrative procedures to actual practice and changes in practice, and deleting or correcting language that fails to accurately reflect the intended provision of the Plan.


8.2	Termination of the Plan.


(a)	Right to Terminate. The Company expects this Plan to be continued indefinitely but necessarily reserves the right to terminate the Plan, or any portion of the Plan, and all contributions attributed to the terminated portion, at any time. Each Employer reserves the right to terminate its participation in the Plan at any time by appropriate action of its board of directors.

(b)

Full Vesting. In the event of termination or partial termination, the Accrued Benefit of each affected Participant, to the extent funded, will become fully Vested as of the termination date. For purposes of accelerated vesting, affected Participants will include only those who are in active Employment as of the Plan termination date. All non-Vested Participants who incurred a Termination Date before the Plan termination date will be considered to have received constructive cash outs of their entire Accrued Benefits under Section 4.1(c)(ii).

(c)

Provision for Benefits upon Plan Termination. In the event of termination, the Plan Administrator may in its discretion (1) continue the Trust for so long as it considers advisable and so long as permitted by law, either through the existing trust agreement(s), or through successor funding media, or (2) terminate the Trust, pay all expenses, and direct the payment of the benefits as allocated under Section 8.2(d), either in the form of lump-sum distributions, annuity contracts, transfer to another qualified plan, or any other form selected by the Plan Administrator, to the extent not prohibited by law.


(d)	Allocation of Assets. Upon termination, the Plan Administrator will allocate the assets that remain after payment of all Plan expenses, to pay benefits due to Participants and Beneficiaries under applicable provisions of the Plan, as specified in ERISA Section 4044.


(e)	Surplus Reversion. Any assets that remain after all benefits under the Plan have been allocated will be returned to the Company and/or the affected Employer(s).


(f)	Interest and Mortality Assumptions. Upon termination of the Plan:


(i)	If the Interest Credit rate that is then in effect under Section 3.9(c) is a variable rate, the rate of interest that will be used to determine the Accrued Benefit under Section 3.1(c) shall be equal to the average of the Interest Credit rates that were used for that purpose during the five-year period ending on the Plan termination date; and

(ii)

The interest rate and mortality table that are used to determine the amount of any Accrued Benefit under Section 3.1(c) that is payable in the form of an annuity at the Participant’s Normal Retirement Date shall be the rate and table specified under the Plan for such purpose as of the Plan termination date, except that if such interest rate is a variable rate, the interest rate shall be equal to the average of the interest rates that were used for that purpose during the five-year period ending on the Plan termination date.

8.3

Merger. In the event of any merger or consolidation of the Plan with any other plan, or the transfer of assets or liabilities by the Plan to another plan, each Participant will be entitled to receive a benefit immediately after the merger, consolidation, or transfer if the Plan then terminated, that is equal to or greater than the benefit he or she would have been entitled to receive immediately before the merger, consolidation, or transfer if the Plan had then terminated.

ARTICLE 9

ADMINISTRATION


9.1	Voya Financial Plan Administrative Committee and Voya Financial Plan Investment Committee.

(a)

Appointment of Committee Members. The Chief Executive Officer of Voya Financial, Inc. (“CEO”) shall appoint at least three persons to serve on each of the PAC and the PIC. The CEO may but is not required to appoint one individual who will serve on both of the PAC and the PIC concurrently. In the event that a member of the PAC or PIC dies, resigns or is removed (automatically or by the CEO) the CEO shall appoint a successor member if necessary to ensure that at least three persons are serving as members of such Committee.

(b)

Rules Regarding Membership. Committee members may, but need not be, a director, officer, or Employee. Any person or group of persons may serve in more than one fiduciary capacity with respect to the Plan, and any fiduciary may serve as such in addition to being an officer, employee, agent, or other representative of a “party in interest” as defined by Section 3(14) of ERISA. Any member of one or more of the Committees may resign by delivering his or her written resignation to the CEO prior to the effective date of such resignation. In addition, if a member of one or more of the Committees is an Employee or director at the time of his or her appointment, he or she will automatically cease to be a member upon termination of his or her employment or directorship. The CEO may remove any member of a Committee without cause by written action prior to the effective date of such removal. Each of the Committees shall continue to have the full power to act through their remaining members during any period that one or more Committee memberships are vacant.


9.2	Duties and Powers of the PAC.

(a)

Plan Administrator and Named Fiduciary. The PAC is a “named fiduciary” of the Plan, as defined in Section 402(a)(2) of ERISA, with respect to the overall operation and administration of the Plan, and is the administrator of the Plan within the meaning of Section 3(16)(A) of ERISA. In addition to the duties and powers described elsewhere hereunder, the PAC shall have the discretion and authority to control and manage the operation and administration of the Plan.


(b)	Administrative Duties and Powers. The PAC shall have all of the duties and powers necessary or desirable to carry out the operation and administration of the Plan (except for the specific duties and powers assigned to the PIC), including, but not limited to, the following:


(i)	to communicate the terms of the Plan to Participants and Beneficiaries;


(ii)	to prescribe procedures and related forms (which may be electronic in nature) to be followed by Participants and Beneficiaries, including forms and procedures for making elections and contributions under the Plan;


(iii)	to receive from Participants and Beneficiaries such information as shall be necessary for the proper administration of the Plan;


(iv)	to keep records related to the Plan, including any other information required by ERISA or the Code;


(v)	to appoint, discharge, and periodically review the performance of third party administrators, recordkeepers, insurers, service providers, other agents, consultants and accountants in the administration of the Plan;


(vi)	to determine whether any domestic relations order received by the Plan is a qualified domestic relations order as provided in Code Section 414(p);


(vii)	to prepare and file any reports or returns with respect to the Plan required by ERISA, the Code, or any other law;


(viii)	to correct errors and make equitable adjustments for mistakes made in the administration of the Plan;


(ix)	to issue rules, policies, and procedures necessary for the proper conduct and administration of the Plan and to change, alter, or amend such rules, policies, and procedures;


(x)	to determine all questions arising in the administration of the Plan, to the extent the determination is not the responsibility of a third party administrator, insurer, the PIC, or some other entity;


(xi)	to propose and accept settlements of claims involving the Plan;


(xii)	to direct a Trustee to pay benefits and Plan expenses properly chargeable to the Plan;


(xiii)	to act as agent or designate an agent for the service of legal process;


(xiv)	to appoint and remove a Trustee or Trustees with respect to a portion of or all of the assets of the Trust, with the exception of Trustees described in Section 9.3(b)(iv);


(xv)	to authorize the Plan to enter into a trust agreement with a Trustee(s), with the exception of Trustees described in Section 9.3(b)(iv), and approve any amendments to the trust agreement; and


(xvi)	such other duties or powers provided in the Plan or necessary to operate and administer the Plan.

(c)

Discretionary Authority to Interpret the Plan. The PAC shall have complete discretion and sole authority to interpret and construe the provisions of the Plan, make findings of fact, correct errors, and supply omissions, except in circumstances where discretion is exercised by the PIC as permitted pursuant to Section 9.3. All decisions and interpretations of the PAC made pursuant to the Plan shall be final, conclusive and binding on all persons and may not be overturned unless found by a court to be arbitrary and capricious. The PAC shall have all of the powers necessary or desirable to carry out these responsibilities, including, but not limited to, the following:


(i)	to prescribe rules, procedures and related forms (which may be electronic in nature) to be followed by Participants and Beneficiaries filing claims for benefits under the Plan;


(ii)	to receive from Participants and Beneficiaries such information as shall be necessary for the proper determination of benefits payable under the Plan;


(iii)	to keep records related to claims for benefits filed and paid under the Plan;


(iv)	to determine and enforce any limits on benefit elections hereunder;

(v)

to correct errors and make equitable adjustments for mistakes made in the payment or nonpayment of benefits under the Plan, specifically, and without limitation, to recover erroneous overpayments made by the Plan to a Participant, dependent or beneficiary, in whatever manner the PAC deems appropriate, including suspensions or recoupment of, or offsets against, future payments, including benefit payments or wages, due that Participant, dependent or Beneficiary;


(vi)	to determine questions relating to coverage and participation under the Plan and the rights of Participants or Beneficiaries;


(vii)	to propose and accept settlements and offsets of claims, overpayments and other disputes involving claims for benefits under the Plan;


(viii)	to compute the amount and kind of benefits payable to Participants and Beneficiaries, to the extent such determination is not the responsibility of a third party administrator, insurer, or some other entity; and


(ix)	to direct the Trustee(s) to pay benefits and any Plan expenses properly chargeable to the Plan that are related to claims for benefits.


(d)	Participants or Beneficiaries entitled to benefits shall furnish forms, including but not limited to annuity applications, and any information or evidence, as requested

by the PAC for the proper administration of the Plan. Failure on the part of any Participant or Beneficiary to comply with such request within a reasonable period of time shall be sufficient grounds for delay in the payment of benefits until the information or evidence requested is received.


9.3	Duties and Powers of the PIC.


(a)	Named Fiduciary. The PIC is a “named fiduciary” of the Plan, as defined in Section 402(a)(2) of ERISA, with respect to the Plan’s investment matters. The PIC shall have complete and sole discretion to interpret and construe the provisions of the Plan insofar as they relate to the Plan’s investments.


(b)	Duties and Powers. The PIC shall have the following specific duties and powers related to the management and control of the Plan’s assets:


(i)	to establish and periodically review the Plan’s overall investment policy, including asset allocation, investment policy statement or investment guidelines, if any;


(ii)	to direct the Trustee(s) with respect to the investment and management of the Plan’s assets, including any voting rights for any securities held by the Trustee;


(iii)	to direct the Trustee(s) to pay investment-related expenses properly chargeable to the Plan, including expenses of Trustees described in Section 9.3(b)(iv);


(iv)	to authorize the Plan to enter into a trust agreement with a Trustee(s), and approve any amendments to the trust agreement in connection with a specific investment, such as in connection with a group trust, or a common or collective trust arrangement;


(v)	to authorize the Plan to enter into insurance contracts and arrangements, including contracts for participation in single-client or pooled separate accounts to facilitate the investment of plan assets;


(vi)	to appoint, periodically review the performance of, and remove one or more investment manager(s), as defined in Section 3(38) of ERISA, to manage any portion of the Trust or an insurance company single-client or pooled separate account, including the exercise of any voting rights of any securities managed by the investment manager;


(vii)	to communicate regarding the liquidity needs of the Plan so that investment discretion can be exercised to effect specific objectives; and


(viii)	to hire, discharge and periodically review the performance of investment consultants, investment advisers, and any other service provider in connection with the Plan’s investments deemed appropriate in the discretion of the PIC.


9.4	Functioning of the Committees.


(a)	Meetings. Each Committee shall meet on a periodic, as-needed basis and each Committee shall enact such rules and regulations as it may deem necessary and proper to carry out its responsibilities. Meetings may be held in person, telephonically, or by other electronic means as appropriate. Each Committee shall periodically report to the CEO concerning the discharge of its responsibilities.

(b)

Chairperson, Secretary and Legal Counsel. Each Committee may select one of its members as the Chairperson. In the event that a Committee fails to appoint a Chairperson, the CEO may appoint a Chairperson for that Committee. The Chairperson, if appointed, shall be responsible for conducting meetings. The Chairperson may appoint a Secretary, who may but need not be a Committee member, who shall keep regular records of all meetings and decisions and shall keep books of account, records and other data necessary for the proper administration of the Committee. Legal Counsel to the Committees shall be provided by one or more Voya Financial, Inc. Law Department Attorneys as assigned from time to time by the Chief Legal Officer of Voya Financial, Inc. and/or by such outside counsel as assigned in-house counsel may engage.

(c)

Action of the Committees. Each Committee may take any action that it is required or authorized to take under the Plan by vote of a majority of members present at any meeting at which a quorum exists. A quorum exists if a majority of the members of a Committee are present. One member may vote on behalf of another absent member to the extent authorized in writing by the absent member. Alternatively, in the absence of a meeting, the Committees may take action by written approval of a majority of the members.


(d)	Deadlocks. In the event of a deadlock, a Committee shall determine the method for resolving such deadlock. If there are two or more members, no member shall act upon any question pertaining solely to himself, and the other member or members shall make any determination required by the Plan in respect thereof.


(e)	Execution of Documents. Each Committee may authorize any one or more of its members or any other person as an authorized signatory to execute documents on its behalf. To the extent necessary, a Committee may notify the Trustee(s) or other service providers in writing of any such authorization and the name or names of the member or members or other person(s) so designated.


9.5	Allocation and Delegation of Duties. Each of the Committees shall have the authority to:

(a)

Allocate, from time-to-time, by a written instrument filed in its records, all or any part of its responsibilities under the Plan to one or more of its members, including a subcommittee, as may be deemed advisable, and in the same manner to revoke such allocation of responsibilities. In the exercise of such allocated responsibilities, any action of the member or subcommittee to whom responsibilities are allocated shall have the same force and effect for all purposes hereunder as if such action had been taken by the allocating Committee. The allocating Committee shall not be liable for any acts or omissions of such member or subcommittee. The member or subcommittee to whom responsibilities have been allocated shall periodically report to the allocating Committee concerning the discharge of the allocated responsibilities.

(b)

Delegate, from time-to-time, by a written instrument filed in its records, all or any part of its responsibilities under the Plan to such person or persons as the Committee may deem advisable (and may authorize such person(s) to delegate such responsibilities to such other person or persons as the Committee shall authorize) and in the same manner to revoke any such delegation of responsibilities. Any action of the delegate in the exercise of such delegated responsibilities shall have the same force and effect for all purposes hereunder as if such action had been taken by the delegating Committee. The delegating Committee shall not be liable for any acts or omissions of any such delegate. The delegate shall periodically report to the delegating Committee concerning the discharge of the delegated responsibilities.

9.6

Deemed Delegation of Duties and Powers. The PAC shall be deemed to have delegated its responsibilities for plan administration and/or determining benefits and eligibility for benefits to a third party administrator, insurer or other fiduciary where such person has been appointed by the PAC to make such determinations. In such case, such other person shall have the duties and powers as the PAC as set forth above, including the complete discretion to interpret and construe the provisions of the Plan relevant to its delegated authority. The Benefits Department of the Company has the authority to act on behalf of the PAC with respect to non-discretionary day-to-day administrative matters.

9.7

Payment of Expenses. Those members of the Committees who are full-time paid Employees of an Employer shall serve without compensation. The expenses of the Committees, including reasonable compensation as may be agreed upon in writing between an Employer and the Committees for members who are not full-time Employees of an Employer, shall be deemed administrative expenses payable in accordance with Section 9.8.


9.8	Plan Expenses. All fees and expenses incurred in connection with the operation and administration of the Plan, including but not limited to Committee, legal, accounting,

actuarial, investment, Trustee, management, and administrative fees and expenses, will be paid out of the Trust or any other Plan asset to the extent that it is legally permissible for these fees and expenses to be so paid, unless the expenses are paid by an Employer. To the extent permitted by law, an Employer may also advance amounts properly payable by the Plan or Trust and then obtain reimbursement from the Plan or Trust for these advances.

9.9

Information to be supplied by a Participating Employer. Each Employer shall provide the PAC and PIC with such information as the PAC or PIC shall from time-to-time need or reasonably request in the discharge of its duties, including but not limited to complete information regarding the Compensation and Employment of each Participant. The Committees may rely conclusively on the information provided. The Committees may rely conclusively upon all tables, valuations, certificates, opinions, and reports furnished by any actuary, accountant, controller, counsel or other person who is employed or engaged for any purpose in connection with the administration of the Plan.

9.10

Actuarial Determinations. The PAC shall appoint an enrolled actuary to make annual actuarial valuations of the Plan’s experience and liabilities, to prepare actuarial statements, and to recommend the amounts of contributions to be made by the Company and/or the Employers. The PAC will inform the Company of the amount of contributions determined to be necessary to provide benefits, based on the recommendations of the enrolled actuary. The Company shall be solely responsible for determining the amount of any contributions to be made to the Plan. The Company and each Employer shall be responsible for making contributions to the Plan in the amounts determined by the Company based on the recommendations of the enrolled actuary.


9.11	Funding Policy. The PAC shall maintain records showing the fiscal operation of the Plan, and shall keep in convenient form the data required for actuarial valuations. The Company, and not the PAC, shall maintain and execute a funding policy.


9.12	Electronic Communications. The Committees may carry out their duties and maintain Plan records through electronic means. To the extent electronic means are used for Participant elections, an electronic signature shall constitute a wet signature.

9.13

Indemnification. Each member (or former member) of a Committee, and any other person who is an Employee, officer or director of a participating Employer (or a former Employee, officer or director of a participating Employer) shall be indemnified and held harmless by each participating Employer against and with respect to all damages, losses, obligations, liabilities, liens, deficiencies, costs and expenses, including without limitation, reasonable attorney’s fees and other costs incident to any suit, action, investigation, claim or proceedings to which he or she may be a party by reason of his or her performance of any functions and duties under the Plan, except in relation to matters as to which he or she committed an act of gross negligence or willful misconduct in the performance of his or her duties. The foregoing right to indemnification shall be in addition to such other rights as a Committee member (or former member) or other person

may enjoy as a matter of law or by reason of insurance coverage of any kind. Rights granted hereunder shall be in addition to and not in lieu of any rights to indemnification to which the Committee member (or former member) or other person may be entitled pursuant to the limited liability company agreement, limited partnership agreement, by-laws or similar constitutional document of any participating Employer.


9.14	Trustees. A Trustee appointed pursuant to Article 9 will have such duties as are set forth in the trust agreement entered with the Trustee. Such trust agreement is an integral part of the Plan.


9.15	Claims Procedure.


(a)	Application for Benefits. Each Participant or Beneficiary must submit a written application for payment with such documentation as the Plan Administrator considers necessary to process the claim. This form may be completed and submitted electronically.

(b)

Decision on Claim. Within 90 days after receipt of a claim, the Plan Administrator will issue a decision. If the claim is denied in whole or in part, the notice of the decision will set forth (1) specific reasons for the denial and references to Plan provisions upon which the denial is based; (2) a description of any additional information necessary to process the claim, including an explanation of why such information is necessary; and (3) an explanation of the Plan’s claim review procedure, including a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA. If special circumstances require an extension of time, the Plan Administrator will furnish the claimant notice of the extension, and an explanation of why it is necessary, before the end of the initial 90 day period. If an extension of time is required, such extension will not exceed 90 days from the end of the initial 90-day period.

(c)

Appeal. The claimant (which may be the Participant, his or her Beneficiary or a representative of the Participant or Beneficiary) may appeal an adverse decision by requesting in writing, within 60 days after he or she receives the decision, that the PAC review the decision. He or she may submit, in writing, comments, documents, records and other information relating to the claim that he or she wants the PAC to consider. The claimant may inspect all documents that are reasonably pertinent to his or her case free of charge, upon reasonable notice to the PAC, but may not inspect confidential information concerning any other person or an Employer. The PAC will provide for a review that takes into account all comments, documents, records, or other information submitted by the claimant, without regard to whether such information was submitted or considered in the initial decision. The PAC will proceed promptly to resolve all issues and issue a written decision, with a statement of reasons and references to supporting provisions of the Plan, within 60 days. If special circumstances require an extension of time, the PAC will render a decision as soon as possible,

but not later than 120 days after receipt of the appeal. If an extension is required, the PAC will issue notice of its need for an extension with an explanation of the circumstances requiring the extension, before the extension period begins. If an extension is required due to the claimant’s failure to submit information necessary to decide the claim, the period for making the determination on appeal will be tolled from the date of the notification of the extension until the date on which the claimant responds to the request for additional information.

(d)

Decision on Appeal. The PAC will issue a written decision on appeal. If the claim is denied in whole or in part, the notice of the decision on appeal will set forth (1) specific reasons for the denial and references to Plan provisions upon which the denial is based; (2) a statement that the claimant is entitled to receive, upon request and free of charge, copies of all documents, records, or other information relevant to the claimant’s claim; (3) an explanation of voluntary appeal procedures offered, if any, including a description of the claimant’s right to obtain information about such procedures; and (4) a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA.


(e)	Exhaust Claims Procedures. No Participant, Beneficiary, or other claimant may bring a lawsuit to recover benefits under the Plan until the Participant, Beneficiary, or other claimant has timely exercised all appeal rights available under the Plan’s claims procedures and the appeal(s) seeking benefits have been denied by the PAC.

(f)

Time Limit for Lawsuits. Any lawsuit seeking benefits must be brought within the shorter of (i) one year from the date of the final appeal denial or (ii) three years from the date of the services giving rise to the claim. All claims other than claims for benefits (such as, but not limited to: claims for penalties, equitable relief, interference with protected rights, or production of documents; claims against nonfiduciaries) must be brought within one year of the act or omission giving rise to the claim.

ARTICLE 10

MEDICAL BENEFITS ACCOUNT

10.1

Establishment of Medical Benefits Account. The Trustee shall, at the direction of the Company, establish a Medical Benefits Account for the purpose of providing for the payment of benefits to Medical Benefits Account Beneficiaries. The Company shall, in its sole discretion, determine if and when such Medical Benefits Account shall be established and the funding thereof. The medical benefits that will be available and the provisions for determining the amount that will be paid from the Medical Benefits Account are as set forth in the Company’s Medical Plan. Notwithstanding the foregoing, the Company may modify, amend or terminate the Company’s Medical Plan at any time and for any reason or no reason, subject to the applicable provisions of ERISA.

(a)

Subject to the limitations of this Article, the Medical Benefits Account Beneficiaries shall be specified in the Company’s Medical Plan. No benefits may be paid under the Company’s Medical Plan from the Medical Benefits Account to any active Employee (or his or her Spouse or dependents) of the Employer. Benefits may be paid under the Company’s Medical Plan from the Medical Benefits Account only to Medical Benefits Account Beneficiaries.

(b)

Benefits paid from the Medical Benefits Account, when added to any life insurance protection provided by the Plan, if any, shall be subordinate to retirement benefits, such that the aggregate actual contributions for medical benefits, when added to the actual contributions for life insurance protection provided by the Plan, do not exceed 25% of the total actual contributions to the Plan (other than contributions to fund past service credits) after the date that the Medical Benefits Account is established.

(c)

The Trustee shall separately account for contributions to the Medical Benefits Account on behalf of each Key Employee. All benefits paid from the Medical Benefits Account to each such Key Employee (and such Key Employee’s Spouse or dependents) shall be paid solely from the separate account established for such Key Employee. The Trustee shall credit each such separate account with a pro rata share of the gains and losses of the Medical Benefits Account, taking into account all contributions to and distributions from such separate account.

(d)

The Company shall, at the time the Company makes a contribution to the Plan, designate the portion of such contribution, if any, allocable to funding the Medical Benefits Account. Such contributions shall be reasonable and ascertainable. Nothing herein shall require the Company to allocate any portion of a contribution to the Medical Benefits Account and if no such designation is made, no portion of the Company’s contribution shall be deemed to be to the Medical Benefits Account.


(e)	No amount of corpus or income may be paid from the Medical Benefits Account for any nonmedical purpose unless all liabilities to Medical Benefits Account Beneficiaries have been fully satisfied. However, payment of necessary or appropriate administrative expenses applicable to the Plan or the Medical Benefits Account may be paid therefrom.


(f)	Upon satisfaction of all Medical Benefits Account liabilities, any remaining assets credited to the Medical Benefits Account shall be paid to the Company.


(g)	Any forfeitures of amounts credited to the Medical Benefits Account shall be applied as soon as possible to reduce future Company contributions to the Medical Benefits Account.


(h)	The assets allocated to the Medical Benefits Account shall be invested as part of the general Trust Fund.


10.2	No Qualified Transfers. No transfer of “excess pension assets” (as that term is defined in Code Section 420(e)) shall be made to the Medical Benefits Account.


10.3	Definitions. For purposes of this Article 10, the following terms shall have the following meanings:


(a)	“Company’s Medical Plan” means the plan or program that sets forth the benefits provided by the Company to retirees (their Spouses and dependents, if provided therein) for sickness, accident, hospitalization, or medical expenses, as in effect from time to time, that shall be funded in whole or in part by the Medical Benefits Account.


(b)	“Key Employee” means any Employee, who at any time during the Plan Year or any preceding Plan Year during which contributions were made on behalf of such Employee, is or was a Key Employee as otherwise defined by the Plan.


(c)	“Medical Benefits Account” means the separate account established under this Article that provides for the payment of benefits for sickness, accident, hospitalization, and medical expenses of Medical Benefits Account Beneficiaries and that is intended to satisfy the requirements of Code Section 401(h).


(d)	“Medical Benefits Account Beneficiaries” means a Participant, and his or her Spouse or eligible dependents, who has separated from service with his or her Employer due to normal retirement or, if applicable, early retirement, provided such retiree is eligible to receive retiree medical benefits pursuant to the Company’s Medical Plan.

ARTICLE 11
MISCELLANEOUS


11.1	Headings; References. The headings and subheadings in this Plan have been inserted for convenient reference, and to the extent any heading or subheading conflicts with the text, the text will govern. Capitalized terms used in the Plan shall have their meaning defined in the Plan unless the context clearly indicates to the contrary.


11.2	Construction. The Plan will be construed in accordance with the laws of the State of Georgia, excluding choice of law provisions, except to the extent such laws are preempted by ERISA and the Code.

11.3

Qualification for Continued Tax-Exempt Status. Notwithstanding any other provision of the Plan, the amendment and restatement of the Plan is adopted on the condition that it will be approved by the Internal Revenue Service as meeting the requirements of the Code and ERISA for continued tax-exempt status, and in the event continued qualification is denied and cannot be obtained by revisions satisfactory to the Company, this amendment and restatement will be null and void. Should that occur, the Plan as previously in effect shall apply.

11.4

Nonalienation. No benefits payable under the Plan will be subject to the claim or legal process of any creditor of any Participant or Beneficiary, and no Participant or Beneficiary will alienate, transfer, anticipate, or assign any benefits under the Plan, except that distributions will be made pursuant to (a) qualified domestic relations orders issued in accordance with Code Section 414(p), (b) judgments resulting from federal tax assessments, (c) agreements between a Participant or Beneficiary and an Employer under Treas. Reg. Section 1.401(a)(l3)(e) for the use of all or part of his or her benefits under the Plan to repay his or her indebtedness to the Employer, which amount of benefits will be paid in a lump sum as soon as practicable after the agreement is executed and will be subject to the withholding requirements set forth in Section 11.7, and (d) as otherwise required or permitted by applicable law.


11.5	No Employment Rights. Participation in the Plan will not give any Employee the right to be retained in the employ of any Employer, or upon termination any right or interest in the Plan except as provided in the Plan.


11.6	No Enlargement of Rights. No person will have any right to or interest in any portion of the Plan, except as specifically provided in the Plan.


11.7	Withholding for Taxes. Payments under the Plan will be subject to withholding for income and payroll taxes as required by law.

This amendment and restatement is executed on behalf of Voya Services Company by the Authorized Officers whose signatures appear below on this 19 day of October, 2018.

By: /s/ Kimberly D. Shattuck

Kimberly D. Shattuck

Authorized Officer

By: /s/ Howard F. Greene

Howard F. Greene

Authorized Officer

APPENDIX 1.4(a)

GRANDFATHERED ACTUARIAL ASSUMPTIONS

I. Grandfathered Benefits

A. Prior Plan Grandfathering

The following assumptions will be used to determine the value of a Prior Plan Benefit payable in an optional form if they produce a benefit larger than the assumptions in Section 1.4(a) of the main text of the Plan.

1. AFS Plan

For purposes of converting the single life annuity to an optional form of payment, Actuarial Equivalence shall be determined using the Applicable Mortality Table and an interest rate of 7.0%.

2. EIC, LOG and SLD Plan

For purposes of determining the amount of the benefit payable in the optional forms described in Appendix 4.1(b) under the EIC Plan, the SLD Plan, and the LOG Plan (Non-Field Force), the tables below (II.1-II.5(f)) shall be used to determine the benefit payable under the Plan.

B. Grandfathering of December 31, 2011 Accrued Amounts

In the case of a Participant who has an Accrued Benefit under the Plan as of December 31, 2011, the retirement benefit payable to such Participant in any annuity payment form will not be less than the retirement benefit that would have been payable to such Participant in such annuity payment form based solely upon his or her Accrued Benefit as of December 31, 2011, converted from a single life annuity, where applicable, into an optional annuity payment form using the 1994 Group Annuity Mortality Static Table for Males for both Participant and Beneficiary and an interest rate of 5.5%.

Factors for Forms of Payment

II.1 Factors for Joint and Survivor Annuity.

X equals the Participant’s age and Y equals the Beneficiary’s age.



	If X equals or exceeds Y	If X is less than Y, and X equals or is less than 62	If X is less than Y, and X exceeds 62
50% Survivor Option	.92 - (X-Y)(.004) + .004 (62-X)	.92 - (X-Y)(.004) + .002 (62-X)	.92 - (X-Y)(.004) + .001 (62-X)
66 2/3% Survivor Option	.90 - (X-Y)(.005) + .004 (62-X)	.90 - (X-Y)(.005) + .002 (62-X)	.90 - (X-Y)(.005) + .001 (62-X)
100% Survivor Option	.86 - (X-Y)(.006) + .004 (62-X)	.86 - (X-Y)(.006) + .002 (62-X)	.86 - (X-Y)(.006) + .001 (62-X)

II.2 Factors for Ten Years Certain and Life Annuity.



Age	Factor	Age	Factor	Age	Factor
55	0.969	64	0.919	73	0.802
56	0.966	65	0.909	74	0.785
57	0.962	66	0.899	75	0.766
58	0.958	67	0.887	76	0.745
59	0.953	68	0.875	77	0.724
60	0.948	69	0.862	78	0.701
61	0.942	70	0.848	79	0.679
62	0.935	71	0.833	80	0.656
63	0.927	72	0.818

II.3 Factors for Twenty Years Certain and Life Annuity.



Age	Factor	Age	Factor	Age	Factor
55	0.939	62	0.873	69	0.769
56	0.932	63	0.861	70	0.751
57	0.924	64	0.847	71	0.733
58	0.925	65	0.833	72	0.713
59	0.906	66	0.818	73	0.692
60	0.896	67	0.803	74	0.671
61	0.885	68	0.787	75	0.649

II.4(a) Factors for Social Security Level Income Option - Single Life Annuity.



Age	Factor	Age	Factor	Age	Factor
55	0.388	59	0.555	63	0.815
56	0.423	60	0.609	64	0.902
57	0.463	61	0.670	65	1.000
58	0.506	62	0.738


II.4(b)	Factors for Social Security Level Income Option - Single Life Annuity (No Benefit Payable After Age 65).



Ratio	55	56	57	58	59	60	61	62	63	64
Factor	1.634	1.734	1.861	2.025	2.246	2.557	3.028	3.817	5.401	10.167

II.5(a) Factors for Social Security Level Income Option - 100% Joint and Survivor Annuity.

PARTICIPANT AGE



		55	56	57	58	59	60	61	62	63	64
	25	0.491	0.528	0.567	0.609	0.654	0.702	0.754	0.809	0.869	0.932
	26	0.490	0.527	0.566	0.608	0.653	0.702	0.754	0.809	0.868	0.932
	27	0.489	0.526	0.565	0.607	0.653	0.701	0.753	0.809	0.868	0.932
	28	0.488	0.525	0.564	0.607	0.652	0.700	0.752	0.808	0.868	0.932
	29	0.487	0.524	0.563	0.606	0.651	0.700	0.752	0.808	0.867	0.931
	30	0.486	0.523	0.562	0.605	0.650	0.699	0.751	0.807	0.867	0.931
	31	0.484	0.521	0.561	0.604	0.649	0.698	0.750	0.807	0.867	0.931
	32	0.483	0.520	0.560	0.603	0.648	0.697	0.750	0.806	0.866	0.931
	33	0.482	0.519	0.559	0.601	0.647	0.696	0.749	0.805	0.866	0.931
	34	0.480	0.517	0.557	0.600	0.646	0.695	0.748	0.805	0.865	0.930
	35	0.478	0.516	0.556	0.599	0.645	0.694	0.747	0.804	0.865	0.930
	36	0.477	0.514	0.554	0.597	0.644	0.693	0.746	0.803	0.864	0.930
	37	0.475	0.513	0.553	0.596	0.642	0.692	0.745	0.803	0.864	0.930
	38	0.473	0.511	0.551	0.595	0.641	0.691	0.744	0.802	0.863	0.929
	39	0.471	0.509	0.550	0.593	0.640	0.690	0.743	0.801	0.863	0.929
	40	0.470	0.507	0.548	0.591	0.638	0.688	0.742	0.800	0.862	0.929
	41	0.468	0.505	0.546	0.590	0.637	0.687	0.741	0.799	0.861	0.928
	42	0.466	0.503	0.544	0.588	0.635	0.686	0.740	0.798	0.861	0.928
	43	0.463	0.501	0.542	0.586	0.633	0.684	0.739	0.797	0.860	0.928
B	44	0.461	0.499	0.540	0.584	0.631	0.682	0.737	0.796	0.859	0.927
E	45	0.459	0.497	0.538	0.582	0.630	0.681	0.736	0.795	0.859	0.927
N	46	0.457	0.495	0.536	0.580	0.628	0.679	0.734	0.794	0.858	0.926
E	47	0.454	0.492	0.534	0.578	0.626	0.677	0.733	0.793	0.857	0.926
F	48	0.452	0.490	0.531	0.576	0.624	0.676	0.731	0.791	0.856	0.925
I	49	0.449	0.488	0.529	0.574	0.622	0.674	0.730	0.790	0.855	0.925
C	50	0.447	0.485	0.526	0.571	0.620	0.672	0.728	0.789	0.854	0.924
I	51	0.444	0.482	0.524	0.569	0.617	0.670	0.726	0.787	0.853	0.924
A	52	0.442	0.480	0.521	0.566	0.615	0.668	0.725	0.786	0.852	0.923
R	53	0.439	0.477	0.519	0.564	0.613	0.666	0.723	0.784	0.851	0.923
Y	54	0.436	0.475	0.516	0.562	0.610	0.663	0.721	0.783	0.850	0.922
	55	0.434	0.472	0.514	0.559	0.608	0.661	0.719	0.781	0.849	0.921
	56	0.431	0.469	0.511	0.557	0.606	0.659	0.717	0.780	0.847	0.921
A	57	0.428	0.467	0.509	0.554	0.603	0.657	0.715	0.778	0.846	0.920
G	58	0.426	0.464	0.506	0.551	0.601	0.655	0.713	0.776	0.845	0.920
E	59	0.423	0.462	0.503	0.549	0.598	0.652	0.711	0.775	0.844	0.919
	60	0.421	0.459	0.501	0.546	0.596	0.650	0.709	0.773	0.843	0.918
	61	0.418	0.457	0.498	0.544	0.594	0.648	0.707	0.771	0.841	0.917
	62	0.416	0.454	0.496	0.541	0.591	0.646	0.705	0.770	0.840	0.917
	63	0.414	0.452	0.493	0.539	0.589	0.644	0.703	0.768	0.839	0.916
	64	0.411	0.449	0.491	0.537	0.587	0.641	0.701	0.766	0.838	0.915
	65	0.409	0.447	0.489	0.534	0.584	0.639	0.699	0.765	0.837	0.915



	55	56	57	58	59	60	61	62	63	64
66	0.407	0.445	0.487	0.532	0.582	0.637	0.697	0.763	0.835	0.914
67	0.405	0.443	0.484	0.530	0.580	0.635	0.695	0.762	0.834	0.913
68	0.403	0.441	0.482	0.528	0.578	0.633	0.694	0.760	0.833	0.913
69	0.401	0.439	0.480	0.526	0.576	0.631	0.692	0.759	0.832	0.912
70	0.400	0.437	0.478	0.524	0.574	0.629	0.690	0.757	0.831	0.911
71	0.398	0.435	0.477	0.522	0.572	0.627	0.688	0.756	0.829	0.911
72	0.397	0.434	0.475	0.520	0.570	0.626	0.687	0.754	0.828	0.910
73	0.395	0.432	0.473	0.518	0.569	0.624	0.685	0.753	0.827	0.910
74	0.394	0.431	0.472	0.517	0.567	0.622	0.684	0.751	0.826	0.909
75	0.393	0.430	0.470	0.515	0.565	0.621	0.682	0.750	0.825	0.908
76	0.392	0.428	0.469	0.514	0.564	0.619	0.681	0.749	0.824	0.908
77	0.391	0.427	0.468	0.513	0.563	0.618	0.680	0.748	0.823	0.907
78	0.390	0.426	0.467	0.512	0.561	0.617	0.678	0.747	0.823	0.907
79	0.389	0.425	0.466	0.510	0.560	0.616	0.677	0.746	0.822	0.906
80	0.389	0.425	0.465	0.509	0.559	0.615	0.676	0.745	0.821	0.906
81	0.388	0.424	0.464	0.509	0.558	0.614	0.675	0.744	0.820	0.905
82	0.388	0.424	0.463	0.508	0.557	0.613	0.674	0.743	0.820	0.905
83	0.387	0.423	0.463	0.507	0.557	0.612	0.673	0.742	0.819	0.905
84	0.387	0.423	0.462	0.507	0.556	0.611	0.673	0.742	0.819	0.904
85	0.387	0.422	0.462	0.506	0.555	0.611	0.672	0.741	0.818	0.904

II.5(b) Social Security Level Income Option - 100% Joint and Survivor (No Benefit After Age 65).

PARTICIPANT AGE



		55	56	57	58	59	60	61	62	63	64
	25	1.965	2.117	2.309	2.558	2.891	3.360	4.066	5.246	7.612	14.723
	26	1.961	2.113	2.305	2.553	2.885	3.353	4.057	5.235	7.596	14.692
	27	1.957	2.109	2.300	2.547	2.879	3.346	4.048	5.224	7.579	14.659
	28	1.953	2.104	2.295	2.542	2.872	3.338	4.039	5.211	7.562	14.624
	29	1.948	2.099	2.290	2.536	2.866	3.330	4.029	5.198	7.543	14.587
	30	1.944	2.094	2.284	2.529	2.858	3.321	4.019	5.185	7.523	14.548
	31	1.939	2.089	2.278	2.523	2.851	3.312	4.008	5.170	7.502	14.506
	32	1.934	2.084	2.272	2.516	2.843	3.303	3.996	5.155	7.479	14.463
	33	1.929	2.078	2.265	2.508	2.834	3.293	3.984	5.139	7.456	14.417
	34	1.923	2.072	2.259	2.501	2.826	3.283	3.971	5.122	7.431	14.368
	35	1.917	2.065	2.252	2.493	2.816	3.272	3.958	5.105	7.405	14.317
	36	1.911	2.059	2.244	2.484	2.807	3.260	3.943	5.086	7.377	14.263
	37	1.905	2.052	2.236	2.476	2.796	3.248	3.928	5.066	7.348	14.206
	38	1.899	2.045	2.228	2.466	2.786	3.235	3.913	5.046	7.318	14.146
	39	1.892	2.037	2.220	2.457	2.775	3.222	3.897	5.025	7.286	14.084
	40	1.885	2.030	2.211	2.447	2.763	3.209	3.880	5.002	7.253	14.019
	41	1.878	2.022	2.203	2.437	2.752	3.195	3.862	4.979	7.219	13.951
	42	1.871	2.014	2.193	2.426	2.739	3.180	3.844	4.955	7.183	13.880
	43	1.863	2.005	2.184	2.416	2.727	3.165	3.825	4.930	7.146	13.806
B	44	1.856	1.997	2.174	2.404	2.714	3.149	3.806	4.904	7.107	13.730
E	45	1.848	1.988	2.164	2.393	2.700	3.133	3.785	4.877	7.067	13.650
N	46	1.840	1.979	2.154	2.381	2.686	3.116	3.765	4.850	7.026	13.568
E	47	1.832	1.970	2.144	2.369	2.672	3.099	3.743	4.821	6.983	13.484
F	48	1.824	1.961	2.133	2.357	2.658	3.082	3.722	4.792	6.940	13.396
I	49	1.816	1.951	2.122	2.345	2.643	3.064	3.699	4.762	6.895	13.307
C	50	1.807	1.942	2.112	2.332	2.628	3.046	3.677	4.732	6.849	13.215
I	51	1.799	1.932	2.101	2.319	2.613	3.028	3.653	4.701	6.802	13.121
A	52	1.791	1.923	2.090	2.307	2.598	3.009	3.630	4.669	6.754	13.025
R	53	1.782	1.913	2.079	2.294	2.583	2.991	3.606	4.637	6.706	12.928
Y	54	1.774	1.904	2.068	2.281	2.567	2.972	3.582	4.604	6.657	12.829
	55	1.766	1.894	2.057	2.268	2.552	2.953	3.558	4.572	6.607	12.729
	56	1.758	1.885	2.046	2.255	2.536	2.934	3.534	4.539	6.557	12.628
A	57	1.750	1.876	2.035	2.242	2.521	2.915	3.509	4.506	6.507	12.526
G	58	1.742	1.866	2.024	2.229	2.506	2.896	3.485	4.473	6.457	12.424
E	59	1.734	1.858	2.014	2.217	2.491	2.877	3.461	4.440	6.406	12.322
	60	1.727	1.849	2.003	2.205	2.476	2.859	3.437	4.407	6.356	12.220
	61	1.719	1.840	1.993	2.193	2.461	2.840	3.414	4.375	6.307	12.119
	62	1.712	1.832	1.984	2.181	2.447	2.823	3.391	4.343	6.258	12.019
	63	1.706	1.824	1.974	2.169	2.433	2.805	3.368	4.312	6.210	11.920
	64	1.699	1.816	1.965	2.158	2.419	2.788	3.346	4.282	6.162	11.823



	55	56	57	58	59	60	61	62	63	64
65	1.693	1.809	1.956	2.148	2.406	2.772	3.324	4.252	6.116	11.728
66	1.687	1.802	1.947	2.137	2.393	2.756	3.304	4.223	6.071	11.635
67	1.681	1.795	1.939	2.127	2.381	2.740	3.283	4.195	6.027	11.545
68	1.676	1.788	1.931	2.118	2.369	2.725	3.264	4.168	5.985	11.456
69	1.671	1.782	1.924	2.109	2.358	2.711	3.245	4.141	5.944	11.371
70	1.666	1.777	1.917	2.100	2.347	2.697	3.227	4.116	5.904	11.288
71	1.661	1.771	1.910	2.092	2.337	2.684	3.209	4.091	5.865	11.207
72	1.657	1.766	1.904	2.084	2.327	2.671	3.192	4.067	5.828	11.129
73	1.653	1.761	1.898	2.077	2.318	2.659	3.176	4.045	5.792	11.055
74	1.650	1.757	1.893	2.070	2.309	2.648	3.161	4.023	5.758	10.983
75	1.647	1.753	1.888	2.063	2.301	2.637	3.147	4.003	5.725	10.914
76	1.644	1.749	1.883	2.057	2.293	2.627	3.133	3.983	5.694	10.849
77	1.641	1.746	1.879	2.052	2.286	2.618	3.120	3.965	5.665	10.787
78	1.639	1.743	1.875	2.047	2.280	2.609	3.109	3.948	5.637	10.729
79	1.637	1.740	1.872	2.043	2.274	2.601	3.098	3.932	5.612	10.675
80	1.636	1.738	1.869	2.039	2.269	2.594	3.088	3.918	5.588	10.625
81	1.634	1.736	1.866	2.035	2.264	2.588	3.079	3.904	5.567	10.578
82	1.633	1.735	1.864	2.032	2.259	2.582	3.070	3.892	5.547	10.535
83	1.632	1.733	1.862	2.029	2.256	2.576	3.063	3.881	5.528	10.495
84	1.631	1.732	1.860	2.027	2.252	2.572	3.056	3.870	5.511	10.458
85	1.631	1.731	1.859	2.025	2.249	2.567	3.050	3.861	5.495	10.424

II.5(c) Social Security Level Income Option – 66 ⅔% Joint and Survivor Annuity.

PARTICIPANT AGE



		55	56	57	58	59	60	61	62	63	64
	25	0.461	0.498	0.538	0.580	0.627	0.677	0.731	0.791	0.855	0.924
	26	0.461	0.497	0.537	0.580	0.626	0.677	0.731	0.790	0.854	0.924
	27	0.460	0.497	0.536	0.579	0.626	0.676	0.731	0.790	0.854	0.924
	28	0.459	0.496	0.535	0.578	0.625	0.675	0.730	0.790	0.854	0.924
	29	0.458	0.495	0.535	0.578	0.624	0.675	0.730	0.789	0.854	0.924
	30	0.457	0.494	0.534	0.577	0.624	0.674	0.729	0.789	0.853	0.924
	31	0.456	0.493	0.533	0.576	0.623	0.674	0.729	0.788	0.853	0.923
	32	0.455	0.492	0.532	0.575	0.622	0.673	0.728	0.788	0.853	0.923
	33	0.454	0.491	0.531	0.574	0.621	0.672	0.727	0.787	0.852	0.923
	34	0.453	0.490	0.530	0.574	0.621	0.672	0.727	0.787	0.852	0.923
	35	0.452	0.489	0.529	0.573	0.620	0.671	0.726	0.786	0.852	0.923
	36	0.451	0.488	0.528	0.572	0.619	0.670	0.725	0.786	0.851	0.922
	37	0.449	0.487	0.527	0.570	0.618	0.669	0.725	0.785	0.851	0.922
	38	0.448	0.485	0.526	0.569	0.617	0.668	0.724	0.784	0.850	0.922
	39	0.447	0.484	0.524	0.568	0.616	0.667	0.723	0.784	0.850	0.922
	40	0.445	0.483	0.523	0.567	0.614	0.666	0.722	0.783	0.849	0.922
	41	0.444	0.481	0.522	0.566	0.613	0.665	0.721	0.782	0.849	0.921
	42	0.442	0.480	0.520	0.564	0.612	0.664	0.720	0.782	0.848	0.921
B	43	0.441	0.478	0.519	0.563	0.611	0.663	0.719	0.781	0.848	0.921
E	44	0.439	0.477	0.517	0.561	0609	0.662	0.718	0.780	0.847	0.920
N	45	0.438	0.475	0.516	0.560	0.608	0.660	0.717	0.779	0.847	0.920
E	46	0.436	0,473	0.514	0.558	0.607	0.659	0.716	0.778	0.846	0.920
F	47	0.434	0.472	0.512	0.557	0.605	0.658	0.715	0.777	0845	0.919
I	48	0.432	0.470	0.511	0.555	0.604	0.656	0.714	0.776	0.844	0.919
C	49	0.431	0.468	0.509	0.554	0.602	0.655	0.713	0.775	0.844	0.918
I	50	0.429	0.466	0.507	0.552	0.600	0.653	0.711	0.774	0.843	0.918
A	51	0.427	0.464	0.505	0.550	0.599	0.652	0.710	0.773	0.842	0.918
R	52	0.425	0.463	0.504	0.548	0.597	0.650	0.709	0.772	0.841	0.917
Y	53	0.423	0.461	0.502	0.547	0.595	0.649	0.707	0.771	0.841	0.917
	54	0.421	0.459	0.500	0.545	0.594	0647	0.706	0.770	0.840	0.916
	55	0.420	0.457	0.498	0.543	0.592	0.646	0.704	0.769	0.839	0.916
A	56	0.418	0.455	0.496	0.541	0.590	0.644	0.703	0.767	0.838	0.915
G	57	0.416	0.453	0.494	0.539	0.589	0.643	0.702	0.766	0.837	0.915
E	58	0.414	0.451	0.493	0.538	0.587	0.641	0.700	0.765	0.836	0.914
	59	0.412	0.450	0.491	0.536	0.585	0.639	0.699	0.764	0.835	0.914
	60	0.410	0.448	0.489	0.534	0.583	0.638	0.697	0.763	0.834	0.913
	61	0.409	0.446	0.487	0.532	0.582	0.636	0.696	0.761	0.834	0.913
	62	0.407	0.444	0.485	0.530	0.580	0.634	0.694	0.760	0.833	0.912
	63	0.406	0.443	0.484	0.529	0.578	0.633	0.693	0.759	0.832	0.912
	64	0.404	0.441	0.482	0.527	0.577	0.631	0.691	0.758	0.831	0.911
	65	0.402	0.440	0.480	0.525	0.575	0.630	0.690	0.757	0.830	0.911



	55	56	57	58	59	60	61	62	63	64
66	0.401	0.438	0.479	0.524	0.574	0.628	0.689	0.755	0.829	0.910
67	0.400	0.437	0,477	0.522	0.572	0.627	0.687	0.754	0.828	0.910
68	0.398	0.435	0.476	0.521	0.571	0.625	0.686	0.753	0.827	0.909
69	0.397	0.434	0.475	0.520	0.569	0.624	0.685	0.752	0.827	0.909
70	0.396	0.433	0.473	0.518	0.568	0.623	0.684	0.751	0.826	0.908
71	0.395	0.431	0.472	0.517	0.567	0.622	0.682	0.750	0.825	0.908
72	0.394	0.430	0,471	0.516	0.565	0.620	0.681	0.749	0.824	0.907
73	0.393	0.429	0.470	0.514	0.564	0.619	0.680	0.748	0.823	0.907
74	0.392	0.428	0.469	0.513	0.563	0.618	0.679	0.747	0.823	0.907
75	0.391	0.427	0.468	0.512	0.562	0.617	0.678	0.746	0.822	0.906
76	0.390	0.427	0.467	0.511	0.561	0.616	0.677	0.745	0.821	0.906
77	0.390	0.426	0.466	0.511	0.560	0.615	0.676	0.745	0.821	0.905
78	0.389	0.425	0.465	0.510	0.559	0.614	0.676	0.744	0.820	0.905
79	0.389	0.425	0.465	0.509	0.558	0.613	0.675	0.743	0.820	0.905
80	0.388	0.424	0.464	0.508	0.558	0.613	0.674	0.743	0.819	0.905
81	0.388	0.424	0.464	0.508	0.557	0.612	0.673	0.742	0.819	0.904
82	0.388	0.423	0.463	0.507	0.557	0.611	0.673	0.741	0.818	0.904
83	0.388	0.423	0.463	0.507	0.556	0.611	0.672	0.741	0.818	0.904
84	0.387	0.423	0.462	0.506	0.556	0.610	0.672	0.740	0.817	0.903
85	0.387	0.423	0.462	0.506	0.555	0610	0.671	0.740	0.817	0.903


II.5(d)	Social Security Level Income Option – 66 ⅔% Joint and Survivor (No Benefit After Age 65).

PARTICIPANT AGE



		55	56	57	58	59	60	61	62	63	64
		55	56	57	58	59	60	61	62	63	64
	25	1.856	1.992	2.162	2.383	2.679	3.096	3.724	4.774	6.881	13.210
	26	1.854	1.989	2.159	2.380	2.675	3.092	3.718	4.767	6.870	13.189
	27	1.851	1.986	2.156	2.376	2.671	3.087	3.713	4.759	6.858	13.167
	28	1.848	1.983	2.153	2.372	2.667	3.081	3.706	4.751	6.846	13.144
	29	1.845	1.980	2.149	2.368	2.662	3.076	3.700	4.742	6.834	13.119
	30	1.842	1.976	2.145	2.364	2.657	3.070	3.693	4.733	6.820	13.093
	31	1.839	1.973	2.141	2.360	2.652	3.064	3.685	4.724	6.806	13.065
	32	1.836	1.969	2.137	2.355	2.647	3.058	3.677	4.714	6.791	13.036
	33	1.832	1.965	2.133	2.350	2.641	3.051	3.669	4.703	6.776	13.006
	34	1.829	1.961	2.128	2.345	2.635	3.044	3.661	4.692	6.759	12.973
	35	1.825	1.957	2.124	2.339	2.629	3.037	3.652	4.680	6.742	12.939
	36	1.821	1.952	2.119	2.334	2.623	3.029	3.642	4.667	6.723	12.903
	37	1.816	1.948	2.113	2.328	2.616	3.021	3.632	4.654	6.704	12.865
	38	1.812	1.943	2.108	2.322	2.609	3.013	3.622	4.640	6.684	12.825
	39	1.808	1.938	2.102	2.315	2.601	3.004	3.611	4.626	6.662	12.783
	40	1.803	1.933	2.097	2.309	2.594	2.995	3.599	4.611	6.640	12.740
	41	1.798	1.928	2.091	2.302	2.586	2.985	3.588	4.595	6.517	12.694
	42	1.793	1.922	2.084	2.295	2.577	2.975	3.575	4.579	6.593	12.647
B	43	1.788	1.916	2.078	2.288	2.569	2.965	3.563	4.563	6.568	12.598
E	44	1.783	1.911	2.072	2.280	2.560	2.955	3.550	4.545	6.542	12.547
N	45	1.778	1.905	2.065	2.272	2.551	2.944	3.536	4.527	6.516	12.494
E	46	1.773	1.899	2.058	2.264	2.542	2.933	3.522	4.509	6.488	12.439
F	47	1.767	1.893	2.051	2.256	2.532	2.921	3.508	4.490	6.460	12.382
I	48	1.762	1.886	2.044	2.248	2.523	2.910	3.493	4.470	6.430	12.324
C	49	1.756	1.880	2.037	2.240	2.513	2.898	3.478	4.450	5.400	12.264
I	50	1.751	1.874	2.029	2.231	2.503	2.886	3.463	4.430	6.370	12.203
A	51	1.745	1.867	2.022	2.223	2.493	2.873	3.447	4.409	6.338	12.140
R	52	1.739	1.861	2.015	2.214	2.483	2.861	3.432	4.388	6.306	12.076
Y	53	1.734	1.855	2.007	2.206	2.472	2.848	3.416	4.366	6.274	12.011
	54	1.728	1.848	2.000	2.197	2.462	2.836	3.400	4.344	6.241	11.945
	55	1.723	1.842	1.992	2.188	2.451	2.823	3.383	4.323	6.208	11.878
	56	1.717	1.835	1.985	2.179	2.441	2.810	3.367	4.301	6.174	11.811
A	57	1.712	1.829	1.978	2.171	2.431	2.797	3.351	4.278	6.141	11.743
G	58	1.707	1.823	1.971	2.162	2.420	2.785	3.335	4.256	6.107	11.674
E	59	1.701	1.817	1.964	2.154	2.410	2.772	3.319	4.234	6.073	11.606
	60	1.696	1.811	1.957	2.146	2.400	2.760	3.303	4.212	6.040	11.538
	61	1.691	1.805	1.950	2.138	2.390	2.747	3.287	4.191	6.007	11.471
	62	1.687	1.800	1.943	2.130	2.381	2.735	3.271	4.170	5.974	11.404
	63	1.682	1.795	1.937	2.122	2.371	2.724	3.256	4.149	5.942	11.338



	55	56	57	58	59	60	61	62	63	64
	55	56	57	58	59	60	61	62	63	64
64	1.678	1.789	1.931	2.115	2.362	2.712	3.241	4.128	5.910	11.273
65	1.673	1.784	1.925	2.107	2.353	2.701	3.227	4.108	5.879	11.210
66	1.669	1.780	1.919	2.100	2.345	2.690	3.213	4.089	5.849	11.148
67	1.666	1.775	1.913	2.094	2.337	2.680	3.199	4.070	5.820	11.087
68	1.662	1.771	1.908	2.087	2.329	2.670	3.186	4.052	5.792	11.028
69	1.659	1.767	1.903	2.081	2.321	2.660	3.173	4.034	5.764	10.971
70	1.655	1.763	1.898	2.075	2.314	2.651	3.161	4.017	5.737	10.916
71	1.652	1.759	1.894	2.070	2.307	2.642	3.149	4.000	5.711	10.862
72	1.650	1.755	1.890	2.065	2.300	2.634	3.138	3.985	5.686	10.810
73	1.647	1.752	1.886	2.060	2.294	2.626	3.127	3.969	5.662	10.760
74	1.645	1.749	1.882	2.055	2.288	2.618	3.117	3.955	5.639	10.712
75	1.643	1.747	1.879	2.051	2.283	2.611	3.107	3.941	5.618	10.666
76	1.641	1.744	1.876	2.047	2.278	2.604	3.098	3.928	5.597	10.623
77	1.639	1.742	1.873	2.043	2.273	2.598	3.090	3.916	5.577	10.581
78	1.637	1.740	1.870	2.040	2.269	2.592	3.082	3.904	5.559	10.543
79	1.636	1.738	1.868	2.037	2.265	2.587	3.075	3.894	5.542	10.506
80	1.635	1.737	1.866	2.034	2.261	2.582	3.068	3.884	5.526	10.473
81	1.634	1.736	1.864	2.032	2.258	2.578	3.062	3.875	5.512	10.442
82	1.633	1.734	1.863	2.030	2.255	2.574	3.056	3.867	5.498	10.413
83	1.633	1.734	1.861	2.028	2.252	2.570	3.051	3.859	5.486	10.386
84	1.632	1.733	1.860	2.026	2.250	2.567	3.047	3.853	5.474	10.362
85	1.632	1.732	1.859	2.025	2.248	2.564	3.043	3.846	5.464	10.339

II.5(e) Social Security Level Income Option –50% Joint and Survivor Annuity.

PARTICIPANT AGE



		55	56	57	58	59	60	61	62	63	64
	25	0.445	0.481	0.521	0.564	0.611	0.662	0.718	0.780	0.846	0.920
	26	0.444	0.481	0.521	0.564	0.611	0.662	0.718	0.779	0.846	0 920
	27	0.444	0.480	0.520	0.563	0.610	0.662	0.718	0.779	0.846	0.919
	28	0.443	0.480	0.519	0.563	0.610	0.661	0.717	0.779	0.846	0.919
	29	0.442	0.479	0.519	0.562	0.609	0.661	0.717	0.778	0.846	0.919
	30	0.442	0.478	0.518	0.561	0.609	0.660	0.717	0.778	0 845	0.919
	31	0.441	0.478	0.517	0 561	0.608	0.660	0.716	0.778	0.845	0.919
	32	0.440	0.477	0.517	0.560	0.608	0.659	0.716	0.777	0.845	0.919
	33	0.439	0.476	0.516	0.559	0.607	0.659	0.715	0.777	0.845	0.919
	34	0.438	0.475	0.515	0.559	0.606	0.658	0.715	0.777	0.844	0.919
	35	0.437	0.474	0.514	0.558	0.605	0.657	0.714	0.776	0.844	0.918
	36	0.436	0.473	0.513	0.557	0.605	0.657	0.713	0.776	0.844	0.918
	37	0.435	0.472	0.512	0.556	0.604	0.656	0.713	0.775	0.843	0.918
	38	0.434	0.471	0.511	0.555	0.603	0.655	0.712	0.775	0.843	0.918
	39	0.433	0.470	0.510	0.554	0.602	0.654	0.712	0.774	0.842	0.918
	40	0.432	0.469	0.509	0.553	0.601	0.654	0.711	0.773	0.842	0.917
	41	0.431	0.468	0.508	0.552	0.600	0.653	0.710	0.773	0.842	0.917
	42	0.430	0.467	0.507	0.551	0.599	0.652	0.709	0.772	0.841	0.917
	43	0.429	0.466	0.506	0.550	0.598	0.651	0.708	0.772	0.841	0.917
B	44	0.427	0.464	0.505	0.549	0.597	0.650	0.708	0.771	0.840	0.916
E	45	0.426	0.463	0.504	0.548	0.596	0.649	0.707	0.770	0.840	0.916
N	46	0.425	0.462	0.502	0.547	0.595	0.648	0.706	0.769	0.839	0.916
E	47	0.423	0.460	0.501	0.545	0.594	0.647	0.705	0.769	0.839	0.915
F	48	0.422	0.459	0.500	0.544	0.593	0.646	0.704	0.768	0.838	0.915
I	49	0.421	0.458	0.498	0.543	0.591	0.645	0.703	0.767	0.837	0.915
C	50	0.419	0.456	0.497	0.541	0.590	0.643	0.702	0.766	0.837	0.914
I	51	0.418	0.455	0.496	0.540	0.589	0.642	0.701	0.765	0.836	0.914
A	52	0.416	0.453	0.494	0.539	0.587	0.641	0.700	0.764	0.836	0.914
R	53	0.415	0.452	0.493	0.537	0.586	0.640	0.699	0.764	0.835	0.913
Y	54	0.413	0.451	0.491	0.536	0.585	0.639	0.698	0.763	0.834	0.913
	55	0.412	0.449	0.490	0.534	0.583	0.637	0.697	0.762	0.834	0.913
	56	0.411	0.448	0.488	0.533	0.582	0.636	0.695	0.761	0.833	0.912
A	57	0.409	0.446	0.487	0.532	0.581	0.635	0.694	0.760	0.832	0.912
G	58	0.408	0.445	0.425	0.530	0.579	0.633	0.693	0.759	0.831	0.911
E	59	0.406	0.443	0.484	0.529	0.578	0.632	0.692	0.758	0.831	0.911
	60	0.405	0.442	0.483	0.527	0.577	0.631	0.691	0.757	0.830	0.911
	61	0.404	0.441	0.481	0.526	0.575	0.630	0.690	0.756	0.829	0.910
	62	0.403	0.439	0.480	0.525	0.574	0.628	0.689	0.755	0.829	0.910
	63	0.401	0.438	0.479	0.523	0.573	0.627	0.687	0.754	0.828	0.909
	64	0.400	0.437	0.477	0.522	0.571	0.626	0.686	0.753	0.827	0.909
	65	0.399	0.436	0.476	0.521	0.670	0.625	0.685	0.752	0.826	0.909

100



	55	56	57	58	59	60	61	62	63	64
66	0.398	0.434	0.475	0.520	0.569	0.624	0.684	0.751	0.826	0.908
67	0.397	0.433	0.474	0.518	0.568	0.623	0.683	0.750	0.825	0.908
68	0.396	0.432	0.473	0.517	0.567	0.622	0.682	0.750	0.824	0.908
69	0.395	0.431	0.472	0.516	0.566	0.620	0.681	0.749	0.824	0.907
70	0.394	0.430	0.471	0.515	0.565	0.619	0.680	0.748	0.823	0.907
71	0.393	0.429	0.470	0.514	0.564	0.619	0.679	0.747	0.823	0.906
72	0.392	0.429	0.469	0.513	0.563	0.618	0.679	0.746	0.822	0.906
73	0.392	0.428	0.468	0.512	0.562	0.617	0.678	0.746	0.821	0.906
74	0.391	0.427	0.467	0.512	0.561	0.616	0.677	0.745	0.821	0.905
75	0.390	0.426	0.466	0.511	0.560	0.615	0.676	0.744	0.820	0.905
76	0.390	0.426	0.466	0.510	0.559	0 614	0.675	0.744	0.820	0.905
77	0.389	0.425	0.465	0.509	0.559	0.614	0.675	0.743	0.819	0.905
78	0.389	0.425	0.465	0.509	0.558	0.613	0.674	0.742	0.819	0.904
79	0.389	0.424	0.464	0.508	0 558	0.612	0.674	0.742	0.818	0.904
80	0.388	0.424	0.464	0.508	0.557	0.612	0.673	0.741	0.818	0.904
81	0.388	0.424	0.463	0.507	0.557	0.611	0.673	0.741	0.818	0.904
82	0.388	0.423	0.463	0.507	0.556	0.611	0.672	0.741	0.817	0.903
83	0.388	0.423	0.463	0.507	0.556	0 610	0.672	0.740	0.817	0.903
84	0 387	0.423	0.462	0.506	0.555	0.610	0.671	0.740	0.817	0.903
85	0.387	0.423	0.462	0.506	0.555	0.610	0.671	0.740	0.816	0.903

101

II.5(f) Social Security Level Income Option - 50% Joint and Survivor (No Benefit After Age 65).

PARTICIPANT AGE



		55	56	57	58	59	60	61	62	63	64
	25	1.802	1.928	2.088	2.295	2.572	2.963	3.552	4.537	6.513	12.452
	26	1.800	1.926	2.086	2.292	2.569	2.959	3.547	4.531	6.505	12.436
	27	1.798	1.924	2.083	2.289	2.566	2.956	3.543	4.525	6.496	12.419
	28	1.796	1.922	2.081	2.287	2.563	2.952	3.538	4.519	6.487	12.402
	29	1.793	1.919	2.078	2.283	2.559	2.948	3.533	4.513	6.477	12.383
	30	1.791	1.917	2.075	2.280	2.556	2.943	3.528	4.506	6.467	12.364
	31	1.789	1.914	2.072	2.277	2.552	2.939	3.522	4.499	6.457	12.343
	32	1.786	1.911	2.069	2.273	2.548	2.934	3.517	4.491	6.446	12.321
	33	1.783	1.908	2.066	2.270	2.544	2.929	3.510	4.483	6.434	12.298
	34	1.781	1.905	2.062	2.266	2.539	2.924	3.504	4.474	6.421	12.274
	35	1.778	1.902	2.059	2.262	2.534	2.918	3.497	4.466	6.408	12.248
	36	1.775	1.899	2.055	2.258	2.529	2.913	3.490	4.456	6.394	12.221
	37	1.771	1.895	2.051	2.253	2.524	2.906	3.482	4.446	6.380	12.192
	38	1.768	1.891	2.047	2.248	2.519	2.900	3.475	4.436	6.365	12.162
	39	1.765	1.888	2.043	2.244	2.513	2.893	3.466	4.425	6.349	12.131
	40	1.761	1.884	2.038	2.239	2.508	2.887	3.458	4.414	6.332	12.098
	41	1.758	1.880	2.034	2.234	2.502	2.879	3.449	4.402	6.315	12.064
	42	1.754	1.876	2.029	2.228	2.495	2.1!72	3.440	4.390	6.297	12.029
	43	1.750	1.871	2.024	2.223	2.489	2.864	3.430	4.377	6.278	11.992
	44	1.746	1.867	2.019	2.217	2.482	2.856	3.420	4.364	6.259	11.953
B	45	1.742	1.863	2.014	2.211	2.176	2.848	3.410	4.351	6.239	11.914
E	46	1.738	1.858	2.009	2.205	2.469	2.840	3.400	4.337	6.218	11.873
N	47	1.734	1.854	2.004	2.199	2.462	2.831	3.389	4.323	6.196	11.830
E	48	1.730	1.849	1.999	2.193	2.454	2.823	3.378	4.308	6.174	11.786
F	49	1.726	1.844	1.993	2.187	2.447	2.814	3.367	4.293	6.152	11.741
I	50	1.722	1.839	1.988	2.180	2.439	2.804	3.355	4.278	6.129	11.695
C	51	1.718	1.835	1.982	2.174	2.432	2.795	3.344	4.262	6.105	11.648
I	52	1.713	1.830	1.977	2.167	2.424	2.786	3.332	4.246	6.081	11.600
A	53	1.709	1.825	1.971	2.161	2.416	2.776	3.320	4.230	6.057	11.551
R	54	1.705	1.820	1.966	2.154	2.408	2.767	3.308	4.214	6.032	11.502
Y	55	1.701	1.815	1.960	2.148	2.401	2.757	3.295	4.197	6.007	11.452
	56	1.697	1.810	1.954	2.141	2.393	2.748	3.283	4.180	5.982	11.401
	57	1.693	1.806	1.949	2.135	2.385	2.738	3.271	4.164	5.957	11.350
A	58	1.689	1.801	1.943	2.128	2.377	2.728	3.259	4.147	5.931	11.299
G	59	1.685	1.797	1.938	2.122	2.370	2.719	3.247	4.131	5.906	11.247
E	60	1.681	1.792	1.933	2.116	2.362	2.710	3.235	4.114	5.881	11.196
	61	1.677	1.788	1.928	2.110	2.355	2.700	3.223	4.098	5.856	11.146
	62	1.674	1.784	1.923	2.104	2.347	2.691	3.211	4.082	5.832	11.096
	63	1.670	1.780	1.918	2.098	2.340	2.683	3.200	4.066	5.807	11.046
	64	1.667	1.776	1.913	2.092	2.334	2.674	3.188	4.051	5.784	10.997

102



	55	56	57	58	59	60	61	62	63	64
65	1.664	1.772	1.909	2.087	2.327	2.666	3.178	4.036	5.760	10.950
66	1.661	1.768	1.905	2.082	2.320	2.658	3.167	4.021	5.738	10.903
67	1.658	1.765	1.900	2.077	2.314	2.650	3.157	4.007	5.716	10.858
68	1.655	1.762	1.896	2.072	2.308	2.642	3.147	3.993	5.694	10.814
69	1.653	1.759	1.893	2.067	2.303	2.635	3.137	3.980	5.674	10.771
70	1.650	1.756	1.889	2.063	2.297	2.628	3.128	3.967	5.653	10.729
71	1.648	1.753	1.886	2.059	2.292	2.621	3.119	3.955	5.634	10.689
72	1.646	1.750	1.883	2.055	2.287	2.615	3.111	3.943	5.615	10.650
73	1.644	1.748	1.880	2.051	2.282	2.609	3.103	3.931	5.597	10.612
74	1.642	1.746	1.877	2.048	2.278	2.603	3.095	3.921	5.580	10.576
75	1.640	1.744	1.874	2 044	2.274	2.598	3.088	3.910	5.564	10.542
76	1.639	1.742	1.872	2.041	2.270	2.593	3.081	3.900	5.548	10.509
77	1.638	1.740	1.870	2.039	2.266	2.588	3.075	3.891	5.533	10.478
78	1.637	1.739	1.868	2 036	2.263	2.584	3.069	3.883	5.520	10.449
79	1.636	1.737	1.866	2.034	2.260	2.580	3.063	3.875	5.507	10.422
80	1.635	1.736	1.865	2.032	2.257	2.576	3.058	3.867	5.495	10.397
81	1.634	1.735	1.863	2.030	2.255	2.573	3.054	3.861	5.484	10.373
82	1.633	1.734	1.862	2.029	2.253	2.570	3.049	3.855	5.474	10.352
83	1.633	1.734	1.861	2.027	2.251	2.567	3.046	3.849	5.465	10.332
84	1.633	1.733	1.860	2.026	2.249	2.565	3.042	3.844	5.456	10.313
85	1.632	1.733	1.860	2.025	2.248	2.562	3.039	3.839	5.448	10.296

103

III. Lexington Plan

Contingent annuitant factors shall be as determined by the following formulas for affected Participants retiring at age 65.


100% Continuation	75% plus 1% for each year the contingent annuitant is older than the Lexington Participant or minus 1% for each year the contingent annuitant is younger than the Lexington Participant.


75% Continuation	80% plus 3/4% for each year the contingent annuitant is older than the Lexington Participant or minus 3/4% for each year the contingent annuitant is younger than the Lexington Participant.


50% Continuation	86% plus 1/2% for each year the contingent annuitant is older than the Lexington Participant or minus 1/2% for each year the contingent annuitant is younger than the Lexington Participant.

The initial factor shall be increased by .6% for each full year the Lexington Participant is under age 65 and decreased by .6% for each full year the Lexington Participant is over age 65. Age shall be determined as the age on the individual’s nearest birthday.

Table Illustrating the Factors at Various Ages



Participant’s Age	Contingent Annuitant’s Age	100% Continuance	75% Continuance	50% Continuance
65	70	.800	.838	.885
65	65	.750	.800	.860
65	60	.700	.763	.835
65	55	.650	.725	.810
62	64	.788	.833	.888
62	60	.748	.803	.868
60	62	.800	.845	.900
55	53	.790	.845	.910

_________________

104

Ten Year Guaranteed Period Factors

Age Factor

65 .910

64 .917

63 .924

62 .931

61 .938

60 .945

59 .952

58 .959

57 .966

56 .973

55 .980

IV. ReliaStar Plan

Actuarial Equivalence shall be determined through the consistent application of the UP 1984

Mortality Table with a two-year set back or any successor table thereto. The interest rate assumption for a Plan Year shall be the interest rate assumptions which are used by the Pension Benefit Guaranty Corporation immediate annuity factors or deferred annuity factors (whichever is applicable) as in effect on the first day of said Plan Year.

V. Security-Connecticut Plan

For purposes of converting the single life annuity to an optional form of payment, Actuarial Equivalence shall be determined using an interest rate of 7.5% and the 1971 Group Annuity Table for males with no age adjustment for the Participant but with six-year set back for the Spouse, Domestic Partner or Beneficiary.

VI. USLICO Plan

For purposes of converting the single life annuity to an optional form of payment, Actuarial Equivalence shall be determined using an interest rate of 7%, and the 1971 Group Annuity Table for males.

VII. Special Rules For Level Income Option Or Social Security Bridge

For purposes of converting a single life annuity to a level income or Social Security bridge optional form of benefit, the term “Actuarial Equivalent” means a benefit that is equal to the greater of (A) the benefit determined using the assumptions described in this Appendix for the applicable Prior Plan, or (B) the benefit determined using the Applicable Interest Rate and the Applicable Mortality Table for the Plan Year that includes the Benefit Commencement Date.

105

APPENDIX 2.4

LIST OF PARTICIPATING EMPLOYERS

AS OF JANUARY 1, 2018

Pursuant to resolutions of the Board adopted in December 2003, this Appendix may be changed from time to time by action of the PAC without the need for a Plan amendment.

PARTICIPATING EMPLOYERS

Voya Retirement Insurance and Annuity Company

Voya Institutional Plan Services, LLC

Voya Insurance and Annuity Company

Voya Investment Management LLC

Voya Services Company

ReliaStar Life Insurance Company

Voya Institutional Trust Company

ReliaStar Life Insurance Company of New York

Security Life of Denver Insurance Company

Voya Financial Advisors, Inc.

106

APPENDIX 3.1(a)

PRIOR PLAN NORMAL RETIREMENT DATE

I. Application. This Appendix describes the Normal Retirement Date that will apply in lieu of the Normal Retirement Date in Section 3.1(a) of the main text of the Plan to the extent more favorable to the Participant.

II. USLICO Plan. For a Participant whose Prior Plan was the USLICO Plan, the Normal Retirement Date is the first day of the month in which the Participant reaches Normal Retirement Age.

107

APPENDIX 3.1(b)(ii)

PRIOR PLAN BENEFIT

I. Application. This Appendix describes the Prior Plan Benefit.

II. AFS Plan. The Prior Plan Benefit for each Participant whose Prior Plan is the AFS Plan is the monthly single life annuity Actuarial Equivalent of such Participant’s Account determined as of December 31, 2001, as adjusted for Interest Credits from December 31, 2001 to his or her Normal Retirement Date; provided, however, that the Interest Credits for any Plan Year for the “cash balance account” determined under Article 4 of the AFS Plan, without regard to Articles 5 and 6 of the AFS Plan, shall not be less than 5.00%.

III. EIC Plan, LOG Plan or SLD Plan. The Prior Plan Benefit for each Participant whose Prior Plan is the LOG Plan, the SLD Plan, or the EIC Plan is the benefit accrued under such plan as of December 31, 2001 adjusted, if applicable, in accordance with this paragraph. For each Participant who was an Employee on December 31, 2001 and who remains continuously employed as an Employee after that date, the final average compensation portion of the benefit accrued as of December 31, 2001 will be multiplied by the ratio (not less than one) of the Participant’s Final Average Compensation as of his or her Termination Date (determined in accordance with Section 1.87) over his or her “final average compensation” under the applicable Prior Plan as of December 31, 2001. If a Participant described in the preceding sentence has a Termination Date after December 31, 2001 and thereafter resumes employment as an Employee, the indexing described in the preceding sentence shall not apply to any period of Employment following such Termination Date. The Account Balance portion of the Prior Plan Benefit will be adjusted for Interest Credits to his or her Normal Retirement Date. Notwithstanding the foregoing, for each Participant who earned years of benefit service under the EIC Plan, the LOG Plan, or the SLD Plan after December 31, 1999, his or her “pre-2000 accrued benefit” (as defined in the applicable Prior Plan) will be multiplied by the ratio of the Participant’s Final Average Compensation as of his or her Termination Date over his or her Final Average Compensation as of December 31, 1999, which ratio will not be less than one; provided, however, that if such a Participant has a Termination Date after December 31, 1999 and thereafter resumes employment as an Employee, the indexing described in this sentence shall not apply to any period of Employment following such Termination Date.

IV. Financial Services Plan. The Prior Plan Benefit for each Participant who (i) was an employee of ING Financial Services LLC and a participant in the ING US Financial Services Corporation Retirement Plan (“Financial Services Plan”) on December 31, 2003, (ii) who became an employee of ING Investment Management, LLC on January 1, 2004, and (iii) remains continuously employed as an Employee after that date, is equal to the benefit accrued for such Participant under the Financial Services Plan as of December 31, 2003 (the “Financial Services Plan Benefit”) adjusted in accordance with this paragraph as of such Participant’s Termination Date and reduced by the Financial Services Plan Benefit. For a Participant who remains continuously employed as an Employee after December 31, 2003, the Financial Services Plan Benefit will be multiplied by the ratio (not less than one) of the Participant’s Final Average Compensation as of his or her Termination Date over the Participant’s Final Average

108

Compensation as of December 31, 2003. Both the numerator and the denominator of the ratio will apply the definition of Compensation and Final Average Compensation from this Plan. For clarification, the adjustment described in the preceding sentence is the only Prior Plan Benefit payable under this Plan and the Financial Services Plan Benefit is payable only from the Financial Services Plan. If a Participant described in the first sentence of this section has a Termination Date after December 31, 2003 and thereafter resumes employment as an Employee, the indexing described in the second and third sentences of this section shall not apply to any period of Employment following such Termination Date.

V. Lexington Plan. The Prior Plan Benefit for each Participant whose Prior Plan is the Lexington Plan is the frozen benefit accrued by that Participant under the Lexington Plan prior to December 31, 2001.

VI. ReliaStar Plan. The Prior Plan Benefit for each Participant whose Prior Plan is the ReliaStar Plan is the frozen benefit accrued by that Participant under the ReliaStar Plan prior to December 31, 2001.

A ReliaStar Participant who formerly participated in the USLICO Plan is eligible for a Social Security bridge benefit if benefits under the pre-1991 USLICO Plan formula for service and compensation through December 31, 1995 is better than the Participant’s benefits under the USLICO Plan 1991 formula.

The bridge benefit is equal to the amount of the Social Security reduction that normally applies to benefits under the pre-1991 formula. The Social Security reduction will begin (and the bridge benefit will end) when the Participant reaches age 62.

A ReliaStar Participant who formerly participated in the Security-Connecticut Plan and who terminates employment after age 55 but before age 62 and who immediately commences benefits is eligible for a Social Security bridge benefit on benefits earned under the Security-Connecticut Plan as of December 31, 1997. The bridge benefit is payable until the beginning of the month in which the Participant dies or reaches age 62, whichever occurs first.

VII. Hypothetical Prior Plan Benefit for Eligible Employees Hired Between January 1, 2000 and December 31, 2001. Each Eligible Employee who (1) was hired as an employee of an employer participating in a Prior Plan on or after January 1, 2000 and before January 1, 2002, and (2) would have become a participant in a Prior Plan in 2002, shall be deemed to have a Prior Plan Benefit equal to the benefit, if any, he or she would have earned under such Prior Plan for his or her period of employment in 2000 and 2001.

VIII. Portion of Accrued Benefit Derived from Prior Plan Account Balance.


(A)	General. A nominal Account and Account Balance will be maintained for each Participant who had a “cash balance account” under a Prior Plan and will have the following allocations made to such Account.

109

(B)

Interest Credits. For Plan Years beginning prior to January 1, 2012, an Interest Credit will be allocated to each active and inactive Participant’s Account as of the last day of each Plan Year, calculated by multiplying his or her Account Balance as of the first day of that Plan Year by the Interest Credit Percentage for that Plan Year. For the Participant whose Benefit Commencement Date occurs other than on the last day of a Plan Year, the Plan will allocate an Interest Credit for such Plan Year based on the Interest Credit Percentage in effect for the Plan Year, multiplied by the ratio of whole months expired in the year before the Benefit Commencement Date, over 12. Starting January 1, 2012, Interest Credits will be allocated to each active and inactive Participant’s Account on a monthly basis in accordance with Section 3.9(c).

(C)

Termination of Allocations. No Participant will receive an allocation of employer credits to a Prior Plan Account after December 31, 2001. Each Vested terminated Participant will receive allocations of Interest Credits until his or her Benefit Commencement Date in accordance with Section 3.9(c). The non-Vested Participant will continue to receive allocations of Interest Credits until he or she incurs a Termination Date, at which time the Account will be forfeited. The forfeited Account shall be restored (with Interest Credits) if the Participant is reemployed with a Controlled Group Member before a Five-Year Break, or after December 31, 2011. No Participant will receive any allocation of Interest Credits after his or her Benefit Commencement Date.


(D)	Accrued Benefit Attributable to Account Balance. A Participant’s Cash Balance Pension Formula Accrued Benefit, including the portion thereof attributable to a Prior Plan Account Balance, shall be determined in accordance with Section 3.1(c).

110

APPENDIX 3.1(e)

AFS MINIMUM BENEFIT

I. Application. This Appendix applies to each AFS Transition Participant and each Aeltus Participant.

II. Aeltus. Each Aeltus Participant who is an AFS Specified Transition Participant will be eligible for an AFS Minimum Benefit but that benefit will be the same AFS Minimum Benefit payable to an AFS Non-Specified Participant. The remainder of the AFS Minimum Benefit shall be paid from the Financial Services Plan.

III. AFS Transition Benefit. The AFS Transition Benefit means (A) minus (B), where:

A = The Present Value of the Gross Benefit; and

B = The Present Value of the Offset.

The AFS Transition Benefit can never be less than 50% of the Present Value of the Gross Benefit. In the case that the AFS Transition Benefit is less than 50% of the Present Value of the Gross Benefit, 50% of the Present Value of the Gross Benefit will be substituted for the AFS Transition Benefit.

IV. Credited Service. Credited Service is the sum of (A) and (B), where:

A = The period or periods of the AFS Transition Participant’s employment considered in the determination of benefit accrual under the AFS Plan through December 31, 2001, as determined under the AFS Plan Document; and

B = For an AFS Specified Transition Participant (other than an Aeltus Participant), his or her Benefit Service earned in the 2002 through 2006 Plan Years while the AFS Transition Participant is considered an AFS Transition Participant. For an AFS Non-Specified Transition Participant or Aeltus Participant, no Benefit Service after December 31, 2001 will be recognized.

V. Determination Age. The AFS Transition Participant’s Determination Age is the AFS Transition Participant’s age at his or her Determination Date in whole years and completed months.

VI. Determination Date. The Determination Date is either the AFS Transition Participant’s Termination Date or Benefit Commencement Date, depending on the context.

VII. Gross Benefit.

A. The Gross Benefit means the product of (1), (2), and (3), where:

111


1 =	1.5% of the AFS Transition Participant’s Final Average Compensation calculated as of the earlier of December 31, 2006 or the AFS Transition Participant’s Termination Date ending his or her status as an AFS Transition Participant;


2 =	The AFS Transition Participant’s Credited Service (limited to a maximum of 35 years); and


3 =	100% minus the Early Retirement Reduction Factor from Table 2 at the commencement age from Table 1.


B.	The commencement age assumed for the Gross Benefit is determined based on the Participant’s Determination Age and Vesting Service from Table 1 below.

TABLE 1



Determination Age	Vesting Service at Termination	Gross Benefit Commencement Age
Less than Age 50	Less than 15 years	Age 65
Less than Age 50	At least 15 years	Age 50
At least Age 50 and Less than Age 65	Less than 15 years	Age 65
At least Age 50 and less than Age 65	At least 15 years	Determination Age
At least Age 65	Any	Determination Age

112

Table 2

Early Retirement Reduction Factor



Commencement Age*	Percent Reduction
50	44.0%
51	40.0%
52	36.0%
53	32.0%
54	28.0%
55	24.0%
56	20.0%
57	16.0%
58	12.0%
59	8.0%
60	4.0%
61	2.0%
62	0.0%
63	0.0%
64	0.0%
65	0.0%

*In determining the Participant’s commencement age, completed years and months are used. Interpolation may be required.

VIII. Offset.

A. The Offset means the product of (1) and (2), where:


1 =	1.5% of the Participant’s PIA calculated as of the earlier of December 31, 2006 or the AFS Transition Participant’s Termination Date ending his status as an AFS Transition Participant; and


2 =	The Participant’s Credited Service (limited to a maximum of 33.3333 years).

113

B. The commencement age assumed for calculating the PIA as well as the Present Value of the Offset is determined based on the AFS Transition Participant’s Determination Age and Vesting Service. This determination is summarized in the following table:

TABLE 3



Determination Age	Vesting Service at Termination Date	Offset Commencement Age
Less than Age 62	Less than 15 years	Age 65
Less than Age 62	At least 15 years	Age 62
At least Age 62 and less than Age 65	Less than 15 years	Age 65
At least Age 62 and less than Age 65	At least 15 years	Determination Age
At least Age 65	Any	Determination Age

IX. PIA. PIA means the Primary Insurance Amount which is or may be payable to the Participant at the commencement age determined in Table 3 under the provisions of the Federal Social Security Act (as it is in effect on the Determination Date), based on the assumption that the Participant’s earnings before his or her employment with AFS and his or her earnings after the earlier of December 31, 2006 or the AFS Transition Participant’s Termination Date ending his or her status as an AFS Transition Participant are zero.

X. Present Value or Present Value of Gross Benefit or Present Value of Offset. Present Value is determined as of the applicable Determination Age using the following actuarial assumptions:


A.	The Applicable Interest Rate and Applicable Mortality Table for the Plan Year that includes the Determination Date.


B.	The cost-of-living adjustment rate (COLA Rate) as of the Determination Date, which is determined by the following steps:


1.	Determine the cost-of-living adjustment rate (defined in Appendix 3.7) for the Plan Year in which the Determination Date occurs. It should be rounded to the nearest tenth of 1% and capped at 3%.


2.	Repeat (1) for each of the four Plan Years immediately preceding the Determination Date.


3.	Compute the average of the five cost-of-living adjustment rates. It should be rounded to the nearest hundredth of 1%. The result is the COLA Rate.

114

XI. Transition Cash Balance Account (TCBA). The TCBA is a historical account established as of December 31, 2001 that receives Interest Credits.

XII. AFS Minimum Benefit.

Calculate Lump-Sum Amount at Termination Date. At the AFS Transition Participant’s Termination Date, the greatest of (1), (2) and (3), below (called the “AFS Present-Value Measuring Amount”), shall be used as the measuring amount to first be expressed as a single life annuity at the Participant’s Normal Retirement Date (or Determination Date if after the Normal Retirement Date) pursuant to B, below, and then compared against the amount determined under Section 3.1(e)(i)(A):


1 =	The AFS Transition Participant’s Prior Plan Account Balance with Interest Credits through Termination Date;


2 =	The AFS Transition Participant’s TCBA with Interest Credits through Termination Date; and


3 =	The AFS Transition Participant’s AFS Transition Benefit at Termination Date.

Compare as a Single Life Annuity Benefit at Normal Retirement Date (or After). To express the AFS Present-Value Measuring Amount under (A) as a single life annuity benefit (called an “AFS Minimum Benefit Comparison Annuity”) at the Participant’s Normal Retirement Date for a Participant who has not yet reached his or her Normal Retirement Date, the AFS Present-Value Measuring Amount under (A) will be projected to the Participant’s Normal Retirement Date with assumed future interest at the Interest Credit Percentage in effect as of the Determination Date, and such balance will be converted into a single life annuity starting at the Participant’s Normal Retirement Date using the Applicable Interest Rate and Applicable Mortality Table in effect under the Plan as of the Determination Date. To express the AFS Present-Value Measuring Amount determined under (A) as an AFS Minimum Benefit Comparison Annuity as of a Determination Date that is at or after a Participant’s Normal Retirement Date for a Participant who has reached his or her Normal Retirement Date, the AFS Present-Value Measuring Amount determined under (A) will be converted into a single life annuity starting at as of such Determination Date using the Applicable Interest Rate and Applicable Mortality Table in effect under the Plan as of the Determination Date.


C.	At Benefit Commencement Date. If the AFS Minimum Benefit Comparison Annuity derived under (B) above exceeds the amount determined under Section 3.1(e)(i), then, in lieu of a retirement benefit attributable to the Final Average Pay Pension Formula described in Section 3.1(b) and that portion of his or her Cash

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Balance Pension Formula Accrued Benefit described in Section 3.1(c) attributable to his or her Prior Plan Account Balance, the AFS Transition Participant shall be entitled to a retirement benefit based on his or her AFS Minimum Benefit which is the greater of (1) or (2) as of the Benefit Commencement Date, where:


1 =	The Participant’s AFS Present-Value Measuring Amount as of his or her Termination Date under (A), credited with interest through his or her Benefit Commencement Date at an annual rate equal to the Interest Credit Percentage; or


2 =	The Participant’s AFS Transition Benefit at his or her Benefit Commencement Date.

(For clarity, the Participant also may be entitled to a retirement benefit based on his or her Cash Balance Pension Formula Accrued Benefit described in Section 3.1(c), calculated by disregarding the portion thereof attributable to his or her Prior Plan Account Balance.)

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APPENDIX 3.3(a)

PRIOR PLAN EARLIEST RETIREMENT DATES

The Earliest Retirement Date described below will apply in lieu of the Earliest Retirement Date in Section 1.35 and Section 3.3(a) of the main text of the Plan to the extent more favorable to the Participant for his or her Prior Plan Benefit or AFS Minimum Benefit:


I.	AFS Plan. The Earliest Retirement Date for an AFS Transition Participant for his or her Prior Plan Benefit or AFS Minimum Benefit is the first day of the month coincident with or next following the date the Employee reaches age 50 with 15 years of Vesting Service.


II.	LOG Plan – Former Southland Life Participants. The Earliest Retirement Date for a LOG Participant who was a participant in the Southland Plan for the portion of his or her Prior Plan Benefit attributable to the Southland Plan is the first day of the month following age 55.

III.

ReliaStar Plan. The Earliest Retirement Date for a Participant for the portion of his or her Prior Plan Benefit attributable to the ReliaStar Plan is (a) the first day of the month coincident with or next following attainment of age 55 with at least ten years of Vesting Service, or (b) for a Participant hired prior to December 31, 1993, the first day of the month coincident with or next following (i) age 60 with no service requirement, or (ii) age 55 with ten years of Vesting Service.

For a Participant who also participated in the USLICO Plan, the Earliest Retirement Date for the portion of his or her Prior Plan Benefit attributable to the USLICO Plan is the first day of the month following the attainment of age 55.


IV.	Lexington Plan. The Earliest Retirement Date for a Participant who also participated in the Lexington Plan for the portion of his or her Prior Plan Benefit attributable to the Lexington Plan is the first of the month coincident with or next following attainment of at least age 55.

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APPENDIX 3.3(b)(ii)

EARLY COMMENCEMENT REDUCTION FACTORS
FOR PRIOR PLAN BENEFITS OTHER THAN THE AFS MINIMUM BENEFIT


I.	Application. This Appendix provides early commencement reduction factors applicable to Prior Plan Benefits other than the AFS Minimum Benefit. See Appendix 3.1(e) for the AFS Minimum Benefit.


II.	EIC Plan. The following table applies to EIC Participants who terminated employment prior to January 1, 2000. Benefits accrued on or after January 1, 2000 will be reduced using the reduction factors in the main text of the Plan. Benefits will be reduced based on the date of termination and the benefit service earned at termination under the EIC Plan:



Age	Reduction if less than 25 years of benefit service and Retired prior to 1994	Reduction if less than 25 years of benefit service and Retired after 1993	Reduction if more than 25 years of benefit service
55	66.666667%	50.0%	35.0%
56	60.0%	45.0%	30.0%
57	53.333333%	40.0%	25.0%
58	46.666667%	35.0%	20.0%
59	40.0%	30.0%	15.0%
60	33.333333%	25.0%	10.0%
61	26.666667%	20.0%	5.0%
62	20.0%	15.0%	0.0%
63	13.333333%	10.0%	0.0%
64	6.666667%	5.0%	0.0%
65	0.0%	0.0%	0.0%

For Vested EIC Participants who terminated employment prior to July 1, 1988, the 25 years of benefit service requirement found in the above table is replaced with 20 years of vesting service, each as determined under the EIC Plan.


III.	Lexington Plan. A Lexington Participant eligible to begin receiving a benefit before Normal Retirement Date will have his or her benefit attributable to the Lexington Plan reduced by the following factors based on his or her age at Benefit Commencement Date. Interpolation will be used for partial months.

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Age	Reduction Percentage
55	0.500
56	0.467
57	0.434
58	0.400
59	0.367
60	0.333
61	0.267
62	0.200
63	0.134
64	0.067
65	0.000


IV.	LOG Plan. Participants in the LOG Plan who terminated prior to January 1, 2000 and who were not eligible for the LOG Field Force Plan, or for Participants in the LOG Field Force Plan who terminated prior to January 1, 1997 were entitled to the following early commencement reductions:


A.	Pre-1994. The benefit accrued prior to 1994 is reduced by 0.416667 percent (5/12%) per month, for each month that precedes age 65.

Post-1993. Benefits accrued after 1993 and before 2000 are reduced as follows: If the benefit commences on or after age 62, it is unreduced. If the benefit commences prior to age 62, it will be reduced by 0.558333 percent per month for each month preceding age 62 up to a maximum of 24 months. The benefit will be further reduced by 0.416667 percent per month for each month that the Benefit Commencement Date precedes age 60, up to a maximum of 60 months.

The Netherlands Insurance Company Plan. Participants in the LOG Plan who also participated in the TNIC Plan will have their benefits reduced as follows: If the benefit commences on or after age 62, it is unreduced. If the benefit commences prior to age 62, it will be reduced by 0.558333 percent per month for each month preceding age 62 up to a maximum of 24 months. The benefit will be further reduced by 0.416667 percent per month for each month that the Benefit Commencement Date precedes age 60, up to a maximum of 60 months.


D.	Southland Life Plan. A Participant who also participated in the Southland Plan whose Benefit Commencement Date is before age 62 will have his or her Prior Plan Benefit attributable to the Southland Plan reduced by 5% per year for years between age 55 and 62. If the Participant’s Benefit Commencement Date is on or after age 62, the benefit is unreduced.

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V.	SLD Plan. Participants in the SLD Plan who terminated prior to January 1, 2000 were entitled to early retirement benefits under a Pre-1989 and Post-1988 formula. The reduction schedules for these benefits are as follows:

Post-1988. Participants commencing early retirement benefits on or after age 62 are entitled to an unreduced retirement benefit for the portion of their benefit attributable to the SLD Plan earned after 1988. If the Benefit attributable to the SLD Plan commences prior to age 62, it will be reduced by 0.558333 percent per month for each month preceding age 62 to a maximum of 24 months. The benefit will be further reduced by 0.416667 percent per month for each month that the Participant’s Benefit Commencement Date precedes age 60, up to a maximum of 60 months.


B.	Pre-1989. The portion of the SLD Plan Benefit earned before 1989 is reduced for early commencement by .5% per month (6% per year) from 61 - 65 and .3% per month (3.6% per year) from 55-60.


VI.	ReliaStar Plan. The portion of the benefit attributable to the ReliaStar Plan will be reduced by the following percentages for Early Retirement based on age and Vesting Service at Benefit Commencement Date. Interpolation will be used for partial years.



Age at BCD	Years of Vesting Service at BCD
	10	11	12	13	14	15+
55	21%	21%	21%	21%	21%	21%
56	18%	18%	18%	18%	18%	18%
57	15%	15%	15%	15%	15%	15%
58	15%	12%	12%	12%	12%	12%
59	15%	12%	9%	9%	9%	9%
60	15%	12%	9%	6%	6%	6%
61	12%	12%	9%	6%	3%	3%
62	9%	9%	9%	6%	3%	0%
63	6%	6%	6%	6%	3%	0%
64	3%	3%	3%	3%	3%	0%
65	0%	0%	0%	0%	0%	0%

A Participant who is eligible for a Vested Termination Benefit, but not an Early Retirement Benefit, and who chooses to begin receiving his or her benefit attributable to the ReliaStar Plan before his or her Normal Retirement Date will have his or her benefit attributable to the ReliaStar Plan reduced by the following percentages based on his or her age at the Benefit Commencement Date:

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Age at Benefit Commencement Date	Reduction Percentage
55	55%
56	52%
57	48%
58	44%
59	39%
60	35%
61	30%
62	23%
63	16%
64	9%
65	0%

Security-Connecticut Plan. A Participant who also participated in the Security- Connecticut Plan and who is eligible to begin receiving a benefit before Normal Retirement Date will have his or her benefit attributable to the Security- Connecticut Plan reduced by the following percentages based on age and years of Vesting Service at the Benefit Commencement Date. Interpolation will be used for partial years.



Age at Benefit Commencement Date	Years of Vesting Service at Benefit Commencement Date
Age at Benefit Commencement Date	Less than 20	20-24	25+
55	65%	50%	37%
56	60%	46%	31%
57	55%	42%	25%
58	50%	38%	20%
59	45%	34%	15%
60	40%	30%	10%
61	33%	26%	5%
62	25%	21%	0%
63	17%	15%	0%
64	9%	8%	0%
65	0%	0%	0%

USLICO Plan. A Participant who also participated in the USLICO Plan and who is eligible to begin receiving a benefit before Normal Retirement Date will have his or her benefit attributable to the USLICO Plan reduced by the following percentages based on the period during which the benefit was accrued. The Pre- 1991 Factors will be applied to the portion of the benefit accrued under the USLICO Plan before 1991 and the Post-1990 Factors will be applied to the

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portion of the benefit accrued under the USLICO Plan after 1990. Interpolation will be used for partial years.



Age	Accrued Benefit Period
	Pre-1991 Factors	Post-1990 Factors
55	30%	50%
56	27%	43%
57	24%	36%
58	21%	29%
59	18%	22%
60	15%	15%
61	12%	7.5%
62	9%	0%
63	6%	0%
64	3%	0%
65	0%	0%

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APPENDIX 3.4(a)

PRIOR PLAN VESTING SCHEDULES


I.	Application. This Appendix describes any special vesting rules applicable to Participants who also participated in a Prior Plan. A Participant who terminated employment under a Prior Plan will be Vested in accordance with the schedule described in the Prior Plan at the time of his or her termination of employment except as provided below.


II.	ING Financial Services Corporation Plan. Each Participant who was an employee of ING Financial Services LLC and who was a participant in the ING US Financial Services Corporation Retirement Plan on December 31, 2003 and who became an employee of ING Investment Management LLC on January 1, 2004 shall be fully vested.

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APPENDIX 3.7

COST-OF-LIVING ADJUSTMENTS

I. Application. This Appendix 3.7 describes the cost-of-living adjustments for certain benefits as described in this Appendix. Nothing in this Appendix is intended to provide a cost-of-living adjustment that would not have been provided under the applicable Prior Plan.

II. Definitions.

A. Adjusted Benefit. The Adjusted Benefit equals the benefit payable to the Participant or Beneficiary that reflects cost-of-living adjustments. The Adjusted Benefit may not be less than the Initial Benefit.

B. Adjustment Rate. An amount equal to the percent change in the Consumer Price Index, which is calculated using an applicable table and applicable month.

C. Initial Benefit. The Initial Benefit is the benefit payable in the optional form of annuity elected by the Participant or Beneficiary that is payable on the Benefit Commencement Date.

III. AFS Transition Participants.

A. Applicable Benefit.


1.	The Participant is entitled to receive cost-of-living adjustments on the portion of his or her benefit attributable to his or her AFS Minimum Benefit to the extent provided under the AFS Plan as in effect immediately before the Merger.


2.	The Participant must elect to receive his or her entire AFS Minimum Benefit (including the benefit attributable to his or her Account Balance) as an annuity with cost-of-living adjustments.

B. Methodology.


1.	The applicable table is the Bureau of Labor Statistics Consumer Price Index, U.S. City Average for Urban Wage Earners and Clerical Workers, published by the United States Department of Labor.


2.	The applicable month is the September which immediately precedes the Plan Year.


3.	The Adjustment Rate is calculated by dividing the value of the Consumer Price Index under the applicable table in the applicable month for the

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current Plan Year by the value of the Consumer Price Index under the same table 12 months earlier.


4.	The Adjustment Rate shall be rounded to the nearest tenth of one percent.


5.	The Adjustment Rate shall not exceed 3.0%.

C. First cost-of-living adjustment.


1.	Timing. The first cost-of-living adjustment will occur on January 1 following the Benefit Commencement Date.


2.	Amount. The Adjusted Benefit is equal to the product of (a) and (b) below, where:


a) =	The Initial Benefit; and


b) =	One plus the Adjustment Rate.

D. Subsequent cost-of-living adjustments.


1.	Each January 1, the Adjusted Benefit will be adjusted as described in (C)(2) above, except that the Adjusted Benefit will replace the Initial Benefit in (C)(2)(a).


2.	If a cost-of-living adjustment would decrease the Adjusted Benefit below the Initial Benefit, the full value of what otherwise would have been a negative adjustment will be taken into account in determining any subsequent increases.

E. Treatment of bridge benefit. If the Participant selected an optional form with a Social Security bridge benefit:


1.	While the bridge benefit is payable,


a)	The Participant’s Initial Benefit is equal to his or her total benefit, which includes any bridge benefit.


b)	The Participant’s Adjusted Benefit is calculated using the Initial Benefit described in (a) above.

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2. Once the bridge benefit is no longer payable,


a)	The Participant’s Initial Benefit does not include any bridge benefit for purposes of determining whether the Adjusted Benefit is less than the Initial Benefit.


b)	The Participant’s Adjusted Benefit for the first cost of living adjustment after the bridge benefit is no longer payable is reduced by the amount of any bridge benefit included in the Initial Benefit.

IV. EIC Plan Participants.

A. Applicable Benefit.


1.	The Participant is entitled to receive cost-of-living adjustments on the portion of his or her Benefit attributable to his or her Indexed Pre-2000 Accrued Benefit as indexed to December 31, 2001 to the extent provided under the EIC Plan as in effect prior to January 1, 2002.


2.	No adjustment is made to the portion of the Accrued Benefit that is attributable to any employee contributions made to the Plan before 1991.


3.	The Participant must elect to receive his or her entire Accrued Benefit (other than the benefit attributable to his or her Account Balance) as an annuity.

B. Methodology.


1.	The applicable table is the Bureau of Labor Statistics Consumer Price Index, U.S. City Average for All Urban Consumers, published by the United States Department of Labor.


2.	The applicable month is the August which immediately precedes the Plan Year.


3.	The Adjustment Rate is calculated by dividing the value of the Consumer Price Index under the applicable table in the applicable month for the current Plan Year by the value of the Consumer Price Index under the same table 12 months earlier.


4.	The Adjustment Rate shall be rounded to the nearest tenth of 1%.


5.	The Adjustment Rate shall not exceed 3.0%.

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C. First cost-of-living adjustment.


1.	Timing. The first cost-of-living adjustment will occur on January 1 following the Benefit Commencement Date.


2.	Amount. The Adjusted Benefit is equal to the product of (a) and (b) below, where:


a) =	The Initial Benefit; and


b) =	One plus the value of (i) multiplied by (ii) divided by (iii) below, where:


(i) =	The Adjustment Rate calculated in (B) above;


(ii)	The number of months for which the Participant received payment in the previous Plan Year; and


(iii) =	12.

D. Subsequent cost-of-living adjustments.


1.	Each January 1, the Adjusted Benefit will be adjusted as described in (C)(2) above, except that the Adjusted Benefit will replace the Initial Benefit in (C)(2)(a).


2.	If a cost-of-living adjustment would decrease the Adjusted Benefit below the Initial Benefit, the full value of what otherwise would have been a negative adjustment will be taken into account in determining any subsequent increases.

E. Treatment of Bridge Benefit. If the Participant selected an optional form of benefit with a Social Security bridge benefit:


1.	While the bridge benefit is payable,


a)	The Participant’s Initial Benefit is equal to his or her total benefit, which includes any bridge benefit; and


b)	The Participant’s Adjusted Benefit is calculated using the Initial Benefit described in (a) above.

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2.	Once the bridge benefit is no longer payable,


a)	The Participant’s Initial Benefit does not include any bridge benefit for purposes of determining whether the Adjusted Benefit is less than the Initial Benefit; and


b)	The Participant’s Adjusted Benefit for the first cost-of-living adjustment after the bridge benefit is no longer payable is equal to his or her Adjusted Benefit minus the amount of the bridge benefit and any cost-of-living adjustments that have been made to the bridge benefit.

V. USLICO Plan Participants.

A. Applicable Benefit.


1.	The Participant is entitled to receive cost-of-living adjustments on the portion of his or her benefit attributable to his or her frozen benefit attributable to USLICO service prior to 1996 to the extent provided under the USLICO Plan as in effect immediately before the Merger.


2.	The Participant must elect to receive his or her entire benefit attributable to USLICO as an annuity.

B. Calculation.


1.	The applicable table is the Bureau of Labor Statistics Consumer Price Index, for Urban Wage Earners and Clerical Workers for the U.S. as a whole (1967 base = 100), published by the United States Department of Labor.


2.	The applicable month is the October which immediately precedes the Plan Year.


3.	The Adjustment Rate is calculated by dividing the value of the Consumer Price Index under the applicable table in the applicable month for the current Plan Year by the value of the Consumer Price Index under the same table in the applicable month one year prior to the Plan Year in which the first adjustment occurred.


4.	The Adjustment Rate shall not be rounded.


5.	The Adjustment Rate shall not exceed 3.0% compounded annually for the same period of time reflected in the determination of the Adjustment Rate.

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C. First cost-of-living adjustment.


1.	Timing. The first cost-of-living adjustment will occur on January 1 following one completed Plan Year after the Benefit Commencement Date.


2.	Amount. The Adjusted Benefit is equal to the product of (a) and (b) below, where:


a) =	The Initial Benefit; and


b) =	One plus the Adjustment Rate calculated in (B) above.

D. Subsequent cost-of-living adjustments.


1.	Each January 1, the Adjusted Benefit will be determined as described in (C)(2) above.


2.	If a cost-of-living adjustment would decrease the Adjusted Benefit below the Initial Benefit, the full value of what otherwise would have been a negative adjustment will be taken into account in determining any subsequent increases.

E. Treatment of Bridge Benefit. If the Participant selected an optional form with a Social Security bridge benefit:


1.	While the bridge benefit is payable,


a)	The Participant’s Initial Benefit is equal to his or her total Benefit, which includes any bridge benefit; and


b)	The Participant’s Adjusted Benefit is calculated using the Initial Benefit described in (a) above.

2. Once the bridge benefit is no longer payable,


a)	The Participant’s Initial Benefit does not include any bridge benefit for the purposes of determining whether the Adjusted Benefit is less than the Initial Benefit; and


b)	The Participant’s Adjusted Benefit for the first cost-of-living adjustment after the bridge benefit is no longer payable is reduced by the amount of any bridge benefit and any cost-of-living adjustments that have been made to the bridge benefit.

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VI. Beneficiary Entitlement. If the Participant elects an optional form of annuity that includes a survivorship option, then the Beneficiary will be entitled to the cost-of-living adjustments described in this Appendix.

VII. Reference Information. The following table summarizes the applicable table from the Bureau of Labor Statistics, month, and maximum for each of the Prior Plans with cost-of- living adjustments.



Prior Plan	Table Number	Month	Maximum
AFS Plan	CWUR0000SA0	September of the immediately preceding Plan Year	3% applied annually
EIC Plan	CUUR0000AA0	August of the immediately preceding Plan Year	3% applied annually
USLICO Plan	CWUR0000AA0	October of the immediately preceding Plan Year	3% compounded annually from January 1 preceding the first adjustment date

VIII. Change in Reference Information for Determining Cost-of-Living Adjustments. Notwithstanding any contrary provision in the EIC Plan, the AFS Plan, or the USLICO Plan, the cost-of-living adjustment for any Plan Year beginning after the date this paragraph is approved by the Internal Revenue Service (as evidenced by a favorable determination letter) will be based on the Bureau of Labor Statistics Consumer Price Index, U.S. City Average for All Urban Consumers, published by the United States Department of Labor, in August of the Plan Year immediately preceding the Plan Year for which such adjustment is to take effect and the methodology described in this paragraph shall apply only to cost-of-living adjustments due for Plan Years beginning after receipt of such Internal Revenue Service approval.

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APPENDIX 4.1(a)

NORMAL FORM FOR PRIOR PLAN BENEFIT

I. Application

This Appendix describes any special normal forms of benefit applicable to benefits attributable to a Prior Plan.

II. Normal Form for Prior Plan Benefit under Southland Plan

This Section II applies to Participants who participated in the Southland Plan for periods before January 1, 1990.

A Participant who participated in the Southland Plan prior to 1990 and who is married on his or her Benefit Commencement Date shall be entitled to the greater of (i) his or her Prior Plan benefit attributable to the benefit earned under the Southland Plan as of December 31, 1989 with pay indexing through December 31, 1999 paid in an unreduced 50% joint and survivor annuity, or (ii) his or her entire Accrued Benefit payable in the reduced 50% joint and survivor annuity.

III. Normal Form for Prior Plan Benefit under ReliaStar Plan

This Section III is applicable to Participants who participated in the ReliaStar Plan for periods before January 1, 2002. The normal form of benefit for the Prior Plan Benefit attributable to the ReliaStar Plan is a single life annuity payable to the Participant monthly for his or her life and if the Participant dies after the Benefit Commencement Date and before the due date of the 60th monthly payment, there shall be paid to his or her Beneficiary in a single lump sum the Actuarial Equivalent of the remaining unpaid installments that would have been paid to the Participant had he or she lived until the due date of the 60th monthly payment. If the Participant is married, the Participant’s Spouse consents to payment in the normal form, and the Beneficiary is the Participant’s Spouse, the remaining monthly installments may be paid, at the request of such Spouse, to the Spouse for the remainder of the 60-month period, and in the event the Spouse dies before the end of the 60-month period, to the contingent Beneficiary or successor Beneficiary, if any, otherwise to the deceased Spouse’s estate.

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APPENDIX 4.1(b)

PRIOR PLAN BENEFIT AND AFS MINIMUM BENEFIT OPTIONAL FORMS


I.	Application. In addition to the Optional Forms of payment listed in Section 4.1(b) of the main Plan document, a Participant may elect to receive his or her Prior Plan Benefit or AFS Minimum Benefit in an Optional Form as described in this Appendix.


II.	Definitions. Capitalized terms in this Appendix shall have the meaning set forth below. If a capitalized term is not determined herein, it shall have the meaning set forth in Article I of the main Plan document.

A. COLA Adjustment means an adjustment described in Appendix 3.7.

Social Security Bridge Benefit means for any period, an adjusted monthly benefit (relative to the benefit that otherwise would be payable at the Participant’s Normal Retirement Date) producing, so far as practicable, a level combined monthly benefit from this Plan and the Participant’s Social Security benefit (both before and after such Social Security benefit is payable). The Social Security Bridge Benefit is estimated.


III.	AFS Plan - All AFS Participants. An AFS Participant may elect to receive his or her Prior Plan Account Balance in one of the following forms:


A.	Lump-Sum Option. An AFS Participant may elect to receive 50% of the value of his or her Prior Plan Account Balance as a lump sum and the remainder as an annuity. If the Prior Plan Account Balance is $25,000 or less, the AFS Participant may receive the full Prior Plan Account Balance as a lump sum.

If an AFS Participant is eligible to, and elects to, receive the entire Prior Plan Account Balance in a lump sum, and if the value of the AFS Participant’s Net ING Benefit is $5,000 or less, then the AFS Participant may also elect to take the value of the Net ING Benefit as a lump sum or may receive an Immediate Annuity.

Full Cash Refund Annuity. A full cash refund annuity provides the AFS Participant with a reduced monthly benefit amount payable to the AFS Participant for his or her lifetime. When the AFS Participant dies, his or her Beneficiary will receive a lump sum equal to the excess, if any, of the portion of the Account Balance paid as an annuity at the Benefit Commencement Date over the sum of the monthly payments made to the AFS Participant before his or her death.

For an AFS Transition Participant, the term “AFS Minimum Benefit” is substituted for “Account Balance”.

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IV.

AFS Plan - AFS Transition Participants. In addition to the Optional Forms described in III, above, an AFS Transition Participant who is at least age 50 with 15 or more years of vesting service or at least age 65 at the time payments begin and who elects to receive his or her entire AFS Minimum Benefit as an annuity on or after age 50 may choose to have his or her AFS Minimum Benefit paid in the following Optional Forms:


A.	Single Life Annuity with Social Security Bridge Benefit. This option pays a monthly benefit to the AFS Transition Participant for life with a Social Security Bridge benefit until the AFS Transition Participant reaches age 62. All payments end at the AFS Participant’s death.

This option is subject to a COLA Adjustment.

10, 15, and 20 Year Term Certain and Life Annuity. This option pays a reduced monthly benefit (compared to the single life annuity) to the AFS Transition Participant for life with payments guaranteed for a minimum number of 120, 180 or 240 months, depending on the specific option selected. If the AFS Transition Participant dies before the minimum number of payments is made, the AFS Transition Participant’s Beneficiary will receive the remaining guaranteed monthly payments. The Social Security Bridge Benefit is provided until age 62 and the option is subject to a COLA Adjustment.

This option is not available for Benefit Commencement Dates after 11:59 p.m. on May 1, 2008.

25%, 50%, 80%, or 100% Joint and Survivor Annuity. This option pays a reduced monthly benefit (compared to the single life annuity) to the AFS Transition Participant for life with 25%, 50%, 80%, or 100%, depending on the specific option elected, of the reduced monthly amount paid to the surviving Spouse or Domestic Partner of the AFS Transition Participant following the AFS Transition Participant’s death. All benefits end when the survivor dies. The Social Security Bridge Benefit is provided to the AFS Transition Participant until age 62 and the benefit is subject to COLA Adjustment.

The 25% and 80% Joint and Survivor Annuity are not available for Benefit Commencement Dates after 11:59 p.m. on May 1, 2008.

80%/50% Joint and Last Survivor Annuity. This option pays a reduced monthly benefit (compared to the single life annuity) to the AFS Transition Participant for life and after the death of the AFS Transition Participant or his or her Spouse or Domestic Partner, whichever occurs first, 80% will be paid to the survivor if the survivor is the AFS Transition Participant and 50% will be paid to the survivor if the survivor is the AFS Transition Participant’s Spouse or Domestic Partner. All benefits end when the survivor dies. The Social Security Bridge

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Benefit is provided to the AFS Transition Participant until age 62 and the option is subject to a COLA Adjustment.

This option is not available for Benefit Commencement Dates after 11:59 p.m. on May 1, 2008.

50% or 75% Joint and Last Survivor Annuity. This option pays a reduced monthly benefit (compared to the single life annuity) to the AFS Transition Participant for as long as both the AFS Transition Participant and his or her Spouse or Domestic Partner are alive. After the death of the AFS Transition Participant or his or her Spouse or Domestic Partner, whichever occurs first, 50% or 75%, depending on the specific option elected, of the reduced benefit amount will be paid to the survivor. Benefits end when the survivor dies. The Social Security Bridge Benefit is provided to the AFS Transition Participant until age 62 and the option is subject to a COLA Adjustment.

This option is not available for Benefit Commencement Dates after 11:59 p.m. on May 1, 2008.


V.	EIC, LOG and SLD Plans. A Participant whose Prior Plan is the EIC, LOG, or SLD Plan may elect to receive his or her Prior Plan Benefit attributable to the EIC, LOG, or SLD Plan under the following Optional Forms:


A.	20 Year Term Certain and Life Annuity. This option pays a reduced monthly benefit (compared to the Single Life Annuity) to the Participant for life with payments guaranteed for a minimum of 240 months. If the Participant dies before all payments are made, the Participant’s Beneficiary will receive the remaining guaranteed monthly payments.


B.	Social Security Level Income Option. This option pays a monthly benefit to the Participant for life with a Social Security Bridge Benefit until the Participant reaches 65. All payments end with the death of the Participant.

This option may be combined with a single life annuity or with a 100% or 50% Joint and Survivor Option for the surviving Spouse or Domestic Partner of the Participant.

This option is not available for Benefit Commencement Dates after 11:59 p.m. on May 1, 2008 except with respect to the 100% Joint and Survivor option.


C.	COLA Options. A Participant whose Prior Plan was the EIC Plan will receive the portion of his or her Prior Plan Benefit attributable to his or her “pre-2000 accrued benefit” (as defined in the EIC Plan) as indexed in accordance with the main Plan document through December 31, 2001 in any of the Optional Forms available at the time of his or her Benefit Commencement Date for Participants in

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the EIC Plan together with a COLA Adjustment. The remaining Prior Plan Benefit not available with a COLA Adjustment may be paid in any of the optional forms described for Participants in the EIC Plan.


VI.	Lexington Plan. A Participant whose Prior Plan is the Lexington Plan may elect to receive the Prior Plan Benefit attributable to the Lexington Plan in the following optional forms:

A single life annuity, which, if the Participant has been married for at least one year before his or her Benefit Commencement Date, dies within two years of the Benefit Commencement Date, and was married to the same spouse at the Participant’s death, the surviving Spouse will receive a benefit as though the Participant had elected the 50% Joint and Survivor Annuity for the Prior Plan Benefit attributable to the Lexington Plan adjusted to reflect the payments received by the Participant before death.


VII.	TNIC Plan. If the Participant formerly participated in the TNIC Plan, the Participant may receive the portion of his or her Prior Plan Benefit attributable to the TNIC Plan in the following optional form:

Lump Sum. If the lump sum value of the portion of the Prior Plan Benefit attributable to the TNIC Plan is more than $5,000 but not more than $25,000 as of the Participant’s Benefit Commencement Date, the Participant may elect to have the benefit paid in a lump sum or in an Immediate Annuity as of the first day of any month after his or her Termination Date.


VIII.	ReliaStar Plan. A Participant whose Prior Plan is the ReliaStar Plan may elect to receive the portion of his or her Prior Plan Benefit attributable to the ReliaStar Plan in one of the following optional forms:


A.	15- and 20-Year Term Certain and Life Annuity. This option pays a reduced monthly benefit (compared to the single life annuity) to the Participant for life with payments guaranteed for a minimum of 180 or 240 months, depending on the option selected. If the Participant dies before all guaranteed payments are made, his or her Beneficiary will receive the remaining monthly payments.

The 15-Year Certain and Life Annuity is not available for Benefit Commencement Dates after 11:59 p.m. on May 1, 2008.

Joint and Two-Thirds Last Survivor Annuity. This option provides a reduced monthly benefit (compared to the single life annuity) to the Participant and his or her Spouse or Domestic Partner for as long as both are alive. Upon the death of the first to die, the monthly benefit reduces to 2/3 of the amount payable while both were alive. This reduced monthly benefit continues for the survivor’s lifetime.

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With respect to a Participant whose Prior Plan is the ReliaStar Plan, the Spouse of such a deceased Participant may elect an immediate lump sum payment of his or her Qualified Preretirement Survivor Annuity in accordance with the provisions in Sec. 7.1(c)(2) of that Prior Plan, regardless of the Participant’s age at time of his or her death.


IX.	Northern Plan. A Participant who participated in the Northern Plan may elect to receive the Prior Plan Benefit attributable to the Northern Plan in the following optional forms:


B.	Lump Sum. If the lump-sum value of the portion of the Prior Plan Benefit attributable to the Northern Plan is more than $5,000 but not more than $15,000 as of the Participant’s Benefit Commencement Date, the Participant may elect to have the Benefit paid in a lump sum or in an Immediate Annuity as of the first day of any month after his or her Termination Date.


C.	5 or 10 Year Certain Annuity Feature. A five or ten-year term certain feature may be added to the 50% or 100% Joint and Survivor Annuity option or the Joint and Two-Thirds Last Survivor Annuity option. If the Participant and Spouse or Domestic Partner die before the end of the five or ten-year period, payments will continue to the Beneficiary through the end of that guaranteed period.

This option is not available for Benefit Commencement Dates after 11:59 p.m. on May 1, 2008.


X.	Security-Connecticut Plan. A Participant who participated in the Security-Connecticut Plan may elect to receive his or her Prior Plan Benefit attributable to the Security- Connecticut Plan in the following optional form:

Variable Annuity Option. 50% of the lump-sum value of the Prior Plan Benefit attributable to the Security-Connecticut Plan may be applied to purchase a variable annuity contract from a life insurance company licensed to do business in the State of Connecticut (as selected by the PAC) with payments in the form of a single life annuity, joint and 50% or 100% survivor annuity with the Participant’s Spouse or ten- year term certain and life annuity. The remaining Prior Plan Benefit attributable to the Security-Connecticut Plan may be paid in any of the optional forms described for Participants in the ReliaStar Plan.


XI.	USLICO Plan. A Participant whose Prior Plan was the ReliaStar Plan and who participated in the USLICO Plan may elect to receive the portion of his or her Prior Plan

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benefit attributable to the USLICO Plan in any of the Optional Forms available with respect to benefits attributable to the ReliaStar Plan available at the time of his or her Benefit Commencement Date with a Social Security Bridge Benefit to age 62 and a COLA Adjustment.

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APPENDIX 4.5

MINIMUM REQUIRED DISTRIBUTIONS

Section 1. Application and General Rules

1.1 Precedence and Effective Date. Subject to Section 4.1, the requirements of this Appendix shall apply to any distribution of a Participant’s interest and will take precedence over any inconsistent provisions of this Plan. Unless otherwise specified, the provisions of this Appendix apply to calendar years beginning after December 31, 2002.

1.2 Requirements of Regulations Incorporated. All distributions required under this Appendix shall be determined and made in accordance with Code Section 401(a)(9), including the incidental death benefit requirement in Code Section 401(a)(9)(G), and the regulations thereunder.

1.3 Limits on Distribution Periods. As of the first Distribution Calendar Year, Distributions to a Participant if not made in a single sum may only be made over one of the following periods:


(a)	the life of the Participant,


(b)	the joint lives of the Participant and a Designated Beneficiary, or

(c) a period certain not extending beyond the joint life and last survivor expectancy of the Participant and a Designated Beneficiary.

1.4 Defined Terms. Capitalized terms not defined herein will have the same meaning assigned to those terms in the main text of the Plan.

Section 2. Time and Manner of Distribution.

2.1 Required Beginning Date. The Participant’s entire interest will be distributed, or begin to be distributed, no later than the Participant’s Required Beginning Date.

2.2 Death of Participant Before Distributions Begin. If the Participant dies before distributions begin, the Plan will cash out any survivor benefit that has a present value not greater than $5,000 (or such other dollar amount as may be specified in Code Section 411(a)(11)(A)), or will cash out any survivor benefit payable under Section 5.2 to a non-Spouse Beneficiary, who is not a natural person as soon as practicable after the Participant’s date of death. From time to time, the Plan Administrator may recalculate the present values of the benefits not in pay status, based on the Applicable Interest Rate and the Applicable Mortality Table then in effect, and make lump-sum payments of those that are not over $5,000. In any event, the Participant’s entire interest will be distributed, or begin to be distributed, no later than as follows:

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(a) If the Participant’s surviving Spouse is the Participant’s sole Designated Beneficiary, then distributions to the surviving Spouse will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died, or by December 31 of the calendar year in which the Participant would have attained age 70½, if later.

(b) If the Participant’s surviving Spouse is not the Participant’s sole Designated Beneficiary, then distributions to the Designated Beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died.

(c) If there is no Designated Beneficiary as of September 30 of the year following the year of the Participant’s death, the Participant’s entire interest will be distributed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

(d) If the Participant’s surviving Spouse is the Participant’s sole Designated Beneficiary and the surviving Spouse dies after the Participant but before distributions to the surviving Spouse are required to begin, this Section 2.2, other than Section 2.2(a), will apply as if the surviving Spouse were the Participant.

For purposes of this Section 2.2 and Section 5, unless Section 2.2(d) applies, distributions are considered to begin on the Participant’s Required Beginning Date. If Section 2.2(d) applies, distributions are considered to begin on the date distributions are required to begin to the surviving Spouse under Section 2.2(a). If distributions under an annuity meeting the requirements of this Appendix commence to the Participant before the Participant’s Required Beginning Date (or to the Participant’s surviving Spouse before the date distributions are required to begin to the surviving Spouse under Section 2.2(a)) the date distributions are considered to begin is the date distributions actually commence.

2.3 Forms of Distribution. Unless the Participant’s interest is distributed in the form of an annuity purchased from an insurance company or in a single sum on or before the Required Beginning Date, as of the first Distribution Calendar Year distributions will be made in accordance with Sections 3, 4 and 5 of this Appendix. If the Participant’s interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of Code Section 401(a)(9) and Treas. Reg. Section 1.401(a)(9). Any part of the Participant’s interest which is in the form of an individual account described in Code Section 414(k) will be distributed in a manner satisfying the requirements of Code Section 401(a)(9) and Treas. Reg. Section 1.401(a)(9) that apply to individual accounts.

Section 3. Determination of Amount to be Distributed Each Year.

3.1 General Annuity Requirements. If the Participant’s interest is to be paid in the form of annuity distributions under the Plan, payments under the annuity shall satisfy the following requirements:

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(a) the annuity distributions will be paid in periodic payments made at uniform intervals not longer than one year;

(b) the distribution period will be over a life (or lives) or over a period certain not longer than the period described in Section 4 or 5 of this Appendix 4.5;

(c) once payments have begun over a period, the period will be changed only in accordance with Section 6 of this Appendix 4.5; and

(d) payments will either be nonincreasing or increase only as follows:

(1) by an annual percentage increase that does not exceed the percentage increase in an Eligible Cost-Of-Living Index for a 12-month period ending in the year during which the increase occurs or a prior year;

(2) by a percentage increase that occurs at specified times and does not exceed the cumulative total of annual percentage increases in an Eligible Cost-of- Living Index since the Benefit Commencement Date, or if later, the date of the most recent percentage increase;

(3) by a constant percentage of less than 5% per year, applied not less frequently than annually;

(4) as a result of dividend or other payments that result from Actuarial Gains, provided:

(i) Actuarial Gain is measured not less frequently than annually,

(ii) the resulting dividend or other payments are either paid no later than the year following the year for which the actuarial experience is measured or paid in the same form as the payment of the annuity over the remaining period of the annuity (beginning no later than the year following the year for which the actuarial experience is measured),

(iii) the Actuarial Gain taken into account is limited to Actuarial Gain from investment experience,

(iv) the assumed interest rate used to calculate such Actuarial Gains is not less than 3%, and

(v) the annuity payments are not increased by a constant percentage as described in (3) of this Section 3.1(d);

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(5) to the extent of the reduction in the amount of the Participant’s payments to provide for a survivor benefit, but only if there is no longer a survivor benefit because the Beneficiary whose life was being used to determine the distribution period described in Section 4 of this Appendix 4.5 dies or is no longer the Participant’s Beneficiary pursuant to a qualified domestic relations order within the meaning of Code Section 414(p);

(6) to provide a final payment upon the Participant’s death not greater than the excess of the actuarial present value of the Participant’s Accrued Benefit (within the meaning of Code Section 411(a)(7), calculated as of the Benefit Commencement Date using the Applicable Interest Rate and the Applicable Mortality Table (or, if greater, the total amount of employee contributions, if any) over the total of payments before the Participant’s death;

(7) to allow a Beneficiary to convert the survivor portion of a joint and survivor annuity into a lump sum distribution upon the Participant’s death; or

(8) to pay increased benefits that result from a Plan amendment.

3.2 Amount Required to Be Distributed by Required Beginning Date and Later Payment Intervals. The amount that must be distributed on or before the Participant’s Required Beginning Date (or, if the Participant dies before distributions begin, the date distributions are required to begin under Section 2.2(a) or (b) of this Appendix 4.5) is the payment that is required for one payment interval. The second payment need not be made until the end of the next payment interval even if that payment interval ends in the next calendar year. All of the Participant’s benefit accruals as of the last day of the first Distribution Calendar Year will be included in the calculation of the amount of the annuity payments for payment intervals ending on or after the Participant’s Required Beginning Date.

3.3 Additional Accruals After First Distribution Calendar Year. Any additional benefits accruing to the Participant in a calendar year after the first Distribution Calendar Year will be distributed beginning with the first payment interval ending in the calendar year immediately following the calendar year in which such benefit accrues.

Section 4. Requirements for Annuity Distributions that Commence During Participant’s Lifetime.

4.1 Joint Life Annuities Where the Beneficiary Is Not the Participant’s Spouse. If the Participant’s interest is being distributed in the form of a joint and survivor annuity for the joint lives of the Participant and a non-Spouse Beneficiary, annuity payments to be made on or after the Participant’s Required Beginning Date to the Designated Beneficiary after the Participant’s death must not at any time exceed the applicable percentage of the annuity payment for such period that would have been payable to the Participant, using the table set forth in Treas. Reg. Section 1.401(a)(9)-6, Q&A 2(c)(2), in the manner described in Q&A 2(c)(1), to determine the applicable percentage. If the form of distribution combines a joint and survivor annuity for

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the joint lives of the Participant and a non-Spouse Beneficiary and a period certain annuity, the requirement in the preceding sentence will apply to annuity payments to be made to the Designated Beneficiary after the expiration of the period certain.

4.2 Period Certain Annuities. Unless the Participant’s Spouse is the sole Designated Beneficiary and the form of distribution is a period certain and no life annuity, the period certain for an annuity distribution commencing during the Participant’s lifetime may not exceed the applicable distribution period for the Participant under the Uniform Lifetime Table set forth in Treas. Reg. Section 1.401(a)(9)-9, Q&A-2, for the calendar year that contains the Benefit Commencement Date. If the Benefit Commencement Date precedes the year in which the Participant reaches age 70, the applicable distribution period for the Participant is the distribution period for age 70 under the Uniform Lifetime Table set forth in Treas. Reg. Section 1.401(a)(9)-9, Q&A-2, plus the excess of 70 over the age of the Participant as of the Participant’s birthday in the year that contains the Benefit Commencement Date. If the Participant’s Spouse is the Participant’s sole Designated Beneficiary and the form of distribution is a period certain and no life annuity, the period certain may not exceed the longer of the Participant’s applicable distribution period, as determined under this Section 4.2, or the joint life and last survivor expectancy of the Participant and the Participant’s Spouse as determined under the Joint and Last Survivor Table set forth in Treas. Reg. Section 1.401(a)(9)-9, Q&A-3, using the Participant’s and Spouse’s attained ages as of the Participant’s and Spouse’s birthdays in the calendar year that contains the Benefit Commencement Date.

Section 5. Requirements For Minimum Distributions After the Participant’s Death.

5.1 Death After Distributions Begin. If the Participant dies after distribution of his or her interest begins in the form of an annuity meeting the requirements of this Appendix 4.5, the remaining portion of the Participant’s interest will continue to be distributed over the remaining period over which distributions commenced.

5.2 Death Before Distributions Begin.

(a) Participant Survived by Designated Beneficiary. If the Participant dies before the date distribution of his or her interest begins and there is a Designated Beneficiary, the Participant’s entire interest will be distributed, beginning no later than the time described in Section 2.2(a) or (b) of this Appendix 4.5, over the life of the Designated Beneficiary or over a period certain not exceeding:

(i) unless the Benefit Commencement Date is before the first Distribution Calendar Year, the Life Expectancy of the Designated Beneficiary will be determined using the Beneficiary’s age as of the Beneficiary’s birthday in the calendar year immediately following the calendar year of the Participant’s death; or

(ii) if the Benefit Commencement Date is before the first Distribution Calendar Year, the Life Expectancy of the Designated Beneficiary will be

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determined using the Beneficiary’s age as of the Beneficiary’s birthday in the calendar year that contains the Benefit Commencement Date.

(b) No Designated Beneficiary. If the Participant dies before the date distributions begin and there is no Designated Beneficiary as of September 30 of the year following the year of the Participant’s death, distribution of the Participant’s entire interest will be completed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

(c) Death of Surviving Spouse Before Distributions to Surviving Spouse Begin. If the Participant dies before the date distribution of his or her interest begins, the Participant’s surviving Spouse is the Participant’s sole Designated Beneficiary, and the surviving Spouse dies before distributions to the surviving Spouse begin, this Section 5 will apply as if the surviving Spouse were the Participant, except that the time by which Distributions must begin will be determined without regard to Section 2.2(a) of this Appendix 4.5.

Section 6. Changes to Annuity Payment Period.

6.1 Permitted Changes. An annuity payment period may be changed only in association with an annuity payment increase described in Section 3.1(d) of this Appendix 4.5 or in accordance with Section 6.2 of this Appendix 4.5.

6.2 Reannuitization. An annuity payment period may be changed and the annuity payments modified in accordance with that change if the conditions in Section 6.3 of this Appendix 4.5 are satisfied and:

(a) the modification occurs when the Participant retires or in connection with a Plan termination;

(b) the payment period prior to modification is a period certain without life contingencies; or

(c) the annuity payments after modification are paid under a qualified joint and survivor annuity over the joint lives of the Participant and a Designated Beneficiary, the Participant’s Spouse is the sole Designated Beneficiary, and the modification occurs in connection with the Participant becoming married to such Spouse.

6.3 Conditions. The conditions in this Section 6.3 are satisfied if:

(a) the future payments after the modification satisfy the requirements of Code Section 401(a)(9), Treas. Reg. Section 1.401(a)(9), and this Appendix 4.5 (determined by treating the date of the change as a new Benefit Commencement Date and the actuarial present value of the remaining payments prior to modification as the entire interest of the Participant);

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(b) for purposes of Code Section 415 and Code Section 417, the modification is treated as a new Benefit Commencement Date;

(c) after taking into account the modification, the annuity (including all past and future payments) satisfies the requirements of Code Section 415 (determined at the original Benefit Commencement Date, using the interest rates and mortality tables applicable to such date); and

(d) the end point of the period certain, if any, for any modified payment period is not later than the end point available to the employee at the original Benefit Commencement Date under Code Section 401(a)(9) and this Appendix 4.5.

Section 7. Payments to a Surviving Child.

7.1 Special Rule. For purposes of this Appendix 4.5, payments made to a Participant’s surviving child until the child reaches the age of majority (or dies, if earlier) shall be treated as if such payments were made to the surviving Spouse to the extent the payments become payable to the surviving Spouse upon cessation of the payments to the child.

7.2 Age of Majority. For purposes of this Section 7.2, a child shall be treated as having not reached the age of majority if the child has not completed a specified course of education and is under the age of 26. In addition, a child who is disabled within the meaning of Code Section 72(m)(7) when the child reaches the age of majority shall be treated as having not reached the age of majority so long as the child continues to be disabled.

Section 8. Definitions.

8.1 Actuarial Gain. The difference between an amount determined using the actuarial assumptions (i.e., investment return, mortality, expense, and other similar assumptions) used to calculate the initial payments before adjustment for any increases and the amount determined under the actual experience with respect to those factors. Actuarial Gain also includes differences between the amount determined using actuarial assumptions when an annuity was purchased or commenced and such amount determined using actuarial assumptions used in calculating payments at the time the Actuarial Gain is determined.

8.2 Designated Beneficiary. The individual who is designated by the Participant (or the Participant’s surviving Spouse) as the Beneficiary of the Participant’s interest under the Plan and who is the Designated Beneficiary under Code Section 401(a)(9) and Treas. Reg. Section 1.401(a)(9)-4.

8.3 Distribution Calendar Year. A calendar year for which a minimum distribution is required. For distributions beginning before the Participant’s death, the first Distribution Calendar Year is the calendar year immediately preceding the calendar year which contains the Participant’s Required Beginning Date. For distributions beginning after the Participant’s death,

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the first Distribution Calendar Year is the calendar year in which distributions are required to begin pursuant to Section 2.2.

8.4 Eligible Cost-of-living Index. An index described in paragraphs (b)(2), (b)(3) or (b)(4) of Treas. Reg. Section 1.401(a)(9)-6, Q&A-14.

8.5 Life Expectancy. Life Expectancy as computed by use of the Single Life Table in Treas. Reg. Section 1.401(a)(9)-9, Q&A-1.

8.6 Required Beginning Date. The Required Beginning Date of a Participant is April 1 of the calendar year following the later of the calendar year in which the Participant attains age 70½ or the calendar year in which the Participant retires, except that benefit distributions to a 5-Percent Owner must commence by April 1 of the calendar year following the calendar year in which the Participant attains age 70½.

8.7 5-Percent Owner. A Participant is treated as a 5-Percent Owner for purposes of this Appendix 4.5 if the Participant is a 5-Percent Owner as defined in Code Section 416 at any time during the Plan year ending with or within the calendar year in which such owner attains age 70½. Once distributions have begun to a 5-Percent Owner under this Appendix 4.5, they must continue to be distributed, even if the Participant ceases to be a 5-Percent Owner in a subsequent year.

Section 9. Transition.

9.1 Transition Rule. F-3 and F-3A of Section 1.401(a)(9)-1 of the 1987 proposed regulations, A-1 of Section 1.401(a)(9)-6 of the 2001 proposed regulations, Section 1.401(a)(9)-6T of the temporary regulations, or a reasonable and good faith interpretation of the requirements of Code Section 401(a)(9) (as elected by the Company) apply in lieu of the requirements of Sections 3, 4 and 6 of this Appendix 4.5 for purposes of determining minimum required distributions for calendar years 2003, 2004, and 2005.

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APPENDIX A

2015 EARLY PAYMENT WINDOW

I. Application. This Appendix A applies to Window Eligible Individuals, who elect to receive a lump sum payment or commence a monthly payment in accordance with the terms of this Appendix A. The provisions of this Appendix A will apply notwithstanding anything in the Plan document to the contrary.

II. Window Eligible Individuals. Except as provided below, the window is open to each individual who satisfies the following:


A.	Deferred Participants. To be a Window Eligible Individual, a Participant must satisfy the following:


1.	Has a Termination Date on or before March 31, 2015,


2.	Is not an employee of any Controlled Group Member at any time after March 31, 2015,


3.	Has not received payment or commenced payment of the entirety of his or her Accrued Benefit under the Plan by March 1, 2015,


4.	Was under age 70 as of December 31, 2014,


5.	Is living on November 1, 2015, and


6.	Is not an excluded individual under Paragraph B below.


B.	Excluded Individuals. Anyone who does not satisfy the requirements of Paragraph A above will not be considered a Window Eligible Individual. In addition, notwithstanding the provisions of Paragraph A, the following individuals will not be Window Eligible Individuals:


1.	Any Participant whose Accrued Benefit is subject to assignment pursuant to a qualified domestic relations order, or whose distribution rights are limited, pursuant to the Plan’s domestic relations order qualification determination procedures, due to a pending review of a domestic relations order.


2.	Any alternate payee under a qualified domestic relations order, as defined in Code Section 414(p).


3.	Any individual whose benefit under the Plan is subject to a tax levy.


4.	For the avoidance of doubt, those individuals who are on long-term disability and meet the following criteria:

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a.	Who was disabled after December 31, 2001 and before January 1, 2012,


b.	Who had at least five years of Vesting Service at disablement,


c.	Who was not considered a Fieldforce participant,


d.	Who remained disabled as of March 31, 2015, and


e.	Who, as of March 31, 2015, was eligible for continuing benefit accruals under the terms of the Plan.


5.	Any individual for whom there is not adequate data in the Plan records to determine benefit amounts or eligibility.


6.	Any individual who is classified in the Plan’s records in a category other than Participant (for avoidance of doubt, this includes Beneficiaries, Surviving Spouses, and Domestic Partners).


C.	Special Rule. Notwithstanding the provisions of this Section II to the contrary, a Deferred Participant will be a Window Eligible Individual if he or she satisfies the requirements of Paragraph A of Section II above, other than Subparagraph 3, and commenced his or her Plan benefits between March 1, 2015 and July 1, 2015.

III. Election Period. The election period for the Early Payment Window will begin on September 9, 2015 and end on October 21, 2015 (the “election period”). An election received after the election period will be deemed to have been made during the election period if all required information is received in good order and all signatures required for the election were signed during the election period and the election was (i) mailed within the election period but no later than October 21, 2015 and (ii) received by the Plan by November 2, 2015.

Elections are subject to the procedures established by the Company in accordance with Section VII. No election made during the election period may be revoked after the earlier of the date the lump sum is paid or a monthly benefit commences or the date of the Window Eligible Individual’s death.

IV. Payment Options.


A.	Deferred Participant. A Participant who is a Window Eligible Individual may elect one of the following options for payment of the full Accrued Benefit due to Participant under the Plan.


1.	A single lump-sum payment of the Participant’s full Accrued Benefit (including any Prior Plan Benefit);

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2.	The Normal Form, as stated in Section 4.1(a), based on the Participant’s marital status; or


3.	If the Participant has a Spouse, the 75% Joint and Survivor Annuity, with the Participant’s Spouse as the joint annuitant.

Deferred Participant - On or after Earliest Retirement Date - For Deferred Participants who have reached their Earliest Retirement Date as of November 1, 2015 for all components of their entire Accrued Benefit and who are Window Eligible Individuals, in addition to the payment options in Paragraph A above, all Optional Forms of payment available to the Deferred Participant in the Plan. All window annuities will be determined without a cost-of-living feature.


C.	Spousal Consent Requirements. A Participant’s payment election under this Section IV is subject to the Spousal consent requirements of Section 4.3. If the applicable Spousal consent is not received within the time period required, the Participant’s payment election under this Early Payment Window will not take effect.

V. Calculation of Benefits.


A.	Deferred Participant. Benefit amounts will be calculated as follows for Deferred Participants who are Window Eligible Individuals, in the following manner:


1.	Lump-Sum Payment.


a.	For any Participant who, based on his or her Service as of his or her Termination Date, would be eligible for subsidized early commencement reduction factors under the Plan if the Participant waited to commence his or her Plan benefit (or if the Participant is currently eligible for subsidized early commencement reduction factors), the single lump-sum payment will be the greater of:


1.	The present value, based on the Actuarial Equivalence determined under Section 1.4(a), of the Participant’s Accrued Benefit payable at the Participant’s Earliest Retirement Date but not earlier than November 1, 2015 (considering the subsidized early commencement reduction factors applicable to the Participant), and


2.	The present value, based on the Actuarial Equivalence as determined under Section 1.4(a), of the Participant’s Accrued Benefit payable at Normal Retirement Age.


b.	For all other Participants, the single lump-sum payment will be the present value, based on the Actuarial Equivalence as determined

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under Section 1.4(a), of the Participant’s Accrued Benefit payable at Normal Retirement Age.


2.	Annuity Forms. The annuity payment forms will be calculated as of November 1, 2015 based on converting the Participant’s single lump-sum payment, as determined above, to the appropriate immediate annuity, using the Actuarial Equivalence factors in Section 1.4(a).


B.	Cost of Living Adjustments. For any cost-of-living adjustments included in the calculation of a lump-sum payment, the cost-of-living adjustment will be valued as follows:


1.	AFS and EIC Participants. The cost-of-living adjustment will be valued based on the methodology stated in Paragraph B of Section X in Appendix 3.1(e) and the applicable Adjustment Rate for the Prior Plan in which the Participant participated.


2.	USLICO Participants. The cost-of-living adjustment rate will be determined by the following steps:


a.	Determine the accumulated cost-of-living Adjustment Rate as defined in Appendix 3.7 for the five-year period ending December 31, 2014.


b.	Determine the accumulated 3% annual maximum adjustment rate for the same five-year period.


c.	Select the smaller amount from Subparagraphs a. and b. above.


d.	Compute the geometric average of the accumulated Adjustment Rate from Subparagraph c. above to determine the annual rate, which will be rounded to the nearest hundredth of 1%. The result is the cost-of-living Adjustment Rate to be used in determining the future value of the USLICO benefits with a COLA feature.

Adjustment for Payments Received. Any Window Eligible Individual described in Paragraph C of Section II will have his or her benefits calculated as provided above, as applicable. However, the lump-sum will be reduced to reflect the present value of the payments already received. The present value of the payments received will be the accumulated value of these payments with interest at the Plan’s crediting rate for the 2015 Plan Year from the payment date to November 1, 2015.


D.	Special Rules. For the avoidance of doubt, other than a Window Eligible Individual described in Paragraph C of Section II, this Appendix A will not apply to any benefits (or portion of a Participant’s Plan benefits) that are in pay status.

149

For any Window Eligible Individual over Normal Retirement Age as of November 1, 2015, the lump-sum is calculated based on the accumulated payments from the Participant’s Normal Retirement Date to October 1, 2015 with interest at the Plan’s crediting rate for the 2015 Plan Year, plus the present value of future payments starting on November 1, 2015.

VI. Impact of Subsequent Events. A Window Eligible Individual’s payment election under this Appendix A will be nullified and voided if any of the following occur:


A.	The Window Eligible Individual ceases to be a Window Eligible Individual on or before November 1, 2015.


B.	The Window Eligible Individual dies before November 1, 2015.


C.	The Window Eligible Individual is rehired by a Controlled Group Member before November 1, 2015.


D.	The Window Eligible Individual marries and the Window Eligible Individual does not complete an updated election within the election period, complete with the new Spouse’s consent if so required.

VII. Administrative Procedures. The Company will establish such procedures as it deems necessary to carry out this Appendix A, and such administrative procedures may include excluding individuals who would otherwise be Window Eligible Individuals to the extent including such individuals is not administratively feasible. Any such procedures will be applied in a consistent and nondiscriminatory manner.

VIII. Dual Status. An individual may be a Beneficiary of a deceased Participant and a Window Eligible Individual as a Deferred Participant. In that case, the provisions of this Appendix A will only apply to the individual’s benefit as a Deferred Participant.

IX. Benefit Adjustments. The benefits payable under this Appendix A will be adjusted to the extent required under Article VI.

X. Payment Date. Benefits elected under this Appendix A will be paid (or an annuity will commence) as of November 1, 2015, provided that actual payment may be delayed to the extent necessary to facilitate administration.

150

Exhibit 10.83

Kevin Silva,

EVP and CHRO

Voya Financial®

230 Park Avenue

New York, NY 10169

August 6, 2015

Patricia J. Walsh

[HOME ADDRESS]

Dear Trish,

I am very pleased to extend a contingent offer of employment with Voya Financial®. The purpose of this letter is to set forth the provisions of our offer for the position of EVP, Chief Legal Officer. We ask that the provisions set forth remain confidential and, unless otherwise directed, any questions you have regarding these provisions should be discussed with me.

Please note that conditions (e.g. background, references, licenses) for employment are discussed in the contingencies" sections below.

Employer Entity: The official name of your employer is Voya Services Company (“Company”). The employer's main office is located at 5780 Powers Ferry Road, Atlanta, GA 30327, (770) 980-5100.

Start Date/Location: Your start date will be mutually agreed upon, but no later than Sep 8th, 2015. You will work in the Voya office currently located at 230 Park Ave, New York, NY 10169.

Base Salary: Your annual base salary will be $525,000, payable semi-monthly on the 15th and last day of each month. If the 15th or last day of the month falls on a day in which banks are closed, you will be paid on the business day before in accordance with the Company's regular payroll practices. As an exempt employee, you are not eligible for overtime compensation over 40 hours per week. You will be scheduled for a performance review at our common anniversary date of March 2016, and annually thereafter. The Company reserves the right to review and adjust compensation to reflect what is appropriate for each position and consistent with your performance. No minimum wage allowances will be deducted from your pay.

Incentive Compensation Plan: You will be eligible to participate in the Incentive Compensation Plan (ICP) starting on your hire date. Based on the achievement of business and individual objectives, you will be eligible for a full-year bonus for 2015. Bonuses are typically paid in the March following the performance year. Your target bonus incentive is 95% of your year-end base salary. Please note that ICP awards are not guaranteed. The ICP is a discretionary plan and the Company reserves the right to modify or discontinue the terms of the ICP at any time, including but not limited to mandating a partial deferral of any award.

RETIREMENT | INVESTMENT | INSURANCE

Page 2

August 6, 2015

Long-Term Incentive Awards: You will be eligible to receive long-term incentive awards under the same terms and conditions as similarly situated employees starting in March 2016. Your target award value will be 150% of your annual base salary. You will be eligible for a full-year award for 2015. Awards are reviewed each year and are not guaranteed; therefore participation is at the discretion of the Company. Further details regarding long-term incentive awards will be provided once you are granted an award.

Stock Ownership Requirements: The Compensation and Benefits Committee of Voya's Board of Directors recently established Executive Stock Ownership Guidelines for its Leaders Council members and other select leaders. As a Leaders Council member, you are covered by these Guidelines and will be required to own three times your base salary. The Guideline must be met within five years of the start of your employment. During the phase-in period, you will be required to retain 50% of the net after-tax shares received upon the vesting of all equity awards granted to you after your hire date (Net Share Retention Requirement). Following the initial phase-in period, if you at any time fail to meet the Guidelines (either due to sales or due to a declining share price), the Net Share Retention Requirement will be 100%. Please refer to Voya's Executive Stock Ownership Guidelines for full details.

Sign-on Bonus: You will receive a one-time cash bonus payment of $525,000 less applicable taxes, payable no later than the sixty (60) days after your start date. If you voluntarily leave or are terminated for cause, as determined by the Company, within twelve months of your start date, you will be required to repay the full amount of this sign-on bonus.

Additionally, you will receive a one-time cash bonus payment of $175,000 less applicable taxes, payable in March of 2016 to replace the value of your annual incentive award that otherwise would have been paid by your previous employer. If you voluntarily leave or are terminated for cause, as determined by the Company, within twelve months of the payment date of this cash bonus payment, you will be required to repay a prorated portion of the installment. The repayment amount will be determined by multiplying the installment amount paid and a fraction, the numerator of which is the number of months remaining in the twelve month period and the denominator of which is twelve.

Special Restricted Cash Award: You will receive one special restricted cash award, in the amount of $1,000,000 to replace the value of your long term incentive award that otherwise would have been vested by your previous employer. The award will be payable in three (3) installments of $333,333.33 in May 2016, May 2017, May 2018. Payments will be subject to applicable taxes and withholdings. If you voluntarily leave or are terminated for cause, as determined by the Company, within twelve months of the payment date of any and each of the installments, you will be required to repay a prorated portion of the cash award installment(s). The repayment amount will be determined by multiplying the installment amount paid and a fraction, the numerator of which is the number of months remaining in the twelve month period and the denominator of which is twelve.

One-time Restricted Stock Unit Award: You will receive a one-time Restricted Stock Unit (RSU) award with an initial grant value of $1,000,000. The award will vest 1/3 per year beginning one year after the date of grant. The award will be granted pursuant to the 2014 Omnibus Employee Incentive Plan, with additional terms and conditions, including a vesting schedule, to be set forth in an award agreement to be entered into between you and the Company. The grant, which is subject to approval by the Compensation and Benefits Committee of Voya's

PLAN | INVEST | PROTECT

Page 3

August 6, 2015

Board of Directors and conditioned upon your execution of the award agreement, will generally be made within 90 days of your start date subject to Compensation and Benefit Committee approval prior to the grant date. The number of RSUs granted by the award will the calculated by dividing the grant value by the closing price on the New York Stock Exchange of one share of Company stock (ticker: VOYA) on the grant date. You will receive more information about this award once your employment has commenced.

Deferred Compensation Savings Plan: You will be eligible to participate in the Company's Deferred Compensation Savings Plan (DCSP) effective on your date of hire. If you would like to receive a copy of the plan details and enrollment materials please contact Paula Ward at (770) 933-3639. You must return your enrollment forms to the benefits department within 30 days of your date of hire to participate in calendar years 2015 and/or 2016. Deferral elections will begin as soon as administratively possible once you have received an approval confirmation.

Pension Plan: You will be eligible to participate in the Voya Retirement Plan ("Pension Plan”). The Pension Plan is a defined benefit retirement plan that is funded by the Company and does not require employee contributions. Eligible employees, (generally, any part-time or full time employees excluding temporaries) will enter the Pension Plan on their date of hire and will accrue benefits under a cash balance pension formula which credits an amount equal to 4% of your eligible pay to a notional account each month. Interest is credited monthly based on a 30 year U.S. Treasury securities bond rate published by the IRS in the preceding August of each year. You are vested in this benefit after three calendar years of employment in which you work at least 1000 hours per calendar year. For more information regarding this benefit please consult the Retirement Plan Summary Plan Description found on Voya 360°. Once you have received your first pay check you can go on-line at www.yourbenefitsresources.com/voya and view your pension benefits.

401(k) Savings Plan: Under the Voya 401(k) Savings Plan ("Savings Plan”), the Company will match 100% of the first 6% of eligible compensation that you contribute to the Savings Plan, subject to IRS limitations. You may enroll in the Savings Plan as soon as the plan administrator receives your payroll data (usually 1 week of your hire date). If you do not actively enroll or waive enrollment within your first 60 days of employment, you will be automatically enrolled in the Savings Plan with a pre-tax contribution rate equal to 3% of your eligible compensation and your contribution rate will automatically be increased by 1% each March until it reaches 6%. You may change your contribution rate and investment elections at any time. The Company's matching contributions are made when your contributions are made. The Savings Plan also accepts rollovers from any other qualified plan at any time. You will receive additional information about the Savings Plan, including investment options and enrollment instructions shortly after your date of hire.

Welfare Benefits: The Company offers flexible benefits plans that you can use to build a benefits package that meets your needs (e.g., medical, dental, vision, life insurance, etc.). Basic company-provided benefits become effective immediately on your date of hire. Elective benefits such as medical, dental, vision and other supplemental coverage options, become effective upon your date of hire provided you make your elections within 30 days of your hire date. Detailed benefits information is located on Voya 360° and a personalized worksheet with instructions on how to enroll in benefits will be mailed to you at your home address as soon as you come on board.

PLAN | INVEST | PROTECT

Page 4

August 6, 2015

Paid Time-Off (PTO) Bank: Under current Company policy, new employees earn an annual PTO Bank of 224 hours (28 days), prorated based upon date of hire. The PTO Bank shall be used for absences for vacation, personal time, family illness and individual sick days.

Changes to Benefit Programs: The benefit programs described on the Company's pre-boarding site may be changed by the Company, in whole or in part, at any time, with or without notice to you. Your participation in any benefit programs does not ensure your continued employment or the right to any benefits, except as specifically provided in any Company benefit plan.

Worker’s Compensation Insurance Carrier Information: Workers' Compensation Insurance Carrier: AIG, P.O. Box 1821, Alpharetta, GA 30023-1821 - Telephone: 800-448-9707. For any inquiries regarding Benefits and Pay please contact Voya, 5780 Powers Ferry Road, Atlanta, GA 30327 - HR - (800) 555-1899.

Fingerprinting: Fingerprinting may be required for certain employees in order to comply with government agency rules and regulations. If you are subject to the fingerprinting requirement, further information will be provided to you.

Confidentiality of Information: In the performance of your duties on behalf of the Company, you will have access to, receive and be entrusted with confidential information regarding the Company, its affiliates and their clients. All such confidential information is to be held in strictest confidence and, except in the performance of your duties on behalf of the Company, you shall not directly or indirectly disclose or use any such confidential information. This information shall be and remain the Company's sole and exclusive property. Upon termination of your employment, or whenever requested by the Company, you shall promptly deliver to the Company any and all confidential information or other Company property in your possession or under your control.

Contingencies: This offer is contingent upon: (i) verification of your references; (ii) successful completion of a background check; (iii) successful passing of a pre-employment drug screening test; (iv) verification of your eligibility to work in the U.S.; (v) execution of the Mutual Agreement to Arbitrate Claims; and (vi) if applicable, successful completion of the U-4 application. Federal law requires all new employees to demonstrate their identity and authorization to work in this country by presenting documents listed on the Employment Eligibility Verification Form I-9. The Mutual Agreement to Arbitrate Claims is an agreement between you and the Company to resolve disputes through arbitration.

Employment at Will: This letter is not intended to create an employment contract, and the terms and conditions of your employment may be changed at the Company's discretion. Employment with the Company is on an at-will basis. This means that you are not employed for any set period of time, and you or the Company may terminate your employment at any time, for any reason.

PLAN | INVEST | PROTECT

Page 5

August 6, 2015

We are pleased to present the contingent offer above. Please indicate your acceptance with the terms of this letter by signing below and returning one signed copy to me within three (3) days via fax or email Fax#: (860) 580-4856 / E-Mail: linda.terry@voya.com. Please contact Rod Martin directly if you have any questions at (212) 309-5992. We look forward to having you as part of the Voya Team.

Sincerely,

/s/ Kevin Silva

Kevin Silva

EVP and CHRO

PLAN | INVEST | PROTECT

Page 6

August 6, 2015

Enclosures

Acknowledgement of pay information

I acknowledge that the section “Base Salary” has notified me of my pay rate, overtime rate (if eligible), allowances, and designated pay day on the date given below.

I acknowledge this pay information has been given to me in English because it is my primary language.

If my primary language is Chinese, Haitian-Creole, Korean, Polish, Russian, Spanish or other, I will notify HR so that this pay information may be provided in my primary language.

Agreed to and accepted by:

/s/ Patricia J. Walsh 08/06/2015

Signature Date

PLAN | INVEST | PROTECT

Exhibit 21.1



	Subsidiary	% Parent Interest Held	State/Country of Jurisdiction	Parent
1	Australia Retirement Services Holding, LLC	100	Delaware	Voya Institutional Plan Services, LLC
2	IB Holdings LLC	100	Virginia	Voya Holdings Inc.
3	IIPS OF FLORIDA, LLC	100	Florida	Voya Financial, Inc.
4	ILICA Inc.	100	Connecticut	Voya Holdings Inc.
5	ING Pomona Private Equity Management (Luxembourg) S.A.	100	Luxembourg	Voya Investment Management Alternative Assets LLC
6	Langhorne I, LLC	100	Missouri	Voya Holdings Inc.
7	Midwestern United Life Insurance Company	100	Indiana	Security Life of Denver Insurance Company
8	Opportunity Investor P Associates, L.P.	49	Delaware	Pomona G.P. Holdings LLC
9	Opportunity Investor P Associates, L.P.	1	Delaware	Opportunity Investor P Secondary Associates, LLC
10	Opportunity Investor P Secondary Associates, LLC	100	Delaware	Pomona G.P. Holdings LLC
11	Pen-Cal Administrators, Inc.	100	California	Voya Financial, Inc.
12	Pomona Associates IV LP	49	Delaware	Pomona G.P. Holdings LLC
13	Pomona Associates IV LP	1	Delaware	Pomona Secondary Associates IV LLC
14	Pomona Associates V, LP	49	Delaware	Pomona G.P. Holdings LLC
15	Pomona Associates V, LP	1	Delaware	Pomona Secondary Associates V LLC
16	Pomona Associates VI, LP	49	Delaware	Pomona G.P. Holdings LLC
17	Pomona Associates VI, LP	1	Delaware	Pomona Secondary Associates VI LLC
18	Pomona Associates VII, L.P.	49	Delaware	Pomona G.P. Holdings LLC
19	Pomona Associates VII, L.P.	1	Delaware	Pomona Secondary Associates VII LLC
20	Pomona Capital Asia Limited	100	Hong Kong	Pomona Management LLC
21	Pomona Energy Partners US, L.P.	99.75	Delaware	Pomona Capital VII, L.P.
22	Pomona Energy Partners, L.P.	100	Delaware	Pomona Associates VII, L.P.
23	Pomona Europe Advisers Limited	100	United Kingdom	Pomona Europe, Ltd.
24	Pomona Europe, Ltd.	100	United Kingdom	Pomona Management LLC
25	Pomona G.P. Holdings LLC	50	Delaware	Voya Pomona Holdings LLC
26	Pomona Holdings Associates II, LLC	100	Delaware	Pomona Primary Associates II LLC
27	Pomona Holdings Associates III LLC	100	Delaware	Pomona Primary Associates III LLC
28	Pomona Investors II, L.P.	49	Delaware	Pomona G.P. Holdings LLC
29	Pomona Investors II, L.P.	1	Delaware	Pomona Primary Associates II LLC
30	Pomona Investors III, L.P.	49	Delaware	Pomona G.P. Holdings LLC
31	Pomona Investors III, L.P.	1	Delaware	Pomona Primary Associates III LLC
32	Pomona Investors IV, L.P.	49	Delaware	Pomona G.P. Holdings LLC
33	Pomona Investors IV, L.P.	1	Delaware	Pomona Primary Associates IV LLC
34	Pomona Investors V L.P.	49	Delaware	Pomona G.P. Holdings LLC
35	Pomona Investors V L.P.	1	Delaware	Pomona Primary Associates V LLC
36	Pomona Management LLC	100	Delaware	Voya Pomona Holdings LLC
37	Pomona Primary Associates II LLC	100	Delaware	Pomona G.P. Holdings LLC



	Subsidiary	% Parent Interest Held	State/Country of Jurisdiction	Parent
38	Pomona Primary Associates III LLC	100	Delaware	Pomona G.P. Holdings LLC
39	Pomona Primary Associates IV LLC	100	Delaware	Pomona G.P. Holdings LLC
40	Pomona Primary Associates V LLC	100	Delaware	Pomona G.P. Holdings LLC
41	Pomona Secondary Associates IV LLC	100	Delaware	Pomona G.P. Holdings LLC
42	Pomona Secondary Associates V LLC	100	Delaware	Pomona G.P. Holdings LLC
43	Pomona Secondary Associates VI LLC	100	Delaware	Pomona G.P. Holdings LLC
44	Pomona Secondary Associates VII LLC	100	Delaware	Pomona G.P. Holdings LLC
45	Pomona Secondary Associates VIII, LLC	100	Delaware	Pomona G.P. Holdings LLC
46	Pomona Secondary Co-Investment Associates, LLC	100	Delaware	Pomona G.P. Holdings LLC
47	Pomona Secondary Co-Investment Associates, LP	1	Delaware	Pomona Secondary Co-Investment Associates, LLC
48	Pomona Secondary Co-Investment Associates, LP	49	Delaware	Pomona G.P. Holdings LLC
49	Pomona Voya (US) Holdings Associates II LLC	100	Delaware	Pomona G.P. Holdings LLC
50	Pomona Voya (US) Holdings Associates II, L.P.	1	Delaware	Pomona Voya (US) Holdings Associates II LLC
51	Pomona Voya (US) Holdings Associates II, L.P.	49	Delaware	Pomona G.P. Holdings LLC
52	Pomona Voya (US) Holdings Associates III LLC	100	Delaware	Pomona G.P. Holdings LLC
53	Pomona Voya (US) Holdings Associates III LP	1	Delaware	Pomona Voya (US) Holdings Associates III LLC
54	Pomona Voya (US) Holdings Associates III LP	49	Delaware	Pomona G.P. Holdings LLC
55	Pomona Voya (US) Holdings Associates IV LLC	100	Delaware	Pomona G.P. Holdings LLC
56	Pomona Voya (US) Holdings Associates IV, L.P.	1	Delaware	Pomona Voya (US) Holdings Associates IV LLC
57	Pomona Voya (US) Holdings Associates V, LLC	100	Delaware	Pomona G.P. Holdings LLC
58	Pomona Voya (US) Holdings Associates, L.P.	1	Delaware	Pomona Voya (US) Holdings Associates LLC
59	Pomona Voya (US) Holdings Associates, L.P.	49	Delaware	Pomona G.P. Holdings LLC
60	Pomona Voya (US) Holdings Co- Investment Associates II, L.P.	1	Delaware	Pomona Voya (US) Holdings Associates II, L.P.
61	Pomona Voya (US) Holdings Co- Investment Associates II, L.P.	1	Delaware	Pomona Voya (US) Holdings Associates IV LLC
62	Pomona Voya (US) Holdings Co- Investment Associates II, L.P.	49	Delaware	Pomona G.P. Holdings LLC
63	Pomona Voya (US) Holdings Co-Investment Associates L.P.	1	Delaware	Pomona Voya (US) Holdings Associates II LLC



	Subsidiary	% Parent Interest Held	State/Country of Jurisdiction	Parent
64	Pomona Voya (US) Holdings Co-Investment Associates L.P.	49	Delaware	Pomona G.P. Holdings LLC
65	Pomona Voya (US) Holdings Co-Investment II, L.P.	45.88	Delaware	Security Life of Denver Insurance Company
66	Pomona Voya (US) Holdings Co-Investment II, L.P.	24.28	Delaware	ReliaStar Life Insurance Company
67	Pomona Voya (US) Holdings Co-Investment II, L.P.	0.1	Delaware	Pomona Voya (US) Holdings Co- Investment Associates II, L.P.
68	Pomona Voya (US) Holdings Co-Investment II, L.P.	1	Delaware	Pomona Voya (US) Holdings Associates II, L.P.
69	Pomona Voya (US) Holdings Co-Investment II, L.P.	29.69	Delaware	Voya Retirement Insurance and Annuity Company
70	Pomona Voya (US) Holdings V L.P.	22.64	Delaware	Security Life of Denver Insurance Company
71	Pomona Voya (US) Holdings V L.P.	26.64	Delaware	ReliaStar Life Insurance Company
72	Pomona Voya (US) Holdings V L.P.	0.1	Delaware	Pomona Voya (US) Holdings Associates V, L.P.
73	Pomona Voya (US) Holdings V L.P.	33.3	Delaware	Voya Retirement Insurance and Annuity Company
74	Pomona Voya (US) Holdings V-A, L.P.	0.1	Delaware	Pomona Voya (US) Holdings Associates V, L.P.
75	Pomona Voya (US) Holdings V-A, L.P.	32.69	Delaware	Voya Retirement Insurance and Annuity Company
76	Pomona Voya (US) Holdings V-A, L.P.	21.8	Delaware	Security Life of Denver Insurance Company
77	Pomona Voya (US) Holdings V-A, L.P.	27.25	Delaware	ReliaStar Life Insurance Company
78	Pomona Voya Asia Pacific Associates, L.P.	49	Delaware	Pomona G.P. Holdings LLC
79	Pomona Voya Asia Pacific Associates, L.P.	1	Delaware	Pomona Voya Asia Pacific Associates, LLC
80	Pomona Voya Asia Pacific Associates, LLC	100	Delaware	Pomona G.P. Holdings LLC
81	Rancho Mountain Properties, Inc.	100	Delaware	Voya II Custom Investments LLC
82	ReliaStar Life Insurance Company	100	Minnesota	Voya Holdings Inc.
83	ReliaStar Life Insurance Company of New York	100	New York	ReliaStar Life Insurance Company
84	Roaring River II, Inc.	100	Arizona	Security Life of Denver International Limited
85	Roaring River IV Holding, LLC	100	Delaware	Security Life of Denver Insurance Company
86	Roaring River IV, LLC	100	Missouri	Roaring River IV Holding, LLC
87	Roaring River, LLC	100	Missouri	ReliaStar Life Insurance Company
88	Security Life Assignment Corporation	100	Colorado	Voya Financial, Inc.
89	Security Life of Denver Insurance Company	100	Colorado	Voya Financial, Inc.
90	Security Life of Denver International Limited	100	Arizona	Voya Financial, Inc.



	Subsidiary	% Parent Interest Held	State/Country of Jurisdiction	Parent
91	SLDI Georgia Holdings, Inc.	100	Georgia	Roaring River II, Inc.
92	The New Providence Insurance Company, Limited	100	Cayman Island	IB Holdings LLC
93	The Voya Proprietary Alpha Fund, LLC	36.6	Delaware	Security Life of Denver Insurance Company
94	The Voya Proprietary Alpha Fund, LLC	30.2	Delaware	ReliaStar Life Insurance Company
95	The Voya Proprietary Alpha Fund, LLC	1	Delaware	Voya Alternative Asset Management LLC
96	Voya Alternative Asset Management Ireland Limited	100	Ireland	Voya Investment Management Alternative Assets LLC
97	Voya Alternative Asset Management LLC	100	Delaware	Voya Investment Management Alternative Assets LLC
98	Voya America Equities, Inc.	100	Colorado	Security Life of Denver Insurance Company
99	Voya Benefits Company, LLC	100	Delaware	Voya Holdings Inc.
100	Voya Capital, LLC	100	Delaware	Voya Investment Management LLC
101	Voya Custom Investments LLC	100	Delaware	Roaring River II, Inc.
102	Voya Financial Advisors, Inc.	100	Minnesota	Voya Holdings Inc.
103	Voya Financial Partners, LLC	100	Delaware	Voya Retirement Insurance and Annuity Company
104	Voya Financial Products Company, Inc.	100	Delaware	Voya Financial, Inc.
105	Voya Funds Services, LLC	100	Delaware	Voya Capital, LLC
106	Voya Furman Selz Investments III LLC	95.81	Delaware	Voya Investment Management Alternative Assets LLC
107	Voya Holdings Inc.	100	Connecticut	Voya Financial, Inc.
108	Voya II Custom Investments LLC	100	Delaware	SLDI Georgia Holdings, Inc.
109	Voya Institutional Plan Services, LLC	100	Delaware	Voya Holdings Inc.
110	Voya Institutional Trust Company	100	Connecticut	Voya Holdings Inc.
111	Voya Insurance Management (Bermuda) Ltd.	100	Bermuda	Voya Financial, Inc.
112	Voya Insurance Solutions, Inc.	100	Connecticut	Voya Holdings Inc.
113	Voya International Nominee Holdings, Inc.	100	Connecticut	Voya Holdings Inc.
114	Voya Investment Management (Bermuda) Holdings Limited	100	Bermuda	Voya Investment Management Co. LLC
115	Voya Investment Management (UK) Limited	100	United Kingdom	Voya Investment Management Co. LLC
116	Voya Investment Management Alternative Assets LLC	100	Delaware	Voya Investment Management LLC
117	Voya Investment Management Co. LLC	100	Delaware	Voya Investment Management LLC
118	Voya Investment Management LLC	100	Delaware	Voya Holdings Inc.
119	Voya Investment Trust Co.	100	Connecticut	Voya Investment Management Co. LLC



	Subsidiary	% Parent Interest Held	State/Country of Jurisdiction	Parent
120	Voya Investments Distributor, LLC	100	Delaware	Voya Funds Services, LLC
121	Voya Investments, LLC	100	Arizona	Voya Funds Services, LLC
122	Voya Multi-Strategy Opportunity Fund LLC	100	Delaware	Voya Alternative Asset Management LLC
123	Voya Payroll Management, Inc.	100	Delaware	Voya Financial, Inc.
124	Voya Pomona Asia Pacific G.P. Limited	100	Hong Kong	Pomona Voya Asia Pacific Associates, L.P.
125	Voya Pomona Asia Pacific Private Equity Co-Invest I L.P.	58.65	Delaware	Security Life of Denver Insurance Company
126	Voya Pomona Asia Pacific Private Equity Co-Invest I L.P.	1.3	Delaware	Voya Pomona Asia Pacific G.P. Limited
127	Voya Pomona Asia Pacific Private Equity Co-Invest I L.P.	39.99	Delaware	Voya Retirement Insurance and Annuity Company
128	Voya Pomona Holdings LLC	100	Delaware	Voya Investment Management Alternative Assets LLC
129	Voya Realty Group LLC	100	Delaware	Voya Investment Management Alternative Assets LLC
130	Voya Retirement Advisors, LLC	100	New Jersey	Voya Institutional Plan Services, LLC
131	Voya Retirement Insurance and Annuity Company	100	Connecticut	Voya Holdings Inc.
132	Voya Services Company	100	Delaware	Voya Financial, Inc.

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements:



1.	Registration Statement (Form S-8 No. 333-188298) pertaining to the ING U.S., Inc. 2013 Omnibus Employee Incentive Plan,
2.	Registration Statement (Form S-8 No. 333-188299) pertaining to the ING U.S., Inc. 2013 Omnibus Non-Employee Director Incentive Plan,
3.	Registration Statement (Form S-8 No. 333-191261) pertaining to the ING U.S. 401(k) Plan for ILIAC Agents,
4.	Registration Statement (Form S-8 No. 333-191262) pertaining to the ING U.S. Savings Plan and ESOP,
5.	Registration Statement (Form S-8 No. 333-202527) pertaining to the Voya Financial, Inc. 2014 Omnibus Employee Incentive Plan,
6.	Registration Statement (Form S-8, No. 333-209728) pertaining to the Voya Financial, Inc. Employee Stock Purchase Plan, and Incentive Plan, and
7.	Registration Statement (Form S-3 No. 333-218956) and related Prospectus of Voya Financial, Inc.;

of our report dated February 22, 2019 with respect to the consolidated financial statements and schedules of Voya Financial, Inc., and the effectiveness of internal control over financial reporting of Voya Financial, Inc. included in this Annual Report (Form 10-K) of Voya Financial, Inc. for the year ended December 31, 2018.

/s/ Ernst & Young LLP

Boston, Massachusetts

February 22, 2019

Exhibit 31.1

CERTIFICATION

I, Rodney O. Martin, Jr., certify that:


1.	I have reviewed this annual report on Form 10-K of Voya Financial, Inc.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and


5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.



Date:		February 22, 2019

By:	/s/	Rodney O. Martin, Jr.
		Rodney O. Martin, Jr. Chairman and Chief Executive Officer
		(Duly Authorized Officer and Principal Executive Officer)

Exhibit 31.2

CERTIFICATION

I, Michael S. Smith, certify that:


1.	I have reviewed this annual report on Form 10-K of Voya Financial, Inc.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and


5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.



Date:		February 22, 2019

By:	/s/	Michael S. Smith
		Michael S. Smith Executive Vice President and Chief Financial Officer
		(Duly Authorized Officer and Principal Financial Officer)

Exhibit 32.1

CERTIFICATION

Pursuant to 18 U.S.C. §1350, the undersigned officer of Voya Financial, Inc. (the "Company") hereby certifies that, to the officer's knowledge, the Company's Annual Report on Form 10-K for the year ended December 31, 2018 (the "Report") fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



February 22, 2019	By:	/s/	Rodney O. Martin, Jr.
			Rodney O. Martin, Jr.
			Chairman and Chief Executive Officer

Exhibit 32.2

CERTIFICATION



February 22, 2019	By:	/s/	Michael S. Smith
			Michael S. Smith
			Executive Vice President and Chief Financial Officer