Income Taxes

Income taxes were different from the amount computed by applying the federal income tax rate to income (loss) before income taxes for the following reasons for the periods indicated:



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Income (loss) before income taxes	$	103.0		$	112.8		$	164.7		$	219.7
Tax rate	35.0		%	35.0		%	35.0		%	35.0		%
Income tax expense (benefit) at federal statutory rate	36.1			39.5			57.6			76.9
Tax effect of:
Dividends received deduction	(7.9		)	(6.3		)	(13.9		)	(11.6		)
Valuation allowance	—			1.9			—			1.9
IRS audit adjustment	—			—			(0.1		)	(0.3		)
Other	0.2			0.8			0.8			0.8
Income tax expense (benefit)	$	28.4		$	35.9		$	44.4		$	67.7

Valuation allowances are provided when it is considered unlikely that deferred tax assets will be realized. As of June 30, 2014 and December 31, 2013, the Company had total valuation allowances of approximately $11.1. As of June 30, 2014 and December 31, 2013, $130.4 of these valuation allowances were allocated to continuing operations and $(119.3) as of the end of each period were allocated to Other comprehensive income related to realized and unrealized capital losses.

For the three months and six months ended June 30, 2014 and 2013, there were no total changes in the valuation allowances. With respect to the three months and six months ended June 30, 2014, there were no changes in the valuation allowances that were allocated to continuing operations or Other comprehensive income. With respect to the three months and six months ended June 30, 2013, $1.9 was allocated to continuing operations and $(1.9) was allocated to Other comprehensive income.

Tax Sharing Agreement

The results of the Company's operations are included in the consolidated tax return of Voya Financial, Inc. Generally, the Company's financial statements recognize the current and deferred income tax consequences that result from the Company's activities during the current and preceding periods pursuant to the provisions of Income Taxes (ASC 740) as if the Company were a separate taxpayer rather than a member of Voya Financial, Inc.'s consolidated income tax return group with the exception of any net operating loss carryforwards and capital loss carryforwards, which are recorded pursuant to the tax sharing agreement. Under the tax sharing agreement, Voya Financial, Inc. will pay the Company for the tax benefits of ordinary and capital losses only in the event that the consolidated tax group actually uses the tax benefit of losses generated.

Tax Regulatory Matters

During April 2014, the IRS completed its examination of the Company's returns through tax year 2012. The 2012 audit settlement did not have a material impact on the financial statements. The Company is currently under audit by the IRS, and it is expected that the examination of tax year 2013 will be finalized within the next twelve months. The Company and the IRS have agreed to participate in the Compliance Assurance Program for the tax years 2013 and 2014.