Voya Financial, Inc. (Form: 10-Q, Received: 08/09/2019 06:07:34)

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

——————————————————————

FORM 10-Q



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

For the quarterly period ended June 30, 2019



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



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

(212) 309-8200

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value	VOYA	New York Stock Exchange
Depositary Shares, each representing a 1/40^th	VOYAPrB	New York Stock Exchange
interest in a share of 5.35% Fixed-Rate Reset Non-Cumulative Preferred Stock, Series B, $0.01 par value	VOYAPrB	New York Stock Exchange

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 ☐ No

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 ☐ No

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



Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐
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.			☐

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ☐ Yes ☐ No

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of August 2, 2019, 140,359,868 shares of Common Stock, $0.01 par value, were outstanding.



	1

Voya Financial, Inc.

Form 10-Q for the period ended June 30, 2019

INDEX

		PAGE
PART I.	FINANCIAL INFORMATION (UNAUDITED)

Item 1.	Financial Statements:
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	6
	Condensed Consolidated Statements of Comprehensive Income	7
	Condensed Consolidated Statements of Changes in Shareholders' Equity	8
	Condensed Consolidated Statements of Cash Flows	12
	Notes to Condensed Consolidated Financial Statements:	13
	1. Business, Basis of Presentation and Significant Accounting Policies	13
	2. Discontinued Operations	20
	3. Investments (excluding Consolidated Investment Entities)	21
	4. Derivative Financial Instruments	35
	5. Fair Value Measurements (excluding Consolidated Investment Entities)	41
	6. Deferred Policy Acquisition Costs and Value of Business Acquired	52
	7. Share-based Incentive Compensation Plans	53
	8. Shareholders' Equity	55
	9. Earnings per Common Share	58
	10. Accumulated Other Comprehensive Income (Loss)	59
	11. Income Taxes	63
	12. Financing Agreements	64
	13. Commitments and Contingencies	65
	14. Consolidated Investment Entities	68
	15. Restructuring	74
	16. Segments	76
	17. Condensed Consolidating Financial Information	81

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	96

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	141

Item 4.	Controls and Procedures	141

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	142

Item 1A.	Risk Factors	142

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	142

Item 6.	Exhibits	142

Exhibit Index		143

Signature		144



	2

Table of Contents

For the purposes of the discussion in this Quarterly Report on Form 10-Q, 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 Quarterly Report on Form 10-Q, including "Risk Factors," and "Management’s Discussion and Analysis of Financial Condition and Results of Operations," 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, and (xi) our ability to successfully manage the separation of the fixed and variable annuities businesses that we sold to VA Capital Company LLC on June 1, 2018, including the transition services on the expected timeline and economic terms. Factors that may cause actual results to differ from those in any forward-looking statement also include those described under "Risk Factors," "Management’s Discussion and Analysis of Financial Condition and Results of Operations-Trends and Uncertainties" in the Annual Report on Form 10-K for the year ended December 31, 2018 (File No. 001-35897) (the "Annual Report on Form 10-K").

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.



	3

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Voya Financial, Inc.

Condensed Consolidated Balance Sheets

June 30, 2019 (Unaudited) and December 31, 2018

(In millions, except share and per share data)



	June 30, 2019		December 31, 2018
Assets:
Investments:
Fixed maturities, available-for-sale, at fair value (amortized cost of $44,806 as of 2019 and $45,241 as of 2018)	$	49,150	$	46,298
Fixed maturities, at fair value using the fair value option	3,358		2,956
Equity securities, at fair value (cost of $335 as of 2019 and $255 as of 2018)	367		273
Short-term investments	154		168
Mortgage loans on real estate, net of valuation allowance of $1 as of 2019 and $2 as of 2018	8,418		8,676
Policy loans	1,797		1,833
Limited partnerships/corporations	1,325		1,158
Derivatives	440		247
Other investments	96		90
Securities pledged (amortized cost of $1,739 as of 2019 and $1,824 as of 2018)	1,945		1,867
Total investments	67,050		63,566
Cash and cash equivalents	1,482		1,538
Short-term investments under securities loan agreements, including collateral delivered	1,929		1,684
Accrued investment income	662		650
Premium receivable and reinsurance recoverable	6,640		6,860
Deferred policy acquisition costs and Value of business acquired	3,246		4,116
Current income taxes	226		237
Deferred income taxes	576		1,157
Other assets	1,425		1,336
Assets related to consolidated investment entities:
Limited partnerships/corporations, at fair value	1,429		1,421
Cash and cash equivalents	59		331
Corporate loans, at fair value using the fair value option	512		542
Other assets	11		16
Assets held in separate accounts	79,915		71,228
Total assets	$	165,162	$	154,682



The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

	4

Table of Contents

Voya Financial, Inc.

Condensed Consolidated Balance Sheets

June 30, 2019 (Unaudited) and December 31, 2018

(In millions, except share and per share data)



	June 30, 2019			December 31, 2018
Liabilities and Shareholders' Equity:
Future policy benefits	$	14,841		$	14,488
Contract owner account balances	50,580			51,001
Payables under securities loan and repurchase agreements, including collateral held	1,972			1,821
Short-term debt	97			1
Long-term debt	3,041			3,136
Derivatives	432			139
Pension and other postretirement provisions	445			551
Other liabilities	2,106			2,148
Liabilities related to consolidated investment entities:
Collateralized loan obligations notes, at fair value using the fair value option	432			540
Other liabilities	562			688
Liabilities related to separate accounts	79,915			71,228
Total liabilities	154,423			145,741

Commitments and Contingencies (Note 13)

Shareholders' equity:
Preferred stock ($0.01 par value per share; $625 and $325 aggregate liquidation preference as of 2019 and 2018, respectively)	—			—
Common stock ($0.01 par value per share; 900,000,000 shares authorized; 275,273,194 and 272,431,745 shares issued as of 2019 and 2018, respectively; 140,329,307 and 150,978,184 shares outstanding as of 2019 and 2018, respectively)	3			3
Treasury stock (at cost; 134,943,887 and 121,453,561 shares as of 2019 and 2018, respectively)	(5,663		)	(4,981		)
Additional paid-in capital	24,642			24,316
Accumulated other comprehensive income (loss)	2,867			607
Retained earnings (deficit):
Appropriated-consolidated investment entities	—			—
Unappropriated	(11,785		)	(11,732		)
Total Voya Financial, Inc. shareholders' equity	10,064			8,213
Noncontrolling interest	675			728
Total shareholders' equity	10,739			8,941
Total liabilities and shareholders' equity	$	165,162		$	154,682



The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

	5

Table of Contents

Voya Financial, Inc.

Condensed Consolidated Statements of Operations

For the Three and Six Months Ended June 30, 2019 and 2018 (Unaudited)

(In millions, except per share data)



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Revenues:
Net investment income	$	880		$	813		$	1,695		$	1,636
Fee income	662			660			1,327			1,336
Premiums	585			533			1,167			1,072
Net realized capital gains (losses):
Total other-than-temporary impairments	(3		)	—			(36		)	(14		)
Less: Portion of other-than-temporary impairments recognized in Other comprehensive income (loss)	—			1			—			1
Net other-than-temporary impairments recognized in earnings	(3		)	(1		)	(36		)	(15		)
Other net realized capital gains (losses)	53			(119		)	103			(286		)
Total net realized capital gains (losses)	50			(120		)	67			(301		)
Other revenue	102			101			215			200
Income (loss) related to consolidated investment entities:
Net investment income	67			126			72			137
Total revenues	2,346			2,113			4,543			4,080
Benefits and expenses:
Policyholder benefits	852			706			1,667			1,414
Interest credited to contract owner account balances	380			382			751			764
Operating expenses	687			645			1,389			1,345
Net amortization of Deferred policy acquisition costs and Value of business acquired	67			74			152			174
Interest expense	42			46			84			95
Operating expenses related to consolidated investment entities:
Interest expense	16			16			21			22
Other expense	4			3			4			4
Total benefits and expenses	2,048			1,872			4,068			3,818
Income (loss) from continuing operations before income taxes	298			241			475			262
Income tax expense (benefit)	44			45			69			49
Income (loss) from continuing operations	254			196			406			213
Income (loss) from discontinued operations, net of tax	(3		)	28			(82		)	457
Net income (loss)	251			224			324			670
Less: Net income (loss) attributable to noncontrolling interest	25			58			24			58
Net income (loss) available to Voya Financial, Inc.	226			166			300			612
Less: Preferred stock dividends	—			—			10			—
Net income (loss) available to Voya Financial, Inc.'s common shareholders	$	226		$	166		$	290		$	612

Net income (loss) per common share:
Basic
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders	$	1.59		$	0.83		$	2.56		$	0.91
Income (loss) available to Voya Financial, Inc.'s common shareholders	$	1.57		$	1.00		$	1.99		$	3.60

Diluted
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders	$	1.53		$	0.80		$	2.47		$	0.88
Income (loss) available to Voya Financial, Inc.'s common shareholders	$	1.51		$	0.96		$	1.93		$	3.48

Cash dividends declared per share of common stock	$	0.01		$	0.01		$	0.02		$	0.02



The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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Voya Financial, Inc.

Condensed Consolidated Statements of Comprehensive Income

For the Three and Six Months Ended June 30, 2019 and 2018 (Unaudited)

(In millions)



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net income (loss)	$	251		$	224		$	324		$	670
Other comprehensive income (loss), before tax:
Unrealized gains (losses) on securities	1,141			(867		)	2,425			(2,390		)
Other-than-temporary impairments	1			10			2			30
Pension and other postretirement benefits liability	(1		)	(3		)	(2		)	(6		)
Other comprehensive income (loss), before tax	1,141			(860		)	2,425			(2,366		)
Income tax expense (benefit) related to items of other comprehensive income (loss)	240			(292		)	508			(606		)
Other comprehensive income (loss), after tax	901			(568		)	1,917			(1,760		)
Comprehensive income (loss)	1,152			(344		)	2,241			(1,090		)
Less: Comprehensive income (loss) attributable to noncontrolling interest	25			58			24			58
Comprehensive income (loss) attributable to Voya Financial, Inc.	$	1,127		$	(402	)	$	2,217		$	(1,148	)



The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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Voya Financial, Inc.

Condensed Consolidated Statements of Changes in Shareholders' Equity

For the Three Months Ended June 30, 2019 (Unaudited)

(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
	Preferred Stock		Common Stock		Treasury Stock			Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)		Appropriated		Unappropriated			Total Voya Financial, Inc. Shareholders' Equity			Noncontrolling Interest			Total Shareholders' Equity
Balance as of April 1, 2019	$	—	$	3	$	(5,203	)	$	24,310		$	1,966	$	—	$	(12,011	)	$	9,065		$	741		$	9,806
Adoption of ASU 2018-02	—		—		—			—			—		—		—			—			—			—
Comprehensive income (loss):
Net income (loss)	—		—		—			—			—		—		226			226			25			251
Other comprehensive income (loss), after tax	—		—		—			—			901		—		—			901			—			901
Total comprehensive income (loss)																		1,127			25			1,152
Preferred stock issuance	—		—		—			293			—		—		—			293			—			293
Common stock issuance	—		—		—			—			—		—		—			—			—			—
Common stock acquired - Share repurchase	—		—		(446		)	10			—		—		—			(436		)	—			(436		)
Dividends on preferred stock	—		—		—			—			—		—		—			—			—			—
Dividends on common stock	—		—		—			(2		)	—		—		—			(2		)	—			(2		)
Share-based compensation	—		—		(14		)	31			—		—		—			17			—			17
Contributions from (Distributions to) noncontrolling interest, net	—		—		—			—			—		—		—			—			(91		)	(91		)
Balance as of June 30, 2019	$	—	$	3	$	(5,663	)	$	24,642		$	2,867	$	—	$	(11,785	)	$	10,064		$	675		$	10,739



The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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Voya Financial, Inc. Condensed Consolidated Statements of Changes in Shareholders' Equity For the Six Months Ended June 30, 2019 (Unaudited) (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
	Preferred Stock		Common Stock		Treasury Stock			Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)		Appropriated		Unappropriated			Total Voya Financial, Inc. Shareholders' Equity			Noncontrolling Interest			Total Shareholders' Equity
Balance as of January 1, 2019	$	—	$	3	$	(4,981	)	$	24,316		$	607	$	—	$	(11,732	)	$	8,213		$	728		$	8,941
Adoption of ASU 2018-02	—		—		—			—			343		—		(343		)	—			—			—
Comprehensive income (loss):
Net income (loss)	—		—		—			—			—		—		300			300			24			324
Other comprehensive income (loss), after tax	—		—		—			—			1,917		—		—			1,917			—			1,917
Total comprehensive income (loss)																		2,217			24			2,241
Preferred stock issuance	—		—		—			293			—		—		—			293			—			293
Common stock issuance	—		—		—			2			—		—		—			2			—			2
Common stock acquired - Share repurchase	—		—		(646		)	(40		)	—		—		—			(686		)	—			(686		)
Dividends on preferred stock	—		—		—			—			—		—		(10		)	(10		)	—			(10		)
Dividends on common stock	—		—		—			(3		)	—		—		—			(3		)	—			(3		)
Share-based compensation	—		—		(36		)	74			—		—		—			38			—			38
Contributions from (Distributions to) noncontrolling interest, net	—		—		—			—			—		—		—			—			(77		)	(77		)
Balance as of June 30, 2019	$	—	$	3	$	(5,663	)	$	24,642		$	2,867	$	—	$	(11,785	)	$	10,064		$	675		$	10,739



The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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Voya Financial, Inc.

Condensed Consolidated Statements of Changes in Shareholders' Equity

For the Three Months Ended June 30, 2018 (Unaudited)

(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
	Preferred Stock		Common Stock		Treasury Stock			Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Appropriated		Unappropriated			Total Voya Financial, Inc. Shareholders' Equity			Noncontrolling Interest			Total Shareholders' Equity
Balance as of April 1, 2018	$	—	$	3	$	(3,936	)	$	23,961		$	1,511		$	—	$	(12,161	)	$	9,378		$	1,031		$	10,409
Comprehensive income (loss):
Net income (loss)	—		—		—			—			—			—		166			166			58			224
Reversal of Other Comprehensive Income (Loss) due to Sale of Annuity and CBVA	—		—		—			—			(79		)	—		—			(79		)	—			(79		)
Other comprehensive income (loss), after tax	—		—		—			—			(489		)	—		—			(489		)	—			(489		)
Total comprehensive income (loss)																			(402		)	58			(344		)
Effect of transaction for entities under common control	—		—		—			(31		)	—			—		—			(31		)	—			(31		)
Net consolidations (deconsolidations) of consolidated investment entities	—		—		—			—			—			—		—			—			(33		)	(33		)
Preferred stock issuance	—		—		—			—			—			—		—			—			—			—
Common stock issuance	—		—		—			(1		)	—			—		—			(1		)	—			(1		)
Common stock acquired - Share repurchase	—		—		(500		)	—			—			—		—			(500		)	—			(500		)
Dividends on preferred stock	—		—		—			—			—			—		—			—			—			—
Dividends on common stock	—		—		—			(1		)	—			—		—			(1		)	—			(1		)
Share-based compensation	—		—		(6		)	23			—			—		—			17			—			17
Contributions from (Distributions to) noncontrolling interest, net	—		—		—			—			—			—		—			—			(274		)	(274		)
Balance as of June 30, 2018	$	—	$	3	$	(4,442	)	$	23,951		$	943		$	—	$	(11,995	)	$	8,460		$	782		$	9,242



The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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Voya Financial, Inc. Condensed Consolidated Statements of Changes in Shareholders' Equity For the Six Months Ended June 30, 2018 (Unaudited) (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 as of January 1, 2018	$	—	$	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 as of 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)	—		—		—			—			—			—		612			612			58			670
Reversal of Other Comprehensive Income (Loss) due to Sale of Annuity and CBVA	—		—		—			—			(79		)	—		—			(79		)	—			(79		)
Other comprehensive income (loss), after tax	—		—		—			—			(1,681		)	—		—			(1,681		)	—			(1,681		)
Total comprehensive income (loss)																			(1,148		)	58			(1,090		)
Effect of transaction for entities under common control	—		—		—			(31		)	—			—		—			(31		)	—			(31		)
Net consolidations (deconsolidations) of consolidated investment entities	—		—		—			—			—			—		—			—			(33		)	(33		)
Preferred stock issuance	—		—		—			—			—			—		—			—			—			—
Common stock issuance	—		—		—			1			—			—		—			1			—			1
Common stock acquired - Share repurchase	—		—		(600		)	100			—			—		—			(500		)	—			(500		)
Dividends on preferred stock	—		—		—			—			—			—		—			—			—			—
Dividends on common stock	—		—		—			(3		)	—			—		—			(3		)	—			(3		)
Share-based compensation	—		—		(15		)	63			—			—		—			48			—			48
Contributions from (Distributions to) noncontrolling interest, net	—		—		—			—			—			—		—			—			(273		)	(273		)
Balance as of June 30, 2018	$	—	$	3	$	(4,442	)	$	23,951		$	943		$	—	$	(11,995	)	$	8,460		$	782		$	9,242



The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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Voya Financial, Inc.

Condensed Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2019 and 2018 (Unaudited)

(In millions)



	Six Months Ended June 30,
	2019			2018
Cash Flows from Operating Activities:
Net cash provided by (used in) operating activities - continuing operations	$	549		$	(408	)
Net cash provided by operating activities - discontinued operations	—			1,462
Net cash provided by operating activities	549			1,054
Cash Flows from Investing Activities:
Proceeds from the sale, maturity, disposal or redemption of:
Fixed maturities	4,463			4,577
Equity securities	15			20
Mortgage loans on real estate	608			471
Limited partnerships/corporations	115			152
Acquisition of:
Fixed maturities	(4,125		)	(4,881		)
Equity securities	(23		)	(20		)
Mortgage loans on real estate	(357		)	(574		)
Limited partnerships/corporations	(221		)	(158		)
Short-term investments, net	14			403
Derivatives, net	62			35
Sales from consolidated investment entities	329			602
Purchases within consolidated investment entities	(572		)	(607		)
Collateral (delivered) received, net	(95		)	38
Other, net	(12		)	(5		)
Net cash (used in) provided by investing activities - discontinued operations	(128		)	34
Net cash provided by investing activities	73			87
Cash Flows from Financing Activities:
Deposits received for investment contracts	2,855			3,083
Maturities and withdrawals from investment contracts	(3,285		)	(2,716		)
Settlements on deposit contracts	(6		)	—
Proceeds from issuance of debt with maturities of more than three months	—			350
Repayment of debt with maturities of more than three months	—			(350		)
Debt issuance costs	—			(6		)
Borrowings of consolidated investment entities	304			469
Repayments of borrowings of consolidated investment entities	(407		)	(461		)
Contributions from (distributions to) participants in consolidated investment entities, net	282			34
Proceeds from issuance of common stock, net	2			1
Proceeds from issuance of preferred stock, net	293			—
Share-based compensation	(17		)	(15		)
Common stock acquired - Share repurchase	(686		)	(500		)
Dividends paid on common stock	(3		)	(3		)
Dividends paid on preferred stock	(10		)	—
Net cash used in financing activities - discontinued operations	—			(1,209		)
Net cash used in financing activities	(678		)	(1,323		)
Net decrease in cash and cash equivalents	(56		)	(182		)
Cash and cash equivalents, beginning of period	1,538			1,716
Cash and cash equivalents, end of period	$	1,482		$	1,534
Non-cash investing and financing activities:
Initial recognition of operating leases upon adoption of ASU 2016-02	$	146		$	—
Leased assets in exchange for finance lease liabilities	68			—



The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(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 in the Discontinued Operations Note to these Condensed Consolidated Financial Statements) and certain run-off activities that are not meaningful to the Company's business strategy. See the Segments Note to these Condensed 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 early 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.

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 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 Condensed Consolidated Financial Statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") and are unaudited. 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 Condensed 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 Condensed Consolidated Financial Statements include the accounts of Voya Financial, Inc. and its subsidiaries, as well as partnerships (voting interest entities ("VOEs")) in which the Company has control and variable interest entities ("VIEs") for which the Company is the primary beneficiary. See the Consolidated Investment Entities Note to these Condensed Consolidated Financial Statements. Intercompany transactions and balances have been eliminated.

The accompanying Condensed Consolidated Financial Statements reflect adjustments (including normal, recurring adjustments) necessary to present fairly the financial position of the Company as of June 30, 2019, its results of operations, comprehensive income and changes in shareholders' equity for the three and six months ended June 30, 2019 and 2018, and its statements of cash flows for the six months ended June 30, 2019 and 2018, in conformity with U.S. GAAP. Interim results are not necessarily indicative of full year performance.

The December 31, 2018 Consolidated Balance Sheet is from the audited Consolidated Financial Statements included in the Company's Annual Report on Form 10-K, filed with the SEC. Therefore, these unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and related notes included in the Company's Annual Report on Form 10-K.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Adoption of New Pronouncements

The following table provides a description of the Company's adoption of new Accounting Standard Updates ("ASUs") issued by the Financial Accounting Standards Board ("FASB") 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 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 ("AOCI") 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 the change reported in the period of adoption.	The impact to the January 1, 2019 Condensed Consolidated Balance Sheet was an increase to AOCI of $343, with a corresponding decrease to Retained earnings. The ASU did not have a material impact on the Company's results of operations, cash flows, or disclosures.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(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 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, and • 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, using the modified retrospective method, with the exception of the presentation and disclosure requirements which were adopted prospectively.	The adoption had no effect on the Company's financial condition, results of operations, or cash flows. The adoption resulted in a change to the Company's significant accounting policy with respect to Derivatives, as follows: Fair Value Hedge: For derivative instruments that are designated and qualify as a fair value hedge, the entire change in the fair value of the hedging instrument included in the assessment of hedge effectiveness is recorded in the same line item in the Condensed Consolidated Statements of Operations as impacted by the hedged item. Cash Flow Hedge: For derivative instruments that are designated and qualify as a cash flow hedge, the entire change in the fair value of the hedging instrument included in the assessment of hedge effectiveness is reported as a component of AOCI. Those amounts are subsequently reclassified to earnings when the hedged item affects earnings, and are reported in the same line item in the Condensed Consolidated Statements of Operations as impacted by the hedged item. Other required disclosure changes have been included in Note 4, Derivative Financial Instruments.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(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 2016-02, 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 using the modified retrospective method.	Adoption of the ASU resulted in the establishment of a $146 lease liability for operating leases and a corresponding right-of-use asset, which are included in Other liabilities and Other assets, respectively. The Company elected the practical expedients at transition. The ASU did not impact the Company's Shareholders’ equity or results of operations, and did not materially impact cash flows or disclosures.

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 ("DAC") 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. On July 17, 2019, the FASB decided to issue an exposure draft proposing the extension of the effective date of ASU 2018-12 for public business entities that are required to file with the SEC by one year, to fiscal years beginning after December 15, 2021. This exposure draft is expected to be issued during the third quarter of 2019 and will have a 30 day comment period. 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:



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(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
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 AOCI. 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.
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 AOCI.	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.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(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
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 value of business acquired ("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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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(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 2019-04, Codification Improvements to Financial Instruments	This standard, issued in April 2019, represents changes to clarify, correct errors in, and improve the financial instruments guidance in the following areas: • Topic 326, Financial Instruments-Credit Losses, • Topic 815, Derivatives and Hedging, and • Topic 825, Financial Instruments.	Generally January 1, 2020, including interim periods, with early adoption permitted. The effective dates and transition methods vary by provision.	The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2019-04.
ASU 2018-15, Customer's Accounting for 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 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. In addition, the FASB issued various amendments during 2018 and 2019 to clarify the provisions of ASU 2016-13.	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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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

2. Discontinued Operations

On June 1, 2018, the Company consummated a series of transactions (collectively, the "2018 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 2018 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 2018 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. Pursuant to the terms of the 2018 Transaction, the Company has retained a small number of CBVA and Annuities policies that are not included in the disposed businesses described above as "Retained Business."

During the second quarter of 2019, the Company settled the outstanding purchase price true-up amounts with VA Capital. The Company does not anticipate further material charges in connection with the 2018 Transaction. Income(loss) from discontinued operations, net of tax for the six months ended June 30, 2019 includes a $82 charge related to the purchase price true-up settlement in connection with the 2018 Transaction.

The following table summarizes the components of Income (loss) from discontinued operations, net of tax for the six months ended June 30, 2019 and 2018:



	Six Months Ended June 30,
	2019			2018
Revenues:
Net investment income	$	—		$	510
Fee income	—			295
Premiums	—			(50		)
Total net realized capital gains (losses)	—			(345		)
Other revenue	—			10
Total revenues	—			420
Benefits and expenses:
Interest credited and other benefits to contract owners/policyholders	—			442
Operating expenses	—			(14		)
Net amortization of Deferred policy acquisition costs and Value of business acquired	—			49
Interest expense	—			10
Total benefits and expenses	—			487
Income (loss) from discontinued operations before income taxes	—			(67		)
Income tax expense (benefit)	—			(19		)
Adjustment to loss on sale, net of tax	(82		)	505
Income (loss) from discontinued operations, net of tax	$	(82	)	$	457



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

3. Investments (excluding Consolidated Investment Entities)

Fixed Maturities

Available-for-sale and fair value option ("FVO") fixed maturities were as follows as of June 30, 2019:



	Amortized Cost		Gross Unrealized Capital Gains		Gross Unrealized Capital Losses		Embedded Derivatives⁽²⁾		Fair Value		OTTI⁽³⁾⁽⁴⁾
Fixed maturities:
U.S. Treasuries	$	1,666	$	500	$	—	$	—	$	2,166	$	—
U.S. Government agencies and authorities	197		52		—		—		249		—
State, municipalities and political subdivisions	1,642		114		2		—		1,754		—
U.S. corporate public securities	18,170		2,307		67		—		20,410		—
U.S. corporate private securities	6,292		444		38		—		6,698		—
Foreign corporate public securities and foreign governments⁽¹⁾	5,320		521		31		—		5,810		—
Foreign corporate private securities⁽¹⁾	5,027		250		15		—		5,262		—
Residential mortgage-backed securities	5,282		285		20		29		5,576		10
Commercial mortgage-backed securities	3,892		203		5		—		4,090		—
Other asset-backed securities	2,415		46		23		—		2,438		2
Total fixed maturities, including securities pledged	49,903		4,722		201		29		54,453		12
Less: Securities pledged	1,739		219		13		—		1,945		—
Total fixed maturities	$	48,164	$	4,503	$	188	$	29	$	52,508	$	12

⁽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 Condensed Consolidated Statements of Operations.

⁽³⁾ Represents Other-than-Temporary-Impairments ("OTTI") reported as a component of Other comprehensive income (loss).

⁽⁴⁾ Amount excludes $411 of net unrealized gains on impaired available-for-sale securities.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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	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.

⁽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.

The amortized cost and fair value of fixed maturities, including securities pledged, as of June 30, 2019, are shown below by contractual maturity. Actual maturities may differ from contractual maturities as securities may be restructured, called or prepaid. Mortgage-backed securities ("MBS") and Other asset-backed securities ("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	$	1,265	$	1,277
After one year through five years	6,452		6,697
After five years through ten years	9,227		9,800
After ten years	21,370		24,575
Mortgage-backed securities	9,174		9,666
Other asset-backed securities	2,415		2,438
Fixed maturities, including securities pledged	$	49,903	$	54,453

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.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

As of June 30, 2019 and December 31, 2018, 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
June 30, 2019
Communications	$	2,456	$	368	$	1	$	2,823
Financial	5,184		614		6		5,792
Industrial and other companies	14,889		1,312		57		16,144
Energy	3,764		457		52		4,169
Utilities	6,270		575		23		6,822
Transportation	1,394		133		4		1,523
Total	$	33,957	$	3,459	$	143	$	37,273

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

The Company has elected the FVO for certain of its fixed maturities to better match the measurement of assets and liabilities in the Condensed Consolidated Statements of Operations. Certain collateralized mortgage obligations ("CMOs"), primarily interest-only and principal-only strips, are accounted for as hybrid instruments and reported at fair value with changes in the fair value recorded in Other net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.

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 June 30, 2019 and December 31, 2018, approximately 40.3% and 41.6%, 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.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Repurchase Agreements

As of June 30, 2019 and December 31, 2018, the Company did not have any securities pledged in dollar rolls or reverse repurchase agreements. As of June 30, 2019, the carrying value of securities pledged and obligation to repay loans related to repurchase agreement transaction was $67, respectively, and included in Securities pledged and Payables under securities loan and repurchase agreements, including collateral held, respectively, on the Condensed Consolidated Balance Sheets. As of December 31, 2018, the carrying value of securities pledged and obligation to repay loans related to repurchase agreement transaction was $45 and $46, respectively. Securities pledged related to repurchase agreements are comprised of other asset-backed securities.

Securities Lending

The Company engages in securities lending whereby the initial collateral 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 high quality 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. As of June 30, 2019 and December 31, 2018, the fair value of loaned securities was $1,707 and $1,635, respectively, and is included in Securities pledged on the Condensed 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 June 30, 2019 and December 31, 2018, cash collateral retained by the lending agent and invested in short-term liquid assets on the Company's behalf was $1,525 and $1,581, respectively, and is recorded in Short-term investments under securities loan agreements, including collateral delivered on the Condensed Consolidated Balance Sheets. As of June 30, 2019 and December 31, 2018, liabilities to return collateral of $1,525 and $1,581, respectively, are included in Payables under securities loan and repurchase agreements, including collateral held on the Condensed 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 Condensed Consolidated Balance Sheets. This collateral generally consists of U.S. Treasury, U.S. Government agency securities and MBS pools. As of June 30, 2019 and December 31, 2018, the fair value of securities retained as collateral by the lending agent on the Company’s behalf was $238 and $111, respectively.

The following table presents borrowings under securities lending transactions by asset class pledged as of the dates indicated:



	June 30, 2019 ⁽¹⁾⁽²⁾		December 31, 2018 ⁽¹⁾⁽²⁾
U.S. Treasuries	$	403	$	337
U.S. Government agencies and authorities	43		7
U.S. corporate public securities	860		992
Equity Securities	—		1
Short-term investments	61		—
Foreign corporate public securities and foreign governments	396		355
Payables under securities loan agreements	$	1,763	$	1,692

⁽¹⁾As of June 30, 2019 and December 31, 2018, borrowings under securities lending transactions include cash collateral of $1,525 and $1,581, respectively.

⁽²⁾As of June 30, 2019 and December 31, 2018, borrowings under securities lending transactions include non-cash collateral of $238 and $111, 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.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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 June 30, 2019:



	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
U.S. Treasuries	$	—	$	—		$	54	$	—	*	$	54	$	—	*
State, municipalities and political subdivisions	7		—		*	49		2			56		2
U.S. corporate public securities	320		5			926		62			1,246		67
U.S. corporate private securities	273		5			496		33			769		38
Foreign corporate public securities and foreign governments	96		2			348		29			444		31
Foreign corporate private securities	86		1			491		14			577		15
Residential mortgage-backed	644		11			372		9			1,016		20
Commercial mortgage-backed	192		1			122		4			314		5
Other asset-backed	712		10			524		13			1,236		23
Total	$	2,330	$	35		$	3,382	$	166		$	5,712	$	201
Total number of securities in an unrealized loss position	342					542					884

*Less than $1.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)



	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
U.S. Treasuries	$	24	$	—	*	$	94	$	2	$	118	$	2
State, municipalities and political subdivisions	523		10			241		12		764		22
U.S. corporate public securities	6,544		305			972		110		7,516		415
U.S. corporate private securities	2,348		68			888		102		3,236		170
Foreign corporate public securities and foreign governments	2,379		119			314		48		2,693		167
Foreign corporate private securities	2,130		113			403		39		2,533		152
Residential mortgage-backed	897		18			602		35		1,499		53
Commercial mortgage-backed	1,555		33			550		22		2,105		55
Other asset-backed	1,436		46			98		2		1,534		48
Total	$	17,836	$	712		$	4,162	$	372	$	21,998	$	1,084
Total number of securities in an unrealized loss position	2,338					751				3,089

*Less than $1.

Based on the Company's quarterly evaluation of its securities in a unrealized loss position, described below, the Company concluded that these securities were not other-than-temporarily impaired as of June 30, 2019. The Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases.

On a quarterly basis, the Company evaluates its available-for-sale investment portfolio to determine whether there has been an other-than-temporary decline in fair value below the amortized cost basis. All available-for-sale securities with fair values less than amortized cost are included in the Company’s evaluation. Generally, for non-structured securities, management 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, management considers in the determination of recovery value the same consideration 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. The Company also considers quality and amount of any credit enhancement; 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. For structured securities, such as non-agency RMBS, CMBS, and ABS, the Company evaluates other-than-temporary impairments based on actual and projected cash flows, after considering the quality and updated loan-to-value ratios, reflecting current home prices of the underlying collateral, forecasted loss severity, the payment priority in the tranche and any credit enhancement within the structure. In assessing credit impairment, the Company performs discounted cash flow analysis comparing the current amortized cost of a security to the present value of the expected future cash flows, including estimated defaults, and prepayments. The discount rate is generally the effective interest rate of the fixed maturity prior to the impairment.

See the Business, Basis of Presentation and Significant Accounting Policies Note to our Consolidated Financial Statements in Part II, Item 8. in our Annual Report on Form 10-K for the policy used to evaluate whether the investments are other-than-temporarily impaired.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Gross unrealized capital losses on fixed maturities, including securities pledged, decreased $883 from $1,084 to $201 for the six months ended June 30, 2019. The decrease in gross unrealized capital losses was primarily due to declining interest rates.

At June 30, 2019, $39 of the total $201 of gross unrealized losses were from 13 available-for-sale fixed maturity securities with an unrealized loss position of 20% or more of amortized cost for 12 months or greater.

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 impairments included in the Condensed Consolidated Statements of Operations, excluding impairments included in Other comprehensive income (loss) by type for the periods indicated:



	Three Months Ended June 30,
	2019				2018
	Impairment			No. of Securities	Impairment		No. of Securities
Foreign corporate public securities and foreign governments⁽¹⁾	$	3		1	$	—	—
Foreign corporate private securities⁽¹⁾	—			—	—		—
Residential mortgage-backed	—		*	13	1		18
Other asset-backed	—		*	1	—		—
Total	$	3		15	$	1	18
Credit Impairments	$	—			$	1
Intent Impairments	$	3			$	—
⁽¹⁾ Primarily U.S. dollar denominated.
*Less than $1
	Six Months Ended June 30,
	2019				2018
	Impairment			No. of Securities	Impairment		No. of Securities
Foreign corporate public securities and foreign governments⁽¹⁾	$	3		1	$	—	—
Foreign corporate private securities⁽¹⁾	30			3	14		1
Residential mortgage-backed	—		*	24	1		25
Other asset-backed	1			3	—		—
Total	$	34		31	$	15	26
Credit Impairments	$	31			$	15
Intent Impairments	$	3			$	—
⁽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 Condensed Consolidated Financial Statements (Unaudited)

(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:



	Three Months Ended June 30,
	2019		2018
Balance at April 1	$	19	$	24
Additional credit impairments:
On securities previously impaired	—		—
Reductions:
Increase in cash flows	—		—
Securities sold, matured, prepaid or paid down	—		2
Balance at June 30	$	19	$	22

	Six Months Ended June 30,
	2019		2018
Balance at January 1	$	22	$	40
Additional credit impairments:
On securities previously impaired	—		—
Reductions:
Increase in cash flows	1		—
Securities sold, matured, prepaid or paid down	2		18
Balance at June 30	$	19	$	22

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 three and six months ended June 30, 2019, the Company did not have any new commercial mortgage loan troubled debt restructuring. For the three months ended June 30, 2019, the Company did not have any new private placement troubled debt restructuring. For the six months ended June 30, 2019, the Company had one new private placement troubled debt restructuring with a pre-modification cost basis of $124 and post-modification carrying value of $93. For the three and six months ended June 30, 2018, the Company did not have any new commercial mortgage loan or private placement troubled debt restructuring.

For the three and six months ended June 30, 2019 and June 30, 2018, respectively, 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



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

current information including a review of loan-specific credit quality, property characteristics and market trends. Loan performance is monitored on a loan specific basis through the review of submitted appraisals, operating statements, rent revenues and annual inspection reports, among other items. This review ensures properties are performing at a consistent and acceptable level to secure the debt. 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:



	June 30, 2019								December 31, 2018
	Impaired		Non Impaired			Total			Impaired		Non Impaired			Total
Commercial mortgage loans	$	4	$	8,415		$	8,419		$	4	$	8,674		$	8,678
Collective valuation allowance for losses	N/A		(1		)	(1		)	N/A		(2		)	(2		)
Total net commercial mortgage loans	$	4	$	8,414		$	8,418		$	4	$	8,672		$	8,676

N/A - Not Applicable

There were no impairments on the mortgage loan portfolio for the three months ended June 30, 2019. There was one impairment of $2 on the mortgage loan portfolio for the six months ended June 30, 2019. There were no impairments on the mortgage loan portfolio for the three and six months ended June 30, 2018.

The following table summarizes the activity in the allowance for losses for commercial mortgage loans for the periods indicated:



	June 30, 2019			December 31, 2018
Collective valuation allowance for losses, balance at January 1	$	2		$	3
Addition to (reduction of) allowance for losses	(1		)	(1		)
Collective valuation allowance for losses, end of period	$	1		$	2

The carrying values and unpaid principal balances of impaired mortgage loans were as follows as of the dates indicated:



	June 30, 2019		December 31, 2018
Impaired loans, gross	$	4	$	4
Less: Allowances for losses on impaired loans	—		—
Impaired loans, net	$	4	$	4
Unpaid principal balance of impaired loans	$	5	$	5

As of June 30, 2019 and December 31, 2018, the Company did not have any impaired loans with allowances for losses.

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.

As of June 30, 2019 and December 31, 2018, the Company had no loans greater than 60 days in arrears and there were no mortgage loans in the Company's portfolio in process of foreclosure. The Company foreclosed on one loan during the six months ended June 30, 2019 with a carrying value of $5.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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:



	Three Months Ended June 30,
	2019		2018
Impaired loans, average investment during the period (amortized cost) ⁽¹⁾	$	6	$	4
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.

	Six Months Ended June 30,
	2019		2018
Impaired loans, average investment during the period (amortized cost) ⁽¹⁾	$	8	$	4
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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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(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
June 30, 2019⁽¹⁾
Loan-to-Value Ratios:
	0%	-	50%	$	714	$	42	$	11	$	2	$	—	$	769	9.1	%
>	50%	-	60%	1,830		63		74		4		—		1,971		23.4	%
>	60%	-	70%	3,581		459		601		179		49		4,869		57.8	%
>	70%	-	80%	320		249		87		70		12		738		8.8	%
>	80%	and above		15		48		1		8		—		72		0.9	%
Total				$	6,460	$	861	$	774	$	263	$	61	$	8,419	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, 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	%

⁽¹⁾Balances do not include collective valuation allowance for losses.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(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:



	June 30, 2019				December 31, 2018
	Gross Carrying Value		% of Total		Gross Carrying Value		% of Total
Commercial Mortgage Loans by U.S. Region:
Pacific	$	2,127	25.3	%	$	2,078	23.8	%
South Atlantic	1,698		20.1	%	1,771		20.4	%
Middle Atlantic	1,508		17.9	%	1,525		17.6	%
West South Central	914		10.9	%	952		11.0	%
Mountain	869		10.3	%	892		10.3	%
East North Central	721		8.6	%	833		9.6	%
New England	163		1.9	%	154		1.8	%
West North Central	342		4.1	%	390		4.5	%
East South Central	77		0.9	%	83		1.0	%
Total Commercial mortgage loans	$	8,419	100.0	%	$	8,678	100.0	%



	June 30, 2019				December 31, 2018
	Gross Carrying Value		% of Total		Gross Carrying Value		% of Total
Commercial Mortgage Loans by Property Type:
Retail	$	2,426	28.8	%	$	2,482	28.6	%
Industrial	2,001		23.8	%	2,074		23.9	%
Apartments	2,073		24.6	%	2,110		24.3	%
Office	1,197		14.2	%	1,316		15.2	%
Hotel/Motel	244		2.9	%	210		2.4	%
Other	404		4.8	%	411		4.7	%
Mixed Use	74		0.9	%	75		0.9	%
Total Commercial mortgage loans	$	8,419	100.0	%	$	8,678	100.0	%



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Net Investment Income

The following table summarizes Net investment income for the periods indicated:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Fixed maturities	$	690	$	685	$	1,375	$	1,348
Equity securities	3		3		7		6
Mortgage loans on real estate	98		99		194		196
Policy loans	24		26		47		51
Short-term investments and cash equivalents	3		5		7		9
Other	84		11		108		60
Gross investment income	902		829		1,738		1,670
Less: investment expenses	22		16		43		34
Net investment income	$	880	$	813	$	1,695	$	1,636

As of June 30, 2019 and December 31, 2018, the Company had $2 and $5, respectively, 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 Condensed 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. Net 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 first-in-first-out ("FIFO") methodology.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Net realized capital gains (losses) were as follows for the periods indicated:



	Three Months Ended June 30,
	2019			2018
Fixed maturities, available-for-sale, including securities pledged	$	11		$	—
Fixed maturities, at fair value option	121			(143		)
Equity securities	8			1
Derivatives	(67		)	15
Embedded derivatives - fixed maturities	2			(5		)
Guaranteed benefit derivatives	(26		)	15
Other investments	1			(3		)
Net realized capital gains (losses)	$	50		$	(120	)

	Six Months Ended June 30,
	2019			2018
Fixed maturities, available-for-sale, including securities pledged	$	(6	)	$	(40	)
Fixed maturities, at fair value option	206			(333		)
Equity securities	15			(2		)
Derivatives	(66		)	32
Embedded derivatives - fixed maturities	3			(12		)
Guaranteed benefit derivatives	(84		)	43
Other investments	(1		)	11
Net realized capital gains (losses)	$	67		$	(301	)

For the three and six months ended June 30, 2019, the change in the fair value of equity securities still held as of June 30, 2019 was $8 and $15, respectively. For the three and six months ended June 30, 2018, the change in the fair value of equity securities still held as of June 30, 2018 was $1 and $(2), respectively.

Proceeds from the sale of fixed maturities, available-for-sale, and equity securities and the related gross realized gains and losses, before tax, were as follows for the periods indicated:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Proceeds on sales	$	1,342	$	2,222	$	3,198	$	3,802
Gross gains	25		21		60		32
Gross losses	8		31		38		57



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Table of Contents

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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 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 London Interbank Offered Rates ( 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.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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. 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") rules related to the variation margin payments, the Company is required to adjust the derivative balances with the variation margin payments related to its cleared derivatives executed through CME.



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Table of Contents

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The notional amounts and fair values of derivatives were as follows as of the dates indicated:



	June 30, 2019						December 31, 2018
	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	$	32	$	—	$	—	$	44	$	—	$	—
Foreign exchange contracts	778		20		17		744		14		23
Derivatives: Non-qualifying for hedge accounting⁽¹⁾
Interest rate contracts	23,835		231		396		24,085		140		109
Foreign exchange contracts	114		—		—		30		—		—
Equity contracts	1,883		189		17		1,756		93		4
Credit contracts	225		—		2		281		—		3
Embedded derivatives and Managed custody guarantees:
Within fixed maturity investments	N/A		29		—		N/A		26		—
Within products	N/A		—		217		N/A		—		126
Within reinsurance agreements	N/A		—		129		N/A		—		21
Total			$	469	$	778			$	273	$	286

⁽¹⁾Open derivative contracts are reported as Derivatives assets or liabilities on the Condensed 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 June 30, 2019 and December 31, 2018. 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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Table of Contents

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(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 are presented in the tables below as of the dates indicated:



	June 30, 2019
	Notional Amount		Asset Fair Value			Liability Fair Value
Credit contracts	$	225	$	—		$	2
Equity contracts	1,769		189			16
Foreign exchange contracts	892		20			17
Interest rate contracts	21,958		230			396
			439			431
Counterparty netting⁽¹⁾			(244		)	(244		)
Cash collateral netting⁽¹⁾			(170		)	(183		)
Securities collateral netting⁽¹⁾			(14		)	(1		)
Net receivables/payables			$	11		$	3

⁽¹⁾Represents the netting of receivable balances with payable balances, net of collateral, for the same counterparty under eligible netting agreements.



	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.

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 Condensed 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 Condensed Consolidated Balance Sheets. As of June 30, 2019, the Company held $154 and pledged $163 of net cash collateral related to OTC derivative contracts and cleared derivative contracts, respectively. 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. In addition, as of June 30, 2019, the Company delivered $171 of securities and held $14 of securities as collateral. As of December 31, 2018, the Company delivered $187 of securities and held $11 of securities as collateral.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The location and effect of derivatives qualifying for hedge accounting on the Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Comprehensive Income are as follows for the periods indicated:



	Interest Rate Contracts		Foreign Exchange Contracts
Derivatives: Qualifying for hedge accounting
Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Net investment income		Net investment income
Three Months Ended June 30, 2019
Amount of Gain or (Loss) Recognized in Other Comprehensive Income	$	1	$	20
Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income	—		3
Six Months Ended June 30, 2019
Amount of Gain or (Loss) Recognized in Other Comprehensive Income	2		10
Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income	—		6

The location and amount of gain (loss) recognized in the Condensed Consolidated Statements of Operations for derivatives qualifying for hedge accounting are as follows for the periods indicated:



	Three Months Ended June 30, 2019
	Net Investment Income		Other net realized capital gains/(losses)
Total amounts of line items presented in the statement of operations in which the effects of cash flow hedges are recorded	$	880	$	53
Derivatives: Qualifying for hedge accounting
Cash flow hedges:
Foreign exchange contracts:
Gain (loss) reclassified from accumulated other comprehensive income into income	3		—

	Six Months Ended June 30, 2019
	Net Investment Income		Other net realized capital gains/(losses)
Total amounts of line items presented in the statement of operations in which the effects of cash flow hedges are recorded	$	1,695	$	103
Derivatives: Qualifying for hedge accounting
Cash flow hedges:
Foreign exchange contracts:
Gain (loss) reclassified from accumulated other comprehensive income into income	6		—



	39

Table of Contents

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The location and effect of derivatives not designated as hedging instruments on the Condensed Consolidated Statements of Operations are as follows for the period indicated:



	Location of Gain or (Loss) Recognized in Income on Derivative	Three Months Ended June 30,
		2019			2018
Derivatives: Non-qualifying for hedge accounting
Interest rate contracts	Other net realized capital gains (losses)	$	(79	)	$	12
Foreign exchange contracts	Other net realized capital gains (losses)	2			5
Equity contracts	Other net realized capital gains (losses)	10			(5		)
Credit contracts	Other net realized capital gains (losses)	—			1
Embedded derivatives and Managed custody guarantees:
Within fixed maturity investments	Other net realized capital gains (losses)	2			(5		)
Within products	Other net realized capital gains (losses)	(26		)	15
Within reinsurance agreements	Policyholder benefits	(63		)	33
Total		$	(154	)	$	56

	Location of Gain or (Loss) Recognized in Income on Derivative	Six Months Ended June 30,
		2019			2018
Derivatives: Non-qualifying for hedge accounting
Interest rate contracts	Other net realized capital gains (losses)	$	(131	)	$	33
Foreign exchange contracts	Other net realized capital gains (losses)	4			3
Equity contracts	Other net realized capital gains (losses)	57			(9		)
Credit contracts	Other net realized capital gains (losses)	4			1
Embedded derivatives and Managed custody guarantees:
Within fixed maturity investments	Other net realized capital gains (losses)	3			(12		)
Within products	Other net realized capital gains (losses)	(84		)	43
Within reinsurance agreements	Policyholder benefits	(122		)	88
Total		$	(269	)	$	147



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Table of Contents

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

5. Fair Value Measurements (excluding Consolidated Investment Entities)

Fair Value Measurement

The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of June 30, 2019:



	Level 1			Level 2			Level 3			Total
Assets:
Fixed maturities, including securities pledged:
U.S. Treasuries	$	1,568		$	598		$	—		$	2,166
U.S. Government agencies and authorities	—			249			—			249
State, municipalities and political subdivisions	—			1,754			—			1,754
U.S. corporate public securities	—			20,311			99			20,410
U.S. corporate private securities	—			5,116			1,582			6,698
Foreign corporate public securities and foreign governments⁽¹⁾	—			5,802			8			5,810
Foreign corporate private securities⁽¹⁾	—			4,892			370			5,262
Residential mortgage-backed securities	—			5,547			29			5,576
Commercial mortgage-backed securities	—			4,090			—			4,090
Other asset-backed securities	—			2,338			100			2,438
Total fixed maturities, including securities pledged	1,568			50,697			2,188			54,453
Equity securities	175			—			192			367
Derivatives:
Interest rate contracts	2			229			—			231
Foreign exchange contracts	—			20			—			20
Equity contracts	—			40			149			189
Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements	3,533			32			—			3,565
Assets held in separate accounts	73,844			5,969			102			79,915
Total assets	$	79,122		$	56,987		$	2,631		$	138,740
Percentage of Level to total	57		%	41		%	2		%	100		%
Liabilities:
Derivatives:
Guaranteed benefit derivatives:
IUL	$	—		$	—		$	160		$	160
Other⁽²⁾	—			—			57			57
Other derivatives:
Interest rate contracts	—			396			—			396
Foreign exchange contracts	—			17			—			17
Equity contracts	1			16			—			17
Credit contracts	—			2			—			2
Embedded derivative on reinsurance	—			129			—			129
Total liabilities	$	1		$	560		$	217		$	778

⁽¹⁾Primarily U.S. dollar denominated.

⁽²⁾Includes Guaranteed minimum withdrawal benefits with life payouts ("GMWBL"), Guaranteed minimum withdrawal benefits ("GMWB"), Fixed Indexed Annuities ("FIA"), Stabilizer and MCGs.



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Table of Contents

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(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
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
Other⁽²⁾	—			—			44			44
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, FIA, Stabilizer and MCGs.



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Table of Contents

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(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 Condensed 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.

The valuation approaches and key inputs for each category of assets or liabilities that are classified within Level 2 and Level 3 of the fair value hierarchy are presented below.

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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Table of Contents

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(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: Level 2 and Level 3 equity securities, typically private equities or equity securities not traded on an exchange, are valued by other sources such as analytics or brokers.

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, 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. 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.

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 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.



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Table of Contents

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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 three and six months ended June 30, 2019 and 2018. 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.



	45

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The following tables summarize the change in fair value of the Company’s Level 3 assets and liabilities and transfers in and out of Level 3 for the periods indicated:



	Three Months Ended June 30, 2019
	Fair Value as of April 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 June 30			Change In Unrealized Gains (Losses) Included in Earnings⁽⁴⁾
				Net Income			OCI
Fixed maturities, including securities pledged:
U.S. corporate public securities	$	109		$	—		$	—		$	—	$	—		$	—	$	(5	)	$	—	$	(5	)	$	99		$	—
U.S. corporate private securities	1,565			—			30			6		—			—		(9		)	—		(10		)	1,582			—
Foreign corporate public securities and foreign governments⁽¹⁾	9			—			(1		)	—		—			—		—			—		—			8			—
Foreign corporate private securities⁽¹⁾	266			—			8			96		—			—		—			—		—			370			—
Residential mortgage-backed securities	49			(2		)	—			—		—			—		—			—		(18		)	29			(2		)
Commercial mortgage-backed securities	16			—			—			—		—			—		—			—		(16		)	—			—
Other asset-backed securities	144			—			—			21		—			—		(1		)	—		(64		)	100			—
Total fixed maturities, including securities pledged	2,158			(2		)	37			123		—			—		(15		)	—		(113		)	2,188			(2		)
Equity securities	184			8			—			—		—			—		—			—		—			192			8
Derivatives:
Guaranteed benefit derivatives:
IUL⁽²⁾	(146		)	(13		)	—			—		(15		)	—		14			—		—			(160		)	—
Other⁽²⁾⁽⁶⁾	(41		)	(13		)	—			—		(7		)	—		4			—		—			(57		)	—
Other derivatives, net	137			9			—			13		—			—		(10		)	—		—			149			12
Assets held in separate accounts⁽⁵⁾	67			2			—			33		—			—		—			—		—			102			—

⁽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 Condensed 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 June 30, amounts are included in Net investment income and Total net realized capital gains (losses) in the Condensed 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, FIA, Stabilizer and MCGs.



	46

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)



	Six Months Ended June 30, 2019
	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 June 30			Change In Unrealized Gains (Losses) Included in Earnings⁽⁴⁾
				Net Income			OCI
Fixed maturities, including securities pledged:
U.S. corporate public securities	$	44		$	—		$	2		$	—	$	—		$	—		$	(5	)	$	60	$	(2	)	$	99		$	—
U.S. corporate private securities	1,393			1			84			153		—			(13		)	(25		)	—		(11		)	1,582			—
Foreign corporate public securities and foreign governments⁽¹⁾	11			—			(3		)	—		—			—			—			—		—			8			—
Foreign corporate private securities⁽¹⁾	251			(29		)	47			194		—			(93		)	—			—		—			370			1
Residential mortgage-backed securities	28			(4		)	—			7		—			—			—			—		(2		)	29			(4		)
Commercial mortgage-backed securities	14			—			—			—		—			—			—			—		(14		)	—			—
Other asset-backed securities	138			—			—			24		—			—			(2		)	—		(60		)	100			—
Total fixed maturities, including securities pledged	1,879			(32		)	130			378		—			(106		)	(32		)	60		(89		)	2,188			(3		)
Equity securities	129			14			—			49		—			—			—			—		—			192			14
Derivatives:
Guaranteed benefit derivatives:
IUL⁽²⁾	(82		)	(76		)	—			—		(28		)	—			26			—		—			(160		)	—
Other ⁽²⁾⁽⁶⁾	(44		)	(8		)	—			—		(7		)	—			2			—		—			(57		)	—
Other derivatives, net	83			61			—			23		—			—			(18		)	—		—			149			66
Assets held in separate accounts⁽⁵⁾	62			3			—			39		—			—			—			3		(5		)	102			—

⁽¹⁾ Primarily U.S. dollar denominated.

These amounts are included in Other net realized gains (losses) in the Condensed 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.

⁽⁶⁾ Includes GMWBL, GMWB, FIA, Stabilizer and MCGs.



	47

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)



	Three Months Ended June 30, 2018
	Fair Value as of April 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 June 30			Change In Unrealized Gains (Losses) Included in Earnings⁽⁴⁾
				Net Income			OCI
Fixed maturities, including securities pledged:
U.S. corporate public securities	$	36		$	—		$	—		$	3	$	—		$	—		$	—		$	5	$	—		$	44		$	—
U.S. corporate private securities	1,148			7			(13		)	169		—			(8		)	(36		)	18		—			1,285			—
Foreign corporate public securities and foreign governments ⁽¹⁾	12			—			—			—		—			—			—			—		—			12			—
Foreign corporate private securities ⁽¹⁾	179			8			(5		)	122		—			(70		)	—			—		—			234			—
Residential mortgage-backed securities	98			(2		)	(1		)	11		—			(40		)	—			—		(23		)	43			(2		)
Commercial mortgage-backed securities	8			—			—			18		—			—			—			—		—			26			—
Other asset-backed securities	199			—			(2		)	71		—			—			(2		)	32		(134		)	164			—
Total fixed maturities, including securities pledged	1,680			13			(21		)	394		—			(118		)	(38		)	55		(157		)	1,808			(2		)
Equity securities	99			1			—			7		—			(2		)	—			—		—			105			1
Derivatives:
Guaranteed benefit derivatives:
IUL⁽²⁾	(150		)	3			—			—		(14		)	—			19			—		—			(142		)	—
Other ⁽²⁾⁽⁶⁾	(122		)	12			—			—		2			—			5			—		—			(103		)	—
Other derivatives, net	151			(6		)	—			10		—			—			(15		)	—		—			140			(11		)
Assets held in separate accounts⁽⁵⁾	11			—			—			27		—			—			—			—		—			38			—

⁽¹⁾ Primarily U.S. dollar denominated.

These amounts are included in Other net realized gains (losses) in the Condensed 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.

⁽⁶⁾ Includes GMWBL, GMWB, FIA, Stabilizer and MCGs.



	48

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)



	Six Months Ended June 30, 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 June 30			Change In Unrealized Gains (Losses) Included in Earnings⁽⁴⁾
				Net Income			OCI
Fixed maturities, including securities pledged:
U.S. corporate public securities	$	57		$	—		$	(1	)	$	9	$	—		$	(13	)	$	—		$	—	$	(8	)	$	44		$	—
U.S. corporate private securities	1,127			7			(39		)	200		—			(8		)	(42		)	40		—			1,285			—
Foreign corporate public securities and foreign governments⁽¹⁾	11			—			1			—		—			—			—			—		—			12			—
Foreign corporate private securities⁽¹⁾	169			(6		)	18			123		—			(70		)	—			—		—			234			(13		)
Residential mortgage-backed securities	42			(5		)	(1		)	12		—			—			—			—		(5		)	43			(5		)
Commercial mortgage-backed securities	17			—			—			26		—			—			—			—		(17		)	26			—
Other asset-backed securities	92			—			(3		)	89		—			—			(3		)	35		(46		)	164			—
Total fixed maturities, including securities pledged	1,515			(4		)	(25		)	459		—			(91		)	(45		)	75		(76		)	1,808			(18		)
Equity securities, available-for-sale	102			(2		)	—			7		—			(2		)	—			—		—			105			(2		)
Derivatives:
Guaranteed benefit derivatives:
IUL⁽²⁾	(159		)	7			—			—		(26		)	—			36			—		—			(142		)	—
Other ⁽²⁾⁽⁶⁾	(147		)	36			—			—		—			—			8			—		—			(103		)	—
Other derivatives, net	159			(8		)	—			20		—			—			(31		)	—		—			140			(19		)
Assets held in separate accounts⁽⁵⁾	11			—			—			27		—			—			—			—		—			38			—

⁽¹⁾ Primarily U.S. dollar denominated.

These amounts are included in Other net realized gains (losses) in the Condensed 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.

⁽⁶⁾ Includes GMWBL, GMWB, FIA, Stabilizer and MCGs.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

For the three and six months ended June 30, 2019 and 2018, the transfers in and out of Level 3 for fixed maturities 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.

Following is a description of selected inputs:

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 IUL as of the dates indicated:



	Range⁽¹⁾
	June 30, 2019		December 31, 2018
Unobservable Input
Nonperformance risk	0.20% to 0.55%		0.38% to 0.84%
Actuarial Assumptions:
Lapses	2% to 10%		2% to 10%
Mortality	—	⁽²⁾	—	⁽²⁾


⁽¹⁾	Represents the range of reasonable assumptions that management has used in its fair value calculations.

⁽²⁾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

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 Condensed Consolidated Balance Sheets.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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.

The carrying values and estimated fair values of the Company’s financial instruments as of the dates indicated:



	June 30, 2019				December 31, 2018
	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Fixed maturities, including securities pledged	$	54,453	$	54,453	$	51,121	$	51,121
Equity securities	367		367		273		273
Mortgage loans on real estate	8,418		8,879		8,676		8,811
Policy loans	1,797		1,797		1,833		1,833
Cash, cash equivalents, short-term investments and short-term investments under securities loan agreements	3,565		3,565		3,390		3,390
Derivatives	440		440		247		247
Other investments	96		102		90		92
Assets held in separate accounts	79,915		79,915		71,228		71,228
Liabilities:
Investment contract liabilities:
Funding agreements without fixed maturities and deferred annuities⁽¹⁾	33,713		39,692		34,053		37,052
Funding agreements with fixed maturities	1,389		1,384		1,209		1,197
Supplementary contracts, immediate annuities and other	936		967		976		960
Derivatives:
Guaranteed benefit derivatives:
IUL	160		160		82		82
Other ⁽²⁾	57		57		44		44
Other derivatives	432		432		139		139
Short-term debt	97		107		1		1
Long-term debt	3,041		3,304		3,136		3,112
Embedded derivative on reinsurance	129		129		21		21

⁽¹⁾ 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.

⁽²⁾Includes GMWBL, GMWB, FIA, Stabilizer and MCG.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(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 Condensed Consolidated Balance Sheets:



Financial Instrument	Classification
Mortgage loans on real estate	Level 3
Policy loans	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

6. Deferred Policy Acquisition Costs and Value of Business Acquired

The following tables present a rollforward of DAC and VOBA for the periods indicated:



	2019
	DAC			VOBA				Total
Balance as of January 1, 2019	$	3,298		$	818			$	4,116
Deferrals of commissions and expenses	126			4				130
Amortization:
Amortization, excluding unlocking	(239		)	(69		)		(308		)
Unlocking⁽¹⁾	14			23				37
Interest accrued	91			28			⁽²⁾	119
Net amortization included in Condensed Consolidated Statements of Operations	(134		)	(18		)		(152		)
Change due to unrealized capital gains/losses on available-for-sale securities	(582		)	(266		)		(848		)
Balance as of June 30, 2019	$	2,708		$	538			$	3,246

	2018
	DAC			VOBA				Total
Balance as of January 1, 2018	$	2,818		$	556			$	3,374
Deferrals of commissions and expenses	98			4				102
Amortization:
Amortization, excluding unlocking	(160		)	(44		)		(204		)
Unlocking⁽¹⁾	(63		)	(27		)		(90		)
Interest accrued	91			29			⁽²⁾	120
Net amortization included in Condensed Consolidated Statements of Operations	(132		)	(42		)		(174		)
Change due to unrealized capital gains/losses on available-for-sale securities	460			246				706
Balance as of June 30, 2018	$	3,244		$	764			$	4,008

⁽¹⁾Includes the impacts of annual review of assumptions which typically occurs in the third quarter; and retrospective and prospective unlocking. Additionally, the 2018 amounts include unfavorable unlocking for DAC and VOBA of $25 and $18, respectively, associated with an update to assumptions related to customer consents of changes to guaranteed minimum interest rate provisions.

⁽²⁾ Interest accrued at the following rates for VOBA: 2.7% to 7.4% during 2019 and 3.5% to 7.4% during 2018.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

7. Share-based Incentive Compensation Plans

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") (together, the "Omnibus Plans"). As of June 30, 2019, common stock reserved and available for issuance under the 2013 Omnibus Plan and the 2014 Omnibus Plan was 347,663 and 3,501,704 shares, respectively.

On March 27, 2019, the Company's Board of Directors adopted, subject to shareholder approval, the Voya Financial, Inc. 2019 Omnibus Employee Incentive Plan (the "2019 Omnibus Plan"). Shareholder approval for the 2019 Omnibus Plan was subsequently obtained at the Annual Meeting of Shareholders held on May 23, 2019. The 2019 Omnibus Plan provides for 11,700,000 shares of common stock to be available for issuance as equity-based compensation awards. As of the date of the filing of this Quarterly Report on Form 10-Q, no awards have been made under the 2019 Omnibus 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 ("Director Plan").

Compensation Cost

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:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Restricted Stock Unit (RSU) awards	$	10	$	10	$	27	$	29
Performance Stock Unit (PSU) awards	8		9		25		27
Stock options	2		2		4		5
Total share-based compensation expense	20		21		56		61
Income tax benefit	19		9		20		15
After-tax share-based compensation expense	$	1	$	12	$	36	$	46

Awards Outstanding

The following table summarizes RSU and PSU awards activity under the Omnibus Plans and the Director Plan for the period 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 as of January 1, 2019	2.4			$	43.36	2.5			$	40.21
Adjustment for PSU performance factor	N/A			N/A		0.3			31.35
Granted	0.8			50.09		0.7			51.64
Vested	(1.1	)		40.20		(1.2	)		28.95
Forfeited	—		*	48.00		—		*	47.76
Outstanding as of June 30, 2019	2.1			$	47.76	2.3			$	48.86

* Less than 0.1.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(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
Outstanding as of January 1, 2019	2.6		$	37.60
Granted	1.0		50.03
Exercised	(0.5	)	37.60
Forfeited	—		—
Outstanding as of June 30, 2019	3.1		$	41.61
Vested, exercisable, as of June 30, 2019	2.1		$	37.60

In February 2019, the Company awarded contingent stock options under the 2014 Omnibus Plan with a per option grant date fair value of $13.78. 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.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

8. 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, 2018	270.0	98.0	172.0
Common shares issued	—	—	—
Common shares acquired - share repurchase	—	22.8	(22.8	)
Share-based compensation	2.4	0.6	1.8
Balance, December 31, 2018	272.4	121.4	151.0
Common shares issued	—	—	—
Common shares acquired - share repurchase	—	12.8	(12.8	)
Share-based compensation	2.8	0.7	2.1
Balance, June 30, 2019	275.2	134.9	140.3

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 May 2, 2019, the Board of Directors provided share repurchase authorization, increasing the aggregate of the Company's common stock authorized for repurchase by $500. The current share repurchase authorization expires on June 30, 2020 (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 June 19, 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 $200 and received initial delivery of 2,963,512 shares. This arrangement closed on August 6, 2019 and an additional 695,566 shares were delivered.

On April 9, 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 $236 and received initial delivery of 3,593,453 shares. This arrangement closed on June 4, 2019 and an additional 879,199 shares were delivered.

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 $250 and received initial delivery of 5,059,449 shares. This arrangement closed on April 4, 2019 and an additional 290,765 shares were delivered.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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 June 30, 2019, no warrants have been exercised.

Preferred Stock

On June 11, 2019, the Company issued 300,000 shares of 5.35% Fixed-Rate Reset Non-Cumulative Preferred Stock, Series B ("the Series B preferred stock"), with a $0.01 par value per share and a liquidation preference of $1,000 per share, for aggregate net proceeds of $293. The Company deposited the Series B preferred stock under a deposit agreement with a depositary, which issued interests in fractional shares of the Series B preferred stock in the form of depositary shares ("Depositary Shares") evidenced by depositary receipts; each Depositary Share representing 1/40th interest in a share of the Series B preferred stock.

On September 12, 2018, the Company issued 325,000 shares of 6.125% Fixed-Rate Reset Non-Cumulative Preferred Stock, Series A ("the Series A preferred stock"), 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 and B preferred stock for the last preceding dividend period.

The Series A and Series B preferred stock are not subject to any mandatory redemption, sinking fund, retirement fund, purchase fund or similar provisions. The Company may, at its option, redeem the Series A 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 and (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. The Company may, at its option, redeem the Series B 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 (equivalent to $25.50 per Depositary Share), plus an amount equal to any accrued and unpaid dividends per share that have accrued but not been declared and paid for the then-current dividend period, but excluding, such redemption date and (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, 2029 or any reset date, in each case, at a redemption price equal to $1,000 per share of the Series B preferred stock (equivalent to $25.00 per Depositary Share), plus an amount equal to any accrued and unpaid dividends per share 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.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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 June 30, 2019 and December 31, 2018, there were 100,000,000 shares of preferred stock authorized. Preferred stock issued and outstanding are as follows:



	June 30, 2019		December 31, 2018
Series	Issued	Outstanding	Issued	Outstanding
6.125% Non-cumulative Preferred Stock, Series A	325,000	325,000	325,000	325,000
5.35% Non-cumulative Preferred Stock, Series B	300,000	300,000	—	—
Total	625,000	625,000	325,000	325,000

As of June 30, 2019, there were no preferred stock dividends in arrears.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

9. 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:



	Three Months Ended June 30,					Six Months Ended June 30,
(in millions, except for per share data)	2019			2018		2019			2018
Earnings
Net income (loss) available to common shareholders:
Income (loss) from continuing operations	$	254		$	196	$	406		$	213
Less: Preferred stock dividends	—			—		10			—
Less: Net income (loss) attributable to noncontrolling interest	25			58		24			58
Income (loss) from continuing operations available to common shareholders	229			138		372			155
Income (loss) from discontinued operations, net of tax	(3		)	28		(82		)	457
Net income (loss) available to common shareholders	$	226		$	166	$	290		$	612

Weighted average common shares outstanding
Basic	144.1			167.0		145.5			169.7
Dilutive Effects:
Warrants	2.3			1.5		1.2			1.5
RSU awards	1.2			1.4		1.3			1.7
PSU awards	1.6			2.1		2.0			1.9
Stock Options	0.7			0.8		0.6			0.8
Diluted	149.9			172.8		150.6			175.6

Basic⁽¹⁾
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders	$	1.59		$	0.83	$	2.56		$	0.91
Income (loss) from discontinued operations, net of taxes available to Voya Financial, Inc.'s common shareholders	$	(0.02	)	$	0.17	$	(0.56	)	$	2.69
Income (loss) available to Voya Financial, Inc.'s common shareholders	$	1.57		$	1.00	$	1.99		$	3.60
Diluted⁽¹⁾
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders	$	1.53		$	0.80	$	2.47		$	0.88
Income (loss) from discontinued operations, net of taxes available to Voya Financial, Inc.'s common shareholders	$	(0.02	)	$	0.16	$	(0.54	)	$	2.60
Income (loss) available to Voya Financial, Inc.'s common shareholders	$	1.51		$	0.96	$	1.93		$	3.48

⁽¹⁾ Basic and diluted earnings per share are calculated using unrounded, actual amounts. Therefore, the components of earnings per share may not sum to its corresponding total.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

10. Accumulated Other Comprehensive Income (Loss)

Shareholders' equity included the following components of Accumulated Other Comprehensive Income ("AOCI") as of the dates indicated:



	June 30,
	2019			2018
Fixed maturities, net of OTTI	$	4,521		$	1,805
Derivatives⁽¹⁾	168			143
DAC/VOBA adjustment on available-for-sale securities	(1,228		)	(570		)
Premium deficiency reserve	(134		)	(128		)
Sales inducements and other intangibles adjustment on available-for-sale securities	(157		)	(88		)
Unrealized capital gains (losses), before tax	3,170			1,162
Deferred income tax asset (liability)	(312		)	(229		)
Net unrealized capital gains (losses)	2,858			933
Pension and other postretirement benefits liability, net of tax	9			10
AOCI	$	2,867		$	943

⁽¹⁾Gains and losses reported in Accumulated Other Comprehensive Income (AOCI) from hedge transactions that resulted in the acquisition of an identified asset are reclassified into earnings in the same period or periods during which the asset acquired affects earnings. As of June 30, 2019 the portion of the AOCI that is expected to be reclassified into earnings within the next 12 months is $25.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Changes in AOCI, including the reclassification adjustments recognized in the Condensed Consolidated Statements of Operations were as follows for the periods indicated:



	Three Months Ended June 30, 2019
	Before-Tax Amount				Income Tax			After-Tax Amount
Available-for-sale securities:
Fixed maturities	$	1,574			$	(332	)	$	1,242
Other	—				—			—
OTTI	1				—			1
Adjustments for amounts recognized in Net realized capital gains (losses) in the Condensed Consolidated Statements of Operations	(11		)		3			(8		)
DAC/VOBA	(350		)		73			(277		)
Premium deficiency reserve	(41		)		8			(33		)
Sales inducements	(45		)		10			(35		)
Change in unrealized gains/losses on available-for-sale securities	1,128				(238		)	890

Derivatives:
Derivatives	21			⁽¹⁾	(4		)	17
Adjustments related to effective cash flow hedges for amounts recognized in Net investment income in the Condensed Consolidated Statements of Operations	(7		)		2			(5		)
Change in unrealized gains/losses on derivatives	14				(2		)	12

Pension and other postretirement benefits liability:
Amortization of prior service cost recognized in Operating expenses in the Condensed Consolidated Statements of Operations	(1		)		—			(1		)
Change in pension and other postretirement benefits liability	(1		)		—			(1		)
Change in Accumulated other comprehensive income (loss)	$	1,141			$	(240	)	$	901

⁽¹⁾ See the Derivative Financial Instruments Note to these Condensed Consolidated Financial Statements for additional information.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)



	Six Months Ended June 30, 2019
	Before-Tax Amount				Income Tax			After-Tax Amount
Available-for-sale securities:
Fixed maturities	$	3,439			$	(722	)	$	2,717
Other	—				—			—
OTTI	2				—			2
Adjustments for amounts recognized in Net realized capital gains (losses) in the Condensed Consolidated Statements of Operations	6				(1		)	5
DAC/VOBA	(848		)	⁽¹⁾	178			(670		)
Premium deficiency reserve	(77		)		16			(61		)
Sales inducements	(93		)		20			(73		)
Change in unrealized gains/losses on available-for-sale securities	2,429				(509		)	1,920

Derivatives:
Derivatives	11			⁽²⁾	(2		)	9
Adjustments related to effective cash flow hedges for amounts recognized in Net investment income in the Condensed Consolidated Statements of Operations	(13		)		3			(10		)
Change in unrealized gains/losses on derivatives	(2		)		1			(1		)

Pension and other postretirement benefits liability:
Amortization of prior service cost recognized in Operating expenses in the Condensed Consolidated Statements of Operations	(2		)		—			(2		)
Change in pension and other postretirement benefits liability	(2		)		—			(2		)
Change in Accumulated other comprehensive income (loss)	$	2,425			$	(508	)	$	1,917

⁽¹⁾ See the Deferred Policy Acquisition Costs and Value of Business Acquired Note to these Condensed Consolidated Financial Statements for additional information.

⁽²⁾ See the Derivative Financial Instruments Note to these Condensed Consolidated Financial Statements for additional information.



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Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)



	Three Months Ended June 30, 2018
	Before-Tax Amount				Income Tax			After-Tax Amount
Available-for-sale securities:
Fixed maturities	$	(1,412	)		$	458		$	(954	)
Other	32				(11		)	21
OTTI	10				(5		)	5
Adjustments for amounts recognized in Net realized capital gains (losses) in the Condensed Consolidated Statements of Operations	7				(2		)	5
DAC/VOBA	348				(99		)	249
Premium deficiency reserve	21				(4		)	17
Sales inducements	75				(30		)	45
Change in unrealized gains/losses on available-for-sale securities	(919		)		307			(612		)

Derivatives:
Derivatives	69			⁽¹⁾	(17		)	52
Adjustments related to effective cash flow hedges for amounts recognized in Net investment income in the Condensed Consolidated Statements of Operations	(7		)		2			(5		)
Change in unrealized gains/losses on derivatives	62				(15		)	47

Pension and other postretirement benefits liability:
Amortization of prior service cost recognized in Operating expenses in the Condensed Consolidated Statements of Operations	(3		)		—			(3		)
Change in pension and other postretirement benefits liability	(3		)		—			(3		)
Change in Accumulated other comprehensive income (loss)	$	(860	)		$	292		$	(568	)

⁽¹⁾ See the Derivative Financial Instruments Note to these Condensed Consolidated Financial Statements for additional information.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)



	Six Months Ended June 30, 2018
	Before-Tax Amount				Income Tax			After-Tax Amount
Available-for-sale securities:
Fixed maturities	$	(3,624	)		$	920		$	(2,704	)
Other	18				(8		)	10
OTTI	30				(9		)	21
Adjustments for amounts recognized in Net realized capital gains (losses) in the Condensed Consolidated Statements of Operations	47				(10		)	37
DAC/VOBA	901			⁽¹⁾	(215		)	686
Premium deficiency reserve	62				(13		)	49
Sales inducements	190				(54		)	136
Change in unrealized gains/losses on available-for-sale securities	(2,376		)		611			(1,765		)

Derivatives:
Derivatives	29			⁽²⁾	(9		)	20
Adjustments related to effective cash flow hedges for amounts recognized in Net investment income in the Condensed Consolidated Statements of Operations	(13		)		3			(10		)
Change in unrealized gains/losses on derivatives	16				(6		)	10

Pension and other postretirement benefits liability:
Amortization of prior service cost recognized in Operating expenses in the Condensed Consolidated Statements of Operations	(6		)		1			(5		)
Change in pension and other postretirement benefits liability	(6		)		1			(5		)
Change in Accumulated other comprehensive income (loss)	$	(2,366	)		$	606		$	(1,760	)

⁽¹⁾ See the Deferred Policy Acquisition Costs and Value of Business Acquired Note to these Condensed Consolidated Financial Statements for additional information.

⁽²⁾ See the Derivative Financial Instruments Note to these Condensed Consolidated Financial Statements for additional information.

11. Income Taxes

The Company uses the estimated annual effective tax rate method in computing its interim tax provision. Certain items, including changes in the realizability of deferred tax assets and changes in liabilities for uncertain tax positions, are excluded from the estimated annual effective tax rate and the actual tax expense or benefit is reported in the period the related item is incurred.

The Company's effective tax rate for the three and six months ended June 30, 2019 was 15.0% and 14.4%, respectively. The effective tax rate for this period differed from the statutory rate of 21% primarily due to the effect of the dividends received deduction ("DRD") and noncontrolling interest.

The Company's effective tax rate for the three and six months ended June 30, 2018 was 18.7%. The effective tax rate differed from the statutory rate of 21% for the three and six months ended June 30, 2018 primarily due to the effect of the DRD and noncontrolling interest, partially offset by nondeductible executive compensation and alternative minimum tax ("AMT") sequestration.

Tax Regulatory Matters

For the tax years 2017 through 2019, the Company participates in the Internal Revenue Service ("IRS") Compliance Assurance Process ("CAP"), which is a continuous audit program provided by the IRS. During 2019, the IRS finalized the audit of the



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Company for the period ended December 31, 2017. The Company is under examination for the period ended December 31, 2018. The Company expects the examination to be finalized within the next twelve months.

12. Financing Agreements

Short-term and Long-term Debt

The following table summarizes the carrying value of the Company’s debt securities issued and outstanding as of June 30, 2019 and December 31, 2018:



	Maturity	June 30, 2019		December 31, 2018
5.5% Senior Notes, due 2022	07/15/2022	$	96	$	96
3.125% Senior Notes, due 2024	07/15/2024	397		396
3.65% Senior Notes, due 2026	06/15/2026	496		496
5.7% Senior Notes, due 2043	07/15/2043	395		395
4.8% Senior Notes, due 2046	06/15/2046	297		297
4.7% Fixed-to-Floating Rate Junior Subordinated Notes, due 2048	01/23/2048	345		344
5.65% Fixed-to-Floating Rate Junior Subordinated Notes, due 2053	05/15/2053	739		739
7.25% Voya Holdings Inc. debentures, due 2023⁽¹⁾	08/15/2023	139		138
7.63% Voya Holdings Inc. debentures, due 2026⁽¹⁾	08/15/2026	138		138
6.97% Voya Holdings Inc. debentures, due 2036⁽¹⁾	08/15/2036	79		79
8.42% Equitable of Iowa Companies Capital Trust II Notes, due 2027	04/01/2027	13		14
1.00% Windsor Property Loan	06/14/2027	4		5
Subtotal		3,138		3,137
Less: Current portion of long-term debt		97		1
Total		$	3,041	$	3,136

⁽¹⁾ Guaranteed by ING Group.

Loss on Debt Extinguishment

The Company did not incur a loss on debt extinguishment for the three and six months ended June 30, 2019. The Company did not incur a loss on debt extinguishment for the three months ended June 30, 2018. The Company incurred a loss on debt extinguishment of $3 for the six months ended June 30, 2018, which was recorded in Interest Expense in the Condensed Consolidated Statements of Operations.

Senior Notes

On June 12, 2019, the Company delivered to the holders of its 5.5% Senior Notes due 2022 (the "2022 Notes") a notice of redemption. The Company has elected to redeem all of the outstanding $97 aggregate principal amount of 2022 Notes, and the redemption occurred on July 12, 2019. In connection with this transaction, the Company expects to incur a loss on debt extinguishment of $9 for the three and nine months ended September 30, 2019, which will be recorded in Interest expense in the Condensed Consolidated Statements of Operations.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Aetna Notes

As of June 30, 2019, the outstanding principal amount of the Aetna Notes was $358, which is guaranteed by ING Group. During the six months ended June 30, 2019, the Company deposited $3 of collateral to a control account benefiting ING Group with a third-party collateral agent and provided a $63 letter of credit benefiting ING Group, thereby increasing the remaining collateral balance to $269. The collateral may be exchanged at any time upon the posting of any other form of acceptable collateral to the account.

Senior Unsecured Credit Facility Agreement

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 June 30, 2019, there were no amounts outstanding as revolving credit borrowings and no amounts of LOCs outstanding under the senior unsecured credit facility.

13. Commitments and Contingencies

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 June 30, 2019, the Company had off-balance sheet commitments to acquire mortgage loans of $43 and purchase limited partnerships and private placement investments of $1,177, of which $394 related to consolidated investment entities.

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 the dates indicated:



	June 30, 2019		December 31, 2018
Fixed maturity collateral pledged to FHLB ⁽¹⁾	$	1,676	$	1,472
FHLB restricted stock⁽²⁾	78		75
Other fixed maturities-state deposits	139		129
Cash and cash equivalents	26		13
Securities pledged⁽³⁾	1,945		1,867
Total restricted assets	$	3,864	$	3,556

⁽¹⁾ Included in Fixed maturities, available for sale, at fair value on the Condensed Consolidated Balance Sheets.

⁽²⁾ Included in Other investments on the Condensed Consolidated Balance Sheets.

⁽³⁾Includes the fair value of loaned securities of $1,707 and $1,635 as of June 30, 2019 and December 31, 2018, respectively. In addition, as of June 30, 2019 and December 31, 2018, the Company delivered securities as collateral of $238 and $232, respectively. Loaned securities and securities delivered as collateral are included in Securities pledged on the Condensed Consolidated Balance Sheets.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Federal Home Loan Bank Funding Agreements

The Company is a member of the FHLB of Des Moines, FHLB of Boston and the FHLB of Topeka and is required to pledge collateral to back funding agreements issued to the FHLB. As of June 30, 2019 and December 31, 2018, the Company had $1,389 and $1,209, respectively, in non-putable funding agreements, which are included in Contract owner account balances on the Condensed Consolidated Balance Sheets. As of June 30, 2019 and December 31, 2018, assets with a market value of approximately $1,676 and $1,472, respectively, collateralized the FHLB funding agreements. Assets pledged to the FHLB are included in Fixed maturities, available-for-sale, at fair value on the Condensed 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 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 June 30, 2019, 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.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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.

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.

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 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.

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 the 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.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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 June 30, 2019, approximately $77 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.

14. 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 $341 and $354 as of June 30, 2019 and December 31, 2018, respectively. If the Company were to liquidate, the 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 4 and 2 CLOs as of June 30, 2019 and December 31, 2018, respectively.

Limited Partnerships

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



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

interest, and investments held are included in the Company’s ongoing consolidation analysis for each limited partnership. The Company consolidated 12 funds, which were structured as partnerships, as of June 30, 2019 and December 31, 2018, respectively.

Registered Investment Companies

The Company consolidated one sponsored investment fund accounted for as a VOE as of June 30, 2019 and December 31, 2018, respectively, because it is the majority investor in the fund, and as such, has a controlling financial interest in the fund.

The following table summarizes the components of the consolidated investment entities as of the dates indicated:



	June 30, 2019		December 31, 2018
Assets of Consolidated Investment Entities
VIEs
Cash and cash equivalents	$	59	$	331
Corporate loans, at fair value using the fair value option	512		542
Limited partnerships/corporations, at fair value	1,302		1,313
Other assets	10		15
Total VIE assets	1,883		2,201
VOEs
Limited partnerships/corporations, at fair value	127		108
Other assets	1		1
Total VOE assets	128		109
Total assets of consolidated investment entities	$	2,011	$	2,310

Liabilities of Consolidated Investment Entities
VIEs
CLO notes, at fair value using the fair value option	$	432	$	540
Other liabilities	561		681
Total VIE liabilities	993		1,221
VOEs
Other liabilities	1		7
Total VOE liabilities	1		7
Total liabilities of consolidated investment entities	$	994	$	1,228

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 Condensed 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 Condensed Consolidated Statements of Operations.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(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 2020 and 2026, paying interest at LIBOR, EURIBOR or PRIME plus a spread of up to 10.0%. As of June 30, 2019 and December 31, 2018, the unpaid principal balance exceeded the fair value of the corporate loans by approximately $10 and $13, respectively. Less than 1.0% of the collateral assets were in default as of June 30, 2019 and December 31, 2018, respectively.

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 0.7% 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 7.1 years as of June 30, 2019. 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.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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.

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 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 June 30, 2019 and December 31, 2018, certain private equity funds maintained term loans and revolving lines of credit of $819 and $753, 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 June 30, 2019 and December 31, 2018, outstanding borrowings amount to $480 and $584, respectively.



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Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

On February 1, 2018, Pomona Investment Fund entered into a three-year revolving credit agreement with Credit Suisse. The size of the facility as of June 30, 2019 is $25; the loan bears interest at LIBOR plus 325 bps and has a commitment fee of 160 bps. There was no outstanding borrowing as of June 30, 2019.

The borrowings are reflected in Liabilities related to consolidated investment entities - other liabilities on the Company's Condensed Consolidated Balance Sheets. The borrowings are carried at an amount equal to the unpaid principal balance.

The following table summarizes the fair value hierarchy levels of consolidated investment entities as of June 30, 2019:



	Level 1		Level 2		Level 3		NAV		Total
Assets
VIEs
Cash and cash equivalents	$	59	$	—	$	—	$	—	$	59
Corporate loans, at fair value using the fair value option	—		512		—		—		512
Limited partnerships/corporations, at fair value	—		—		—		1,302		1,302
VOEs
Limited partnerships/corporations, at fair value	—		—		—		127		127
Total assets, at fair value	$	59	$	512	$	—	$	1,429	$	2,000
Liabilities
VIEs
CLO notes, at fair value using the fair value option	$	—	$	432	$	—	$	—	$	432
Total liabilities, at fair value	$	—	$	432	$	—	$	—	$	432

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



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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 three and six months ended June 30, 2019 and 2018, there were no transfers in or out of Level 3 or transfers between Level 1 and Level 2.

Deconsolidation of Certain Investment Entities

There were no deconsolidations during the three and six months ended June 30, 2019. During the six months ended June 30, 2018, the Company determined it was no longer the primary beneficiary of one previously consolidated CLO due to a reduction in the Company’s investment in the CLO. This caused a reduction in the Company's obligation to absorb losses and right to receive benefits of the CLO that could potentially be significant to the CLO. As a result of this determination, the Company deconsolidated one and two investment entities, respectively, during the three and six months ended June 30, 2018.

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 June 30, 2019 and December 31, 2018, the Company held $525 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 Condensed Consolidated Balance Sheet
	June 30, 2019				December 31, 2018
	Carrying Amount		Maximum exposure to loss		Carrying Amount		Maximum exposure to loss
Fixed maturities, available for sale	$	525	$	525	$	523	$	523
Limited partnership/corporations	1,325		1,325		1,158		1,158

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



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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 Condensed 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 Condensed 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 Condensed Consolidated Financial Statements for details regarding the carrying amounts and classifications of these assets.

15. Restructuring

Organizational Restructuring

As a result of the closing of the 2018 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 2018 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 Condensed 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 three and six months ended June 30, 2019, the Company incurred Organizational Restructuring expenses of $55 and $138, respectively associated with continuing operations. For the three and six months ended June 30, 2018, the Company incurred Organizational Restructuring expenses of $7 and $12, respectively associated with continuing operations.

Restructuring expenses that were directly related to the preparation for and execution of the 2018 Transaction are included in Income (loss) from discontinued operations, net of tax, in the Condensed Consolidated Statements of Operations. For the three and six months ended June 30, 2019, the Company did not incur Organizational Restructuring expenses associated with discontinued operations as a result of the 2018 Transaction. For the three and six months ended June 30, 2018, the Company incurred Organizational Restructuring expenses as a result of the 2018 Transaction of $8 and $6, respectively, of severance and organizational transition costs, which are reflected in discontinued operations.

In addition to the restructuring costs incurred above, the anticipated reduction in employees from the execution of the initiatives described above triggered an immaterial curtailment loss and related re-measurement gain of the Company's qualified defined benefit pension plan for the six months ended June 30, 2019.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The summary below presents Organizational Restructuring expenses, pre-tax, by type of costs incurred, for the periods indicated:



	Three Months Ended June 30,				Six Months Ended June 30,				Cumulative Amounts Incurred to Date
	2019		2018		2019		2018		Cumulative Amounts Incurred to Date
Severance benefits	$	4	$	3	$	51	$	5	$	70
Organizational transition costs	51		12		87		13		127
Total restructuring expenses	$	55	$	15	$	138	$	18	$	197

Including the expense of $138 for the six months ended June 30, 2019, the aggregate amount of Organizational Restructuring expenses expected to be incurred 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.

The following table presents the accrued liability associated with Organizational Restructuring expenses as of June 30, 2019:



	Severance Benefits			Organizational Transition Costs			Total
Accrued liability as of January 1, 2019	$	12		$	9		$	21
Provision	51			87			138
Payments	(12		)	(61		)	(73		)
Accrued liability as of June 30, 2019	$	51		$	35		$	86

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 Condensed 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.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The summary below presents 2016 Restructuring expenses, pre-tax, by type of costs incurred, for the periods indicated:



	Three Months Ended June 30,					Six Months Ended June 30,				Cumulative Amounts Incurred to Date
	2019		2018			2019		2018		Cumulative Amounts Incurred to Date
Severance benefits	$	—	$	(2	)	$	—	$	4	$	69
Asset write-off costs	—		—			—		—		17
Transition costs	1		1			1		6		25
Other costs	2		4			5		7		41
Total restructuring expenses	$	3	$	3		$	6	$	17	$	152

The following table presents the accrued liability associated with 2016 Restructuring expenses as of June 30, 2019:



	Severance Benefits			Transition Costs			Other Costs			Total
Accrued liability as of January 1, 2019	$	8		$	14		$	2		$	24
Provision	—			1			5			6
Payments	(2		)	(3		)	(6		)	(11		)
Accrued liability as of June 30, 2019	$	6		$	12		$	1		$	19

16. Segments

The Company provides its principal products and services through four segments: Retirement, Investment Management, Employee Benefits, and Individual Life. Corporate includes activities not directly related to the segments, results of the Retained Business and certain insignificant run-off activities.

Measurement

Adjusted operating earnings before income taxes is a measure used by management to evaluate segment performance. The Company believes that Adjusted operating earnings before income taxes provides a meaningful measure of its business and segment performances 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 and/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 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 the U.S. GAAP 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



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

the estimated cost of these benefits. The estimated cost, which is reflected in operating results, 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;


•	Dividend payments made to preferred shareholders are included as reductions to reflect the Adjusted operating earnings that is available to common shareholders;


•	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 Condensed Consolidated Financial Statements (Unaudited)

(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:



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Income (loss) from continuing operations before income taxes	$	298		$	241		$	475		$	262
Less Adjustments:
Net investment gains (losses) and related charges and adjustments	55			(40		)	78			(101		)
Net guaranteed benefit hedging gains (losses) and related charges and adjustments	(9		)	2			(11		)	(12		)
Income (loss) related to businesses exited through reinsurance or divestment	2			(8		)	(19		)	(53		)
Income (loss) attributable to noncontrolling interest	25			58			24			58
Loss related to early extinguishment of debt	—			—			—			(3		)
Immediate recognition of net actuarial gains (losses) related to pension and other post-employment benefit obligations and gains (losses) from plan amendments and curtailments	—			—			66			—
Dividend payments made to preferred shareholders	—			—			10			—
Other adjustments	(53		)	(9		)	(145		)	(28		)
Total adjustments to income (loss) from continuing operations	$	20		$	3		$	3		$	(139	)

Adjusted operating earnings before income taxes by segment:
Retirement	$	180		$	169		$	309		$	278
Investment Management	41			52			75			113
Employee Benefits	49			35			87			67
Individual Life	47			41			95			58
Corporate	(39		)	(59		)	(94		)	(115		)
Total	$	278		$	238		$	472		$	401

Adjusted operating revenues is a measure of the Company's segment revenues. Each segment's 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;



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

•

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;

•

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 Adjusted operating revenues.

The summary below reconciles Adjusted operating revenues for the segments to Total revenues for the periods indicated:



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Total revenues	$	2,346		$	2,113		$	4,543		$	4,080

Adjustments:
Net realized investment gains (losses) and related charges and adjustments	51			(49		)	61			(122		)
Gain (loss) on change in fair value of derivatives related to guaranteed benefits	(4		)	4			(7		)	(3		)
Revenues related to businesses exited through reinsurance or divestment	76			(18		)	152			(58		)
Revenues attributable to noncontrolling interest	44			76			48			82
Other adjustments	84			67			171			125
Total adjustments to revenues	251			80			425			24

Adjusted operating revenues by segment:
Retirement	688			670			1,336			1,332
Investment Management	163			171			311			356
Employee Benefits	515			460			1,023			913
Individual Life	643			641			1,269			1,272
Corporate	86			91			179			183
Total	$	2,095		$	2,033		$	4,118		$	4,056



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Investment Management intersegment revenues	$	30	$	39	$	60	$	82

The summary below presents Total assets for the Company’s segments as of the dates indicated:



	June 30, 2019		December 31, 2018
Retirement	$	114,292	$	104,995
Investment Management	657		690
Employee Benefits	2,758		2,560
Individual Life	27,724		26,431
Corporate	18,062		18,051
Total assets, before consolidation⁽¹⁾	163,493		152,727
Consolidation of investment entities	1,669		1,955
Total assets	$	165,162	$	154,682

⁽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.



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

17. 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 June 30, 2019 and December 31, 2018, their results of operations and comprehensive income for the three and six months ended June 30, 2019 and 2018, and statements of cash flows for the six months ended June 30, 2019 and 2018.

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 Condensed 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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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Balance Sheet

June 30, 2019



	Parent Issuer			Subsidiary Guarantor		Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Assets:
Investments:
Fixed maturities, available-for-sale, at fair value	$	—		$	—	$	49,165		$	(15	)	$	49,150
Fixed maturities, at fair value using the fair value option	—			—		3,358			—			3,358
Equity securities, at fair value	124			—		243			—			367
Short-term investments	—			—		154			—			154
Mortgage loans on real estate, net of valuation allowance	—			—		8,418			—			8,418
Policy loans	—			—		1,797			—			1,797
Limited partnerships/corporations	—			—		1,325			—			1,325
Derivatives	51			—		490			(101		)	440
Investments in subsidiaries	11,455			7,988		—			(19,443		)	—
Other investments	—			—		96			—			96
Securities pledged	—			—		1,945			—			1,945
Total investments	11,630			7,988		66,991			(19,559		)	67,050
Cash and cash equivalents	452			—		1,030			—			1,482
Short-term investments under securities loan agreements, including collateral delivered	11			—		1,918			—			1,929
Accrued investment income	—			—		662			—			662
Premium receivable and reinsurance recoverable	—			—		6,640			—			6,640
Deferred policy acquisition costs and Value of business acquired	—			—		3,246			—			3,246
Current income taxes	(2		)	13		215			—			226
Deferred income taxes	561			24		(9		)	—			576
Loans to subsidiaries and affiliates	277			—		—			(277		)	—
Due from subsidiaries and affiliates	2			—		5			(7		)	—
Other assets	9			—		1,416			—			1,425
Assets related to consolidated investment entities:
Limited partnerships/corporations, at fair value	—			—		1,429			—			1,429
Cash and cash equivalents	—			—		59			—			59
Corporate loans, at fair value using the fair value option	—			—		512			—			512
Other assets	—			—		11			—			11
Assets held in separate accounts	—			—		79,915			—			79,915
Total assets	$	12,940		$	8,025	$	164,040		$	(19,843	)	$	165,162



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Balance Sheet (Continued)

June 30, 2019



	Parent Issuer		Subsidiary Guarantor		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
Liabilities and Shareholders' Equity:
Future policy benefits	$	—	$	—	$	14,841	$	—		$	14,841
Contract owner account balances	—		—		50,580		—			50,580
Payables under securities loan and repurchase agreements, including collateral held	—		—		1,972		—			1,972
Short-term debt	96		94		184		(277		)	97
Long-term debt	2,668		371		17		(15		)	3,041
Derivatives	51		—		482		(101		)	432
Pension and other postretirement provisions	—		—		445		—			445
Due to subsidiaries and affiliates	3		—		2		(5		)	—
Other liabilities	58		10		2,040		(2		)	2,106
Liabilities related to consolidated investment entities:
Collateralized loan obligations notes, at fair value using the fair value option	—		—		432		—			432
Other liabilities	—		—		562		—			562
Liabilities related to separate accounts	—		—		79,915		—			79,915
Total liabilities	2,876		475		151,472		(400		)	154,423
Shareholders' equity:
Total Voya Financial, Inc. shareholders' equity	10,064		7,550		11,893		(19,443		)	10,064
Noncontrolling interest	—		—		675		—			675
Total shareholders' equity	10,064		7,550		12,568		(19,443		)	10,739
Total liabilities and shareholders' equity	$	12,940	$	8,025	$	164,040	$	(19,843	)	$	165,162



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(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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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(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 Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Operations

For the Three Months Ended June 30, 2019



	Parent Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Revenues:
Net investment income	$	8		$	—		$	876		$	(4	)	$	880
Fee income	—			—			662			—			662
Premiums	—			—			585			—			585
Net realized capital gains (losses):
Total other-than-temporary impairments	—			—			(3		)	—			(3		)
Less: Portion of other-than-temporary impairments recognized in Other comprehensive income (loss)	—			—			—			—			—
Net other-than-temporary impairments recognized in earnings	—			—			(3		)	—			(3		)
Other net realized capital gains (losses)	—			—			53			—			53
Total net realized capital gains (losses)	—			—			50			—			50
Other revenue	—			—			102			—			102
Income (loss) related to consolidated investment entities:
Net investment income	—			—			67			—			67
Total revenues	8			—			2,342			(4		)	2,346
Benefits and expenses:
Policyholder benefits	—			—			852			—			852
Interest credited to contract owner account balances	—			—			380			—			380
Operating expenses	3			—			684			—			687
Net amortization of Deferred policy acquisition costs and Value of business acquired	—			—			67			—			67
Interest expense	35			8			3			(4		)	42
Operating expenses related to consolidated investment entities:
Interest expense	—			—			16			—			16
Other expense	—			—			4			—			4
Total benefits and expenses	38			8			2,006			(4		)	2,048
Income (loss) from continuing operations before income taxes	(30		)	(8		)	336			—			298
Income tax expense (benefit)	(6		)	(1		)	51			—			44
Income (loss) from continuing operations	(24		)	(7		)	285			—			254
Income (loss) from discontinued operations, net of tax	—			(3		)	—			—			(3		)
Net income (loss) before equity in earnings (losses) of unconsolidated affiliates	(24		)	(10		)	285			—			251
Equity in earnings (losses) of subsidiaries, net of tax	250			153			—			(403		)	—
Net income (loss)	226			143			285			(403		)	251
Less: Net income (loss) attributable to noncontrolling interest	—			—			25			—			25
Net income (loss) available to Voya Financial, Inc.	226			143			260			(403		)	226
Less: Preferred stock dividends	—			—			—			—			—
Net income (loss) available to Voya Financial, Inc.'s common shareholders	$	226		$	143		$	260		$	(403	)	$	226



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Operations

For the Six Months Ended June 30, 2019



	Parent Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Revenues:
Net investment income	$	23		$	—		$	1,679		$	(7	)	$	1,695
Fee income	—			—			1,327			—			1,327
Premiums	—			—			1,167			—			1,167
Net realized capital gains (losses):
Total other-than-temporary impairments	—			—			(36		)	—			(36		)
Less: Portion of other-than-temporary impairments recognized in Other comprehensive income (loss)	—			—			—			—			—
Net other-than-temporary impairments recognized in earnings	—			—			(36		)	—			(36		)
Other net realized capital gains (losses)	—			—			103			—			103
Total net realized capital gains (losses)	—			—			67			—			67
Other revenue	—			—			215			—			215
Income (loss) related to consolidated investment entities:
Net investment income	—			—			72			—			72
Total revenues	23			—			4,527			(7		)	4,543
Benefits and expenses:
Policyholder benefits	—			—			1,667			—			1,667
Interest credited to contract owner account balances	—			—			751			—			751
Operating expenses	6			—			1,383			—			1,389
Net amortization of Deferred policy acquisition costs and Value of business acquired	—			—			152			—			152
Interest expense	72			14			5			(7		)	84
Operating expenses related to consolidated investment entities:
Interest expense	—			—			21			—			21
Other expense	—			—			4			—			4
Total benefits and expenses	78			14			3,983			(7		)	4,068
Income (loss) from continuing operations before income taxes	(55		)	(14		)	544			—			475
Income tax expense (benefit)	(11		)	(2		)	82			—			69
Income (loss) from continuing operations	(44		)	(12		)	462			—			406
Income (loss) from discontinued operations, net of tax	—			(82		)	—			—			(82		)
Net income (loss) before equity in earnings (losses) of unconsolidated affiliates	(44		)	(94		)	462			—			324
Equity in earnings (losses) of subsidiaries, net of tax	344			221			—			(565		)	—
Net income (loss)	300			127			462			(565		)	324
Less: Net income (loss) attributable to noncontrolling interest	—			—			24			—			24
Net income (loss) available to Voya Financial, Inc.	300			127			438			(565		)	300
Less: Preferred stock dividends	10			—			—			—			10
Net income (loss) available to Voya Financial, Inc.'s common shareholders	$	290		$	127		$	438		$	(565	)	$	290



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Operations

For the Three Months Ended June 30, 2018



	Parent Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Revenues:
Net investment income	$	5		$	1		$	810		$	(3	)	$	813
Fee income	—			—			660			—			660
Premiums	—			—			533			—			533
Net realized capital gains (losses):
Total other-than-temporary impairments	—			—			—			—			—
Less: Portion of other-than-temporary impairments recognized in Other comprehensive income (loss)	—			—			1			—			1
Net other-than-temporary impairments recognized in earnings	—			—			(1		)	—			(1		)
Other net realized capital gains (losses)	—			—			(119		)	—			(119		)
Total net realized capital gains (losses)	—			—			(120		)	—			(120		)
Other revenue	(5		)	—			106			—			101
Income (loss) related to consolidated investment entities:
Net investment income	—			—			126			—			126
Total revenues	—			1			2,115			(3		)	2,113
Benefits and expenses:
Policyholder benefits	—			—			706			—			706
Interest credited to contract owner account balances	—			—			382			—			382
Operating expenses	1			—			644			—			645
Net amortization of Deferred policy acquisition costs and Value of business acquired	—			—			74			—			74
Interest expense	40			9			—			(3		)	46
Operating expenses related to consolidated investment entities:
Interest expense	—			—			16			—			16
Other expense	—			—			3			—			3
Total benefits and expenses	41			9			1,825			(3		)	1,872
Income (loss) from continuing operations before income taxes	(41		)	(8		)	290			—			241
Income tax expense (benefit)	(313		)	(2		)	351			9			45
Income (loss) from continuing operations	272			(6		)	(61		)	(9		)	196
Income (loss) from discontinued operations, net of tax	—			—			28			—			28
Net income (loss) before equity in earnings (losses) of unconsolidated affiliates	272			(6		)	(33		)	(9		)	224
Equity in earnings (losses) of subsidiaries, net of tax	(106		)	269			—			(163		)	—
Net income (loss)	166			263			(33		)	(172		)	224
Less: Net income (loss) attributable to noncontrolling interest	—			—			58			—			58
Net income (loss) available to Voya Financial, Inc.	166			263			(91		)	(172		)	166
Less: Preferred stock dividends	—			—			—			—			—
Net income (loss) available to Voya Financial, Inc.'s common shareholders	$	166		$	263		$	(91	)	$	(172	)	$	166



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Operations

For the Six Months Ended June 30, 2018



	Parent Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Revenues:
Net investment income	$	7		$	1		$	1,635		$	(7	)	$	1,636
Fee income	—			—			1,336			—			1,336
Premiums	—			—			1,072			—			1,072
Net realized capital gains (losses):
Total other-than-temporary impairments	—			—			(14		)	—			(14		)
Less: Portion of other-than-temporary impairments recognized in Other comprehensive income (loss)	—			—			1			—			1
Net other-than-temporary impairments recognized in earnings	—			—			(15		)	—			(15		)
Other net realized capital gains (losses)	—			—			(286		)	—			(286		)
Total net realized capital gains (losses)	—			—			(301		)	—			(301		)
Other revenue	(5		)	—			205			—			200
Income (loss) related to consolidated investment entities:
Net investment income	—			—			137			—			137
Total revenues	2			1			4,084			(7		)	4,080
Benefits and expenses:
Policyholder benefits	—			—			1,414			—			1,414
Interest credited to contract owner account balances	—			—			764			—			764
Operating expenses	6			—			1,339			—			1,345
Net amortization of Deferred policy acquisition costs and Value of business acquired	—			—			174			—			174
Interest expense	80			20			2			(7		)	95
Operating expenses related to consolidated investment entities:
Interest expense	—			—			22			—			22
Other expense	—			—			4			—			4
Total benefits and expenses	86			20			3,719			(7		)	3,818
Income (loss) from continuing operations before income taxes	(84		)	(19		)	365			—			262
Income tax expense (benefit)	(313		)	(5		)	367			—			49
Income (loss) from continuing operations	229			(14		)	(2		)	—			213
Income (loss) from discontinued operations, net of tax	—			—			457			—			457
Net income (loss) before equity in earnings (losses) of unconsolidated affiliates	229			(14		)	455			—			670
Equity in earnings (losses) of subsidiaries, net of tax	383			1,087			—			(1,470		)	—
Net income (loss)	612			1,073			455			(1,470		)	670
Less: Net income (loss) attributable to noncontrolling interest	—			—			58			—			58
Net income (loss) available to Voya Financial, Inc.	612			1,073			397			(1,470		)	612
Less: Preferred stock dividends	—			—			—			—			—
Net income (loss) available to Voya Financial, Inc.'s common shareholders	$	612		$	1,073		$	397		$	(1,470	)	$	612



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Comprehensive Income

For the Three Months Ended June 30, 2019



	Parent Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income (loss)	$	226		$	143		$	285		$	(403	)	$	251
Other comprehensive income (loss), before tax:
Unrealized gains (losses) on securities	1,141			874			1,142			(2,016		)	1,141
Other-than-temporary impairments	1			1			1			(2		)	1
Pension and other postretirement benefits liability	(1		)	(1		)	(1		)	2			(1		)
Other comprehensive income (loss), before tax	1,141			874			1,142			(2,016		)	1,141
Income tax expense (benefit) related to items of other comprehensive income (loss)	240			183			240			(423		)	240
Other comprehensive income (loss), after tax	901			691			902			(1,593		)	901
Comprehensive income (loss)	1,127			834			1,187			(1,996		)	1,152
Less: Comprehensive income (loss) attributable to noncontrolling interest	—			—			25			—			25
Comprehensive income (loss) attributable to Voya Financial, Inc.	$	1,127		$	834		$	1,162		$	(1,996	)	$	1,127

Condensed Consolidating Statement of Comprehensive Income

For the Six Months Ended June 30, 2019



	Parent Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income (loss)	$	300		$	127		$	462		$	(565	)	$	324
Other comprehensive income (loss), before tax:
Unrealized gains (losses) on securities	2,425			1,910			2,426			(4,336		)	2,425
Other-than-temporary impairments	2			2			2			(4		)	2
Pension and other postretirement benefits liability	(2		)	(1		)	(2		)	3			(2		)
Other comprehensive income (loss), before tax	2,425			1,911			2,426			(4,337		)	2,425
Income tax expense (benefit) related to items of other comprehensive income (loss)	508			399			508			(907		)	508
Other comprehensive income (loss), after tax	1,917			1,512			1,918			(3,430		)	1,917
Comprehensive income (loss)	2,217			1,639			2,380			(3,995		)	2,241
Less: Comprehensive income (loss) attributable to noncontrolling interest	—			—			24			—			24
Comprehensive income (loss) attributable to Voya Financial, Inc.	$	2,217		$	1,639		$	2,356		$	(3,995	)	$	2,217



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Comprehensive Income

For the Three Months Ended June 30, 2018



	Parent Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income (loss)	$	166		$	263		$	(33	)	$	(172	)	$	224
Other comprehensive income (loss), before tax:
Unrealized gains (losses) on securities	(867		)	(596		)	(867		)	1,463			(867		)
Other-than-temporary impairments	10			8			10			(18		)	10
Pension and other postretirement benefits liability	(3		)	(1		)	(3		)	4			(3		)
Other comprehensive income (loss), before tax	(860		)	(589		)	(860		)	1,449			(860		)
Income tax expense (benefit) related to items of other comprehensive income (loss)	(292		)	(123		)	(292		)	415			(292		)
Other comprehensive income (loss), after tax	(568		)	(466		)	(568		)	1,034			(568		)
Comprehensive income (loss)	(402		)	(203		)	(601		)	862			(344		)
Less: Comprehensive income (loss) attributable to noncontrolling interest	—			—			58			—			58
Comprehensive income (loss) attributable to Voya Financial, Inc.	$	(402	)	$	(203	)	$	(659	)	$	862		$	(402	)

Condensed Consolidating Statement of Comprehensive Income

For the Six Months Ended June 30, 2018



	Parent Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income (loss)	$	612		$	1,073		$	455		$	(1,470	)	$	670
Other comprehensive income (loss), before tax:
Unrealized gains (losses) on securities	(2,390		)	(1,759		)	(2,390		)	4,149			(2,390		)
Other-than-temporary impairments	30			28			30			(58		)	30
Pension and other postretirement benefits liability	(6		)	(2		)	(6		)	8			(6		)
Other comprehensive income (loss), before tax	(2,366		)	(1,733		)	(2,366		)	4,099			(2,366		)
Income tax expense (benefit) related to items of other comprehensive income (loss)	(606		)	(361		)	(606		)	967			(606		)
Other comprehensive income (loss), after tax	(1,760		)	(1,372		)	(1,760		)	3,132			(1,760		)
Comprehensive income (loss)	(1,148		)	(299		)	(1,305		)	1,662			(1,090		)
Less: Comprehensive income (loss) attributable to noncontrolling interest	—			—			58			—			58
Comprehensive income (loss) attributable to Voya Financial, Inc.	$	(1,148	)	$	(299	)	$	(1,363	)	$	1,662		$	(1,148	)



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Cash Flows For the Six Months Ended June 30, 2019

	Parent Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net cash (used in) provided by operating activities	$	(83	)	$	435		$	632		$	(435	)	$	549
Cash Flows from Investing Activities:
Proceeds from the sale, maturity, disposal or redemption of:
Fixed maturities	—			—			4,463			—			4,463
Equity securities	13			—			2			—			15
Mortgage loans on real estate	—			—			608			—			608
Limited partnerships/corporations	—			—			115			—			115
Acquisition of:
Fixed maturities	—			—			(4,125		)	—			(4,125		)
Equity securities	(21		)	—			(2		)	—			(23		)
Mortgage loans on real estate	—			—			(357		)	—			(357		)
Limited partnerships/corporations	—			—			(221		)	—			(221		)
Short-term investments, net	—			—			14			—			14
Derivatives, net	—			—			62			—			62
Sales from consolidated investments entities	—			—			329			—			329
Purchases within consolidated investment entities	—			—			(572		)	—			(572		)
Maturity (issuance) of short-term intercompany loans, net	(197		)	—			4			193			—
Return of capital contributions and dividends from subsidiaries	956			383			—			(1,339		)	—
Collateral received (delivered), net	—			—			(95		)	—			(95		)
Other, net	—			—			(12		)	—			(12		)
Net cash used in investing activities - discontinued operations	—			(128		)	—			—			(128		)
Net cash provided by (used in) investing activities	751			255			213			(1,146		)	73



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Cash Flows (Continued) For the Six Months Ended June 30, 2019

	Parent Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Cash Flows from Financing Activities:
Deposits received for investment contracts	—			—			2,855			—			2,855
Maturities and withdrawals from investment contracts	—			—			(3,285		)	—			(3,285		)
Settlements on deposit contracts	—			—			(6		)	—			(6		)
Net proceeds from (repayments of) short-term intercompany loans	(4		)	94			103			(193		)	—
Return of capital contributions and dividends to parent	—			(786		)	(988		)	1,774			—
Borrowings of consolidated investment entities	—			—			304			—			304
Repayments of borrowings of consolidated investment entities	—			—			(407		)	—			(407		)
Contributions from (distributions to) participants in consolidated investment entities	—			—			282			—			282
Proceeds from issuance of common stock, net	2			—			—			—			2
Proceeds from issuance of preferred stock, net	293			—			—			—			293
Share-based compensation	(17		)	—			—			—			(17		)
Common stock acquired - Share repurchase	(686		)	—			—			—			(686		)
Dividends paid on common stock	(3		)	—			—			—			(3		)
Dividends paid on preferred stock	(10		)	—			—			—			(10		)
Net cash (used in) provided by financing activities	(425		)	(692		)	(1,142		)	1,581			(678		)
Net increase (decrease) in cash and cash equivalents	243			(2		)	(297		)	—			(56		)
Cash and cash equivalents, beginning of period	209			2			1,327			—			1,538
Cash and cash equivalents, end of period	$	452		$	—		$	1,030		$	—		$	1,482



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Cash Flows For the Six Months Ended June 30, 2018

	Parent Issuer			Subsidiary Guarantor		Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net cash (used in) provided by operating activities	$	(81	)	$	298	$	1,152		$	(315	)	$	1,054
Cash Flows from Investing Activities:
Proceeds from the sale, maturity, disposal or redemption of:
Fixed maturities	—			—		4,577			—			4,577
Equity securities	18			—		2			—			20
Mortgage loans on real estate	—			—		471			—			471
Limited partnerships/corporations	—			—		152			—			152
Acquisition of:
Fixed maturities	—			—		(4,881		)	—			(4,881		)
Equity securities	(18		)	—		(2		)	—			(20		)
Mortgage loans on real estate	—			—		(574		)	—			(574		)
Limited partnerships/corporations	—			—		(158		)	—			(158		)
Short-term investments, net	212			—		191			—			403
Derivatives, net	—			—		35			—			35
Sales from consolidated investments entities	—			—		602			—			602
Purchases within consolidated investment entities	—			—		(607		)	—			(607		)
Maturity (issuance) of short-term intercompany loans, net	11			—		418			(429		)	—
Return of capital contributions and dividends from subsidiaries	811			96		—			(907		)	—
Collateral received (delivered), net	—			—		38			—			38
Other, net	—			1		(6		)	—			(5		)
Net cash provided by (used in) investing activities - discontinued operations	—			331		(297		)	—			34
Net cash provided by (used in) investing activities	1,034			428		(39		)	(1,336		)	87



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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Cash Flows (Continued) For the Six Months Ended June 30, 2018

	Parent Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Consolidating Adjustments		Consolidated
Cash Flows from Financing Activities:
Deposits received for investment contracts	—			—			3,083			—		3,083
Maturities and withdrawals from investment contracts	—			—			(2,716		)	—		(2,716		)
Proceeds from issuance of debt with maturities of more than three months	350			—			—			—		350
Repayment of debt with maturities of more than three months	(337		)	(13		)	—			—		(350		)
Debt issuance costs	(6		)	—			—			—		(6		)
Net (repayments of) proceeds from short-term intercompany loans	(418		)	(68		)	57			429		—
Return of capital contributions and dividends to parent	—			(386		)	(836		)	1,222		—
Borrowings of consolidated investment entities	—			—			469			—		469
Repayments of borrowings of consolidated investment entities	—			—			(461		)	—		(461		)
Contributions from (distributions to) participants in consolidated investment entities, net	—			—			34			—		34
Proceeds from issuance of common stock, net	1			—			—			—		1
Share-based compensation	(15		)	—			—			—		(15		)
Common stock acquired - Share repurchase	(500		)	—			—			—		(500		)
Dividends paid on common stock	(3		)	—			—			—		(3		)
Net cash used in financing activities - discontinued operations	—			—			(1,209		)	—		(1,209		)
Net cash (used in) provided by financing activities	(928		)	(467		)	(1,579		)	1,651		(1,323		)
Net increase (decrease) in cash and cash equivalents	25			259			(466		)	—		(182		)
Cash and cash equivalents, beginning of period	244			1			1,471			—		1,716
Cash and cash equivalents, end of period	269			260			1,005			—		1,534
Less: Cash and cash equivalents of discontinued operations, end of period	—			—			—			—		—
Cash and cash equivalents of continuing operations, end of period	$	269		$	260		$	1,005		$	—	$	1,534



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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Dollar amounts in millions, unless otherwise stated)

For the purposes of the discussion in this Quarterly Report on Form 10-Q, 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.

The following discussion and analysis presents a review of our consolidated results of operations for the three and six months ended June 30, 2019 and 2018 and financial condition as of June 30, 2019 and December 31, 2018. This item should be read in its entirety and in conjunction with the Condensed Consolidated Financial Statements and related notes contained in Part I, Item 1. of this Quarterly Report on Form 10-Q, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section contained in our Annual Report on Form 10-K for the year ended December 31, 2018 ("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. Investors are directed to consider the risks and uncertainties discussed in Part II, Item 1A. of this Quarterly Report on Form 10-Q, as well as in other documents we have filed with the Securities and Exchange Commission ("SEC").

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 and certain insignificant run-off activities that are not meaningful to our business strategy. See the Segments Note to our Consolidated Financial Statements in Part II, Item 8. of our Annual Report on Form 10-K for further information on our segments.

The following represents segment percentage contributions to total Adjusted operating revenues and Adjusted operating earnings before income taxes for the six months ended June 30, 2019:



	June 30, 2019
percent of total	Adjusted Operating Revenues		Adjusted Operating Earnings before Income Taxes
Retirement	32.4	%	65.5	%
Investment Management	7.6	%	15.9	%
Employee Benefits	24.8	%	18.4	%
Individual Life	30.8	%	20.1	%
Corporate	4.4	%	(19.9	)%

Discontinued Operations

On June 1, 2018, we consummated a series of transactions (collectively, the "2018 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 2018 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. The 2018 Transaction resulted in the disposition of substantially all of our Closed Block Variable Annuity ("CBVA") and Annuities businesses. Pursuant to the terms of the 2018 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." Refer to the Discontinued Operations Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for further details.

During the second quarter of 2019, we settled the outstanding purchase price true-up amounts with VA Capital. We do not anticipate further material charges in connection with the 2018 Transaction. Income (loss) from discontinued operations, net of tax for the six months ended June 30, 2019 includes a $82 charge related to the purchase price true-up settlement in connection with the 2018 Transaction.



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The following table summarizes the components of Income (loss) from discontinued operations, net of tax for the six months ended June 30, 2019 and 2018:



	Six Months Ended June 30,
	2019			2018
Revenues:
Net investment income	$	—		$	510
Fee income	—			295
Premiums	—			(50		)
Total net realized capital gains (losses)	—			(345		)
Other revenue	—			10
Total revenues	—			420
Benefits and expenses:
Interest credited and other benefits to contract owners/policyholders	—			442
Operating expenses	—			(14		)
Net amortization of Deferred policy acquisition costs and Value of business acquired	—			49
Interest expense	—			10
Total benefits and expenses	—			487
Income (loss) from discontinued operations before income taxes	—			(67		)
Income tax expense (benefit)	—			(19		)
Adjustment to loss on sale, net of tax	(82		)	505
Income (loss) from discontinued operations, net of tax	$	(82	)	$	457

Trends and Uncertainties

We describe known material trends and uncertainties that might affect our business in our Annual Report on Form 10-K for the year ended December 31, 2018, under the caption "Management’s Discussion and Analysis of Financial Condition and Results of Operations - Trends and Uncertainties", and in other sections of that document, including "Risk Factors". In addition, we describe below in this Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") more recently developing known trends and uncertainties that we believe may materially affect our future liquidity, financial condition or results of operations.

Interest Rates

In the second quarter of 2019, interest rates declined significantly in a continuation of a trend that has persisted through much of the first half of 2019. 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 monetary policy rates. On July 31, 2019, the Federal Reserve did indeed lower its key policy rate by 25 basis points, the first Federal Funds rate cut since 2008. Lower rates and a flattening yield curve in the United States were consistent with trends in global markets, presumably reflecting expectations for lower global growth and subdued inflationary pressures.

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

•

Our continuing business general account investment portfolio, which was approximately $65.3 billion as of June 30, 2019, consists predominantly of fixed income investments and had an annualized earned yield of approximately 5.4% in the second quarter of 2019, inclusive of alternative and prepayment income. In the near term and absent a 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. While our continuing business general account investment portfolio is predominantly comprised of fixed rate investments acquired to back our fixed rate liabilities, our general account also includes a small amount of securities with an earned yield that fluctuates with changes in short-term interest rates.



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•

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.

Further changes in interest rates, whether positive or negative, would likely have modest effects on our future Adjusted operating earnings. For example, we estimate that a 100 basis point increase or decrease in rates from current levels over the next three years would generally increase or decrease our Adjusted operating earnings by approximately 2-4% in future periods, with the impacts increasing from the lower to the higher end of the range the longer the rate change persists.

Stranded Costs

As a result of the 2018 Transaction, certain costs that relate to activities for which we continue to provide transitional services for businesses sold and for which we are reimbursed under a transition services agreement ("TSA"), are reported within continuing operations along with the associated revenues from the TSAs. Additionally, indirect costs, such as those related to corporate and shared service functions that were previously allocated to the businesses sold, and other expenses that do not meet the foregoing criteria are reported within continuing operations. These costs reported within continuing operations ("Stranded Costs") are included in Adjusted operating earnings before income taxes and Income (loss) from continuing operations for all periods presented. Because we do not believe that TSA revenues and Stranded Costs are representative of the future run-rate of revenues and expenses of our continuing operations, they are recorded in Corporate. We plan to address the Stranded Costs through a cost reduction strategy. Refer to Restructuring in the section below for more information on this program.

Restructuring

Organizational Restructuring

As a result of the closing of the 2018 Transaction, we are undertaking further restructuring efforts to execute the transition and reduce stranded expenses associated with businesses sold, 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 I, Item 1. of this Quarterly Report on Form 10-Q 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 Condensed Consolidated Statements of Operations, but excluded from Adjusted operating earnings before income taxes. For the three and six months ended June 30, 2019, we incurred Organizational Restructuring expenses of $55 and $138 million, respectively, of severance and organizational transition costs associated with continuing operations. For the three and six months ended June 30, 2018, we incurred Organizational Restructuring expenses of $7 million and $12 million, respectively, of severance and organizational transition costs associated with continuing operations.

Including the expense of $138 million for the six months ended June 30, 2019, the aggregate amount of 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.



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Restructuring expenses that were directly related to the preparation for and execution of the 2018 Transaction are included in Income (loss) from discontinued operations, net of tax, in the Condensed Consolidated Statements of Operations. For the three and six months ended June 30, 2019, we did not incur Organizational Restructuring expenses associated with discontinued operations as a result of the 2018 Transaction. For the three and six months ended June 30, 2018, we incurred Organizational Restructuring expenses as a result of the 2018 Transaction of $8 million and $6 million, respectively, 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.

For the three and six months ended June 30, 2019, the total of all initiatives in the 2016 Restructuring program resulted in restructuring expenses of $3 million and $6 million, respectively, which are reflected in Operating expenses in the Condensed Consolidated Statements of Operations, but are excluded from Adjusted operating earnings before income taxes. For the three and six months ended June 30, 2018, these initiatives resulted in restructuring expenses of $3 million and $17 million, respectively, which are reflected in Operating expenses in the Condensed 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.

Operating Measures

This MD&A includes a discussion of Adjusted operating earnings before income taxes and Adjusted operating revenues, each of which is a measure used by management to evaluate segment performance. We believe that Adjusted operating earnings before income taxes provides a meaningful measure of our business 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. Adjusted operating earnings before income taxes does not replace Income (loss) from continuing operations before income taxes as the comparable U.S. GAAP 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. See the Segments Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for a description of the adjustments made to reconcile Income (loss) before income taxes to Total adjusted operating earnings before income taxes and the adjustments made to reconcile Total revenues to Total adjusted operating revenues.



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Results of Operations - Company Condensed Consolidated

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



	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions)	2019			2018			2019			2018
Revenues:
Net investment income	$	880		$	813		$	1,695		$	1,636
Fee income	662			660			1,327			1,336
Premiums	585			533			1,167			1,072
Net realized capital gains (losses)	50			(120		)	67			(301		)
Other revenue	102			101			215			200
Income related to consolidated investment entities	67			126			72			137
Total revenues	2,346			2,113			4,543			4,080
Benefits and expenses:
Interest credited and other benefits to contract owners/policyholders	1,232			1,088			2,418			2,178
Operating expenses	687			645			1,389			1,345
Net amortization of Deferred policy acquisition costs and Value of business acquired	67			74			152			174
Interest expense	42			46			84			95
Operating expenses related to consolidated investment entities	20			19			25			26
Total benefits and expenses	2,048			1,872			4,068			3,818
Income from continuing operations before income taxes	298			241			475			262
Income tax expense	44			45			69			49
Income from continuing operations	254			196			406			213
Income (loss) from discontinued operations, net of tax	(3		)	28			(82		)	457
Net Income	251			224			324			670
Less: Net income attributable to noncontrolling interest	25			58			24			58
Less: Preferred stock dividends	—			—			10			—
Net income (loss) available to our common shareholders	$	226		$	166		$	290		$	612



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



	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions)	2019			2018			2019			2018
Operating expenses:
Commissions	$	183		$	164		$	378		$	337
General and administrative expenses:
Net actuarial (gains)/losses related to pension and other postretirement benefit obligations	—			—			(66		)	—
Restructuring expenses	58			10			144			29
Other general and administrative expenses	509			522			1,063			1,081
Total general and administrative expenses	567			532			1,141			1,110
Total operating expenses, before DAC/VOBA deferrals	750			696			1,519			1,447
DAC/VOBA deferrals	(63		)	(51		)	(130		)	(102		)
Total operating expenses	$	687		$	645		$	1,389		$	1,345

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



	As of June 30,
($ in millions)	2019			2018
AUM and AUA:
Retirement⁽²⁾	$	401,756		$	420,882
Investment Management	264,324			256,530
Employee Benefits	1,842			1,821
Individual Life	15,590			15,673
Eliminations/Other	(123,321		)	(128,680		)
Total AUM and AUA⁽¹⁾⁽²⁾	$	560,191		$	566,226

AUM	305,881			291,259
AUA⁽²⁾	254,310			274,967
Total AUM and AUA⁽¹⁾⁽²⁾	$	560,191		$	566,226

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

⁽²⁾Retirement includes Assets Under Advisement, which are presented in AUA. For further detail, refer to the Retirement segment results section below. Prior period information have been revised to conform to current period presentation.



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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:



	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions)	2019			2018			2019			2018
Income from continuing operations before income taxes	$	298		$	241		$	475		$	262
Less Adjustments⁽¹⁾:
Net investment gains (losses) and related charges and adjustments	55			(40		)	78			(101		)
Net guaranteed benefit hedging gains (losses) and related charges and adjustments	(9		)	2			(11		)	(12		)
Loss related to businesses exited through reinsurance or divestment	2			(8		)	(19		)	(53		)
Income attributable to noncontrolling interest	25			58			24			58
Loss related to early extinguishment of debt	—			—			—			(3		)
Immediate recognition of net actuarial gains (losses) related to pension and other post-employment benefit obligations and gains (losses) from plan amendments and curtailments	—			—			66			—
Dividend payments made to preferred shareholders	—			—			10			—
Other adjustments	(53		)	(9		)	(145		)	(28		)
Total adjustments to income (loss) from continuing operations before income taxes	$	20		$	3		$	3		$	(139	)

Adjusted operating earnings before income taxes by segment:
Retirement	$	180		$	169		$	309		$	278
Investment Management	41			52			75			113
Employee Benefits	49			35			87			67
Individual Life	47			41			95			58
Corporate	(39		)	(59		)	(94		)	(115		)
Total adjusted operating earnings before income taxes	$	278		$	238		$	472		$	401

⁽¹⁾ Refer to the Segments Note to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for a description of these items.



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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:



	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions)	2019			2018			2019			2018
Total revenues	$	2,346		$	2,113		$	4,543		$	4,080
Adjustments⁽¹⁾:
Net realized investment gains (losses) and related charges and adjustments	51			(49		)	61			(122		)
Gain (loss) on change in fair value of derivatives related to guaranteed benefits	(4		)	4			(7		)	(3		)
Revenues related to businesses exited through reinsurance or divestment	76			(18		)	152			(58		)
Revenues attributable to noncontrolling interest	44			76			48			82
Other adjustments	84			67			171			125
Total adjustments to revenues	$	251		$	80		$	425		$	24

Adjusted operating revenues by segment:
Retirement	$	688		$	670		$	1,336		$	1,332
Investment Management	163			171			311			356
Employee Benefits	515			460			1,023			913
Individual Life	643			641			1,269			1,272
Corporate	86			91			179			183
Total adjusted operating revenues	$	2,095		$	2,033		$	4,118		$	4,056

⁽¹⁾Refer to the Segments Note to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for a description of these items.

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 related charges and adjustments 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:



	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions)	2019			2018			2019			2018
Other-than-temporary impairments	$	(3	)	$	(1	)	$	(36	)	$	(15	)
CMO-B fair value adjustments⁽¹⁾	32			(38		)	61			(76		)
Gains (losses) on the sale of securities	13			(7		)	24			(34		)
Other, including changes in the fair value of derivatives	9			(1		)	25			5
Total investment gains (losses)	51			(47		)	74			(120		)
Net amortization of DAC/VOBA and other intangibles on above	4			7			4			19
Net investment gains (losses)	$	55		$	(40	)	$	78		$	(101	)

⁽¹⁾ For a description of our CMO-B portfolio, see Investments - CMO-B Portfolio in Part I, Item 2. of this Quarterly report on Form 10-Q and Part II, Item 7. of our Annual Report on Form 10-K.



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



	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions)	2019			2018			2019			2018
Gain (loss), excluding nonperformance risk	$	(11	)	$	(1	)	$	(12	)	$	(11	)
Gain (loss) due to nonperformance risk	2			3			1			(1		)
Net gain (loss) prior to related amortization of DAC/VOBA and sales inducements	(9		)	2			(11		)	(12		)
Net amortization of DAC/VOBA and sales inducements	—			—			—			—
Net guaranteed benefit hedging gains (losses) and related charges and adjustments	$	(9	)	$	2		$	(11	)	$	(12	)

Terminology Definitions

Net realized capital gains (losses), net realized investment gains (losses) and related charges and adjustments, and Net guaranteed benefit hedging gains (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."

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 - Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018

Net Income (Loss)

Net investment income increased $67 million from $813 million to $880 million primarily due to:


•	higher alternative investment income in the current period primarily driven by the impact of equity market performance; and


•	higher prepayment fee income.

The increase was partially offset by:


•	the impact of the current interest rate environment on reinvestment rates.

Premiums increased $52 million from $533 million to $585 million primarily due to:


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

The increase was partially offset by:


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

Net realized capital gains (losses) increased $170 million from a loss of $120 million to a gain of $50 million primarily due to:


•	Net realized investment gains as a result of favorable CMO-B fair value adjustments, Gains on the sale of securities and changes in the fair value of derivatives; and


•	favorable impact of market value changes associated with business reinsured, which are partially offset by a corresponding amount in Interest credited and other benefits to contract owners/policyholders;



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The increase was partially offset by:


•	unfavorable change in the fair value of guaranteed benefit derivatives excluding nonperformance risk as a result of interest rate movements.

Other revenue increased $1 million from $101 million to $102 million primarily due to:


•	revenue resulting from transition services agreements.

The increase was partially offset by:


•	lower broker-dealer revenues in our Retirement segment.

Interest credited and other benefits to contract owners/policyholders increased $144 million from $1,088 million to $1,232 million primarily due to:


•	market value impacts and changes in the reinsurance deposit asset associated with business reinsured, which are partially offset by a corresponding amount in Net realized capital gains (losses);


•	growth on stop loss and voluntary partially offset by lower group life in our Employee Benefits segment;


•	reserve changes as a result of unfavorable net mortality in our Individual Life segment; and


•	favorable reserves in the prior period in our Retained Business driven by a reserve refinement for our Guaranteed Minimum Death Benefits ("GMDB") block.

Operating expenses increased $42 million from $645 million to $687 million primarily due to:


•	higher restructuring charges in the current period; and


•	an increase in growth based expenses in our Employee Benefits and Retirement segments. partially offset by lower expenses in our Individual Life segment.

The increase was partially offset by:


•	lower Stranded Costs; and


•	lower expenses in our Individual Life segment due to ceasing new business sales.

Net amortization of DAC/VOBA decreased $7 million from $74 million to $67 million primarily due to:


•	lower net unfavorable DAC/VOBA and other intangibles unlocking due to prospective assumption updates related to changes in reinsurance in the prior period, in our Individual Life segment; and


•	net favorable amortization on our business reinsured.

Income from continuing operations before income taxes increased $57 million from $241 million to a $298 million primarily due to:


•	Net investment gains and related charges and adjustments primarily due to equity market and interest rate movements, discussed below;


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


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

The increase was partially offset by:


•	unfavorable changes in Other adjustments due to higher restructuring charges in the current period;


•	lower Income attributable to noncontrolling interest; and


•	unfavorable changes in Net guaranteed benefit hedging gains (loss) and related charges and adjustments primarily due to changes in interest rates, discussed below.

Income tax expense decreased $1 million from $45 million to $44 million primarily due to:


•	alternative minimum tax ("AMT") sequestration in 2018 that did not recur in 2019; and



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•	a change in the dividends received deduction ("DRD").

The decrease was partially offset by:


•	an increase in income before income taxes;


•	a change in noncontrolling interest; and


•	a change in the valuation allowance.

Income (loss) from discontinued operations, net of tax changed $31 million from a gain of $28 million to a loss of $3 million primarily due to:


•	Adjustment to loss on sale, net of tax excluding costs to sell made in the current period.

Adjusted operating Earnings before Income Taxes

Adjusted operating earnings before income taxes increased $40 million from $238 million to $278 million primarily due to:


•	higher premiums driven by growth of the stop loss, voluntary blocks and group life in our Employee Benefits segment;


•	an increase in alternative investment income and prepayment fee income;


•	lower net unfavorable DAC/VOBA and other intangibles unlocking due to prospective assumption updates related to changes in reinsurance in the prior period in our Individual Life segment; and


•	lower Stranded costs.

The increase was partially offset by:


•	lower underwriting gains, net of DAC/VOBA and other intangibles amortization, primarily driven by adverse net mortality due to higher severity on the combined interest and non-interest sensitive blocks in our Individual Life segment;


•	higher benefits incurred in stop loss and voluntary due to growth in business, partially offset by lower loss ratios in Group Life and Stop Loss in our Employee Benefits segments; and


•	higher expenses primarily resulting from business growth in our Retirement and Employee Benefits segments.

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

Net investment gains (losses) and related charges and adjustments changed $95 million from a loss of $40 million to a gain of $55 million due to:


•	favorable changes in CMO-B fair value adjustments as a result of equity market and interest rate movements;


•	gains on the sale of securities in the current period; and


•	favorable changes in the fair value of derivatives.

The increase was partially offset by:


•	favorable amortization of DAC/VOBA and sales inducements in the prior period.

Net guaranteed benefit hedging gains losses and related charges and adjustments decreased $11 million from a gain of $2 million to a loss of $9 million primarily due to:


•	unfavorable changes in fair value of guaranteed benefit derivatives excluding nonperformance risk as a result of changes in interest rates; and


•	lower gains due to nonperformance risk.

Income (loss) related to businesses exited through reinsurance or divestment increased $10 million from a loss of $8 million to a gain of $2 million primarily due to:


•	favorable market value changes in assets and liabilities associated with business reinsured.



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Other adjustments to operating earnings changed $44 million from a loss of $9 million to a loss of $53 million primarily due to:


•	higher costs recorded in the current period related to restructuring. See the Restructuring Note in Part I, Item 1. of this Quarterly Report on Form 10-Q for further description.

Consolidated - Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018

Net Income (Loss)

Net investment income increased $59 million from $1,636 million to $1,695 million primarily due to:


•	higher prepayment fee income.

This increase was partially offset by:


•	lower alternative investment income in the current period primarily driven by the impact of equity market performance.

Fee income decreased $9 million from $1,336 million to $1,327 million primarily due to:


•	lower management and administrative fees earned in our Investment Management segment due to lower average general account AUM driven by the impact of the 2018 Transaction

Premiums increased $95 million from $1,072 million to $1,167 million primarily due to:


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

The increase was partially offset by:


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

Net realized capital gains (losses) increased $368 million from a loss of $301 million to a gain of $67 million primarily due to:


•	gains from market value changes associated with business reinsured, which are fully offset by a corresponding amount in Interest credited and other benefits to contract owners/policyholders; and


•	Net realized investment gains as a result of favorable CMO-B fair value adjustments, gains on the sale of securities and changes in the fair value of derivatives partially offset by higher impairments in the current period.

Other revenue increased $15 million from $200 million to $215 million primarily due to:


•	revenue resulting from transition services agreements.

The increase was partially offset by:


•	lower broker-dealer revenues in our Retirement segment.

Interest credited and other benefits to contract owners/policyholders increased $240 million from $2,178 million to $2,418 million primarily due to:


•	market value impacts and changes in the reinsurance deposit asset associated with business reinsured, which are partially offset by a corresponding amount in Net realized capital gains (losses);


•	growth on stop loss, voluntary and group life in our Employee Benefits segment;


•	favorable reserves in the prior period in our Retained Business driven by a reserve refinement for our Guaranteed Minimum Death Benefits ("GMDB") block.

The increase was partially offset by:


•	favorable reserve changes as a result of net mortality in our Individual Life segment.



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Operating expenses increased $44 million from $1,345 million to $1,389 million primarily due to:


•	higher restructuring charges in the current period;


•	an increase in growth based expenses in our Retirement and Employee Benefit segments;


•	higher litigation reserves in our Retirement segment; and


•	higher broker-dealer expenses.

The increase was partially offset by:


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


•	higher litigation reserves related to a divested business in the prior period;


•	lower Stranded Costs;


•	lower expenses in our Individual Life segment due to ceasing new business sales; and


•	lower expenses related to net compensation adjustments.

Net amortization of DAC/VOBA decreased $22 million from $174 million to $152 million primarily due to:


•	unfavorable unlocking in the prior period driven by an update to the assumptions related to the GMIR initiatives in our Retirement segment. See DAC/VOBA and Other Intangibles Unlocking in Part I, Item 2. of this Quarterly Report on Form 10-Q for further information; and


•	higher unlocking in the prior period driven by unfavorable mortality partially offset by higher amortization in the current period on the interest sensitive block, in our Individual Life segment.

The decrease was partially offset by:


•	net unfavorable amortization on our business reinsured; and


•	favorable amortization in the prior period due to net investment losses.

Income from continuing operations before income taxes increased $213 million from $262 million to $475 million primarily due to:


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


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


•	Immediate recognition of net actuarial gain related to pension plan adjustments and curtailments, discussed below;


•	Income on business exited through reinsurance or divestment, discussed below; and

The increase was partially offset by:


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


•	lower Income (loss) attributable to noncontrolling interest.

Income tax expense increased $20 million from $49 million to $69 million primarily due to:


•	an increase in income before income taxes;


•	a change in noncontrolling interest; and


•	a change in the valuation allowance.

The increase was partially offset by:


•	a change in the DRD; and


•	AMT sequestration in 2018 that did not recur in 2019.



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Income from discontinued operations, net of tax changed $539 million from a gain of $457 million to a loss of $82 million primarily due to:


•	Adjustment to loss on sale, net of tax excluding costs to sell made in the current period.

Adjusted operating Earnings before Income Taxes

Adjusted operating earnings before income taxes increased $71 million from $401 million to $472 million primarily due to:


•	higher premiums driven by growth of the stop loss, voluntary blocks and group life in our Employee Benefits segment;


•	lower net unfavorable DAC/VOBA and other intangibles unlocking due to prospective assumption updates related to changes in reinsurance in the prior period in our Individual Life segment;


•	unfavorable DAC/VOBA unlocking in the prior period driven by an update to the assumptions related the GMIR initiative in our Retirement segment;


•	lower Stranded costs.

The increase was partially offset by:


•	higher benefits incurred in stop loss, voluntary and group life due to growth in business, partially offset by lower loss ratios in Group Life and Stop Loss in our Employee Benefits segments;


•	higher expenses primarily resulting from business growth in our Retirement and Employee Benefits segments; and


•	lower adjusted operating earnings in our Investment Management segment due to lower average general account AUM driven by the impact of the 2018 Transaction.

Adjustments from Income (Loss) before Income Taxes to Operating Earnings (Loss) before Income Taxes

Net investment losses and related charges and adjustments increased $179 million from a loss of $101 million to a gain of $78 million primarily due to:


•	favorable changes in CMO-B fair value adjustments as a result of equity market and interest rate movements;


•	gains on the sale of securities in the current period; and


•	favorable changes in the fair value of derivatives.

The increase was partially offset by:


•	higher impairments in the current period; and


•	favorable amortization of DAC/VOBA and sales inducements in the prior period.

Net guaranteed benefit hedging gains and related charges and adjustments decreased $1 million from a loss of $12 million to a loss of $11 million primarily due to:


•	unfavorable changes in fair value of guaranteed benefit derivatives excluding nonperformance risk as a result of changes in interest rates.

The decrease was partially offset by:


•	gains due to nonperformance risk.

Loss related to businesses exited through reinsurance or divestment decreased $34 million from a loss of $53 million to a loss of $19 million primarily due to:


•	higher litigation reserves related to a divested business in the prior period.

The decrease was partially offset by:


•	higher unfavorable market value changes in assets and liabilities associated with business reinsured in the current period.



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Immediate recognition of net actuarial gains related to pension and other postretirement benefit obligations and gains from plan adjustments and curtailments changed $66 million due to the remeasurement of the pension plan as a result of a curtailment.

Loss related to early extinguishment of debt decreased $3 million from $3 million to $0 million primarily due to:


•	Losses in connection with repurchased debt in the prior period. See Liquidity and Capital Resources - in Part I, Item 2. of this Quarterly Report on Form 10-Q for further description.

Other adjustments to operating earnings changed $117 million from a loss of $28 million to a loss of $145 million primarily due to:


•	higher costs recorded in the current period related to restructuring. See the Restructuring Note in Part I, Item 1. of this Quarterly Report on Form 10-Q for further description.

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:



	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2019		2018		2019		2018
Adjusted operating revenues:
Net investment income and net realized gains (losses)	$	449	$	430	$	864	$	853
Fee income	211		210		410		422
Premiums	4		4		5		6
Other revenue	24		26		57		51
Total adjusted operating revenues	688		670		1,336		1,332
Operating benefits and expenses:
Interest credited and other benefits to contract owners/policyholders	238		239		469		476
Operating expenses	248		237		516		485
Net amortization of DAC/VOBA	22		25		42		93
Total operating benefits and expenses	508		501		1,027		1,054
Adjusted operating earnings before income taxes⁽¹⁾	$	180	$	169	$	309	$	278

⁽¹⁾ See DAC/VOBA and Other Intangibles Unlocking in Part I, Item 2. of this Quarterly Report on Form 10-Q for further information.



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Starting first quarter of 2019, Assets Under Advisement are presented in AUA, which includes recordkeeping, stable value investment-only wrap, brokerage and investment advisory assets. Prior period information have been revised to conform to current period presentation.

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



	As of June 30,
($ in millions)	2019		2018
Corporate markets	$	67,748	$	61,888
Tax-exempt markets	65,978		62,814
Total full service plans	133,726		124,702
Stable value⁽¹⁾ and pension risk transfer	10,472		11,518
Retail wealth management	10,223		9,695
Total AUM	154,421		145,915
AUA	247,335		274,967
Total AUM and AUA	$	401,756	$	420,882

⁽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 June 30,
($ in millions)	2019		2018
General Account	$	32,688	$	32,519
Separate Account	73,105		70,913
Mutual Fund/Institutional Funds	48,628		42,483
AUA	247,335		274,967
Total AUM and AUA	$	401,756	$	420,882

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



	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions)	2019			2018			2019			2018
Balance as of beginning of period	$	150,415		$	143,716		$	139,133		$	138,191
Transfer / Adjustment ⁽¹⁾	—			196			—			6,212
Deposits	4,649			4,440			10,115			8,959
Surrenders, benefits and product charges	(4,870		)	(4,574		)	(10,243		)	(9,455		)
Net flows	(221		)	(134		)	(128		)	(496		)
Interest credited and investment performance	4,227			2,137			15,416			2,008
Balance as of end of period	$	154,421		$	145,915		$	154,421		$	145,915

⁽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 - Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018

Adjusted operating earnings before income taxes increased $11 million from $169 million to $180 million primarily due to:


•	higher alternative asset income; and


•	higher prepayment income.



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The increase was partially offset by:


•	higher expenses primarily resulting from business growth.

Retirement - Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018

Adjusted operating earnings before income taxes increased $31 million from $278 million to $309 million primarily due to:


•	unfavorable DAC/VOBA unlocking in the prior period driven by an update to the assumptions related the GMIR initiative;


•	higher prepayment fee income; and


•	higher investment income margins.

The increase was partially offset by:


•	higher expenses primarily resulting from business growth; and


•	lower fee income due to margin rate compression and business mix.

Investment Management

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



	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2019		2018		2019		2018
Adjusted operating revenues:
Net investment income and net realized gains (losses)	$	7	$	5	$	5	$	16
Fee income	152		161		297		326
Other revenue	4		5		9		14
Total adjusted operating revenues	163		171		311		356
Operating benefits and expenses:
Operating expenses	122		119		236		243
Total operating benefits and expenses	122		119		236		243
Adjusted operating earnings before income taxes	$	41	$	52	$	75	$	113

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



	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2019		2018		2019		2018
Investment Management intersegment revenues	$	30	$	39	$	60	$	82



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



	As of June 30,
($ in millions)	2019		2018
Assets under Management
External clients:
Investment Management sourced	$	92,675	$	86,802
Affiliate sourced⁽¹⁾	38,686		36,882
Variable annuities ⁽²⁾	26,944		27,851
Total external clients	158,305		151,535
General account	55,921		55,617
Total AUM	214,226		207,152
Assets under Administration ⁽³⁾	50,098		49,378
Total AUM and AUA	$	264,324	$	256,530

⁽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 2018 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:



	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions)	2019			2018			2019			2018
Net Flows:
Investment Management sourced	$	693		$	1,152		$	1,858		$	1,208
Affiliate sourced	(501		)	(409		)	(1,055		)	(916		)
Variable annuities ⁽¹⁾	(616		)	(627		)	(1,166		)	(1,341		)
Sub-advisor replacements ⁽²⁾	897			—			897			—
Total	$	473		$	116		$	534		$	(1,049	)

⁽¹⁾ Reflects net flows associated with the businesses divested as part of the 2018 Transaction.

⁽²⁾Reflects net flows mainly associated with outside managed funds.

Investment Management - Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018

Adjusted operating earnings before income taxes decreased $11 million from $52 million to $41 million primarily due to:


•	lower average general account AUM driven by the impact of the 2018 Transaction; and


•	higher operating expenses due primarily to higher non-volume expenses partially offset by lower volume related expenses.

The decrease was partially offset by:


•	higher investment capital returns.

Investment Management - Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018

Adjusted operating earnings before income taxes decreased $38 million from $113 million to $75 million primarily due to:


•	lower average general account AUM driven by the impact of the 2018 Transaction;


•	lower investment capital returns;


•	a decrease in average Retail AUM driven by negative net flows resulting in lower management and administrative fees earned; and


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



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The decrease was partially offset by:


•	lower operating expenses.

Employee Benefits

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



	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions)	2019			2018			2019			2018
Adjusted operating revenues:
Net investment income and net realized gains (losses)	$	29		$	28		$	55		$	55
Fee income	16			15			32			31
Premiums	472			418			939			829
Other revenue	(2		)	(1		)	(3		)	(2		)
Total adjusted operating revenues	515			460			1,023			913
Operating benefits and expenses:
Interest credited and other benefits to contract owners/policyholders	361			335			725			661
Operating expenses	100			87			202			178
Net amortization of DAC/VOBA	5			3			9			7
Total operating benefits and expenses	466			425			936			846
Adjusted operating earnings before income taxes⁽¹⁾	$	49		$	35		$	87		$	67

⁽¹⁾ See DAC/VOBA and Other Intangibles Unlocking in Part I, Item 2. of this Quarterly Report on Form 10-Q for further information.

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



	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions)	2019			2018			2019			2018
Sales by Product Line:
Group life and Disability	$	13		$	12		$	117		$	72
Stop loss	9			15			245			194
Total group products	22			27			362			266
Voluntary products	31			10			100			75
Total sales by product line	$	53		$	37		$	462		$	341

Total gross premiums and deposits	$	532		$	469		$	1,053		$	931

Group life and Disability	$	715		$	664		$	715		$	664
Stop loss	1,045			938			1,045			938
Voluntary	392			312			392			312
Total annualized in-force premiums	$	2,152		$	1,914		$	2,152		$	1,914

Loss Ratios:
Group life (interest adjusted)	74.4		%	81.5		%	77.0		%	80.4		%
Stop loss	80.6		%	81.7		%	79.0		%	81.0		%
Total Loss Ratio⁽¹⁾	71.6		%	72.6		%	71.6		%	72.6		%

⁽¹⁾ Total Loss Ration is presented on a trailing twelve month basis.



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Employee Benefits - Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018

Adjusted operating earnings before income taxes increased $14 million from $35 million to $49 million primarily due to:


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


•	favorable true-ups of $6 million, in the current period, related to certain reserves, commission accruals and deferrals.

The increase was partially offset by:


•	higher benefits incurred in stop loss and voluntary due to growth in business, partially offset by lower loss ratios in Group Life and Stop Loss; and


•	higher distribution expenses and commissions to support business growth.

Employee Benefits - Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018

Adjusted Operating earnings before income taxes increased $20 million from $67 million to $87 million primarily due to:


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


•	favorable true-ups of $6 million, in the current period, related to certain reserves, commission accruals and deferrals.

The increase was partially offset by:


•	higher benefits incurred in stop loss, voluntary and group life due to growth in business, partially offset by lower loss ratios in Group Life and Stop Loss; and


•	higher distribution expenses and commissions to support business growth.



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Individual Life

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



	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2019		2018		2019		2018
Adjusted operating revenues:
Net investment income and net realized gains (losses)	$	240	$	225	$	455	$	443
Fee income	307		309		615		614
Premiums	94		103		192		208
Other revenue	2		4		7		7
Total adjusted operating revenues	643		641		1,269		1,272
Operating benefits and expenses:
Interest credited and other benefits to contract owners/policyholders	493		489		951		984
Operating expenses	60		66		131		140
Net amortization of DAC/VOBA	43		45		92		90
Total operating benefits and expenses	596		600		1,174		1,214
Adjusted operating earnings before income taxes⁽¹⁾	$	47	$	41	$	95	$	58

⁽¹⁾ See DAC/VOBA and Other Intangibles Unlocking in Part I, Item 2. of this Quarterly Report on Form 10-Q for further information.

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



	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2019		2018		2019		2018
Total gross premiums ⁽¹⁾	$	429	$	444	$	888	$	893
End of period:
In-force face amount ⁽¹⁾	$	325,562	$	316,574	$	325,562	$	316,574
In-force policy count ⁽¹⁾	785,786		800,771		785,786		800,771

⁽¹⁾ Effective 2019, we have ceased sales of our Individual Life products.

Individual Life - Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018

Adjusted operating earnings before income taxes increased $6 million from $41 million to $47 million primarily due to:


•	lower net unfavorable DAC/VOBA and other intangibles unlocking due to prospective assumption updates related to changes in reinsurance in the prior period;


•	higher net investment income primarily due to higher alternative investment income and prepayment fee income; and


•	lower operating expenses.

The increase was partially offset by:


•	lower underwriting gains, net of DAC/VOBA and other intangibles amortization, primarily driven by adverse net mortality due to higher severity on the combined interest and non-interest sensitive blocks.

Individual Life - Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018

Adjusted operating earnings before income taxes increased $37 million from $58 million to $95 million primarily due to:


•	lower net unfavorable DAC/VOBA and other intangibles unlocking due to prospective assumption updates related to changes in reinsurance in the prior period;


•	higher net investment income primarily due to higher alternative investment income and prepayment fee income; and



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•	lower operating expenses.

The increase was partially offset by:


•	lower underwriting gains, net of DAC/VOBA and other intangibles amortization, primarily driven by adverse net mortality in the non-interest sensitive block.

Corporate

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



	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions)	2019			2018			2019			2018
Adjusted operating revenues:
Net investment income and net realized gains (losses)	$	51		$	69		$	108		$	130
Fee income	10			10			20			21
Premiums	13			6			28			26
Other revenue	12			6			23			6
Total adjusted operating revenues	86			91			179			183
Operating benefits and expenses:
Interest credited and other benefits to contract owners/policyholders	48			39			103			95
Operating expenses	31			60			67			101
Net amortization of DAC/VOBA	2			3			4			5
Interest expense	44			48			99			97
Total operating benefits and expenses	125			150			273			298
Adjusted operating earnings before income taxes	$	(39	)	$	(59	)	$	(94	)	$	(115	)

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



	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2019		2018		2019		2018
Amortization of intangibles	$	8	$	9	$	17	$	18
Other⁽¹⁾	23		51		50		83
Total Operating expenses	$	31	$	60	$	67	$	101

⁽¹⁾Includes expense from corporate operations, Retained Business and other closed blocks, and expense not allocated to our segments, including Stranded Costs.

Corporate - Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018

Adjusted operating earnings before income taxes improved $20 million from a loss of $59 million to a loss of $39 million primarily related to:


•	lower Stranded Costs;


•	net compensation adjustments in the prior period not recurring in the current period;


•	lower interest expense as we converted debt to equity instruments during the fourth quarter of 2018; and


•	revenue resulting from transition services agreements.

This increase was partially offset by:


•	residual activity from Retained Business, which will have volatility due to the nature of the block.



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Corporate - Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018

Adjusted operating earnings before income taxes improved $21 million from a loss of $115 million to a loss of $94 million primarily due to:


•	lower Stranded Costs;


•	revenue resulting from transition services agreements;


•	lower net compensation adjustments in the current period; and


•	lower interest expense as we converted debt to equity instruments during the fourth quarter of 2018 partially offset by preferred stock dividend payments in the current year.

The increase was partially offset by:


•	residual activity from Retained Business, which will have volatility due to the nature of the block.

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, which excludes alternative investments and income that are a component of Assets held for sale and Income (loss) from discontinued operations, net of tax, respectively, and alternative investments and income in Corporate. These alternative investments are carried at fair value, which is estimated based on the net asset value ("NAV") of these funds.

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.

Alternative investment income for the three and six months ended June 30, 2019 and 2018, respectively, and the average assets of alternative investments as of the dates indicated were as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2019		2018		2019		2018
Retirement:
Alternative investment income	$	33	$	20	$	32	$	38
Average alternative investment	722		558		714		547
Investment Management⁽¹⁾:
Alternative investment income	7		5		5		16
Average alternative investment	228		250		218		256
Employee Benefits:
Alternative investment income	4		2		4		4
Average alternative investment	84		53		83		52
Individual Life:
Alternative investment income	25		16		31		25
Average alternative investment	491		348		477		330

⁽¹⁾ Includes performance fees 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. Should the market value of a portfolio increase in future periods, reversals of carried interest could be fully or partially recovered. No amounts for carried interest were reversed or recovered for the three and six months ended June 30, 2019 and 2018.



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DAC/VOBA and Other Intangibles Unlocking

Changes in Adjusted operating earnings before income taxes and Net income (loss) are influenced by increases and decreases in amortization of DAC, VOBA, deferred sales inducements ("DSI") and unearned revenue ("URR"), collectively, "DAC/VOBA and other intangibles." For Individual Life, changes in Adjusted operating earnings before income taxes and Net income (loss) are also influenced by increases and decreases in amortization of net cost of reinsurance, as well as by changes in reserves associated with UL and variable universal life ("VUL") secondary guarantees and paid-up guarantees. Unlocking 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. as well as the "DAC/VOBA and Other Intangibles Unlocking" section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7. of our Annual Report on Form 10-K for more information.

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 and will favorably impact the DAC/VOBA amortization rate and Adjusted operating earnings over time. See Critical Accounting Judgments and Estimates in the Management's Discussion and Analysis section in Part I, Item 2. of this Quarterly Report on Form 10-Q for further information.

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:



	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions)	2019			2018			2019			2018
Retirement ⁽¹⁾	$	5		$	3		$	9		$	(38	)
Employee Benefits	—			—			—			(1		)
Individual Life	(6		)	(31		)	(9		)	(60		)
Corporate	—			—			—			—
Total DAC/VOBA and other intangibles unlocking	$	(1	)	$	(28	)	$	—		$	(99	)

⁽¹⁾ Includes unfavorable unlocking of $43 million in the three months ended March 31, 2018, associated with the assumption update related to the GMIR initiative.

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:



	Six Months Ended June 30,
($ in millions)	2019		2018
Beginning cash and cash equivalents balance	$	209	$	244
Sources:
Proceeds from loans from subsidiaries, net of repayments	—		11
Dividends and returns of capital from subsidiaries	956		811
Amounts received from subsidiaries under tax sharing agreements, net	—		4
Refund of income taxes, net	16		—
Sale of short-term investments	—		212
Proceeds from 2048 Notes offering	—		350
Proceeds from issuance of preferred stock, net	293		—
Other, net	12		—
Total sources	1,277		1,388
Uses:
Payment of interest expense	69		74
Repayments of loans from subsidiaries, net of new issuances	4		418
New issuances of loans to subsidiaries, net of repayments	197		—
Amounts paid to subsidiaries under tax sharing agreements, net	48		—
Debt issuance costs	—		6
Common stock acquired - Share repurchase	686		500
Share-based compensation	17		15
Dividends paid on preferred stock	10		—
Dividends paid on common stock	3		3
Maturity of 2018 Notes	—		337
Other, net	—		10
Total uses	1,034		1,363
Net increase in cash and cash equivalents	243		25
Ending cash and cash equivalents balance	$	452	$	269

Share Repurchase Program and Dividends to Common 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. On May 2, 2019, our Board of Directors provided share repurchase authorization, increasing the aggregate of our common stock authorized for repurchase by $500 million. The additional share repurchase authorization expires on June 30, 2020 (unless extended). The authorization for the share repurchase program may be terminated, increased or decreased by the Board of Directors at any time. As of June 30, 2019, we were authorized to repurchase shares up to an aggregate purchase price of $300 million, after consideration of the upfront payment made upon entering into a share repurchase agreement on June 19, 2019, which is described below.

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 closed on April 4, 2019 and an additional 290,765 shares were delivered.



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On April 9, 2019, we entered into a share repurchase agreement with a third-party financial institution, pursuant to which we made an upfront payment of $236 million and received initial delivery of 3,593,453 shares. This arrangement closed on June 4, 2019 and an additional 879,199 shares were delivered.

On June 19, 2019, we entered into a share repurchase agreement with a third-party financial institution, pursuant to which we made an upfront payment of $200 million and received initial delivery of 2,963,512 shares. This arrangement closed on August 6, 2019 and an additional 695,566 shares were delivered.

The following table summarizes our return of capital to common shareholders:



	Six Months Ended June 30,
($ in millions)	2019		2018
Dividends to shareholders	$	3	$	3
Repurchase of common shares	646		600
Total cash returned to shareholders	$	649	$	603

On August 1, 2019, our Board of Directors authorized a third-quarter 2019 common stock dividend of $0.15 per share.

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.

We had $97 million of short-term debt borrowings outstanding consisting entirely of the current portion of long-term debt as of June 30, 2019. The following table summarizes our borrowing activities for the six months ended June 30, 2019:



($ in millions)	Beginning Balance		Issuance		Maturities and Repurchases		Other Changes			Ending Balance
Long-Term Debt:
Debt securities	$	3,132	$	—	$	—	$	2		$	3,134
Windsor property loan	5		—		—		(1		)	4
Subtotal	3,137		—		—		1			3,138
Less: Current portion of long-term debt	1		—		—		96			97
Total long-term debt	$	3,136	$	—	$	—	$	(95	)	$	3,041



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As of June 30, 2019, we were in compliance with our debt covenants.

Preferred Stock. On June 11, 2019, we issued 300,000 shares of 5.35% Fixed-Rate Reset Non-Cumulative Preferred Stock, Series B ("the Series B preferred stock), with a $0.01 par value per share and a liquidation preference of $1,000 per share, represented by 12,000,000 Depositary Shares each representing a 1/40^th interest in a share of the Series B preferred stock, for aggregate net proceeds of $293 million.

We did not declare or pay dividends on the Series A or Series B preferred stock during the three months ended June 30, 2019. During the six months ended June 30, 2019, we declared and paid dividends of $10 million on the Series A preferred stock. As of June 30, 2019, there were no preferred stock dividends in arrears. See the Shareholders' Equity Note in Part I, Item 1. of this Quarterly Report on Form 10-Q for further information.

Senior Notes. As of June 30, 2019, Voya Financial, Inc. had five series of senior notes (collectively, the "Senior Notes") with aggregate outstanding principal amount of $1.7 billion. 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.

On June 12, 2019, we delivered to the holders of our 5.5% Senior Notes due 2022 (the "2022 Notes") a notice of redemption. We have elected to redeem all of the outstanding $97 million aggregate principal amount of 2022 Notes, and the redemption occurred on July 12, 2019. In connection with this transaction, we expect to incur a loss on debt extinguishment of $9 million for the three and nine months ended September 30, 2019, which will be recorded in Interest expense in the Condensed Consolidated Statements of Operations.

Junior Subordinated Notes. As of June 30, 2019, Voya Financial, Inc. had two series of junior subordinated notes (collectively, the "Junior Subordinated Notes") with aggregate outstanding principal amount of $1.1 billion. The Junior Subordinated Notes are guaranteed on an unsecured, junior subordinated basis by Voya Holdings.

Aetna Notes. As of June 30, 2019, Voya Holdings was the obligor under three series of debentures (collectively, the "Aetna Notes") with aggregate outstanding principal amount of $358 million, 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 guaranteed by Voya Financial, Inc.

As of June 30, 2019, the amount of collateral required to avoid the payment of a fee to ING Group was $258 million.

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 June 30, 2019, 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.



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The following table summarizes our credit facilities as of June 30, 2019:

($ 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

N/A

300

—

Voya Financial, Inc. / SLDI

Retirement

Unsecured

Committed

03/20/2022

250

225

Voya Financial, Inc. / SLDI

Individual Life

Unsecured

Committed

12/31/2025

475

—

Voya Financial, Inc. / SLDI

Individual Life

Unsecured

Committed

07/01/2037

1,725

1,566

159

Voya Financial, Inc. /Roaring River LLC

Individual Life

Unsecured

Committed

10/01/2025

425

356

Voya Financial, Inc. /Roaring River IV, LLC

Individual Life

Unsecured

Committed

12/31/2028

565

312

253

Voya Financial, Inc.⁽¹⁾

Individual Life

Unsecured

Committed

12/09/2023

300

182

118

Voya Financial, Inc.

Individual Life/Retirement/Other

Unsecured

Committed

02/11/2022

300

—

SLDI

Hannover Re⁽²⁾

Unsecured

Committed

10/29/2023

—

Voya Financial, Inc.

Hannover Re⁽²⁾

Unsecured

Uncommitted

04/27/2021

156

—

Total

5,568

3,635

1,624

N/A- Not Applicable

⁽¹⁾Effective June 14, 2019, the commitment was increased from $195 million to $300 million and the maturity date was extended from 12/09/2021 to 12/09/2023.

⁽²⁾Individual Life Reinsurance business acquired by Hannover Re in 2009 via indemnity reinsurance.

Total fees associated with credit facilities were $8 million and $16 million for the three and six months ended June 30, 2019, respectively. Total fees associated with credit facilities were $8 million and $18 million for the three and six months ended June 30, 2018, respectively.

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 June 30, 2019, such facilities provided for up to $4.5 billion of capacity, of which $3.6 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 Security Life of Denver International Limited ("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 Security Life of Denver Insurance Company ("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



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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 June 30, 2019 is $13 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 June 30, 2019 in relation to intercompany indemnifications, guarantees or support agreements. As of June 30, 2019, no circumstances existed in which we were required to currently perform under these arrangements.

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 June 30, 2019, the aggregate amount that may be borrowed or lent under agreements with life insurance subsidiaries was $1.9 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 June 30, 2019, Voya Financial, Inc. had no outstanding borrowings from subsidiaries and had loaned $277 million to its subsidiaries.

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 our Annual Report on Form 10-K for additional information.

With respect to our reinsurance agreements, based on the amount of reinsurance outstanding as of June 30, 2019 and December 31, 2018, a two-notch downgrade of our insurance subsidiaries would have resulted in an estimated increase in our collateral requirements by approximately $13 million and $14 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.

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.



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The financial strength and credit ratings of Voya Financial, Inc. and its principal subsidiaries as of the date of this Quarterly Report on Form 10-Q 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.	withdrawn	BBB+/stable	Baa2/stable	BBB+/Stable

Financial Strength Rating/Outlook:	A/stable	A/stable	A2/stable	A+/Stable
Voya Retirement Insurance and Annuity Company	⁽⁵⁾
Security Life of Denver Insurance Company	⁽⁵⁾
ReliaStar Life 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)."

⁽⁵⁾ Effective April 11, 2019, A.M. Best withdrew, at the Company’s request, its financial strength ratings with respect to Voya Retirement Insurance Annuity Company and Security Life of Denver Insurance Company.

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, 2018 through June 30, 2019 and subsequently through the date of this Quarterly Report on Form 10-Q are as follows:


•	On March 11, 2019, Fitch affirmed the ratings of the holding company, Voya Financial, Inc. and revised its outlook on the ratings to Stable from Negative. At the same time, Fitch affirmed the financial strength ratings of Voya's life insurance subsidiaries and maintained its Stable outlook on these ratings.

•

On April 11, 2019, A.M. Best affirmed the financial strength rating of A of the life insurance entities of Voya Financial, Inc. Additionally, A.M. Best affirmed the long-term issuer credit rating of "bbb+" of Voya Financial, Inc. The outlook of these was assigned as Stable. Concurrently, A.M. Best withdrew the ratings of Voya, Voya Retirement Insurance Annuity Company and Security Life of Denver Insurance Company at our request to no longer participate in A.M. Best's rating process with respect to those entities.


•	On June 11, 2019, S&P upgraded the long-term issuer credit rating of Voya Financial, Inc. from BBB, Positive to BBB+, Stable and the financial strength rating of the insurance entities of Voya Financial, Inc. from A, Positive to A+, Stable.

Reinsurance

On November 19, 2008, an existing reinsurance agreement between Scottish Re (U.S.), Inc. ("SRUS") and Ballantyne Re, an Irish public limited company ("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 SLD was substituted for SRUS as the ceding company to Ballantyne Re and made the sole beneficiary of the trust established by to support the reserve requirements of the ceded business. On April 12, 2019, SLD entered into a Lock-Up Support Agreement (the "Lock-Up Agreement") with Ballantyne Re, certain other companies, and holders of certain notes issued by Ballantyne Re in connection with the restructuring of Ballantyne Re. Under the terms of the Lock-Up Agreement, SLD agreed, subject to certain conditions, to enter into a novation and related agreements (the "Novation").



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The Novation occurred on June 12, 2019 with the result that Swiss Re Life & Health America Inc. ("Swiss Re") was substituted for Ballantyne Re as the reinsurer effective April 1, 2019. As part of the Novation, Swiss Re established a new trust account with assets supporting its reinsurance obligation to SLD. At the time of closing, $582 million of trust assets on a market value basis supporting reserves of $572 million as of March 31, 2019 were funded into the new trust account. The Novation did not change SLD's reinsurance coverage related to the reinsured business.

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 subjected 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.

SLDI and RRII may not declare or pay dividends other than in accordance with their respective annual capital and dividend plans as approved by the Arizona Department of Insurance, which each include a minimum capital requirement.

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.

Insurance Subsidiaries - Dividends, Returns of Capital, and Capital Contributions

The following table summarizes dividends by each of the Company's Principal Insurance Subsidiaries to its parent for the periods indicated:



	Dividends Paid				Extraordinary Distributions Paid
	Six Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2019		2018		2019		2018
Subsidiary Name (State of domicile):
Voya Retirement Insurance and Annuity Company ("VRIAC") (CT)	$	396	$	126	$	—	$	—
Security Life of Denver Insurance Company ("SLD") (CO)	—		—		—		—
ReliaStar Life Insurance Company ("RLI") (MN)	—		—		360		—

Other Subsidiaries - Dividends, Returns of Capital, and Capital Contributions

On March 26, 2019, RRII declared a dividend in the amount of $152 million payable to its parent, SLDI. On the same date, SLDI declared a dividend of $170 million payable to its parent, Voya Financial. Both of these dividends were paid on March 27, 2019.

Off-Balance Sheet Arrangements

We have obligations for the return of non-cash collateral under an amendment to our securities lending program. Non-cash collateral received in connection with the securities lending program may not be sold or re-pledged by our lending agent, except in the event



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of default, and is not reflected on our Condensed Consolidated Balance Sheets. For information regarding obligations under this program, see the Investments (excluding Consolidated Investment Entities) Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.

For changes in commitments related to the acquisition of mortgage loans and the purchase of limited partnerships and private placement investments related to consolidated investment entities, see the Commitments and Contingencies Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.

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 Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.

Critical Accounting Judgments and Estimates

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.

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:


•	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 Condensed Consolidated Financial Statements.

The above critical accounting estimates are described in the Business, Basis of Presentation and Significant Accounting Policies Note in our Consolidated Financial Statements in Part II, Item 8. of our Annual Report on Form 10-K.

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.

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 and will favorably impact the DAC/VOBA amortization rate and Adjusted operating earnings over time. There was no unlocking of DAC and VOBA related to GMIR initiative for the six months ended June 30, 2019. For the six months ended June 30, 2018, unfavorable unlocking of DAC and VOBA related to GMIR initiative was $43 million, which was included in Net amortization of DAC/VOBA in the Condensed Consolidated Financial Statements.



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Sensitivity

We perform sensitivity analyses to assess the impact that certain assumptions have on DAC/VOBA and other intangibles, as well as certain reserves. As of June 30, 2019, there have been no material changes to the sensitivities disclosed in Critical Accounting Judgments and Estimates in Part II. Item 7. of our Annual Report on Form 10-K.

Income Taxes

We use the estimated annual effective tax rate method in computing our interim tax provision. Certain items, including changes in the realizability of deferred tax assets and changes in liabilities for uncertain tax positions, are excluded from the estimated annual effective tax rate and the actual tax expense or benefit is reported in the period the related item is incurred.

See the Income Taxes Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for more information.

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.

See Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7. of our Annual Report on Form 10-K for information on our investment strategy.

See the Investments (excluding Consolidated Investment Entities) Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for more information on investments.

Portfolio Composition

The following table presents the investment portfolio as of the dates indicated:



	June 30, 2019				December 31, 2018
($ in millions)	Carrying Value		% of Total		Carrying Value		% of Total
Fixed maturities, available-for-sale, excluding securities pledged	$	49,150	73.3	%	$	46,298	72.9	%
Fixed maturities, at fair value using the fair value option	3,358		5.0	%	2,956		4.7	%
Equity securities, available-for-sale	367		0.5	%	273		0.4	%
Short-term investments⁽¹⁾	154		0.2	%	168		0.3	%
Mortgage loans on real estate	8,418		12.6	%	8,676		13.6	%
Policy loans	1,797		2.7	%	1,833		2.9	%
Limited partnerships/corporations	1,325		2.0	%	1,158		1.8	%
Derivatives	440		0.7	%	247		0.4	%
Other investments	96		0.1	%	90		0.1	%
Securities pledged	1,945		2.9	%	1,867		2.9	%
Total investments	$	67,050	100.0	%	$	63,566	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:



	June 30, 2019
($ in millions)	Amortized Cost		% of Total		Fair Value		% of Total
Fixed maturities:
U.S. Treasuries	$	1,666	3.3	%	$	2,166	4.0	%
U.S. Government agencies and authorities	197		0.4	%	249		0.5	%
State, municipalities and political subdivisions	1,642		3.3	%	1,754		3.2	%
U.S. corporate public securities	18,170		36.4	%	20,410		37.4	%
U.S. corporate private securities	6,292		12.6	%	6,698		12.3	%
Foreign corporate public securities and foreign governments⁽¹⁾	5,320		10.7	%	5,810		10.7	%
Foreign corporate private securities⁽¹⁾	5,027		10.1	%	5,262		9.7	%
Residential mortgage-backed securities	5,282		10.6	%	5,576		10.2	%
Commercial mortgage-backed securities	3,892		7.8	%	4,090		7.5	%
Other asset-backed securities	2,415		4.8	%	2,438		4.5	%
Total fixed maturities, including securities pledged	$	49,903	100.0	%	$	54,453	100.0	%
⁽¹⁾ Primarily U.S. dollar denominated.



	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.

As of June 30, 2019, the average duration of our fixed maturities portfolio, including securities pledged, is between 7.5 and 8.0 years.

Fixed Maturities Credit Quality - Ratings

For information regarding our fixed maturities credit quality ratings, see the Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Consolidated Financial Statements in Part II, Item 7. of our Annual Report on Form 10-K.



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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)	June 30, 2019
NAIC Quality Designation	1			2			3			4			5			6			Total Fair Value
U.S. Treasuries	$	2,166		$	—		$	—		$	—		$	—		$	—		$	2,166
U.S. Government agencies and authorities	249			—			—			—			—			—			249
State, municipalities and political subdivisions	1,592			159			—			—			1			2			1,754
U.S. corporate public securities	9,643			9,778			798			179			12			—			20,410
U.S. corporate private securities	2,516			3,773			276			111			22			—			6,698
Foreign corporate public securities and foreign governments⁽¹⁾	2,304			3,202			231			72			—			1			5,810
Foreign corporate private securities⁽¹⁾	581			4,379			215			44			42			1			5,262
Residential mortgage-backed securities	5,380			96			34			4			30			32			5,576
Commercial mortgage-backed securities	3,951			139			—			—			—			—			4,090
Other asset-backed securities	2,128			222			23			4			59			2			2,438
Total fixed maturities	$	30,510		$	21,748		$	1,577		$	414		$	166		$	38		$	54,453
% of Fair Value	56.0		%	39.9		%	2.9		%	0.8		%	0.3		%	0.1		%	100.0		%
⁽¹⁾ Primarily U.S. dollar denominated.



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($ 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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The following tables present credit quality of fixed maturities, including securities pledged, using NAIC acceptable rating organizations ("ARO") ratings as of the dates indicated:



($ in millions)	June 30, 2019
ARO Quality Ratings	AAA			AA			A			BBB			BB and Below			Total Fair Value
U.S. Treasuries	$	2,166		$	—		$	—		$	—		$	—		$	2,166
U.S. Government agencies and authorities	241			8			—			—			—			249
State, municipalities and political subdivisions	109			957			526			159			3			1,754
U.S. corporate public securities	224			1,287			8,113			9,791			995			20,410
U.S. corporate private securities	160			277			2,226			3,703			332			6,698
Foreign corporate public securities and foreign governments⁽¹⁾	47			536			1,699			3,198			330			5,810
Foreign corporate private securities⁽¹⁾	—			—			633			4,417			212			5,262
Residential mortgage-backed securities	3,912			124			124			525			891			5,576
Commercial mortgage-backed securities	2,064			359			855			654			158			4,090
Other asset-backed securities	832			277			879			227			223			2,438
Total fixed maturities	$	9,755		$	3,825		$	15,055		$	22,674		$	3,144		$	54,453
% of Fair Value	17.9		%	7.0		%	27.7		%	41.6		%	5.8		%	100.0		%
⁽¹⁾Primarily U.S. dollar denominated.



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($ 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.

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, decreased $883 million from $1,084 million to $201 million for the six months ended June 30, 2019. The decrease in gross unrealized capital losses was primarily due to declining interest rates and tightening credit spreads.

As of June 30, 2019 and December 31, 2018, we held one and three fixed maturities, respectively, with unrealized capital losses in excess of $10 million. As of June 30, 2019 and December 31, 2018, the unrealized capital losses on these fixed maturities equaled $16 million or 8.0% and $49 million or 4.5% of the total unrealized losses, respectively.

As of June 30, 2019, we held $4.2 billion of energy sector fixed maturity securities, constituting 7.7% of the total fixed maturities portfolio, with gross unrealized capital losses of $52 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 $16 million. As of June 30, 2019, our fixed maturity exposure to the energy sector is comprised of 93.0% investment grade securities.

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.



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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)	June 30, 2019						December 31, 2018
Sector Type	Amortized Cost		Fair Value		% Fair Value		Amortized Cost		Fair Value		% Fair Value
Midstream	$	1,491	$	1,683	40.4	%	$	1,545	$	1,596	39.0	%
Integrated Energy	662		753		18.1	%	817		837		20.5	%
Independent Energy	914		997		23.9	%	923		931		22.8	%
Oil Field Services	420		409		9.8	%	472		428		10.5	%
Refining	277		327		7.8	%	277		293		7.2	%
Total	$	3,764	$	4,169	100.0	%	$	4,034	$	4,085	100.0	%

See the Investments (excluding Consolidated Investment Entities) Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for further information on unrealized capital losses.

CMO-B Portfolio

The following table presents fixed maturities balances held in the CMO-B portfolio by NAIC quality rating as of the dates indicated:



($ in millions)	June 30, 2019						December 31, 2018
NAIC Quality Designation	Amortized Cost		Fair Value		% Fair Value		Amortized Cost		Fair Value		% Fair Value
1	$	3,306	$	3,509	95.4	%	$	2,951	$	3,101	97.0	%
2	84		84		2.3	%	17		16		0.5	%
3	14		23		0.6	%	14		25		0.8	%
4	—		—		—	%	—		—		—	%
5	16		29		0.8	%	5		9		0.3	%
6	25		32		0.9	%	30		46		1.4	%
Total	$	3,445	$	3,677	100.0	%	$	3,017	$	3,197	100.0	%

For CMO securities where we elected the FVO, amortized cost represents the market values. For details on the NAIC designation methodology, see "Fixed Maturities Credit Quality-Ratings" in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7. of our Annual Report on Form 10-K.

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:



	June 30, 2019						December 31, 2018
($ 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	$	14,899	$	62	$	236	$	15,081	$	32	$	80

The Company utilizes interest rate futures and interest rate swaps as a part of the CMO-B portfolio to hedge interest rate risk.



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The following table presents our CMO-B fixed maturity securities balances and tranche type as of the dates indicated:



($ in millions)	June 30, 2019						December 31, 2018
Tranche Type	Amortized Cost		Fair Value		% Fair Value		Amortized Cost		Fair Value		% Fair Value
Inverse Floater	$	387	$	506	13.8	%	$	399	$	487	15.2	%
Interest Only (IO)	154		166		4.5	%	167		181		5.7	%
Inverse IO	1,550		1,635		44.4	%	1,335		1,393		43.5	%
Principal Only (PO)	249		254		6.9	%	249		252		7.9	%
Floater	15		15		0.4	%	16		16		0.5	%
Agency Credit Risk Transfer	1,088		1,098		29.9	%	849		865		27.1	%
Other	2		3		0.1	%	2		3		0.1	%
Total	$	3,445	$	3,677	100.0	%	$	3,017	$	3,197	100.0	%

During the six months ended June 30, 2019, the market value of our CMO-B portfolio increased primarily due to new purchase activity exceeding paydowns and maturities. Valuation of the securities within our CMO-B portfolio improved during the quarter benefited by mute prepayment risk 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.

The following table presents returns for our CMO-B portfolio for the periods indicated:



	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions)	2019			2018			2019			2018
Net investment income (loss)	$	111		$	118		$	220		$	232
Net realized capital gains (losses)⁽¹⁾	(27		)	(92		)	(53		)	(186		)
Income (loss) from continuing operations before income taxes	$	84		$	26		$	167		$	46

⁽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:



	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions)	2019			2018			2019			2018
Income (loss) from continuing operations before income taxes	$	84		$	26		$	167		$	46
Realized gains/(losses) including OTTI	—			(3		)	(1		)	(5		)
Fair value adjustments	(32		)	38			(61		)	76
Total adjustments to income (loss) from continuing operations	(32		)	35			(62		)	71
Adjusted operating earnings before income taxes	$	52		$	61		$	105		$	117



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See Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7. of our Annual Report on Form 10-K for information on our CMO-B portfolio.

Structured Securities

Residential mortgage-backed securities

The following tables present our residential mortgage-backed securities as of June 30, 2019 and December 31, 2018:



	June 30, 2019
($ in millions)	Amortized Cost		Gross Unrealized Capital Gains		Gross Unrealized Capital Losses		Embedded Derivatives		Fair Value
Prime Agency	$	3,113	$	194	$	6	$	16	$	3,317
Prime Non-Agency	1,978		70		12		4		2,040
Alt-A	165		21		—		9		195
Sub-Prime⁽¹⁾	140		26		1		—		165
Total RMBS	$	5,396	$	311	$	19	$	29	$	5,717
⁽¹⁾ Includes subprime other asset backed securities.

	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.



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Commercial Mortgage-backed securities

The following tables present our commercial mortgage-backed securities as of June 30, 2019 and December 31, 2018:



	June 30, 2019
($ 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
2013 and prior	$	398	$	429	$	32	$	33	$	90	$	92	$	127	$	135	$	4	$	5	$	651	$	694
2014	347		378		30		31		62		64		25		27		42		42		506		542
2015	328		341		151		156		104		108		129		134		38		39		750		778
2016	95		97		16		17		35		37		63		66		8		8		217		225
2017	275		280		77		78		137		142		56		58		39		42		584		600
2018	277		306		33		34		268		277		108		111		22		22		708		750
2019	214		233		10		10		131		135		121		123		—		—		476		501
Total CMBS	$	1,934	$	2,064	$	349	$	359	$	827	$	855	$	629	$	654	$	153	$	158	$	3,892	$	4,090

	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
2013 and prior	$	451	$	462	$	65	$	65	$	81	$	80	$	88	$	93	$	22	$	22	$	707	$	722
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
2019	—		—		—		—		—		—		—		—		—		—		—		—
Total CMBS	$	1,834	$	1,822	$	392	$	390	$	603	$	596	$	447	$	447	$	162	$	161	$	3,438	$	3,416

As of June 30, 2019, 96.6% and 3.4% of CMBS investments were designated as NAIC-1 and NAIC-2, respectively. As of December 31, 2018, 97.1% and 2.3% 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 June 30, 2019 and December 31, 2018:



	June 30, 2019
($ 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	$	683	$	679	$	169	$	167	$	655	$	647	$	39	$	38	$	87	$	83	$	1,633	$	1,614
Auto-Loans	45		46		10		10		9		9		—		—		—		—		64		65
Student Loans	14		14		94		97		105		108		—		—		—		—		213		219
Credit Card loans	23		23		—		—		—		—		—		—		—		—		23		23
Other Loans	67		69		2		2		111		113		184		187		4		5		368		376
Total Other ABS⁽¹⁾	$	832	$	831	$	275	$	276	$	880	$	877	$	223	$	225	$	91	$	88	$	2,301	$	2,297
⁽¹⁾ Excludes subprime other asset backed securities.

	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.

As of June 30, 2019, 87.3% and 9.1% of Other ABS investments were designated as NAIC-1 and NAIC-2, respectively. As of December 31, 2018, 87.0% and 8.0% 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 Condensed 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 June 30, 2019, our mortgage loans on real estate portfolio had a weighted average DSC of 2.2 times and a weighted average LTV ratio of 61.6%. As of December 31, 2018, 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%. See the Investments (excluding Consolidated Investment Entities) Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for further information on mortgage loans on real estate.

Other-Than-Temporary Impairments

We evaluate available-for-sale fixed maturities 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 to our Consolidated Financial Statements in Part II, Item 8. in our Annual Report on Form 10-K for the policy used to evaluate whether the investments are other-than-temporarily impaired.

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 in our Consolidated Financial Statements in Part II, Item 8. of our 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.

As of June 30, 2019, the Company's total European exposure had an amortized cost and fair value of $5,046 million and $5,415 million, respectively. European exposure with a primary focus on Greece, Ireland, Italy, Portugal and Spain (which we refer to as "peripheral Europe") amounts to $593 million, which includes non-financial institutions exposure in Ireland of $194 million, in Italy of $192 million, in Portugal of $10 million and in Spain of $131 million. We also had financial institutions exposure in Ireland of $26 million, in Italy of $9 million and in Spain of $31 million. We did not have any exposure to Greece.

Among the remaining $4,822 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 June 30, 2019, our non-peripheral sovereign exposure was $187 million, which consisted of fixed maturities and derivative assets. We also had $783 million in net exposure to non-peripheral financial institutions, with a concentration in Switzerland of $170 million and the United Kingdom of $391 million. The balance of $3,852 million was invested across non-peripheral, non-financial institutions.

Some of the major country level exposures were in the United Kingdom of $2,363 million, in The Netherlands of $508 million, in Belgium of $288 million, in France of $388 million, in Germany of $277 million, in Switzerland of $378 million, and in Russia of $98 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. 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 our 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 $341 million and $354 million as of June 30, 2019 and December 31, 2018, 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 Condensed 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 Condensed 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 our 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.

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 to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for more information.



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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 to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q 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 Condensed 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 to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for details regarding the carrying amounts and classifications of these assets.

Legislative and Regulatory Developments

In April 2018, the SEC approved a new rule, Regulation Best Interest ("Regulation BI") and related forms and interpretations. Among other things, Regulation BI will apply a heightened "best interest" standard to broker-dealers and their associated persons, including our retail broker-dealer, Voya Financial Advisors, when they make securities investment recommendations to retail customers. Compliance with Regulation BI is required beginning June 30, 2020. We do not believe Regulation BI will have a material impact on us. We anticipate that the Department of Labor, and possibly other state and federal regulators, will 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. If these additional rules are more onerous than Regulation BI, or are not coordinated with Regulation BI, the impact on us will be more substantial. Until we see the text of any such rule, it will be too early to assess that impact.

Item 3. 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. There have been no material changes in our exposure to these market risks since December 31, 2018. For further details on these market risks, see Quantitative and Qualitative Disclosures About Market Risk in Part II, Item 7A. in our Annual Report on Form 10-K.

Item 4. Controls and Procedures

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 SEC filings is made known to them in a timely manner.

Changes in Internal Control Over Financial Reporting

There were no changes to the Company's internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the quarter ended June 30, 2019 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.



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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

See the Commitments and Contingencies Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors

For a discussion of the Company’s potential risks and uncertainties, please see Risk Factors in Part I, Item IA. of our Annual Report on Form 10-K for the year ended December 31, 2018 (the "Annual Report on Form 10-K") filed with the SEC. In addition, please see Management’s Discussion and Analysis of Financial Condition and Results of Operations-Trends and Uncertainties in Part I, Item 2. of this Quarterly Report on Form 10-Q.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

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 June 30, 2019:



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)}
April 1, 2019 - April 30, 2019	3,932,959	$	52.33	⁽³⁾⁽⁴⁾	3,884,218	$	47
May 1, 2019 - May 31, 2019	1,001,908	52.88		⁽⁴⁾	879,199	500
June 1, 2019 - June 30, 2019	3,042,893	54.65		⁽⁵⁾	2,963,512	340
Total	7,977,760	$	53.28		7,726,929	N/A

⁽¹⁾ In connection with the exercise or 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 June 30, 2019, there was an increase of 250,831 Treasury shares in connection with such withholding activities.

⁽²⁾ On May 2, 2019, the Board of Directors provided share repurchase authorization, increasing the aggregate of our common stock authorized for repurchase by $500. The current share repurchase authorization expires on June 30, 2020 (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.

⁽³⁾ On January 3, 2019, the Company entered into a share repurchase agreement with a third-party financial institution to repurchase $250 million of the Company's common stock. This arrangement closed on April 4, 2019, and additional 290,765 shares were delivered. The total number of shares repurchased under this share repurchase agreement was 5,350,214 at an average price per share upon settlement of $46.73.

⁽⁴⁾ On April 9, 2019, the Company entered into a share repurchase agreement with a third-party financial institution to repurchase $236 million of the Company's common stock. This arrangement closed on June 4, 2019, and additional 879,199 shares were delivered. The total number of shares repurchased under this share repurchase agreement was 4,472,652 at an average price per share upon settlement of $52.77.

⁽⁵⁾ On June 19, 2019, the Company entered into a share repurchase agreement with a third-party financial institution to repurchase $200 million of the Company's common stock. Pursuant to the agreement, the Company received initial delivery of 2,963,512 shares. This arrangement closed on August 6, 2019 and an additional 695,566 shares were delivered. The total number of shares repurchased under this share repurchase agreement was 3,659,078 at an average price per share upon settlement of $54.66.

Item 6. Exhibits

See Exhibit Index on page 143 hereof.



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Voya Financial, Inc.



Exhibit Index
Exhibit No.		Description of Exhibit
10.1+*		Voya Financial, Inc. 2019 Omnibus Employee Incentive Plan
31.1+		Rule 13a-14(a)/15d-14(a) Certification of Rodney O. Martin, Jr. Chief Executive Officer (included as Exhibit 31.1 to Form 10-Q)
31.2+		Rule 13a-14(a)/15d-14(a) Certification of Michael S. Smith, Chief Financial Officer (included as Exhibit 31.2 to Form 10-Q)
32.1+		Section 1350 Certification of Rodney O. Martin, Jr. Chief Executive Officer (included as Exhibit 32.1 to Form 10-Q)
32.2+		Section 1350 Certification of Michael S. Smith, Chief Financial Officer (included as Exhibit 32.2 to Form 10-Q)
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+		Inline XBRL Taxonomy Extension Schema
101.CAL+		Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF+		Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB+		Inline XBRL Taxonomy Extension Label Linkbase
101.PRE+		Inline XBRL Taxonomy Extension Presentation Linkbase
104		Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101).

+ Filed herewith.

* This exhibit is a management contract or a compensatory plan or arrangement.



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SIGNATURE

Pursuant to the requirements 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.



August 8, 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)



	144

Exhibit 10.1

VOYA FINANCIAL, INC.

2019 OMNIBUS EMPLOYEE INCENTIVE PLAN

Table of Contents



ARTICLE I GENERAL			B-1
	1.1	Purpose	B-1
	1.2	Definitions of Certain Terms	B-1
	1.3	Administration	B-5
	1.4	Persons Eligible for Awards	B-7
	1.5	Types of Awards under Plan	B-7
	1.6	Shares of Common Stock Available for Awards	B-7
ARTICLE II AWARDS UNDER THE PLAN			B-8
	2.1	Agreements Evidencing Awards	B-8
	2.2	No Rights as a Stockholder	B-8
	2.3	Options	B-8
	2.4	Restricted Shares	B-9
	2.5	Restricted Stock Units	B-9
	2.6	Dividend Equivalent Rights	B-10
	2.7	Other Stock-Based and Cash-Based Awards	B-10
	2.8	Individual Limitation on Awards	B-10
	2.9	Repayment if Conditions Not Met	B-10
ARTICLE III MISCELLANEOUS			B-11
	3.1	Amendment of the Plan	B-11
	3.2	Tax Withholding	B-11
	3.3	Required Consents and Legends	B-11
	3.4	Right of Offset	B-12
	3.5	Nonassignability; No Hedging	B-12
	3.6	Change in Control	B-12
	3.7	Right of Discharge Reserved	B-13
	3.8	Nature of Payments	B-13
	3.9	Non-Uniform Determinations	B-13
	3.10	Other Payments or Awards	B-14
	3.11	Plan Headings	B-14
	3.12	Termination of Plan	B-14
	3.13	Section 409A	B-14
	3.14	Clawback/Recoupment	B-15
	3.15	Governing Law	B-15
	3.16	Choice of Forum	B-15
	3.17	Severability; Entire Agreement	B-16
	3.18	Waiver of Claims	B-16
	3.19	No Third Party Beneficiaries	B-16
	3.20	Successors and Assigns of Voya Financial	B-16
	3.21	Waiver of Jury Trial	B-17
	3.22	Date of Adoption, Approval of Stockholders and Effective Date	B-17

VOYA FINANCIAL, INC.

2019 OMNIBUS EMPLOYEE INCENTIVE PLAN

ARTICLE I

GENERAL


1.1	Purpose

The Voya Financial, Inc. 2019 Omnibus Employee Incentive Plan (as amended from time to time, the “Plan”) is designed to help the Company (as hereinafter defined): (1) attract, retain and motivate officers and key employees (including prospective employees), Consultants and others who may perform services for the Company (other than non-employee directors of the Company (as hereinafter defined)); (2) align the interests of such persons with the stockholders of Voya Financial; and (3) promote ownership of Voya Financial’s equity.

This Plan governs Awards granted on or after the Effective Date (as hereinafter defined). This Plan will not affect the terms or conditions of any equity award grants under any other plans before the Effective Date.


1.2	Definitions of Certain Terms

For purposes of this Plan, the following terms have the meanings set forth below:

1.2.0 “Affiliate” means any person or entity that controls, is controlled by or is under common control with the Company.

1.2.1 “Award” means an award made pursuant to the Plan.

1.2.2 “Award Agreement” means the written document by which each Award is evidenced, and which the Committee will require a Grantee to execute or acknowledge as a condition to receiving an Award or the benefits under an Award, and which sets forth the terms and provisions applicable to Awards granted under the Plan to such Grantee. Any reference herein to an agreement in writing will be deemed to include an electronic writing to the extent permitted by applicable law.

1.2.3 “Board” means the Board of Directors of Voya Financial.

1.2.4 “Business Combination” has the meaning set forth in Section 1.2.7(d).

1.2.5 “Certificate” means a stock certificate (or other appropriate document or evidence of ownership) representing shares of Common Stock.

1.2.6 “Cause” means (x) with respect to a Grantee employed pursuant to a written employment agreement which agreement includes a definition of “Cause”, “Cause” as defined in that agreement or (y) with respect to any other Grantee, the occurrence of any of the following:

(a) such Grantee’s commission of any felony or any crime involving fraud, dishonesty or moral turpitude under the laws of the United States or any state thereof or under the laws of any other jurisdiction;

(b) such Grantee’s commission of, or participation in, a fraud or act of dishonesty against Voya Financial or any Subsidiary or any client of Voya Financial or of any Subsidiary;

(c) such Grantee’s material violation of any material contract or agreement between the Grantee and Voya Financial or any Subsidiary;

(d) any act or omission by Grantee involving malfeasance or gross negligence in the performance of Grantee’s duties and responsibilities to the material detriment of Voya Financial or any Subsidiary; or

(e) such Grantee’s material violation of the applicable rules or regulations of any governmental or self-regulatory authority that causes material harm to Voya Financial or any Subsidiary, such Grantee’s disqualification or bar by any governmental or self-regulatory authority from serving in the capacity required by his or her job description or such Grantee’s loss of any governmental or self-regulatory license that is reasonably necessary for such Grantee to perform his or her duties or responsibilities, in each case as an employee or a Consultant, as applicable, of Voya Financial or any Subsidiary.

The determination as to whether Cause has occurred shall be made by the Committee in its sole discretion and, in such case, the Committee also may, but shall not be required to, specify the date such Cause occurred (including by determining that a prior termination of Employment was for Cause).

1.2.7 “Change in Control” means the occurrence of any of the following events:

(a) individuals who, on the Effective Date, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the Effective Date, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of Voya Financial in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director; provided, however, that no individual initially elected or nominated as a director of Voya Financial as a result of an actual or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director;

(b) any person (as defined in Section 3(a)(9) of the Exchange Act and used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), becomes a beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Voya Financial representing 30% or more of the combined voting power of Voya Financial’s then-outstanding securities eligible to vote for the election of the Board (the “Voya Financial Voting Securities”); provided, however, that the event described in this paragraph (b) shall not be deemed to be a Change in Control by virtue of the ownership of, or an acquisition of, Voya Financial Voting Securities: (1) by Voya Financial or any Subsidiary, (2) by any employee benefit plan (or related trust) sponsored or maintained by Voya Financial or any Subsidiary, (3) by any underwriter temporarily holding securities pursuant to an offering of such securities or (4) pursuant to a Non-Qualifying Transaction (as defined in Section 1.2.7(d));

(c) the approval by the stockholders of Voya Financial of any dissolution or liquidation of Voya Financial or the consummation of a sale of all or substantially all of Voya Financial’s assets; or

(d) the consummation of any merger, consolidation or statutory share exchange or similar form of corporate transaction involving Voya Financial that requires the approval of the stockholders of Voya Financial, whether for such transaction or the issuance of securities in the transaction (a “Business Combination”) unless immediately following such Business Combination: (1) more than 50% of the total voting power of (A) the entity resulting from such Business Combination (the “Surviving Entity”), or (B) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of at least 95% of the voting power, is represented by Voya Financial Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Voya Financial Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Voya Financial Voting Securities among the holders thereof immediately prior to the Business Combination), (2) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Entity or the parent) is or becomes the beneficial owner, directly or indirectly, of 30% or more of the total voting power of the outstanding voting securities eligible to elect directors of the parent (or, if there is no

parent, the Surviving Entity) and (3) at least a majority of the members of the board of directors of the parent (or, if there is no parent, the Surviving Entity) following the consummation of the Business Combination were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (1), (2) and (3) described in this Section (d) shall be deemed a “Non-Qualifying Transaction”).

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any person acquires beneficial ownership of more than 30% of the Voya Financial Voting Securities as a result of the acquisition of Voya Financial Voting Securities by Voya Financial which reduces the number of Voya Financial Voting Securities outstanding; provided that if after such acquisition by Voya Financial such person becomes the beneficial owner of additional Voya Financial Voting Securities that increases the percentage of outstanding Voya Financial Voting Securities beneficially owned by such person, a Change in Control shall then occur.

1.2.8 “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto, and the applicable rulings and regulations thereunder.

1.2.9 “Committee” has the meaning set forth in Section 1.3.1.

1.2.10 “Common Stock” means the common stock of Voya Financial, par value $0.01 per share, and any other securities or property issued in exchange therefor or in lieu thereof pursuant to Section 1.6.3.

1.2.11 “Company” means Voya Financial, Inc. and any Subsidiary.

1.2.12 “Consent” has the meaning set forth in Section 3.3.2.

1.2.13 “Consultant” means any individual (other than a non-employee director of Voya Financial) who provides bona fide consulting or advisory services to Voya Financial or any Subsidiary pursuant to a written agreement.

1.2.14 “Covered Person” has the meaning set forth in Section 1.3.4.

1.2.15 “Effective Date” has the meaning set forth in Section 3.22.

1.2.16 “Employee” means a regular, active employee and a prospective employee of Voya Financial or any Subsidiary, as determined by the Committee, in its sole discretion.

1.2.17 “Employment” means a Grantee’s performance of services for Voya or any Subsidiary, as determined by the Committee. The terms “employ” and “employed” will have their correlative meanings. The Committee in its sole discretion may determine (a) whether and when a Grantee’s leave of absence results in a termination of Employment, (b) whether and when a change in a Grantee’s association with Voya Financial or any Subsidiary results in a termination of Employment and (c) the impact, if any, of any such leave of absence or change in association on outstanding Awards. Unless expressly provided otherwise, any references in the Plan or any Award Agreement to a Grantee’s Employment being terminated will include both voluntary and involuntary terminations. Notwithstanding the foregoing, with respect to any Award subject to Section 409A of the Code (“Section 409A”) (and not exempt therefrom), a termination of Employment occurs when a Grantee experiences a “separation from service” (as such term is defined under Section 409A).

1.2.18 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor thereto, and the applicable rules and regulations thereunder.

1.2.19 “Fair Market Value” means, with respect to a share of Common Stock, the closing price reported for the Common Stock on the applicable date as reported on the New York Stock Exchange or, if not so reported,

as determined in accordance with a valuation methodology approved by the Committee, unless determined as otherwise specified herein. For purposes of the grant of any Award, the applicable date will be the trading day on which the Award is granted or, if the date the Award is granted is not a trading day, the trading day immediately prior to the date the Award is granted. For purposes of the exercise of any Award, the applicable date is the date a notice of exercise is received by the Company or, if such date is not a trading day, the trading day immediately following the date a notice of exercise is received by the Company.

1.2.20 “Family Member” means, as to a Grantee, any (i) child, stepchild, grandchild, parent, stepparent, grandparent, spouse, mother-in-law, father-in-law, son-in-law or daughter-in-law (including adoptive relationships), or domestic partner of such Grantee, (ii) trusts for the exclusive benefit of one or more such persons and/or the Grantee and (iii) other entity owned solely by one or more such persons and/or the Grantee.

1.2.21 “Good Reason” means, in the absence of written consent of a Grantee:

(a) any material and adverse change in the Grantee’s position or authority with Voya Financial or any Subsidiary as in effect immediately before a Change in Control, other than an isolated and insubstantial action not taken in bad faith and which is remedied by Voya Financial or any Subsidiary within 60 days after receipt of notice thereof given by the Grantee;

(b) the transfer of the Grantee’s primary work site to a new primary work site that is more than 50 miles from the Grantee’s primary work site in effect immediately before a Change in Control; or

(c) a diminution of the Grantee’s base salary in effect immediately before a Change in Control by more than 10%, unless such diminution applies to all similarly situated employees.

Notwithstanding the foregoing, placing the Grantee on a paid leave for up to 90 days, pending the determination of whether there is a basis to terminate the Grantee for Cause, shall not constitute a Good Reason event. If the Grantee does not deliver to Voya Financial or the Subsidiary of whom he is an Employee, as applicable, a written notice of termination within 60 days after the Grantee has knowledge that an event constituting Good Reason has occurred, the event will no longer constitute Good Reason. In addition, the Grantee must give Voya Financial or the Subsidiary, as applicable, notice and 30 days to cure the event constituting Good Reason.

1.2.22 “Grantee” means an Employee or Consultant who receives an Award.

1.2.23 “Incentive Stock Option” means a stock option to purchase shares of Common Stock that is intended to be an “incentive stock option” within the meaning of Sections 421 and 422 of the Code, as now constituted or subsequently amended, or pursuant to a successor provision of the Code, and which is designated as an Incentive Stock Option in the applicable Award Agreement.

1.2.24 “Incumbent Directors” has the meaning set forth in Section 1.2.7(a).

1.2.25 “Non-Qualifying Transaction” has the meaning set forth in Section 1.2.7(d).

1.2.26 “Performance Goals” means the goals determined by the Committee, in its discretion, to be applicable to a Grantee with respect to an Award. Performance goals for any Award may relate to any criteria determined by the Committee, in its discretion. As determined by the Committee, the Performance Goals applicable to an Award may provide for a targeted level or levels of achievement on a whole Company basis or with respect to one or more businesses, business units, segments or Subsidiaries, or on the basis of individual performance. The Performance Goals may differ from Grantee to Grantee and from Award to Award. Any criteria used may be measured in absolute terms or relative to comparative companies and may be subject to adjustment as determined by the Committee in its discretion. The Committee may provide that any evaluation of performance include or exclude certain items that may occur during any fiscal year of the Company, including,

without limitation, the following: (i) asset write downs; (ii) litigation or claim judgments or settlements; (iii) the effect of changes in tax laws, accounting principles or other laws or provisions affecting reported results; (iv) any reorganization and restructuring programs; (v) DAC/VOBA unlocking, as described in the Company’s periodic financial disclosures; (vi) extraordinary or nonrecurring items, or other notable items; (vii) acquisitions or divestitures; and (viii) foreign exchange gains and losses.

1.2.27 “Plan” has the meaning set forth in Section 1.1.

1.2.28 “Plan Action” has the meaning set forth in Section 3.3.1.

1.2.29 “Section 409A” has the meaning set forth in Section 1.2.17.

1.2.30 “Securities Act” means the Securities Act of 1933, as amended from time to time, or any successor thereto, and the applicable rules and regulations thereunder.

1.2.31 “Subsidiary” means any corporation or other entity in which Voya Financial has a direct or indirect ownership interest of 50% or more of the total combined voting power of the then-outstanding securities or interests of such corporation or other entity entitled to vote generally in the election of directors or managing partners.

1.2.32 “Surviving Entity” has the meaning set forth in Section 1.2.7(d).

1.2.33 “Ten Percent Stockholder” means a person owning stock possessing more than 10% of the total combined voting power of all classes of stock of Voya Financial and of any Subsidiary or parent corporation of Voya Financial.

1.2.34 “Voya Financial” means Voya Financial, Inc., a Delaware corporation.

1.2.35 “Voya Financial Voting Securities” has the meaning set forth in Section 1.2.7(b).


1.3	Administration

1.3.1 The Compensation and Benefits Committee of the Board (as constituted from time to time, and including any successor committee, the “Committee”) will administer the Plan. In particular, the Committee will have the authority in its sole discretion to:

(a) exercise all of the powers granted to it under the Plan;

(b) construe, interpret and implement the Plan and all Award Agreements;

(c) prescribe, amend and rescind rules and regulations relating to the Plan, including rules governing the Committee’s own operations;

(d) make all determinations necessary or advisable in administering the Plan;

(e) correct any defect, supply any omission and reconcile any inconsistency in the Plan;

(f) amend the Plan to reflect changes in applicable law;

(g) grant Awards and determine who will receive Awards, when such Awards will be granted and the terms of such Awards, including setting forth provisions with regard to the effect of a termination of Employment on such Awards;

(h) amend any outstanding Award Agreement in any respect, including, without limitation, to (1) accelerate the time or times at which the Award becomes vested, unrestricted or may be exercised (and, in connection with such acceleration, the Committee may provide that any shares of Common Stock

acquired pursuant to such Award will be restricted shares, which are subject to vesting, transfer, forfeiture or repayment provisions similar to those in the Grantee’s underlying Award), (2) accelerate the time or times at which shares of Common Stock are delivered under the Award (and, without limitation on the Committee’s rights, in connection with such acceleration, the Committee may provide that any shares of Common Stock delivered pursuant to such Award will be restricted shares, which are subject to vesting, transfer, forfeiture or repayment provisions similar to those in the Grantee’s underlying Award), (3) waive or amend any goals, restrictions or conditions set forth in such Award Agreement, or impose new goals, restrictions and conditions or (4) reflect a change in the Grantee’s circumstances (e.g., a change to part-time employment status or a change in position, duties or responsibilities); and

(i) determine at any time whether, to what extent and under what circumstances and method or methods, subject to Section 2.3.6 and 3.13, (1) Awards may be (A) settled in cash, shares of Common Stock, other securities, other Awards or other property (in which event, the Committee may specify what other effects such settlement will have on the Grantee’s Award, including the effect on any repayment provisions under the Plan or Award Agreement), (B) exercised or (C) canceled, forfeited or suspended, (2) shares of Common Stock, other securities, other Awards or other property and other amounts payable with respect to an Award may be deferred either automatically or at the election of the Grantee thereof or of the Committee, (3) to the extent permitted under applicable law, loans (whether or not secured by Common Stock) may be extended by the Company with respect to any Awards, (4) Awards may be settled by Voya Financial, any Subsidiary or any of its affiliates or any of its or their designees and (5) the exercise price for any stock option (other than an Incentive Stock Option, unless the Committee determines that such a stock option will no longer constitute an Incentive Stock Option) may be reset.

1.3.2 Actions of the Committee may be taken by the vote of a majority of its members present at a meeting (which may be held telephonically). Any action may be taken by a written instrument signed by a majority of the Committee members, and action so taken will be fully as effective as if it had been taken by a vote at a meeting. The determination of the Committee on all matters relating to the Plan or any Award Agreement will be final, binding and conclusive.

The Committee may allocate among its members and delegate to any person who is not a member of the Committee or to any administrative group within the Company, any of its powers, responsibilities or duties, subject to applicable law. In delegating its authority, the Committee will consider the extent to which any delegation may cause Awards to fail to meet the requirements of Rule 16(b)-3(d)(1) or Rule 16(b)-3(e) under the Exchange Act. Except as specifically provided to the contrary, references to the Committee include any administrative group, individual or individuals to whom the Committee has delegated its duties and powers.

1.3.3 Notwithstanding anything to the contrary contained herein, the Board may, in its sole discretion, at any time and from time to time, grant Awards or administer the Plan. In any such case, the Board will have all of the authority and responsibility granted to the Committee herein.

1.3.4 No Employee or member of the Board (each such person, a “Covered Person”) will have any liability to any person (including any Grantee) for any action taken or omitted to be taken or any determination made in good faith with respect to the Plan or any Award, except as expressly provided by statute. Each Covered Person will be indemnified and held harmless by Voya Financial against and from (a) any loss, cost, liability or expense (including attorneys’ fees) that may be imposed upon or incurred by such Covered Person in connection with or resulting from any action, suit or proceeding to which such Covered Person may be a party or in which such Covered Person may be involved by reason of any action taken or omitted to be taken under the Plan or any Award Agreement, in each case, in good faith and (b) any and all amounts paid by such Covered Person, with Voya Financial’s approval, in settlement thereof, or paid by such Covered Person in satisfaction of any judgment in any such action, suit or proceeding against such Covered Person, provided that Voya Financial will have the right, at its own expense, to assume and defend any such action, suit or proceeding and, once Voya Financial gives notice of its intent to assume the defense, Voya Financial will have sole control over such defense with

counsel of Voya Financial’s choice. The foregoing right of indemnification will not be available to a Covered Person to the extent that a court of competent jurisdiction in a final judgment or other final adjudication, in either case, not subject to further appeal, determines that the acts or omissions of such Covered Person giving rise to the indemnification claim resulted from such Covered Person’s bad faith, fraud or willful misconduct. The foregoing right of indemnification will not be exclusive of any other rights of indemnification to which Covered Persons may be entitled under Voya Financial’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any other power that Voya Financial may have to indemnify such persons or hold them harmless.


1.4	Persons Eligible for Awards

Awards under the Plan may be made to Employees and Consultants.


1.5	Types of Awards under Plan

Awards may be made under the Plan in the form of any of the following: (A) in each case in respect of Common Stock, (a) performance shares, (b) restricted shares, (c) restricted stock units, (d) dividend equivalent rights, (e) stock options and (f) other stock-based or stock-related Awards (including performance-based awards and as further described in Section 2.7) and (B) cash-based awards (as further described in Section 2.7), in each case that the Committee determines to be consistent with the purposes of the Plan and the interests of the Company.


1.6	Shares of Common Stock Available for Awards

1.6.1 Common Stock Subject to the Plan. Subject to the other provisions of this Section 1.6, the total number of shares of Common Stock that may be issued pursuant to Awards granted under the Plan shall be 11,700,000. Such shares of Common Stock may, in the discretion of the Committee, be either authorized but unissued shares or shares previously issued and reacquired by Voya Financial. Shares of Common Stock issued in connection with awards that are assumed, converted or substituted as a result of the acquisition by Voya Financial or a Subsidiary of another company (including by way of merger, combination or similar transaction) will not count against the number of shares that may be issued under the Plan.

1.6.2 Replacement of Shares. If any Award or any award outstanding as of the Effective Date that was granted under the Voya Financial, Inc. 2014 Omnibus Employee Incentive Plan (each, a “Prior Plan Award”) is forfeited, expires, terminates, otherwise lapses or, solely with respect to any Award or Prior Plan Award that is not exercisable for or convertible into Common Stock, is settled for cash without the delivery of Common Stock, then the shares of Common Stock covered by such forfeited, expired, terminated or lapsed Award or Prior Plan Award will be available for grant under the Plan. For the avoidance of doubt, the following will not again become available for issuance under the Plan: (A) any shares of Common Stock withheld in respect of taxes, (B) any shares tendered or withheld to pay the exercise price of stock options, and (C) any shares repurchased by the Company from the optionee with the proceeds from the exercise of stock options.

1.6.3 Adjustments. The Committee will adjust the number of shares of Common Stock authorized pursuant to Section 1.6.1, adjust the individual Grantee limitations set forth in Section 2.8, adjust the number of shares of Common Stock set forth in Section 2.3.2 that can be issued through Incentive Stock Options and adjust the terms of any outstanding Awards (including, without limitation, the number of shares of Common Stock covered by each outstanding Award, the type of property to which the Award relates and the exercise or strike price of any Award), in such manner as it deems appropriate (including, without limitation, by payment of cash) to prevent the enlargement or dilution of rights, or otherwise as it deems appropriate, for any increase or decrease in the number of issued shares of Common Stock (or issuance of shares of stock other than shares of Common Stock) resulting from a recapitalization, stock split, reverse stock split, stock dividend, spinoff, splitup, combination, reclassification or exchange of shares of Common Stock, merger, consolidation, rights offering, separation, reorganization or liquidation, or any other change in the corporate structure or shares of Voya Financial,

including any extraordinary dividend or extraordinary distribution; provided that no such adjustment shall be made if or to the extent that it would cause an outstanding Award to cease to be exempt from, or to fail to comply with, Section 409A. After any adjustment made pursuant to this Section 1.6.3, the number of shares of Common Stock subject to each outstanding Award will be rounded down to the nearest whole number.

ARTICLE II

AWARDS UNDER THE PLAN


2.1	Agreements Evidencing Awards

Each Award granted under the Plan will be evidenced by an Award Agreement that will contain such provisions and conditions as the Committee deems appropriate. Unless otherwise provided herein, the Committee may grant Awards in tandem with or, subject to Section 3.13, in substitution for or satisfaction of any other Award or Awards granted under the Plan or any award granted under any other plan of Voya Financial or any of its Affiliates. By accepting an Award pursuant to the Plan, a Grantee thereby agrees that the Award will be subject to all of the terms and provisions of the Plan and the applicable Award Agreement.


2.2	No Rights as a Stockholder

No Grantee (or other person having rights pursuant to an Award) will have any of the rights of a stockholder of Voya Financial with respect to shares of Common Stock subject to an Award until the delivery of such shares. Except as otherwise provided in Section 1.6.3, no adjustments will be made for dividends, distributions or other rights (whether ordinary or extraordinary, and whether in cash, Common Stock, other securities or other property) for which the record date is before the date the Certificates for the shares are delivered, or in the event the Committee elects to use another system, such as book entries by the transfer agent, before the date in which such system evidences the Grantee’s ownership of such Shares.


2.3	Options

2.3.1 Grant. Stock options may be granted in such number and at such times during the term of the Plan as the Committee may determine.

2.3.2 Incentive Stock Options. At the time of grant, the Committee will determine (a) whether all or any part of a stock option granted to an eligible Employee will be an Incentive Stock Option and (b) the number of shares subject to such Incentive Stock Option; provided, however, that (1) the aggregate Fair Market Value (determined as of the time the option is granted) of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by an eligible Employee during any calendar year (under all such plans of Voya Financial or any Affiliate) will not exceed $100,000 and (2) no Incentive Stock Option (other than an Incentive Stock Option that may be assumed or issued by Voya Financial in connection with a transaction to which Section 424(a) of the Code applies) may be granted to a person who is not eligible to receive an Incentive Stock Option under the Code. The form of any stock option which is entirely or in part an Incentive Stock Option will clearly indicate that such stock option is an Incentive Stock Option or, if applicable, the number of shares subject to the Incentive Stock Option. No more than 2,000,000 shares of Common Stock (as adjusted pursuant to the provisions of Section 1.6.3) that can be delivered under the Plan shall be issued through Incentive Stock Options.

2.3.3 Exercise Price. The exercise price per share with respect to each stock option will be determined by the Committee but will not be less than the Fair Market Value of the Common Stock (or, in the case of an Incentive Stock Option granted to a Ten Percent Stockholder, 110% of the Fair Market Value).

2.3.4 Term of Stock Option. In no event will any stock option be exercisable after the expiration of ten years (or, in the case of an Incentive Stock Option granted to a Ten Percent Stockholder, five years) from the date on which the stock option is granted.

2.3.5 Vesting and Exercise of Stock Option and Payment for Shares. A stock option may vest and be exercised at such time or times and subject to such terms and conditions as will be determined by the Committee at the time the stock option is granted and set forth in the Award Agreement. Subject to any limitations in the applicable Award Agreement, any shares not acquired pursuant to the exercise of a stock option on the applicable vesting date may be acquired thereafter at any time before the final expiration of the stock option. To exercise a stock option, the Grantee must give written notice to Voya Financial specifying the number of shares to be acquired and accompanied by payment of the full purchase price therefor in cash or by certified or official bank check or in another form as determined by the Company, including: (a) personal check, (b) shares of Common Stock, based on the Fair Market Value as of the exercise date, of the same class as those to be granted by exercise of the stock option, (c) any other form of consideration approved by the Company and permitted by applicable law and (d) any combination of the foregoing. The Committee may also make arrangements for the cashless exercise of a stock option. Any person exercising a stock option will make such representations and agreements and furnish such information as the Committee may in its discretion deem necessary or desirable to assure compliance by Voya Financial, on terms acceptable to Voya Financial, with the provisions of the Securities Act, the Exchange Act and any other applicable legal requirements. If a Grantee so requests, shares acquired pursuant to the exercise of a stock option may be issued in the name of the Grantee and another jointly with the right of survivorship.

2.3.6 Repricing. Except as otherwise permitted by Section 1.6.3, reducing the exercise price of stock options issued and outstanding under the Plan, including through amendment, cancellation in exchange for the grant of a substitute Award or repurchase for cash or other consideration (in each case that has the effect of reducing the exercise price), will require approval of the stockholders of Voya Financial.


2.4	Restricted Shares

2.4.1 Grants. The Committee may grant or offer for sale restricted shares in such amounts and subject to such terms and conditions as the Committee may determine. The terms and conditions set forth by the Committee in the applicable Award Agreement may relate to vesting and nontransferability restrictions that will lapse upon the achievement of one or more goals related to the completion of service by the Grantee or the achievement of Performance Goals, as determined by the Committee at the time of grant. Upon the delivery of such shares, the Grantee will have the rights of a stockholder with respect to the restricted shares, subject to any other restrictions and conditions as the Committee may include in the applicable Award Agreement. In the event that a Certificate is issued in respect of restricted shares, such Certificate may be registered in the name of the Grantee or its designated agent until the time the restrictions lapse.

2.4.2 Right to Vote and Receive Dividends on Restricted Shares. Each Grantee of an Award of restricted shares will, during the period of restriction, be the beneficial and record owner of such restricted shares and will have full voting rights with respect thereto. Unless the Committee determines otherwise in an Award Agreement, during the period of restriction, all dividends (whether ordinary or extraordinary and whether paid in cash, additional shares or other property) or other distributions paid upon any restricted share will be retained by the Company for the account of the relevant Grantee. Such dividends or other distributions will revert back to the Company if for any reason the restricted share upon which such dividends or other distributions were paid reverts back to the Company. Upon the expiration of the period of restriction, all such dividends or other distributions made on such restricted share and retained by the Company will be paid, without interest, to the relevant Grantee.


2.5	Restricted Stock Units

The Committee may grant Awards of restricted stock units in such amounts and subject to such terms and conditions as the Committee may determine. A Grantee of a restricted stock unit will have only the rights of a general unsecured creditor of Voya Financial until delivery of shares of Common Stock, cash or other securities or property is made as specified in the applicable Award Agreement. The terms and conditions set forth by the Committee in the applicable Award Agreement may relate to vesting and nontransferability restrictions that will

lapse upon the achievement of one or more goals related to the completion of service by the Grantee or the achievement of Performance Goals, as determined by the Committee at the time of grant. On the delivery date specified in the Award Agreement, the Grantee of each restricted stock unit not previously forfeited or terminated will receive one share of Common Stock, cash or other securities or property equal in value to a share of Common Stock or a combination thereof, as specified by the Committee.


2.6	Dividend Equivalent Rights

The Committee may include in the Award Agreement with respect to any Award a dividend equivalent right entitling the Grantee to receive amounts equal to all or any portion of the regular cash dividends that would be paid on the shares of Common Stock covered by such Award if such shares had been delivered pursuant to such Award. The Grantee of a dividend equivalent right will have only the rights of a general unsecured creditor of Voya Financial until payment of such amounts is made as specified in the applicable Award Agreement. In the event such a provision is included in an Award Agreement, the Committee will determine whether such payments will be made in cash, in shares of Common Stock or in another form, whether they will be conditioned upon the exercise of the Award to which they relate (subject to compliance with Section 409A), the time or times at which they will be made, and such other terms and conditions as the Committee will deem appropriate.


2.7	Other Stock-Based and Cash-Based Awards

2.7.1 Other Stock-Based Awards. The Committee may grant other types of stock-based or stock-related Awards (including the grant or offer for sale of unrestricted shares of Common Stock and the grant of performance-based awards) in such amounts and subject to such terms and conditions as the Committee may determine. The terms and conditions set forth by the Committee in the applicable Award Agreement may relate to vesting and nontransferability restrictions that will lapse upon the achievement of one or more goals related to the completion of service by the Grantee or the achievement of Performance Goals, as determined by the Committee at the time of grant. Such Awards may entail the transfer of actual shares of Common Stock to Award recipients and may include Awards designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States.

2.7.2 Cash-Based Awards. The Committee may grant cash-based Awards unrelated to Common Stock in such amounts and subject to such terms and conditions as the Committee may determine. The terms and conditions set forth by the Committee in the applicable Award Agreement may relate to vesting and payout based upon achievement of one or more goals related to completion of service by the Grantee, achievement of Performance Goals or other performance criteria unrelated to Common Stock, as determined by the Committee at the time of grant. Such Awards will be payable solely in cash and may include Awards designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States.


2.8	Individual Limitation on Awards

The maximum number of shares of Common Stock that may be covered by Awards granted under the Plan to any one individual in any one fiscal year of the Company may not exceed 1,000,000 (as adjusted pursuant to the provisions of Section 1.6.3).


2.9	Repayment if Conditions Not Met

If the Committee determines that all terms and conditions of the Plan and a Grantee’s Award Agreement were not satisfied, then the Grantee will be obligated to pay the Company immediately upon demand therefor, (a) with respect to a stock option, an amount equal to the excess of the Fair Market Value (determined at the time of exercise) of the shares of Common Stock that were delivered in respect of such exercised stock option, over the exercise price paid therefor, (b) with respect to restricted shares, an amount equal to the Fair Market Value (determined at the time such shares became vested) of such restricted shares, (c) with respect to restricted stock

units, an amount equal to the Fair Market Value (determined at the time of delivery) of the shares of Common Stock delivered with respect to the applicable delivery date and (d) with respect to any cash-based Award, the full amount in cash paid to the Grantee, in each case with respect to clauses (a), (b), (c) and (d) of this Section 2.9, without reduction for any amount applied to satisfy withholding tax or other obligations in respect of such Award.

ARTICLE III

MISCELLANEOUS


3.1	Amendment of the Plan

3.1.1 Unless otherwise provided in the Plan or in an Award Agreement, the Board may from time to time suspend, discontinue, revise or amend the Plan in any respect whatsoever but, subject to Section 1.6.3 and 3.6 or as otherwise specifically provided herein, no such amendment shall materially adversely impair the rights of the Grantee of any Award without the Grantee’s consent.

3.1.2 Unless otherwise determined by the Board, stockholder approval of any suspension, discontinuance, revision or amendment will be obtained only to the extent necessary to comply with any applicable laws, regulations or rules of a securities exchange or self-regulatory agency; provided, however, if and to the extent the Board determines it is appropriate for the Plan to comply with the provisions of Section 422 of the Code, no amendment that would require stockholder approval under Section 422 of the Code will be effective without the approval of the stockholders of Voya Financial.


3.2	Tax Withholding

Grantees shall be solely responsible for any applicable taxes (including, without limitation, income and excise taxes) and penalties, and any interest that accrues thereon, that they incur in connection with the receipt, vesting or exercise of any Award. As a condition to the delivery of any shares of Common Stock, cash or other securities or property pursuant to any Award or the lifting or lapse of restrictions on any Award, or in connection with any other event that gives rise to a federal or other governmental tax withholding obligation on the part of the Company relating to an Award (including, without limitation, the Federal Insurance Contributions Act (FICA) tax), (a) the Company may deduct or withhold (or cause to be deducted or withheld) from any payment or distribution to a Grantee whether or not pursuant to the Plan (including shares of Common Stock otherwise deliverable), (b) the Committee will be entitled to require that the Grantee remit cash to the Company (through payroll deduction or otherwise) or (c) the Company may enter into any other suitable arrangements to withhold, in each case in an amount sufficient in the opinion of the Company to satisfy such withholding obligation.


3.3	Required Consents and Legends

3.3.1 If the Committee at any time determines that any Consent (as hereinafter defined) is necessary or desirable as a condition of, or in connection with, the granting of any Award, the delivery of shares of Common Stock or the delivery of any cash, securities or other property under the Plan, or the taking of any other action thereunder (each such action, a “Plan Action”), then such Plan Action will not be taken, in whole or in part, unless and until such Consent will have been effected or obtained to the full satisfaction of the Committee. The Committee may direct that any Certificate evidencing shares delivered pursuant to the Plan will bear a legend setting forth such restrictions on transferability as the Committee may determine to be necessary or desirable, and may advise the transfer agent to place a stop transfer order against any legended shares.

3.3.2 The term “Consent” as used in this Article III with respect to any Plan Action includes (a) any and all listings, registrations or qualifications in respect thereof upon any securities exchange or under any federal, state,

or local law, or law, rule or regulation of a jurisdiction outside the United States, (b) any and all written agreements and representations by the Grantee with respect to the disposition of shares, or with respect to any other matter, which the Committee may deem necessary or desirable in order to comply with the terms of any such listing, registration or qualification or to obtain an exemption from the requirement that any such listing, qualification or registration be made, (c) any and all other consents, clearances and approvals in respect of a Plan Action by any governmental or other regulatory body or any stock exchange or self-regulatory agency, (d) any and all consents by the Grantee to (1) the Company’s supplying to any third party recordkeeper of the Plan such personal information as the Committee deems advisable to administer the Plan, (2) the Company’s deducting amounts from the Grantee’s wages, or another arrangement satisfactory to the Committee, to reimburse the Company for advances made on the Grantee’s behalf to satisfy certain withholding and other tax obligations in connection with an Award and (3) the Company’s imposing sales and transfer procedures and restrictions and hedging restrictions on shares of Common Stock delivered under the Plan and (e) any and all consents or authorizations required to comply with, or required to be obtained under, applicable local law or otherwise required by the Committee. Nothing herein will require the Company to list, register or qualify the shares of Common Stock on any securities exchange.


3.4	Right of Offset

In the event of a Grantee’s termination of Employment, the Company will have the right to offset against its obligation to deliver shares of Common Stock (or other property or cash) under the Plan or any Award Agreement any outstanding amounts (including, without limitation, travel and entertainment or advance account balances, loans, repayment obligations under any Awards, or amounts repayable to the Company pursuant to tax equalization, housing, automobile or other employee programs) that the Grantee then owes to the Company and any amounts the Committee otherwise deems appropriate pursuant to any tax equalization policy or agreement. Notwithstanding the foregoing, if an Award provides for the deferral of compensation within the meaning of Section 409A, the Committee will have no right to offset against its obligation to deliver shares of Common Stock (or other property or cash) under the Plan or any Award Agreement if such offset could subject the Grantee to the additional tax imposed under Section 409A in respect of an outstanding Award.


3.5	Nonassignability; No Hedging

No Award (or any rights and obligations thereunder) granted to any person under the Plan may be sold, exchanged, transferred, assigned, pledged, hypothecated or otherwise disposed of or hedged, in any manner (including through the use of any cash-settled instrument), whether voluntarily or involuntarily and whether by operation of law or otherwise, other than by will or by the laws of descent and distribution, and all such Awards (and any rights thereunder) will be exercisable during the life of the Grantee only by the Grantee or the Grantee’s legal representative. Notwithstanding the foregoing, the Committee may permit transfers of Awards to a Family Member (including transfers effected by a domestic relations order (in which case the term “spouse” in the definition of “Family Member” shall be deemed to include former spouses)) subject to such terms and conditions as the Committee shall determine, including requiring that such Awards be transferred without the receipt of consideration by the Grantee. Any sale, exchange, transfer, assignment, pledge, hypothecation, or other disposition in violation of the provisions of this Section 3.5 will be null and void and any Award which is hedged in any manner will immediately be forfeited. All of the terms and conditions of the Plan and the Award Agreements will be binding upon any permitted successors and assigns.


3.6	Change in Control

3.6.1 Unless otherwise determined by the Committee (or unless otherwise set forth in an employment agreement or an Award Agreement), if a Grantee’s Employment is terminated by Voya Financial or any successor entity thereto without Cause, or if the Grantee terminates employment for Good Reason, in each case upon or within two years after a Change in Control, each Award granted to such Grantee prior to such Change in Control shall become fully vested (including the lapsing of all restrictions and conditions) and, as applicable,

exercisable as of the date of such termination of Employment, and any shares of Common Stock deliverable pursuant to restricted stock units shall be delivered promptly (but no later than 15 days) following such Grantee’s termination of Employment, provided that, as of the Change in Control date, any outstanding performance-based Awards shall be deemed earned at the greater of the target performance level or actual performance level through the Change in Control date (or if no target performance level is specified with respect to an Award, such Award shall be deemed earned as if a target performance level had been set and achieved at exactly 100% of such target performance level) with respect to all open performance periods.

3.6.2 In the event of a Change in Control, a Grantee’s Award shall be treated, to the extent determined by the Committee to be permitted under Section 409A, in accordance with one of the following methods as determined by the Committee in its sole discretion: (a) settle such Awards for an amount (as determined in the sole discretion of the Committee) of cash or securities, where, in the case of stock options, the value of such amount, if any, will be equal to the in-the-money spread value (if any) of such Award; (b) provide for the assumption of or the issuance of substitute awards that will substantially preserve the otherwise applicable terms of any affected Awards previously granted under the Plan, as determined by the Committee in its sole discretion; or (c) provide that for a period of at least 20 days prior to the Change in Control, any stock options will be exercisable as to all shares of Common Stock subject thereto (but any such exercise will be contingent upon and subject to the occurrence of the Change in Control and if the Change in Control does not take place within a specified period after giving such notice for any reason whatsoever, the exercise will be null and void) and that any stock options not exercised prior to the consummation of the Change in Control will terminate and be of no further force and effect as of the consummation of the Change in Control. For the avoidance of doubt, in the event of a Change in Control, the Committee may, in its sole discretion, terminate any stock option for which the exercise price is equal to or exceeds the per share value of the consideration to be paid in the Change in Control transaction without payment of consideration therefor.


3.7	Right of Discharge Reserved

Neither the grant of an Award nor any provision in the Plan or in any Award Agreement will confer upon any Grantee the right to continued Employment by the Company or affect any right which the Company may have to terminate or alter the terms and conditions of such Employment.


3.8	Nature of Payments

3.8.1 Any and all grants of Awards and deliveries of Common Stock, cash, securities or other property under the Plan will be in consideration of services performed or to be performed for the Company by the Grantee. Awards under the Plan may, in the discretion of the Committee, be made in substitution in whole or in part for cash or other compensation otherwise payable to a Grantee. Only whole shares of Common Stock will be delivered under the Plan. Awards will, to the extent reasonably practicable, be aggregated in order to eliminate any fractional shares. Fractional shares may, in the discretion of the Committee, be forfeited or be settled in cash or otherwise as the Committee may determine.

3.8.2 All such grants and deliveries of shares of Common Stock, cash, securities or other property under the Plan will constitute a special discretionary incentive payment to the Grantee and will not be required to be taken into account in computing the amount of salary or compensation of the Grantee for the purpose of determining any contributions to or any benefits under any pension, retirement, profit-sharing, bonus, life insurance, severance or other benefit plan of the Company or under any agreement with the Grantee, unless the Company specifically provides otherwise.


3.9	Non-Uniform Determinations

3.9.1 The Committee’s determinations under the Plan and Award Agreements need not be uniform and any such determinations may be made by it selectively among persons who receive, or are eligible to receive, Awards

under the Plan (whether or not such persons are similarly situated). Without limiting the generality of the foregoing, the Committee will be entitled, among other things, to make non-uniform and selective determinations under Award Agreements, and to enter into non-uniform and selective Award Agreements, as to (a) the persons to receive Awards, (b) the terms and provisions of Awards and (c) whether a Grantee’s Employment has been terminated for purposes of the Plan.

3.9.2 To the extent the Committee deems it necessary, appropriate or desirable to comply with foreign law or practices and to further the purposes of the Plan, the Committee may, without amending the Plan, establish special rules applicable to Awards to Grantees who are foreign nationals, are employed outside the United States, or both, and grant Awards (or amend existing Awards) in accordance with those rules.


3.10	Other Payments or Awards

Nothing contained in the Plan will be deemed in any way to limit or restrict the Company from making any award or payment to any person under any other plan, arrangement or understanding, whether now existing or hereafter in effect.


3.11	Plan Headings

The headings in the Plan are for the purpose of convenience only and are not intended to define or limit the construction of the provisions hereof.


3.12	Termination of Plan

The Board reserves the right to terminate the Plan at any time; provided, however, that in any case, the Plan will terminate on the tenth anniversary of the Effective Date, and provided further, that all Awards made under the Plan before its termination will remain in effect until such Awards have been satisfied or terminated in accordance with the terms and provisions of the Plan and the applicable Award Agreements.


3.13	Section 409A

3.13.1 All Awards made under the Plan that are intended to be “deferred compensation” subject to Section 409A shall be interpreted, administered and construed to comply with Section 409A, and all Awards made under the Plan that are intended to be exempt from Section 409A shall be interpreted, administered and construed to comply with and preserve such exemption. The Board and the Committee shall have full authority to give effect to the intent of the foregoing sentence. To the extent necessary to give effect to this intent, in the case of any conflict or potential inconsistency between the Plan and a provision of any Award or Award Agreement with respect to an Award, the Plan shall govern.

3.13.2 Without limiting the generality of Section 3.13.1, with respect to any Award made under the Plan that is (whether or not intended to be) “deferred compensation” subject to Section 409A:

(a) any payment due upon a Grantee’s termination of employment shall be paid only upon such Grantee’s separation from service from the Company within the meaning of Section 409A;

(b) any payment to be made with respect to such Award in connection with the Grantee’s separation from service from the Company within the meaning of Section 409A (and any other payment that would be subject to the limitations in Section 409A(a)(2)(b) of the Code) shall be delayed until six months after the Grantee’s separation from service (or earlier death) to the extent such Grantee is a “specified employee” (within the meaning of Section 409A);

(c) to the extent necessary to comply with Section 409A, any other securities, other Awards or other property that the Company may deliver in lieu of shares of Common Stock in respect of an Award shall not

have the effect of deferring delivery or payment beyond the date on which such delivery or payment would occur with respect to the shares of Common Stock that would otherwise have been deliverable (unless the Committee elects a later date for this purpose in accordance with the requirements of Section 409A);

(d) with respect to any required Consent described in Section 3.3.2 or the applicable Award Agreement, if such Consent has not been effected or obtained as of the latest date provided by such Award Agreement for payment in respect of such Award and further delay of payment is not permitted in accordance with the requirements of Section 409A, such Award or portion thereof, as applicable, will be forfeited and terminate notwithstanding any prior earning or vesting;

(e) if the Award includes a “series of installment payments” (within the meaning of Section 1.409A-2(b)(2)(iii) of the Treasury Regulations), the Grantee’s right to the series of installment payments shall be treated as a right to a series of separate payments and not as a right to a single payment;

(f) if the Award includes “dividend equivalents” (within the meaning of Section 1.409A-3(e) of the Treasury Regulations), the Grantee’s right to the dividend equivalents shall be treated separately from the right to other amounts under the Award; and

(g) for purposes of determining whether the Grantee has experienced a separation from service from the Company within the meaning of Section 409A, “subsidiary” shall mean a corporation or other entity in a chain of corporations or other entities in which each corporation or other entity, starting with Voya Financial, has a controlling interest in another corporation or other entity in the chain, ending with such corporation or other entity. For purposes of the preceding sentence, the term “controlling interest” has the same meaning as provided in Section 1.414(c)-2(b)(2)(i) of the Treasury Regulations, provided that the language “at least 20 percent” is used instead of “at least 80 percent” each place it appears in Section 1.414(c)-2(b)(2)(i) of the Treasury Regulations.


3.14	Clawback/Recoupment

Awards under this Plan may be subject to recoupment or clawback as may be required by applicable law or stock exchange listing conditions or by the Voya Financial Inc. Compensation Recoupment Policy as it may be amended from time to time.


3.15	Governing Law

THE PLAN WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.


3.16	Choice of Forum

3.16.1 The Company and each Grantee, as a condition to such Grantee’s participation in the Plan, hereby irrevocably submit to the exclusive jurisdiction of any state or federal court located in New York, New York over any suit, action or proceeding arising out of or relating to or concerning the Plan. The Company and each Grantee, as a condition to such Grantee’s participation in the Plan, acknowledge that the forum designated by this Section 3.16.1 has a reasonable relationship to the Plan and to the relationship between such Grantee and the Company. Notwithstanding the foregoing, nothing herein will preclude the Company from bringing any action or proceeding in any other court for the purpose of enforcing the provisions of Section 3.16.1.

3.16.2 The agreement by the Company and each Grantee as to forum is independent of the law that may be applied in the action, and the Company and each Grantee, as a condition to such Grantee’s participation in the Plan, (a) agree to such forum even if the forum may under applicable law choose to apply non-forum law, (b) hereby waive, to the fullest extent permitted by applicable law, any objection which the Company or such Grantee now or hereafter may have to personal jurisdiction or to the laying of venue of any such suit, action or proceeding in any court referred to in Section 3.16.1, (c) undertake not to commence any action arising out of or

relating to or concerning the Plan in any forum other than the forum described in this Section 3.16 and (d) agree that, to the fullest extent permitted by applicable law, a final and non-appealable judgment in any such suit, action or proceeding in any such court will be conclusive and binding upon the Company and each Grantee.

3.16.3 Each Grantee, as a condition to such Grantee’s participation in the Plan, hereby irrevocably appoints the Chief Legal Officer of Voya Financial as such Grantee’s agent for service of process in connection with any action, suit or proceeding arising out of or relating to or concerning the Plan, who will promptly advise such Grantee of any such service of process.

3.16.4 Each Grantee, as a condition to such Grantee’s participation in the Plan, agrees to keep confidential the existence of, and any information concerning, a dispute, controversy or claim described in Section 3.16, except that a Grantee may disclose information concerning such dispute, controversy or claim to the court that is considering such dispute, controversy or claim or to such Grantee’s legal counsel (provided that such counsel agrees not to disclose any such information other than as necessary to the prosecution or defense of the dispute, controversy or claim).


3.17	Severability; Entire Agreement

If any of the provisions of the Plan or any Award Agreement is finally held to be invalid, illegal or unenforceable (whether in whole or in part), such provision will be deemed modified to the extent, but only to the extent, of such invalidity, illegality or unenforceability and the remaining provisions will not be affected thereby; provided that if any of such provisions is finally held to be invalid, illegal, or unenforceable because it exceeds the maximum scope determined to be acceptable to permit such provision to be enforceable, such provision will be deemed to be modified to the minimum extent necessary to modify such scope in order to make such provision enforceable hereunder. The Plan and any Award Agreements contain the entire agreement of the parties with respect to the subject matter thereof and supersede all prior agreements, promises, covenants, arrangements, communications, representations and warranties between them, whether written or oral with respect to the subject matter thereof.


3.18	Waiver of Claims

Each Grantee of an Award recognizes and agrees that any determination made by the Committee, the Company or the Board on all matters relating to the Plan or any Award Agreement will be final, binding and conclusive, including, without limitation, the amount of any Award and the terms of any Award Agreement. Each Grantee of an Award recognizes and agrees that neither the Committee, the Company nor the Board will be required to obtain the consent of any Grantee in order to make any amendment to the Plan or any Award Agreement (other than an amendment to the Plan or an Award Agreement to which his or her consent is expressly required by the express terms of an Award Agreement).


3.19	No Third Party Beneficiaries

Except as expressly provided in an Award Agreement, neither the Plan nor any Award Agreement will confer on any person other than the Company and the Grantee of any Award any rights or remedies thereunder. The exculpation and indemnification provisions of Section 1.3.4 will inure to the benefit of a Covered Person’s estate and beneficiaries and legatees.


3.20	Successors and Assigns of Voya Financial

The terms of the Plan will be binding upon and inure to the benefit of Voya Financial and any successor entity contemplated by Section 3.5.


3.21	Waiver of Jury Trial

EACH GRANTEE WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THE PLAN.


3.22	Date of Adoption, Approval of Stockholders and Effective Date

The Plan was adopted by the Board on March 27, 2019, approved by the stockholders of Voya Financial on May 23, 2019 and became effective upon such stockholder approval (the “Effective Date”).

Exhibit 31.1

CERTIFICATION

I, Rodney O. Martin, Jr., certify that:


1.	I have reviewed this quarterly report on Form 10-Q 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:		August 8, 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 quarterly report on Form 10-Q 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:		August 8, 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 Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 (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.



August 8, 2019	By:	/s/	Rodney O. Martin, Jr.
			Rodney O. Martin, Jr.
			Chairman and Chief Executive Officer

Exhibit 32.2

CERTIFICATION



August 8, 2019	By:	/s/	Michael S. Smith
			Michael S. Smith
			Executive Vice President and Chief Financial Officer