Voya Financial, Inc. - Quarter Report: 2021 March (Form 10-Q)

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 March 31, 2021


☐			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 May 3, 2021, 121,231,241 shares of Common Stock, 0.01 par value, were outstanding.


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Voya Financial, Inc.

Form 10-Q for the period ended March 31, 2021

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	10
	Notes to Condensed Consolidated Financial Statements:	11
	1. Business, Basis of Presentation and Significant Accounting Policies	11
	2. Discontinued Operations	13
	3. Investments (excluding Consolidated Investment Entities)	18
	4. Derivative Financial Instruments	31
	5. Fair Value Measurements (excluding Consolidated Investment Entities)	36
	6. Deferred Policy Acquisition Costs and Value of Business Acquired	45
	7. Share-based Incentive Compensation Plans	45
	8. Shareholders' Equity	45
	9. Earnings per Common Share	47
	10. Accumulated Other Comprehensive Income (Loss)	48
	11. Income Taxes	50
	12. Financing Agreements	50
	13. Commitments and Contingencies	51
	14. Consolidated and Nonconsolidated Investment Entities	53
	15. Restructuring	58
	16. Segments	59




Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	63

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	97

Item 4.	Controls and Procedures	99

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	99

Item 1A.	Risk Factors	100

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	100



Item 6.	Exhibits	100

Exhibit Index		101

Signature		102


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Table of Contents

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

NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including "Risk Factors," and "Management’s Discussion and Analysis of Financial Condition and Results of Operations," contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements relating to future developments in our business or expectations for our future financial performance and any statement not involving a historical fact. Forward-looking statements use words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," and other words and terms of similar meaning in connection with a discussion of future operating or financial performance. Actual results, performance or events may differ materially from those projected in any forward-looking statement due to, among other things, (i) general economic conditions, particularly economic conditions in our core markets, (ii) performance of financial markets, including emerging markets, (iii) the frequency and severity of insured loss events, (iv) mortality and morbidity levels, (v) persistency and lapse levels, (vi) interest rates, (vii) currency exchange rates, (viii) general competitive factors, (ix) changes in laws and regulations, (x) changes in the policies of governments and/or regulatory authorities, (xi) our ability to successfully manage the separation of the Individual Life business that we sold to Resolution Life US on January 4, 2021, including the transition services on the expected timeline and economic terms. Factors that may cause actual results to differ from those in any forward-looking statement also include those described under "Risk Factors," "Management’s Discussion and Analysis of Financial Condition and Results of Operations-Trends and Uncertainties" in the Annual Report on Form 10-K for the year ended December 31, 2020 (File No. 001-35897) (the "Annual Report on Form 10-K").

The risks included here are not exhaustive. Current reports on Form 8-K and other documents filed with the Securities and Exchange Commission ("SEC") include additional factors that could affect our businesses and financial performance. Moreover, we operate in a rapidly changing and competitive environment. New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors.


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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Voya Financial, Inc.

Condensed Consolidated Balance Sheets

March 31, 2021 (Unaudited) and December 31, 2020

(In millions, except share and per share data)


	March 31, 2021		December 31, 2020

Assets:
Investments:
Fixed maturities, available-for-sale, at fair value (amortized cost of $30,507 as of 2021 and $37,531 as of 2020; allowance for credit losses of $18 as of 2021 and $26 as of 2020)	$	33,355	$	43,569
Fixed maturities, at fair value using the fair value option	2,690		3,011

Equity securities, at fair value (cost of $354 as of 2021 and $197 as of 2020)	393		242
Short-term investments	306		111
Mortgage loans on real estate	5,663		6,830
Less: Allowance for credit losses	58		89
Mortgage loans on real estate, net	5,605		6,741
Policy loans	424		718
Limited partnerships/corporations	1,487		1,476
Derivatives	205		215
Other investments	80		319
Securities pledged (amortized cost of $850 as of 2021 and $355 as of 2020)	949		449
Total investments	45,494		56,851
Cash and cash equivalents	1,170		1,502
Short-term investments under securities loan agreements, including collateral delivered	843		399
Accrued investment income	470		507
Premium receivable and reinsurance recoverable	13,867		3,575
Less: Allowance for credit losses on reinsurance recoverable	28		18
Premium receivable and reinsurance recoverable, net	13,839		3,557
Deferred policy acquisition costs and Value of business acquired	1,592		1,510

Current income taxes	15		—
Deferred income taxes	935		1,186

Other assets	2,769		983
Assets related to consolidated investment entities:
Limited partnerships/corporations, at fair value	1,724		1,724
Cash and cash equivalents	146		221
Corporate loans, at fair value using the fair value option	870		805
Other assets	24		18
Assets held in separate accounts	92,970		90,552
Assets held for sale	—		20,703
Total assets	$	162,861	$	180,518


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

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Voya Financial, Inc.

Condensed Consolidated Balance Sheets

March 31, 2021 (Unaudited) and December 31, 2020

(In millions, except share and per share data)


	March 31, 2021		December 31, 2020

Liabilities and Shareholders' Equity:
Future policy benefits	$	10,250	$	10,211
Contract owner account balances	42,536		42,414
Payables under securities loan and repurchase agreements, including collateral held	902		353
Short-term debt	1		1
Long-term debt	2,969		3,044

Derivatives	281		387
Pension and other postretirement provisions	333		361
Current income taxes	—		2

Other liabilities	2,172		1,933
Liabilities related to consolidated investment entities:
Collateralized loan obligations notes, at fair value using the fair value option	797		783
Other liabilities	651		684
Liabilities related to separate accounts	92,970		90,552
Liabilities held for sale	—		18,615
Total liabilities	153,862		169,340

Commitments and Contingencies (Note 13)

Shareholders' equity:
Preferred stock ($0.01 par value per share; $625 aggregate liquidation preference as of 2021 and 2020 respectively)	—		—
Common stock ($0.01 par value per share; 900,000,000 shares authorized; 145,372,932 and 143,342,468 shares issued as of 2021 and 2020, respectively; 121,221,645 and 124,237,363 shares outstanding as of 2021 and 2020, respectively)	2		2
Treasury stock (at cost; 24,151,287 and 19,105,105 shares as of 2021 and 2020, respectively)	(1,301)		(1,016)
Additional paid-in capital	11,177		11,183
Accumulated other comprehensive income (loss)	1,910		4,898
Retained earnings (deficit):

Unappropriated	(3,857)		(4,957)
Total Voya Financial, Inc. shareholders' equity	7,931		10,110
Noncontrolling interest	1,068		1,068
Total shareholders' equity	8,999		11,178
Total liabilities and shareholders' equity	$	162,861	$	180,518


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 Months Ended March 31, 2021 and 2020 (Unaudited)

(In millions, except per share data)


	Three Months Ended March 31,
		2021		2020

Revenues:
Net investment income		$	714	$	698
Fee income		458		505
Premiums		(4,987)		608
Net realized capital gains (losses):
Total impairments		—		(20)


Other net realized capital gains (losses)		1,742		(213)
Total net realized capital gains (losses)		1,742		(233)
Other revenue		110		92
Income (loss) related to consolidated investment entities:
Net investment income		6		15

Total revenues		(1,957)		1,685
Benefits and expenses:
Policyholder benefits		(4,434)		596
Interest credited to contract owner account balances		244		286
Operating expenses		602		640
Net amortization of Deferred policy acquisition costs and Value of business acquired		539		76
Interest expense		49		40
Operating expenses related to consolidated investment entities:
Interest expense		5		3

Total benefits and expenses		(2,995)		1,641
Income (loss) from continuing operations before income taxes		1,038		44
Income tax expense (benefit)		(48)		(6)
Income (loss) from continuing operations		1,086		50
Income (loss) from discontinued operations, net of tax		14		(130)
Net income (loss)		1,100		(80)
Less: Net income (loss) attributable to noncontrolling interest		—		6
Net income (loss) available to Voya Financial, Inc.		1,100		(86)
Less: Preferred stock dividends		14		14
Net income (loss) available to Voya Financial, Inc.'s common shareholders		1,086		(100)

Net income (loss) per common share:
Basic
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders		$	8.74	$	0.23
Income (loss) available to Voya Financial, Inc.'s common shareholders		$	8.85	$	(0.76)

Diluted
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders		$	8.19	$	0.22
Income (loss) available to Voya Financial, Inc.'s common shareholders		$	8.29	$	(0.73)


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 Months Ended March 31, 2021 and 2020 (Unaudited)

(In millions)


	Three Months Ended March 31,
		2021		2020

Net income (loss)		$	1,100	$	(80)
Other comprehensive income (loss), before tax:
Unrealized gains (losses) on securities		(3,494)		(1,884)
Impairments		4		—
Pension and other postretirement benefits liability		—		(1)
Other comprehensive income (loss), before tax		(3,490)		(1,885)
Income tax expense (benefit) related to items of other comprehensive income (loss)		(502)		(395)
Other comprehensive income (loss), after tax		(2,988)		(1,490)
Comprehensive income (loss)		(1,888)		(1,570)
Less: Comprehensive income (loss) attributable to noncontrolling interest		—		6
Comprehensive income (loss) attributable to Voya Financial, Inc.		$	(1,888)	$	(1,576)


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 March 31, 2021 (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, 2021	$	—	$	2	$	(1,016)	$	11,183	$	4,898	$	(4,957)	$	10,110	$	1,068	$	11,178









Comprehensive income (loss):
Net income (loss)	—		—		—		—		—		1,100		1,100		—		1,100
Reversal of Other Comprehensive Income (Loss) due to Individual Life Transaction	—		—		—		—		(913)		—		(913)		—		(913)
Other comprehensive income (loss), after tax	—		—		—		—		(2,075)		—		(2,075)		—		(2,075)
Total comprehensive income (loss)													(1,888)		—		(1,888)




Common stock issuance	—		—		—		2		—		—		2		—		2
Common stock acquired - Share repurchase	—		—		(235)		(20)		—		—		(255)		—		(255)
Dividends on preferred stock	—		—		—		(14)		—		—		(14)		—		(14)
Dividends on common stock	—		—		—		(20)		—		—		(20)		—		(20)
Share-based compensation	—		—		(50)		46		—		—		(4)		—		(4)

Balance as of March 31, 2021	$	—	$	2	$	(1,301)	11,177		$	1,910	$	(3,857)	$	7,931	$	1,068	$	8,999


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 March 31, 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	$	(4,718)	$	9,339	$	822	$	10,161






Adjustment for adoption of ASU 2016-13	—		—		—		—		—		(33)		(33)		—		(33)
Comprehensive income (loss):
Net income (loss)	—		—		—		—		—		(86)		(86)		6		(80)

Other comprehensive income (loss), after tax	—		—		—		—		(1,490)		—		(1,490)		—		(1,490)
Total comprehensive income (loss)													(1,576)		6		(1,570)




Common stock issuance	—		—		—		2		—		—		2		—		2
Common stock acquired - Share repurchase	—		—		(406)		40		—		—		(366)		—		(366)
Dividends on preferred stock	—		—		—		(14)		—		—		(14)		—		(14)
Dividends on common stock	—		—		—		(20)		—		—		(20)		—		(20)
Share-based compensation	—		—		(16)		40		—		—		24		—		24
Contributions from (Distributions to) noncontrolling interest, net	—		—		—		—		—		—		—		10		10
Balance as of March 31, 2020	$	—	$	2	$	(882)	$	11,232	$	1,841	$	(4,837)	$	7,356	$	838	$	8,194


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 Three Months Ended March 31, 2021 and 2020 (Unaudited)

(In millions)


	Three Months Ended March 31,
	2021		2020
			(As adjusted)
Cash Flows from Operating Activities:






















Net cash used in operating activities - continuing operations	$	(697)	$	(104)
Net cash (used in) provided by operating activities - discontinued operations	(239)		28
Net cash (used in) operating activities	(936)		(76)
Cash Flows from Investing Activities:
Proceeds from the sale, maturity, disposal or redemption of:
Fixed maturities	1,446		1,185
Equity securities	168		2
Mortgage loans on real estate	160		144
Limited partnerships/corporations	316		71

Acquisition of:
Fixed maturities	(1,889)		(1,537)
Equity securities	(247)		(1)
Mortgage loans on real estate	(184)		(234)
Limited partnerships/corporations	(77)		(112)

Short-term investments, net	(31)		(12)

Derivatives, net	(19)		174

Sales from consolidated investment entities	65		63
Purchases within consolidated investment entities	(155)		(206)
Collateral (delivered) received, net	105		(96)

Other, net	418		(11)
Net cash provided by (used in) investing activities - discontinued operations	594		(241)
Net cash provided by (used in) investing activities	670		(811)
Cash Flows from Financing Activities:
Deposits received for investment contracts	1,584		2,038
Maturities and withdrawals from investment contracts	(1,449)		(1,399)

Settlements on deposit contracts	(2)		(2)

Repayment of debt with maturities of more than three months	(85)		—


Borrowings of consolidated investment entities	17		122
Repayments of borrowings of consolidated investment entities	—		(176)
Contributions from (distributions to) participants in consolidated investment entities, net	—		348
Proceeds from issuance of common stock, net	2		2


Share-based compensation	(40)		(14)
Common stock acquired - Share repurchase	(255)		(366)
Dividends paid on common stock	(20)		(20)
Dividends paid on preferred stock	(14)		(14)
Principal payments for financing leases	(6)		(5)

Net cash provided by financing activities - discontinued operations	—		213
Net cash (used in) provided by financing activities	(268)		727
Net decrease in cash and cash equivalents	(534)		(160)
Cash and cash equivalents, beginning of period	1,922		1,472
Cash and cash equivalents, end of period	1,388		1,312
Less: Cash and cash equivalents of discontinued operations, end of period	218		279
Cash and cash equivalents of continuing operations, end of period	$	1,170	$	1,033


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 March 15, 2021, the Company announced several updates to our operating model and leadership team. In conjunction with those updates, the Retirement and Employee Benefits segments were renamed to Wealth Solutions and Health Solutions, respectively. The Company will continue to provide its principal products and services through three segments: Wealth Solutions, Investment Management and Health Solutions. 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.

On January 4, 2021, the Company completed a series of transactions pursuant to a Master Transaction Agreement (the “Resolution MTA”) entered into on December 18, 2019 with Resolution Life U.S. Holdings Inc., a Delaware corporation (“Resolution Life US”), pursuant to which Resolution Life US acquired all of the shares of the capital stock of Security Life of Denver Company ("SLD") and Security Life of Denver International Limited ("SLDI"), including the capital stock of several subsidiaries of SLD and SLDI. The Company will continue to hold an insignificant number of Individual Life, and non-Wealth Solutions annuities policies which together with the businesses sold through divestment or reinsurance will be referred to as "divested businesses".

Concurrently with the sale, SLD entered into reinsurance agreements with insurance subsidiaries of the Company. Pursuant to these agreements, the Company's subsidiaries reinsured 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 resulted in the disposition of substantially all of our life insurance and legacy non-Wealth Solutions annuity businesses and related assets.

On February 8, 2021, we entered into an agreement with Cetera Financial Group, Inc. (“Cetera”), one of the nation's largest networks of independently managed broker-dealers, pursuant to which Cetera will acquire the independent financial planning channel of VFA. In connection with this transaction, we expect to transfer approximately 900 independent financial professionals serving retail customers with approximately $40 billion in assets to Cetera, while retaining approximately 600 field and phone-based financial professionals who support our Wealth Solutions business. The transaction is expected to close in the second or third quarter of 2021. The closing is subject to certain conditions, including the receipt of required regulatory approvals.

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") and are unaudited. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. 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. Intercompany transactions and balances have been eliminated. See the Consolidated and Nonconsolidated Investment Entities Note to 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)

The accompanying Condensed Consolidated Financial Statements reflect adjustments (including normal, recurring adjustments) necessary to present fairly the financial position of the Company as of March 31, 2021, its results of operations, comprehensive income and changes in shareholders' equity for the three months ended March 31, 2021 and 2020, and its statements of cash flows for the three months ended March 31, 2021 and 2020, in conformity with U.S. GAAP. Interim results are not necessarily indicative of full year performance.

The December 31, 2020 Consolidated Balance Sheet is from the audited Consolidated Financial Statements included in the Company's Annual Report on Form 10-K, filed with the SEC. Therefore, these unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and related notes included in the Company's Annual Report on Form 10-K.

Adoption of New Pronouncements

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


Standard	Description of Requirements	Effective Date and Method of Adoption	Effect on the Financial Statements or Other Significant Matters
ASU 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 on a prospective basis, except for those provisions that required retrospective or modified retrospective method.	Adoption of the ASU did not have an impact on the Company's financial condition, results of operations, or cash flows.


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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 2020-04, 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. In January, 2021, the FASB issued ASU 2021-01 which clarified the scope of relief related to ASU 2020-04.	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 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.	In November, 2020, the FASB released ASU 2020-11, which deferred 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.

2. Discontinued Operations

As noted in the Business, Basis of Presentation and Significant Accounting Policies Note, on January 4, 2021, the Company sold several of its subsidiaries and the related Individual Life and fixed and variable annuities businesses within these subsidiaries to Resolution Life US pursuant to the Resolution MTA entered into on December 18, 2019.

The Individual Life Transaction

Sale of legal entities

The purchase price received by the Company at the closing was based on estimated amounts and is subject to a post-close true-up mechanism pursuant to which the purchase price will be adjusted based on SLD's adjusted book value as of 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)

This true-up is expected to happen in the second half of 2021. In addition to cash consideration, proceeds include an approximately $225 interest in RLGH and certain other affiliates of Resolution Life US, and $123 principal amount in surplus notes issued by SLD. In connection with the closing, the Company agreed to defer receipt of $100 in cash proceeds for a period of up to 42 months, subject to an adjustment mechanism based on certain financial contingencies affecting SLD over that period. In addition, in connection with the unwind of certain guarantee obligations affecting portions of SLD's business, in lieu of $60 of cash proceeds, the Company has received approximately $60 in additional preferred equity interests in Resolution Life US affiliates.

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, subject to the terms and conditions in the Resolution MTA. The limited guarantee terminated upon closing of the Individual Life Transaction on January 4, 2021.

The Company has determined that the entities disposed of met 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 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 for 2020 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.

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, 2020, the Company recorded an estimated loss on sale, net of tax of $1,466 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, 2020, less cost to sell and other adjustments in accordance with the Resolution MTA. In addition, Income (loss) from discontinued operations, net of tax, for the three months ended March 31, 2021 includes an estimated reduction on the loss on sale, net of tax of $14. The estimated loss on sale, net of tax as of March 31, 2021 of $1,452 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 estimated loss on sale is subject to a true-up mechanism that is expected to be completed in the second half of 2021 which may result in changes to the purchase price and may impact the final loss on sale related to the Individual Life Transaction which will result in changes to be recorded in the Company's Condensed Statement of Operations in future periods.

Furthermore, in connection with the close of the Individual Life Transaction, the Company reversed $913 of Additional other comprehensive income, net of tax that was previously recorded and related to the entities sold. As a result of the transaction, the Company incurred loss recognition of $523, which is inclusive $302 of DAC / VOBA write down and $221 of premium deficiency reserve. The DAC/VOBA write down and the premium deficiency reserve were recorded in Net amortization of DAC/VOBA and Policyholder benefits, respectively in the Condensed Consolidated Financial Statements for the three months ended March 31, 2021.


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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 December 31, 2020:



	December 31, 2020
Assets:
Investments:
Fixed maturities, available-for-sale, at fair value	$	13,317
Fixed maturities, at fair value using the fair value option	682


Mortgage loans on real estate, net of valuation allowance	1,242
Policy loans	999

Derivatives	443
Other investments(1)	368
Securities pledged	4
Total investments	17,055
Cash and cash equivalents	420
Short-term investments under securities loan agreements, including collateral delivered	2

Premium receivable and reinsurance recoverable, net	2,783
Deferred policy acquisition costs and Value of business acquired	289


Current income taxes	—
Deferred income taxes	(831)
Other assets(2)	826
Assets held in separate accounts	1,625
Write-down of businesses held for sale to fair value less cost to sell	(1,466)
Total assets held for sale	$	20,703

Liabilities:
Future policy benefits and contract owner account balances	$	15,675
Payables under securities loan and repurchase agreements, including collateral held	300
Derivatives	117
Notes payable	219


Other liabilities	679
Liabilities related to separate accounts	1,625
Total liabilities held for sale	$	18,615

(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 (closed on January 4, 2021) for the three months ended March 31, 2021 and 2020:


	Three Months Ended March 31,
	2021		2020
Revenues:
Net investment income	$	—	$	169
Fee income	—		174
Premiums	—		7
Total net realized capital gains (losses)	—		(26)
Other revenue	—		(2)
Total revenues	—		322
Benefits and expenses:
Interest credited and other benefits to contract owners/policyholders	—		238
Operating expenses	—		26
Net amortization of Deferred policy acquisition costs and Value of business acquired	—		12
Interest expense	—		2
Total benefits and expenses	—		278
Income (loss) from discontinued operations before income taxes	—		44
Income tax expense (benefit)	—		9
Adjustment to loss on sale, net of tax	14		(165)
Income (loss) from discontinued operations, net of tax	$	14	$	(130)

Reinsurance

Concurrently with the sale of the Company's Individual Life business, the Company's wholly owned subsidiaries 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 entered into four reinsurance agreements with SLD. Pursuant to these agreements, RLI and VRIAC ceded to SLD a 100% quota share, and RLNY ceded to SLD a 75% quota share, of their respective individual life insurance and annuities businesses. The reinsurance obligation with counterparty SLD are secured by collateralized assets held in a trust. Additionally, RLI entered into a reinsurance agreement, on a coinsurance basis with funds withheld, with a subsidiary of Resolution Life. RLI, RLNY, and VRIAC continue to be subsidiaries of the Company. The reinsurance transaction does not extinguish the Company’s primary liability to its policyholders. As a result of the reinsurance transactions on January 4, 2021, the Company reinsured $11.4 billion of policyholder liabilities under indemnity coinsurance and modified coinsurance arrangements. As of January 4, 2021, reinsurance recoverable associated with these transactions was $10.4 billion. The Company ceded $5.6 billion in premiums and $5.5 billion in policyholder benefits. The Company transferred invested assets with a fair market value of $10.8 billion and cash of $427 as consideration for the reinsurance arrangements. As a result of the transfer of invested assets the Company recognized $1.9 billion in pre-tax realized gains. The Company also recognized non-cash assets of $345 and $1.7 billion relating to the pre-tax net cost of reinsurance asset and deposit asset on January 4, 2021 as a result of entering into the reinsurance agreements.

Furthermore, at the close of the Individual Life Transaction on January 4, 2021, we have $1.3 billion of pre-tax deferred intangibles associated with the divested businesses. The deferred intangibles 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 established as a result of the Individual Life Transaction. The deferred intangibles are amortized as a charge to earnings over the life of the underlying policies. Additionally, for the portion of the reinsurance transactions that involve policies that do not meet risk transfer, a deposit asset was established in the amount of $1.7 billion on a pre-tax basis. This relates to liabilities related to Contract owner account balances that currently exist for the related underlying policies. The quarterly pre-tax impact


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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

of the amortization of the deferred intangibles was $24 and the amortization of the deposit asset is largely offset by the interest credited to policyholders. The amortization of the deferred intangibles and the deposit asset has been 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 and deposit asset to decline over time.

The reinsurance agreements along with the sale of the legal entities noted above resulted in the disposition of substantially all of the Company's life insurance and legacy non-wealth solutions annuity businesses. The revenues and net results of the Individual Life and Annuities businesses that were 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.

Information regarding the effect of reinsurance on the Consolidated Balance Sheets is as follows as of the periods indicated:


	March 31, 2021
	Direct		Assumed		Ceded		Total, Net of Reinsurance
Assets
Premiums receivable	$	165	$	11	$	(221)	$	(45)
Reinsurance recoverable, net of allowance for credit losses	—		—		13,884		13,884
Total	$	165	$	11	$	13,663	$	13,839

Liabilities
Future policy benefits and contract owner account balances	$	52,771	$	15	$	(13,884)	$	38,902
Liability for funds withheld under reinsurance agreements	218		—		—		218
Total	$	52,989	$	15	$	(13,884)	$	39,120

Information regarding the effect of reinsurance on the Consolidated Statement of Operations is as follows for the periods indicated:


	March 31,
	2021
Premiums:
Direct premiums	$	772
Reinsurance assumed	9
Reinsurance ceded	(5,768)
Net premiums	$	(4,987)

Fee income:
Gross fee income	$	458
Reinsurance ceded	—
Net fee income	$	458

Interest credited and other benefits to contract owners / policyholders:
Direct interest credited and other benefits to contract owners / policyholders	$	1,967
Reinsurance assumed	32
Reinsurance ceded(1)	(6,189)
Net interest credited and other benefits to contract owners / policyholders	$	(4,190)

(1) Includes $5,788 amounts paid to reinsurers in connection with the Company's UL contracts for the three months ended March 31, 2021.


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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 March 31, 2021:


	Amortized Cost		Gross Unrealized Capital Gains		Gross Unrealized Capital Losses		Embedded Derivatives(2)		Fair Value		Allowance for credit losses
Fixed maturities:
U.S. Treasuries	$	744	$	213	$	—	$	—	$	957	$	—
U.S. Government agencies and authorities	47		12		—		—		59		—
State, municipalities and political subdivisions	887		85		2		—		970		—
U.S. corporate public securities	10,378		1,403		108		—		11,673		—
U.S. corporate private securities	4,884		460		48		—		5,296		—
Foreign corporate public securities and foreign governments(1)	3,285		355		29		—		3,611		—
Foreign corporate private securities(1)	3,570		299		32		—		3,821		16




Residential mortgage-backed securities	4,694		180		21		15		4,868		—
Commercial mortgage-backed securities	3,555		165		26		—		3,694		—
Other asset-backed securities	2,025		33		11		—		2,045		2

Total fixed maturities, including securities pledged	34,069		3,205		277		15		36,994		18
Less: Securities pledged	850		169		70		—		949		—
Total fixed maturities	$	33,219	$	3,036	$	207	$	15	$	36,045	$	18

(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, 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	$	1,033	$	438	$	—	$	—	$	1,471	$	—
U.S. Government agencies and authorities	74		28		—		—		102		—
State, municipalities and political subdivisions	1,166		180		—		—		1,346		—
U.S. corporate public securities	13,366		3,028		7		—		16,387		—
U.S. corporate private securities	5,653		828		35		—		6,446		—
Foreign corporate public securities and foreign governments(1)	4,023		714		1		—		4,736		—
Foreign corporate private securities(1)	4,220		470		29		—		4,646		15




Residential mortgage-backed securities	5,370		255		17		20		5,626		2
Commercial mortgage-backed securities	3,882		290		40		—		4,131		1
Other asset-backed securities	2,110		46		10		—		2,138		8

Total fixed maturities, including securities pledged	40,897		6,277		139		20		47,029		26
Less: Securities pledged	355		95		1		—		449		—
Total fixed maturities	$	40,542	$	6,182	$	138	$	20	$	46,580	$	26

(1) Primarily U.S. dollar denominated.

The amortized cost and fair value of fixed maturities, including securities pledged, as of March 31, 2021, 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	$	705	$	717
After one year through five years	4,291		4,568
After five years through ten years	6,161		6,752
After ten years	12,638		14,350
Mortgage-backed securities	8,249		8,562
Other asset-backed securities	2,025		2,045
Fixed maturities, including securities pledged	$	34,069	$	36,994

As of March 31, 2021 and December 31, 2020, 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.


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


	Amortized Cost		Gross Unrealized Capital Gains		Gross Unrealized Capital Losses		Fair Value
March 31, 2021
Communications	$	1,253	$	215	$	5	$	1,463
Financial	3,593		415		37		3,971
Industrial and other companies	9,639		985		86		10,538
Energy	1,986		275		27		2,234
Utilities	3,918		477		20		4,375
Transportation	1,217		99		35		1,281
Total	$	21,606	$	2,466	$	210	$	23,862

December 31, 2020
Communications	$	1,629	$	425	$	1	$	2,053
Financial	4,419		811		3		5,227
Industrial and other companies	11,670		2,088		15		13,743
Energy	2,594		474		28		3,040
Utilities	4,963		944		1		5,906
Transportation	1,331		196		23		1,504
Total	$	26,606	$	4,938	$	71	$	31,473

The Company invests in various categories of collateralized mortgage obligations (CMOs), including CMOs that are not agency-backed, that are subject to different degrees of risk from changes in interest rates and defaults. The principal risks inherent in holding CMOs are prepayment and extension risks related to significant decreases and increases in interest rates resulting in the prepayment of principal from the underlying mortgages, either earlier or later than originally anticipated. As of March 31, 2021 and December 31, 2020, approximately 44.2% and 44.5%, respectively, of the Company's CMO holdings, were invested in the above mentioned types of CMOs such as interest-only or principal-only strips, that are subject to more prepayment and extension risk than traditional CMOs.

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

Repurchase Agreements

As of March 31, 2021 and December 31, 2020, the Company did not have any securities pledged in dollar rolls or reverse repurchase agreements. As of March 31, 2021, the carrying value of securities pledged and obligation to repay loans related to repurchase agreement transaction was $80 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, 2020, the carrying value of securities pledged and obligation to repay loans related to repurchase agreement transactions were $82. Securities pledged related to repurchase agreements are comprised of other asset-backed securities.


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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Securities Pledged

The Company engages in securities lending whereby the initial collateral is required at a rate of 103% 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 March 31, 2021 and December 31, 2020, the fair value of loaned securities was $655 and $197, respectively, and is included in Securities pledged on the Condensed Consolidated Balance Sheets.

If cash is received as collateral, the lending agent retains the cash collateral and invests it in short-term liquid assets on behalf of the Company. As of March 31, 2021 and December 31, 2020, cash collateral retained by the lending agent and invested in short-term liquid assets on the Company's behalf was $614 and $106, respectively, and is recorded in Short-term investments under securities loan agreements, including collateral delivered on the Condensed Consolidated Balance Sheets. As of March 31, 2021 and December 31, 2020, liabilities to return collateral of $614 and $106, respectively, are included in Payables under securities loan and repurchase agreements, including collateral held on the Condensed Consolidated Balance Sheets.

The Company accepts non-cash collateral in the form of securities. The securities retained as collateral by the lending agent may not be sold or re-pledged, except in the event of default, and are not reflected on the Company’s Condensed Consolidated Balance Sheets. This collateral generally consists of U.S. Treasury, U.S. Government agency securities and MBS pools. As of March 31, 2021 and December 31, 2020, the fair value of securities retained as collateral by the lending agent on the Company’s behalf was $60 and $96, respectively.

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


	March 31, 2021		December 31, 2020
U.S. Treasuries	$	32	$	90
U.S. Government agencies and authorities	3		3
U.S. corporate public securities	366		76
Equity Securities	5		—

Common Stock	68		—
Foreign corporate public securities and foreign governments	200		33
Payables under securities loan agreements	$	674	$	202

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:


	Three Months Ended March 31, 2021
	Residential mortgage-backed securities		Commercial mortgage-backed securities		Foreign corporate private securities		Other asset-backed securities		Total
Balance as of January 1	$	2	$	1	$	15	$	8	$	26
Credit losses on securities for which credit losses were not previously recorded	—		—		—		—		—
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	(2)		(1)		1		(6)		(8)
Write-offs	—		—		—		—		—
Recoveries of amounts previously written-off	—		—		—		—		—
Balance as of March 31	$	—	$	—	$	16	$	2	$	18


	Year Ended December 31, 2020
	Residential mortgage-backed securities		Commercial mortgage-backed securities		Foreign corporate private 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		15		8		26
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 December 31	$	2	$	1	$	15	$	8	$	26


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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 March 31, 2021:


	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
U.S. Treasuries	$	21	$	—	6		$	—	$	—	—	$	21	$	—	6

State, municipalities and political subdivisions	58		2		14		—		—		—	58		2		14
U.S. corporate public securities	1,777		103		455		37		5		5	1,814		108		460
U.S. corporate private securities	520		23		42		167		25		10	687		48		52
Foreign corporate public securities and foreign governments	531		27		99		8		2		3	539		29		102
Foreign corporate private securities	142		31		13		53		1		6	195		32		19
Residential mortgage-backed	544		10		151		365		11		101	909		21		252
Commercial mortgage-backed	405		6		66		445		20		64	850		26		130
Other asset-backed	211		4		63		198		7		79	409		11		142
Total	$	4,209	$	206	909		$	1,273	$	71	268	$	5,482	$	277	1,177

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)


	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
U.S. Treasuries	$	12	$	—	2		$	—	$	—	—	$	12	$	—	2

State, municipalities and political subdivisions	7		—		2		—		—		—	7		—		2
U.S. corporate public securities	241		5		163		23		2		4	264		7		167
U.S. corporate private securities	419		12		30		112		23		8	531		35		38
Foreign corporate public securities and foreign governments	45		—		19		9		1		2	54		1		21
Foreign corporate private securities	238		29		19		6		—		1	244		29		20
Residential mortgage-backed	658		12		150		147		5		75	805		17		225
Commercial mortgage-backed	844		39		127		36		1		7	880		40		134
Other asset-backed	261		2		61		376		8		110	637		10		171
Total	$	2,725	$	99	573		$	709	$	40	207	$	3,434	$	139	780

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 March 31, 2021. 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.

Gross unrealized capital losses on fixed maturities, including securities pledged, increased $138 from $139 to $277 for the three months ended March 31, 2021. The increase in gross unrealized capital losses was primarily due to non-credit related market factors.

At March 31, 2021, $22 of the total $277 of gross unrealized losses were from 8 available-for-sale fixed maturity securities with an unrealized loss position of 20% or more of amortized cost for 12 months or greater.


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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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.

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 March 31,
	2021				2020
	Impairment			No. of Securities	Impairment			No. of Securities


U.S. corporate public securities	—			—	19			2



Residential mortgage-backed	—		*	7	1			8
Commercial mortgage-backed	—		*	1	—		*	1




Total	$	—	*	8	$	20		11
Credit Impairments	$	—			$	—
Intent Impairments	$	—			$	20
(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.

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 months ended March 31, 2021, the Company had one new commercial mortgage loan troubled debt restructuring with a pre and post modification carrying value of $5. For the three months ended March 31, 2021, the Company did not have any new private placement troubled debt restructuring. For the three months ended March 31, 2020, the Company did not have any new commercial mortgage loan or new private placement troubled debt restructuring.

For the three months ended March 31, 2021 and March 31, 2020, 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


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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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.

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 March 31, 2021 and December 31, 2020, respectively.


	As of March 31, 2021
	Loan-to-Value Ratios
Year of Origination	0% - 50%		>50% - 60%		>60% - 70%		>70% - 80%		>80% and above		Total
2021	$	42	$	98	$	39	$	—	$	—	$	179
2020	174		238		69		—		—		481
2019	243		227		93		—		—		563
2018	158		74		48		—		—		280
2017	598		326		4		—		1		929
2016	479		268		1		—		—		748
2015 and prior	2,011		450		22		—		—		2,483
Total	$	3,705	$	1,681	$	276	$	—	$	1	$	5,663


	As of December 31, 2020
	Loan-to-Value Ratios
Year of Origination	0% - 50%		>50% - 60%		>60% - 70%		>70% - 80%		>80% and above		Total
2020	$	202	$	251	$	39	$	—	$	—	$	492
2019	327		230		125		—		—		682
2018	211		158		73		—		—		442
2017	645		427		5		—		—		1,077
2016	627		313		2		—		—		942
2015 and prior	2,525		648		22		—		—		3,195
Total	$	4,537	$	2,027	$	266	$	—	$	—	$	6,830


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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 DSC ratio as of the dates indicated. The information is updated as of March 31, 2021 and December 31, 2020, respectively.


	As of March 31, 2021
	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
2021	$	123	$	56	$	—	$	—	$	—	$	179
2020	388		82		11		—		—		481
2019	382		85		40		56		—		563
2018	113		63		73		31		—		280
2017	509		234		118		68		—		929
2016	629		89		26		4		—		748
2015 and prior	2,115		216		99		53		—		2,483
Total	$	4,259	$	825	$	367	$	212	$	—	$	5,663


	As of December 31, 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	$	356	$	116	$	20	$	—	$	—	$	492
2019	455		108		51		68		—		682
2018	205		90		92		55		—		442
2017	630		243		133		71		—		1,077
2016	841		58		40		3		—		942
2015 and prior	2,714		283		121		77		—		3,195
Total	$	5,201	$	898	$	457	$	274	$	—	$	6,830


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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 U.S. region as of the dates indicated. The information is updated as of March 31, 2021 and December 31, 2020, respectively.


	As of March 31, 2021
	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
2021	$	67	$	6	$	7	$	11	$	28	$	39	$	—	$	—	$	21	$	179
2020	99		186		40		38		39		39		2		14		24		481
2019	69		145		14		151		65		56		15		14		34		563
2018	66		96		61		17		22		12		—		6		—		280
2017	131		95		384		142		77		57		6		37		—		929
2016	199		142		177		42		65		89		10		18		6		748
2015 and prior	639		535		432		181		239		218		63		139		37		2,483
Total	$	1,270	$	1,205	$	1,115	$	582	$	535	$	510	$	96	$	228	$	122	$	5,663


	As of December 31, 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	$	107	$	187	$	41	$	39	$	38	$	39	$	2	$	15	$	24	$	492
2019	98		194		21		169		69		61		18		13		39		682
2018	105		141		70		37		59		15		—		15		—		442
2017	172		125		417		155		102		62		6		38		—		1,077
2016	274		174		185		46		103		114		13		27		6		942
2015 and prior	890		684		521		237		299		290		70		160		44		3,195
Total	$	1,646	$	1,505	$	1,255	$	683	$	670	$	581	$	109	$	268	$	113	$	6,830

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 March 31, 2021 and December 31, 2020, respectively.


	As of March 31, 2021
	Property Type
Year of Origination	Retail		Industrial		Apartments		Office		Hotel/Motel		Other		Mixed Use		Total
2021	$	7	$	21	$	68	$	83	$	—	$	—	$	—	$	179
2020	$	58	$	91	$	166	$	166	$	—	$	—	$	—	$	481
2019	47		98		309		82		27		—		—		563
2018	46		91		104		16		4		19		—		280
2017	112		458		197		159		3		—		—		929
2016	130		258		187		156		8		5		4		748
2015 and prior	942		389		473		320		96		212		51		2,483
Total	$	1,342	$	1,406	$	1,504	$	982	$	138	$	236	$	55	$	5,663


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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, 2020
	Property Type
Year of Origination	Retail		Industrial		Apartments		Office		Hotel/Motel		Other		Mixed Use		Total
2020	$	59	$	94	$	165	$	174	$	—	$	—	$	—	$	492
2019	55		111		384		95		37		—		—		682
2018	77		109		191		25		5		35		—		442
2017	138		505		252		178		4		—		—		1,077
2016	175		301		255		187		10		9		5		942
2015 and prior	1,276		484		570		426		117		268		54		3,195
Total	$	1,780	$	1,604	$	1,817	$	1,085	$	173	$	312	$	59	$	6,830

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


	March 31, 2021		December 31, 2020
Allowance for credit losses, beginning of period	$	89	$	16	(1)
Credit losses on mortgage loans for which credit losses were not previously recorded	1		7

Change in allowance due to transfer of loans from Voya Reinsurance portfolios to Resolution	(14)		—
Increase (decrease) on mortgage loans with allowance recorded in previous period	(18)		69
Provision for expected credit losses	58		92
Write-offs	—		(3)
Recoveries of amounts previously written-off	—		—
Allowance for credit losses, end of period	$	58	$	89

(1) On January 1, 2020, as a result of implementing ASU 2016-13 Measurement of Credit Losses of Financial Instruments, the company recorded a transition adjustment on a continuing basis for Allowance for credit losses on mortgage loans on real estate of $15.

While still heavily impacted by COVID-19, the Commercial Mortgage Loan portfolio allowance decreased by $31 during the first quarter. We continue to observe distress in the hotel sector.

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.

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


	March 31, 2021		December 31, 2020
Delinquency:
Current	$	5,658	$	6,825
30-59 days past due	—		—
60-89 days past due	—		—
Greater than 90 days past due	5		5
Total	$	5,663	$	6,830


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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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 March 31, 2021, the company had one commercial mortgage loan in non-accrual status. As of December 31, 2020, the Company had one commercial mortgage loan in non-accrual status. There was no interest income recognized on loans in non-accrual status for the three months ended March 31, 2021 and year ended December 31, 2020.

As of March 31, 2021 and December 31, 2020, 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 March 31, 2021.

Net Investment Income

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


	Three Months Ended March 31,
		2021		2020
Fixed maturities		$	515	$	571
Equity securities		5		3
Mortgage loans on real estate		61		74
Policy loans		6		11
Short-term investments and cash equivalents		1		2
Other		143		55
Gross investment income		731		716
Less: investment expenses		17		18
Net investment income		$	714	$	698

As of March 31, 2021 and December 31, 2020, the Company had $2 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 March 31,
	2021		2020
Fixed maturities, available-for-sale, including securities pledged	$	1,768	$	(36)
Fixed maturities, at fair value option	(248)		33
Equity securities	6		(10)
Derivatives	23		(30)
Embedded derivatives - fixed maturities	(5)		8
Guaranteed benefit derivatives	57		(193)
Mortgage Loans	138		(5)
Other investments	3		—
Net realized capital gains (losses)	$	1,742	$	(233)

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 March 31,
		2021		2020
Proceeds on sales		$	9,631	$	467
Gross gains		1,697		11
Gross losses		2		20

4. Derivative Financial Instruments

The Company primarily enters into the following types of derivatives:

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

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

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.

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


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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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.

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

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


	March 31, 2021						December 31, 2020
	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	$	22	$	—	$	—	$	22	$	—	$	—
Foreign exchange contracts	683		4		38		756		4		43


Derivatives: Non-qualifying for hedge accounting(1)
Interest rate contracts	18,943		189		237		19,837		195		328
Foreign exchange contracts	180		1		2		122		—		3
Equity contracts	255		11		3		412		16		12
Credit contracts	207		—		1		223		—		1
Embedded derivatives and Managed custody guarantees:
Within fixed maturity investments	—		15		—		N/A		20		—
Within products	—		—		41		N/A		—		95
Within reinsurance agreements	—		—		192		N/A		—		163
Managed custody guarantees	—		—		—		N/A		—		4
Total			$	220	$	514			$	235	$	649

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

N/A - Not applicable

Based on the notional amounts, a substantial portion of the Company’s derivative positions was not designated or did not qualify for hedge accounting as part of a hedging relationship as of March 31, 2021 and December 31, 2020. 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 are presented in the tables below as of the dates indicated:


	March 31, 2021
	Notional Amount		Asset Fair Value		Liability Fair Value
Credit contracts	$	207	$	—	$	1
Equity contracts	202		11		3
Foreign exchange contracts	863		5		40
Interest rate contracts	16,259		189		237
			205		281
Counterparty netting(1)			(197)		(197)
Cash collateral netting(1)			(6)		(32)
Securities collateral netting(1)			—		(34)
Net receivables/payables			$	2	$	18

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


	December 31, 2020
	Notional Amount		Asset Fair Value		Liability Fair Value
Credit contracts	$	223	$	—	$	1
Equity contracts	306		16		12
Foreign exchange contracts	878		4		46
Interest rate contracts	17,331		195		328
			215		387
Counterparty netting(1)			(207)		(207)
Cash collateral netting(1)			(2)		(140)
Securities collateral netting(1)			—		(35)
Net receivables/payables			$	6	$	5

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

Collateral

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

As of March 31, 2021, the Company held $3 and pledged $32 of net cash collateral related to OTC derivative contracts and cleared derivative contracts, respectively. As of December 31, 2020, the Company held $5 and $140 of net cash collateral related to OTC derivative contracts and cleared derivative contracts, respectively. In addition, as of March 31, 2021, the Company delivered $214 of securities and held $1 of securities as collateral. As of December 31, 2020, the Company delivered $170 of securities and held no securities as collateral.


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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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


	Three Months Ended March 31,
	2021				2020
	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 capital gains/(losses)		Net investment income		Net investment income and Other net realized capital gains/(losses)
Amount of Gain or (Loss) Recognized in Other Comprehensive Income	$	(1)	$	6	$	2	$	92
Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income	—		(3)		—		3

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


	Three Months Ended March 31,
	2021				2020
	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	$	714	$	1,742	$	698	$	(213)
Derivatives: Qualifying for hedge accounting
Cash flow hedges:
Foreign exchange contracts:
Gain (loss) reclassified from accumulated other comprehensive income into income	2		(5)		3		—


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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 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 March 31,
		2021		2020
Derivatives: Non-qualifying for hedge accounting
Interest rate contracts	Other net realized capital gains (losses)	$	25	$	(37)
Foreign exchange contracts	Other net realized capital gains (losses)	—		7
Equity contracts	Other net realized capital gains (losses)	3		—
Credit contracts	Other net realized capital gains (losses)	—		2
Embedded derivatives and Managed custody guarantees:
Within fixed maturity investments	Other net realized capital gains (losses)	(5)		8
Within products	Other net realized capital gains (losses)	35		(167)
Within reinsurance agreements	Policyholder benefits	52		65
Managed custody guarantees	Other net realized capital gains (losses)	4		(26)
Total		$	114	$	(148)


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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 measured at fair value on a recurring basis as of March 31, 2021:


	Level 1			Level 2			Level 3			Total
Assets:
Fixed maturities, including securities pledged:
U.S. Treasuries	$	719		$	238		$	—		$	957
U.S. Government agencies and authorities	—			59			—			59
State, municipalities and political subdivisions	—			970			—			970
U.S. corporate public securities	—			11,613			60			11,673
U.S. corporate private securities	—			3,712			1,584			5,296
Foreign corporate public securities and foreign governments(1)	—			3,604			7			3,611
Foreign corporate private securities(1)	—			3,441			380			3,821
Residential mortgage-backed securities	—			4,821			47			4,868
Commercial mortgage-backed securities	—			3,694			—			3,694
Other asset-backed securities	—			1,976			69			2,045
Total fixed maturities, including securities pledged	719			34,128			2,147			36,994
Equity securities	136			—			257			393
Derivatives:
Interest rate contracts	1			188			—			189
Foreign exchange contracts	—			5			—			5
Equity contracts	—			11			—			11

Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements	2,006			313			—			2,319
Assets held in separate accounts	86,878			5,855			237			92,970
Total assets	$	89,740		$	40,500		$	2,641		$	132,881
Percentage of Level to total	68		%	30		%	2		%	100		%
Liabilities:
Derivatives:
Guaranteed benefit derivatives(2)	—			—			41			41





Other derivatives:
Interest rate contracts	18			219			—			237
Foreign exchange contracts	—			40			—			40
Equity contracts	—			3			—			3
Credit contracts	—			1			—			1
Embedded derivative on reinsurance	—			104			88			192
Total liabilities	$	18		$	367		$	129		$	514

(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 measured at fair value on a recurring basis as of December 31, 2020:


	Level 1			Level 2			Level 3			Total
Assets:
Fixed maturities, including securities pledged:
U.S. Treasuries	$	1,134		$	337		$	—		$	1,471
U.S. Government agencies and authorities	—			102			—			102
State, municipalities and political subdivisions	—			1,346			—			1,346
U.S. corporate public securities	—			16,294			93			16,387
U.S. corporate private securities	—			4,546			1,900			6,446
Foreign corporate public securities and foreign governments(1)	—			4,736			—			4,736
Foreign corporate private securities(1)	—			4,189			457			4,646
Residential mortgage-backed securities	—			5,583			43			5,626
Commercial mortgage-backed securities	—			4,131			—			4,131
Other asset-backed securities	—			2,077			61			2,138
Total fixed maturities, including securities pledged	1,134			43,341			2,554			47,029
Equity securities	70			—			172			242
Derivatives:
Interest rate contracts	7			140			48			195
Foreign exchange contracts	—			4			—			4
Equity contracts	—			15			1			16

Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements	1,903			109			—			2,012
Assets held in separate accounts	84,329			6,001			222			90,552
Total assets	$	87,443		$	49,610		$	2,997		$	140,050
Percentage of Level to total	63		%	35		%	2		%	100		%
Liabilities:
Derivatives:
Guaranteed benefit derivatives(2)	—			—			99			99





Other derivatives:
Interest rate contracts	—			280			48			328
Foreign exchange contracts	—			46			—			46
Equity contracts	—			12			—			12
Credit contracts	—			1			—			1
Embedded derivative on reinsurance	—			163			—			163
Total liabilities	$	—		$	502		$	147		$	649

(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)

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.

RMBS, CMBS and ABS: Fair value is determined using third-party commercial pricing services, with the primary inputs being credit spreads off benchmark yields, prepayment speed assumptions, current and forecasted loss severity, debt service coverage ratios, collateral type, payment priority within tranche and the vintage of the loans underlying the security.


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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Generally, the Company does not obtain more than one vendor price from pricing services per instrument. The Company uses a hierarchy process in which prices are obtained from a primary vendor and, if that vendor is unable to provide the price, the next vendor in the hierarchy is contacted until a price is obtained or it is determined that a price cannot be obtained from a commercial pricing service. When a price cannot be obtained from a commercial pricing service, independent broker quotes are solicited. Securities priced using independent broker quotes are classified as Level 3.

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, London Interbank Offered Rates ("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.

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


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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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. The remaining derivative instruments are classified as Level 3 and are estimated using the income approach. The fair value is calculated by estimating future cash flows for a certain discrete projection period, estimating the terminal value, if appropriate, and discounting these amounts to present value at a rate of return that considers the relative risk of the cash flows and the time value of money.

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 and transfers in and out of Level 3 for the period indicated:


	Three Months Ended March 31, 2021
	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 March 31		Change In Unrealized Gains (Losses) Included in Earnings(3)		Change In Unrealized Gains (Losses) Included in OCI(3)
			Net Income		OCI
Fixed maturities, including securities pledged:

U.S. corporate public securities	$	93	$	3	$	(5)	$	1	$	—	$	(32)	$	—	$	—	$	—	$	60	$	—	$	(5)
U.S. corporate private securities	1,900		50		(96)		57		—		(327)		(48)		76		(28)		1,584		(1)		(94)
Foreign corporate public securities and foreign governments(1)	—		—		—		7		—		—		—		—		—		7		—		—
Foreign corporate private securities(1)	457		7		(10)		—		—		(47)		(27)		—		—		380		1		(10)
Residential mortgage-backed securities	43		(3)		—		16		—		(7)		—		—		(2)		47		(3)		—
Commercial mortgage-backed securities	—		—		—		—		—		—		—		—		—		—		—		—
Other asset-backed securities	61		—		(2)		7		—		(4)		(15)		22		—		69		—		(2)
Total fixed maturities, including securities pledged	2,554		57		(113)		88		—		(417)		(90)		98		(30)		2,147		(3)		(111)




Equity securities	172		10		—		224		—		(140)		(9)		—		—		257		10		—
Derivatives:





Guaranteed benefit derivatives(2)(5)	(99)		57		—		—		—		—		1		—		—		(41)		—		—
Other derivatives, net	1		—		—		—		—		—		(1)		—		—		—		(1)		—

Embedded derivatives on reinsurance	—		1		—		—		(89)		—		—		—		—		(88)		—		—
Assets held in separate accounts(4)	222		1		—		33		—		(1)		—		—		(18)		237		—		—

(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 March 31 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.


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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 and transfers in and out of Level 3 for the period indicated:


	Three Months Ended March 31, 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 March 31		Change In Unrealized Gains (Losses) Included in Earnings(3)		Change In Unrealized Gains (Losses) Included in OCI(3)
			Net Income		OCI
Fixed maturities, including securities pledged:

U.S. corporate public securities	$	74	$	—	$	—	$	—	$	—	$	—	$	(3)	$	—	$	(5)	$	66	$	—	$	—
U.S. corporate private securities	1,457		1		(74)		46		—		(3)		(82)		—		(54)		1,291		—		(74)
Foreign corporate public securities and foreign governments(1)	—		—		—		4		—		—		—		—		—		4		—		—
Foreign corporate private securities(1)	328		(3)		(51)		3		—		(4)		—		10		(6)		277		—		(51)
Residential mortgage-backed securities	23		(2)		—		17		—		—		—		—		(8)		30		(2)		—

Other asset-backed securities	78		—		—		10		—		—		(1)		—		—		87		—		—
Total fixed maturities, including securities pledged	1,960		(4)		(125)		80		—		(7)		(86)		10		(73)		1,755		(2)		(125)




Equity securities, available-for-sale	128		(9)		—		—		—		—		—		—		—		119		(9)		—
Derivatives:





Guaranteed benefit derivatives (2)(5)	(60)		(193)		—		—		—		—		—		—		—		(253)		—		—


Assets held in separate accounts(4)	116		(3)		—		47		—		(1)		—		—		(18)		141		—		—

(1) Primarily U.S. dollar denominated.

(3) For financial instruments still held as of March 31, amounts are included in Net investment income and Total net realized capital gains (losses) in the Condensed Consolidated Statements of Operations. Unrealized gains (losses) on securities in the Condensed Consolidated Statements of Comprehensive Income.

(5) 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)

For the three months ended March 31, 2021 and 2020, the transfers in and out of Level 3 for fixed maturities were due to the variation in inputs relied upon for valuation each quarter. Securities that are primarily valued using independent broker quotes when prices are not available from one of the commercial pricing services are reflected as transfers into Level 3. When securities are valued using more widely available information, the securities are transferred out of Level 3 and into Level 1 or 2, as appropriate.

Significant Unobservable Inputs

The Company's Level 3 fair value measurements of its fixed maturities, equity securities and equity and credit derivative contracts are primarily based on broker quotes for which the quantitative detail of the unobservable inputs is neither provided nor reasonably corroborated, thus negating the ability to perform a sensitivity analysis. The Company performs a review of broker quotes by performing a monthly price variance comparison and back tests broker quotes to recent trade prices.

Other Financial Instruments

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

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

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


	March 31, 2021				December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Fixed maturities, including securities pledged	$	36,994	$	36,994	$	47,029	$	47,029
Equity securities	393		393		242		242
Mortgage loans on real estate	5,663		6,044		6,830		7,316
Policy loans	424		424		718		718

Cash, cash equivalents, short-term investments and short-term investments under securities loan agreements	2,319		2,319		2,012		2,012
Derivatives	205		205		215		215

Deposit assets(4)	1,555		1,648		—		—
Other investments	109		111		285		368
Assets held in separate accounts	92,970		92,970		90,552		90,552
Liabilities:
Investment contract liabilities:
Funding agreements without fixed maturities and deferred annuities(1)	$	35,430	$	42,338	$	35,545	$	45,576
Funding agreements with fixed maturities	1,199		1,201		796		795
Supplementary contracts, immediate annuities and other	886		871		912		800
Derivatives:
Guaranteed benefit derivatives(2)	41		41		99		99





Other derivatives	281		281		387		387
Short-term debt	1		1		1		1
Long-term debt	2,969		3,391		3,044		3,043
Deposit liabilities(3)	1,831		2,034		—		—
Embedded derivative on reinsurance	192		192		163		163

(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.

(3) Included in Other liabilities on the Condensed Consolidated Balance Sheets.

(4) Included in Other assets on the Condensed Consolidated Balance Sheets.

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
Notes receivable			Level 2
Deposit assets			Level 3
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
Deposit liabilities			Level 3
Notes Payable			Level 2

6. Deferred Policy Acquisition Costs and Value of Business Acquired

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


	2021
	DAC		VOBA			Total
Balance as of January 1, 2021	$	1,440	$	70		$	1,510
Impact of ASU 2016-13	—		—			—
Deferrals of commissions and expenses	23		2			25
Amortization:
Amortization, excluding unlocking (2)	(418)		(133)			(551)
Unlocking(1)	(17)		(9)			(26)
Interest accrued	29		9		(2)	38
Net amortization included in Condensed Consolidated Statements of Operations	(406)		(133)			(539)
Change due to unrealized capital gains/(losses) on available-for-sale securities	264		332			596
Balance as of March 31, 2021	$	1,321	$	271		$	1,592

	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	26		—			26
Amortization:
Amortization, excluding unlocking	(74)		(22)			(96)
Unlocking(1)	(12)		(13)			(25)
Interest accrued	31		14		(2)	45
Net amortization included in Condensed Consolidated Statements of Operations	(55)		(21)			(76)
Change due to unrealized capital gains/(losses) on available-for-sale securities	226		198			424
Balance as of March 31, 2020	$	1,962	$	641		$	2,603

(1) Includes the impacts of annual review of assumptions which typically occurs in the third quarter; and retrospective and prospective unlocking.

(2) During 2021, the Company recognized loss recognition of $301 and $1 for DAC and VOBA, respectively. There was no loss recognition during 2020.

(2) Interest accrued at the following rates for VOBA: 3.5% to 7.2% during 2021 and 3.5% and 7.4% during 2020.

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 March 31, 2021, common stock reserved and available for issuance under the 2013 Omnibus Plan, the 2014 Omnibus Plan and the 2019 Omnibus Plan was 347,663, 1,883,295 and 10,211,724 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").

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 March 31,
		2021		2020
Restricted Stock Unit (RSU) awards		$	18	$	18
Performance Stock Unit (PSU) awards		19		18
Stock options		—		2

Total share-based compensation expense		37		38
Income tax benefit		11		19
After-tax share-based compensation expense		$	26	$	19

Awards Outstanding

The following table summarizes RSU and PSU awards activity under the Omnibus Plans and the Director Plan for the periods 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, 2021	1.5		$	55.86		2.0		$	55.48
Adjustment for PSU performance factor	—		—			0.3		53.22
Granted	0.8		56.59			0.7		49.88
Vested	(1.0)		53.05			(0.9)		53.27
Forfeited	—	*	58.74			—	*	58.30
Outstanding as of March 31, 2021	1.3		$	57.10		2.1		$	54.07

* 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, 2021	2.6	$	42.29

Granted	—	—
Exercised	(0.2)	38.12
Forfeited	—	—
Outstanding as of March 31, 2021	2.4	$	42.71

Vested, exercisable, as of March 31, 2021	1.7	$	40.81

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, 2020	140.7	8.4	132.3
Common shares issued	0.1	—	0.1
Common shares acquired - share repurchase	—	10.2	(10.2)
Share-based compensation	2.5	0.5	2.0

Balance, December 31, 2020	143.3	19.1	124.2
Common shares issued	—	—	—
Common shares acquired - share repurchase	—	4.2	(4.2)
Share-based compensation	2.0	0.8	1.2
Balance, March 31, 2021	145.3	24.1	121.2

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


	Three Months Ended March 31,
		2021		2020
Dividends declared per share of Common Stock		$	0.165	$	0.15

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 January 28, 2021, the Board of Directors provided its most recent share repurchase authorization, increasing the aggregate amount of the Company's common stock authorized for repurchase by $1 billion. The share repurchase authorization expires on March 31, 2022 (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 three months ended March 31, 2021:



Execution Date	Payment		Initial Shares Delivered	Closing Date	Additional Shares Delivered	Total Shares Repurchased
February 11, 2021	$	250	3,617,291	(1)	(1)	(1)


December 28, 2020	$	150	2,066,472	January 26, 2021	509,909	2,576,381

(1) This arrangement is scheduled to terminate no later than the end of the second quarter of 2021, at which time the Company will settle any positive or negative share balances based on the daily volume-weighted average price of the Company's common stock.

During the three months ended March 31, 2021, the Company repurchased 98,508 shares of the Company's common stock in open market repurchases for an aggregate purchase price of $5.

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 March 29, 2021, the Company paid a quarterly dividend of $0.165 per share on its common stock. As a consequence, the exercise price of the warrants to purchase shares of common stock was adjusted to $47.84 per share of common stock and the number of shares of common stock for which each warrant is exercisable has been adjusted to 1.002715059. As of March 31, 2021, no warrants have been exercised.

Preferred Stock

As of March 31, 2021 and December 31, 2020, there were 100,000,000 shares of preferred stock authorized. Preferred stock issued and outstanding are as follows:


	March 31, 2021		December 31, 2020
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 March 31,	Per Share		Aggregate		Per Share		Aggregate
2021	$	30.625	$	10	$	13.375	$	4
2020	$	30.625	$	10	$	13.375	$	4

As of March 31, 2021, 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 March 31,
(in millions, except for per share data)	2021		2020
Earnings
Net income (loss) available to common shareholders:
Income (loss) from continuing operations	$	1,086	$	50
Less: Preferred stock dividends	14		14
Less: Net income (loss) attributable to noncontrolling interest	—		6
Income (loss) from continuing operations available to common shareholders	1,072		30
Income (loss) from discontinued operations, net of tax	14		(130)
Net income (loss) available to common shareholders	$	1,086	$	(100)

Weighted average common shares outstanding
Basic	122.7		130.9
Dilutive Effects(1):
Warrants	5.4		2.9
RSU awards	1.1		1.2
PSU awards	1.1		1.8
Stock Options	0.6		0.6
Diluted	130.9		137.4

Basic(2)
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders	$	8.74	$	0.23
Income (loss) from discontinued operations, net of taxes available to Voya Financial, Inc.'s common shareholders	$	0.11	$	(0.99)
Income (loss) available to Voya Financial, Inc.'s common shareholders	$	8.85	$	(0.76)
Diluted(1)
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders	$	8.19	$	0.22
Income (loss) from discontinued operations, net of taxes available to Voya Financial, Inc.'s common shareholders	$	0.10	$	(0.94)
Income (loss) available to Voya Financial, Inc.'s common shareholders	$	8.29	$	(0.73)

(1) For the three months ended March 31, 2021, weighted average shares used for calculating earnings per share excludes the impact of forward contracts related to the share repurchase agreement entered into on February 11, 2021 as the inclusion of these instruments would be antidilutive to the earnings per share calculation. For more information on the share repurchase agreement, see the Shareholders' Equity Note to these Consolidated Financial Statements.

(2) 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:


	March 31,
	2021		2020
Fixed maturities, net of impairment	$	2,928	$	2,819

Derivatives(1)	62		235
DAC/VOBA adjustment on available-for-sale securities	(728)		(906)
Premium deficiency reserve adjustment	(15)		(146)
Sales inducements and other intangibles adjustment on available-for-sale securities	5		(127)
Other	5		—
Unrealized capital gains (losses), before tax	2,257		1,875
Deferred income tax asset (liability)	(351)		(40)
Net unrealized capital gains (losses)	1,906		1,835
Pension and other postretirement benefits liability, net of tax	4		6
AOCI	$	1,910	$	1,841

(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 March 31, 2021, the portion of the AOCI that is expected to be reclassified into earnings within the next 12 months is $20.


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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 March 31, 2021
	Before-Tax Amount			Income Tax		After-Tax Amount
Available-for-sale securities:
Fixed maturities	$	(3,929)		$	594	$	(3,335)

Other	2			—		2
Impairments	4			(1)		3
Adjustments for amounts recognized in Net realized capital gains (losses) in the Condensed Consolidated Statements of Operations	(1,760)			370		(1,390)
DAC/VOBA	1,343		(1)	(282)		1,061
Premium deficiency reserve adjustment	446			(94)		352
Sales inducements and other intangibles	419			(88)		331
Change in unrealized gains (losses) on available-for-sale securities	(3,475)			499		(2,976)

Derivatives:
Derivatives	(9)		(2)	2		(7)
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	(15)			3		(12)

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)	$	(3,490)		$	502	$	(2,988)

(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 March 31, 2020
	Before-Tax Amount			Income Tax		After-Tax Amount
Available-for-sale securities:
Fixed maturities	$	(2,756)		$	578	$	(2,178)



Adjustments for amounts recognized in Net realized capital gains (losses) in the Condensed Consolidated Statements of Operations	29			(6)		23
DAC/VOBA	592		(1)	(124)		468
Premium deficiency reserve adjustment	103			(22)		81
Sales inducements and other intangibles	58			(12)		46
Change in unrealized gains (losses) on available-for-sale securities	(1,974)			414		(1,560)

Derivatives:
Derivatives	96		(2)	(20)		76
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	90			(19)		71

Pension and other postretirement benefits liability:
Amortization of prior service cost recognized in Operating expenses in the Condensed Consolidated Statements of Operations	(1)			—		(1)
Change in pension and other postretirement benefits liability	(1)			—		(1)
Change in Accumulated other comprehensive income (loss)	$	(1,885)		$	395	$	(1,490)

(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 months ended March 31, 2021 was (4.6)%. The effective tax rate differed from the statutory rate of 21% primarily due to the effect of the release of a stranded tax benefit in Other Comprehensive Income due to the Individual Life Transaction and the effect of the dividends received deduction ("DRD").

The Company's effective tax rate for the three months ended March 31, 2020 was (13.6)%. The effective tax rate differed from the statutory rate of 21% primarily due to the effect of the DRD, nondeductible expenses, and tax credits.

Tax Regulatory Matters

For the tax years 2019 through 2021, the Company participated in the Internal Revenue Service ("IRS") Compliance Assurance Process ("CAP"), which is a continuous audit program provided by the IRS. For the 2019 and 2020 tax years, the Company was

in the Compliance Maintenance Bridge ("Bridge") phase of CAP. In the Bridge phase, the IRS did not conduct any review or provide any letters of assurance for those tax years.

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 March 31, 2021 and December 31, 2020:


	Issuer	Maturity	March 31, 2021		December 31, 2020



3.125% Senior Notes, due 2024 (2)(3)	Voya Financial, Inc.	07/15/2024	$	375	$	398
3.65% Senior Notes, due 2026 (2)(3)	Voya Financial, Inc.	06/15/2026	444		497
5.7% Senior Notes, due 2043 (2)(3)	Voya Financial, Inc.	07/15/2043	395		395
4.8% Senior Notes, due 2046 (2)(3)	Voya Financial, Inc.	06/15/2046	297		297
4.7% Fixed-to-Floating Rate Junior Subordinated Notes, due 2048	Voya Financial, Inc.	01/23/2048	345		345
5.65% Fixed-to-Floating Rate Junior Subordinated Notes, due 2053	Voya Financial, Inc.	05/15/2053	739		739
7.25% Voya Holdings Inc. debentures, due 2023(1)	Voya Holdings, Inc.	08/15/2023	139		139
7.63% Voya Holdings Inc. debentures, due 2026(1)	Voya Holdings, Inc.	08/15/2026	139		138
6.97% Voya Holdings Inc. debentures, due 2036(1)	Voya Holdings, Inc.	08/15/2036	79		79
8.42% Equitable of Iowa Companies Capital Trust II Notes, due 2027	Equitable of Iowa Capital Trust II	04/01/2027	14		14


1.00% Windsor Property Loan	Voya Retirement Insurance and Annuity Company	06/14/2027	4		4


Subtotal			2,970		3,045
Less: Current portion of long-term debt			1		1
Total			$	2,969	$	3,044

(1) Guaranteed by ING Group.

(2) Interest is paid semi-annually in arrears.

(3) Guaranteed by Voya Holdings.

As of March 31, 2021, the Company was in compliance with its debt covenants.

Aetna Notes

As of March 31, 2021, the outstanding principal amount of the Aetna Notes was $358, which is guaranteed by ING Group. As of March 31, 2021, 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 Notes

During the three months ended March 31, 2021, the Company repurchased $23 and $53 par value of its 3.125% Senior Notes, due 2024 and 3.65% Senior Notes, due 2026, respectively, for $25 and $60, respectively, on the open market, resulting in loss on debt extinguishment of $10, which is included in Interest expense on the Condensed Consolidated Statements of Operations.

Senior Unsecured Credit Facility Agreement

As of March 31, 2021, 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 March 31, 2021, 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.

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 March 31, 2021, the Company had off-balance sheet commitments to acquire mortgage loans of $63 and purchase limited partnerships and private placement investments of $879, of which $229 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:


	March 31, 2021		December 31, 2020
Fixed maturity collateral pledged to FHLB (1)	$	1,566	$	1,386
FHLB restricted stock(2)	68		54
Other fixed maturities-state deposits	47		47
Cash and cash equivalents	16		15
Securities pledged(3)	949		449
Total restricted assets	$	2,646	$	1,951

(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 $655 and $197 as of March 31, 2021 and December 31, 2020, respectively. In addition, as of March 31, 2021 and December 31, 2020, the Company delivered securities as collateral of $214 and $170 and repurchase agreements of $80 and $82, 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 March 31, 2021 and December 31, 2020, the Company had $1,201 and $795, respectively, in non-putable funding agreements, which are included in Contract owner account balances on the Condensed Consolidated Balance Sheets. As of March 31, 2021 and December 31, 2020, assets with a market value of approximately $1,566 and $1,386, respectively, collateralized the FHLB funding agreements. Assets pledged to the FHLB are included in Fixed maturities, available-for-sale, at fair value on the Condensed Consolidated Balance Sheets.

Litigation, Regulatory Matters and Contingencies

Litigation, regulatory and other loss contingencies arise in connection with the Company's activities as a diversified financial services firm. The Company is a defendant in a number of litigation matters arising from the conduct of its business, both in the ordinary course and otherwise. In some of these matters, claimants seek to recover very large or indeterminate amounts, including compensatory, punitive, treble and exemplary damages. Modern pleading practice in the U.S. permits considerable variation in the assertion of monetary damages and other relief. Claimants are not always required to specify the monetary damages they seek or they may be required only to state an amount sufficient to meet a court's jurisdictional requirements.


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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. 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 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 March 31, 2021, 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 $25.

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 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.


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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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

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

As of March 31, 2021, approximately $89 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 and Nonconsolidated Investment Entities

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. Refer to the Condensed Consolidated Balance Sheets for the assets and liabilities of the Company's consolidated investment entities.

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 $247 and $233 as of March 31, 2021 and December 31, 2020, respectively. If the Company were to liquidate, the assets held by consolidated investment entities would not be available to the general creditors of the Company as a result of the liquidation.

Consolidated VIEs and VOEs

Collateral Loan Obligations Entities ("CLOs")

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

In return for providing collateral management services, the Company earns investment management fees and contingent performance fees. In addition to earning fee income, the Company often holds an investment in certain of the CLOs it manages, generally within the unrated and most subordinated tranche of each CLO. The fee income earned and investments held are included in the Company's ongoing consolidation assessment for each CLO. The Company was the primary beneficiary of 5 and 3 CLOs as of March 31, 2021 and December 31, 2020, respectively.

Limited Partnerships ("LPs")

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 March 31, 2021 and December 31, 2020.


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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Registered Investment Companies

The Company did not consolidate any sponsored investment funds accounted for as VOEs as of March 31, 2021. The Company deconsolidated one sponsored investment fund accounted for as a VOE as of December 31, 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.

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 within the Fair Value Measurements (excluding Consolidated Investment Entities) Note to these Condensed Consolidated Financial Statements.

As discussed in more detail below, the Company utilizes valuations obtained from third-party commercial pricing services, brokers and investment sponsors or third-party administrators that supply NAV (or its equivalent) per share used as a practical expedient. The valuations obtained from brokers and third-party commercial pricing services are non-binding. These valuations are reviewed on a monthly or quarterly basis depending on the entity and its underlying investments. Procedures include, but are not limited to, a review of underlying fund investor reports, review of top and worst performing funds requiring further scrutiny, review of variance from prior periods and review of variance from benchmarks, where applicable. In addition, the Company considers both macro and fund specific events that may impact the latest NAV supplied and determines if further adjustments of value should be made. Such changes, if any, are subject to senior management review.

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

Cash and Cash Equivalents

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

CLOs

Corporate loans: Corporate loan investments, which comprise the majority of consolidated CLO portfolio collateral, are senior secured corporate loans maturing at various dates between 2021 and 2029, paying interest at LIBOR, EURIBOR or PRIME plus a spread of up to 10.0%. As of March 31, 2021 and December 31, 2020, the unpaid principal balance exceeded the fair value of the corporate loans by approximately $6 and $20, respectively. Less than 1.0% of the collateral assets were in default as of March 31, 2021 and December 31, 2020.

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


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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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 or EURIBOR plus a pre-defined spread, which varies from 0.5% for the more senior tranches to 8.5% for the more subordinated tranches. CLO notes mature in 2026, 2031 and 2034, and have a weighted average maturity of 10 years as of March 31, 2021. 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.

•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.


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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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 March 31, 2021 and December 31, 2020, certain private equity funds maintained term loans and revolving lines of credit of $1,098 and $647, respectively. The term loans mature in three to five years, and the revolving lines of credit are eligible for renewal every three years; all loans bear interest at LIBOR/EURIBOR plus 150 - 215 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 March 31, 2021 and December 31, 2020, outstanding borrowings amount to $605 and $491, respectively. The borrowings are reflected in Liabilities related to consolidated investment entities - other liabilities on the Company's Condensed Consolidated Balance Sheets. The borrowings are carried at an amount equal to the unpaid principal balance.

The following table summarizes the fair value hierarchy levels of consolidated investment entities as of March 31, 2021:


	Level 1		Level 2		Level 3		NAV		Total
Assets

Cash and cash equivalents	$	146	$	—	$	—	$	—	$	146
Corporate loans, at fair value using the fair value option	—		870		—		—		870
Limited partnerships/corporations, at fair value	—		—		—		1,724		1,724




Total assets, at fair value	$	146	$	870	$	—	$	1,724	$	2,740
Liabilities

CLO notes, at fair value using the fair value option	$	—	$	797	$	—	$	—	$	797
Total liabilities, at fair value	$	—	$	797	$	—	$	—	$	797


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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 December 31, 2020:


	Level 1		Level 2		Level 3		NAV		Total
Assets

Cash and cash equivalents	$	221	$	—	$	—	$	—	$	221
Corporate loans, at fair value using the fair value option	—		805		—		—		805
Limited partnerships/corporations, at fair value	—		—		—		1,724		1,724




Total assets, at fair value	$	221	$	805	$	—	$	1,724	$	2,750
Liabilities

CLO notes, at fair value using the fair value option	$	—	$	783	$	—	$	—	$	783
Total liabilities, at fair value	$	—	$	783	$	—	$	—	$	783

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 months ended March 31, 2021 and 2020, there were no transfers in or out of Level 3 or transfers between Level 1 and Level 2.

Deconsolidation of Certain Investment Entities

The Company had no deconsolidations during the three months ended March 31, 2021 and 2020.

Nonconsolidated VIEs

The Company also holds variable interest in certain CLOs and LPs that are not consolidated as it has been determined that the Company is not the primary beneficiary.

CLOs

As of March 31, 2021 and December 31, 2020, the Company held $403 and $405 ownership interests, respectively, in unconsolidated CLOs, which also represents the Company's maximum exposure to loss.

LPs

As of March 31, 2021 and December 31, 2020, the Company held $1,487 and $1,476 ownership interests, respectively, in unconsolidated limited partnerships, which also represents the Company's maximum exposure to loss.

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 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


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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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

Pursuant to the Company executing the Resolution MTA and the Individual Life Transaction, the Company sold 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, which is an insurance holding company newly formed by Resolution Life Group Holdings, L.P. (“RLGH”), a Bermuda-based limited partnership. The Company also entered into an agreement with Cetera on February 8, 2021, pursuant to which Cetera will acquire the independent financial planning channel of VFA. Additionally, the Company transferred or ceased usage of a substantial number of administrative systems and will undertake restructuring efforts to reduce stranded expenses associated with its Individual Life business and independent financial planning channel as well as its corporate and shared services functions. The Company anticipates incurring additional restructuring expenses directly related to these dispositions beyond the first quarter of 2021, of $100 - $175 in addition to the $78 incurred during 2020 and $11 incurred for the three months ended March 31, 2021. The prior restructuring initiatives disclosed in the 2020 Form 10-K concluded prior to 2021 and the Company does not anticipate incurring any additional restructuring expenses related to those initiatives.

The restructuring activities related to the Individual Life Transaction 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 March 31,			Cumulative Amounts Incurred to Date(1)
		2021				2020
Severance benefits		$	4	$	(3)		$	65
Organizational transition costs		7		22			331
Total restructuring expenses		$	11	$	19		$	396
Continuing operations		$	11	$	15		$	331
Discontinued operations		$	—	$	4		$	65

(1) Includes expenses incurred during 2017-2020.

The following table presents the accrued liability associated with Organizational Restructuring expenses as of March 31, 2021:


	Severance Benefits		Organizational Transition Costs		Total
Accrued liability as of January 1, 2021	$	21	$	33	$	54
Provision	4		7		11
Payments	(7)		(26)		(33)

Accrued liability as of March 31, 2021	$	18	$	14	$	32


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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

16. Segments

On January 4, 2021, the Company completed a series of transactions pursuant to the Resolution MTA entered into on December

18, 2019 with Resolution Life US to sell several of its subsidiaries and the related Individual Life and fixed and variable annuities businesses within these subsidiaries. See the Business Held for Sale and Discontinued Operations Note to these Condensed Consolidated Financial Statements.

Measurement

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

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

•Net guaranteed benefit hedging gains (losses), which are significantly influenced by economic and market conditions and are not indicative of normal operations, include changes in the fair value of derivatives related to guaranteed benefits, net of related reserve increases (decreases) and net of related amortization of DAC, VOBA and sales inducements, less 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, and non-Wealth Solution annuities policies that were not part of the divested businesses). 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;


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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

•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.

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 March 31,
	2021		2020
Income (loss) from continuing operations before income taxes	$	1,038	$	44
Less Adjustments:
Net investment gains (losses) and related charges and adjustments	38		(8)
Net guaranteed benefit hedging gains (losses) and related charges and adjustments	10		(89)
Income (loss) related to businesses exited or to be exited through reinsurance or divestment	725		9
Income (loss) attributable to noncontrolling interest	—		6
Income (loss) related to early extinguishment of debt	(10)		—

Dividend payments made to preferred shareholders	14		14
Other adjustments	(11)		(22)
Total adjustments to income (loss) from continuing operations	$	766	$	(90)

Adjusted operating earnings before income taxes by segment:
Wealth Solutions	$	255	$	124
Investment Management	52		40
Health Solutions	37		61
Corporate	(71)		(91)
Total	$	273	$	134


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Voya Financial, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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;

•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, and non-Wealth Solution annuities policies that were not part of the divested businesses). 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 March 31,
	2021		2020
Total revenues	$	(1,957)	$	1,685

Adjustments:
Net realized investment gains (losses) and related charges and adjustments	32		(8)
Gains (losses) on change in fair value of derivatives related to guaranteed benefits	10		(90)
Revenues related to businesses exited or to be exited through reinsurance or divestment	(3,709)		344
Revenues attributable to noncontrolling interest	5		9
Other adjustments	109		33
Total adjustments to revenues	(3,553)		288

Adjusted operating revenues by segment:
Wealth Solutions	782		677
Investment Management	190		166
Health Solutions	600		543
Corporate	24		11
Total	$	1,595	$	1,397


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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 March 31,
	2021		2020
Investment Management intersegment revenues	$	23	$	26

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


	March 31, 2021		December 31, 2020
Wealth Solutions	$	131,521	$	129,801
Investment Management	981		1,027
Health Solutions	3,019		2,917
Corporate	24,824		23,535
Total assets, before consolidation(1)	160,345		157,280
Consolidation of investment entities	2,516		2,535
Total assets, excluding assets held for sale	162,861		159,815
Assets held for sale	—		20,703
Total assets	$	162,861	$	180,518

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


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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 months ended March 31, 2021 and 2020 and financial condition as of March 31, 2021 and December 31, 2020. 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, 2020 ("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

On March 15, 2021, the Company announced several updates to our operating model and leadership team. In conjunction with those updates, the Retirement and Employee Benefits segments were renamed to Wealth Solutions and Health Solutions, respectively. We will continue to provide our principal products and services through three segments: Wealth Solutions, Investment Management and Health Solutions. 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.

Discontinued Operations

The Individual Life Transaction

On January 4, 2021, we completed a series of transactions pursuant to a Master Transaction Agreement (the “Resolution MTA”) entered into on December 18, 2019 with Resolution Life U.S. Holdings Inc., a Delaware corporation (“Resolution Life US”), pursuant to which Resolution Life US acquired Security Life of Denver Company ("SLD"), Security Life of Denver International Limited ("SLDI") and Roaring River II, Inc. ("RRII") including several subsidiaries of SLD.

The purchase price we received at the closing was based on estimated amounts and is subject to a post-close true-up mechanism pursuant to which the purchase price will be adjusted based on SLD’s adjusted book value as of the closing date. This true-up is currently expected to be completed in the second half of 2021. In addition to cash consideration, proceeds include an approximately $225 million interest in RLGH and certain other affiliates of Resolution Life US, and $123 million principal amount in surplus notes issued by SLD.

In connection with the closing, we agreed to defer receipt of $100 million in cash proceeds for a period of up to 42 months, subject to an adjustment mechanism based on certain financial contingencies affecting SLD over that period. In addition, in connection with the unwind of certain guarantee obligations affecting portions of SLD’s business, in lieu of $60 million of cash proceeds, we have received approximately $60 million in additional preferred equity interests in Resolution Life US affiliates. We have determined that the legal entities sold and the Individual Life and Annuities businesses within these entities met 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 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, 2020, we recorded an estimated loss on sale, net of tax of $1,466 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, 2020, less cost to sell and other adjustments in accordance with the Resolution MTA. Income (loss) from discontinued operations, net of tax, for the three months ended March 31, 2021 includes an estimated reduction of the loss on sale of $14 million, net of tax. The estimated loss on sale, net of tax as of March 31, 2021 of $1,452 million, represents the excess of the estimated carrying value of the businesses held for sale over the estimated


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purchase price, which approximates fair value, less cost to sell. As a result of the Individual Life Transaction, the net aggregate reduction in Total shareholders' equity, excluding Accumulated other comprehensive income (“AOCI”), was $633 million. The net aggregate reduction in Total shareholders’ equity, including AOCI, was $2.3 billion. This includes the impact of the cumulative estimated loss on sale as well as the reversal of the AOCI related to the entities sold.

Refer to Discontinued Operations Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for disclosures related to the reinsurance transactions.

Upon the close of the Individual Life transaction, we continue to hold an insignificant number of Individual Life, and non-Wealth Solutions annuities policies which together with the businesses sold through divestment or reinsurance will be referred to as "divested businesses".

The following table summarizes the components of Income (loss) from discontinued operations, net of tax related to the Individual Life Transaction for the three months ended March 31, 2021 and 2020:


	Three Months Ended March 31,
	2021		2020
Revenues:
Net investment income	$	—	$	169
Fee income	—		174
Premiums	—		7
Total net realized capital gains (losses)	—		(26)
Other revenue	—		(2)
Total revenues	—		322
Benefits and expenses:
Interest credited and other benefits to contract owners/policyholders (1)	—		238
Operating expenses	—		26
Net amortization of Deferred policy acquisition costs and Value of business acquired(2)	—		12
Interest expense	—		2
Total benefits and expenses	—		278
Income (loss) from discontinued operations before income taxes	—		44
Income tax expense (benefit)	—		9
Adjustment to loss on sale, net of tax	14		(165)
Income (loss) from discontinued operations, net of tax	$	14	$	(130)

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, 2020, 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. Even though the pace of vaccinations are increasing in certain countries, including the United States, the disease continues to spread throughout the world. The persistence of new infections, including the introduction of new variants that may decrease the effectiveness of vaccines, has slowed the re-opening of the U.S. economy and, even in regions where


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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 the approval of additional vaccines and the pace at which they are administered globally.

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 March 31, 2021, our estimated combined RBC ratio on a pro forma basis for the completion of the Individual Life Transaction was 603%, above our 400% target.

Although we paused our repurchase program later in the first quarter of 2020 as a prudent measure in light of current market uncertainties, we restarted this program in the last quarter of 2020 and since then have completed repurchases of approximately $355 million of our common shares. In January 2021, we increased our common shareholder dividend by 10%. 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. To date, the most significant effects of adverse economic conditions have been on our fee-based income, with net investment income experiencing milder effects. Underwriting income, principally affected by increases to mortality and morbidity due to the disease, has also been negatively affected.

Wealth Solutions

In Wealth Solutions, 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 of COVID-19 is likely to be primarily on fee-based income, we estimate that lower interest rates will continue to contribute to a 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 prior year. The macroeconomic and overall market improvement since that time along with positive net flows contributed to AUM levels, although pockets of economic stress in the economy remain and lingering uncertainty regarding the sustained economic recovery. We believe, in aggregate, that investment capital will be reevaluated higher, however if the economy worsens or credit stresses intensify, investment capital results could decline. In addition, we had seen an elevated level of outflows associated with our retail business at the outset of the pandemic that has since subsided. The pandemic has made generating new business leads more challenging, resulting in a reduction in sales meetings and activities that could result in a lower level of sales activity during the year. If the pandemic persists and the economy fails to grow or declines from current levels, asset values could be negatively impacted resulting in lower management fee revenue and/ or investment capital returns.

Health Solutions

In Health Solutions, 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 in 2021 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, operating earnings of our Health Solutions segment would decline by approximately $1 to $2 million due to increased claims.


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Interest Rate Environment

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 general account investment portfolio, which was approximately $45.1 billion as of March 31, 2021, consists predominantly of fixed income investments. In the near term, 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 2021 will earn an average yield below the prevailing portfolio yield. If interest rates were to rise, we expect the yield on our new money 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.

•Several 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.

For additional information on the impact of the continued low interest rate environment, see Risk Factors - The level of interest rates may adversely affect our profitability, particularly in the event of a continuation of the current low interest rate environment or a period of rapidly increasing interest rates in Part I, Item 1A. of our Annual Report on Form 10-K. Also, for additional information on our sensitivity to interest rates, see Quantitative and Qualitative Disclosures About Market Risk in Part II, Item 7A. of our Annual Report on Form 10-K.

Stranded Costs

As a result of the Individual Life Transaction, the historical revenues and certain expenses of the divested businesses have been classified as discontinued operations. Historical revenues and certain expenses of the businesses that have been divested via reinsurance at closing of the Individual Life Transaction (including an insignificant amount of Individual Life and non-Wealth Solutions 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 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 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. 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


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restructuring efforts to reduce stranded expenses associated with its Individual Life business and independent financial planning channel as well as its corporate and shared services functions. The Company anticipates incurring additional restructuring expenses directly related to these dispositions beyond the first quarter of 2021, of $100 - $175 in addition to the $78 incurred during 2020 and $11 incurred for the three months ended March 31, 2021. The prior restructuring initiatives disclosed in the 2020 Form 10-K concluded prior to 2021 and the Company does not anticipate incurring any additional restructuring expenses related to those initiatives. 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.

Operating Measures

In this MD&A, we discuss Adjusted operating earnings before income taxes and Adjusted operating revenues, each of which is a measure used by management to evaluate segment performance. For additional information on each measure, see Segments Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.

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").


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Results of Operations - Company Condensed Consolidated

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


	Three Months Ended March 31,
($ in millions)	2021		2020		Change
Revenues:
Net investment income	$	714	$	698	$	16
Fee income	458		505		(47)
Premiums	(4,987)		608		(5,595)
Net realized capital gains (losses)	1,742		(233)		1,975
Other revenue	110		92		18
Income (loss) related to consolidated investment entities	6		15		(9)


Total revenues	(1,957)		1,685		(3,642)
Benefits and expenses:
Interest credited and other benefits to contract owners/policyholders	(4,190)		882		(5,072)
Operating expenses	602		640		(38)
Net amortization of Deferred policy acquisition costs and Value of business acquired (1)	539		76		463
Interest expense	49		40		9
Operating expenses related to consolidated investment entities	5		3		2
Total benefits and expenses	(2,995)		1,641		(4,636)
Income (loss) from continuing operations before income taxes	1,038		44		994
Income tax expense (benefit)	(48)		(6)		(42)
Income (loss) from continuing operations	1,086		50		1,036
Income (loss) from discontinued operations, net of tax	14		(130)		144
Net Income (loss)	1,100		(80)		1,180
Less: Net income (loss) attributable to noncontrolling interest	—		6		(6)
Less: Preferred stock dividends	14		14		—
Net income (loss) available to our common shareholders	$	1,086	$	(100)	$	1,186

(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.

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


	As of March 31,
($ in millions)	2021		2020
AUM and AUA:
Wealth Solutions(1)	$	540,383	$	385,877
Investment Management(1)	309,480		257,672
Health Solutions	1,834		1,780
Eliminations/Other	(122,409)		(107,514)
Total AUM and AUA(1)(2)	$	729,288	$	537,815

AUM	373,353		292,510
AUA(1)	355,934		245,305
Total AUM and AUA(1)(2)	$	729,288	$	537,815

(1) Wealth Solutions and Investment Management include Assets Under Advisement, which are presented in AUA.

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

For additional information on reconciliations of Income (loss) from continuing operations to Adjusted operating earnings before


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income taxes and Total revenues to Adjusted operating revenues, and their relative contributions of each segment, see Segments

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

Consolidated - Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020

Total Revenues

Total revenues decreased $3,642 million from $1,685 million to $(1,957) million. The following items contributed to the overall decrease.

Net investment income increased $16 million from $698 million to $714 million primarily due to:

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

The increase was partially offset by:

•transfer of assets to a comfort trust pursuant to the reinsurance agreements entered into concurrent with the closing of the Individual Life Transaction.

Fee income decreased $47 million from $505 million to $458 million primarily due to:

•lower fee income compared to the prior period due to the close of the Individual Life Transaction.

The decrease was partially offset by:

•an increase in average separate account and institutional/mutual fund AUM in Wealth Solutions driven by market performance and positive net flows.

Premiums decreased $5,595 million from $608 million to $(4,987) million primarily due to:

•the close of the Individual Life Transaction, at which point RLI, VRIAC, and RLNY ceded substantially all of their Individual Life and Non-Wealth Solution Annuities businesses to SLD, which are fully offset by a corresponding amount in Interest credited and other benefits to contract owners/policyholders.

The decrease was partially offset by:

•higher premiums driven by growth in the Stop Loss and Voluntary blocks of business in Health Solutions.

Net realized capital gains (losses) changed $1,975 million from losses of $233 million to gains of $1,742 million primarily due to:

•realized gains on the transfer of assets to a comfort trust pursuant to reinsurance agreements entered into concurrent with the close of the Individual Life Transaction;

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

•decrease in the allowance for losses for commercial mortgage loans.

The increase was partially offset by:

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

Other revenue increased $18 million from $92 million to $110 million primarily due to:

•revenue from transition services agreements resulting from the close of the Individual Life Transaction.


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Total Benefits and Expenses

Total benefits and expenses decreased $4,636 million from $1,641 million to $(2,995) million. The following items contributed to the overall decrease.

Interest credited and other benefits to contract owners/policyholders decreased $5,072 million from $882 million to $(4,190) million primarily due to:

•the close of the Individual Life Transaction, at which point RLI, VRIAC, and RLNY ceded substantially all of their Individual Life and Non-Wealth Solutions Annuities businesses to SLD, which are fully offset by a corresponding amount in Premiums;

•lower benefits compared to the prior year due to the close of the Individual Life Transaction; and

•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).

The decrease was partially offset by:

•amortization and loss recognition driven by the realized gains on the transfer of assets to a comfort trust pursuant to reinsurance agreements entered into concurrent with the close of the Individual Life Transaction;

•an increase in the allowance for losses on reinsurance recoverables;

•actual versus expected mortality in the current period for the businesses ceded to SLD related to claims prior to the close of the Individual Life Transaction; and

•higher claims in Group Life, primarily related to COVID-19, and growth in Stop Loss and Voluntary blocks of business, partially offset by lower Voluntary loss ratios in Health Solutions.

Operating expenses decreased $38 million from $640 million to $602 million primarily due to:

•a ceding commission paid as part of the close of the Individual Life Transaction at which point RLI, VRIAC and RLNY ceded substantially all of the Individual Life and Non-Wealth Solution Annuities businesses to SLD;

•lower expenses due to direct operating expenses in the prior period reported in businesses exited or to be exited through reinsurance or divestment that ceased upon the closing of the Individual Life Transaction;

•lower restructuring charges in the current period;

•lower amortization of intangible assets in Corporate related to a prior acquisition that became fully amortized; and

•a favorable change in quarterly pension costs.

The decrease was partially offset by:

•an increase in growth-based expenses in Wealth Solutions and Health Solutions;

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

•higher incentive compensation in Corporate due to stronger performance in the current period.

Net amortization of DAC/VOBA increased $463 million from $76 million to $539 million primarily due to:

•higher amortization on higher gross profits in Wealth Solutions.

The increase was partially offset by:

•a favorable change in unlocking in Wealth Solutions primarily driven by separate account market performance in the current period.

Interest expense increased $9 million from $40 million to $49 million primarily due to:

•debt extinguishment expenses associated with repurchased debt in the current period.


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Income Tax Benefit

Income tax benefit increased $42 million from $6 million to $48 million primarily due to:

•the release of a stranded tax benefit in Other Comprehensive Income; and

•an increase in the dividends received deduction.

The increase was partially offset by:

•an increase in income before income taxes.

Loss from discontinued operations, net of tax changed $144 million from a loss of $130 million to a gain of $14 million primarily due to:

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

The increase was partially offset by:

•a decrease in Net results from discontinued operations as business ceased at the close of the Individual Life Transaction.

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 changed $46 million from a loss of $8 million to a gain of $38 million primarily due to:

•decrease in the allowance for losses for commercial mortgage loans.

Net guaranteed benefit hedging gains (losses) and related charges and adjustments changed $99 million from a loss of $89 million to a gain of $10 million primarily due to:

•favorable hedging gains due to changes in interest rates.

Income (loss) related to businesses exited or to be exited through reinsurance or divestment increased $716 million from $9 million to $725 million primarily due to:

•realized gains net of related intangible amortization and loss recognition due to transfer of assets to a comfort trust pursuant to reinsurance agreements entered into concurrent with the close of the Individual Life Transaction.

The increase was partially offset by:

•net earnings in the prior period related to the Individual Life and the Non-Wealth Solution Annuities businesses in RLI, VRIAC, and RLNY that were ceded to SLD at the close of the Individual Life Transaction;

•actual versus expected mortality in the current period for the businesses ceded to SLD related to claims prior to the close of the Individual Life Transaction; and

•amortization of intangibles related to the businesses ceded to SLD at the close of the Individual Life Transaction.

Loss related to early extinguishment of debt was $10 million primarily due to:

•losses associated with repurchased debt in the current period.

Other adjustments to operating earnings improved $11 million from a loss of $22 million to a loss of $11 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.


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Results of Operations - Segment by Segment

Adjusted operating earnings is the measure of segment profit or loss management uses to evaluate segment performance. Adjusted operating earnings should not be viewed as a substitute for GAAP pretax income. We believe the presentation of segment adjusted operating earnings as we measure it for management purposes enhances the understanding of our business by reflecting the underlying performance of our core operations and facilitating a more meaningful trend analysis. Refer to the Segments Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for further information on the presentation of segment results and our definition of adjusted operating earnings.

Wealth Solutions

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


	Three Months Ended March 31,
($ in millions)	2021		2020
Adjusted operating revenues:
Net investment income and net realized gains (losses)	$	509	$	437
Fee income	252		216
Premiums	—		2
Other revenue	21		22
Total adjusted operating revenues	782		677
Operating benefits and expenses:
Interest credited and other benefits to contract owners/policyholders	216		235
Operating expenses	283		282
Net amortization of DAC/VOBA	29		36

Total operating benefits and expenses	527		553
Adjusted operating earnings before income taxes (1)	$	255	$	124

(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 tables present AUM and AUA for our Wealth Solutions segment as of the dates indicated:


	As of March 31,
($ in millions)	2021		2020
Corporate markets	$	89,999	$	62,562
Tax-exempt markets	81,180		62,504
Total full service plans	171,179		125,066
Stable value(1) and pension risk transfer	10,664		11,423
Retail wealth management	12,367		9,273
Total AUM(1)	194,209		145,762
AUA(2)	346,173		240,115
Total AUM and AUA(1)(2)	$	540,383	$	385,877

(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) Assets Under Advisement, presented in AUA, includes recordkeeping, stable value investment-only wrap, brokerage and investment advisory assets.


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	As of March 31,
($ in millions)	2021		2020
General Account	$	33,397	$	33,828
Separate Account	87,910		65,330
Mutual Fund/Institutional Funds	72,902		46,604
AUA(1)	346,173		240,115
Total AUM and AUA(1)	$	540,383	$	385,877

(1) Assets Under Advisement, presented in AUA, includes recordkeeping, stable value investment-only wrap, brokerage and investment advisory assets.

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


	Three Months Ended March 31,
($ in millions)	2021		2020
Balance as of beginning of period	$	189,579	$	164,747

Deposits	6,902		6,472
Surrenders, benefits and product charges	(6,210)		(5,189)
Net flows	692		1,283
Interest credited and investment performance	3,938		(20,268)
Balance as of end of period	$	194,209	$	145,762

Wealth Solutions - Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020

Adjusted operating earnings before income taxes increased $131 million from $124 million to $255 million primarily due to:

•higher alternative asset income;

•higher fee revenue primarily driven by higher average equity markets and positive net flows;

•a favorable change in DAC unlocking; and

•lower credited interest driven by improved crediting rates.

The increase was partially offset by:

•higher amortization of DAC driven by higher gross profits.

Investment Management

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


	Three Months Ended March 31,
($ in millions)	2021		2020
Adjusted operating revenues:
Net investment income and net realized gains (losses)	$	28	$	3
Fee income	158		157
Other revenue	3		6
Total adjusted operating revenues	190		166
Operating benefits and expenses:
Operating expenses	137		126
Total operating benefits and expenses	137		126
Adjusted operating earnings before income taxes	$	52	$	40


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


	Three Months Ended March 31,
($ in millions)	2021		2020
Investment Management intersegment revenues	$	23	$	26

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


	As of March 31,
($ in millions)	2021		2020
External clients:
Institutional(1)	$	134,460	$	93,662
Retail(1)	75,382		60,168
Total external clients	209,842		153,830
General account	38,708		56,873
Total AUM(1)	248,550		210,703
AUA(2)	60,930		46,969
Total AUM and AUA(1)(2)	$	309,480	$	257,672

(1) Includes assets associated with the divested businesses.

(2) Includes assets sourced by other segments and also reported as AUA or AUM by such other segments. Assets Under Advisement, presented in AUA, includes advisory assets, mutual fund, general account and stable value assets.

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


	Three Months Ended March 31,
	2021		2020
Net Flows:
Institutional(1)	$	(128)	$	1,833
Retail	(252)		(908)

Divested businesses	(795)		(702)

Total(1)	$	(1,175)	$	223

(1) Starting Q1 2021, amounts exclude liquidity related cash flow activities. Historical periods presented have been revised to conform with this presentational change.

Investment Management - Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020

Adjusted operating earnings before income taxes increased $12 million from $40 million to $52 million primarily due to:

•higher investment capital returns; and

•higher fee revenue primarily driven by higher average equity markets and positive net flows, mostly offset by a decline in fees earned as a result of the Individual Life Transaction.

The increase was partially offset by:

•higher operating expenses primarily driven by higher earnings.


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Health Solutions

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


	Three Months Ended March 31,
($ in millions)	2021		2020
Adjusted operating revenues:
Net investment income and net realized gains (losses)	$	36	$	29
Fee income	15		15
Premiums	550		500
Other revenue	(2)		(1)
Total adjusted operating revenues	600		543
Operating benefits and expenses:
Interest credited and other benefits to contract owners/policyholders	437		364
Operating expenses	119		113
Net amortization of DAC/VOBA	6		5
Total operating benefits and expenses	563		482
Adjusted operating earnings before income taxes	$	37	$	61

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


	Three Months Ended March 31,
($ in millions)	2021			2020
Sales by Product Line:
Group life and Disability	$	60		$	81
Stop loss	297			241

Total group products	357			322
Voluntary products	81			80
Total sales by product line	$	438		$	402

Total gross premiums and deposits	$	607		$	560

Group life and Disability	$	730		$	704
Stop loss	1,182			1,084
Voluntary	554			483

Total annualized in-force premiums	$	2,466		$	2,271

Loss Ratios:
Group life (interest adjusted)	100.7		%	78.1		%
Stop loss	75.6		%	73.2		%
Total Loss Ratio(1)	71.8		%	69.1		%

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

Health Solutions - Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020

Adjusted Operating earnings before income taxes decreased $24 million from $61 million to $37 million primarily due to:

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

•higher distribution expenses to support business growth.


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The decrease was partially offset by:

•higher premiums driven by growth of the Stop Loss and Voluntary blocks; and

•higher alternative asset income.

Corporate

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


	Three Months Ended March 31,
($ in millions)	2021		2020
Adjusted operating revenues:
Net investment income and net realized gains (losses)	$	1	$	10

Premiums	—		—
Other revenue	23		1
Total adjusted operating revenues	24		11
Operating benefits and expenses:
Interest credited and other benefits to contract owners/policyholders	—		8
Operating expenses(1)	39		37

Interest expense(2)	55		57
Total operating benefits and expenses	95		102
Adjusted operating earnings before income taxes	$	(71)	$	(91)

(1) Includes expenses from corporate activities, and expenses not allocated to our segments. Three months ended March 31, 2021 and 2020 primarily include stranded costs related to the divested businesses and amortization of intangibles.

(2) Includes dividend payments made to preferred shareholders.

Corporate - Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020

Adjusted operating earnings before income taxes improved $20 million from a loss of $91 million to a loss of $71 million primarily due to:

•revenue resulting from transition services agreements associated with the Individual Life Transaction; and

•lower amortization associated with intangibles that became fully amortized in the third quarter of 2020.

The increase was partially offset by:

•higher incentive compensation expense in the current period compared to the prior period.

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. 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.


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The following table presents alternative investment income and average assets of alternative investments for the periods indicated:


	Three Months Ended March 31,
($ in millions)	2021		2020
Wealth Solutions:
Alternative investment income	$	107	$	31
Average alternative investment	1,127		883
Investment Management:
Alternative investment income	28		3
Average alternative investment	262		230
Health Solutions:
Alternative investment income	8		3
Average alternative investment	85		95

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."

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 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 March 31,
($ in millions)	2021		2020
Wealth Solutions	$	2	$	(16)

Total DAC/VOBA and other intangibles unlocking	$	2	$	(16)

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 revolving credit sublimit 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.

Business divestitures have also provided an important source of liquidity in recent periods, including through a significant increase in excess capital levels as a result of the completion of the Individual Life transaction in January 2021. We estimate that our excess capital (which we define as the amount of capital and surplus in our insurance subsidiaries above our 400% RBC target, plus the amount of holding company liquidity above our $200 million target) as of March 31, 2021 was approximately $1.6 billion. Depending on the outcome of certain business contingencies affecting SLD, the ultimate contribution of the transaction to our excess capital could vary by approximately $100 million (positively or negatively) over an approximately five-year period between 2021 and 2025. In addition, as described above, the purchase price received in the Individual Life Transaction is subject to a post-close true-up mechanism based on SLD’s adjusted book value on the closing date. The true up is expected to be completed by the end of 2021.


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


	Three Months Ended March 31,
($ in millions)	2021		2020
Beginning cash and cash equivalents balance	$	229	$	212
Sources:


Proceeds from loans from subsidiaries, net of repayments	—		557

Dividends and returns of capital from subsidiaries	385		—

Proceeds from Resolution sale	572		—





Amounts received from subsidiaries under tax sharing agreements, net	218		—

Sale of interest in wholly owned subsidiary	80		—



Collateral received, net	6		—
Other, net	26		2
Total sources	1,287		559
Uses:



Premium paid and other fees related to debt extinguishment	9		—
Payment of interest expense	28		27
Capital provided to subsidiaries	40		—
Repayments of loans from subsidiaries, net of repayments	483		—


Debt repurchase, net	76		—
New issuances of loans to subsidiaries, net of repayments	116		81




Common stock acquired - Share repurchase	255		366
Share-based compensation	40		14
Dividends paid on preferred stock	14		14
Dividends paid on common stock	20		20




Collateral delivered, net	—		28

Total uses	1,081		550
Net increase in cash and cash equivalents	206		9
Ending cash and cash equivalents balance	$	435	$	221

Share Repurchase Program and Dividends to Common Shareholders

See the Shareholders' Equity Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for information relating to authorizations by the Board of Directors to repurchase our shares and amounts of common stock repurchased pursuant to such authorizations during the three months ended March 31, 2021. As of March 31, 2021, we were authorized to repurchase shares up to an aggregate purchase price of $879 million.

On January 28, 2021, the Board of Directors provided its most recent share repurchase authorization, increasing the aggregate amount of the Company's common stock authorized for repurchase by $1 billion. The additional share repurchase authorization expires on March 31, 2022 (unless extended), and does not obligate the Company to purchase any shares. The authorization for the share repurchase program may be terminated, increased or decreased by the Board of Directors at any time.

On February 11, 2021, we entered into a share repurchase agreement with a third-party financial institution to repurchase $250 million of the Company's common stock. Pursuant to the agreement, we received initial delivery of 3,617,291 shares based on the closing market price of the Company's stock on February 11, 2021 of $55.29. This arrangement is scheduled to terminate no later than the end of the second quarter of 2021, at which time we will settle any positive or negative share balances based on the daily volume-weighted average price of the Company's common stock.


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The following table summarizes our payment of common dividends and repurchases of common shares for the periods indicated:


	Three Months Ended March 31,
($ in millions)	2021		2020
Dividends paid on common shares	$	20	$	20
Repurchases of common shares (at cost)	235		406
Total	$	255	$	426

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.

As of March 31, 2021, we had $1 million of short-term debt borrowings outstanding consisting entirely of the current portion of long-term debt. The following table summarizes our borrowing activities for the three months ended March 31, 2021:


($ in millions)	Beginning Balance		Issuance		Maturities and Repayment		Other Changes		Ending Balance







Debt securities	$	3,041	$	—	$	(76)	$	1	$	2,966

Windsor property loan	4		—		—		—		4



Subtotal	3,045		—		(76)		1		2,970
Less: Current portion of long-term debt	1		—		—		—		1
Total long-term debt	$	3,044	$	—	$	(76)	$	1	$	2,969

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

See the Financing Agreements Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for information on the senior unsecured credit facility.

Other Credit Facilities

We have historically used credit facilities to provide collateral for affiliated reinsurance transactions with captive insurance subsidiaries. These arrangements, which facilitated the financing of statutory reserve requirements, primarily related to our divested businesses.


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The following table summarizes our credit facilities as of March 31, 2021:


($ 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.	Other	Unsecured	Committed	12/11/2021	200		163		—


Total					$	710	$	164	$	500

As a result of the sale of SLD and SLDI to Resolution, many of the Company’s credit facilities transferred to Resolution while others were terminated. Total fees associated with the remaining credit facilities were immaterial for the three months ended March 31, 2021 and 2020.

Voya Financial, Inc. Credit Support of Subsidiaries

Voya Financial, Inc. provide guarantees to certain of our subsidiaries to support various business requirements:

•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.

We did not recognize any asset or liability as of March 31, 2021 in relation to intercompany indemnifications, guarantees or support agreements. As of March 31, 2021, no guarantees 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 March 31, 2021, the aggregate amount that may be borrowed or lent under agreements with life insurance subsidiaries was $1.5 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 March 31, 2021, Voya Financial, Inc. had $170 million in outstanding borrowings from subsidiaries and had loaned $295 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.

Financial strength ratings represent the opinions of rating agencies regarding the financial ability of an insurance company to meet its obligations under an insurance policy. Credit ratings represent the opinions of rating agencies regarding an entity's ability to repay its indebtedness. These ratings are not a recommendation to buy or hold any of our securities and they may be revised or revoked at any time at the sole discretion of the rating organization.


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The financial strength and credit ratings of Voya Financial, Inc. and its principal subsidiaries as of the date of this Quarterly Report on Form 10-Q are summarized in the following table.

Rating Agency

A.M. Best

Fitch, Inc.

Moody's Investors Service, Inc.

Standard & Poor's

("A.M. Best")(1)

("Fitch")(2)

("Moody's")(3)

("S&P")(4)

Long-term Issuer Credit Rating/Outlook:

Voya Financial, Inc.

(5)

BBB+/stable

Baa2/stable

BBB+/Stable

Financial Strength Rating/Outlook:

Voya Retirement Insurance and Annuity Company

(5)

A/stable

A2/stable

A+/Stable

ReliaStar Life Insurance Company

A/stable

A2/stable

A+/Stable

ReliaStar Life Insurance Company of New York

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 Financial, Inc. and Voya Retirement Insurance Annuity 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. In April 2019, Moody’s changed its outlook for the U.S. life insurance sector to negative from stable. 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 subject 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 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 2021. However, as a result of the extraordinary dividends it paid in 2015, 2016 and 2017, together with statutory losses incurred in connection with the recapture and cession to one of our Arizona captives of certain term life business in the fourth quarter of 2016, our Principal Insurance Subsidiary domiciled in Minnesota currently has negative earned surplus and cannot 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.

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.


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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
	Three Months Ended March 31,				Three Months Ended March 31,
($ in millions)	2021		2020		2021		2020
Subsidiary Name (State of domicile):
Voya Retirement Insurance and Annuity Company ("VRIAC") (CT)	$	78	$	—	$	—	$	—
ReliaStar Life Insurance Company ("RLI") (MN)	—		—		—		—

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.

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.


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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 January 4, 2021, we completed a series a transactions pursuant to the Resolution MTA with Resolution Life US pursuant to which Resolution Life US acquired 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 resulted in the sale of a significant portion of our Individual Life business as well as the fixed and variable Annuities business associated with the subsidiaries sold. In connection with this transaction, as of December 31, 2020, we recorded an estimated loss on sale, net of tax, of $1,466 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 of December 31, 2020, less cost to sell and other adjustments in accordance with the Resolution MTA. In addition, Income (loss) from discontinued operations, net of tax, for the three months ended March 31, 2021 includes a reduction to the estimated loss on sale, net of tax of $14. The estimated loss on sale is subject to a true up mechanism that is expected to be completed in the second half of 2021 which may result in changes to the purchase price and may impact the final loss on sale related to the Individual Life Transaction which could result in changes to be recorded in the Company's Condensed Statement of Operations in future periods. For additional information on the Individual Life Transaction and the related estimated loss on sale, net of tax, see Overview 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.

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 three months ended March 31, 2021 and as a result of the close of the Individual Life transaction, we have reviewed our blocks of business to determine recoverability of DAC, VOBA and other intangibles. This review, referred to as loss recognition testing, has resulted in the write down of DAC/VOBA of $302 million and the establishment of premium deficiency reserves of $215 million in our divested businesses, The loss recognition was recorded in the Consolidated Statements of Operations and excluded from Adjusted operating earnings for the quarter ended March 31, 2021.

Sensitivity

We perform sensitivity analyses to assess the impact that certain assumptions have on DAC/VOBA and other intangibles, as well as certain reserves. As of March 31, 2021 there have been no material changes to the sensitivities disclosed in Critical Accounting Judgements and Estimates in Part II. Item 7 of our Annual Report on Form 10-K..

Income Taxes

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

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


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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:


	March 31, 2021				December 31, 2020
($ in millions)	Carrying Value		% of Total		Carrying Value		% of Total
Fixed maturities, available-for-sale, excluding securities pledged	$	33,355	73.4	%	$	43,569	76.6	%
Fixed maturities, at fair value using the fair value option	2,690		5.9	%	3,011		5.3	%
Equity securities, available-for-sale	393		0.9	%	242		0.4	%
Short-term investments(1)	306		0.7	%	111		0.2	%
Mortgage loans on real estate	5,605		12.3	%	6,741		11.9	%
Policy loans	424		0.9	%	718		1.3	%
Limited partnerships/corporations	1,487		3.1	%	1,476		2.5	%
Derivatives	205		0.5	%	215		0.4	%
Other investments	80		0.2	%	319		0.6	%
Securities pledged	949		2.1	%	449		0.8	%
Total investments	$	45,494	100.0	%	$	56,851	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:


	March 31, 2021
($ in millions)	Amortized Cost		% of Total		Fair Value		% of Total
Fixed maturities:
U.S. Treasuries	$	744	2.2	%	$	957	2.6	%
U.S. Government agencies and authorities	47		0.1	%	59		0.2	%
State, municipalities and political subdivisions	887		2.6	%	970		2.6	%
U.S. corporate public securities	10,378		30.6	%	11,673		31.6	%
U.S. corporate private securities	4,884		14.3	%	5,296		14.3	%
Foreign corporate public securities and foreign governments(1)	3,285		9.6	%	3,611		9.7	%
Foreign corporate private securities(1)	3,570		10.5	%	3,821		10.3	%
Residential mortgage-backed securities	4,694		13.8	%	4,868		13.2	%
Commercial mortgage-backed securities	3,555		10.4	%	3,694		10.0	%
Other asset-backed securities	2,025		5.9	%	2,045		5.5	%
Total fixed maturities, including securities pledged	$	34,069	100.0	%	$	36,994	100.0	%
(1) Primarily U.S. dollar denominated.


	December 31, 2020
($ in millions)	Amortized Cost		% of Total		Fair Value		% of Total
Fixed maturities:
U.S. Treasuries	$	1,033	2.5	%	$	1,471	3.1	%
U.S. Government agencies and authorities	74		0.2	%	102		0.2	%
State, municipalities and political subdivisions	1,166		2.9	%	1,346		2.9	%
U.S. corporate public securities	13,366		32.7	%	16,387		34.9	%
U.S. corporate private securities	5,653		13.8	%	6,446		13.7	%
Foreign corporate public securities and foreign governments(1)	4,023		9.8	%	4,736		10.0	%
Foreign corporate private securities(1)	4,220		10.3	%	4,646		9.9	%
Residential mortgage-backed securities	5,370		13.1	%	5,626		12.0	%
Commercial mortgage-backed securities	3,882		9.5	%	4,131		8.8	%
Other asset-backed securities	2,110		5.2	%	2,138		4.5	%
Total fixed maturities, including securities pledged	$	40,897	100.0	%	$	47,029	100.0	%
(1)Primarily U.S. dollar denominated.

As of March 31, 2021, the average duration of our fixed maturities portfolio, including securities pledged, is between 7.0 and 7.5 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)	March 31, 2021
NAIC Quality Designation	1		2		3		4		5		6		Total Fair Value
U.S. Treasuries	$	957	$	—	$	—	$	—	$	—	$	—	$	957
U.S. Government agencies and authorities	59		—		—		—		—		—		59
State, municipalities and political subdivisions	861		106		3		—		—		—		970
U.S. corporate public securities	4,061		6,951		563		73		25		—		11,673
U.S. corporate private securities	1,706		3,039		432		104		15		—		5,296
Foreign corporate public securities and foreign governments(1)	1,165		2,252		170		23		—		1		3,611
Foreign corporate private securities(1)	302		3,126		206		187		—		—		3,821
Residential mortgage-backed securities	4,495		290		43		—		19		21		4,868
Commercial mortgage-backed securities	3,252		353		72		17		—		—		3,694
Other asset-backed securities	1,774		208		10		13		34		6		2,045
Total fixed maturities	$	18,632	$	16,325	$	1,499	$	417	$	93	$	28	$	36,994
% of Fair Value	50.4%		44.0%		4.1%		1.1%		0.3%		0.1%		100.0%
(1) Primarily U.S. dollar denominated.


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($ in millions)	December 31, 2020
NAIC Quality Designation	1		2		3		4		5		6		Total Fair Value
U.S. Treasuries	$	1,471	$	—	$	—	$	—	$	—	$	—	$	1,471
U.S. Government agencies and authorities	102		—		—		—		—		—		102
State, municipalities and political subdivisions	1,214		128		4		—		—		—		1,346
U.S. corporate public securities	6,275		9,258		757		84		13		—		16,387
U.S. corporate private securities	2,296		3,627		390		119		14		—		6,446
Foreign corporate public securities and foreign governments(1)	1,707		2,759		235		35		—		—		4,736
Foreign corporate private securities(1)	418		3,863		145		220		—		—		4,646
Residential mortgage-backed securities	5,265		236		78		1		22		24		5,626
Commercial mortgage-backed securities	3,712		346		63		10		—		—		4,131
Other asset-backed securities	1,843		227		12		13		41		2		2,138
Total fixed maturities	$	24,303	$	20,444	$	1,684	$	482	$	90	$	26	$	47,029
% of Fair Value	51.7%		43.4%		3.6%		1.0%		0.2%		0.1%		100.0%
(1)Primarily U.S. dollar denominated.

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)	March 31, 2021
ARO Quality Ratings	AAA		AA		A		BBB		BB and Below		Total Fair Value
U.S. Treasuries	$	957	$	—	$	—	$	—	$	—	$	957
U.S. Government agencies and authorities	53		—		6		—		—		59
State, municipalities and political subdivisions	53		527		276		111		3		970
U.S. corporate public securities	74		646		3,861		6,479		613		11,673
U.S. corporate private securities	104		104		1,405		3,219		464		5,296
Foreign corporate public securities and foreign governments(1)	9		254		999		2,145		204		3,611
Foreign corporate private securities(1)	—		49		293		3,154		325		3,821
Residential mortgage-backed securities	3,304		296		126		353		789		4,868
Commercial mortgage-backed securities	1,350		453		753		1,013		125		3,694
Other asset-backed securities	379		499		874		203		90		2,045
Total fixed maturities	$	6,283	$	2,828	$	8,593	$	16,677	$	2,613	$	36,994
% of Fair Value	17.0%		7.6%		23.2%		45.1%		7.1%		100.0%
(1)Primarily U.S. dollar denominated.


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($ in millions)	December 31, 2020
ARO Quality Ratings	AAA			AA			A			BBB			BB and Below			Total Fair Value
U.S. Treasuries	$	1,471		$	—		$	—		$	—		$	—		$	1,471
U.S. Government agencies and authorities	95			7			—			—			—			102
State, municipalities and political subdivisions	84			769			354			135			4			1,346
U.S. corporate public securities	168			933			5,928			8,575			783			16,387
U.S. corporate private securities	109			156			2,011			3,685			485			6,446
Foreign corporate public securities and foreign governments(1)	14			386			1,430			2,601			305			4,736
Foreign corporate private securities(1)	—			49			390			3,868			339			4,646
Residential mortgage-backed securities	3,976			340			143			299			868			5,626
Commercial mortgage-backed securities	1,543			484			845			1,098			161			4,131
Other asset-backed securities	414			490			913			223			98			2,138
Total fixed maturities	$	7,874		$	3,614		$	12,014		$	20,484		$	3,043		$	47,029
% of Fair Value	16.7		%	7.7		%	25.5		%	43.6		%	6.5		%	100.0		%
(1)Primarily U.S. dollar denominated.

Fixed maturities rated BB and below may have speculative characteristics and changes in economic conditions or other circumstances that are more likely to lead to a weakened capacity of the issuer to make principal and interest payments than is the case with higher rated fixed maturities.

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:


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($ in millions)	March 31, 2021
											NAIC Rating (%)
	Fair Value		Fair Value %		Unrealized Capital Gain/Loss		% Public		% Private		1		2		3		4-6
Energy	$	2,234	6.1	%	$	248	69	%	31	%	20.1	%	60.5	%	15.4	%	4.0	%
Midstream	957		2.6	%	111		64	%	36	%	6.4	%	78.6	%	13.5	%	1.5	%
Independent Energy	479		1.3	%	43		67	%	33	%	25.9	%	26.9	%	32.2	%	15.0	%
Integrated Energy	444		1.2	%	49		78	%	22	%	52.2	%	37.5	%	10.2	%	0.1	%
Refining	174		0.5	%	31		85	%	15	%	—	%	95.0	%	5.0	%	—	%
Oil Field Services	180		0.5	%	14		63	%	37	%	18.1	%	77.2	%	4.2	%	0.5	%
Metals	559		1.5	%	76		67	%	33	%	11.7	%	82.4	%	5.8	%	0.1	%
Airlines/Aircraft Leasing	316		0.9	%	(12)		48	%	52	%	19.8	%	47.6	%	13.4	%	19.2	%
Restaurants	261		0.7	%	13		88	%	12	%	1.3	%	92.7	%	0.2	%	5.8	%
Airports	152		0.4	%	8		44	%	56	%	21.8	%	34.5	%	43.7	%	—	%
Lodging	199		0.5	%	1		94	%	6	%	84.1	%	5.4	%	9.7	%	0.8	%
Automotive	331		0.9	%	28		51	%	49	%	16.6	%	65.5	%	14.7	%	3.2	%
Retailers	840		2.3	%	85		88	%	12	%	43.4	%	52.9	%	2.6	%	1.1	%
COVID-19 Subtotal	4,892		13.3	%	447		72	%	28	%	28.3	%	59.3	%	8.7	%	3.7	%
Remaining Portfolio	32,102		86.7	%	2,482		76	%	24	%	54.3	%	41.7	%	2.9	%	1.1	%
Grand Total	$	36,994	100.0%		$	2,929	75%		25%		50.4%		44.1%		4.1%		1.4%

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 $138 million from $139 million to $277 million for the three months ended March 31, 2021. The modest increase in unrealized losses was driven by moderately higher interest rates in the longer end of the yield curve. See section "Overview - Trends and Uncertainties" in this Management’s Discussion and Analysis.

As of March 31, 2021 and December 31, 2020, we held two and three fixed maturities with unrealized capital losses in excess of $10 million. As of March 31, 2021 and December 31, 2020, the unrealized capital losses on these fixed maturities equaled $32 million or 11.7% and $45 million or 32.3% of the total unrealized losses, respectively.


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As of March 31, 2021, we held $2.2 billion of energy sector fixed maturity securities, constituting 6.0% 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 these fixed maturity securities equaled $15 million. As of March 31, 2021, our fixed maturity exposure to the energy sector is comprised of 80.6% investment grade securities.

As of December 31, 2020, we held $3.0 billion of energy sector fixed maturity securities, constituting 6.5% of the total fixed maturities portfolio, with gross unrealized capital losses of $28 million, including one energy sector fixed maturity security with unrealized capital losses in excess of $10 million. The unrealized capital losses on this fixed maturity security equaled $16 million. As of December 31, 2020, our fixed maturity exposure to the energy sector is comprised of 84.0% 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)	March 31, 2021						December 31, 2020
NAIC Quality Designation	Amortized Cost		Fair Value		% Fair Value		Amortized Cost		Fair Value		% Fair Value
1	$	2,775	$	2,875	88.7	%	$	3,182	$	3,333	90.4	%
2	282		285		8.8	%	232		235		6.4	%
3	37		41		1.3	%	72		75		2.0	%
4	—		—		—	%	—		—		—	%
5	10		19		0.6	%	11		22		0.6	%
6	17		21		0.6	%	17		23		0.6	%
Total	$	3,121	$	3,241	100.0	%	$	3,514	$	3,688	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:


	March 31, 2021						December 31, 2020
($ 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	$	13,641	$	138	$	221	$	12,381	$	60	$	214

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


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


($ in millions)	March 31, 2021						December 31, 2020
Tranche Type	Amortized Cost		Fair Value		% Fair Value		Amortized Cost		Fair Value		% Fair Value
Inverse Floater	$	119	$	168	5.3	%	$	204	$	282	7.7	%
Interest Only (IO)	393		397		12.2	%	358		362		9.8	%
Inverse IO	1,457		1,512		46.7	%	1,741		1,819		49.3	%
Principal Only (PO)	146		152		4.7	%	185		193		5.2	%
Floater	8		8		0.2	%	9		9		0.2	%
Agency Credit Risk Transfer	959		964		29.7	%	968		973		26.4	%
Other	39		40		1.2	%	49		50		1.4	%
Total	$	3,121	$	3,241	100.0	%	$	3,514	$	3,688	100.0	%

During the three months ended March 31, 2021, the market value of our CMO-B securities portfolio declined due to some assets moving to reinsured blocks and as a result of lower valuations due to higher rate levels.

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


	Three Months Ended March 31,
($ in millions)		2021		2020
Net investment income (loss)		$	163	$	137
Net realized capital gains (losses)(1)		(150)		(38)
Income (loss) from continuing operations before income taxes		$	13	$	99

(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 (including CMO-B portfolio income

(loss) related to businesses to be exited through reinsurance or divestment) 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. 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 operations before income taxes from our CMO-B portfolio to Adjusted operating earnings before income taxes from our CMO-B portfolio for the periods indicated:


	Three Months Ended March 31,
($ in millions)		2021		2020
Income (loss) from operations before income taxes		$	13	$	99
Realized gains (losses) including impairment		(27)		1
Fair value adjustments		55		(52)
Total adjustments to income (loss) from operations		28		(51)
Adjusted operating earnings before income taxes		$	41	$	48

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.


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Structured Securities

Residential mortgage-backed securities

The following tables present our residential mortgage-backed securities as of March 31, 2021 and December 31, 2020:


	March 31, 2021
($ in millions)	Amortized Cost		Gross Unrealized Capital Gains		Gross Unrealized Capital Losses		Embedded Derivatives		Fair Value
Prime Agency	$	2,495	$	112	$	3	$	7	$	2,611
Prime Non-Agency	2,080		57		17		1		2,121
Alt-A	103		9		1		7		118
Sub-Prime(1)	42		5		—		—		47
Total RMBS	$	4,720	$	183	$	21	$	15	$	4,897
(1) Includes subprime other asset backed securities.

	December 31, 2020
($ in millions)	Amortized Cost		Gross Unrealized Capital Gains		Gross Unrealized Capital Losses		Embedded Derivatives		Fair Value
Prime Agency	$	2,966	$	168	$	2	$	10	$	3,142
Prime Non-Agency	2,271		75		13		2		2,335
Alt-A	114		10		2		8		130
Sub-Prime(1)	47		6		—		—		53
Total RMBS	$	5,398	$	259	$	17	$	20	$	5,660
(1) Includes subprime other asset backed securities.

Commercial Mortgage-backed securities

The following tables present our commercial mortgage-backed securities as of March 31, 2021 and December 31, 2020:


	March 31, 2021
($ 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
2014 and prior	$	550	$	606	$	91	$	93	$	153	$	160	$	135	$	134	$	34	$	32	$	963	$	1,025
2015	179		192		151		158		83		85		112		114		22		23		547		572
2016	51		53		21		22		28		30		51		51		—		—		151		156
2017	83		87		33		34		75		76		83		83		40		40		314		320
2018	88		96		32		32		109		111		100		102		16		17		345		358
2019	162		179		49		50		171		172		328		331		13		13		723		745
2020	104		105		38		39		96		98		170		172		—		—		408		414
2021	32		32		24		25		22		21		26		26		—		—		104		104
Total CMBS	$	1,249	$	1,350	$	439	$	453	$	737	$	753	$	1,005	$	1,013	$	125	$	125	$	3,555	$	3,694


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	December 31, 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
2014 and prior	$	587	$	691	$	125	$	128	$	162	$	168	$	143	$	141	$	47	$	45	$	1,064	$	1,173
2015	204		234		171		181		98		100		141		142		30		31		644		688
2016	60		68		23		24		36		39		50		50		—		—		169		181
2017	107		122		37		38		85		86		93		92		51		51		373		389
2018	100		117		27		27		170		174		122		123		20		21		439		462
2019	178		207		46		47		182		180		372		381		12		13		790		828
2020	102		104		38		39		96		98		167		169		—		—		403		410
Total CMBS	$	1,338	$	1,543	$	467	$	484	$	829	$	845	$	1,088	$	1,098	$	160	$	161	$	3,882	$	4,131

As of March 31, 2021, 87.6% and 10.0% of CMBS investments were designated as NAIC-1 and NAIC-2, respectively. As of December 31, 2020, 89.9% and 8.4% of CMBS investments were designated as NAIC-1 and NAIC-2, respectively.

Other Asset-backed Securities

The following tables present our other asset-backed securities as of March 31, 2021 and December 31, 2020:


	March 31, 2021
($ 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	$	294	$	296	$	352	$	354	$	722	$	724	$	26	$	25	$	72	$	62	$	1,466	$	1,461
Auto-Loans	2		2		—		1		8		9		—		—		—		—		10		12
Student Loans	31		31		130		134		15		16		2		2		—		—		178		183
Credit Card loans	—		—		—		—		—		—		—		—		—		—		—		—
Other Loans	48		50		11		11		120		123		168		176		—		—		347		360
Total Other ABS(1)	$	375	$	379	$	493	$	500	$	865	$	872	$	196	$	203	$	72	$	62	$	2,001	$	2,016
(1) Excludes subprime other asset backed securities.

	December 31, 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	$	315	$	332	$	333	$	729	$	726	$	28	$	28	$	75	$	66	$	1,476	$	1,468
Auto-Loans	3		3		10		10		10		11		—		—		—		—		23		24
Student Loans	39		40		127		133		40		41		2		2		—		—		208		216
Credit Card loans	—		—		—		—		—		—		—		—		—		—		—		—
Other Loans	50		56		14		14		126		132		183		194		—		—		373		396
Total Other ABS(1)	$	404	$	414	$	483	$	490	$	905	$	910	$	213	$	224	$	75	$	66	$	2,080	$	2,104
(1) Excludes subprime other asset backed securities.


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As of March 31, 2021, 86.4% and 10.0% of Other ABS investments were designated as NAIC-1 and NAIC-2, respectively. As of December 31, 2020, 86.0% and 10.8% of Other ABS investments were designated as NAIC-1 and NAIC-2, respectively.

Mortgage Loans on Real Estate

As of March 31, 2021, there was one commercial mortgage loan with a pre and post carrying value of $8 and $5, 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 as of December 31, 2020.

As of March 31, 2021, our mortgage loans on real estate portfolio had a weighted average DSC of 2.2 times and a weighted average LTV ratio of 45.7%. As of December 31, 2020, our mortgage loans on real estate portfolio had a weighted average DSC of 2.2 times, and a weighted average LTV ratio of 45.2%. While still heavily impacted by COVID-19, the Commercial Mortgage Loan portfolio allowance decreased by $31 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.

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 in our Consolidated Financial Statements in Part II, Item 8. of our Annual Report on Form 10-K for the policy used to evaluate whether the investments are impaired.

Derivatives

We use derivatives for a variety of hedging purposes. We also have embedded derivatives within fixed maturities instruments and certain product features. See the Business, Basis of Presentation and Significant Accounting Policies Note in our Consolidated Financial Statements in Part II, Item 8. of our Annual Report on Form 10-K for further information.

European Exposures

We quantify and allocate our exposure to the region by attempting to identify aspects of the region or country risk to which we are exposed. Among the factors we consider are the nationality of the issuer, the nationality of the issuer's ultimate parent, the corporate and economic relationship between the issuer and its parent, as well as the political, legal and economic environment in which each functions. By undertaking this assessment, we believe that we develop a more accurate assessment of the actual geographic risk, with a more integrated understanding of contributing factors to the full risk profile of the issuer.

In the normal course of our ongoing risk and portfolio management process, we closely monitor compliance with a credit limit hierarchy designed to minimize overly concentrated risk exposures by geography, sector and issuer. This framework takes into account various factors such as internal and external ratings, capital efficiency and liquidity and is overseen by a combination of Investment and Corporate Risk Management, as well as insurance portfolio managers focused specifically on managing the investment risk embedded in our portfolio.

While financial conditions in Europe have broadly improved, the possibility of capital market volatility spreading through a highly integrated and interdependent banking system remains. Despite signs of continuous improvement in the region, we continue to closely monitor our exposure to the region.

As of March 31, 2021, our total European exposure had an amortized cost and fair value of $3,409 million and $3,673 million, respectively. European exposure with a primary focus on Greece, Ireland, Italy, Portugal and Spain (which we refer to as "peripheral Europe") amounts to $383 million, which includes non-financial institutions exposure in Ireland of $141 million, in Italy of $113 million, and in Spain of $95 million. We also had financial institutions exposure in Italy of $10 million and in Spain of $24 million. We did not have any exposure to Portugal, Ireland and Greece.


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Among the remaining $3,290 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 March 31, 2021, our non-peripheral sovereign exposure was $93 million, which consisted of fixed maturities and derivative assets. We also had $556 million in net exposure to non-peripheral financial institutions, with a concentration in Switzerland of $96 million and the United Kingdom of $279 million. The balance of $2,641 million was invested across non-peripheral, non-financial institutions.

Some of the major country level exposures were in the United Kingdom of $1,763 million, in The Netherlands of $273 million, in Belgium of $167 million, in France of $321 million, in Germany of $199 million, in Switzerland of $258 million, and in Russia of $57 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 and Nonconsolidated Investment Entities

We use many forms of entities to achieve our business objectives and we have participated in varying degrees in the design and

formation of these entities. These entities are considered to be VIEs or VOEs (collectively, "Consolidated Investment Entities"),

or nonconsolidated VIEs, and we evaluate our involvement with each entity to determine whether consolidation is required.

See Consolidation and Noncontrolling Interests and Fair Value Measurements 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. Additionally, see the Consolidated and Nonconsolidated 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. Refer to the Consolidated and Nonconsolidated Investment Entities Note and 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 for an understanding over the Company's Securitizations. 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.

Guarantors and Issuers of Guaranteed Securities

Voya Financial, Inc. (the “Parent Issuer”) has issued certain notes pursuant to transactions registered under the Securities Act of 1933. Such securities consist of (i) the 5.7% senior notes due 2043, the 3.65% senior notes due 2026, the 4.8% senior notes due 2046, and the 3.125% senior notes due 2024, with an aggregate principal amount of $1.5 billion as of March 31, 2021 and December 31, 2020 (collectively, the “Senior Notes”) and (ii) the 5.65% fixed-to-floating rate junior subordinated notes due 2053 and the 4.7% fixed-to-floating junior subordinated notes due 2048, with an aggregate principal amount of $1.1 billion as of March 31, 2021 and December 31, 2020 (collectively, the “Junior Subordinated Notes” and, together with the Senior Notes, the “Registered Notes”).

Voya Holdings (the “Subsidiary Guarantor”), a wholly owned subsidiary of the Parent Issuer, has guaranteed each of the Registered Notes on a full and unconditional basis. No other subsidiary of the Parent Issuer has guaranteed any of the Registered Notes. The Parent Issuer and the Subsidiary Guarantor are hereby referred to below as the “Obligor Group.”

The full and unconditional guarantees require the Subsidiary Guarantor to satisfy the obligations of the guaranteed security immediately, if and when the Parent Issuer has failed to make a scheduled payment thereunder. If the Subsidiary Guarantor does not make such payment, any holder of the guaranteed security may immediately bring suit directly against the Subsidiary Guarantor for payment of amounts due and payable.

Set forth below is summarized financial information of the Obligor Group, as presented on a combined basis. Inter-combination transactions and balances within the Obligor Group have been eliminated. In addition, financial information of any non-issuer or non-guarantor subsidiaries, which would normally be consolidated by either the Parent Issuer or the Subsidiary Guarantor under U.S. generally accepted accounting principles, has been excluded from such presentation.


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Refer to the Summarized Financial Information of the Obligor Group as of and for the three months ended March 31, 2021 and as of and for the year ended December 31, 2020 below:


	As of and for the
($ in millions)	Three Months Ended March 31, 2021		Year Ended December 31, 2020
Summarized Statement of Operations Information:
Total revenues	$	8	$	32
Total benefits and expenses	54		173
Income (loss) from continuing operations, net of tax	547		(100)

Net income (loss) before equity in earnings (losses) of unconsolidated affiliates	547		(100)
Net income (loss) available to Obligor Group	547		(100)


Summarized Balance Sheet Information
Total investments	246		60
Cash and cash equivalents	437		229
Current income tax assets	(485)		—
Deferred income tax assets	792		869
Loans to non-obligated subsidiaries	296		180
Due from non-obligated subsidiaries	(32)		2
Total assets	1,365		1,356

Short-term debt with non-obligated subsidiaries	170		653

Long-term debt	2,968		3,041
Total liabilities	$	3,749	$	4,120

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. 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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The following table summarizes the net estimated potential change in fair value from hypothetical 100 basis point upward and downward shifts in interest rates as of March 31, 2021:


	As of March 31, 2021
					Hypothetical Change in Fair Value(2)
($ in millions)	Notional		Fair Value(1)		+ 100 Basis Points Yield Curve Shift		- 100 Basis Points Yield Curve Shift

Financial assets with interest rate risk:
Fixed maturity securities, including securities pledged	$	—	$	36,994	$	(2,569)	$	2,518
Commercial mortgage and other loans	—		6,044		(278)		257




Financial liabilities with interest rate risk:
Investment contracts:
Funding agreements without fixed maturities and deferred annuities(4)	—		42,338		(3,498)		4,197
Funding agreements with fixed maturities	—		1,201		(42)		30
Supplementary contracts and immediate annuities	—		871		(38)		44
Derivatives:
Interest rate contracts	18,965		48		67		(105)
Long-term debt	—		3,391		(208)		238
Embedded derivatives on reinsurance	—		192		68		(79)
Guaranteed benefit derivatives(3):




Other(4)	—		41		(15)		43

(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) 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.

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

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 March 31, 2021. 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 March 31, 2021
					Hypothetical Change in Fair Value(1)
($ in millions)	Notional		Fair Value		+ 10% Equity Shock		-10% Equity Shock
Financial assets with equity market risk:
Equity securities, available-for-sale	$	—	$	393	$	31	$	(31)
Limited liability partnerships/corporations	—		1,487		92		(92)
Derivatives:
Equity futures and total return swaps	160		7		16		(16)
Equity options	42		1		—		—
Financial liabilities with equity market risk:
Guaranteed benefit derivatives:


Other(2)	—		41		(11)		11

(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.

Market Risk Related to Credit Risk

In connection with the Individual Life Transaction, we entered into large reinsurance agreements with SLD, our former insurance subsidiary, with respect to the portion of the Individual Life and other legacy businesses that have been written by our insurance subsidiaries domiciled in Minnesota, Connecticut, and New York. As a result, SLD became our largest reinsurer during the first quarter. While SLD's reinsurance obligations to us are collateralized through assets held in trust, in the event of any default by SLD of its reinsurance obligations to us, or any loss of credit for such reinsurance, there can be no assurance that such assets will be sufficient to support the reserves that we would be required to establish or pay claims. There were no other material changes in our credit risk.

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

Item 4. Controls and Procedures

Disclosure Controls and Procedures

The Company carried out an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended ("Exchange Act")) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company's current disclosure controls and procedures are effective in ensuring that material information relating to the Company required to be disclosed in the Company's periodic SEC filings is made known to them in a timely manner.

Changes in Internal Control Over Financial Reporting

There were no changes to the Company's internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the quarter ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

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


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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, 2020 (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.

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 March 31, 2021:


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)(4)
						(in millions)
January 1, 2021 - January 31,2021	608,945	$	58.65	(3)	509,909	$	1,134
February 1, 2021- February 28, 2021	4,364,086	55.90		(4)	3,715,799	879
March 1, 2021 - March 31, 2021	73,151	64.01			—	879
Total	5,046,182	$	56.35		4,225,708	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 March 31, 2021, there was an increase of 820,474 Treasury shares in connection with such withholding activities.

(2) On January 28, 2021, the Board of Directors provided its most recent share repurchase authorization, increasing the aggregate amount of the Company's common stock authorized for repurchase by $1 billion. The additional share repurchase authorization expires on March 31, 2022 (unless extended), and does not obligate the Company to purchase any shares. The authorization for the share repurchase program may be terminated, increased or decreased by the Board of Directors at any time.

(3) On December 28, 2020, the Company entered into a share repurchase agreement with a third-party financial institution to repurchase $150 million of the Company's common stock. Pursuant to the agreement, the Company received initial delivery of 2,066,472 shares based on the closing market price of the Company's stock on December 28, 2020 of $58.07. This arrangement closed on January 22, 2021 and an additional 509,909 shares were delivered based on the daily volume-weighted average price of the Company's common stock.

(4) On February 11, 2021, the Company entered into a share repurchase agreement with a third-party financial institution to repurchase $250 million of the Company's common stock. Pursuant to the agreement, the Company received initial delivery of 3,617,291 shares based on the closing market price of the Company's stock on February 11, 2021 of $55.29. This arrangement is scheduled to terminate no later than the end of the second quarter of 2021, at which time the Company will settle any positive or negative share balances based on the daily volume-weighted average price of the Company's common stock.

Item 6. Exhibits

See Exhibit Index on the following page.


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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.


May 10, 2021	Voya Financial, Inc.
(Date)	(Registrant)


	By: /s/	Michael S. Smith
		Michael S. Smith
		Executive Vice President and
		Chief Financial Officer
		(Duly Authorized Officer and Principal Financial Officer)


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