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, 2020

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: 001-35897______________________________________

Voya Financial, Inc.

(Exact name of registrant as specified in its charter)

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

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

(212) 309-8200

(Registrant’s telephone number, including area code)

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

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

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

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  ☒ Yes    ☐ No

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

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

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

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

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

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of October 30, 2020, 126,267,808 shares of Common Stock, 0.01 par value, were outstanding.

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Voya Financial, Inc.

Form 10-Q for the period ended September 30, 2020

INDEX

						PAGE
PART I.			FINANCIAL INFORMATION (UNAUDITED)
Item 1.			Financial Statements:
			Condensed Consolidated Balance Sheets			4
			Condensed Consolidated Statements of Operations			6
			Condensed Consolidated Statements of Comprehensive Income			7
			Condensed Consolidated Statements of Changes in Shareholders' Equity			8
			Condensed Consolidated Statements of Cash Flows			12
			Notes to Condensed Consolidated Financial Statements:			13
			1. Business, Basis of Presentation and Significant Accounting Policies			13
			2. Discontinued Operations			19
			3. Investments (excluding Consolidated Investment Entities)			24
			4. Derivative Financial Instruments			39
			5. Fair Value Measurements (excluding Consolidated Investment Entities)			49
			6. Deferred Policy Acquisition Costs and Value of Business Acquired			67
			7. Share-based Incentive Compensation Plans			67
			8. Shareholders' Equity			69
			9. Earnings per Common Share			71
			10. Accumulated Other Comprehensive Income (Loss)			72
			11. Income Taxes			76
			12. Financing Agreements			77
			13. Commitments and Contingencies			78
			14. Consolidated Investment Entities			80
			15. Restructuring			87
			16. Segments			88
			17. Condensed Consolidating Financial Information			93
Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations			108
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			157
Item 4.			Controls and Procedures			159
PART II.			OTHER INFORMATION
Item 1.			Legal Proceedings			160
Item 1A.			Risk Factors			160
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			161
Item 5.			Other Information			161
Item 6.			Exhibits			163
Exhibit Index						164
Signature						165

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

NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including "Risk Factors," and "Management’s Discussion and Analysis of Financial Condition and Results of Operations," contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements relating to future developments in our business or expectations for our future financial performance and any statement not involving a historical fact. Forward-looking statements use words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," and other words and terms of similar meaning in connection with a discussion of future operating or financial performance. Actual results, performance or events may differ materially from those projected in any forward-looking statement due to, among other things, (i) general economic conditions, particularly economic conditions in our core markets, (ii) performance of financial markets, including emerging markets, (iii) the frequency and severity of insured loss events, (iv) the effects of natural or man-made disasters, including pandemic events and specifically the current COVID-19 pandemic event, (v) mortality and morbidity levels, (vi) persistency and lapse levels, (vii) interest rates, (viii) currency exchange rates, (ix) general competitive factors, (x) changes in laws and regulations, (xi) changes in the policies of governments and/or regulatory authorities, and (xii) our ability to successfully manage the separation of the fixed and variable annuities businesses that we sold to VA Capital Company LLC on June 1, 2018, including the transition services on the expected timeline and economic terms and (xiii) our ability to successfully complete the Individual Life Transaction (as defined below) on the expected economic terms or at all. Factors that may cause actual results to differ from those in any forward-looking statement also include those described under "Risk Factors," "Management’s Discussion and Analysis of Financial Condition and Results of Operations-Trends and Uncertainties" in the Annual Report on Form 10-K for the year ended December 31, 2019 (File No. 001-35897) (the "Annual Report on Form 10-K") and 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.

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PART I.        FINANCIAL INFORMATION

Item 1.        Financial Statements

Voya Financial, Inc.

Condensed Consolidated Balance Sheets

September 30, 2020 (Unaudited) and December 31, 2019

(In millions, except share and per share data)

			September 30, 2020						December 31, 2019
Assets:
Investments:
Fixed maturities, available-for-sale, at fair value (amortized cost of $36,974 as of 2020 and $35,836 as of 2019; allowance for credit losses of $16 as of 2020)			$	42,330					$	39,663
Fixed maturities, at fair value using the fair value option			3,014						2,707
Equity securities, at fair value (cost of $329 as of 2020 and $196 as of 2019)			371						196
Short-term investments			70						68
Mortgage loans on real estate, net of valuation allowance of $1 as of 2019			6,817						6,878
Less: Allowance for credit losses			55						—
Mortgage loans on real estate, net			6,762						6,878
Policy loans			735						776
Limited partnerships/corporations			1,383						1,290
Derivatives			270						316
Other investments			319						385
Securities pledged (amortized cost of $677 as of 2020 and $1,264 as of 2019)			827						1,408
Total investments			56,081						53,687
Cash and cash equivalents			1,052						1,181
Short-term investments under securities loan agreements, including collateral delivered			664						1,395
Accrued investment income			545						505
Premium receivable and reinsurance recoverable			3,676						3,732
Less: Allowance for credit losses on reinsurance recoverable			19						—
Premium receivable and reinsurance recoverable, net			3,657						3,732
Deferred policy acquisition costs and Value of business acquired			1,669						2,226
Deferred income taxes			1,314						1,458
Other assets			812						902
Assets related to consolidated investment entities:
Limited partnerships/corporations, at fair value			1,600						1,632
Cash and cash equivalents			84						68
Corporate loans, at fair value using the fair value option			921						513
Other assets			8						13
Assets held in separate accounts			82,879						81,670
Assets held for sale			20,180						20,069
Total assets			$	171,466					$	169,051

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

Condensed Consolidated Balance Sheets

September 30, 2020 (Unaudited) and December 31, 2019

(In millions, except share and per share data)

			September 30, 2020						December 31, 2019
Liabilities and Shareholders' Equity:
Future policy benefits			$	10,295					$	9,945
Contract owner account balances			42,187						40,923
Payables under securities loan and repurchase agreements, including collateral held			575						1,373
Short-term debt			1						1
Long-term debt			3,043						3,042
Derivatives			434						403
Pension and other postretirement provisions			375						468
Current income taxes			9						27
Other liabilities			1,419						1,345
Liabilities related to consolidated investment entities:
Collateralized loan obligations notes, at fair value using the fair value option			538						474
Other liabilities			834						652
Liabilities related to separate accounts			82,879						81,670
Liabilities held for sale			18,232						18,498
Total liabilities			160,821						158,821
Commitments and Contingencies (Note 13)
Shareholders' equity:
Preferred stock ($0.01 par value per share; $625 aggregate liquidation preference as of 2020 and 2019)			—						—
Common stock ($0.01 par value per share; 900,000,000 shares authorized; 143,150,588 and 140,726,677 shares issued as of 2020 and 2019, respectively; 126,239,226 and 132,325,790 shares outstanding as of 2020 and 2019, respectively)			2						2
Treasury stock (at cost; 16,911,362 and 8,400,887 shares as of 2020 and 2019, respectively)			(889)						(460)
Additional paid-in capital			11,213						11,184
Accumulated other comprehensive income (loss)			4,483						3,331
Retained earnings (deficit):
Unappropriated			(5,152)						(4,649)
Total Voya Financial, Inc. shareholders' equity			9,657						9,408
Noncontrolling interest			988						822
Total shareholders' equity			10,645						10,230
Total liabilities and shareholders' equity			$	171,466					$	169,051

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

Condensed Consolidated Statements of Operations

For the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

(In millions, except per share data)

			Three Months Ended September 30,												Nine Months Ended September 30,
			2020						2019						2020						2019
Revenues:
Net investment income			$	800					$	687					$	2,084					$	2,057
Fee income			507						494						1,470						1,459
Premiums			604						565						1,819						1,717
Net realized capital gains (losses):
Total impairments			(10)						(3)						(80)						(32)
Other net realized capital gains (losses)			(60)						(17)						(224)						25
Total net realized capital gains (losses)			(70)						(20)						(304)						(7)
Other revenue			90						106						263						325
Income (loss) related to consolidated investment entities:
Net investment income			140						43						87						115
Total revenues			2,071						1,875						5,419						5,666
Benefits and expenses:
Policyholder benefits			1,020						705						2,327						2,009
Interest credited to contract owner account balances			279						298						851						879
Operating expenses			630						627						1,913						1,979
Net amortization of Deferred policy acquisition costs and Value of business acquired			241						36						336						136
Interest expense			40						51						120						135
Operating expenses related to consolidated investment entities:
Interest expense			5						8						18						29
Other expense			1						1						3						5
Total benefits and expenses			2,216						1,726						5,568						5,172
Income (loss) from continuing operations before income taxes			(145)						149						(149)						494
Income tax expense (benefit)			(72)						5						(73)						47
Income (loss) from continuing operations			(73)						144						(76)						447
Income (loss) from discontinued operations, net of tax			(140)						(4)						(361)						18
Net income (loss)			(213)						140						(437)						465
Less: Net income (loss) attributable to noncontrolling interest			106						19						33						44
Net income (loss) available to Voya Financial, Inc.			(319)						121						(470)						421
Less: Preferred stock dividends			14						14						32						24
Net income (loss) available to Voya Financial, Inc.'s common shareholders			(333)						107						(502)						397
Net income (loss) per common share:
Basic
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders			$	(1.53)					$	0.80					$	(1.11)					$	2.65
Income (loss) available to Voya Financial, Inc.'s common shareholders			$	(2.64)					$	0.77					$	(3.93)					2.77
Diluted
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders			$	(1.53)					$	0.77					$	(1.11)					$	2.55
Income (loss) available to Voya Financial, Inc.'s common shareholders			$	(2.64)					$	0.74					$	(3.93)					$	2.67

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

Condensed Consolidated Statements of Comprehensive Income

For the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

(In millions)

			Three Months Ended September 30,												Nine Months Ended September 30,
			2020						2019						2020						2019
Net income (loss)			$	(213)					$	140					$	(437)					$	465
Other comprehensive income (loss), before tax:
Unrealized gains (losses) on securities			562						798						1,460						3,223
Impairments			—						—						—						2
Pension and other postretirement benefits liability			—						(1)						(2)						(3)
Other comprehensive income (loss), before tax			562						797						1,458						3,222
Income tax expense (benefit) related to items of other comprehensive income (loss)			118						167						306						675
Other comprehensive income (loss), after tax			444						630						1,152						2,547
Comprehensive income (loss)			231						770						715						3,012
Less: Comprehensive income (loss) attributable to noncontrolling interest			106						19						33						44
Comprehensive income (loss) attributable to Voya Financial, Inc.			$	125					$	751					$	682					$	2,968

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

Condensed Consolidated Statements of Changes in Shareholders' Equity

For the Three Months Ended September 30, 2020 (Unaudited)

(In millions)

			Preferred Stock						Common Stock						Treasury Stock						Additional Paid-In Capital						Accumulated Other Comprehensive Income (Loss)												Retained Earnings (Deficit)						Total Voya Financial, Inc. Shareholders' Equity						Noncontrolling Interest						Total Shareholders' Equity
																																							Unappropriated
Balance as of July 1, 2020			—						$	2					(887)						$	11,227					$	4,039											$	(4,833)					$	9,548					$	741					$	10,289
Adoption of ASU 2016-13			—						—						—						—						—												—						—						—						—
Comprehensive income (loss):
Net income (loss)			—						—						—						—						—												(319)						(319)						106						(213)
Other comprehensive income (loss), after tax			—						—						—						—						444												—						444						—						444
Total comprehensive income (loss)																																													125						106						231
Net consolidations (deconsolidations) of consolidated investment entities			—						—						—						—						—												—						—						—						—
Common stock issuance			—						—						—						2						—												—						2						—						2
Common stock acquired - Share repurchase			—						—						—						—						—												—						—						—						—
Dividends on preferred stock			—						—						—						(14)						—												—						(14)						—						(14)
Dividends on common stock			—						—						—						(19)						—												—						(19)						—						(19)
Share-based compensation			—						—						(2)						17						—												—						15						—						15
Contributions from (Distributions to) noncontrolling interest, net			—						—						—						—						—												—						—						141						141
Balance as of September 30, 2020			—						$	2					$	(889)					$	11,213					$	4,483											$	(5,152)					$	9,657					$	988					$	10,645

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

Condensed Consolidated Statements of Changes in Shareholders' Equity

For the Nine Months Ended September 30, 2020 (Unaudited)

(In millions)

			Preferred Stock						Common Stock						Treasury Stock						Additional Paid-In Capital						Accumulated Other Comprehensive Income (Loss)												Retained Earnings (Deficit)						Total Voya Financial, Inc. Shareholders' Equity						Noncontrolling Interest						Total Shareholders' Equity
																																							Unappropriated
Balance as of January 1, 2020			$	—					$	2					$	(460)					$	11,184					$	3,331											$	(4,649)					$	9,408					$	822					$	10,230
Adjustment for adoption of ASU 2016-13			—						—						—						—						—												(33)						(33)						—						(33)
Comprehensive income (loss):
Net income (loss)			—						—						—						—						—												(470)						(470)						33						(437)
Other comprehensive income (loss), after tax			—						—						—						—						1,152												—						1,152						—						1,152
Total comprehensive income (loss)																																													682						33						715
Net consolidations (deconsolidations) of consolidated investment entities			—						—						—						—						—												—						—						(103)						(103)
Common stock issuance			—						—						—						4						—												—						4						—						4
Common stock acquired - Share repurchase			—						—						(406)						40						—												—						(366)						—						(366)
Dividends on preferred stock			—						—						—						(32)						—												—						(32)						—						(32)
Dividends on common stock			—						—						—						(58)						—												—						(58)						—						(58)
Share-based compensation			—						—						(23)						75						—												—						52						—						52
Contributions from (Distributions to) noncontrolling interest, net			—						—						—						—						—												—						—						236						236
Balance as of September 30, 2020			—						$	2					$	(889)					$	11,213					$	4,483											$	(5,152)					$	9,657					$	988					$	10,645

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

Condensed Consolidated Statements of Changes in Shareholders' Equity

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

(In millions)

			Preferred Stock						Common Stock						Treasury Stock						Additional Paid-In Capital						Accumulated Other Comprehensive Income (Loss)												Retained Earnings (Deficit)						Total Voya Financial, Inc. Shareholders' Equity						Noncontrolling Interest						Total Shareholders' Equity
																																							Unappropriated
Balance as of July 1, 2019			$	—					3						(5,663)						24,642						2,867												(11,785)						$	10,064					$	676					$	10,740
Adoption of ASU 2018-02			—						—						—						—						—												—						—						—						—
Comprehensive income (loss):
Net income (loss)			—						—						—						—						—												121						121						19						140
Other comprehensive income (loss), after tax			—						—						—						—						630												—						630						—						630
Total comprehensive income (loss)																																													751						19						770
Preferred stock issuance			—						—						—						—						—												—						293						—						293
Common stock issuance			—						—						—						(14)						—												—						1						—						1
Common stock acquired - Share repurchase			—						—						(290)						40						—												—						(250)						—						(250)
Dividends on preferred stock			—						—						—						(14)						—												—						(14)						—						(14)
Dividends on common stock			—						—						—						(20)						—												—						(20)						—						(20)
Share-based compensation			—						—						(2)						22						—												—						20						—						20
Contributions from (Distributions to) noncontrolling interest, net			—						—						—						—						—												—						—						(34)						(34)
Balance as of September 30, 2019			$	—					3						$	(5,955)					$	24,671					$	3,497											$	(11,664)					$	10,552					$	661					$	11,213

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

Condensed Consolidated Statements of Changes in Shareholders' Equity

For the Nine Months Ended September 30, 2019 (Unaudited)

(In millions)

			Preferred Stock						Common Stock						Treasury Stock						Additional Paid-In Capital						Accumulated Other Comprehensive Income (Loss)									Retained Earnings (Deficit)									Total Voya Financial, Inc. Shareholders' Equity						Noncontrolling Interest						Total Shareholders' Equity
																																				Unappropriated
Balance as of January 1, 2019			$	—					$	3					$	(4,981)					$	24,316					$	607											$	(11,732)					$	8,213					$	728					$	8,941
Adoption of ASU 2018-02			—						—						—						—						343												(343)						—						—						—
Comprehensive income (loss):
Net income (loss)			—						—						—						—						—												421						421						44						465
Other comprehensive income (loss), after tax			—						—						—						—						2,547												—						2,547						—						2,547
Total comprehensive income (loss)																																													2,968						44						3,012
Preferred stock issuance			—						—						—						293						—												—						293						—						293
Common stock issuance			—						—						—						3						—												—						3						—						3
Common stock acquired - Share repurchase			—						—						(936)						—						—												—						(936)						—						(936)
Dividends on preferred stock			—						—						—						(14)						—												(10)						(24)						—						(24)
Dividends on common stock			—						—						—						(23)						—												—						(23)						—						(23)
Share-based compensation			—						—						(38)						96						—												—						58						—						58
Contributions from (Distributions to) noncontrolling interest, net			—						—						—						—						—												—						—						(111)						(111)
Balance as of September 30, 2019			$	—					$	3					$	(5,955)					$	24,671					$	3,497											$	(11,664)					$	10,552					$	661					$	11,213

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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•Voya Financial, Inc.

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2020 and 2019 (Unaudited)

(In millions)

			Nine Months Ended September 30,
			2020						2019
Cash Flows from Operating Activities:
Net cash (used in) provided by operating activities - continuing operations			$	1,045					$	726
Net cash provided by operating activities - discontinued operations			(257)						125
Net cash provided by operating activities			788						851
Cash Flows from Investing Activities:
Proceeds from the sale, maturity, disposal or redemption of:
Fixed maturities			3,948						5,062
Equity securities			22						20
Mortgage loans on real estate			414						772
Limited partnerships/corporations			229						169
Acquisition of:
Fixed maturities			(4,952)						(4,822)
Equity securities			(154)						(30)
Mortgage loans on real estate			(355)						(425)
Limited partnerships/corporations			(275)						(309)
Short-term investments, net			(2)						4
Derivatives, net			98						41
Sales from consolidated investment entities			300						484
Purchases within consolidated investment entities			(689)						(1,120)
Collateral (delivered) received, net			(67)						(141)
Other, net			22						(64)
Net cash (used in) provided by investing activities - discontinued operations			(364)						(522)
Net cash (used in) investing activities			(1,825)						(881)
Cash Flows from Financing Activities:
Deposits received for investment contracts			4,561						3,483
Maturities and withdrawals from investment contracts			(3,953)						(4,120)
Settlements on deposit contracts			(5)						(6)
Repayment of debt with maturities of more than three months			—						(106)
Borrowings of consolidated investment entities			365						853
Repayments of borrowings of consolidated investment entities			(613)						(726)
Contributions from (distributions to) participants in consolidated investment entities, net			846						598
Proceeds from issuance of common stock, net			4						3
Proceeds from issuance of preferred stock, net			—						293
Share-based compensation			(15)						(17)
Common stock acquired - Share repurchase			(366)						(936)
Dividends paid on common stock			(58)						(23)
Dividends paid on preferred stock			(32)						(24)
Principal payments for financing leases			(16)						(3)
Net cash provided by financing activities - discontinued operations			396						599
Net cash provided by (used in) financing activities			1,114						(132)
Net (decrease) increase in cash and cash equivalents			77						(162)
Cash and cash equivalents, beginning of period			1,472						1,538
Cash and cash equivalents, end of period			1,549						1,376
Less: Cash and cash equivalents of discontinued operations, end of period			497						221
Cash and cash equivalents of continuing operations, end of period			$	1,052					$	1,155
Non-cash investing and financing activities:
Initial recognition of operating leases upon adoption of ASU 2016-02			$	—					$	146
Leased assets in exchange for finance lease liabilities			—						68

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

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

1.    Business, Basis of Presentation and Significant Accounting Policies

Business    

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

On December 18, 2019, the Company entered into a Master Transaction Agreement (the “Resolution MTA”) with Resolution Life U.S. Holdings Inc., a Delaware corporation (“Resolution Life US”), pursuant to which Resolution Life US will acquire all of the shares of the capital stock of Security Life of Denver Insurance Company ("SLD") and Security Life of Denver International Limited ("SLDI"), including the capital stock of several subsidiaries of SLD and SLDI. The transaction is expected to close by January 4, 2021 and is subject to conditions specified in the Resolution MTA, including the receipt of required regulatory approvals. The assets and liabilities related to the businesses to be sold have been classified as held for sale in the accompanying Condensed Consolidated Balance Sheets and as discontinued operations in the accompanying Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Cash Flows and are reported separately for all periods presented. See the Business Held for Sale and Discontinued Operations Note to these Condensed Consolidated Financial Statements.

Concurrently with the sale, SLD will enter into reinsurance agreements with insurance subsidiaries of the Company. Pursuant to these agreements, the Company's subsidiaries will reinsure to SLD certain individual life insurance and annuities businesses. The sale of SLD, SLDI and several of their subsidiaries along with the aforementioned reinsurance transactions are referred to herein as the "Individual Life Transaction". The Individual Life Transaction will result in the disposition of substantially all of our life insurance and legacy non-retirement annuity businesses and related assets. As such, the Company will no longer report its Individual Life business as an operating segment.

On June 1, 2018, the Company consummated a series of transactions (collectively, the "2018 Transaction") pursuant to a Master Transaction Agreement with VA Capital Company LLC ("VA Capital") and Athene Holding Ltd. ("Athene"). As part of the Transaction, Venerable Holdings, Inc. ("Venerable"), a wholly owned subsidiary of VA Capital, acquired two of the Company's subsidiaries, Voya Insurance and Annuity Company ("VIAC") and Directed Services, LLC ("DSL"), and VIAC and other Voya subsidiaries reinsured to Athene substantially all of their fixed and fixed indexed annuities business. In connection with the 2018 Transaction, VIAC and another Voya subsidiary engaged in a series of reinsurance arrangements pursuant to which Voya and its subsidiaries other than VIAC retained VIAC’s businesses other than variable annuities and fixed and fixed indexed annuities. The Transaction resulted in the disposition of substantially all of the Company's Closed Block Variable Annuity ("CBVA") and Annuities businesses.

The Company provides its principal products and services through three segments: Retirement, Investment Management and Employee Benefits. In addition, the Company includes in Corporate activities that are not directly related to its segments and certain run-off activities that are not meaningful to the Company's business strategy. See the Segments Note to these Condensed Consolidated Financial Statements.

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

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") and are unaudited. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Condensed Consolidated

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Financial Statements and the reported amounts of revenues and expenses during the reporting period. The inputs into the Company's estimates and assumptions consider the economic implications of COVID-19 on the Company's critical and significant accounting estimates. 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.

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

The accompanying Condensed Consolidated Financial Statements reflect adjustments (including normal, recurring adjustments) necessary to present fairly the financial position of the Company as of September 30, 2020, its results of operations, comprehensive income and changes in shareholders' equity for the three and nine months ended September 30, 2020 and 2019, and its statements of cash flows for the nine months ended September 30, 2020 and 2019, in conformity with U.S. GAAP. Interim results are not necessarily indicative of full year performance.

The December 31, 2019 Consolidated Balance Sheet is from the audited Consolidated Financial Statements included in the Company's Annual Report on Form 10-K, filed with the SEC. Therefore, these unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and related notes included in the Company's Annual Report on Form 10-K.

Subsequent Events

The Company has evaluated subsequent events through the issuance date of the Condensed Consolidated financial statements including the implications of the COVID-19 pandemic. The Company is not aware of any material matters that could impact the Company's financial position, results of operations or cash flows or for which a disclosure is required.

Significant Accounting Policies

Effective January 1, 2020, the Company adopted Accounting Standards Update ("ASU") 2016-13 "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, as amended ("ASU 2016-13"). The Company adopted ASU 2016-13 using the modified retrospective method for financial assets measured at amortized cost and the prospective method for available-for-sale debt securities as required by ASU 2016-13. As a result, the Company had changes to the following significant accounting policies:

•Investments: Mortgage Loans on Real Estate;

•Impairments; and

•Reinsurance.

Comparative information has not been adjusted and continues to be reported under previously applicable U.S. GAAP. The Company’s accounting policies amended by the adoption of ASU 2016-13 are as follows:

Investments

Mortgage Loans on Real Estate: The Company's mortgage loans on real estate are all commercial mortgage loans, which are reported at amortized cost, net of the allowance for credit losses. Amortized cost is the principal balance outstanding, net of deferred loan fees and costs. Accrued interest receivable is reported in Accrued investment income on the 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 debt type, capital market factors, and market vacancy rates, and loan-specific risk characteristics such as debt service coverage ratios (“DSCR”), loan-to-value (“LTV”), collateral size, seniority of the loan, segmentation, and property types.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The allowance for credit losses is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. The change in the allowance for credit losses is recorded in Other net realized capital gains (losses) in the Condensed Consolidated Statements of Operations. Loans are written off against the allowance when management believes the uncollectability of a loan balance is confirmed. Expected recoveries do not exceed the aggregate of amounts previously written-off and expected to be written-off.

For those mortgages that are determined to require foreclosure, expected credit losses are based on the fair value of the underlying collateral, net of estimated costs to obtain and sell at the point of foreclosure.

Impairments

The Company evaluates its available-for-sale investments quarterly to determine whether a decline in fair value below the amortized cost basis has resulted from credit loss or other factors. As a result of the adoption of ASU 2016-13, the Company no longer considers in this evaluation process the length of time a fixed maturity has been in an unrealized loss position.

For available-for-sale securities that do not meet the intent impairment criteria but the Company has determined that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss allowance is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in Other comprehensive income (loss).

Changes in the allowance for credit losses are recorded in Net realized capital gains (losses) as Impairments in the Condensed Consolidated Statements of Operations. Losses are charged against the allowance when the Company believes the uncollectability of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Accrued interest receivable on available-for-sale securities is excluded from the estimate of credit losses.

Reinsurance

Reinsurance recoverable balances are reported net of the allowance for credit losses in 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 Policyholder benefits in the Condensed Consolidated Statements of Operations.

Adoption of New Pronouncements

The following table provides a description of the Company's adoption of new Accounting Standard Updates ("ASUs") issued by the Financial Accounting Standards Board ("FASB") and the impact of the adoption on the Company's financial statements.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Standard			Description of Requirements			Effective Date and Method of Adoption			Effect on the Financial Statements or Other Significant Matters
ASU 2018-15, Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract			This standard, issued in August 2018, requires a customer in a hosting arrangement that is a service contract to follow the guidance for internal-use software projects to determine which implementation costs to capitalize as an asset. Capitalized implementation costs are required to be expensed over the term of the hosting arrangement. In addition, a customer is required to apply the impairment and abandonment guidance for long-lived assets to the capitalized implementation costs. Balances related to capitalized implementation costs must be presented in the same financial statement line items as other hosting arrangement balances, and additional disclosures are required.			January 1, 2020 using the prospective method.			Adoption of the ASU did not have a material impact on the Company's financial condition, results of operations, or cash flows.
ASU 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement			This standard, issued in August 2018, simplifies certain disclosure requirements for fair value measurement.			January 1, 2020 using the transition method prescribed for each applicable provision.			Adoption of this ASU had no effect on the Company's financial condition, results of operations, or cash flows. The adoption resulted in various disclosure changes that have been included in Note 5, Fair Value Measurements.
ASU 2016-13, Measurement of Credit Losses on Financial Instruments			This standard, issued in June 2016: • Introduces a new current expected credit loss ("CECL") model to measure impairment on certain types of financial instruments, • Requires an entity to estimate lifetime expected credit losses, under the new CECL model, based on relevant information about historical events, current conditions, and reasonable and supportable forecasts, • Modifies the impairment model for available-for-sale debt securities, and • Provides a simplified accounting model for purchased financial assets with credit deterioration since their origination. In addition, the FASB issued various amendments during 2018, 2019, and 2020 to clarify the provisions of ASU 2016-13.			January 1, 2020, using the modified retrospective method for financial assets measured at amortized cost and the prospective method for available-for-sale debt securities.			The Company recorded a $33 decrease, net of tax, to Unappropriated retained earnings as of a January 1, 2020 for the cumulative effect of adopting ASU 2016-13. The combined transition adjustment for continuing and discontinued operations includes recognition of an allowance for credit losses of $19 related to mortgage loans and $28 related to reinsurance recoverables, net of the effect of Deferred policy acquisition costs and Value of business acquired of $5 and deferred income taxes of $9. The provisions that required prospective adoption had no effect on the Company's financial condition, results of operations, or cash flows. In addition, disclosures have been updated to reflect accounting policy changes made as a result of the implementation of ASU 2016-13. (See the Significant Accounting Policies section.) Comparative information has not been adjusted and continues to be reported under previously applicable U.S. GAAP.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Future Adoption of Accounting Pronouncements

The following table provides a description of future adoptions of new accounting standards that may have an impact on the Company's financial statements when adopted:

Standard			Description of Requirements			Effective date and transition provisions			Effect on the financial statements or other significant matters
ASU 2020-06, Simplifying the Accounting for Convertible Instruments and Contracts in an Entity's Own Equity			This standard, issued in August 2020, simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity's own equity.			January 1, 2022, including interim periods, with early adoption permitted no earlier than January 1, 2021. An entity must adopt the guidance at the beginning of its annual fiscal year. Initial adoption of ASU 2020-06 may be reported on either a modified retrospective or full retrospective basis.			The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2020-06.
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 are effective as of March 12, 2020, the issuance date of the ASU. An entity may elect to apply the amendments prospectively through December 31, 2022.			The Company expects that it will elect to apply some of the expedients and exceptions provided in ASU 2020-04; however, the Company is still evaluating the guidance, and therefore, the impact of the adoption of ASU 2020-04 on the Company’s financial condition and results of operations has not yet been determined.
ASU 2019-12, Simplifying the Accounting for Income Taxes			This standard, issued in December 2019, simplifies the accounting for income taxes by eliminating certain exceptions to the general principles and simplifying several aspects of ASC 740, Income taxes, including requirements related to the following: • The intraperiod tax allocation exception to the incremental approach, • The tax basis step-up in goodwill obtained in a transaction that is not a business combination, • Hybrid tax regimes, • Ownership changes in investments - changes from a subsidiary to an equity method investment, • Separate financial statements of entities not subject to tax, • Interim-period accounting for enacted changes in tax law, and • The year-to-date loss limitation in interim-period tax accounting.			January 1, 2021 with early adoption permitted. Early adoption in an interim period must reflect any adjustments as of the beginning of the annual period. Initial adoption of ASU 2019-12 is required to be reported on a prospective basis, except for certain provisions that are required to be applied retrospectively or modified retrospectively.			The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2019-12.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Standard			Description of Requirements			Effective date and transition provisions			Effect on the financial statements or other significant matters
ASU 2018-14, Changes to the Disclosure Requirements for Defined Benefit Plans			This standard, issued in August 2018, eliminates certain disclosure requirements that are no longer considered cost beneficial and requires new disclosures that are considered relevant.			December 31, 2020 with early adoption permitted. Initial adoption of ASU 2018-14 is required to be reported on a retrospective basis for all periods presented.			The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2018-14.
ASU 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts			This standard, issued in August 2018, changes the measurement and disclosures of insurance liabilities and deferred acquisition costs ("DAC") for long-duration contracts issued by insurers.			On September 30, 2020, the FASB voted to affirm its decision to defer the effective date of the amendments in ASU 2018-12 for SEC filers to fiscal years ending after December 15, 2022, including interim periods within those fiscal years. Initial adoption for the liability for future policy benefits and DAC is required to be reported using either a full retrospective or modified retrospective approach. For market risk benefits, full retrospective application is required.			The implications of these requirements, including transition options, and related potential financial statement impacts are currently being evaluated. While it is not possible to estimate the expected impact of adoption at this time, the Company believes there is a reasonable possibility that implementation of ASU 2018-12 may result in a significant impact on Shareholders’ equity and future earnings patterns.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

2.    Business Held for Sale and Discontinued Operations

As noted in the Business, Basis of Presentation and Significant Accounting Policies Note, on December 18, 2019, the Company entered into the Resolution MTA with Resolution Life US to sell several of its subsidiaries and the related Individual Life and fixed and variable annuities businesses within these subsidiaries. Additionally, on June 1, 2018, the Company consummated a series of transactions pursuant to a Master Transaction Agreement (the "2018 MTA") to sell substantially all of its fixed and fixed indexed annuities businesses.

The following table presents summary information related to income (loss) from discontinued operations for the periods presented:

			Nine Months Ended September 30,
			2020						2019
Income (loss) from discontinued operations, net of tax
Individual Life Transaction			$	(361)					$	100
2018 Transaction			—						(82)
Total			$	(361)					$	18

The Individual Life Transaction

Sale of legal entities

Pursuant to the Company executing the Resolution MTA and upon closing of the Individual Life Transaction, the Company will sell five of its legal subsidiaries, SLD, SLDI, Roaring River II ("RRII"), Midwestern United Life Insurance Company ("MUL") and Voya American Equities, Inc. ("VAE") to Resolution Life US. Resolution Life US is an insurance holding company newly formed by Resolution Life Group Holdings, L.P., a Bermuda-based limited partnership (“RLGH”). The Individual Life Transaction is expected to close by January 4, 2021 and is subject to conditions specified in the Resolution MTA, including the receipt of required regulatory approvals.

The purchase price in the transaction is approximately $1.25 billion, with an adjustment based on the adjusted capital and surplus of SLD, SLDI and RRII at closing. The purchase price includes cash consideration of approximately $902, a $225 equity interest in RLGH, and $123 principal amount in surplus notes issued by SLD that will be retained by the Company under modified terms. The receivable for the surplus notes and SLD's corresponding liability outstanding as of September 30, 2020 and December 31, 2019 are included in Other investments and Liabilities held for sale, respectively, on the Company's Condensed Consolidated Balance Sheets. In the summary of major categories of assets and liabilities held for sale below, SLD's corresponding liability for the surplus notes is included in Notes payable.

The Individual Life Transaction is subject to a $100 reverse termination fee that would be payable by Resolution Life US to the Company if the Resolution MTA is terminated in prescribed circumstances related to the failure by Resolution Life US’s reserve financing provider to provide a committed financing facility. A separate $20 termination fee would be payable by Resolution Life US to the Company in prescribed circumstances where the Resolution MTA is terminated due to a failure to obtain certain approvals or consents.

Concurrent with the execution of the Resolution MTA, RLGH provided the Company with a limited guarantee to guarantee its financial obligations for an amount not to exceed $1.3 billion, including the termination fees and subject to the terms and conditions in the Resolution MTA.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The Company has determined that these entities to be disposed of meet the criteria to be classified as held for sale and that the sale represents a strategic shift that will have a major effect on the Company’s operations. Accordingly, the results of operations of the entities to be sold have been presented as discontinued operations in the accompanying Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Cash Flows, and the assets and liabilities of the businesses have been classified as held for sale and segregated for all periods presented in the Condensed Consolidated Balance Sheets. A business classified as held for sale is recorded at the lower of its carrying value or estimated fair value less cost to sell. If the carrying value exceeds its estimated fair value less cost to sell, a loss is recognized. Transactions between the businesses held for sale and businesses in continuing operations that are expected to continue to exist after the disposal are not eliminated to appropriately reflect the continuing operations and the assets, liabilities and results of the businesses held for sale.

The results of discontinued operations are reported in "Income (loss) from discontinued operations, net of tax" in the accompanying Condensed Consolidated Statements of Operations for all periods presented. As of December 31, 2019, the Company recorded an estimated loss on sale, net of tax of $1,108 to write down the carrying value of the businesses held for sale to estimated fair value, which is based on the estimated sales price of the Individual Life Transaction as of December 31, 2019, less cost to sell and other adjustments in accordance with the Resolution MTA. In addition, the Company is required to remeasure the estimated fair value and loss on sale at the end of each quarter until closing of the Individual Life Transaction. As such, Income (loss) from discontinued operations, net of tax, for the nine months ended September 30, 2020 includes an additional estimated loss on sale of $231, net of tax. The estimated loss on sale, net of tax as of September 30, 2020 of $1,339 represents the excess of the estimated carrying value of the businesses held for sale over the estimated purchase price, which approximates fair value, less cost to sell. Additionally, the estimated loss on sale is based on assumptions that are subject to change due to fluctuations in market conditions and other variables that may occur prior to the closing date.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The following table summarizes the major categories of assets and liabilities classified as held for sale related to the Individual Life Transaction in the accompanying Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019:

			September 30, 2020						December 31, 2019
Assets:
Investments:
Fixed maturities, available-for-sale, at fair value			$	12,779					$	11,483
Fixed maturities, at fair value using the fair value option			774						752
Mortgage loans on real estate, net of allowance for credit losses of $12 as of 2020			1,264						1,319
Policy loans			996						1,005
Derivatives			314						304
Other investments(1)			337						430
Securities pledged			2						235
Total investments			16,466						15,528
Cash and cash equivalents			497						291
Short-term investments under securities loan agreements, including collateral delivered			2						216
Premium receivable and reinsurance recoverable, net allowance for credit losses of $15 as of 2020			2,838						3,101
Deferred policy acquisition costs and Value of business acquired			372						607
Current income taxes			—						136
Deferred income taxes			(794)						(757)
Other assets(2)			665						570
Assets held in separate accounts			1,473						1,485
Write-down of businesses held for sale to fair value less cost to sell			(1,339)						(1,108)
Total assets held for sale			$	20,180					$	20,069
Liabilities:
Future policy benefits and contract owner account balances			$	15,505					$	15,472
Payables under securities loan and repurchase agreements, including collateral held			209						428
Derivatives			86						77
Notes payable			219						252
Other liabilities			740						784
Liabilities related to separate accounts			1,473						1,485
Total liabilities held for sale			$	18,232					$	18,498

(1) Includes Other investments, Equity securities, Limited partnerships/corporations and Short-term investments.

(2) Includes Other assets and Accrued investment income.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The following table summarizes the components of Income (loss) from discontinued operations, net of tax related to the Individual Life Transaction for the nine months ended September 30, 2020 and 2019:

			Nine Months Ended September 30,
			2020						2019
Revenues:
Net investment income			$	485					$	494
Fee income			596						574
Premiums			21						21
Total net realized capital gains (losses)			20						59
Other revenue			(13)						(18)
Total revenues			1,109						1,130
Benefits and expenses:
Interest credited and other benefits to contract owners/policyholders (1)			947						788
Operating expenses			107						58
Net amortization of Deferred policy acquisition costs and Value of business acquired (2)			215						151
Interest expense			5						8
Total benefits and expenses			1,274						1,005
Income (loss) from discontinued operations before income taxes			(165)						125
Income tax expense (benefit)			(35)						25
Loss on sale, net of tax			(231)						—
Income (loss) from discontinued operations, net of tax			$	(361)					$	100

(1) Includes loss recognition recorded in the third quarter of 2020 associated with certain blocks of reserves.

(2) Includes the impact of annual assumption updates completed in the third quarter of 2020.

The estimated purchase price and estimated carrying value of the legal entities to be sold as of the future date of closing, and therefore the estimated loss on sale related to the Individual Life Transaction, are subject to adjustment in future quarters until closing, and may be influenced by, but not limited to, the following factors:

•The performance of the businesses held for sale, including the impact of mortality, reinsurance rates and financing costs;

•Changes in the terms of the Transaction, including as the result of subsequent negotiations or as necessary to obtain regulatory approval; and

•Other changes in the terms of the Transaction due to unanticipated developments.

The Company is required to remeasure the estimated fair value and loss on sale at the end of each quarter until closing of the Individual Life Transaction. Changes in the estimated loss on sale that occur prior to closing of the Individual Life Transaction will be reported as an adjustment to Income (loss) from discontinued operations, net of tax, in future quarters prior to closing.

Reinsurance

Concurrently with the sale, SLD will enter into reinsurance agreements with Reliastar Life Insurance Company ("RLI"), ReliaStar Life Insurance Company of New York ("RLNY"), and Voya Retirement Insurance and Annuity Company ("VRIAC"), each of which is a direct or indirect wholly owned subsidiary of the Company. Pursuant to these agreements, RLI and VRIAC will reinsure to SLD a 100% quota share, and RLNY will reinsure to SLD a 75% quota share, of their respective individual life insurance and annuities businesses. RLI, RLNY, and VRIAC will remain subsidiaries of the Company. The Company currently expects that these reinsurance transactions will be carried out on a coinsurance basis, with SLD’s reinsurance obligations collateralized in one of three ways: 1) invested assets placed in a comfort trust; 2) funds withheld basis with invested assets remaining on the respective subsidiaries of the Company; or 3) some combination of these two

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

collateralization structures. Based on values as of September 30, 2020, U.S GAAP reserves to be ceded under the Individual Life Transaction (defined below) are expected to be approximately $10.3 billion and are subject to change until closing. The reinsurance agreements along with the sale of the legal entities noted above will result in the disposition of substantially all of the Company's life insurance and legacy non-retirement annuity businesses. The revenues and net results of the Individual Life and Annuities businesses that will be disposed of via reinsurance are reported in businesses exited or to be exited through reinsurance or divestment which is an adjustment to the Company's U.S. GAAP revenues and earnings measures to calculate Adjusted operating revenues and Adjusted operating earnings before income taxes, respectively. The Company's loss on sale estimate includes the effect of charges associated with the termination or recapture of certain existing reinsurance arrangements.

The 2018 Transaction

The Company has determined that the CBVA and Annuities businesses disposed of in the 2018 Transaction disclosed in the Business, Basis of Presentation and Significant Accounting Policies Note to these Condensed Consolidated Financial Statements meet the criteria to be classified as discontinued operations and that the sale represents a strategic shift that has a major effect on the Company’s operations.  Accordingly, the results of operations of the businesses sold have been presented as discontinued operations in the accompanying Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Cash Flows for all periods presented.

Income (loss) from discontinued operations for the nine months ended September 30, 2019 included an additional loss on sale of $82 related to purchase price true-up amounts with VA Capital which was settled during the second quarter of 2019.

Upon execution of the Individual Life Transaction including the reinsurance arrangements disclosed in the Individual Life Transaction section above, the Company will continue to hold an insignificant number of Individual Life, Annuities and CBVA policies. These policies are referred to in this Quarterly Report on Form 10-Q as "Residual Runoff Business".

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

3.    Investments (excluding Consolidated Investment Entities)

Fixed Maturities

Available-for-sale and fair value option ("FVO") fixed maturities were as follows as of September 30, 2020:

			Amortized Cost						Gross Unrealized Capital Gains						Gross Unrealized Capital Losses						Embedded Derivatives(2)						Fair Value						Allowance for credit losses
Fixed maturities:
U.S. Treasuries			$	1,058					$	483					$	—					$	—					$	1,541					$	—
U.S. Government agencies and authorities			73						30						—						—						103						—
State, municipalities and political subdivisions			1,171						183						1						—						1,353						—
U.S. corporate public securities			13,051						2,674						36						—						15,689						—
U.S. corporate private securities			5,433						807						41						—						6,199						—
Foreign corporate public securities and foreign governments(1)			3,989						598						13						—						4,574						—
Foreign corporate private securities(1)			4,354						409						39						—						4,724						—
Residential mortgage-backed securities			5,430						278						34						23						5,695						2
Commercial mortgage-backed securities			4,011						271						78						—						4,203						1
Other asset-backed securities			2,095						37						29						—						2,090						13
Total fixed maturities, including securities pledged			40,665						5,770						271						23						46,171						16
Less: Securities pledged			677						154						4						—						827						—
Total fixed maturities			$	39,988					$	5,616					$	267					$	23					$	45,344					$	16

(1) Primarily U.S. dollar denominated.

(2) Embedded derivatives within fixed maturity securities are reported with the host investment. The changes in fair value of embedded derivatives are reported in Other net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Available-for-sale and FVO fixed maturities were as follows as of December 31, 2019:

			Amortized Cost						Gross Unrealized Capital Gains						Gross Unrealized Capital Losses						Embedded Derivatives(2)						Fair Value						OTTI(3)(4)
Fixed maturities:
U.S. Treasuries			$	1,074					$	308					$	—					$	—					$	1,382					$	—
U.S. Government agencies and authorities			74						21						—						—						95						—
State, municipalities and political subdivisions			1,220						103						—						—						1,323						—
U.S. corporate public securities			12,980						1,977						19						—						14,938						—
U.S. corporate private securities			5,568						488						21						—						6,035						—
Foreign corporate public securities and foreign governments(1)			3,887						460						6						—						4,341						—
Foreign corporate private securities(1)			4,545						288						2						—						4,831						—
Residential mortgage-backed securities			4,999						200						14						19						5,204						5
Commercial mortgage-backed securities			3,402						176						4						—						3,574						—
Other asset-backed securities			2,058						22						25						—						2,055						1
Total fixed maturities, including securities pledged			39,807						4,043						91						19						43,778						6
Less: Securities pledged			1,264						154						10						—						1,408						—
Total fixed maturities			$	38,543					$	3,889					$	81					$	19					$	42,370					$	6

(1) Primarily U.S. dollar denominated.

(2) Embedded derivatives within fixed maturity securities are reported with the host investment. The changes in fair value of embedded derivatives are reported in Other net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.

(3) Represents OTTI reported as a component of Other comprehensive income (loss).

(4) Amount excludes $336 of net unrealized gains on impaired available-for-sale securities.

The amortized cost and fair value of fixed maturities, including securities pledged, as of September 30, 2020, are shown below by contractual maturity. Actual maturities may differ from contractual maturities as securities may be restructured, called or prepaid. Mortgage-backed securities ("MBS") and Other asset-backed securities ("ABS") are shown separately because they are not due at a single maturity date.

			Amortized Cost						Fair Value
Due to mature:
One year or less			$	1,255					$	1,266
After one year through five years			4,982						5,311
After five years through ten years			7,561						8,529
After ten years			15,331						19,077
Mortgage-backed securities			9,441						9,898
Other asset-backed securities			2,095						2,090
Fixed maturities, including securities pledged			$	40,665					$	46,171

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

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

As of September 30, 2020 and December 31, 2019, the Company did not have any investments in a single issuer, other than obligations of the U.S. Government and government agencies, with a carrying value in excess of 10% of the Company’s Total shareholders' equity.

The following tables present the composition of the U.S. and foreign corporate securities within the fixed maturity portfolio by industry category as of the dates indicated:

			Amortized Cost						Gross Unrealized Capital Gains						Gross Unrealized Capital Losses						Fair Value
September 30, 2020
Communications			$	1,665					$	395					$	1					$	2,059
Financial			4,179						713						8						4,884
Industrial and other companies			11,438						1,890						33						13,295
Energy			2,620						359						51						2,928
Utilities			4,966						887						1						5,852
Transportation			1,333						157						30						1,460
Total			$	26,201					$	4,401					$	124					$	30,478
December 31, 2019
Communications			$	1,694					$	295					$	—					$	1,989
Financial			4,067						535						1						4,601
Industrial and other companies			11,669						1,274						16						12,927
Energy			2,819						368						27						3,160
Utilities			4,895						561						1						5,455
Transportation			1,206						116						2						1,320
Total			$	26,350					$	3,149					$	47					$	29,452

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

The Company invests in various categories of CMOs, including CMOs that are not agency-backed, that are subject to different degrees of risk from changes in interest rates and defaults. The principal risks inherent in holding CMOs are prepayment and extension risks related to significant decreases and increases in interest rates resulting in the prepayment of principal from the underlying mortgages, either earlier or later than originally anticipated. As of September 30, 2020 and December 31, 2019, approximately 44.8% and 43.4%, respectively, of the Company's CMO holdings, were invested in the above mentioned types of CMOs such as interest-only or principal-only strips, that are subject to more prepayment and extension risk than traditional CMOs.

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

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Repurchase Agreements

As of September 30, 2020 and December 31, 2019, the Company did not have any securities pledged in dollar rolls or reverse repurchase agreements. As of September 30, 2020, the carrying value of securities pledged and obligation to repay loans related to repurchase agreement transaction was $87 and included in Securities pledged and Payables under securities loan and repurchase agreements, including collateral held on the Condensed Consolidated Balance Sheets. As of December 31, 2019, the carrying value of securities pledged and obligation to repay loans related to repurchase agreement transaction was $66. Securities pledged related to repurchase agreements are comprised of other asset-backed securities.

Securities Lending

The Company engages in securities lending whereby the initial collateral is required at a rate of 102% of the market value of the loaned securities. The lending agent retains the collateral and invests it in high quality liquid assets on behalf of the Company. The market value of the loaned securities is monitored on a daily basis with additional collateral obtained or refunded as the market value of the loaned securities fluctuates. The lending agent indemnifies the Company against losses resulting from the failure of a counterparty to return securities pledged where collateral is insufficient to cover the loss. As of September 30, 2020 and December 31, 2019, the fair value of loaned securities was $546 and $1,159, respectively, and is included in Securities pledged on the Condensed Consolidated Balance Sheets.

If cash is received as collateral, the lending agent retains the cash collateral and invests it in short-term liquid assets on behalf of the Company. As of September 30, 2020 and December 31, 2019, cash collateral retained by the lending agent and invested in short-term liquid assets on the Company's behalf was $284 and $1,055, respectively, and is recorded in Short-term investments under securities loan agreements, including collateral delivered on the Condensed Consolidated Balance Sheets. As of September 30, 2020 and December 31, 2019, liabilities to return collateral of $284 and $1,055, respectively, are included in Payables under securities loan and repurchase agreements, including collateral held on the Condensed Consolidated Balance Sheets.

The Company accepts non-cash collateral in the form of securities. The securities retained as collateral by the lending agent may not be sold or re-pledged, except in the event of default, and are not reflected on the Company’s Condensed Consolidated Balance Sheets. This collateral generally consists of U.S. Treasury, U.S. Government agency securities and MBS pools. As of September 30, 2020 and December 31, 2019, the fair value of securities retained as collateral by the lending agent on the Company’s behalf was $277 and $146, respectively.

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

			September 30, 2020 (1)(2)						December 31, 2019 (1)(2)
U.S. Treasuries			$	176					$	213
U.S. Government agencies and authorities			8						15
U.S. corporate public securities			175						684
Equity Securities			105						—
Foreign corporate public securities and foreign governments			97						289
Payables under securities loan agreements			$	561					$	1,201

(1)As of September 30, 2020 and December 31, 2019, borrowings under securities lending transactions include cash collateral of $284 and $1,055, respectively.

(2)As of September 30, 2020 and December 31, 2019, borrowings under securities lending transactions include non-cash collateral of $277 and $146, respectively.

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

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Allowance for credit losses

The following table presents a rollforward of the allowance for credit losses on available-for-sale fixed maturity securities for the period presented:

			Nine Months Ended September 30, 2020
			Residential mortgage-backed securities						Commercial mortgage-backed securities												Other asset-backed securities						Total
Balance as of January 1			$	—					$	—											$	—					$	—
Credit losses on securities for which credit losses were not previously recorded			2						1												13						16
Initial allowance for credit losses recognized on financial assets accounted for as PCD			—						—												—						—
Reductions for securities sold during the period			—						—												—						—
Reductions for intent to sell or more likely than not will be required to sell securities prior to recovery of amortized cost			—						—												—						—
Increase (decrease) on securities with allowance recorded in previous period			—						—												—						—
Write-offs			—						—												—						—
Recoveries of amounts previously written off			—						—												—						—
Balance as of September 30			$	2					$	1											$	13					$	16

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Unrealized Capital Losses

The following table presents available-for-sale fixed maturities, including securities pledged, for which an allowance for credit losses has not been recorded by market sector and duration as of the date indicated:

			Twelve Months or Less Below Amortized Cost																								More Than Twelve Months Below Amortized Cost																		Total
			Fair Value						Unrealized Capital Losses						Number of securities																		Fair Value						Unrealized Capital Losses						Number of securities						Fair Value						Unrealized Capital Losses						Number of securities
September 30, 2020
U.S. Treasuries			$	14					$	—					3																		$	—					$	—					—						$	14					$	—					3
State, municipalities and political subdivisions			14						1						5																		1						—						1						15						1						6
U.S. corporate public securities			841						29						311																		38						7						9						879						36						320
U.S. corporate private securities			332						12						32																		107						29						9						439						41						41
Foreign corporate public securities and foreign governments			191						10						60																		23						3						4						214						13						64
Foreign corporate private securities			341						39						30																		7						—						1						348						39						31
Residential mortgage-backed			728						28						141																		171						6						84						899						34						225
Commercial mortgage-backed			1,286						77						185																		13						1						3						1,299						78						188
Other asset-backed			673						9						140																		411						20						126						1,084						29						266
Total			$	4,420					$	205					907																		$	771					$	66					237						$	5,191					$	271					1,144

The Company concluded that an allowance for credit losses was unnecessary for these securities because the unrealized losses are interest rate related.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Unrealized capital losses (including noncredit impairments), along with the fair value of fixed maturity securities, including securities pledged, by market sector and duration were as follows as of December 31, 2019:

			Twelve Months or Less Below Amortized Cost																		More Than Twelve Months Below Amortized Cost												Total
			Fair Value						Unrealized Capital Losses																		Fair Value						Unrealized Capital Losses						Fair Value						Unrealized Capital Losses
U.S. Treasuries			$	2					$	—		*															$	21					$	—		*			$	23					$	—		*
State, municipalities and political subdivisions			25						—			*															1						—			*			26						—			*
U.S. corporate public securities			122						3																		199						16						321						19
U.S. corporate private securities			113						1																		195						20						308						21
Foreign corporate public securities and foreign governments			15						—			*															103						6						118						6
Foreign corporate private securities			36						—			*															78						2						114						2
Residential mortgage-backed			730						8																		194						6						924						14
Commercial mortgage-backed			472						4																		18						—			*			490						4
Other asset-backed			308						5																		641						20						949						25
Total			$	1,823					$	21																	$	1,450					$	70					$	3,273					$	91
Total number of securities in an unrealized loss position			334																								338												672

*Less than $1.

Based on the Company's quarterly evaluation of its securities in a unrealized loss position, described below, the Company concluded that these securities were not impaired as of September 30, 2020. 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.

See the Business, Basis of Presentation and Significant Accounting Policies Note to these Condensed Consolidated Financial Statements for the policy used to evaluate whether the investments are impaired.

Gross unrealized capital losses on fixed maturities, including securities pledged, increased $180 from $91 to $271 for the nine months ended September 30, 2020. The increase in gross unrealized capital losses was primarily due to non-credit related market factors.

At September 30, 2020, $7 of the total $271 of gross unrealized losses were from 4 available-for-sale fixed maturity securities with an unrealized loss position of 20% or more of amortized cost for 12 months or greater.

Evaluating Securities for 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.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The following table identifies the Company's impairments included in the Condensed Consolidated Statements of Operations, excluding impairments included in Other comprehensive income (loss) by type for the periods indicated:

			Three Months Ended September 30,
			2020												2019
			Impairment						No. of Securities						Impairment						No. of Securities
State, municipalities and political subdivisions			$	—					2						$	—					—
U.S. corporate public securities			2						18						—						—
U.S. corporate private securities			1						4						—						—
Foreign corporate public securities and foreign governments(1)			—						12						—						2
Foreign corporate private securities(1)			2						5						1						1
Residential mortgage-backed			1						24						2						14
Commercial mortgage-backed			4						18						—						—
Other asset-backed			—						1						—			*			2
Total			$	10					84						$	3					19
Credit Impairments			$	—											$	2
Intent Impairments			$	10											$	1
(1) Primarily U.S. dollar denominated.
*Less than $1
			Nine Months Ended September 30,
			2020												2019
			Impairment						No. of Securities						Impairment						No. of Securities
State, municipalities and political subdivisions			$	—					13						$	—					—
U.S. corporate public securities			32						80						—						—
U.S. corporate private securities			1						9						—						—
Foreign corporate public securities and foreign governments(1)			4						39						3						3
Foreign corporate private securities(1)			8						17						26						4
Residential mortgage-backed			6						56						3						26
Commercial mortgage-backed			28						124						—						—
Other asset-backed			1						74						—						5
Total			$	80					412						$	32					38
Credit Impairments			$	—											$	33
Intent Impairments			$	80											$	4
(1) Primarily U.S. dollar denominated.
*Less than $1

The Company may sell securities during the period in which fair value has declined below amortized cost for fixed maturities. In certain situations, new factors, including changes in the business environment, can change the Company’s previous intent to continue holding a security. Accordingly, these factors may lead the Company to record additional intent related capital losses.

For the three and nine months ended September 30, 2020, intent impairments in the amounts of $5 and $55 were recorded on assets designated to be included in the reinsurance agreement associated with the Individual Life Transaction.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Troubled Debt Restructuring

The Company invests in high quality, well performing portfolios of commercial mortgage loans and private placements. Under certain circumstances, modifications are granted to these contracts. Each modification is evaluated as to whether a troubled debt restructuring has occurred. A modification is a troubled debt restructuring when the borrower is in financial difficulty and the creditor makes concessions. Generally, the types of concessions may include reducing the face amount or maturity amount of the debt as originally stated, reducing the contractual interest rate, extending the maturity date at an interest rate lower than current market interest rates and/or reducing accrued interest. The Company considers the amount, timing and extent of the concession granted in determining any impairment or changes in the specific credit allowance recorded in connection with the troubled debt restructuring. A credit allowance may have been recorded prior to the quarter when the loan is modified in a troubled debt restructuring. Accordingly, the carrying value (net of the allowance) before and after modification through a troubled debt restructuring may not change significantly, or may increase if the expected recovery is higher than the pre-modification recovery assessment. For the three and nine months ended September 30, 2020, the Company did have one new commercial mortgage loan trouble debt restructuring with a pre and post modification carrying value of $3. For the three and nine months ended September 30, 2020 the company did not have any new private placement troubled debt restructuring. For the three and nine months ended September 30, 2019, the Company did not have any new commercial mortgage loan troubled debt restructuring. For the three months ended September 30, 2019, the Company did not have any new private placement troubled debt restructuring. For the nine months ended September 30, 2019, the Company had one new private placement troubled debt restructuring with a pre-modification cost basis of $107 and a post-modification carrying value of $78.

For the three and nine months ended September 30, 2020 and September 30, 2019, the Company did not have any commercial mortgage loans or private placements modified in a troubled debt restructuring with a subsequent payment default.

Mortgage Loans on Real Estate

 

The Company diversifies its commercial mortgage loan portfolio by geographic region and property type to reduce concentration risk. The Company manages risk when originating commercial mortgage loans by generally lending only up to 75% of the estimated fair value of the underlying real estate. Subsequently, the Company continuously evaluates mortgage loans based on relevant current information including a review of loan-specific 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. The LTV ratio, calculated at time of origination, is expressed as a percentage of the amount of the loan relative to the value of the underlying property. A LTV ratio in excess of 100% indicates the unpaid loan amount exceeds the underlying collateral. The DSC ratio, based upon the most recently received financial statements, is expressed as a percentage of the amount of a property’s net income to its debt service payments. A DSC ratio of less than 1.0 indicates that a property’s operations do not generate sufficient income to cover debt payments. These ratios are utilized as part of the review process described above.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The following 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, 2020 and December 31, 2019, respectively.

			As of September 30, 2020
			Loan-to-Value Ratios
Year of Origination			0% - 50%						>50% - 60%						>60% - 70%						>70% - 80%						>80% and above						Total
2020			$	117					$	187					$	28					$	—					$	—					$	332
2019			339						239						104						14						—						696
2018			204						167						74						—						—						445
2017			653						429						17						1						—						1,100
2016			620						326						7						—						—						953
2015			638						102						—						—						—						740
2014 and prior			2,022						498						31						—						—						2,551
Total			$	4,593					$	1,948					$	261					$	15					$	—					$	6,817

			As of December 31, 2019
			Loan-to-Value Ratios
Year of Origination			0% - 50%						>50% - 60%						>60% - 70%						>70% - 80%						>80% and above						Total
2020			$	—					$	—					$	—					$	—					$	—					$	—
2019			121						138						227						211						26						723
2018			11						141						188						159						14						513
2017			153						283						697						12						15						1,160
2016			122						221						579						50						—						972
2015			39						502						248						15						—						804
2014 and prior			241						438						1,771						256						1						2,707
Total			$	687					$	1,723					$	3,710					$	703					$	56					$	6,879

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, 2020 and December 31, 2019, respectively.

			As of September 30, 2020
			Debt Service Coverage Ratios
Year of Origination			>1.5x						>1.25x - 1.5x						>1.0x - 1.25x						<1.0x						Commercial mortgage loans secured by land or construction loans						Total
2020			$	249					$	72					$	11					$	—					$	—					$	332
2019			463						109						52						72						—						696
2018			235						51						103						56						—						445
2017			634						259						135						72						—						1,100
2016			850						58						40						5						—						953
2015			696						36						8						—						—						740
2014 and prior			2,107						251						92						101						—						2,551
Total			$	5,234					$	836					$	441					$	306					$	—					$	6,817

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

			As of December 31, 2019
			Debt Service Coverage Ratios
Year of Origination			>1.5x						>1.25x - 1.5x						>1.0x - 1.25x						<1.0x						Commercial mortgage loans secured by land or construction loans						Total
2020			$	—					$	—					$	—					$	—					$	—					$	—
2019			493						165						66						—						—						724
2018			351						13						88						61						—						513
2017			608						292						167						93						—						1,160
2016			873						63						31						4						—						971
2015			743						50						6						6						—						805
2014 and prior			2,265						210						139						92						—						2,706
Total			$	5,333					$	793					$	497					$	256					$	—					$	6,879

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, 2020 and December 31, 2019, respectively.

			As of September 30, 2020
			U.S. Region
Year of Origination			Pacific						South Atlantic						Middle Atlantic						West South Central						Mountain						East North Central						New England						West North Central						East South Central						Total
2020			$	84					$	142					$	20					$	29					$	18					$	15					$	—					$	—					$	24					$	332
2019			99						197						20						180						69						60						18						14						39						696
2018			105						142						71						38						59						16						—						14						—						445
2017			173						126						423						168						103						62						6						39						—						1,100
2016			275						175						187						46						104						119						13						28						6						953
2015			207						187						168						38						54						64						11						11						—						740
2014 and prior			700						523						368						205						261						231						60						159						44						2,551
Total			$	1,643					$	1,492					$	1,257					$	704					$	668					$	567					$	108					$	265					$	113					$	6,817

			As of December 31, 2019
			U.S. Region
Year of Origination			Pacific						South Atlantic						Middle Atlantic						West South Central						Mountain						East North Central						New England						West North Central						East South Central						Total
2020			$	—					$	—					$	—					$	—					$	—					$	—					$	—					$	—					$	—					$	—
2019			100						200						35						187						67						63						18						15						37						722
2018			106						182						73						47						60						16						—						14						15						513
2017			177						128						464						171						107						63						6						45						—						1,161
2016			277						181						193						47						107						119						14						28						6						972
2015			226						218						171						43						54						68						12						12						—						804
2014 and prior			741						553						390						224						275						242						67						169						46						2,707
Total			$	1,627					$	1,462					$	1,326					$	719					$	670					$	571					$	117					$	283					$	104					$	6,879

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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, 2020 and December 31, 2019, respectively.

			As of September 30, 2020
			Property Type
Year of Origination			Retail						Industrial						Apartments						Office						Hotel/Motel						Other						Mixed Use						Total
2020			$	49					$	30					$	121					$	132					$	—					$	—					$	—					$	332
2019			55						112						394						100						35						—						—						696
2018			77						110						193						25						4						36						—						445
2017			140						512						265						179						4						—						—						1,100
2016			177						304						260						188						10						9						5						953
2015			165						280						127						78						23						67						—						740
2014 and prior			1,149						217						469						361						97						203						55						2,551
Total			$	1,812					$	1,565					$	1,829					$	1,063					$	173					$	315					$	60					$	6,817

			As of December 31, 2019
			Property Type
Year of Origination			Retail						Industrial						Apartments						Office						Hotel/Motel						Other						Mixed Use						Total
2020			$	—					$	—					$	—					$	—					$	—					$	—					$	—					$	—
2019			55						130						400						105						32						—						—						722
2018			83						122						221						46						4						36						—						512
2017			142						557						268						190						4						—						—						1,161
2016			179						312						263						192						10						10						6						972
2015			198						285						133						90						30						69						—						805
2014 and prior			1,216						230						512						376						108						209						56						2,707
Total			$	1,873					$	1,636					$	1,797					$	999					$	188					$	324					$	62					$	6,879

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

			September 30, 2020
Allowance for credit losses, balance at January 1			$	16
Credit losses on mortgage loans for which credit losses were not previously recorded			3
Initial allowance for credit losses recognized on financial assets accounted for as PCD			—
Increase (decrease) on mortgage loans with allowance recorded in previous period			39
Provision for expected credit losses			58
Writeoffs			(3)
Recoveries of amounts previously written off			—
Allowance for credit losses, end of period			$	55

While still heavily impacted by COVID-19, the Commercial Mortgage Loan portfolio allowance decreased by $19 during the quarter as certain sectors of the economy resumed operations, albeit at lower than pre-pandemic levels. We continue to observe distress in the hotel sector.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

To provide temporary financial assistance to our commercial mortgage loans borrowers adversely affected by COVID-19 related stress, the Company has provided payment forbearance to approximately 8% of the outstanding principal amount of our commercial mortgage loans. Deferred payment amounts are expected to be repaid across the 12 months following the end of the agreed upon forbearance period. No modifications to any commercial mortgage loans have been made as of the issuance date of this filing.

As of September 30, 2020, the Company identified 484 commercial mortgage loans with an amortized cost balance of $1,234 in connection with the reinsurance transactions occurring immediately after the closing of the Individual Life Transaction. These commercial mortgage loans are reported with the Company's Mortgage loans on real estate on the Condensed Consolidated Balance Sheets as of September 30, 2020. These commercial mortgage loans are held at lower of cost or market at September 30, 2020 resulting in an immaterial addition to the allowance for credit losses. Additionally, included in the allowance for credit losses table above are allowances of $11 associated with the identified commercial mortgages that will be transferred to the comfort trust as part of the reinsurance portion of the Individual Life Transaction.

The following table presents past due commercial mortgage loans as of the dates indicated:

			September 30, 2020						December 31, 2019
Delinquency:
Current			$	6,806					$	6,879
30-59 days past due			—						—
60-89 days past due			6						—
Greater than 90 days past due			5						—
Total			$	6,817					$	6,879

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, 2020, the company had one commercial mortgage loan in non-accrual status. As of December 31, 2019, the Company had no commercial mortgage loans in non-accrual status. There was no interest income recognized on loans in non-accrual status for the nine months ended September 30, 2020 and at December 31, 2019.

As of September 30, 2020 and December 31, 2019, the Company had no commercial mortgage loans that were over 90 days or more past due but are not on non-accrual status. The Company had no commercial mortgage loans on non-accrual status for which there is no related allowance for credit losses as of September 30, 2020.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Net Investment Income

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

			Three Months Ended September 30,												Nine Months Ended September 30,
			2020						2019						2020						2019
Fixed maturities			$	618					$	556					$	1,785					$	1,667
Equity securities			4						3						10						8
Mortgage loans on real estate			74						80						221						241
Policy loans			11						9						34						32
Short-term investments and cash equivalents			—						3						3						9
Other			113						51						85						149
Gross investment income			820						702						2,138						2,106
Less: investment expenses			20						15						54						49
Net investment income			$	800					$	687					$	2,084					$	2,057

As of September 30, 2020 and December 31, 2019, the Company had $1 and $1, respectively, of investments in fixed maturities that did not produce net investment income. Fixed maturities are moved to a non-accrual status when the investment defaults.

Interest income on fixed maturities is recorded when earned using an effective yield method, giving effect to amortization of premiums and accretion of discounts. Such interest income is recorded in Net investment income in the Condensed Consolidated Statements of Operations.

Net Realized Capital Gains (Losses)

Net realized capital gains (losses) comprise the difference between the amortized cost of investments and proceeds from sale and redemption, as well as losses incurred due to the credit-related and intent-related impairment of investments. Realized investment gains and losses are also primarily generated from changes in fair value of embedded derivatives within products and fixed maturities, changes in fair value of fixed maturities recorded at FVO and changes in fair value including accruals on derivative instruments, except for effective cash flow hedges. Net realized capital gains (losses) also include changes in fair value of equity securities. The cost of the investments on disposal is generally determined based on first-in-first-out ("FIFO") methodology.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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

			Three Months Ended September 30,
			2020						2019
Fixed maturities, available-for-sale, including securities pledged			$	(7)					$	20
Fixed maturities, at fair value option			(131)						10
Equity securities			7						3
Derivatives			11						(14)
Embedded derivatives - fixed maturities			(3)						4
Guaranteed benefit derivatives			35						(43)
Mortgage Loans			17						—
Other investments			1						—
Net realized capital gains (losses)			$	(70)					$	(20)
			Nine Months Ended September 30,
			2020						2019
Fixed maturities, available-for-sale, including securities pledged			$	(59)					$	7
Fixed maturities, at fair value option			(84)						177
Equity securities			11						14
Derivatives			(22)						(160)
Embedded derivatives - fixed maturities			4						6
Guaranteed benefit derivatives			(113)						(51)
Mortgage Loans			(41)						—
Other investments			—						—
Net realized capital gains (losses)			$	(304)					$	(7)

For the three and nine months ended September 30, 2020 and 2019, the change in the fair value of equity securities still held as of September 30, 2020 and 2019 was $11 and $14, respectively.

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

			Three Months Ended September 30,												Nine Months Ended September 30,
			2020						2019						2020						2019
Proceeds on sales			$	341					$	519					$	1,706					$	3,243
Gross gains			7						11						97						54
Gross losses			4						4						73						35

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

4.    Derivative Financial Instruments

The Company enters into the following types of derivatives:

Interest rate caps and floors: The Company uses interest rate cap contracts to hedge the interest rate exposure arising from duration mismatches between assets and liabilities. Interest rate caps are also used to hedge interest rate exposure if rates rise above a specified level. The Company uses interest rate floor contracts to hedge interest rate exposure if rates decrease below a specified level. The Company pays an upfront premium to purchase these caps and floors. The Company utilizes these contracts in non-qualifying hedging relationships.

Interest rate swaps: Interest rate swaps are used by the Company primarily to reduce market risks from changes in interest rates and to alter interest rate exposure arising from mismatches between assets and/or liabilities. Interest rate swaps are also used to hedge the interest rate risk associated with the value of assets it owns or in an anticipation of acquiring them. Using interest rate swaps, the Company agrees with another party to exchange, at specified intervals, the difference between fixed rate and floating rate interest payments, calculated by reference to an agreed upon notional principal amount. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made to/from the counterparty at each due date. The Company utilizes these contracts in qualifying hedging relationships as well as non-qualifying hedging relationships.

Foreign exchange swaps: The Company uses foreign exchange or currency swaps to reduce the risk of change in the value, yield or cash flows associated with certain foreign denominated invested assets. Foreign exchange swaps represent contracts that require the exchange of foreign currency cash flows against U.S. dollar cash flows at regular periods, typically quarterly or semi-annually. The Company utilizes these contracts in qualifying hedging relationships as well as non-qualifying hedging relationships.

Credit default swaps: Credit default swaps are used to reduce credit loss exposure with respect to certain assets that the Company owns or to assume credit exposure on certain assets that the Company does not own. Payments are made to, or received from, the counterparty at specified intervals. In the event of a default on the underlying credit exposure, the Company will either receive a payment (purchased credit protection) or will be required to make a payment (sold credit protection) equal to the par minus recovery value of the swap contract. The Company utilizes these contracts in non-qualifying hedging relationships.

Total return swaps: The Company uses total return swaps as a hedge against a decrease in variable annuity account values, which are invested in certain indices. Total return swaps are also used as a hedge of other corporate liabilities. Using total return swaps, the Company agrees with another party to exchange, at specified intervals, the difference between the economic risk and reward of assets or a market index and the London Interbank Offered Rates ("LIBOR") rate, calculated by reference to an agreed upon notional principal amount. No cash is exchanged at the onset of the contracts. Cash is paid and received over the life of the contract based upon the terms of the swaps. The Company utilizes these contracts in non-qualifying hedging relationships.

Currency forwards: The Company utilizes currency forward contracts to hedge currency exposure related to its invested assets. The Company utilizes these contracts in non-qualifying hedging relationships.

Forwards: The Company uses forward contracts to hedge certain invested assets against movement in interest rates, particularly mortgage rates. The Company uses To Be Announced mortgage-backed securities as an economic hedge against rate movements. The Company utilizes forward contracts in non-qualifying hedging relationships.

Futures: Futures contracts are used to hedge against a decrease in certain equity indices. Such decreases may correlate to a decrease in variable annuity account values which would increase the possibility of the Company incurring an expense for guaranteed benefits in excess of account values. The Company also uses interest rate futures contracts to hedge its exposure to market risks due to changes in interest rates. The Company enters into exchange traded futures with regulated futures commissions that are members of the exchange. The Company also posts initial and variation margins, with the exchange, on a daily basis. The Company utilizes exchange-traded futures in non-qualifying hedging relationships. The Company may also use futures contracts as a hedge against an increase in certain equity indices.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Swaptions: A swaption is an option to enter into a swap with a forward starting effective date. The Company uses swaptions to hedge the interest rate exposure associated with the minimum crediting rate and book value guarantees embedded in the retirement products that the Company offers. Increases in interest rates will generate losses on assets that are backing such liabilities. In certain instances, the Company locks in the economic impact of existing purchased swaptions by entering into offsetting written swaptions. The Company pays a premium when it purchases the swaption. The Company utilizes these contracts in non-qualifying hedging relationships.

Options: The Company uses equity options to hedge against an increase in various equity indices. Such increases may result in increased payments to the holders of the fixed-index annuity ("FIA") and indexed universal life ("IUL") contracts. The Company pays an upfront premium to purchase these options. The Company utilizes these options in non-qualifying hedging relationships.

Currency Options: The Company uses currency option contracts to hedge currency exposure related to its invested assets. The Company utilizes these contracts in non-qualifying hedging relationships.

Managed custody guarantees ("MCGs"): The Company issues certain credited rate guarantees on variable fixed income portfolios that represent stand-alone derivatives. The market value is partially determined by, among other things, levels of or changes in interest rates, prepayment rates and credit ratings/spreads.

Embedded derivatives: The Company also invests in certain fixed maturity instruments and has issued certain products that contain embedded derivatives for which market value is at least partially determined by, among other things, levels of or changes in domestic and/or foreign interest rates (short-term or long-term), exchange rates, prepayment rates, equity rates or credit ratings/spreads. In addition, the Company has entered into coinsurance with funds withheld arrangements, which contain embedded derivatives.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The Company's use of derivatives is limited mainly to economic hedging to reduce the Company's exposure to cash flow variability of assets and liabilities, interest rate risk, credit risk, exchange rate risk and equity market risk. It is the Company's policy not to offset amounts recognized for derivative instruments and amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral arising from derivative instruments executed with the same counterparty under a master netting arrangement, which provides the Company with the legal right of offset. However, in accordance with the Chicago Mercantile Exchange ("CME") rules related to the variation margin payments, the Company is required to adjust the derivative balances with the variation margin payments related to its cleared derivatives executed through CME.

The notional amounts and fair values of derivatives from continuing operations, including amounts related to businesses to be

exited via reinsurance associated with the Individual Life Transaction, were as follows as of the dates indicated:

			September 30, 2020																		December 31, 2019
			Notional Amount						Asset Fair Value						Liability Fair Value						Notional Amount						Asset Fair Value						Liability Fair Value
Derivatives: Qualifying for hedge accounting(1)
Cash flow hedges:
Interest rate contracts			$	30					$	—					$	—					$	30					$	—					$	—
Foreign exchange contracts			739						30						9						771						12						21
Derivatives: Non-qualifying for hedge accounting(1)
Interest rate contracts			20,372						226						414						25,027						294						371
Foreign exchange contracts			111						—						2						92						—						1
Equity contracts			405						14						7						400						10						8
Credit contracts			229						—						2						237						—						2
Embedded derivatives and Managed custody guarantees:
Within fixed maturity investments			N/A						23						—						N/A						19						—
Within products			N/A						—						166						N/A						—						60
Within reinsurance agreements			N/A						—						143						N/A						—						100
Managed custody guarantees			N/A						—						11						N/A						—						—
Total									$	293					$	754											$	335					$	563

(1) Open derivative contracts are reported as Derivatives assets or liabilities on the Condensed Consolidated Balance Sheets at fair value.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The notional amounts and fair values of derivatives for businesses held for sale were as follows as of the dates indicated:

			September 30, 2020																		December 31, 2019
			Notional Amount						Asset Fair Value						Liability Fair Value						Notional Amount						Asset Fair Value						Liability Fair Value
Derivatives: Qualifying for hedge accounting(1)
Cash flow hedges:
Interest rate contracts			$	1					$	—					$	—					$	1					$	—					$	—
Foreign exchange contracts			32						2						—						19						1						1
Derivatives: Non-qualifying for hedge accounting(1)
Interest rate contracts			2,205						49						52						2,227						49						56
Foreign exchange contracts			25						—						1						18						—						—
Equity contracts			1,910						263						33						1,753						254						20
Embedded derivatives and Managed custody guarantees:
Within fixed maturity investments			N/A						9						—						N/A						8						—
Within products			N/A						—						215						N/A						—						217
Within reinsurance agreements			N/A						—						95						N/A						—						75
Total									$	323					$	396											$	312					$	369

(1) Open derivative contracts are reported as Derivatives assets or liabilities on the Condensed Consolidated Balance Sheets at fair value.

Based on the notional amounts, a substantial portion of the Company’s derivative positions was not designated or did not qualify for hedge accounting as part of a hedging relationship as of September 30, 2020 and December 31, 2019. The Company utilizes derivative contracts mainly to hedge exposure to variability in cash flows, interest rate risk, credit risk, foreign exchange risk and equity market risk. The majority of derivatives used by the Company are designated as product hedges, which hedge the exposure arising from insurance liabilities or guarantees embedded in the contracts the Company offers through various product lines. These derivatives do not qualify for hedge accounting as they do not meet the criteria of being "highly effective" as outlined in ASC Topic 815, but do provide an economic hedge, which is in line with the Company’s risk management objectives. The Company also uses derivatives contracts to hedge its exposure to various risks associated with the investment portfolio. The Company does not seek hedge accounting treatment for certain of these derivatives as they generally do not qualify for hedge accounting due to the criteria required under the portfolio hedging rules outlined in ASC Topic 815. The Company also uses credit default swaps coupled with other investments in order to produce the investment characteristics of otherwise permissible investments that do not qualify as effective accounting hedges under ASC Topic 815.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Although the Company has not elected to net its derivative exposures, the notional amounts and fair values of Over-The-Counter ("OTC") and cleared derivatives excluding exchange traded contracts for continuing operations and businesses held for sale are presented in the tables below as of the dates indicated:

			September 30, 2020
Continuing operations:(1)
			Notional Amount						Asset Fair Value						Liability Fair Value
Credit contracts			$	229					$	—					$	2
Equity contracts			280						14						7
Foreign exchange contracts			850						30						11
Interest rate contracts			17,285						226						414
									270						434
Counterparty netting(2)									(221)						(221)
Cash collateral netting(2)									(43)						(210)
Securities collateral netting(2)									—						—
Net receivables/payables									$	6					$	3

(1) Includes amounts related to businesses to be exited via reinsurance associated with the Individual Life Transaction,

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

			September 30, 2020
Businesses held for sale:
			Notional Amount						Asset Fair Value						Liability Fair Value
Credit contracts			$	—					$	—					$	—
Equity contracts			1,910						263						33
Foreign exchange contracts			57						2						1
Interest rate contracts			2,206						49						52
									314						86
Counterparty netting(1)									(84)						(84)
Cash collateral netting(1)									(208)						(1)
Securities collateral netting(1)									(17)						—
Net receivables/payables									$	5					$	1

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

			December 31, 2019
Continuing operations:(1)
			Notional Amount						Asset Fair Value						Liability Fair Value
Credit contracts			$	237					$	—					$	2
Equity contracts			293						9						7
Foreign exchange contracts			863						12						22
Interest rate contracts			23,634						295						371
									316						402
Counterparty netting(2)									(290)						(290)
Cash collateral netting(2)									(25)						(100)
Securities collateral netting(2)									—						(5)
Net receivables/payables									$	1					$	7

(1) Includes amounts related to businesses to be exited via reinsurance associated with the Individual Life Transaction,

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

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

			December 31, 2019
Businesses held for sale:
			Notional Amount						Asset Fair Value						Liability Fair Value
Credit contracts			$	—					$	—					$	—
Equity contracts			1,753						254						20
Foreign exchange contracts			37						1						1
Interest rate contracts			2,228						49						56
									304						77
Counterparty netting(1)									(76)						(76)
Cash collateral netting(1)									(206)						—
Securities collateral netting(1)									(17)						—
Net receivables/payables									$	5					$	1

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

Collateral

Under the terms of the OTC Derivative International Swaps and Derivatives Association, Inc. ("ISDA") agreements, the Company may receive from, or deliver to, counterparties collateral to assure that terms of the ISDA agreements will be met with regard to the Credit Support Annex ("CSA"). The terms of the CSA call for the Company to pay interest on any cash received equal to the Federal Funds rate. To the extent cash collateral is received and delivered, it is included in Payables under securities loan and repurchase agreements, including collateral held and Short-term investments under securities loan agreements, including collateral delivered, respectively, on the Condensed Consolidated Balance Sheets and is reinvested in short-term investments. Collateral held is used in accordance with the CSA to satisfy any obligations. Investment grade bonds owned by the Company are the source of noncash collateral posted, which is reported in Securities pledged on the Condensed Consolidated Balance Sheets.

Continuing operations: As of September 30, 2020, the Company held $34 and pledged $196 of net cash collateral related to OTC derivative contracts and cleared derivative contracts, respectively. As of December 31, 2019, the Company held $9 and $82 of net cash collateral related to OTC derivative contracts and cleared derivative contracts, respectively. In addition, as of September 30, 2020, the Company delivered $194 of securities and held no securities as collateral. As of December 31, 2019, the Company delivered $183 of securities and held no securities as collateral.

Businesses held for sale: As of September 30, 2020, the Company held $209 and pledged $1 of net cash collateral related to OTC derivative contracts and cleared derivative contracts, respectively. As of December 31, 2019, the Company held $213 and no net cash collateral related to OTC derivative contracts and cleared derivative contracts, respectively. In addition, as of September 30, 2020, the Company delivered $2 of securities and held $17 of securities as collateral. As of December 31, 2019, the Company delivered $2 of securities and held $18 of securities as collateral.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The location and effect of derivatives qualifying for hedge accounting from continuing operations, including amounts related to

businesses to be exited via reinsurance associated with the Individual Life Transaction, on the Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Comprehensive Income are as follows for the period indicated:

			Three Months Ended September 30,
			2020												2019
			Interest Rate Contracts						Foreign Exchange Contracts						Interest Rate Contracts						Foreign Exchange Contracts
Derivatives: Qualifying for hedge accounting
Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income			Net investment income						Net investment income and Other Net Realized Gains/Losses						Net investment income						Net investment income and Other Net Realized Gains/Losses
Amount of Gain or (Loss) Recognized in Other Comprehensive Income			$	—					$	(42)					$	—					$	33
Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income			—						—						—						3
			Nine Months Ended September 30,
			2020												2019
			Interest Rate Contracts						Foreign Exchange Contracts						Interest Rate Contracts						Foreign Exchange Contracts
Derivatives: Qualifying for hedge accounting
Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income			Net investment income						Net investment income and Other Net Realized Gains/Losses						Net investment income						Net investment income and Other Net Realized Gains/Losses
Amount of Gain or (Loss) Recognized in Other Comprehensive Income			$	2					$	31					$	2					$	43
Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income			—						6						—						9

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The location and amount of gain (loss) recognized from continuing operations, including amounts related to businesses to be exited via reinsurance associated with the Individual Life Transaction, in the Condensed Consolidated Statements of Operations for derivatives qualifying for hedge accounting are as follows for the period indicated:

			Three Months Ended September 30,
			2020												2019
			Net Investment Income						Other net realized capital gains/(losses)						Net Investment Income						Other net realized capital gains/(losses)
Total amounts of line items presented in the statement of operations in which the effects of cash flow hedges are recorded			$	800					$	(60)					$	687					$	(17)
Derivatives: Qualifying for hedge accounting
Cash flow hedges:
Foreign exchange contracts:
Gain (loss) reclassified from accumulated other comprehensive income into income			3						(3)						3						—
			Nine Months Ended September 30,
			2020												2019
			Net Investment Income						Other net realized capital gains/(losses)						Net Investment Income						Other net realized capital gains/(losses)
Total amounts of line items presented in the statement of operations in which the effects of cash flow hedges are recorded			$	2,084					$	(224)					$	2,057					$	25
Derivatives: Qualifying for hedge accounting
Cash flow hedges:
Foreign exchange contracts:
Gain (loss) reclassified from accumulated other comprehensive income into income			9						(3)						9						—

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The location and effect of derivatives not designated as hedging instruments from continuing operations, including amounts related to businesses to be exited via reinsurance associated with the Individual Life Transaction, on the Condensed Consolidated Statements of Operations are as follows for the periods indicated:

			Location of Gain or (Loss) Recognized in Income on Derivative						Three Months Ended September 30,
									2020						2019
Derivatives: Non-qualifying for hedge accounting
Interest rate contracts			Other net realized capital gains (losses)						$	21					$	(18)
Foreign exchange contracts			Other net realized capital gains (losses)						(4)						4
Equity contracts			Other net realized capital gains (losses)						(2)						(3)
Credit contracts			Other net realized capital gains (losses)						(1)						—
Embedded derivatives and Managed custody guarantees:
Within fixed maturity investments			Other net realized capital gains (losses)						(3)						4
Within products			Other net realized capital gains (losses)						28						(36)
Within reinsurance agreements			Policyholder benefits						8						(48)
Managed custody guarantees			Other net realized capital gains (losses)						7						(4)
Total									$	54					$	(101)
			Location of Gain or (Loss) Recognized in Income on Derivative						Nine Months Ended September 30,
									2020						2019
Derivatives: Non-qualifying for hedge accounting
Interest rate contracts			Other net realized capital gains (losses)						$	(12)					$	(148)
Foreign exchange contracts			Other net realized capital gains (losses)						2						8
Equity contracts			Other net realized capital gains (losses)						(11)						(20)
Credit contracts			Other net realized capital gains (losses)						3						2
Embedded derivatives and Managed custody guarantees:
Within fixed maturity investments			Other net realized capital gains (losses)						4						7
Within products			Other net realized capital gains (losses)						(103)						(120)
Within reinsurance agreements			Policyholder benefits						(52)						(170)
Managed custody guarantees			Other net realized capital gains (losses)						(10)						(4)
Total									$	(179)					$	(445)

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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

			Location of Gain or (Loss) Recognized in Income on Derivative															Three Months Ended September 30,
																		2020						2019
Derivatives: Non-qualifying for hedge accounting
Foreign exchange contracts			Income (loss) from discontinued operations, net of tax															$	—					$	—
Equity contracts			Income (loss) from discontinued operations, net of tax															43						(4)
Credit contracts			Income (loss) from discontinued operations, net of tax															—						—
Embedded derivatives and Managed custody guarantees:
Within fixed maturity investments			Income (loss) from discontinued operations, net of tax															(1)						(1)
Within products			Income (loss) from discontinued operations, net of tax															(43)						—
Total																		$	(1)					$	(5)
			Location of Gain or (Loss) Recognized in Income on Derivative									Nine Months Ended September 30,
																		2020						2019
Derivatives: Non-qualifying for hedge accounting
Foreign exchange contracts			Income (loss) from discontinued operations, net of tax															$	1					$	—
Equity contracts			Income (loss) from discontinued operations, net of tax															(18)						74
Credit contracts			Income (loss) from discontinued operations, net of tax															—						1
Embedded derivatives and Managed custody guarantees:
Within fixed maturity investments			Income (loss) from discontinued operations, net of tax															1						—
Within products			Income (loss) from discontinued operations, net of tax															13						—
Total																		$	(3)					$	75

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

5.    Fair Value Measurements (excluding Consolidated Investment Entities)

Fair Value Measurement

The following table presents the Company's hierarchy for its assets and liabilities from continuing operations, including amounts related to businesses to be exited via reinsurance associated with the Individual Life Transaction, measured at fair value on a recurring basis as of September 30, 2020:

			Level 1						Level 2						Level 3						Total
Assets:
Fixed maturities, including securities pledged:
U.S. Treasuries			$	1,190					$	351					$	—					$	1,541
U.S. Government agencies and authorities			—						103						—						103
State, municipalities and political subdivisions			—						1,353						—						1,353
U.S. corporate public securities			—						15,571						118						15,689
U.S. corporate private securities			—						4,472						1,727						6,199
Foreign corporate public securities and foreign governments(1)			—						4,574						—						4,574
Foreign corporate private securities(1)			—						4,276						448						4,724
Residential mortgage-backed securities			—						5,660						35						5,695
Commercial mortgage-backed securities			—						4,199						4						4,203
Other asset-backed securities			—						2,015						75						2,090
Total fixed maturities, including securities pledged			1,190						42,574						2,407						46,171
Equity securities			200						—						171						371
Derivatives:
Interest rate contracts			6						172						48						226
Foreign exchange contracts			—						30						—						30
Equity contracts			—						13						1						14
Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements			1,719						67						—						1,786
Assets held in separate accounts			76,316						6,356						207						82,879
Total assets			$	79,431					$	49,212					$	2,834					$	131,477
Percentage of Level to total			61		%				37		%				2		%				100		%
Liabilities:
Derivatives:
Guaranteed benefit derivatives(2)			—						—						177						177
Other derivatives:
Interest rate contracts			—						366						48						414
Foreign exchange contracts			—						11						—						11
Equity contracts			—						7						—						7
Credit contracts			—						2						—						2
Embedded derivative on reinsurance			—						143						—						143
Total liabilities			$	—					$	529					$	225					$	754

(1) Primarily U.S. dollar denominated.

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

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The following table presents the Company's hierarchy for its assets and liabilities related to businesses held for sale measured at

fair value on a recurring basis as of September 30, 2020:

			Level 1						Level 2						Level 3						Total
Assets:
Fixed maturities, including securities pledged:
U.S. Treasuries			$	716					$	386					$	—					$	1,102
U.S. Government agencies and authorities			—						176						—						176
State, municipalities and political subdivisions			—						453						—						453
U.S. corporate public securities			—						6,387						31						6,418
U.S. corporate private securities			—						677						377						1,054
Foreign corporate public securities and foreign governments(1)			—						1,554						2						1,556
Foreign corporate private securities(1)			—						525						98						623
Residential mortgage-backed securities			—						540						—						540
Commercial mortgage-backed securities			—						1,042						4						1,046
Other asset-backed securities			—						579						8						587
Total fixed maturities, including securities pledged			716						12,319						520						13,555
Equity securities			2						—						2						4
Derivatives:
Interest rate contracts			—						1						48						49
Foreign exchange contracts			—						2						—						2
Equity contracts			—						61						202						263
Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements			504						—						—						504
Assets held in separate accounts			1,473						—						—						1,473
Total assets			$	2,695					$	12,383					$	772					$	15,850
Percentage of Level to total			17		%				78		%				5		%				100		%
Liabilities:
Derivatives:
Guaranteed benefit derivatives - IUL			—						—						215						215
Other derivatives:
Interest rate contracts			—						4						48						52
Foreign exchange contracts			—						1						—						1
Equity contracts			—						33						—						33
Credit contracts			—						—						—						—
Embedded derivative on reinsurance			—						95						—						95
Total liabilities			$	—					$	133					$	263					$	396

(1) Primarily U.S. dollar denominated.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The following table presents the Company's hierarchy for its assets and liabilities from continuing operations, including amounts related to businesses to be exited via reinsurance associated with the Individual Life Transaction, measured at fair value on a recurring basis as of December 31, 2019:

			Level 1						Level 2						Level 3						Total
Assets:
Fixed maturities, including securities pledged:
U.S. Treasuries			$	1,083					$	299					$	—					$	1,382
U.S. Government agencies and authorities			—						95						—						95
State, municipalities and political subdivisions			—						1,323						—						1,323
U.S. corporate public securities			—						14,864						74						14,938
U.S. corporate private securities			—						4,578						1,457						6,035
Foreign corporate public securities and foreign governments(1)			—						4,341						—						4,341
Foreign corporate private securities(1)			—						4,503						328						4,831
Residential mortgage-backed securities			—						5,181						23						5,204
Commercial mortgage-backed securities			—						3,574						—						3,574
Other asset-backed securities			—						1,977						78						2,055
Total fixed maturities, including securities pledged			1,083						40,735						1,960						43,778
Equity securities			68						—						128						196
Derivatives:
Interest rate contracts			2						243						49						294
Foreign exchange contracts			—						12						—						12
Equity contracts			—						10						—						10
Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements			2,613						31						—						2,644
Assets held in separate accounts			75,405						6,149						116						81,670
Total assets			$	79,171					$	47,180					$	2,253					$	128,604
Percentage of Level to total			61		%				37		%				2		%				100		%
Liabilities:
Derivatives:
Guaranteed benefit derivatives(2)			—						—						60						60
Other derivatives:
Interest rate contracts			—						322						49						371
Foreign exchange contracts			—						22						—						22
Equity contracts			—						8						—						8
Credit contracts			—						2						—						2
Embedded derivative on reinsurance			—						100						—						100
Total liabilities			$	—					$	454					$	109					$	563

(1)Primarily U.S. dollar denominated.

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

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The following table presents the Company's hierarchy for its assets and liabilities related to businesses held for sale measured at

fair value on a recurring basis as of December 31, 2019:

			Level 1						Level 2						Level 3						Total
Assets:
Fixed maturities, including securities pledged:
U.S. Treasuries			$	472					$	314					$	—					$	786
U.S. Government agencies and authorities			—						161						—						161
State, municipalities and political subdivisions			—						439						—						439
U.S. corporate public securities			—						5,949						32						5,981
U.S. corporate private securities			—						596						316						912
Foreign corporate public securities and foreign governments(1)			—						1,490						7						1,497
Foreign corporate private securities(1)			—						438						80						518
Residential mortgage-backed securities			—						588						—						588
Commercial mortgage-backed securities			—						995						—						995
Other asset-backed securities			—						587						6						593
Total fixed maturities, including securities pledged			472						11,557						441						12,470
Equity securities			2						—						33						35
Derivatives:
Interest rate contracts			—						—						49						49
Foreign exchange contracts			—						1						—						1
Equity contracts			—						52						202						254
Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements			533						—						—						533
Assets held in separate accounts			1,485						—						—						1,485
Total assets			$	2,492					$	11,610					$	725					$	14,827
Percentage of Level to total			17		%				78		%				5		%				100		%
Liabilities:
Derivatives:
Guaranteed benefit derivatives - IUL			$	—					$	—					$	217					$	217
Other derivatives:
Interest rate contracts			—						7						49						56
Foreign exchange contracts			—						1						—						1
Equity contracts			—						20						—						20
Embedded derivative on reinsurance			—						75						—						75
Total liabilities			$	—					$	103					$	266					$	369

(1) Primarily U.S. dollar denominated.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Valuation of Financial Assets and Liabilities at Fair Value

Certain assets and liabilities are measured at estimated fair value on the Company’s Consolidated Balance Sheets. The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The exit price and the transaction (or entry) price will be the same at initial recognition in many circumstances. However, in certain cases, the transaction price may not represent fair value. The fair value of a liability is based on the amount that would be paid to transfer a liability to a third-party with an equal credit standing. Fair value is required to be a market-based measurement that is determined based on a hypothetical transaction at the measurement date, from a market participant’s perspective. The Company considers three broad valuation approaches when a quoted price is unavailable: (i) the market approach, (ii) the income approach and (iii) the cost approach. The Company determines the most appropriate valuation technique to use, given the instrument being measured and the availability of sufficient inputs. The Company prioritizes the inputs to fair valuation approaches and allows for the use of unobservable inputs to the extent that observable inputs are not available.

The Company utilizes a number of valuation methodologies to determine the fair values of its financial assets and liabilities in conformity with the concepts of exit price and the fair value hierarchy as prescribed in ASC Topic 820. Valuations are obtained from third-party commercial pricing services, brokers and industry-standard, vendor-provided software that models the value based on market observable inputs. The valuations obtained from third-party commercial pricing services are non-binding. The Company reviews the assumptions and inputs used by third-party commercial pricing services for each reporting period in order to determine an appropriate fair value hierarchy level. The documentation and analysis obtained from third-party commercial pricing services are reviewed by the Company, including in-depth validation procedures confirming the observability of inputs. The valuations are reviewed and validated monthly through the internal valuation committee price variance review, comparisons to internal pricing models, back testing to recent trades or monitoring of trading volumes.

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

For fixed maturities classified as Level 2 assets, fair values are determined using a matrix-based market approach, based on prices obtained from third-party commercial pricing services and the Company’s matrix and analytics-based pricing models, which in each case incorporate a variety of market observable information as valuation inputs. The market observable inputs used for these fair value measurements, by fixed maturity asset class, are as follows:

U.S. Treasuries: Fair value is determined using third-party commercial pricing services, with the primary inputs being stripped interest and principal U.S. Treasury yield curves that represent a U.S. Treasury zero-coupon curve.

U.S. government agencies and authorities, State, municipalities and political subdivisions: Fair value is determined using third-party commercial pricing services, with the primary inputs being U.S. Treasury yield curves, trades of comparable securities, credit spreads off benchmark yields and issuer ratings.

U.S. corporate public securities, Foreign corporate public securities and foreign governments: Fair value is determined using third-party commercial pricing services, with the primary inputs being benchmark yields, trades of comparable securities, issuer ratings, bids and credit spreads off benchmark yields.

U.S. corporate private securities and Foreign corporate private securities: Fair values are determined using a matrix and analytics-based pricing model. The model incorporates the current level of risk-free interest rates, current corporate credit spreads, credit quality of the issuer and cash flow characteristics of the security. The model also considers a liquidity spread, the value of any collateral, the capital structure of the issuer, the presence of guarantees, and prices and quotes for comparably rated publicly traded securities.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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 borrower’s ability to compete in its relevant market. Using this data, the model generates estimated market values, which the Company considers reflective of the fair value of each privately placed bond.

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

Derivatives: Derivatives are carried at fair value, which is determined using the Company’s derivative accounting system in conjunction with observable key financial data from third-party sources, such as yield curves, exchange rates, S&P 500 Index prices, LIBOR and Overnight Index Swap ("OIS") rates. The Company uses OIS for valuations of collateralized interest rate derivatives, which are obtained from third-party sources. For those derivatives that are unable to be valued by the accounting system, the Company typically utilizes values established by third-party brokers. Counterparty credit risk is considered and incorporated in the Company’s valuation process through counterparty credit rating requirements and monitoring of overall exposure. It is the Company’s policy to transact only with investment grade counterparties with a credit rating of A- or better. The Company’s nonperformance risk is also considered and incorporated in the Company’s valuation process. The Company also has certain credit default swaps and options that are priced by third party vendors or by using models that primarily use market observable inputs, but contain inputs that are not observable to market participants, which have been classified as Level 3. The remaining derivative instruments are valued based on market observable inputs and are classified as Level 2.

Guaranteed benefit derivatives: The Company records reserves for annuity contracts containing GMWBL and GMWB riders. The guarantee is an embedded derivative and is required to be accounted for separately from the host variable annuity contract. The fair value of the obligation is calculated based on actuarial and capital market assumptions related to the projected cash flows, including benefits and related contract charges, over the anticipated life of the related contracts. The cash flow estimates are produced by using stochastic techniques under a variety of market return scenarios and other market implied assumptions. These derivatives are classified as Level 3 liabilities in the fair value hierarchy.

The index-crediting feature in the Company's FIA and IUL contracts is an embedded derivative that is required to be accounted for separately from the host contract. The fair value of the obligation is calculated based on actuarial and capital market assumptions related to the projected cash flows, including benefits and related contract charges, over the anticipated life of the related contracts for FIAs and over the current indexed term for IULs. The cash flow estimates are produced by market implied assumptions. These derivatives are classified as Level 3 liabilities in the fair value hierarchy.

The Company records reserves for Stabilizer and MCG contracts containing guaranteed credited rates. The guarantee is treated as an embedded derivative or a stand-alone derivative (depending on the underlying product) and is required to be reported at fair value. The estimated fair value is determined based on the present value of projected future claims, minus the present value of future guaranteed premiums. At inception of the contract, the Company projects a guaranteed premium to be equal to the present value of the projected future claims. The income associated with the contracts is projected using relevant actuarial and capital market assumptions, including benefits and related contract charges, over the anticipated life of the related contracts. The cash flow estimates are produced by using stochastic techniques under a variety of risk neutral scenarios and other market implied assumptions. These derivatives are classified as Level 3 liabilities.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The discount rate used to determine the fair value of the Company's GMWBL, GMWB, FIA, IUL and Stabilizer embedded derivative liabilities and the stand-alone derivative for MCG includes an adjustment to reflect the risk that these obligations will not be fulfilled ("nonperformance risk"). The nonperformance risk adjustment incorporates a blend of observable, similarly rated peer holding company credit spreads, adjusted to reflect the credit quality of the individual insurance subsidiary that issued the guarantee, as well as an adjustment to reflect the non-default spreads and the priority and recovery rates of policyholder claims.

Embedded derivatives on reinsurance: The carrying value of embedded derivatives is estimated based upon the change in the fair value of the assets supporting the funds withheld payable under reinsurance agreements. The fair value of the embedded derivative is based on market observable inputs and is classified as Level 2.

Level 3 Financial Instruments

The fair values of certain assets and liabilities are determined using prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement (i.e., Level 3 as defined by ASC Topic 820), including but not limited to liquidity spreads for investments within markets deemed not currently active. These valuations, whether derived internally or obtained from a third-party, use critical assumptions that are not widely available to estimate market participant expectations in valuing the asset or liability. In addition, the Company has determined, for certain financial instruments, an active market is such a significant input to determine fair value that the presence of an inactive market may lead to classification in Level 3. In light of the methodologies employed to obtain the fair values of financial assets and liabilities classified as Level 3, additional information is presented below.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The following table summarizes the change in fair value of the Company's Level 3 assets and liabilities from continuing operations, including amounts related to businesses

to be exited via reinsurance associated with the Individual Life Transaction, and transfers in and out of Level 3 for the period indicated:

			Three Months Ended September 30, 2020
			Fair Value as of July 1						Total 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			$	107					$	—					$	4					$	4					$	—					$	—					$	(2)					$	42					$	(37)					$	118					$	—		$	4
U.S. corporate private securities			1,390						(1)						11						47						—						—						(20)						406						(106)						1,727						(1)			11
Foreign corporate public securities and foreign governments(1)			—						—						—						—						—						—						—						—						—						—						—			—
Foreign corporate private securities(1)			305						(1)						(15)						221						—						(15)						(1)						17						(63)						448						(2)			(15)
Residential mortgage-backed securities			38						(2)						—						2						—						—						—						2						(5)						35						(2)			—
Commercial mortgage-backed securities			—						—						—						4						—						—						—						—						—						4						—			—
Other asset-backed securities			99						—						—						11						—						—						(19)						1						(17)						75						—			—
Total fixed maturities, including securities pledged			1,939						(4)						—						289						—						(15)						(42)						468						(228)						2,407						(5)			—
Equity securities			161						7						—						3						—						—						—						—						—						171						7			—
Derivatives:
Guaranteed benefit derivatives(2)(5)			(210)						36						—						—						(4)						—						1						—						—						(177)						—			—
Other derivatives, net			—						—						—						1						—						—						—						—						—						1						1			—
Assets held in separate accounts(4)			174						4						—						43						—						(1)						—						—						(13)						207						—			—

(1) Primarily U.S. dollar denominated.

(2) All gains and losses on Level 3 liabilities are classified as realized gains (losses) for the purpose of this disclosure because it is impracticable to track realized and unrealized gains (losses) separately on a contract-by contract basis. These amounts are included in Other net realized gains (losses) in the Condensed Consolidated Statements of Operations.

(3) For financial instruments still held as of September 30 amounts are included in Net investment income and Total net realized capital 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 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.

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

			56

---

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

			Nine Months Ended September 30, 2020
			Fair Value as of January 1						Total 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			$	74					$	—					$	5					$	4					$	—					$	—					$	(5)					$	40					$	—					$	118					$	—		$	5
U.S. corporate private securities			1,457						1						42						124						—						(16)						(141)						455						(195)						1,727						—			42
Foreign corporate public securities and foreign governments(1)			—						—						—						—						—						—						—						—						—						—						—			—
Foreign corporate private securities(1)			328						(5)						(35)						234						—						(15)						(5)						8						(62)						448						(5)			(35)
Residential mortgage-backed securities			23						(4)						—						23						—						—						—						—						(7)						35						(4)			—
Commercial mortgage-backed securities			—						—						—						4						—						—						—						—						—						4						—			—
Other asset-backed securities			78						—						—						17						—						—						(21)						1						—						75						—			—
Total fixed maturities, including securities pledged			1,960						(8)						12						406						—						(31)						(172)						504						(264)						2,407						(9)			12
Equity securities			128						12						—						33						—						—						(2)						—						—						171						12			—
Derivatives:
Guaranteed benefit derivatives(2)(5)			(60)						(112)						—						—						(6)						—						1						—						—						(177)						—			—
Other derivatives, net			—						—						—						1						—						—						—						—						—						1						1			—
Assets held in separate accounts(4)			116						3						—						123						—						(2)						—						3						(36)						207						—			—

(1) Primarily U.S. dollar denominated.

(2) All gains and losses on Level 3 liabilities are classified as realized gains (losses) for the purpose of this disclosure because it is impracticable to track realized and unrealized gains (losses) separately on a contract-by contract basis. These amounts are included in Other net realized gains (losses) in the Condensed Consolidated Statements of Operations.

(3) For financial instruments still held as of September 30 amounts are included in Net investment income and Total net realized capital 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 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.

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

			57

---

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The following table summarizes the change in fair value of the Company's Level 3 assets and liabilities related to businesses held for sale and transfers in and out of Level 3

for the period indicated:

			Three Months Ended September 30, 2020
			Fair Value as of July 1						Total 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			$	31					$	—					$	—					$	1					$	—					$	—					$	(1)					$	—					$	—					$	31					$	—		$	—
U.S. corporate private securities			304						—						(3)						38						—						—						(4)						85						(43)						377						—			(3)
Foreign corporate public securities and foreign governments(1)			3						—						(1)						—						—						—						—						—						—						2						—			(1)
Foreign corporate private securities(1)			81						—						(7)						43						—						—						(1)						5						(23)						98						—			(7)
Residential mortgage-backed securities			—						—						—						—						—						—						—						—						—						—						—			—
Commercial mortgage-backed securities			—						—						—						4						—						—						—						—						—						4						—			—
Other asset-backed securities			8						—						—						1						—						—						(1)						—						—						8						—			—
Total fixed maturities, including securities pledged			427						—						(11)						87						—						—						(7)						90						(66)						520						—			(11)
Equity securities			2						—						—						—						—						—						—						—						—						2						—			—
Derivatives:
Guaranteed benefit derivatives - IUL(2)			(177)						(43)						—						—						(17)						—						22						—						—						(215)						—			—
Other derivatives, net			167						34						—						15						—						—						(14)						—						—						202						35			—

(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.

(3) For financial instruments still held as of September 30 amounts are included in Income (loss) from discontinued operations, net of tax in the Condensed Consolidated Statements of Operations or Unrealized gains (losses) on securities in the Condensed Consolidated Statements of Comprehensive Income.

			58

---

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

			Nine Months Ended September 30, 2020
			Fair Value as of January 1						Total 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			$	32					$	—					$	—					$	1					$	—					$	—					$	(2)					$	—					$	—					$	31					$	—		$	—
U.S. corporate private securities			316						—						6						61						—						(13)						(18)						90						(65)						377						—			6
Foreign corporate public securities and foreign governments(1)			7						—						(5)						—						—						—						—						—						—						2						—			(4)
Foreign corporate private securities(1)			80						—						(7)						46						—						—						(1)						3						(23)						98						—			(7)
Residential mortgage-backed securities			—						—						—						—						—						—						—						—						—						—						—			—
Commercial mortgage-backed securities			—						—						—						4						—						—						—						—						—						4						—			—
Other asset-backed securities			6						—						—						4						—						—						(2)						—						—						8						—			—
Total fixed maturities, including securities pledged			441						—						(6)						116						—						(13)						(23)						93						(88)						520						—			(5)
Equity securities			33						—						—						—						—						(30)						(1)						—						—						2						—			—
Derivatives:
Guaranteed benefit derivatives - IUL(2)			(217)						13						—						—						(51)						—						40						—						—						(215)						—			—
Other derivatives, net			202						(16)						—						43						—						—						(27)						—						—						202						—			—

(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.

(3) For financial instruments still held as of September 30 amounts are included in Income (loss) from discontinued operations, net of tax in the Condensed Consolidated Statements of Operations or Unrealized gains (losses) on securities in the Condensed Consolidated Statements of Comprehensive Income.

			59

---

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The following table summarizes the change in fair value of the Company's Level 3 assets and liabilities from continuing operations, including amounts related to businesses

to be exited via reinsurance associated with the Individual Life Transaction, and transfers in and out of Level 3 for the period indicated:

			Three Months Ended September 30, 2019
			Fair Value as of July 1						Total 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)
									Net Income						OCI
Fixed maturities, including securities pledged:
U.S. corporate public securities			$	68					$	—					$	4					$	5					$	—					$	—					$	(2)					$	—					$	—					$	75					$	—
U.S. corporate private securities			1,294						1						32						132						—						—						(55)						6						—						1,410						1
Foreign corporate public securities and foreign governments(1)			—						—						—						—						—						—						—						—						—						—						—
Foreign corporate private securities(1)			292						—						3						7						—						—						—						—						—						302						—
Residential mortgage-backed securities			30						(3)						—						15						—						—						—						—						(7)						35						(3)
Commercial mortgage-backed securities			3						—						—						13						—						—						—						—						(3)						13						—
Other asset-backed securities			82						—						1						38						—						—						(1)						—						(9)						111						—
Total fixed maturities, including securities pledged			1,769						(2)						40						210						—						—						(58)						6						(19)						1,946						(2)
Equity securities, available-for-sale			156						2						—						—						—						—						—						—						—						158						2
Derivatives:
Guaranteed benefit derivatives (2)(5)			(57)						(43)						—						—						(3)						—						1						—						—						(102)						—
Other derivatives, net			149						(4)						—						10						—						—						(9)						—						—						146						(3)
Assets held in separate accounts(4)			102						1						—						12						—						(1)						—						—						(14)						100						—

(1) Primarily U.S. dollar denominated.

(2) All gains and losses on Level 3 liabilities are classified as realized gains (losses) for the purpose of this disclosure because it is impracticable to track realized and unrealized gains (losses) separately on a contract-by contract basis.

These amounts are included in Other net realized gains (losses) in the Condensed Consolidated Statements of Operations.

(3) For financial instruments still held as of September 30, amounts are included in Net investment income and Total net realized capital 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 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.

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

			60

---

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

			Nine Months Ended September 30, 2019
			Fair Value as of January 1						Total 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)
									Net Income						OCI
Fixed maturities, including securities pledged:
U.S. corporate public securities			$	34					$	—					$	5					$	5					$	—					$	—					$	(7)					$	38					$	—					$	75					$	—
U.S. corporate private securities			1,134						2						99						267						—						(14)						(74)						7						(11)						1,410						1
Foreign corporate public securities and foreign governments(1)			—						—						—						—						—						—						—						—						—						—						—
Foreign corporate private securities(1)			217						(25)						41						149						—						(80)						—						—						—						302						1
Residential mortgage-backed securities			28						(7)						—						16						—						—						—						—						(2)						35						(7)
Commercial mortgage-backed securities			14						—						—						13						—						—						—						—						(14)						13						—
Other asset-backed securities			127						—						1						40						—						—						(2)						—						(55)						111						—
Total fixed maturities, including securities pledged			1,554						(30)						146						490						—						(94)						(83)						45						(82)						1,946						(5)
Equity securities, available-for-sale			104						12						—						42						—						—						—						—						—						158						12
Derivatives:
Guaranteed benefit derivatives (2)(5)			(44)						(51)						—						—						(10)						—						3						—						—						(102)						—
Other derivatives, net			83						57						—						33						—						—						(27)						—						—						146						63
Assets held in separate accounts(4)			62						4						—						51						—						(1)						—						3						(19)						100						—

(1) Primarily U.S. dollar denominated.

(2) All gains and losses on Level 3 liabilities are classified as realized gains (losses) for the purpose of this disclosure because it is impracticable to track realized and unrealized gains (losses) separately on a contract-by contract basis.

These amounts are included in Other net realized gains (losses) in the Condensed Consolidated Statements of Operations.

(3) For financial instruments still held as of September 30, amounts are included in Net investment income and Total net realized capital 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 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.

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

			61

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The following table summarizes the change in fair value of the Company's Level 3 assets and liabilities related to businesses held for sale and transfers in and out of Level 3

for the period indicated:

			Three Months Ended September 30, 2019
			Fair Value as of July 1						Total 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)
									Net Income						OCI
Fixed maturities, including securities pledged:
U.S. corporate public securities			$	31					$	—					$	2					$	—					$	—					$	—					$	(1)					$	—					$	—					$	32					$	—
U.S. corporate private securities			288						—						9						28						—						—						(6)						—						—						319						—
Foreign corporate public securities and foreign governments(1)			8						—						(1)						—						—						—						—						—						—						7						—
Foreign corporate private securities(1)			78						—						2						—						—						—						—						—						—						80						—
Residential mortgage-backed securities			—						—						—						—						—						—						—						—						—						—						—
Commercial mortgage-backed securities			—						—						—						—						—						—						—						—						—						—						—
Other asset-backed securities			14						—						—						7						—						—						—						—						(8)						13						—
Total fixed maturities including securities pledged			419						—						12						35						—						—						(7)						—						(8)						451						—
Equity securities			36						1						—						—						—						—						—						—						—						37						1
Derivatives:
Guaranteed benefit derivatives - IUL(2)			(160)						76						—						—						28						—						(26)						—						—						(82)						—
Other derivatives, net			148						(5)						—						11						—						—						(8)						—						—						146						(2)

(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.

(3) For financial instruments still held as of September 30 amounts are included in Income (loss) from discontinued operations, net of tax in the Condensed Consolidated Statements of Operations.

			62

---

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

			Nine Months Ended September 30, 2019
			Fair Value as of January 1						Total 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)
									Net Income						OCI
Fixed maturities, including securities pledged:
U.S. corporate public securities			$	10					$	—					$	3					$	—					$	—					$	—					$	(1)					$	22					$	(2)					$	32					$	—
U.S. corporate private securities			259						—						26						47						—						—						(13)						—						—						319						—
Foreign corporate public securities and foreign governments(1)			11						—						(4)						—						—						—						—						—						—						7						—
Foreign corporate private securities(1)			34						(4)						11						52						—						(13)						—						—						—						80						—
Residential mortgage-backed securities			—						—						—						—						—						—						—						—						—						—						—
Commercial mortgage-backed securities			—						—						—						—						—						—						—						—						—						—						—
Other asset-backed securities			11						—						—						7						—						—						—						—						(5)						13						—
Total fixed maturities including securities pledged			325						(4)						36						106						—						(13)						(14)						22						(7)						451						—
Equity securities			25						5						—						7						—						—						—						—						—						37						5
Derivatives:
Guaranteed benefit derivatives - IUL(2)			(82)						—						—						—						—						—						—						—						—						(82)						—
Other derivatives, net			83						56						—						33						—						—						(26)						—						—						146						63

(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.

(3) For financial instruments still held as of September 30 amounts are included in Income (loss) from discontinued operations, net of tax in the Condensed Consolidated Statements of Operations.

			63

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

For the three and nine months ended September 30, 2020 and 2019, 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..

Quantitative information about the significant unobservable inputs used in the Company's Level 3 fair value measurements of its guaranteed benefit derivatives is presented in the following sections and table.

Significant unobservable inputs used in the fair value measurements of IULs include nonperformance risk and policyholder behavior assumptions, such as lapses.

Following is a description of selected inputs:

Nonperformance Risk: For the estimate of the fair value of embedded derivatives associated with the Company's product guarantees, the Company uses a blend of observable, similarly rated peer holding company credit spreads, adjusted to reflect the credit quality of the individual insurance company subsidiary that issued the guarantee as well as an adjustment to reflect the non-default spreads and the priority and recovery rates of policyholder claims.

Actuarial Assumptions: Management regularly reviews actuarial assumptions, which are based on the Company's experience and periodically reviewed against industry standards. Industry standards and Company experience may be limited on certain products.

The following table presents the unobservable inputs for IUL for businesses held for sale as of the dates indicated:

																		September 30, 2020												December 31, 2019
Unobservable Input																		Range(1)						Weighted Average(3)						Range(1)
Interest rate implied volatility																		—						—						—
Nonperformance risk																		0.14% to 0.60%						0.28		%				0.22% to 0.42%
Actuarial Assumptions:
Lapses																		2% to 10%						6		%				2% to 10%
Mortality																		—			(2)			—						—			(2)

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

(2) The mortality rate is derived based on similarly underwritten business

(3) Unobservable inputs were weighted by the relative fair value of the instruments. For credit contracts, the average represents the arithmetic average of the inputs and is not weighted by the relative fair value or notional amount.

Generally, the following will cause an increase (decrease) in the IUL embedded derivative fair value liabilities:

•A decrease (increase) in nonperformance risk

•A decrease (increase) in lapses

Other Financial Instruments

The following disclosures are made in accordance with the requirements of ASC Topic 825 which requires disclosure of fair value information about financial instruments, whether or not recognized at fair value on the Consolidated Balance Sheets.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

ASC Topic 825 excludes certain financial instruments, including insurance contracts and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.

The carrying values and estimated fair values of the Company's financial instruments from continuing operations, including amounts related to businesses to be exited via reinsurance associated with the Individual Life Transaction, as of the dates indicated:

			September 30, 2020												December 31, 2019
			Carrying Value						Fair Value						Carrying Value						Fair Value
Assets:
Fixed maturities, including securities pledged			$	46,171					$	46,171					$	43,778					$	43,778
Equity securities			371						371						196						196
Mortgage loans on real estate			6,817						7,266						6,878						7,262
Policy loans			735						735						776						776
Cash, cash equivalents, short-term investments and short-term investments under securities loan agreements			1,786						1,786						2,644						2,644
Derivatives			270						270						316						316
Other investments			285						360						320						456
Assets held in separate accounts			82,879						82,879						81,670						81,670
Liabilities:
Investment contract liabilities:
Funding agreements without fixed maturities and deferred annuities(2)			$	35,331					$	45,223					$	33,916					$	41,035
Funding agreements with fixed maturities			795						795						877						877
Supplementary contracts, immediate annuities and other			914						876						821						872
Derivatives:
Guaranteed benefit derivatives(2)			177						177						60						60
Other derivatives			434						434						403						403
Short-term debt			1						1						1						1
Long-term debt			3,043						3,491						3,042						3,418
Embedded derivative on reinsurance			143						143						100						100

(1) Certain amounts included in Funding agreements without fixed maturities and deferred annuities are also reflected within the Guaranteed benefit derivatives section of the table above.

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

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The carrying values and estimated fair values of the Company's financial instruments related to businesses held for sale as of the dates indicated:

			September 30, 2020												December 31, 2019
			Carrying Value						Fair Value						Carrying Value						Fair Value
Assets:
Fixed maturities, including securities pledged			$	13,555					$	13,555					$	12,470					$	12,470
Equity securities			4						4						35						35
Mortgage loans on real estate			1,264						1,378						1,319						1,405
Policy loans			996						996						1,005						1,005
Cash, cash equivalents, short-term investments and short-term investments under securities loan agreements			504						504						533						533
Derivatives			314						314						305						305
Other investments			46						46						42						42
Assets held in separate accounts			1,473						1,473						1,485						1,485
Liabilities:
Investment contract liabilities:
Funding agreements with fixed maturities			$	1,010					$	1,008					$	927					$	923
Supplementary contracts, immediate annuities and other			106						99						97						104
Notes Payable			219						257						252						320
Derivatives:
Guaranteed benefit derivatives - IUL			215						215						217						217
Embedded derivative on reinsurance			95						95						75						75

The following table presents the classifications of financial instruments which are not carried at fair value on the Condensed Consolidated Balance Sheets:

Financial Instrument			Classification
Mortgage loans on real estate			Level 3
Policy loans			Level 2
Other investments			Level 2
Funding agreements without fixed maturities and deferred annuities			Level 3
Funding agreements with fixed maturities			Level 2
Supplementary contracts and immediate annuities			Level 3
Short-term debt and Long-term debt			Level 2
Notes Payable			Level 2

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

6.    Deferred Policy Acquisition Costs and Value of Business Acquired

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

			2020
			DAC						VOBA						Total
Balance as of January 1, 2020			$	1,762					$	464					$	2,226
Impact of ASU 2016-13			3						—						3
Deferrals of commissions and expenses			77						4						81
Amortization:
Amortization, excluding unlocking			(205)						(82)						(287)
Unlocking(1)			(41)						(136)						(177)
Interest accrued			91						37			(2)			128
Net amortization included in Condensed Consolidated Statements of Operations			(155)						(181)						(336)
Change due to unrealized capital gains/losses on available-for-sale securities			(157)						(148)						(305)
Balance as of September 30, 2020			$	1,530					$	139					$	1,669
			2019
			DAC						VOBA						Total
Balance as of January 1, 2019			$	2,155					$	818					$	2,973
Deferrals of commissions and expenses			75						6						81
Amortization:
Amortization, excluding unlocking			(238)						(106)						(344)
Unlocking(1)			20						53						73
Interest accrued			93						42			(2)			135
Net amortization included in Condensed Consolidated Statements of Operations			(125)						(11)						(136)
Change due to unrealized capital gains/losses on available-for-sale securities			(351)						(369)						(720)
Balance as of September 30, 2019			$	1,754					$	444					$	2,198

(1) Includes the impacts of annual review of assumptions which typically occurs in the third quarter; and retrospective and prospective unlocking. There was no loss recognition related to DAC/VOBA during the nine months ended September 30, 2020 and 2019.

(2) Interest accrued at the following rates for VOBA: 3.5% to 7.2% during 2020 and 3.5% and 7.4% during 2019.

7.     Share-based Incentive Compensation Plans

The Company has provided equity-based compensation awards to its employees under the ING U.S., Inc. 2013 Omnibus Employee Incentive Plan (the "2013 Omnibus Plan"), the Voya Financial, Inc. 2014 Omnibus Employee Incentive Plan (the "2014 Omnibus Plan") and the Voya Financial, Inc. 2019 Omnibus Employee Incentive Plan (the "2019 Omnibus Plan") (together, the "Omnibus Plans"). As of September 30, 2020, common stock reserved and available for issuance under the 2013 Omnibus Plan, the 2014 Omnibus Plan and the 2019 Omnibus Plan was 347,663, 3,179,470 and 10,618,641 shares, respectively.

The Company offers equity-based awards to Voya Financial, Inc. non-employee directors under the Voya Financial, Inc. 2013 Omnibus Non-Employee Director Incentive Plan ("Director Plan").

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Compensation Cost

The following table summarizes share-based compensation expense, which includes expenses related to awards granted under the Omnibus Plans and Director Plan for the periods indicated:

			Three Months Ended September 30,									Nine Months Ended September 30,
			2020						2019						2020						2019
Restricted Stock Unit (RSU) awards			$	9					$	10					$	36					$	37
Performance Stock Unit (PSU) awards			7						9						32						34
Stock options			1						2						4						6
Total share-based compensation expense			17						21						72						77
Income tax benefit			3						4						26						24
After-tax share-based compensation expense			$	14					$	17					$	46					$	53

Awards Outstanding

The following table summarizes RSU and PSU awards activity under the Omnibus Plans and the Director Plan for the period indicated:

			RSU Awards																		PSU Awards
(awards in millions)			Number of Awards						Weighted Average Grant Date Fair Value																		Number of Awards						Weighted Average Grant Date Fair Value
Outstanding as of January 1, 2020			1.9						$	48.55																	2.2						$	48.85
Adjustment for PSU performance factor			—						—																		0.4						42.27
Granted			0.7						62.75																		0.7						61.86
Vested			(1.0)						47.34																		(1.2)						42.41
Forfeited			—			*			53.81																		(0.1)						53.82
Outstanding as of September 30, 2020			1.6						$	55.69																	2.0						$	55.47

* Less than 0.1

The following table summarizes the number of options under the Omnibus Plans for the periods indicated:

			Stock Options
(awards in millions)			Number of Awards						Weighted Average Exercise Price
Outstanding as of January 1, 2020			2.9						$	41.93
Granted			—						—
Exercised			(0.1)						37.60
Forfeited			—			*			50.30
Outstanding as of September 30, 2020			2.8						$	42.08
Vested, exercisable, as of September 30, 2020			2.1						$	40.41

* Less than 0.1

In February 2019, the Company awarded contingent stock options under the 2014 Omnibus Plan with a per option grant date fair value of $13.78. These options are subject to vesting conditions based on the achievement of specified performance measures, and generally become exercisable one year following satisfaction of the relevant vesting condition. The options have a term of ten years from the grant date.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

8.     Shareholders' Equity

Common Shares

The following table presents the rollforward of common shares used in calculating the weighted average shares utilized in the basic earnings per common share calculation for the periods indicated:

			Common Shares
(shares in millions)			Issued						Held in Treasury						Outstanding
Balance, January 1, 2019			272.4						121.4						151.0
Common shares issued			0.1						—						0.1
Common shares acquired - share repurchase			—						21.1						(21.1)
Share-based compensation			3.2						0.9						2.3
Treasury Stock retirement			(135.0)						(135.0)						—
Balance, December 31, 2019			140.7						8.4						132.3
Common shares issued			0.1						—						0.1
Common shares acquired - share repurchase			—						8.1						(8.1)
Share-based compensation			2.3						0.4						1.9
Balance, September 30, 2020			143.1						16.9						126.2

Dividends declared per share of Common Stock were as follows for the periods indicated:

			Three Months Ended September 30,												Nine Months Ended September 30,
			2020						2019						2020						2019
Dividends declared per share of Common Stock			$	0.15					$	0.15					$	0.45					$	0.17

Share Repurchase Program

From time to time, the Company's Board of Directors authorizes the Company to repurchase shares of its common stock. These authorizations permit stock repurchases up to a prescribed dollar amount and generally may be accomplished through various means, including, without limitation, open market transactions, privately negotiated transactions, forward, derivative, or accelerated repurchase, or automatic repurchase transactions, including 10b5-1 plans, or tender offers. Share repurchase authorizations typically expire if unused by a prescribed date.

On October 31, 2019, the Board of Directors provided share repurchase authorization, increasing the aggregate of the Company's common stock authorized for repurchase by $800. The current share repurchase authorization expires on December 31, 2020 (unless extended), and does not obligate the Company to purchase any shares. The authorization for the share repurchase program may be terminated, increased or decreased by the Board of Directors at any time.

The following table presents repurchases of the Company's common stock through share repurchase agreements with third-party financial institutions during the nine months ended September 30, 2020:

Execution Date

Payment

Initial Shares Delivered

Closing Date

Additional Shares Delivered

Total Shares Repurchased

December 19, 2019

$

200

2,591,093

February 26, 2020

727,368

3,318,461

During the nine months ended September 30, 2020, the Company repurchased 7,390,099 shares of the Company's common stock in open market repurchases for an aggregate purchase price of $366.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Warrants

On May 7, 2013, the Company issued to ING Group warrants to purchase up to 26,050,846 shares of the Company's common stock equal in the aggregate to 9.99% of the issued and outstanding shares of common stock at that date. The exercise price of the warrants at the time of issuance was $48.75 per share of common stock, subject to adjustments, including for stock dividends, cash dividends in excess of $0.01 per share a quarter, subdivisions, combinations, reclassifications and non-cash distributions. The warrants also provide for, upon the occurrence of certain change of control events affecting the Company, an increase in the number of shares to which a warrant holder will be entitled upon payment of the aggregate exercise price of the warrant. The warrants became exercisable to ING Group and its affiliates on January 1, 2017 and to all other holders starting on the first anniversary of the completion of the IPO (May 7, 2014). The warrants expire on the tenth anniversary of the completion of the IPO (May 7, 2023). The warrants are net share settled, which means that no cash will be payable by a warrant holder in respect of the exercise price of a warrant upon exercise, and are classified as permanent equity. They have been recorded at their fair value determined on the issuance date of May 7, 2013 in the amount of $94 as an addition and reduction to Additional-paid-in-capital. Warrant holders are not entitled to receive dividends. On March 12, 2018, ING Group sold its remaining interests in the warrants and no longer owns any warrants.

On September 28, 2020, the Company paid a quarterly dividend of $0.15 per share on its common stock. As a consequence, the exercise price of the warrants to purchase shares of common stock was adjusted to $48.09 per share of common stock and the number of shares of common stock for which each warrant is exercisable has been adjusted to 1.002732027. As of September 30, 2020, no warrants have been exercised.

Preferred Stock

As of September 30, 2020 and December 31, 2019, there were 100,000,000 shares of preferred stock authorized. Preferred stock issued and outstanding are as follows:

									September 30, 2020															December 31, 2019
Series									Issued						Outstanding									Issued						Outstanding
6.125% Non-cumulative Preferred Stock, Series A									325,000						325,000									325,000						325,000
5.35% Non-cumulative Preferred Stock, Series B									300,000						300,000									300,000						300,000
Total									625,000						625,000									625,000						625,000

The declaration of dividends on preferred stock per share and in the aggregate were as follows for the periods indicated:

						Series A												Series B
Three Months Ended September 30,						Per Share						Aggregate						Per Share						Aggregate
2020						$	30.625					$	10					$	13.375					$	4
2019						30.625						10						12.9292						4
Nine Months Ended September 30,
2020						$	61.250					$	20					$	40.125					$	12
2019						61.7604						20						12.9292						4

As of September 30, 2020, there were no preferred stock dividends in arrears.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

9.     Earnings per Common Share

The following table presents a reconciliation of Net income (loss) and shares used in calculating basic and diluted net income (loss) per common share for the periods indicated:

			Three Months Ended September 30,						Nine Months Ended September 30,
(in millions, except for per share data)			2020			2019			2020			2019
Earnings
Net income (loss) available to common shareholders:
Income (loss) from continuing operations			$	(73)		$	144		$	(76)		$	447
Less: Preferred stock dividends			14			14			32			24
Less: Net income (loss) attributable to noncontrolling interest			106			19			33			44
Income (loss) from continuing operations available to common shareholders			(193)			111			(141)			380
Income (loss) from discontinued operations, net of tax			(140)			(4)			(361)			18
Net income (loss) available to common shareholders			$	(333)		$	107		$	(502)		$	397
Weighted average common shares outstanding
Basic			126.3			138.4			127.8			143.1
Dilutive Effects:
Warrants(1)(2)			—			2.3			—			1.6
RSU awards(1)(2)			—			1.3			—			1.3
PSU awards(1)(2)			—			1.7			—			1.9
Stock Options(1)(2)			—			0.6			—			0.6
Diluted			126.3			144.3			127.8			148.5
Basic(3)
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders			$	(1.53)		$	0.80		$	(1.11)		$	2.65
Income (loss) from discontinued operations, net of taxes available to Voya Financial, Inc.'s common shareholders			$	(1.11)		$	(0.03)		$	(2.82)		$	0.12
Income (loss) available to Voya Financial, Inc.'s common shareholders			$	(2.64)		$	0.77		$	(3.93)		$	2.77
Diluted(3)
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders			$	(1.53)		$	0.77		$	(1.11)		$	2.55
Income (loss) from discontinued operations, net of taxes available to Voya Financial, Inc.'s common shareholders			$	(1.11)		$	(0.03)		$	(2.82)		$	0.12
Income (loss) available to Voya Financial, Inc.'s common shareholders			$	(2.64)		$	0.74		$	(3.93)		$	2.67

(1) For the three months ended September 30, 2020, weighted average shares used for calculating basic and diluted earnings per share are the same, as the inclusion of 0.6 shares, 0.9 shares, 1.3 shares, and 0.4 shares for warrants, RSU awards, PSU awards, and stock options, respectively, would be antidilutive to the earnings per share calculation due to the net loss from continuing operations available to common shareholders in the period.

(2) For the nine months ended September 30, 2020, weighted average shares used for calculating basic and diluted earnings per share are the same, as the inclusion of 1.2 shares, 0.9 shares, 1.3 shares, and 0.4 shares for warrants, RSU awards, PSU awards, and stock options, respectively, would be antidilutive to the earnings per share calculation due to the net loss from continuing operations available to common shareholders in the period.

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

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

10.    Accumulated Other Comprehensive Income (Loss)

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

			September 30,
			2020						2019
Fixed maturities, net of impairment			$	7,704					$	5,827
Derivatives(1)			144						195
DAC/VOBA adjustment on available-for-sale securities			(1,837)						(1,593)
Premium deficiency reserve			(438)						(257)
Sales inducements and other intangibles adjustment on available-for-sale securities			(353)						(204)
Unrealized capital gains (losses), before tax			5,220						3,968
Deferred income tax asset (liability)			(742)						(479)
Net unrealized capital gains (losses)			4,478						3,489
Pension and other postretirement benefits liability, net of tax			5						8
AOCI			$	4,483					$	3,497

(1) Gains and losses reported in Accumulated Other Comprehensive Income (AOCI) from hedge transactions that resulted in the acquisition of an identified asset are reclassified into earnings in the same period or periods during which the asset acquired affects earnings. As of September 30, 2020, the portion of the AOCI that is expected to be reclassified into earnings within the next 12 months is $22.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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

			Three Months Ended September 30, 2020
			Before-Tax Amount						Income Tax						After-Tax Amount
Available-for-sale securities:
Fixed maturities			$	783					$	(164)					$	619
Other			(1)						—						(1)
Adjustments for amounts recognized in Net realized capital gains (losses) in the Condensed Consolidated Statements of Operations			7						(1)						6
DAC/VOBA			78						(17)						61
Premium deficiency reserve			(114)						24						(90)
Sales inducements and other intangibles			(140)						29						(111)
Change in unrealized gains/losses on available-for-sale securities			613						(129)						484
Derivatives:
Derivatives			(45)			(1)			10						(35)
Adjustments related to effective cash flow hedges for amounts recognized in Net investment income in the Condensed Consolidated Statements of Operations			(6)						1						(5)
Change in unrealized gains/losses on derivatives			(51)						11						(40)
Pension and other postretirement benefits liability:
Amortization of prior service cost recognized in Operating expenses in the Condensed Consolidated Statements of Operations			—						—						—
Change in pension and other postretirement benefits liability			—						—						—
Change in Accumulated other comprehensive income (loss)			$	562					$	(118)					$	444

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

			73

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

			Nine Months Ended September 30, 2020
			Before-Tax Amount						Income Tax						After-Tax Amount
Available-for-sale securities:
Fixed maturities			$	2,114					$	(444)					$	1,670
Other			(1)						—						(1)
Adjustments for amounts recognized in Net realized capital gains (losses) in the Condensed Consolidated Statements of Operations			44						(9)						35
DAC/VOBA			(339)			(1)			71						(268)
Premium deficiency reserve			(189)						40						(149)
Sales inducements and other intangibles			(168)						35						(133)
Change in unrealized gains/losses on available-for-sale securities			1,461						(307)						1,154
Derivatives:
Derivatives			17			(2)			(3)						14
Adjustments related to effective cash flow hedges for amounts recognized in Net investment income in the Condensed Consolidated Statements of Operations			(18)						4						(14)
Change in unrealized gains/losses on derivatives			(1)						1						—
Pension and other postretirement benefits liability:
Amortization of prior service cost recognized in Operating expenses in the Condensed Consolidated Statements of Operations			(2)						—						(2)
Change in pension and other postretirement benefits liability			(2)						—						(2)
Change in Accumulated other comprehensive income (loss)			$	1,458					$	(306)					$	1,152

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

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

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

			Three Months Ended September 30, 2019
			Before-Tax Amount						Income Tax						After-Tax Amount
Available-for-sale securities:
Fixed maturities			$	1,314					$	(275)					$	1,039
Impairments			—						—						—
Adjustments for amounts recognized in Net realized capital gains (losses) in the Condensed Consolidated Statements of Operations			(8)						1						(7)
DAC/VOBA			(364)						77						(287)
Premium deficiency reserve			(123)						26						(97)
Sales inducements and other intangibles			(47)						9						(38)
Change in unrealized gains/losses on available-for-sale securities			772						(162)						610
Derivatives:
Derivatives			32			(1)			(7)						25
Adjustments related to effective cash flow hedges for amounts recognized in Net investment income in the Condensed Consolidated Statements of Operations			(6)						1						(5)
Change in unrealized gains/losses on derivatives			26						(6)						20
Pension and other postretirement benefits liability:
Amortization of prior service cost recognized in Operating expenses in the Condensed Consolidated Statements of Operations			(1)						1						—
Change in pension and other postretirement benefits liability			(1)						1						—
Change in Accumulated other comprehensive income (loss)			$	797					$	(167)					$	630

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

			75

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

			Nine Months Ended September 30, 2019
			Before-Tax Amount						Income Tax						After-Tax Amount
Available-for-sale securities:
Fixed maturities			$	4,753					$	(997)					$	3,756
Impairments			2						—						2
Adjustments for amounts recognized in Net realized capital gains (losses) in the Condensed Consolidated Statements of Operations			(2)						—						(2)
DAC/VOBA			(1,212)			(1)			255						(957)
Premium deficiency reserve			(200)						42						(158)
Sales inducements and other intangibles			(140)						29						(111)
Change in unrealized gains/losses on available-for-sale securities			3,201						(671)						2,530
Derivatives:
Derivatives			43			(2)			(9)						34
Adjustments related to effective cash flow hedges for amounts recognized in Net investment income in the Condensed Consolidated Statements of Operations			(19)						4						(15)
Change in unrealized gains/losses on derivatives			24						(5)						19
Pension and other postretirement benefits liability:
Amortization of prior service cost recognized in Operating expenses in the Condensed Consolidated Statements of Operations			(3)						1						(2)
Change in pension and other postretirement benefits liability			(3)						1						(2)
Change in Accumulated other comprehensive income (loss)			$	3,222					$	(675)					$	2,547

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

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

11.    Income Taxes

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

The Company's effective tax rate for the three and nine months ended September 30, 2020 was 49.7% and 49.0%. The effective tax rate differed from the statutory rate of 21% primarily due the effect of the dividends received deduction ("DRD"), tax credits and noncontrolling interest.

The Company's effective tax rate for the three and nine months ended September 30, 2019 was 3.4% and 9.5%. The effective tax rate differed from the statutory rate of 21% primarily due to the effect of the DRD, tax credits, and noncontrolling interest.

The Coronavirus Aid, Relief and Economic Security (“CARES”) Act, which became effective on March 27, 2020, has not had any material impact on corporate income taxes.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Tax Regulatory Matters

For the tax years 2018 through 2020, Voya Financial, Inc. participates in the Internal Revenue Service ("IRS") Compliance Assurance Process ("CAP"), which is a continuous audit program provided by the IRS. The IRS finalized the audit of Voya Financial, Inc. for the period ended December 31, 2018. For the periods ended December 31, 2019 and December 31, 2020, the IRS has determined that Voya Financial, Inc. would be in the Compliance Maintenance Bridge ("Bridge") phase of CAP. In the Bridge phase, the IRS does not intend to conduct any review or provide any letters of assurance for the tax year.

12.    Financing Agreements

Short-term and Long-term Debt

The following table summarizes the carrying value of the Company’s debt securities issued and outstanding as of September 30, 2020 and December 31, 2019:

			Maturity						September 30, 2020						December 31, 2019
3.125% Senior Notes, due 2024			07/15/2024						397						397
3.65% Senior Notes, due 2026			06/15/2026						497						496
5.7% Senior Notes, due 2043			07/15/2043						395						395
4.8% Senior Notes, due 2046			06/15/2046						297						297
4.7% Fixed-to-Floating Rate Junior Subordinated Notes, due 2048			01/23/2048						345						345
5.65% Fixed-to-Floating Rate Junior Subordinated Notes, due 2053			05/15/2053						739						739
7.25% Voya Holdings Inc. debentures, due 2023(1)			08/15/2023						139						139
7.63% Voya Holdings Inc. debentures, due 2026(1)			08/15/2026						139						138
6.97% Voya Holdings Inc. debentures, due 2036(1)			08/15/2036						79						79
8.42% Equitable of Iowa Companies Capital Trust II Notes, due 2027			04/01/2027						13						14
1.00% Windsor Property Loan			06/14/2027						4						4
Subtotal									3,044						3,043
Less: Current portion of long-term debt									1						1
Total									$	3,043					$	3,042

(1) Guaranteed by ING Group.

As of September 30, 2020, the Company was in compliance with its debt covenants.

Aetna Notes

As of September 30, 2020, the outstanding principal amount of the Aetna Notes was $358, which is guaranteed by ING Group. As of September 30, 2020, the Company provided $373 of collateral benefiting ING Group, comprised of a deposit of $210 to a control account with a third-party collateral agent and $163 of letter of credit. The collateral may be exchanged at any time upon the posting of any other form of acceptable collateral to the account.

Senior Unsecured Credit Facility Agreement

As of September 30, 2020, the Company had a $500 senior unsecured credit facility with a syndicate of banks which expires November 1, 2024. The facility provides $500 of committed capacity for issuing letters of credit and the full $500 may be utilized for direct borrowings. As of September 30, 2020, there were no amounts outstanding as revolving credit borrowings and no amounts of LOCs outstanding under the senior unsecured credit facility. Under the terms of the facility, the Company is required to maintain a minimum net worth of $6.15 billion, which may increase upon any future equity issuances by the Company.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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, 2020, the Company had off-balance sheet commitments to acquire mortgage loans of $108 and purchase limited partnerships and private placement investments of $1,041, of which $251 related to consolidated investment entities.

Restricted Assets

The Company is required to maintain assets on deposit with various regulatory authorities to support its insurance operations. The Company may also post collateral in connection with certain securities lending, repurchase agreements, funding agreements, credit facilities and derivative transactions. The components of the fair value of the restricted assets were as follows as of the dates indicated:

			September 30, 2020						December 31, 2019
Fixed maturity collateral pledged to FHLB (1)			$	1,182					$	1,211
FHLB restricted stock(2)			54						55
Other fixed maturities-state deposits			53						48
Cash and cash equivalents			14						12
Securities pledged(3)			827						1,408
Total restricted assets			$	2,130					$	2,734

(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 $546 and $1,159 as of September 30, 2020 and December 31, 2019, respectively. In addition, as of September 30, 2020 and December 31, 2019, the Company delivered securities as collateral of $194 and $183 and repurchase agreements of $87 and $66, respectively. Loaned securities and securities delivered as collateral are included in Securities pledged on the Condensed Consolidated Balance Sheets.

Federal Home Loan Bank Funding Agreements

The Company is a member of the FHLB of Des Moines and the FHLB of Boston and is required to pledge collateral to back funding agreements issued to the FHLB. As of September 30, 2020 and December 31, 2019, the Company had $795 and $877, respectively, in non-putable funding agreements, which are included in Contract owner account balances on the Condensed Consolidated Balance Sheets. As of September 30, 2020 and December 31, 2019, assets with a market value of approximately $1,182 and $1,211, 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. Additionally, SLD is currently a member of FHLB of Topeka. The related non-puttable funding agreements and the assets pledged are reflected in Liabilities and Assets held for sale on 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.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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. Such matters include an SEC inquiry into mutual fund share classes offered by Voya’s investment advisor subsidiary, involving issues similar to those under the SEC’s Share Class Selection Disclosure Initiative where the SEC has been examining the subsidiary’s receipt of 12b1 fees and other revenue in relation to the accuracy and adequacy of its disclosures. It is the practice of the Company to cooperate fully in these matters.

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, excluding the SEC inquiry referenced immediately above, 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, 2020, the Company estimates the aggregate range of reasonably possible losses, in excess of any amounts accrued for these matters as of such date, to be up to approximately $50.

For other matters, the Company is currently not able to estimate the reasonably possible loss or range of loss. The Company is often unable to estimate the possible loss or range of loss until developments in such matters have provided sufficient information to support an assessment of the range of possible loss, such as quantification of a damage demand from plaintiffs, discovery from plaintiffs and other parties, investigation of factual allegations, rulings by a court on motions or appeals, analysis by experts and the progress of settlement discussions. On a quarterly and annual basis, the Company reviews relevant information with respect to litigation and regulatory contingencies and updates the Company's accruals, disclosures and reasonably possible losses or ranges of loss based on such reviews.

Litigation includes Henkel of America v. ReliaStar Life Insurance Company, et al. (USDC District of Connecticut, No. 1:18-cv-00965) (filed June 8, 2018). Plaintiff alleges that ReliaStar breached the terms of a stop loss policy it issued to Plaintiff by refusing to reimburse Plaintiff for more than $47 in claims incurred by participants in prior years and submitted for coverage under the stop loss policy. Plaintiff alleges a breach of contract claim or, in the alternative, that the stop loss policy be declared to cover the submitted claims, and also asserts that ReliaStar engaged in unfair trade practices and unfair insurance practices in violation of state statutes, and did so willfully and intentionally to warrant an award of punitive damages under state law. The Company denies the allegations, which it believes are without merit, and intends to defend the case vigorously.

Finally, industry wide, life insurers continue to be exposed to class action litigation related to the cost of insurance rates and periodic deductions from cash value. Common allegations include that insurance companies have breached the terms of their universal life insurance policies by establishing or increasing the cost of insurance rates using cost factors not permitted by the contract, thereby unjustly enriching themselves. This litigation is generally known as cost of insurance litigation.

Cost of insurance litigation for the Company includes Barnes v. Security Life of Denver (USDC District of Colorado, No. 1:18-cv-00718) (filed March 27, 2018), a putative class action in which the plaintiff alleges that his insurance policy only permitted the Company to rely upon his expected future mortality experience to establish and increase his cost of insurance, but the Company instead relied upon other, non-disclosed factors to do so. Plaintiff alleges breach of contract and conversion claims

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

against the Company and also seeks declaratory relief. The Company denies the allegations in the complaint, believes the complaint to be without merit, and intends to defend the matter vigorously.

Cost of insurance litigation for the Company also includes Advance Trust & Life Escrow Services, LTA v. Security Life of Denver (USDC District of Colorado, No. 1:18-cv-01897) (filed July 26, 2018), a putative class action in which Plaintiff alleges that two specific types of universal life insurance policies only permitted the Company to rely upon the policyholder’s expected future mortality experience to establish and increase the cost of insurance, but the Company instead relied upon other, non-disclosed factors not only in the administration of the policies over time, but also in the decision to increase insurance costs beginning in approximately October 2015. Plaintiff alleges a breach of contract and seeks class certification. The Company denies the allegations in the complaint, believes the complaint to be without merit, and intends to defend the lawsuit vigorously.

Finally, cost of insurance litigation includes Advance Trust & Life Escrow Services, LTA v. ReliaStar Life Insurance Company (USDC District of Minnesota, No. 1:18-cv-02863) (filed October 5, 2018), a putative class action in which Plaintiff alleges that the Company’s universal life insurance policies only permitted the Company to rely upon the policyholders’ expected future mortality experience to establish the cost of insurance, and that as projected mortality experience improved, the policy language required the Company to decrease the cost of insurance. Plaintiff alleges that the Company did not decrease the cost of insurance as required, thereby breaching its contract with the policyholders, and seeks class certification. The Company denies the allegations in the complaint, believes the complaint to be without merit, and will defend the lawsuit vigorously.

Contingencies related to Performance-based Capital Allocations on Private Equity Funds

Certain performance-based capital allocations related to sponsored private equity funds ("carried interest") are not final until the conclusion of an investment term specified in the relevant asset management contract. As a result, such carried interest, if accrued or paid to the Company during such term, is subject to later adjustment based on subsequent fund performance. If the fund’s cumulative investment return falls below specified investment return hurdles, some or all of the previously accrued carried interest is reversed to the extent that the Company is no longer entitled to the performance-based capital allocation. Should the fund’s cumulative investment return subsequently increase above specified investment return hurdles in future periods, previous reversals could be fully or partially recovered.

As of September 30, 2020, approximately $81 of previously accrued carried interest would be subject to full or partial reversal in future periods if cumulative fund performance hurdles are not maintained throughout the remaining life of the affected funds.

14.     Consolidated Investment Entities

In the normal course of business, the Company provides investment management services to, invests in and has transactions with, various types of investment entities which may be considered VIEs or VOEs. The Company evaluates its involvement with each entity to determine whether consolidation is required.

The Company holds variable interests in certain investment entities in the form of debt or equity investments, as well as the right to receive management fees, performance fees, and carried interest. The Company consolidates certain entities under the VIE guidance when it is determined that the Company is the primary beneficiary. Alternatively, certain entities are consolidated under the VOE guidance when control is obtained through voting rights.

The Company has no right to the benefits from, nor does it bear the risks associated with consolidated investment entities beyond the Company’s direct equity and debt investments in and management fees generated from these entities. Such direct investments amounted to approximately $254 and $279 on a continuing basis as of September 30, 2020 and December 31, 2019, respectively. If the Company were to liquidate, the assets held by consolidated investment entities would not be available to the general creditors of the Company as a result of the liquidation.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Consolidated VIEs and VOEs

Collateral Loan Obligations Entities ("CLOs")

The Company is involved in the design, creation, and the ongoing management of CLOs. These entities are created for the purpose of acquiring diversified portfolios of senior secured floating rate leveraged loans, and securitizing these assets by issuing multiple tranches of collateralized debt; thereby providing investors with a broad array of risk and return profiles. Also known as collateralized financing entities under Topic 810, CLOs are variable interest entities by definition.

In return for providing collateral management services, the Company earns investment management fees and contingent performance fees. In addition to earning fee income, the Company often holds an investment in certain of the CLOs it manages, generally within the unrated and most subordinated tranche of each CLO. The fee income earned and investments held are included in the Company's ongoing consolidation assessment for each CLO. The Company was the primary beneficiary of 4 and 3 CLOs as of September 30, 2020 and December 31, 2019, respectively.

Limited Partnerships

The Company invests in and manages various limited partnerships, including private equity funds and hedge funds. These entities have been evaluated by the Company and are determined to be VIEs due to the equity holders, as a group, lacking the characteristics of a controlling financial interest.  

In return for serving as the general partner of and providing investment management services to these entities, the Company earns management fees and carried interest in the normal course of business. Additionally, the Company often holds an investment in each limited partnership it manages, generally in the form of general partner and limited partner interests. The fee income, carried interest, and investments held are included in the Company’s ongoing consolidation analysis for each limited partnership. The Company consolidated 12 funds, which were structured as partnerships, as of September 30, 2020 and December 31, 2019.

Registered Investment Companies

The Company deconsolidated one sponsored investment fund accounted for as a VOE as of September 30, 2020, because it is no longer the majority investor in the fund, and as such, does not have a controlling financial interest in the fund. The Company consolidated one sponsored investment fund accounted for as a VOE as of December 31, 2019, because it is the majority investor in the fund, and as such, had a controlling financial interest in the fund.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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

			September 30, 2020						December 31, 2019
Assets of Consolidated Investment Entities
VIEs
Cash and cash equivalents			$	84					$	68
Corporate loans, at fair value using the fair value option			921						513
Limited partnerships/corporations, at fair value			1,600						1,470
Other assets			8						12
Total VIE assets			2,613						2,063
VOEs
Limited partnerships/corporations, at fair value			—						162
Other assets			—						1
Total VOE assets			—						163
Total assets of consolidated investment entities			$	2,613					$	2,226
Liabilities of Consolidated Investment Entities
VIEs
CLO notes, at fair value using the fair value option			$	538					$	474
Other liabilities			834						650
Total VIE liabilities			1,372						1,124
VOEs
Other liabilities			—						2
Total VOE liabilities			—						2
Total liabilities of consolidated investment entities			$	1,372					$	1,126

Fair Value Measurement

Upon consolidation, the Company elected to apply the FVO for financial assets and financial liabilities held by CLOs and continued to measure these assets (primarily corporate loans) and liabilities (debt obligations issued by CLOs) at fair value in subsequent periods. The Company has elected the FVO to more closely align its accounting with the economics of its transactions and allows the Company to more effectively align changes in the fair value of CLO assets with a commensurate change in the fair value of CLO liabilities.

Investments held by consolidated private equity funds are measured and reported at fair value in the Company's Condensed Consolidated Financial Statements. Changes in the fair value of consolidated investment entities are recorded as a separate line item within Income (loss) related to consolidated investment entities in the Company's Condensed Consolidated Statements of Operations.

The methodology for measuring the fair value of financial assets and liabilities of consolidated investment entities, and the classification of these measurements in the fair value hierarchy is consistent with the methodology and classification applied by the Company to its investment portfolio.

As discussed in more detail below, the Company utilizes valuations obtained from third-party commercial pricing services, brokers and investment sponsors or third-party administrators that supply NAV (or its equivalent) per share used as a practical expedient. The valuations obtained from brokers and third-party commercial pricing services are non-binding. These valuations are reviewed on a monthly or quarterly basis depending on the entity and its underlying investments. Procedures include, but are not limited to, a review of underlying fund investor reports, review of top and worst performing funds requiring further scrutiny, review of variance from prior periods and review of variance from benchmarks, where applicable. In addition, the

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Company considers both macro and fund specific events that may impact the latest NAV supplied and determines if further adjustments of value should be made. Such changes, if any, are subject to senior management review.

When a price cannot be obtained from a commercial pricing service, independent broker quotes are solicited. Securities priced using independent broker quotes are classified as Level 3. Broker quotes and prices obtained from pricing services are reviewed and validated through an internal valuation committee price variance review, comparisons to internal pricing models, back testing to recent trades or monitoring of trading volumes.

Cash and Cash Equivalents

The carrying amounts for cash reflect the assets’ fair values. The fair value for cash equivalents is determined based on quoted market prices. These assets are classified as Level 1.

CLOs

Corporate loans: Corporate loan investments, which comprise the majority of consolidated CLO portfolio collateral, are senior secured corporate loans maturing at various dates between 2020 and 2029, paying interest at LIBOR, EURIBOR or PRIME plus a spread of up to 10.0%. As of September 30, 2020 and December 31, 2019, the unpaid principal balance exceeded the fair value of the corporate loans by approximately $43 and $18, respectively. Less than 1.0% of the collateral assets were in default as of September 30, 2020 and December 31, 2019.

The fair values for corporate loans are determined using independent commercial pricing services. Fair value measurement based on pricing services may be classified in Level 2 or Level 3 depending on the type, complexity, observability and liquidity of the asset being measured. The inputs used by independent commercial pricing services, such as benchmark yields and credit risk adjustments, are those that are derived principally from or corroborated by observable market data. Hence, the fair value measurement of corporate loans priced by independent pricing service providers is classified within Level 2 of the fair value hierarchy. In addition, there are assets held with CLO portfolios that represent senior level debt of other third party CLOs. These CLO investments are classified within Level 3 of the fair value hierarchy. See description of fair value process for CLO notes below.

CLO notes: The CLO notes are backed by diversified loan portfolios consisting primarily of senior secured floating rate leveraged loans. Repayment risk is segmented into tranches with credit ratings of these tranches reflecting both the credit quality of underlying collateral as well as how much protection a given tranche is afforded by tranches that are subordinate to it. The most subordinated tranche bears the first loss and receives the residual payments, if any. The interest rates are generally variable rates based on LIBOR plus a pre-defined spread, which varies from 0.7% for the more senior tranches to 7.6% for the more subordinated tranches. CLO notes mature in 2026 and 2031, and have a weighted average maturity of 8.4 years as of September 30, 2020. The investors in this debt are not affiliated with the Company and have no recourse to the general credit of the Company for this debt.

The fair values of the CLO notes are measured based on the fair value of the CLO's corporate loans, as the Company uses the measurement alternative available under ASU 2014-13 and determined that the inputs for measuring financial assets are more observable. The CLO notes are classified within Level 2 of the fair value hierarchy, consistent with the classification of the majority of the CLO financial assets.

The Company reviews the detailed prices including comparisons to prior periods for reasonableness. The Company utilizes a formal pricing challenge process to request a review of any price during which time the vendor examines its assumptions and relevant market inputs to determine if a price change is warranted.

The following narrative indicates the sensitivity of inputs:

•Default Rate: An increase (decrease) in the expected default rate would likely increase (decrease) the discount margin (increase risk premium) used to value the CLO investments and CLO notes and, as a result, would potentially decrease the value of the CLO investments and CLO notes.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

•Recovery Rate: A decrease (increase) in the expected recovery of defaulted assets would potentially decrease (increase) the valuation of CLO investments and CLO notes.

•Prepayment Rate: A decrease (increase) in the expected rate of collateral prepayments would potentially decrease (increase) the valuation of CLO investments and CLO notes as the expected weighted average life ("WAL") would increase (decrease).

•Discount Margin (spread over LIBOR): An increase (decrease) in the discount margin used to value the CLO investments and CLO notes would decrease (increase) the value of the CLO investments and CLO notes.

Private Equity Funds

As prescribed in ASC Topic 820, the unit of account for these investments is the interest in the investee fund. The Company owns an undivided interest in the fund portfolio and does not have the ability to dispose of individual assets and liabilities in the fund portfolio. Rather, the Company would be required to redeem or dispose of its entire interest in the investee fund. There is no current active market for interests in underlying private equity funds.

Valuation is generally based on the valuations provided by the fund's general partner or investment manager. The valuations typically reflect the fair value of the Company's capital account balance of each fund investment, including unrealized capital gains (losses), as reported in the financial statements of the respective investee fund as of the respective year end or the latest available date. In circumstances where fair values are not provided, the Company seeks to determine the fair value of fund investments based upon other information provided by the fund's general partner or investment manager or from other sources.

The fair value of securities received in-kind from fund investments is determined based on the restrictions around the securities.

•Unrestricted, publicly traded securities are valued at the closing public market price on the reporting date;

•Restricted, publicly traded securities may be valued at a discount from the closing public market price on the reporting date, depending on the circumstances; and

•Privately held securities are valued by the directors/general partner of the investee fund, based on a variety of factors, including the price of recent transactions in the company's securities and the company's earnings, revenue and book value.

In the case of direct investments or co-investments in private equity companies, the Company initially recognizes investments at cost and subsequently adjusts investments to fair value. On a quarterly basis, the Company reviews the general partner or lead investor's valuation of the investee company, taking into account other available information, such as indications of a market value through subsequent issues of capital or transactions between third parties, performance of the investee company during the period and public, comparable companies' analysis, where appropriate.

Investments in these funds typically may not be fully redeemed at net asset value ("NAV") within 90 days because of inherent restriction on near term redemptions.

As of September 30, 2020 and December 31, 2019, certain private equity funds maintained term loans and revolving lines of credit of $667 and $669, respectively. The term loans renew every three years and the revolving lines of credit renew annually; all loans bear interest at LIBOR/EURIBOR plus 150 - 200 bps. The lines of credit are used for funding transactions before capital is called from investors, as well as for the financing of certain purchases. As of September 30, 2020 and December 31, 2019, outstanding borrowings amount to $459 and $602, respectively.

On March 30, 2020, Pomona Investment Fund terminated its three-year revolving credit agreement with Credit Suisse and entered into a five-year revolving credit agreement with Barclays Bank Plc. The loan bears interest at LIBOR plus 285 bps and has a commitment fee of 85 bps.

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

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The following table summarizes the fair value hierarchy levels of consolidated investment entities as of September 30, 2020:

			Level 1						Level 2						Level 3						NAV						Total
Assets
VIEs
Cash and cash equivalents			$	84					$	—					$	—					$	—					$	84
Corporate loans, at fair value using the fair value option			—						921						—						—						921
Limited partnerships/corporations, at fair value			—						—						—						1,600						1,600
VOEs
Limited partnerships/corporations, at fair value			—						—						—						—						—
Total assets, at fair value			$	84					$	921					$	—					$	1,600					$	2,605
Liabilities
VIEs
CLO notes, at fair value using the fair value option			$	—					$	538					$	—					$	—					$	538
Total liabilities, at fair value			$	—					$	538					$	—					$	—					$	538

The following table summarizes the fair value hierarchy levels of consolidated investment entities as of December 31, 2019:

			Level 1						Level 2						Level 3						NAV						Total
Assets
VIEs
Cash and cash equivalents			$	68					$	—					$	—					$	—					$	68
Corporate loans, at fair value using the fair value option			—						513						—						—						513
Limited partnerships/corporations, at fair value			—						—						—						1,470						1,470
VOEs
Limited partnerships/corporations, at fair value			—						—						—						162						162
Total assets, at fair value			$	68					$	513					$	—					$	1,632					$	2,213
Liabilities
VIEs
CLO notes, at fair value using the fair value option			$	—					$	474					$	—					$	—					$	474
Total liabilities, at fair value			$	—					$	474					$	—					$	—					$	474

Transfers of investments out of Level 3 and into Level 2 or Level 1, if any, are recorded as of the beginning of the period in which the transfer occurred. For the three and nine months ended September 30, 2020 and 2019, there were no transfers in or out of Level 3 or transfers between Level 1 and Level 2.

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Deconsolidation of Certain Investment Entities

In the second quarter of 2020, the Company determined its interest in the Pomona Investment Fund was less than a majority of the fund's NAV and therefore did not represent a controlling financial interest. As a result of this determination, the Company deconsolidated one investment entity during the nine months ended September 30, 2020. The Company had no deconsolidations during the three months ended September 30, 2020. There were no deconsolidations during the three and nine months ended September 30, 2019.

Nonconsolidated VIEs

CLOs

In addition to the consolidated CLOs, the Company also holds variable interest in certain CLOs that are not consolidated as it has been determined that the Company is not the primary beneficiary. With these CLOs, the Company serves as the investment manager and receives investment management fees and contingent performance fees. Generally, the Company does not hold any interest in the nonconsolidated CLOs but if it does, such ownership has been deemed to be insignificant. The Company has not provided, and is not obligated to provide, any financial or other support to these entities.

The Company reviews its assumptions on a periodic basis to determine if conditions have changed such that the projection of these contingent fees becomes significant enough to reconsider the Company's consolidation status as variable interest holder. As of September 30, 2020 and December 31, 2019, the Company held $389 and $377 ownership interests, respectively, in unconsolidated CLOs on a continuing basis.

Limited Partnerships

The Company manages or holds investments in certain private equity funds and hedge funds. With these entities, the Company serves as the investment manager and is entitled to receive at-market investment management fees and at-market contingent performance fees. The Company does not consolidate any of these investment funds for which it is not considered to be the primary beneficiary.

In addition, the Company does not consolidate the funds in which its involvement takes a form of a limited partner interest and is restricted to a role of a passive investor, as a limited partner's interest does not provide the Company with any substantive kick-out or participating rights, nor does it provide the Company with power to direct the activities of the fund.

The following table presents the carrying amounts of the variable interests in VIEs in which the Company concluded that it holds a variable interest, but is not the primary beneficiary as of the dates indicated. The Company determines its maximum exposure to loss to be: (i) the amount invested in the debt or equity of the VIE and (ii) other commitments and guarantees to the VIE.

Variable Interests on the Condensed Consolidated Balance Sheet
			September 30, 2020												December 31, 2019
			Carrying Amount						Maximum exposure to loss						Carrying Amount						Maximum exposure to loss
Fixed maturities, available-for-sale and fair value option			$	389					$	389					$	377					$	377
Limited partnership/corporations			1,383						1,383						1,290						1,290

Securitizations

The Company invests in various tranches of securitization entities, including RMBS, CMBS and ABS. Through its investments, the Company is not obligated to provide any financial or other support to these entities. Each of the RMBS, CMBS and ABS entities are thinly capitalized by design and considered VIEs. The Company's involvement with these entities is limited to that

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

of a passive investor. The Company has no unilateral right to appoint or remove the servicer, special servicer or investment manager, which are generally viewed to have the power to direct the activities that most significantly impact the securitization entities' economic performance, in any of these entities, nor does the Company function in any of these roles. The Company, through its investments or other arrangements, does not have the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the entity. Therefore, the Company is not the primary beneficiary and does not consolidate any of the RMBS, CMBS and ABS entities in which it holds investments. These investments are accounted for as investments available-for-sale as described in the Fair Value Measurements (excluding Consolidated Investment Entities) Note to these Condensed Consolidated Financial Statements and unrealized capital gains (losses) on these securities are recorded directly in AOCI, except for certain RMBS which are accounted for under the FVO whose change in fair value is reflected in Other net realized gains (losses) in the Condensed Consolidated Statements of Operations. The Company’s maximum exposure to loss on these structured investments is limited to the amount of its investment. Refer to the Investments (excluding Consolidated Investment Entities) Note to these Condensed Consolidated Financial Statements for details regarding the carrying amounts and classifications of these assets.

15.     Restructuring

Organizational Restructuring

As a result of the closing of the 2018 Transaction, the decision to cease new sales following the strategic review of the Company’s Individual Life business, additional cost savings targets announced in November 2018, and the Individual Life Transaction, the Company has undertaken restructuring efforts to execute the 2018 and Individual Life Transaction, reduce stranded expenses, as well as improve operational efficiency, strengthen technology capabilities and centralize certain sales, operations and investment management activities ("Organizational Restructuring"). The initiatives associated with the closing of the 2018 Transaction and the decision to cease new sales following the strategic review of the Company's Individual Life Business concluded during 2019. See below for further description of restructuring activities related to the Individual Life Transaction.

These activities have resulted in recognition of severance and organizational transition costs that are reflected in both continuing operations and discontinued operations. Amounts reflected in continuing operations are reported in Operating expenses in the Condensed Consolidated Statements of Operations, but excluded from Adjusted operating earnings before income taxes. These expenses are classified as a component of Other adjustments to Income (loss) from continuing operations before income taxes and consequently are not included in the adjusted operating results of the Company's segments.

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

			Three Months Ended September 30,												Nine Months Ended September 30,												Cumulative Amounts Incurred to Date(1)
			2020						2019						2020						2019
Severance benefits			$	(3)					$	(9)					$	(11)					$	42					$	47
Organizational transition costs			30						35						94						122						296
Total restructuring expenses			$	27					$	26					$	83					$	164					$	343
Continuing operations			$	10					$	26					$	46					$	164					$	296
Discontinued operations			$	17					$	—					$	37					$	—					$	47

(1) Includes expenses incurred during 2018.

Total restructuring expenses reflected in the table above include expenses related to the Individual Life transaction of $17 and $43 for the three and nine months ended September 30, 2020, respectively, a substantial portion of which is included in Income(loss) from discontinued operations, net of tax, in the Condensed Consolidated Statements of Operations. The aggregate amount of Organizational Restructuring expenses incurred in 2019 and expected to be incurred through the end of 2020, excluding restructuring efforts resulting from the Individual Life transaction, is in the range of $250 to $300. These costs

			87

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

include severance, organizational transition costs incurred to reorganize operations and other costs such as contract terminations and asset write-offs.

The following table presents the accrued liability associated with Organizational Restructuring expenses as of September 30, 2020:

			Severance Benefits																		Organizational Transition Costs						Total
Accrued liability as of January 1, 2020			$	30																	$	25					$	55
Provision			(11)																		94						83
Payments			(10)																		(79)						(89)
Accrued liability as of September 30, 2020			$	9																	$	40					$	49

Pursuant to the Individual Life Transaction, the Company will divest or dissolve four regulated insurance entities, including its life companies domiciled in Colorado and Indiana, and captive entities domiciled in Arizona. The Company will also divest Voya America Equities LLC, a regulated broker-dealer, and transfer or cease usage of a substantial number of administrative systems. The Company will undertake further restructuring efforts to reduce stranded expenses associated with its Individual Life business as well as its corporate and shared services functions. The Company anticipates incurring additional restructuring expenses directly related to the disposition beyond 2020, in addition to the $17 and $43 incurred for the three and nine months ended September 30, 2020, respectively. These collective costs, which include severance, transition and other costs, cannot currently be estimated but could be material.

16.    Segments

Pursuant to the Individual Life Transaction disclosed in the Business Held for Sale and Discontinued Operations Note, the Company will no longer report its Life Insurance business as a segment. The Company revised prior period information to conform to current period presentation.

The Company provides its principal products and services through three segments: Retirement, Investment Management and Employee Benefits.

Measurement

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

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

			88

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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

•Income (loss) related to businesses exited or to be exited through reinsurance or divestment, which includes gains and (losses) associated with transactions to exit blocks of business within continuing operations (including net investment gains (losses) on securities sold and expenses directly related to these transactions) and residual run-off activity (including an insignificant number of Individual Life, Annuities and CBVA policies that were not part of the Individual Life and 2018 Transactions). Excluding this activity, which also includes amortization of intangible assets related to businesses exited or to be exited, better reveals trends in the Company's core business and more closely aligns Adjusted operating earnings before income taxes with how the Company manages its segments;

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

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

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

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

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

•Other items not indicative of normal operations or performance of the Company's segments or related to events such as

capital or organizational restructurings undertaken to achieve long-term economic benefits, including certain costs related to debt and equity offerings, acquisition / merger integration expenses, severance and other expenses associated with such activities. These items vary widely in timing, scope and frequency between periods as well as between companies to which the Company is compared. Accordingly, the Company adjusts for these items as management believes that these items distort the ability to make a meaningful evaluation of the current and future performance of the Company's segments.

			89

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The summary below reconciles Adjusted operating earnings before income taxes for the segments to Income (loss) from continuing operations before income taxes for the periods indicated:

			Three Months Ended September 30,												Nine Months Ended September 30,
			2020						2019						2020						2019
Income (loss) from continuing operations before income taxes			$	(145)					$	149					$	(149)					$	494
Less Adjustments:
Net investment gains (losses) and related charges and adjustments			29						14						63						73
Net guaranteed benefit hedging gains (losses) and related charges and adjustments			16						(12)						(36)						(22)
Income (loss) related to businesses exited or to be exited through reinsurance or divestment			(342)						31						(387)						80
Income (loss) attributable to noncontrolling interest			106						19						33						44
Income (loss) related to early extinguishment of debt			—						(12)						—						(12)
Immediate recognition of net actuarial gains (losses) related to pension and other post-employment benefit obligations and gains (losses) from plan amendments and curtailments			—						—						—						66
Dividend payments made to preferred shareholders			14						14						32						24
Other adjustments			(8)						(27)						(45)						(172)
Total adjustments to income (loss) from continuing operations			$	(185)					$	27					$	(340)					$	81
Adjusted operating earnings before income taxes by segment:
Retirement			$	25					$	117					$	185					$	426
Investment Management			47						46						106						121
Employee Benefits			56						57						154						144
Corporate			(88)						(98)						(254)						(278)
Total			$	40					$	122					$	190					$	413

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

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

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

			90

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

•Revenues related to businesses exited or to be exited through reinsurance or divestment, which includes revenues associated with transactions to exit blocks of business within continuing operations (including net investment gains (losses) on securities sold related to these transactions) and residual run-off activity (including an insignificant number of Individual Life, Annuities and CBVA policies that were not part of the Individual Life and 2018 Transactions). Excluding this activity better reveals trends in the Company's core business and more closely aligns Adjusted operating revenues with how the Company manages its segments;

•Revenues attributable to noncontrolling interest, which represents the interests of shareholders, other than the Company, in consolidated entities. Revenues attributable to noncontrolling interest represents such shareholders' interests in the gains and losses of those entities, or the attribution of results from consolidated VIEs or VOEs to which the Company is not economically entitled; and

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

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

			Three Months Ended September 30,												Nine Months Ended September 30,
			2020						2019						2020						2019
Total revenues			$	2,071					$	1,875					$	5,419					$	5,666
Adjustments:
Net realized investment gains (losses) and related charges and adjustments			27						16						60						71
Gains (losses) on change in fair value of derivatives related to guaranteed benefits			16						(12)						(36)						(21)
Revenues related to businesses exited or to be exited through reinsurance or divestment			399						401						1,075						1,216
Revenues attributable to noncontrolling interest			116						34						59						88
Other adjustments			80						71						205						223
Total adjustments to revenues			638						510						$	1,363					$	1,577
Adjusted operating revenues by segment:
Retirement			718						675						$	1,954					$	2,011
Investment Management			173						167						467						478
Employee Benefits			541						503						1,615						1,526
Corporate			2						20						20						74
Total			$	1,434					$	1,365					$	4,056					$	4,089

			91

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Other Segment Information

The Investment Management segment revenues include the following intersegment revenues, primarily consisting of asset-based management and administration fees for the periods indicated:

			Three Months Ended September 30,												Nine Months Ended September 30,
			2020						2019						2020						2019
Investment Management intersegment revenues			$	28					$	25					$	81					$	76

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

			September 30, 2020						December 31, 2019
Retirement			$	121,763					$	118,024
Investment Management			744						745
Employee Benefits			2,922						3,117
Corporate			23,498						25,206
Total assets, before consolidation(1)			148,927						147,092
Consolidation of investment entities			2,359						1,890
Total assets, excluding assets held for sale			151,286						148,982
Assets held for sale			20,180						20,069
Total assets			$	171,466					$	169,051

(1) Total assets, before consolidation includes the Company's direct investments in CIEs prior to consolidation, which are accounted for using the equity method or fair value option.

			92

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

17.    Condensed Consolidating Financial Information

The accompanying condensed consolidating financial information has been prepared and presented pursuant to SEC Regulation S-X, Rule 3-10, "Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered" ("Rule 3-10"). The condensed consolidating financial information presents the financial position of Voya Financial, Inc. ("Parent Issuer"), Voya Holdings ("Subsidiary Guarantor") and all other subsidiaries ("Non-Guarantor Subsidiaries") of the Company as of September 30, 2020 and December 31, 2019, their results of operation and comprehensive income for the three and nine months ended September 30, 2020 and 2019, and statements of cash flows for the nine months ended September 30, 2020 and 2019.

The 5.7% senior notes due 2043, the 3.65% senior notes due 2026, the 4.8% senior notes due 2046, the 3.125% senior notes due 2024 (collectively, the "Senior Notes"), the 5.65% fixed-to-floating rate junior subordinated notes due 2053 and the 4.7% fixed-to-floating junior subordinated notes due 2048 (collectively, the "Junior Subordinated Notes"), each issued by Parent Issuer, are fully and unconditionally guaranteed by Subsidiary Guarantor, a 100% owned subsidiary of Parent Issuer. No other subsidiary of Parent Issuer guarantees the Senior Notes or the Junior Subordinated Notes. Rule 3-10(h) provides that a guarantee is full and unconditional if, when the issuer of a guaranteed security has failed to make a scheduled payment, the guarantor is obligated to make the scheduled payment immediately and, if it does not, any holder of the guaranteed security may immediately bring suit directly against the guarantor for payment of amounts due and payable. In the event that Parent Issuer does not fulfill the guaranteed obligations, any holder of the Senior Notes or the Junior Subordinated Notes may immediately bring a claim against Subsidiary Guarantor for amounts due and payable.

The following condensed consolidating financial information is presented in conformance with the components of the Condensed Consolidated Financial Statements. Investments in subsidiaries are accounted for using the equity method for purposes of illustrating the consolidating presentation. Equity in the subsidiaries is therefore reflected in the Parent Issuer's and Subsidiary Guarantor's Investment in subsidiaries and Equity in earnings of subsidiaries. Non-Guarantor Subsidiaries represent all other subsidiaries on a combined basis. The consolidating adjustments presented herein eliminate investments in subsidiaries and intercompany balances and transactions.

			93

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Balance Sheet

September 30, 2020

			Parent Issuer						Subsidiary Guarantor						Non-Guarantor Subsidiaries						Consolidating Adjustments						Consolidated
Assets:
Investments:
Fixed maturities, available-for-sale, at fair value			$	5					$	—					$	42,339					$	(14)					$	42,330
Fixed maturities, at fair value using the fair value option			—						—						3,014						—						3,014
Equity securities, at fair value			—						—						371						—						371
Short-term investments			—						—						70						—						70
Mortgage loans on real estate, net of valuation allowance			—						—						6,817						—						6,817
Less: Allowance for credit losses			—						—						55						—						55
Mortgage loans on real estate, net			—						—						6,762						—						6,762
Policy loans			—						—						735						—						735
Limited partnerships/corporations			6						—						1,377						—						1,383
Derivatives			52						—						218						—						270
Investments in subsidiaries			11,501						8,747						—						(20,248)						—
Other investments			—						—						319						—						319
Securities pledged			—						—						827						—						827
Total investments			11,564						8,747						56,032						(20,262)						56,081
Cash and cash equivalents			223						1						828						—						1,052
Short-term investments under securities loan agreements, including collateral delivered			11						—						653						—						664
Accrued investment income			—						—						545						—						545
Premium receivable and reinsurance recoverable			—						—						3,676						—						3,676
Less: Allowance for credit losses on reinsurance recoverable			—						—						19						—						19
Premium receivable and reinsurance recoverable, net			—						—						3,657						—						3,657
Deferred policy acquisition costs and Value of business acquired			—						—						1,669						—						1,669
Deferred income taxes			839						37						438						—						1,314
Loans to subsidiaries and affiliates			219						—						430						(649)						—
Due from subsidiaries and affiliates			5						—						2						(7)						—
Other assets			5						—						807						—						812
Assets related to consolidated investment entities:
Limited partnerships/corporations, at fair value			—						—						1,600						—						1,600
Cash and cash equivalents			—						—						84						—						84
Corporate loans, at fair value using the fair value option			—						—						921						—						921
Other assets			—						—						8						—						8
Assets held in separate accounts			—						—						82,879						—						82,879
Assets held for sale			—						—						20,180						—						20,180
Total assets			$	12,866					$	8,785					$	170,733					$	(20,918)					$	171,466

			94

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Balance Sheet (Continued)

September 30, 2020

			Parent Issuer						Subsidiary Guarantor						Non-Guarantor Subsidiaries						Consolidating Adjustments						Consolidated
Liabilities and Shareholders' Equity:
Future policy benefits			$	—					$	—					$	10,295					$	—					$	10,295
Contract owner account balances			—						—						42,187						—						42,187
Payables under securities loan and repurchase agreements, including collateral held			4						—						571						—						575
Short-term debt			431						40						179						(649)						1
Long-term debt			2,670						371						17						(15)						3,043
Derivatives			48						—						386						—						434
Pension and other postretirement provisions			—						—						375						—						375
Current income taxes			1						(27)						35						—						9
Due to subsidiaries and affiliates			—						—						5						(5)						—
Other liabilities			55						5						1,361						(2)						1,419
Liabilities related to consolidated investment entities:
Collateralized loan obligations notes, at fair value using the fair value option			—						—						538						—						538
Other liabilities			—						—						834						—						834
Liabilities related to separate accounts			—						—						82,879						—						82,879
Liabilities held for sale			—						—						18,232						—						18,232
Total liabilities			3,209						389						157,894						(671)						160,821
Shareholders' equity:
Total Voya Financial, Inc. shareholders' equity			9,657						8,396						11,851						(20,247)						9,657
Noncontrolling interest			—						—						988						—						988
Total shareholders' equity			9,657						8,396						12,839						(20,247)						10,645
Total liabilities and shareholders' equity			$	12,866					$	8,785					$	170,733					$	(20,918)					$	171,466

			95

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Balance Sheet

December 31, 2019

			Parent Issuer						Subsidiary Guarantor						Non-Guarantor Subsidiaries						Consolidating Adjustments						Consolidated
Assets:
Investments:
Fixed maturities, available-for-sale, at fair value			$	5					$	—					$	39,673					$	(15)					$	39,663
Fixed maturities, at fair value using the fair value option			—						—						2,707						—						2,707
Equity securities, at fair value			—						—						196						—						196
Short-term investments			—						—						68						—						68
Mortgage loans on real estate, net of valuation allowance			—						—						6,878						—						6,878
Less: Allowance for credit losses			—						—						—						—						—
Mortgage loans on real estate, net			—						—						6,878						—						6,878
Policy loans			—						—						776						—						776
Limited partnerships/corporations			4						—						1,286						—						1,290
Derivatives			49						—						267						—						316
Investments in subsidiaries			11,003						8,493						—						(19,496)						—
Other investments			—						—						385						—						385
Securities pledged			—						—						1,408						—						1,408
Total investments			11,061						8,493						53,644						(19,511)						53,687
Cash and cash equivalents			212						—						969						—						1,181
Short-term investments under securities loan agreements, including collateral delivered			11						—						1,384						—						1,395
Accrued investment income			—						—						505						—						505
Premium receivable and reinsurance recoverable			—						—						3,732						—						3,732
Less: Allowance for credit losses on reinsurance recoverable			—						—						—						—						—
Premium receivable and reinsurance recoverable, net			—						—						3,732						—						3,732
Deferred policy acquisition costs and Value of business acquired			—						—						2,226						—						2,226
Deferred income taxes			816						39						603						—						1,458
Loans to subsidiaries and affiliates			164						—						69						(233)						—
Due from subsidiaries and affiliates			2						—						6						(8)						—
Other assets			7						—						895						—						902
Assets related to consolidated investment entities:
Limited partnerships/corporations, at fair value			—						—						1,632						—						1,632
Cash and cash equivalents			—						—						68						—						68
Corporate loans, at fair value using the fair value option			—						—						513						—						513
Other assets			—						—						13						—						13
Assets held in separate accounts			—						—						81,670						—						81,670
Assets held for sale			—						—						20,069						—						20,069
Total assets			$	12,273					$	8,532					$	167,998					$	(19,752)					$	169,051

			96

---

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Balance Sheet (Continued)

December 31, 2019

			Parent Issuer						Subsidiary Guarantor						Non-Guarantor Subsidiaries						Consolidating Adjustments						Consolidated
Liabilities and Shareholders' Equity:
Future policy benefits			$	—					$	—					$	9,945					$	—					$	9,945
Contract owner account balances			—						—						40,923						—						40,923
Payables under securities loan and repurchase agreements, including collateral held			—						—						1,373						—						1,373
Short-term debt			69						87						78						(233)						1
Long-term debt			2,669						371						17						(15)						3,042
Derivatives			50						—						353						—						403
Pension and other postretirement provisions			—						—						468						—						468
Current income taxes			28						(17)						16						—						27
Due to subsidiaries and affiliates			4						—						2						(6)						—
Other liabilities			45						10						1,292						(2)						1,345
Liabilities related to consolidated investment entities:
Collateralized loan obligations notes, at fair value using the fair value option			—						—						474						—						474
Other liabilities			—						—						652						—						652
Liabilities related to separate accounts			—						—						81,670						—						81,670
Liabilities held for sale			—						—						18,498						—						18,498
Total liabilities			2,865						451						155,761						(256)						158,821
Shareholders' equity:
Total Voya Financial, Inc. shareholders' equity			9,408						8,081						11,415						(19,496)						9,408
Noncontrolling interest			—						—						822						—						822
Total shareholders' equity			9,408						8,081						12,237						(19,496)						10,230
Total liabilities and shareholders' equity			$	12,273					$	8,532					$	167,998					$	(19,752)					$	169,051

			97

---

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Operations

For the Three Months Ended September 30, 2020

			Parent Issuer						Subsidiary Guarantor						Non-Guarantor Subsidiaries						Consolidating Adjustments						Consolidated
Revenues:
Net investment income			$	2					$	—					$	800					$	(2)					$	800
Fee income			—						—						507						—						507
Premiums			—						—						604						—						604
Net realized capital gains (losses):
Total impairments			—						—						(10)						—						(10)
Other net realized capital gains (losses)			8						—						(68)						—						(60)
Total net realized capital gains (losses)			8						—						(78)						—						(70)
Other revenue			—						—						90						—						90
Income (loss) related to consolidated investment entities:
Net investment income			—						—						140						—						140
Total revenues			10						—						2,063						(2)						2,071
Benefits and expenses:
Policyholder benefits			—						—						1,020						—						1,020
Interest credited to contract owner account balances			—						—						279						—						279
Operating expenses			3						—						627						—						630
Net amortization of Deferred policy acquisition costs and Value of business acquired			—						—						241						—						241
Interest expense			33						7						2						(2)						40
Operating expenses related to consolidated investment entities:
Interest expense			—						—						5						—						5
Other expense			—						—						1						—						1
Total benefits and expenses			36						7						2,175						(2)						2,216
Income (loss) from continuing operations before income taxes			(26)						(7)						(112)						—						(145)
Income tax expense (benefit)			(5)						(5)						(62)						—						(72)
Income (loss) from continuing operations			(21)						(2)						(50)						—						(73)
Income (loss) from discontinued operations, net of tax			—						—						(140)						—						(140)
Net income (loss) before equity in earnings (losses) of unconsolidated affiliates			(21)						(2)						(190)						—						(213)
Equity in earnings (losses) of subsidiaries, net of tax			(298)						(205)						—						503						—
Net income (loss)			(319)						(207)						(190)						503						(213)
Less: Net income (loss) attributable to noncontrolling interest			—						—						106						—						106
Net income (loss) available to Voya Financial, Inc.			(319)						(207)						(296)						503						(319)
Less: Preferred stock dividends			14						—						—						—						14
Net income (loss) available to Voya Financial, Inc.'s common shareholders			$	(333)					$	(207)					$	(296)					$	503					$	(333)

			98

---

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Operations

For the Nine Months Ended September 30, 2020

			Parent Issuer						Subsidiary Guarantor						Non-Guarantor Subsidiaries						Consolidating Adjustments						Consolidated
Revenues:
Net investment income			$	7					$	—					$	2,085					$	(8)					$	2,084
Fee income			—						—						1,470						—						1,470
Premiums			—						—						1,819						—						1,819
Net realized capital gains (losses):
Total impairments			—						—						(80)						—						(80)
Other net realized capital gains (losses)			3						—						(227)						—						(224)
Total net realized capital gains (losses)			3						—						(307)						—						(304)
Other revenue			—						—						263						—						263
Income (loss) related to consolidated investment entities:
Net investment income			—						—						87						—						87
Total revenues			10						—						5,417						(8)						5,419
Benefits and expenses:
Policyholder benefits			—						—						2,327						—						2,327
Interest credited to contract owner account balances			—						—						851						—						851
Operating expenses			5						—						1,908						—						1,913
Net amortization of Deferred policy acquisition costs and Value of business acquired			—						—						336						—						336
Interest expense			101						22						5						(8)						120
Operating expenses related to consolidated investment entities:
Interest expense			—						—						18						—						18
Other expense			—						—						3						—						3
Total benefits and expenses			106						22						5,448						(8)						5,568
Income (loss) from continuing operations before income taxes			(96)						(22)						(31)						—						(149)
Income tax expense (benefit)			(20)						(10)						(43)						—						(73)
Income (loss) from continuing operations			(76)						(12)						12						—						(76)
Income (loss) from discontinued operations, net of tax			—						—						(361)						—						(361)
Net income (loss) before equity in earnings (losses) of unconsolidated affiliates			(76)						(12)						(349)						—						(437)
Equity in earnings (losses) of subsidiaries, net of tax			(394)						(96)						—						490						—
Net income (loss)			(470)						(108)						(349)						490						(437)
Less: Net income (loss) attributable to noncontrolling interest			—						—						33						—						33
Net income (loss) available to Voya Financial, Inc.			(470)						(108)						(382)						490						(470)
Less: Preferred stock dividends			32						—						—						—						32
Net income (loss) available to Voya Financial, Inc.'s common shareholders			$	(502)					$	(108)					$	(382)					$	490					$	(502)

			99

---

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Operations

For the Three Months Ended September 30, 2019

			Parent Issuer						Subsidiary Guarantor						Non-Guarantor Subsidiaries						Consolidating Adjustments						Consolidated
Revenues:
Net investment income			$	4					$	—					$	685					$	(2)					$	687
Fee income			—						—						494						—						494
Premiums			—						—						565						—						565
Net realized capital gains (losses):
Total impairments			—						—						(3)						—						(3)
Other net realized capital gains (losses)			—						—						(17)						—						(17)
Total net realized capital gains (losses)			—						—						(20)						—						(20)
Other revenue			—						—						106						—						106
Income (loss) related to consolidated investment entities:
Net investment income			—						—						43						—						43
Total revenues			4						—						1,873						(2)						1,875
Benefits and expenses:
Policyholder benefits			—						—						705						—						705
Interest credited to contract owner account balances			—						—						298						—						298
Operating expenses			4						—						623						—						627
Net amortization of Deferred policy acquisition costs and Value of business acquired			—						—						36						—						36
Interest expense			44						9						—						(2)						51
Operating expenses related to consolidated investment entities:
Interest expense			—						—						8						—						8
Other expense			—						—						1						—						1
Total benefits and expenses			48						9						1,671						(2)						1,726
Income (loss) from continuing operations before income taxes			(44)						(9)						202						—						149
Income tax expense (benefit)			(13)						(6)						24						—						5
Income (loss) from continuing operations			(31)						(3)						178						—						144
Income (loss) from discontinued operations, net of tax			—						—						(4)						—						(4)
Net income (loss) before equity in earnings (losses) of unconsolidated affiliates			(31)						(3)						174						—						140
Equity in earnings (losses) of subsidiaries, net of tax			151						119						—						(270)						—
Net income (loss)			120						116						174						(270)						140
Less: Net income (loss) attributable to noncontrolling interest			—						—						19						—						19
Net income (loss) available to Voya Financial, Inc.			120						116						155						(270)						121
Less: Preferred stock dividends			14						—						—						—						14
Net income (loss) available to Voya Financial, Inc.'s common shareholders			$	106					$	116					$	155					$	(270)					$	107

			100

---

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Operations

For the Nine Months Ended September 30, 2019

			Parent Issuer						Subsidiary Guarantor						Non-Guarantor Subsidiaries						Consolidating Adjustments						Consolidated
Revenues:
Net investment income			$	27					$	—					$	2,039					$	(9)					$	2,057
Fee income			—						—						1,459						—						1,459
Premiums			—						—						1,717						—						1,717
Net realized capital gains (losses):
Total impairments			—						—						(32)						—						(32)
Other net realized capital gains (losses)			—						—						25						—						25
Total net realized capital gains (losses)			—						—						(7)						—						(7)
Other revenue			—						—						325						—						325
Income (loss) related to consolidated investment entities:
Net investment income			—						—						115						—						115
Total revenues			27						—						5,648						(9)						5,666
Benefits and expenses:
Policyholder benefits			—						—						2,009						—						2,009
Interest credited to contract owner account balances			—						—						879						—						879
Operating expenses			10						—						1,969						—						1,979
Net amortization of Deferred policy acquisition costs and Value of business acquired			—						—						136						—						136
Interest expense			116						23						5						(9)						135
Operating expenses related to consolidated investment entities:
Interest expense			—						—						29						—						29
Other expense			—						—						5						—						5
Total benefits and expenses			126						23						5,032						(9)						5,172
Income (loss) from continuing operations before income taxes			(99)						(23)						616						—						494
Income tax expense (benefit)			(24)						(8)						79						—						47
Income (loss) from continuing operations			(75)						(15)						537						—						447
Income (loss) from discontinued operations, net of tax			—						(82)						100						—						18
Net income (loss) before equity in earnings (losses) of unconsolidated affiliates			(75)						(97)						637						—						465
Equity in earnings (losses) of subsidiaries, net of tax			495						340						—						(835)						—
Net income (loss)			420						243						637						(835)						465
Less: Net income (loss) attributable to noncontrolling interest			—						—						44						—						44
Net income (loss) available to Voya Financial, Inc.			420						243						593						(835)						421
Less: Preferred stock dividends			24						—						—						—						24
Net income (loss) available to Voya Financial, Inc.'s common shareholders			$	396					$	243					$	593					$	(835)					$	397

			101

---

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Comprehensive Income

For the Three Months Ended September 30, 2020

			Parent Issuer						Subsidiary Guarantor						Non-Guarantor Subsidiaries						Consolidating Adjustments						Consolidated
Net income (loss)			$	(319)					$	(207)					$	(190)					$	503					$	(213)
Other comprehensive income (loss), before tax:
Unrealized gains (losses) on securities			562						345						563						(908)						562
Impairments			—						(1)						—						1						—
Pension and other postretirement benefits liability			—						—						—						—						—
Other comprehensive income (loss), before tax			562						344						563						(907)						562
Income tax expense (benefit) related to items of other comprehensive income (loss)			118						72						118						(190)						118
Other comprehensive income (loss), after tax			444						272						445						(717)						444
Comprehensive income (loss)			125						65						255						(214)						231
Less: Comprehensive income (loss) attributable to noncontrolling interest			—						—						106						—						106
Comprehensive income (loss) attributable to Voya Financial, Inc.			$	125					$	65					$	149					$	(214)					$	125

Condensed Consolidating Statement of Comprehensive Income

For the Nine Months Ended September 30, 2020

			Parent Issuer						Subsidiary Guarantor						Non-Guarantor Subsidiaries						Consolidating Adjustments						Consolidated
Net income (loss)			$	(470)					$	(108)					$	(349)					$	490					$	(437)
Other comprehensive income (loss), before tax:
Unrealized gains (losses) on securities			1,460						979						1,460						(2,439)						1,460
Impairments			—						(1)						—						1						—
Pension and other postretirement benefits liability			(2)						(1)						(2)						3						(2)
Other comprehensive income (loss), before tax			1,458						977						1,458						(2,435)						1,458
Income tax expense (benefit) related to items of other comprehensive income (loss)			306						205						306						(511)						306
Other comprehensive income (loss), after tax			1,152						772						1,152						(1,924)						1,152
Comprehensive income (loss)			682						664						803						(1,434)						715
Less: Comprehensive income (loss) attributable to noncontrolling interest			—						—						33						—						33
Comprehensive income (loss) attributable to Voya Financial, Inc.			$	682					$	664					$	770					$	(1,434)					$	682

			102

---

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Comprehensive Income

For the Three Months Ended September 30, 2019

			Parent Issuer						Subsidiary Guarantor						Non-Guarantor Subsidiaries						Consolidating Adjustments						Consolidated
Net income (loss)			$	120					$	116					$	174					$	(270)					$	140
Other comprehensive income (loss), before tax:
Unrealized gains (losses) on securities			798						526						797						(1,323)						798
Impairments			—						—						—						—						—
Pension and other postretirement benefits liability			(1)						—						(1)						1						(1)
Other comprehensive income (loss), before tax			797						526						796						(1,322)						797
Income tax expense (benefit) related to items of other comprehensive income (loss)			167						111						167						(278)						167
Other comprehensive income (loss), after tax			630						415						629						(1,044)						630
Comprehensive income (loss)			750						531						803						(1,314)						770
Less: Comprehensive income (loss) attributable to noncontrolling interest			—						—						19						—						19
Comprehensive income (loss) attributable to Voya Financial, Inc.			$	750					$	531					$	784					$	(1,314)					$	751

Condensed Consolidating Statement of Comprehensive Income

For the Nine Months Ended September 30, 2019

			Parent Issuer						Subsidiary Guarantor						Non-Guarantor Subsidiaries						Consolidating Adjustments						Consolidated
Net income (loss)			$	420					$	243					$	637					$	(835)					$	465
Other comprehensive income (loss), before tax:
Unrealized gains (losses) on securities			3,223						2,436						3,223						(5,659)						3,223
Impairments			2						2						2						(4)						2
Pension and other postretirement benefits liability			(3)						(1)						(3)						4						(3)
Other comprehensive income (loss), before tax			3,222						2,437						3,222						(5,659)						3,222
Income tax expense (benefit) related to items of other comprehensive income (loss)			675						510						675						(1,185)						675
Other comprehensive income (loss), after tax			2,547						1,927						2,547						(4,474)						2,547
Comprehensive income (loss)			2,967						2,170						3,184						(5,309)						3,012
Less: Comprehensive income (loss) attributable to noncontrolling interest			—						—						44						—						44
Comprehensive income (loss) attributable to Voya Financial, Inc.			$	2,967					$	2,170					$	3,141					$	(5,309)					$	2,968

			103

---

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Cash Flows

For the Nine Months Ended September 30, 2020

			Parent Issuer						Subsidiary Guarantor						Non-Guarantor Subsidiaries						Consolidating Adjustments						Consolidated
Net cash (used in) provided by operating activities			$	(117)					$	298					$	932					$	(325)					$	788
Cash Flows from Investing Activities:
Proceeds from the sale, maturity, disposal or redemption of:
Fixed maturities			—						—						3,948						—						3,948
Equity securities			—						—						22						—						22
Mortgage loans on real estate			—						—						414						—						414
Limited partnerships/corporations			—						—						229						—						229
Acquisition of:
Fixed maturities			—						—						(4,952)						—						(4,952)
Equity securities			—						—						(154)						—						(154)
Mortgage loans on real estate			—						—						(355)						—						(355)
Limited partnerships/corporations			—						—						(275)						—						(275)
Short-term investments, net			—						—						(2)						—						(2)
Derivatives, net			(2)						—						100						—						98
Sales from consolidated investments entities			—						—						300						—						300
Purchases within consolidated investment entities			—						—						(689)						—						(689)
Maturity (issuance) of short-term intercompany loans, net			(56)						—						(362)						418						—
Return of capital contributions and dividends from subsidiaries			294						48						—						(342)						—
Capital contributions to subsidiaries			(7)						(5)						—						12						—
Collateral received (delivered), net			4						—						(71)						—						(67)
Other, net			—						—						22						—						22
Net cash used in investing activities - discontinued operations			—						—						(364)						—						(364)
Net cash (used in) provided by investing activities			233						43						(2,189)						88						(1,825)

			104

---

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Cash Flow

(Continued)

For the Nine Months Ended September 30, 2020

			Parent Issuer						Subsidiary Guarantor						Non-Guarantor Subsidiaries						Consolidating Adjustments						Consolidated
Cash Flows from Financing Activities:
Deposits received for investment contracts			—						—						4,561						—						4,561
Maturities and withdrawals from investment contracts			—						—						(3,953)						—						(3,953)
Settlements on deposit contracts			—												(5)						—						(5)
Net proceeds from (repayments of) short-term intercompany loans			362						(46)						102						(418)						—
Return of capital contributions and dividends to parent			—						(294)						(373)						667						—
Contributions of capital from parent			—												12						(12)						—
Borrowings of consolidated investment entities			—						—						365						—						365
Repayments of borrowings of consolidated investment entities			—						—						(613)						—						(613)
Contributions from (distributions to) participants in consolidated investment entities			—						—						846						—						846
Proceeds from issuance of common stock, net			4						—						—						—						4
Share-based compensation			(15)						—						—						—						(15)
Common stock acquired - Share repurchase			(366)												—						—						(366)
Dividends paid on common stock			(58)												—						—						(58)
Dividends paid on preferred stock			(32)												—						—						(32)
Principal payments for financing leases			—						—						(16)						—						(16)
Net cash provided by financing activities - discontinued operations			—						—						396						—						396
Net cash provided by (used in) financing activities			(105)						(340)						1,322						237						1,114
Net increase (decrease) in cash and cash equivalents			11						1						65						—						77
Cash and cash equivalents, beginning of period			212						—						1,260						—						1,472
Cash and cash equivalents, end of period			223						1						1,325						—						1,549
Less: Cash and cash equivalents of discontinued operations, end of period			—						—						497						—						497
Cash and cash equivalents of continuing operations, end of period			$	223					$	1					$	828					$	—					$	1,052

			105

---

Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Cash Flows

For the Nine Months Ended September 30, 2019

			Parent Issuer						Subsidiary Guarantor						Non-Guarantor Subsidiaries						Consolidating Adjustments						Consolidated
Net cash (used in) provided by operating activities			$	(91)					$	425					$	952					$	(435)					$	851
Cash Flows from Investing Activities:
Proceeds from the sale, maturity, disposal or redemption of:
Fixed maturities			—						—						5,062						—						5,062
Equity securities			18						—						2						—						20
Mortgage loans on real estate			—						—						772						—						772
Limited partnerships/corporations			—						—						169						—						169
Acquisition of:
Fixed maturities			(5)						—						(4,817)						—						(4,822)
Equity securities			(27)						—						(3)						—						(30)
Mortgage loans on real estate			—						—						(425)						—						(425)
Limited partnerships/corporations			(4)						—						(305)						—						(309)
Short-term investments, net			—						—						4						—						4
Derivatives, net			—						—						41						—						41
Sales from consolidated investments entities			—						—						484						—						484
Purchases within consolidated investment entities			—						—						(1,120)						—						(1,120)
Maturity (issuance) of short-term intercompany loans, net			(157)						—						(125)						282						—
Return of capital contributions and dividends from subsidiaries			956						414						—						(1,370)						—
Capital contributions to subsidiaries			(3)						—						—						3						—
Collateral received (delivered), net			—						—						(141)						—						(141)
Other, net			—						—						(64)						—						(64)
Net cash used in investing activities - discontinued operations			—						(128)						(394)						—						(522)
Net cash provided by (used in) investing activities			778						286						(860)						(1,085)						(881)

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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Condensed Consolidating Statement of Cash Flows

(Continued)

For the Nine Months Ended September 30, 2019

			Parent Issuer						Subsidiary Guarantor						Non-Guarantor Subsidiaries						Consolidating Adjustments						Consolidated
Cash Flows from Financing Activities:
Deposits received for investment contracts			—						—						3,483						—						3,483
Maturities and withdrawals from investment contracts			—						—						(4,120)						—						(4,120)
Settlements on deposit contracts			—						—						(6)						—						(6)
Repayment of debt with maturities of more than three months			(106)						—						—						—						(106)
Net (repayments of) proceeds from short-term intercompany loans			125						73						84						(282)						—
Return of capital contributions and dividends to parent			—						(786)						(1,019)						1,805						—
Contributions of capital from parent			—						—						3						(3)						—
Borrowings of consolidated investment entities			—						—						853						—						853
Repayments of borrowings of consolidated investment entities			—						—						(726)						—						(726)
Contributions from (distributions to) participants in consolidated investment entities, net			—						—						598						—						598
Proceeds from issuance of common stock, net			3						—						—						—						3
Proceeds from issuance of preferred stock, net			293						—						—						—						293
Share-based compensation			(17)						—						—						—						(17)
Common stock acquired - Share repurchase			(936)						—						—						—						(936)
Dividends paid on common stock			(23)						—						—						—						(23)
Dividends paid on preferred stock			(24)						—						—						—						(24)
Principal payments for financing lease			—						—						(3)						—						(3)
Net cash provided by financing activities - discontinued operations			—						—						599						—						599
Net cash used in financing activities			(685)						(713)						(254)						1,520						(132)
Net increase (decrease) in cash and cash equivalents			2						(2)						(162)						—						(162)
Cash and cash equivalents, beginning of period			209						2						1,327						—						1,538
Cash and cash equivalents, end of period			211						—						1,165						—						1,376
Less: Cash and cash equivalents of discontinued operations, end of period			—						—						221						—						221
Cash and cash equivalents of continuing operations, end of period			$	211					$	—					$	944					$	—					$	1,155

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

(Dollar amounts in millions, unless otherwise stated)

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

The following discussion and analysis presents a review of our consolidated results of operations for the three and nine months ended September 30, 2020 and 2019 and financial condition as of September 30, 2020 and December 31, 2019. This item should be read in its entirety and in conjunction with the Condensed Consolidated Financial Statements and related notes contained in Part I, Item 1. of this Quarterly Report on Form 10-Q, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section contained in our Annual Report on Form 10-K for the year ended December 31, 2019 ("Annual Report on Form 10-K").

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

Overview

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

The following represents segment percentage contributions to total Adjusted operating revenues and Adjusted operating earnings before income taxes for the nine months ended September 30, 2020:

									September 30, 2020
percent of total									Adjusted Operating Revenues						Adjusted Operating Earnings before Income Taxes
Retirement									48.2		%				97.4		%
Investment Management									11.5		%				55.8		%
Employee Benefits									39.8		%				81.1		%
Corporate									0.5		%				(133.7)		%

During the third quarter of 2020, we conducted our annual review of assumptions and made changes which impacted our segments' results of operations as well as the results of discontinued operations described below. The impact of assumption changes on our results from continuing operations was unfavorable unlocking of $383 million, of which $165 million was included in Adjusted operating earnings before income taxes for the current period. The impact of the annual review of assumptions on our discontinued operations resulted in unfavorable unlocking of $193 million which was reported in Income (loss) from discontinued operations for the current period. Unlocking in the third quarter of 2020 was primarily driven by changes in long term interest and equity rates.

During the third quarter of 2020, and as a result of the annual review of assumptions, we recorded loss recognition associated with certain blocks of reserves associated with our continuing and discontinued operations. Loss recognition recorded in continuing operations was $171 million of which $10 million was reflected in Adjusted operating earnings before income taxes. Loss recognition recorded in discontinued operations was $26 million and was reported Income (loss) from discontinued operations, net of tax.

For further information, see DAC/VOBA and Other Intangibles Unlocking and the Critical Accounting Judgements and Estimates in Part I, Item 2. of this Quarterly Report on Form 10-Q.

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Discontinued Operations

The Individual Life Transaction

On December 18, 2019, we entered into a Master Transaction Agreement (the “Resolution MTA”) with Resolution Life U.S. Holdings Inc., a Delaware corporation (“Resolution Life US”), pursuant to which Resolution Life US will acquire certain of our subsidiaries, including Security Life of Denver Insurance Company ("SLD"), Security Life of Denver International Limited ("SLDI") and Roaring River II, Inc. ("RRII"). The transaction is expected to close by January 4, 2021 and is subject to conditions specified in the Resolution MTA, including the receipt of required regulatory approvals.

We have determined that the legal entities to be sold and the Individual Life and Annuities businesses within these entities meet the criteria to be classified as held for sale and that the sale represents a strategic shift that will have a major effect on our operations. Accordingly, the results of operations of the businesses to be sold have been presented as discontinued operations, and the assets and liabilities of the related businesses have been classified as held for sale and segregated for all periods presented in this Quarterly Report on Form 10-Q.

As of December 31, 2019, we recorded an estimated loss on sale, net of tax of $1,108 million to write down the carrying value of the businesses held for sale to estimated fair value, which is based on the estimated sales price of the Individual Life Transaction (as defined below) as of December 31, 2019, less cost to sell and other adjustments in accordance with the Resolution MTA. In addition, we are required to remeasure the estimated fair value and loss on sale at the end of each quarter until closing of the Individual Life Transaction. As such, Income (loss) from discontinued operations, net of tax, for the nine months ended September 30, 2020 includes an additional estimated loss on sale of $231 million, net of tax. The estimated loss on sale, net of tax as of September 30, 2020 of $1,339 million, represents the excess of the estimated carrying value of the businesses held for sale over the estimated purchase price, which approximates fair value, less cost to sell. Additionally, the estimated loss on sale is based on assumptions that are subject to change due to fluctuations in market conditions and other variables that may occur prior to the closing date. For additional information on the Individual Life Transaction and the related estimated loss on sale, see Trends and Uncertainties in Part I, Item 2 of this Quarterly Report on Form 10-Q.

Concurrently with the sale, SLD will enter into reinsurance agreements with Reliastar Life Insurance Company ("RLI"), ReliaStar Life Insurance Company of New York (“RLNY”), and Voya Retirement Insurance and Annuity Company ("VRIAC"), each of which is a direct or indirect wholly owned subsidiary of the Company. Pursuant to these agreements, RLI and VRIAC will reinsure to SLD a 100% quota share, and RLNY will reinsure to SLD a 75% quota share, of their respective in-scope individual life insurance and annuities businesses. RLI, RLNY, and VRIAC will remain subsidiaries of the Company. We currently expect that these reinsurance transactions will be carried out on a coinsurance or modified coinsurance basis, with SLD’s reinsurance obligations collateralized in one of three ways: (1) invested assets placed in a comfort trust; (2) funds withheld basis with invested assets remaining on the respective subsidiaries of the Company; or (3) some combination of these two collateralization structures. During the three and nine months ended September 30, 2020, we recorded $5 million and $55 million in intent impairments based on assets we expect to transfer to the comfort trust upon closing. Based on values as of September 30, 2020, U.S. GAAP reserves to be ceded under the Individual Life Transaction are expected to be approximately $10.3 billion and are subject to change until closing. The reinsurance agreements along with the sale of the legal entities noted above (referred to as the "Individual Life Transaction") will result in the disposition of substantially all of the Company's life insurance and legacy non-retirement annuity businesses. The revenues and net results of the Individual Life and Annuities businesses that will be disposed of via reinsurance are reported in businesses exited or to be exited through reinsurance or divestment which is an adjustment to our U.S. GAAP revenues and earnings measures to calculate Adjusted operating revenues and Adjusted operating earnings before income taxes, respectively.

At the closing of the transaction, in addition to the loss on sale described above, we will recognize a further adjustment to Total shareholders' equity, excluding Accumulated other comprehensive income, associated with the portion of the transaction that involves a sale through reinsurance, to the extent the structure is carried out on a coinsurance basis with a comfort trust. We currently estimate that we could realize capital gains, net of DAC and tax, on the investment securities we sell into the comfort trust of our reinsurance counterparty. We also estimate that an allowance for credit losses for the reinsurance recoverable will be established, based on the credit worthiness of our counterparty, form of collateral and other factors. We currently estimate these newly established credit losses, as well as the expected reversal of credit losses on our commercial mortgages are expected to be immaterial on a net basis. Overall, the net aggregate reduction in Total shareholders' equity, excluding Accumulated other comprehensive income, due to the Individual Life Transaction would be in the range of $0 million to $500 million. We currently expect to be towards the lower end of the range, which includes an estimate of realized gains on investments of approximately $1.2 billion, net of DAC and taxes, based on asset values as of September 30, 2020. These estimated impacts are subject to changes through the date of the transaction closing due to many factors including interest rate

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movements, other investment valuation items, asset selections and changes to the structure of the reinsurance transactions, including an ultimate reinsurance structure that is not entirely on a coinsurance basis with a comfort trust.

Furthermore, upon closing of the Individual Life Transaction, we expect to have deferred intangibles in the range of $1.2 billion to $1.7 billion net of tax, subject to changes due to the same factors mentioned above regarding the reduction in Total shareholders' equity, excluding Accumulated other comprehensive income. The deferred intangibles will consist of (1) existing DAC, VOBA and URR balances on businesses already exited via reinsurance and for the portion of the transaction that involves a sale through reinsurance, (2) existing deferred Cost of reinsurance (“COR”) on businesses already exited via reinsurance and (3) deferred COR to be established upon closing of the reinsurance transactions mentioned above. The aggregate deferred intangibles will be amortized as a charge to earnings over the life of the underlying policies. We expect the annual impact of the amortization of these deferred intangibles to be approximately $100 million to $150 million, net of tax which will be classified as a component of Income (loss) related to businesses exited or to be exited via reinsurance which is an adjustment to Income (loss) from continuing operations before income taxes to calculate Adjusted operating earnings before taxes and consequently are not included in the adjusted operating results of our segments. Additionally, we would expect the annual impact of the amortization of the deferred intangibles to decline over time.

Additionally, to the extent the reinsurance transactions referred to above reinsure policies that do not meet risk transfer, a deposit asset will be established in the amount of net consideration transferred to SLD, which is expected to be in the range of $1.1 billion to $1.6 billion, net of tax. This compares to liabilities related to Contract owner account balances that currently exist for the related underlying policies. The annual net impact of the interest income accretion on the deposit asset and interest credited to the Contract owner account balances is expected to be in the range of approximately $25 million to $50 million, net of tax.

The following table summarizes the components of Income (loss) from discontinued operations, net of tax related to the Individual Life Transaction for the nine months ended September 30, 2020 and 2019:

			Nine Months Ended September 30,
			2020						2019
Revenues:
Net investment income			$	485					$	494
Fee income			596						574
Premiums			21						21
Total net realized capital gains (losses)			20						59
Other revenue			(13)						(18)
Total revenues			1,109						1,130
Benefits and expenses:
Interest credited and other benefits to contract owners/policyholders (1)			947						788
Operating expenses			107						58
Net amortization of Deferred policy acquisition costs and Value of business acquired(2)			215						151
Interest expense			5						8
Total benefits and expenses			1,274						1,005
Income (loss) from discontinued operations before income taxes			(165)						125
Income tax expense (benefit)			(35)						25
Loss on sale, net of tax			(231)						—
Income (loss) from discontinued operations, net of tax			$	(361)					$	100

(1) Includes loss recognition recorded in the third quarter of 2020 associated with certain blocks of reserves.

(2) Includes the impact of annual assumption updates completed in the third quarter of 2020.

The 2018 Transaction

On June 1, 2018, we consummated a series of transactions (collectively, the "2018 Transaction") pursuant to a Master Transaction Agreement with VA Capital Company LLC ("VA Capital") and Athene Holding Ltd. ("Athene"). As part of the 2018 Transaction, Venerable Holdings, Inc. ("Venerable"), a wholly owned subsidiary of VA Capital, acquired two of our subsidiaries, Voya Insurance and Annuity Company ("VIAC") and Directed Services, LLC ("DSL"), and VIAC and other Voya

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subsidiaries reinsured to Athene substantially all of their fixed and fixed indexed annuities business. The 2018 Transaction resulted in the disposition of substantially all of our Closed Block Variable Annuity ("CBVA") and Annuities businesses.

Income (loss) from discontinued operations for the nine months ended September 30, 2019 included an additional loss on sale of $82 related to purchase price true-up amounts with VA Capital which was settled during 2019.

Upon execution of the Individual Life Transaction including the reinsurance arrangements disclosed above, we will continue to hold an insignificant number of Individual Life, Annuities and CBVA policies. These policies are referred to in this Quarterly Report on Form 10-Q as "Residual Runoff Business".

Trends and Uncertainties

We describe known material trends and uncertainties that might affect our business in our Annual Report on Form 10-K for the year ended December 31, 2019, under the caption "Management’s Discussion and Analysis of Financial Condition and Results of Operations - Trends and Uncertainties", and in other sections of that document, including "Risk Factors". In addition, we describe below in this Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") more recently developing known trends and uncertainties that we believe may materially affect our future liquidity, financial condition or results of operations. All statements in this section, other than statements of historical fact, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. For a discussion of factors that could cause actual results, performance, or events to differ from those discussed in any forward-looking statement, including in a material manner, see “Note Concerning Forward-Looking Statements” in this Quarterly Report on Form 10-Q.

COVID-19 and its Effect on the Global Economy

COVID-19, the disease caused by the novel coronavirus, has had a significant adverse effect on the global economy since March of 2020. The disease continues to spread widely across the United States and in many countries throughout the world. The persistence of new infections has slowed the re-opening of the U.S. economy and, even in regions where restrictions have largely been lifted, economic activity has been slow to recover. Longer-term, the economic outlook is uncertain, but may depend in significant part on progress with respect to effective therapies to treat COVID-19 or a vaccine. For further information regarding risks associated with COVID-19, see “Risk Factors” in Part II, Item 1A. of this Quarterly Report on Form 10-Q.

Effect on Voya Financial - Financial Condition, Capital and Liquidity

Because both public health and economic circumstances are changing so rapidly at present, it is impossible to predict how COVID-19 will affect Voya Financial’s future financial condition. Absent a further significant and prolonged market shock, however, we do not anticipate a material effect on our balance sheet, statutory capital, or liquidity. Our capital levels remain strong and significantly above our targets. As of September 30, 2020, our estimated combined RBC ratio was 455%, above our 400% target.

We completed repurchases of approximately $400 million of our common shares in the first nine months of 2020, although we paused repurchases later in the first quarter as a prudent measure in light of current market uncertainties. We do not anticipate any reduction in our dividend and continue to monitor the dividends-paying capacity of our insurance subsidiaries.

Effect on Voya Financial - Results of Operations

Predicting with accuracy the consequences of COVID-19 on our results of operations is impossible. Based on current information, however, we believe that the most significant effects of adverse economic conditions will be on our fee-based income, with net investment income experiencing milder effects. Underwriting income, which will principally be affected by increases to mortality and morbidity due to the disease, could also face significant declines, particularly under severe epidemiological scenarios.

Retirement

In Retirement, we’ve experienced pressure on earnings driven by equity market volatility as well as lower interest rates, with effects weighted more heavily towards our full-service corporate markets business and less on recordkeeping business. Although the impact will primarily be on fee-based income, we estimate that lower interest rates will continue to contribute to a

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lower spread-based income. Longer-term effects will depend significantly on equity market performance and prevailing interest rate levels, as well as the magnitude and duration of elevated unemployment levels. We believe that expense reductions and other management actions would be available to offset a portion of any impact.

Investment Management

In Investment Management, fee income has been pressured by the market disruption resulting in lower valuations and assets under management earlier in the year. Overall market improvement since that time and positive net flows contribute to ongoing recovery. In the third quarter, we have seen a partial recovery of certain COVID-19 impacts with higher fund revaluation results reported on investment capital including carried interests and performance fees related to investments that Voya manages. Due to normal lag in reporting from the underlying fund investments, these investment capital results are recognized generally one quarter in arrears. We believe, in aggregate, that investment capital valuations will continue to improve in the fourth quarter of 2020, however if the economy worsens, investment capital results could decline in the future. In addition, we had seen an elevated level of outflows associated with our retail business at the outset of the pandemic that subsided in the second quarter of 2020 and, in the third quarter, we continued to see that positive trend. Other business impacts resulting from COVID-19 include a reduction in sales meetings and activities that could lower the level of sales activity next year.

Employee Benefits

In Employee Benefits, the reduction in premium revenues due to COVID-19 has not been material, though future impacts to premium revenues are still possible in a more severe recession scenario with significant and prolonged unemployment. The effects from COVID-19 have been seen primarily in increased mortality claims on group life policies. We currently do not expect a significant increase in medical stop loss claims, since we believe most COVID-19 related claims are likely to fall below applicable deductibles; our experience to date has been consistent with this expectation.

We expect mortality claims in group life to be elevated through 2020 and into early 2021 due to COVID-19 related deaths, with the magnitude of such claims dependent on mortality rates from the disease. Because COVID-19 disproportionately affects older individuals, and our group life policies generally insure the lives of working-age individuals, the impact of population-wide mortality rates should be mitigated to some extent by the younger average age of our covered lives. We believe that increased claims will have a modest, but not material, effect on the financial results of our Employee Benefits business in 2020. We currently estimate that, for every 10,000 incremental deaths in the United States due to COVID-19, operating earnings of our Employee Benefits segment would decline by approximately $1 to $2 million due to increased claims.

Individual Life

Although we have entered into an agreement to sell our Individual Life business, the financial performance of that business continues to be reflected in our financial results until that transaction closes, which we currently expect to occur by January 4, 2021. Individual Life financial performance is reported partially within discontinued operations and partially as a non-operating adjustment to our consolidated net income.

As with the group life policies that we have underwritten in our Employee Benefits business, we would expect Individual Life mortality claims to be elevated for the next several quarters due to COVID-19 related deaths, with the magnitude of such claims dependent on mortality rates from the disease. We currently estimate that, for every 10,000 incremental deaths in the United States due to COVID-19, the earnings of our Individual Life segment would decline by approximately $2.5 to $5 million due to increased claims.

Interest Rates

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

•Our continuing business general account investment portfolio, which was approximately $55.3 billion as of September 30, 2020, consists predominantly of fixed income investments and had an annualized earned yield of approximately 4.7% in the third quarter of 2020. In the near term and absent further material change in yields available on fixed income investments, we expect the yield we earn on new investments will be lower than the yields we earn on maturing investments, which were generally purchased in environments where interest rates were higher than current levels. We currently anticipate that proceeds that are reinvested in fixed income investments during 2020 will earn an average yield below the prevailing portfolio yield. If interest rates were to rise, we expect the yield on our new money

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investments would also rise and gradually converge toward the yield of those maturing assets. In addition, while less material to financial results than new money investment rates, movements in prevailing interest rates also influence the prices of fixed income investments that we sell on the secondary market rather than holding until maturity or repayment, with rising interest rates generally leading to lower prices in the secondary market, and falling interest rates generally leading to higher prices.

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

Further changes in interest rates, whether positive or negative, would likely have modest effects on our future Adjusted operating earnings. For example, we estimate that a 100 basis point increase or decrease in corporate bond yields over the next three years would generally increase or decrease our Adjusted operating earnings by approximately $10 to $60 million over that period, with the impacts increasing from the lower to the higher end of the range the longer the rate change persists.

Discontinued Operations

As described above, as of December 31, 2019, we recorded an estimated loss on sale, net of tax of $1,108 million related to the Individual Life Transaction. In addition, the Company is required to remeasure the estimated fair value and loss on sale at the end of each quarter until closing of the Individual Life Transaction. As such, Income (loss) from discontinued operations, net of tax, for the nine months ended September 30, 2020 includes an additional estimated loss on sale of $231 million, net of tax. The estimated loss on sale, net of tax as of September 30, 2020 of $1,339 million represents the excess of the estimated carrying value of the businesses held for sale over the estimated purchase price, which approximates fair value, less cost to sell. The purchase price in the transaction is approximately $1.25 billion, with an adjustment based on the adjusted capital and surplus of SLD, SLDI and RRII at closing including the assumption of surplus notes.

The estimated purchase price and estimated carrying value of the legal entities to be sold as of the future date of closing, and therefore the estimated loss on sale related to the Individual Life Transaction, are subject to adjustment in future quarters until closing, and may be influenced by, but not limited to, the following factors:

•The performance of the businesses held for sale, including the impact of mortality, reinsurance rates and financing costs;

•Changes in the terms of the Transaction, including as the result of subsequent negotiations or as necessary to obtain regulatory approval; and

•Other changes in the terms of the Transaction due to unanticipated developments.

The Company is required to remeasure the estimated fair value and loss on sale at the end of each quarter until the closing of the Individual Life Transaction. Changes in the estimated loss on sale that occur prior to closing of the Individual Life Transaction will be reported as an adjustment to Income (loss) from discontinued operations, net of tax, in future quarters prior to closing.

Stranded Costs

As a result of the 2018 Transaction and the Individual Life Transaction, the historical revenues and certain expenses of the sold businesses have been classified as discontinued operations. Historical revenues and certain expenses of the businesses that will be divested via reinsurance at closing of the Individual Life Transaction (including an insignificant amount of Individual Life and closed block non retirement annuities that are not part of the transaction) are reported within continuing operations, but are excluded from adjusted operating earnings as businesses exited or to be exited through reinsurance or divestment. Expenses classified within discontinued operations and businesses exited or to be exited through reinsurance include only direct operating expenses incurred by these businesses and then only to the extent that the nature of such expenses was such that we would cease to incur such expenses upon the close of the 2018 Transaction and the Individual Life Transaction. Certain other direct costs of these businesses, including those which relate to activities for which we have or will provide transitional services and for which we have or will be reimbursed under transition services agreements (“TSAs”) are reported within continuing operations along

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with the associated revenues from the TSAs. Additionally, indirect costs, such as those related to corporate and shared service functions that were previously allocated to the businesses sold or divested via reinsurance, are reported within continuing operations. These costs ("Stranded Costs") and the associated revenues from the TSAs are reported within continuing operations in Corporate, since we do not believe they are representative of the future run-rate of revenues and expenses of our continuing operations. The Stranded Costs related to the 2018 Transaction were removed in the fourth quarter of 2019 and we plan to address the Stranded Costs related to the Individual Life Transaction through a cost reduction strategy. Refer to Restructuring in the section below for more information on this program.

Restructuring

Organizational Restructuring

As a result of the closing of the 2018 Transaction, we have undertaken restructuring efforts to execute the transition and reduce stranded expenses associated with our CBVA and fixed and fixed indexed annuities businesses, as well as our corporate and shared services functions ("Organizational Restructuring").

In August 2018, we announced that we were targeting a cost savings of $110 million to $130 million by the middle of 2019 to address the stranded costs of the 2018 Transaction. Additionally, in October 2018, we announced our decision to cease new sales following the strategic review of our Individual Life business, which was expected to result in cost savings of $20 million. The initiatives associated with these restructuring efforts concluded during 2019.

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

The Organizational Restructuring initiatives described above have resulted in recognition of severance and organizational transition costs that are reflected in both continuing operations and discontinued operations. Amounts reflected in continuing operations are reported in Operating expenses in the Condensed Consolidated Statements of Operations, but excluded from Adjusted operating earnings before income taxes. For the three and nine months ended September 30, 2020, we incurred Organizational Restructuring expenses of $10 million and $46 million, respectively, associated with continuing operations. For the three and nine months ended September 30, 2019, the Company incurred Organizational Restructuring expenses of $26 million and $164 million, respectively, associated with continuing operations.

In addition to the restructuring costs incurred above, the anticipated reduction in employees from the execution of the initiatives described above triggered an immaterial curtailment loss and related re-measurement gain of our qualified defined benefit pension plan as of January 31, 2019, which was recorded during the first quarter of 2019.

The aggregate amount of Organizational Restructuring expenses incurred in 2019 and expected to be incurred through the end of 2020, excluding restructuring efforts resulting from the Individual Life Transaction, is in the range of $250 million to $300 million. These costs include severance, organizational transition costs incurred to reorganize operations and other costs such as contract terminations and asset write-offs.

Pursuant to the Individual Life Transaction, we will divest or dissolve four regulated insurance entities, including its life companies domiciled in Colorado and Indiana, and captive entities domiciled in Arizona. We will also divest Voya America Equities LLC, a regulated broker-dealer, and transfer or cease usage of a substantial number of administrative systems. We will undertake further restructuring efforts to reduce stranded expenses associated with our Individual Life business as well as our corporate and shared services functions. We anticipate incurring additional restructuring expenses directly related to the disposition beyond 2020, in addition to the $17 million and $43 million incurred for the three and nine months ended September 30, 2020, respectively, a substantial portion of which is included in Income (loss) from discontinued operations, net of tax in the Condensed Consolidated Statements of Operations. These collective costs, which include severance, transition and other costs, cannot currently be estimated but could be material. We expect to be able to estimate the costs in fourth quarter 2020.

Operating Measures

This MD&A includes a discussion of Adjusted operating earnings before income taxes and Adjusted operating revenues, each of which is a measure used by management to evaluate segment performance. We believe that Adjusted operating earnings

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before income taxes provides a meaningful measure of our business performance and enhances the understanding of our financial results by focusing on the operating performance and trends of the underlying business segments and excluding items that tend to be highly variable from period to period based on capital market conditions or other factors. Adjusted operating earnings before income taxes does not replace Income (loss) from continuing operations before income taxes as the comparable U.S. GAAP measure of our consolidated results of operations. Therefore, we believe that it is useful to evaluate both Income (loss) from continuing operations before income taxes and Adjusted operating earnings before income taxes when reviewing our financial and operating performance. See the Segments Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for a description of the adjustments made to reconcile Income (loss) before income taxes to Total adjusted operating earnings before income taxes and the adjustments made to reconcile Total revenues to Total adjusted operating revenues.

Results of Operations - Company Condensed Consolidated

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

			Three Months Ended September 30,												Nine Months Ended September 30,
($ in millions)			2020						2019						2020						2019
Revenues:
Net investment income			$	800					$	687					$	2,084					$	2,057
Fee income			507						494						1,470						1,459
Premiums			604						565						1,819						1,717
Net realized capital gains (losses)			(70)						(20)						(304)						(7)
Other revenue			90						106						263						325
Income (loss) related to consolidated investment entities			140						43						87						115
Total revenues			2,071						1,875						5,419						5,666
Benefits and expenses:
Interest credited and other benefits to contract owners/policyholders			1,299						1,003						3,178						2,888
Operating expenses			630						627						1,913						1,979
Net amortization of Deferred policy acquisition costs and Value of business acquired (1)			241						36						336						136
Interest expense			40						51						120						135
Operating expenses related to consolidated investment entities			6						9						21						34
Total benefits and expenses			2,216						1,726						5,568						5,172
Income (loss) from continuing operations before income taxes			(145)						149						(149)						494
Income tax expense (benefit)			(72)						5						(73)						47
Income (loss) from continuing operations			(73)						144						(76)						447
Income (loss) from discontinued operations, net of tax			(140)						(4)						(361)						18
Net Income (loss)			(213)						140						(437)						465
Less: Net income (loss) attributable to noncontrolling interest			106						19						33						44
Less: Preferred stock dividends			14						14						32						24
Net income (loss) available to our common shareholders			$	(333)					$	107					$	(502)					$	397

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

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

			Three Months Ended September 30,												Nine Months Ended September 30,
($ in millions)			2020						2019						2020						2019
Operating expenses:
Commissions			$	137					$	158					$	427					$	520
General and administrative expenses:
Net actuarial (gains) losses related to pension and other postretirement benefit obligations			—						—						—						(66)
Restructuring expenses			10						28						46						172
Other general and administrative expenses			511						456						1,521						1,434
Total general and administrative expenses			521						484						1,567						1,540
Total operating expenses, before DAC/VOBA deferrals			658						642						1,994						2,060
DAC/VOBA deferrals			(28)						(15)						(81)						(81)
Total operating expenses			$	630					$	627					$	1,913					$	1,979

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

			As of September 30,
($ in millions)			2020						2019
AUM and AUA:
Retirement (1)			$	482,546					$	407,810
Investment Management			291,441						267,293
Employee Benefits			1,879						1,911
Eliminations/Other			(118,388)						(108,707)
Total AUM and AUA(1) (2)			$	657,478					$	568,307
AUM			345,601						310,367
AUA(1)			311,877						257,940
Total AUM and AUA(1) (2)			$	657,478					$	568,307

(1) Retirement includes Assets Under Advisement, which are presented in AUA.

(2) Includes AUM and AUA related to the Individual Life and 2018 Transactions, for which a substantial portion of the assets continue to be managed by our Investment Management segment.

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

			Three Months Ended September 30,												Nine Months Ended September 30,
($ in millions)			2020						2019						2020						2019
Income from continuing operations before income taxes			$	(145)					$	149					$	(149)					$	494
Less Adjustments(1):
Net investment gains (losses) and related charges and adjustments			29						14						63						73
Net guaranteed benefit hedging gains (losses) and related charges and adjustments			16						(12)						(36)						(22)
Income (loss) related to businesses exited or to be exited through reinsurance or divestment			(342)						31						(387)						80
Income (loss) attributable to noncontrolling interest			106						19						33						44
Income (loss) related to early extinguishment of debt			—						(12)						—						(12)
Immediate recognition of net actuarial gains (losses) related to pension and other post-employment benefit obligations and gains (losses) from plan amendments and curtailments			—						—						—						66
Dividend payments made to preferred shareholders			14						14						32						24
Other adjustments			(8)						(27)						(45)						(172)
Total adjustments to income (loss) from continuing operations before income taxes			$	(185)					$	27					$	(340)					$	81
Adjusted operating earnings before income taxes by segment:
Retirement			$	25					$	117					$	185					$	426
Investment Management			47						46						106						121
Employee Benefits			56						57						154						144
Corporate			(88)						(98)						(254)						(278)
Total adjusted operating earnings before income taxes			$	40					$	122					$	190					$	413

(1) Refer to the Segments Note in Part I, Item 1. of this Quarterly Report on Form 10-Q for a description of these items.

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

			Three Months Ended September 30,												Nine Months Ended September 30,
($ in millions)			2020						2019						2020						2019
Total revenues			$	2,071					$	1,875					$	5,419					$	5,666
Adjustments(1):
Net realized investment gains (losses) and related charges and adjustments			27						16						60						71
Gains (losses) on change in fair value of derivatives related to guaranteed benefits			16						(12)						(36)						(21)
Revenues related to businesses exited or to be exited through reinsurance or divestment			399						401						1,075						1,216
Revenues attributable to noncontrolling interest			116						34						59						88
Other adjustments			80						71						205						223
Total adjustments to revenues			$	638					$	510					$	1,363					$	1,577
Adjusted operating revenues by segment:
Retirement			$	718					$	675					$	1,954					$	2,011
Investment Management			173						167						467						478
Employee Benefits			541						503						1,615						1,526
Corporate			2						20						20						74
Total adjusted operating revenues			$	1,434					$	1,365					$	4,056					$	4,089

(1) Refer to the Segments Note in Part I, Item 1. of this Quarterly Report on Form 10-Q for a description of these items.

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

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

			Three Months Ended September 30,												Nine Months Ended September 30,
($ in millions)			2020						2019						2020						2019
Other-than-temporary impairments			$	(10)					$	(3)					$	(80)					$	(32)
CMO-B fair value adjustments(1)			10						23						136						83
Gains (losses) on the sale of securities			8						24						37						35
Other, including changes in the fair value of derivatives			25						(21)						(9)						(6)
Total investment gains (losses) including businesses to be exited through reinsurance or divestment			33						23						84						80
Net amortization of DAC/VOBA and other intangibles on above			2						(1)						2						2
Net investment gains (losses) including businesses to be exited through reinsurance or divestment			35						22						86						82
Less: Net investment gains (losses) related to the businesses to be exited through reinsurance or divestment, net of DAC/VOBA and other intangibles			6						8						23						9
Net investment gains (losses) excluding businesses to be exited through reinsurance or divestment			$	29					$	14					$	63					$	73

(1) For a description of our CMO-B portfolio, refer to Investments - CMO-B Portfolio in Part I, Item 2. of this Quarterly report on Form 10-Q.

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

			Three Months Ended September 30,												Nine Months Ended September 30,
($ in millions)			2020						2019						2020						2019
Gain (loss), excluding nonperformance risk			$	22					$	(17)					$	(56)					$	(29)
Gain (loss) due to nonperformance risk			(6)						5						20						7
Net gain (loss) prior to related amortization of DAC/VOBA and sales inducements			16						(12)						(36)						(22)
Net amortization of DAC/VOBA and sales inducements			—						—						—						—
Net guaranteed benefit hedging gains (losses) and related charges and adjustments			$	16					$	(12)					$	(36)					$	(22)

The following tables present businesses exited or to be exited through reinsurance or divestment adjustments to Income (loss) from continuing operations and Total revenues for the periods indicated:

			Three Months Ended September 30,												Nine Months Ended September 30,
($ in millions)			2020						2019						2020						2019
Income (loss) related to businesses exited through reinsurance or divestment			$	(60)					$	40					$	(62)					$	34
Income (loss) related to businesses to be exited through reinsurance or divestment			(282)						(9)						(325)						46
Total income (loss) related to business exited or to be exited through reinsurance or divestment			$	(342)					$	31					$	(387)					$	80

			Three Months Ended September 30,												Nine Months Ended September 30,
($ in millions)			2020						2019						2020						2019
Revenues related to businesses exited through reinsurance or divestment			$	14					$	36					$	(33)					$	120
Revenues related to businesses to be exited through reinsurance or divestment			385						365						1,108						1,096
Total revenues related to business exited or to be exited through reinsurance or divestment			$	399					$	401					$	1,075					$	1,216

The following table presents summary information related to the Income (loss) from discontinued operations, net of tax for the

periods indicated:

			Three Months Ended September 30,												Nine Months Ended September 30,
			2020						2019						2020						2019
Individual Life Transaction			$	(140)					$	(4)					$	(361)					$	100
2018 Transaction (1)			—						—						—						(82)
Income (loss) from discontinued operations, net of tax (2)			$	(140)					$	(4)					$	(361)					$	18

(1) Represents purchase price true-up amount settled during the three months ended March 31, 2019.

(2) Refer to Overview in Part I, Item 2. of this Quarterly Report on Form 10-Q for further detail.

The following table presents significant items included in Income (loss) from discontinued operations, net of tax related to the

Individual Life Transaction for the periods indicated:

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			Three Months Ended September 30,												Nine Months Ended September 30,
($ in millions)			2020						2019						2020						2019
Gain (loss) on sale, net of tax			$	9					$	—					$	(231)					$	—
Net results of discontinued operations			(189)						(6)						(165)						125
Income tax benefit (expense)			40						2						35						(25)
Income (loss) from discontinued operations, net of tax(1)			$	(140)					$	(4)					$	(361)					$	100

(1) Refer to Overview in Part I, Item 2. of this Quarterly Report on Form 10-Q for further detail.

Terminology Definitions

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

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

Consolidated - Three Months Ended September 30, 2020 Compared to Three Months Ended September 30, 2019

Net Income (Loss)

Net investment income increased $113 million from $687 million to $800 million primarily due to:

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

•growth in general account assets in our Retirement segment.

The increase was partially offset by:

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

Fee income increased $13 million from $494 million to $507 million primarily due to:

•an increase in average separate account and institutional/mutual fund AUM in our Retirement segment driven by market performance.

The increase was partially offset by:

•lower management and administrative fees earned in our Investment Management segment due to lower average fee rates; and

•a change in customer fund allocations in our Retirement segment.

Premiums increased $39 million from $565 million to $604 million primarily due to:

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

Net realized capital losses increased $50 million from $20 million to $70 million primarily due to:

•unfavorable changes in fair value option securities due to interest rate movements;

•impairments taken during the current quarter; and

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

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The increase was partially offset by:

•a favorable change in the fair value of guaranteed benefit derivatives excluding nonperformance risk as a result of interest rate movements including a loss due to nonperformance risk; and

•a favorable change in Net investment gains (losses) and related charges and adjustments, excluding the impact of impairments, primarily due to interest rate and equity market movements, discussed below.

Other revenue decreased $16 million from $106 million to $90 million primarily due to:

•lower revenue resulting from transition services agreements; and

•lower broker-dealer revenues in our Retirement segment.

Interest credited and other benefits to contract owners/policyholders increased $296 million from $1,003 million to $1,299 million primarily due to:

•loss recognition and unfavorable reserve changes in our non-Life businesses to be reinsured driven by the impact of the Annual Assumption updates;

•unfavorable unlocking in our Life business to be reinsured driven by the impact of the Annual Assumption updates; and

•growth in stop loss and voluntary blocks of business and higher claims in group life in our Employee Benefits segment.

The increase was partially offset by:

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

Operating expenses increased $3 million from $627 million to $630 million primarily due to:

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

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

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

The increase was partially offset by:

•lower restructuring charges in the current period;

•a favorable adjustment to incentive compensation;

•a favorable change in quarterly pension costs;

•a favorable adjustment to litigation reserves in our Retirement segment; and

•lower Stranded Costs.

Net amortization of DAC/VOBA increased $205 million from $36 million to $241 million primarily due to:

•unfavorable unlocking in our Retirement segment and Life business to be reinsured primarily driven by the impact of the Annual Assumption updates; and

•net unfavorable amortization on our business reinsured.

Interest expense decreased $11 million from $51 million to $40 million primarily due to:

•debt extinguishment in connection with repurchased debt in the prior period.

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Income (loss) from continuing operations before income taxes decreased $294 million from a gain of $149 million to a loss of $145 million primarily due to:

•an unfavorable change in Income (loss) related to businesses exited or to be exited through reinsurance or divestment, discussed below; and

•lower Adjusted operating earnings before income taxes, discussed below.

The decrease was partially offset by:

•higher Income attributable to noncontrolling interest;

•a favorable change in Net guaranteed benefit hedging gains (loss) and related charges and adjustments primarily due to changes in interest rates, discussed below;

•a favorable change in Other adjustments due to lower restructuring charges in the current period;

•a favorable change in Net investment gains (losses) and related charges and adjustments, discussed below; and

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

•loss related to early extinguishment of debt in the prior period.

Income tax expense (benefit) changed $77 million from an expense of $5 million to a benefit of $72 million primarily due to:

•a decrease in income before income taxes;

•an increase in noncontrolling interest; and

•an increase in the dividends received deduction ("DRD").

The change was partially offset by:

•a decrease in tax credits.

Loss from discontinued operations, net of tax increased $136 million from a loss of $4 million to a loss of $140 million primarily due to:

•a decrease in Net results from discontinued operations related to the Individual Life Transaction.

The increase was partially offset by:

•an increase in the tax benefit driven by lower pre-tax earnings; and

•favorable adjustments to the Individual Life Transaction loss on sale, net of tax excluding costs to sell made in the current period.

Adjusted operating Earnings before Income Taxes

Adjusted operating earnings before income taxes decreased $82 million from $122 million to $40 million primarily due to:

•unfavorable DAC unlocking primarily due to the annual assumption updates in our Retirement segment;

•higher benefits incurred due to growth in business and COVID-19 impacts in our Employee Benefits segment;

•higher admin expenses in our Employee Benefits and Investment Management segments driven by business growth; and

•lower revenue resulting from transition services agreements associated with the 2018 Transaction.

The decrease was partially offset by:

•higher alternative asset income;

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

•favorable incentive compensation adjustments in the current period;

•favorable change in pension costs;

•a favorable adjustment to a legal accrual;

•lower Stranded Costs in the current period related to the 2018 Transaction due to increased benefits from cost savings; and

•higher fee revenue primarily due to improvement in equity markets in our Retirement segment.

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

Net investment gains and related charges and adjustments increased $15 million from $14 million to $29 million due to:

•favorable changes in the fair value of derivatives;

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

•decrease in gains included in Business exited or to be exited through reinsurance or divestment.

The decrease was partially offset by:

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

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

•higher impairments in the current quarter.

Net guaranteed benefit hedging gains (losses) and related charges and adjustments changed $28 million from a loss of $12 million to a gain of $16 million primarily due to:

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

The increase was partially offset by:

•unfavorable changes due to nonperformance risk in the current period.

Income (loss) related to businesses exited or to be exited through reinsurance or divestment changed $373 million from a gain of $31 million to a loss of $342 million primarily due to:

•loss recognition and unfavorable reserve changes in our non-Life businesses to be reinsured driven by the impact of the Annual Assumption updates;

•unfavorable unlocking in our Life business to be reinsured driven by the impact of the Annual Assumption updates;

•a litigation recovery related to a divested business in the prior period; and

•net unfavorable amortization associated with business reinsured and to be reinsured in the current period.

The decrease was partially offset by:

•higher alternative investment income primarily driven by the impact of equity market performance.

Loss related to early extinguishment of debt decreased $12 million primarily due to:

•losses in connection with repurchased and restructured debt in the prior period.

Other adjustments to operating earnings improved $19 million from a loss of $27 million to a loss of $8 million primarily due to:

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

Consolidated - Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019

Net Income (Loss)

Net investment income increased $27 million from $2,057 million to $2,084 million primarily due to:

•growth in general account assets in our Retirement segment.

The increase was partially offset by:

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

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

Fee income increased $11 million from $1,459 million to $1,470 million primarily due to:

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

•higher management and administrative fees earned in our Investment Management segment due to higher average external client AUM driven by market performance.

The increase was partially offset by:

•a change in customer fund allocations in our Retirement segment.

Premiums increased $102 million from $1,717 million to $1,819 million primarily due to:

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

Net realized capital losses increased $297 million from $7 million to $304 million primarily due to:

•higher impairments taken during the current year;

•unfavorable changes in fair value option securities due to interest rate movements;

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

•an unfavorable change in the fair value of guaranteed benefit derivatives excluding nonperformance risk as a result of interest rate movements partially offset by a gain due to nonperformance risk; and

•an unfavorable change in Net investment gains (losses) and related charges and adjustments primarily due to interest rate and equity market movements, discussed below.

Other revenue decreased $62 million from $325 million to $263 million primarily due to:

•lower revenue resulting from transition services agreements;

•lower broker-dealer revenues in our Retirement segment; and

•unfavorable market value adjustments on separate accounts in our Retirement segment.

Interest credited and other benefits to contract owners/policyholders increased $290 million from $2,888 million to $3,178 million primarily due to:

•loss recognition and unfavorable reserve changes in our non-Life businesses to be reinsured driven by the impact of the Annual Assumption updates;

•unfavorable unlocking in our Life business to be reinsured driven by the impact of the Annual Assumption updates;

•growth in stop loss and voluntary blocks of business and higher claims in group life partially offset by lower stop loss loss ratios in our Employee Benefits segment; and

•unfavorable net mortality in our business to be reinsured.

The increase was partially offset by:

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

Operating expenses decreased $66 million from $1,979 million to $1,913 million primarily due to:

•lower restructuring charges in the current period;

•lower Stranded Costs;

•favorable adjustments to incentive compensation; and

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•a favorable change in quarterly pension costs.

The decrease was partially offset by:

•a net actuarial gain related to our pension and other postretirement benefit obligations during the prior period;

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

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

•higher litigation reserves in our Retirement segment; and

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

Net amortization of DAC/VOBA increased $200 million from $136 million to $336 million primarily due to:

•unfavorable unlocking in our Retirement segment and Life business to be reinsured primarily driven by the impact of the Annual Assumption updates; and

•net unfavorable amortization on our business reinsured.

The increase was partially offset by:

•favorable amortization on lower gross profits in our Retirement segment.

Interest expense decreased $15 million from $135 million to $120 million primarily due to:

•debt extinguishment in connection with repurchased debt in the prior period.

Income from continuing operations before income taxes decreased $643 million from $494 million to $149 million primarily due to:

•an unfavorable change in Income (loss) related to businesses exited or to be exited through reinsurance or divestment, discussed below;

•lower Adjusted operating earnings before income taxes, discussed below;

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

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

•lower Income attributable to noncontrolling interest;

•an unfavorable change in Net investment gains (losses) and related charges and adjustments, discussed below; and

•higher preferred stock dividends.

The decrease was partially offset by:

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

•loss related to early extinguishment of debt in the prior period.

Income tax expense (benefit) changed $120 million from an expense of $47 million to a benefit of $73 million primarily due to:

•a decrease in income before income taxes.

The change was partially offset by:

•a decrease in the DRD; and

•a decrease in tax credits.

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Income (loss) from discontinued operations, net of tax changed $379 million from income of $18 million to loss of $361 million primarily due to:

•a decrease in Net results from discontinued operations related to the Individual Life Transaction; and

•unfavorable adjustments to the Individual Life Transaction loss on sale, net of tax excluding costs to sell made in the current period.

The change was partially offset by:

•an increase in the tax benefit driven by lower pre-tax earnings; and

•an unfavorable adjustment to the 2018 Transaction loss on sale, net of tax excluding costs to sell made in the prior period.

Adjusted operating Earnings before Income Taxes

Adjusted operating earnings before income taxes decreased $223 million from $413 million to $190 million primarily due to:

•unfavorable DAC unlocking primarily due to the annual assumption updates in our Retirement segment;

•lower alternative asset and prepayment income;

•higher benefits incurred due to growth in business and COVID-19 impacts, partially offset by lower stop loss loss ratios in our Employee Benefits segment;

•higher admin expenses resulting from business growth in our Retirement, Employee Benefits and Investment Management segments;

•lower revenue resulting from transition services agreements associated with the 2018 Transaction;

•a legal accrual in our Retirement segment;

•higher preferred stock dividend payments in the current year; and

•unfavorable market value adjustments in our Retirement segment.

The decrease was partially offset by:

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

•lower Stranded Costs in the current period related to the 2018 Transaction due to increased benefits from cost savings;

•favorable incentive compensation adjustments in the current period; and

•favorable change in pension costs.

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

Net investment gains (losses) and related charges and adjustments decreased $10 million from $73 million to $63 million primarily due to:

•higher impairments in the current year;

•increased gains included in Business exited or to be exited through reinsurance or divestment; and

•unfavorable changes in the fair value of derivatives.

The decrease was partially offset by:

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

•increased gains on the sale of securities in the current period.

Net guaranteed benefit hedging losses and related charges and adjustments increased $14 million from $22 million to $36 million primarily due to:

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

The increase was partially offset by:

•gains due to nonperformance risk in the current period.

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Income (loss) related to businesses exited or to be exited through reinsurance or divestment changed $467 million from a gain of $80 million to a loss of $387 million primarily due to:

•loss recognition and unfavorable reserve changes in our non-Life businesses to be reinsured driven by the impact of the Annual Assumption updates;

•unfavorable unlocking in our Life business to be reinsured driven by the impact of the Annual Assumption updates;

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

•lower alternative investment income primarily driven by the impact of equity market performance;

•higher impairments associated with our business to be reinsured; and

•unfavorable net mortality associated with our business to be reinsured.

The decrease was partially offset by:

•net favorable amortization associated with business reinsured and to be reinsured in the current period.

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

Loss related to early extinguishment of debt decreased $12 million primarily due to :

•losses in connection with repurchased and restructured debt in the prior period.

Other adjustments to operating earnings improved $127 million from a loss of $172 million to a loss of $45 million primarily due to:

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

Results of Operations - Segment by Segment

Retirement

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

			Three Months Ended September 30,												Nine Months Ended September 30,
($ in millions)			2020						2019						2020						2019
Adjusted operating revenues:
Net investment income and net realized gains (losses)			$	473					$	437					$	1,246					$	1,301
Fee income			222						218						635						628
Premiums			—						(1)						8						4
Other revenue			23						21						65						78
Total adjusted operating revenues			718						675						1,954						2,011
Operating benefits and expenses:
Interest credited and other benefits to contract owners/policyholders			249						238						724						707
Operating expenses			254						267						806						783
Net amortization of DAC/VOBA			190						53						238						95
Total operating benefits and expenses			693						558						1,769						1,585
Adjusted operating earnings before income taxes (1)			$	25					$	117					$	185					$	426

(1) Includes $175 million unfavorable unlocking related to annual review of the assumptions, $10 million of which was related to the loss recognition. See DAC/VOBA and Other Intangibles Unlocking in Part I, Item 2. of this Quarterly Report on Form 10-Q for further information.

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

			As of September 30,
($ in millions)			2020						2019
Corporate markets			$	77,915					$	68,892
Tax-exempt markets			74,753						66,636
Total full service plans			152,668						135,528
Stable value(1) and pension risk transfer			11,955						10,630
Retail wealth management			11,031						10,273
Total AUM			175,654						156,431
AUA (2)			306,892						251,379
Total AUM and AUA (2)			$	482,546					$	407,810

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

(2) Starting first quarter of 2019, Assets Under Advisement are presented in AUA, which includes recordkeeping, stable value investment-only wrap, brokerage and investment advisory assets.

			As of September 30,
($ in millions)			2020						2019
General Account			$	34,382					$	32,928
Separate Account			78,388						73,358
Mutual Fund/Institutional Funds			62,884						50,145
AUA (1)			306,892						251,379
Total AUM and AUA (1)			$	482,546					$	407,810

(1) Starting first quarter of 2019, Assets Under Advisement are presented in AUA, which includes recordkeeping, stable value investment-only wrap, brokerage and investment advisory assets.

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

			Three Months Ended September 30,												Nine Months Ended September 30,
($ in millions)			2020						2019						2020						2019
Balance as of beginning of period			$	163,796					$	154,421					$	164,747					$	139,133
Deposits			8,104						5,468						19,271						15,583
Surrenders, benefits and product charges			(4,549)						(4,287)						(14,336)						(14,530)
Net flows			3,555						1,181						4,935						1,053
Interest credited and investment performance			8,303						829						5,972						16,245
Balance as of end of period			$	175,654					$	156,431					$	175,654					$	156,431

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Retirement - Three Months Ended September 30, 2020 Compared to Three Months Ended September 30, 2019

Adjusted operating earnings before income taxes decreased $92 million from $117 million to $25 million primarily due to:

•unfavorable DAC unlocking primarily due to the annual assumption updates.

The decrease was partially offset by:

•higher alternative asset income;

•a favorable adjustment to a legal accrual; and

•higher fee revenue primarily due to improvement in equity markets.

Retirement - Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019

Adjusted operating earnings before income taxes decreased $241 million from $426 million to $185 million primarily due to:

•unfavorable DAC unlocking primarily due to the annual assumption updates;

•lower alternative asset and prepayment income;

•higher admin expenses due to a legal accrual and expenses resulting from business growth; and

•lower other revenue primarily driven by MVA.

Investment Management

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

			Three Months Ended September 30,												Nine Months Ended September 30,
($ in millions)			2020						2019						2020						2019
Adjusted operating revenues:
Net investment income and net realized gains (losses)			$	16					$	5					$	(3)					$	10
Fee income			154						158						459						455
Other revenue			4						4						12						13
Total adjusted operating revenues			173						167						467						478
Operating benefits and expenses:
Operating expenses			126						121						361						357
Total operating benefits and expenses			126						121						361						357
Adjusted operating earnings before income taxes			$	47					$	46					$	106					$	121

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

			Three Months Ended September 30,												Nine Months Ended September 30,
($ in millions)			2020						2019						2020						2019
Investment Management intersegment revenues			$	28					$	25					$	81					$	76

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

			As of September 30,
($ in millions)			2020						2019
Assets under Management
External clients:
Investment Management sourced			$	110,932					$	96,662
Affiliate sourced(1)			41,384						37,247
Variable annuities(2)			28,069						27,017
Total external clients			180,385						160,926
General account			57,815						56,336
Total AUM			238,200						217,262
Assets under Administration(3)			53,241						50,031
Total AUM and AUA			$	291,441					$	267,293

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

(2) Reflects AUM associated with the businesses divested as part of the 2018 Transaction.

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

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

			Three Months Ended September 30,												Nine Months Ended September 30,
($ in millions)			2020						2019						2020						2019
Net Flows:
Investment Management sourced			2,083						$	1,307					10,750						$	3,165
Affiliate sourced			(264)						(184)						69						(1,239)
Variable annuities(1)			(605)						(621)						(1,827)						(1,787)
Sub-advisor replacements(2)			—						219						—						1,116
Total			1,214						$	721					8,993						$	1,255

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

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

Investment Management - Three Months Ended September 30, 2020 Compared to Three Months Ended September 30, 2019

Adjusted operating earnings before income taxes increased $1 million from $46 million to $47 million primarily due to:

•higher investment capital returns.

The increase was partially offset by:

•higher operating expenses; and

•lower fee revenue primarily due to a decrease in Retail fee revenues.

Investment Management - Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019

Adjusted operating earnings before income taxes decreased $15 million from $121 million to $106 million primarily due to:

•lower investment capital returns; and

•higher operating expenses.

The decrease was partially offset by:

•higher fee revenue primarily due to higher average AUM.

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Employee Benefits

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

			Three Months Ended September 30,												Nine Months Ended September 30,
($ in millions)			2020						2019						2020						2019
Adjusted operating revenues:
Net investment income and net realized gains (losses)			$	33					$	29					$	80					$	84
Fee income			15						16						46						48
Premiums			494						460						1,494						1,399
Other revenue			(1)						(2)						(5)						(5)
Total adjusted operating revenues			541						503						1,615						1,526
Operating benefits and expenses:
Interest credited and other benefits to contract owners/policyholders			372						341						1,119						1,066
Operating expenses			108						101						327						303
Net amortization of DAC/VOBA			6						4						15						13
Total operating benefits and expenses			485						446						1,461						1,382
Adjusted operating earnings before income taxes (1)			$	56					$	57					$	154					$	144

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

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

			Three Months Ended September 30,												Nine Months Ended September 30,
($ in millions)			2020						2019						2020						2019
Sales by Product Line:
Group life and Disability			$	11					$	7					$	113					$	124
Stop loss			35						25						293						270
Total group products			46						32						406						394
Voluntary products			8						6						129						106
Total sales by product line			$	54					$	38					$	535					$	500
Total gross premiums and deposits			$	554					$	515					$	1,677					$	1,568
Group life and Disability			$	702					$	715					$	702					$	715
Stop loss			1,091						1,037						1,091						1,037
Voluntary			474						392						474						392
Total annualized in-force premiums			$	2,267					$	2,144					$	2,267					$	2,144
Loss Ratios:
Group life (interest adjusted)			81.9		%				76.3		%				81.3		%				76.7		%
Stop loss			79.8		%				78.6		%				77.1		%				78.8		%
Total Loss Ratio(1)			69.7		%				71.0		%				69.7		%				71.0		%

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

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Employee Benefits - Three Months Ended September 30, 2020 Compared to Three Months Ended September 30, 2019

Adjusted Operating earnings before income taxes decreased $1 million from $57 million to $56 million primarily due to:

•higher benefits incurred due to growth in business and COVID-19 impacts; and

•higher distribution expenses and commissions to support business growth.

The decrease was partially offset by:

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

•higher alternative asset income.

Employee Benefits - Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019

Adjusted Operating earnings before income taxes increased $10 million from $144 million to $154 million primarily due to:

•higher premiums driven by growth of the voluntary and stop loss blocks.

The increase was partially offset by:

•higher benefits incurred due to growth in business and COVID-19 impacts, partially offset by lower stop loss loss ratios;

•higher distribution expenses and commissions to support business growth; and

•favorable true-ups related to certain reserves, commission accruals, and deferrals in the prior period.

Corporate

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

			Three Months Ended September 30,												Nine Months Ended September 30,
($ in millions)			2020						2019						2020						2019
Adjusted operating revenues:
Net investment income and net realized gains (losses)			$	1					$	8					$	16					$	38
Premiums			—						1						—						2
Other revenue			1						11						4						34
Total adjusted operating revenues			2						20						20						74
Operating benefits and expenses:
Interest credited and other benefits to contract owners/policyholders			2						11						16						29
Operating expenses (1)			30						48						96						165
Interest expense (2)			57						59						162						158
Total operating benefits and expenses			90						118						274						352
Adjusted operating earnings before income taxes			$	(88)					$	(98)					$	(254)					$	(278)

(1) Includes expenses from corporate activities, and expenses not allocated to our segments. Nine months ended September 30, 2020 and 2019 primarily include stranded costs related to the 2018 and Individual Life Transactions and amortization of intangibles.

(2) Includes dividend payments made to preferred shareholders.

Corporate - Three Months Ended September 30, 2020 Compared to Three Months Ended September 30, 2019

Adjusted operating earnings before income taxes improved $10 million from a loss of $98 million to a loss of $88 million primarily due to:

•favorable incentive compensation adjustments in the current period;

•pension benefit which is retained in Corporate effective at the start of the current year; and

•lower Stranded Costs in the current period related to the 2018 Transaction due to increased benefits from cost savings.

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The increase was partially offset by:

•lower revenue resulting from transition services agreements associated with the 2018 Transaction.

Corporate - Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019

Adjusted operating earnings before income taxes improved $24 million from a loss of $278 million to a loss of $254 million primarily due to:

•lower Stranded Costs in the current period related to the 2018 Transaction due to increased benefits from cost savings;

•favorable incentive compensation adjustments in the current period; and

•pension benefit which is retained in Corporate effective at the start of the current year.

The increase was partially offset by:

•lower revenue resulting from transition services agreements associated with the 2018 Transaction; and

•higher preferred stock dividend payments in the current year.

Alternative Investment Income

Investment income on certain alternative investments can be volatile due to changes in market conditions. The following table presents the amount of investment income (loss) on certain alternative investments that is included in segment Adjusted operating earnings before income taxes and the average level of assets in each segment, prior to intercompany eliminations, which excludes alternative investments and income that are a component of Assets held for sale, Income (loss) related to businesses exited or to be exited through reinsurance or divestment and Income (loss) from discontinued operations, net of tax, respectively, and alternative investments and income in Corporate. These alternative investments are carried at fair value, which is estimated based on the net asset value ("NAV") of these funds.

While investment income on these assets can be volatile, based on current plans, we expect to earn 9.0% on these assets over the long term.

Alternative investment income for the three and nine months ended September 30, 2020 and 2019, respectively, and the average assets of alternative investments as of the dates indicated were as follows:

			Three Months Ended September 30,												Nine Months Ended September 30,
($ in millions)			2020						2019						2020						2019
Retirement:
Alternative investment income			$	62					$	25					$	27					$	57
Average alternative investment			852						773						877						733
Investment Management(1):
Alternative investment income			16						5						(3)						10
Average alternative investment			242						226						229						221
Employee Benefits:
Alternative investment income			7						3						4						7
Average alternative investment			100						86						98						84

DAC/VOBA and Other Intangibles Unlocking

Changes in Adjusted operating earnings before income taxes and Net income (loss) are influenced by increases and decreases in amortization of DAC, VOBA, deferred sales inducements ("DSI") and unearned revenue ("URR"), collectively, "DAC/VOBA and other intangibles." Unlocking, described below, related to DAC, VOBA, DSI and URR, as well as amortization of net cost of reinsurance and reserve adjustments associated with universal life-type and variable universal life-type secondary guarantees, are referred to as "DAC/VOBA and other intangibles unlocking."

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We amortize DAC/VOBA and other intangibles related to universal life-type contracts and fixed and variable deferred annuity contracts over the estimated lives of the contracts in relation to the emergence of estimated gross profits. Assumptions as to mortality, persistency, interest crediting rates, returns associated with separate account performance, impact of hedge performance, expenses to administer the business and certain economic variables, such as inflation, are based on our experience and our overall short-term and long-term future expectations for returns available in the capital markets. At each valuation date, estimated gross profits are updated with actual gross profits and the assumptions underlying future estimated gross profits are evaluated for continued reasonableness. Adjustments to estimated gross profits require that amortization rates be revised retroactively to the date of the contract issuance, which is referred to as unlocking. As a result of this process, the cumulative balances of DAC/VOBA and other intangibles are adjusted with an offsetting benefit or charge to income to reflect changes in the period of the revision. An unlocking event that results in a benefit to income ("favorable unlocking") generally occurs as a result of actual experience or future expectations being favorable compared to previous estimates. Changes in DAC/VOBA and other intangibles due to contract changes or contract terminations higher than estimated are also included in "unlocking." At each valuation date, we evaluate these assumptions and, if actual experience or other evidence suggests that earlier assumptions should be revised, we adjust the reserve balance, with a related charge or credit to Policyholder benefits. These reserve adjustments are included in unlocking associated with all our segments. An unlocking event that results in a charge to income ("unfavorable unlocking") generally occurs as a result of actual experience or future expectations being unfavorable compared to previous estimates. As a result of unlocking, the amortization schedules for future periods are also adjusted.

The DAC/VOBA and other intangibles unlocking in the table below includes the net impact of the annual review of the assumptions. During the third quarter of 2020 we completed our annual review of the assumptions, including projection model inputs, in each of our segments (except for Investment Management, for which assumption reviews are not relevant). As a result of this review, we have made a number of changes to our assumptions resulting a net unfavorable impact to Adjusted operating earnings before income taxes of $175 million in the current period, compared to a net unfavorable impact of $25 million in the prior period. The unlocking in the third quarter 2020 was driven principally by reductions in the long-term interest rates of 175 basis points and long-term equity rate of return of 100 basis points in our Retirement business. The unlocking in the third quarter 2019 was driven principally by a reduction in the long-term interest rate of 50 basis points and lower net margins in our Retirement business.

The following table presents the amount of DAC/VOBA and other intangibles unlocking included in segment Adjusted operating earnings before income taxes for the periods indicated:

			Three Months Ended September 30,												Nine Months Ended September 30,
($ in millions)			2020						2019						2020						2019
Retirement			$	(172)					$	(29)					$	(179)					$	(20)
Total DAC/VOBA and other intangibles unlocking			$	(172)					$	(29)					$	(179)					$	(20)

We also review the estimated gross profits for each of our blocks of business to determine recoverability of DAC/VOBA and other intangibles each period. If these assets are deemed to be unrecoverable, a write-down is recorded that is referred to as loss recognition. During the quarter ended September 30, 2020, our annual review of the assumptions resulted in loss recognition, related to the reductions in long-term interest rates and equity rate of return, of $68 million, $10 million of which was reflected in Adjusted operating earnings before income taxes and included in the table above. The remaining $58 million was excluded from Adjusted operating earnings before income taxes and reflected in Income (loss) from businesses exited or to be exited through reinsurance. During the quarter ended September 30, 2019, there was no loss recognition. Refer to Critical Accounting Judgments and Estimates in Part I, Item 2. of this Quarterly Report on Form 10-Q for more information.

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.

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Consolidated Sources and Uses of Liquidity and Capital

Our principal available sources of liquidity are product charges, investment income, proceeds from the maturity and sale of investments, proceeds from debt issuance and borrowing facilities, equity securities issuance, repurchase agreements, contract deposits and securities lending. Primary uses of these funds are payments of policyholder benefits, commissions and operating expenses, interest credits, share repurchases, investment purchases and contract maturities, withdrawals and surrenders.

Parent Company Sources and Uses of Liquidity

Voya Financial, Inc. is largely dependent on cash flows from its operating subsidiaries to meet its obligations. The principal sources of funds available to Voya Financial, Inc. include dividends and returns of capital from its operating subsidiaries, as well as cash and short-term investments, and proceeds from debt issuances, borrowing facilities and equity securities issuances. These sources of funds include the $500 million direct borrowing limit of our Third Amended and Restated Credit Agreement and reciprocal borrowing facilities maintained with Voya Financial, Inc.'s subsidiaries as well as alternate sources of liquidity described below.

Voya Financial, Inc.'s primary sources and uses of cash for the periods indicated are presented in the following table:

			Nine Months Ended September 30,
($ in millions)			2020						2019
Beginning cash and cash equivalents balance			$	212					$	209
Sources:
Proceeds from loans from subsidiaries, net of repayments			362						125
Dividends and returns of capital from subsidiaries			294						956
Collateral received, net			4						—
Refund of income taxes, net			112						128
Proceeds from issuance of preferred stock, net			—						293
Other, net			6						—
Total sources			778						1,502
Uses:
Premium paid and other fees related to debt extinguishment			—						9
Payment of interest expense			93						98
Capital provided to subsidiaries			7						3
New issuances of loans to subsidiaries, net of repayments			54						157
Amounts paid to subsidiaries under tax sharing agreements, net			142						128
Common stock acquired - Share repurchase			366						936
Share-based compensation			15						17
Dividends paid on preferred stock			32						24
Dividends paid on common stock			58						23
Repurchase of Senior Notes			—						97
Other, net			—						8
Total uses			767						1,500
Net increase in cash and cash equivalents			11						2
Ending cash and cash equivalents balance			$	223					$	211

Share Repurchase Program and Dividends to Common Shareholders

On March 13, 2014, our Board of Directors authorized a share repurchase program, pursuant to which we may, from time to time, purchase shares of our common stock through various means, including, without limitation, open market transactions, privately negotiated transactions, forward, derivative, or accelerated repurchase, or automatic repurchase transactions, including 10b5-1 plans, or tender offers.

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Since 2014, our Board of Directors has periodically renewed our authority to repurchase our shares. On October 2019, the Board of Directors provided share repurchase authorization, increasing the aggregate of our common stock authorized for repurchase by $800 million. The current share repurchase authorization expires on December 31, 2020 (unless extended), and does not obligate the Company to purchase any shares.

The authorization for the share repurchase program may be terminated, increased or decreased by our Board of Directors at any time. As of September 30, 2020, we were authorized to repurchase shares up to an aggregate purchase price of $284 million.

The following table presents repurchases of our common stock through share repurchase agreements with third-party financial institutions during the nine months ended September 30, 2020:

Execution Date

Payment

Initial Shares Delivered

Closing Date

Additional Shares Delivered

Total Shares Repurchased

December 19, 2019

$

200

2,591,093

February 26, 2020

727,368

3,318,461

During the nine months ended September 30, 2020, we repurchased 7,390,099 shares of our common stock in open market repurchases for an aggregate purchase price of $366 million.

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

						Nine Months Ended September 30,
($ in millions)						2020						2019
Dividends to shareholders						$	58					$	23
Repurchase of common shares						406						936
Total cash returned to shareholders						$	464					$	959

Liquidity

We manage liquidity through access to substantial investment portfolios as well as a variety of other sources of liquidity including committed credit facilities, securities lending and repurchase agreements. Our asset-liability management ("ALM") process takes into account the expected maturity of investments and expected benefit payments as well as the specific nature and risk profile of the liabilities. As part of our liquidity management process, we model different scenarios to determine whether existing assets are adequate to meet projected cash flows.

Capitalization

The primary components of our capital structure consist of debt and equity securities. Our capital position is supported by cash flows within our operating subsidiaries, the availability of borrowed funds under liquidity facilities, and any additional capital we raise to invest in the growth of the business and for general corporate purposes. We manage our capital position based on a variety of factors including, but not limited to, our financial strength, the credit rating of Voya Financial, Inc. and of its insurance company subsidiaries and general macroeconomic conditions.

See the Financing Agreements and Shareholders’ Equity Notes to our Consolidated Financial Statements in Part I, Item 1. of this Form 10-Q for additional details over changes in debt and equity during the year and impacting capitalization.

Senior Unsecured Credit Facility

As of September 30, 2020, we had a $500 million senior unsecured credit facility with a syndicate of banks which expires November 1, 2024. The facility provides $500 million of committed capacity for issuing letters of credit and the full $500 million may be utilized for direct borrowings. As of September 30, 2020, there were no amounts outstanding as revolving credit borrowings and no amounts of LOCs outstanding under the senior unsecured credit facility. Under the terms of the facility, we are required to maintain a minimum net worth of $6.15 billion, which may increase upon any future equity issuances by us.

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Other Credit Facilities

We use credit facilities to provide collateral required primarily under our affiliated reinsurance transactions with captive insurance subsidiaries. We also issue guarantees and enter into financing arrangements in connection with these credit facilities. These arrangements are designed to facilitate the financing of statutory reserve requirements.

The following table summarizes our credit facilities as of September 30, 2020:

($ in millions)

Obligor / Applicant

Business Supported

Secured / Unsecured

Committed / Uncommitted

Expiration

Capacity

Utilization

Unused Commitment

Voya Financial, Inc.

Other

Unsecured

Committed

11/01/2024

$

500

$

—

$

500

Voya Financial, Inc.

Other

Secured

Uncommitted

Various

10

1

—

Voya Financial, Inc. /SLDI

Other(3)

Unsecured

Uncommitted

12/31/2020

300

58

—

Voya Financial, Inc. / SLDI

Individual Life(2)

Unsecured

Committed

12/31/2025

475

475

—

Voya Financial, Inc. / SLDI

Individual Life(2)

Unsecured

Committed

07/01/2037

1,725

1,691

34

Voya Financial, Inc. /Roaring River LLC

Individual Life(2)(4)

Unsecured

Committed

10/01/2025

425

385

40

Voya Financial, Inc. /Roaring River IV, LLC

Individual Life(2)

Unsecured

Committed

12/31/2028

565

365

200

Voya Financial, Inc.

Individual Life(3)

Unsecured

Committed

12/09/2024

300

264

36

Voya Financial, Inc.

Individual Life/Retirement/Other(3)

Unsecured

Committed

02/11/2022

300

300

—

SLDI

Hannover Re(1)

Unsecured

Committed

10/29/2023

1

1

—

Total

$

4,601

$

3,540

$

810

N/A- Not Applicable

(1) Individual Life Reinsurance business acquired by Hannover Re in 2009 via indemnity reinsurance, see "Reinsurance" below for further information.

(2) These facilities will be terminated as a result of the sale of SLD and SLDI to Resolution. Fees associated with these facilities for the three and nine months ended September 30, 2020 were $7million and $20 million, respectively. Fees associated with these facilities for the three and nine months ended September 30, 2019 were $7 million and $21 million, respectively.

(3) In December 2019 and January 2020, these facilities were amended to include terms which require us to maintain a minimum net worth of $6.15 billion. The minimum net worth may increase upon any future equity issuances by us.

(4) This facility is associated with a total return swap between Voya Financial, Inc. and the lender. As of September 30, 2020, we did not meet the net worth requirement pursuant to the swap agreements. We are currently working with the lender to obtain a waiver to not designate this as a collateralized event.

Total fees associated with credit facilities were $7 million and $22 million for the three and nine months ended September 30, 2020, respectively. Total fees associated with credit facilities were $9 million and $25 million for the three and nine months ended September 30, 2019, respectively.

Voya Financial, Inc. Credit Support of Subsidiaries

In addition to our Senior Unsecured Credit Facility, Voya Financial, Inc. maintains credit facilities with third-party banks to support the reinsurance obligations of our captive reinsurance subsidiaries in which Voya Financial is either a primary obligor or provides a financial guarantee. As of September 30, 2020, such facilities provided for up to $4.0 billion of capacity, of which $3.4 billion was utilized.

We also provide credit support to our Roaring River IV, LLC ("Roaring River IV") captive reinsurance subsidiary through a surplus maintenance agreement with a third-party bank in connection with a financing arrangement involving $565 million of statutory reserves which matures December 31, 2028. The reimbursement agreement requires Voya Financial, Inc. to cause capital to be maintained in Roaring River IV Holding LLC, the intermediate holding company of Roaring River IV, and in Roaring River IV. These amounts will vary over time based on a percentage of Roaring River IV in force life insurance. Upon closing the transaction, we expect to unwind this financing arrangement, and this guarantee will therefore terminate.

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In addition, we provide guarantees to certain of our subsidiaries to support various business requirements:

•Under the Buyer Facility Agreement put into place by Hannover Re, Voya Financial, Inc. and Security Life of Denver International Limited ("SLDI") have contingent reimbursement obligations and Voya Financial, Inc. has guarantee obligations, up to the full $2.9 billion principal amount of the note and one $600 million letter of credit issued pursuant to the agreement, if Security Life of Denver Insurance Company ("SLD") or SLDI were to direct the sale or liquidation of the note other than as permitted by the Buyer Facility Agreement, or fail to return reinsurance collateral (including the note) upon termination of the Buyer Facility Agreement or as otherwise required by the Buyer Facility Agreement. In addition, Voya Financial, Inc. has agreed to indemnify Hannover Re for any losses it incurs in the event that SLD or SLDI were to exercise offset rights unrelated to the Hannover Re block. We expect to restructure this guarantee arrangement in connection with the Individual Life Transaction.

•Voya Financial, Inc. has also entered into a corporate guarantee agreement with a third-party ceding insurer where it guarantees the reinsurance obligations of our subsidiary, SLD, assumed under a reinsurance agreement with the third-party cedent for the amount of the statutory reserves assumed by SLD. The current amount of reserves outstanding as of September 30, 2020 is $13 million. We intend to terminate this guarantee arrangement in connection with the Individual Life Transaction.

•Voya Financial, Inc. guarantees the obligations of Voya Holdings under the $13 million principal amount Equitable Notes maturing in 2027, and provides a back-to-back guarantee to ING Group in respect of its guarantee of $358 million combined principal amount of Aetna Notes. For more information see "Capitalization- Aetna Notes" above.

•Voya Financial, Inc. and Voya Holdings provide a guarantee to certain Voya insurance subsidiaries of VIAC’s payment obligations to those subsidiaries under certain VIAC surplus notes held by those subsidiaries. The agreement provides for Voya and Voya Holdings to reimburse the applicable subsidiary to the extent that any interest on, principal of, or any redemption payment with respect to such surplus note is unpaid by VIAC on its scheduled date.

We did not recognize any asset or liability as of September 30, 2020 in relation to intercompany indemnifications, guarantees or support agreements. As of September 30, 2020, no circumstances existed in which we were required to currently perform under these arrangements.

Borrowings from Subsidiaries

We maintain revolving reciprocal loan agreements with a number of our life and non-life insurance subsidiaries that are used to fund short-term cash requirements that arise in the ordinary course of business. Under these agreements, either party may borrow up to the maximum allowable under the agreement for a term not more than 270 days. For life insurance subsidiaries, the amounts that either party may borrow from the other under the agreement vary and are between 2% and 5% of the insurance subsidiary's statutory net admitted assets (excluding separate accounts) as of the previous year end depending on the state of domicile. As of September 30, 2020, the aggregate amount that may be borrowed or lent under agreements with life insurance subsidiaries was $1.9 billion. For non-life insurance subsidiaries, the maximum allowable under the agreement is based on the assets of the subsidiaries and their particular cash requirements. As of September 30, 2020, Voya Financial, Inc. had $431 million outstanding borrowings from subsidiaries and had loaned $219 million to its subsidiaries.

Ratings

Our access to funding and our related cost of borrowing, collateral requirements for derivative instruments and the attractiveness of certain of our products to customers are affected by our credit ratings and insurance financial strength ratings, which are periodically reviewed by the rating agencies. Financial strength ratings and credit ratings are important factors affecting public confidence in an insurer and its competitive position in marketing products. Credit ratings are also important to our ability to raise capital through the issuance of debt and for the cost of such financing.

A downgrade in our credit ratings or the credit or financial strength ratings of our rated subsidiaries could have a material adverse effect on our results of operations and financial condition. See Risk Factors- A downgrade or a potential downgrade in our financial strength or credit ratings could result in a loss of business and adversely affect our results of operations and financial condition in Part I, Item 1A. of our Annual Report on Form 10-K for additional information.

With respect to certain reinsurance agreements, based on the amount of reinsurance outstanding as of September 30, 2020 and December 31, 2019, a two-notch downgrade of our insurance subsidiaries would have resulted in an estimated increase in our

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collateral requirements by approximately $13 million, respectively. The nature of the collateral that we may be required to post is principally in the form of cash, highly rated securities or LOC.

Financial strength ratings represent the opinions of rating agencies regarding the financial ability of an insurance company to meet its obligations under an insurance policy. Credit ratings represent the opinions of rating agencies regarding an entity's ability to repay its indebtedness. These ratings are not a recommendation to buy or hold any of our securities and they may be revised or revoked at any time at the sole discretion of the rating organization.

The financial strength and credit ratings of Voya Financial, Inc. and its principal subsidiaries as of the date of this Quarterly Report on Form 10-Q are summarized in the following table.

Rating Agency

A.M. Best

Fitch, Inc.

Moody's Investors Service, Inc.

Standard & Poor's

("A.M. Best")(1)

("Fitch")(2)

("Moody's")(3)

("S&P")(4)

Long-term Issuer Credit Rating/Outlook:

Voya Financial, Inc.

withdrawn

BBB+/stable

Baa2/stable

BBB+/Stable

Financial Strength Rating/Outlook:

Voya Retirement Insurance and Annuity Company

(5)

A/stable

A2/stable

A+/Stable

Security Life of Denver Insurance Company

(5)

A/watch negative

A3/under review negative

A+/watch negative

ReliaStar Life Insurance Company

A/stable

A/stable

A2/stable

A+/Stable

ReliaStar Life Insurance Company of New York

A/stable

A/stable

A2/stable

A+/Stable

(1) A.M. Best's financial strength ratings for insurance companies range from "A++ (superior)" to "s (suspended)." Long-term credit ratings range from "aaa (exceptional)" to "s (suspended)."   

(2) Fitch's financial strength ratings for insurance companies range from "AAA (exceptionally strong)" to "C (distressed)." Long-term credit ratings range from "AAA (highest credit quality)," which denotes exceptionally strong capacity for timely payment of financial commitments, to "D (default)."

(3) Moody’s financial strength ratings for insurance companies range from "Aaa (exceptional)" to "C (lowest)." Numeric modifiers are used to refer to the ranking within the group- with 1 being the highest and 3 being the lowest. These modifiers are used to indicate relative strength within a category. Long-term credit ratings range from "Aaa (highest)" to "C (default)."

(4) S&P's financial strength ratings for insurance companies range from "AAA (extremely strong)" to "D (default)." Long-term credit ratings range from "AAA (extremely strong)" to "D (default)."

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

Rating agencies use an "outlook" statement for both industry sectors and individual companies. For an industry sector, a stable outlook generally implies that over the next 12 to 18 months the rating agency expects ratings to remain unchanged among companies in the sector. For a particular company, an outlook generally indicates a medium- or long-term trend in credit fundamentals, which if continued, may lead to a rating change. On April 1, Moody’s changed its outlook for the U.S. life insurance sector to negative from stable. In December 2019, Fitch revised its outlook on the U.S. life insurance sector to negative from stable.  Subsequently, in March of 2020, Fitch revised its rating outlook for the U.S. life insurance sector to negative from stable. Also in March 2020, A.M. Best revised its outlook on the U.S. life insurance sector to negative from stable.

Restrictions on Dividends and Returns of Capital from Subsidiaries

Our business is conducted through operating subsidiaries. U.S. insurance laws and regulations regulate the payment of dividends and other distributions by our U.S. insurance subsidiaries to their respective parents. These restrictions are based in part on the prior year's statutory income and surplus. In general, dividends up to specified levels are considered ordinary and may be paid without prior approval. Dividends in larger amounts, or "extraordinary" dividends, are subjected to approval by the insurance commissioner of the state of domicile of the insurance subsidiary proposing to pay the dividend. In addition, under the insurance laws of our principal insurance subsidiaries domiciled in Connecticut and Minnesota (these insurance subsidiaries, together with our insurance subsidiary domiciled in Colorado are referred to collectively, as our "Principal Insurance Subsidiaries"), no dividend or other distribution exceeding an amount equal to an insurance company’s earned surplus may be paid without the domiciliary insurance regulator’s prior approval. Our Principal Insurance Subsidiary domiciled in Connecticut has ordinary dividend capacity for 2020. However, as a result of the extraordinary dividends it paid in 2015,

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2016 and 2017, together with statutory losses incurred in connection with the recapture and cession to one of our Arizona captives of certain term life business in the fourth quarter of 2016, our Principal Insurance Subsidiary domiciled in Minnesota currently has negative earned surplus. In addition, primarily as a result of statutory losses incurred in connection with the retrocession of our Principal Insurance Subsidiary domiciled in Minnesota of certain life insurance business in the fourth quarter of 2018, our Principal Insurance Subsidiary domiciled in Colorado has a net loss from operations for the twelve-month period ending the preceding December 31. Therefore, neither our Minnesota nor Colorado Principal Insurance Subsidiaries have the capacity at this time to make ordinary dividend payments. Any extraordinary dividend payment would be subject to domiciliary insurance regulatory approval, which can be granted or withheld at the discretion of the regulator.

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

We may receive dividends from or contribute capital to our wholly owned non-life insurance subsidiaries such as broker-dealers, investment management entities and intermediate holding companies.

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

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

			Dividends Paid												Extraordinary Distributions Paid
			Nine Months Ended September 30,												Nine Months Ended September 30,
($ in millions)			2020						2019						2020						2019
Subsidiary Name (State of domicile):
Voya Retirement Insurance and Annuity Company ("VRIAC") (CT)			$	294					$	396					$	—					$	—
Security Life of Denver Insurance Company ("SLD") (CO)			—						—						—						—
ReliaStar Life Insurance Company ("RLI") (MN)			—						—						—						360

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

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

Off-Balance Sheet Arrangements

We have obligations for the return of non-cash collateral under an amendment to our securities lending program. Non-cash collateral received in connection with the securities lending program may not be sold or re-pledged by our lending agent, except in the event of default, and is not reflected on our Condensed Consolidated Balance Sheets. For information regarding obligations under this program, see the Investments (excluding Consolidated Investment Entities) Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.

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

Impact of New Accounting Pronouncements

For information regarding the impact of new accounting pronouncements, see the Business, Basis of Presentation and Significant Accounting Policies Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.

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Critical Accounting Judgments and Estimates

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Critical estimates and assumptions are evaluated on an on-going basis based on historical developments, market conditions, industry trends and other information that is reasonable under the circumstances. There can be no assurance that actual results will conform to estimates and assumptions and that reported results of operations will not be materially affected by the need to make future accounting adjustments to reflect changes in these estimates and assumptions from time to time. The inputs into our estimates and assumptions consider the economic implications of COVID-19 on our critical and significant accounting estimates. 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:

•Estimated loss on businesses held for sale;

•Reserves for future policy benefits;

•DAC, VOBA and other intangibles (collectively, "DAC/VOBA and other intangibles");

•Valuation of investments and derivatives;

•Impairments;

•Income taxes;

•Contingencies; and

•Employee benefit plans.

In developing these accounting estimates, we make subjective and complex judgments that are inherently uncertain and subject to material changes as facts and circumstances develop. Although variability is inherent in these estimates, we believe the amounts provided are appropriate based on the facts available upon preparation of the Condensed Consolidated Financial Statements.

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

Estimated loss on businesses held for sale

On December 18, 2019, we entered into the Resolution MTA with Resolution Life US pursuant to which Resolution Life US will acquire all of the shares of the capital stock of SLD and SLDI, including the capital stock of several subsidiaries of SLD and SLDI. This transaction will result in the sale of a significant portion of of our Individual Life business as well as the fixed and variable Annuities business associated with the subsidiaries sold. We have determined that the businesses to be disposed via sale meet the criteria to be classified as held for sale and the sale represents a strategic shift that will have a major effect on our operations. Accordingly, the results of operations of the businesses to be sold have been presented as discontinued operations in the accompanying Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Cash Flows, and the assets and liabilities of the businesses have been classified as held for sale and segregated for all periods presented in the Condensed Consolidated Balance Sheets. A business classified as held for sale is recorded at the lower of its carrying value or estimated fair value less cost to sell. If the carrying value exceeds its estimated fair value less cost to sell, a loss is recognized. Transactions between the businesses held for sale and businesses in continuing operations that are expected to continue to exist after the disposal are not eliminated to appropriately reflect the continuing operations and the assets, liabilities and results of the businesses held for sale. In connection with this transaction, we recorded an estimated loss on sale, net of tax, of $1,108 million in the fourth quarter of 2019. The estimated loss on sale, net of tax is based on assumptions that are subject to change due to fluctuations in market conditions and other variables that may occur prior to the closing date, which is expected to take place by January 4, 2021. We are required to remeasure the estimated fair value and loss on sale at the end of each quarter until closing of the Transaction. As such, Income (loss) from discontinued operations, net of tax, for the nine months ended September 30, 2020 includes an additional estimated loss on sale, net of tax of $231 million. For additional information on the Individual Life Transaction and the related estimated loss on sale, net of tax, see Trends and Uncertainties in Part II, Item 7. of our Annual Report on Form 10-K and the Business Held for Sale and Discontinued Operations Note to our accompanying Condensed Consolidated Financial Statements.

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Assumptions and Periodic Review

Changes in assumptions can have a significant impact on DAC/VOBA and other intangibles balances, amortization rates, reserve levels and results of operations. Assumptions are management's best estimates of future outcome. We periodically review these assumptions against actual experience and, based on additional information that becomes available, update our assumptions. Deviation of emerging experience from our assumptions could have a significant effect on our DAC/VOBA and other intangibles, reserves and the related results of operations. During the third quarter of 2020 and 2019, we conducted our annual review of assumptions, including projection model inputs and made a number of changes to our assumptions which impacted the results of our segments included in our Net income (loss). For further information, see the Overview and the DAC/VOBA and Other Intangibles Unlocking sections of the Management's Discussion and Analysis of Financial Condition and Results of Operations in Part I, Item 2. of this Quarterly Report on Form 10-Q.

Sensitivity

We perform sensitivity analyses to assess the impact that certain assumptions have on DAC/VOBA and other intangibles, as well as certain reserves. The following table presents the estimated instantaneous net impact to income from continuing and discontinued operations of various assumption changes on our DAC/VOBA and other intangible balances and the impact on related reserves for future policy benefits and reinsurance. The effects are not representative of the aggregate impacts that could result if a combination of such changes to equity markets, interest rates and other assumptions occurred.

($ in millions)			As of September 30, 2020
			Continuing Operations (1)						Discontinued Operations						Total
Decrease in long-term equity rate of return assumption by 100 basis points			$	(39)					$	—					$	(39)
A change to the long-term interest rate assumption of -50 basis points			(52)						(16)						(68)
A change to the long-term interest rate assumption of +50 basis points			45						27						72
An assumed increase in future mortality by 1%			(11)						(6)						(17)

1) Includes DAC/VOBA and other intangibles of the Individual Life business that will be exited via reinsurance pursuant to the Resolution MTA.

Lower assumed equity rates of return, lower assumed interest rates, increased assumed future mortality and decreased equity market values generally decrease DAC/VOBA and other intangibles and increase future policy benefits, thus decreasing income before income taxes. Higher assumed interest rates generally increase DAC/VOBA and other intangibles and decrease future policy benefits, thus increasing income before income taxes.

Impairments

Effective January 1, 2020, the Company adopted Accounting Standards Update ("ASU") 2016-13 "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, as amended" ("ASU 2016-13"). The Company adopted ASU 2016-13 using the modified retrospective method for financial assets measured at amortized cost and the prospective method for available-for-sale debt securities as required by ASU 2016-13. As a result beginning January 1, 2020, the Company's accounting for impairments is as follows:

We evaluate our available-for-sale investments quarterly to determine whether there has been a decline in fair value below the amortized cost basis. This evaluation process entails considerable judgment and estimation. Factors considered in this analysis include, but are not limited to, the length of time and the extent to which the fair value has been less than amortized cost, the issuer's financial condition and near-term prospects, future economic conditions and market forecasts, interest rate changes and changes in ratings of the security. A severe unrealized loss position on a fixed maturity may not have any impact on: (a) the ability of the issuer to service all scheduled interest and principal payments and (b) the evaluation of recoverability of all contractual cash flows or the ability to recover an amount at least equal to its amortized cost based on the present value of the expected future cash flows to be collected.

When assessing our intent to sell a security, or if it is more likely than not we will be required to sell a security before recovery of its amortized cost basis, we evaluate facts and circumstances such as, but not limited to, decisions to rebalance the investment portfolio and sales of investments to meet cash flow or capital needs.

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We use the following methodology and significant inputs in determining whether a credit loss exists:

•When determining collectability and the period over which the value is expected to recover for U.S. and foreign corporate securities, foreign government securities and state and political subdivision securities, we apply the same considerations utilized in our overall impairment evaluation process, which incorporates information regarding the specific security, the industry and geographic area in which the issuer operates and overall macroeconomic conditions. Projected future cash flows are estimated using assumptions derived from our best estimates of likely scenario-based outcomes, after giving consideration to a variety of variables that includes, but is not limited to: general payment terms of the security; the likelihood that the issuer can service the scheduled interest and principal payments; the quality and amount of any credit enhancements; the security's position within the capital structure of the issuer; possible corporate restructurings or asset sales by the issuer; and changes to the rating of the security or the issuer by rating agencies.

•Additional considerations are made when assessing the unique features that apply to certain structured securities, such as subprime, Alt-A, non-agency RMBS, CMBS and ABS. These additional factors for structured securities include, but are not limited to: the quality of underlying collateral; expected prepayment speeds; loan-to-value ratio; debt service coverage ratios; current and forecasted loss severity; consideration of the payment terms of the underlying assets backing a particular security; and the payment priority within the tranche structure of the security.

•When determining the amount of the credit loss for U.S. and foreign corporate securities, foreign government securities and state and political subdivision securities, we consider the estimated fair value as the recovery value when available information does not indicate that another value is more appropriate. When information is identified that indicates a recovery value other than estimated fair value, we consider in the determination of recovery value the same considerations utilized in its overall impairment evaluation process, which incorporates available information and our best estimate of scenario-based outcomes regarding the specific security and issuer; possible corporate restructurings or asset sales by the issuer; the quality and amount of any credit enhancements; the security's position within the capital structure of the issuer; fundamentals of the industry and geographic area in which the security issuer operates; and the overall macroeconomic conditions.

•We perform a discounted cash flow analysis comparing the current amortized cost of a security to the present value of future cash flows expected to be received, including estimated defaults and prepayments. The discount rate is generally the effective interest rate of the fixed maturity prior to impairment.

Mortgage loans on real estate are all commercial mortgage loans, which are reported at amortized cost, net of the allowance for credit losses. 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 debt type, capital market factors, and market vacancy rates, and loan-specific risk characteristics such as debt service coverage ratios (“DSCR”), loan-to-value (“LTV”), collateral size, seniority of the loan, segmentation, and property types. The allowance for credit losses is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. For those mortgages that are determined to require foreclosure, the carrying value is reduced to the fair value of the underlying collateral, net of estimated costs to obtain and sell at the point of foreclosure.

Impairment analysis of the investment portfolio involves considerable judgment, is subject to considerable variability, is established using management's best estimate and is revised as additional information becomes available. As such, changes in, or deviations from, the assumptions used in such analysis can have a significant effect on the results of operations.

For additional information regarding the evaluation process for impairments, see the Investments (excluding Consolidated Investment Entities) Note in our accompanying Condensed Consolidated Financial Statements.

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Income Taxes

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

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

Investments (excluding Consolidated Investment Entities)

Investments for our general account are managed by our wholly owned asset manager, Voya Investment Management LLC, pursuant to investment advisory agreements with affiliates. In addition, our internal treasury group manages our holding company liquidity investments, primarily money market funds.

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

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

Portfolio Composition

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

			September 30, 2020												December 31, 2019
($ in millions)			Carrying Value						% of Total						Carrying Value						% of Total
Fixed maturities, available-for-sale, excluding securities pledged			$	42,330					75.4		%				$	39,663					74.0		%
Fixed maturities, at fair value using the fair value option			3,014						5.4		%				2,707						5.0		%
Equity securities, available-for-sale			371						0.7		%				196						0.4		%
Short-term investments(1)			70						0.1		%				68						0.1		%
Mortgage loans on real estate			6,762						12.1		%				6,878						12.8		%
Policy loans			735						1.3		%				776						1.4		%
Limited partnerships/corporations			1,383						2.4		%				1,290						2.4		%
Derivatives			270						0.5		%				316						0.6		%
Other investments			319						0.6		%				385						0.7		%
Securities pledged			827						1.5		%				1,408						2.6		%
Total investments			$	56,081					100.0		%				$	53,687					100.0		%

(1) Short-term investments include investments with remaining maturities of one year or less, but greater than three months, at the time of purchase.

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Fixed Maturities

The following tables present total fixed maturities, including securities pledged, by market sector as of the dates indicated:

			September 30, 2020
($ in millions)			Amortized Cost						% of Total						Fair Value						% of Total
Fixed maturities:
U.S. Treasuries			$	1,058					2.6		%				$	1,541					3.3		%
U.S. Government agencies and authorities			73						0.2		%				103						0.2		%
State, municipalities and political subdivisions			1,171						2.9		%				1,353						2.9		%
U.S. corporate public securities			13,051						31.9		%				15,689						34.2		%
U.S. corporate private securities			5,433						13.4		%				6,199						13.4		%
Foreign corporate public securities and foreign governments(1)			3,989						9.8		%				4,574						9.9		%
Foreign corporate private securities(1)			4,354						10.7		%				4,724						10.2		%
Residential mortgage-backed securities			5,430						13.4		%				5,695						12.3		%
Commercial mortgage-backed securities			4,011						9.9		%				4,203						9.1		%
Other asset-backed securities			2,095						5.2		%				2,090						4.5		%
Total fixed maturities, including securities pledged			$	40,665					100.0		%				$	46,171					100.0		%
(1) Primarily U.S. dollar denominated.

			December 31, 2019
($ in millions)			Amortized Cost						% of Total						Fair Value						% of Total
Fixed maturities:
U.S. Treasuries			$	1,074					2.7		%				$	1,382					3.2		%
U.S. Government agencies and authorities			74						0.2		%				95						0.2		%
State, municipalities and political subdivisions			1,220						3.1		%				1,323						3.0		%
U.S. corporate public securities			12,980						32.5		%				14,938						34.0		%
U.S. corporate private securities			5,568						14.0		%				6,035						13.8		%
Foreign corporate public securities and foreign governments(1)			3,887						9.8		%				4,341						10.0		%
Foreign corporate private securities(1)			4,545						11.4		%				4,831						11.0		%
Residential mortgage-backed securities			4,999						12.6		%				5,204						11.9		%
Commercial mortgage-backed securities			3,402						8.5		%				3,574						8.2		%
Other asset-backed securities			2,058						5.2		%				2,055						4.7		%
Total fixed maturities, including securities pledged			$	39,807					100.0		%				$	43,778					100.0		%
(1)Primarily U.S. dollar denominated.

As of September 30, 2020, the average duration of our fixed maturities portfolio, including securities pledged, is between 7.0 and 8.0 years.

Fixed Maturities Credit Quality - Ratings

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

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The following tables present credit quality of fixed maturities, including securities pledged, using NAIC designations as of the dates indicated:

($ in millions)			September 30, 2020
NAIC Quality Designation			1						2						3						4						5						6						Total Fair Value
U.S. Treasuries			$	1,541					$	—					$	—					$	—					$	—					$	—					$	1,541
U.S. Government agencies and authorities			103						—						—						—						—						—						103
State, municipalities and political subdivisions			1,222						130						—						—						—						1						1,353
U.S. corporate public securities			6,372						8,463						736						96						22						—						15,689
U.S. corporate private securities			2,271						3,574						235						105						14						—						6,199
Foreign corporate public securities and foreign governments(1)			1,645						2,672						208						48						—						1						4,574
Foreign corporate private securities(1)			502						3,867						130						225						—						—						4,724
Residential mortgage-backed securities			5,374						244						30						—						23						24						5,695
Commercial mortgage-backed securities			3,799						375						18						11						—						—						4,203
Other asset-backed securities			1,822						218						10						12						22						6						2,090
Total fixed maturities			$	24,651					$	19,543					$	1,367					$	497					$	81					$	32					$	46,171
% of Fair Value			53.4%						42.3%						3.0%						1.0%						0.2%						0.1%						100.0%
(1) Primarily U.S. dollar denominated.

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($ in millions)			December 31, 2019
NAIC Quality Designation			1						2						3						4						5						6						Total Fair Value
U.S. Treasuries			$	1,382					$	—					$	—					$	—					$	—					$	—					$	1,382
U.S. Government agencies and authorities			95						—						—						—						—						—						95
State, municipalities and political subdivisions			1,200						121						—						—						—						2						1,323
U.S. corporate public securities			6,783						7,327						682						124						22						—						14,938
U.S. corporate private securities			2,095						3,620						157						148						15						—						6,035
Foreign corporate public securities and foreign governments(1)			1,758						2,389						148						46						—						—						4,341
Foreign corporate private securities(1)			505						4,050						232						44						—						—						4,831
Residential mortgage-backed securities			5,030						111						18						1						19						25						5,204
Commercial mortgage-backed securities			3,166						322						66						12						8						—						3,574
Other asset-backed securities			1,765						209						21						3						57						—						2,055
Total fixed maturities			$	23,779					$	18,149					$	1,324					$	378					$	121					$	27					$	43,778
% of Fair Value			54.2%						41.5%						3.0%						0.9%						0.3%						0.1%						100.0%
(1)Primarily U.S. dollar denominated.

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

($ in millions)			September 30, 2020
ARO Quality Ratings			AAA						AA						A						BBB						BB and Below															Total Fair Value
U.S. Treasuries			$	1,541					$	—					$	—					$	—					$	—														$	1,541
U.S. Government agencies and authorities			97						6						—						—						—															103
State, municipalities and political subdivisions			88						793						342						129						1															1,353
U.S. corporate public securities			167						901						5,973						7,840						808															15,689
U.S. corporate private securities			109						205						1,951						3,586						348															6,199
Foreign corporate public securities and foreign governments(1)			14						375						1,397						2,509						279															4,574
Foreign corporate private securities(1)			—						49						401						3,957						317															4,724
Residential mortgage-backed securities			4,133						331						135						264						832															5,695
Commercial mortgage-backed securities			1,537						510						977						1,013						166															4,203
Other asset-backed securities			389						499						907						214						81															2,090
Total fixed maturities			$	8,075					$	3,669					$	12,083					$	19,512					$	2,832														$	46,171
% of Fair Value			17.5%						7.9%						26.2%						42.3%						6.1%															100.0%
(1)Primarily U.S. dollar denominated.

($ in millions)			December 31, 2019
ARO Quality Ratings			AAA						AA						A						BBB						BB and Below																		Total Fair Value
U.S. Treasuries			$	1,382					$	—					$	—					$	—					$	—																	$	1,382
U.S. Government agencies and authorities			89						6						—						—						—																		95
State, municipalities and political subdivisions			83						757						360						121						2																		1,323
U.S. corporate public securities			152						924						5,715						7,373						774																		14,938
U.S. corporate private securities			148						184						1,882						3,494						327																		6,035
Foreign corporate public securities and foreign governments(1)			13						377						1,353						2,378						220																		4,341
Foreign corporate private securities(1)			—						—						591						4,022						218																		4,831
Residential mortgage-backed securities			3,768						175						110						383						768																		5,204
Commercial mortgage-backed securities			1,397						365						872						777						163																		3,574
Other asset-backed securities			393						411						920						215						116																		2,055
Total fixed maturities			$	7,425					$	3,199					$	11,803					$	18,763					$	2,588																	$	43,778
% of Fair Value			17.0		%				7.3		%				27.0		%				42.8		%				5.9		%																100.0		%
(1)Primarily U.S. dollar denominated.

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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.

Potential Credit Related COVID-19 Exposures

The following table presents our fixed maturities portfolio exposure to sectors that we believe may be particularly affected by the economic consequences of COVID-19:

($ in millions)			September 30, 2020
																																	NAIC Rating (%)
			Fair Value						Fair Value %						Unrealized Capital Gain/Loss						% Public						% Private						1						2						3						4-6
Energy			$	2,928					6.3		%				$	308					72		%				28		%				21.9		%				64.5		%				11.0		%				2.6		%
Midstream			1,236						2.7		%				145						67		%				33		%				5.6		%				87.1		%				7.0		%				0.3		%
Independent Energy			634						1.4		%				37						75		%				25		%				36.2		%				27.6		%				25.5		%				10.7		%
Integrated Energy			614						1.3		%				83						83		%				17		%				50.1		%				43.4		%				6.5		%				—		%
Refining			207						0.4		%				33						90		%				10		%				—		%				95.1		%				4.9		%				—		%
Oil Field Services			237						0.5		%				10						47		%				53		%				15.3		%				73.7		%				10.8		%				0.2		%
Metals			679						1.5		%				123						81		%				19		%				15.2		%				75.1		%				9.7		%				—		%
Airlines/Aircraft Leasing			325						0.7		%				(20)						47		%				53		%				21.6		%				43.5		%				34.9		%				—		%
Restaurants			277						0.6		%				35						94		%				6		%				1.2		%				91.5		%				0.1		%				7.2		%
Airports			184						0.4		%				15						52		%				48		%				25.2		%				61.2		%				13.6		%				—		%
Lodging			251						0.5		%				(13)						85		%				15		%				65.1		%				18.3		%				12.2		%				4.4		%
Automotive			468						1.0		%				35						55		%				45		%				22.1		%				61.6		%				12.7		%				3.6		%
Retailers			1,248						2.8		%				215						87		%				13		%				52.1		%				45.7		%				1.3		%				0.9		%
COVID-19 Subtotal			6,360						13.8		%				698						76		%				24		%				33.2		%				56.0		%				9.1		%				1.7		%
Remaining Portfolio			39,811						86.2		%				4,801						77		%				23		%				57.4		%				39.5		%				2.0		%				1.1		%
Grand Total			$	46,171					100.0%						$	5,499					76%						24%						53.4%						42.3%						3.1%						1.2%

To the extent that issuers of these securities suffer economic distress, impairments among our portfolio assets may increase, perhaps significantly, which would reduce the carrying value of these assets for statutory purposes and decrease our admitted statutory capital. Such distress, or a further general deterioration in credit markets, could also result in ratings downgrades across our portfolio, which would require our insurance subsidiaries to hold additional amounts of risk-based capital.  In both cases, the amount of our excess capital above our targets would decline, and if the reductions were significant enough, we might be required to use available sources of liquidity to fund additional statutory capital requirements.

In April 2020, we first analyzed the potential impact of two hypothetical stress scenarios on our excess capital levels out through the second quarter 2021. “Stress Case One” was determined to reduce our excess capital levels by approximately $300 million. “Stress Case Two”, a more severe hypothetical stress scenario, would reduce our excess capital levels by approximately $600 million. Based on a review of those scenarios and credit events through third quarter, including certain downgrades in our securities portfolio in the second and third quarters of 2020, we have revised our hypothetical stress cases to $300 million for “Stress Case One” and $450 million for “Stress Case Two”. In addition, the timeframe was extended out through the end of 2021. To date, results are generally consistent with “Stress Case One”. Although we believe that these scenarios reflect the range of adverse conditions that we might reasonably experience due to COVID-19, it is possible the outcomes are worse, perhaps materially so. The effects on our capital in such scenarios reflect only the impact from impairments or ratings downgrades on our asset portfolio, and not from declines in our earnings (including from increased claims) that might also result from COVID-19.

Unrealized Capital Losses

Gross unrealized capital losses on fixed maturities, including securities pledged, increased $180 million from $91 million to $271 million for the nine months ended September 30, 2020. A modest steepening of the yield curve, that included higher

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interest rates in the long-end, increased unrealized losses on a small portion of the portfolio. Tighter spreads on the quarter and historically low interest rates continue to limit the overall amount of unrealized losses. As a result of the uncertainty related to the effect of the COVID-19 pandemic, spreads on all risk assets widened substantially through late March only to recover much of that weakness during the second quarter, with modest improvement in the third quarter. Risk-free rates rallied on this uncertainty and remained at these low levels despite the stabilization in market conditions and sentiment. The combination of these two factors resulted in a $146 million reduction in the gross unrealized loss during the quarter. See “-Overview - Trends and Uncertainties in this Management’s Discussion and Analysis.

As of September 30, 2020 and December 31, 2019, we held two and one fixed maturities with unrealized capital losses in excess of $10 million. As of September 30, 2020 and December 31, 2019, the unrealized capital losses on these fixed maturities equaled $33 million or 12.2% and $13 million or 14.2% of the total unrealized losses, respectively.

As of September 30, 2020, we held $2.9 billion of energy sector fixed maturity securities, constituting 6.3% of the total fixed maturities portfolio, with gross unrealized capital losses of $51 million, including one energy sector fixed maturity security with unrealized capital losses in excess of $10 million. The unrealized capital losses on these fixed maturity securities equaled $20 million. As of September 30, 2020, our fixed maturity exposure to the energy sector is comprised of 86.5% investment grade securities.

As of December 31, 2019, we held $3.2 billion of energy sector fixed maturity securities, constituting 7.2% of the total fixed maturities portfolio, with gross unrealized capital losses of $27 million, including one energy sector fixed maturity security with unrealized capital losses in excess of $10 million. The unrealized capital losses on this fixed maturity security equaled $13 million. As of December 31, 2019, our fixed maturity exposure to the energy sector is comprised of 91.1% investment grade securities.

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

CMO-B Portfolio

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

($ in millions)						September 30, 2020																		December 31, 2019
NAIC Quality Designation						Amortized Cost						Fair Value						% Fair Value						Amortized Cost						Fair Value						% Fair Value
1						$	3,201					$	3,351					91.5		%				$	3,131					$	3,273					95.4		%
2						236						240						6.6		%				104						105						3.1		%
3						21						23						0.6		%				12						12						0.3		%
4						—						—						—		%				—						—						—		%
5						12						23						0.6		%				8						18						0.5		%
6						18						25						0.7		%				19						25						0.7		%
Total						$	3,488					$	3,662					100.0		%				$	3,274					$	3,433					100.0		%

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

The following table presents the notional amounts and fair values of interest rate derivatives used in our CMO-B portfolio as of the dates indicated:

			September 30, 2020																		December 31, 2019
($ in millions)			Notional Amount						Asset Fair Value						Liability Fair Value						Notional Amount						Asset Fair Value						Liability Fair Value
Derivatives non-qualifying for hedge accounting:
Interest Rate Contracts			$	13,009					$	62					$	221					$	13,772					$	58					$	131

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

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

($ in millions)						September 30, 2020																		December 31, 2019
Tranche Type						Amortized Cost						Fair Value						% Fair Value						Amortized Cost						Fair Value						% Fair Value
Inverse Floater						$	230					$	318					8.7		%				$	273					$	350					10.2		%
Interest Only (IO)						281						286						7.8		%				179						183						5.3		%
Inverse IO						1,815						1,901						51.9		%				1,615						1,681						49.1		%
Principal Only (PO)						209						217						5.9		%				230						235						6.8		%
Floater						10						10						0.3		%				11						12						0.3		%
Agency Credit Risk Transfer						941						928						25.3		%				957						962						28.0		%
Other						2						2						0.1		%				9						10						0.3		%
Total						$	3,488					$	3,662					100.0		%				$	3,274					$	3,433					100.0		%

During the nine months ended September 30, 2020, the market value of our CMO-B portfolio increased primarily due to new purchase activity exceeding paydowns and maturities. Valuation of the securities within our CMO-B portfolio have remained stable and the strategy continues to generate positive relative performance. Yields within the CMO-B portfolio continue to decline as fair value asset yields reset lower and higher yielding historical CMO-B assets paydown or mature and are replaced with lower yielding new assets.

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

			Three Months Ended September 30,												Nine Months Ended September 30,
($ in millions)			2020						2019						2020						2019
Net investment income (loss)			$	179					$	115					$	485					$	322
Net realized capital gains (losses)(1)			(127)						(44)						(223)						(97)
Income (loss) from continuing operations before income taxes			$	52					$	71					$	262					$	225

(1)Net realized capital gains (losses) also include derivatives interest settlements, mark to market adjustments and realized gains (losses) on standalone derivatives contracts that are in the CMO-B portfolio.

In defining the Adjusted operating earnings before income taxes for our CMO-B portfolio, certain recharacterizations are recognized. The net coupon settlement on interest rate swaps hedging CMO-B securities that is included in Net realized capital gains (losses) is reflected as Adjusted operating earnings before income taxes in the table below. In addition, the premium amortization and change in fair value for securities designated under the FVO are included in Net realized capital gains (losses), whereas the coupon for these securities is included in Net investment income. In order to present the economics of these fair value securities in a similar manner to those of an available for sale security, the premium amortization is reclassified from Net realized capital gains (losses).

After adjusting for the two items referenced immediately above, the following table presents a reconciliation of Income (loss) from continuing operations before income taxes from our CMO-B portfolio to Adjusted operating earnings before income taxes from our CMO-B portfolio for the periods indicated:

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			Three Months Ended September 30,												Nine Months Ended September 30,
($ in millions)			2020						2019						2020						2019
Income (loss) from continuing operations before income taxes			$	52					$	71					$	262					$	225
Realized gains/(losses) including impairment			3						2						9						1
Fair value adjustments			(10)						(23)						(136)						(83)
Total adjustments to income (loss) from continuing operations			(7)						(21)						(127)						(82)
Adjusted operating earnings before income taxes			$	45					$	50					$	135					$	143

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

Structured Securities

Residential mortgage-backed securities

The following tables present our residential mortgage-backed securities as of September 30, 2020 and December 31, 2019:

			September 30, 2020
($ in millions)			Amortized Cost						Gross Unrealized Capital Gains						Gross Unrealized Capital Losses						Embedded Derivatives						Fair Value
Prime Agency			$	2,994					$	188					$	2					$	11					$	3,191
Prime Non-Agency			2,297						79						30						2						2,348
Alt-A			118						10						2						10						136
Sub-Prime(1)			49						6						—						—						55
Total RMBS			$	5,458					$	283					$	34					$	23					$	5,730
(1) Includes subprime other asset backed securities.
			December 31, 2019
($ in millions)			Amortized Cost						Gross Unrealized Capital Gains						Gross Unrealized Capital Losses						Embedded Derivatives						Fair Value
Prime Agency			$	2,783					$	137					$	3					$	10					$	2,927
Prime Non-Agency			2,062						47						10						2						2,101
Alt-A			133						14						—						8						155
Sub-Prime(1)			52						6						1						—						57
Total RMBS			$	5,030					$	204					$	14					$	20					$	5,240
(1) Includes subprime other asset backed securities.

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Commercial Mortgage-backed securities

The following tables present our commercial mortgage-backed securities as of September 30, 2020 and December 31, 2019:

			September 30, 2020
($ in millions)			AAA						AA						A						BBB						BB and Below						Total
			Amortized Cost			Fair Value			Amortized Cost			Fair Value			Amortized Cost			Fair Value			Amortized Cost			Fair Value			Amortized Cost			Fair Value			Amortized Cost			Fair Value
2013 and prior			$	269		$	317		$	94		$	96		$	132		$	134		$	102		$	96		$	16		$	15		$	613		$	658
2014			314			371			71			72			53			53			25			24			31			31			494			551
2015			224			255			171			178			120			118			132			131			23			24			670			706
2016			59			66			31			32			36			38			53			52			—			—			179			188
2017			111			128			41			41			118			116			99			96			72			69			441			450
2018			120			140			27			27			205			203			124			122			17			18			493			510
2019			177			210			43			42			212			208			371			365			9			9			812			834
2020			49			50			21			22			108			107			131			127			—			—			309			306
Total CMBS			$	1,323		$	1,537		$	499		$	510		$	984		$	977		$	1,037		$	1,013		$	168		$	166		$	4,011		$	4,203
			December 31, 2019
($ in millions)			AAA						AA						A						BBB						BB and Below						Total
			Amortized Cost			Fair Value			Amortized Cost			Fair Value			Amortized Cost			Fair Value			Amortized Cost			Fair Value			Amortized Cost			Fair Value			Amortized Cost			Fair Value
2013 and prior			$	286		$	316		$	42		$	43		$	70		$	71		$	124		$	131		$	3		$	4		$	525		$	565
2014			307			336			44			45			59			61			28			29			25			25			463			496
2015			234			248			160			165			115			119			127			132			25			25			661			689
2016			59			61			17			18			30			32			50			53			8			8			164			172
2017			131			138			41			41			129			134			66			68			66			68			433			449
2018			121			137			24			25			231			240			95			98			2			2			473			502
2019			143			160			28			28			213			215			268			267			31			31			683			701
Total CMBS			$	1,281		$	1,396		$	356		$	365		$	847		$	872		$	758		$	778		$	160		$	163		$	3,402		$	3,574

As of September 30, 2020, 90.4% and 8.9% of CMBS investments were designated as NAIC-1 and NAIC-2, respectively. As of December 31, 2019, 88.6% and 9.0% of CMBS investments were designated as NAIC-1 and NAIC-2, respectively.

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Other Asset-backed Securities

The following tables present our other asset-backed securities as of September 30, 2020 and December 31, 2019:

			September 30, 2020
($ 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			$	312		$	311		$	351		$	351		$	700		$	687		$	26		$	25		$	71		$	49		$	1,460		$	1,423
Auto-Loans			4			3			10			10			10			11			—			—			—			—			24			24
Student Loans			17			18			119			124			74			75			1			1			—			—			211			218
Credit Card loans			—			—			—			—			—			—			—			—			—			—			—			—
Other Loans			51			57			14			14			125			130			180			189			—			—			370			390
Total Other ABS(1)			$	384		$	389		$	494		$	499		$	909		$	903		$	207		$	215		$	71		$	49		$	2,065		$	2,055
(1) Excludes subprime other asset backed securities.
			December 31, 2019
($ in millions)			AAA						AA						A						BBB						BB and Below						Total
			Amortized Cost			Fair Value			Amortized Cost			Fair Value			Amortized Cost			Fair Value			Amortized Cost			Fair Value			Amortized Cost			Fair Value			Amortized Cost			Fair Value
Collateralized Obligation			$	317		$	315		$	298		$	298		$	699		$	689		$	31		$	30		$	86		$	76		$	1,431		$	1,408
Auto-Loans			3			4			10			10			8			8			—			—			—			—			21			22
Student Loans			17			17			94			96			93			95			2			1			—			—			206			209
Credit Card loans			1			1			—			—			—			—			—			—			—			—			1			1
Other Loans			55			58			6			7			123			126			179			183			5			5			368			379
Total Other ABS(1)			$	393		$	395		$	408		$	411		$	923		$	918		$	212		$	214		$	91		$	81		$	2,027		$	2,019
(1) Excludes subprime other asset backed securities.

As of September 30, 2020, 87.0% and 10.6% of Other ABS investments were designated as NAIC-1 and NAIC-2, respectively. As of December 31, 2019, 85.9% and 10.2% of Other ABS investments were designated as NAIC-1 and NAIC-2, respectively.

Mortgage Loans on Real Estate

We rate commercial mortgages to quantify the level of risk. We place those loans with higher risk on a watch list and closely monitor these loans for collateral deficiency or other credit events that may lead to a potential loss of principal and/or interest.Due to the adoption of ASU 2016-13 which is effective January 1, 2020, the allowance for credit losses is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. 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 debt type, capital market factors, and market vacancy rates, and loan-specific risk characteristics such as debt service coverage ratios (“DSCR”), loan-to-value (“LTV”), collateral size, seniority of the loan, segmentation, and property types.

Loans are written off against the allowance when management believes the uncollectability of a loan balance is confirmed. Expected recoveries do not exceed the aggregate of amounts previously written-off and expected to be written-off. For those mortgages that are determined to require foreclosure, expected credit losses are based on the fair value of the underlying collateral, net of estimated costs to obtain and sell at the point of foreclosure. As of September 30, 2020, there were two commercial mortgage loans with a pre and post carrying value of $9 and $6, respectively for which repayment is expected to be provided substantially through the operation or sale of collateral and the borrower is experiencing financial difficulty. The collateral is Office/Retail space and Hotel. The expected credit loss was based on the fair value of the underlying collateral and there was a subsequent write off against the allowance of $3.

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Loan-to-value ("LTV") and debt service coverage ("DSC") ratios are measures commonly used to assess the risk and quality of commercial mortgage loans. The LTV ratio, calculated at time of origination, is expressed as a percentage of the amount of the loan relative to the value of the underlying property. An LTV ratio in excess of 100% indicates the unpaid loan amount exceeds the value of the underlying collateral. The DSC ratio, based upon the most recently received financial statements, is expressed as a percentage of the amount of a property's Net income (loss) to its debt service payments. A DSC ratio of less than 1.0 indicates that property's operations do not generate sufficient income to cover debt payments. These ratios are utilized as part of the review process described above.

As of September 30, 2020, our mortgage loans on real estate portfolio had a weighted average DSC of 2.2 times and a weighted average LTV ratio of 45.1%. As of December 31, 2019, our mortgage loans on real estate portfolio had a weighted average DSC of 2.3 times, and a weighted average LTV ratio of 61.5%. While still heavily impacted by COVID-19, the Commercial Mortgage Loan portfolio allowance decreased by $19 during the quarter as certain sectors of the economy resumed operations, albeit at lower than pre-pandemic levels. We continue to observe distress in the hotel sector. See the Investments (excluding Consolidated Investment Entities) Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for further information on mortgage loans on real estate.

To provide temporary financial assistance to our commercial mortgage loan borrowers adversely affected by COVID-19 related stress, the Company has provided payment forbearance to approximately 8% of the outstanding principal amount of our commercial mortgage loans. Deferred payment amounts are expected to be repaid across the 12 months following the end of the agreed upon forbearance period. No modifications to any commercial mortgage loans have been made as of the issuance date of this filing.

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 Condensed Consolidated Financial Statements Part I, Item 1. of this Quarterly Report on Form 10-Q for the policy used to evaluate whether the investments are impaired.

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

Derivatives

We use derivatives for a variety of hedging purposes. We also have embedded derivatives within fixed maturities instruments and certain product features. See the Business, Basis of Presentation and Significant Accounting Policies Note in our Consolidated Financial Statements in Part II, Item 8. of our Annual Report on Form 10-K for further information.

European Exposures

We quantify and allocate our exposure to the region by attempting to identify aspects of the region or country risk to which we are exposed. Among the factors we consider are the nationality of the issuer, the nationality of the issuer's ultimate parent, the corporate and economic relationship between the issuer and its parent, as well as the political, legal and economic environment in which each functions. By undertaking this assessment, we believe that we develop a more accurate assessment of the actual geographic risk, with a more integrated understanding of contributing factors to the full risk profile of the issuer.

In the normal course of our ongoing risk and portfolio management process, we closely monitor compliance with a credit limit hierarchy designed to minimize overly concentrated risk exposures by geography, sector and issuer. This framework takes into account various factors such as internal and external ratings, capital efficiency and liquidity and is overseen by a combination of Investment and Corporate Risk Management, as well as insurance portfolio managers focused specifically on managing the investment risk embedded in our portfolio.

As of September 30, 2020, our total European exposure had an amortized cost and fair value of $4,074 million and $4,525 million, respectively. European exposure with a primary focus on Greece, Ireland, Italy, Portugal and Spain (which we refer to as "peripheral Europe") amounts to $500 million, which includes non-financial institutions exposure in Ireland of $174 million, in Italy of $146 million, and in Spain of $137 million. We also had financial institutions exposure in Ireland of zero million, in Italy of $10 million and in Spain of $33 million. We did not have any exposure to Portugal or Greece.

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Among the remaining $4,025 million of total non-peripheral European exposure, we had a portfolio of credit-related assets similarly diversified by country and sector across developed and developing Europe. As of September 30, 2020, our non-peripheral sovereign exposure was $149 million, which consisted of fixed maturities and derivative assets. We also had $668 million in net exposure to non-peripheral financial institutions, with a concentration in Switzerland of $131 million and the United Kingdom of $324 million. The balance of $3,208 million was invested across non-peripheral, non-financial institutions.

Some of the major country level exposures were in the United Kingdom of $2,062 million, in The Netherlands of $366 million, in Belgium of $231 million, in France of $379 million, in Germany of $221 million, in Switzerland of $307 million, and in Russia of $76 million. We believe the primary risk results from market value fluctuations resulting from spread volatility and the secondary risk is default risk, dependent upon the strength of continued recovery of economic conditions in Europe.

Consolidated Investment Entities

We provide investment management services to, and have transactions with, various collateralized loan obligations ("CLO entities"), private equity funds, hedge funds, registered investment companies, insurance entities, securitizations and other investment entities in the normal course of business. In certain instances, we serve as the investment manager, making day-to-day investment decisions concerning the assets of these entities. These entities are considered to be either variable interest entities ("VIEs") or voting interest entities ("VOEs"), and we evaluate our involvement with each entity to determine whether consolidation is required.

Certain investment entities are consolidated under consolidation guidance. We consolidate certain entities under the VIE guidance when it is determined that we are the primary beneficiary. We consolidate certain entities under the VOE guidance when we act as the controlling general partner and the limited partners have no substantive rights to impact ongoing governance and operating activities of the entity, or when we otherwise have control through voting rights. See Consolidation and Noncontrolling Interests in the Business, Basis of Presentation and Significant Accounting Policies Note to our Consolidated Financial Statements in Part II, Item 8. of our Annual Report on Form 10-K.

We have no right to the benefits from, nor do we bear the risks associated with these investments beyond our direct debt or equity investments in and management fees generated from these entities. Such direct investments amounted to approximately $254 and $279 as of September 30, 2020 and December 31, 2019, respectively. If we were to liquidate, the assets held by consolidated investment entities would not be available to our general creditors as a result of the liquidation.

Fair Value Measurement

Upon consolidation of CLO entities, we elected to apply the FVO for financial assets and financial liabilities held by these entities and have continued to measure these assets (primarily corporate loans) and liabilities (debt obligations issued by CLO entities) at fair value in subsequent periods. We have elected the FVO to more closely align the accounting with the economics of the transactions and allow us to more effectively reflect changes in the fair value of CLO assets with a commensurate change in the fair value of CLO liabilities.

    

Investments held by consolidated private equity funds and hedge funds are reported in our Condensed Consolidated Financial Statements. Changes in the fair value of consolidated investment entities are recorded as a separate line item within Income (loss) related to consolidated investment entities in our Condensed Consolidated Financial Statements.

The methodology for measuring the fair value and fair value hierarchy classification of financial assets and liabilities of consolidated investment entities is consistent with the methodology and fair value hierarchy rules that we apply to our investment portfolio. See Fair Value Measurement in the Business, Basis of Presentation and Significant Accounting Policies Note to our Consolidated Financial Statements in Part II, Item 8. of our Annual Report on Form 10-K.

Nonconsolidated VIEs

We also hold variable interests in certain CLO entities that we do not consolidate because we have determined that we are not the primary beneficiary. With these CLO entities, we serve as the investment manager and receive investment management fees and contingent performance fees. Generally, we do not hold any interest in the nonconsolidated CLO entities, but if we do, such ownership has been deemed to be insignificant. We have not provided and are not obligated to provide any financial or other support to these entities.

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We manage or hold investments in certain private equity funds and hedge funds. With these entities, we serve as the investment manager and are entitled to receive investment management fees and contingent performance fees that are generally expected to be insignificant. Although we have the power to direct the activities that significantly impact the economic performance of the funds, we do not hold a significant variable interest in any of these funds and, as such, do not have the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the entity. Accordingly, we are not considered the primary beneficiary and did not consolidate any of these investment funds.

In addition, we do not consolidate funds in which our involvement takes the form of a limited partner interest and is restricted to a role of a passive investor, as a limited partner's interest does not provide us with any substantive kick-out or participating rights, which would overcome the presumption of control by the general partner. See the Consolidated Investment Entities Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for more information.

Securitizations

We invest in various tranches of securitization entities, including RMBS, CMBS and ABS. Through our investments, we are not obligated to provide any financial or other support to these entities. Each of the RMBS, CMBS and ABS entities are thinly capitalized by design and considered VIEs. Our involvement with these entities is limited to that of a passive investor. We have no unilateral right to appoint or remove the servicer, special servicer or investment manager, which are generally viewed to have the power to direct the activities that most significantly impact the securitization entities' economic performance, in any of these entities, nor do we function in any of these roles. We, through our investments or other arrangements, do not have the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the entity. Therefore, we are not the primary beneficiary and do not consolidate any of the RMBS, CMBS and ABS entities in which we hold investments. These investments are accounted for as investments available-for-sale as described in the Fair Value Measurements (excluding Consolidated Investment Entities) Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q and unrealized capital gains (losses) on these securities are recorded directly in AOCI, except for certain RMBS which are accounted for under the FVO whose change in fair value is reflected in Other net realized gains (losses) in the Condensed Consolidated Statements of Operations. Our maximum exposure to loss on these structured investments is limited to the amount of our investment. Refer to the Investments (excluding Consolidated Investment Entities) Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for details regarding the carrying amounts and classifications of these assets.

Item 3.        Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk that our consolidated financial position and results of operations will be affected by fluctuations in the value of financial instruments. We have significant holdings in financial instruments and are naturally exposed to a variety of market risks. The main market risks we are exposed to include interest rate risk, equity market price risk and credit risk. We do not have material market risk exposure to "trading" activities in our Condensed Consolidated Financial Statements. For further details on these market risks, see Quantitative and Qualitative Disclosures About Market Risk in Part II, Item 7A. in our Annual Report on Form 10-K.

Market Risk Related to Interest Rates

We assess interest rate exposures for financial assets, liabilities and derivatives using hypothetical test scenarios that assume either increasing or decreasing 100 basis point parallel shifts in the yield curve. The following table summarizes the net estimated potential change in fair value within our continuing operations from hypothetical 100 basis point upward and downward shifts in interest rates as of September 30, 2020. In calculating these amounts, we exclude gains and losses on separate account fixed income securities related to products for which the investment risk is borne primarily by the separate account contract holder rather than by us. While the test scenarios are for illustrative purposes only and do not reflect our expectations regarding future interest rates or the performance of fixed-income markets, they are a near-term, reasonably possible hypothetical change that illustrates the potential impact of such events. These tests do not measure the change in value that could result from non-parallel shifts in the yield curve. As a result, the actual change in fair value from a 100 basis point change in interest rates could be different from that indicated by these calculations.

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			As of September 30, 2020
															Hypothetical Change in Fair Value(2)
($ in millions)			Notional						Fair Value(1)						+ 100 Basis Points Yield Curve Shift						- 100 Basis Points Yield Curve Shift
Continuing operations:(6)
Financial assets with interest rate risk:
Fixed maturity securities, including securities pledged			$	—					$	46,171					$	(3,265)					$	2,672
Commercial mortgage and other loans			—						7,266						(367)						215
Notes Receivable(3)			—						257						(34)						41
Financial liabilities with interest rate risk:
Investment contracts:
Funding agreements without fixed maturities and deferred annuities(4)			—						45,223						(3,657)						4,657
Funding agreements with fixed maturities			—						795						(23)						11
Supplementary contracts and immediate annuities			—						876						(43)						51
Derivatives:
Interest rate contracts			20,402						188						41						(9)
Long-term debt			—						3,491						(228)						261
Embedded derivatives on reinsurance			—						143						77						(84)
Guaranteed benefit derivatives(4):
Other(5)			—						177						(102)						96

(1)    Separate account assets and liabilities which are interest sensitive are not included herein as any interest rate risk is borne by the holder of separate account.

(2)    (Decreases) in assets or (decreases) in liabilities are presented in parentheses. Increases in assets or increases in liabilities are presented without parentheses.

(3)    Reflects SLD's surplus notes as of September 30, 2020 and is included included in Other investments on the Condensed Consolidated Balance Sheets.

(4)    Certain amounts included in Funding agreements without fixed maturities and deferred annuities section are also reflected within the Guaranteed benefit derivatives section of the tables above.

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

(6)    Includes amounts related to businesses to be exited via reinsurance associated with the Individual Life Transaction.

Market Risk Related to Equity Market Prices

We assess equity risk exposures for financial assets, liabilities and derivatives using hypothetical test scenarios that assume either an increase or decrease of 10% in all equity market benchmark levels. The following table summarizes the net estimated potential change in fair value from an instantaneous increase and decrease in all equity market benchmark levels of 10% as of September 30, 2020. In calculating these amounts, we exclude gains and losses on separate account equity securities related to products for which the investment risk is borne primarily by the separate account contract holder rather than by us. While the test scenarios are for illustrative purposes only and do not reflect our expectations regarding the future performance of equity markets, they are near-term, reasonably possible hypothetical changes that illustrate the potential impact of such events. These scenarios consider only the direct effect on fair value of declines in equity benchmark market levels and not changes in asset-based fees recognized as revenue, changes in our estimates of total gross profits used as a basis for amortizing DAC/VOBA, other intangibles and other costs, or changes in any other assumptions such as market volatility or mortality, utilization or persistency rates in variable contracts that could also impact the fair value of our living benefits features. In addition, these scenarios do not reflect the effect of basis risk, such as potential differences in the performance of the investment funds underlying the variable annuity products relative to the equity market benchmark we use as a basis for developing our hedging strategy. The impact of basis risk could result in larger differences between the change in fair value of the equity-based derivatives and the related living benefit features, in comparison to the hypothetical test scenarios.

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			As of September 30, 2020
															Hypothetical Change in Fair Value(1)
($ in millions)			Notional						Fair Value						+ 10% Equity Shock						-10% Equity Shock
Continuing operations:(3)
Financial assets with equity market risk:
Equity securities, available-for-sale			$	—					$	371					$	23					$	(23)
Limited liability partnerships/corporations			—						1,383						85						(85)
Derivatives:
Equity futures and total return swaps			262						4						1						(1)
Equity options			143						3						1						(1)
Financial liabilities with equity market risk:
Guaranteed benefit derivatives:
Other(2)			—						177						(2)						3

(1) (Decreases) in assets or (decreases) in liabilities are presented in parentheses. Increases in assets or increases in liabilities are presented without parentheses.

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

(3)    Includes amounts related to businesses to be exited via reinsurance associated with the Individual Life Transaction.

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

During the third quarter of 2020, we implemented a new accounting and financial reporting platform, including a new general ledger system. This new system will standardize processes, improve the efficiency of our operations and further strengthen internal controls over financial reporting. As such, we modified our internal controls over financial reporting to align with the new processes and system.

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PART II.     OTHER INFORMATION

Item 1.        Legal Proceedings

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

Item 1A.    Risk Factors

For a discussion of the Company’s potential risks and uncertainties, see Risk Factors in Part I, Item IA. of our Annual Report on Form 10-K for the year ended December 31, 2019 (the "Annual Report on Form 10-K") (File No. 001-35897) filed with the SEC and Management’s Discussion and Analysis of Financial Condition and Results of Operations-Trends and Uncertainties in Part I, Item 2. of this Quarterly Report on Form 10-Q.

The COVID-19 pandemic has had, and is likely to continue to have, adverse effects on our financial condition and results of operations.

Many businesses around the world, including ours, have been significantly affected by the global outbreak of COVID-19 disease. Since March 2020, when the disease first became widespread, global financial markets have experienced periods of extreme volatility. These market events, which include a significant drop in equity prices in the early spring followed by a recovery in the second and third quarters, declines in U.S. Treasury yields and distress in certain credit market sectors such as energy, real estate, transportation and retail, adversely affected our first, second and third quarter 2020 financial results and are likely to continue to have adverse effects on our business for the foreseeable future. These future adverse effects, which could be material, may include:

•Increased impairments or credit rating downgrades within our general account portfolio, which could consume our excess capital and reduce the dividend capacity of our insurance subsidiaries. Although we currently believe that we have adequate liquidity for the foreseeable future, if our asset portfolio were to experience a material amount of impairments or ratings downgrades, we might require additional statutory capital within our insurance subsidiaries and would need to consider additional steps to preserve liquidity at our holding company, including reducing or eliminating planned share buybacks or our common stock dividend;

•Reductions in the carrying value of our deferred tax assets as a result of a need to establish an additional valuation allowance against such assets, which would decrease GAAP equity and increase our leverage ratios, and could also affect the statutory surplus of our insurance subsidiaries if there is a reduction in the statutory carrying value of our deferred tax asset admitted for statutory purposes;

•Declines in fee revenues from lower AUM/AUA and plan participant counts, as a result of increased unemployment and furloughs, lower asset prices, suspensions or reductions in participant plan deposits or employer matching contributions, and an increase in plan loans and withdrawals;

• Reduced premium revenues in our Employee Benefits business due to increased unemployment;

•Decreased spread-based revenues due to lower interest rates;

•Material harm to the financial condition of our reinsurers, which would increase the probability of default on reinsurance recoveries;

•A decline in fund management carried interests and performance fees in our Investment Management business; and

•Reduced sales levels due to decreased RFP activity or delayed decision making by our clients or prospective clients.

In addition, underwriting income in our Employee Benefits and Individual Life businesses (with respect to the latter, until we close our divestment of that business) will be adversely affected to the extent that mortality claims for individual or group life policies, or medical expense claims under voluntary benefit or stop loss policies, exceed the related reserves and deductibles. Accordingly, to the extent that COVID-19 leads to a material increase in overall mortality or medical expense among our insured population, our financial results will be adversely affected, and those effects could be material.

We have also faced, and are likely to continue to face, disruption of our normal business operations, including the ability to interact with existing or potential clients. While many states have lifted their most severe restrictions requiring mandatory

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business shutdowns and stay-at-home orders, the resurgence and persistence of new infections in many U.S. states has slowed the reopening of the U.S. economy and some U.S. states have or are considering the reimposition of shutdowns or stay-at-home orders in an attempt to slow the spread of infections. Although our business has been deemed an essential service in most or all jurisdictions in which we operate, the vast majority of our employees have been working from home since March 2020. While our work from home arrangements have not created any significant problems, if such problems were to arise in the future, such that significant portions of our workforce are unable to work remotely in an effective manner, the impact of COVID-19 on our business could be exacerbated.

In addition, our business process and IT operations depend to a significant extent on outsourcing providers and a joint venture based in India, which has reimposed lockdowns in several cities across India as they experience resurgences of COVID-19 cases. Although our joint venture operations did not experience any notable disruptions from a transition to work-from-home, several of our outsourcing providers have experienced difficulty in moving their employee bases to a work-from-home arrangement. While these difficulties have not yet materially interfered with our business operations, there is a risk of future disruptions, particularly if the Indian lockdowns persist for an extended period of time.

The transition to work-from-home also increases vulnerabilities to cybersecurity threats and other fraudulent activities. Although we are remaining vigilant on this issue and have not experienced any significant incidents, we are expending a substantial amount of resources to defend against potential attacks, which may occur while in this state of heightened risk.

The extent to which COVID-19 will continue to negatively affect our business operations, potentially in a material manner, will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic, macroeconomic conditions, the continued effectiveness of our business continuity plan (including work-from-home arrangements and staffing in operational facilities), the direct and indirect impact of the pandemic on our employees, clients, counterparties and service providers, as well as other market participants, and actions taken by governmental authorities and other third parties in response to the pandemic.

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

Purchases of Equity Securities by the Issuer

The following table summarizes Voya Financial, Inc.’s repurchases of its common stock for the three months ended September 30, 2020:

Period						Total Number of Shares Purchased(1)						Average Price Paid Per Share						Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs						Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(2)
																								(in millions)
July 1, 2020 - July 31,, 2020						—						$	—					—						$	284
August 1, 2020- August 31, 2020						27,360						51.17						—						284
September 1, 2020 - September 30, 2020						2,955						52.07						—						284
Total						30,315						$	51.25					—						N/A

(1) In connection with the exercise or vesting of equity-based compensation awards, employees may remit to Voya Financial, Inc., or Voya Financial, Inc. may withhold into treasury stock, shares of common stock in respect to tax withholding obligations and option exercise cost associated with such exercise or vesting. For the three months ended September 30, 2020, there was an increase of 30,315 Treasury shares in connection with such withholding activities.

(2) On October 31, 2019, the Board of Directors provided share repurchase authorization, increasing the aggregate of the Company's stock authorized for repurchase by $800. The additional share repurchase authorization expires on December 31, 2020 (unless extended) and does not obligate the Company to purchase any shares. The authorization for the share repurchase program may be terminated, increased or decreased by the Board of Directors at any time.

Item 5.         Other Information

On November 1, 2019, we amended and restated the terms of our Second Amended and Restated Revolving Credit Agreement (the "Second Amended and Restated Credit Agreement"), dated as of May 6, 2016 (and filed as Exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 001-35897) filed on May 6, 2016), by entering into a Third Amended and Restated Revolving Credit Agreement (the "Third Amended and Restated Credit Agreement") with a syndicate of banks. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Third Amended and Restated Credit Agreement.

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The Third Amended and Restated Credit Agreement modifies several of the terms of the Second Amended and Restated Credit Agreement including extending the term of the agreement to November 1, 2024, and reducing the total borrowing capacity to $500 million.

Availability

Under the terms of the Third Amended and Restated Credit Agreement, an aggregate amount of up to $500 million is available for revolving loan borrowings and issuances of letters of credit ("LOCs").

Repayment

The Third Amended and Restated Credit Agreement matures on November 1, 2024, and any direct borrowing amount still outstanding will be due in full immediately on that date and any letter of credit obligation still outstanding as of that date must be cash collateralized until no such obligations are outstanding. The Third Amended and Restated Credit Agreement may be pre-paid at any time in whole or in part without premium or penalty, subject to breakage fees in the event of a prepayment of a Eurodollar Rate Loan other than at the end of the applicable interest period. In most circumstances, amounts repaid or prepaid (whether voluntary or otherwise) may be re-borrowed, subject to certain conditions precedent to borrowing. The unutilized portion of any commitment under the Third Amended and Restated Credit Agreement may be reduced or terminated by us at any time without penalty. As of November 6, 2019, there were no amounts outstanding as revolving credit borrowings or for LOCs outstanding under the Third Amended and Restated Credit Agreement.

Interest Rates and Fees

Each Eurodollar Rate Loan under the Third Amended and Restated Credit Agreement bears interest on the outstanding principal amount owing at a rate equal to LIBOR (which cannot be less than zero) plus the applicable rate described below. A Base Rate Loan under the Third Amended and Restated Credit Agreement bears interest at a rate per annum equal to the highest of (a) the Federal Funds Rate plus 0.50%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America, N.A. as its "prime rate" and (c) the Eurodollar Rate plus 1.00% plus, in each case, the applicable rate described below. The Company pays a fee based on the face value of letters of credit using the applicable rates below.

In addition, the Company pays a commitment fee calculated by multiplying the applicable rate listed in the table below by the unused capacity available under the Third Amended and Restated Credit Agreement.

The applicable rate means a percentage per annum to be determined in accordance with the following Debt Rating based pricing grid.

Debt Ratings S&P/Moody's						Commitment Fee						Letters of Credit						Eurodollar Rate +						Base Rate +
≥ A / A2						0.090		%				0.750		%				0.875		%				—		%
A- / A3						0.110		%				0.875		%				1.000		%				—		%
BBB+ / Baa1						0.125		%				1.000		%				1.125		%				0.125		%
BBB / Baa2						0.175		%				1.250		%				1.375		%				0.375		%
≤ BBB- / Baa3						0.225		%				1.500		%				1.625		%				0.625		%

Guarantee

Voya Holdings Inc., the Company's wholly-owned subsidiary, has provided a guarantee to the lenders in connection with the obligations owed under the Third Amended and Restated Credit Agreement.

Covenants

The Third Amended and Restated Credit Agreement contains negative covenants customarily included in a loan agreement of this type, including restrictions on (i) the granting of liens, (ii) the incurrence of indebtedness and (iii) the sale of assets. In addition, the Third Amended and Restated Credit Agreement also contains certain financial covenants, including a requirement to maintain a minimum "net worth" (as defined the Third Amended and Restated Credit Agreement) of $6.15 billion, with adjustments for equity issuances after June 30, 2019.

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The Third Amended and Restated Credit Agreement requires us to deliver our financial statements to the Administrative Agent for distribution to each lender (if they are not posted on EDGAR), and to observe (and cause certain of our subsidiaries to observe) certain affirmative covenants subject to materiality and other customary and agreed exceptions. These affirmative covenants include (i) payment of obligations, (ii) preservation of corporate existence and maintenance of assets (including intellectual property rights and relevant licenses), (iii) maintenance of properties, (iv) maintenance of insurance, (v) maintenance of books and records, (vi) inspection rights and (vii) use of proceeds.

Events of Default

The Third Amended and Restated Credit Agreement sets out certain customary events of default (subject to applicable grace periods) including for, but not limited to, non-payment, breach of certain covenants, breach of representations or warranties, cross default of certain other Indebtedness and the occurrence of an ERISA Event. A Change of Control (as defined in the Third Amended and Restated Credit Agreement) will constitute an event of default.

Item 6.        Exhibits

See Exhibit Index on page 164 hereof.

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Voya Financial, Inc.

Exhibit Index
Exhibit No.						Description of Exhibit
31.1+						Rule 13a-14(a)/15d-14(a) Certification of Rodney O. Martin, Jr. Chief Executive Officer (included as Exhibit 31.1 to Form 10-Q)
31.2+						Rule 13a-14(a)/15d-14(a) Certification of Michael S. Smith, Chief Financial Officer (included as Exhibit 31.2 to Form 10-Q)
32.1+						Section 1350 Certification of Rodney O. Martin, Jr. Chief Executive Officer (included as Exhibit 32.1 to Form 10-Q)
32.2+						Section 1350 Certification of Michael S. Smith, Chief Financial Officer (included as Exhibit 32.2 to Form 10-Q)
101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH+						Inline XBRL Taxonomy Extension Schema
101.CAL+						Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF+						Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB+						Inline XBRL Taxonomy Extension Label Linkbase
101.PRE+						Inline XBRL Taxonomy Extension Presentation Linkbase
104+						Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101).

+ Filed herewith.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

			By: /s/			Michael S. Smith
						Michael S. Smith
						Executive Vice President and
						Chief Financial Officer
						(Duly Authorized Officer and Principal Financial Officer)

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