Insurance Subsidiaries

Principal Insurance Subsidiaries Statutory Equity and Income

Each of Voya Financial, Inc.'s four principal insurance subsidiaries (the "Principal Insurance Subsidiaries") is subject to minimum risk-based capital ("RBC") requirements established by the insurance departments of their respective states of domicile. The formulas for determining the amount of RBC specify various weighting factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. Regulatory compliance is determined by a ratio of total adjusted capital ("TAC"), as defined by the National Association of Insurance Commissioners ("NAIC"), to authorized control level RBC, as defined by the NAIC. Each of the Company's Principal Insurance Subsidiaries exceeded the minimum RBC requirements that would require any regulatory or corrective action for all periods presented herein.

The Company's Principal Insurance Subsidiaries are each required to prepare statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the insurance department of its respective state of domicile. Such statutory accounting practices primarily differ from U.S. GAAP by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities and contract owner account balances using different actuarial assumptions as well as valuing investments and certain assets and accounting for deferred taxes on a different basis. Certain assets that are not admitted under statutory accounting principles are charged directly to surplus. Depending on the regulations of the insurance department of an insurance company’s state of domicile, the entire amount or a portion of an insurance company’s asset balance can be non-admitted based on the specific rules regarding admissibility. For the years ended December 31, 2017, 2016 and 2015, the Principal Insurance Subsidiaries have no prescribed or permitted practices that materially impact total capital and surplus.

Statutory Net income (loss) for the years ended December 31, 2017, 2016 and 2015 and statutory capital and surplus as of December 31, 2017 and 2016 of the Company's Principal Insurance Subsidiaries are as follows:



	Statutory Net Income (Loss)								Statutory Capital and Surplus
	2017		2016			2015			2017		2016
Subsidiary Name (State of Domicile):
Voya Insurance and Annuity Company ("VIAC") (IA)	$	514	$	232		$	553		$	1,835	$	1,906
Voya Retirement Insurance and Annuity Company ("VRIAC") (CT)	195		266			318			1,793		1,959
Security Life of Denver Insurance Company (CO)	58		93			(245		)	950		897
ReliaStar Life Insurance Company ("RLI") (MN)	234		(507		)	74			1,483		1,662

All of the Company's Principal Insurance Subsidiaries have capital and surplus levels that exceed their respective regulatory minimum requirements.

As of December 31, 2017, VIAC had the following surplus notes ("the Surplus Notes") outstanding to its insurance company affiliates.



	Maturity	2017		2016
7.979% Security Life of Denver Insurance Company, due 2029 ⁽¹⁾	12/07/2029	$	35	$	35
6.257% Security Life of Denver International Limited, due 2034 ⁽¹⁾	12/29/2034	50		50
6.257% ReliaStar Life Insurance Company, due 2034	12/29/2034	175		175
6.257% Voya Retirement Insurance and Annuity Company, due 2034	12/29/2034	175		175

⁽¹⁾Under the Transaction, an affiliate of the buyer will purchase these surplus notes upon closing.

As part of the restructuring associated with the Master Transaction Agreement, effective December 28, 2017 Voya Financial, Inc. ("Voya") and Voya Holdings Inc.("Voya Holdings") entered into an agreement with VIAC in order to provide a joint and several guarantee of VIAC’s payment obligations as the issuer of the Surplus Notes. Accordingly, on January 9, 2018, Kroll Bond Rating Agency assigned a rating of BBB+, outlook Stable to the Surplus Notes.

Insurance Subsidiaries Dividend Restrictions

The states in which the insurance subsidiaries of Voya Financial, Inc. are domiciled impose certain restrictions on the subsidiaries' ability to pay dividends to their parent. 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.

Under the insurance laws applicable to Voya Financial, Inc.'s insurance subsidiaries domiciled in Connecticut, Iowa and Minnesota, an "extraordinary" dividend or distribution is defined as a dividend or distribution that, together with other dividends and distributions made within the preceding twelve months, exceeds the greater of (i) 10% of the insurer's policyholder surplus as of the preceding December 31, or (ii) the insurer's net gain from operations for the twelve-month period ending the preceding December 31, in each case determined in accordance with statutory accounting principles. Under Colorado insurance law, an "extraordinary dividend" or distribution is defined as a dividend or distribution that, together with other dividends and distributions made within the preceding twelve months, exceeds the lesser of (i) 10% of the insurer's policyholder surplus as of the preceding December 31, or (ii) the insurer's net gain from operations for the twelve-month period ending the preceding December 31, in each case determined in accordance with statutory accounting principles. In addition, under the insurance laws of Connecticut, Iowa and Minnesota, no dividend or other distribution exceeding an amount equal to a domestic insurance company's earned surplus may be paid without the domiciliary insurance regulator's prior approval. The Company's Principal Insurance Subsidiaries domiciled in Colorado, Connecticut and Iowa each have ordinary dividend capacity for 2018. However, as a result of the extraordinary dividends it paid in 2015 and 2016, together with statutory losses incurred in connection with the recapture and cession to one of the Company's Arizona captives of certain term life insurance business in the fourth quarter of 2016, the Company's Principal Insurance Subsidiary domiciled in Minnesota currently has negative earned surplus and therefore does not have capacity at this time to make ordinary dividend payments to Voya Holdings and cannot make an extraordinary dividend payment without domiciliary insurance regulatory approval, which can be granted or withheld at the discretion of the regulator.

Principal Insurance Subsidiaries - Dividends and Return of Capital

The following table summarizes dividends permitted to be paid by the Company's Principal Insurance Subsidiaries to Voya Financial, Inc. or Voya Holdings without the need for insurance regulatory approval for the periods presented:



	Dividends Permitted without Approval
	2018		2017		2016
Subsidiary Name (State of domicile):
Voya Insurance and Annuity Company (IA)⁽¹⁾	$	208	$	279	$	448
Voya Retirement Insurance and Annuity Company (CT)	158		266		364
Security Life of Denver Insurance Company (CO)	53		74		55
ReliaStar Life Insurance Company (MN)	—		—		—

⁽¹⁾ Due to the impending sale of VIAC, the Company does not expect VIAC to pay any ordinary dividends in 2018. The difference between the buyer's capital and statutory capital reflects the purchase price for VIAC and will represent either a capital contribution or extraordinary dividend upon closing.

The following table summarizes dividends and extraordinary distributions paid by each of the Company's Principal Insurance Subsidiaries to its parent for the periods indicated:



	Dividends Paid				Extraordinary Distributions Paid
	Year Ended December 31,				Year Ended December 31,
	2017		2016		2017		2016
Subsidiary Name (State of domicile):
Voya Insurance and Annuity Company (IA)	$	278	$	373	$	250	$	—
Voya Retirement Insurance and Annuity Company (CT)	265		278		—		—
Security Life of Denver Insurance Company (CO)	73		54		—		—
ReliaStar Life Insurance Company (MN)	—		—		231		100

Captive Reinsurance Subsidiaries

Voya Financial, Inc.'s special purpose life reinsurance captive insurance company subsidiaries domiciled in Missouri (collectively referred to as the "captive reinsurance subsidiaries") provide reinsurance to the Company’s insurance subsidiaries in order to facilitate the financing of statutory reserves including those associated with Regulation XXX or AG38 and to fund certain statutory annuity reserve requirements. Each of the Company's captive reinsurance subsidiaries, that is domiciled in Missouri, is subject to specific minimum capital requirements set forth in the insurance statutes of Missouri, and is required to prepare statutory financial statements in accordance with statutory accounting practices prescribed in the Missouri insurance statutes or permitted by the Missouri insurance department. There are no prescribed practices material to the Missouri captive reinsurance subsidiaries, except that certain of these subsidiaries have included the value of LOCs and trust notes as admitted assets supporting the statutory reserves ceded to such subsidiaries. The effect of these prescribed practices was to increase statutory capital and surplus by $623 and $577 as of December 31, 2017 and 2016, respectively. The aggregate statutory capital and surplus, including the aforementioned prescribed practices, was $398 and $352 as of December 31, 2017 and 2016, respectively.

The Company's Arizona captives, SLDI and its wholly owned subsidiary RRII, provide reinsurance to the Company's insurance subsidiaries in order to facilitate the financing of statutory reserves including those associated with Regulation XXX or AG38 and to fund certain statutory annuity reserve requirements including the living benefit guarantees under the Company's CBVA business. Arizona state insurance statutes and regulations require the Company's Arizona captives to file financial statements with the Arizona Department of Insurance ("ADOI") and allow the filing of such financial statements on a U.S. GAAP basis modified for certain prescribed practices outlined in the Arizona insurance statutes that are applicable to U.S. GAAP filers. These prescribed practices had no impact on Company's Arizona captives Shareholder's equity as of December 31, 2017 and 2016. In addition, the Arizona captives obtained approval from the ADOI for certain permitted practices, including, for SLDI, taking reinsurance credit for certain ceded reserves where the assets backing the liabilities are held by a wholly owned Principal Insurance Subsidiary of Voya Financial, Inc. SLDI has recorded a receivable for these assets. The effect of the permitted practice was to increase SLDI's Shareholder's equity by $451 and $441 as of December 31, 2017 and 2016, respectively, but has no effect on the Company's consolidated Total shareholders' equity. In the unlikely event that the permitted practice is suspended in the future, the Company has various alternatives which could be executed to allow the reinsurance credit for these ceded reserves. Additionally, RRII has obtained approval from the ADOI to present the U.S. GAAP deferred liability resulting from its assumption of business from a wholly owned Principal Insurance Subsidiary of Voya Financial, Inc. net of related federal income taxes, as a separate component of Shareholder's equity. The effect of the permitted practice was to increase RRII's Shareholder's equity by $2,761 and $2,467 as of December 31, 2017 and 2016 , respectively, but has no effect on SLDI or the Company's Consolidated total shareholders' equity. In conjunction with the Transaction disclosed in the Business Held for Sale and Discontinued Operations Note to these Consolidated Financial Statements, the reinsurance treaty assumed by RRII is expected to be recaptured in 2018 and the associated liability will be released through RRII net income. At that time, the permitted practice will no longer be in effect.

The captive reinsurance subsidiaries may not declare or pay any dividends other than in accordance with their respective insurance reserve financing transaction agreements and their respective governing licensing orders. Likewise, the Company's Arizona captives may not declare or pay dividends other than in accordance with their annual capital and dividend plans as approved by the ADOI, which include minimum capital requirements. The Company's Arizona captives did not make any dividend payments in 2017.