For the needs of the dialogue on this Annual Report on Form 10-Okay, the time periodVoya Financial, Inc. refers toVoya Financial, Inc. and the phrases "Company," "we," "our," and "us" check withVoya Financial, Inc. and its subsidiaries. The following dialogue and evaluation presents a evaluation of our outcomes of operations for the years endedDecember 31, 2021 and 2020, and monetary situation as ofDecember 31, 2021 and 2020. This merchandise ought to be learn in its entirety and at the side of the Consolidated Financial Statements and associated notes contained in Part II, Item 8. of this Annual Report on Form 10-Okay. For dialogue and evaluation of our outcomes of operations for the years endedDecember 31, 2020 and 2019, check with our 2020 Annual Report on Form 10-Okay filed with theSEC onMarch 1, 2021 . In addition to historic information, this dialogue accommodates ahead-wanting statements about our enterprise, operations and monetary efficiency based mostly on present expectations that contain dangers, uncertainties and assumptions. Actual outcomes could differ materially from these mentioned within the ahead-wanting statements in consequence of numerous elements. See the "Note Concerning Forward-Looking Statements." 49
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Table of Contents Overview We present our principal merchandise and providers by means of three segments: Wealth Solutions, Investment Management andHealth Solutions . Corporate consists of actions circuitously associated to our segments and sure run-off actions that aren't significant to our enterprise technique. In normal, our major sources of income embody charge earnings from managing funding portfolios for purchasers in addition to asset administration and administrative charges from sure insurance coverage and funding merchandise; funding earnings on our normal account and different funds; and from insurance coverage premiums. Our charge earnings derives from asset- and participant-based mostly advisory and recordkeeping charges on our retirement merchandise, from administration and administrative charges we earn from managing consumer property, and from the distribution, servicing and administration of mutual funds. We generate funding earnings on the property in our normal account, primarily fastened earnings property, that again our liabilities and surplus. We earn premiums on insurance coverage insurance policies, together with cease-loss, group life, voluntary and incapacity merchandise in addition to retirement contracts. Our bills principally consist of normal enterprise bills, commissions and different prices of promoting and servicing our merchandise, curiosity credited on normal account liabilities in addition to insurance coverage claims and advantages together with adjustments within the reserves we're required to carry for anticipated future insurance coverage advantages. Because our charge earnings is usually tied to account values, our profitability is decided partly by the quantity of property now we have beneath administration, administration or advisement, which in flip is determined by gross sales volumes to new and present purchasers, web deposits from retirement plan contributors, and adjustments in the market worth of account property. Our profitability additionally is determined by the distinction between the funding earnings we earn on our normal account property, or our portfolio yield, and crediting charges on consumer accounts. Underwriting earnings, principally depending on our capacity to cost our insurance coverage merchandise at a degree that allows us to earn a margin over the prices related to offering advantages and administering these merchandise, and to successfully handle actuarial and policyholder habits elements, is one other element of our profitability. Profitability additionally is determined by our capacity to successfully deploy capital and make the most of our tax property. Furthermore, profitability is determined by our capacity to handle bills to amass new enterprise, akin to commissions and distribution bills, in addition to different working prices.
Discontinued Operations
The Individual Life Transaction
OnJanuary 4, 2021 , we accomplished a sequence of transactions pursuant to a Master Transaction Agreement (the "Resolution MTA") entered into onDecember 18, 2019 withResolution Life U.S. Holdings Inc. , aDelaware company ("Resolution Life US"), pursuant to which Resolution Life US acquiredSecurity Life of Denver Company ("SLD"),Security Life of Denver International Limited ("SLDI") andRoaring River II, Inc. ("RRII") together with a number of subsidiaries of SLD. The buy value we obtained on the closing was based mostly on estimated quantities and was topic to a put up-shut true-up mechanism pursuant to which the acquisition value was adjusted based mostly on SLD's adjusted ebook worth as of the deadline. In addition to money consideration, proceeds included roughly$225 million curiosity in RLGH and sure different associates of Resolution Life US, and$123 million principal quantity in surplus notes issued by SLD. In reference to the closing,$100 million was deferred in money proceeds for a interval of as much as 42 months, topic to an adjustment mechanism based mostly on sure monetary contingencies affecting SLD over that interval. In addition, in reference to the unwind of sure assure obligations affecting parts of SLD's enterprise, in lieu of$60 million of money proceeds, we obtained roughly$60 million in extra most well-liked fairness pursuits in Resolution Life US associates. During 2021, we accomplished the put up-shut true-up course of with Resolution Life US which resulted in no materials adjustments to loss on sale recorded upon shut. Additionally, we obtained$100 million fromResolution Life US which was deferred on the time of shut as talked about above. We decided that the authorized entities offered and the Individual Life and Annuities companies inside these entities met the standards to be labeled as held for sale and that the sale represents a strategic shift that may have a significant impact on our operations. Accordingly, the outcomes of operations of the companies offered have been introduced as discontinued operations, and the property and liabilities of the associated companies have been labeled as held on the market and segregated for all intervals introduced on this Annual Report on Form 10-Okay.
As of
50 -------------------------------------------------------------------------------- Table of Contents of the companies held on the market to estimated truthful worth, which was based mostly on the estimated gross sales value of the Individual Life transaction (as outlined above) as ofDecember 31, 2020 much less value to promote and different changes in accordance with the Resolution MTA. Income (loss) from discontinued operations, web of tax, for the 12 months endedDecember 31, 2021 consists of an estimated discount to loss on sale of$12 million , web of tax. The loss on sale, web of tax as ofDecember 31, 2021 of$1,454 million , represents the surplus of the carrying worth of the companies offered over the acquisition value, which equals truthful worth, much less value to promote. As a consequence of the shut of the Individual Life Transaction, the web mixture discount in Total shareholders' fairness, excluding Accumulated different complete earnings ("AOCI"), was$0.6 billion . The web mixture discount in Total shareholders' fairness, together with AOCI, was$2.3 billion . This consists of the affect of the cumulative loss on sale in addition to the reversal of the AOCI associated to the entities offered.
Refer to Reinsurance Note in our Consolidated Financial Statements in Part II,
Item 8. of this Annual Report on Form 10-Okay for disclosures associated to the
reinsurance transactions pursuant to the Resolution MTA.
Advertisement
Upon the shut of the Individual Life transaction, we proceed to carry an
insignificant quantity of Individual Life, and non-Wealth Solutions annuities
insurance policies which along with the companies offered by means of divestment or
reinsurance will probably be known as “divested businesses”.
The following desk summarizes the elements of Income (loss) from discontinued operations, web of tax associated to the Individual Life Transaction (closed onJanuary 4, 2021 ) for the intervals indicated: Year Ended December 31, 2021 2020 2019 Revenues: Net funding earnings $ -$ 669 $ 665 Fee earnings - 778 750 Premiums - 26 27 Total web good points (losses) - 27 45 Other income - (16) (21) Total revenues - 1,484 1,466 Benefits and bills: Interest credited and different advantages to contract homeowners/policyholders - 1,225 1,055 Operating bills - 147 83 Net amortization of Deferred coverage acquisition prices and Value of enterprise acquired - 238 153 Interest expense - 6 10 Total advantages and bills - 1,616 1,301 Income (loss) from discontinued operations earlier than earnings taxes - (132) 165 Income tax expense (profit) - (29) 34 Loss on sale, web of tax 12 (316) (1,150)
Income (loss) from discontinued operations, web of tax
$ (419) $ (1,019) Trends and Uncertainties Throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"), we talk about a quantity of tendencies and uncertainties that we imagine could materially have an effect on our future liquidity, monetary situation or outcomes of operations. Where these tendencies or uncertainties are particular to a specific side of our enterprise, we frequently embody such a dialogue beneath the related caption of this MD&A, as half of our broader evaluation of that space of our enterprise. In addition, the next elements signify some of the important thing normal tendencies and uncertainties which have influenced the event of our enterprise and our historic monetary efficiency and that we imagine will proceed to affect our persevering with enterprise operations and monetary efficiency sooner or later. 51
-------------------------------------------------------------------------------- Table of Contents COVID-19 and its Effect on the Global Economy COVID-19, the illness attributable to the novel coronavirus, has had a big antagonistic impact on the worldwide financial system since March of 2020. Even although the tempo of vaccinations has elevated in lots of international locations, together withthe United States , the illness continues to unfold all through the world. The persistence of new infections, together with the introduction of new variants, has slowed the re-opening of theU.S. financial system and, even in areas the place restrictions have largely been lifted, financial exercise has been sluggish to get better. In addition, whereas the flexibility to impose federal vaccine mandates have been curtailed by theU.S. Supreme Court , we proceed to be topic to numerous state and native vaccine mandates that will require not less than a portion of ourU.S. workers to be vaccinated, which might doubtlessly affect our work pressure. Longer-term, the financial outlook is unsure, however could rely in vital half on progress with respect to efficient therapies to deal with COVID-19 or the approval of extra vaccines and the tempo at which they're administered globally. For additional data relating to dangers related to COVID-19, see Risk Factors - The COVID-19 pandemic has had, and is more likely to proceed to have, antagonistic results on our monetary situation and outcomes of operations in Part I, Item 1A. of this Annual Report on Form 10-Okay.
Effect on
Because each public well being and financial circumstances are altering so quickly at current, it's inconceivable to foretell how COVID-19 will have an effect onVoya Financial's future monetary situation. Absent an extra vital and extended market shock, nonetheless, we don't anticipate a cloth impact on our stability sheet, statutory capital, or liquidity. Our capital ranges stay sturdy and considerably above our targets. As ofDecember 31, 2021 , our estimated mixed RBC ratio, with changes for sure intercompany transactions, was 550%, above our 375% goal. We have accomplished repurchases of roughly$1,143 million of our frequent shares as ofDecember 31, 2021 . In January andOctober 2021 , we elevated our frequent shareholder dividend by 10% and 21%, respectively. We don't anticipate any discount in our dividend and proceed to observe the dividends-paying capability of our insurance coverage subsidiaries. We have distributed$910 million in 2021 from our insurance coverage subsidiaries.
Effect on
Predicting with accuracy the long run penalties of COVID-19 on our outcomes of operations is inconceivable. To date, essentially the most vital results of antagonistic financial situations have been on our charge-based mostly earnings, with web funding earnings experiencing milder results. Underwriting earnings, principally affected by will increase to mortality and morbidity because of the illness, has additionally been negatively affected. Wealth Solutions In Wealth Solutions, we initially skilled stress on earnings pushed by fairness market volatility in addition to decrease rates of interest, with results weighted extra closely in the direction of our full-service company markets enterprise and much less on recordkeeping enterprise. While fairness market enhancements have resulted in greater AUM ranges and favorable ends in charge-based mostly earnings, we estimate that low market rates of interest will proceed to contribute to a decrease unfold-based mostly earnings. Longer-term results will rely considerably on fairness market efficiency and prevailing rate of interest ranges, in addition to unemployment ranges. We imagine that expense reductions and different administration actions can be out there to offset a portion of any affect. Investment ManagementIn Investment Management , fairness market enhancements have contributed to AUM ranges and greater charge-based mostly margin. In addition, Investment capital has been revaluated greater over the past 12 months, nonetheless if the financial system declines as a consequence of COVID-19 and rising variants, funding capital outcomes might materially decline. We had seen an elevated degree of outflows related to our retail enterprise on the outset of the pandemic that has since subsided. The pandemic has made producing new enterprise leads more difficult, leading to a discount in gross sales conferences and actions that would end in a decrease degree of gross sales exercise throughout the 12 months. If the pandemic persists and the financial system fails to develop or declines from present ranges, asset values might be negatively impacted leading to decrease administration charge income and/or funding capital returns.
Health Solutions
In Health Solutions, the consequences from COVID-19 have been seen primarily in
elevated mortality claims on group life insurance policies. We haven’t seen a
vital improve in medical cease loss claims.
52 -------------------------------------------------------------------------------- Table of Contents We anticipate mortality claims in group life to be elevated in 2022 as a consequence of COVID-19 associated deaths, with the magnitude of such claims depending on mortality charges from the illness. We at the moment estimate that, for each 10,000 incremental deaths inthe United States as a consequence of COVID-19, we'd see between$2 to$3 million of extra claims. Experience thus far is in step with this expectation.
Market Conditions
While extraordinary financial lodging has suppressed volatility in fee, credit score and home fairness markets for an prolonged interval, international capital markets are actually previous peak lodging because theU.S. Federal Reserve continues its gradual tempo of coverage normalization. As international financial coverage turns into much less accommodating, a rise in market volatility might have an effect on our enterprise, together with by means of results on the speed and unfold element of yields we earn on invested property, adjustments in required reserves and capital, and fluctuations in the worth of our property beneath administration ("AUM"), administration or advisement ("AUA"). These results might be exacerbated by uncertainty about future fiscal coverage, adjustments in tax coverage, the scope of potential deregulation, ranges of international commerce, and geopolitical danger. In the short- to medium-time period, the potential for elevated volatility, coupled with prevailing rates of interest beneath historic averages, can stress gross sales and cut back demand as shoppers hesitate to make monetary choices. In addition, this surroundings might make it troublesome to fabricate merchandise which are persistently each enticing to prospects and worthwhile. Financial efficiency may be adversely affected by market volatility as charges pushed by AUM fluctuate, hedging prices improve and income declines as a consequence of lowered gross sales and elevated outflows. As an organization with sturdy retirement, funding administration and insurance coverage capabilities, nonetheless, we imagine the market situations famous above could, over the long run, improve the attractiveness of our broad portfolio of merchandise and providers. We might want to proceed to observe the habits of our prospects and different elements, together with mortality charges, morbidity charges, and lapse charges, which modify in response to adjustments in market situations as a way to be sure that our merchandise and providers stay enticing in addition to worthwhile. For extra data on our sensitivity to rates of interest and fairness market costs, see Quantitative and Qualitative Disclosures About Market Risk in Part II, Item 7A. of this Annual Report on Form 10-Okay. Interest Rate Environment We imagine the rate of interest surroundings will proceed to affect our enterprise and monetary efficiency sooner or later for a number of causes, together with the following: •Our normal account funding portfolio, which was roughly$45 billion as ofDecember 31, 2021 , consists predominantly of fastened earnings investments and had an annualized earned yield of roughly 4.5% within the fourth quarter of 2021. In the close to time period and absent additional materials change in yields out there on fastened earnings investments, we anticipate the yield we earn on new investments will probably be decrease than the yields we earn on maturing investments, which have been usually bought in environments the place rates of interest have been greater than present ranges. We at the moment anticipate that proceeds that have been reinvested in fastened earnings investments throughout 2021 will earn a mean yield beneath the prevailing portfolio yield. If rates of interest have been to rise, we anticipate the yield on our new cash investments would additionally rise and step by step converge towards the yield of these maturing property. In addition, whereas much less materials to monetary outcomes than new cash funding charges, actions in prevailing rates of interest additionally affect the costs of fastened earnings investments that we promote on the secondary market fairly than holding till maturity or reimbursement, with rising curiosity charges usually resulting in decrease costs within the secondary market, and falling rates of interest usually resulting in greater costs. • Several of our merchandise pay assured minimal charges akin to fastened accounts and a portion of the steady worth accounts included inside outlined contribution retirement plans. We are required to pay these assured minimal charges even when earnings on our funding portfolio decline, with the ensuing funding margin compression negatively impacting earnings. In addition, we anticipate extra policyholders to carry insurance policies (decrease lapses) with comparatively excessive assured charges longer in a low rate of interest surroundings. Conversely, an increase in common yield on our funding portfolio would positively affect earnings if the common rate of interest we pay on our merchandise doesn't rise correspondingly. Similarly, we anticipate policyholders can be much less more likely to maintain insurance policies (greater lapses) with present ensures as rates of interest rise. For extra data on the affect of the continued low rate of interest surroundings, see Risk Factors - The degree of rates of interest could adversely have an effect on our profitability, notably within the occasion of a continuation of the present low rate of interest surroundings or a interval of quickly rising rates of interest in Part I, Item 1A. of this Annual Report on Form 10-Okay. Also, for added data on our sensitivity to rates of interest, see Quantitative and Qualitative Disclosures About Market Risk in Part II, Item 7A. of this Annual Report on Form 10-Okay. 53
-------------------------------------------------------------------------------- Table of Contents Seasonality and Other Matters Our enterprise outcomes can differ from quarter to quarter in consequence of seasonal elements. For all of our segments, the primary quarter of every year sometimes has elevated working bills, reflecting greater payroll taxes, fairness compensation grants, and sure different bills that are typically concentrated in the primary quarters. Additionally, different funding earnings tends to be decrease within the first quarters. Other seasonal elements that have an effect on our enterprise embody: Wealth Solutions •The first quarters are likely to have the best degree of recurring deposits in Corporate Markets, because of the improve in participant contributions from the receipt of annual bonus award funds or annual lump sum matches and revenue sharing contributions made by many employers. Corporate Market withdrawals additionally have a tendency to extend within the first quarters as departing sponsors change suppliers at the beginning of a brand new 12 months. •In the third quarters, training tax-exempt markets sometimes have the bottom recurring deposits, because of the timing of trip schedules within the educational calendar. •The fourth quarters are likely to have the best degree of single/switch deposits as a consequence of new Corporate Market plan gross sales as sponsors switch from different suppliers when contracts expire on the fiscal or calendar 12 months-finish. Recurring deposits in the Corporate Market could also be decrease within the fourth quarters as greater paid contributors reduce or halt their contributions upon reaching the annual maximums allowed for the 12 months. Finally, Corporate Market withdrawals are likely to improve within the fourth quarters, as within the first quarters, as a consequence of departing sponsors. Investment Management •In the fourth quarters, efficiency charges are sometimes greater as a consequence of sure efficiency charges being related to calendar-12 months efficiency in opposition to established benchmarks and hurdle charges.Health Solutions •The first quarters are likely to have the best Group Life loss ratio. Sales for Group Life and Stop Loss additionally are typically the best within the first quarters, as most of our contracts have January begin dates in alignment with the beginning of our purchasers' fiscal years. •The third quarters are likely to have the second highest Group Life and Stop Loss gross sales, as a big quantity of our contracts have July begin dates in alignment with the beginning of our purchasers' fiscal years. In addition to those seasonal elements, our outcomes are impacted by the annual evaluation of assumptions associated to future coverage advantages and deferred coverage acquisition prices ("DAC"), worth of enterprise acquired ("VOBA") (collectively, "DAC/VOBA") and different intangibles, which we usually full within the third quarter of every year, and annual remeasurement associated to our worker profit plans, which we usually full within the fourth quarter of every year. See Critical Accounting Judgments and Estimates in Part II, Item 7. of this Annual Report on Form 10-Okay for additional data.
Stranded Costs
As a consequence of the Individual Life Transaction, the historic revenues and sure bills of the divested companies have been labeled as discontinued operations. Historical revenues and sure bills of the companies which have been divested by way of reinsurance at closing of the Individual Life Transaction (together with an insignificant quantity of Individual Life and non-Wealth Solutions annuities that aren't half of the transaction) are reported inside persevering with operations, however are excluded from adjusted working earnings as companies exited or to be exited by means of reinsurance or divestment. Expenses labeled inside discontinued operations and companies exited or to be exited by means of reinsurance embody solely direct working bills incurred by these companies and then solely to the extent that the character of such bills was such that we ceased to incur such bills upon the shut of the Individual Life Transaction. Certain different direct prices of these companies, together with these which relate to actions for which we offer transitional providers and for which we're reimbursed beneath transition providers agreements ("TSAs") are reported inside persevering with operations together with the related revenues from the TSAs. Additionally, oblique prices, akin to these associated to company and shared service features that have been beforehand allotted to the companies offered or divested by way of reinsurance, are reported inside persevering with operations. These prices ("Stranded Costs") and the related revenues from the TSAs are reported inside persevering with operations in Corporate, since we don't imagine they're consultant of the long run run-fee of revenues and bills of the persevering with operations of our enterprise segments. We have carried out a value discount technique to deal with Stranded Costs. Refer to Restructuring in Part II, Item 7 of this Annual Report on Form 10-Okay for extra data on this program. 54 --------------------------------------------------------------------------------
Table of Contents Restructuring Organizational Restructuring Pursuant to the Company executing the Resolution MTA and the Individual Life Transaction, the Company offered 5 of its authorized subsidiaries, SLD, SLDI, RRII, MUL and VAE to Resolution Life US, which is an insurance coverage holding firm newly shaped by RLGH, aBermuda -based restricted partnership. The Company additionally executed an settlement with Cetera onJune 9, 2021 , the place Cetera acquired the impartial monetary planning channel of VFA. Additionally, the Company transferred or ceased utilization of a considerable quantity of administrative programs and is endeavor restructuring efforts to scale back stranded bills related to its Individual Life enterprise and impartial monetary planning channel as effectively as its company and shared providers features. The Company anticipates incurring extra restructuring bills immediately and not directly associated to these tendencies past 2021, of$25 -$75 along with the$78 incurred throughout 2020 and$91 incurred for the 12 months endedDecember 31, 2021 . See the Restructuring Note in our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-Okay for data on the restructuring actions associated to the Individual Life Transaction.
Results of Operations
Operating Measures
In this MD&A, we talk about Adjusted working earnings earlier than earnings taxes and Adjusted working revenues, every of which is a measure utilized by administration to consider phase efficiency. For extra data on every measure, see Segments Note to our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-Okay.
AUM and AUA
A considerable portion of our charges, different expenses and margins are based mostly on AUM. AUM represents on-stability sheet property supporting buyer account values/liabilities and surplus in addition to off-stability sheet institutional/mutual funds. Customer account values replicate the quantity of policyholder fairness that has amassed inside retirement, annuity and common-life kind merchandise. AUM consists of normal account property managed by our Investment Management phase wherein we bear the funding danger, separate account property wherein the contract proprietor bears the funding danger and institutional/mutual funds, which are excluded from our stability sheets. AUM-based mostly revenues improve or lower with an increase or fall within the quantity of AUM, whether or not attributable to adjustments in capital markets or by web flows. AUM is principally affected by web deposits (i.e., new deposits, much less surrenders and different outflows) and funding efficiency (i.e., curiosity credited to contract proprietor accounts for property that earn a hard and fast return or market efficiency for property that earn a variable return). Separate account AUM and institutional/mutual fund AUM embody property managed by our Investment Management phase, in addition to property managed by third-social gathering funding managers. OurInvestment Management phase displays the revenues earned for managing affiliated property for our different segments in addition to property managed for third events. AUA represents amassed property on contracts pursuant to which we both present administrative or advisement providers or product ensures for property managed by third events. These contracts usually are not insurance coverage contracts and the property are excluded from the Consolidated Financial Statements. Fees earned on AUA are usually based mostly on the quantity of contributors, asset ranges and/or the degree of providers or product ensures which are offered.
Our consolidated AUM/AUA consists of eliminations of AUM/AUA managed by our
Investment Management phase that can be mirrored in different segments’ AUM/AUA
and changes for AUM not mirrored in any segments.
55 -------------------------------------------------------------------------------- Table of Contents The following desk presents AUM and AUA as of the dates indicated: As of December 31, ($ in hundreds of thousands) 2021 2020 AUM and AUA: Wealth Solutions$ 536,246 $ 520,258 Investment Management 323,656 301,680 Health Solutions 1,887 1,837 Eliminations/Other (122,754) (123,587) Total AUM and AUA(1)$ 739,035 $ 700,188 AUM$ 405,285 $ 364,610 AUA 333,749 335,578 Total AUM and AUA(1)$ 739,035 $ 700,188
(1) Includes AUM and AUA associated to the divested companies, for which a
substantial portion of the property proceed to be managed by our Investment
Management phase.
Terminology Definitions Sales Statistics In our dialogue of our phase outcomes beneath Results of Operations-Segment by Segment, we generally check with gross sales exercise for numerous merchandise. The time period "sales" is used otherwise for various merchandise, as described extra totally beneath. These gross sales statistics don't correspond to revenues beneathU.S. GAAP and are utilized by us as working statistics underlying our monetary efficiency.
Net flows are deposits much less redemptions (together with advantages and different product
expenses).
Sales for
premiums, which signify common premiums on new insurance policies, plus a portion of
new single premiums.
Total gross premiums and deposits are outlined as premium income and deposits for insurance policies written and assumed. This measure supplies data as to progress and persistency tendencies associated to premium and deposits.
Other Measures
Total annualized in-pressure premiums are outlined as a full 12 months of premium on the fee in impact on the finish of the interval. This measure supplies data as to the expansion and persistency tendencies in premium income. Interest adjusted loss ratios are outlined because the ratio of advantages expense to premium income unique of the low cost element within the change in profit reserve. This measure experiences the loss ratio associated to mortality on life merchandise and morbidity on well being merchandise. Net good points (losses), Net funding good points (losses) and associated expenses and changes and Net assured profit losses and associated expenses and changes embody adjustments within the truthful worth of derivatives. Increases within the truthful worth of spinoff property or decreases within the truthful worth of spinoff liabilities end in "gains." Decreases within the truthful worth of spinoff property or will increase within the truthful worth of spinoff liabilities end in "losses." In addition, now we have sure merchandise that comprise ensures which are embedded derivatives associated to assured advantages and index-crediting options, whereas different merchandise comprise such ensures which are thought-about derivatives (collectively "guaranteed benefit derivatives"). 56 -------------------------------------------------------------------------------- Table of Contents Results of Operations - Company Consolidated The following desk presents our Consolidated Statements of Operations for the intervals indicated: Year Ended December 31, ($ in hundreds of thousands) 2021 2020 Change Revenues: Net funding earnings$ 2,774 $ 2,909 $ (135) Fee earnings 1,827 2,026 (199) Premiums (3,354) 2,416 (5,770) Net good points (losses) 1,423 (365) 1,788 Other income 579 409 170 Income (loss) associated to consolidated funding entities 981 254 727 Total revenues 4,230 7,649 (3,419) Benefits and bills: Interest credited and different advantages to contract homeowners/policyholders (2,163) 4,101 (6,264) Operating bills 2,586 2,654 (68)
Net amortization of Deferred coverage acquisition prices
and Value of enterprise acquired
795 352 443 Interest expense 186 159 27
Operating bills associated to consolidated funding
entities
49 31 18 Total advantages and bills 1,453 7,297 (5,844)
Income (loss) from persevering with operations earlier than earnings
taxes
2,777 352 2,425 Income tax expense (profit) (98) (18) (80) Income (loss) from persevering with operations 2,875 370 2,505 Income (loss) from discontinued operations, web of tax 12 (419) 431 Net Income (loss) 2,887 (49) 2,936
Less: Net earnings (loss) attributable to noncontrolling
curiosity
761 157 604 Less: Preferred inventory dividends 36 36 -
Net earnings (loss) out there to our frequent shareholders
$ (242) $ 2,332 For extra data on reconciliations of Income (loss) from persevering with operations earlier than earnings taxes to Adjusted working earnings earlier than earnings taxes and Total revenues to Adjusted working revenues, and their relative contributions of every phase, see Segments Note to our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-Okay.
Consolidated – Year Ended
2020
Total Revenues
Total Revenues decreased
The following gadgets contributed to the general lower.
Net funding earnings decreased$135 million from$2,909 million to$2,774 million primarily as a consequence of: •switch of property to a consolation belief pursuant to the reinsurance agreements entered into concurrent with the closing of the Individual Life Transaction.
The lower was partially offset by:
•greater different funding earnings within the present interval primarily pushed by
market efficiency; and
57 -------------------------------------------------------------------------------- Table of Contents •greater prepayment charge earnings within the present interval primarily pushed by curiosity fee actions.
Fee earnings decreased
primarily as a consequence of:
•decrease charge earnings in comparison with the prior interval because of the shut of the
Individual Life Transaction in each companies exited and Investment Management.
The lower was partially offset by:
•a rise in common charge-based mostly fund AUM in Wealth options primarily pushed by market efficiency, partially offset by a decrease earned fee; and •a rise in common exterior consumer AUM in Investment Management primarily pushed by market efficiency and optimistic web flows. Premiums decreased$5,770 million from$2,416 million to$(3,354) million primarily as a consequence of: •the shut of the Individual Life Transaction, at which level RLI, VRIAC, and RLNY ceded considerably all of their Individual Life and Non-Wealth Solution Annuities companies to SLD, that are totally offset by a corresponding quantity in Interest credited and different advantages to contract homeowners/policyholders.
The lower was partially offset by:
•greater premiums pushed by progress of the Stop Loss and Voluntary blocks of
enterprise in
Net good points (losses) modified
of
•realized good points on the switch of property to a consolation belief pursuant to reinsurance agreements entered into concurrent with the shut of the Individual Life Transaction; •a good change within the allowance for losses on industrial mortgage loans; and •realized achieve pushed by the sale of our stake in a restricted partnership curiosity.
The change have been partially offset by:
•unfavorable mark-to-market changes on securities topic to truthful worth choice accounting primarily pushed by a normal market re-pricing of prepayment danger; •losses from market worth adjustments related to enterprise reinsured, that are totally offset by a corresponding quantity in Interest credited and different advantages to contract homeowners/policyholders; and •unfavorable adjustments within the truthful worth of assured profit derivatives as a consequence of rate of interest actions.
Other income elevated
as a consequence of:
•a web achieve associated to the sale of the impartial monetary planning channel of VFA; and •income from transition providers agreements ensuing from the shut of the Individual Life Transaction.
The improve was partially offset by:
•decrease revenues pushed by the sale of the impartial monetary planning channel of VFA; and •efficiency charges earned in our Investment Management phase within the prior 12 months which didn't repeat.
Income associated to consolidated funding entities elevated
•improve as a consequence of favorable market appreciation within the restricted partnerships due
to greater demand for the choice asset funding class; and
•new funds launched throughout the present interval.
58 -------------------------------------------------------------------------------- Table of Contents Total Benefits and Expenses
Total advantages and bills decreased by
Interest credited and different advantages to contract homeowners/policyholders decreased
•the shut of the Individual Life Transaction, at which level, RLI, VRIAC, and RLNY ceded considerably all of their Individual Life and Non-Wealth Solutions Annuities companies to SLD, that are totally offset by a corresponding quantity in Premiums; •loss recognition and annual assumptions replace unlocking throughout the prior 12 months associated to our companies reinsured on the shut of the Individual Life Transaction; and •market worth impacts and adjustments within the reinsurance deposit asset related with enterprise reinsured, that are totally offset by a corresponding quantity in Net good points (losses).
The lower was partially offset by:
•amortization and loss recognition pushed by the realized good points on the switch of property to a consolation belief pursuant to reinsurance agreements entered into concurrent with the shut of the Individual Life Transaction; •greater claims in Group Life, primarily associated to COVID-19, and progress in Stop Loss and Voluntary blocks of enterprise, partially offset by decrease Voluntary loss ratios and different reserve changes inHealth Solutions ; •a rise within the allowance for losses on reinsurance recoverables; and •precise versus anticipated mortality within the present interval for the companies ceded to SLD associated to claims previous to the shut of the Individual Life Transaction. Operating bills decreased$68 million from$2,654 million to$2,586 million primarily as a consequence of: •decrease bills pushed by the shut of the Individual Life Transaction and sale of the impartial monetary planning channel of VFA; •a ceding fee paid as half of the shut of the Individual Life Transaction at which level RLI, VRIAC and RLNY ceded considerably all of the Individual Life and Non-Wealth Solution Annuities companies to SLD; •decrease stranded prices within the present interval associated to the Individual Life Transaction as a consequence of elevated advantages from prices financial savings; •a good change in pension prices. See the Employee Benefit Arrangements Note in Part II, Item 8. of this Annual Report on Form 10-Okay for additional data; and •decrease amortization of intangible property in Corporate associated to a previous acquisition that grew to become totally amortized throughout the third quarter of 2020.
The lower was partially offset by:
•a rise in progress-based mostly bills in our Wealth Solutions andHealth Solutions segments; •greater incentive compensation in Corporate as a consequence of sturdy efficiency within the present interval; •greater restructuring expenses within the present interval. See the Restructuring Note in Part II, Item 8. of this Annual Report on Form 10-Okay for data; •greater compensation associated bills in our Investment Management phase primarily related to greater earnings within the present interval; and •greater litigation reserves in Wealth Solutions throughout the present intervals in comparison with the prior interval. 59 -------------------------------------------------------------------------------- Table of Contents Net amortization of DAC/VOBA elevated$443 million from$352 million to$795 million primarily as a consequence of: •amortization and loss recognition pushed by the realized good points on the switch of property to a consolation belief pursuant to reinsurance agreements entered into concurrent with the shut of the Individual Life Transaction; •unfavorable annual assumption updates leading to a write-down of DAC and VOBA, partially offset by unfavorable assumption updates within the prior interval associated to our companies ceded to SLD on the shut of the Individual Life Transaction; and •greater amortization on greater gross earnings and enterprise progress in Wealth Solutions andHealth Solutions .
The improve was partially offset by:
•favorable Wealth Solutions annual assumption replace unlocking within the present
interval in comparison with unfavorable unlocking within the prior interval.
Income Tax Benefit
Income tax profit elevated
primarily as a consequence of:
•the$521 million launch of the tax valuation allowance in 2021, which consisted of a$290 million allowance launch associated to all of the federal deferred tax property and a considerable portion of the state deferred tax property and a$231 million launch of a stranded tax profit allotted to persevering with operations from Accumulated Other Comprehensive Income; and •a rise in noncontrolling curiosity.
The improve was partially offset by:
•a rise in earnings earlier than earnings taxes.
Loss from Discontinued Operations, web of Tax
Income (loss) from discontinued operations, web of tax modified
a loss of
•unfavorable changes to the Individual Life Transaction loss on sale, web of tax excluding prices to promote made within the prior interval and favorable changes made within the present interval; and •web losses from discontinued operations, web of tax within the prior interval which ceased on the shut of the Individual Life Transaction.
Adjustments from Income (Loss) from Continuing Operations earlier than Income Taxes to
Adjusted Operating Earnings earlier than Income Taxes
For extra data on the reconciliation changes listed beneath, see the Segments Note to our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-Okay.
Net funding good points (losses) and associated expenses and changes modified
million
•unfavorable mark-to-market changes on securities topic to truthful worth choice accounting primarily pushed by a normal market re-pricing of prepayment danger.
The change was partially offset by:
•a realized achieve pushed by the sale of our stake in a restricted partnership
curiosity; and
•a good change within the allowance for losses on industrial mortgage loans.
60 -------------------------------------------------------------------------------- Table of Contents Net assured profit good points (losses) and associated expenses and changes modified$23 million from a achieve of$22 million to a loss of$1 million primarily as a consequence of:
•unfavorable adjustments in spinoff valuations as a consequence of rate of interest actions.
Gain (loss) associated to companies exited by means of reinsurance or divestment modified$1,154 million from a loss of$342 million to an earnings of$812 million primarily as a consequence of: The shut of the Individual Life Transaction: •on the shut of the Individual Life Transaction the switch of property to a consolation belief pursuant to the reinsurance agreements resulted in realized good points which have been partially offset by intangibles amortization and loss recognition; and •precise versus anticipated mortality within the present 12 months for the companies ceded to SLD associated to claims previous to the shut of the Individual Life Transaction.
Other present 12 months occasions:
•a achieve in second quarter associated to the sale of the impartial monetary planning channel of VFA web of transaction-associated prices to promote; •third quarter annual assumption updates which resulted in DAC and VOBA loss recognition on the deferred intangibles related to our companies ceded to SLD; and •present 12 months amortization of the deferred intangibles related to the companies ceded to SLD.
For additional data on the deferred intangibles, see the Reinsurance Note in
Part II, Item 8. of this Annual Report on Form 10-Okay.
Prior 12 months impacts:
•web losses, as a consequence of loss recognition and unfavorable unlocking pushed by the annual assumption updates web of favorable different funding efficiency, within the prior 12 months associated to the Individual Life and the Non-Wealth Solution Annuities companies in RLI, VRIAC, and RLNY that have been ceded to SLD on the shut of the Individual Life Transaction. For additional particulars on loss recognition, see Critical Accounting Judgments and Estimates - Assumptions and Periodic Review in Part II, Item 7. of this Annual Report on Form 10-Okay. Losses associated to early extinguishment of debt elevated$31 million primarily as a consequence of: •losses in reference to debt extinguishments accomplished throughout the present 12 months. See the Financing Agreements Note in Part II, Item 8. of this Annual Report on Form 10-Okay for additional data. Immediate recognition of web actuarial good points associated to pension and different postretirement profit obligations and good points from plan changes and curtailments elevated$31 million from$2 million to$33 million . See Critical Accounting Judgments and Estimates - Employee Benefits Plans in Part II, Item 7. of this Annual Report on Form 10-Okay for additional data.
Other changes elevated
•greater prices recorded within the present 12 months associated to restructuring. See the Restructuring Note in Part II, Item 8. of this Annual Report on Form 10-Okay for data.
Results of Operations – Segment by Segment
Adjusted working earnings is the measure of phase revenue or loss administration makes use of to judge phase efficiency. Adjusted working earnings shouldn't be considered as an alternative to GAAP pretax earnings. We imagine the presentation of phase adjusted working earnings as we measure it for administration functions enhances the understanding of our enterprise by reflecting the underlying efficiency of our core operations and facilitating a extra significant development evaluation. Refer to the Segments Note to our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-Okay for additional data on the presentation of phase outcomes and our definition of adjusted working earnings. 61
-------------------------------------------------------------------------------- Table of Contents Wealth Solutions
The following desk presents Adjusted working earnings earlier than earnings taxes of
our Wealth Solutions phase for the intervals indicated:
Year Ended December 31, ($ in hundreds of thousands) 2021 2020 Adjusted working revenues: Net funding earnings and web good points (losses)$ 2,114 $ 1,742 Fee earnings 1,056 877 Premiums - 8 Other income 68 89 Total adjusted working revenues 3,238 2,717 Operating advantages and bills: Interest credited and different advantages to contract homeowners/policyholders 891 961 Operating bills 1,146 1,075 Net amortization of DAC/VOBA 91 237 Total working advantages and bills 2,128 2,274 Adjusted working earnings earlier than earnings taxes(1) $
1,110
(1) Includes unlocking associated to annual evaluation of the assumptions. Refer to
DAC/VOBA and Other Intangibles Unlocking in Part II, Item 7. of this Annual
Report on Form 10-Okay for additional data.
The following tables current Total Client Assets, which comprise complete AUM and
AUA, for our Wealth Solutions phase as of the dates indicated:
As of December 31, ($ in hundreds of thousands) 2021 2020 Full Service$ 187,702 $ 165,412 Recordkeeping 279,501 247,309 Total Defined Contribution 467,203 412,721 Investment-only Stable Value 40,246 42,864 Retail Client and Other Assets 28,796 64,673 Total Client Assets$ 536,246 $ 520,258 As of December 31, ($ in hundreds of thousands) 2021 2020 Fee-based$ 434,340 $ 379,840 Spread-based 33,359 34,712 Investment-only Stable Value 40,246 42,864 Retail Client Assets 28,300 62,842 Total Client Assets$ 536,246 $ 520,258 62
-------------------------------------------------------------------------------- Table of Contents The following desk presents Full Service, Recordkeeping, and Stable Value web flows for our Wealth Solutions phase for the intervals indicated: Year EndedDecember 31 , ($ in hundreds of thousands) 2021
2020
Full Service - Corporate markets: Deposits$ 14,740 $
12,400
Surrenders, advantages and product expenses (13,709)
(10,468)
Net flows 1,031
1,934
Full Service - Tax-exempt markets: Deposits 6,239
8,203
Surrenders, advantages and product expenses (6,694) (8,533) Net flows (455) (330) Total Full Service Net Flows $ 576$ 1,604 Recordkeeping and Stable Value: Recordkeeping Net Flows$ (6,731) $
24,497
Investment-only Stable Value Net Flows$ (2,108) $
4,291
Wealth Solutions – Year Ended
31, 2020
Adjusted working earnings earlier than earnings taxes elevated
million
•greater different funding earnings; •a good change in DAC unlocking primarily as a consequence of fairness market efficiency and unfavorable annual assumption updates within the prior 12 months; and •greater charge income pushed by greater common fairness markets, partially offset by the affect of the Financial Planning Channel sale and a decrease earned fee.
The improve was partially offset by:
•greater bills primarily pushed by enterprise progress, partially offset by the affect of the Financial Planning Channel sale; •greater amortization of DAC pushed by greater gross earnings and enterprise progress; and •a better authorized accrual within the present interval in comparison with the prior interval. 63
-------------------------------------------------------------------------------- Table of Contents Investment Management
The following desk presents Adjusted working earnings earlier than earnings taxes of
our Investment Management phase for the intervals indicated:
Year EndedDecember 31 , ($ in hundreds of thousands) 2021
2020
Adjusted working revenues: Net funding earnings and web good points (losses) $ 103$ 15 Fee earnings 667 619 Other income 13 69 Total adjusted working revenues 783
702
Operating advantages and bills: Operating bills 544
506
Total working advantages and bills 544
506
Adjusted working earnings earlier than earnings taxes $ 239
OurInvestment Management working phase revenues embody the next intersegment revenues, primarily consisting of asset-based mostly administration and administration charges. Year Ended December 31, ($ in hundreds of thousands) 2021 2020 Investment Management intersegment revenues$ 92
The following desk presents AUM and AUA for our Investment Management phase
as of the dates indicated:
As of December 31, ($ in hundreds of thousands) 2021 2020 AUM External purchasers: Institutional(1)$ 148,921 $ 111,964 Retail(1) 76,907 75,116 Total exterior purchasers 225,829 187,080 General account 38,004 58,421 Total AUM(1) 263,832 245,501 AUA(2) 59,823 56,179 Total AUM and AUA(1)(2)$ 323,656 $ 301,680
(1) Includes property related to the divested companies.
(2) Includes property sourced by different segments and additionally reported as AUA or AUM by
such different segments. Assets Under Advisement, introduced in AUA, consists of
advisory property, mutual fund, normal account and steady worth property.
The following desk presents web flows for our Investment Management phase for the intervals indicated: Year Ended December 31, ($ in hundreds of thousands) 2021 2020 Net Flows: Institutional(1)$ 9,075 $ 10,614 Retail (1,304) (2,240) Divested companies (2,974) (2,506) Total(1)$ 4,796 $ 5,869 (1) Starting Q1 2021, quantities exclude liquidity associated money move actions. Historical intervals introduced have been revised to adapt with this presentational change. 64
——————————————————————————–
Table of
Investment Management
Adjusted working earnings earlier than earnings taxes elevated
million
•greater funding capital returns primarily pushed by total market efficiency; and •greater charge income primarily pushed by greater common fairness markets and optimistic web flows, partially offset by a decline in charges earned in consequence of the Individual Life Transaction.
The improve was partially offset by:
•decrease different income primarily as a consequence of prior 12 months efficiency charges which didn't repeat; and •greater working bills primarily pushed by variable compensation as a consequence of greater earnings.Health Solutions
The following desk presents Adjusted working earnings earlier than earnings taxes of
the
Year Ended December 31, ($ in hundreds of thousands) 2021 2020 Adjusted working revenues: Net funding earnings and web good points (losses) $ 165$ 114 Fee earnings 69 61 Premiums 2,168 1,986 Other income (7) (7) Total adjusted working revenues 2,395 2,155 Operating advantages and bills: Interest credited and different advantages to contract homeowners/policyholders 1,674 1,495 Operating bills 492 436 Net amortization of DAC/VOBA 25 19 Total working advantages and bills 2,191 1,951 Adjusted working earnings earlier than earnings taxes $ 204$ 204 65
-------------------------------------------------------------------------------- Table of Contents The following desk presents gross sales, gross premiums and in-pressure for ourHealth Solutions phase for the intervals indicated: Year Ended December 31, ($ in hundreds of thousands) 2021 2020 Sales by Product Line: Group life and Disability$ 110 $ 119 Stop loss 355 308 Total group merchandise 465 427 Voluntary merchandise 128 134 Total gross sales by product line$ 593 $ 561 Total gross premiums and deposits$ 2,429 $ 2,234 Group life and Disability 752 714 Stop loss 1,181 1,096 Voluntary 576 472 Total annualized in-pressure premiums$ 2,510 $ 2,282 Loss Ratios: Group life (curiosity adjusted) 95.5 % 81.8 % Stop loss 77.3 % 77.7 % Total Loss Ratio(1) 72.5 % 70.4 %
(1) Total Loss Ratio is introduced on a trailing twelve month foundation.
31, 2020
Adjusted working earnings earlier than earnings taxes didn’t change from
primarily as a consequence of:
•greater premiums pushed by progress of the Stop Loss and Voluntary blocks; and
•greater funding earnings primarily pushed by different asset earnings.
The favorable adjustments have been offset by:
•greater advantages incurred as a consequence of progress in enterprise and COVID-19 impacts,
partially offset by a decrease Voluntary loss ratio; and
•greater distribution bills, commissions and amortization of intangibles
pushed by enterprise progress.
66 -------------------------------------------------------------------------------- Table of Contents Corporate
The following desk presents Adjusted working earnings earlier than earnings taxes of
Corporate for the intervals indicated:
Year Ended December 31, ($ in hundreds of thousands) 2021 2020 Adjusted working revenues: Net funding earnings and web good points (losses) $
4
Other income 96 5 Total adjusted working revenues 100 21 Operating advantages and bills: Interest credited and different advantages to contract homeowners/policyholders - 18 Operating bills(1) 160 142 Interest Expense(2) 201 210 Total working advantages and bills 361 369 Adjusted working earnings earlier than earnings taxes $
(261)
(1) Includes bills from company actions, and bills not allotted to our segments. Years endedDecember 31, 2021 and 2020 primarily embody stranded prices associated to the divested companies and amortization of intangibles. (2) Includes dividend funds made to most well-liked shareholders. Corporate - Year EndedDecember 31, 2021 Compared to Year EndedDecember 31, 2020
Adjusted working earnings earlier than earnings taxes improved
of
•income ensuing from transition providers agreements related to the Individual Life Transaction; •decrease stranded prices within the present interval associated to the Individual Life Transaction as a consequence of elevated advantages from value financial savings initiatives; •decrease amortization related to intangibles that grew to become totally amortized in the third quarter of 2020; and •decrease curiosity expense pushed by present 12 months debt extinguishments.
The enchancment was partially offset by:
•greater incentive compensation expense within the present interval pushed by an
improve in Adjusted working earnings earlier than earnings taxes.
Alternative Investment Income
Investment earnings on sure different investments may be unstable as a consequence of adjustments in market situations. The following desk presents the quantity of funding earnings (loss) on sure different investments that's included in phase Adjusted working earnings earlier than earnings taxes and the common degree of property in every phase, previous to intercompany eliminations, which excludes different investments and earnings which are a element of Assets held on the market, Income (loss) associated to companies exited or to be exited by means of reinsurance or divestment and Income (loss) from discontinued operations, web of tax, respectively, and different investments and earnings in Corporate. These different investments are carried at truthful worth, which is estimated based mostly on the web asset worth ("NAV") of these funds.
While funding earnings on these property may be unstable, based mostly on present plans,
we anticipate to earn 9.0% on these property over the lengthy-time period.
67 --------------------------------------------------------------------------------
The following desk presents the funding earnings for the years ended
investments as of the dates indicated:
Year Ended December 31, ($ in hundreds of thousands) 2021 2020 Wealth Solutions: Alternative funding earnings $ 511$ 107 Average different investments 1,360 878 Investment Management: Alternative funding earnings 104 15 Average different investments 309 237 Health Solutions: Alternative funding earnings 50 13 Average different investments 134 99 DAC/VOBA and Other Intangibles Unlocking Changes in Adjusted working earnings earlier than earnings taxes and Net earnings (loss) are influenced by will increase and decreases in amortization of DAC, VOBA, deferred gross sales inducements ("DSI"), and unearned income ("URR"), collectively, "DAC/VOBA and different intangibles". Unlocking, described beneath, associated to DAC, VOBA, DSI and URR, in addition to amortization of web value of reinsurance, are known as "DAC/VOBA and other intangibles unlocking." We amortize DAC/VOBA and different intangibles associated to fastened and variable deferred annuity contracts over the estimated lives of the contracts in relation to the emergence of estimated gross earnings. Assumptions as to mortality, persistency, curiosity crediting charges, returns related to separate account efficiency, affect of hedge efficiency, bills to manage the enterprise and sure financial variables, akin to inflation, are based mostly on our expertise and our total brief-time period and lengthy-time period future expectations for returns out there within the capital markets. At every valuation date, estimated gross earnings are up to date with precise gross earnings and the assumptions underlying future estimated gross earnings are evaluated for continued reasonableness. Adjustments to estimated gross earnings require that amortization charges be revised retroactively to the date of the contract issuance, which is referred to as unlocking. As a consequence of this course of, the cumulative balances of DAC/VOBA and different intangibles are adjusted with an offsetting profit or cost to earnings to replicate adjustments within the interval of the revision. An unlocking occasion that ends in a profit to earnings ("favorable unlocking") usually happens as a consequence of precise expertise or future expectations being favorable in comparison with earlier estimates. Changes in DAC/VOBA and different intangibles as a consequence of contract adjustments or contract terminations greater than estimated are additionally included in "unlocking." At every valuation date, we consider these assumptions and, if precise expertise or different proof means that earlier assumptions ought to be revised, we modify the reserve stability, with a associated cost or credit score to Policyholder advantages. These reserve changes are included in unlocking related to all our segments. An unlocking occasion that ends in a cost to earnings ("unfavorable unlocking") usually happens in consequence of precise expertise or future expectations being unfavorable in comparison with earlier estimates. As a consequence of unlocking, the amortization schedules for future intervals are additionally adjusted. The DAC/VOBA and different intangibles unlocking within the desk beneath consists of the web affect of the annual evaluation of the assumptions. During the third quarter of 2021 and 2020, we accomplished our annual evaluation of the assumptions, together with projection mannequin inputs, in every of our segments (aside from Investment Management, for which assumption evaluations usually are not related). As a consequence of this evaluation, now we have made a quantity of adjustments to our assumptions leading to a web favorable affect of$10 million to Adjusted working earnings earlier than earnings taxes in 2021 and a web unfavorable affect of$175 million to Adjusted working earnings earlier than earnings taxes in 2020. The favorable unlocking in third quarter 2021 was pushed principally by adjustments in our asset return assumptions. The unfavorable unlocking in third quarter 2020 was pushed principally by reductions within the lengthy-time period rates of interest of 175 foundation factors and lengthy-time period fairness fee of return of 100 foundation factors in our Wealth Solutions enterprise. 68 -------------------------------------------------------------------------------- Table of Contents The following desk presents the quantity of DAC/VOBA and different intangibles unlocking included in Adjusted working earnings earlier than earnings taxes for the intervals indicated: Year Ended December 31, ($ in hundreds of thousands) 2021 2020 Wealth Solutions$ 29 $ (149) Total DAC/VOBA and different intangibles unlocking$ 29
We additionally evaluation the estimated gross earnings for every of our blocks of enterprise to decide recoverability of DAC/VOBA and different intangibles every interval. If these property are deemed to be unrecoverable, a write-down is recorded that's referred to as loss recognition. During the third quarter of 2021, our evaluations didn't end in materials loss recognition or premium deficiency reserve that impacted Adjusted working earnings earlier than earnings taxes. During the third quarter of 2020, our evaluations resulted in loss recognition, associated to the reductions in lengthy-time period rates of interest and fairness fee of return, of$68 million ,$10 million of which was mirrored in Adjusted working earnings earlier than earnings taxes and included in the desk above. The remaining$58 million was excluded from Adjusted working earnings earlier than earnings taxes and mirrored in Income (loss) from companies exited or to be exited by means of reinsurance. See Critical Accounting Judgments and Estimates in Part II, Item 7. of this Annual Report on Form 10-Okay for extra data.
Liquidity and Capital Resources
Liquidity refers to our capacity to entry ample sources of money to satisfy the necessities of our working, investing and financing actions. Capital refers to our lengthy-time period monetary assets out there to help enterprise operations and future progress. Our capacity to generate and preserve ample liquidity and capital is determined by the profitability of the companies, timing of money flows on investments and merchandise, normal financial situations and entry to the capital markets and the opposite sources of liquidity and capital described herein. The following dialogue presents a evaluation of our sources and makes use of of liquidity and capital. This dialogue ought to be learn in its entirety and in conjunction with the Off-Balance Sheet Arrangements and Aggregate Contractual Obligations desk contained in Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7. of this Annual Report on Form 10-Okay.
Consolidated Sources and Uses of Liquidity and Capital
Our principal out there sources of liquidity are product expenses, funding earnings, proceeds from the maturity and sale of investments, proceeds from debt issuance and borrowing amenities, fairness securities issuance, repurchase agreements, contract deposits and securities lending. Primary makes use of of these funds are funds of policyholder advantages, commissions and working bills, curiosity credit, share repurchases, funding purchases and contract maturities, withdrawals and surrenders.
Parent Company Sources and Uses of Liquidity
Voya Financial, Inc. is basically depending on money flows from its working subsidiaries to satisfy its obligations. The principal sources of funds out there toVoya Financial, Inc. embody dividends and returns of capital from its working subsidiaries, in addition to money and brief-time period investments, and proceeds from debt issuances, borrowing amenities and fairness securities issuances. These sources of funds embody the$500 million revolving credit score sublimit of our Third Amended and Restated Credit Agreement and reciprocal borrowing amenities maintained withVoya Financial, Inc.'s subsidiaries in addition to alternate sources of liquidity described beneath. Business divestitures have additionally offered an essential supply of liquidity in latest intervals, together with by means of a big improve in extra capital ranges in consequence of the completion of the Individual Life transaction inJanuary 2021 . We estimate that our extra capital (which we outline as the quantity of capital and surplus in our insurance coverage subsidiaries above our 375% RBC goal, plus the quantity of holding firm liquidity above our$200 million goal) as ofDecember 31, 2021 was roughly$1.5 billion . 69
——————————————————————————–
Table of
Voya Financial, Inc.’s
indicated are introduced within the following desk:
Year Ended December 31, ($ in hundreds of thousands) 2021 2020 2019
Beginning money and money equivalents stability
212$ 209 Sources: Proceeds from loans from subsidiaries, web of repayments(2) 12 585 65 Dividends and returns of capital from subsidiaries 1,633 294 1,064 Proceeds from Resolution Sale 672 - - Proceeds from issuance of most well-liked inventory, web - - 293 Amounts obtained from subsidiaries beneath tax sharing agreements, web - 231 - Refund of earnings taxes, web - 112 128 Proceeds from sale of fairness securities, web - - 121 DCSP Hedge Collateral Movements 10 - - Sale of Interest in Wholly Owned Subsidiary 80 - - Asset maturities and funding earnings, web 215 - - Other, web - - 15 Total sources 2,622 1,222 1,686 Uses: Repurchase of Senior Notes 453 - 97 Premium paid and different charges associated to debt extinguishment 28 - 9 Payment of curiosity expense 130 132 136 Capital offered to subsidiaries (1) 49 441 3 Repayments of loans from subsidiaries, web of new issuances 523 - - New issuances of loans to subsidiaries, web of repayments(2) - - 85 Amounts paid to subsidiaries beneath tax sharing preparations, web 141 - 123 Common inventory acquired - Share repurchase 1,113 516 1,136 Share-based compensation 44 17 22 Dividends paid on most well-liked inventory 36 36 28 Dividends paid on frequent inventory 80 76 44 Other, web 35 4 - Total makes use of 2,632 1,222 1,683 Net improve (lower) in money and money equivalents (10) - 3 Ending money and money equivalents stability$ 202 $
212
(1) Reflects a capital contribution to SLDI of
(2) Reflects netting of intercompany receivable from subsidiaries of
in 2021 and
Share Repurchase Program and Dividends to Shareholders
See the Shareholders' Equity Note in Part II, Item 8. of this Annual Report on Form 10-Okay for data regarding authorizations by the Board of Directors to repurchase our shares and quantities of frequent inventory repurchased pursuant to such authorizations for the years endedDecember 31, 2021 , 2020 and 2019. As ofDecember 31, 2021 , we have been approved to repurchase shares as much as an mixture buy value of$521 million . 70
-------------------------------------------------------------------------------- Table of Contents The following desk supplies a abstract of frequent dividends and repurchases of frequent shares for the intervals indicated: ($ in hundreds of thousands) Year EndedDecember 31, 2021 2020
2019
Dividends paid on frequent shares$ 80 $ 76 $
44
Repurchases of frequent shares (at value) 1,143 526 1,096 Total$ 1,223 $ 602 $ 1,140
Subsequent to
by means of a 10b5-1 plan for an mixture buy value of
Liquidity
We handle liquidity by means of entry to substantial funding portfolios as effectively as a range of different sources of liquidity together with dedicated credit score amenities, securities lending and repurchase agreements. Our asset-legal responsibility administration ("ALM") course of takes under consideration the anticipated maturity of investments and anticipated profit funds in addition to the particular nature and danger profile of the liabilities. As half of our liquidity administration course of, we mannequin totally different situations to find out whether or not present property are ample to meet projected money flows. Capitalization The major elements of our capital construction consist of debt and fairness securities. Our capital place is supported by money flows inside our working subsidiaries, the supply of borrowed funds beneath liquidity amenities, and any extra capital we elevate to put money into the expansion of the enterprise and for normal company functions. We handle our capital place based mostly on a range of elements together with, however not restricted to, our monetary energy, the credit standing ofVoya Financial, Inc. and of its insurance coverage firm subsidiaries and normal macroeconomic situations. Non-controlling curiosity in restricted partnerships, a element of Shareholders' Equity on our Consolidated Balance Sheets, elevated in consequence of favorable market appreciation in restricted partnership investments, web of contributions and distributions. See the Consolidated and Nonconsolidated Investment Entities Note to our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-Okay for added particulars over adjustments in non-controlling curiosity throughout the 12 months and impacting capitalization. As ofDecember 31, 2021 , we had$1 million of brief-time period debt borrowings excellent consisting fully of the present portion of lengthy-time period debt. The following desk summarizes our borrowing actions for the 12 months endedDecember 31, 2021 : Beginning Maturities and ($ in hundreds of thousands) Balance Issuance Repayment Other Changes Ending Balance Total lengthy-time period debt$ 3,044 $ -$ (453) $ 4$ 2,595 As ofDecember 31, 2020 , we had$1 million of brief-time period debt borrowings excellent consisting fully of the present portion of lengthy-time period debt. The following desk summarizes our borrowing actions for the 12 months endedDecember 31, 2020 : Beginning Maturities and ($ in hundreds of thousands) Balance Issuance Repayment Other Changes Ending Balance Total lengthy-time period debt$ 3,042 $ - $ - $ 2$ 3,044
As of
See the Financing Agreements and Shareholders' Equity Notes in Part II, Item 8. of this Annual Report on Form 10-Okay for added particulars over adjustments in debt and fairness throughout the 12 months and impacting capitalization. 71 -------------------------------------------------------------------------------- Table of Contents Financial Leverage Ratio The Financial Leverage Ratio is a measure that we use to observe the extent of our debt relative to our complete capitalization. It is influenced by adjustments in the quantity of our Financial obligations (numerator) and adjustments in our Adjusted capitalization (denominator) which incorporates Total shareholders' fairness. The following desk presents the monetary leverage ratio for the intervals indicated: As of December 31, ($ in hundreds of thousands) 2021 2020 Financial Debt Total monetary debt$ 2,596 $ 3,045 Other monetary obligations(1) 300 485 Total monetary obligations 2,896 3,530
Equity(7)
Preferred fairness(2) 612 612 Common fairness, excluding AOCI 5,541 4,600 Total shareholders' fairness, excluding AOCI 6,153 5,212 AOCI 2,100 4,898Total Voya Financial, Inc. shareholders' fairness 8,253 10,110 Noncontrolling curiosity 1,568 1,068 Total shareholders' fairness$ 9,821 $ 11,178 Capital(7) Capitalization(3)$ 10,849 $ 13,155 Adjusted capitalization(4)$ 12,717 $ 14,708 Debt-to-Capital(7) Debt-to-Capital Ratio(5) 23.9 % 23.1 % Financial Leverage Ratio(6) 27.6 % 28.2 % (1) Includes working leases, financing leases, and unfunded pension plan after-tax. (2) Includes most well-liked inventory par worth and extra paid-in-capital. (3) Includes Total monetary debt andTotal Voya Financial, Inc. shareholders' fairness. (4) Includes Total monetary obligations and Total shareholders' fairness. (5) Total monetary debt divided by Capitalization. (6) Total monetary obligations and Preferred fairness divided by Adjusted capitalization. (7) 2021 outcomes embody impacts associated to the shut of the Individual Life Transaction for each the offered entities and the companies that have been ceded: Common fairness, excluding AOCI, consists of the funding good points, web of associated intangible amortization and expenses, because of the switch of property to the consolation belief; AOCI consists of the discount in unrealized good points and associated intangible amortization and expenses associated to switch of property to the consolation belief in addition to the discharge of the AOCI associated to the offered entities. Our Financial Leverage Ratio decreased 60 foundation factors from 28.2% atDecember 31, 2020 to 27.6% atDecember 31, 2021 . This lower was primarily pushed by debt extinguishment, partially offset by a lower in Adjusted capitalization. The lower in Adjusted capitalization was primarily as a consequence of repurchases of frequent inventory and a discount in Accumulated different complete earnings associated to the Life Insurance Transaction and the impact of greater rates of interest, partially offset by will increase in Net earnings out there to frequent shareholders and in Noncontrolling curiosity. For additional particulars in regards to the change in Noncontrolling curiosity, check with the Consolidated and Nonconsolidated Investment Entities Note in Part II, Item 8. of this Annual Report on Form 10-Okay. 72
-------------------------------------------------------------------------------- Table of Contents Preferred Stock Our capacity to declare or pay dividends on, or buy, redeem or in any other case purchase, shares of our frequent inventory will probably be considerably restricted within the occasion that we don't declare and pay (or put aside) dividends on the Series A and Series B most well-liked inventory for the final previous dividend interval. During the 12 months endedDecember 31, 2021 , we declared and paid dividends of$20 million and$16 million on the Series A and Series B most well-liked inventory, respectively. During the 12 months endedDecember 31, 2020 , we declared and paid dividends of$20 million and$16 million on the Series A and Series B most well-liked inventory, respectively. During the 12 months endedDecember 31, 2019 , we declared and paid dividends of$20 million and$8 million on the Series A and Series B most well-liked inventory, respectively. As ofDecember 31, 2021 , there have been no most well-liked inventory dividends in arrears. See the Shareholders' Equity Note in Part II, Item 8. of this Annual Report on Form 10-Okay for additional data on most well-liked inventory issuances.
Senior Unsecured Credit Facility
See the Financing Agreements Note in Part II, Item 8. of this Annual Report on
Form 10-Okay for data on the senior unsecured credit score facility.
Other Credit Facilities
We have traditionally used credit score amenities to supply collateral for affiliated reinsurance transactions with captive insurance coverage subsidiaries. These preparations, which facilitated the financing of statutory reserve necessities, primarily associated to our divested companies.
See the Financing Agreements Note in Part II, Item 8. of this Annual Report on
Form 10-Okay for data on different credit score amenities.
Voya Financial, Inc. supplies ensures to sure of our subsidiaries to help numerous enterprise necessities: •Voya Financial, Inc. ensures the obligations ofVoya Holdings beneath the$13 million principal quantity Equitable Notes maturing in 2027, and supplies a again-to-again assure to ING Group in respect of its assure of$358 million mixed principal quantity ofAetna Notes. •Voya Financial, Inc. andVoya Holdings present a assure of cost of obligations to sure subsidiaries beneath sure surplus notes held by these subsidiaries. We didn't acknowledge any asset or legal responsibility as ofDecember 31, 2021 in relation to intercompany indemnifications, ensures or help agreements. As ofDecember 31, 2021 , no ensures existed wherein we have been required to at the moment carry out beneath these preparations.
Securities Pledged
We have interaction in securities lending whereby sure securities from our portfolio
are loaned to different establishments for brief intervals of time.
See Business, Basis of Presentation and Significant Accounting Policies and
Investments (excluding Consolidated Investment Entities) Note in Part II, Item
8. of this Annual report on 10-Okay for additional data on our securities
lending program.
Repurchase Agreements
We enter into reverse repurchase agreements and have interaction in greenback repurchase
agreements with mortgage-backed securities (“dollar rolls”) and repurchase
agreements with different collateral sorts to extend our return on investments and
enhance liquidity.
See Business, Basis of Presentation and Significant Accounting Policies and
Investments (excluding Consolidated Investment Entities) Note in Part II, Item
8. of this Annual report on 10-Okay for additional data on repurchase
agreements.
73 -------------------------------------------------------------------------------- Table of Contents FHLB We are at the moment a member of the FHLB ofBoston and the FHLB ofDes Moines and could have interaction in transactions with FHLB for funding earnings enhancement and/or liquidity functions. We are required to keep up a collateral deposit to again any funding agreements issued by the FHLB. We have the flexibility to acquire funding from the FHLBs, within the type of non-putable funding agreements, based mostly on a proportion of the worth of our property and topic to the supply of eligible collateral. The sorts of securities usually pledged embody mortgage securities, industrial actual property andU.S. treasury securities. Our borrowing capability can be restricted by the lending worth of our property eligible to be pledged to the FHLB. As ofDecember 31, 2021 and 2020, our out there collateral lending worth was roughly$2.4 billion for VRIAC and RLI. We had$1,461 million and$795 million in FHLB funding agreements as ofDecember 31, 2021 and 2020, that are included in Contract proprietor account balances on the Consolidated Balance Sheets. As ofDecember 31, 2021 and 2020, we had property with a market worth of roughly$1,881 million and$1,386 million , respectively, which collateralized the FHLB funding agreements.
Borrowings from Subsidiaries
We preserve revolving reciprocal mortgage agreements with a quantity of our life and non-life insurance coverage subsidiaries which are used to fund brief-time period money necessities that come up within the abnormal course of enterprise. Under these agreements, both social gathering could borrow as much as the utmost allowable beneath the settlement for a time period no more than 270 days. For life insurance coverage subsidiaries, the quantities that both social gathering could borrow beneath the settlement differ and are between 2% and 5% of the insurance coverage subsidiary's statutory web admitted property (excluding separate accounts) as of the earlier 12 months finish relying on the state of domicile. As ofDecember 31, 2021 , the mixture quantity that could be borrowed or lent beneath agreements with life insurance coverage subsidiaries was$1.5 billion . For non-life insurance coverage subsidiaries, the utmost allowable beneath the settlement is based mostly on the property of the subsidiaries and their specific money necessities. As ofDecember 31, 2021 ,Voya Financial, Inc. had$130 million in excellent borrowings from subsidiaries and had loaned$123 million to its subsidiaries.
Collateral – Derivative Contracts
As ofDecember 31, 2021 , we held$17 million and$71 million of web money collateral associated to OTC spinoff contracts and cleared spinoff contracts, respectively. As ofDecember 31, 2020 , we held$5 million and$140 million of web money collateral associated to OTC spinoff contracts and cleared spinoff contracts, respectively. In addition, as ofDecember 31, 2021 , we delivered$124 million of securities and held two securities as collateral. As ofDecember 31, 2020 , we delivered$170 million of securities and held no securities as collateral. See the Derivatives Note in Part II, Item 8. Of this Annual report on 10-Okay for data on collateral for derivatives.
Ratings
Our entry to funding and our associated value of borrowing, collateral necessities for spinoff devices and the attractiveness of sure of our merchandise to prospects are affected by our credit score rankings and insurance coverage monetary energy rankings, that are periodically reviewed by the score businesses. Financial energy rankings and credit score rankings are essential elements affecting public confidence in an insurer and its aggressive place in advertising and marketing merchandise. Credit rankings are additionally essential to our capacity to lift capital by means of the issuance of debt and for the fee of such financing. A downgrade in our credit score rankings or the credit score or monetary energy rankings of our rated subsidiaries might have a cloth antagonistic impact on our outcomes of operations and monetary situation. See Risk Factors- A downgrade or a possible downgrade in our monetary energy or credit score rankings might end in a loss of enterprise and adversely have an effect on our outcomes of operations and monetary situation in Part I, Item 1A. of this Annual Report on Form 10-Okay. Financial energy rankings signify the opinions of score businesses relating to the monetary capacity of an insurance coverage firm to satisfy its obligations beneath an insurance coverage coverage. Credit rankings signify the opinions of score businesses relating to an entity's capacity to repay its indebtedness. These rankings usually are not a suggestion to purchase or maintain any of our securities and they could be revised or revoked at any time on the sole discretion of the score group. 74 -------------------------------------------------------------------------------- Table of Contents The monetary energy and credit score rankings ofVoya Financial, Inc. and its principal subsidiaries as of the date of this Annual Report on Form 10-Okay are summarized within the following desk. Rating Agency Moody's Investors A.M. Best Fitch, Inc. 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. (5) BBB+/steady Baa2/steady BBB+/Stable Financial Strength Rating/Outlook: Voya Retirement Insurance and Annuity (5) A/steady A2/steady A+/Stable
Company
ReliaStar Life Insurance Company A/steady A/steady A2/steady A+/Stable ReliaStar Life Insurance Company of New A/steady A/steady A2/steady A+/Stable
York
(1)A.M. Best's monetary energy rankings for insurance coverage corporations vary from "A++ (superior)" to "s (suspended)." Long-term credit ratings range from "aaa (distinctive)" to "s (suspended)." (2) Fitch's monetary energy rankings for insurance coverage corporations vary from "AAA (exceptionally sturdy)" to "C (distressed)." Long-term credit score rankings vary from "AAA (highest credit quality)," which denotes exceptionally sturdy capability for well timed cost of monetary commitments, to "D (default)." (3) Moody's monetary energy rankings for insurance coverage corporations vary from "Aaa (distinctive)" to "C (lowest)." Numeric modifiers are used to check with the rating inside the group with 1 being the best and 3 being the bottom. These modifiers are used to point relative energy inside a class. Long-term credit score rankings vary from "Aaa (highest)" to "C (default)." (4) S&P's monetary energy rankings for insurance coverage corporations vary from "AAA (extraordinarily sturdy)" to "D (default)." Long-term credit ratings range from "AAA (extraordinarily sturdy)" to "D (default)." (5) EffectiveApril 11, 2019 ,A.M. Best withdrew, on the Company's request, its monetary energy rankings with respect toVoya Financial, Inc. andVoya Retirement Insurance and Annuity Company . Rating businesses use an "outlook" assertion for each business sectors and particular person corporations. For an business sector, a steady outlook usually implies that over the following 12 to 18 months the score company expects rankings to stay unchanged amongst corporations within the sector. For a specific firm, an outlook usually signifies a medium- or lengthy-time period development in credit score fundamentals, which if continued, could result in a score change. In June of 2021, Moody's revised its outlook for theU.S. life insurance coverage sector from detrimental to steady. In December of 2021,A.M. Best revised its outlook on theU.S. life insurance coverage sector from detrimental to steady. Also inDecember 2021 , Fitch revised its outlook for theU.S. life insurance coverage sector from detrimental to impartial.
Reinsurance
We reinsure our enterprise by means of a diversified group of effectively capitalized, extremely rated reinsurers. However, we stay liable to the extent our reinsurers don't meet their obligations beneath the reinsurance agreements. We monitor tendencies in arbitration and any litigation outcomes with our reinsurers. Collectability of reinsurance balances are evaluated by monitoring rankings and evaluating the monetary energy of our reinsurers. Large reinsurance recoverable balances with offshore or different non-accredited reinsurers are secured by means of numerous kinds of collateral, together with secured trusts, funds withheld accounts and irrevocable LOCs. The S&P monetary energy score of our reinsurers with our largest reinsurance recoverable balances are A- rated or higher. These reinsurers are (i) Resolution Life US and its subsidiaries, (ii)Lincoln National Life Insurance Company andLincoln Life & Annuity Company of New York and subsidiaries of Lincoln National Corporation ("Lincoln"), and (iii)RGA Reinsurance Company . Only these reinsurance recoverable balances the place restoration is deemed possible are acknowledged as property on our Consolidated Balance Sheets. In reference to the Individual Life Transaction onJanuary 4, 2021 , RLI, RLNY, and VRIAC entered into reinsurance agreements with SLD. Pursuant to those agreements, RLI and VRIAC reinsured to SLD a 100% quota share, and RLNY reinsured to SLD a 75% quota share, of their respective particular person life insurance coverage and annuities companies. RLI, RLNY, and VRIAC stay subsidiaries of our Company. For extra data relating to our reinsurance recoverable balances, see Quantitative and Qualitative Disclosures About Market Risk in Part II, Item 7A. and the Reinsurance Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-Okay. 75 -------------------------------------------------------------------------------- Table of Contents Pension and Postretirement Plans When contributing to our certified retirement plans we are going to take into consideration the minimal and most quantities required by ERISA, the attained funding goal proportion of the plan, the variable-fee premiums that could be required by thePension Benefit Guaranty Corporation ("PBGC") and any funding reduction that may be enacted byCongress . Contributions to our non-certified plans and different postretirement and put up-employment plans are funded from normal property of the respective sponsoring subsidiary firm as advantages are paid.
For extra data on our pension and postretirement plan preparations,
see the Employee Benefit Arrangements Note in our Consolidated Financial
Statements in Part II, Item 8. of this Annual Report on Form 10-Okay.
Restrictions on Dividends and Returns of Capital from Subsidiaries
Our enterprise is performed by means of working subsidiaries.U.S. insurance coverage legal guidelines and rules regulate the cost of dividends and different distributions by ourU.S. insurance coverage subsidiaries to their respective dad and mom. These restrictions are based mostly partly on the prior 12 months's statutory earnings and surplus. In normal, dividends as much as specified ranges are thought-about abnormal and could also be paid with out prior approval. Dividends in bigger quantities, or "extraordinary" dividends, are topic to approval by the insurance coverage commissioner of the state of domicile of the insurance coverage subsidiary proposing to pay the dividend. In addition, beneath the insurance coverage legal guidelines of our principal insurance coverage subsidiaries domiciled inConnecticut andMinnesota (these insurance coverage subsidiaries are referred to collectively as our "Principal Insurance Subsidiaries"), no dividend or different distribution exceeding an quantity equal to an insurance coverage firm's earned surplus could also be paid with out the domiciliary insurance coverage regulator's prior approval. Our Principal Insurance Subsidiary domiciled inConnecticut has abnormal dividend capability for 2021. However, in consequence of the extraordinary dividends it paid in 2015, 2016 and 2017, along with deferred good points on reinsurance in reference to historic recaptures and cessions of time period life insurance coverage enterprise together with the latest Individual Life Transaction, our Principal Insurance Subsidiary domiciled inMinnesota at the moment has detrimental earned surplus and can't make abnormal dividend funds. Any extraordinary dividend cost can be topic to domiciliary insurance coverage regulatory approval, which may be granted or withheld on the discretion of the regulator. For a abstract of relevant legal guidelines and rules governing dividends, see the Insurance Subsidiaries Dividend Restrictions part of the Insurance Subsidiaries Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-Okay. The following desk summarizes dividends permitted to be paid by our Principal Insurance Subsidiaries toVoya Financial, Inc. orVoya Holdings with out the necessity for insurance coverage regulatory approval and dividends and extraordinary distributions paid by every of our Principal Insurance Subsidiaries to its mum or dad for the intervals indicated: Dividends Permitted with out Approval Dividends Paid Extraordinary Distributions Paid Year Ended December 31, Year Ended December 31, ($ in hundreds of thousands) 2022 2021 2021 2020 2021 2020 SubsidiaryName (State of domicile):Voya Retirement Insurance and Annuity Company ("VRIAC") (CT)$ 522 $ 372 $ 78 294$ 474 $ -ReliaStar Life Insurance Company ("RLI") (MN) - - - - 358 -
Other Subsidiaries – Dividends, Returns of Capital, and Capital Contributions
We could obtain dividends from or contribute capital to our wholly owned non-life insurance coverage subsidiaries akin to dealer-sellers, funding administration entities and intermediate holding corporations. For the 12 months endedDecember 31, 2021 , dividends, web of capital contributions, obtained byVoya Financial, Inc. andVoya Holdings from non-life subsidiaries was$606 million , of which$112 million was a web non-money contribution to the non-life subsidiaries. For the 12 months endedDecember 31, 2020 , dividends web of capital contributions obtained byVoya Financial, Inc. andVoya Holdings from non-life subsidiaries was$13 million . 76
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Table of
Statutory Capital
Each of our wholly owned Principal Insurance Subsidiaries is subjected to minimal danger based mostly capital ("RBC") necessities established by the insurance coverage departments of their relevant state of domicile. The formulation for figuring out the quantity of RBC specify numerous weighting elements which are utilized to monetary balances or numerous ranges of exercise based mostly on the perceived diploma of danger. Regulatory compliance is decided by a ratio of complete adjusted capital ("TAC"), as outlined by the NAIC, to RBC necessities, as outlined by the NAIC. Each of ourU.S. insurance coverage subsidiaries exceeded the minimal RBC necessities that will require regulatory or corrective motion for all intervals introduced herein. Our estimated RBC ratio on a mixed foundation for our Principal Insurance Subsidiaries, with changes for sure intercompany transactions, was roughly 550% as ofDecember 31, 2021 . We additionally established a brand new RBC goal of 375%, efficientDecember 31, 2021 . Our wholly owned insurance coverage subsidiaries are required to organize statutory monetary statements in accordance with statutory accounting practices prescribed or permitted by the insurance coverage division of the state of domicile of the respective insurance coverage subsidiary. Statutory accounting practices primarily differ fromU.S. GAAP by charging coverage acquisition prices to expense as incurred, establishing future coverage profit liabilities utilizing totally different actuarial assumptions in addition to valuing investments and sure property and accounting for deferred taxes on a unique foundation. Certain property that aren't admitted beneath statutory accounting ideas are charged on to surplus. Depending on the rules of the insurance coverage division of the state of domicile, the whole quantity or a portion of an asset stability may be non-admitted relying on particular guidelines relating to admissibility. The most important non-admitted property are sometimes a portion of deferred tax property in extra of prescribed thresholds.
For a abstract of statutory capital and surplus of our Principal Insurance
Subsidiaries, see the Insurance Subsidiaries Note in our Consolidated Financial
Statements in Part II, Item 8. of this Annual Report on Form 10-Okay.
The following desk summarizes the estimated ratio of TAC to CAL on a mixed foundation primarily for our Principal Insurance Subsidiaries adjusted for an intercompany mortgage of$130 million as ofDecember 31, 2021 , and professional forma for the Individual Life Transaction and adjusted for an intercompany mortgage of$653 million as ofDecember 31, 2020 . ($ in hundreds of thousands) ($ in hundreds of thousands) As of December 31, 2021 As of December 31, 2020 CAL TAC Ratio CAL TAC Ratio$ 834 $ 4,584 550 %$ 767 $ 3,823 498 %
For extra data relating to RBC, see Business-Regulation-Insurance
Regulation in Part I, Item 1. of this Annual Report on Form 10-Okay.
77 -------------------------------------------------------------------------------- Table of Contents Off-Balance Sheet Arrangements and Aggregate Contractual Obligations The following desk presents our on- and off- stability sheet contractual obligations due in numerous intervals as ofDecember 31, 2021 . The funds mirrored on this desk are based mostly on our estimates and assumptions about these obligations and consequently the precise money outflows in future intervals will differ, presumably materially, from these introduced within the desk. Less than More than ($ in hundreds of thousands) Total 1 Year 1-3 Years 3-5 Years 5 Years Contractual Obligations: Purchase obligations(1)$ 993 $ 948 $ 45 $ - $ - Reserves for insurance coverage obligations(2)(3) 59,389 3,950 6,818 7,276 41,345 Retirement and different plans(4) 1,701 157 318 330 896 Short-term and lengthy-time period debt obligations(5) 5,844 140 444 882 4,378 Operating leases(6) 133 33 49 25 26 Finance leases(7) 23 21 2 - - Securities lending, repurchase agreements and collateral held(8) 1,300 1,195 - - 105 Total(9)$ 69,383 $ 6,444 $ 7,676 $ 8,513 $ 46,750 (1) Purchase obligations consist primarily of excellent commitments beneath different investments that will happen any time inside the phrases of the partnership and non-public loans. The precise timing, nonetheless, of funding these commitments associated to partnerships and non-public loans can't be estimated. Therefore, the quantity of the commitments associated to partnerships and non-public loans is included within the class "Less than 1 Year." (2) Reserves for insurance coverage obligations consist of quantities required to satisfy our future obligations for future coverage advantages and contract proprietor account balances. Amounts introduced within the desk signify estimated money funds beneath such contracts, together with vital assumptions associated to the receipt of future premiums, mortality, morbidity, lapse, renewal, retirement, incapacity and annuitization comparable with precise expertise. These assumptions additionally embody market progress and curiosity crediting in step with assumptions utilized in amortizing DAC. Estimated money funds are undiscounted for the time worth of cash. Accordingly, the sum of money flows introduced of$59.4 billion considerably exceeds the sum of Future coverage advantages and Contract proprietor account balances of$52.8 billion recorded on our Consolidated Balance Sheets as ofDecember 31, 2021 . Estimated money funds are additionally introduced gross of reinsurance. Due to the importance of the assumptions used, the quantities introduced might materially differ from precise outcomes. (3) Contractual obligations associated to sure closed blocks that have been divested by means of reinsurance to 3rd events with reserves within the quantity of$1.1 billion , have been excluded from the desk. Although we're not relieved of authorized legal responsibility to the contract holder for these closed blocks, third-social gathering collateral of$1.4 billion has been offered for the cost of the associated insurance coverage obligations. The sufficiency of collateral held for any particular person block could differ. (4) Includes estimated profit funds beneath our certified and non-certified pension plans, estimated profit funds beneath our different postretirement profit plans, and estimated funds of deferred compensation based mostly on participant elections and a mean retirement age. (5) The estimated funds due by interval for lengthy-time period debt displays the contractual maturities of principal, in addition to estimated future curiosity funds. The cost of principal and estimated future curiosity for brief-time period debt are mirrored in estimated funds due in lower than one 12 months. See the Financing Agreements Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-Okay for added data regarding the brief-time period and lengthy-time period debt obligations. (6) Operating leases consist primarily of excellent commitments for workplace area, gear and cars. (7) Finance lease obligation is related to a service contract. (8) Securities mortgage, repurchase agreements, and collateral held signify the legal responsibility to return collateral obtained from counterparties beneath securities lending agreements, OTC spinoff and cleared spinoff contracts in addition to the obligations associated to borrowings beneath repurchase agreements. Securities lending agreements embody provisions which allow us to name again securities with minimal discover and accordingly, the payable is classed as having a time period of lower than 1 12 months. Additionally, Securities lending agreements and collateral held embody off-stability sheet non-money collateral of$117 million and$96 million , respectively. (9) Unrecognized tax advantages are excluded from the desk as a consequence of immateriality. In addition, in 2015 we entered right into a put choice settlement with aDelaware belief that providesVoya Financial, Inc. the fitting, at any time over a ten-12 months interval, to situation as much as$500 million of senior notes to the belief in return for principal and curiosity strips ofU.S. Treasury securities which are held by the belief. See Liquidity-Put Option Agreement for Senior Debt Issuance for extra data on this settlement.
Critical Accounting Judgments and Estimates
General
The preparation of monetary statements in conformity with accounting ideas usually accepted inthe United States ("U.S. GAAP") requires us to make estimates and assumptions that have an effect on the reported quantities of property and liabilities and disclosure of contingent property and liabilities as of the date of the Consolidated Financial Statements and the reported quantities of revenues and bills throughout the reporting interval. Critical estimates and assumptions are evaluated on an on-going foundation based mostly on historic developments, market situations, business tendencies and different data that's affordable beneath the circumstances. There may be no assurance that precise outcomes will conform to estimates and assumptions and that reported outcomes of operations is not going to be materially affected by the necessity to make future accounting changes to replicate adjustments in these estimates and assumptions every now and then. The inputs into our estimates and assumptions take into account the financial implications of COVID-19 on our essential and vital accounting estimates. Those estimates are inherently topic to alter and precise 78 -------------------------------------------------------------------------------- Table of Contents outcomes might differ from these estimates, and the variations could also be materials to the accompanying Consolidated Financial Statements.
We have recognized the next accounting judgments and estimates as essential
in that they contain a better diploma of judgment and are topic to a
vital diploma of variability:
•Reserves for future coverage advantages; •DAC, VOBA and different intangibles (collectively, "DAC/VOBA and different intangibles"); •Valuation of investments and derivatives; •Impairments; •Income taxes; •Contingencies; and •Employee profit plans. In growing these accounting estimates, we make subjective and advanced judgments which are inherently unsure and topic to materials adjustments as information and circumstances develop. Although variability is inherent in these estimates, we imagine the quantities offered are applicable based mostly on the information out there upon preparation of the Consolidated Financial Statements. The above essential accounting estimates are described within the Business, Basis of Presentation and Significant Accounting Policies Note and the Discontinued Operations Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-Okay.
Reserves for Future Policy Benefits
The dedication of future coverage profit reserves relies on actuarial assumptions. The principal assumptions used to ascertain liabilities for future coverage advantages are based mostly on our expertise and periodically reviewed in opposition to business requirements. These assumptions embody mortality, morbidity, coverage lapse, contract renewal, cost of subsequent premiums or deposits by the contract proprietor, retirement, funding returns, inflation, profit utilization and bills. The assumptions used require appreciable judgments. Changes in, or deviations from, the assumptions used can considerably have an effect on our reserve ranges and associated outcomes of operations. •Mortality is the incidence of demise amongst policyholders triggering the cost of underlying insurance coverage protection by the insurer. In addition, mortality additionally refers back to the ceasing of funds on life-contingent annuities because of the demise of the annuitant. We make the most of a mix of precise and business expertise when setting our mortality assumptions. •A lapse fee is the share of in-pressure insurance policies surrendered by the policyholder or canceled by us as a consequence of non-cost of premiums. See the Reserves for Future Policy Benefits and Contract Owner Account Balances Note and the Guaranteed Benefit Features Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-Okay for additional data on our reserves for future coverage advantages, contract proprietor account balances and product ensures.
Insurance and Other Reserves
Reserves for conventional life insurance coverage contracts (time period insurance coverage, collaborating and non-collaborating complete life insurance coverage and conventional group life insurance coverage) and accident and medical health insurance signify the current worth of future advantages to be paid to or on behalf of contract homeowners and associated bills, much less the current worth of future web premiums. Assumptions, that are "locked-in" at inception of the contracts, embody rates of interest, mortality, bills and persistency and are based mostly on our estimates of anticipated expertise on the interval the coverage is offered or acquired, together with a provision for antagonistic deviation. Interest charges used to calculate the current worth of these reserves ranged from 1.5% to 7.7%. Due to the locked-in assumptions, sensitivity related to these contracts don't end in vital impacts to our outcomes of operations. Reserves for payout contracts with life contingencies are equal to the current worth of anticipated future funds. Assumptions, that are locked-in at inception of the contracts, embody rates of interest, mortality and bills, and are based mostly on our estimates of anticipated expertise on the interval the coverage is offered or acquired, together with a provision for antagonistic deviation. Such assumptions usually differ by annuity plan kind, 12 months of situation and coverage period. Interest charges used to calculate the current worth of future advantages ranged from 2.3% to 5.3%. Due to the locked-in assumptions, sensitivity related to these contracts don't end in vital impacts to our outcomes of operations 79 -------------------------------------------------------------------------------- Table of Contents Although assumptions are locked-in upon the issuance of conventional life insurance coverage contracts, sure accident and medical health insurance contracts and payout contracts with life contingencies, vital adjustments in expertise or assumptions could require us to supply for anticipated future losses on a product by establishing premium deficiency reserves. Premium deficiency reserves are decided based mostly on finest estimate assumptions that exist on the time the premium deficiency reserve is established and don't embody a provision for antagonistic deviation. See "Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles" beneath for premium deficiency reserves established throughout 2021 and 2020.
Product Guarantees and Index-crediting Features
The assumptions used to ascertain the liabilities for our product ensures require appreciable judgment and are established as administration's finest estimate of future outcomes. We periodically evaluation these assumptions and, if needed, replace them based mostly on extra data that turns into out there. Changes in, or deviations from, the assumptions used can considerably have an effect on our reserve ranges and associated outcomes of operations.
Stabilizer and MCG: We additionally situation stabilizer (“Stabilizer”) contracts that
comprise embedded derivatives which are measured at estimated truthful worth
individually from the host contracts. The managed custody assure product
(“MCG”) is a stand-alone spinoff and is measured in its entirety at estimated
truthful worth.
The estimated truthful worth of the Stabilizer embedded spinoff and MCG stand-alone spinoff is decided based mostly on the current worth of projected future claims, minus the current worth of future assured premiums. At inception of the contract, we venture a assured premium to be equal to the current worth of the projected future claims. The earnings related to the contracts is projected utilizing actuarial and capital market assumptions, together with advantages and associated contract expenses, over the anticipated life of the associated contracts. The money move estimates are projected beneath a number of capital market situations utilizing observable danger-free charges and different finest estimate assumptions.
The liabilities for Stabilizer embedded derivatives and the MCG stand-alone
spinoff embody a danger margin to seize uncertainties associated to
policyholder habits assumptions. The margin represents extra compensation
a market participant would require to imagine these dangers.
The low cost fee used to find out the truthful worth of the liabilities for our Stabilizer embedded derivatives and the MCG stand-alone spinoff consists of an adjustment to replicate the chance that these obligations is not going to be fulfilled ("nonperformance risk"). Our nonperformance danger adjustment is predicated on a mix of observable, equally rated peer holding firm credit score spreads, adjusted to replicate the credit score high quality of our particular person insurance coverage subsidiary that issued the assure, in addition to an adjustment to replicate the non-default spreads and the precedence and restoration charges of policyholder claims. Universal and Variable Universal Life: Reserves for UL and variable common life ("VUL") secondary ensures and paid-up ensures are calculated by estimating the anticipated worth of demise advantages payable and recognizing these advantages ratably over the buildup interval based mostly on complete anticipated assessments. The reserve for such merchandise acknowledges the portion of contract assessments obtained in early years used to compensate us for advantages offered in later years. Assumptions used, such because the rate of interest, lapse fee and mortality, are in step with assumptions utilized in estimating gross earnings for functions of amortizing DAC. See Quantitative and Qualitative Disclosures About Market Risk in Part II, Item 7A. of this Annual Report on Form 10-Okay for added data relating to particular hedging methods we make the most of to mitigate danger for the product ensures, in addition to sensitivities of the embedded spinoff and stand-alone spinoff liabilities to adjustments in sure capital markets assumptions.
Deferred Policy Acquisition Costs, Value of Business Acquired and Other
Intangibles
DAC represents coverage acquisition prices which were capitalized and are topic to amortization and curiosity. VOBA represents the excellent worth of in-pressure enterprise acquired and is topic to amortization and curiosity. DSI represents advantages paid to contract homeowners for a specified interval which are incremental to the quantities we credit score on comparable contracts with out gross sales inducements and are greater than the contract's anticipated ongoing crediting charges for intervals after the inducement. URR pertains to UL and VUL merchandise and represents coverage expenses for advantages or providers to be offered in future intervals.
Collectively, we check with DAC, VOBA, DSI and URR as “DAC/VOBA and other
intangibles”.
80 -------------------------------------------------------------------------------- Table of Contents Assumptions and Periodic Review Assumptions deemed essential to the DAC/VOBA and different intangibles estimates embody the lengthy-time period fairness fee of return, lengthy-time period rate of interest, and future mortality. Changes in assumptions can have a big affect on DAC/VOBA and different intangibles balances, amortization charges, reserve ranges, and outcomes of operations. Assumptions are administration's finest estimates of future end result. We periodically evaluation these assumptions in opposition to precise expertise and, based mostly on extra data that turns into out there, replace our assumptions. Deviation of rising expertise from our assumptions might have a big impact on our DAC/VOBA and different intangibles, reserves, and the associated outcomes of operations. During the third quarter of 2021 and 2020, we performed our annual evaluation of assumptions, together with projection mannequin inputs and made a quantity of adjustments to our assumptions which impacted the outcomes of our segments included in our Net earnings (loss). For the third quarter of 2021, the affect of annual assumption adjustments on Adjusted working earnings earlier than earnings taxes was$10 million favorable DAC/VOBA unlocking related to our persevering with operations. This was totally offset by$15 million unfavorable DAC/VOBA unlocking related to our divested companies and excluded from Adjusted working earnings earlier than earnings taxes for the present interval. The favorable DAC/VOBA unlocking in our persevering with operations for the present interval was primarily pushed by adjustments in asset return assumptions. DAC/VOBA unlocking is mirrored in Net amortization of DAC/VOBA within the Consolidated Statements of Operations. During the third quarter of 2021, and in consequence of the annual evaluation of assumptions, we recorded loss recognition of$136 million for DAC/VOBA and established premium deficiency reserves of$225 million , each of which have been associated to our divested companies and excluded from Adjusted working earnings for the present interval. Loss recognition associated to DAC/VOBA and premium deficiency reserves have been recorded in Net amortization of DAC/VOBA and Interest credited to contract proprietor account balances, respectively within the Consolidated Statements of Operations. During the primary quarter of 2021, and in consequence of the shut of the Individual Life transaction, we reviewed our blocks of enterprise to find out recoverability of DAC/VOBA and different intangibles. This evaluation resulted within the write down of DAC/VOBA and recording loss recognition of$302 million related to DAC/VOBA and the institution of premium deficiency reserves of$221 million in our divested companies. The loss recognition and institution of premium deficiency reserves have been recorded within the Consolidated Statements of Operations and excluded from Adjusted working earnings. During the third quarter of 2020, we performed our annual evaluation of assumptions and made adjustments which impacted our segments' outcomes of operations, in addition to the outcomes of discontinued operations described beneath. The affect of assumption adjustments on our outcomes from persevering with operations was unfavorable unlocking of$383 million , of which$165 million was included in Adjusted working earnings earlier than earnings taxes for the present interval. The affect of the annual evaluation of assumptions on our discontinued operations resulted in unfavorable unlocking of$193 million which was reported in Income (loss) from discontinued operations for the present interval. Unlocking within the third quarter of 2020 was primarily pushed by adjustments in long run curiosity and fairness charges. During the third quarter of 2020, and in consequence of the annual evaluation of assumptions, we recorded loss recognition related to sure blocks of reserves related to our persevering with and discontinued operations. Loss recognition recorded in persevering with operations was$171 million , of which$10 million was mirrored in Adjusted working earnings earlier than earnings taxes. Loss recognition recorded in discontinued operations was$26 million and was reported Income (loss) from discontinued operations, web of tax. For additional data, see the DAC/VOBA and Other Intangibles Unlocking part of the Management's Discussion and Analysis of Financial Condition and Results of Operations in Part 2, Item 7. of this Annual Report on Form 10-Okay for additional data. Sensitivity We carry out sensitivity analyses to evaluate the affect that sure assumptions have on DAC/VOBA and different intangibles, in addition to sure reserves. The following desk presents the estimated instantaneous web affect to earnings from persevering with and discontinued operations of numerous assumption adjustments on our DAC/VOBA and different intangible balances and the affect on associated reserves for future coverage advantages and reinsurance. The results usually are not consultant of the mixture impacts that would consequence if a mix of such adjustments to fairness markets, rates of interest and different assumptions occurred. 81
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Table of Contents As ofDecember 31 , ($ in hundreds of thousands) 2021
Decrease in lengthy-time period fairness fee of return assumption by 100 foundation
factors
$ (29)
A change to the lengthy-time period rate of interest assumption of -50 foundation factors
(34)
A change to the lengthy-time period rate of interest assumption of +50 foundation factors
24 An assumed improve in future mortality by 1% - Lower assumed fairness charges of return, decrease assumed rates of interest, elevated assumed future mortality and decreased fairness market values usually lower DAC/VOBA and different intangibles and improve future coverage advantages, thus reducing earnings earlier than earnings taxes. Higher assumed rates of interest usually improve DAC/VOBA and different intangibles and lower future coverage advantages, thus rising earnings earlier than earnings taxes.
Valuation of Investments and Derivatives
Our funding portfolio consists of sure investments recorded at truthful worth and consists of public and non-public fastened maturity securities, industrial mortgage and different loans, fairness securities, brief-time period investments, different invested property and spinoff monetary devices. We enter into rate of interest, fairness market, credit score default and foreign money contracts, together with swaps, futures, forwards, caps, flooring and choices, to scale back and handle numerous dangers related to adjustments in worth, yield, value, money move or trade charges of property or liabilities held or supposed to be held, or to imagine or cut back credit score publicity related to a referenced asset, index or pool. We additionally make the most of choices and futures on fairness indices to scale back and handle dangers related to our common-life kind and annuity merchandise. See the Investments (excluding Consolidated Investment Entities) Note and the Derivative Financial Instruments Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-Okay for additional data.
Investments
We measure the truthful worth of our monetary property and liabilities based mostly on assumptions utilized by market contributors in pricing the asset or legal responsibility, which could embody inherent danger, restrictions on the sale or use of an asset, or nonperformance danger, together with our personal credit score danger. The estimate of truthful worth is the value that will be obtained to promote an asset or paid to switch a legal responsibility ("exit price") in an orderly transaction between market contributors within the principal market, or essentially the most advantageous market within the absence of a principal market, for that asset or legal responsibility. We use a quantity of valuation sources to find out the truthful values of our monetary property and liabilities, together with quoted market costs, third-social gathering industrial pricing providers, third-social gathering brokers, business-normal, vendor-offered software program that fashions the worth based mostly on market observable inputs, and different inner modeling strategies based mostly on projected money flows. We categorize our monetary devices into a 3-degree hierarchy based mostly on the precedence of the inputs to the valuation method. The truthful worth hierarchy provides the best precedence to quoted costs in energetic markets for similar property or liabilities (Level 1) and the bottom precedence to unobservable inputs (Level 3). If the inputs used to measure truthful worth fall inside totally different ranges of the hierarchy, the class degree is predicated on the bottom precedence degree enter that's vital to the truthful worth measurement of the instrument. When out there, the estimated truthful worth of securities is predicated on quoted costs in energetic markets which are readily and frequently obtainable. When quoted costs in energetic markets usually are not out there, the dedication of estimated truthful worth is predicated on market normal valuation methodologies, together with discounted money flows, matrix pricing or different comparable strategies. Inputs to those methodologies embody, however usually are not restricted to, market observable inputs akin to benchmark yields, credit score high quality, issuer spreads, bids, provides and money move traits of the safety. For privately positioned bonds, we additionally take into account such elements as the web value of the borrower, worth of the collateral, the capital construction of the borrower, the presence of ensures, and the borrower's capacity to compete in its related market. Valuations are reviewed and validated month-to-month by an inner valuation committee utilizing value variance experiences, comparisons to inner pricing fashions, again testing of latest trades, and monitoring of buying and selling volumes, as applicable. The valuation of monetary property and liabilities entails appreciable judgment, is topic to appreciable variability, is established utilizing administration's finest estimate, and is revised as extra data turns into out there. As such, adjustments in, or deviations from, the assumptions utilized in such valuations can considerably have an effect on our outcomes of operations. Financial markets 82 -------------------------------------------------------------------------------- Table of Contents are topic to vital actions in valuation and liquidity, which may affect our capacity to liquidate and the promoting value that may be realized for our securities. Derivatives Derivatives are carried at truthful worth, which is decided by utilizing observable key monetary information, akin to yield curves, trade charges, S&P 500 costs,London Interbank Offered Rates ("LIBOR") and Overnight Index Swap Rates ("OIS") or by means of values established by third-social gathering sources, akin to brokers. Valuations for our futures contracts are based mostly on unadjusted quoted costs from an energetic trade. Counterparty credit score danger is taken into account and included in our valuation course of by means of counterparty credit standing necessities and monitoring of total publicity. Our personal credit score danger can be thought-about and included in our valuation course of. We have sure CDS and choices which are priced by third social gathering distributors or by utilizing fashions that primarily use market observable inputs, however comprise inputs that aren't observable to market contributors. We even have investments in sure fastened maturities and have issued sure common life-kind and annuity merchandise that comprise embedded derivatives for which truthful worth is not less than partially decided by ranges of or adjustments in home and/or overseas rates of interest (brief-time period or lengthy-time period), trade charges, prepayment charges, fairness markets, or credit score rankings/spreads. The truthful values of these embedded derivatives are decided utilizing costs or valuation strategies that require inputs which are each unobservable and vital to the total truthful worth measurement. For extra data relating to the valuation of and vital assumptions related to embedded derivatives and stand-alone derivatives related to sure common life-kind and annuity contracts, see "Reserves for Future Policy Benefits" above. In addition, now we have entered into coinsurance with funds withheld and modified coinsurance reinsurance preparations that comprise embedded derivatives. The truthful worth of the embedded derivatives is predicated on the change within the truthful worth of the underlying property held within the belief utilizing the valuation strategies and assumptions described for our investments held. The valuation of derivatives entails appreciable judgment, is topic to appreciable variability, is established utilizing administration's finest estimate and is revised as extra data turns into out there. As such, adjustments in, or deviations from, these assumptions utilized in such valuations can have a vital impact on the outcomes of operations. For extra data relating to the truthful worth of our investments and derivatives, see the Fair Value Measurements (excludingConsolidated Investment Entities) Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-Okay. For extra data relating to the sensitivities of rate of interest danger and fairness market value danger and affect on investments and derivatives, see the Quantitative and Qualitative Disclosures About Market Risk in Part II, Item 7A. of this Annual Report on Form 10-Okay. Impairments Fixed maturities, out there-for-sale, and mortgage loans on actual property may be topic to credit score impairment, which may have a big impact on the outcomes of operations. Refer to the Business, Basis of Presentation and Significant Accounting Policies Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-Okay for an understanding of our methodology and vital inputs thought-about inside the allowance for credit score losses and impairments. For extra data relating to the analysis course of for credit score impairments, check with the Investments (excluding Consolidated Investment Entities) Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-Okay.
Income Taxes
Valuation Allowances
We use sure assumptions and estimates in figuring out the earnings taxes payable or refundable for the present 12 months, the deferred earnings tax liabilities and property for gadgets acknowledged otherwise in our Consolidated Financial Statements from quantities proven on our earnings tax returns and the federal earnings tax expense. Determining these quantities requires evaluation and interpretation of present tax legal guidelines and rules, together with the loss limitation guidelines related to change in management. We train appreciable judgment in evaluating the quantity and timing of recognition of the ensuing earnings tax liabilities and property, which resulted in a launch of a good portion of our remaining valuation allowance within the present 12 months. 83 -------------------------------------------------------------------------------- Table of Contents For extra understanding over the Company's valuation allowance, check with the Business, Basis of Presentation and Significant Accounting Policies Note in Part II, Item 8. of this Annual report on Form 10-Okay. InDecember 2014 , we entered into an Issue Resolution Agreement ("IA") with theIRS regarding the Internal Revenue Code Section 382 calculation of the annual limitation on the use of sure of the Company's federal tax attributes that will apply as a consequence of the Section 382 occasion skilled by the Company inMarch 2014 . We don't anticipate the annual limitation to affect our capacity to make the most of the losses or credit.
For additional data on our earnings taxes, together with data on the
valuation allowance launch, see the Income Taxes Note to our Consolidated
Financial Statements in Part II, Item 8 of this Annual Report on Form 10-Okay.
Tax Contingencies
We acknowledge the tax profit from an unsure tax place solely whether it is extra probably than to not be sustained beneath examination by the relevant taxing authority. We additionally take into account positions which were reviewed and agreed to as half of an examination by the relevant taxing authority. For gadgets that meet the extra-probably-than-not recognition threshold, we measure the tax place as the most important quantity of profit that's greater than 50% more likely to be realized upon final decision with the relevant tax authority that has full information of all related data. Tax positions that don't meet the extra-probably-than-not normal usually are not acknowledged.
Changes in Law
Certain adjustments or future occasions, akin to adjustments in tax laws, geographic
combine of earnings, completion of tax audits, planning alternatives and
expectations about future outcomes might have an effect on our estimates of
deferred taxes, valuation allowances, tax provisions and efficient tax charges.
Contingencies
For data relating to our contingencies, see the Commitments and
Contingencies Note in our Consolidated Financial Statements in Part II, Item 8.
of this Annual Report on Form 10-Okay.
Employee Benefits Plans
We sponsor outlined profit pension and different postretirement profit plans masking eligible workers, gross sales representatives and different people. For accounting insurance policies associated to our worker profit plans, see the Business, Basis of Presentation and Significant Accounting Policies Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-Okay.
The desk beneath summarizes the elements of the web actuarial (good points) losses
associated to pension obligations acknowledged inside Operating bills in our
Consolidated Statements of Operations for the intervals indicated:
(Gain)/Loss Recognized ($ in hundreds of thousands) 2021 2020 2019 Discount Rate$ (102) $ 208 $ 292 Asset Returns 48 (190) (263) Mortality Table Assumptions 7 (21) (22) Demographic Data and different 15 1 (11) Total Net Actuarial (Gain)/Loss Recognized$ (32) $ (2) $ (4) For the 12 months endedDecember 31, 2021 , we elevated our pension plans low cost fee by 0.33% leading to a lower in our profit obligations and a corresponding actuarial achieve of$102 million . This improve within the low cost fee was pushed by improve within the 30-12 monthsTreasury and company AA yields. For the 12 months endedDecember 31, 2020 , we decreased our pension plans low cost fee by 0.69% leading to a rise in our profit obligations and a corresponding actuarial loss of$208 million . This lower within the low cost fee was pushed by lower within the 30-12 monthsTreasury and company AA yields. For the 12 months endedDecember 31, 2019 , we decreased our pension plans low cost fee by 1.1%, leading to a rise in our profit obligations and a corresponding actuarial loss of$292 million . This lower within the low cost fee was pushed by lower within the 30-12 monthsTreasury and company AA yields. 84 -------------------------------------------------------------------------------- Table of Contents Our anticipated lengthy-time period fee of return on our Voya Retirement Plan (the "Retirement Plan") property was 5.60% and 6.25% for 2021 and 2020, respectively. Our anticipated return on plan property is calculated utilizing 30-12 months ahead wanting assumptions based mostly on the lengthy-time period goal asset allocation. In 2021, the precise return on our Retirement Plan property was roughly 4.14%, leading to an actuarial loss of$48 million . In 2020, the precise return on our Retirement Plan property was roughly 15.6%, leading to an actuarial achieve of$190 million . In 2019, the precise return on our Retirement Plan property was roughly 24.4%, leading to an actuarial achieve of$263 million . InOctober 2021 , theSociety of Actuaries ("SOA") launched and we adopted new mortality enchancment projection scales (MP-2021) that projected a better fee of mortality enchancment than what was issued in 2020. These mortality assumption adjustments elevated our complete profit legal responsibility by lower than 1% in 2021 and contributed$7 million to the web actuarial achieve for the 12 months endedDecember 31, 2021 . Changes in mortality assumptions in 2020 and 2019 contributed$(21) million and$(22) million , respectively, to the web actuarial (achieve)/loss in these intervals. The Retirement Plan is a tax certified outlined profit plan, the advantages of that are assured (inside sure specified authorized limits) by thePension Benefit Guaranty Corporation ("PBGC"). BeginningJanuary 1, 2012 , the Retirement Plan adopted a money stability pension system as a substitute of a last common pay ("FAP") system, permitting all eligible workers to take part within the Retirement Plan. Participants earn an annual credit score equal to 4% of eligible compensation. Interest is credited month-to-month based mostly on a 30-12 monthsU.S. Treasury securities bond fee printed by theIRS within the previous August of every year. The accrued vested money pension stability profit is transportable; contributors can take it in the event that they go away us. Sensitivity The low cost fee and anticipated fee of return assumptions regarding our outlined profit pension plans have traditionally had essentially the most vital impact on our web periodic profit prices and the projected and amassed projected profit obligations related to these plans. The low cost charges are based mostly on present market data offered by plan actuaries. The low cost fee modeling course of entails choosing a portfolio of prime quality, non-callable bonds that may match the money flows of the outlined profit pension plans. The weighted common low cost fee in 2021 for the web periodic profit value was 2.67% for outlined profit pension plans. The low cost fee as ofDecember 31, 2021 for the profit obligation of our pension plans was 3.00%. As ofDecember 31, 2021 , the sensitivities of the impact of a change within the low cost fee are as introduced beneath. This represents the estimate of actuarial good points (losses) that will be acknowledged instantly by means of Operating bills in our Consolidated Statements of Operations: Increase (Decrease) in Net Periodic Benefit ($ in hundreds of thousands) Cost-Pension Plans Increase in low cost fee by 100 foundation factors $ (267) Decrease in low cost fee by 100 foundation factors 330 Increase (Decrease) in ($ in hundreds of thousands) Pension Benefit Obligation Increase in low cost fee by 100 foundation factors $
(267)
Decrease in low cost fee by 100 foundation factors 330 The low cost fee for use to find out curiosity value for 2022 is 3.00%. The estimated affect of this transformation in addition to actuarial achieve on low cost fee skilled throughout 2021 is predicted to extend our web periodic pension value by roughly$5 million . The anticipated fee of return considers the asset allocation, historic returns on the kinds of property held and present financial surroundings. Based on these elements, we anticipate that the property will earn a mean proportion per 12 months over the long run. This estimation is predicated on an energetic return on a compound foundation, with a discount for administrative bills and supervisor charges paid to non-affiliated corporations from the property. For estimation functions, we assume the lengthy-time period asset combine will probably be in step with the present combine. Changes within the asset combine might affect the quantity of recorded pension earnings or expense, the funded standing of the Retirement Plan and the necessity for future money contributions. 85
-------------------------------------------------------------------------------- Table of Contents The anticipated fee of return for 2021 was 5.60%, web of bills, for the Retirement Plan. The anticipated fee of return assumption is simply relevant to the Retirement Plan as property usually are not held by any of the opposite pension and different postretirement plans. As ofDecember 31, 2021 , the impact of a change within the precise fee of return on the web periodic profit value is introduced within the desk beneath. This represents the estimate of actuarial good points (losses) that will be acknowledged instantly by means of Operating bills in our Consolidated Statements of Operations: Increase (Decrease) in Net Periodic Benefit ($ in hundreds of thousands) Cost-Pension Plans Increase in precise fee of return by 100 foundation factors $ (22) Decrease in precise fee of return by 100 foundation factors 22 The anticipated fee of return for 2022 is 4.85%, web of bills, for the Retirement Plan, reflecting a change in asset allocation from fairness securities to fastened maturities. The estimated affect of this transformation in addition to the actuarial loss skilled on plan property in 2021 is predicted to extend our web periodic profit value by roughly$17 million .
In addition to the anticipated will increase in web periodic profit value described
above,
periodic pension value, akin to service value, that aren’t influenced by the
low cost fee or anticipated return on plan property assumptions.
For extra data associated to our worker profit plans, see the Employee Benefit Arrangements Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-Okay.
Impact of New Accounting Pronouncements
For data relating to the affect of new accounting pronouncements, see the Business, Basis of Presentation and Significant Accounting Policies Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-Okay.
INVESTMENTS (excluding Consolidated Investment Entities)
Investments for our normal account are managed by our wholly owned asset
supervisor,
agreements with associates. In addition, our inner treasury group manages our
holding firm liquidity investments, primarily cash market funds.
Investment Strategy
Our funding technique seeks to attain sustainable danger-adjusted returns by specializing in principal preservation, disciplined matching of asset traits with legal responsibility necessities and the diversification of dangers. Investment actions are undertaken in response to funding coverage statements that comprise internally established pointers and danger tolerances and are required to adjust to relevant legal guidelines and insurance coverage rules. Risk tolerances are established for credit score danger, credit score unfold danger, market danger, liquidity danger and focus danger throughout issuers, sectors and asset sorts that search to mitigate the affect of money move variability arising from these dangers. Segmented portfolios are established for teams of merchandise with comparable legal responsibility traits. Our funding portfolio consists largely of excessive high quality fastened maturities and brief-time period investments, investments in industrial mortgage loans, different investments and different devices, together with a small quantity of fairness holdings. Fixed maturities embody publicly issued company bonds, authorities bonds, privately positioned notes and bonds, bonds issued by states and municipalities, ABS, conventional MBS and numerous CMO tranches managed together with monetary derivatives as half of a proprietary technique referred to as CMO-B. We use derivatives for hedging functions to scale back our publicity to the money move variability of property and liabilities, rate of interest danger, credit score danger and market danger. In addition, we use credit score derivatives to duplicate publicity to particular person securities or swimming pools of securities as a method of reaching credit score publicity much like bonds of the underlying issuer(s) extra effectively. See the Investments (excluding Consolidated Investment Entities) Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-Okay for extra data on investments. 86
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Portfolio Composition
The following desk presents the funding portfolio as of the dates indicated: December 31, 2021 December 31, 2020 Carrying Carrying ($ in hundreds of thousands) Value % of Total Value % of Total Fixed maturities, out there-for-sale, excluding securities pledged $ 33,699 73.9 % $ 43,569 76.6 % Fixed maturities, at truthful worth choice 2,354 5.2 % 3,011 5.3 % Equity securities, at truthful worth 240 0.5 % 242 0.4 % Short-term investments(1) 97 0.2 % 111 0.2 % Mortgage loans on actual property 5,612 12.3 % 6,741 11.9 % Policy loans 392 0.9 % 718 1.3 % Limited partnerships/companies 1,739 3.8 % 1,476 2.5 % Derivatives 171 0.4 % 215 0.4 % Other investments 79 0.2 % 319 0.6 % Securities pledged 1,198 2.6 % 449 0.8 % Total investments $ 45,581 100.0 % $ 56,851 100.0 %
(1) Short-term investments embody investments with remaining maturities of one
12 months or much less, however higher than three months, on the time of buy.
Fixed Maturities
The following tables current complete fastened maturities, together with securities
pledged, by market sector, as of the dates indicated:
December 31, 2021 ($ in hundreds of thousands) Amortized Cost % of Total Fair Value % of Total Fixed maturities: U.S. Treasuries $ 764 2.2 %$ 1,003 2.7 % U.S. Government businesses and authorities 69 0.2 % 81 0.2 % State, municipalities and political subdivisions 1,000 2.9 % 1,111 3.0 % U.S. company public securities 10,402 30.5 % 11,941 32.1 % U.S. company non-public securities 4,889 14.3 % 5,325 14.3 % Foreign company public securities and overseas governments(1) 3,373 9.9 % 3,723 10.0 % Foreign company non-public securities(1) 3,320 9.7 % 3,501 9.4 % Residential mortgage-backed securities 4,183 12.3 % 4,302 11.5 % Commercial mortgage-backed securities 4,032 11.8 % 4,183 11.2 % Other asset-backed securities 2,069 6.2 % 2,081 5.6 % Total fastened maturities, together with securities pledged$ 34,101 100.0 %$ 37,251 100.0 %
(1) Primarily
87
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December 31, 2020 ($ in hundreds of thousands) Amortized Cost % of Total Fair Value % of Total Fixed maturities: U.S. Treasuries $ 1,033 2.5 %$ 1,471 3.1 % U.S. Government businesses and authorities 74 0.2 % 102 0.2 % State, municipalities and political subdivisions 1,166 2.9 % 1,346 2.9 % U.S. company public securities 13,366 32.7 % 16,387 34.9 % U.S. company non-public securities 5,653 13.8 % 6,446 13.7 % Foreign company public securities and overseas governments(1) 4,023 9.8 % 4,736 10.0 % Foreign company non-public securities(1) 4,220 10.3 % 4,646 9.9 % Residential mortgage-backed securities 5,370 13.1 % 5,626 12.0 % Commercial mortgage-backed securities 3,882 9.5 % 4,131 8.8 % Other asset-backed securities 2,110 5.2 % 2,138 4.5 % Total fastened maturities, together with securities pledged$ 40,897 100.0 %$ 47,029 100.0 %
(1) Primarily
As of
together with securities pledged, is between 7.0 and 7.5 years.
Fixed Maturities Credit Quality – Ratings
The Securities Valuation Office ("SVO") of the NAIC evaluates the fastened maturity safety investments of insurers for regulatory reporting and capital evaluation functions and assigns securities to 1 of six credit score high quality classes known as "NAIC designations." An internally developed score is used as permitted by the NAIC if no score is out there. These designations are usually much like the credit score high quality designations of the NAIC acceptable score organizations ("ARO") for marketable fastened maturity securities, known as score company designations aside from sure structured securities as described beneath. NAIC designations of "1," highest high quality and "2," prime quality, embody fastened maturity securities usually thought-about funding grade by such score organizations. NAIC designations 3 by means of 6 embody fastened maturity securities usually thought-about beneath funding grade by such score organizations. The NAIC designations for structured securities, together with subprime and Alt-A RMBS, are based mostly upon a comparability of the bond's amortized value to the NAIC's loss expectation for every safety. Securities the place modeling ends in no anticipated loss in every situation are thought-about to have the best designation of NAIC 1. A big proportion of our RMBS securities carry the NAIC 1 designation whereas the ARO score signifies beneath funding grade. This is primarily as a consequence of the credit score and intent impairments recorded by us that lowered the amortized value on these securities to a degree leading to no anticipated loss in any situation, which corresponds to the NAIC 1 designation. The methodology reduces regulatory reliance on score businesses and permits for higher regulatory enter into the assumptions used to estimate anticipated losses from such structured securities. In the tables beneath, we current the score of structured securities based mostly on rankings from the NAIC methodologies described above (which can not correspond to score company designations). NAIC designations (e.g., NAIC 1-6) are based mostly on the NAIC methodologies. As a consequence of time lags between the funding of investments, the finalization of authorized paperwork and the completion of the SVO submitting course of, the fastened maturity portfolio usually consists of securities, that haven't but been rated by the SVO as of every stability sheet date, akin to non-public placements. Pending receipt of SVO rankings, the categorization of these securities by NAIC designation is predicated on the anticipated rankings indicated by inner evaluation. Information about sure of our fastened maturity securities holdings by the NAIC designation is about forth within the following tables. Corresponding score company designation doesn't immediately translate into NAIC designation, however represents our greatest estimate of comparable rankings from score businesses, together with Moody's, S&P and Fitch. If no score is out there from a score company, then an internally developed score is used. As ofDecember 31, 2021 and 2020, the weighted common NAIC high quality score of our fastened maturities portfolio was 1.5. 88
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Table of Contents The following tables current credit score high quality of fastened maturities, together with securities pledged, utilizing NAIC designations as of the dates indicated: ($ in hundreds of thousands) December 31, 2021 Total Fair NAIC Quality Designation 1 2 3 4 5 6 Value U.S. Treasuries$ 1,003 $ - $ - $ - $ - $ -$ 1,003 U.S. Government businesses and authorities 81 - - - - - 81 State, municipalities and political subdivisions 1,003 105 3 - - - 1,111 U.S. company public securities 4,112 7,341 406 63 19 - 11,941U.S. company non-public securities 1,787 3,111 319 105 3 - 5,325 Foreign company public securities and overseas governments(1) 1,151 2,389 160 23 - - 3,723 Foreign company non-public securities(1) 310 2,850 185 82 - 74 3,501 Residential mortgage-backed securities 4,227 37 1 2 17 18 4,302 Commercial mortgage-backed securities 3,553 487 114 29 - - 4,183 Other asset-backed securities 1,685 330 10 13 30 13 2,081 Total fastened maturities$ 18,912 $ 16,650 $ 1,198 $ 317 $ 69 $ 105 $ 37,251 % of Fair Value 50.8% 44.7% 3.2% 0.9% 0.2% 0.2% 100.0%
(1) Primarily
($ in hundreds of thousands) December 31, 2020 Total Fair NAIC Quality Designation 1 2 3 4 5 6 Value U.S. Treasuries$ 1,471 $ - $ - $ - $ - $ -$ 1,471 U.S. Government businesses and authorities 102 - - - - - 102 State, municipalities and political subdivisions 1,214 128 4 - - - 1,346 U.S. company public securities 6,275 9,258 757 84 13 - 16,387U.S. company non-public securities 2,296 3,627 390 119 14 - 6,446 Foreign company public securities and overseas governments(1) 1,707 2,759 235 35 - - 4,736 Foreign company non-public securities(1) 418 3,863 145 220 - - 4,646 Residential mortgage-backed securities 5,265 236 78 1 22 24 5,626 Commercial mortgage-backed securities 3,712 346 63 10 - - 4,131 Other asset-backed securities 1,843 227 12 13 41 2 2,138 Total fastened maturities$ 24,303 $ 20,444 $ 1,684 $ 482 $ 90 $ 26 $ 47,029 % of Fair Value 51.7% 43.4% 3.6% 1.0% 0.2% 0.1% 100.0%
(1) Primarily
89 -------------------------------------------------------------------------------- Table of Contents The fastened maturities in our portfolio are usually rated by exterior score businesses and, if not externally rated, are rated by us on a foundation much like that utilized by the score businesses. As ofDecember 31, 2021 and 2020, the weighted common high quality score of our fastened maturities portfolio was A. Ratings are derived from three ARO rankings and are utilized as follows, based mostly on the quantity of company rankings obtained: • when three rankings are obtained then the center score is utilized; • when two rankings are obtained then the decrease score is utilized; • when a single score is obtained, the ARO score is utilized; and • when rankings are unavailable then an inner score is utilized. The following tables current credit score high quality of fastened maturities, together with securities pledged, utilizing ARO rankings as of the dates indicated: ($ in hundreds of thousands) December 31, 2021 Total Fair ARO Quality Ratings AAA AA A BBB BB and Below Value U.S. Treasuries$ 1,003 $ - $ - $ - $ -$ 1,003 U.S. Government businesses and authorities 70 - 11 - - 81 State, municipalities and political subdivisions 55 623 326 104 3 1,111 U.S. company public securities 66 728 3,727 6,954 466 11,941 U.S. company non-public securities 68 91 1,520 3,314 332 5,325 Foreign company public securities and overseas governments(1) 8 229 1,045 2,233 208 3,723 Foreign company non-public securities(1) - 48 259 2,938 256 3,501 Residential mortgage-backed securities 2,927 258 216 298 603 4,302 Commercial mortgage-backed securities 1,600 424 869 1,166 124 4,183 Other asset-backed securities 257 445 968 324 87 2,081 Total fastened maturities$ 6,054 $ 2,846 $ 8,941 $ 17,331 $ 2,079 $ 37,251 % of Fair Value 16.3% 7.6% 24.0% 46.5% 5.6% 100.0%
(1) Primarily
($ in hundreds of thousands) December 31, 2020 Total Fair ARO Quality Ratings AAA AA A BBB BB and Below Value U.S. Treasuries$ 1,471 $ - $ - $ - $ -$ 1,471 U.S. Government businesses and authorities 95 7 - - - 102 State, municipalities and political subdivisions 84 769 354 135 4 1,346 U.S. company public securities 168 933 5,928 8,575 783 16,387 U.S. company non-public securities 109 156 2,011 3,685 485 6,446 Foreign company public securities and overseas governments(1) 14 386 1,430 2,601 305 4,736 Foreign company non-public securities(1) - 49 390 3,868 339 4,646 Residential mortgage-backed securities 3,976 340 143 299 868 5,626 Commercial mortgage-backed securities 1,543 484 845 1,098 161 4,131 Other asset-backed securities 414 490 913 223 98 2,138 Total fastened maturities$ 7,874 $ 3,614 $ 12,014 $ 20,484 $ 3,043 $ 47,029 % of Fair Value 16.7 % 7.7 % 25.5 % 43.6 % 6.5 % 100.0 %
(1) Primarily
90 -------------------------------------------------------------------------------- Table of Contents Fixed maturities rated BB and beneath could have speculative traits and adjustments in financial situations or different circumstances which are extra more likely to result in a weakened capability of the issuer to make principal and curiosity funds than is the case with greater rated fastened maturities.
Potential Credit Related COVID-19 Exposures
The following desk presents our fastened maturities portfolio publicity to sectors that we imagine could also be notably affected by the financial penalties of COVID-19: ($ in hundreds of thousands) December 31, 2021 NAIC Rating (%) Unrealized % % Fair Value Fair Value % Capital Gain/Loss Public Private 1 2 3 4-6 Energy$ 2,203 5.8 % $ 296 72 % 28 % 19.7 % 66.4 % 9.9 % 4.0 % Midstream 949 2.5 % 131 69 % 31 % 6.4 % 88.6 % 3.4 % 1.6 % Independent Energy 379 1.0 % 51 74 % 26 % 23.9 % 23.9 % 33.2 % 19.0 % Integrated Energy 463 1.2 % 62 79 % 21 % 53.0 % 38.0 % 9.0 % - % Refining 189 0.5 % 36 90 % 10 % - % 94.2 % 5.7 % 0.1 % Oil Field Services 223 0.6 % 16 54 % 46 % 16.3 % 80.2 % 3.1 % 0.4 % Metals 596 1.6 % 93 66 % 34 % 11.4 % 84.6 % 3.9 % 0.1 % Airlines/Aircraft Leasing 301 0.8 % 17 52 % 48 % 22.9 % 40.0 % 12.3 % 24.8 % Restaurants 296 0.8 % 14 89 % 11 % 1.1 % 93.3 % 0.1 % 5.5 % Airports 160 0.4 % 14 46 % 54 % 24.8 % 32.9 % 42.2 % 0.1 % Lodging 204 0.5 % - 94 % 6 % 83.6 % 9.1 % 7.3 % - % Automotive 297 0.8 % 24 51 % 49 % 22.9 % 64.9 % 11.1 % 1.1 % Retailers 867 2.3 % 101 91 % 9 % 37.5 % 58.1 % 2.2 % 2.2 % COVID-19 Subtotal 4,924 13.0 % 559 74.2 % 26 % 27.4 % 61.3 % 7.2 % 4.1 % Remaining Portfolio 32,327 87.0 % 2,637 77 % 23 % 54.8 % 41.8 % 2.4 % 1.0 % Grand Total 37,251 100 % 3,196 76 % 24 % 50.7 % 44.7 % 3.2 % 1.4 % To the extent that issuers of these securities endure financial misery, impairments amongst our portfolio property could improve, maybe considerably, which would cut back the carrying worth of these property for statutory functions and lower our admitted statutory capital. Such misery, or an extra normal deterioration in credit score markets, might additionally end in rankings downgrades throughout our portfolio, which might require our insurance coverage subsidiaries to carry extra quantities of danger-based mostly capital. In each instances, the quantity of our extra capital above our targets would decline, and if the reductions have been vital sufficient, we may be required to make use of out there sources of liquidity to fund extra statutory capital necessities.
Unrealized Capital Losses
Gross unrealized capital losses on fastened maturities, together with securities pledged, elevated$10 million from$139 million to$149 million for the 12 months endedDecember 31, 2021 . The improve in gross unrealized capital losses was pushed by reasonably greater rates of interest within the entrance finish of the yield curve. See part "Overview - Trends and Uncertainties" on this Management's Discussion and Analysis. As ofDecember 31, 2021 , we held one fastened maturity safety with unrealized capital losses in extra of$10 million . The unrealized capital losses on the fastened maturity securities equaled$12 million , or 7.9% of the entire unrealized losses. As ofDecember 31, 2020 , we held three fastened maturities with unrealized capital losses in extra of$10 million . The unrealized capital losses on these fastened maturities equaled$45 million , or 32.3% of the entire unrealized losses. As ofDecember 31, 2021 , we held$2.2 billion of power sector fastened maturity securities, constituting 5.9% of the entire fastened maturities portfolio, with gross unrealized capital losses of$18 million , together with one power sector fastened maturity safety with unrealized capital losses in extra of$10 million . The unrealized capital losses on this fastened maturity safety equaled$12 91
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million. As of
sector is comprised of 86.2% funding grade securities.
As ofDecember 31, 2020 , we held$3.0 billion of power sector fastened maturity securities, constituting 6.5% of the entire fastened maturities portfolio, with gross unrealized capital losses of$28 million together with one power sector fastened maturity safety with unrealized capital losses in extra of$10 million . The unrealized capital losses on this fastened maturity safety equaled$16 million . As ofDecember 31, 2020 , our fastened maturity publicity to the power sector is comprised of 84.0% funding grade securities. The following desk presents theU.S. and overseas company securities inside our power holdings by sector as of the dates indicated: ($ in hundreds of thousands) December 31, 2021 December 31, 2020 Sector Type Amortized Cost Fair Value % Fair Value Amortized Cost Fair Value % Fair Value Midstream $ 818$ 949 43.1 % $ 1,087$ 1,287 42.3 % Integrated Energy 401 463 21.0 % 509 611 20.1 % Independent Energy 328 379 17.2 % 598 676 22.2 % Oil Field Services 207 223 10.1 % 217 238 7.8 % Refining 153 189 8.6 % 183 228 7.6 % Total $ 1,907$ 2,203 100.0 % $ 2,594$ 3,040 100.0 % See the Investments (excluding Consolidated Investment Entities) Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-Okay for additional data on unrealized capital losses.
CMO-
As half of our broadly diversified funding portfolio, now we have a core holding in a proprietary mortgage derivatives technique referred to as CMO-B, which invests in a range of CMO securities together with rate of interest derivatives in focusing on a selected kind of publicity to theU.S. residential mortgage market. Because of their relative complexity and usually small pure purchaser base, we imagine sure sorts of CMO securities are persistently priced beneath their intrinsic worth, thereby offering a supply of potential return for buyers in this technique. The CMO securities which are half of our CMO-B portfolio are both notional or principal securities, backed by the curiosity and principal elements, respectively, of mortgages secured by single-household residential actual property. There are many variations of these two sorts of securities together with curiosity solely and principal solely securities, in addition to inverse-floating fee (principal) securities and inverse curiosity solely securities, all of that are half of our CMO-B portfolio. This technique has been in place for practically 20 years and thus far has been a big supply of funding earnings whereas exhibiting comparatively low volatility and correlation in comparison with the opposite asset sorts in the funding portfolio, though we can't predict whether or not favorable returns will proceed in future intervals. To shield in opposition to the potential for credit score loss related to financially troubled debtors, investments in our CMO-B portfolio are primarily in CMO securities backed by one of the federal government sponsored entities: the Federal National Mortgage Association ("Fannie Mae"), the Federal Home Loan Mortgage Corporation ("Freddie Mac") orGovernment National Mortgage Association ("Ginnie Mae"). Because the timing of the receipt of the underlying money move is very depending on the extent and path of rates of interest, our CMO-B portfolio additionally has publicity to each rate of interest and convexity danger. The publicity to curiosity fee danger, the potential for adjustments in worth that outcomes from adjustments within the normal degree of rates of interest, is managed to an outlined goal period utilizing rate of interest swaps and rate of interest futures. The publicity to convexity danger-the potential for adjustments in worth that consequence from adjustments in period attributable to adjustments in rates of interest-is dynamically hedged utilizing rate of interest swaps and at instances, rate of interest swaptions. Prepayment danger represents the potential for antagonistic adjustments in portfolio worth ensuing from adjustments in residential mortgage prepayment velocity (precise and projected), which in flip is determined by a quantity of elements, together with situations in each credit score markets and housing markets. Changes within the prepayment habits of householders signify each a danger and potential supply of return for our CMO-B portfolio. As a consequence, we search to put money into securities which are broadly diversified by collateral kind to take 92 -------------------------------------------------------------------------------- Table of Contents benefit of the uncorrelated prepayment experiences of householders with distinctive traits that affect their capacity or want to prepay their mortgage. We select collateral sorts and particular person securities based mostly on an in-depth quantitative evaluation of prepayment incentives throughout out there borrower sorts. The following desk presents fastened maturities balances held within the CMO-B portfolio by NAIC high quality score as of the dates indicated: ($ in hundreds of thousands) December 31, 2021 December 31, 2020 NAIC Quality Designation Amortized Cost Fair Value % Fair Value Amortized Cost Fair Value % Fair Value 1 $ 2,621$ 2,700 97.4 % $ 3,182$ 3,333 90.4 % 2 34 35 1.3 % 232 235 6.4 % 3 - - - % 72 75 2.0 % 4 - - - % - - - % 5 9 16 0.6 % 11 22 0.6 % 6 15 18 0.7 % 17 23 0.6 % Total $ 2,679$ 2,769 100.0 % $ 3,514$ 3,688 100.0 %
For CMO securities the place we elected the FVO, amortized value represents the
market values. For particulars on the NAIC designation methodology, please see
“Fixed Maturities Credit Quality-Ratings” above.
The following desk presents the notional quantities and truthful values of curiosity
fee derivatives utilized in our CMO-B portfolio as of the dates indicated:
December 31, 2021 December 31, 2020 Asset Liability Asset Liability Notional Fair Fair Notional Fair Fair ($ in hundreds of thousands) Amount Value Value Amount Value Value Derivatives non-qualifying for hedge accounting: Interest Rate Contracts$ 9,770 $ 80 $ 146 $ 12,381 $ 60 $ 214 The Company make the most of rate of interest futures and rate of interest swaps as an element of the CMO-B portfolio to hedge rate of interest danger. The following desk presents our CMO-B fastened maturity securities balances and tranche kind as of the dates indicated: ($ in hundreds of thousands) December 31, 2021 December 31, 2020 Tranche Type Amortized Cost Fair Value % Fair Value Amortized Cost Fair Value % Fair Value Inverse Floater $ 85$ 127 4.6 % $ 204$ 282 7.7 % Interest Only (IO) 459 460 16.6 % 358 362 9.8 % Inverse IO 1,072 1,107 40.0 % 1,741 1,819 49.3 % Principal Only (PO) 110 116 4.2 % 185 193 5.2 % Floater 7 7 0.3 % 9 9 0.2 % Agency Credit Risk Transfer 910 915 33.0 % 968 973 26.4 % Other 36 37 1.3 % 49 50 1.4 % Total $ 2,679$ 2,769 100.0 % $ 3,514$ 3,688 100.0 %
During the 12 months ended
securities portfolio declined as a consequence of some property transferring to reinsured blocks and
in consequence of decrease valuations as a consequence of each greater fee and unfold ranges.
93 -------------------------------------------------------------------------------- Table of Contents The following desk presents returns for our CMO-B portfolio for the intervals indicated: Year Ended December 31, ($ in hundreds of thousands) 2021 2020 2019 Net funding earnings$ 599 $ 667 $ 452 Net good points (losses)(1) (642) (385) (203) Income (loss) from persevering with operations earlier than earnings taxes$ (43) $
282
(1) Net (losses) additionally embody derivatives curiosity settlements, mark to market changes and realized good points (losses) on standalone derivatives contracts that are within the CMO-B portfolio. In defining the Adjusted working earnings earlier than earnings taxes for our CMO-B portfolio (together with CMO-B portfolio earnings (loss) associated to companies to be exited by means of reinsurance or divestment) sure recharacterizations are acknowledged. The web coupon settlement on rate of interest swaps hedging CMO-B securities that's included in Net good points (losses) is mirrored. In addition, the premium amortization and change in truthful worth for securities designated beneath the FVO are included in Net good points (losses), whereas the coupon for these securities is included in Net funding earnings. In order to current the economics of these truthful worth securities in an analogous method to these of an out there on the market safety, the premium amortization is reclassified from Net good points (losses). After adjusting for the 2 gadgets referenced instantly above, the next desk presents a reconciliation of Income (loss) from operations earlier than earnings taxes from our CMO-B portfolio to Adjusted working earnings earlier than earnings taxes from our CMO-B portfolio for the intervals indicated: Year Ended December 31, ($ in hundreds of thousands) 2021 2020 2019 Income (loss) from persevering with operations earlier than earnings taxes$ (43) $ 282 $ 249 Realized good points/(losses) together with impairment (27) 8 3 Fair worth changes 239 (112) (62)
Total changes to earnings (loss) from persevering with
operations
212 (104) (59)
Adjusted working earnings earlier than earnings taxes
178
See Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7. of this Annual Report on Form 10-Okay for data on our CMO-B portfolio.
The following tables current our residential mortgage-backed securities as of the dates indicated: December 31, 2021 Gross Unrealized Gross Unrealized Embedded ($ in hundreds of thousands) Amortized Cost Capital Gains Capital Losses Derivatives Fair Value Prime Agency$ 1,937 $ 88 $ 8 $ 5$ 2,022 Prime Non-Agency 2,146 42 22 1 2,167 Alt-A 84 8 1 6 97 Sub-Prime(1) 38 4 - - 42 Total RMBS$ 4,205 $ 142 $ 31 $ 12$ 4,328
(1) Includes subprime different asset backed securities.
94
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Table of Contents December 31, 2020 Gross Unrealized Gross Unrealized Embedded ($ in hundreds of thousands) Amortized Cost Capital Gains Capital Losses Derivatives Fair Value Prime Agency$ 2,966 $ 168 $ 2 $ 10$ 3,142 Prime Non-Agency 2,271 75 13 2 2,335 Alt-A 114 10 2 8 130 Sub-Prime(1) 47 6 - - 53 Total RMBS$ 5,398 $ 259 $ 17 $ 20$ 5,660
(1) Includes subprime different asset backed securities.
The following tables current our industrial mortgage-backed securities as of the dates indicated: December 31, 2021AAA AA A BBB BB and Below Total ($ in hundreds of thousands) Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value 2014 and prior $ 560$ 623 $ 44$ 45 $ 150$ 155 $ 97$ 98 $ 58$ 56 $ 909$ 977 2015 169 186 150 155 83 86 115 115 22 23 539 565 2016 50 55 20 21 28 30 49 49 - - 147 155 2017 85 91 23 23 66 67 69 71 33 34 276 286 2018 99 108 20 21 94 97 58 59 3 3 274 288 2019 184 203 36 36 139 141 296 297 8 8 663 685 2020 92 93 31 32 73 74 164 166 - - 360 365 2021 240 241 92 91 220 219 312 311 - - 864 862 Total CMBS$ 1,479 $ 1,600 $ 416$ 424 $ 853$ 869 $ 1,160 $ 1,166 $ 124$ 124 $ 4,032 $ 4,183 December 31, 2020AAA AA A BBB BB and Below Total ($ in hundreds of thousands) Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value 2014 and prior $ 587$ 691 $ 125$ 128 $ 162$ 168 $ 143$ 141 $ 47$ 45 $ 1,064 $ 1,173 2015 204 234 171 181 98 100 141 142 30 31 644 688 2016 60 68 23 24 36 39 50 50 - - 169 181 2017 107 122 37 38 85 86 93 92 51 51 373 389 2018 100 117 27 27 170 174 122 123 20 21 439 462 2019 178 207 46 47 182 180 372 381 12 13 790 828 2020 102 104 38 39 96 98 167 169 - - 403 410 Total CMBS$ 1,338 $ 1,543 $ 467$ 484 $ 829$ 845 $ 1,088 $ 1,098 $ 160$ 161 $ 3,882 $ 4,131 As ofDecember 31, 2021 , 84.9% and 11.6% of CMBS investments have been designated as NAIC-1 and NAIC-2, respectively. As ofDecember 31, 2020 , 89.9% and 8.4% of CMBS investments have been designated as NAIC-1 and NAIC-2, respectively. 95 -------------------------------------------------------------------------------- Table of ContentsOther Asset-backed Securities The following tables current our different asset-backed securities as of the dates indicated: December 31, 2021AAA AA A BBB BB and Below Total ($ in hundreds of thousands) 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 $ 185$ 186 $ 328$ 328 $ 850$ 848 $ 121$ 120 $ 68 $ 64 $ 1,552 $ 1,546 Auto-Loans 2 2 - 1 8 8 - - - - 10 11 Student Loans 17 17 108 110 9 9 1 1 - - 135 137 Credit Card loans - - - - 4 4 - - - - 4 4 Other Loans 48 52 4 3 96 99 198 203 - - 346 357 Total Other ABS(1) $ 252$ 257 $ 440$ 442 $ 967$ 968 $ 320 $
324
(1) Excludes subprime different asset backed securities.
December 31, 2020AAA AA A BBB BB and Below Total ($ in hundreds of thousands) 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 $ 312$ 315 $ 332$ 333 $ 729$ 726 $ 28$ 28 $ 75 $ 66 $ 1,476 $ 1,468 Auto-Loans 3 3 10 10 10 11 - - - - 23 24 Student Loans 39 40 127 133 40 41 2 2 - - 208 216 Credit Card loans - - - - - - - - - - - - Other Loans 50 56 14 14 126 132 183 194 - - 373 396 Total Other ABS(1) $ 404$ 414 $ 483$ 490 $ 905$ 910 $ 213$ 224 $ 75 $ 66 $ 2,080 $ 2,104
(1) Excludes subprime different asset backed securities.
As of
designated as NAIC-1 and NAIC-2, respectively. As of
and 10.8% of Other ABS investments have been designated as NAIC-1 and NAIC-2,
respectively.
Mortgage Loans on Real Estate As ofDecember 31, 2021 and 2020, our mortgage loans on actual property portfolio had a weighted common DSC of 2.13 instances and 2.24 instances, and a weighted common LTV ratio of 45.5% and 45.2%, respectively. See the Investments (excluding Consolidated Investment Entities) Note and Business, Basis of Presentation and Significant Accounting Policies Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-Okay for additional data on mortgage loans on actual property.
Impairments
We consider out there-for-sale fastened maturities for impairment on a daily foundation. The evaluation of whether or not impairments have occurred is predicated on a case-by-case analysis of the underlying causes for the decline in estimated truthful worth. See the Business, Basis of Presentation and Significant Accounting Policies Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-Okay for the coverage used to judge whether or not the investments are impaired. Additionally, see the Investments (excluding Consolidated Investment Entities) Note in our Consolidated Financial Statements of Part II, Item 8. of this Annual Report on Form 10-Okay for additional data on impairments. 96
-------------------------------------------------------------------------------- Table of Contents Derivatives We use derivatives for a range of hedging functions. We even have embedded derivatives inside fastened maturities devices and sure product options. See the Business, Basis of Presentation and Significant Accounting Policies Note and Derivative Financial Instruments Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-Okay for additional data. European Exposures We quantify and allocate our publicity to the area by trying to determine points of the area or nation danger to which we're uncovered. Among the elements we take into account are the nationality of the issuer, the nationality of the issuer's final mum or dad, the company and financial relationship between the issuer and its mum or dad, in addition to the political, authorized and financial surroundings wherein every features. By endeavor this evaluation, we imagine that we develop a extra correct evaluation of the precise geographic danger, with a extra built-in understanding of contributing elements to the complete danger profile of the issuer. In the conventional course of our ongoing danger and portfolio administration course of, we carefully monitor compliance with a credit score restrict hierarchy designed to attenuate overly concentrated danger exposures by geography, sector and issuer. This framework takes under consideration numerous elements akin to inner and exterior rankings, capital effectivity and liquidity and is overseen by a mix of Investment and Corporate Risk Management, in addition to insurance coverage portfolio managers targeted particularly on managing the funding danger embedded in our portfolio. While monetary situations inEurope have broadly improved, the likelihood of capital market volatility spreading by means of a extremely built-in and interdependent banking system stays. Despite indicators of steady enchancment within the area, we proceed to carefully monitor our publicity to the area. As ofDecember 31, 2021 , our complete European publicity had an amortized value and truthful worth of$3,333 million and$3,562 million , respectively. European publicity with a major give attention toGreece ,Ireland ,Italy ,Portugal andSpain (which we check with as "peripheralEurope ") quantities to$386 million , which incorporates non-monetary establishments publicity inIreland of$146 million , inItaly of$110 million and inSpain of$98 million . We additionally had monetary establishments publicity inItaly of$10 million andSpain of$22 million . We didn't have any publicity toIreland orGreece . Among the remaining$3,176 million of complete non-peripheral European publicity, we had a portfolio of credit score-associated property equally diversified by nation and sector throughout developed and growingEurope . As ofDecember 31, 2021 , our non-peripheral sovereign publicity was$95 million , which consisted of fastened maturities and spinoff property. We additionally had$575 million in web publicity to non-peripheral monetary establishments, with a focus inSwitzerland of$97 million and theUnited Kingdom of$262 million . The stability of$2,506 million was invested throughout non-peripheral, non-monetary establishments. Some of the key nation degree exposures have been within theUnited Kingdom of$1,629 million , inThe Netherlands of$276 million , inBelgium of$159 million , inFrance of$349 million , inGermany of$218 million , inSwitzerland of$231 million , and inRussia of$58 million . We imagine the first danger outcomes from market worth fluctuations ensuing from unfold volatility and the secondary danger is default danger, dependent upon the energy of continued restoration of financial situations inEurope .
Consolidated and Nonconsolidated Investment Entities
We use many kinds of entities to attain our enterprise aims and now we have participated in various levels within the design and formation of these entities. These entities are thought-about to be VIEs or VOEs (collectively, "Consolidated Investment Entities"), or nonconsolidated VIEs, and we consider our involvement with every entity to find out whether or not consolidation is required. We carry out a quarterly consolidation evaluation to evaluate if the consolidation of a fund is required. The consolidation course of brings on the property, liabilities, noncontrolling curiosity and operations of the VIE and/or VOE into our monetary statements. If the fund not meets the standards for consolidation, the property, liabilities, noncontrolling curiosity and operations of the fund is faraway from our monetary statements. This course of of consolidation/deconsolidation might have a cloth affect on complete shareholders' fairness. See Consolidation and Noncontrolling Interests and Fair Value Measurement within the Business, Basis of Presentation and Significant Accounting Policies Note to our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-Okay. Additionally, see the Consolidated andNonconsolidated Investment Entities Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-Okay for extra data. 97 -------------------------------------------------------------------------------- Table of Contents Securitizations We put money into numerous tranches of securitization entities, together with RMBS, CMBS and ABS. Refer to the Consolidated and Nonconsolidated Investment Entities Note and Fair Value Measurements (excluding Consolidated Investment Entities) Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-Okay for an understanding over the Company's Securitizations. Refer to the Investments (excluding Consolidated Investment Entities) Note to our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-Okay for particulars relating to the carrying quantities and classifications of these property.
Guarantors and Issuers of
Voya Financial, Inc. (the "Parent Issuer") has issued sure notes pursuant to transactions registered beneath the Securities Act of 1933. Such securities consist of (i) the 5.7% senior notes due 2043, the three.65% senior notes due 2026, and the 4.8% senior notes due 2046, with an mixture principal quantity of$1.1 billion as ofDecember 31, 2021 (collectively, the "Senior Notes") and (ii) the 5.65% fastened-to-floating fee junior subordinated notes due 2053 and the 4.7% fastened-to-floating junior subordinated notes due 2048, with an mixture principal quantity of$1.1 billion as ofDecember 31, 2021 (collectively, the "Junior Subordinated Notes" and, along with the Senior Notes, the "Registered Notes").Voya Holdings (the "Subsidiary Guarantor"), an entirely owned subsidiary of the Parent Issuer, has assured every of the Registered Notes on a full and unconditional foundation. No different subsidiary of the Parent Issuer has assured any of the Registered Notes. The Parent Issuer and the Subsidiary Guarantor are hereby referred to beneath because the "Obligor Group ." The full and unconditional ensures require the Subsidiary Guarantor to fulfill the obligations of the assured safety instantly, if and when the Parent Issuer has didn't make a scheduled cost thereunder. If the Subsidiary Guarantor doesn't make such cost, any holder of the assured safety could instantly deliver go well with immediately in opposition to the Subsidiary Guarantor for cost of quantities due and payable. Set forth beneath is summarized monetary data of theObligor Group , as introduced on a mixed foundation. Inter-combination transactions and balances inside theObligor Group have been eradicated. In addition, monetary data of any non-issuer or non-guarantor subsidiaries, which might usually be consolidated by both the Parent Issuer or the Subsidiary Guarantor beneathU.S. usually accepted accounting ideas, has been excluded from such presentation. 98
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Table of Contents Refer to the Summarized Financial Information of theObligor Group for the intervals indicated beneath: As of and for the 12 months ended December 31, ($ in hundreds of thousands) 2021 2020 Summarized Statement of Operations Information: Total revenues $ 34 $ 32 Total advantages and bills 192 173 Income (loss) from persevering with operations, web of tax 718 (100)
Net earnings (loss) earlier than fairness in earnings (losses) of
unconsolidated associates
718 (100) Net earnings (loss) out there to Obligor Group 718 (100) Summarized Balance Sheet Information: Total investments 44 60 Cash and money equivalents 205 212 Deferred earnings tax property 908 869 Loans to non-obligated subsidiaries 123 180 Due from non-obligated subsidiaries 61 19 Total property 1,356 1,356 Short-term debt with non-obligated subsidiaries 130 653 Long-term debt 2,594 3,041 Total liabilities $ 2,836$ 4,120