0000837010vriac:TotalDiscretionaryRateSettingProductsMember2022-12-31InvestmentPurchaseCommitmentMember2024-01-012024-03-31
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
——————————————————————
FORM 10-Q
| | | | | |
| (Mark One) | |
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2023March 31, 2024
OR
| | | | | |
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 033-23376
VOYA RETIREMENT INSURANCE & ANNUITY CO
(Exact name of registrant as specified in its charter)
| | | | | | | | |
| Connecticut | | 71-0294708 |
| (State or other jurisdiction of incorporation or organization) | | (IRS Employer Identification No.) |
| | | | | | | | | | | | | | | | | |
| One Orange Way | Windsor, | Connecticut | | 06095-4774 | (860) 580-4646 |
| (Address of principal executive offices) | | (Zip Code) |
(860) 580-4646
(Registrant’s telephone number, including area code) | (Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. ý Yes o No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ý Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | |
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | x | Smaller reporting company | ☐ |
| | Emerging growth company | ☐ |
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ý No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ☐ Yes ☐ No
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of NovemberMay 3, 2023,2024, 55,000 shares of Common Stock, $50 par value were outstanding, all of which were directly owned by Voya Holdings Inc.
NOTE: WHEREAS VOYA RETIREMENT INSURANCE AND ANNUITY COMPANY MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q, THIS FORM IS BEING FILED WITH THE REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL INSTRUCTION H(2).
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Form 10-Q for the period ended September 30, 2023March 31, 2024
INDEX
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| PART I. | FINANCIAL INFORMATION (UNAUDITED) | |
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| Item 1. | Financial Statements: | |
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| Item 2. | | |
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| Item 4. | | |
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| PART II. | OTHER INFORMATION | |
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| Item 1. | | |
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| Item 1A. | | |
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| Item 6. | | |
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As used in this Quarterly Report on Form 10-Q, "VRIAC" refers to Voya Retirement Insurance and Annuity Company and the "Company," "we," "our" and "us" refer to VRIAC and its wholly owned subsidiaries.
NOTE CONCERNING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, including "Risk Factors" and "Management’s Narrative Analysis of the Results of Operations and Financial Condition" contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements relating to future developments in our business or expectations for our future financial performance and any statement not involving a historical fact. Forward-looking statements use words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," and other words and terms of similar meaning in connection with a discussion of future operating or financial performance. Actual results, performance or events may differ materially from those projected in any forward-looking statement due to, among other things, (i) global market risks, including general economic conditions, particularly economic conditions in our core markets,ability to manage such risks and interest rates; (ii) performanceliquidity and credit risks, including financial strength or credit ratings downgrades, requirements to post collateral, and availability of financial markets,funds through lending programs; (iii) strategic and business risks, including emerging markets, (iii) interest rates,our ability to maintain market share or otherwise manage our third party relationships; (iv) investment risks, including the frequencyability to achieve desired returns or liquidate certain assets; (v) operational risks, including cybersecurity and severity of insured loss events, (v) the effects of natural or man-made disasters,privacy failures and our dependence on third parties; (vi) tax, regulatory and legal risks, including pandemic events, (vi) mortality and morbidity levels, (vii) persistency and lapse levels, (viii) currency exchange rates, (ix) general competitive factors, (x)limits on our ability to use deferred tax assets, changes in lawslaw, regulation or accounting standards, and regulations, such as those relating to Federal taxation, state insurance regulations and NAIC regulations and guidelines, (xi) changes in the policies of governments and/or regulatory authorities, and (xii) our parent company, Voya Financial, Inc.'s ability to successfully manage the separation of the Individual Life business that closed on January 4, 2021.comply with regulations. Factors that may cause actual results to differ from those in any forward-looking statement also include those described under "Risk Factors" and "Management’s Narrative Analysis of the Results of Operations and Financial Condition" in the Annual Report on Form 10-K for the year ended December 31, 20222023 (File No. 033-23376) (the "Annual Report on Form 10-K") and in this Quarterly Report on Form 10-Q.
The risks included here are not exhaustive. Current reports on Form 8-K and other documents filed with the Securities and Exchange Commission ("SEC") include additional factors that could affect our businesses and financial performance. Moreover, we operate in a rapidly changing and competitive environment. New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors.
PART I. FINANCIAL INFORMATION (UNAUDITED)
Item 1. Financial Statements
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Condensed Consolidated Balance Sheets
September 30, 2023March 31, 2024 (Unaudited) and December 31, 2022 (Unaudited)2023
(In millions, except share and per share data)
| | September 30,
2023 | | December 31,
2022 |
| March 31,
2024 | | | March 31,
2024 | | December 31,
2023 |
| Assets | Assets | | | |
| Investments: | Investments: | |
| Fixed maturities, available-for-sale, at fair value (amortized cost of $20,985 as of 2023 and $22,218 as of 2022; net of allowance for credit losses of $14 as of 2023 and $7 as of 2022) | $ | 18,131 | | | $ | 19,772 | |
| Investments: | |
| Investments: | |
| Fixed maturities, available-for-sale, at fair value (amortized cost of $19,886 and $20,496 as of 2024 and 2023, respectively; net of allowance for credit losses of $16 and $14 as of 2024 and 2023, respectively) | |
| Fixed maturities, available-for-sale, at fair value (amortized cost of $19,886 and $20,496 as of 2024 and 2023, respectively; net of allowance for credit losses of $16 and $14 as of 2024 and 2023, respectively) | |
| Fixed maturities, available-for-sale, at fair value (amortized cost of $19,886 and $20,496 as of 2024 and 2023, respectively; net of allowance for credit losses of $16 and $14 as of 2024 and 2023, respectively) | |
| Fixed maturities, at fair value using the fair value option | Fixed maturities, at fair value using the fair value option | 1,230 | | | 1,255 | |
| | Equity securities, at fair value | Equity securities, at fair value | 123 | | | 133 | |
| | Equity securities, at fair value | |
| | Equity securities, at fair value | |
| Short-term investments | Short-term investments | 186 | | | 248 | |
| Mortgage loans on real estate (net of allowance for credit losses of $24 as of 2023 and $14 as of 2022) | 4,129 | | | 4,213 | |
| Mortgage loans on real estate (net of allowance for credit losses of $22 as of 2024 and 2023) | |
| | | Policy loans | |
| | Policy loans | |
| | Policy loans | Policy loans | 161 | | | 159 | |
| Limited partnerships/corporations | Limited partnerships/corporations | 1,085 | | | 1,043 | |
| Derivatives | Derivatives | 328 | | | 322 | |
| Securities pledged (amortized cost of $845 as of 2023 and $894 as of 2022) | 718 | | | 792 | |
| Securities pledged (amortized cost of $951 and $855 as of 2024 and 2023, respectively) | |
| Other investments | Other investments | 127 | | | 132 | |
| Total investments | Total investments | 26,218 | | | 28,069 | |
| Cash and cash equivalents | Cash and cash equivalents | 154 | | | 220 | |
| Short-term investments under securities loan agreements, including collateral delivered | Short-term investments under securities loan agreements, including collateral delivered | 753 | | | 939 | |
| Accrued investment income | Accrued investment income | 309 | | | 289 | |
| | Premium receivable and reinsurance recoverable (net of allowance for credit losses of $0 as of 2023 and 2022) | 2,811 | | | 3,032 | |
| Premium receivable and reinsurance recoverable (net of allowance for credit losses of $0 as of 2024 and 2023) | |
| | Premium receivable and reinsurance recoverable (net of allowance for credit losses of $0 as of 2024 and 2023) | |
| | Premium receivable and reinsurance recoverable (net of allowance for credit losses of $0 as of 2024 and 2023) | |
| | Deferred policy acquisition costs and Value of business acquired | |
| | Deferred policy acquisition costs and Value of business acquired | |
| | Deferred policy acquisition costs and Value of business acquired | Deferred policy acquisition costs and Value of business acquired | 923 | | | 938 | |
| | Deferred income taxes | Deferred income taxes | 888 | | | 774 | |
| | Other assets (net of allowance for credit loss of $0 as of 2023 and 2022) | 1,690 | | | 1,681 | |
| Deferred income taxes | |
| | Deferred income taxes | |
| | Other assets (net of allowance for credit loss of $0 as of 2024 and 2023) | |
| | Other assets (net of allowance for credit loss of $0 as of 2024 and 2023) | |
| | Other assets (net of allowance for credit loss of $0 as of 2024 and 2023) | |
| Assets held in separate accounts | Assets held in separate accounts | 82,861 | | | 77,639 | |
| Total assets | Total assets | $ | 116,607 | | | $ | 113,581 | |
| | | | | | | | |
| The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. |
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| 4 | |
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Condensed Consolidated Balance Sheets
September 30, 2023March 31, 2024 (Unaudited) and December 31, 2022 (Unaudited)2023
(In millions, except share and per share data)
| | September 30,
2023 | | December 31,
2022 |
| March 31,
2024 | | | March 31,
2024 | | December 31,
2023 |
| Liabilities: | Liabilities: | | | |
| Future policy benefits and contract owner account balances | |
| Future policy benefits and contract owner account balances | |
| Future policy benefits and contract owner account balances | Future policy benefits and contract owner account balances | $ | 31,213 | | | $ | 32,942 | |
| | Payables under securities loan agreements, including collateral held | Payables under securities loan agreements, including collateral held | 779 | | | 921 | |
| Payables under securities loan agreements, including collateral held | |
| Payables under securities loan agreements, including collateral held | |
| | | Due to affiliates | |
| | Due to affiliates | |
| | Due to affiliates | Due to affiliates | 115 | | | 134 | |
| Derivatives | Derivatives | 305 | | | 331 | |
| | Other liabilities | Other liabilities | 797 | | | 687 | |
| | Other liabilities | |
| | Other liabilities | |
| Liabilities related to separate accounts | Liabilities related to separate accounts | 82,861 | | | 77,639 | |
| Total liabilities | Total liabilities | $ | 116,070 | | | $ | 112,654 | |
| | Commitments and Contingencies (Note 13) | Commitments and Contingencies (Note 13) | |
| Commitments and Contingencies (Note 13) | |
| Commitments and Contingencies (Note 13) | | | | |
| | Shareholder's equity: | Shareholder's equity: | |
| Common stock (100,000 shares authorized, 55,000 issued and outstanding as of 2023 and 2022, respectively; $50 par value per share) | 3 | | | 3 | |
| Shareholder's equity: | |
| Shareholder's equity: | |
| Common stock ($50 par value per share, 100,000 shares authorized, 55,000 issued and outstanding as of 2024 and 2023) | |
| Common stock ($50 par value per share, 100,000 shares authorized, 55,000 issued and outstanding as of 2024 and 2023) | |
| Common stock ($50 par value per share, 100,000 shares authorized, 55,000 issued and outstanding as of 2024 and 2023) | |
| Additional paid-in capital | Additional paid-in capital | 2,770 | | | 2,778 | |
| Accumulated other comprehensive income (loss) | Accumulated other comprehensive income (loss) | (2,407) | | | (2,067) | |
| Retained earnings (deficit) | Retained earnings (deficit) | 171 | | | 213 | |
| Total shareholder's equity | Total shareholder's equity | 537 | | | 927 | |
| Total liabilities and shareholder's equity | Total liabilities and shareholder's equity | $ | 116,607 | | | $ | 113,581 | |
| | | | | | | | |
| The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. |
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| 5 | |
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Condensed Consolidated Statements of Operations
For the Three and Nine Months Ended September 30,March 31, 2024 and 2023 and 2022 (Unaudited)
(In millions)
| | Three Months Ended March 31, | |
| Three Months Ended March 31, | |
| Three Months Ended March 31, | |
| 2024 | |
| 2024 | |
| 2024 | |
| | Three Months Ended September 30, | Nine Months Ended September 30, |
| Revenues: | |
| | 2023 | | 2022 | | 2023 | | 2022 | |
| Revenues: | |
| | Revenues: | Revenues: | | | | | | | | |
| Net investment income | Net investment income | $ | 384 | | | $ | 366 | | | $ | 1,155 | | | $ | 1,235 | | |
| Net investment income | |
| Net investment income | |
| Fee income | Fee income | 254 | | | 237 | | | 738 | | | 746 | | |
| Fee income | |
| Fee income | |
| Premiums | |
| Premiums | |
| Premiums | Premiums | 15 | | | 2 | | | 24 | | | 10 | | |
| | Net gains (losses) | Net gains (losses) | (64) | | | (69) | | | (142) | | | (387) | | |
| | Net gains (losses) | |
| | Net gains (losses) | |
| Other revenue | |
| Other revenue | |
| Other revenue | Other revenue | 2 | | | 8 | | | 12 | | | 37 | | |
| Total revenues | Total revenues | 591 | | | 544 | | | 1,787 | | | 1,641 | | |
| Total revenues | |
| Total revenues | |
| Benefits and expenses: | |
| Benefits and expenses: | |
| Benefits and expenses: | Benefits and expenses: | | | | | | |
| Interest credited and other benefits to contract owners/policyholders | Interest credited and other benefits to contract owners/policyholders | 261 | | | 174 | | | 623 | | | 553 | | |
| Interest credited and other benefits to contract owners/policyholders | |
| Interest credited and other benefits to contract owners/policyholders | |
| Operating expenses | |
| Operating expenses | |
| Operating expenses | Operating expenses | 269 | | | 269 | | | 851 | | | 869 | | |
| | Net amortization of Deferred policy acquisition costs and Value of business acquired | Net amortization of Deferred policy acquisition costs and Value of business acquired | 19 | | | 21 | | | 58 | | | 62 | | |
| Interest expense | 1 | | | 1 | | | 2 | | | 1 | | |
| | Net amortization of Deferred policy acquisition costs and Value of business acquired | |
| | Net amortization of Deferred policy acquisition costs and Value of business acquired | |
| | Total benefits and expenses | |
| | Total benefits and expenses | |
| | | Total benefits and expenses | Total benefits and expenses | 550 | | | 465 | | | 1,534 | | | 1,485 | | |
| Income (loss) before income taxes | Income (loss) before income taxes | 41 | | | 79 | | | 253 | | | 156 | | |
| Income (loss) before income taxes | |
| Income (loss) before income taxes | |
| Income tax expense (benefit) | |
| Income tax expense (benefit) | |
| Income tax expense (benefit) | Income tax expense (benefit) | (29) | | | 5 | | | (7) | | | (2) | | |
| Net income (loss) | Net income (loss) | $ | 70 | | | $ | 74 | | | $ | 260 | | | $ | 158 | | |
| Net income (loss) | |
| Net income (loss) | |
| | | | | | | | |
| The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. |
| | |
| 6 | |
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Condensed Consolidated Statements of Comprehensive Income
For the Three and Nine Months Ended September 30,March 31, 2024 and 2023 and 2022 (Unaudited)
(In millions)
| | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2023 | | 2022 | | 2023 | | 2022 | |
| Net income (loss) | $ | 70 | | | $ | 74 | | | $ | 260 | | | $ | 158 | | |
| Other comprehensive income (loss), before tax: | | | | | | | | |
| Change in current discount rate | 4 | | | 10 | | | 15 | | | 41 | | |
| Unrealized gains (losses) on securities | (686) | | | (1,220) | | | (446) | | | (4,871) | | |
| | | | | | | | |
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| Other comprehensive income (loss), before tax | (682) | | | (1,210) | | | (431) | | | (4,830) | | |
| Income tax expense (benefit) related to items of other comprehensive income (loss) | (144) | | | (254) | | | (91) | | | (1,014) | | |
| Other comprehensive income (loss), after tax | (538) | | | (956) | | | (340) | | | (3,816) | | |
| Comprehensive income (loss) | $ | (468) | | | $ | (882) | | | $ | (80) | | | $ | (3,658) | | |
| | | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | |
| 2024 | | 2023 | | | | | |
| Net income (loss) | $ | 160 | | | $ | 90 | | | | | | |
| Other comprehensive income (loss), before tax: | | | | | | | | |
| Change in current discount rate | 9 | | | 6 | | | | | | |
| Unrealized gains (losses) on securities | (97) | | | 492 | | | | | | |
| | | | | | | | |
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| Other comprehensive income (loss), before tax | (88) | | | 498 | | | | | | |
| Income tax expense (benefit) related to items of other comprehensive income (loss) | (18) | | | 104 | | | | | | |
| Other comprehensive income (loss), after tax | (70) | | | 394 | | | | | | |
| Comprehensive income (loss) | $ | 90 | | | $ | 484 | | | | | | |
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| The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. |
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| 7 | |
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Condensed Consolidated Statements of Changes in Shareholder’s Equity
For the Three Months Ended September 30,March 31, 2024 and 2023 and 2022 (Unaudited)
(In millions)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common Stock | | Additional Paid-In Capital | | Accumulated Other Comprehensive Income (Loss) | | Retained Earnings (Deficit) | | Total Shareholder's Equity |
| Balance as of July 1, 2023 | $ | 3 | | | $ | 2,770 | | | $ | (1,869) | | | $ | 101 | | | $ | 1,005 | |
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| Comprehensive income (loss): | | | | | | | | | |
| Net income (loss) | — | | | — | | | — | | | 70 | | | 70 | |
| Other comprehensive income (loss), after tax | — | | | — | | | (538) | | | — | | | (538) | |
| Total comprehensive income (loss) | | | | | | | | | (468) | |
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| Balance as of September 30, 2023 | $ | 3 | | | $ | 2,770 | | | $ | (2,407) | | | $ | 171 | | | $ | 537 | |
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| Balance as of July 1, 2022 | $ | 3 | | | $ | 2,778 | | | $ | (1,298) | | | $ | (36) | | | $ | 1,447 | |
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| Comprehensive income (loss): | | | | | | | | | |
| Net income (loss) | — | | | — | | | — | | | 74 | | | 74 | |
| Other comprehensive income (loss), after tax | — | | | — | | | (956) | | | — | | | (956) | |
| Total comprehensive income (loss) | | | | | | | | | (882) | |
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| Balance as of September 30, 2022 | $ | 3 | | | $ | 2,778 | | | $ | (2,254) | | | $ | 38 | | | $ | 565 | |
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| Common Stock | | Additional Paid-In Capital | | Accumulated Other Comprehensive Income (Loss) | | Retained Earnings (Deficit) | | Total Shareholder's Equity |
| Balance as of January 1, 2024 | $ | 3 | | | $ | 2,770 | | | $ | (1,531) | | | $ | 298 | | | $ | 1,540 | |
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| Comprehensive income (loss): | | | | | | | | | |
| Net income (loss) | — | | | — | | | — | | | 160 | | | 160 | |
| Other comprehensive income (loss), after tax | — | | | — | | | (70) | | | — | | | (70) | |
| Total comprehensive income (loss) | | | | | | | | | 90 | |
| Dividends paid and distributions of capital | — | | | — | | | — | | | (163) | | | (163) | |
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| Balance as of March 31, 2024 | $ | 3 | | | $ | 2,770 | | | $ | (1,601) | | | $ | 295 | | | $ | 1,467 | |
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| Balance as of January 1, 2023 | $ | 3 | | | $ | 2,778 | | | $ | (2,067) | | | $ | 213 | | | $ | 927 | |
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| Comprehensive income (loss): | | | | | | | | | |
| Net income (loss) | — | | | — | | | — | | | 90 | | | 90 | |
| Other comprehensive income (loss), after tax | — | | | — | | | 394 | | | — | | | 394 | |
| Total comprehensive income (loss) | | | | | | | | | 484 | |
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| Balance as of March 31, 2023 | $ | 3 | | | $ | 2,778 | | | $ | (1,673) | | | $ | 303 | | | $ | 1,411 | |
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| The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. |
| | |
| 8 | |
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Condensed Consolidated Statements of Changes in Shareholder’s Equity
For the Nine Months Ended September 30, 2023 and 2022 (Unaudited)
(In millions)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
| Common Stock | | Additional Paid-In Capital | | Accumulated Other Comprehensive Income (Loss) | | Retained Earnings (Deficit) | | Total Shareholder's Equity |
| Balance as of January 1, 2023 | $ | 3 | | | $ | 2,778 | | | $ | (2,067) | | | $ | 213 | | | $ | 927 | |
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| Comprehensive income (loss): | | | | | | | | | |
| Net income (loss) | — | | | — | | | — | | | 260 | | | 260 | |
| Other comprehensive income (loss), after tax | — | | | — | | | (340) | | | | | (340) | |
| Total comprehensive income (loss) | | | | | | | | | (80) | |
| Dividends paid and distributions of capital | — | | | (8) | | | — | | | (302) | | | (310) | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Balance as of September 30, 2023 | $ | 3 | | | $ | 2,770 | | | $ | (2,407) | | | $ | 171 | | | $ | 537 | |
| | | | | | | | | |
| | | | | | | | | |
| Balance as of January 1, 2022 | $ | 3 | | | $ | 3,191 | | | $ | 1,562 | | | $ | 324 | | | $ | 5,080 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Comprehensive income (loss): | | | | | | | | | |
| Net income (loss) | — | | | — | | | — | | | 158 | | | 158 | |
| Other comprehensive income (loss), after tax | — | | | — | | | (3,816) | | | — | | | (3,816) | |
| Total comprehensive income (loss) | | | | | | | | | (3,658) | |
| Dividends paid and distributions of capital | — | | | (413) | | | — | | | (444) | | | (857) | |
| | | | | | | | | |
| | | | | | | | | |
| Balance as of September 30, 2022 | $ | 3 | | | $ | 2,778 | | | $ | (2,254) | | | $ | 38 | | | $ | 565 | |
| | | | | | | | | |
| | | | | | | | |
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. |
| | |
| 9 | |
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Condensed Consolidated Statements of Cash Flows
For the NineThree Months Ended September 30,March 31, 2024 and 2023 and 2022 (Unaudited)
(In millions)
| | Nine Months Ended September 30, |
| 2023 | | 2022 |
| Three Months Ended March 31, | | | Three Months Ended March 31, |
| 2024 | | | 2024 | | 2023 |
| Net cash provided by operating activities | Net cash provided by operating activities | $ | 931 | | | $ | 1,020 | |
| Cash Flows from Investing Activities: | Cash Flows from Investing Activities: | | | |
| Proceeds from the sale, maturity, disposal or redemption of: | Proceeds from the sale, maturity, disposal or redemption of: | |
| Proceeds from the sale, maturity, disposal or redemption of: | |
| Proceeds from the sale, maturity, disposal or redemption of: | |
| Fixed maturities | Fixed maturities | 3,829 | | | 3,352 | |
| Equity securities | 4 | | | — | |
| Fixed maturities | |
| Fixed maturities | |
| | Mortgage loans on real estate | |
| Mortgage loans on real estate | |
| Mortgage loans on real estate | Mortgage loans on real estate | 340 | | | 506 | |
| Limited partnerships/corporations | Limited partnerships/corporations | 38 | | | 61 | |
| Acquisition of: | Acquisition of: | |
| Fixed maturities | Fixed maturities | (2,690) | | | (4,574) | |
| Fixed maturities | |
| Fixed maturities | |
| | Mortgage loans on real estate | |
| Mortgage loans on real estate | |
| Mortgage loans on real estate | Mortgage loans on real estate | (267) | | | (464) | |
| Limited partnerships/corporations | Limited partnerships/corporations | (84) | | | (129) | |
| Short-term investments, net | Short-term investments, net | 62 | | | — | |
| Derivatives, net | Derivatives, net | 42 | | | 166 | |
| Short-term loan to affiliate, net | Short-term loan to affiliate, net | (161) | | | 26 | |
| Receipts on deposit asset contracts | Receipts on deposit asset contracts | 196 | | | 85 | |
| Other, net | Other, net | 50 | | | 41 | |
| Net cash provided by (used in) investing activities | Net cash provided by (used in) investing activities | 1,359 | | | (930) | |
| Cash Flows from Financing Activities: | Cash Flows from Financing Activities: | | | |
| Deposits received for investment contracts | Deposits received for investment contracts | 1,159 | | | 3,763 | |
| Deposits received for investment contracts | |
| Deposits received for investment contracts | |
| Maturities and withdrawals from investment contracts | Maturities and withdrawals from investment contracts | (3,254) | | | (3,305) | |
| Dividends paid and distributions of capital | Dividends paid and distributions of capital | (310) | | | (857) | |
| | Other, net | |
| Other, net | |
| Other, net | Other, net | 49 | | | 80 | |
| Net cash provided by (used in) financing activities | Net cash provided by (used in) financing activities | (2,356) | | | (319) | |
| Net increase (decrease) in cash and cash equivalents | Net increase (decrease) in cash and cash equivalents | (66) | | | (229) | |
| Cash and cash equivalents, beginning of period | Cash and cash equivalents, beginning of period | 220 | | | 436 | |
| Cash and cash equivalents, end of period | Cash and cash equivalents, end of period | $ | 154 | | | $ | 207 | |
|
| | | | | | | | |
| The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. |
| | |
| 9 | | 10 |
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
1. Business, Basis of Presentation and Significant Accounting Policies
Business
Voya Retirement Insurance and Annuity Company ("VRIAC") is a stock life insurance company domiciled in the State of Connecticut. VRIAC and its wholly owned subsidiaries (collectively, the "Company") provide financial products and services in the United States. VRIAC is authorized to conduct its insurance business in all states and in the District of Columbia, Guam, Puerto Rico and the Virgin Islands.
VRIAC is a direct, wholly owned subsidiary of Voya Holdings Inc. ("Parent"), which is a direct, wholly owned subsidiary of Voya Financial, Inc. ("Voya Financial").
The Company derives its revenue mainly from (a) Investment income earned on investments, (b) Fee income generated from separate account assets supporting variable options under variable annuity contract investments, as designated by contract owners, (c) Premiums, (d) Net gains (losses) on investments and changes in fair value of embedded derivatives on product guarantees, and (e) Other revenue which includes certain other fees. The Company's benefits and expenses primarily consist of (a) Interest credited and other benefits to contract owners/policyholders, (b) Operating expenses, which include expenses related to the selling and servicing of the various products offered by the Company and other general business expenses, and (c) Amortization of Deferred acquisition costs ("DAC") and Value of business acquired ("VOBA"). In addition, the Company collects broker-dealer commission revenues through Voya Financial Partners, LLC ("VFP"), which are, in turn, paid to broker-dealers and expensed.
The Company offers qualified and non-qualified annuity contracts that include a variety of funding and payout options for individuals and employer-sponsored retirement plans qualified under Internal Revenue Code Sections 401, 403, 408, 457 and 501, as well as non-qualified deferred compensation plans and related services. The Company's products are offered primarily to public and private school systems, higher education institutions, hospitals and healthcare facilities, not-for-profit organizations, state and local governments, small to mid-sized corporations and individuals. The Company also provides stable value investment options, including separate account guaranteed investment contracts ("GICs") and synthetic GICs, to institutional clients. The Company's products are generally distributed through independent brokers and advisors, third-party administrators and consultants.
Products offered by the Company include deferred and immediate (i.e., payout) annuity contracts. The Company's products also include programs offered to qualified plans and non-qualified deferred compensation plans that package administrative and record-keeping services, participant education, and retirement readiness planning tools along with a variety of investment options, including proprietary and non-proprietary mutual funds and variable and fixed investment options. In addition, the Company offers wrapper agreements entered into with retirement plans, which contain certain benefit responsive guarantees (i.e., guarantees of principal and previously accrued interest for benefits paid under the terms of the plan) with respect to portfolios of plan-owned assets not invested with the Company. Stable value products are also provided to institutional plan sponsors where the Company may or may not be providing other employer sponsored products and services.
The Company has one operating segment.
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, and the differences may be material to the Condensed Consolidated Financial Statements.
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated) The Condensed Consolidated Financial Statements include the accounts of VRIAC and its wholly owned subsidiaries, VFP, Voya Institutional Plan Services, LLC ("VIPS"), and Voya Retirement Advisors, LLC ("VRA"). Intercompany transactions and balances have been eliminated.
The accompanying Condensed Consolidated Financial Statements are unaudited and reflect adjustments (including normal, recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows for the interim periods presented, in conformity with U.S. GAAP. Interim results are not necessarily indicative of full year performance.
On January 1,The December 31, 2023 Consolidated Balance Sheet is from the Company adopted Accounting Standard Update (“ASU”) 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts ("ASU 2018-12"), under the modified retrospective adoption method. ASU 2018-12 provided new authoritative guidance impacting the accounting and disclosure requirements for long-duration insurance and investment contracts issued by the Company. The unaudited Condensedaudited Consolidated Financial Statements are presented under the new guidance for reporting periods beginning January 1, 2021. See “Adoption of New Pronouncements” below for additional information regarding this adoption and the transition impacts recorded as of January 1, 2021. See "Significant Accounting Policies" below for additional details regarding the key policy changes effected by this ASU and updated accounting policies resulting from the adoption of this ASU for all periods presentedincluded in the unaudited Condensed Consolidated Financial Statements. This section is meant to serve as an update to, and should be read in conjunction with the Business, Basis of Presentation and Significant Accounting Policies Note to the Consolidated Financial Statements in Part II, Item 8. of theCompany's Annual Report on Form 10-K forfiled with the year ended December 31, 2022.SEC. Therefore, these unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and related notes included in the Company's Annual Report on Form 10-K.
Significant Accounting PoliciesAdoption of New Pronouncements
Effective January 1, 2023, the Company adopted ASU 2018-12, as amended. As a result, the Company made changesEquity Securities Subject to the following significant accounting policies:Contractual Sale Restrictions
EstimatesIn June 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2022-03, "Fair Value Measurement (Topic 280): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions" ("ASU 2022-03"), which clarifies that contractual restrictions on equity security sales are not considered part of the security unit of account and, Assumptionstherefore, are not considered in measuring the fair value. In addition, the restrictions cannot be recognized and measured as separate units of account. Disclosures on such restrictions are also required.
Upon adoptionThe provisions of ASU 2018-12, DAC and VOBA2022-03 were no longer considered significant estimates byadopted prospectively on January 1, 2024. The adoption did not have an impact on the Company, as the amortization methodology is no longer subject to a significant degreeCompany's financial condition, results of variability and does not require a high degree of judgment.operations, or cash flows.
Deferred Policy Acquisition Costs and ValueFuture Adoption of Business AcquiredAccounting Pronouncements
DAC represents policy acquisition costs that have been capitalized and are subject to amortization. Capitalized costs are incremental, direct costs of contract acquisition and certain other costs related directly to successful acquisition activities. Such costs consist principally of commissions, underwriting, sales and contract issuance and processing expenses directly related to the successful acquisition of new and renewal business. Indirect or unsuccessful acquisition costs, maintenance, product development and overhead expenses are charged to expense as incurred. VOBA represents the outstanding value of in-force business acquired and is subject to amortization. The value is based on the present value of estimated net cash flows embedded in the insurance contracts at the time of the acquisition and increased for subsequent deferrable expenses on purchased policies. DAC/VOBA amortization is recorded in Net amortization of Deferred policy acquisition costs and Value of business acquired in the Condensed Consolidated Statements of Operations.Income Tax Disclosures
Amortization MethodologiesIn December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU 2023-09"), which requires:
The Company amortizes DAC/VOBA related
•A tabular rate reconciliation of (1) reported income tax expense/benefit from continuing operations, to deferred annuity contracts(2) the product of the income/loss from continuing operations before income taxes and the statutory federal income tax rate, using specific categories, as well as disclosure of certain reconciling items based on a constant level basis over the expected term of the related contracts. Contracts are grouped for amortization purposes5% threshold.
•Year-to-date net income taxes paid, disaggregated by market type federal, state, and issue year cohort using assumptionsforeign, as well as disaggregated information on net income taxes paid to an individual jurisdiction based on a basis consistent with those used in estimating the associated liability or other related balance, where applicable.5% threshold.
The principal assumption deemed critical to the DAC/VOBA amortizationamendments are effective for annual periods beginning after December 15, 2024 and should be applied prospectively, with retrospective application permitted. Early adoption is the estimated contract term, which incorporates mortality and persistency, and represents management’s best estimate of future outcome.also permitted. The Company periodically reviews this assumption against actual experienceis currently in the process of determining the impacts of adoption of the provisions of ASU 2023-09.
Segment Disclosures
In November 2023, the FASB issued ASU 2023-07 "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" ("ASU 2023-07"), which requires all current annual disclosures about profit/loss and assets to be reported in interim periods, as well as enhanced disclosures about significant segment expenses.
The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024, and are required to be applied retrospectively. Restated prior period disclosures should be based on additional information that becomes available, updates the assumption. Changessignificant segment expense categories disclosed in contract term estimates are reflected prospectivelythe period of adoption. The Company is currently in amortization expense asthe process of determining the impacts of adoption of the beginningprovisions of the reporting period in which the change is made.ASU 2023-07.
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated) VOBA is subject to recoverability testing; DAC is not. The Company performs testing to assess the recoverability of VOBA on an annual basis, or more frequently if circumstances indicate that a potential loss recognition issue exists. If VOBA is not deemed recoverable, charges will be applied against the VOBA balance before an additional reserve is established.Climate Related Disclosures
Future Policy Benefits
In March 2024, the SEC adopted a final rule under SEC Release No. 33-11275, The Company establishesEnhancement and carries actuarially-determined reserves that are calculatedStandardization of Climate-Related Disclosures for Investors, to meet its future obligations, including estimatesenhance and standardize climate-related disclosures. The rule will require companies to disclose material Scope 1 and Scope 2 greenhouse gas emissions; climate-related risks, governance, and oversight; and the financial effects of unpaid claimssevere weather events and claims thatother natural conditions. These disclosures will be phased in beginning with the Company's annual report for the year ending December 31, 2025. While the implementation of this rule is pending the outcome of legal challenges, the Company believes have been incurred but have not yet been reported as of the balance sheet date. Reserves for payout contracts with life contingencies are equal to the present value of future payments.
Principal assumptions used to establish liabilities for future policy benefits include interest rate, mortality, morbidity, policy lapse, contract renewal, payment of subsequent premiums or deposits by the contract owner, retirement, inflation, and benefit utilization. Other than interest rate assumptions, these assumptions are based on Company experience and periodically reviewed against industry standards. The Company reviews these assumptions at least annually and updates them if necessary. In addition to assumption updates, the Company adjusts reserves for actual experience in the period in which the experience occurs. Changes in, or deviations from, the assumptions used can significantly affect the Company's reserve levels and related results of operations. Remeasurements of the reserves as a result of assumption updates and adjustments for actual experience are recognized in Interest credited and other benefits to contract owners/policyholders in the Condensed Consolidated Statements of Operations.
Interest rates used in discounting the reserves are based on an upper-medium grade (low credit risk) fixed income instrument yield derived from observable market data. A 30-year forward rate is used for periods beyond the last observable market point. Reserves are remeasured quarterly to reflect changes in the discount rate, with the resulting change recorded in Accumulated other comprehensive income ("AOCI"). Locked-in interest rates used to determine interest accretion on reserves for new contracts sold after January 1, 2021 are based on the upper-medium grade (low credit risk) fixed income instrument yield applicable at the time the contract was issued. Locked-in interest accretion rates for contracts in force as of the January 1, 2021 transition date for ASU 2018-12 are based on the locked-in interest rates in effect for those contracts immediately before the transition date. Interest accretion is recorded in Interest credited and other benefits to contract owners/policyholders on the Condensed Consolidated Statements of Operations.
Product Guarantees and Additional Reserves
The Company calculates additional reserve liabilities for certain variable annuity guaranteed benefits and variable funding products. The Company periodically evaluates its estimates and adjusts the additional liability balance, with a related charge or credit to benefit expense, if actual experience or other evidence suggests that earlier assumptions should be revised. Changes in, or deviations from, the assumptions used can significantly affect the Company's reserve levels and related results of operations.
Stabilizer and MCG: Guaranteed credited rates give rise to an embedded derivative in the stabilizer ("Stabilizer") products and a stand-alone derivative for managed custody guarantee products ("MCG"). These derivatives are measured at estimated fair value and recorded in Future policy benefits and contract owner account balances. Changes in estimated fair value, that are not related to attributed fees collected or payments made, are reported in Net gains (losses) in the Condensed Consolidated Statements of Operations.
The estimated fair value of the Stabilizer embedded derivative and MCG stand-alone derivative is determined based on the present value of projected future claims, minus the present value of future guaranteed premiums. At inception of the contract, the Company projects a guaranteed premium to be equal to the present value of the projected future claims. The income associated with the contracts is projected using actuarial and capital market assumptions, including benefits and related contract charges, over the anticipated life of the related contracts. The cash flow estimates are projected under multiple capital market scenarios using observable risk-free rates and other best estimate assumptions.
The liabilities for the Stabilizer embedded derivative and the MCG stand-alone derivative include a risk margin to capture uncertainties related to policyholder behavior assumptions. The margin represents additional compensation a market participant would require to assume these risks.
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)The discount rate used to determine the fair value of the liabilities for the Stabilizer embedded derivative and the MCG stand-alone derivative includes an adjustment to reflect the risk that these obligations will not be fulfilled ("nonperformance risk").
Reinsurance
The Company utilizes reinsurance agreements in most aspects of its insurance business to reduce its exposure to large losses. Such reinsurance permits recovery of a portion of losses from reinsurers, although it does not discharge the primary liability of the Company as direct insurer of the risks reinsured.
For each of its reinsurance agreements, the Company determines whether the agreement provides indemnification against loss or liability relating to insurance risk. The Company reviews contractual features, particularly those that may limit the amount of insurance risk to which the reinsurer is subject or features that delay the timely reimbursement of claims. The assumptions used to account for long-duration reinsurance agreements are consistent with those used for the underlying contracts with the exception of the interest accretion rate on reinsurance recoverable assets associated with in-force business reinsured. Ceded Future policy benefits and contract owner account balances are reported gross on the Condensed Consolidated Balance Sheets.
For reinsurance of long-duration contracts that transfer significant insurance risk, the difference, if any, between the amounts paid and benefits received related to the underlying contracts is included in the expected net cost of reinsurance, which is recorded in Premiums receivable and reinsurance recoverable or Other liabilities, as appropriate, on the Condensed Consolidated Balance Sheets.
Accounting for reinsurance requires use of assumptions and estimates, particularly related to the future performance of the underlying business and the potential impact of counterparty credit risks. The Company reviews assumptions used to establish assets and liabilities relating to ceded and assumed reinsurance at least annually and updates them if necessary. In addition to the assumption updates, the Company adjusts these assets or liabilities for actual experience in the period in which the experience occurs. The Company also evaluates the financial strength of potential reinsurers and continually monitors the financial condition of reinsurers.
Reinsurance recoverable balances are reported net of the allowance for credit losses on the Company’s Condensed Consolidated Balance Sheets. Management estimates the credit loss allowance balance using a factor-based method of probability of default and loss given default which incorporates relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Included in the factor-based method are the consideration of capital market factors, counterparty financial information and ratings, and reinsurance agreement-specific risk characteristics such as collateral type, collateral size, and covenant strength.
The allowance for credit losses is a valuation account that is deducted from the reinsurance recoverable balance to present the net amount expected to be collected on the reinsurance recoverable. The change in the allowance for credit losses is recorded in Interest credited and other benefits to contract owners/policyholders in the Condensed Consolidated Statements of Operations.
Current reinsurance recoverable balances deemed probable of recovery and payable balances under reinsurance agreements are included in Premiums receivable and reinsurance recoverable and Other liabilities, respectively. Such assets and liabilities relating to reinsurance agreements with the same reinsurer are recorded net on the Condensed Consolidated Balance Sheets if a right of offset exists within the reinsurance agreement. Premiums, Fee income and Interest credited and other benefits to contract owners/policyholders are reported net of reinsurance ceded.
Significant accounting policies that were unchanged from those included in the Company’s December 31, 2022 Annual Report on Form 10-K as a result of the adoption of ASU 2018-12 have not been repeated. These policies include Internal Replacements, Contract Owner Account Balances, and Separate Accounts.
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)Adoption of New Pronouncements
Long-Duration Contracts
The following section provides a description of the Company's adoption of ASU 2018-12 issued by the Financial Accounting Standards Board ("FASB") and the impact of the adoption on the Company's financial statements:
This standard, issued in August 2018, changes the measurement and disclosures of insurance liabilities and DAC for long-duration contracts issued by insurers. In addition to expanded disclosures, the standard’s requirements include:
•Annual review and, if necessary, update of cash flow assumptions used to measure the liability for future policy benefits for nonparticipating traditional and limited payment insurance contracts, measured on a retrospective catch-up basis and recognized in the period the update is made. The rate used is required to be updated quarterly, with related changes in the liability recorded in AOCI.
•Fair value measurement of contract guarantee features qualifying as Market Risk Benefits ("MRB"), with changes in fair value recognized in the Statements of Operations. Changes in the instrument-specific credit risk will be recorded in AOCI.
•Amortization of DAC on a constant level basis over the expected term of the contracts, without reference to revenue or profitability. An accounting election may be made to apply the DAC requirements to VOBA.
The Company adopted ASU 2018-12 on January 1, 2023, on a modified retrospective basis for the liability for future policy benefits and DAC and on a full retrospective basis for MRBs. The January 1, 2021 transition impact increased Total shareholder’s equity. This increase was primarily driven by the removal of DAC/VOBA and Premium deficiency reserve adjustment balances, and partially offset by the impact of remeasurement of Future policy benefits and Reinsurance recoverable
using the discount rate at January 1, 2021. Total shareholder’s equity was also impacted by the establishment of MRB liabilities related to guaranteed minimum benefits on certain deferred annuity contracts.
Disclosures and post-transition comparative information have been restated to conform to the requirements of ASU 2018-12.
The following tables provide additional information related to the transition adjustments:
| | | | | | | | | | | |
| DAC | | VOBA |
| Wealth Solutions Deferred and Individual Annuities | | |
| Balance, December 31, 2020 | $ | 129 | | | $ | 40 | |
| Adjustment for removal of related balances in AOCI | 439 | | | 386 | |
| Balance, January 1, 2021 | $ | 568 | | | $ | 426 | |
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)The following table presents information on transition adjustments, net of tax, related to the adoption of ASU 2018-12 for retained earnings and AOCI to arrive at the opening balances as of January 1, 2021:
| | | | | |
Total Shareholder's equity December 31, 2020 | $ | 4,897 | |
AOCI | |
Reversal of AOCI adjustments | 1,018 | |
Effect of remeasurement of liability at current discount rate | (339) | |
Total AOCI adjustments | $ | 679 | |
| |
Retained Earnings | |
Establishment of MRBs | $ | (61) | |
Other adjustments | 3 | |
Total Retained earnings | $ | (58) | |
Total adjustment for the adoption of ASU 2018-12 | $ | 621 | |
Total Shareholder's equity January 1, 2021 | $ | 5,518 | |
The following table provides a description of the Company’s adoption of other new ASUs issued by the FASB andcurrently assessing the impact of adoption on the Company’s financial statements:
| | | | | | | | | | | |
Standard | Description of Requirements | Effective Date and Transition Provisions | Effect on the Financial Statements or Other Significant Matters |
ASU 2022-02, Troubled Debt Restructurings ("TDRs") and Vintage Disclosures | This standard, issued in March 2022, eliminates the accounting guidance on troubled debt restructurings for creditors, requires enhanced disclosures for creditors about loan modifications when a borrower is experiencing financial difficulty, and requires public business entities to include current-period gross write-offs in the vintage disclosure tables. | January 1, 2023 on a prospective basis. | Adoption of the ASU did not have an impact on the Company's financial condition, results of operations, or cash flows.
Required disclosure changes have been included in the Investments Note to these Condensed Consolidated Financial Statements.
|
ASU 2020-04, Reference Rate Reform | This standard, issued in March 2020, provides temporary optional expedients and exceptions for applying U.S. GAAP principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. | The amendments were effective as of March 12, 2020, the issuance date of the ASU. An entity may elect to apply the amendments prospectively through December 31, 2024. | The Company has elected to apply the optional expedient provided in ASU 2020-04 for qualifying contract modifications. To date, adoption of the guidance has not had a material impact on the Company’s financial condition and results of operations. The Company will continue to evaluate the impacts of reference rate reform on contract modifications and hedging relationships as the project nears completion. |
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Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amountsand related disclosures in millions, unless otherwise stated)Future Adoption of Accounting Pronouncements
The following table provides a description of future adoptions ofnew accounting standardsthe event 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 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions | This standard, issued in June 2022, clarifies that contractual restrictions on equity security sales are not considered part of the security unit of account and, therefore, are not considered in measuring fair value. In addition, the restrictions cannot be recognized and measured as separate units of account. Disclosures on such restrictions are also required. | The amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and are required to be applied prospectively, with any adjustments from the adoption recognized in earnings and disclosed. | The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2022-03. |
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stay is lifted.
2. Investments
Fixed Maturities
Available-for-sale and fair value option ("FVO") fixed maturities were as follows as of September 30, 2023:March 31, 2024:
| | Amortized
Cost | | Gross
Unrealized
Capital
Gains | | Gross
Unrealized
Capital
Losses | | Embedded Derivatives(2) | | Allowance for credit losses | | Fair
Value |
| Amortized
Cost | | | Amortized
Cost | | Gross
Unrealized
Capital
Gains | | Gross
Unrealized
Capital
Losses | | Embedded Derivatives(2) | | Allowance for credit losses | | Fair
Value |
| Fixed maturities: | Fixed maturities: | | | | | | | | | | | |
| U.S. Treasuries | |
| U.S. Treasuries | |
| U.S. Treasuries | U.S. Treasuries | $ | 328 | | | $ | — | | | $ | 40 | | | $ | — | | | $ | — | | | $ | 288 | |
| U.S. Government agencies and authorities | U.S. Government agencies and authorities | 32 | | | — | | | 4 | | | — | | | — | | | 28 | |
| State, municipalities and political subdivisions | State, municipalities and political subdivisions | 626 | | | — | | | 109 | | | — | | | — | | | 517 | |
| U.S. corporate public securities | U.S. corporate public securities | 6,470 | | | 16 | | | 1,197 | | | — | | | 1 | | | 5,288 | |
| U.S. corporate private securities | U.S. corporate private securities | 3,909 | | | 7 | | | 413 | | | — | | | — | | | 3,503 | |
Foreign corporate public securities and foreign governments(1) | Foreign corporate public securities and foreign governments(1) | 2,242 | | | 4 | | | 346 | | | — | | | 3 | | | 1,897 | |
Foreign corporate private securities(1) | Foreign corporate private securities(1) | 2,499 | | | 7 | | | 198 | | | — | | | 1 | | | 2,307 | |
| Residential mortgage-backed securities | Residential mortgage-backed securities | 2,612 | | | 19 | | | 172 | | | (2) | | | — | | | 2,457 | |
| Commercial mortgage-backed securities | Commercial mortgage-backed securities | 2,829 | | | 1 | | | 479 | | | — | | | 9 | | | 2,342 | |
| Other asset-backed securities | Other asset-backed securities | 1,513 | | | 4 | | | 65 | | | — | | | — | | | 1,452 | |
| Total fixed maturities, including securities pledged | Total fixed maturities, including securities pledged | 23,060 | | | 58 | | | 3,023 | | | (2) | | | 14 | | | 20,079 | |
| Less: Securities pledged | Less: Securities pledged | 845 | | | — | | | 127 | | | — | | | — | | | 718 | |
| Total fixed maturities | Total fixed maturities | $ | 22,215 | | | $ | 58 | | | $ | 2,896 | | | $ | (2) | | | $ | 14 | | | $ | 19,361 | |
(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 Net gains (losses) in the Condensed Consolidated Statements of Operations.
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated) Available-for-sale and FVO fixed maturities were as follows as of December 31, 2022:2023:
| | Amortized
Cost | | Gross
Unrealized
Capital
Gains | | Gross
Unrealized
Capital
Losses | | Embedded Derivatives(2) | | Allowance
for credit
losses | | Fair
Value |
| Amortized
Cost | | | Amortized
Cost | | Gross
Unrealized
Capital
Gains | | Gross
Unrealized
Capital
Losses | | Embedded Derivatives(2) | | Allowance
for credit
losses | | Fair
Value |
| Fixed maturities: | Fixed maturities: | | | | | | | | | | | |
| U.S. Treasuries | |
| U.S. Treasuries | |
| U.S. Treasuries | U.S. Treasuries | $ | 404 | | | $ | 4 | | | $ | 31 | | | $ | — | | | $ | — | | | $ | 377 | |
| U.S. Government agencies and authorities | U.S. Government agencies and authorities | 33 | | | — | | | 3 | | | — | | | — | | | 30 | |
| State, municipalities and political subdivisions | State, municipalities and political subdivisions | 691 | | | 1 | | | 92 | | | — | | | — | | | 600 | |
| U.S. corporate public securities | U.S. corporate public securities | 6,938 | | | 32 | | | 1,032 | | | — | | | — | | | 5,938 | |
| U.S. corporate private securities | U.S. corporate private securities | 3,885 | | | 11 | | | 328 | | | — | | | — | | | 3,568 | |
Foreign corporate public securities and foreign governments(1) | Foreign corporate public securities and foreign governments(1) | 2,380 | | | 9 | | | 317 | | | — | | | 6 | | | 2,066 | |
Foreign corporate private securities(1) | Foreign corporate private securities(1) | 2,617 | | | 6 | | | 184 | | | — | | | 1 | | | 2,438 | |
| Residential mortgage-backed securities | Residential mortgage-backed securities | 3,023 | | | 21 | | | 153 | | | 2 | | | — | | | 2,893 | |
| Commercial mortgage-backed securities | Commercial mortgage-backed securities | 2,978 | | | — | | | 379 | | | — | | | — | | | 2,599 | |
| Other asset-backed securities | Other asset-backed securities | 1,418 | | | 1 | | | 109 | | | — | | | — | | | 1,310 | |
| Total fixed maturities, including securities pledged | Total fixed maturities, including securities pledged | 24,367 | | | 85 | | | 2,628 | | | 2 | | | 7 | | | 21,819 | |
| Less: Securities pledged | Less: Securities pledged | 894 | | | 3 | | | 105 | | | — | | | — | | | 792 | |
| Total fixed maturities | Total fixed maturities | $ | 23,473 | | | $ | 82 | | | $ | 2,523 | | | $ | 2 | | | $ | 7 | | | $ | 21,027 | |
(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 Net gains (losses) in the Condensed Consolidated Statements of Operations.
The amortized cost and fair value of fixed maturities, including securities pledged, as of September 30, 2023,March 31, 2024, 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 |
| Amortized
Cost | | | Amortized
Cost | | Fair
Value |
| Due to mature: | Due to mature: | | | |
| One year or less | |
| One year or less | |
| One year or less | One year or less | $ | 633 | | | $ | 616 | |
| After one year through five years | After one year through five years | 3,013 | | | 2,833 | |
| After five years through ten years | After five years through ten years | 3,148 | | | 2,843 | |
| After ten years | After ten years | 9,312 | | | 7,536 | |
| Mortgage-backed securities | Mortgage-backed securities | 5,441 | | | 4,799 | |
| Other asset-backed securities | Other asset-backed securities | 1,513 | | | 1,452 | |
| Fixed maturities, including securities pledged | Fixed maturities, including securities pledged | $ | 23,060 | | | $ | 20,079 | |
As of September 30, 2023March 31, 2024 and December 31, 2022,2023, 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 Shareholder's Equity.
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated) Repurchase Agreements and Securities Pledged
As of September 30, 2023March 31, 2024 and December 31, 2022,2023, the Company did not have any securities pledged in dollar rolls, repurchase agreement transactions or reverse repurchase agreements.
The Company engages in securities lending whereby the initial collateral is required at a rate of at least 102% of the market value of the loaned securities. The lending agent retains the collateral and invests it in high quality liquid assets on behalf of the Company. The market value of the loaned securities is monitored on a daily basis with additional collateral obtained or refunded as the market value of the loaned securities fluctuates. The lending agent indemnifies the Company against losses resulting from the failure of a counterparty to return securities pledged where collateral is insufficient to cover the loss.
In the normal course of business, the Company receives cash collateral and non-cash collateral in the form of securities. 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. 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.
The following table presents Securities pledged as of the dates indicated:
| | March 31, 2024 | | | March 31, 2024 | | December 31, 2023 |
| | September 30, 2023 | | December 31, 2022 |
Securities loaned to lending agent(1) | |
Securities loaned to lending agent(1) | |
Securities loaned to lending agent(1) | Securities loaned to lending agent(1) | $ | 559 | | | $ | 690 | |
Securities pledged as collateral(1)(2) | Securities pledged as collateral(1)(2) | 159 | | | 102 | |
| Total | Total | $ | 718 | | | $ | 792 | |
(1) Included in Securities pledged on the Condensed Consolidated Balance Sheets.
(2) See Collateral within the Derivatives Financial Instruments Note to these Condensed Consolidated Financial Statements for more information.
The following table presents collateral held by asset class that the Company pledged under securities lending as of the dates indicated:
| | September 30, 2023 | | December 31, 2022 |
| March 31, 2024 | | | March 31, 2024 | | December 31, 2023 |
| U.S. Treasuries | U.S. Treasuries | $ | 18 | | | $ | 51 | |
| | U.S. corporate public securities | U.S. corporate public securities | 404 | | | 466 | |
| | U.S. corporate public securities | |
| U.S. corporate public securities | |
| Short-term Investments | |
| Foreign corporate public securities and foreign governments | Foreign corporate public securities and foreign governments | 158 | | | 201 | |
| Total(1) | Total(1) | $ | 580 | | | $ | 718 | |
Total(1) | |
Total(1) | |
(1) As of September 30, 2023March 31, 2024 and December 31, 2022,2023, liabilities to return cash collateral were $460$513 and $615,$499, respectively, and included in Payables under securities loan agreements, including collateral held on the Condensed Consolidated Balance Sheets.
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.
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated) Allowance for credit losses
The following tables present a rollforward of the allowance for credit losses on available-for-sale fixed maturity securities for the period presented:
| | Nine Months Ended September 30, 2023 |
| U.S. corporate public securities | | | Commercial mortgage-backed securities | | Foreign corporate public securities and foreign governments | | Foreign corporate private securities | | | Total |
| Balance as of January 1, 2023 | $ | — | | | | $ | — | | | $ | 6 | | | $ | 1 | | | | $ | 7 | |
| | | | | | | Three Months Ended March 31, 2024 | |
| | | | | | | Three Months Ended March 31, 2024 | |
| | | | | | | Three Months Ended March 31, 2024 | |
| | | | | | | Commercial mortgage-backed securities | | | | | | | | | Commercial mortgage-backed securities | | Foreign corporate public securities and foreign governments | | Foreign corporate private securities | | Other asset-backed securities | | Total |
| Balance as of January 1, 2024 | |
| Credit losses on securities for which credit losses were not previously recorded | Credit losses on securities for which credit losses were not previously recorded | 1 | | | | 9 | | | — | | | — | | | | 10 | |
| | Reductions for securities sold during the period | Reductions for securities sold during the period | — | | | | — | | | (2) | | | — | | | | (2) | |
| Reductions for securities sold during the period | |
| Reductions for securities sold during the period | |
| | Increase (decrease) on securities with allowance recorded in previous period | |
| Increase (decrease) on securities with allowance recorded in previous period | |
| Increase (decrease) on securities with allowance recorded in previous period | Increase (decrease) on securities with allowance recorded in previous period | — | | | | — | | | (1) | | | — | | | | (1) | |
| | Balance as of September 30, 2023 | $ | 1 | | | | $ | 9 | | | $ | 3 | | | $ | 1 | | | | $ | 14 | |
| Balance as of March 31, 2024 | |
| | Balance as of March 31, 2024 | |
| | Balance as of March 31, 2024 | |
| | | Year Ended December 31, 2022 |
| | Residential mortgage-backed securities | | | Foreign corporate public securities and foreign governments | | Foreign corporate private securities | | | Total |
| Balance as of January 1, 2022 | | $ | 1 | | | | $ | — | | | $ | 47 | | | | $ | 48 | |
| | | | Year Ended December 31, 2023 | |
| | | | Year Ended December 31, 2023 | |
| | | | Year Ended December 31, 2023 | |
| | | | Commercial mortgage-backed securities | | | | | | Commercial mortgage-backed securities | | Foreign corporate public securities and foreign governments | | Foreign corporate private securities | | Other asset-backed securities | | Total |
| Balance as of January 1, 2023 | |
| Credit losses on securities for which credit losses were not previously recorded | Credit losses on securities for which credit losses were not previously recorded | | — | | | | 6 | | | — | | | | 6 | |
| | Reductions for securities sold during the period | Reductions for securities sold during the period | | — | | | | — | | | (49) | | | | (49) | |
| Reductions for securities sold during the period | |
| Reductions for securities sold during the period | |
| | Increase (decrease) on securities with allowance recorded in previous period | |
| Increase (decrease) on securities with allowance recorded in previous period | |
| Increase (decrease) on securities with allowance recorded in previous period | Increase (decrease) on securities with allowance recorded in previous period | | (1) | | | | — | | | 3 | | | | 2 | |
| | Balance as of December 31, 2022 | | $ | — | | | | $ | 6 | | | $ | 1 | | | | $ | 7 | |
| Balance as of December 31, 2023 | |
| | Balance as of December 31, 2023 | |
| | Balance as of December 31, 2023 | |
For additional information about the Company’s methodology and significant inputs used in determining whether a credit loss exists, see the Business, Basis of Presentation and Significant Accounting Policies Note to the Consolidated Financial Statements in Part II, Item 8. of the Annual Report on Form 10-K.
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated) Unrealized Capital Losses
The following tables present available-for-sale fixed maturities, including securities pledged, for which an allowance for credit losses has not been recorded by investment category and duration as of the dates indicated:
| | | As of September 30, 2023 | |
| | 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 | |
| | | | | As of March 31, 2024 | |
| | | | | As of March 31, 2024 | |
| | | | | As of March 31, 2024 | |
| | | Twelve Months or Less Below Amortized Cost | |
| | | Twelve Months or Less Below Amortized Cost | |
| | | Twelve Months or Less Below Amortized Cost | | | More Than Twelve Months Below Amortized Cost | | Total |
| | | | | Fair
Value | |
| U.S. Treasuries | |
| U.S. Treasuries | |
| U.S. Treasuries | U.S. Treasuries | | $ | 192 | | | $ | 8 | | | | $ | 96 | | | $ | 32 | | | | $ | 288 | | | $ | 40 | | |
| U.S. Government, agencies and authorities | U.S. Government, agencies and authorities | | 12 | | | 1 | | | | 16 | | | 3 | | | | 28 | | | 4 | | |
| U.S. Government, agencies and authorities | |
| U.S. Government, agencies and authorities | |
| State, municipalities and political subdivisions | |
| State, municipalities and political subdivisions | |
| State, municipalities and political subdivisions | State, municipalities and political subdivisions | | 23 | | | 1 | | | | 493 | | | 108 | | | | 516 | | | 109 | | |
| U.S. corporate public securities | U.S. corporate public securities | | 1,059 | | | 74 | | | | 3,933 | | | 1,123 | | | | 4,992 | | | 1,197 | | |
| U.S. corporate public securities | |
| U.S. corporate public securities | |
| U.S. corporate private securities | |
| U.S. corporate private securities | |
| U.S. corporate private securities | U.S. corporate private securities | | 691 | | | 27 | | | | 2,550 | | | 386 | | | | 3,241 | | | 413 | | |
| Foreign corporate public securities and foreign governments | Foreign corporate public securities and foreign governments | | 443 | | | 21 | | | | 1,315 | | | 325 | | | | 1,758 | | | 346 | | |
| Foreign corporate public securities and foreign governments | |
| Foreign corporate public securities and foreign governments | |
| Foreign corporate private securities | |
| Foreign corporate private securities | |
| Foreign corporate private securities | Foreign corporate private securities | | 346 | | | 15 | | | | 1,716 | | | 183 | | | | 2,062 | | | 198 | | |
| Residential mortgage-backed | Residential mortgage-backed | | 238 | | | 12 | | | | 776 | | | 160 | | | | 1,014 | | | 172 | | |
| Residential mortgage-backed | |
| Residential mortgage-backed | |
| Commercial mortgage-backed | |
| Commercial mortgage-backed | |
| Commercial mortgage-backed | Commercial mortgage-backed | | 62 | | | 3 | | | | 2,216 | | | 476 | | | | 2,278 | | | 479 | | |
| Other asset-backed | Other asset-backed | | 80 | | | 4 | | | | 1,045 | | | 61 | | | | 1,125 | | | 65 | | |
| Other asset-backed | |
| Other asset-backed | |
| Total | |
| Total | |
| Total | Total | | $ | 3,146 | | | $ | 166 | | | | $ | 14,156 | | | $ | 2,857 | | | | $ | 17,302 | | | $ | 3,023 | | |
| | |
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated) | | As of December 31, 2022 | |
| 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 | |
| As of December 31, 2023 | |
| As of December 31, 2023 | |
| As of December 31, 2023 | |
| Twelve Months or Less Below Amortized Cost | |
| Twelve Months or Less Below Amortized Cost | |
| Twelve Months or Less Below Amortized Cost | | | More Than Twelve Months Below Amortized Cost | | Total |
| Fair
Value | |
| U.S. Treasuries | |
| U.S. Treasuries | |
| U.S. Treasuries | U.S. Treasuries | $ | 223 | | | $ | 30 | | | | | $ | 2 | | | $ | 1 | | | | $ | 225 | | | $ | 31 | | |
| U.S. Government, agencies and authorities | U.S. Government, agencies and authorities | 30 | | | 3 | | | | | — | | | — | | | | 30 | | | 3 | | |
| U.S. Government, agencies and authorities | |
| U.S. Government, agencies and authorities | |
| State, municipalities and political subdivisions | |
| State, municipalities and political subdivisions | |
| State, municipalities and political subdivisions | State, municipalities and political subdivisions | 545 | | | 85 | | | | | 15 | | | 7 | | | | 560 | | | 92 | | |
| U.S. corporate public securities | U.S. corporate public securities | 4,290 | | | 613 | | | | | 998 | | | 419 | | | | 5,288 | | | 1,032 | | |
| U.S. corporate public securities | |
| U.S. corporate public securities | |
| U.S. corporate private securities | |
| U.S. corporate private securities | |
| U.S. corporate private securities | U.S. corporate private securities | 2,819 | | | 264 | | | | | 331 | | | 64 | | | | 3,150 | | | 328 | | |
| Foreign corporate public securities and foreign governments | Foreign corporate public securities and foreign governments | 1,509 | | | 201 | | | | | 298 | | | 116 | | | | 1,807 | | | 317 | | |
| Foreign corporate public securities and foreign governments | |
| Foreign corporate public securities and foreign governments | |
| Foreign corporate private securities | |
| Foreign corporate private securities | |
| Foreign corporate private securities | Foreign corporate private securities | 2,203 | | | 173 | | | | | 52 | | | 11 | | | | 2,255 | | | 184 | | |
| Residential mortgage-backed | Residential mortgage-backed | 1,065 | | | 78 | | | | | 328 | | | 75 | | | | 1,393 | | | 153 | | |
| Residential mortgage-backed | |
| Residential mortgage-backed | |
| Commercial mortgage-backed | |
| Commercial mortgage-backed | |
| Commercial mortgage-backed | Commercial mortgage-backed | 1,792 | | | 252 | | | | | 759 | | | 127 | | | | 2,551 | | | 379 | | |
| Other asset-backed | Other asset-backed | 912 | | | 68 | | | | | 360 | | | 41 | | | | 1,272 | | | 109 | | |
| Other asset-backed | |
| Other asset-backed | |
| Total | |
| Total | |
| Total | Total | $ | 15,388 | | | $ | 1,767 | | | | | $ | 3,143 | | | $ | 861 | | | | $ | 18,531 | | | $ | 2,628 | | |
| |
As of September 30, 2023,March 31, 2024, the average duration of our fixed maturities portfolio, including securities pledged, is between 6.06.5 and 6.57 years.
As of September 30, 2023March 31, 2024 and December 31, 2022,2023, the Company concluded that an allowance for credit losses was not warranted for the securities above because the unrealized losses are interest rate related. The Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases.
Evaluating Securities for Impairments
The Company performs a regular evaluation, on a security-by-security basis, of its available-for-sale securities holdings, including fixed maturity securities in accordance with its impairment policy in order to evaluate whether such investments are impaired.
ForThere were no intent impairments for the three and nine months ended September 30, 2023, intent impairments included in the Condensed Consolidated Statements of Operations, but excluding impairments included in Other comprehensive income (loss), were $15March 31, 2024 and $21 respectively. For the three and nine months ended September 30, 2022, intent impairments were $8 and $15, respectively.2023.
The Company may sell securities during the period in which fair value has declined below amortized cost for fixed maturities. In certain situations, new factors, including changes in the business environment, can change the Company’s previous intent to continue holding a security. Accordingly, these factors may lead the Company to record additional intent related capital losses.
Debt Restructuring
Upon the adoption of ASU 2022-02 as of January 1, 2023, the Company no longer identifies certain debt modifications as troubled debt restructuring, but instead evaluates all debt modifications to determine whether a modification results in a new loan or a continuation of an existing loan. Disclosures are required for loan modifications with borrowers experiencing financial difficulty. For the three months ended March 31, 2024 and 2023 the Company had no material debt modifications that require such disclosure.
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated) loan or a continuation of an existing loan. Disclosures are required for loan modifications with borrowers experiencing financial difficulty. For the three and nine months ended September 30, 2023, the Company did not have any material debt modifications that require such disclosure.
Mortgage Loans on Real Estate
The Company diversifies its commercial mortgage loan portfolio by geographic region and property type to reduce concentration risk. The Company manages risk when originating commercial mortgage loans by generally lending only up to 75% of the estimated fair value of the underlying real estate. Subsequently, the Company continuously evaluates mortgage loans based on relevant current information including a review of loan-specific performance, property characteristics and market trends. Loan performance is monitored on a loan specific basis through the review of submitted appraisals, operating statements, rent revenues and annual inspection reports, among other items. This review ensures properties are performing at a consistent and acceptable level to secure the debt. The components to evaluate debt service coverage are received and reviewed at least annually to determine the level of risk.
Loan-to-value ("LTV") and debt service coverage ("DSC") ratios are measures commonly used to assess the risk and quality of mortgage loans. These ratios are utilized as part of the review process described above.
The following tables present commercial mortgage loans by year of origination and LTV ratio as of the dates indicated. The information is updated as of September 30, 2023March 31, 2024 and December 31, 2022,2023, respectively.
| | As of September 30, 2023 |
| Loan-to-Value Ratios |
| As of March 31, 2024 | | | As of March 31, 2024 |
| Loan-to-Value Ratios | | | Loan-to-Value Ratios |
| Year of Origination | Year of Origination | 0% - 50% | | >50% - 60% | | >60% - 70% | | >70% - 80% | | >80% and above | | Total | Year of Origination | 0% - 50% | | >50% - 60% | | >60% - 70% | | >70% - 80% | | >80% and above | | Total |
| 2024 | |
| 2023 | 2023 | $ | 63 | | | $ | 177 | | | $ | — | | | $ | — | | | $ | — | | | $ | 240 | |
| 2022 | 2022 | 206 | | | 297 | | | 65 | | | — | | | — | | | 568 | |
| 2021 | 2021 | 194 | | | 183 | | | 215 | | | — | | | — | | | 592 | |
| 2020 | 2020 | 133 | | | 119 | | | — | | | 10 | | | 11 | | | 273 | |
| 2019 | 170 | | | 59 | | | 20 | | | — | | | — | | | 249 | |
| Prior | Prior | 1,882 | | | 310 | | | 5 | | | — | | | 34 | | | 2,231 | |
| Total | Total | $ | 2,648 | | | $ | 1,145 | | | $ | 305 | | | $ | 10 | | | $ | 45 | | | $ | 4,153 | |
| | As of December 31, 2022 |
| Loan-to-Value Ratios |
| As of December 31, 2023 | | | As of December 31, 2023 |
| Loan-to-Value Ratios | | | Loan-to-Value Ratios |
| Year of Origination | Year of Origination | 0% - 50% | | >50% - 60% | | >60% - 70% | | >70% - 80% | | >80% and above | | Total | Year of Origination | 0% - 50% | | >50% - 60% | | >60% - 70% | | >70% - 80% | | >80% and above | | Total |
| 2023 | |
| 2022 | 2022 | $ | 210 | | | $ | 283 | | | $ | 63 | | | $ | — | | | $ | — | | | $ | 556 | |
| 2021 | 2021 | 187 | | | 229 | | | 239 | | | 10 | | | — | | | 665 | |
| 2020 | 2020 | 98 | | | 170 | | | 24 | | | 10 | | | — | | | 302 | |
| 2019 | 2019 | 167 | | | 72 | | | 20 | | | — | | | — | | | 259 | |
| 2018 | 123 | | | 34 | | | 3 | | | — | | | — | | | 160 | |
| Prior | Prior | 1,866 | | | 399 | | | 20 | | | — | | | — | | | 2,285 | |
| Total | Total | $ | 2,651 | | | $ | 1,187 | | | $ | 369 | | | $ | 20 | | | $ | — | | | $ | 4,227 | |
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated) The following tables present commercial mortgage loans by year of origination and DSC ratio as of the dates indicated. The information is updated as of September 30, 2023March 31, 2024 and December 31, 2022,2023, respectively. | | As of September 30, 2023 |
| Debt Service Coverage Ratios |
| As of March 31, 2024 | | | As of March 31, 2024 |
| Debt Service Coverage Ratios | | | Debt Service Coverage Ratios |
| Year of Origination | Year of Origination | >1.5x | | >1.25x - 1.5x | | >1.0x - 1.25x | | <1.0x | | Total* | Year of Origination | >1.5x | | >1.25x - 1.5x | | >1.0x - 1.25x | | <1.0x | | Total* |
| 2024 | |
| 2023 | 2023 | $ | 113 | | | $ | 78 | | | $ | 49 | | | $ | — | | | $ | 240 | |
| 2022 | 2022 | 197 | | | 40 | | | 183 | | | 148 | | | 568 | |
| 2021 | 2021 | 206 | | | 12 | | | 57 | | | 317 | | | 592 | |
| 2020 | 2020 | 185 | | | 21 | | | 5 | | | 62 | | | 273 | |
| 2019 | 153 | | | 18 | | | 63 | | | 15 | | | 249 | |
| Prior | Prior | 1,635 | | | 236 | | | 217 | | | 143 | | | 2,231 | |
| Total | Total | $ | 2,489 | | | $ | 405 | | | $ | 574 | | | $ | 685 | | | $ | 4,153 | |
*No commercial mortgage loans were secured by land or construction loans
| | As of December 31, 2022 |
| Debt Service Coverage Ratios |
| As of December 31, 2023 | | | As of December 31, 2023 |
| Debt Service Coverage Ratios | | | Debt Service Coverage Ratios |
| Year of Origination | Year of Origination | >1.5x | | >1.25x - 1.5x | | >1.0x - 1.25x | | <1.0x | | Total* | Year of Origination | >1.5x | | >1.25x - 1.5x | | >1.0x - 1.25x | | <1.0x | | Total* |
| 2023 | |
| 2022 | 2022 | $ | 278 | | | $ | 89 | | | $ | 171 | | | $ | 18 | | | $ | 556 | |
| 2021 | 2021 | 212 | | | 24 | | | 248 | | | 181 | | | 665 | |
| 2020 | 2020 | 211 | | | 9 | | | 10 | | | 72 | | | 302 | |
| 2019 | 2019 | 161 | | | 40 | | | 53 | | | 5 | | | 259 | |
| 2018 | 93 | | | 21 | | | 46 | | | — | | | 160 | |
| Prior | Prior | 1,569 | | | 331 | | | 171 | | | 214 | | | 2,285 | |
| Total | Total | $ | 2,524 | | | $ | 514 | | | $ | 699 | | | $ | 490 | | | $ | 4,227 | |
*No commercial mortgage loans were secured by land or construction loans
The following tables present the commercial mortgage loans by year of origination and U.S. region as of the dates indicated. The information is updated as of September 30, 2023March 31, 2024 and December 31, 2022,2023, respectively. | | As of September 30, 2023 |
| U.S. Region |
| As of March 31, 2024 | | | As of March 31, 2024 |
| U.S. Region | | | U.S. Region |
| Year of Origination | Year of Origination | Pacific | | South Atlantic | | Middle Atlantic | | West South Central | | Mountain | | East North Central | | New England | | West North Central | | East South Central | | Total | Year of Origination | Pacific | | South Atlantic | | Middle Atlantic | | West South Central | | Mountain | | East North Central | | New England | | West North Central | | East South Central | | Total |
| 2024 | |
| 2023 | 2023 | $ | 51 | | | $ | 42 | | | $ | 6 | | | $ | 72 | | | $ | 16 | | | $ | 29 | | | $ | 2 | | | $ | 20 | | | $ | 2 | | | $ | 240 | |
| 2022 | 2022 | 114 | | | 116 | | | 46 | | | 88 | | | 100 | | | 81 | | | 2 | | | 1 | | | 20 | | | 568 | |
| 2021 | 2021 | 79 | | | 44 | | | 106 | | | 142 | | | 97 | | | 75 | | | 10 | | | 38 | | | 1 | | | 592 | |
| 2020 | 2020 | 63 | | | 131 | | | 13 | | | 9 | | | 8 | | | 30 | | | — | | | 6 | | | 13 | | | 273 | |
| 2019 | 43 | | | 70 | | | 6 | | | 53 | | | 34 | | | 4 | | | 13 | | | 10 | | | 16 | | | 249 | |
| Prior | Prior | 485 | | | 465 | | | 626 | | | 169 | | | 164 | | | 163 | | | 33 | | | 115 | | | 11 | | | 2,231 | |
| Total | Total | $ | 835 | | | $ | 868 | | | $ | 803 | | | $ | 533 | | | $ | 419 | | | $ | 382 | | | $ | 60 | | | $ | 190 | | | $ | 63 | | | $ | 4,153 | |
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated) | | As of December 31, 2022 |
| U.S. Region |
| As of December 31, 2023 | | | As of December 31, 2023 |
| U.S. Region | | | U.S. Region |
| Year of Origination | Year of Origination | Pacific | | South Atlantic | | Middle Atlantic | | West South Central | | Mountain | | East North Central | | New England | | West North Central | | East South Central | | Total | Year of Origination | Pacific | | South Atlantic | | Middle Atlantic | | West South Central | | Mountain | | East North Central | | New England | | West North Central | | East South Central | | Total |
| 2023 | |
| 2022 | 2022 | $ | 114 | | | $ | 115 | | | $ | 46 | | | $ | 87 | | | $ | 101 | | | $ | 73 | | | $ | 1 | | | $ | 1 | | | $ | 18 | | | $ | 556 | |
| 2021 | 2021 | 79 | | | 53 | | | 112 | | | 139 | | | 97 | | | 117 | | | 9 | | | 37 | | | 22 | | | 665 | |
| 2020 | 2020 | 64 | | | 143 | | | 14 | | | 14 | | | 8 | | | 30 | | | — | | | 6 | | | 23 | | | 302 | |
| 2019 | 2019 | 47 | | | 73 | | | 6 | | | 54 | | | 34 | | | 5 | | | 14 | | | 10 | | | 16 | | | 259 | |
| 2018 | 28 | | | 55 | | | 49 | | | 7 | | | 7 | | | 9 | | | — | | | 5 | | | — | | | 160 | |
| Prior | Prior | 485 | | | 466 | | | 607 | | | 196 | | | 172 | | | 192 | | | 34 | | | 116 | | | 17 | | | 2,285 | |
| Total | Total | $ | 817 | | | $ | 905 | | | $ | 834 | | | $ | 497 | | | $ | 419 | | | $ | 426 | | | $ | 58 | | | $ | 175 | | | $ | 96 | | | $ | 4,227 | |
The following tables present the commercial mortgage loans by year of origination and property type as of the dates indicated. The information is updated as of September 30, 2023March 31, 2024 and December 31, 2022,2023, respectively.
| | As of September 30, 2023 |
| Property Type |
| As of March 31, 2024 | | | As of March 31, 2024 |
| Property Type | | | Property Type |
| Year of Origination | Year of Origination | Retail | | Industrial | | Apartments | | Office | | Hotel/Motel | | Other | | Mixed Use | | Total | Year of Origination | Retail | | Industrial | | Apartments | | Office | | Hotel/Motel | | Other | | Mixed Use | | Total |
| 2024 | |
| 2023 | 2023 | $ | 66 | | | $ | 118 | | | $ | 17 | | | $ | 14 | | | $ | 25 | | | $ | — | | | $ | — | | | $ | 240 | |
| 2022 | 2022 | 72 | | | 233 | | | 221 | | | 26 | | | 10 | | | 6 | | | — | | | 568 | |
| 2021 | 2021 | 22 | | | 128 | | | 327 | | | 100 | | | — | | | 7 | | | 8 | | | 592 | |
| 2020 | 2020 | 50 | | | 47 | | | 60 | | | 116 | | | — | | | — | | | — | | | 273 | |
| 2019 | 29 | | | 56 | | | 126 | | | 29 | | | 9 | | | — | | | — | | | 249 | |
| Prior | Prior | 572 | | | 636 | | | 450 | | | 360 | | | 46 | | | 129 | | | 38 | | | 2,231 | |
| Total | Total | $ | 811 | | | $ | 1,218 | | | $ | 1,201 | | | $ | 645 | | | $ | 90 | | | $ | 142 | | | $ | 46 | | | $ | 4,153 | |
| | As of December 31, 2022 |
| Property Type |
| As of December 31, 2023 | | | As of December 31, 2023 |
| Property Type | | | Property Type |
| Year of Origination | Year of Origination | Retail | | Industrial | | Apartments | | Office | | Hotel/Motel | | Other | | Mixed Use | | Total | Year of Origination | Retail | | Industrial | | Apartments | | Office | | Hotel/Motel | | Other | | Mixed Use | | Total |
| 2023 | |
| 2022 | 2022 | $ | 72 | | | $ | 227 | | | $ | 216 | | | $ | 25 | | | $ | 10 | | | $ | 6 | | | $ | — | | | $ | 556 | |
| 2021 | 2021 | 23 | | | 144 | | | 382 | | | 100 | | | — | | | 8 | | | 8 | | | 665 | |
| 2020 | 2020 | 50 | | | 48 | | | 80 | | | 124 | | | — | | | — | | | — | | | 302 | |
| 2019 | 2019 | 29 | | | 58 | | | 128 | | | 33 | | | 11 | | | — | | | — | | | 259 | |
| 2018 | 34 | | | 69 | | | 30 | | | 11 | | | — | | | 16 | | | — | | | 160 | |
| Prior | Prior | 633 | | | 620 | | | 456 | | | 372 | | | 48 | | | 117 | | | 39 | | | 2,285 | |
| Total | Total | $ | 841 | | | $ | 1,166 | | | $ | 1,292 | | | $ | 665 | | | $ | 69 | | | $ | 147 | | | $ | 47 | | | $ | 4,227 | |
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated) The following table summarizes the activity in the allowance for losses for commercial mortgage loans for the periods indicated:
| | September 30, 2023 | | December 31, 2022 | |
| March 31, 2024 | |
| March 31, 2024 | |
| March 31, 2024 | |
| Allowance for credit losses, beginning of the period | Allowance for credit losses, beginning of the period | $ | 14 | | | $ | 11 | | |
| Allowance for credit losses, beginning of the period | |
| Allowance for credit losses, beginning of the period | |
| Credit losses on mortgage loans for which credit losses were not previously recorded | |
| Credit losses on mortgage loans for which credit losses were not previously recorded | |
| Credit losses on mortgage loans for which credit losses were not previously recorded | Credit losses on mortgage loans for which credit losses were not previously recorded | 2 | | | 2 | | |
| | Increase (decrease) on mortgage loans with an allowance recorded in a previous period | Increase (decrease) on mortgage loans with an allowance recorded in a previous period | 8 | | | 1 | | |
| | Increase (decrease) on mortgage loans with an allowance recorded in a previous period | |
| | Increase (decrease) on mortgage loans with an allowance recorded in a previous period | |
| Provision for expected credit losses | |
| Provision for expected credit losses | |
| Provision for expected credit losses | Provision for expected credit losses | 24 | | | 14 | | |
| Write-offs | Write-offs | — | | | — | | |
| Write-offs | |
| Write-offs | |
| Recoveries of amounts previously written-off | |
| Recoveries of amounts previously written-off | |
| Recoveries of amounts previously written-off | Recoveries of amounts previously written-off | — | | | — | | |
| | Allowance for credit losses, end of period | Allowance for credit losses, end of period | $ | 24 | | | $ | 14 | | |
| | Allowance for credit losses, end of period | |
| | Allowance for credit losses, end of period | |
The following table presents past due commercial mortgage loans as of the dates indicated:
| | September 30, 2023 | | December 31, 2022 |
| March 31, 2024 | | | March 31, 2024 | | December 31, 2023 |
| Delinquency: | Delinquency: | | | |
| Current | |
| Current | |
| Current | Current | $ | 4,127 | | | $ | 4,227 | |
| 30-59 days past due | 30-59 days past due | 26 | | | — | |
| 60-89 days past due | 60-89 days past due | — | | | — | |
| Greater than 90 days past due | Greater than 90 days past due | — | | | — | |
| Total | Total | $ | 4,153 | | | $ | 4,227 | |
Commercial mortgage loans are placed on non-accrual status when 90 days in arrears if the Company has concerns regarding the collectability of future payments, or if a loan has matured without being paid off or extended. As of September 30,March 31, 2024 and December 31, 2023 the Company had $26 of matured$30 and $11, respectively, commercial mortgage loans not paid off or extended,in non-accrual status, with an LTV ratio of 100%. As of December 31, 2022, the Company had no commercial mortgage loans in non-accrual status. The amount of interest income recognized on loans in non-accrual status for the ninethree months ended September 30, 2023 was immaterial. There was no interest income recognized on loans in non-accrual status forMarch 31, 2024 and the year ended December 31, 2022.2023 was immaterial.
Net Investment Income
The following table summarizes Net investment income for the periods indicated:
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
| | | Three Months Ended March 31, | |
| | | Three Months Ended March 31, | |
| | | Three Months Ended March 31, | |
| | | | | 2024 | | | | | | | 2024 | | 2023 |
| Fixed maturities | Fixed maturities | $ | 319 | | | $ | 351 | | | $ | 970 | | | $ | 1,060 | |
| | Equity securities | |
| Equity securities | |
| Equity securities | Equity securities | 2 | | | 2 | | | 8 | | | 7 | |
| Mortgage loans on real estate | Mortgage loans on real estate | 50 | | | 45 | | | 147 | | | 134 | |
| Policy loans | Policy loans | 2 | | | 2 | | | 6 | | | 6 | |
| Short-term investments and cash equivalents | Short-term investments and cash equivalents | 3 | | | 1 | | | 7 | | | 2 | |
| Limited partnerships and other | Limited partnerships and other | 25 | | | (16) | | | 69 | | | 80 | |
| Gross investment income | Gross investment income | 401 | | | 385 | | | 1,207 | | | 1,289 | |
| Less: Investment expenses | Less: Investment expenses | 17 | | | 19 | | | 52 | | | 54 | |
| Net investment income | Net investment income | $ | 384 | | | $ | 366 | | | $ | 1,155 | | | $ | 1,235 | |
As of March 31, 2024 and December 31, 2023, the Company had $8 and $7 of investments in fixed maturities that did not produce net investment income. Fixed maturities are moved to a non-accrual status when the investment defaults.
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated) As of September 30, 2023 and December 31, 2022, the Company had $8 of investments in fixed maturities that did not produce net investment income. Fixed maturities are moved to a non-accrual status when the investment defaults.
Net Gains (Losses)
Net gains (losses) were as follows for the periods indicated:
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
| | | Three Months Ended March 31, | |
| | | Three Months Ended March 31, | |
| | | Three Months Ended March 31, | |
| | | | | 2024 | | | | | | | 2024 | | 2023 |
| Fixed maturities, available-for-sale, including securities pledged | Fixed maturities, available-for-sale, including securities pledged | $ | (12) | | | $ | 12 | | | $ | (36) | | | $ | (50) | |
| Fixed maturities, at fair value option | Fixed maturities, at fair value option | (90) | | | (196) | | | (190) | | | (504) | |
| | Equity securities, at fair value | |
| Equity securities, at fair value | |
| Equity securities, at fair value | Equity securities, at fair value | (1) | | | (4) | | | (7) | | | (25) | |
| Derivatives | Derivatives | 66 | | | 125 | | | 123 | | | 182 | |
| Embedded derivatives - fixed maturities | Embedded derivatives - fixed maturities | (3) | | | (2) | | | (3) | | | (5) | |
| Other derivatives | Other derivatives | 1 | | | 2 | | | 1 | | | 1 | |
| Managed custody guarantees | Managed custody guarantees | (15) | | | (6) | | | (12) | | | (8) | |
| Stabilizers | (9) | | | — | | | (9) | | | 19 | |
| | Mortgage loans | |
| Mortgage loans | |
| Mortgage loans | Mortgage loans | (1) | | | (1) | | | (9) | | | 3 | |
| Other investments | Other investments | — | | | 1 | | | — | | | — | |
| Net gains (losses) | Net gains (losses) | $ | (64) | | | $ | (69) | | | $ | (142) | | | $ | (387) | |
Proceeds from the sale of fixed maturities, available-for-sale and equity securities and the related gross realized gains and losses, before tax, were as follows for the periods indicated:
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
| | | Three Months Ended March 31, | |
| | | Three Months Ended March 31, | |
| | | Three Months Ended March 31, | |
| | | | | 2024 | | | | | | | 2024 | | 2023 |
| Proceeds on sales | Proceeds on sales | $ | 584 | | | $ | 723 | | | $ | 2,716 | | | $ | 2,167 | |
| Gross gains | Gross gains | 9 | | | 16 | | | 38 | | | 34 | |
| Gross losses | Gross losses | 5 | | | 12 | | | 44 | | | 45 | |
3. Derivative Financial Instruments
The Company primarily enters into the following types of derivatives:
Interest rate swaps: Interest rate swaps are used by the Company primarily to reduce market risks from changes in interest rates and to alter interest rate exposure arising from mismatches between assets and/or liabilities. Interest rate swaps are also used to hedge the interest rate risk associated with the value of assets it owns or in an anticipation of acquiring them. Using interest rate swaps, the Company agrees with another party to exchange, at specified intervals, the difference between fixed rate and floating rate interest payments, calculated by reference to an agreed upon notional principal amount. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made to/from the counterparty at each due date. The Company utilizes these contracts in qualifying hedging relationships as well as non-qualifying hedging relationships.
Foreign exchange swaps: The Company uses foreign exchange or currency swaps to reduce the risk of change in the value, yield or cash flows associated with certain foreign denominated invested assets. Foreign exchange swaps represent contracts that require the exchange of foreign currency cash flows against U.S. dollar cash flows at regular periods, typically quarterly or semi-annually. The Company utilizes these contracts in qualifying hedging relationships as well as non-qualifying hedging relationships.
Futures: The Company uses interest rate futures contracts to hedge its exposure to market risks due to changes in interest rates. The Company enters into exchange traded futures with regulated futures commissions that are members of the exchange. The Company also posts initial and variation margins, with the exchange, on a daily basis. The Company utilizes exchange-traded futures in non-qualifying hedging relationships.
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated) Company also posts initial and variation margins, with the exchange, on a daily basis. The Company utilizes exchange-traded futures in non-qualifying hedging relationships. The Company may also use futures contracts as a hedge against an increase in certain equity indices.
Embedded derivatives: The Company also invests in certain fixed maturity instruments and has issued certain products that contain embedded derivatives for which market value is at least partially determined by, among other things, levels of or changes in domestic and/or foreign interest rates (short-term or long-term), exchange rates, prepayment rates, equity rates, or credit ratings/spreads. In addition, the Company has entered into coinsurance with funds withheld arrangements, which contain embedded derivatives.
The Company utilizes derivative contracts mainly to hedge exposure to variability in cash flows, interest rate risk, credit risk, foreign exchange risk and equity market risk. The majority of derivatives used by the Company are designated as product hedges, which hedge the exposure arising from insurance liabilities or guarantees embedded in the contracts the Company offers through various product lines. The Company also uses derivatives contracts to hedge its exposure to various risks associated with the investment portfolio. The Company also uses credit default swaps coupled with other investments in order to produce the investment characteristics of otherwise permissible investments. Based on the notional amounts, a substantial portion of the Company’s derivative positions was not designated or did not qualify for hedge accounting as part of a hedging relationship as outlined in ASC Topic 815 as of September 30, 2023March 31, 2024 and December 31, 2022.2023.
The notional amounts and fair values of derivatives were as follows as of the dates indicated:
| | September 30, 2023 | | December 31, 2022 |
| Notional
Amount | | Asset
Fair Value | | Liability
Fair Value | | Notional
Amount | | Asset
Fair Value | | Liability
Fair Value |
| March 31, 2024 | | | March 31, 2024 | | December 31, 2023 |
| Notional
Amount | | | Notional
Amount | | Asset
Fair Value | | Liability
Fair Value | | Notional
Amount | | Asset
Fair Value | | Liability
Fair Value |
Derivatives: Qualifying for hedge accounting(1) | Derivatives: Qualifying for hedge accounting(1) | | | | | | | | | | | |
| Cash flow hedges: | Cash flow hedges: | |
| Cash flow hedges: | |
| Cash flow hedges: | |
| Interest rate contracts | |
| Interest rate contracts | |
| Interest rate contracts | Interest rate contracts | $ | 18 | | | $ | — | | | $ | — | | | $ | 18 | | | $ | — | | | $ | — | |
| Foreign exchange contracts | Foreign exchange contracts | 612 | | | 50 | | | 2 | | | 596 | | | 58 | | | 2 | |
Derivatives: Non-qualifying for hedge accounting(1) | Derivatives: Non-qualifying for hedge accounting(1) | |
| Interest rate contracts | Interest rate contracts | 12,092 | | | 274 | | | 301 | | | 12,470 | | | 262 | | | 327 | |
| Interest rate contracts | |
| Interest rate contracts | |
| Foreign exchange contracts | Foreign exchange contracts | 79 | | | 4 | | | — | | | 45 | | | 2 | | | — | |
| | Credit contracts | Credit contracts | 118 | | | — | | | 2 | | | 141 | | | — | | | 2 | |
| Credit contracts | |
| Credit contracts | |
| Embedded derivatives and Managed custody guarantees: | Embedded derivatives and Managed custody guarantees: | |
Within fixed maturity investments(2) | |
Within fixed maturity investments(2) | |
Within fixed maturity investments(2) | Within fixed maturity investments(2) | N/A | | — | | | 2 | | | N/A | | 2 | | | — | |
| Managed custody guarantees(3) | Managed custody guarantees(3) | N/A | | — | | | 18 | | | N/A | | — | | | 6 | |
| Managed custody guarantees(3) | |
| Managed custody guarantees(3) | |
Stabilizers(3) | Stabilizers(3) | N/A | | — | | | 9 | | | N/A | | — | | | — | |
| Total | Total | | $ | 328 | | | $ | 334 | | | $ | 324 | | | $ | 337 | |
(1) Open derivative contracts are reported as Derivatives assets or liabilities at fair value on the Condensed Consolidated Balance Sheets.
(2) Included in Fixed maturities, available-for-sale, at fair value on the Condensed Consolidated Balance Sheets.
(3) Included in Future policy benefits and contract owner account balances on the Condensed Consolidated Balance Sheets.
N/A - Not Applicable
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated) The Company does not offset any derivative assets and liabilities in the Condensed Consolidated Balance Sheets. The disclosures set out in the table below include the fair values of Over-The-Counter (“OTC”) and cleared derivatives excluding exchange traded contracts subject to master netting agreements or similar agreements as of the dates indicated:
| | Gross Amount Recognized(1) | Counterparty Netting(2) | Cash Collateral Netting(2) | Securities Collateral Netting(2) | Net receivables/ payables |
| September 30, 2023 | |
| Gross Amount Recognized(1) | | | Gross Amount Recognized(1) | | Counterparty Netting(2) | | Cash Collateral Netting(2) | | Securities Collateral Netting(2) | | Net receivables/ payables |
| March 31, 2024 | |
| Derivative assets | |
| Derivative assets | |
| Derivative assets | Derivative assets | $ | 328 | | $ | (277) | | $ | (44) | | $ | (6) | | $ | 1 | |
| Derivative liabilities | Derivative liabilities | 305 | | (277) | | (19) | | (9) | | — | |
| | December 31, 2022 | |
| December 31, 2023 | |
| December 31, 2023 | |
| December 31, 2023 | |
| Derivative assets | |
| Derivative assets | |
| Derivative assets | Derivative assets | 321 | | (263) | | (51) | | (6) | | 1 | |
| Derivative liabilities | Derivative liabilities | 331 | | (263) | | (64) | | (1) | | 3 | |
|
(1) As of September 30, 2023, gross amounts do not exclude assetMarch 31, 2024 and liability exchange traded contracts. As of December 31, 2022,2023 gross amounts exclude asset and liability exchange traded contracts of $1$0 and $0, respectively.
(2) Represents the netting of receivable with payable balances, net of collateral, for the same counterparty under eligible netting agreements.
Collateral
Under the terms of the OTC Derivative International Swaps and Derivatives Association, Inc. ("ISDA") agreements, the Company may receive from, or deliver to, counterparties, collateral to assure that terms of the ISDA agreements will be met with regard to the Credit Support Annex ("CSA"). The terms of the CSA call for the Company to pay interest on any cash received equal to the Federal Funds rate. To the extent cash collateral is received and delivered, it is included in Payables under securities loan agreements, including collateral held and Short-term investments under securities loan agreements, including collateral delivered, respectively, on the Condensed Consolidated Balance Sheets and is reinvested in short-term investments. Collateral held is used in accordance with the CSA to satisfy any obligations. Investment grade bonds owned by the Company are the source of noncash collateral posted, which is reported in Securities pledged on the Condensed Consolidated Balance Sheets.
As of September 30, 2023,March 31, 2024, the Company held $47$26 and pledged $19$46 of net cash collateral related to OTC derivative contracts and cleared derivative contracts, respectively. As of December 31, 2022,2023, the Company held $50$17 and delivered $62$112 of net cash collateral related to OTC derivative contracts and cleared derivative contracts, respectively. In addition, as of September 30, 2023,March 31, 2024, the Company delivered $159$154 of securities and held $6$4 of securities as collateral. As of December 31, 2022,2023, the Company delivered $102$153 of securities and held $7$10 securities as collateral.
| | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | 2023 |
| Interest Rate Contracts | | Foreign Exchange Contracts | | Interest Rate Contracts | | Foreign Exchange Contracts |
| Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income | Net investment income | | Net investment income and Net gains (losses) | | Net investment income | | Net investment income and Net gains (losses) |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Three Months Ended March 31, | | | | | | | |
| Amount of Gain or (Loss) Recognized in Other Comprehensive Income | $ | — | | | $ | 7 | | | $ | — | | | $ | (10) | |
| Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income | — | | | 2 | | | — | | | 2 | |
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated) The location and effect of derivatives qualifying for hedge accounting on the Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Comprehensive Income are as follows for the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | 2022 |
| Interest Rate Contracts | | Foreign Exchange Contracts | | Interest Rate Contracts | | Foreign Exchange Contracts |
| Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income | Net investment income | | Net investment income and Net gains (losses) | | Net investment income | | Net investment income and Net gains (losses) |
| Three Months Ended September 30, | | | | | | | |
| Amount of Gain or (Loss) Recognized in Other Comprehensive Income | $ | — | | | $ | 6 | | | $ | (1) | | | $ | 54 | |
| Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income | — | | | 3 | | | — | | | 2 | |
| | | | | | | |
| Nine Months Ended September 30, | | | | | | | |
| Amount of Gain or (Loss) Recognized in Other Comprehensive Income | $ | — | | | $ | (9) | | | $ | (2) | | | $ | 105 | |
| Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income | — | | | 7 | | | — | | | 7 | |
The location and amount of gain (loss) recognized in the Condensed Consolidated Statements of Operations for derivatives qualifying for hedge accounting are as follows for the periods indicated:
| | | | 2023 | | 2022 |
| Net investment income | | Net gains (losses) | | Net investment income | | Net gains (losses) |
| Three Months Ended September 30, | | | | | | | |
| Three Months Ended March 31, | |
| Three Months Ended March 31, | |
| Three Months Ended March 31, | |
| 2024 | | | 2024 | | 2023 |
| Net investment income | | | Net investment income | | Net gains (losses) | | Net investment income | | Net gains (losses) |
| Three Months Ended March 31, | |
| Total amounts of line items presented in the statements of operations in which the effects of cash flow hedges are recorded | |
| Total amounts of line items presented in the statements of operations in which the effects of cash flow hedges are recorded | |
| Total amounts of line items presented in the statements of operations in which the effects of cash flow hedges are recorded | Total amounts of line items presented in the statements of operations in which the effects of cash flow hedges are recorded | $ | 384 | | | $ | (64) | | | $ | 366 | | | $ | (69) | |
| | Cash flow hedges: | |
| Cash flow hedges: | |
| Cash flow hedges: | Cash flow hedges: | |
| | Foreign exchange contracts: | Foreign exchange contracts: | |
| Gain (loss) reclassified from accumulated other comprehensive income into income | 3 | | | — | | | 2 | | | — | |
| | | Foreign exchange contracts: | |
| | | Nine Months Ended September 30, | |
| Total amounts of line items presented in the statements of operations in which the effects of cash flow hedges are recorded | $ | 1,155 | | | $ | (142) | | | $ | 1,235 | | | $ | (387) | |
| Foreign exchange contracts: | |
| Gain (loss) reclassified from accumulated other comprehensive income into income | |
| Gain (loss) reclassified from accumulated other comprehensive income into income | |
| Gain (loss) reclassified from accumulated other comprehensive income into income | |
| | Foreign exchange contracts: | |
| Gain (loss) reclassified from accumulated other comprehensive income into income | 7 | | | — | | | 7 | | | — | |
|
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)The location and effect of derivatives not designated as hedging instruments on the Condensed Consolidated Statements of Operations are as follows for the periods indicated:
| | Location of Gain (Loss) on Derivative | | Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
| Location of Gain (Loss) Recognized on Derivative | |
| Location of Gain (Loss) Recognized on Derivative | |
| Location of Gain (Loss) Recognized on Derivative | | | | | Three Months Ended March 31, |
| | | | | | 2024 | | | | | | | | 2024 | | 2023 |
| Derivatives: Non-qualifying for hedge accounting | Derivatives: Non-qualifying for hedge accounting | Derivatives: Non-qualifying for hedge accounting |
| Interest rate contracts | Interest rate contracts | Net gains (losses) | | $ | 64 | | | $ | 121 | | | $ | 121 | | | $ | 178 | |
| Foreign exchange contracts | Foreign exchange contracts | Net gains (losses) | | 2 | | | 3 | | | 2 | | | 7 | |
| | Credit contracts | |
| Credit contracts | |
| Credit contracts | Credit contracts | Net gains (losses) | | — | | | 1 | | | — | | | (3) | |
| Embedded derivatives and Managed custody guarantees: | Embedded derivatives and Managed custody guarantees: | Embedded derivatives and Managed custody guarantees: |
| Within fixed maturity investments | Within fixed maturity investments | Net gains (losses) | | (3) | | | (2) | | | (3) | | | (5) | |
| | Managed custody guarantees | Managed custody guarantees | Net gains (losses) | | (15) | | | (6) | | | (12) | | | (8) | |
| Stabilizers | Net gains (losses) | | (9) | | | — | | | (9) | | | 19 | |
| | Managed custody guarantees | |
| | Managed custody guarantees | |
| | Total | Total | | $ | 40 | | | $ | 118 | | | $ | 100 | | | $ | 189 | |
| Total | |
| Total | |
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated) 4. Fair Value Measurements
Fair Value Measurement
The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of September 30, 2023:March 31, 2024:
| | Level 1 | | Level 2 | | Level 3 | | Total |
| Level 1 | | | Level 1 | | Level 2 | | Level 3 | | Total |
| Assets: | Assets: | | | | | | | |
| Fixed maturities, including securities pledged: | Fixed maturities, including securities pledged: | |
| Fixed maturities, including securities pledged: | |
| Fixed maturities, including securities pledged: | |
| U.S. Treasuries | |
| U.S. Treasuries | |
| U.S. Treasuries | U.S. Treasuries | $ | 239 | | | $ | 49 | | | $ | — | | | $ | 288 | |
| U.S. Government agencies and authorities | U.S. Government agencies and authorities | — | | | 28 | | | — | | | 28 | |
| State, municipalities and political subdivisions | State, municipalities and political subdivisions | — | | | 517 | | | — | | | 517 | |
| U.S. corporate public securities | U.S. corporate public securities | — | | | 5,275 | | | 13 | | | 5,288 | |
| U.S. corporate private securities | U.S. corporate private securities | — | | | 2,378 | | | 1,125 | | | 3,503 | |
Foreign corporate public securities and foreign governments(1) | Foreign corporate public securities and foreign governments(1) | — | | | 1,897 | | | — | | | 1,897 | |
Foreign corporate private securities (1) | Foreign corporate private securities (1) | — | | | 1,931 | | | 376 | | | 2,307 | |
| Residential mortgage-backed securities | Residential mortgage-backed securities | — | | | 2,403 | | | 54 | | | 2,457 | |
| Commercial mortgage-backed securities | Commercial mortgage-backed securities | — | | | 2,342 | | | — | | | 2,342 | |
| Other asset-backed securities | Other asset-backed securities | — | | | 1,413 | | | 39 | | | 1,452 | |
| Total fixed maturities, including securities pledged | Total fixed maturities, including securities pledged | 239 | | | 18,233 | | | 1,607 | | | 20,079 | |
| | Equity securities | Equity securities | 10 | | | — | | | 113 | | | 123 | |
| Equity securities | |
| Equity securities | |
| Derivatives: | Derivatives: | |
| Interest rate contracts | |
| Interest rate contracts | |
| Interest rate contracts | Interest rate contracts | 1 | | | 273 | | | — | | | 274 | |
| Foreign exchange contracts | Foreign exchange contracts | — | | | 54 | | | — | | | 54 | |
| | | Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements | |
| | Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements | |
| | Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements | Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements | 1,092 | | | 1 | | | — | | | 1,093 | |
| Assets held in separate accounts | Assets held in separate accounts | 77,145 | | | 5,375 | | | 341 | | | 82,861 | |
| Total assets | Total assets | $ | 78,487 | | | $ | 23,936 | | | $ | 2,061 | | | $ | 104,484 | |
| Liabilities: | Liabilities: | | | | | | | |
| Stabilizer and MCGs | Stabilizer and MCGs | $ | — | | | $ | — | | | $ | 27 | | | $ | 27 | |
| Stabilizer and MCGs | |
| Stabilizer and MCGs | |
| Derivatives: | Derivatives: | |
| Interest rate contracts | |
| Interest rate contracts | |
| Interest rate contracts | Interest rate contracts | 9 | | | 292 | | | — | | | 301 | |
| Foreign exchange contracts | Foreign exchange contracts | — | | | 2 | | | — | | | 2 | |
| | Credit contracts | Credit contracts | — | | | 2 | | | — | | | 2 | |
| Credit contracts | |
| Credit contracts | |
| | Total liabilities | Total liabilities | $ | 9 | | | $ | 296 | | | $ | 27 | | | $ | 332 | |
| Total liabilities | |
| Total liabilities | |
(1) Primarily U.S. dollar denominated.
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated) The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of December 31, 2022:2023:
| | Level 1 | | Level 2 | | Level 3 | | Total |
| Level 1 | | | Level 1 | | Level 2 | | Level 3 | | Total |
| Assets: | Assets: | | | | | | | |
| Fixed maturities, including securities pledged: | Fixed maturities, including securities pledged: | |
| Fixed maturities, including securities pledged: | |
| Fixed maturities, including securities pledged: | |
| U.S. Treasuries | |
| U.S. Treasuries | |
| U.S. Treasuries | U.S. Treasuries | $ | 291 | | | $ | 86 | | | $ | — | | | $ | 377 | |
| U.S. Government agencies and authorities | U.S. Government agencies and authorities | — | | | 30 | | | — | | | 30 | |
| State, municipalities and political subdivisions | State, municipalities and political subdivisions | — | | | 600 | | | — | | | 600 | |
| U.S. corporate public securities | U.S. corporate public securities | — | | | 5,925 | | | 13 | | | 5,938 | |
| U.S. corporate private securities | U.S. corporate private securities | — | | | 2,212 | | | 1,356 | | | 3,568 | |
Foreign corporate public securities and foreign governments(1) | Foreign corporate public securities and foreign governments(1) | — | | | 2,064 | | | 2 | | | 2,066 | |
Foreign corporate private securities (1) | Foreign corporate private securities (1) | — | | | 2,099 | | | 339 | | | 2,438 | |
| Residential mortgage-backed securities | Residential mortgage-backed securities | — | | | 2,873 | | | 20 | | | 2,893 | |
| Commercial mortgage-backed securities | Commercial mortgage-backed securities | — | | | 2,599 | | | — | | | 2,599 | |
| Other asset-backed securities | Other asset-backed securities | — | | | 1,258 | | | 52 | | | 1,310 | |
| Total fixed maturities, including securities pledged | Total fixed maturities, including securities pledged | 291 | | | 19,746 | | | 1,782 | | | 21,819 | |
| Equity securities | Equity securities | 16 | | | — | | | 117 | | | 133 | |
| Derivatives: | Derivatives: | |
| Interest rate contracts | Interest rate contracts | 1 | | | 261 | | | — | | | 262 | |
| Interest rate contracts | |
| Interest rate contracts | |
| Foreign exchange contracts | Foreign exchange contracts | — | | | 60 | | | — | | | 60 | |
| | | Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements | |
| | Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements | |
| | Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements | Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements | 1,407 | | | — | | | — | | | 1,407 | |
| Assets held in separate accounts | Assets held in separate accounts | 72,065 | | | 5,227 | | | 347 | | | 77,639 | |
| Total assets | Total assets | $ | 73,780 | | | $ | 25,294 | | | $ | 2,246 | | | $ | 101,320 | |
| Liabilities: | Liabilities: | | | | | | | |
| Stabilizer and MCGs | Stabilizer and MCGs | $ | — | | | $ | — | | | $ | 6 | | | $ | 6 | |
| Stabilizer and MCGs | |
| Stabilizer and MCGs | |
| Derivatives: | Derivatives: | |
| Interest rate contracts | |
| Interest rate contracts | |
| Interest rate contracts | Interest rate contracts | 2 | | | 325 | | | — | | | 327 | |
| Foreign exchange contracts | Foreign exchange contracts | — | | | 2 | | | — | | | 2 | |
| | Credit contracts | Credit contracts | — | | | 2 | | | — | | | 2 | |
| Credit contracts | |
| Credit contracts | |
| | Total liabilities | Total liabilities | $ | 2 | | | $ | 329 | | | $ | 6 | | | $ | 337 | |
| Total liabilities | |
| Total liabilities | |
(1) Primarily U.S. dollar denominated.
Valuation of Financial Assets and Liabilities at Fair Value
Certain assets and liabilities are measured at estimated fair value on the Company's Condensed Consolidated Balance Sheets. The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The exit price and the transaction (or entry) price will be the same at initial recognition in many circumstances. However, in certain cases, the transaction price may not represent fair value. The fair value of a liability is based on the amount that would be paid to transfer a liability to a third-party with an equal credit standing. Fair value is required to be a market-based measurement that is determined based on a hypothetical transaction at the measurement date, from a market participant's perspective. The Company considers three broad valuation approaches when a quoted price is unavailable: (i) the market approach, (ii) the income approach and (iii) the cost approach. The Company determines the most appropriate valuation technique to use, given the instrument being measured and the availability of sufficient inputs. The Company prioritizes the
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated) inputs to fair valuation approaches and allows for the use of unobservable inputs to the extent that observable inputs are not available.
The Company utilizes a number of valuation methodologies to determine the fair values of its financial assets and liabilities in conformity with the concepts of exit price and the fair value hierarchy as prescribed in ASC Topic 820. Valuations are obtained from third-party commercial pricing services, brokers and industry-standard, vendor-provided software that models the value based on market observable inputs. The valuations obtained from third-party commercial pricing services are non-binding. The Company reviews the assumptions and inputs used by third-party commercial pricing services for each reporting period in order to determine an appropriate fair value hierarchy level. The documentation and analysis obtained from third-party commercial pricing services are reviewed by the Company, including in-depth validation procedures confirming the observability of inputs. The valuations are reviewed and validated monthly through the internal valuation committee price variance review, comparisons to internal pricing models, back testing to recent trades or monitoring of trading volumes.
When available, the fair value of the Company's financial assets and liabilities are based on quoted prices of identical assets in active markets and therefore, reflected in Level 1. The valuation approaches and key inputs for each category of assets or liabilities that are classified within Level 2 and Level 3 of the fair value hierarchy are presented below.
For fixed maturities classified as Level 2 assets, fair values are determined using a matrix-based market approach, based on prices obtained from third-party commercial pricing services and the Company’s matrix and analytics-based pricing models, which in each case incorporate a variety of market observable information as valuation inputs. The market observable inputs used for these fair value measurements, by fixed maturity asset class, are as follows:
U.S. Treasuries: Fair value is determined using third-party commercial pricing services, with the primary inputs being stripped interest and principal U.S. Treasury yield curves that represent a U.S. Treasury zero-coupon curve.
U.S. government agencies and authorities, State, municipalities and political subdivisions: Fair value is determined using third-party commercial pricing services, with the primary inputs being U.S. Treasury yield curves, trades of comparable securities, credit spreads off benchmark yields and issuer ratings.
U.S. corporate public securities, Foreign corporate public securities and foreign governments: Fair value is determined using third-party commercial pricing services, with the primary inputs being benchmark yields, trades of comparable securities, issuer ratings, bids and credit spreads off benchmark yields.
U.S. corporate private securities and Foreign corporate private securities: Fair values are determined using a matrix and analytics-based pricing model. The model incorporates the current level of risk-free interest rates, current corporate credit spreads, credit quality of the issuer and cash flow characteristics of the security. The model also considers a liquidity spread, the value of any collateral, the capital structure of the issuer, the presence of guarantees, and prices and quotes for comparably rated publicly traded securities.
RMBS, CMBS and ABS: Fair value is determined using third-party commercial pricing services, with the primary inputs being credit spreads off benchmark yields, prepayment speed assumptions, current and forecasted loss severity, debt service coverage ratios, collateral type, payment priority within tranche and the vintage of the loans underlying the security.
Generally, the Company does not obtain more than one vendor price from pricing services per instrument. The Company uses a hierarchy process in which prices are obtained from a primary vendor and, if that vendor is unable to provide the price, the next vendor in the hierarchy is contacted until a price is obtained or it is determined that a price cannot be obtained from a commercial pricing service. When a price cannot be obtained from a commercial pricing service, independent broker quotes are solicited. Securities priced using independent broker quotes are classified as Level 3.
Fair values of privately placed bonds are determined primarily using a matrix-based pricing model and are generally classified as Level 2 assets. The model considers the current level of risk-free interest rates, current corporate spreads, the credit quality of the issuer and cash flow characteristics of the security. Also considered are factors such as the net worth of the borrower, the value of collateral, the capital structure of the borrower, the presence of guarantees and the Company's evaluation of the
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated) borrower's ability to compete in its relevant market. Using this data, the model generates estimated market values, which the Company considers reflective of the fair value of each privately placed bond.
Equity securities: Level 2 and Level 3 equity securities, typically private equities or equity securities not traded on an exchange, are valued by other sources such as analytics or brokers.
Derivatives: Derivatives are carried at fair value, which is determined using the Company's derivative accounting system in conjunction with observable key financial data from third party sources, such as yield curves, exchange rates, S&P 500 Index prices, London Interbank Offered Rates ("LIBOR"), Overnight Index Swap ("OIS") rates, and Secured Overnight Financing Rate ("SOFR"). The Company uses SOFR discounting for valuations of interest rate derivatives; however, certain legacy positions may continue to be discounted on OIS. The Company uses OIS for valuations of collateralized interest rate derivatives, which are obtained from third-party sources. For those derivatives that are unable to be valued by the accounting system, the Company typically utilizes values established by third-party brokers. Counterparty credit risk is considered and incorporated in the Company's valuation process through counterparty credit rating requirements and monitoring of overall exposure. It is the Company's policy to transact only with investment grade counterparties with a credit rating of A- or better. The Company's nonperformance risk is also considered and incorporated in the Company's valuation process. The Company also has certain credit default swaps and options that are priced by third party vendors or by using models that primarily use market observable inputs, but contain inputs that are not observable to market participants, which have been classified as Level 3. The remaining derivative instruments are valued based on market observable inputs and are classified as Level 2.
Stabilizer and MCGs: The Company records reserves for Stabilizer and MCG contracts containing guaranteed credited rates. The guarantee is treated as an embedded derivative or a stand-alone derivative (depending on the underlying product) and is required to be reported at fair value. The estimated fair value is determined based on the present value of projected future claims, minus the present value of future guaranteed premiums. At inception of the contract, the Company projects a guaranteed premium to be equal to the present value of the projected future claims. The income associated with the contracts is projected using relevant actuarial and capital market assumptions, including benefits and related contract charges, over the anticipated life of the related contracts. The cash flow estimates are projected under multiple capital market scenarios using observable risk-free rates and other best estimate assumptions. These derivatives are classified as Level 3 liabilities.
The discount rate used to determine the fair value of the Company's Stabilizer embedded derivative and MCG stand-alone derivative includes an adjustment to reflect the risk that these obligations will not be fulfilled ("nonperformance risk"). The nonperformance risk adjustment incorporates a blend of observable, similarly rated peer holding company credit spreads, adjusted to reflect the credit quality of the individual insurance subsidiary that issued the guarantee, as well as an adjustment to reflect the non-default spreads and the priority and recovery rates of policyholder claims.
Level 3 Financial Instruments
The fair values of certain assets and liabilities are determined using prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement (i.e., Level 3 as defined by ASC Topic 820), including but not limited to liquidity spreads for investments within markets deemed not currently active. These valuations, whether derived internally or obtained from a third-party, use critical assumptions that are not widely available to estimate market participant expectations in valuing the asset or liability. In addition, the Company has determined, for certain financial instruments, an active market is such a significant input to determine fair value that the presence of an inactive market may lead to classification in Level 3. In light of the methodologies employed to obtain the fair values of financial assets and liabilities classified as Level 3, additional information is presented below.
Significant Unobservable Inputs
The Company's Level 3 fair value measurements of its fixed maturities, equity securities and equity and credit derivative contracts are primarily based on broker quotes for which the quantitative detail of the unobservable inputs is neither provided nor reasonably corroborated, thus negating the ability to perform a sensitivity analysis. The Company performs a review of broker quotes by performing a monthly price variance comparison and back tests broker quotes to recent trade prices.
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
The following tables summarize the change in fair value of the Company’s Level 3 assets and liabilities and transfers in and out of Level 3 for the periods indicated:
| | | Three Months Ended September 30, 2023 |
| | Fair Value as of July 1 | | Realized/Unrealized
Gains (Losses) Included in: | | Purchases | | Issuances | | Sales | | Settlements | | Transfers into Level 3 | | Transfers out of Level 3 | | Fair Value as of September 30 | | Change In Unrealized Gains (Losses) Included in Earnings(3) | | Change in Unrealized Gains (Losses) Included in OCI(3) |
| | Net Income | | OCI | |
| | Three Months Ended March 31, 2024 | |
| | Three Months Ended March 31, 2024 | |
| | Three Months Ended March 31, 2024 | |
| Fair Value
as of
January 1 | |
| Fair Value
as of
January 1 | |
| Fair Value
as of
January 1 | | | Realized/Unrealized
Gains (Losses) Included in: | | Purchases | | Issuances | | Sales | | Settlements | | Transfers into Level 3 | | Transfers out of Level 3 | | Fair Value as of March 31 | | Change in Unrealized Gains (Losses) Included in Earnings(3) | | Change in Unrealized Gains (Losses) Included in OCI(3) |
| | Net Income | |
| Fixed maturities, including securities pledged: | Fixed maturities, including securities pledged: | | | | | | | | | | | | | | | | | | | | | | | |
| Fixed maturities, including securities pledged: | |
| Fixed maturities, including securities pledged: | |
| | U.S. Corporate public securities | |
| | U.S. Corporate public securities | |
| | U.S. Corporate public securities | U.S. Corporate public securities | $ | 13 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 13 | | | $ | — | | | $ | — | |
| U.S. Corporate private securities | U.S. Corporate private securities | 1,305 | | | — | | | (36) | | | 17 | | | — | | | — | | | (36) | | | 47 | | | (172) | | | 1,125 | | | — | | | (37) | |
| Foreign corporate private securities(1) | Foreign corporate private securities(1) | 333 | | | (1) | | | (7) | | | 41 | | | — | | | — | | | (17) | | | 43 | | | (16) | | | 376 | | | (1) | | | (7) | |
| Foreign corporate private securities(1) | |
| Foreign corporate private securities(1) | |
| Residential mortgage-backed securities | Residential mortgage-backed securities | 49 | | | (3) | | | — | | | 3 | | | — | | | — | | | — | | | 5 | | | — | | | 54 | | | (3) | | | — | |
| | Other asset-backed securities | |
| Other asset-backed securities | |
| Other asset-backed securities | Other asset-backed securities | 32 | | | — | | | — | | | 10 | | | — | | | — | | | (1) | | | — | | | (2) | | | 39 | | | — | | | — | |
| Total fixed maturities, including securities pledged | Total fixed maturities, including securities pledged | 1,732 | | | (4) | | | (43) | | | 71 | | | — | | | — | | | (54) | | | 95 | | | (190) | | | 1,607 | | | (4) | | | (44) | |
| | Equity securities, at fair value | Equity securities, at fair value | 114 | | | (1) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 113 | | | (1) | | | — | |
Stabilizers and MCGs(2) | (3) | | | (23) | | | — | | | — | | | (1) | | | — | | | — | | | — | | | — | | | (27) | | | — | | | — | |
| | Equity securities, at fair value | |
| Equity securities, at fair value | |
Stabilizer and MCGs(2) | |
| Assets held in separate accounts(4) | Assets held in separate accounts(4) | 344 | | | (5) | | | — | | | 1 | | | — | | | (4) | | | — | | | 6 | | | (1) | | | 341 | | | — | | | — | |
Assets held in separate accounts(4) | |
Assets held in separate accounts(4) | |
(1) Primarily U.S. dollar denominated. | (1) Primarily U.S. dollar denominated. | | (1) Primarily U.S. dollar denominated. |
(2) All gains and losses on Level 3 liabilities are classified as realized gains (losses) for the purpose of this disclosure because it is impracticable to track realized and unrealized gains (losses) separately on a contract-by-contract basis. These amounts are included in Net gains (losses) in the Condensed Consolidated Statements of Operations. | (3) For financial instruments still held as of September 30, amounts are included in Net investment income and Net gains (losses) in the Condensed Consolidated Statements of Operations or Unrealized gains (losses) on securities in the Condensed Consolidated Statements of Comprehensive Income. | (2) All gains and losses on Level 3 liabilities are classified as realized gains (losses) for the purpose of this disclosure because it is impracticable to track realized and unrealized gains (losses) separately on a contract-by-contract basis.These amounts are included in Net gains (losses) in the Condensed Consolidated Statements of Operations. | | (2) All gains and losses on Level 3 liabilities are classified as realized gains (losses) for the purpose of this disclosure because it is impracticable to track realized and unrealized gains (losses) separately on a contract-by-contract basis.These amounts are included in Net gains (losses) in the Condensed Consolidated Statements of Operations. |
(3) For financial instruments still held as of March 31, amounts are included in Net investment income and Net gains (losses) in the Condensed Consolidated Statements of Operations or Unrealized gains (losses) on securities in the Condensed Consolidated Statements of Comprehensive Income. | | (3) For financial instruments still held as of March 31, amounts are included in Net investment income and Net gains (losses) in the Condensed Consolidated Statements of Operations or Unrealized gains (losses) on securities in the Condensed Consolidated Statements of Comprehensive Income. |
(4) The investment income and realized gains (losses) and change in unrealized gains (losses) included in net income (loss) for separate account assets are offset by an equal amount for separate account liabilities, which results in a net zero impact on Net income (loss) for the Company. | (4) The investment income and realized gains (losses) and change in unrealized gains (losses) included in net income (loss) for separate account assets are offset by an equal amount for separate account liabilities, which results in a net zero impact on Net income (loss) for the Company. | (4) The investment income and realized gains (losses) and change in unrealized gains (losses) included in net income (loss) for separate account assets are offset by an equal amount for separate account liabilities, which results in a net zero impact on Net income (loss) for the Company. |
|
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, 2023 | | |
| Fair Value
as of
January 1 | | Realized/Unrealized
Gains (Losses) Included in: | | Purchases | | Issuances | | Sales | | Settlements | | Transfers into Level 3 | | Transfers out of Level 3 | | Fair Value as of September 30 | | Change in Unrealized Gains (Losses) Included in Earnings(3) | | Change in Unrealized Gains (Losses) Included in OCI(3) |
| | Net Income | | OCI | |
| Fixed maturities, including securities pledged: | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Corporate public securities | $ | 13 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 13 | | | $ | — | | | $ | — | |
| U.S. Corporate private securities | 1,356 | | | — | | | (34) | | | 79 | | | — | | | (3) | | | (113) | | | 32 | | | (192) | | | 1,125 | | | — | | | (36) | |
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Foreign corporate public securities and foreign governments(1) | 2 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (2) | | | — | | | — | | | — | |
Foreign corporate private securities(1) | 339 | | | 1 | | | (1) | | | 89 | | | — | | | — | | | (145) | | | 95 | | | (2) | | | 376 | | | 1 | | | (2) | |
| Residential mortgage-backed securities | 20 | | | (5) | | | — | | | 37 | | | — | | | — | | | — | | | 2 | | | — | | | 54 | | | (5) | | | — | |
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| Other asset-backed securities | 52 | | | — | | | (1) | | | 10 | | | — | | | — | | | (2) | | | — | | | (20) | | | 39 | | | — | | | — | |
| Total fixed maturities, including securities pledged | 1,782 | | | (4) | | | (36) | | | 215 | | | — | | | (3) | | | (260) | | | 129 | | | (216) | | | 1,607 | | | (4) | | | (38) | |
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| Equity securities, at fair value | 117 | | | (7) | | | — | | | — | | | — | | | — | | | — | | | 3 | | | — | | | 113 | | | (7) | | | — | |
Stabilizer and MCGs(2) | (6) | | | (20) | | | — | | | — | | | (1) | | | — | | | — | | | — | | | — | | | (27) | | | — | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | |
Assets held in separate accounts(4) | 347 | | | (9) | | | — | | | 8 | | | — | | | (13) | | | — | | | 9 | | | (1) | | | 341 | | | — | | | — | |
(1) Primarily U.S. dollar denominated. |
(2) All gains and losses on Level 3 liabilities are classified as realized gains (losses) for the purpose of this disclosure because it is impracticable to track realized and unrealized gains (losses) separately on a contract-by-contract basis. These amounts are included in Net gains (losses) in the Condensed Consolidated Statements of Operations. |
(3) For financial instruments still held as of September 30, amounts are included in Net investment income and Net gains (losses) in the Condensed Consolidated Statements of Operations or Unrealized gains (losses) on securities in the Condensed Consolidated Statements of Comprehensive Income. |
(4) The investment income and realized gains (losses) and change in unrealized gains (losses) included in net income (loss) for separate account assets are offset by an equal amount for separate account liabilities, which results in a net zero impact on Net income (loss) for the Company. |
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| Three Months Ended March 31, 2023 |
| Fair Value
as of
January 1 | | Realized/Unrealized
Gains (Losses) Included in: | | Purchases | | Issuances | | Sales | | Settlements | | Transfers into Level 3 | | Transfers out of Level 3 | | Fair Value as of March 31 | | Change in Unrealized Gains (Losses) Included in Earnings(3) | | Change in Unrealized Gains (Losses) Included in OCI(3) |
| | Net Income | | OCI | | | | | |
| Fixed maturities, including securities pledged: | | | | | | | | | | | | | | | | | | | | | | | |
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| U.S. Corporate public securities | $ | 13 | | | $ | 1 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 14 | | | $ | — | | | $ | — | |
| U.S. Corporate private securities | 1,356 | | | — | | | 26 | | | 30 | | | — | | | — | | | (48) | | | — | | | | | 1,364 | | | — | | | 26 | |
Foreign corporate public securities and foreign governments(1) | 2 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (2) | | | — | | | — | | | — | |
Foreign corporate private securities(1) | 339 | | | 1 | | | 4 | | | 49 | | | — | | | — | | | (41) | | | — | | | — | | | 352 | | | 1 | | | 4 | |
| Residential mortgage-backed securities | 20 | | | — | | | — | | | 28 | | | — | | | — | | | — | | | — | | | — | | | 48 | | | — | | | — | |
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| Other asset-backed securities | 52 | | | — | | | — | | | 2 | | | — | | | — | | | (1) | | | — | | | (20) | | | 33 | | | — | | | — | |
| Total fixed maturities, including securities pledged | 1,782 | | | 2 | | | 30 | | | 109 | | | — | | | — | | | (90) | | | — | | | (22) | | | 1,811 | | | 1 | | | 30 | |
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| Equity securities, at fair value | 117 | | | (4) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 113 | | | (3) | | | — | |
Stabilizers and MCGs(2) | (6) | | | 3 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (3) | | | — | | | — | |
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Assets held in separate accounts(4) | 347 | | | 4 | | | — | | | — | | | — | | | (2) | | | — | | | — | | | — | | | 349 | | | — | | | — | |
(1) Primarily U.S. dollar denominated. |
(2) All gains and losses on Level 3 liabilities are classified as realized gains (losses) for the purpose of this disclosure because it is impracticable to track realized and unrealized gains (losses) separately on a contract-by-contract basis. These amounts are included in Net gains (losses) in the Condensed Consolidated Statements of Operations. |
(3) For financial instruments still held as of March 31, amounts are included in Net investment income and Net gains (losses) in the Condensed Consolidated Statements of Operations. |
(4) The investment income and realized gains (losses) and change in unrealized gains (losses) included in net income (loss) for separate account assets are offset by an equal amount for separate account liabilities, which results in a net zero impact on Net income (loss) for the Company. |
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
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| Three Months Ended September 30, 2022 |
| Fair Value as of July 1 | | Realized/Unrealized
Gains (Losses) Included in: | | Purchases | | Issuances | | Sales | | Settlements | | Transfers into Level 3 | | Transfers out of Level 3 | | Fair Value as of September 30 | | Change In Unrealized Gains (Losses) Included in Earnings(3) | | Change in Unrealized Gains (Losses) Included in OCI(3) |
| | Net Income | | OCI | | | | | |
| Fixed maturities, including securities pledged: | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Corporate public securities | $ | 8 | | | $ | — | | | $ | (1) | | | $ | 1 | | | $ | — | | | $ | — | | | $ | (1) | | | $ | — | | | $ | — | | | $ | 7 | | | $ | — | | | $ | (1) | |
| U.S. Corporate private securities | 1,323 | | | — | | | (71) | | | 63 | | | — | | | — | | | (28) | | | 11 | | | — | | | 1,298 | | | — | | | (72) | |
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Foreign corporate public securities and foreign governments(1) | 4 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (4) | | | — | | | — | | | — | |
Foreign corporate private securities(1) | 303 | | | (2) | | | (8) | | | 20 | | | — | | | — | | | (3) | | | — | | | (4) | | | 306 | | | (3) | | | (9) | |
| Residential mortgage-backed securities | 22 | | | (2) | | | — | | | 2 | | | — | | | — | | | — | | | — | | | (1) | | | 21 | | | (2) | | | — | |
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| Other asset-backed securities | 47 | | | — | | | (2) | | | 13 | | | — | | | — | | | (1) | | | — | | | (4) | | | 53 | | | — | | | (2) | |
| Total fixed maturities, including securities pledged | 1,707 | | | (4) | | | (82) | | | 99 | | | — | | | — | | | (33) | | | 11 | | | (13) | | | 1,685 | | | (5) | | | (84) | |
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| Equity securities, at fair value | 121 | | | (5) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 116 | | | (5) | | | — | |
Stabilizer and MCGs(2) | (4) | | | (5) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (9) | | | — | | | — | |
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Assets held in separate accounts(4) | 349 | | | (9) | | | — | | | 32 | | | — | | | (16) | | | — | | | — | | | (17) | | | 339 | | | — | | | — | |
(1) Primarily U.S. dollar denominated. | | |
(2) All gains and losses on Level 3 liabilities are classified as realized gains (losses) for the purpose of this disclosure because it is impracticable to track realized and unrealized gains (losses) separately on a contract-by-contract basis. These amounts are included in Net gains (losses) in the Condensed Consolidated Statements of Operations. |
(3) For financial instruments still held as of September 30, amounts are included in Net investment income and Net gains (losses) in the Condensed Consolidated Statements of Operations. |
(4) The investment income and realized gains (losses) and change in unrealized gains (losses) included in net income (loss) for separate account assets are offset by an equal amount for separate account liabilities, which results in a net zero impact on Net income (loss) for the Company. |
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Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
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| Nine Months Ended September 30, 2022 |
| Fair Value
as of
January 1 | | Realized/Unrealized
Gains (Losses) Included in: | | Purchases | | Issuances | | Sales | | Settlements | | Transfers into Level 3 | | Transfers out of Level 3 | | Fair Value as of September 30 | | Change in Unrealized Gains (Losses) Included in Earnings(3) | | Change in Unrealized Gains (Losses) Included in OCI(3) |
| | Net Income | | OCI | | | | | |
| Fixed maturities, including securities pledged: | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Corporate public securities | $ | 5 | | | $ | — | | | $ | (1) | | | $ | 4 | | | $ | — | | | $ | — | | | $ | (1) | | | $ | — | | | $ | — | | | $ | 7 | | | $ | — | | | $ | (1) | |
| U.S. Corporate private securities | 1,379 | | | — | | | (283) | | | 199 | | | — | | | — | | | (111) | | | 124 | | | (10) | | | 1,298 | | | — | | | (282) | |
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Foreign corporate private securities(1) | 272 | | | (21) | | | (32) | | | 101 | | | — | | | — | | | (21) | | | 110 | | | (103) | | | 306 | | | (5) | | | (33) | |
| Residential mortgage-backed securities | 34 | | | (14) | | | — | | | 2 | | | — | | | — | | | — | | | — | | | (1) | | | 21 | | | (14) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Other asset-backed securities | 33 | | | — | | | (6) | | | 39 | | | — | | | (10) | | | (3) | | | — | | | — | | | 53 | | | — | | | (5) | |
| Total fixed maturities, including securities pledged | 1,723 | | | (35) | | | (322) | | | 345 | | | — | | | (10) | | | (136) | | | 234 | | | (114) | | | 1,685 | | | (19) | | | (321) | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Equity securities, at fair value | 114 | | | (22) | | | — | | | 24 | | | — | | | — | | | — | | | — | | | — | | | 116 | | | (22) | | | — | |
Stabilizers and MCGs(2) | (20) | | | 12 | | | — | | | — | | | (1) | | | — | | | — | | | — | | | — | | | (9) | | | — | | | — | |
| Cash and cash equivalents, short-term investments, and short-term investments under securities loan agreements | — | | | — | | | — | | | 7 | | | — | | | — | | | (7) | | | — | | | — | | | — | | | — | | | — | |
Assets held in separate accounts(4) | 316 | | | (35) | | | — | | | 164 | | | — | | | (20) | | | — | | | 6 | | | (92) | | | 339 | | | — | | | — | |
(1) Primarily U.S. dollar denominated. |
(2) All gains and losses on Level 3 liabilities are classified as realized gains (losses) for the purpose of this disclosure because it is impracticable to track realized and unrealized gains (losses) separately on a contract-by-contract basis. These amounts are included in Net gains (losses) in the Condensed Consolidated Statements of Operations. |
(3) For financial instruments still held as of September 30, amounts are included in Net investment income and Net gains (losses) in the Condensed Consolidated Statements of Operations. |
(4) The investment income and realized gains (losses) and change in unrealized gains (losses) included in net income (loss) for separate account assets are offset by an equal amount for separate account liabilities, which results in a net zero impact on Net income (loss) for the Company. |
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
For the three and nine months ended September 30,March 31, 2024 and 2023, and 2022, the transfers in and out of Level 3 for fixed maturities were due to the variation in inputs relied upon for valuation each quarter. Securities that are primarily valued using independent broker quotes when prices are not available from one of the commercial pricing services are reflected as transfers into Level 3. When securities are valued using more widely available information, the securities are transferred out of Level 3 and into Level 1 or 2, as appropriate.
Significant Unobservable Inputs
The Company's Level 3 fair value measurements of its fixed maturities, equity securities and equity and credit derivative contracts are primarily based on broker quotes for which the quantitative detail of the unobservable inputs is neither provided nor reasonably corroborated, thus negating the ability to perform a sensitivity analysis. The Company performs a review of broker quotes by performing a monthly price variance comparison and back tests broker quotes to recent trade prices.
Other Financial Instruments
The following disclosures are made in accordance with the requirements of ASC Topic 825 which requires disclosure of fair value information about financial instruments, whether or not recognized at fair value on the Condensed Consolidated Balance Sheets.
ASC Topic 825 excludes certain financial instruments, including insurance contracts and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
The carrying values and estimated fair values of the Company’s financial instruments as of the dates indicated:
| | September 30, 2023 | | December 31, 2022 |
| Carrying
Value | | Fair
Value | | Carrying
Value | | Fair
Value |
| March 31, 2024 | | | March 31, 2024 | | December 31, 2023 |
| Carrying
Value | | | Carrying
Value | | Fair
Value | | Carrying
Value | | Fair
Value |
| Assets: | Assets: | | | | | | | |
| Fixed maturities, including securities pledged | |
| Fixed maturities, including securities pledged | |
| Fixed maturities, including securities pledged | Fixed maturities, including securities pledged | $ | 20,079 | | | $ | 20,079 | | | $ | 21,819 | | | $ | 21,819 | |
| Equity securities | Equity securities | 123 | | | 123 | | | 133 | | | 133 | |
| Mortgage loans on real estate | Mortgage loans on real estate | 4,153 | | | 3,813 | | | 4,227 | | | 3,996 | |
| Policy loans | Policy loans | 161 | | | 161 | | | 159 | | | 159 | |
| Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements | Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements | 1,093 | | | 1,093 | | | 1,407 | | | 1,407 | |
| | Derivatives | Derivatives | 328 | | | 328 | | | 322 | | | 322 | |
| | Derivatives | |
| Derivatives | |
Short-term loan to affiliate(2) | |
| Other investments | Other investments | 127 | | | 127 | | | 132 | | | 132 | |
| Assets held in separate accounts | Assets held in separate accounts | 82,861 | | | 82,861 | | | 77,639 | | | 77,639 | |
| Liabilities: | Liabilities: | |
| Investment contract liabilities: | Investment contract liabilities: | |
| Investment contract liabilities: | |
| Investment contract liabilities: | |
Funding agreements without fixed maturities and deferred annuities(1) | |
Funding agreements without fixed maturities and deferred annuities(1) | |
Funding agreements without fixed maturities and deferred annuities(1) | Funding agreements without fixed maturities and deferred annuities(1) | 27,559 | | | 28,482 | | | 29,047 | | | 30,098 | |
| Funding agreements with fixed maturities | Funding agreements with fixed maturities | 672 | | | 674 | | | 731 | | | 733 | |
| Supplementary contracts, immediate annuities and other | Supplementary contracts, immediate annuities and other | 235 | | | 185 | | | 251 | | | 192 | |
| Stabilizer and MCGs | Stabilizer and MCGs | 27 | | | 27 | | | 6 | | | 6 | |
| Derivatives | Derivatives | 305 | | | 305 | | | 331 | | | 331 | |
Short-term debt(2) | 80 | | | 80 | | | 32 | | | 32 | |
Long-term debt(2) | 1 | | | 1 | | | 2 | | | 2 | |
Short-term debt(3) | |
Long-term debt(3) | |
(1) Certain amounts included in Funding agreements without fixed maturities and deferred annuities are also reflected within the Stabilizer and MCGs section of the table above. | (1) Certain amounts included in Funding agreements without fixed maturities and deferred annuities are also reflected within the Stabilizer and MCGs section of the table above. | (1) Certain amounts included in Funding agreements without fixed maturities and deferred annuities are also reflected within the Stabilizer and MCGs section of the table above. |
(2) Included in Other Liabilities on the Condensed Consolidated Balance Sheets. | (2) Included in Other Assets on the Condensed Consolidated Balance Sheets. | |
(3) Included in Other Liabilities on the Condensed Consolidated Balance Sheets. | |
(3) Included in Other Liabilities on the Condensed Consolidated Balance Sheets. | |
(3) Included in Other Liabilities on the Condensed Consolidated Balance Sheets. | |
The following table presents the classification of financial instruments which are not carried at fair value on the Condensed Consolidated Balance Sheets:
| | | | | |
| Financial Instrument | Classification |
| Mortgage loans on real estate | Level 3 |
| Policy loans | Level 2 |
| |
| Short-term loan to affiliate | Level 2 |
| |
| |
| Other investments | Level 2 |
| Funding agreements without fixed maturities and deferred annuities | Level 3 |
| Funding agreements with fixed maturities | Level 2 |
| Supplementary contracts, immediate annuities and other | Level 3 |
| |
| Short-term debt and Long-term debt | Level 2 |
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
5. Deferred Policy Acquisition Costs and Value of Business Acquired
The following table presents a rollforward of DAC and VOBA for the periods indicated:
| | DAC | | VOBA |
| Wealth Solutions Deferred and Individual Annuities | |
| Balance as of January 1, 2022 | $ | 573 | | | $ | 375 | |
| DAC | | | DAC | | VOBA(1) |
| Wealth Solutions Deferred and Individual Annuities | |
| Balance as of January 1, 2023 | |
| Balance as of January 1, 2023 | |
| Balance as of January 1, 2023 | |
| Deferrals of commissions and expenses | Deferrals of commissions and expenses | 54 | | | 4 | |
| Amortization expense | Amortization expense | (49) | | | (31) | |
| Balance as of December 31, 2022 | $ | 578 | | | $ | 348 | |
| Balance as of December 31, 2023 | |
| Deferrals of commissions and expenses | Deferrals of commissions and expenses | 41 | | | 2 | |
| Amortization expense | Amortization expense | (34) | | | (22) | |
| Balance as of September 30, 2023 | $ | 585 | | | $ | 328 | |
| Balance as of March 31, 2024 | |
(1)There was no loss recognition for VOBA during the periods presented.
The following table shows a reconciliation of DAC and VOBA balances to the Condensed Consolidated Balance Sheets for the periods indicated:
| | September 30, 2023 | | December 31, 2022 |
| March 31, 2024 | | | March 31, 2024 | | December 31, 2023 |
| DAC: | DAC: | | | |
| Wealth Solutions Deferred and Individual Annuities | |
| Wealth Solutions Deferred and Individual Annuities | |
| Wealth Solutions Deferred and Individual Annuities | Wealth Solutions Deferred and Individual Annuities | $ | 585 | | | $ | 578 | |
| Other | Other | 10 | | | 12 | |
| VOBA | VOBA | 328 | | | 348 | |
| | Total | Total | $ | 923 | | | $ | 938 | |
| Total | |
| Total | |
There was no loss recognition for VOBA during 2023 and 2022.
6. Reserves for Contract Owner Account Balances
The following table presents a rollforward of Contract owner account balances for the periods indicated:
| | Wealth Solutions Deferred Group and Individual Annuity |
| September 30, 2023 | | December 31, 2022 |
| Wealth Solutions Deferred Group and Individual Annuity | | | Wealth Solutions Deferred Group and Individual Annuity |
| March 31, 2024 | | | March 31, 2024 | | December 31, 2023 |
| Balance at January 1 | Balance at January 1 | $ | 27,951 | | | $ | 27,095 | |
| Deposits | Deposits | 1,662 | | | 2,850 | |
| Fee income | Fee income | (6) | | | (8) | |
| Surrenders and withdrawals | (3,390) | | | (3,774) | |
| Benefit payments | (94) | | | (113) | |
| Net transfers from (to) the general account | (55) | | | 1,174 | |
| Surrenders, withdrawals and benefits | |
Net transfers (from) to the general account(2) | |
| Interest credited | Interest credited | 550 | | | 714 | |
| Other | 8 | | | 13 | |
| Ending Balance | Ending Balance | $ | 26,626 | | | $ | 27,951 | |
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
| | Weighted-average crediting rate | Weighted-average crediting rate | 2.7 | % | | 2.6 | % | Weighted-average crediting rate | 2.8 | % | | 2.7 | % |
Net amount at risk (1) | Net amount at risk (1) | $ | 127 | | | $ | 154 | |
| Cash surrender value | Cash surrender value | $ | 26,255 | | | $ | 27,567 | |
(1) For those guarantees of benefits that are payable in the event of death, the net amount at risk is generally defined as the current guaranteed minimum death benefit in excess of the current account balance at the balance sheet date and is calculated at a contract level. Where a contract has both a living and a death benefit, the Company calculates NAR at a contract level and aggregates the higher of the two values together.
(2) Net transfers (from) to the general account includes transfers of $(439) and $(524) for 2024 and 2023, respectively related to VRIAC-managed institutional/mutual fund plan assets in trust that are not reflected on the Condensed Consolidated Balance Sheets.
The following table shows a reconciliation of the Contract owner account balances for deferred group and individual annuities to the Future policy benefits and contract owner accounts balances on the Condensed Consolidated Balance Sheets for the periods indicated:
| | September 30, 2023 | | December 31, 2022 |
| March 31, 2024 | | | March 31, 2024 | | December 31, 2023 |
| Wealth Solutions Deferred group and individual annuity (Contract owner account balances) | Wealth Solutions Deferred group and individual annuity (Contract owner account balances) | $ | 26,626 | | | $ | 27,951 | |
| Non-puttable funding agreements | |
| Other (Future policy benefits and Contract owner account balances) | Other (Future policy benefits and Contract owner account balances) | 4,587 | | | 4,991 | |
| Ending balance | Ending balance | $ | 31,213 | | | $ | 32,942 | |
(1) Primarily related to reinsured business
The following table summarizes detail on the differences between the interest rate being credited to contract holders as of September 30, 2023,the periods indicated, and the respective guaranteed minimum interest rates ("GMIRs"):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Account Value(1) |
| | Excess of crediting rate over GMIR |
| | At GMIR | | Up to .50% Above GMIR | | 0.51% - 1.00%
Above GMIR | | 1.01% - 1.50% Above GMIR | | 1.51% - 2.00% Above GMIR | | More than 2.00% Above GMIR | | Total |
| Guaranteed minimum interest rate |
| Up to 1.00% | | $ | 13 | | | $ | 5,845 | | | $ | 2,690 | | | $ | 1,998 | | | $ | 829 | | | $ | 784 | | | $ | 12,159 | |
| 1.01% - 2.00% | | 146 | | | 81 | | | 46 | | | 3 | | | — | | | — | | | 276 | |
| 2.01% - 3.00% | | 6,478 | | | 30 | | | 1 | | | — | | | — | | | — | | | 6,509 | |
| 3.01% - 4.00% | | 8,017 | | | — | | | — | | | — | | | — | | | — | | | 8,017 | |
| 4.01% and Above | | 4 | | | — | | | — | | | — | | | — | | | — | | | 4 | |
Renewable beyond 12 months (MYGA)(2) | | 397 | | | — | | | — | | | — | | | 3 | | | — | | | 400 | |
| Total discretionary rate setting products | | $ | 15,055 | | $ | 5,956 | | $ | 2,737 | | $ | 2,001 | | $ | 832 | | $ | 784 | | $ | 27,365 |
(1) Includes only the account values for investment spread products with GMIRs and discretionary crediting rates, net of policy loans. Excludes Stabilizer products, which are fee based.(2) Represents multi year guaranteed annuity ("MYGA") contracts with renewal dates after September 30, 2023 on which we are required to credit interest above the contractual GMIR for at least the next twelve months. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Account Value(1) |
| | Excess of crediting rate over GMIR |
| | At GMIR | | Up to .50% Above GMIR | | 0.51% - 1.00%
Above GMIR | | 1.01% - 1.50% Above GMIR | | 1.51% - 2.00% Above GMIR | | More than 2.00% Above GMIR | | Total |
| As of March 31, 2024 |
| Up to 1.00% | | $ | 11 | | | $ | 4,412 | | | $ | 3,632 | | | $ | 2,018 | | | $ | 1,015 | | | $ | 784 | | | $ | 11,872 | |
| 1.01% - 2.00% | | 134 | | | 68 | | | 41 | | | 6 | | | — | | | 1 | | | 250 | |
| 2.01% - 3.00% | | 6,080 | | | 35 | | | 1 | | | — | | | — | | | — | | | 6,116 | |
| 3.01% - 4.00% | | 7,585 | | | — | | | — | | | — | | | — | | | — | | | 7,585 | |
| 4.01% and Above | | 4 | | | — | | | — | | | — | | | — | | | — | | | 4 | |
Renewable beyond 12 months (MYGA)(2) | | 385 | | | — | | | — | | | — | | | 3 | | | — | | | 388 | |
| Total discretionary rate setting products | | $ | 14,199 | | $ | 4,515 | | $ | 3,674 | | $ | 2,024 | | $ | 1,018 | | $ | 785 | | $ | 26,215 |
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
The following table summarizes detail on the differences between the interest rate being credited to contract holders as of December 31, 2022, and the respective GMIRs:
| | Account Value(1) |
| Excess of crediting rate over GMIR |
| At GMIR | | Up to .50% Above GMIR | | 0.51% - 1.00%
Above GMIR | | 1.01% - 1.50% Above GMIR | | 1.51% - 2.00% Above GMIR | | More than 2.00% Above GMIR | | Total |
Guaranteed minimum interest rate | | As of December 31, 2023 | | As of December 31, 2023 |
| Up to 1.00% | Up to 1.00% | | $ | 5,349 | | $ | 2,857 | | $ | 1,903 | | $ | 1,112 | | $ | 1,461 | | $ | 102 | | $ | 12,784 | |
| 1.01% - 2.00% | 1.01% - 2.00% | | 246 | | 27 | | 34 | | 1 | | — | | 1 | | 309 | |
| 2.01% - 3.00% | 2.01% - 3.00% | | 7,188 | | 11 | | 1 | | — | | — | | — | | 7,200 | |
| 3.01% - 4.00% | 3.01% - 4.00% | | 8,329 | | — | | — | | — | | — | | — | | 8,329 | |
| 4.01% and Above | 4.01% and Above | | 4 | | — | | — | | — | | — | | — | | 4 | |
Renewable beyond 12 months (MYGA)(2) | Renewable beyond 12 months (MYGA)(2) | | 391 | | — | | — | | — | | 3 | | — | | 394 | |
| Total discretionary rate setting products | Total discretionary rate setting products | | $ | 21,507 | | $ | 2,895 | | $ | 1,938 | | $ | 1,113 | | $ | 1,464 | | $ | 103 | | $ | 29,020 | Total discretionary rate setting products | | $ | 14,537 | | $ | 4,772 | | $ | 3,496 | | $ | 2,210 | | $ | 861 | | $ | 798 | | $ | 26,674 |
(1)Includes only the account values for investment spread products with GMIRs and discretionary crediting rates, net of policy loans. Excludes Stabilizer products, which are fee based.
(2) Represents MYGAmulti year guaranteed annuity ("MYGA") contracts with renewal dates after March 31, 2024 and December 31, 20222023 on which we are required to credit interest above the contractual GMIR for at least the next twelve monthsmonths.
7. Reinsurance
As of September 30, 2023,March 31, 2024, the Company has reinsurance treaties with three unaffiliated reinsurers covering a significant portion of the mortality risks and guaranteed death benefits under its variable contracts.
Premiums receivable and reinsurance recoverable were comprised of the following as of the dates indicated:
| | September 30, | | December 31, |
| 2023 | | 2022 |
| March 31 | | | March 31 | | December 31, |
| 2024 | | | 2024 | | 2023 |
| Premiums receivable | Premiums receivable | $ | (1) | | | $ | (1) | |
| Reinsurance recoverable, net of allowance for credit losses | Reinsurance recoverable, net of allowance for credit losses | 2,812 | | | 3,033 | |
| | Total | Total | $ | 2,811 | | | $ | 3,032 | |
| | Total | |
| | Total | |
Information regarding the effect of reinsurance on the Condensed Consolidated Statements of Operations is as follows for the periods indicated:
| | Three Months Ended September 30 |
| 2023 | | 2022 | |
| Three Months Ended March 31, | |
| Three Months Ended March 31, | |
| Three Months Ended March 31, | |
| 2024 | |
| Premiums: | |
| Premiums: | |
| Premiums: | Premiums: | | | | |
| Direct premiums | Direct premiums | $ | 16 | | | $ | 2 | | |
| Direct premiums | |
| Direct premiums | |
| Reinsurance ceded | Reinsurance ceded | (1) | | | — | | |
| Reinsurance ceded | |
| Reinsurance ceded | |
| Net premiums | |
| Net premiums | |
| Net premiums | Net premiums | $ | 15 | | | $ | 2 | | |
| | Interest credited and other benefits to contract owners / policyholders: | Interest credited and other benefits to contract owners / policyholders: | | |
| | Interest credited and other benefits to contract owners / policyholders: | |
| | Interest credited and other benefits to contract owners / policyholders: | |
| Direct interest credited and other benefits to contract owners / policyholders | |
| Direct interest credited and other benefits to contract owners / policyholders | |
| Direct interest credited and other benefits to contract owners / policyholders | Direct interest credited and other benefits to contract owners / policyholders | $ | 256 | | | $ | 226 | | |
| Reinsurance assumed | Reinsurance assumed | 1 | | | — | | |
| Reinsurance assumed | |
| Reinsurance assumed | |
| Reinsurance ceded | |
| Reinsurance ceded | |
| Reinsurance ceded | Reinsurance ceded | 4 | | | (52) | | |
| Net interest credited and other benefits to contract owners / policyholders | Net interest credited and other benefits to contract owners / policyholders | $ | 261 | | | $ | 174 | | |
| Net interest credited and other benefits to contract owners / policyholders | |
| Net interest credited and other benefits to contract owners / policyholders | |
If the Company determines that a reinsurance agreement does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, the Company records the agreement using the deposit method of accounting. As of March 31, 2024 and December 31, 2023, the Company had a deposit asset net of the allowance for credit losses of $1.0 billion, which is reported in Other assets on the Condensed Consolidated Balance Sheets.
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
| | | | | | | | | | | |
| Nine Months Ended September 30 |
| 2023 | | 2022 |
| Premiums: | | | |
| Direct premiums | $ | 26 | | | $ | 12 | |
| Reinsurance ceded | (2) | | | (2) | |
| Net premiums | $ | 24 | | | $ | 10 | |
| | | |
| Interest credited and other benefits to contract owners / policyholders: | | | |
| Direct interest credited and other benefits to contract owners / policyholders | $ | 699 | | | $ | 655 | |
| Reinsurance assumed | 3 | | | 3 | |
| Reinsurance ceded | (79) | | | (105) | |
| Net interest credited and other benefits to contract owners / policyholders | $ | 623 | | | $ | 553 | |
If the Company determines that a reinsurance agreement does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, the Company records the agreement using the deposit method of accounting. As of September 30, 2023 and December 31, 2022, the Company had a deposit asset of $1.1 billion and $1.3 billion, which is reported in Other assets on the Condensed Consolidated Balance Sheets.
8. Separate Accounts
The following tables present a rollforward of Separate account liabilities for the Wealth Solutions stabilizer and deferred annuity business, including a reconciliation to the Condensed Consolidated Balance Sheets, for the periods indicated:
| | March 31, 2024 | |
| March 31, 2024 | |
| March 31, 2024 | | | December 31, 2023 |
| Wealth Solutions Stabilizer | |
| Balance at January 1 | |
| Balance at January 1 | |
| Balance at January 1 | |
| Deposits | |
| Deposits | |
| Deposits | |
| Fee income | |
| Fee income | |
| Fee income | |
| Surrenders, withdrawals and benefits | |
| Surrenders, withdrawals and benefits | |
| Surrenders, withdrawals and benefits | |
| Net transfers (from) to separate accounts | |
| Net transfers (from) to separate accounts | |
| Net transfers (from) to separate accounts | |
| Investment performance | |
| Investment performance | |
| Investment performance | |
| | September 30, 2023 | | December 31, 2022 |
| Balance at end of period | |
| | Wealth Solutions Stabilizer | | Wealth Solutions Deferred Annuity | Total | | Wealth Solutions Stabilizer | | Wealth Solutions Deferred Annuity | Total | |
| Balance at January 1 | $ | 7,196 | | | $ | 68,373 | | $ | 75,569 | | | $ | 8,091 | | | $ | 85,852 | | $ | 93,943 | | |
| Policyholder behavior | (288) | | | 298 | | 10 | | | (68) | | | (1,240) | | (1,308) | | |
| Fee income | (25) | | | (307) | | (332) | | | (34) | | | (412) | | (446) | | |
| Investment performance | 35 | | | 5,611 | | 5,646 | | | (794) | | | (15,828) | | (16,622) | | |
| Other | 1 | | | — | | 1 | | | 1 | | | 1 | | 2 | | |
| Balance at end of period | Balance at end of period | $ | 6,919 | | | $ | 73,975 | | $ | 80,894 | | | $ | 7,196 | | | $ | 68,373 | | $ | 75,569 | | |
| | Balance at end of period | |
Reconciliation to Condensed Consolidated Balance Sheets:
| | Other | Other | | 1,967 | | | | 2,070 | | |
| Other | |
| Other | |
| Total Separate Accounts liabilities | Total Separate Accounts liabilities | | $ | 82,861 | | | | $ | 77,639 | | |
| Total Separate Accounts liabilities | |
| Total Separate Accounts liabilities | |
Stabilizer products allow the contract holder to select either the market value of the account or the book value of the account at termination. The book value of the account is equal to deposits plus interest, less any withdrawals. The fair value is estimated using the income approach.
Cash surrender value represents the amount of the contract holders' account balances distributable at the balance sheet date, less certain surrender charges. The cash surrender value for Wealth Solutions deferred annuity products was $73,947$86,718 and $68,345$81,420 as of September 30, 2023March 31, 2024 and December 31, 2022,2023, respectively.
The aggregate fair value of assets, by major investment asset category, supporting separate accounts were as follows for the periods indicated:
| | | | | | | | | | | | |
| March 31 | | December 31 | |
| 2024 | | 2023 | |
| US Treasury securities and obligations of US government corporations and agencies | $ | 902 | | | $ | 1,015 | | |
| | | | |
| Corporate and foreign debt securities | 2,688 | | | 2,528 | | |
| | | | |
| Mortgage-backed securities | 3,191 | | | 3,231 | | |
| Equity securities (including mutual funds) | 88,451 | | | 83,065 | | |
| | | | |
| Cash, cash equivalents and short-term investments | 289 | | | 399 | | |
| Receivable for securities and accruals | 73 | | | 44 | | |
| Total | $ | 95,594 | | | $ | 90,282 | | |
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
9. Accumulated Other Comprehensive Income (Loss)
Shareholder’s equity included the following components of Accumulated other comprehensive income ("AOCI") as of the dates indicated:
| | | | | | | | | | | | |
| March 31, |
| 2024 | | 2023 | |
| Fixed maturities, net of impairment | $ | (1,928) | | | $ | (2,037) | | |
| | | | |
Derivatives(1) | 60 | | | 97 | | |
| | | | |
| | | | |
| | | | |
| Change in current discount rate | (324) | | | (343) | | |
Deferred income tax asset (liability)(2) | 589 | | | 608 | | |
| Total | (1,603) | | | (1,675) | | |
| Pension and other postretirement benefits liability, net of tax | 2 | | | 2 | | |
| AOCI | $ | (1,601) | | | $ | (1,673) | | |
(1) Gains and losses reported in AOCI from hedge transactions that resulted in the acquisition of an identified asset are reclassified into earnings in the same period or periods during which the asset acquired affects earnings. As of March 31, 2024, the portion of the AOCI that is expected to be reclassified into earnings within the next twelve months is $14
(2) The Company uses the portfolio method to determine when stranded tax benefits (or detriments) are released from AOCI. Changes in AOCI, including the reclassification adjustments recognized in the Condensed Consolidated Statements of Operations were as follows for the periods indicated:
| | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, 2024 |
| Before-Tax Amount | | Income Tax | | After-Tax Amount |
| Available-for-sale securities: | | | | | |
| Fixed maturities | $ | (113) | | | $ | 23 | | | $ | (90) | |
| | | | | |
| | | | | |
| | | | | |
| Adjustments for amounts recognized in Net gains (losses) in the Condensed Consolidated Statements of Operations | 13 | | | (3) | | | 10 | |
| | | | | |
| | | | | |
| Change in unrealized gains (losses) on available-for-sale securities | (100) | | | 20 | | | (80) | |
| | | | | |
| Derivatives: | | | | | |
| Derivatives | 7 | | (1) | (1) | | | 6 | |
| Adjustments related to effective cash flow hedges for amounts recognized in Net investment income in the Condensed Consolidated Statements of Operations | (4) | | | 1 | | | (3) | |
| Change in unrealized gains (losses) on derivatives | 3 | | | — | | | 3 | |
| | | | | |
| Change in current discount rate | 9 | | | (2) | | | 7 | |
| | | | | |
| | | | | |
| | | | | |
| Change in Accumulated other comprehensive income (loss) | $ | (88) | | | $ | 18 | | | $ | (70) | |
(1) See the Derivative Financial Instruments Note to these Condensed Consolidated Financial Statements for additional information.
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
| | | | | | | | | | | | |
| September 30 | | December 31 | |
| 2023 | | 2022 | |
| US Treasury securities and obligations of US government corporations and agencies | $ | 1,026 | | | $ | 1,586 | | |
| | | | |
| Corporate debt securities | 1,752 | | | 1,647 | | |
| Foreign debt securities | 672 | | | 660 | | |
| Mortgage-backed securities | 3,319 | | | 3,434 | | |
| Equity securities (including mutual funds) | 75,503 | | | 69,774 | | |
| | | | |
| Cash, cash equivalents and short-term investments | 337 | | | 311 | | |
| Receivable for securities and accruals | 252 | | | 227 | | |
| Total | $ | 82,861 | | | $ | 77,639 | | |
| | | | | | | | | | | | | | | | | |
| | | | | |
| Three Months Ended March 31, 2023 |
| Before-Tax Amount | | Income Tax | | After-Tax Amount |
| Available-for-sale securities: | | | | | |
| Fixed maturities | $ | 497 | | | $ | (104) | | | $ | 393 | |
| | | | | |
| | | | | |
| | | | | |
| Adjustments for amounts recognized in Net gains (losses) in the Condensed Consolidated Statements of Operations | 10 | | | (2) | | | 8 | |
| | | | | |
| | | | | |
| Change in unrealized gains (losses) on available-for-sale securities | 507 | | | (106) | | | 401 | |
| | | | | |
| Derivatives: | | | | | |
| Derivatives | (10) | | (1) | 2 | | | (8) | |
| Adjustments related to effective cash flow hedges for amounts recognized in Net investment income in the Condensed Consolidated Statements of Operations | (5) | | | 1 | | | (4) | |
| Change in unrealized gains (losses) on derivatives | (15) | | | 3 | | | (12) | |
| | | | | |
| Change in current discount rate | 6 | | | (1) | | | 5 | |
| | | | | |
| | | | | |
| | | | | |
| Change in Accumulated other comprehensive income (loss) | $ | 498 | | | $ | (104) | | | $ | 394 | |
(1) See the Derivative Financial Instruments Note to these Condensed Consolidated Financial Statements for additional information.
9. Accumulated Other Comprehensive Income (Loss)10.Revenue from Contracts with Customers
Shareholder’s equity includedFinancial services revenue is disaggregated by type of service in the following componentstable:
| | | | | | | | | | | | | | | | | |
| Three months ended March 31, | | |
| 2024 | | 2023 | | | | |
| Advisory and recordkeeping & administration | $ | 133 | | | $ | 112 | | | | | |
| Distribution and shareholder servicing | 20 | | | 18 | | | | | |
| Total financial services revenue | 153 | | | 130 | | | | | |
Revenue from other sources(1) | 130 | | | 113 | | | | | |
| Total Fee income and Other revenue | $ | 283 | | | $ | 243 | | | | | |
| | | | | | | |
(1)Primarily consists of AOCIrevenue from insurance contracts and financial instruments.
Receivables of $72 and $94 are included in Other assets on the Condensed Consolidated Balance Sheets as of the dates indicated:
| | | | | | | | | | | | |
| September 30, |
| 2023 | | 2022 | |
| Fixed maturities, net of impairment | $ | (2,965) | | | $ | (2,831) | | |
| | | | |
Derivatives(1) | 88 | | | 163 | | |
| | | | |
| | | | |
| | | | |
| Change in current discount rate | (334) | | | (350) | | |
| Deferred income tax asset (liability) | 803 | | | 762 | | |
| Total | (2,408) | | | (2,256) | | |
| Pension and other postretirement benefits liability, net of tax | 1 | | | 2 | | |
| AOCI | $ | (2,407) | | | $ | (2,254) | | |
(1)
Gains and losses reported in Accumulated Other Comprehensive
11. Income (AOCI)Taxes
The Company's effective tax rate for the three months ended March 31, 2024 was 5.9%. The effective tax rate differed from hedge transactions that resulted in the acquisitionstatutory rate of an identified asset are reclassified into earnings in21% primarily due to the same period or periods during whichSecurity Life of Denver Company capital loss carryback, the asset acquired affects earnings. As of September 30, 2023, the portioneffect of the AOCI that is expected to be reclassified into earnings within the next twelve months is $16.dividends received deduction ("DRD") and tax credits.
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Changes in AOCI, including the reclassification adjustments recognized in the Condensed Consolidated Statements of Operations were as follows for the periods indicated:
| | | | | | | | | | | | | | | | | | |
| | | | | | |
| Three Months Ended September 30, 2023 | |
| Before-Tax Amount | | Income Tax | | After-Tax Amount | |
| Available-for-sale securities: | | | | | | |
| Fixed maturities | $ | (697) | | | $ | 147 | | | $ | (550) | | |
| | | | | | |
| | | | | | |
| | | | | | |
| Adjustments for amounts recognized in Net gains (losses) in the Condensed Consolidated Statements of Operations | 10 | | | (2) | | | 8 | | |
| | | | | | |
| | | | | | |
| Change in unrealized gains (losses) on available-for-sale securities | (687) | | | 145 | | | (542) | | |
| | | | | | |
| Derivatives: | | | | | | |
| Derivatives | 6 | | (1) | (1) | | | 5 | | |
| Adjustments related to effective cash flow hedges for amounts recognized in Net investment income in the Condensed Consolidated Statements of Operations | (5) | | | 1 | | | (4) | | |
| Change in unrealized gains (losses) on derivatives | 1 | | | — | | | 1 | | |
| | | | | | |
| Change in current discount rate | 4 | | | (1) | | | 3 | | |
| | | | | | |
| | | | | | |
| | | | | | |
| Change in Accumulated other comprehensive income (loss) | $ | (682) | | | $ | 144 | | | $ | (538) | | |
(1) See the Derivative Financial Instruments Note to these Condensed Consolidated Financial Statements for additional information.
| | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, 2023 |
| Before-Tax Amount | | Income Tax | | After-Tax Amount |
| Available-for-sale securities: | | | | | |
| Fixed maturities | $ | (451) | | | $ | 95 | | | $ | (356) | |
| | | | | |
| | | | | |
| | | | | |
| Adjustments for amounts recognized in Net gains (losses) in the Condensed Consolidated Statements of Operations | 29 | | | (6) | | | 23 | |
| | | | | |
| | | | | |
| Change in unrealized gains (losses) on available-for-sale securities | (422) | | | 89 | | | (333) | |
| | | | | |
| Derivatives: | | | | | |
| Derivatives | (9) | | (1) | 2 | | | (7) | |
| Adjustments related to effective cash flow hedges for amounts recognized in Net investment income in the Condensed Consolidated Statements of Operations | (15) | | | 3 | | | (12) | |
| Change in unrealized gains (losses) on derivatives | (24) | | | 5 | | | (19) | |
| | | | | |
| Change in current discount rate | 15 | | | (3) | | | 12 | |
| | | | | |
| | | | | |
| | | | | |
| Change in Accumulated other comprehensive income (loss) | $ | (431) | | | $ | 91 | | | $ | (340) | |
(1) See the Derivative Financial Instruments Note to these Condensed Consolidated Financial Statements for additional information.
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
| | | | | | | | | | | | | | | | | | |
| | | | | | |
| | | | | | |
| Three Months Ended September 30, 2022 | |
| Before-Tax Amount | | Income Tax | | After-Tax Amount | |
| Available-for-sale securities: | | | | | | |
| Fixed maturities | $ | (1,262) | | | $ | 265 | | | $ | (997) | | |
| | | | | | |
| | | | | | |
| | | | | | |
| Adjustments for amounts recognized in Net gains (losses) in the Condensed Consolidated Statements of Operations | (5) | | | 1 | | | (4) | | |
| | | | | | |
| | | | | | |
| Change in unrealized gains (losses) on available-for-sale securities | (1,267) | | | 266 | | | (1,001) | | |
| | | | | | |
| Derivatives: | | | | | | |
| Derivatives | 52 | | (1) | (11) | | | 41 | | |
| Adjustments related to effective cash flow hedges for amounts recognized in Net investment income in the Condensed Consolidated Statements of Operations | (5) | | | 1 | | | (4) | | |
| Change in unrealized gains (losses) on derivatives | 47 | | | (10) | | | 37 | | |
| | | | | | |
| Change in current discount rate | 10 | | | (2) | | | 8 | | |
| | | | | | |
| | | | | | |
| | | | | | |
| Change in Accumulated other comprehensive income (loss) | (1,210) | | | 254 | | | (956) | | |
(1) See the Derivative Financial Instruments Note to these Condensed Consolidated Financial Statements for additional information.
| | | | | | | | | | | | | | | | | |
| | | | | |
| Nine Months Ended September 30, 2022 |
| Before-Tax Amount | | Income Tax | | After-Tax Amount |
| Available-for-sale securities: | | | | | |
| Fixed maturities | $ | (5,029) | | | $ | 1,056 | | | $ | (3,973) | |
| | | | | |
| | | | | |
| | | | | |
| Adjustments for amounts recognized in Net gains (losses) in the Condensed Consolidated Statements of Operations | 72 | | | (15) | | | 57 | |
| | | | | |
| | | | | |
| Change in unrealized gains (losses) on available-for-sale securities | (4,957) | | | 1,041 | | | (3,916) | |
| | | | | |
| Derivatives: | | | | | |
| Derivatives | 101 | | (1) | (21) | | | 80 | |
| Adjustments related to effective cash flow hedges for amounts recognized in Net investment income in the Condensed Consolidated Statements of Operations | (15) | | | 3 | | | (12) | |
| Change in unrealized gains (losses) on derivatives | 86 | | | (18) | | | 68 | |
| | | | | |
| Change in current discount rate | 41 | | | (9) | | | 32 | |
| | | | | |
| | | | | |
| | | | | |
| Change in Accumulated other comprehensive income (loss) | $ | (4,830) | | | $ | 1,014 | | | $ | (3,816) | |
(1) See the Derivative Financial Instruments Note to these Condensed Consolidated Financial Statements for additional information.
10.Revenue from Contracts with Customers
Revenue for various financial services is measured based on consideration specified in a contract with a customer and is recognized when the Company has satisfied a performance obligation, unless the transaction price includes variable
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
consideration that is constrained; in such case, we recognize revenue when the uncertainty associated with the constrained amount is subsequently resolved. For advisory and recordkeeping and administration ("R&A") services, the Company recognizes revenue as services are provided, generally over time. The Company provides distribution services at a point in time and recognizes the related revenue as consideration is received. Revenue from shareholder servicing is recognized as services are provided over time. Contract terms are typically less than one year, and consideration is variable. For a description of principal activities from which the Company generates revenue, see the Business section above for further information. Revenue for various financial services is recorded in Fee income and Other revenue in the Condensed Consolidated Statements of Operations.
Financial services revenue is disaggregated by type of service in the following table:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
| Advisory and R&A | $ | 115 | | | $ | 108 | | | $ | 341 | | | $ | 340 | |
| Distribution and shareholder servicing | 19 | | | 19 | | | 55 | | | 61 | |
| Total financial services revenue | 134 | | | 127 | | | 396 | | | 401 | |
Revenue from other sources(1) | 122 | | | 118 | | | 354 | | | 382 | |
| Total Fee income and Other revenue | $ | 256 | | | $ | 245 | | | $ | 750 | | | $ | 783 | |
| | | | | | | |
(1)Primarily consists of revenue from insurance contracts and financial instruments.
Receivables of $89 and $90 are included in Other assets on the Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022, respectively.
11. Income Taxes
The Company's effective tax rates for the three and nine months ended September 30, 2023 were (70.7)% and (2.8)%, respectively. The effective tax rates differed from the statutory rate of 21% primarily due to the effect of the dividends received deduction ("DRD"), the Resolution Capital Loss described below and tax credits.
The Company's effective tax rates for the three and nine months ended September 30, 2022 were 6.3% and (1.3)%, respectively. The effective tax rates differed from the statutory rate of 21% primarily due to the effect of the DRD and tax credits.
On January 4, 2021, Voya Financialthe Company completed a series of transactions pursuant to a Master Transaction Agreement ("MTA") with Resolution Life U.S. Holdings Inc. ("Resolution Life US"). As a part of these transactions, Resolution Life US acquired Voya Financial's wholly owned subsidiary, Security Life of Denver Company ("SLD"). SLD generated capital losses in the 2023 and 2022 tax year,years, which will beare included in a carryback claim for Voya FinancialFinancial. The Company recorded a $13 and $23 tax benefit in accordance with the MTA,2024 and 2023, respectively, resulting in a $26 tax benefit and decrease to the effective tax rate (the "Resolution Capital Loss""Security Life of Denver Company capital loss carryback") for the Company..
In August 2022, President Biden signed into lawThe Company's effective tax rate for the Inflation Reduction Actthree months ended March 31, 2023 was 9.1%. The effective tax rate differed from the statutory rate of 2022, which imposes a 15% corporate alternative minimum tax ("CAMT") on the adjusted financial statement income of large corporations. The CAMT is effective in taxable years beginning after December 31, 2022. Recently, the Treasury issued guidance clarifying the treatment of financial statement income related to noncontrolling interests, making it clear that the Company will not be within the scope of CAMT for 2023. For the 2024 tax year, there is uncertainty around whether the Company will be subject21% primarily due to the CAMT, which is driven by limited guidance to date byeffect of the US TreasuryDRD and IRS. If the CAMT applies in a future year, the Company will be required to pay tax at the 15% CAMT rate despite our U.S. Federal net operating loss carryforwards.credits.
Valuation allowances are provided when it is considered more likely than not that some portion or all of the deferred tax assets ("DTAs") will not be realized. The Company reviews all available positive and negative evidence to determine if a valuation allowance is recorded, including historical and projected pre-tax book income, tax planning strategies and reversals of temporary differences. As of September 30, 2023,March 31, 2024, the Company had year-to-date losses on securities of $(446)$97 in Other comprehensive income, which increased the related DTA. However, operating income remained positive for the period and was largely consistent with the 20222023 year-end valuation allowance analysis. After evaluating the positive and negative evidence, the
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Company did not change its judgement regarding the realization of DTAs and did not establish a valuation allowance. For more information related to the valuation allowance, refer to the Income Taxes Note to the Consolidated Financial Statements included in Part II, Item 8 of the Annual Report on Form 10-K.
Tax Sharing Agreement
The results of the Company's operations are included in the consolidated tax return of Voya Financial. Generally, the Company's consolidated financial statements recognize the current and deferred income tax consequences that result from the Company's activities during the current and preceding periods pursuant to the provisions of Income Taxes (ASC Topic 740) as if the Company were a separate taxpayer rather than a member of Voya Financial's consolidated income tax return group with the exception of any net operating loss carryforwards and capital loss carryforwards, which are recorded pursuant to the tax sharing agreement. If the Company instead were to follow a separate taxpayer approach without any exceptions, there would be no impact to income tax expense (benefit) for the periods indicated above. Also, any current tax benefit related to the Company's tax attributes realized by virtue of its inclusion in the consolidated tax return of Voya Financial would have been recorded directly to equity rather than income. Under the tax sharing agreement, Voya Financial will pay the Company for the tax benefits of ordinary and capital losses only in the event that the consolidated tax group actually uses the tax benefit of losses generated.
Tax Regulatory Matters
For the tax years 20212022 through 2023,2024, the Company participates in the Internal Revenue Service ("IRS") Compliance Assurance Process ("CAP"), which is a continuous audit program provided by the IRS. For the 2023 tax year, the Company is in the Compliance Maintenance Bridge ("Bridge") phase of CAP. In the Bridge phase, the IRS did not conduct any review or provide any letters of assurance for that tax year. For the 2024 tax year, the Company is in the Compliance Maintenance Bridge Plus ("Bridge Plus") phase of CAP. In the Bridge Plus phase, the IRS will review the tax return and issue either a full or partial acceptance letter upon completion of review.
Tax Legislative Matters
In August 2022, the Inflation Reduction Act was signed into law creating the corporate alternative minimum tax ("CAMT"). The IRS has only issued limited guidance on the CAMT, and uncertainty remains regarding the application of and potential adjustments to the CAMT. The Company is not subject to the CAMT based on this guidance and will continue to evaluate the applicability as more guidance is provided.
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
12. Financing Agreements
Reciprocal Loan Agreement
The Company maintains a reciprocal loan agreement with Voya Financial, an affiliate, to facilitate the handling of unanticipated short-term cash requirements that arise in the ordinary course of business. Under this agreement, which expires on April 1, 2026, either party can borrow from the other up to 3.0% of the Company’s statutory admitted assets as of the preceding December 31. Interest on any borrowing by either the Company or Voya Financial is charged at a rate based on the prevailing market rate for similar third-party borrowings or securities.
Under this agreement, the Company incurred $1 and $2immaterial interest expense for the three and nine months ended September 30, 2023, respectively,March 31, 2024 and $1 interest expense for the three and nine months ended September 30, 2022.2023. The Company earned $3 and $14 of interest income for the three and nine months ended September 30, 2023, respectively. The Company earned $1$6 and $4 of interest income for the three and nine months ended September 30, 2022, respectively.March 31, 2024 and 2023.
As of September 30, 2023, VRIACMarch 31, 2024, the Company had $161$400 outstanding receivables and VIPS had an outstanding payable of $80$37 under the reciprocal loan agreement. As of December 31, 2022,2023, the Company had no$295 outstanding receivablereceivables and VIPS had a $31 outstanding payable from/to Voya Financial under the reciprocal loan agreement.
13. Commitments and Contingencies
Commitments
Through the normal course of investment operations, the Company commits to either purchase or sell securities, mortgage loans, or money market instruments, at a specified future date and at a specified price or yield. The inability of counterparties to honor these commitments may result in either a higher or lower replacement cost. Also, there is likely to be a change in the value of the securities underlying the commitments. As of September 30, 2023,March 31, 2024, the Company had off-balance sheet commitments to acquire mortgage loans of $45$54 and purchase limited partnerships and private placement investments of $628.$641.
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
Restricted Assets
The Company is required to maintain assets on deposit with various regulatory authorities to support its insurance operations. The Company may also post collateral in connection with certain securities lending, repurchase agreements, funding agreements, letter of credit ("LOC") and derivative transactions as described further in this note.
The components of the fair value of the restricted assets were as follows as of the dates indicated:
| | September 30, 2023 | | December 31, 2022 |
| March 31, 2024 | | | March 31, 2024 | | December 31, 2023 |
Fixed maturity collateral pledged to FHLB(1) | Fixed maturity collateral pledged to FHLB(1) | $ | 1,032 | | | $ | 997 | |
FHLB restricted stock(2) | FHLB restricted stock(2) | 33 | | | 35 | |
| Other fixed maturities-state deposits | Other fixed maturities-state deposits | 11 | | | 11 | |
| Cash and cash equivalents | Cash and cash equivalents | 2 | | | 2 | |
Securities pledged(3) | Securities pledged(3) | 718 | | | 792 | |
| Total restricted assets | Total restricted assets | $ | 1,796 | | | $ | 1,837 | |
(1) Included in Fixed maturities, available for sale, at fair value on the Condensed Consolidated Balance Sheets.
(2) Included in Other investments on the Condensed Consolidated Balance Sheets.
(3) Includes the fair value of loaned securities of $559$710 and $690$645 as of September 30, 2023March 31, 2024 and December 31, 2022,2023, respectively. In addition, as of September 30, 2023March 31, 2024 and December 31, 2022,2023, the Company delivered securities as collateral of $159$154 and $102,$153, respectively. Loaned securities and securities delivered as collateral are included in Securities pledged on the Condensed Consolidated Balance Sheets.
Federal Home Loan Bank Funding
The Company is a member of the Federal Home Loan Bank of Boston ("FHLB") and is required to pledge collateral to back funding agreements issued to the FHLB. As of September 30, 2023March 31, 2024 and December 31, 2022,2023, the Company had $672$696 and $730,$671, respectively, in non-putable funding agreements, which are included in Future policy benefits and contract owner account balances on the Condensed Consolidated Balance Sheets. As of September 30, 2023March 31, 2024 and December 31, 2022,2023, assets with a market
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
value of approximately $1,032$1,108 and $997,$1,205, respectively, collateralized the FHLB funding agreements. Assets pledged to the FHLB are included in Fixed maturities, available-for-sale, at fair value on the Condensed Consolidated Balance Sheets.
Litigation, Regulatory Matters and Contingencies
Litigation, regulatory and other loss contingencies arise in connection with the Company's activities as a diversified financial services firm. The Company is a defendant in a number of litigation matters arising from the conduct of its business, both in the ordinary course and otherwise. In some of these matters, claimants seek to recover very large or indeterminate amounts, including compensatory, punitive, treble and exemplary damages. Modern pleading practice in the U.S. permits considerable variation in the assertion of monetary damages and other relief. Claimants are not always required to specify the monetary damages they seek or they may be required only to state an amount sufficient to meet a court's jurisdictional requirements. Moreover, some jurisdictions allow claimants to allege monetary damages that far exceed any reasonably possible verdict. The variability in pleading requirements and past experience demonstrates that the monetary and other relief that may be requested in a lawsuit or claim often bears little relevance to the merits or potential value of a claim. Litigation against the Company includes a variety of claims including negligence, breach of contract, fraud, violation of regulation or statute, breach of fiduciary duty, negligent misrepresentation, failure to supervise, elder abuse and other torts.
As with other financial services companies, the Company periodically receives informal and formal requests for information from various state and federal governmental agencies and self-regulatory organizations in connection with inquiries and investigations of the products and practices of the Company or the financial services industry. It is the practice of the Company to cooperate fully in these matters.
The outcome of a litigation or regulatory matter is difficult to predict and the amount or range of potential losses associated with these or other loss contingencies requires significant management judgment. It is not possible to predict the ultimate outcome or to provide reasonably possible losses or ranges of losses for all pending regulatory matters, litigation and other loss contingencies.
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
While it is possible that an adverse outcome in certain cases could have a material adverse effect upon the Company's financial position, based on information currently known, management believes that neither the outcome of pending litigation and regulatory matters, nor potential liabilities associated with other loss contingencies, are likely to have such an effect. However, given the large and indeterminate amounts sought in certain litigation and the inherent unpredictability of all such matters, it is possible that an adverse outcome in certain of the Company's litigation or regulatory matters, or liabilities arising from other loss contingencies, could, from time to time, have a material adverse effect upon the Company's results of operations or cash flows in a particular quarterly or annual period.
For some matters, the Company is able to estimate a possible range of loss. For such matters in which a loss is probable, an accrual has been made. For matters where the Company, however, believes a loss is reasonably possible, but not probable, no accrual is required. For matters for which an accrual has been made, but there remains a reasonably possible range of loss in excess of the amounts accrued or for matters where no accrual is required, the Company develops an estimate of the unaccrued amounts of the reasonably possible range of losses. As of September 30, 2023,March 31, 2024, the Company estimates the aggregate range of reasonably possible losses, in excess of any amounts accrued for these matters as of such date, as not material to the Company.
For other matters, the Company is currently not able to estimate the reasonably possible loss or range of loss. The Company is often unable to estimate the possible loss or range of loss until developments in such matters have provided sufficient information to support an assessment of the range of possible loss, such as quantification of a damage demand from plaintiffs, discovery from plaintiffs and other parties, investigation of factual allegations, rulings by a court on motions or appeals, analysis by experts and the progress of settlement discussions. On a quarterly and annual basis, the Company reviews relevant information with respect to litigation and regulatory contingencies and updates the Company's accruals, disclosures and reasonably possible losses or ranges of loss based on such reviews.
Litigation includes Ravarino, et al. v. Voya Financial, Inc., et al. (USDC District of Connecticut, No. 3:21-cv-01658)(filed December 14, 2021). In this putative class action, the plaintiffs allege that the named defendants, which include the Company, breached their fiduciary duties of prudence and loyalty in the administration of the Voya 401(k) Savings Plan. The plaintiffs claim that the named defendants did not exercise proper prudence in their management of allegedly poorly performing
Voya Retirement Insurance and Annuity Company and Subsidiaries
(A wholly owned subsidiary of Voya Holdings Inc.)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
investment options, including proprietary funds, and passed excessive investment-management and other administrative fees for proprietary and non-proprietary funds onto plan participants. The plaintiffs also allege that the defendants engaged in self-dealing through the inclusion of the Voya Stable Value Option into the plan offerings and by setting the “crediting rate” for participants’ investment in the Stable Value Fund artificially low in relation to Voya’s general account investment returns in order to maximize the spread and Voya’s profits at the participants’ expense. The complaint seeks disgorgement of unjust profits as well as costs incurred. On June 13, 2023, the Court issued a ruling granting in part and denying in part Voya's motion to dismiss. The court largely dismissed the claims for breach of fiduciary duty. The remaining claims concern allegations of breaches of the ERISA prohibited transactions rule and a claim for failure to monitor the Voya Small Cap Growth fund. The Company denies the allegations, which it believes are without merit, and intends to defend the case vigorously.
14. Related Party Transactions
Operating Agreements
The Company has operating agreements whereby the Company provides or receives services from affiliated entities. For the three and nine months ended September 30,March 31, 2024, revenues with affiliated entities related to these agreements were $21. For the three months ended March 31, 2023, revenues with affiliated entities related to these agreements were $19 and $58 . For the three and nine months ended September 30, 2022, revenues with affiliated entities related to these agreements were $20 and $64.$19.
For the three and nine months ended September 30,March 31, 2024, expenses with affiliated entities related to the aforementioned operating agreements were $150. For the three months ended March 31, 2023, expenses with affiliated entities related to the aforementioned operating agreements were $143 and $448. For the three and nine months ended September 30, 2022, expenses with affiliated entities related to the aforementioned operating agreements were $142 and $450.$160.
Item 2. Management’s Narrative Analysis of the Results of Operations and Financial Condition
(Dollar amounts in millions, unless otherwise stated)
For the purposes of thethis discussion, in this Quarterly Report on Form 10-Q, the term "VRIAC" refers to Voya Retirement Insurance and Annuity Company, and the terms "Company," "we," "our,""VRIAC", "the Company", "we", "our", and "us" refer to Voya Retirement Insurance and Annuity Company and its subsidiaries. We are a direct, wholly owned subsidiary of Voya Holdings Inc., which is a direct, wholly owned subsidiary of Voya Financial, Inc. ("Voya Financial" or "Parent").
The following discussion and analysis presents a review of our results of operations for the three and nine months ended September 30,March 31, 2024 and 2023 and 2022 and financial condition as of September 30, 2023March 31, 2024 and December 31, 2022.2023. This item should be read in its entirety and in conjunction with the Condensed Consolidated Financial Statements and related notes contained in Part I., Item 1. of this Quarterly Report on Form 10-Q, as well as "Management's Narrative Analysis of the Results of Operations and Financial Condition" section contained in our Annual Report on Form 10-K for the year ended December 31, 20222023 ("Annual Report on Form 10-K").
In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Actual results may differ materially from those discussed in the forward-looking statements as a result of various factors. See Note Concerning Forward-Looking Statements.
Overview
VRIAC is a stock life insurance company domiciled in the State of Connecticut. VRIAC and its wholly owned subsidiaries (collectively, the "Company") provide financial products and services in the United States. VRIAC is authorized to conduct its insurance business in all states and in the District of Columbia, Guam, Puerto Rico and the Virgin Islands.
Critical Accounting Judgments and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States ("U.S. GAAP") requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Critical estimates and assumptions are evaluated on an on-going basis based on historical developments, market conditions, industry trends and other information that is reasonable under the circumstances. There can be no assurance that actual results will conform to estimates and assumptions and that reported results of operations will not be materially affected by the need to make future accounting adjustments to reflect changes in these estimates and assumptions from time to time. Those estimates are inherently subject to change and actual results could differ from those estimates, and the differences may be material to the accompanying Condensed Consolidated Financial Statements.
We have identified the following accounting judgments and estimates as critical in that they involve a higher degree of judgment and are subject to a significant degree of variability:
•Valuation of investments and derivatives;
•Investment impairments;
•Income taxes; and
•Contingencies
In developing these accounting estimates, we make subjective and complex judgments that are inherently uncertain and subject to material changes as facts and circumstances develop. Although variability is inherent in these estimates, we believe that the amounts provided are appropriate based on the facts available upon preparation of the Condensed Consolidated Financial Statements.
Effective January 1, 2023, we adopted Accounting Standards Update ("ASU") 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts ("ASU 2018-12"). As a result, deferred policy acquisition costs ("DAC") and value of business acquired ("VOBA") were no longer considered critical estimates, as the amortization methodology is no longer subject to a significant degree of variability and does not require a high degree of judgment.
The above critical accounting estimates that were not impacted as a result of the adoption of ASU 2018-12 are described in the Business, Basis of Presentation and Significant Accounting Policies Note in our Consolidated Financial Statements in Part II, Item 8. of our Annual Report on Form 10-K.
Impact of New Accounting Pronouncements
For information regarding the impact of new accounting pronouncements, see the Business, Basis of Presentation and Significant Accounting Policies Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.
Income Taxes
In August 2022, President Biden signed into law the Inflation Reduction Act of 2022, ("IRA of 2022"), which imposesincludes a 15% corporate alternative minimum tax ("CAMT") on the adjusted financial statement income of large corporations and a 1% excise tax on the fair market value of stock that is repurchased by publicly traded U.S. corporations or their specified affiliates.. The CAMT and the excise tax areis effective in taxable years beginning after December 31, 2022. Recently,The Internal Revenue Service has only issued limited guidance on the U.S. Treasury issued guidance clarifyingCAMT, and uncertainty remains regarding the treatmentapplication of financial statement income related to noncontrolling interests, making it clear that Voya Financial will not be within the scope of CAMT for 2023. For the 2024 tax year, there is uncertainty around whether Voya Financial will be subjectand potential adjustments to the CAMT, which is driven by limitedCAMT. Based on this guidance, to date by the U.S. Treasury and IRS. If the CAMT applies in a future year, we will be required to pay tax at the 15% CAMT rate despite our U.S. Federal net operating loss carryforwards. As a separate taxpayer, we do not expect to be subject to the 1% excise tax.
On January 4, 2021, Voya Financial completed a series of transactions pursuant to a Master Transaction Agreement ("MTA") with Resolution Life U.S. Holdings Inc. ("Resolution Life US"). As a part of these transactions, Resolution Life US acquired Voya Financial's wholly owned subsidiary, Security Life of Denver Company ("SLD"). SLD generated capital losses in the 2022 tax year, which will be included in a carryback claimCAMT for Voya Financial in accordance with the MTA, resulting in a $26 tax benefit and decrease to the effective tax rate for VRIAC.2024.
See the Income Taxes Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for more information on income taxes.
Results of Operations
| | ($ in millions) | ($ in millions) | Three Months Ended September 30, | | | Nine Months Ended September 30, | |
| 2023 | | 2022 | | Change | | 2023 | | 2022 | | Change |
| ($ in millions) | |
| ($ in millions) | |
| | | | | | | | | | 2024 | |
| | | | | | | | | | 2024 | |
| | | | | | | | | | 2024 | | | 2023 | | Change |
| Revenues: | Revenues: | | | | | | | | | | | |
| Net investment income | |
| Net investment income | |
| Net investment income | Net investment income | $ | 384 | | | $ | 366 | | | $ | 18 | | | $ | 1,155 | | | $ | 1,235 | | | $ | (80) | |
| Fee income | Fee income | 254 | | | 237 | | | 17 | | | 738 | | | 746 | | | (8) | |
| Premiums | Premiums | 15 | | | 2 | | | 13 | | | 24 | | | 10 | | | 14 | |
| | Net gains (losses) | Net gains (losses) | (64) | | | (69) | | | 5 | | | (142) | | | (387) | | | 245 | |
| | Net gains (losses) | |
| | Net gains (losses) | |
| Other revenue | Other revenue | 2 | | | 8 | | | (6) | | | 12 | | | 37 | | | (25) | |
| Total revenues | Total revenues | 591 | | | 544 | | | 47 | | | 1,787 | | | 1,641 | | | 146 | |
| Benefits and expenses: | Benefits and expenses: | | | | | | | | | | | |
| Interest credited and other benefits to contract owners/policyholders | Interest credited and other benefits to contract owners/policyholders | 261 | | | 174 | | | 87 | | | 623 | | | 553 | | | 70 | |
| Interest credited and other benefits to contract owners/policyholders | |
| Interest credited and other benefits to contract owners/policyholders | |
| Operating expenses | Operating expenses | 269 | | | 269 | | | — | | | 851 | | | 869 | | | (18) | |
| | Net amortization of Deferred policy acquisition costs and Value of business acquired | Net amortization of Deferred policy acquisition costs and Value of business acquired | 19 | | | 21 | | | (2) | | | 58 | | | 62 | | | (4) | |
| Interest expense | 1 | | | 1 | | | — | | | 2 | | | 1 | | | 1 | |
| Net amortization of Deferred policy acquisition costs and Value of business acquired | |
| Net amortization of Deferred policy acquisition costs and Value of business acquired | |
| | Total benefits and expenses | |
| | Total benefits and expenses | |
| | Total benefits and expenses | Total benefits and expenses | 550 | | | 465 | | | 85 | | | 1,534 | | | 1,485 | | | 49 | |
| Income (loss) before income taxes | Income (loss) before income taxes | 41 | | | 79 | | | (38) | | | 253 | | | 156 | | | 97 | |
| Income tax expense (benefit) | Income tax expense (benefit) | (29) | | | 5 | | | (34) | | | (7) | | | (2) | | | (5) | |
| Net income (loss) | Net income (loss) | $ | 70 | | | $ | 74 | | | $ | (4) | | | $ | 260 | | | $ | 158 | | | $ | 102 | |
For the third quarter of 2023, the impact of annual assumption updates was $63 million unfavorable primarily driven by changes in lapse assumptions as well remeasurement of liability of Future policy benefits, The unfavorable remeasurement impact is mainly reflected in Interest credited and other benefits to contract owners/policyholders, Net gains (losses) and Premiums in the Condensed Consolidated Statements of Operations. There was no material impact from assumption updates for the third quarter of 2022.
Three Months Ended September 30, 2023March 31, 2024 compared toThree Months Ended September 30, 2022March 31, 2023
Revenues
PremiumsFee income increased by$13 $35 millionfrom $2$237 millionto$15 $272 million primarily due to:
•remeasurement of deferred profit liability.
Other revenue decreased by $6 million from $8 million to $2 million primarily due to:
•lower revenue from transition service agreements.
Benefits market appreciation and Expenses
Interest credited and other benefits to contract owners/policyholders increasedby $87 million from $174 million to $261 million primarily due to:
•unfavorable amortization on deposit assets due to assumption updates in the current period; and
•higher participant crediting rates due to higher interest rates.
Income Tax Expense (Benefit)
Income tax expense (benefit) changed $34 million from an expense of $5 million to a benefit of $29 million primarily due to:
•the Resolution Capital Loss; and
•a decrease in income before income taxes.
Nine Months Ended September 30, 2023 compared to Nine Months Ended September 30, 2022
Revenues
Net gains (losses) improved by $245$40 million from a loss of $387$25 million to a lossgain of $142$15 million primarily due to:
•anet favorable changes in derivative valuations due to interest rate movements.
The improvement was partially offset by:
•an unfavorable change in mark-to-market adjustments on securities subject to fair value option accounting primarily due to interest rate movements.
The improvement was partially offset by:
•net unfavorable changes in derivative valuations due to interest rate movements.
Other revenue decreased by $25 million from $37 million to $12 million primarily due to:
•lower revenue from transition service agreements.
Benefits and Expenses
Interest credited and other benefits to contract owners/policyholders increasedby $70 million from $553 million to $623 million primarily due to:
•unfavorable amortization on deposit assets due to annual assumption updates in the current period; and
•higher participant crediting rates due to higher interest rates.
Income Tax Expense (Benefit)
Income tax benefit increased $5 million from $2 million to $7 million primarily due to:
•the Resolution Capital Loss.
The increase was partially offset by:
•an increase in income before income taxes.
Investments
See Management's Narrative Analysis of the Results of Operations and Financial Condition in Part II, Item. 7. of our Annual Report on Form 10-K for information on our investment strategy.
See the Investments Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for more information on investments. Additionally, see the Condensed Consolidated Balance Sheets to our Condensed Consolidated Financial Statements Part I, Item 1. of this Quarterly Report on Form 10-Q for a composition of our investment portfolio.
Fixed Maturities Credit Quality - Ratings
For information regarding our fixed maturities credit quality ratings, see the Management's Narrative Analysis of the Results of Operations and Financial Condition in Part II, Item. 7. of our Annual Report on Form 10-K.
The following tables present credit quality of fixed maturities, including securities pledged, using NAIC designations as of the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ($ in millions) | | September 30, 2023 |
| NAIC Quality Designation | | 1 | | 2 | | 3 | | 4 | | 5 | | 6 | | Total Fair Value |
| U.S. Treasuries | | $ | 288 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 288 |
| U.S. Government agencies and authorities | | 28 | | — | | — | | — | | — | | — | | 28 |
| State, municipalities and political subdivisions | | 499 | | 18 | | — | | — | | — | | — | | 517 |
| U.S. corporate public securities | | 1,619 | | 3,451 | | 190 | | 27 | | 1 | | — | | 5,288 |
| U.S. corporate private securities | | 1,260 | | 1,978 | | 230 | | 33 | | 2 | | — | | 3,503 |
Foreign corporate public securities and foreign governments(1) | | 651 | | 1,120 | | 76 | | 48 | | — | | 2 | | 1,897 |
Foreign corporate private securities(1) | | 280 | | 1,876 | | 131 | | 10 | | 10 | | — | | 2,307 |
| Residential mortgage-backed securities | | 2,333 | | 113 | | 2 | | 1 | | 3 | | 5 | | 2,457 |
| Commercial mortgage-backed securities | | 1,939 | | 337 | | 55 | | 6 | | 3 | | 2 | | 2,342 |
| Other asset-backed securities | | 1,261 | | 181 | | 1 | | 5 | | 1 | | 3 | | 1,452 |
| Total fixed maturities | | $ | 10,158 | | $ | 9,074 | | $ | 685 | | $ | 130 | | $ | 20 | | $ | 12 | | $ | 20,079 |
| % of Fair Value | | 50.6% | | 45.2% | | 3.4% | | 0.6% | | 0.1% | | 0.1% | | 100.0% |
(1) Primarily U.S. dollar denominated. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ($ in millions) | | December 31, 2022 |
| NAIC Quality Designation | | 1 | | 2 | | 3 | | 4 | | 5 | | 6 | | Total Fair Value |
| U.S. Treasuries | | $ | 377 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 377 |
| U.S. Government agencies and authorities | | 30 | | — | | — | | — | | — | | — | | 30 |
| State, municipalities and political subdivisions | | 567 | | 33 | | — | | — | | — | | — | | 600 |
| U.S. corporate public securities | | 1,799 | | 3,886 | | 218 | | 26 | | — | | 9 | | 5,938 |
| U.S. corporate private securities | | 1,293 | | 2,027 | | 180 | | 66 | | 2 | | — | | 3,568 |
Foreign corporate public securities and foreign governments(1) | | 680 | | 1,266 | | 75 | | 40 | | — | | 5 | | 2,066 |
Foreign corporate private securities(1) | | 282 | | 2,044 | | 82 | | 21 | | 9 | | — | | 2,438 |
| Residential mortgage-backed securities | | 2,640 | | 238 | | 2 | | — | | 5 | | 8 | | 2,893 |
| Commercial mortgage-backed securities | | 2,160 | | 366 | | 59 | | 7 | | 5 | | 2 | | 2,599 |
| Other asset-backed securities | | 1,081 | | 218 | | 2 | | 5 | | 1 | | 3 | | 1,310 |
| Total fixed maturities | | $ | 10,909 | | $ | 10,078 | | $ | 618 | | $ | 165 | | $ | 22 | | $ | 27 | | $ | 21,819 |
| % of Fair Value | | 50.0% | | 46.2% | | 2.8% | | 0.8% | | 0.1% | | 0.1% | | 100.0% |
(1) Primarily U.S. dollar denominated. |
The following tables present credit quality of fixed maturities, including securities pledged, using ARO ratings as of the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ($ in millions) | | September 30, 2023 |
| ARO Quality Ratings | | AAA | | AA | | A | | BBB | | | | | | BB and Below | | Total Fair Value |
| U.S. Treasuries | | $ | — | | | $ | 288 | | | $ | — | | | $ | — | | | | | | | $ | — | | | $ | 288 | |
| U.S. Government agencies and authorities | | — | | | 28 | | | — | | | — | | | | | | | — | | | 28 | |
| State, municipalities and political subdivisions | | 35 | | | 315 | | | 150 | | | 17 | | | | | | | — | | | 517 | |
| U.S. corporate public securities | | 21 | | | 227 | | | 1,448 | | | 3,380 | | | | | | | 212 | | | 5,288 | |
| U.S. corporate private securities | | 17 | | | 148 | | | 1,109 | | | 1,914 | | | | | | | 315 | | | 3,503 | |
Foreign corporate public securities and foreign governments(1) | | 8 | | | 102 | | | 579 | | | 1,069 | | | | | | | 139 | | | 1,897 | |
Foreign corporate private securities(1) | | — | | | 27 | | | 215 | | | 1,886 | | | | | | | 179 | | | 2,307 | |
| Residential mortgage-backed securities | | 677 | | | 1,507 | | | 59 | | | 90 | | | | | | | 124 | | | 2,457 | |
| Commercial mortgage-backed securities | | 145 | | | 930 | | | 520 | | | 629 | | | | | | | 118 | | | 2,342 | |
| Other asset-backed securities | | 84 | | | 359 | | | 806 | | | 185 | | | | | | | 18 | | | 1,452 | |
| Total fixed maturities | | $ | 987 | | | $ | 3,931 | | | $ | 4,886 | | | $ | 9,170 | | | | | | | $ | 1,105 | | | $ | 20,079 | |
| % of Fair Value | | 4.9 | % | | 19.6 | % | | 24.3 | % | | 45.7 | % | | | | | | 5.5 | % | | 100.0 | % |
(1) Primarily U.S. dollar denominated. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ($ in millions) | | December 31, 2022 |
| ARO Quality Ratings | | AAA | | AA | | A | | BBB | | | | | | BB and Below | | Total Fair Value |
| U.S. Treasuries | | $ | 377 | | | $ | — | | | $ | — | | | $ | — | | | | | | | $ | — | | | $ | 377 | |
| U.S. Government agencies and authorities | | 28 | | | 2 | | | — | | | — | | | | | | | — | | | 30 | |
| State, municipalities and political subdivisions | | 38 | | | 370 | | | 159 | | | 33 | | | | | | | — | | | 600 | |
| U.S. corporate public securities | | 21 | | | 283 | | | 1,679 | | | 3,686 | | | | | | | 269 | | | 5,938 | |
| U.S. corporate private securities | | 27 | | | 146 | | | 1,065 | | | 2,069 | | | | | | | 261 | | | 3,568 | |
Foreign corporate public securities and foreign governments(1) | | 8 | | | 116 | | | 591 | | | 1,218 | | | | | | | 133 | | | 2,066 | |
Foreign corporate private securities(1) | | — | | | 26 | | | 239 | | | 2,047 | | | | | | | 126 | | | 2,438 | |
| Residential mortgage-backed securities | | 2,210 | | | 145 | | | 79 | | | 185 | | | | | | | 274 | | | 2,893 | |
| Commercial mortgage-backed securities | | 895 | | | 288 | | | 608 | | | 687 | | | | | | | 121 | | | 2,599 | |
| Other asset-backed securities | | 88 | | | 290 | | | 694 | | | 221 | | | | | | | 17 | | | 1,310 | |
| Total fixed maturities | | $ | 3,692 | | | $ | 1,666 | | | $ | 5,114 | | | $ | 10,146 | | | | | | | $ | 1,201 | | | $ | 21,819 | |
| % of Fair Value | | 16.9 | % | | 7.6 | % | | 23.5 | % | | 46.5 | % | | | | | | 5.5 | % | | 100.0 | % |
(1) Primarily U.S. dollar denominated. |
Fixed maturities rated BB and below may have speculative characteristics and changes in economic conditions or other circumstances that are more likely to lead to a weakened capacity of the issuer to make principal and interest payments than is the case with higher rated fixed maturities.
Unrealized Capital Losses
As of September 30, 2023 and December 31, 2022, we held five and three, fixed maturity securities with unrealized capital losses in excess of $10 million, respectively. As of September 30, 2023 and December 31, 2022, the unrealized capital losses on these fixed maturity securities equaled $58 million, or 1.9% and $33.2 million, or 1.3%, respectively, of the total unrealized losses.
As of September 30, 2023, we had $1.5 billion of energy sector fixed maturity securities, constituting 7.3% of the total fixed maturities portfolio, with gross unrealized capital losses of $161 million, including no energy sector fixed maturity security with unrealized capital loss in excess of $10 million. As of September 30, 2023, our fixed maturity exposure to the energy sector is comprised of 92.1% investment grade securities.
As of December 31, 2022, we held $1.4 billion of energy sector fixed maturity securities, constituting 6.0% of the total fixed maturities portfolio, with gross unrealized capital losses of $131 million, including no energy sector fixed maturity security with unrealized capital loss in excess of $10 million. As of December 31, 2022, our fixed maturity exposure to the energy sector is comprised of 88.0% investment grade securities.
See the Investments Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for further information on unrealized capital losses.
Residential Mortgage-backed Securities
The following tables present our residential mortgage-backed securities as of the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2023 |
| ($ in millions) | Amortized Cost | | Gross Unrealized Capital Gains | | Gross Unrealized Capital Losses | | Embedded Derivatives | | Fair Value |
| Prime Agency | $ | 1,439 | | | $ | 9 | | | $ | 43 | | | $ | (2) | | | $ | 1,403 | |
| Prime Non-Agency | 1,145 | | | 8 | | | 127 | | | — | | | 1,026 | |
| Alt-A | 20 | | | 2 | | | 1 | | | — | | | 21 | |
Sub-Prime(1) | 16 | | | — | | | 1 | | | — | | | 15 | |
| Total RMBS | $ | 2,620 | | | $ | 19 | | | $ | 172 | | | $ | (2) | | | $ | 2,465 | |
(1) Includes subprime other asset backed securities. |
| December 31, 2022 |
| ($ in millions) | Amortized Cost | | Gross Unrealized Capital Gains | | Gross Unrealized Capital Losses | | Embedded Derivatives | | Fair Value |
| Prime Agency | $ | 1,493 | | | $ | 12 | | | $ | 33 | | | $ | — | | | $ | 1,472 | |
| Prime Non-Agency | 1,496 | | | 7 | | | 118 | | | — | | | 1,385 | |
| Alt-A | 24 | | | 3 | | | 1 | | | 1 | | | 27 | |
Sub-Prime(1) | 19 | | | 1 | | | 1 | | | — | | | 19 | |
| Total RMBS | $ | 3,032 | | | $ | 23 | | | $ | 153 | | | $ | 1 | | | $ | 2,903 | |
(1) Includes subprime other asset backed securities. |
Commercial Mortgage-backed Securities
The following tables present our commercial mortgage-backed securities by origination as of the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2023 |
| ($ in millions) | AAA | AA | A | BBB | BB and Below | Total |
| Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value |
| 2023 | $ | — | | $ | — | | $ | — | | $ | — | | $ | 2 | | $ | 3 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 2 | | $ | 3 | |
| 2022 | 8 | | 8 | | 48 | | 40 | | 93 | | 85 | | 80 | | 72 | | — | | — | | 229 | | 205 | |
| 2021 | 69 | | 61 | | 120 | | 90 | | 144 | | 126 | | 235 | | 207 | | 4 | | 4 | | 572 | | 488 | |
| 2020 | 27 | | 25 | | 30 | | 25 | | 38 | | 29 | | 102 | | 80 | | 10 | | 7 | | 207 | | 166 | |
| 2019 | 9 | | 8 | | 141 | | 118 | | 81 | | 70 | | 199 | | 152 | | 9 | | 8 | | 439 | | 356 | |
| Prior | 52 | | 43 | | 803 | | 657 | | 239 | | 207 | | 143 | | 118 | | 143 | | 99 | | 1,380 | | 1,124 | |
| Total | $ | 165 | | $ | 145 | | $ | 1,142 | | $ | 930 | | $ | 597 | | $ | 520 | | $ | 759 | | $ | 629 | | $ | 166 | | $ | 118 | | $ | 2,829 | | $ | 2,342 | |
| | | | | | | | | | | | |
| December 31, 2022 |
| ($ in millions) | AAA | AA | A | BBB | BB and Below | Total |
| Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value |
| 2022 | $ | 20 | | $ | 17 | | $ | 36 | | $ | 34 | | $ | 114 | | $ | 105 | | $ | 86 | | $ | 76 | | $ | 26 | | $ | 26 | | $ | 282 | | $ | 258 | |
| 2021 | 123 | | 98 | | 67 | | 60 | | 138 | | 121 | | 231 | | 200 | | 3 | | 3 | | 562 | | 482 | |
| 2020 | 50 | | 46 | | 21 | | 18 | | 46 | | 37 | | 107 | | 85 | | — | | — | | 224 | | 186 | |
| 2019 | 126 | | 111 | | 33 | | 31 | | 104 | | 94 | | 202 | | 164 | | 6 | | 4 | | 471 | | 404 | |
| 2018 | 73 | | 64 | | 19 | | 16 | | 71 | | 64 | | 29 | | 24 | | 17 | | 14 | | 209 | | 182 | |
| Prior | 642 | | 559 | | 139 | | 129 | | 206 | | 187 | | 160 | | 138 | | 83 | | 74 | | 1,230 | | 1,087 | |
| Total | $ | 1,034 | | $ | 895 | | $ | 315 | | $ | 288 | | $ | 679 | | $ | 608 | | $ | 815 | | $ | 687 | | $ | 135 | | $ | 121 | | $ | 2,978 | | $ | 2,599 | |
As of September 30, 2023, 82.8% and 14.4% of CMBS investments were designated as NAIC-1 and NAIC-2, respectively. As of December 31, 2022, 82.9% and 14.2% of CMBS investments were designated as NAIC-1 and NAIC-2, respectively.
Other Asset-backed Securities
The following tables present our other asset-backed securities as of the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2023 |
| ($ in millions) | AAA | AA | A | BBB | BB and Below | Total |
| Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value |
| Collateralized Obligation | $ | 53 | | $ | 52 | | $ | 317 | | $ | 315 | | $ | 717 | | $ | 709 | | $ | 72 | | $ | 69 | | $ | 15 | | $ | 10 | | $ | 1,174 | | $ | 1,155 | |
| Auto-Loans | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | |
| Student Loans | 4 | | 4 | | 49 | | 43 | | — | | — | | — | | — | | — | | — | | 53 | | 47 | |
| Credit Card loans | — | | — | | — | | — | | 2 | | 1 | | — | | — | | — | | — | | 2 | | 1 | |
| Other Loans | 36 | | 28 | | 1 | | 1 | | 108 | | 96 | | 127 | | 112 | | 4 | | 4 | | 276 | | 241 | |
Total Other ABS(1) | $ | 93 | | $ | 84 | | $ | 367 | | $ | 359 | | $ | 827 | | $ | 806 | | $ | 199 | | $ | 181 | | $ | 19 | | $ | 14 | | $ | 1,505 | | $ | 1,444 | |
(1) Excludes subprime other asset backed securities | | | | | | | | |
| December 31, 2022 |
| ($ in millions) | AAA | AA | A | BBB | BB and Below | Total |
| Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value |
| Collateralized Obligation | $ | 50 | | $ | 48 | | $ | 247 | | $ | 236 | | $ | 658 | | $ | 616 | | $ | 72 | | $ | 66 | | $ | 15 | | $ | 10 | | $ | 1,042 | | $ | 976 | |
| Auto-Loans | — | | — | | 6 | | 6 | | — | | — | | — | | — | | — | | — | | 6 | | 6 | |
| Student Loans | 10 | | 9 | | 53 | | 48 | | — | | — | | — | | — | | — | | — | | 63 | | 57 | |
| Credit Card loans | — | | — | | — | | — | | 2 | | 1 | | — | | — | | — | | — | | 2 | | 1 | |
| Other Loans | 37 | | 30 | | 1 | | 1 | | 86 | | 76 | | 172 | | 153 | | — | | — | | 296 | | 260 | |
Total Other ABS(1) | $ | 97 | | $ | 87 | | $ | 307 | | $ | 291 | | $ | 746 | | $ | 693 | | $ | 244 | | $ | 219 | | $ | 15 | | $ | 10 | | $ | 1,409 | | $ | 1,300 | |
(1) Excludes subprime other asset backed securities | | | | | | | | |
As of September 30, 2023, 86.8% and 12.6% of Other ABS investments were designated as NAIC-1 and NAIC-2, respectively. As of December 31, 2022, 82.7% and 16.8% of Other ABS investments were designated as NAIC-1 and NAIC-2, respectively.
Mortgage Loans on Real Estate
As of September 30, 2023, our mortgage loans on real estate portfolio had a weighted average DSC of 1.8 times and a weighted average LTV ratio of 46.3%. As of December 31, 2022, our mortgage loans on real estate portfolio had a weighted average DSC of 1.8 times and a weighted average LTV ratio of 46.6%. See the Investments Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for further information on mortgage loans on real estate.
Impairments
We evaluate available-for-sale fixed maturities for impairment on a regular basis. The assessment of whether impairments have occurred is based on a case-by-case evaluation of the underlying reasons for the decline in estimated fair value. See the Business, Basis of Presentation and Significant Accounting Policies Note to our Consolidated Financial Statements in Part II, Item 8. of our Annual Report on Form 10-K for the policy used to evaluate whether the investments are impaired.
See the Investments Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for further information on impairments.
Derivatives
We use derivatives for a variety of hedging purposes. We also have embedded derivatives within fixed maturities instruments and certain product features. See the Business, Basis of Presentation and Significant Accounting Policies Note in our Consolidated Financial Statements in Part II, Item 8. of our Annual Report on Form 10-K for further information.
See the Derivative Financial Instruments Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for further information on derivatives.
European Exposures
We quantify and allocate our exposure to the region by attempting to identify aspects of the region or country risk to which we are exposed. Among the factors we consider are the nationality of the issuer, the nationality of the issuer's ultimate parent, the corporate and economic relationship between the issuer and its parent, as well as the political, legal and economic environment in which each functions. By undertaking this assessment, we believe that we develop a more accurate assessment of the actual geographic risk, with a more integrated understanding of contributing factors to the full risk profile of the issuer.
In the normal course of our ongoing risk and portfolio management process, we closely monitor compliance with a credit limit hierarchy designed to minimize overly concentrated risk exposures by geography, sector and issuer. This framework takes into account various factors such as internal and external ratings, capital efficiency and liquidity and is overseen by a combination of Investment and Corporate Risk Management, as well as insurance portfolio managers focused specifically on managing the investment risk embedded in our portfolio.
While economic conditions in Europe have broadly improved, geopolitical tensions emanating from the Russia-Ukraine conflict remain a notable tail risk. Despite signs of economic improvement in the region, we continue to closely monitor our exposure to the region.
As of September 30, 2023, the Company's total European exposure had an amortized cost and fair value of $2,238 million and $1,967 million, respectively. Some of the major country level exposures were in the United Kingdom of $934 million, in France of $175 million, in The Netherlands of $187 million, in Switzerland of $87 million, in Germany of $172 million, and in Belgium of $37 million. Our direct exposure in Eastern Europe is comparatively small, with $1 million of exposure in Russia and none in Ukraine or Belarus.
Liquidity and Capital Resources
Liquidity refers to our ability to access sufficient sources of cash to meet the requirements of our operating, investing and financing activities. Capital refers to our long-term financial resources available to support business operations and future growth. Our ability to generate and maintain sufficient liquidity and capital depends on the profitability of the businesses, timing of cash flows on investments and products, general economic conditions and access to the capital markets and the other sources of liquidity and capital described herein.
The following discussion presents a review of our sources and uses of liquidity and capital. This discussion should be read in its entirety and in conjunction with the Off-Balance Sheet Arrangements and Aggregate Contractual Obligations table included further below.
Liquidity Management
Our principal available sources of liquidity are product charges, investment income, proceeds from maturity and sale of investments, proceeds from debt issuance and borrowing facilities, repurchase agreements, contract deposits, securities lending and capital contributions. Primary uses of these funds are payments of commissions and operating expenses, interest credits, investment purchases and contract maturities, withdrawals and surrenders and payment of dividends.
Our liquidity position is managed by maintaining adequate levels of liquid assets, such as cash, cash equivalents and short-term investments. As part of the liquidity management process, different scenarios are modeled to determine whether existing assets are adequate to meet projected cash flows. Key variables in the modeling process include interest rates, equity market movements, quantity and type of interest and equity market hedges, anticipated contract owner behavior, market value of the general account assets, variable separate account performance and implications of rating agency actions.
The fixed account liabilities are supported by a general account portfolio, principally composed of fixed rate investments with matching duration characteristics that can generate predictable, steady rates of return. The portfolio management strategy for the fixed account considers the assets available-for-sale. This strategy enables us to respond to changes in market interest rates, prepayment risk, relative values of asset sectors and individual securities and loans, credit quality outlook and other relevant
factors. The objective of portfolio management is to maximize returns, taking into account interest rate and credit risk, as well as other risks. Our asset/liability management discipline includes strategies to minimize exposure to loss as interest rates and economic and market conditions change. In executing this strategy, we use derivative instruments to manage these risks. Our derivative counterparties are of high credit quality.
Liquidity and Capital Resources
Additional sources of liquidity include borrowing facilities to meet short-term cash requirements that arise in the ordinary course of business. We maintain the following agreements:
•AFor information regarding our reciprocal loan agreement with Voya Financial, an affiliate, whereby either party can borrow fromsee the other up to 3.0%Financing Agreements Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of VRIAC's statutory admitted assets as of the prior December 31. As of September 30, 2023, VRIAC had $161 million outstanding receivable and VIPS had $80 million outstanding payable under the reciprocal loan agreement. As of December 31, 2022, we had no outstanding receivable and VIPS had $31 million outstanding payable from/to Voya Financial under the reciprocal loan agreement. We and Voya Financial continue to maintain the reciprocal loan agreement and future borrowings by either party will be subjected to the reciprocal loan terms summarized above. Interestthis Quarterly Report on any borrowing by either us or Voya Financial is charged at a rate based on the prevailing market rate for similar third-party borrowings or securities.Form 10-Q.
•We hold approximately 45.6%46.6% of our assets in marketable securities. These assets include cash, U.S. Treasuries, Agencies, Corporate Bonds, ABS, CMBS and collateralized mortgage obligations ("CMO") and Equity securities. In the event of a temporary liquidity need, cash may be raised by entering into repurchase agreements, dollar rolls and/or security lending agreements by temporarily lending securities and receiving cash collateral. Under our Liquidity Plan, up to 12.0% of our general account statutory admitted assets may be allocated to repurchase, securities lending and dollar roll programs. At the time a temporary cash need arises, the actual percentage of admitted assets available for repurchase transactions will depend upon outstanding allocations to the three programs. As of September 30, 2023,March 31, 2024, VRIAC had securities lending collateral assets of $460$513 million, which represents approximately 0.4% of its general account statutory admitted assets. As of December 31, 2022,2023, VRIAC had securities lending collateral assets of $615$499 million, which represents approximately 0.6%0.4% of its general account statutory admitted assets.
Management believes that our sources of liquidity are adequate to meet our short-term cash obligations.
Capital Contributions and Dividends
During the ninethree months ended September 30,March 31, 2024 and March 31, 2023, and September 30, 2022, VRIAC did not receive any capital contribution from its Parent.
During the ninethree months ended September 30, 2023,March 31, 2024, VRIAC paid an ordinary dividend to its Parent in the aggregate amount of $310$163 million. During the ninethree months ended September 30, 2022,March 31, 2023, VRIAC paiddid not pay either an ordinary andor extraordinary dividendsdividend to its Parent in the aggregate amount of $48 million and $809 million, respectively.Parent.
Ratings
Our access to funding and our related cost of borrowing, collateral requirements for derivative instruments and the attractiveness of certain of our products to customers are affected by our credit ratings and insurance financial strength ratings, which are periodically reviewed by the rating agencies. Financial strength ratings and credit ratings are important factors affecting public confidence in an insurer and its competitive position in marketing products. Credit ratings are also important to our ability to raise capital through the issuance of debt and for the cost of such financing.
A downgrade in our credit ratings or the credit or financial strength ratings of our Parent or rated affiliates could have a material adverse effect on our results of operations and financial condition. See A downgrade or a potential downgrade in our financial strength or credit ratings couldmay result in a loss of business and adversely affect our results of operations and financial condition in Risk Factors in Part I, Item 1A. of our Annual Report on Form 10-K.
Financial strength ratings represent the opinions of rating agencies regarding the financial ability of an insurance company to meet its obligations under an insurance policy. Credit ratings represent the opinions of rating agencies regarding an entity's ability to repay its indebtedness. These ratings are not a recommendation to buy or hold any of our securities and they may be revised or revoked at any time at the sole discretion of the rating organization.
Our financial strength rating as of the date of this Quarterly Report on Form 10-Q are summarized in the following table.
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| | | | Fitch, Inc. | | Moody's Investors Service, Inc. | | Standard & Poor's |
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| Voya Retirement Insurance and Annuity Company | | | | | | | | |
| Financial Strength Rating | | | | A | | A2 | | A+ |
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(1) Fitch's financial strength rating for insurance companies range from "AAA (exceptionally strong)" to "C (distressed). " Long-term credit ratings range from
"AAA "AAA (highest credit quality)," which denotes exceptionally strong capacity for timely payment of financial commitments, to "D (default)."
(2) Moody’s financial strength ratings for insurance companies range from "Aaa (exceptional)" to "C (lowest)." Numeric modifiers are used to refer to the ranking within the group- with 1 being the highest and 3 being the lowest. These modifiers are used to indicate relative strength within a category. Long-term credit ratings range from "Aaa (highest)" to "C (default)."
(3) S&P's financial strength ratings for insurance companies range from "AAA (extremely strong)" to "D (default)." Long-term credit ratings range from "AAA
(extremely (extremely strong)" to "D (default)."
Rating agencies use an "outlook" statement for both industry sectors and individual companies. For an industry sector, a stable outlook generally implies that over the next 12 to 18 months the rating agency expects ratings to remain unchanged among companies in the sector. For a particular company, an outlook generally indicates a medium or long-term trend in credit fundamentals, which if continued, may lead to a rating change. In December 2022,2023, Moody’s affirmed its outlook for the U.S. life insurance sector as stable. Also, in November 2022,2023, Fitch affirmedchanged its outlook from neutral to improving for the North American life insurance sector as neutral. sector.
Off-Balance Sheet Arrangements
We have obligations for the return of non-cash collateral under an amendment to our securities lending program. Non-cash collateral received in connection with the securities lending program may not be sold or re-pledged by our lending agent, except in the event of default, and is not reflected on our Condensed Consolidated Balance Sheets. For information regarding obligations under this program, see the Investments Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.
For changes in commitments related to the acquisition of mortgage loans and the purchase of limited partnerships and private placement investments, see the Commitments and Contingencies Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.
Legislative and Regulatory Developments
Department of Labor ("DOL") Retirement Security Rule
On April 23, 2024, the DOL released the Retirement Security Rule defining who is an investment advice fiduciary for purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The DOL also released final amendments to class prohibited transaction exemptions (PTEs) available to investment advice fiduciaries, including PTE 2020-02 and PTE 84-24.
The effective date for the Retirement Security Rule and amendments to the PTEs is expected to be on or around September 23, 2024. There is a one (1) year transition rule applicable to certain conditions contained in the PTE amendments. The new definition of an investment advice fiduciary expands the definition of who the DOL considers a fiduciary under ERISA. Voya is continuing to study the effect the Retirement Security Rule and amendments may have on its Wealth Solutions business and operations but currently anticipates that such effects will not be significant. Voya’s current in-plan investment advisory services program, which is designed to comply with previous DOL guidance, remains unchanged.
Qualified Professional Asset Manager ("QPAM") Exemption Updates
In April 2024, the DOL published changes to class prohibited transaction exemption 84-14 (the “QPAM Exemption”). As a result of these changes, we will be required to notify the DOL prior to relying on the QPAM Exemption, in addition to satisfying new minimum qualification and recordkeeping requirements.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
The Company carried out an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended ("Exchange Act")) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company's current disclosure controls and procedures are effective in ensuring that material information relating to the Company required to be disclosed in the Company's periodic SEC filings is made known to them in a timely manner.
Changes in Internal Control Over Financial Reporting
There were no changes to the Company's internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the quarter ended September 30, 2023March 31, 2024 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
See the Commitments and Contingencies Note in our Condensed Consolidated Financial Statements in Part I., Item 1. of this Quarterly Report on Form 10-Q.
Item 1A. Risk Factors
For a discussion of the Company's potential risks and uncertainties, see Risk Factors in Part I, Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 20222023 (the "Annual Report on Form 10-K") filed with the Securities and Exchange Commission. In addition, please see Management’s Narrative Analysis of the Results of Operations and Financial Condition Part I, Item 2. of this Quarterly Report on Form 10-Q.(file No. 033-23376).
Item 6. Exhibits
See Exhibit Index on the following page.
Voya Retirement Insurance and Annuity Company
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Exhibit Index |
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| 101.INS | | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
101.SCH+ | | Inline XBRL Taxonomy Extension Schema |
101.CAL+ | | Inline XBRL Taxonomy Extension Calculation Linkbase |
101.DEF+ | | Inline XBRL Taxonomy Extension Definition Linkbase |
101.LAB+ | | Inline XBRL Taxonomy Extension Label Linkbase |
101.PRE+ | | Inline XBRL Taxonomy Extension Presentation Linkbase |
| 104 | | Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101). |
+Filed herewith.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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NovemberMay 9, 20232024 | | | Voya Retirement Insurance and Annuity Company |
| (Date) | | (Registrant) |
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| By: | /s/ | Michael R. Katz |
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| | Michael R. Katz |
| | Chief Financial Officer |
| | (Duly Authorized Officer and Principal Financial Officer) |
