VOYA FINANCIAL, INC., 10-Q filed on 5/8/2019
Quarterly Report
v3.19.1
Document and Entity Information - shares
3 Months Ended
Mar. 31, 2019
May 03, 2019
Document and Entity Information [Abstract]    
Entity Registrant Name Voya Financial, Inc.  
Entity Central Index Key 0001535929  
Current Fiscal Year End Date --12-31  
Entity Filer Category Large Accelerated Filer  
Document Type 10-Q  
Document Period End Date Mar. 31, 2019  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q1  
Amendment Flag false  
Entity Common Stock, Shares Outstanding   144,123,309
Entity Emerging Growth Company false  
Entity Small Business false  
v3.19.1
Condensed Consolidated Balance Sheets - USD ($)
$ in Millions
Mar. 31, 2019
Dec. 31, 2018
Investments:    
Fixed maturities, available-for-sale, at fair value (amortized cost of $45,082 as of 2019 and $45,241 as of 2018) $ 47,923 $ 46,298
Fixed maturities, at fair value using the fair value option 3,159 2,956
Equity securities, at fair value (cost of $330 as of 2019 and $255 as of 2018) 355 273
Short-term investments 192 168
Mortgage loans on real estate, net of valuation allowance of $1 as of 2019 and $2 as of 2018 8,516 8,676
Policy loans 1,827 1,833
Limited partnerships/corporations 1,166 1,158
Derivatives 314 247
Other investments 89 90
Total investments 65,625 63,566
Cash and cash equivalents 1,033 1,538
Short-term investments under securities loan agreements, including collateral delivered 1,886 1,684
Accrued investment income 699 650
Premium receivable and reinsurance recoverable 6,753 6,860
Deferred policy acquisition costs and Value of business acquired 3,600 4,116
Current income taxes 222 237
Deferred income taxes 864 1,157
Other assets 1,353 1,336
Assets related to consolidated investment entities:    
Assets held in separate accounts 77,649 71,228
Total assets 161,985 154,682
Liabilities and Shareholders' Equity:    
Future policy benefits 14,660 14,488
Contract owner account balances 50,706 51,001
Payables under securities loan and repurchase agreements, including collateral held 1,978 1,821
Short-term debt 1 1
Long-term debt 3,136 3,136
Derivatives 243 139
Pension and other postretirement provisions 465 551
Other liabilities 2,141 2,148
Liabilities related to consolidated investment entities:    
Collateralized loan obligations notes, at fair value using the fair value option 529 540
Other liabilities 671 688
Liabilities related to separate accounts 77,649 71,228
Total liabilities 152,179 145,741
Commitments and Contingencies (Note 13)
Shareholders' equity:    
Preferred stock ($0.01 par value per share; 325,000 shares authorized, issued and outstanding as of 2019 and 2018; $325 aggregate liquidation preference as of 2019 and 2018) 0 0
Common stock ($0.01 par value per share; 900,000,000 shares authorized; 274,936,923 and 272,431,745 shares issued as of 2019 and 2018, respectively; 147,970,796 and 150,978,184 shares outstanding as of 2019 and 2018, respectively) 3 3
Treasury stock (at cost; 126,966,127 and 121,453,561 shares as of 2019 and 2018, respectively) (5,203) (4,981)
Additional paid-in capital 24,310 24,316
Accumulated other comprehensive income (loss) 1,966 607
Retained earnings (deficit):    
Appropriated-consolidated investment entities 0 0
Unappropriated (12,011) (11,732)
Total Voya Financial, Inc. shareholders' equity 9,065 8,213
Noncontrolling interest 741 728
Total shareholders' equity 9,806 8,941
Total liabilities and shareholders' equity 161,985 154,682
Limited partnerships/corporations, at fair value    
Assets related to consolidated investment entities:    
Assets related to consolidated investment entities 1,426 1,421
Cash and cash equivalents    
Assets related to consolidated investment entities:    
Assets related to consolidated investment entities 307 331
Corporate loans, at fair value using the fair value option    
Assets related to consolidated investment entities:    
Assets related to consolidated investment entities 551 542
Other assets    
Assets related to consolidated investment entities:    
Assets related to consolidated investment entities 17 16
Collateral Pledged    
Investments:    
Securities pledged (amortized cost of $1,940 as of 2019 and $1,824 as of 2018) $ 2,084 $ 1,867
v3.19.1
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Millions
Mar. 31, 2019
Dec. 31, 2018
Statement of Financial Position [Abstract]    
Fixed maturities, amortized cost $ 45,082 $ 45,241
Equity securities, cost 330 255
Mortgage loans on real estate valuation allowance 1 2
Securities pledged, amortized costs $ 1,940 $ 1,824
Preferred stock, shares authorized 325,000 325,000
Preferred stock, shares issued 325,000 325,000
Preferred stock, shares outstanding 325,000 325,000
Preferred stock, aggregate liquidation preference $ 325 $ 325
Preferred stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 900,000,000 900,000,000
Common stock, shares issued 274,936,923 272,431,745
Common stock, shares outstanding 147,970,796 150,978,184
Treasury stock, shares 126,966,127 121,453,561
Common stock, par value $ 0.01 $ 0.01
v3.19.1
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Revenues:    
Net investment income $ 815.0 $ 823.0
Fee income 665.0 676.0
Premiums 582.0 539.0
Net realized capital gains (losses):    
Total other-than-temporary impairments (33.0) (14.0)
Less: Portion of other-than-temporary impairments recognized in Other comprehensive income (loss) 0.0 0.0
Net other-than-temporary impairments recognized in earnings (33.0) (14.0)
Other net realized capital gains (losses) 50.0 (167.0)
Total net realized capital gains (losses) 17.0 (181.0)
Other revenue 113.0 99.0
Income (loss) related to consolidated investment entities:    
Net investment income 5.0 11.0
Total revenues 2,197.0 1,967.0
Benefits and expenses:    
Policyholder benefits 815.0 708.0
Interest credited to contract owner account balances 371.0 382.0
Operating expenses 702.0 700.0
Net amortization of Deferred policy acquisition costs and Value of business acquired 85.0 100.0
Interest expense 42.0 49.0
Operating expenses related to consolidated investment entities:    
Interest expense 5.0 6.0
Other expense 0.0 1.0
Total benefits and expenses 2,020.0 1,946.0
Income (loss) from continuing operations before income taxes 177.0 21.0
Income tax expense (benefit) 25.0 4.0
Income (loss) from continuing operations 152.0 17.0
Income (loss) from discontinued operations, net of tax (79.0) 429.0
Net income (loss) 73.0 446.0
Less: Net income (loss) attributable to noncontrolling interest (1.0) 0.0
Net income (loss) available to Voya Financial, Inc. 74.0 446.0
Less: Preferred stock dividends 10.0 0.0
Net income (loss) available to Voya Financial, Inc.'s common shareholders $ 64.0 $ 446.0
Net income (loss) per common share:    
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders $ 0.97 $ 0.10
Income (loss) available to Voya Financial, Inc.'s common shareholders 0.44 2.59
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders 0.95 0.10
Income (loss) available to Voya Financial, Inc.'s common shareholders 0.42 2.50
Cash dividends declared per share of common stock $ 0.01 $ 0.01
v3.19.1
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Statement of Comprehensive Income [Abstract]    
Net income (loss) $ 73 $ 446
Other comprehensive income (loss), before tax:    
Unrealized gains (losses) on securities 1,284 (1,523)
Other-than-temporary impairments 1 20
Pension and other postretirement benefits liability (1) (3)
Other comprehensive income (loss), before tax 1,284 (1,506)
Income tax expense (benefit) related to items of other comprehensive income (loss) 268 (314)
Other comprehensive income (loss), after tax 1,016 (1,192)
Comprehensive income (loss) 1,089 (746)
Less: Comprehensive income (loss) attributable to noncontrolling interest (1) 0
Comprehensive income (loss) attributable to Voya Financial, Inc. $ 1,090 $ (746)
v3.19.1
Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($)
$ in Millions
Total
Preferred Stock
Common Stock
Treasury Stock
Additional Paid-In Capital
Accumulated Other Comprehensive Income (Loss)
Appropriated
Unappropriated
Total Voya Financial, Inc. Shareholders' Equity
Noncontrolling Interest
Previously Reported
Previously Reported
Preferred Stock
Previously Reported
Common Stock
Previously Reported
Treasury Stock
Previously Reported
Additional Paid-In Capital
Previously Reported
Accumulated Other Comprehensive Income (Loss)
Previously Reported
Appropriated
Previously Reported
Unappropriated
Previously Reported
Total Voya Financial, Inc. Shareholders' Equity
Previously Reported
Noncontrolling Interest
Cumulative effect of changes in accounting:                                        
Adjustment for adoption of ASU | Accounting Standards Update 2014-09 $ 84 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 84 $ 84 $ 0                    
Adjustment for adoption of ASU | Accounting Standards Update 2016-01 0 0 0 0 0 (28) 0 28 0 0                    
Balance - As adjusted 11,123 0 3 (3,827) 23,821 2,703 0 (12,607) 10,093 1,030                    
Beginning balance at Dec. 31, 2017                     $ 11,039 $ 0 $ 3 $ (3,827) $ 23,821 $ 2,731 $ 0 $ (12,719) $ 10,009 $ 1,030
Comprehensive income (loss):                                        
Net income (loss) 446 0 0 0 0 0 0 446 446 0                    
Other comprehensive income (loss), net of tax (1,192) 0 0 0 0 (1,192) 0 0 (1,192) 0                    
Less: Comprehensive income (loss) attributable to noncontrolling interest 0                 0                    
Comprehensive income (loss) (746)               (746)                      
Common stock issuance 2 0 0 0 2 0 0 0 2 0                    
Common stock acquired - Share repurchase 0 0 0 (100) 100 0 0 0 0 0                    
Dividends on preferred stock 0 0 0 0 0 0 0 0 0 0                    
Dividends on common stock (2) 0 0 0 (2) 0 0 0 (2) 0                    
Share-based compensation 31 0 0 (9) 40 0 0 0 31 0                    
Contributions from (Distributions to) noncontrolling interest, net 1 0 0 0 0 0 0 0 0 1                    
Ending Balance at Mar. 31, 2018 10,409 0 3 (3,936) 23,961 1,511 0 (12,161) 9,378 1,031                    
Beginning balance at Dec. 31, 2018 8,941 0 3 (4,981) 24,316 607 0 (11,732) 8,213 728                    
Comprehensive income (loss):                                        
Net income (loss) 73 0 0 0 0 0 0 74 74 (1)                    
Other comprehensive income (loss), net of tax 1,016 0 0 0 0 1,016 0 0 1,016 0                    
Less: Comprehensive income (loss) attributable to noncontrolling interest (1)                 (1)                    
Comprehensive income (loss) 1,089               1,090                      
Common stock issuance 2 0 0 0 2 0 0 0 2 0                    
Common stock acquired - Share repurchase (250) 0 0 (200) (50) 0 0 0 (250) 0                    
Dividends on preferred stock (10) 0 0 0 0 0 0 (10) (10) 0                    
Dividends on common stock (1) 0 0 0 (1) 0 0 0 (1) 0                    
Share-based compensation 21 0 0 (22) 43 0 0 0 21 0                    
Contributions from (Distributions to) noncontrolling interest, net 14 0 0 0 0 0 0 0 0 14                    
Ending Balance at Mar. 31, 2019 9,806 0 3 (5,203) 24,310 1,966 0 (12,011) 9,065 741                    
Cumulative effect of changes in accounting:                                        
Adjustment for adoption of ASU | Accounting Standards Update 2018-02 $ 0 $ 0 $ 0 $ 0 $ 0 $ 343 $ 0 $ (343) $ 0 $ 0                    
v3.19.1
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Cash Flows from Operating Activities:    
Net cash provided by operating activities - continuing operations $ 131 $ 38
Net cash provided by operating activities - discontinued operations 0 363
Net cash provided by operating activities 131 401
Proceeds from the sale, maturity, disposal or redemption of:    
Fixed maturities 2,414 2,077
Equity securities 9 6
Mortgage loans on real estate 338 241
Limited partnerships/corporations 44 30
Acquisition of:    
Fixed maturities (2,500) (2,254)
Equity securities (18) (12)
Mortgage loans on real estate (180) (391)
Limited partnerships/corporations (74) (54)
Short-term investments, net (24) 278
Derivatives, net 39 17
Sales from consolidated investment entities 57 88
Purchases within consolidated investment entities (91) (138)
Collateral received (delivered), net (45) 0
Other investments, net (13) (17)
Net cash provided by (used in) investing activities - discontinued operations 0 365
Net cash (used in) provided by investing activities (44) 236
Cash Flows from Financing Activities:    
Deposits received for investment contracts 1,453 1,415
Maturities and withdrawals from investment contracts (1,780) (1,360)
Settlements on deposit contracts (2) 0
Proceeds from issuance of debt with maturities of more than three months 0 350
Repayment of debt with maturities of more than three months 0 (350)
Debt issuance costs 0 (6)
Borrowings of consolidated investment entities 36 62
Contributions from (distributions to) participants in consolidated investment entities, net (25) (19)
Proceeds from issuance of common stock, net 2 2
Share-based compensation (15) (9)
Common stock acquired - Share repurchase (250) 0
Dividends paid on common stock (1) (2)
Dividends paid on preferred stock (10) 0
Net cash used in financing activities - discontinued operations 0 (480)
Net cash used in by financing activities (592) (397)
Net (decrease) increase in cash and cash equivalents (505) 240
Cash and Cash Equivalents, beginning of period 1,538 1,716
Cash and Cash Equivalents, end of period 1,033 1,956
Less: Cash and cash equivalents of discontinued operations, end of period 0 545
Cash and cash equivalents of continuing operations, end of period 1,033 1,411
Accounting Standards Update 2016-02    
Non-cash investing and financing activities:    
Initial recognition of operating leases upon adoption of ASU 2016-02 $ 146 $ 0
v3.19.1
Business, Basis of Presentation and Significant Accounting Policies
3 Months Ended
Mar. 31, 2019
Accounting Policies [Abstract]  
Business, Basis of Presentation and Significant Accounting Policies Business, Basis of Presentation and Significant Accounting Policies

Business    

Voya Financial, Inc. and its subsidiaries (collectively the "Company") is a financial services organization in the United States that offers a broad range of retirement services, investment management services, mutual funds, group insurance and supplemental health products.

The Company provides its principal products and services through four segments: Retirement, Investment Management, Employee Benefits and Individual Life. In addition, the Company includes in Corporate activities not directly related to its segments, results of the Retained Business (defined in the Discontinued Operations Note in these Condensed Consolidated Financial Statements) and certain run-off activities that are not meaningful to the Company's business strategy. See the Segments Note to these Condensed Consolidated Financial Statements.

After conducting a strategic review of the Individual Life business, in October 2018, the Company announced that it would retain the in-force block of individual life policies and cease new individual life insurance sales, effective December 31, 2018. Applications for individual life insurance policies were accepted through the end of 2018, resulting in some placement of policies in early 2019. The Company will continue to manage its existing in-force Individual Life business as a separate segment, with results included in the Company's Adjusted operating earnings before income taxes.

Prior to May 2013, the Company was an indirect, wholly-owned subsidiary of ING Groep N.V. ("ING Group" or "ING"), a global financial services holding company based in The Netherlands. In May 2013, Voya Financial Inc. completed its initial public offering of common stock, including the issuance and sale of common stock by Voya Financial, Inc. and the sale of shares of common stock owned indirectly by ING Group. Between October 2013 and March 2015, ING Group completed the sale of its remaining shares of common stock of Voya Financial, Inc. in a series of registered public offerings.

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") and are unaudited. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Those estimates are inherently subject to change and actual results could differ from those estimates.

The Condensed Consolidated Financial Statements include the accounts of Voya Financial, Inc. and its subsidiaries, as well as partnerships (voting interest entities ("VOEs")) in which the Company has control and variable interest entities ("VIEs") for which the Company is the primary beneficiary. See the Consolidated Investment Entities Note to these Condensed Consolidated Financial Statements. Intercompany transactions and balances have been eliminated.

The accompanying Condensed Consolidated Financial Statements reflect adjustments (including normal, recurring adjustments) necessary to present fairly the financial position of the Company as of March 31, 2019, its results of operations, comprehensive income, changes in shareholders' equity and statements of cash flows for the three months ended March 31, 2019 and 2018, in conformity with U.S. GAAP. Interim results are not necessarily indicative of full year performance. The December 31, 2018 Consolidated Balance Sheet is from the audited Consolidated Financial Statements included in the Company's Annual Report on Form 10-K, filed with the SEC. Therefore, these unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and related notes included in the Company's Annual Report on Form 10-K.



Adoption of New Pronouncements

The following table provides a description of the Company's adoption of new ASUs issued by the Financial Accounting Standards Board and the impact of the adoption on the Company's financial statements.
Standard
Description of Requirements
Effective date and method of adoption
Effect on the financial statements or other significant matters
ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income
This standard, issued in February 2018, permits a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 ("Tax Reform"). Stranded tax effects arise because U.S. GAAP requires that the impact of a change in tax laws or rates on deferred tax liabilities and assets be reported in net income, even if related to items recognized within accumulated other comprehensive income. The amount of the reclassification would be based on the difference between the historical corporate income tax rate and the newly enacted 21% corporate income tax rate, applied to deferred tax liabilities and assets reported within accumulated other comprehensive income.
January 1, 2019, with the change reported in the period of adoption.
The impact to the January 1, 2019 Condensed Consolidated Balance Sheet was an increase to Accumulated other comprehensive income of $343, with a corresponding decrease to Retained earnings. The ASU did not have a material impact on the Company's results of operations, cash flows, or disclosures.

Standard
Description of Requirements
Effective date and method of adoption
Effect on the financial statements or other significant matters
ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities
This standard, issued in August 2017, enables entities to better portray risk management activities in their financial statements, as follows:
• Expands an entity's ability to hedge nonfinancial and financial risk components and reduces complexity in accounting for fair value hedges of interest rate risk,
• Eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item, and
• Eases certain documentation and assessment requirements and modifies the accounting for components excluded from the assessment of hedge effectiveness, and modifies required disclosures.

In October 2018, the FASB issued an amendment which expands the list of U.S. benchmark interest rates permitted in the application of hedge accounting.
January 1, 2019, using the modified retrospective method, with the exception of the presentation and disclosure requirements which were adopted prospectively.
The adoption had no effect on the Company's financial condition, results of operations, or cash flows. The adoption resulted in a change to the Company's significant accounting policy with respect to Derivatives, as follows:

Fair Value Hedge: For derivative instruments that are designated and qualify as a fair value hedge, the entire change in the fair value of the hedging instrument included in the assessment of hedge effectiveness is recorded in the same line item in the Condensed Consolidated Statements of Operations as impacted by the hedged item.

Cash Flow Hedge: For derivative instruments that are designated and qualify as a cash flow hedge, the entire change in the fair value of the hedging instrument included in the assessment of hedge effectiveness is reported as a component of AOCI. Those amounts are subsequently reclassified to earnings when the hedged item affects earnings, and are reported in the same line item in the Condensed Consolidated Statements of Operations as impacted by the hedged item.

Other required disclosure changes have been included in Note 4, Derivative Financial Instruments.

Standard
Description of Requirements
Effective date and method of adoption
Effect on the financial statements or other significant matters
ASU 2016-02, Leases
This standard, issued in February 2016, requires lessees to recognize a right-of-use asset and a lease liability for all leases with terms of more than 12 months. The lease liability will be measured as the present value of the lease payments, and the asset will be based on the liability. For income statement purposes, expense recognition will depend on the lessee's classification of the lease as either finance, with a front-loaded amortization expense pattern similar to current capital leases, or operating, with a straight-line expense pattern similar to current operating leases. Lessor accounting will be similar to the current model, and lessors will be required to classify leases as operating, direct financing, or sales-type.

ASU 2016-02 also replaces the sale-leaseback guidance to align with the new revenue recognition standard, addresses statement of operation and statement of cash flow classification, and requires additional disclosures for all leases. In addition, the FASB issued various amendments during 2018 to clarify and simplify the provisions and implementation guidance of ASU 2016-02.
January 1, 2019 using the modified retrospective method.


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


Future Adoption of Accounting Pronouncements
Long-Duration Contracts

In August 2018, the FASB issued ASU 2018-12, "Financial Services - Insurance (Topic 944) Targeted Improvements to the Accounting for Long-Duration Contracts" ("ASU 2018-12"), which changes the measurement and disclosures of insurance liabilities and deferred acquisition costs for long-duration contracts issued by insurers. The provisions of ASU 2018-12 are effective for fiscal years beginning after December 15, 2020, including interim periods, with early adoption permitted. The Company is currently in the process of evaluating the provisions of ASU 2018-12. While it is not possible to estimate the expected impact of adoption at this time, the Company believes there is a reasonable possibility that implementation of ASU 2018-12 may result in a significant impact on Shareholders’ equity and future earnings patterns.

In addition to requiring significantly expanded interim and annual disclosures regarding long-duration insurance contract assets and liabilities, ASU 2018-12's provisions include modifications to the accounting for such contracts in the following areas:
ASU 2018-12 Subject Area
Description of Requirements
Transition Provisions
Effect on the financial statements or other significant matters
Assumptions used to measure the liability for future policy benefits for nonparticipating traditional and limited payment insurance contracts


Requires insurers to review and, if necessary, update cash flow assumptions at least annually.

The effect of updating cash flow assumptions will be measured on a retrospective catch-up basis and presented in the Statement of operations in the period in which the update is made.
The rate used to discount the liability for future policy benefits will be required to be updated quarterly, with related changes in the liability recorded in Accumulated other comprehensive income. The discount rate will be based on an upper-medium grade fixed-income corporate instrument yield reflecting the duration characteristics of the relevant liabilities.

Initial adoption is required to be reported using either a full retrospective or modified retrospective approach. Under either method, upon adoption the liability for future policy benefits will be remeasured using current discount rates as of the beginning of the earliest period presented with the impact recorded as a cumulative effect adjustment to AOCI.

The application of periodic assumption updates for nonparticipating traditional and limited payment insurance contracts is significantly different from the current accounting approach for such liabilities, which is based on assumptions that are locked in at contract inception unless a premium deficiency occurs. Under the current accounting guidance, the liability discount rate is based on expected yields on the underlying investment portfolio held by the insurer.
The implications of these requirements, including transition options, and related potential financial statement impacts are currently being evaluated.
Measurement of market risk benefits


Creates a new category of benefit features called market risk benefits, defined as features that protect contract holders from capital market risk and expose the insurers to that risk. Market risk benefits will be required to be measured at fair value, with changes in fair value recognized in the Statement of operations, except for changes in fair value attributable to changes in the instrument-specific credit risk, which will be recorded in Accumulated other comprehensive income.

Full retrospective application is required. Upon adoption, any difference between the fair value and pre-adoption carrying value of market risk benefits not currently measured at fair value will be recorded to retained earnings. In addition, the cumulative effect of changes in instrument-specific credit risk will be reclassified from retained earnings to AOCI.
Under the current accounting guidance, certain features that are expected to meet the definition of market risk benefits are accounted for as either insurance liabilities (for example, GMDB and GMIB) or embedded derivatives (for example, GMWBL and GMWB).
The implications of these requirements and related potential financial statement impacts are currently being evaluated.

ASU 2018-12 Subject Area
Description of Requirements
Transition Provisions
Effect on the financial statements or other significant matters
Amortization of DAC and other balances


Requires DAC (and other balances that refer to the DAC model, such as deferred sales inducement costs and unearned revenue liabilities) for all long-duration contracts to be measured on a constant level basis over the expected life of the contract.

Initial adoption is required to be reported using either a full retrospective or modified retrospective approach. The method of transition applied for DAC and other balances must be consistent with the transition method selected for future policy benefit liabilities, as described above.

This approach is intended to approximate straight-line amortization and cannot be based on revenue or profits as it is under the current accounting model. Related amounts in AOCI will be eliminated upon adoption. ASU 2018-12 did not change the existing accounting guidance related to VOBA and net cost of reinsurance, which allows, but does not require, insurers to amortize such balances on a basis consistent with DAC.

The implications of these requirements, including transition options, and related potential financial statement impacts are currently being evaluated.
The following table provides a description of future adoptions of other new accounting standards that may have an impact on the Company's financial statements when adopted:
Standard
Description of Requirements

Effective date and transition provisions
Effect on the financial statements or other significant matters
ASU 2019-04, Codification Improvements to Financial Instruments
This standard, issued in April 2019, represents changes to clarify, correct errors in, and improve the financial instruments guidance in the following areas: • Topic 326, Financial Instruments-Credit Losses, • Topic 815, Derivatives and Hedging, and • Topic 825, Financial Instruments.
Generally January 1, 2020, including interim periods, with early adoption permitted. The effective dates and transition methods vary by provision.

The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2019-04.

ASU 2018-15, Implementation costs incurred in a cloud computing arrangement that is a service contract
This standard, issued in August 2018, requires a customer in a hosting arrangement that is a service contract to follow the guidance for internal-use software projects to determine which implementation costs to capitalize as an asset. Capitalized implementation costs are required to be expensed over the term of the hosting arrangement. In addition, a customer is required to apply the impairment and abandonment guidance for long-lived assets to the capitalized implementation costs. Balances related to capitalized implementation costs must be presented in the same financial statement line items as other hosting arrangement balances, and additional disclosures are required.
January 1, 2020 with early adoption permitted. Initial adoption of ASU 2018-15 may be reported either on a prospective or retrospective basis.
The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2018-15.
ASU 2018-14, Changes to the Disclosure Requirements for Defined Benefit Plans
This standard, issued in August 2018, eliminates certain disclosure requirements that are no longer considered cost beneficial and requires new disclosures that are considered relevant.
January 1, 2021 with early adoption permitted. Initial adoption of ASU 2018-14 is required to be reported on a retrospective basis for all periods presented.
The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2018-14.
ASU 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement
This standard, issued in August 2018, simplifies certain disclosure requirements for fair value measurement.
January 1, 2020, including interim periods, with early adoption permitted. The transition method varies by provision.
The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2018-13.
ASU 2016-13, Measurement of Credit Losses on Financial Instruments
This standard, issued in June 2016:
• Introduces a new current expected credit loss ("CECL") model to measure impairment on certain types of financial instruments,
• Requires an entity to estimate lifetime expected credit losses, under the new CECL model, based on relevant information about historical events, current conditions, and reasonable and supportable forecasts,
• Modifies the impairment model for available-for-sale debt securities, and
• Provides a simplified accounting model for purchased financial assets with credit deterioration since their origination.
January 1, 2020, including interim periods, with early adoption permitted. Initial adoption of ASU 2016-13 is required to be reported on a modified retrospective basis, with a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption, except for certain provisions that are required to be applied prospectively.
The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2016-13.
v3.19.1
Discontinued Operations (Notes)
3 Months Ended
Mar. 31, 2019
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations Discontinued Operations

On June 1, 2018, the Company consummated a series of transactions (collectively, the "Transaction") pursuant to a Master Transaction Agreement dated December 20, 2017 (the "MTA") with VA Capital Company LLC ("VA Capital") and Athene Holding Ltd. ("Athene"). As part of the Transaction, Venerable Holdings, Inc. ("Venerable"), a wholly owned subsidiary of VA Capital, acquired two of the Company's subsidiaries, Voya Insurance and Annuity Company ("VIAC") and Directed Services, LLC ("DSL"), and VIAC and other Voya subsidiaries reinsured to Athene substantially all of their fixed and fixed indexed annuities business. In connection with the Transaction, VIAC and another Voya subsidiary engaged in a series of reinsurance arrangements pursuant to which Voya and its subsidiaries other than VIAC retained VIAC’s businesses other than variable annuities and fixed and fixed indexed annuities. Pursuant to the terms of the Transaction, we have retained a small number of CBVA and Annuities policies that are not included in the disposed businesses described above as "Retained Business."

VA Capital provided the Company with its proposed purchase price adjustments in December 2018. Income (loss) from discontinued operations, net of tax in the first quarter of 2019 includes a $79 charge related to a proposed settlement of such purchase price true-up amounts payable by the Company in connection with the Transaction. The Company does not anticipate further material charges in connection with the Transaction.

The following table summarizes the components of Income (loss) from discontinued operations, net of tax for the three months ended March 31, 2019 and 2018:
 
Three Months Ended March 31,
 
2019
 
2018
Revenues:
 
 
 
Net investment income
$

 
$
305

Fee income

 
179

Premiums

 
44

Total net realized capital gains (losses)

 
(176
)
Other revenue

 
6

Total revenues

 
358

Benefits and expenses:
 
 
 
Interest credited and other benefits to contract owners/policyholders

 
320

Operating expenses

 
54

Net amortization of Deferred policy acquisition costs and Value of business acquired

 
10

Interest expense

 
5

Total benefits and expenses

 
389

Income (loss) from discontinued operations before income taxes

 
(31
)
Income tax expense (benefit)

 
(11
)
Adjustment to loss on sale, net of tax
(79
)
 
449

Income (loss) from discontinued operations, net of tax
$
(79
)
 
$
429

v3.19.1
Investments (excluding Consolidated Investment Entities)
3 Months Ended
Mar. 31, 2019
Investments, Debt and Equity Securities [Abstract]  
Investments (excluding Consolidated Investment Entities) Investments (excluding Consolidated Investment Entities)

Fixed Maturities and Equity Securities

Available-for-sale and fair value option ("FVO") fixed maturities were as follows as of March 31, 2019:
 
Amortized Cost
 
Gross Unrealized Capital Gains
 
Gross Unrealized Capital Losses
 
Embedded Derivatives(2)
 
Fair Value
 
OTTI(3)(4)
Fixed maturities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasuries
$
1,789

 
$
413

 
$
1

 
$

 
$
2,201

 
$

U.S. Government agencies and authorities
204

 
44

 

 

 
248

 

State, municipalities and political subdivisions
1,659

 
63

 
7

 

 
1,715

 

U.S. corporate public securities
18,671

 
1,649

 
133

 

 
20,187

 

U.S. corporate private securities
6,364

 
321

 
65

 

 
6,620

 

Foreign corporate public securities and foreign governments(1)
5,436

 
341

 
63

 

 
5,714

 

Foreign corporate private securities(1)
5,132

 
171

 
30

 

 
5,273

 

Residential mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
Agency
3,013

 
155

 
18

 
13

 
3,163

 

Non-Agency
1,867

 
81

 
11

 
13

 
1,950

 
11

Total Residential mortgage-backed securities
4,880

 
236

 
29

 
26

 
5,113

 
11

Commercial mortgage-backed securities
3,785

 
77

 
35

 

 
3,827

 

Other asset-backed securities
2,261

 
34

 
27

 

 
2,268

 
2

Total fixed maturities, including securities pledged
50,181

 
3,349

 
390

 
26

 
53,166

 
13

Less: Securities pledged
1,940

 
167

 
23

 

 
2,084

 

Total fixed maturities
$
48,241

 
$
3,182

 
$
367

 
$
26

 
$
51,082

 
$
13

(1) Primarily U.S. dollar denominated.
(2) Embedded derivatives within fixed maturity securities are reported with the host investment. The changes in fair value of embedded derivatives are reported in Other net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.
(3) Represents Other-than-Temporary-Impairments ("OTTI") reported as a component of Other comprehensive income (loss).
(4) Amount excludes $349 of net unrealized gains on impaired available-for-sale securities.


Available-for-sale and FVO fixed maturities were as follows as of December 31, 2018:
 
Amortized Cost
 
Gross Unrealized Capital Gains
 
Gross Unrealized Capital Losses
 
Embedded Derivatives(2)
 
Fair Value
 
OTTI(3)(4)
Fixed maturities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasuries
$
1,937

 
$
360

 
$
2

 
$

 
$
2,295

 
$

U.S. Government agencies and authorities
204

 
38

 

 

 
242

 

State, municipalities and political subdivisions
1,652

 
29

 
22

 

 
1,659

 

U.S. corporate public securities
19,210

 
1,053

 
415

 

 
19,848

 

U.S. corporate private securities
6,264

 
138

 
170

 

 
6,232

 

Foreign corporate public securities and foreign governments(1)
5,429

 
193

 
167

 

 
5,455

 

Foreign corporate private securities(1)
5,176

 
70

 
152

 

 
5,094

 

Residential mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
Agency
2,916

 
138

 
34

 
14

 
3,034

 

Non-Agency
1,700

 
76

 
19

 
12

 
1,769

 
11

Total Residential mortgage-backed securities
4,616

 
214

 
53

 
26

 
4,803

 
11

Commercial mortgage-backed securities
3,438

 
33

 
55

 

 
3,416

 

Other asset-backed securities
2,095

 
30

 
48

 

 
2,077

 
2

Total fixed maturities, including securities pledged
50,021

 
2,158

 
1,084

 
26

 
51,121

 
13

Less: Securities pledged
1,824

 
107

 
64

 

 
1,867

 

Total fixed maturities
$
48,197

 
$
2,051

 
$
1,020

 
$
26

 
$
49,254

 
$
13

(1) Primarily U.S. dollar denominated.
(2) Embedded derivatives within fixed maturity securities are reported with the host investment. The changes in fair value of embedded derivatives are reported in Other net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.
(3) Represents OTTI reported as a component of Other comprehensive income (loss).
(4) Amount excludes $300 of net unrealized gains on impaired available-for-sale securities.



The amortized cost and fair value of fixed maturities, including securities pledged, as of March 31, 2019, are shown below by contractual maturity. Actual maturities may differ from contractual maturities as securities may be restructured, called or prepaid. Mortgage-backed securities ("MBS") and Other asset-backed securities ("ABS") are shown separately because they are not due at a single maturity date.
 
Amortized
Cost
 
Fair
Value
Due to mature:
 
 
 
One year or less
$
1,294

 
$
1,306

After one year through five years
6,772

 
6,961

After five years through ten years
9,447

 
9,746

After ten years
21,742

 
23,945

Mortgage-backed securities
8,665

 
8,940

Other asset-backed securities
2,261

 
2,268

Fixed maturities, including securities pledged
$
50,181

 
$
53,166



The investment portfolio is monitored to maintain a diversified portfolio on an ongoing basis. Credit risk is mitigated by monitoring concentrations by issuer, sector and geographic stratification and limiting exposure to any one issuer.

As of March 31, 2019 and December 31, 2018, the Company did not have any investments in a single issuer, other than obligations of the U.S. Government and government agencies, with a carrying value in excess of 10% of the Company’s Total shareholders' equity.

The following tables present the composition of the U.S. and foreign corporate securities within the fixed maturity portfolio by industry category as of the dates indicated:
 
Amortized
Cost
 
Gross
Unrealized
Capital
Gains
 
Gross
Unrealized
Capital
Losses
 
Fair
Value
March 31, 2019
 
 
 
 
 
 
 
Communications
$
2,447

 
$
265

 
$
9

 
$
2,703

Financial
5,295

 
449

 
23

 
5,721

Industrial and other companies
15,315

 
869

 
121

 
16,063

Energy
3,912

 
347

 
69

 
4,190

Utilities
6,381

 
421

 
48

 
6,754

Transportation
1,408

 
91

 
11

 
1,488

Total
$
34,758

 
$
2,442

 
$
281

 
$
36,919

 
 
 
 
 
 
 
 
December 31, 2018
 
 
 
 
 
 
 
Communications
$
2,554

 
$
162

 
$
35

 
$
2,681

Financial
5,200

 
293

 
90

 
5,403

Industrial and other companies
15,591

 
487

 
422

 
15,656

Energy
4,034

 
194

 
143

 
4,085

Utilities
6,560

 
253

 
158

 
6,655

Transportation
1,281

 
47

 
32

 
1,296

Total
$
35,220

 
$
1,436

 
$
880

 
$
35,776



Fixed Maturities

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

The Company invests in various categories of CMOs, including CMOs that are not agency-backed, that are subject to different degrees of risk from changes in interest rates and defaults. The principal risks inherent in holding CMOs are prepayment and extension risks related to significant decreases and increases in interest rates resulting in the prepayment of principal from the underlying mortgages, either earlier or later than originally anticipated. As of March 31, 2019 and December 31, 2018, approximately 41.0% and 41.6%, respectively, of the Company's CMO holdings, were invested in the above mentioned types of CMOs such as interest-only or principal-only strips, that are subject to more prepayment and extension risk than traditional CMOs.

Public corporate fixed maturity securities are distinguished from private corporate fixed maturity securities based upon the manner in which they are transacted. Public corporate fixed maturity securities are issued initially through market intermediaries on a registered basis or pursuant to Rule 144A under the Securities Act of 1933 (the "Securities Act") and are traded on the secondary market through brokers acting as principal. Private corporate fixed maturity securities are originally issued by borrowers directly to investors pursuant to Section 4(a)(2) of the Securities Act, and are traded in the secondary market directly with counterparties, either without the participation of a broker or in agency transactions.

Repurchase Agreements

As of March 31, 2019 and December 31, 2018, the Company did not have any securities pledged in dollar rolls or reverse repurchase agreements. As of March 31, 2019, the carrying value of securities pledged and obligation to repay loans related to repurchase agreement transaction was $49 and $46, respectively, and included in Securities pledged and Payables under securities loan and repurchase agreements, including collateral held, respectively, on the Condensed Consolidated Balance Sheets. As of December 31, 2018, the carrying value of securities pledged and obligation to repay loans related to repurchase agreement transaction was $45 and $46, respectively. Securities pledged related to repurchase agreements are comprised of other asset-backed securities.

Securities Lending

As of March 31, 2019 and December 31, 2018, the fair value of loaned securities was $1,842 and $1,635, respectively, and is included in Securities pledged on the Condensed Consolidated Balance Sheets.

If cash is received as collateral, the lending agent retains the cash collateral and invests it in short-term liquid assets on behalf of the Company. As of March 31, 2019 and December 31, 2018, cash collateral retained by the lending agent and invested in short-term liquid assets on the Company's behalf was $1,681 and $1,581, respectively, and is recorded in Short-term investments under securities loan agreements, including collateral delivered on the Condensed Consolidated Balance Sheets. As of March 31, 2019 and December 31, 2018, liabilities to return collateral of $1,681 and $1,581, respectively, are included in Payables under securities loan and repurchase agreements, including collateral held on the Condensed Consolidated Balance Sheets.

The Company accepts non-cash collateral in the form of securities. The securities retained as collateral by the lending agent may not be sold or re-pledged, except in the event of default, and are not reflected on the Company’s Condensed Consolidated Balance Sheets. This collateral generally consists of U.S. Treasury, U.S. Government agency securities and MBS pools. As of March 31, 2019 and December 31, 2018, the fair value of securities retained as collateral by the lending agent on the Company’s behalf was $225 and $111, respectively.

The following table presents borrowings under securities lending transactions by asset class pledged as of the dates indicated:
 
March 31, 2019 (1)(2)
 
December 31, 2018 (1)(2)
U.S. Treasuries
$
444

 
$
337

U.S. Government agencies and authorities
16

 
7

U.S. corporate public securities
1,077

 
992

Equity Securities

 
1

Foreign corporate public securities and foreign governments
369

 
355

Payables under securities loan agreements
$
1,906

 
$
1,692

(1)As of March 31, 2019 and December 31, 2018, borrowings under securities lending transactions include cash collateral of $1,681 and $1,581, respectively.
(2)As of March 31, 2019 and December 31, 2018, borrowings under securities lending transactions include non-cash collateral of $225 and $111, respectively.

The Company's securities lending activities are conducted on an overnight basis, and all securities loaned can be recalled at any time. The Company does not offset assets and liabilities associated with its securities lending program.

Unrealized Capital Losses

Unrealized capital losses (including noncredit impairments), along with the fair value of fixed maturity securities, including securities pledged, by market sector and duration were as follows as of March 31, 2019:
 
Six Months or Less
Below Amortized Cost
 
More Than Six
Months and Twelve Months or Less
Below Amortized Cost
 
More Than Twelve
Months Below
Amortized Cost
 
Total
 
Fair Value
 
Unrealized Capital Losses
 
Fair Value
 
Unrealized Capital Losses
 
Fair Value
 
Unrealized Capital Losses
 
Fair Value
 
Unrealized Capital Losses
U.S. Treasuries
$

 
$

 
$

 
$

 
$
89

 
$
1

 
$
89

 
$
1

State, municipalities and political subdivisions
6

 

*
2

 

*
245

 
7

 
253

 
7

U.S. corporate public securities
248

 
5

 
711

 
18

 
2,015

 
110

 
2,974

 
133

U.S. corporate private securities
215

 
4

 
27

 

*
1,200

 
61

 
1,442

 
65

Foreign corporate public securities and foreign governments
110

 
1

 
185

 
6

 
987

 
56

 
1,282

 
63

Foreign corporate private securities
40

 

*
226

 
5

 
741

 
25

 
1,007

 
30

Residential mortgage-backed
449

 
6

 
64

 
1

 
730

 
22

 
1,243

 
29

Commercial mortgage-backed
369

 
3

 
136

 
4

 
654

 
28

 
1,159

 
35

Other asset-backed
643

 
8

 
496

 
13

 
172

 
6

 
1,311

 
27

Total
$
2,080

 
$
27

 
$
1,847

 
$
47

 
$
6,833

 
$
316

 
$
10,760

 
$
390

*Less than $1.


Unrealized capital losses (including noncredit impairments), along with the fair value of fixed maturity securities, including securities pledged, by market sector and duration were as follows as of December 31, 2018:
 
Six Months or Less
Below Amortized Cost
 
More Than Six
Months and Twelve Months or Less
Below Amortized Cost
 
More Than Twelve
Months Below
Amortized Cost
 
Total
 
Fair Value
 
Unrealized Capital Losses
 
Fair Value
 
Unrealized Capital Losses
 
Fair Value
 
Unrealized Capital Losses
 
Fair Value
 
Unrealized Capital Losses
U.S. Treasuries
$

 
$

 
$
24

 
$

*
$
94

 
$
2

 
$
118

 
$
2

State, municipalities and political subdivisions
140

 
1

 
383

 
9

 
241

 
12

 
764

 
22

U.S. corporate public securities
2,701

 
81

 
3,843

 
224

 
972

 
110

 
7,516

 
415

U.S. corporate private securities
951

 
21

 
1,397

 
47

 
888

 
102

 
3,236

 
170

Foreign corporate public securities and foreign governments
992

 
28

 
1,387

 
91

 
314

 
48

 
2,693

 
167

Foreign corporate private securities
859

 
14

 
1,271

 
99

 
403

 
39

 
2,533

 
152

Residential mortgage-backed
500

 
9

 
397

 
9

 
602

 
35

 
1,499

 
53

Commercial mortgage-backed
854

 
13

 
701

 
20

 
550

 
22

 
2,105

 
55

Other asset-backed
834

 
21

 
602

 
25

 
98

 
2

 
1,534

 
48

Total
$
7,831

 
$
188

 
$
10,005

 
$
524

 
$
4,162

 
$
372

 
$
21,998

 
$
1,084


*Less than $1.

Of the unrealized capital losses aged more than twelve months, the average market value of the related fixed maturities was 95.6% and 91.8% of the average book value as of March 31, 2019 and December 31, 2018, respectively.

Unrealized capital losses (including noncredit impairments) in fixed maturities, including securities pledged, for instances in which fair value declined below amortized cost by greater than or less than 20% for consecutive months as indicated in the tables below, were as follows as of the dates indicated:
 
Amortized Cost
 
Unrealized Capital Losses
 
Number of Securities
 
< 20%
 
> 20%
 
< 20%
 
> 20%
 
< 20%
 
> 20%
March 31, 2019
 
 
 
 
 
 
 
 
 
 
 
Six months or less below amortized cost
$
2,371

 
$
70

 
$
58

 
$
19

 
358

 
14

More than six months and twelve months or less below amortized cost
1,888

 

 
44

 

 
264

 
4

More than twelve months below amortized cost
6,684

 
137

 
228

 
41

 
1,001

 
12

Total
$
10,943

 
$
207

 
$
330

 
$
60

 
1,623

 
30

 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
Six months or less below amortized cost
$
8,131

 
$
197

 
$
204

 
$
50

 
1,023

 
30

More than six months and twelve months or less below amortized cost
10,364

 
117

 
473

 
44

 
1,314

 
9

More than twelve months below amortized cost
4,154

 
119

 
271

 
42

 
702

 
11

Total
$
22,649

 
$
433

 
$
948

 
$
136

 
3,039

 
50


Unrealized capital losses (including noncredit impairments) in fixed maturities, including securities pledged, by market sector for instances in which fair value declined below amortized cost by greater than or less than 20% were as follows as of the dates indicated:
 
Amortized Cost
 
Unrealized Capital Losses
 
Number of Securities
 
< 20%
 
> 20%
 
< 20%
 
> 20%
 
< 20%
 
> 20%
March 31, 2019