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VOYA FINANCIAL : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-K)

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02/23/2017 | 11:15pm CET
For the purposes of the discussion in this Annual Report on Form 10-K, 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 results of operations for the years ended December 31, 2016, 2015 and 2014 and financial condition as of December 31, 2016 and 2015. This item should be read in its entirety and in conjunction with the Consolidated Financial Statements and related notes contained in Part II, Item 8. of this Annual Report on Form 10-K.


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

Overview


We provide our principal products and services through five segments:
Retirement, Investment Management, Annuities, Individual Life and Employee
Benefits. In addition, we have a Closed Block Variable Annuity ("CBVA") segment.
Activities not directly related to our segments such as our corporate
operations, corporate level assets and financial obligations are included in
Corporate. Effective the fourth quarter of 2016, certain activities related to a
run-off block of guaranteed investment contracts ("GICs") and funding agreements
as well as residual activity on closed or divested business, including our group
reinsurance and individual reinsurance businesses, are also included in
Corporate.

• Our Retirement segment provides tax-deferred, employer-sponsored retirement

savings plans and administrative services in corporate, education,

healthcare, other non-profit and government markets. Stable value products

are also offered to institutional clients where we may or may not be

providing defined contribution products and services. Our Retirement segment

also provides individual retirement accounts ("IRAs") and other retail

financial products as well as comprehensive financial advisory services to

individual customers. Our retirement products and services are distributed

through multiple intermediary channels, including third-party administrators

("TPAs"), independent and national wirehouse affiliated brokers and

registered investment advisors, in addition to independent sales agents and

     consulting firms. We also have a direct sales team for large defined
     contribution plans and stable value business, as well as a team of
     affiliated brokers who offer our products in person, via telephone and
     online.



•    Our Investment Management segment provides investment products and
     retirement solutions to both individual and institutional customers by
     offering domestic and international fixed income, equity, multi-asset and

alternative products and solutions across a range of geographies, market

sectors, investment styles and capitalization spectrums. Investment

Management products and services are primarily marketed to institutional

clients, including public, corporate and union retirement plans, endowments

and foundations and insurance companies, as well as individual investors and

the general accounts of our insurance company subsidiaries. Investment

Management products and services are distributed through a combination of

our direct sales force, consultant channel and intermediary partners (such

     as banks, broker-dealers and independent financial advisers).


• Our Annuities segment provides fixed and indexed annuities, tax-qualified

mutual fund custodial products and other investment-only products and payout

annuities for pre-retirement wealth accumulation and postretirement income

     management. Annuity products are primarily distributed by independent
     broker-dealers, independent insurance agents/ independent marketing
     organizations, affiliated broker-dealers, and banks.



•    Our Individual Life segment provides wealth protection and transfer

opportunities through universal and variable life products. Our customers

range across a variety of age groups and income levels. We primarily

distribute our product offerings through a network of independent general

agents and managing directors ("Aligned Distributors"), who are committed to

promoting Voya products to independent agents and advisors. Aligned

Distributors receive higher levels of service, and access to proprietary

tools and training. We also support other independent general agents and

marketing organizations who sell a broad portfolio of products from various

carriers including Voya branded life, annuity and mutual fund offerings.

• Our Employee Benefits segment provides stop loss, group life, voluntary

employee-paid and disability products to mid-sized and large businesses. We

reinsure substantially all of our new disability sales to a third party. To

distribute our products, we utilize brokers, consultants, TPAs and private

exchanges. In the voluntary market, policies are marketed to employees at

the worksite through enrollment firms, technology partners and brokers.




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• Our CBVA segment includes run-off and legacy business lines that are no

longer being actively marketed or sold such as variable annuity contracts

that were designed to offer long-term savings products in which individual

contract owners made deposits that are maintained in separate accounts.

These products included options for policyholders to purchase living benefit

riders. In 2009, we separated our CBVA segment from our other operations,

placing it in run-off, and made a strategic decision to stop actively

writing new retail variable annuity products with substantial guarantee

features (the last policies were issued in 2010 and the block shifted to

run-off). Accordingly, this segment has been classified as closed block and

is managed separately from our other segments. Furthermore, we seek

opportunities to accelerate the run-off of the block, where possible. For

example, in recent years we have made several income enhancement offers to

holders of a particular series of GMIB contracts, under which policy holders

were offered an incentive to annuitize prior to the end of the waiting

period, and we have waived the remaining waiting period on these GMIB

contracts. In addition, the SEC recently approved the filing of our GMIB

enhanced surrender value offer. The offer will occur in the first quarter of

2017 and provide certain GMIB policyholders an option to surrender their

     contracts in exchange for an enhancement to their contract's surrender
     value.



We include in Corporate the activities not directly related to our segments such
as corporate operations, corporate level assets and financial obligations and,
effective the fourth quarter of 2016, certain activities in run-off related to a
block of GICs and funding agreements, described below, as well as residual
activity on closed or divested businesses, including our group reinsurance and
individual reinsurance businesses, which will not have a meaningful ongoing
impact on Operating earnings before income taxes. In addition, Corporate
activities includes investment income on assets backing surplus in excess of
amounts held at the segment level, financing and interest expenses, and other
items not allocated to segments, including items such as expenses of our
Strategic Investment Program described below, certain expenses and liabilities
of employee benefit plans and intercompany eliminations.

During the fourth quarter of 2016, we accelerated the run-off of a block of GICs
and funding agreements through early termination of certain FHLB funding
agreements. The remaining GIC and funding agreements supporting this block will
mature or be terminated by the end of 2017 and any new funding agreements will
support corporate liquidity.

Trends and Uncertainties

Throughout this MD&A, we discuss a number of trends and uncertainties that we
believe may materially affect our future liquidity, financial condition or
results of operations. Where these trends or uncertainties are specific to a
particular aspect of our business, we often include such a discussion under the
relevant caption of this MD&A, as part of our broader analysis of that area of
our business. In addition, the following factors represent some of the key
general trends and uncertainties that have influenced the development of our
business and our historical financial performance and that we believe will
continue to influence our business and financial performance in the future.

Market Conditions


While extraordinary monetary accommodation has suppressed volatility in rate,
credit and domestic equity markets for an extended period, global capital
markets may now be past peak accommodation as the U.S. Federal Reserve continues
its gradual pace of policy normalization. As global monetary policy becomes less
accommodative, an increase in market volatility could affect our business,
including through effects on the yields we earn on invested assets, changes in
required reserves and capital, and fluctuations in the value of our assets under
management ("AUM") or administration ("AUA"). These effects could be exacerbated
by uncertainty about future fiscal policy, changes in tax policy, the scope of
potential deregulation, and levels of global trade. In the short- to
medium-term, the potential for increased volatility, coupled with prevailing
interest rates below historical averages, can pressure sales and reduce demand
as consumers hesitate to make financial decisions. In addition, this environment
could make it difficult to manufacture products that are consistently both
attractive to customers and profitable. Financial performance can be adversely
affected by market volatility as fees driven by AUM fluctuate, hedging costs
increase and revenue declines due to reduced sales and increased outflows. As a
company with strong retirement, investment management and insurance
capabilities, however, we believe the market conditions noted above may, over
the long term, enhance the attractiveness of our broad portfolio of products and
services. We will need to continue to monitor the behavior of our customers and
other factors, including mortality rates, morbidity rates, annuitization rates
and lapse rates, which adjust in response to changes in market conditions in
order to ensure that our products and services remain attractive as well as
profitable. For additional information on our sensitivity to interest rates and
equity market prices, see Quantitative and Qualitative Disclosures About Market
Risk in Part II, Item 7A. of this Annual Report on Form 10-K.

Interest Rate Environment


While interest rates moved sharply higher after the U.S. presidential election,
interest rates remain at levels that are low by historical standards. Despite
the significant trend upward late in the year, the yield curve moved only
modestly higher over the entirety of

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2016. The late upward shift masked a move sharply lower and flatter through the
first half of the year resulting in the average annual rate being lower than the
prior year. The Federal Reserve ended 2016 with its second Fed Funds rate
increase since the beginning of policy normalization. The timing and impact of
any further increases in the Federal Funds rate are uncertain and dependent on
the Federal Reserve Board's assessment of economic growth, continued development
in labor markets, the outlook for inflation and other risks that will impact the
level and volatility of rates. Ultra-low yields throughout the developed world
may serve as an anchor for U.S. Treasury rates.

The continued low interest rate environment has affected and may continue to
affect the demand for our products in various ways. While interest rates remain
low, we may experience lower sales and reduced demand as it is more difficult to
manufacture products that are consistently both attractive to customers and
profitable. Our financial performance may be adversely affected by the current
low interest rate environment, or by rapidly increasing rates.

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

• Our general account investment portfolio, which was approximately $90.7

billion as of December 31, 2016, consists predominantly of fixed income

investments and had an annualized earned yield of approximately 5.1% in the

fourth quarter of 2016. In the near term and absent further material change

in yields available on fixed income investments, we expect the yield we earn

on new investments will be lower than the yields we earn on maturing

investments, which were generally purchased in environments where interest

rates were higher than current levels. We currently anticipate that proceeds

     that are reinvested in fixed income investments during 2017 will earn an
     average yield in the range of 3.75% to 4.25%. 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.


• Certain of our products pay guaranteed minimum rates. For example, fixed

accounts and a portion of the stable value accounts included within defined

contribution retirement plans, universal life ("UL") policies and individual

fixed annuities include guaranteed minimum credited rates. 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.


• Our CBVA segment provides certain guaranteed minimum benefits. A prolonged

low interest rate environment may subject us to increased hedging costs or

an increase in the amount of statutory reserves that our insurance

subsidiaries are required to hold for these variable annuity guarantees,

lowering their statutory surplus, which would adversely affect their ability

to pay dividends to us. A prolonged low interest rate environment may also

affect the perceived value of guaranteed minimum income benefits, which in

turn may lead to a higher rate of annuitization of those products over time.




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 this 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 this Annual
Report on Form 10-K.

The Impact of our CBVA Segment on U.S. GAAP Earnings


We manage our CBVA segment to focus on protecting regulatory and rating agency
capital through risk management and hedging. Because U.S. GAAP accounting
differs from the methods used to determine regulatory and rating agency capital
measures, our CBVA segment tends to create earnings volatility in our U.S. GAAP
financial statements. In particular, the amount of capital we have allocated to
our CBVA segment for U.S. GAAP purposes includes certain intangible assets that
are subject to periodic impairment testing and loss recognition, and U.S. GAAP
reserves in our CBVA segment are in some cases based on assumptions that differ
from those we use to determine statutory and rating agency capital. To the
extent that macroeconomic conditions adversely deviate from our assumptions, or
if market conditions or other developments require us to write-down these
intangible assets or increase U.S. GAAP reserves, we may recognize U.S. GAAP
losses in our CBVA segment. For additional information

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on our hedging program within the CBVA segment, see Quantitative and Qualitative
Disclosures About Market Risk in Part II, Item 7A. of this Annual Report on Form
10-K.

Governmental and Public Policy Impact on Demand for Our Products


The demand for our products is influenced by a dynamic combination of
governmental and public policy factors. We anticipate that legislative and other
governmental activity and our ability to flexibly respond to changes resulting
from such activity will be crucial to our long-term financial performance. In
particular, the demand for our products is influenced by the following factors:

• Availability and quality of public retirement solutions: The lack of

comprehensive or sufficient government-sponsored retirement solutions has

been a significant driver of the popularity of private sector retirement

products. We believe that concerns regarding Social Security and the reduced

     enrollment in defined benefit retirement plans may further increase the
     demand for private sector retirement solutions. The impact of any
     legislative actions or new government programs relating to retirement
     solutions on our business and financial performance will depend

significantly on the level of private sector involvement and our ability to

participate in any such programs. We believe we are well positioned to take

advantage of any future developments involving participation in any such

programs by private sector providers.

• Tax-advantaged status: Many of the retirement savings, accumulation and

protection products we sell qualify for tax-advantaged status. Changes in

U.S. tax laws that alter the tax benefits of certain investment vehicles

could have a material effect on demand for our products.

Increasing Longevity and Aging of the U.S. Population


We believe that the increasing longevity and aging of the U.S. population will
affect (i) the demand, types of and pricing for our products and (ii) the levels
of our AUM and assets under administration ("AUA"). As the "baby boomer"
generation prepares for a longer retirement, we believe that demand for
retirement savings, growth and income products will grow. The impact of this
growth may be offset to some extent by asset outflows as an increasing
percentage of the population begins withdrawing assets to convert their savings
into income.

Competition

We operate in highly competitive markets. We face a variety of large and small
industry participants, including diversified financial institutions, investment
managers and insurance companies. These companies compete in one form or another
for the growing pool of retirement assets driven by a number of exogenous
factors such as the continued aging of the U.S. population and the reduction in
safety nets provided by governments and corporations. In many segments, product
differentiation is difficult as product development and life cycles have
shortened. In addition, we have experienced pressure on fees as product
unbundling and lower cost alternatives have emerged. As a result, scale and the
ability to provide value-added services and build long-term relationships are
important factors to compete effectively. We believe that our leading presence
in the retirement market and resulting relationships with millions of
participants, diverse range of capabilities (as a provider of retirement,
investment management and insurance products and services) and broad
distribution network uniquely position us to effectively serve consumers'
increasing demand for retirement savings, income and protection solutions.

Seasonality and Other Matters


Our business results can vary from quarter to quarter as a result of seasonal
factors. For all of our segments, the first quarter of each year typically has
elevated operating expenses, reflecting higher payroll taxes, equity
compensation grants, and certain other expenses that tend to be concentrated in
the first quarters. Additionally, alternative investment income tends to be
lower in the first quarters. Other seasonal factors that affect our business
include:

Retirement

• The first quarters tend to have the highest level of recurring deposits in

Corporate Markets, due to the increase in participant contributions from

the receipt of annual bonus award payments or annual lump sum matches and

profit sharing contributions made by many employers. Corporate Market

       withdrawals also tend to increase in the first quarters as departing
       sponsors change providers at the start of a new year.



•      In the third quarters, education tax-exempt markets typically have the

lowest recurring deposits, due to the timing of vacation schedules in the

       academic calendar.




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• The fourth quarters tend to have the highest level of single/transfer

deposits due to new Corporate Market plan sales as sponsors transfer from

other providers when contracts expire at the fiscal or calendar year-end.

Recurring deposits in the Corporate Market may be lower in the fourth

quarters as higher paid participants scale back or halt their

contributions upon reaching the annual maximums allowed for the year.

       Finally, Corporate Market withdrawals tend to increase in the fourth
       quarters, as in the first quarters, due to departing sponsors.


Investment Management

• In the fourth quarters, performance fees are typically higher due to

certain performance fees being associated with calendar-year performance

against established benchmarks and hurdle rates.

Individual Life

•      The fourth quarters tend to have the highest levels of universal life
       insurance sales. This seasonal pattern is typical for the industry.


Employee Benefits

•      The first quarters tend to have the highest Group Life loss ratio. Sales
       for Group Life and Stop Loss also tend to be the highest in the first

quarters, as most of our contracts have January start dates in alignment

       with the start of our clients' fiscal years.



•      The third quarters tend to have the second highest Group Life and Stop
       Loss sales, as a large number of our contracts have July start dates in
       alignment with the start of our clients' fiscal years.



In addition to these seasonal factors, our results are impacted by the annual
review of assumptions related to future policy benefits and deferred policy
acquisition costs ("DAC"), value of business acquired ("VOBA") (collectively,
"DAC/VOBA") and other intangibles, which we generally complete in the third
quarter of each year, and annual remeasurement related to our employee benefit
plans, which we generally complete in the fourth quarter of each year. See
Critical Accounting Judgments and Estimates in Part II, Item 7. of this Annual
Report on Form 10-K for further information.

Additionally, we have updated our expense allocation methodology between our
segments effective January 1, 2017 that will result in higher operating expenses
for certain segments, most notably the Annuities segment. This update has no
impact on our total operating expenses.

Carried Interest


Net investment income and net realized gains (losses), within our Investment
Management segment, includes, for this and previous periods, performance fees
related to sponsored private equity funds ("carried interest") that are subject
to later adjustment based on subsequent fund performance, to the extent that
cumulative rates of investment return fall below specified investment hurdles.
For the year ended December 31, 2016, our carried interest total net results
were a loss of $24.0 million, including the reversal of $30.2 million in
previously accrued interest related to a private equity fund which experienced
significant declines in the market value of its investment portfolio. Should the
market value of this portfolio increase in future periods, this reversal could
be fully or partially recovered. As of December 31, 2016, approximately $30.9
million of previously accrued carried interest, none of which is related to the
private equity fund referenced above, 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. For additional
information on carried interest, see Risk Factors - Revenues, earnings and
income from our Investment Management business operations could be adversely
affected if the terms of our asset management agreements are significantly
altered or the agreements are terminated, or if certain performance hurdles are
not realized in Part I, Item 1A. of this Annual Report on Form 10-K.

Strategic Investment Program


In 2015, we announced that we would incur an incremental $350.0 million of
expenses through 2018 for IT simplification, digital and analytics and
cross-enterprise initiatives ("Strategic Investment Program"). We expect these
strategic investments to result in expense efficiency as well as business growth
by improving how we engage our customers. For the year ended December 31, 2016,
we incurred $117.4 million of expenses related to the Strategic Investment
Program, which is reported in Corporate. For 2017, we anticipate incurring
between $80.0 million and $100.0 million of expense related to the Strategic
Investment Program.


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Restructuring


In 2016, we began implementing a series of initiatives designed to make us a
simpler, more agile company able to deliver an enhanced customer experience
("2016 Restructuring"). We expect that these initiatives, combined with the
impact of the Strategic Investment Program, will allow us to increase our annual
run rate cost savings target to at least $100 million in 2018 and subsequent
years. These initiatives include an increasing emphasis on less
capital-intensive products and the achievement of operational synergies from the
combination of our Annuities and Individual Life businesses.

For the year ended December 31, 2016, these initiatives resulted in restructuring expenses of $33.8 million, which are reflected in Operating expenses in the Consolidated Statements of Operations, but excluded from Operating earnings before income taxes. These expenses are classified as a component of Other adjustments to operating earnings and consequently are not included in the operating results of our segments.


As we develop and approve additional restructuring plans, we will incur
additional restructuring expenses in one or more periods through the end of
2018. These costs, which include severance and other costs, cannot currently be
estimated, but could be material, and are not reflected in our run-rate cost
savings estimates for 2018.

Operating Measures

This MD&A includes a discussion of Operating earnings before income taxes and
Operating revenues, each of which is a measure used by management to evaluate
segment performance. We believe that Operating earnings before income taxes
provides a meaningful measure of our business performance and enhances the
understanding of our financial results by focusing on the operating performance
and trends of the underlying business segments and excluding items that tend to
be highly variable from period to period based on capital market conditions or
other factors. Operating earnings before income taxes does not replace Net
income (loss) as the U.S. GAAP measure of our consolidated results of
operations. Therefore, we believe that it is useful to evaluate both Net income
(loss) and Operating earnings before income taxes when reviewing our financial
and operating performance.

Operating Earnings before Income Taxes


Operating earnings before income taxes is a measure used by management to
evaluate segment performance. We believe that Operating earnings before income
taxes provides a meaningful measure of its business and segment performances and
enhances the understanding of our financial results by focusing on the operating
performance and trends of the underlying business segments and excluding items
that tend to be highly variable from period to period based on capital market
conditions and/or other factors. We use the same accounting policies and
procedures to measure segment Operating earnings before income taxes as we do
for consolidated Net income (loss). Operating earnings before income taxes does
not replace Net income (loss) as the U.S. GAAP measure of our consolidated
results of operations. Therefore, we believe that it is useful to evaluate both
Net income (loss) and Operating earnings before income taxes when reviewing our
financial and operating performance. Each segment's Operating earnings before
income taxes is calculated by adjusting Income (loss) 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 operating results, reflects the expected cost
       of these benefits if markets perform in line with our long-term
       expectations and includes the cost of hedging. Other derivative and

reserve changes related to guaranteed benefits are excluded from operating

results, including the impacts related to changes in our nonperformance

       spread;



•      Income (loss) related to businesses exited through reinsurance or

divestment, which includes gains and (losses) associated with transactions

       to exit blocks of business (including net investment gains (losses) on
       securities sold and expenses directly related to these transactions) and

residual run-off activity; these gains and (losses) are often related to

infrequent events and do not reflect performance of operating segments.

       Excluding this activity better reveals trends in our core business,



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which would be obscured by including the effects of business exited, and more
closely aligns Operating earnings before income taxes with how we manage our
segments;

• Income (loss) attributable to noncontrolling interest; which represents

the interest of shareholders, other than Voya Financial, Inc., 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

variable interest entities ("VIEs") or voting interest entities ("VOEs")

       to which we are not economically entitled;


• Income (loss) related to early extinguishment of debt; which includes

losses incurred as a part of transactions where we repurchase outstanding

principal amounts of debt; these losses are excluded from Operating

earnings before income taxes since the outcome of decisions to restructure

       debt are infrequent and 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 our

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. We immediately recognize actuarial gains and losses related to

pension and other postretirement benefit obligations 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 our
       segments or related to infrequent events including capital or

organizational restructurings including certain costs related to debt and

       equity offerings as well as stock and/or cash based deal contingent
       awards; expenses associated with the rebranding of Voya Financial, Inc.;
       severance and other third-party expenses associated with our 2016

Restructuring. These items vary widely in timing, scope and frequency

between periods as well as between companies to which we are compared.

       Accordingly, we adjust for these items as our management believes that
       these items distort the ability to make a meaningful evaluation of the

current and future performance of our segments. Additionally, with respect

to restructuring, these costs represent changes in our operations rather

than investments in the future capabilities of our operating businesses.




Operating earnings before income taxes, when presented on a consolidated basis,
also does not reflect the results of operations of our CBVA segment because this
segment is managed to focus on protecting regulatory and rating agency capital
rather than achieving operating metrics or generating net income. As a result of
this focus on regulatory and rating agency capital, the financial results of the
CBVA segment presented in accordance with GAAP tend to exhibit a high degree of
volatility based on factors, such as the asymmetry between the accounting for
certain liabilities and the corresponding hedging assets, and gains and losses
due to changes in nonperformance risk, that are not necessarily reflective of
the economic costs and benefits of the CBVA business. When we present the
adjustments to Income (loss) before income taxes on a consolidated basis, each
adjustment excludes the relative portions attributable to our CBVA segment and
the relative portions attributable to businesses exited through reinsurance or
divestment.

The most directly comparable U.S. GAAP measure to Operating earnings before income taxes is Income (loss) before income taxes. For a reconciliation of Operating earnings before income taxes to Income (loss) before income taxes, see Results of Operations-Company Consolidated below.

Operating Revenues

Operating revenues is a measure of our 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;




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• Gain (loss) on change 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 operating results, reflects the expected cost of these benefits if
       markets perform in line with our long-term expectations and includes the
       cost of hedging. Other derivative and reserve changes related to
       guaranteed benefits are excluded from operating revenues, including the
       impacts related to changes in our nonperformance spread;


• Revenues related to businesses exited through reinsurance or divestment,

       which includes revenues associated with transactions to exit blocks of
       business (including net investment gains (losses) on securities sold
       related to these transactions) and residual run-off activity; these gains

and (losses) are often related to infrequent events and do not reflect

performance of operating segments. Excluding this activity better reveals

trends in our core business, which would be obscured by including the

effects of business exited, and more closely aligns Operating revenues

       with how we manage our segments;



•      Revenues attributable to noncontrolling interest; which represents the
       interests of shareholders, other than Voya Financial, Inc., 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 we are not economically entitled; and

• Other adjustments to Operating revenues primarily reflect fee income

earned by our broker-dealers for sales of non-proprietary products, which

are reflected net of commission expense in our segments' operating

revenues, other items where the income is passed on to third parties and

the elimination of intercompany investment expenses included in operating

       revenues.



Operating revenues also do not reflect the revenues of our CBVA segment, since
this segment is managed to focus on protecting regulatory and rating agency
capital rather than achieving operating metrics or generating revenues. When we
present the adjustments to total revenues on a consolidated basis, each
adjustment excludes the relative portions attributable to our CBVA segment and
the relative portions attributable to businesses exited through reinsurance or
divestment.

The most directly comparable U.S. GAAP measure to Operating revenues is Total revenues. For a reconciliation of Operating revenues to Total revenues, see Results of Operations-Company Consolidated below.

AUM and AUA


A substantial portion of our fees, other charges and margins are based on AUM.
AUM represents on-balance sheet assets supporting customer account
values/liabilities and surplus as well as off-balance sheet institutional/mutual
funds. Customer account values reflect the amount of policyholder equity that
has accumulated within retirement, annuity and universal-life type products. AUM
includes general account assets managed by our Investment Management segment in
which we bear the investment risk, separate account assets in which the contract
owner bears the investment risk and institutional/mutual funds, which are
excluded from our balance sheets. AUM-based revenues increase or decrease with a
rise or fall in the amount of AUM, whether caused by changes in capital markets
or by net flows.

AUM is principally affected by net deposits (i.e., new deposits, less surrenders
and other outflows) and investment performance (i.e., interest credited to
contract owner accounts for assets that earn a fixed return or market
performance for assets that earn a variable return). Separate account AUM and
institutional/mutual fund AUM include assets managed by our Investment
Management segment, as well as assets managed by third-party investment
managers. Our Investment Management segment reflects the revenues earned for
managing affiliated assets for our other segments as well as assets managed for
third parties.

AUA represents accumulated assets on contracts pursuant to which we either
provide administrative services or product guarantees for assets managed by
third parties. These contracts are not insurance contracts and the assets are
excluded from the Consolidated Financial Statements. Fees earned on AUA are
generally based on the number of participants, asset levels and/or the level of
services or product guarantees that are provided.

Our consolidated AUM/AUA includes eliminations of AUM/AUA managed by our Investment Management segment that is also reflected in other segments' AUM/AUA and adjustments for AUM not reflected in any segments.

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Sales Statistics


In our discussion of our segment results under Results of Operations-Segment by
Segment, we sometimes refer to sales activity for various products. The term
"sales" is used differently for different products, as described more fully
below. These sales statistics do not correspond to revenues under U.S. GAAP and
are used by us as operating measures underlying our financial performance.

Net flows are deposits less redemptions (including benefits and other product charges).


Sales for Individual Life products are based on a calculation of weighted
average annual premiums ("WAP"). Sales for Employee Benefits products are based
on a calculation of annual premiums, which represent regular premiums on new
policies, plus a portion of new single premiums.

WAP is defined as the amount of premium for a policy's first year that is
eligible for the highest first year commission rate, plus a varying portion of
any premium in excess of this base amount, depending on the product. WAP is a
key measure of recent sales performance of our products and is an indicator of
the general growth or decline in certain lines of business. WAP is not equal to
premium revenue under U.S. GAAP. Renewal premiums on existing policies are
included in U.S. GAAP premium revenue in addition to first year premiums and
thus changes in persistency of existing in-force business can potentially offset
growth from current year sales.

Total gross premiums and deposits are defined as premium revenue and deposits
for policies written and assumed. This measure provides information as to growth
and persistency trends related to premium and deposits.

Other Measures


Total annualized in-force premiums are defined as a full year of premium at the
rate in effect at the end of the period. This measure provides information as to
the growth and persistency trends in premium revenue.

Interest adjusted loss ratios are defined as the ratio of benefits expense to
premium revenue exclusive of the discount component in the change in benefit
reserve. This measure reports the loss ratio related to mortality on life
products and morbidity on health products.

In-force face amount is defined as the total life insurance coverage in effect
as of the end of the period presented for business written and assumed. This
measure provides information as to changes in policy growth and persistency with
respect to death benefit coverage.

In-force policy count is defined as the number of policies written and assumed with coverage in effect as of the end of the period. This measure provides information as to policy growth and persistency.


New business policy count (paid) is defined as the number of policies issued
during the period for which initial premiums have been paid by the policyholder.
This measure provides information as to policy growth from sales during the
period.


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Results of Operations - Company Consolidated


The following table presents the consolidated financial information for the
periods indicated:
                                                       Year Ended December 31,
($ in millions)                                 2016             2015             2014
Revenues:
Net investment income                      $    4,620.8     $    4,538.2     $    4,515.3
Fee income                                      3,359.8          3,481.1          3,632.5
Premiums                                        3,514.6          3,024.5          2,626.4
Net realized capital gains (losses)            (1,263.1 )         (733.3 )         (878.4 )
Other revenue                                     361.1            406.9    

432.8

Income (loss) related to consolidated
investment entities:
Net investment income                             189.0            551.1    

665.5

Changes in fair value related to
collateralized loan obligations                       -            (26.9 )           (6.7 )
Total revenues                                 10,782.2         11,241.6    

10,987.4

Benefits and expenses:
Interest credited and other benefits to
contract owners/policyholders                   7,513.5          6,510.0    

5,937.9

Operating expenses                              2,937.3          3,003.4    

3,462.2

Net amortization of Deferred policy
acquisition costs and Value of business
acquired                                          551.0            663.4    

379.3

Interest expense                                  288.0            196.5    

189.7

Operating expenses related to consolidated
investment entities:
Interest expense                                  101.9            272.2            209.5
Other expense                                       3.9             11.6              7.6
Total benefits and expenses                    11,395.6         10,657.1    

10,186.2

Income (loss) before income taxes                (613.4 )          584.5            801.2
Income tax expense (benefit)                     (214.7 )           45.9         (1,731.5 )
Net income (loss)                                (398.7 )          538.6          2,532.7
Less: Net income (loss) attributable to
noncontrolling interest                            29.3            130.3    

237.7

Net income (loss) available to our common
shareholders                               $     (428.0 )   $      408.3     $    2,295.0



The following table presents information about our Operating expenses for the
periods indicated:
                                                       Year Ended December 31,
($ in millions)                                 2016             2015             2014
Operating expenses:
Commissions                                $      993.3     $    1,211.6     $    1,189.5
General and administrative expenses:
Net actuarial (gains)/losses related to
pension and other postretirement benefit
obligations                                        55.2            (62.7 )          372.7
Restructuring expenses                             33.8                -                -
Strategic Investment Program                      117.4             79.5                -

Other general and administrative expenses 2,123.7 2,161.7

2,284.3

Total general and administrative expenses 2,330.1 2,178.5

2,657.0

Total operating expenses, before DAC/VOBA
deferrals                                       3,323.4          3,390.1          3,846.5
DAC/VOBA deferrals                               (386.1 )         (386.7 )         (384.3 )
Total operating expenses                   $    2,937.3     $    3,003.4     $    3,462.2




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

                                           As of December 31,
($ in millions)                   2016            2015            2014
AUM and AUA:
Retirement                    $ 316,849.0     $ 291,757.0     $ 354,544.5
Investment Management           260,691.0       249,541.4       258,627.2
Annuities                        27,725.9        27,035.8        26,650.0
Individual Life                  15,221.4        15,123.9        15,708.3
Employee Benefits                 1,791.1         1,793.0         1,777.2
Closed Block Variable Annuity    37,742.9        38,551.8        43,214.2
Eliminations/Other             (175,667.9 )    (171,391.8 )    (176,729.1 )
Total AUM and AUA             $ 484,353.4     $ 452,411.1     $ 523,792.3

AUM                           $ 287,108.8     $ 270,815.3     $ 278,905.9
AUA                             197,244.6       181,595.8       244,886.4
Total AUM and AUA             $ 484,353.4     $ 452,411.1     $ 523,792.3



The following table presents the relative contributions of each segment to
Operating earnings before income taxes for the periods indicated and a
reconciliation of Operating earnings before income taxes to Income (loss) before
income taxes:
                                                        Year Ended December 31,
($ in millions)                                  2016            2015             2014
Retirement                                   $     449.8     $     470.6     $      517.8
Investment Management                              170.8           181.9            210.3
Annuities                                          321.2           243.0            262.0
Individual Life                                     58.6           172.7            237.3
Employee Benefits                                  126.3           146.1            148.9
Corporate                                         (349.4 )        (236.8 )         (145.7 )
Total operating earnings before income taxes       777.3           977.5    

1,230.6

Adjustments:

Closed Block Variable Annuity(1)                  (955.0 )        (173.3 )         (239.2 )
Net investment gains (losses) and related
charges and adjustments                           (140.9 )         (83.3 )  

215.1

Net guaranteed benefit hedging gains
(losses) and related charges and adjustments       (81.7 )         (93.9 )          (12.8 )
Loss related to businesses exited through
reinsurance or divestment                          (13.5 )        (169.3 )         (157.3 )
Income (loss) attributable to noncontrolling
interests                                           29.3           130.3    

237.7

Loss related to early extinguishment of debt (104.2 ) (10.1 )

             -
Immediate recognition of net actuarial gains
(losses) related to pension and other
postretirement benefit obligations and gains
(losses) from plan amendments and
curtailments                                       (55.2 )          62.7           (372.7 )
Other adjustments to operating earnings            (69.5 )         (56.1 )         (100.2 )
Income (loss) before income taxes            $    (613.4 )   $     584.5    

$ 801.2



(1) Our CBVA segment is managed to focus on protecting regulatory and rating
agency capital rather than achieving operating metrics and, therefore, its
results of operations are not reflected within Operating earnings before income
taxes.



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The following table presents the relative contributions of each segment to
Operating revenues for the periods indicated and a reconciliation of Operating
revenues to Total revenues:
                                                       Year Ended December 31,
($ in millions)                                 2016             2015             2014
Retirement                                 $    3,257.0     $    2,994.1     $    2,427.4
Investment Management                             626.7            622.2            655.4
Annuities                                       1,253.7          1,262.6          1,353.4
Individual Life                                 2,527.5          2,616.7          2,717.8
Employee Benefits                               1,616.4          1,507.2          1,373.0
Corporate                                         108.1            136.4            194.0
Total operating revenues                        9,389.4          9,139.2          8,721.0

Adjustments:
Closed Block Variable Annuity(1)                1,296.2          1,584.5    

1,262.0

Net realized investment gains (losses) and
related charges and adjustments                  (165.1 )         (149.8 )  

216.7

Gain (loss) on change in fair value of
derivatives related to guaranteed benefits        (81.8 )           72.0            (30.5 )
Revenues related to businesses exited
through reinsurance or divestment                  95.9             25.6    

149.3

Revenues attributable to noncontrolling
interests                                         133.1            414.1    

455.0

Other adjustments to operating revenues           114.5            156.0            213.9
Total revenues                             $   10,782.2     $   11,241.6     $   10,987.4

(1) Our CBVA segment is managed to focus on protecting regulatory and rating

agency capital rather than achieving operating metrics and, therefore, its

results of operations are not reflected within Operating revenues.




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

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

                                                       Year Ended December 

31,

($ in millions)                                 2016             2015       

2014

Other-than-temporary impairments           $      (41.5 )   $     (111.9 )   $      (20.3 )
CMO-B fair value adjustments(1)                   (55.7 )          (26.4 )  

188.0

Gains (losses) on the sale of securities (64.8 ) (14.3 )

42.3

Other, including changes in the fair value
of derivatives                                     17.7             (4.1 )  

2.6

Total investment gains (losses)                  (144.3 )         (156.7 )  

212.6

Net amortization of DAC/VOBA and other
intangibles on above                               22.9             58.3    

2.1

Net investment gains (losses), including
Closed Block Variable Annuity                    (121.4 )          (98.4 )  

214.7

Less: Closed Block Variable Annuity net
investment gains (losses) and related
charges and adjustments                            19.5            (15.1 )           (0.4 )
Net investment gains (losses)              $     (140.9 )   $      (83.3 )  

$ 215.1

(1) For a description of our CMO-B portfolio, see Investments - CMO-B Portfolio in Part II, Item 7. of this Annual Report on Form 10-K.

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The following table presents the adjustment to Income (loss) before taxes related to Guaranteed benefit hedging gains (losses) net of DAC/VOBA and other intangibles amortization for the periods indicated. This table excludes CBVA.

                                                       Year Ended December 31,
($ in millions)                                 2016             2015       

2014

Gain (loss), excluding nonperformance risk $ (225.9 ) $ (4.5 )

  $     (105.9 )
Gain (loss) due to nonperformance risk(1)          74.4              6.7    

74.5

Net gain (loss) prior to related
amortization of DAC/VOBA and sales
inducements                                      (151.5 )            2.2            (31.4 )
Net amortization of DAC/VOBA and sales
inducements                                        69.8            (96.1 )  

18.6

Net guaranteed benefit hedging gains
(losses) and related charges and
adjustments                                $      (81.7 )   $      (93.9 )  

$ (12.8 )

(1) Refer to Critical Accounting Judgments and Estimates in Part II, Item 7. of this Annual Report on Form 10-K for further detail.

Notable Items


The tables highlight notable items that are included in Operating earnings
before income taxes from the following categories: (1) large gains (losses) that
are not indicative of performance in the period; and (2) items that typically
recur but can be volatile from period to period (e.g., DAC/VOBA and other
intangibles unlocking).

Each quarter, we update our DAC/VOBA and other intangibles based on actual
historical gross profits and projections of estimated gross profits. During the
third quarter of 2016, 2015 and 2014, we completed our annual review of the
assumptions, including projection model inputs, in each of our segments (except
for the Investment Management segment and Corporate, for which assumption
reviews are not relevant). As a result of these reviews, we have made a number
of changes to our assumptions resulting in net impacts to Operating earnings
before income taxes for the years ended December 31, 2016, 2015 and 2014 of
$(144.9) million, $(82.0) million and $(19.3) million, respectively. These
unfavorable impacts are included in the table below as components of DAC/VOBA
and other intangibles unlocking.

During 2016, 2015, and 2014 we received distributions of cash in the amount of
$25.4 million, $2.5 million, and $4.0 million, respectively, in conjunction with
a Lehman Brothers bankruptcy settlement ("Lehman Recovery") which was recognized
in Net investment income. In addition, in 2015, we recognized losses on certain
receivables associated with previously disposed Low Income Housing Tax Credit
partnerships ("LIHTC"). These losses, in the amount of $0.9 million, were also
recognized in Net investment income.

During 2014, we received $20.0 million related to the amendment or recapture of
certain reinsurance agreements ("Gain on reinsurance recapture"), which was
recorded in Interest credited and other benefits to contract
owners/policyholders within the Individual Life segment's Operating earnings
before income tax.

Collectively, the Lehman Recovery and LIHTC losses, net of DAC/VOBA and other
intangibles impacts, are referred to as "Net gain from Lehman Recovery/LIHTC"
and presented in the table below:
                                                     Year Ended December 

31,

($ in millions)                                    2016        2015        

2014

DAC/VOBA and other intangibles unlocking (1)(2) $ (121.6 ) $ (67.5 ) $ (21.6 ) Net gain from Lehman Recovery/LIHTC(3)

              20.7         1.6         4.0
Gain on reinsurance recapture                          -           -        20.0


(1) DAC/VOBA and other intangibles unlocking are included in Fee income,
Interest credited and other benefits to contract owners/policyholders and Net
amortization of DAC/VOBA and includes the impact of the annual review of the
assumptions. See DAC/VOBA and Other Intangibles Unlocking in Part II, Item 7. of
this Annual Report on Form 10-K for further description.
(2) Unlocking related to the Net gain from Lehman Recovery is excluded
from DAC/VOBA and other  intangibles unlocking for the year ended December 31,
2016 (and included in Net gain from Lehman Recovery/LIHTC).
(3) Net gain (loss) from Lehman Recovery/LIHTC is included in Operating earnings
before income taxes of our segments in 2016, and in Corporate in 2015 and 2014.
Amount excludes net gain for the CBVA segment of $1.8 million for the year ended
December 31, 2016.

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The following table presents the net impact to Operating earnings before income taxes of the Net gain from Lehman Recovery and the related amortization and unlocking of DAC/VOBA and other intangibles by segment for 2016:

                                                                   Year Ended December 31, 2016
                                                                                            DAC/VOBA and
                                                                                                other
                                        Net investment           DAC/VOBA and other          intangibles       Net gain from
($ in millions)                         income (loss)       intangibles amortization(1)     unlocking(1)      Lehman Recovery
Retirement                           $              5.3     $              (1.2 )          $           -     $           4.1
Investment Management                               2.8                       -                        -                 2.8
Annuities                                           5.1                    (1.7 )                    1.1                 4.5
Individual Life                                     9.1                    (3.5 )                    2.4                 8.0
Employee Benefits                                   1.0                       -                        -                 1.0
Corporate                                           0.3                       -                        -                 0.3
Net gain (loss) included in
Operating earnings before income
taxes (2)                            $             23.6     $              

(6.4 ) $ 3.5 $ 20.7



(1) DAC/VOBA and other intangibles amortization and DAC/VOBA and other
intangibles unlocking are included in Fee income, Interest credited and other
benefits to contract owners/policyholders and Net amortization of DAC/VOBA. See
DAC/VOBA and Other Intangibles Unlocking in Part II, Item 7. of this Annual
Report on Form 10-K for further description.
(2) Amount excludes net gain for the CBVA segment of $1.8 million for the year
ended December 31, 2016.

Terminology Definitions

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

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

Consolidated - Year Ended December 31, 2016 Compared to Year Ended December 31, 2015


Net Income (Loss)

Net investment income increased $82.6 million from $4,538.2 million to $4,620.8
million primarily due to growth in general account assets in our Retirement and
CBVA segments, proceeds from the Lehman Recovery in the current period and
growth in fixed indexed annuities ("FIA") in our Annuities segment partially
offset by lower annual reset and multi-year guarantee annuities ("AR/MYGA")
resulting from continued run-off. Partially offsetting these increases were the
impact of the continued low interest rate environment on reinvestment rates and
the impact of the Fourth Quarter 2015 Reinsurance Transaction (defined below in
our Individual Life segment's results of operations).

Fee income decreased $121.3 million from $3,481.1 million to $3,359.8 million
primarily due to continued run-off in our CBVA segment and lower Fee income in
our Retirement segment. These declines are partially offset by an increase in
cost of insurance fees on the aging in-force UL block and higher contractual
charges from higher UL sales. The decline in Fee income in our Retirement
segment was primarily due to the shift in the business mix and lower retirement
plan fees resulting from participants' transfers from variable investment
options into fixed investment options, and terminated contracts in the
recordkeeping business including the impact of the planned exit of the defined
benefit business.

Premiums increased $490.1 million from $3,024.5 million to $3,514.6 million
primarily due to higher annuitization of life contingent contracts in our CBVA
segment as a result of income enhancement offers (described below in our CBVA
segment's results of operations), higher sales of pension risk transfer
contracts and an increased block size across several product lines in our
Employee Benefits segment. These increases were partially offset by lower
premiums as a result of the Fourth Quarter 2015 Reinsurance Transaction.


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Net realized capital losses increased $529.8 million from $733.3 million to
$1,263.1 million primarily due to changes in fair value of derivatives and
guaranteed benefit derivatives, excluding nonperformance risk, including annual
assumption updates in our CBVA segment. The focus in managing our CBVA segment
continues to be on protecting regulatory and rating agency capital, and our
hedging program is primarily designed to mitigate the impacts of market
movements on capital resources, rather than mitigating earnings volatility. In
addition, Net realized capital losses increased as a result of changes in fair
value of guaranteed benefit derivatives, excluding nonperformance risk,
including annual assumption updates in our other segments, primarily due to
changes in interest rates. The losses were partially offset by favorable changes
in fair value of guaranteed benefit derivatives due to nonperformance risk.
Gains from market value changes associated with business reinsured are more than
offset by a corresponding increase in Interest credited and other benefits to
contract owners/policyholders.

Changes in fair value of derivatives and guaranteed benefit derivatives,
excluding nonperformance risk, in our CBVA segment resulted in an increase in
Net realized capital losses, including an unfavorable variance due to changes in
fair value of derivatives from our Variable Annuity Hedge Program, and a
favorable variance related to changes in guaranteed benefit derivatives (refer
to our Closed Block Variable Annuity segment's results of operations for further
description).

Other revenue decreased $45.8 million from $406.9 million to $361.1 million
primarily due to lower letter of credit ("LOC") recoveries as a result of
changes to credit facilities in September of 2015 (see Liquidity and Capital
Resources - Other Credit Facilities in Part II, Item 7. of our Annual Report on
Form 10-K for further description) and lower broker-dealer revenues.

Interest credited and other benefits to contract owners/policyholders increased
$1,003.5 million from $6,510.0 million to $7,513.5 million primarily due to an
increase in reserves in our CBVA segment, which included loss recognition, the
unfavorable result of annual assumption updates, and higher annuitization of
life contingent contracts. Loss recognition in the current period within our
CBVA segment was primarily due to the current interest rate environment and
included $18.7 million related to sales inducements and $217.2 million related
to the establishment of a premium deficiency reserve associated with certain
payout contracts. In addition, unfavorable changes in net mortality of the UL
block driven by severity, higher group stop loss and group life benefits
associated with growth, and favorable loss ratio experience in the prior period
that did not reoccur all contributed to the increase, along with higher sales of
pension risk transfer contracts and accelerated amortization of deferred
interest costs associated with the early termination of certain Federal Home
Loan Bank ("FHLB") funding agreements in connection with the run-off of the
block. An increase in the funds withheld reserve and changes in the reinsurance
deposit asset associated with business reinsured resulting from market value
changes in the related assets are partially offset by a corresponding amount
recorded in Net realized capital losses. These increases were partially offset
by a decrease in reserves as a result of the Fourth Quarter 2015 Reinsurance
Transaction.

Operating expenses decreased $66.1 million from $3,003.4 million to $2,937.3
million primarily due to the impacts of the Fourth Quarter 2015 Reinsurance
Transaction and the Second Quarter 2015 Reinsurance Transaction (see Liquidity
and Capital Resources - Reinsurance in Part II, Item 7. of this Annual Report on
Form 10-K for further description), including fees supporting the transactions
in the prior period. Excluding these impacts, Operating expenses increased due
to the recognition of net actuarial losses related to our pension and other
postretirement benefit obligations, higher expenses related to our Strategic
Investment Program, higher restructuring costs, higher commission expenses
associated with growth of the business in our Employee Benefits segment and net
compensation adjustments. These increases were partially offset by lower
expenses in our CBVA segment as a result of continued run-off, lower LOC fees as
a result of changes to credit facilities in September of 2015, described above,
lower rebranding expense, lower broker-dealer expenses and lower recordkeeping
expenses associated with terminated contracts including the planned exit of the
defined benefit business.

Net amortization of DAC/VOBA decreased $112.4 million from $663.4 million to
$551.0 million primarily due to favorable net changes in DAC/VOBA unlocking,
mostly resulting from annual assumption updates, and lower DAC/VOBA amortization
as a result of changes in guaranteed benefit hedging gains (losses). The
improvement was partially offset by the $85.1 million write-down of DAC/VOBA in
our CBVA segment associated with loss recognition in the current period.

Interest expense increased $91.5 million from $196.5 million to $288.0 million
primarily due to the debt extinguishment in connection with repurchased debt.
See Liquidity and Capital Resources - Debt Securities - Aetna Notes in Part II,
Item 7. of this Annual Report on Form 10-K for further description.

Income (loss) before income taxes decreased $1,197.9 million from income of
$584.5 million to a loss $613.4 million primarily due to losses in our CBVA
segment, including loss recognition on a block of business of $321.0 million,
where our focus continues to be on protecting regulatory and rating agency
capital, and our hedging program is primarily designed to mitigate the impacts
of market movements on capital resources, rather than mitigating earnings
volatility. See Critical Accounting Judgments and Estimates in Part II, Item 7.
of this Annual Report on Form 10-K for further information on the loss
recognition. In addition, lower Operating earnings before income taxes,
described below, net actuarial losses related to our pension and other
postretirement

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benefit obligations, losses attributable to noncontrolling interests and higher
losses related to the early extinguishment of debt contributed to the decline.
Lower losses on business exited through reinsurance or divestment, primarily due
to fees supporting the transactions in the prior period that did not reoccur,
and lower LOC fees as a result of changes to credit facilities in September of
2015, described above, partially offset the overall decrease.

Income tax expense (benefit) decreased by $260.6 million from an expense of
$45.9 million to a benefit of $214.7 million due to a decrease in income before
income taxes as well as the application of the exception to the general rule of
intraperiod tax allocation (ASC 740-20-45-7). See the Income Taxes Note to our
Consolidated Financial Statements in Part II, Item 8 of this Annual Report on
Form 10-K for further information.

Operating Earnings before Income Taxes


Operating earnings before income taxes decreased $200.2 million from $977.5
million to $777.3 million primarily due to higher unfavorable DAC/VOBA and other
intangible unlocking from annual assumption updates, higher expenses in
Corporate, primarily related to our Strategic Investment Program, as well as
accelerated amortization of deferred interest costs associated with the early
termination of certain FHLB funding agreements in connection with the run-off of
the block and more favorable reserve refinements in the prior period compared to
the current period. In addition, a reversal in the current period of previously
accrued carried interest in our Investment Management segment was partially
offset by the Net Gain from Lehman Recovery in the current period.

Excluding these items, Operating earnings before income taxes in our business
segments decreased primarily due to the impact of the continued low interest
rate environment on reinvestment rates, lower prepayment fee income and higher
benefits incurred in our Employee Benefits segment, partially offset by higher
other alternative investment income, the impact of the growth in general account
assets in our Retirement segment, higher performance fees in our Investment
Management segment and improved margins related to the change in the mix of
business in our Annuities segment.

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

CBVA is discussed in Results of Operations - Segment by Segment - CBVA in Part II, Item 7. of this Annual Report on Form 10-K.


Net investment losses and related charges and adjustments increased by $57.6
million from $83.3 million to $140.9 million. A net improvement due to lower
impairments, partially offset by higher losses on the sale of securities and
losses resulting from fair value adjustments on our CMO-B portfolio was more
than offset by unfavorable changes in net amortization of DAC/VOBA and other
intangibles, primarily due to the impact of unlocking.

Net guaranteed benefit hedging losses and related charges and adjustments
decreased $12.2 million from $93.9 million to $81.7 million primarily due to
changes in the fair value of guaranteed benefit derivatives due to
nonperformance risk. The improvement was partially offset by an unfavorable
variance in guaranteed benefit derivatives excluding nonperformance risk, net of
intangibles amortization and unlocking, primarily due to the impact of annual
assumption updates.

Loss related to businesses exited through reinsurance or divestment decreased
$155.8 million from $169.3 million to $13.5 million primarily due to fees
supporting reinsurance transactions in the prior period that did not reoccur and
lower LOC fees as a result of changes to credit facilities in September of 2015,
described above.

Loss related to early extinguishment of debt increased $94.1 million from $10.1
million to $104.2 million primarily due to the debt extinguishment in the
current period in connection with repurchased debt. See Liquidity and Capital
Resources - Debt Securities - Aetna Notes in Part II, Item 7. of this Annual
Report on Form 10-K for further description.

Immediate recognition of net actuarial gains (losses) related to pension and
other postretirement benefit obligations and gains (losses) from plan
adjustments and curtailments changed $117.9 million from a gain of $62.7 million
to a loss of $55.2 million primarily due to a decrease in the discount rate. See
Critical Accounting Judgments and Estimates - Employee Benefits Plans in Part
II, Item 7. of this Annual Report on Form 10-K for further description.

Other adjustments to operating earnings changed $13.4 million from $(56.1) million to $(69.5) million due to higher restructuring costs, partially offset by lower rebranding costs.



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Consolidated - Year Ended December 31, 2015 Compared to Year Ended December 31, 2014


Net Income (Loss)

Net investment income increased $22.9 million from $4,515.3 million to $4,538.2
million primarily due to an increase in general account assets in our Retirement
and CBVA segments, growth in FIA in our Annuities segment and higher prepayment
income. Partially offsetting the increase were lower AUM in our closed blocks as
a result of continued runoff, lower alternative investment income, the impact of
the continued low interest rate environment on reinvestment rates, the
continuing runoff of AR/MYGAs in our Annuities segment and the impact of the
Fourth Quarter 2014 and 2015 Reinsurance Transactions (defined below in our
Individual Life segment's results of operations).

Fee income decreased $151.4 million from $3,632.5 million to $3,481.1 million
primarily due to lower fee income in our CBVA segment as a result of lower
average separate account AUM and lower fees in the recordkeeping and full
service businesses in our Retirement segment. Lower fees within our Investment
Management segment, including fees associated with affiliated and collateral
loan obligations ("CLO") entities, are eliminated in consolidation. These
decreases were partially offset by increased cost of insurance fees on the aging
in-force universal life block and the impact of prospective assumptions changes
in our Individual Life segment, as well as an increase in fees from growth in
assets of mutual fund custodial products in our Annuities segment.

Premiums increased $398.1 million from $2,626.4 million to $3,024.5 million
primarily due to the sale of pension risk transfer contracts in our Retirement
segment and higher group stop loss sales and favorable persistency in the group
life and voluntary product lines in our Employee Benefits segment. The increase
was partially offset by lower premiums from annuitization of life contingent
contracts in our CBVA segment, lower premiums in immediate annuities with life
contingencies in our Annuities segment and lower premiums in our Individual Life
segment and group reinsurance business as a result of the Fourth Quarter 2014
and 2015 Reinsurance Transactions and the Second Quarter 2015 Reinsurance
Transaction (see Liquidity and Capital Resources - Reinsurance in Part II, Item
7. of our Annual Report on Form 10-K for further description), respectively. The
variances in Premiums correspond to changes in Interest credited and other
benefits to contract owners/policyholders.

Net realized capital losses decreased $145.1 million from $878.4 million to
$733.3 million primarily due to changes in fair value of derivatives and
guaranteed benefit derivatives, excluding nonperformance risk, discussed below;
the favorable variances, which included the impact of prospective assumption
changes, were primarily due to unfavorable equity market movements in the
current period compared to the prior period and the impact of changes in
interest rates. These improvements were partially offset by unfavorable changes
in investment gains (losses), which are described below under Net investment
gains (losses) and related charges and adjustments, and changes in fair value of
guaranteed benefit derivatives due to nonperformance risk, which resulted in an
increase in Net realized capital losses of $323.6 million, from a gain of $402.2
million to a gain of $78.6 million. In addition, unfavorable variances due to
market value changes and sales of securities associated with business reinsured
correspond to an increase in Interest credited and other benefits to contract
owners/policyholders.

Changes in fair value of derivatives and guaranteed benefit derivatives,
excluding nonperformance risk, in our CBVA segment resulted in a $779.5 million
decrease in Net realized capital losses, including a favorable variance of
$206.8 million due to changes in fair value of derivatives from our Variable
Annuity Hedge Program, and a favorable variance of $572.7 million related to
changes in guaranteed benefit derivatives. In addition, net realized capital
gains increased $169.6 million primarily due to changes in fair value of
guaranteed benefit derivatives, excluding nonperformance risk in all of our
segments except CBVA.

Other revenue decreased $25.9 million from $432.8 million to $406.9 million primarily due to unfavorable changes in market value adjustments upon surrender and lower performance fees in our Investment Management segment.


Interest credited and other benefits to contract owners/policyholders increased
$572.1 million from $5,937.9 million to $6,510.0 million as a result of several
factors, including sales of pension risk transfer contracts in our Retirement
segment, reserve changes in our CBVA segment as a result of lower favorable
equity market returns in the current period compared to the prior period, as
well as impacts of policyholder behavior and other assumption updates, the Gain
on reinsurance recapture in the prior period, and an unfavorable change in
mortality, net of reinsurance, in our Individual Life segment resulting from a
higher claims severity. Higher reserves in our Employee Benefits segment,
primarily due to higher stop loss sales and higher group life and voluntary
in-force due to improved persistency resulting in higher benefits incurred also
contributed to the increase. Partially offsetting these increases were favorable
changes in intangibles unlocking from prospective assumption changes primarily
in the Individual Life segment, a decrease in reserves as a result of the Fourth
Quarter 2014 and 2015 Reinsurance Transactions, and favorable reserve
refinements in the current period. Lower reserves associated with annuitization
of life contingent contracts in our CBVA segment, a decrease in annuity payout
reserves resulting from a decline in immediate annuities with life contingencies
and lower interest credited driven by the continued runoff of AR/MYGAs also
partially offset the overall increase. In addition, a favorable variance due to
changes in the funds withheld reserve and the reinsurance deposit asset
associated with business reinsured resulting from

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market value changes in the related assets, is partially offset by a corresponding amount recorded in Net realized capital gains (losses).


Operating expenses decreased $458.8 million from $3,462.2 million to $3,003.4
million as a result of several factors, primarily $435.4 million lower pension
expenses related to the immediate recognition of $62.7 million of net actuarial
gains in 2015 compared to net actuarial losses of $372.7 million in 2014,
resulting from changes in assumptions primarily due to discount rates and actual
versus expected results, discussed in further detail below. In addition, lower
Operating expenses in our CBVA segment as a result of continued runoff, lower
variable compensation costs, lower recordkeeping expenses and lower severance
and rebranding costs contributed to the decrease. These decreases were partially
offset by higher sales related expenses in our Employee Benefits and Annuities
segments, expenses from our Strategic Investment Program, and higher fees
supporting reinsurance transactions, including the impacts of the Second Quarter
2015 Reinsurance Transaction and the Fourth Quarter 2014 and 2015 Reinsurance
Transactions.

Net amortization of DAC/VOBA increased $284.1 million from $379.3 million to
$663.4 million primarily due to unfavorable DAC/VOBA unlocking in the current
period compared to the prior period, largely as a result of prospective
assumption changes in our segments, and higher amortization resulting from
higher gross profits in our Annuities segment. These increases were partially
offset by lower amortization resulting from lower gross profits and amortization
rates in our Retirement segment, lower amortization in our Employee Benefits
segment as a result of a lower volume of terminated cases in the current period
compared to the prior period, and lower amortization due to an unfavorable
variance in Net investment gains (losses), described below.

Income (loss) before income taxes decreased $216.7 million from $801.2 million
to $584.5 million primarily due to unfavorable change in DAC/VOBA and other
intangibles unlocking as a result of prospective assumption changes, lower
alternative investment income, the impact of the continued low interest rate
environment on reinvestment rates and lower net investment gains (losses), which
are described below under Net investment gains (losses) and related charges and
adjustments. In addition, lower fee income in our recordkeeping and full service
businesses in our Retirement segment and higher expenses from our Strategic
Investment Program as well as the impacts of the Second Quarter 2015 Reinsurance
Transaction and the Fourth Quarter 2014 and 2015 Reinsurance Transactions and
lower income (loss) attributable to noncontrolling interests contributed to the
decrease. These decreases were partially offset by lower expenses related to the
immediate recognition of actuarial gains (losses) related to pension and other
postretirement benefit obligations, favorable reserve refinements in the current
period, improved margins related to the change in mix of business between
AR/MYGAs and FIAs and higher prepayment income.

Income tax expense (benefit) increased $1,777.4 million from $1,731.5 million
benefit to $45.9 million expense primarily due to a decrease in the amount of
the valuation allowance released in the current period compared to the prior
period, partially offset by a decrease in Income (loss) before income taxes.

Operating Earnings before Income Taxes


Operating earnings before income taxes decreased $253.1 million from $1,230.6
million to $977.5 million primarily due to an unfavorable change in DAC/VOBA and
other intangibles unlocking as a result of prospective assumption changes, lower
alternative investment income, the impact of the continued low interest rate
environment on reinvestment rates and higher Operating expenses as a result of
our Strategic Investment Program. In addition, an unfavorable change in
mortality largely driven by higher claims severity primarily in our Individual
Life segment and lower fee income in our recordkeeping and full service
businesses in our Retirement segment also contributed to the decrease. These
items were partially offset by favorable reserve refinements in the current
period, improved margins related to the change in mix of business between
AR/MYGAs and FIAs and higher prepayment income.

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

CBVA is discussed in Results of Operations - Segment by Segment - CBVA in Part II, Item 7. of this Annual Report on Form 10-K.


Net investment gains (losses) and related charges and adjustments decreased
$298.4 million from a gain of $215.1 million to a loss of $83.3 million as a
result of unfavorable changes in fair value adjustments on our CMO-B portfolio,
higher other-than-temporary impairments, losses on the sale of securities in the
current period compared to gains in the prior period, and an unfavorable
variance in DAC/VOBA and other intangibles unlocking.

Net guaranteed benefit hedging losses and related charges and adjustments
increased $81.1 million from $12.8 million to $93.9 million primarily due to
hedge losses resulting from a high level of market volatility in the current
period, unfavorable changes due to prospective assumption updates and a decrease
in the gain on nonperformance risk. Unfavorable changes due to assumption

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updates included favorable changes in the fair value of guaranteed benefit derivatives, excluding nonperformance risk, that were more than offset by higher DAC/VOBA and other intangibles amortization and unlocking.


Losses related to businesses exited through reinsurance or divestment increased
$12.0 million from $157.3 million to $169.3 million primarily due to higher
costs supporting reinsurance transactions including the reinsurance transactions
entered into during 2014 and 2015.

Loss related to early extinguishment of debt of $10.1 million in the current
period was primarily due to the debt extinguishment in connection with
repurchased debt. See Liquidity and Capital Resources- Debt Securities- Aetna
Notes in Part II, Item 7. of this Annual Report on Form 10-K for further
description.

Immediate recognition of net actuarial gains (losses) related to pension and
other postretirement benefit obligations and (losses) from plan adjustments and
curtailments changed $435.4 million. We immediately recognize actuarial gains
and losses. An actuarial gain of $62.7 million was recorded in the current
period, driven primarily by the net impact of an increase in the discount rate
used to value benefit obligations, a favorable update to mortality assumptions,
offset by unfavorable changes in asset return assumptions. A net actuarial loss
of $372.7 million was recorded in the prior period, driven primarily by the net
impact of a decrease in the discount rate used to value benefit obligations and
an unfavorable update to mortality assumptions. See Critical Accounting
Judgments and Estimates - Employee Benefits Plans in Part II, Item 7. of this
Annual Report on Form 10-K for further information.

Other adjustments to operating earnings changed $44.1 million from $(100.2) million to $(56.1) million primarily due to lower severance and rebranding costs.

Results of Operations - Segment by Segment

Retirement

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

                                                       Year Ended December 31,
($ in millions)                                 2016             2015             2014
Operating revenues:
Net investment income and net realized
gains (losses)                             $    1,673.6     $    1,578.0     $    1,556.1
Fee income                                        687.1            736.1            772.3
Premiums                                          824.4            613.4             26.6
Other revenue                                      71.9             66.6             72.4
Total operating revenues                        3,257.0          2,994.1          2,427.4
Operating benefits and expenses:
Interest credited and other benefits to
contract owners/policyholders                   1,743.7          1,469.3            860.3
Operating expenses                                853.8            869.6            866.2
Net amortization of DAC/VOBA                      209.7            184.6            183.1
Total operating benefits and expenses           2,807.2          2,523.5    

1,909.6

Operating earnings before income taxes $ 449.8 $ 470.6

$ 517.8

The following table presents certain notable items that represented the volatility in Operating earnings before income taxes for the periods indicated:

                                                 Year Ended December 31,
($ in millions)                               2016        2015        2014

DAC/VOBA and other intangibles unlocking(1) $ (65.6 ) $ (37.2 ) $ (30.0 ) Net gain from Lehman Recovery

                   4.1           -           -


(1) Includes the impacts of the annual review of assumptions. See DAC/VOBA and
Other Intangibles Unlocking in Part II, Item 7. of this Annual Report on Form
10-K for further description.


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The DAC/VOBA and other intangibles unlocking in the table above includes the
impact of the annual review of the assumptions, completed in the third quarter
2016, 2015 and 2014, of $(83.0) million, $(39.0) million and $(18.8) million,
respectively, which was included in Net amortization of DAC/VOBA. The unlocking
in 2016 was primarily driven by changes in portfolio yields and expectations for
future contract changes. The unlocking in 2015 was primarily driven by changes
in portfolio yields and projected margins partially offset by favorable lapse
and renewal premium experience.

The following tables present AUM and AUA for our Retirement segment as of the
dates indicated:
                                                          As of December 31,
($ in millions)                                 2016             2015             2014
Corporate markets                          $   49,920.7     $   45,088.6     $   43,806.9
Tax exempt markets                             55,497.0         51,641.9         53,896.6
Total full service plans                      105,417.7         96,730.5         97,703.5

Stable value(1) and pension risk transfer 12,505.5 10,762.9

      8,778.4
Retail wealth management                        3,485.1          3,313.7          3,211.4
Total AUM                                     121,408.3        110,807.1        109,693.3
AUA                                           195,440.7        180,949.9        244,851.2
Total AUM and AUA                          $  316,849.0     $  291,757.0     $  354,544.5
(1) Consists of assets where we are the
investment manager.




                                            As of December 31,
($ in millions)                     2016           2015           2014
General Account                 $  32,469.2    $  29,752.6    $  27,716.3
Separate Account                   60,073.9       56,641.9       59,641.9
Mutual Fund/Institutional Funds    28,865.2       24,412.6       22,335.1
AUA                               195,440.7      180,949.9      244,851.2
Total AUM and AUA               $ 316,849.0    $ 291,757.0    $ 354,544.5




The following table presents a rollforward of AUM for our Retirement segment for
the periods indicated:
                                                           Year Ended December 31,
($ in millions)                                     2016             2015             2014
Balance as of beginning of period              $  110,807.1     $  

109,693.3 $ 105,236.9

  Deposits                                         17,071.3         

15,921.9 14,251.1

Surrenders, benefits and product charges (13,136.8 ) (15,358.2 ) (14,497.8 )

   Net flows                                        3,934.5            563.7           (246.7 )
  Interest credited and investment performance      6,666.7            550.1          5,611.9
  Transfer to reinsurer                                   -                -           (908.8 )
Balance as of end of period                    $  121,408.3     $  110,807.1     $  109,693.3



Effective April 1, 2014, we entered into a coinsurance agreement to reinsure a
block of in-force fixed deferred annuity contracts (the "Second Quarter 2014
Reinsurance Transaction"). This transaction was accounted for using deposit
accounting. Under the agreement, the counterparty contractually assumed from us
certain policyholder liabilities and obligations, although we remain obligated
to contract owners. Consistent with our practice to exclude business (including
blocks of business) exited via reinsurance or divestment from Operating earnings
before income taxes and from Operating revenues, the revenues and expenses of
this reinsured block of business are excluded from these metrics and the tables
above.


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Retirement - Year Ended December 31, 2016 Compared to Year Ended December 31, 2015


Operating revenues

Net investment income and net realized gains increased $95.6 million from
$1,578.0 million to $1,673.6 million due to the growth in general account assets
driven by positive net flows, including participants' transfers from variable
investment options into fixed investment options and higher alternative
investment income including proceeds from the Lehman Recovery. These increases
were partially offset by lower yields, including the impact of the continued low
interest rate environment on reinvestment rates.

Fee income decreased $49.0 million from $736.1 million to $687.1 million
primarily due to the shift in the business mix and lower retirement plan fees
resulting from participants' transfers from variable investment options into
fixed investment options. Terminated contracts in the recordkeeping business,
including the impact of the planned exit of the defined benefit business also
contributed to the decrease.

Premiums increased $211.0 million from $613.4 million to $824.4 million primarily due to higher sales of pension risk transfer contracts in the current period which correspond to higher Interest credited and other benefits to contract owners/policyholders below.

Other revenue increased $5.3 million from $66.6 million to $71.9 million primarily due to an increase in Broker-Dealer revenue.

Operating benefits and expenses


Interest credited and other benefits to contract owners/policyholders increased
$274.4 million from $1,469.3 million to $1,743.7 million primarily due to an
increase in the change in reserves associated with the pension risk transfer
contracts, and higher general account liabilities, which correspond to the
growth in general account assets as referenced above.

Operating expenses decreased $15.8 million from $869.6 million to $853.8 million primarily due to lower recordkeeping expenses associated with terminated contracts, including the impact of the planned exit of the defined benefit business.

Net amortization of DAC/VOBA increased $25.1 million from $184.6 million to $209.7 million primarily due to higher unfavorable DAC/VOBA unlocking as a result of annual assumption updates, partially offset by lower amortization due to lower gross profits.

Operating earnings before income taxes


Operating earnings before income taxes decreased $20.8 million from $470.6
million to $449.8 million primarily due to lower investment yields, including
the impact of the continued low interest rate environment, as well as the shift
in the business mix. Additionally, higher unfavorable DAC/VOBA unlocking as a
result of annual assumption updates contributed to the decrease. These decreases
were partially offset by growth in the general account assets and an increase in
alternative investment income including proceeds from the Lehman Recovery.

Retirement - Year Ended December 31, 2015 Compared to Year Ended December 31, 2014


Operating revenues

Net investment income and net realized gains (losses) increased $21.9 million
from $1,556.1 million to $1,578.0 million primarily due to the growth in general
account assets driven by positive net flows, including participants' transfers
from variable investment options into fixed investment options, and higher
prepayment income. These increases were partially offset by lower alternative
investment income, the impact of the Second Quarter 2014 Reinsurance Transaction
and the impact of the continued low interest rate environment on reinvestment
rates.

Fee income decreased $36.2 million from $772.3 million to $736.1 million
primarily due to lower fees in our recordkeeping and full service businesses.
The decrease in recordkeeping fees was primarily due to terminated contracts.
The decrease in full service retirement plan fees was primarily driven by net
decreases in separate account AUM, mainly due to participants' transfers from
variable investment options into fixed investment options.

Premiums increased $586.8 million from $26.6 million to $613.4 million primarily
due to pension risk transfer contracts, which corresponds to higher Interest
credited and other benefits to contract owners/policyholders below.


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Other revenue decreased $5.8 million from $72.4 million to $66.6 million primarily due to unfavorable changes in market value adjustments related to plan sponsors upon surrender during the current period.

Operating benefits and expenses


Interest credited and other benefits to contract owners/policyholders increased
$609.0 million from $860.3 million to $1,469.3 million primarily due to the
increase in reserves associated with the pension risk transfer contracts as well
as higher general account liabilities, which correspond to the growth in general
account assets as referenced above. The increase was partially offset by the
impact of the Second Quarter 2014 Reinsurance Transaction.

Operating expenses increased $3.4 million from $866.2 million to $869.6 million due to higher distribution expenses and asset based commissions, partially offset by lower recordkeeping expenses associated with terminated contracts.

Net amortization of DAC/VOBA increased $1.5 million from $183.1 million to $184.6 million due to higher unfavorable DAC/VOBA unlocking as a result of assumption updates. This increase was partially offset by higher favorable DAC/VOBA unlocking resulting from participants' transfers into fixed investment options and lower amortization primarily due to lower gross profits and amortization rates.

Operating earnings before income taxes


Operating earnings before income taxes decreased $47.2 million from $517.8
million to $470.6 million primarily due to higher unfavorable DAC/VOBA unlocking
as a result of assumption updates, the impact of terminated contracts in the
recordkeeping business and lower alternative investment income in the current
period. In addition, the increase in distribution expenses and asset based
commissions contributed to the decrease. These unfavorable changes are partially
offset by higher prepayment income, higher favorable DAC/VOBA unlocking
resulting from participants' transfers into fixed investment options and lower
DAC/VOBA amortization primarily due to a decline in gross profits and
amortization rates.

Investment Management

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

                                                           Year Ended December 31,
($ in millions)                                          2016         2015       2014
Operating revenues:
Net investment income and net realized gains (losses) $    (8.0 )   $   1.1    $  19.7
Fee income                                                581.7       584.6      591.1
Other revenue                                              53.0        36.5       44.6
Total operating revenues                                  626.7       622.2      655.4
Operating benefits and expenses:
Operating expenses                                        455.9       440.3 

445.1

Total operating benefits and expenses                     455.9       440.3 

445.1

Operating earnings before income taxes                $   170.8     $ 181.9 

$ 210.3

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

                                                  Year Ended December 31,
($ in millions)                                 2016          2015       

2014

Investment Management intersegment revenues $ 166.1 $ 158.2 $ 157.3




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The following table presents certain notable items that resulted in volatility in Operating earnings before income taxes for the periods indicated:

                                        Year Ended December 31,
($ in millions)                         2016               2015     2014
Net gain from Lehman Recovery $       2.8                 $   -    $   -



The following table presents AUM and AUA for our Investment Management segment
as of the dates indicated:
                                          As of December 31,
($ in millions)                   2016           2015           2014
AUM:
Institutional/retail
Investment Management sourced $  73,991.9    $  68,143.7    $  69,644.3
Affiliate sourced(1)             54,254.1       54,403.4       58,956.2
General account                  82,760.0       78,174.1       77,630.2
Total AUM                       211,006.0      200,721.2      206,230.7
AUA:
Affiliate sourced(2)             49,685.0       48,820.2       52,396.5
Total AUM and AUA             $ 260,691.0    $ 249,541.4    $ 258,627.2


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

The following table presents net flows for our Investment Management segment for
the periods indicated:
                                      Year Ended December 31,
($ in millions)                  2016           2015          2014
Net Flows:
Investment Management sourced $ 2,739.1     $   (517.7 )   $ 1,136.4
Affiliate sourced              (2,871.4 )     (4,088.0 )     1,879.4
Total                         $  (132.3 )   $ (4,605.7 )   $ 3,015.8


Investment Management - Year Ended December 31, 2016 Compared to Year Ended December 31, 2015

Operating revenues


Net investment income and net realized gains (losses) decreased $9.1 million
from a gain of $1.1 million to a loss of $8.0 million primarily due to a
reversal in the current period of previously accrued carried interest as a
result of declines in the market value of a sponsored private equity fund. This
decline was partially offset by higher other alternative investment income
including proceeds from the Lehman Recovery in the current period.

Fee income decreased $2.9 million from $584.6 million to $581.7 million due to a
decline in average AUM primarily driven by the impact of net outflows in the
second half of 2015, resulting in lower management and administrative fees
earned.

Other revenue increased $16.5 million from $36.5 million to $53.0 million primarily due to higher performance fees earned in the current period.

Operating benefits and expenses


Operating expenses increased $15.6 million from $440.3 million to $455.9 million
primarily due to higher compensation and benefit expenses and higher information
technology expenses.


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Operating earnings before income taxes


Operating earnings before income taxes decreased $11.1 million from $181.9
million to $170.8 million primarily due to the reversal of previously accrued
carried interest related to a sponsored private equity fund, and higher
compensation and benefit expenses. These unfavorable changes were partially
offset by higher performance fees earned in the current period and higher other
alternative investment income, including proceeds from the Lehman Recovery.

Investment Management - Year Ended December 31, 2015 Compared to Year Ended December 31, 2014

Operating revenues


Net investment income and net realized gains (losses) decreased $18.6 million
from $19.7 million to $1.1 million primarily due to lower alternative investment
income in the current period.

Fee income decreased $6.5 million from $591.1 million to $584.6 million
primarily due to a decline in institutional/retail average AUM partly driven by
net flows resulting in lower management and administrative fees earned. The
unfavorable variance is also driven by certain fees earned in the prior period
associated with private equity funds that did not reoccur in the current period.

Other revenue decreased $8.1 million from $44.6 million to $36.5 million primarily due to lower performance fees earned in the current period. The decrease was partially offset by higher advisory and servicing fees.

Operating benefits and expenses


Operating expenses decreased $4.8 million from $445.1 million to $440.3 million
primarily due to lower compensation related expenses including lower variable
expenses associated with lower operating earnings partially offset by higher
commissions from higher sales.

Operating earnings before income taxes


Operating earnings before income taxes decreased $28.4 million from $210.3
million to $181.9 million primarily due to lower alternative investment income,
a decline in institutional/retail average AUM as well as lower performance fees
earned in the current period. These unfavorable changes were partially offset by
lower variable expenses associated with lower operating earnings.

Annuities

The following table presents Operating earnings before income taxes of the Annuities segment for the periods indicated:

                                                       Year Ended December 31,
($ in millions)                                 2016             2015             2014
Operating revenues:
Net investment income and net realized
gains (losses)                             $    1,069.6     $    1,068.1     $    1,109.6
Fee income                                         66.8             63.6             57.0
Premiums                                          102.0            116.4            169.0
Other revenue                                      15.3             14.5             17.8
Total operating revenues                        1,253.7          1,262.6          1,353.4
Operating benefits and expenses:
Interest credited and other benefits to
contract owners/policyholders                     676.9            697.9            813.1
Operating expenses                                160.5            152.3            139.8
Net amortization of DAC/VOBA                       95.1            169.4            138.5
Total operating benefits and expenses             932.5          1,019.6    

1,091.4

Operating earnings before income taxes $ 321.2 $ 243.0

 $      262.0




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The following table presents certain notable items that resulted in volatility in Operating earnings before income taxes:

                                                      Year Ended December 

31,

($ in millions)                                       2016          2015    

2014

DAC/VOBA and other intangibles unlocking(1) (2) $ 91.5 $ 12.5

  $ 26.4
Net gain from Lehman Recovery                         4.5               -   

-



(1) Includes the impacts of the annual review of assumptions. See DAC/VOBA and
Other Intangibles Unlocking in Part II, Item 7. of this Annual Report on Form
10-K for further description.
(2)Unlocking related to the Net gain from Lehman Recovery is excluded
from DAC/VOBA and other  intangibles unlocking for the year ended December 31,
2016 (and included in Net gain from Lehman Recovery).

The DAC/VOBA and other intangibles unlocking in the table above includes the
impact of the annual review of the assumptions, completed in the third quarter
of 2016, 2015 and 2014, of $46.4 million, $(18.0) million and $10.3 million,
respectively, which was included in Net amortization of DAC/VOBA. The unlocking
in 2016 was driven primarily by reductions in the expected future lapse rates.
The unlocking in 2015 was driven primarily by revisions to projected margins for
FIAs.

The following table presents AUM for our Annuities segment as of the dates
indicated:
                                         Year ended December 31,
($ in millions)                     2016          2015          2014
AUM by Product Group:
 Annual Reset Annuities          $  3,245.2    $  3,384.5    $  3,617.2

Multi-Year Guaranteed Annuities 1,704.9 1,987.9 2,288.9

 Fixed Indexed Annuities           14,409.7      13,901.7      13,350.5
 SPIA & Payout                      2,822.8       2,822.8       2,878.5

Investment-only products(1) 5,151.4 4,536.0 4,062.0

 Other annuities                      391.9         403.0         452.9
 Total AUM                       $ 27,725.9    $ 27,035.8    $ 26,650.0


(1) Includes mutual funds and certain separate accounts.


                           As of December 31,

($ in millions) 2016 2015 2014 AUM: General account $ 21,888.0 $ 21,790.6 $ 21,795.5 Separate account 781.5 743.4 792.5 Mutual funds 5,056.4 4,501.8 4,062.0 Total AUM $ 27,725.9 $ 27,035.8 $ 26,650.0




The following table presents a rollforward of AUM for our Annuities segment for
the periods indicated:
                                                      Year Ended December 31,
($ in millions)                                  2016           2015           2014
Balance at beginning of period               $ 27,035.8     $ 26,650.0     $ 26,646.7
Deposits                                        3,162.1        3,224.4      

3,044.7

Surrenders, benefits and product charges (3,268.5 ) (3,350.5 )

  (4,115.1 )
Net flows                                        (106.4 )       (126.1 )     (1,070.4 )
Interest credited and investment performance      796.5          511.9        1,073.7
Balance as of end of period                  $ 27,725.9     $ 27,035.8     $ 26,650.0




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Annuities - Year Ended December 31, 2016 Compared to Year Ended December 31, 2015


Operating revenues

Net investment income and net realized gains increased $1.5 million from
$1,068.1 million to $1,069.6 million primarily due to increases in prepayment
fee income and alternative investment income including proceeds from the Lehman
Recovery, as well as higher investment income resulting from the growth of FIAs.
Partially offsetting these items was lower investment income due to lower
AR/MYGA general account assets resulting from the continued product runoff, and
the impact of the continued low interest rate environment on reinvestment rates.

Fee income increased $3.2 million from $63.6 million to $66.8 million primarily due to growth in assets of investment-only products.


Premiums decreased $14.4 million from $116.4 million to $102.0 million primarily
due to lower premiums in immediate annuities with life contingencies, which
corresponds to lower interest credited and other benefits to
contract/policyholders.
Operating benefits and expenses

Interest credited and other benefits to contract owners/policyholders decreased
$21.0 million from $697.9 million to $676.9 million primarily driven by the
change in the mix of business between AR/MYGAs and FIAs due to option costs of
FIAs being generally lower than the credited rates on AR/MYGAs, a decrease in
payout reserves resulting from a decrease in immediate annuities with life
contingencies, and a decrease in sales inducements amortization related to
annual assumption updates. These favorable changes were partially offset by
unfavorable changes in payout reserves related to valuation model refinements,
primarily due to the impact of favorable adjustments in the prior period, as
well as unfavorable adjustments in the current period.

Operating expenses increased $8.2 million from $152.3 million to $160.5 million
primarily due to distribution and information technology expenses to support
business activities, as well as higher mutual fund and FIA commissions.

Net amortization of DAC/VOBA decreased $74.3 million from $169.4 million to $95.1 million primarily due to favorable DAC/VOBA unlocking mainly as a result of annual assumption updates and lower amortization rates.


Operating earnings before taxes increased $78.2 million from $243.0 million to
$321.2 million primarily due to favorable DAC/VOBA and other intangible
unlocking resulting from annual assumption updates and lower amortization rates,
higher prepayment fee income and alternative investment income including
proceeds from the Lehman Recovery, as well as improved margins related to the
shift in the mix of business from AR/MYGAs to FIAs. Partially offsetting these
items were higher operating expenses and unfavorable changes in payout reserves
related to valuation model refinements.

Annuities - Year Ended December 31, 2015 Compared to Year Ended December 31, 2014


Operating revenues

Net investment income and net realized gains (losses) decreased $41.5 million
from $1,109.6 million to $1,068.1 million primarily due to lower average general
account assets resulting from the continued run-off of the AR/MYGAs and lower
alternative investment income. Partially offsetting these items was higher
investment income resulting from the growth in FIAs and higher prepayment
income.

Fee income increased $6.6 million from $57.0 million to $63.6 million primarily
due to growth in assets of mutual fund custodial products. Average assets of
mutual fund custodial products increased from $3.7 billion to $4.4 billion
during the current year due to positive net flows and market performance.

Premiums decreased $52.6 million from $169.0 million to $116.4 million primarily
due to lower premiums in immediate annuities with life contingencies which
correspond to lower Interest credited and other benefits to contract
owners/policyholders.
Other revenue decreased $3.3 million from $17.8 million to $14.5 million
primarily due to changes in market value adjustments related to annuities upon
surrender.

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Operating benefits and expenses


Interest credited and other benefits to contract owners/policyholders decreased
$115.2 million from $813.1 million to $697.9 million primarily due to a decrease
in payout reserves resulting from a decrease in immediate annuities with life
contingencies and a reserve adjustment related to a valuation model refinement.
Also contributing to the decline was lower interest credited, due to the
continued run-off of the AR/MYGAs, as referenced above. The change in the mix of
business between AR/MYGAs and FIAs had a favorable impact on total interest
credited, since option costs of FIAs are lower than credited rates on AR/MYGAs.
These favorable changes are partially offset by unfavorable sales inducement
amortization in the current period and lower favorable mortality results on the
Payout block.

Operating expenses increased $12.5 million from $139.8 million to $152.3 million primarily due to higher mutual fund and FIA commissions and increases in distribution and technology expenses.


Net amortization of DAC/VOBA increased $30.9 million from $138.5 million to
$169.4 million primarily due to an increase in amortization due to higher gross
profits in the current period, as well as unfavorable DAC/VOBA unlocking due to
annual assumption updates. These unfavorable changes were partially offset by
the impact of lower amortization rates.

Operating earnings before income taxes


Operating earnings before taxes decreased $19.0 million from $262.0 million to
$243.0 million as a result of unfavorable DAC/VOBA unlocking resulting from
annual assumption updates, lower alternative investment income, lower favorable
mortality results on the Payout block, and higher operating expenses. Partially
offsetting these items were improved margins related to the change in mix of
business between AR/MYGAs and FIAs, higher prepayment income and a reserve
adjustment related to a valuation model refinement.

Individual Life

The following table presents Operating earnings before income taxes of our Individual Life segment for the periods indicated:

                                                          Year Ended December 31,
($ in millions)                                  2016               2015              2014
Operating revenues:
Net investment income and net realized
gains (losses)                             $       857.2       $       879.4     $       885.1
Fee income                                       1,208.5             1,172.4           1,111.6
Premiums                                           445.8               548.0             699.6
Other revenue                                       16.0                16.9              21.5
Total operating revenues                         2,527.5             2,616.7           2,717.8
Operating benefits and expenses:
Interest credited and other benefits to
contract owners/policyholders                    1,973.3             1,923.3           2,115.6
Operating expenses                                 329.8               351.8             359.2
Net amortization of DAC/VOBA                       165.8               168.9               5.7
Total operating benefits and expenses            2,468.9             2,444.0           2,480.5

Operating earnings before income taxes $ 58.6 $ 172.7 $ 237.3




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The following table presents certain notable items that resulted in volatility in Operating earnings before income taxes for the periods indicated:

                                                    Year Ended December 31,
($ in millions)                                   2016        2015        

2014

DAC/VOBA and other intangibles unlocking(1)(2) $ (143.5 ) $ (38.4 ) $ (10.2 ) Net gain from Lehman Recovery

                       8.0           -         

-

Gain on reinsurance recapture                         -           -        

20.0



(1) Includes the impacts of the annual review of assumptions. See DAC/VOBA and
Other Intangibles Unlocking in Part II, Item 7. of this Annual Report on Form
10-K for further description.
(2)Unlocking related to the Net gain from Lehman Recovery is excluded
from DAC/VOBA and other  intangibles unlocking for the year ended December 31,
2016 (and included in Net gain from Lehman Recovery).

The DAC/VOBA and other intangibles unlocking in the table above includes the
impact of the annual review of the assumptions, completed in the third quarter
2016, 2015 and 2014, of $(109.0) million, $(23.0) million and $(9.5) million,
respectively. The net unfavorable unlocking in 2016 was driven primarily by
changes in portfolio yields and reinsurer rate increases. The unlocking in 2015
was driven primarily by higher persistency on less profitable policies.

The following table presents the impact of the annual review of assumptions by line item for the periods indicated:

                                                       Year Ended December 31,
($ in millions)                                 2016             2015             2014
Fee income                                 $        9.0     $       14.7     $      (17.6 )
Interest credited and other benefits to
contract owners/policyholders                    (105.5 )          (19.8 )         (115.7 )
Net amortization of DAC/VOBA                      (12.5 )          (17.9 )          123.8
Total                                      $     (109.0 )   $      (23.0 )   $       (9.5 )


The following table presents sales, gross premiums, in-force and policy count for our Individual Life segment for the periods indicated:

                                           Year Ended December 31,
($ in millions)                       2016           2015           2014
Sales by Product Line:
Universal life:
Indexed                           $      79.9    $      71.8    $      49.8
Accumulation                              5.0            5.1            9.8
Guaranteed                                0.1            0.1            0.1
Total universal life                     85.0           77.0           59.7
Variable life                             3.7            5.5            7.2
Whole life                                  -              -            0.1
Term                                     11.7           17.8           28.0
Total sales by product line       $     100.4    $     100.3    $      95.0

Total gross premiums and deposits $ 1,798.3 $ 1,877.2 $ 2,014.7 End of period: In-force face amount

              $ 347,070.3    $ 357,220.0    $ 475,815.7
In-force policy count                 886,357        926,918      1,124,771

New business policy count (paid) 15,124 20,220 30,548




Effective October 1, 2014, we disposed of, via reinsurance, a block of in-force
term life contracts (the "Fourth Quarter 2014 Reinsurance Transaction").
Effective October 1, 2015, we also disposed of, via reinsurance, a block of
in-force term life contracts ("Fourth Quarter 2015 Reinsurance Transaction",
collectively the "Fourth Quarter 2014 and 2015 Reinsurance Transactions").

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Consistent with our practice to exclude business (including blocks of business)
exited via reinsurance or divestment from Operating earnings before income taxes
and from Operating revenues, beginning in the period in which the transactions
became effective, the revenues and expenses of these reinsured blocks of
business are excluded from these metrics. See Liquidity and Capital
Resources-Reinsurance in Part II, Item 7. of this Annual Report on Form 10-K for
further description.

Individual Life - Year Ended December 31, 2016 Compared to Year Ended December 31, 2015


Operating revenues

Net investment income and net realized gains decreased $22.2 million from $879.4
million to $857.2 million primarily due to the impact of the Fourth Quarter 2015
Reinsurance transaction. Excluding this impact, investment income increased due
to higher alternative investment income including proceeds from the Lehman
Recovery in the current period, partially offset by lower prepayment fee income
and the impact of the continued low interest rate environment on reinvestment
rates.

Fee income increased $36.1 million from $1,172.4 million to $1,208.5 million
primarily due to an increase in cost of insurance fees on the aging in-force
universal life block, higher net contractual charges driven by higher universal
life premiums and the net favorable impact of intangible unlocking primarily due
to prospective assumption changes.

Premiums decreased $102.2 million from $548.0 million to $445.8 million primarily due to the impact of the Fourth Quarter 2015 Reinsurance Transaction. Operating benefits and expenses


Interest credited and other benefits to contract owners/policyholders increased
$50.0 million from $1,923.3 million to $1,973.3 million primarily due to higher
unfavorable intangible unlocking from annual assumption updates in the current
period, unfavorable net mortality driven by higher severity in the current
period compared to favorable mortality and favorable reserve refinements in the
prior period that did not reoccur, partially offset by the impact of the Fourth
Quarter 2015 Reinsurance Transaction.

Operating expenses decreased $22.0 million from $351.8 million to $329.8 million primarily due to the impact of the Fourth Quarter 2015 Reinsurance Transaction.


Net amortization of DAC/VOBA decreased $3.1 million from $168.9 million to
$165.8 million primarily due to the impact of the Fourth Quarter 2015
Reinsurance Transaction. Excluding this impact, net amortization of DAC/VOBA
increased due to an unfavorable variance in DAC/VOBA unlocking from prospective
assumption changes. In addition, a favorable variance in amortization was
partially offset by unfavorable DAC/VOBA unlocking on the universal life block,
both of which were driven by lower gross profits.

Operating earnings before income taxes


Operating earnings before income taxes decreased $114.1 million from $172.7
million to $58.6 million primarily due to higher net unfavorable DAC/VOBA and
other intangibles unlocking, mostly driven by assumption updates. Excluding the
impact of unlocking, Operating earnings before income taxes decreased slightly
primarily due to favorable reserve refinements in the prior period that did not
reoccur. Additionally, unfavorable changes in net mortality were mostly offset
by lower net intangible amortization driven by lower profits on universal life
blocks and an increase in the cost of insurance fees on the aging in-force
universal life blocks.

Individual Life - Year Ended December 31, 2015 Compared to Year Ended December 31, 2014


Operating revenues

Net investment income and net realized gains (losses) decreased $5.7 million
from $885.1 million to $879.4 million primarily due the  impacts of the Fourth
Quarter 2014 and 2015 Reinsurance Transactions, lower alternative investment
income and the impact of the continued low interest rate environment on
reinvestment rates, partially offset by a change in the mix of invested assets
and higher prepayment income.

Fee income increased $60.8 million from $1,111.6 million to $1,172.4 million primarily due to favorable intangible unlocking resulting from prospective assumption changes and an increase in cost of insurance fees on the aging in-force universal life block.

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Premiums decreased $151.6 million from $699.6 million to $548.0 million
primarily due to the impacts of the Fourth Quarter 2014 and 2015 Reinsurance
Transactions.
Other revenue decreased $4.6 million from $21.5 million to $16.9 million
primarily due to proceeds from legacy company owned life insurance in the prior
period that did not reoccur.

Operating benefits and expenses


Interest credited and other benefits to contract owners/policyholders decreased
$192.3 million from $2,115.6 million to $1,923.3 million primarily due to the
impacts of the Fourth Quarter 2014 and 2015 Reinsurance Transactions, lower
unfavorable intangible unlocking primarily related to annual assumption updates
and a favorable reserve refinement related to indexed universal life products in
the current period. These decreases were partially offset by unfavorable changes
in mortality, net of reinsurance, resulting from higher claims severity and the
Gain on reinsurance recapture in the prior period.

Operating expenses decreased $7.4 million from $359.2 million to $351.8 million
primarily due to the impacts of the Fourth Quarter 2014 and 2015 Reinsurance
Transactions along with lower staffing costs. These decreases were partially
offset by increased credit facility fees supporting reinsurance transactions and
higher commissions.

Net Amortization of DAC/VOBA increased $163.2 million from $5.7 million to
$168.9 million primarily due to unfavorable DAC/VOBA unlocking from prospective
assumption changes. The unfavorable DAC/VOBA unlocking in the current period was
partially offset by intangibles unlocking explained in the Interest credited and
other benefits to contract owners/policyholders and Fee income lines
above. Excluding the impact of unlocking, net amortization of DAC/VOBA decreased
due to lower amortization on the term life block as a result of the impacts of
the Fourth Quarter 2014 and 2015 Reinsurance Transactions, partially offset by
higher amortization on the universal life block due to higher amortization
rates.

Operating earnings before income taxes


Operating earnings before income taxes decreased $64.6 million from $237.3
million to $172.7 million primarily due to an unfavorable change in mortality,
net of reinsurance, from a higher claims severity, net unfavorable DAC/VOBA and
other intangibles unlocking from prospective assumption changes, the impacts of
the Fourth Quarter 2014 and 2015 Reinsurance Transactions, and the Gain on
reinsurance recapture in the prior period. These decreases were partially offset
by an increase in the cost of insurance fees on the aging in-force universal
life block, and a favorable reserve refinement related to indexed universal life
products in the current period.

Employee Benefits

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

                                                         Year Ended December 31,
($ in millions)                                 2016              2015              2014
Operating revenues:
Net investment income and net realized
gains (losses)                             $       111.1     $       108.1     $       111.3
Fee income                                          62.7              68.3              69.6
Premiums                                         1,446.8           1,336.6           1,196.2
Other revenue                                       (4.2 )            (5.8 )            (4.1 )
Total operating revenues                         1,616.4           1,507.2           1,373.0
Operating benefits and expenses:
Interest credited and other benefits to
contract owners/policyholders                    1,169.0           1,050.5             940.7
Operating expenses                                 305.6             289.1             254.7
Net amortization of DAC/VOBA                        15.5              21.5              28.7
Total operating benefits and expenses            1,490.1           1,361.1  

1,224.1

Operating earnings before income taxes $ 126.3 $ 146.1

   $       148.9




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The following table presents certain notable items that resulted in volatility in Operating earnings before income taxes for the periods indicated:

                                                 Year Ended December 31,
($ in millions)                                2016         2015       2014

DAC/VOBA and other intangibles unlocking(1) $ (4.0 ) $ (4.4 ) $ (7.8 ) Net gain from Lehman Recovery

                    1.0           -          -


(1) DAC/VOBA and other intangibles unlocking are included in Fee income,
Interest credited and other benefits to contract owners/policyholders and Net
amortization of DAC/VOBA and includes the impact of the review of the
assumptions. See DAC/VOBA and Other Intangibles Unlocking in Part II, Item 7. of
this Annual Report on Form 10-K for further description.

The DAC/VOBA and other intangibles unlocking in the table above includes the
impact of the annual review of the assumptions, completed in the third quarter
2016, 2015, and 2014, of $0.7 million, $(2.0) million, and $(1.4) million,
respectively. The unlocking in 2016 and 2015 was driven primarily by in-force
assumption updates.

The following table presents the impact of the annual review of assumptions by line item for the periods indicated:

                                  Year Ended December 31,
($ in millions)                 2016         2015       2014
Fee income                   $   (0.2 )    $  3.8     $  7.7

Net amortization of DAC/VOBA 0.9 (5.8 ) (9.1 ) Total

                        $    0.7      $ (2.0 )   $ (1.4 )



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

                                           Year Ended December 31,
($ in millions)                       2016          2015          2014
Sales by Product Line:
Group life                         $    61.2     $    53.6     $    54.2
Group stop loss                        236.6         269.9         225.2
Other group products                    35.5          27.4          18.1
Total group products                   333.3         350.9         297.5
Voluntary products                      56.4          37.5          40.8
Total sales by product line        $   389.7     $   388.4     $   338.3

Total gross premiums and deposits $ 1,643.0 $ 1,529.1 $ 1,374.2 Total annualized in-force premiums 1,713.9 1,603.9 1,406.4

Loss Ratios: Group life (interest adjusted) 77.2 % 75.6 % 76.1 % Group stop loss

                         78.4 %        71.5 %        69.6 %



Employee Benefits - Year Ended December 31, 2016 Compared to Year Ended December 31, 2015


Operating revenues

Net investment income and net realized gains increased $3.0 million from $108.1
million to $111.1 million primarily driven by higher prepayment fee income and
higher alternative investment income, including proceeds from the Lehman
Recovery in the current period.

Fee income decreased $5.6 million from $68.3 million to $62.7 million primarily due to the impact of intangible unlocking in the unearned revenue reserve resulting from annual assumption updates.

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Premiums increased $110.2 million from $1,336.6 million to $1,446.8 million primarily due to increased block size across stop loss, voluntary and group life product lines.

Operating benefits and expenses


Interest credited and other benefits to contract owners/policyholders increased
$118.5 million from $1,050.5 million to $1,169.0 million primarily due to higher
group stop loss and group life benefits associated with growth of the business
and favorable loss ratio experience in the prior period that did not reoccur,
partially offset by a favorable reserve refinement in the current period.

Operating expenses increased $16.5 million from $289.1 million to $305.6 million million primarily due to higher commissions associated with growth of the business.


Net amortization of DAC/VOBA decreased $6.0 million from $21.5 million to $15.5
million primarily due to favorable DAC/VOBA unlocking resulting from annual
assumption updates, partially offset by higher terminated cases in the current
period.

Operating earnings before income taxes


Operating earnings before income taxes decreased $19.8 million from $146.1
million to $126.3 million primarily due to higher benefits incurred and higher
commissions, partially offset by higher premiums driven by growth of the
business and favorable reserve refinement in the current period. The current
period group stop loss and group life ratios are within the expected range
although higher than the prior period.

Employee Benefits - Year Ended December 31, 2015 Compared to Year Ended December 31, 2014


Operating revenues

Net investment income and net realized gains (losses) decreased $3.2 million from $111.3 million to $108.1 million primarily driven by lower alternative investment income.


Fee income decreased $1.3 million from $69.6 million to $68.3 million primarily
due to lower favorable intangible unlocking in the unearned revenue reserve
resulting from prospective assumption changes. The intangible unlocking was
offset by lower unfavorable DAC/VOBA unlocking from prospective assumption
changes as discussed below.
Premiums increased $140.4 million from $1,196.2 million to $1,336.6 million
primarily due to higher sales of group stop loss as well as favorable
persistency on group life and voluntary product lines.

Operating benefits and expenses


Interest credited and other benefits to contract owners/policyholders increased
$109.8 million from $940.7 million to $1,050.5 million primarily due to higher
group stop loss sales and improved persistency in group life and voluntary
products resulting in higher benefits incurred. The current period stop loss
ratio was within the expected range although higher than the prior period.

Operating expenses increased $34.4 million from $254.7 million to $289.1 million
primarily due to higher commissions related to higher sales and higher variable
expenses associated with the growth of the business.

Net amortization of DAC/VOBA decreased $7.2 million from $28.7 million to $21.5
million primarily due to lower unfavorable DAC/VOBA unlocking resulting from
prospective assumption changes. The unfavorable DAC/VOBA unlocking in the
current period was offset by the lower favorable unlocking explained in Fee
income above. In addition, a lower volume of terminated cases in the current
period compared to the prior period contributed to lower amortization.

Operating earnings before income taxes


Operating earnings before income taxes decreased $2.8 million from $148.9
million to $146.1 million primarily due to an increase in benefits incurred and
expenses due to higher volumes and lower Net investment income, partially offset
by higher stop loss premium resulting from higher sales in the current period
and improved group life and voluntary persistency.


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Corporate


The following table presents Operating earnings before income taxes of Corporate
for the periods indicated:
                                                       Year Ended December 31,
($ in millions)                                 2016             2015             2014
Operating revenues:
Net investment income and net realized
gains (losses)                             $      102.8     $      133.1     $      187.5
Fee income                                            -              0.5                -
Premiums                                            2.8              2.7              6.8
Other revenue                                       2.5              0.1             (0.3 )
Total operating revenues                          108.1            136.4            194.0
Operating benefits and expenses:
Interest credited and other benefits to
contract owners/policyholders                      54.4             29.1             52.9
Operating expenses                                216.3            155.1             97.8
Net amortization of DAC/VOBA                          -                -              0.4
Interest Expense                                  186.8            189.0            188.6
Total operating benefits and expenses             457.5            373.2    

339.7

Operating earnings before income taxes $ (349.4 ) $ (236.8 )

$ (145.7 )

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


                                   Year Ended December 31,
($ in millions)                   2016           2015      2014

Strategic Investment Program $ 117.4 $ 79.5 $ - Amortization of intangibles 36.0

           36.6      35.6
Other                              62.9           39.0      62.2
Total Operating expenses     $    216.3        $ 155.1    $ 97.8


Corporate - Year Ended December 31, 2016 Compared to Year Ended December 31, 2015


Operating earnings before income taxes decreased $112.6 million from a loss of
$236.8 million to a loss of $349.4 million primarily related to higher Operating
expenses as a result of higher spending in our Strategic Investment Program and
other operating expenses, including net compensation adjustments as well as
higher legal reserves for several litigation and regulatory matters that were
included within our prior periods disclosures of reasonably possible losses in
excess of reserves. In addition, losses in our run-off blocks of business
included higher Interest credited and other benefits to contract
owners/policyholders primarily due to accelerated amortization of deferred
interest costs associated with the early termination of certain FHLB funding
agreements in the current period, lower Net investment income and net realized
gains (losses) primarily due to declines in the block size of GICs and funding
agreements, and lower earnings as a result of the Second Quarter 2015
Reinsurance Transaction (Defined in Liquidity and Capital Resources-Reinsurance
in Part II, Item 7. of this Annual Report on Form 10-K).

Corporate - Year Ended December 31, 2015 Compared to Year Ended December 31, 2014


Operating earnings before income taxes decreased $91.1 million from a loss of
$145.7 million to a loss of $236.8 million primarily related to $79.5 million of
expenses associated with our Strategic Investment Program and higher incremental
interest expense related to contingent capital. These items were partially
offset by lower other operating expenses, including a lower accrual for a
contingency compared to the prior period. Net investment income and net realized
gains (losses) and Interest credited and other benefits to contract
owners/policyholders decreased primarily due to losses in our run-off blocks of
business from declines in the block size of GICs and funding agreements. In
addition, Net investment income and net realized gains (losses) decreased due to
lower accretion income on impaired assets, and Interest credited and other
benefits to contract owners/policyholders decreased due to unfavorable changes
in the group reinsurance business, partially offset by costs related to the
accelerated amortization of

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deferred interest costs associated with early terminations of FHLB funding agreements occurring in the prior period that did not reoccur in the current period.




Closed Block Variable Annuity

The following table presents Income (loss) before income taxes of our CBVA segment for the periods indicated:

                                                       Year Ended December 31,
($ in millions)                                 2016             2015             2014
Revenues:
Net investment income                      $      285.5     $      231.1     $      163.2
Fee income                                        991.9          1,118.3          1,251.7
Premiums                                          687.0            416.2            522.2
Net realized capital gains (losses)              (671.7 )         (188.1 )         (689.7 )
Other revenue                                       3.5              7.0             14.6
Total revenues                                  1,296.2          1,584.5          1,262.0
Benefits and expenses:
Interest credited and other benefits to
contract owners/policyholders                   1,728.5          1,275.9    

994.8

Operating expenses and interest expense           392.6            431.5            473.6
Net amortization of DAC/VOBA                      130.1             50.4             32.8
Total benefits and expenses                     2,251.2          1,757.8          1,501.2

Income (loss) before income taxes $ (955.0 ) $ (173.3 )

$ (239.2 )

The following table presents certain notable items that result in volatility in Income (loss) before income taxes for the periods indicated:

                                                       Year Ended December 

31,

($ in millions)                                 2016             2015       

2014

Net gains (losses) related to incurred
guaranteed benefits and Variable Annuity
Hedge Program, excluding nonperformance
risk                                       $   (1,501.7 )   $   (1,114.8 )   $   (1,575.3 )
Gain (loss) due to nonperformance risk(1)          75.4             71.9    

327.7

Net investment gains (losses)                      19.5            (15.1 )           (0.4 )
DAC/VOBA and other intangibles unlocking
and loss recognition (2)                         (103.0 )            1.7    

34.4



(1) Refer to Critical Accounting Judgments and Estimates in Part II, Item 7. of
this Annual Report on Form 10-K for further detail.
(2) During the year ended December 31, 2016, we recorded loss recognition in our
CBVA segment of $321.0 million before income taxes, of which $103.8 million is
included in DAC/VOBA and other intangibles unlocking.

The following table presents AUM for our CBVA segment as of the dates indicated:

                         Year Ended December 31,
($ in millions)     2016          2015          2014
AUM:
General account  $  5,207.6    $  3,410.4    $  2,556.3
Separate account   32,535.3      35,141.4      40,657.9
Total AUM        $ 37,742.9    $ 38,551.8    $ 43,214.2




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The following table presents a rollforward of AUM for our CBVA segment for the
periods indicated:
                                                          Year Ended December 31,
($ in millions)                                    2016                2015             2014

Balance as of beginning of period $ 35,575.8 $ 41,132.0 $ 44,788.2 Deposits

                                                 81.1            123.8            170.4
Surrenders, benefits and product charges             (4,312.5 )       (4,659.0 )       (5,593.7 )
Net flows                                            (4,231.4 )       (4,535.2 )       (5,423.3 )
Interest credited and investment
performance                                           1,618.0         (1,021.0 )        1,767.1
Balance as of end of period                          32,962.4         35,575.8         41,132.0

End of period contracts in payout status              4,780.5          2,976.0          2,082.2
Total balance as of end of period(1)       $         37,742.9     $   38,551.8     $   43,214.2
(1) Includes products in accumulation and payout phase, policy
loans and life insurance business.



Closed Block Variable Annuity - Year Ended December 31, 2016 Compared to Year Ended December 31, 2015


Loss before income taxes increased $781.7 million from $173.3 million to $955.0
million. Annual assumption updates and revisions to projection model inputs
implemented during the current period resulted in a loss of $95.5 million,
compared to a loss of $86.0 million in the prior period. The $95.5 million loss
included an unfavorable $250.2 million as a result of updates made to
assumptions principally related to expected earned rates on certain investment
options available to variable annuity contract holders, and discount rates
applicable to future cash flows from variable annuity contracts. This loss was
partially offset by $154.7 million of favorable policyholder behavior
assumptions, driven by a favorable update to utilization rates on guaranteed
minimum withdrawal benefits with life payouts ("GMWBL") contracts, partially
offset by an unfavorable update to lapse rates. The prior period loss of $86.0
million included an unfavorable $43.0 million resulting from policyholder
behavior assumption updates, partially offset by a favorable $27.4 million
resulting from changes to mortality assumptions. The loss also included an
unfavorable $70.4 million as a result of updates made to other assumptions,
principally relating to expected earned rates on certain investment options
available to variable annuity contract holders, discount rates applicable to
future cash flows from variable annuity contracts and long term volatility.

The current period results also included net losses related to the incurred
guaranteed benefits and our Variable Annuity Hedge Program, which increased to a
loss of $1,501.7 million in the current period compared to a loss of $1,114.8
million in the prior period. The $386.9 million unfavorable variance was
primarily due to the favorable equity market performance in the current period,
as well as lower fund returns relative to that market performance. In addition,
unfavorable variances related to interest rates and volatility contributed to
the increase in losses. Partially offsetting this loss is a favorable variance
of $3.5 million related to changes in the fair value of guaranteed benefit
reserves related to nonperformance risk, from $71.9 million in the prior period
to $75.4 million in the current period. The focus in managing our CBVA segment
is on protecting regulatory and rating agency capital, and our hedging program
is primarily designed to mitigate the impacts of market scenarios on capital
resources, rather than mitigating earnings volatility.

During the current period, our CBVA segment incurred loss recognition of $321.0
million including the establishment of a premium deficiency reserve of $217.2
million related to certain payout contracts. The loss recognition was primarily
due to declining portfolio yields resulting from investing new assets in the
continuing low interest rate environment, where new money yields remain below
those of maturing assets. In addition, loss recognition included the write-down
of the value of DAC/VOBA and sales inducements by $103.8 million due to an
increase in interest rates during the current period, which reduced the present
value of expected gross profits relative to the DAC/VOBA balances.

In addition, lower fee income was partially offset by lower operating expenses
as a result of the continued run off of the block, and higher net investment
income was primarily due to higher general account AUM. Higher premiums
associated with the annuitization of life contingent contracts were offset by
corresponding reserve increases in Interest credited to contract
owners/policyholders.


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Closed Blocks Variable Annuity - Year Ended December 31, 2015 Compared to Year Ended December 31, 2014


Loss before income taxes decreased $65.9 million from $239.2 million to $173.3
million. Annual assumption changes and revisions to projection model inputs
implemented during the current period resulted in a loss of $86.0 million,
compared to a gain of $102.3 million in the prior period (which excluded a gain
of $37.9 million due to changes in the technique used to estimate nonperformance
risk). The $86.0 million loss included an unfavorable $43.0 million resulting
from policyholder behavior assumption changes primarily related to an update to
lapse assumptions, partially offset by a favorable $27.4 million resulting from
changes to mortality assumptions. The loss also included an unfavorable $70.4
million as a result of updates made to other assumptions, principally relating
to expected earned rates on certain investment options available to variable
annuity contract holders, discount rates applicable to future cash flows from
variable annuity contracts and long-term volatility. The prior period gain of
$102.3 million included a favorable $170.2 million resulting from policyholder
behavior assumption changes, partially offset by an unfavorable $40.5 million
resulting from changes to mortality assumptions. The gain from policyholder
behavior assumption changes was primarily due to an update to the utilization
assumption on GMWBL contracts, partially offset by an unfavorable result from an
update to lapse assumptions.

The current period results included a $255.8 million decrease in earnings due to
changes in the fair value of guaranteed benefit derivatives related to
nonperformance risk, from gains of $327.7 million in the prior period, which
included the effects of changes in the technique used to estimate nonperformance
risk, to gains of $71.9 million in the current period. DAC/VOBA and other
intangibles unlocking declined by $32.7 million, from a gain of $34.4 million in
the prior period to a gain of $1.7 million in the current year period, mainly
due to unfavorable impacts of assumption changes mentioned above.

Net losses related to the incurred guaranteed benefits and our Variable Annuity
Hedge Program decreased to a loss of $1,114.8 million in the current period
compared to a loss of $1,575.3 million in the prior period. The $460.5 million
favorable variance was primarily due to the impacts of interest rate movements
and unfavorable equity market performance in the current period, partially
offset by unfavorable impacts of assumption changes, mentioned above, as well as
high volatility. The focus in managing our CBVA segment is on protecting
regulatory and rating agency capital, and our hedging program is primarily
designed to mitigate the impacts of market scenarios on capital resources,
rather than mitigating earnings volatility.

In addition, lower fee income was partially offset by lower operating expenses
as a result of continued run off of the block. Lower premiums associated with
the annuitization of life contingent contracts and higher net investment income,
primarily due to higher general account AUM, were offset by corresponding
reserve changes in Interest credited and other benefits to contract
owners/policyholders.

Closed Block Variable Annuity - Regulatory and rating agencies Capital Management


Our focus in managing our CBVA segment is on protecting regulatory and rating
agency capital, and our hedging program is primarily designed to mitigate the
impacts of market movements on capital resources, rather than mitigating
earnings volatility. As of December 31, 2016, our estimated assets available to
support the guarantees in the variable annuity block were $5.0 billion, which
included $4.5 billion of assets backing our regulatory reserves associated with
these guarantees. Rating agency capital is based on a Conditional Tail
Expectation ("CTE"), which is a statistical tail risk measure used to assess the
adequacy of assets supporting variable annuity contract liabilities. Our goal is
to support CBVA with assets at least equal to a CTE95 standard based on the
Standard and Poor's ("S&P") model, which is an aggregate measure across all of
our subsidiaries that have written or provided captive reinsurance for deferred
variable annuity contracts. As of December 31, 2016, we held rating agency
capital that was sufficient at the S&P CTE95 standard.
For further information about our sensitivities to interest rates and equity
market risks, see Quantitative and Qualitative Disclosures About Market Risk in
Part II, Item 7A. of this Annual Report on Form 10-K.

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 Operating earnings before income taxes and the average level of assets
in each segment, prior to intercompany eliminations. These alternative
investments are carried at fair value, which is estimated based on the net asset
value ("NAV") of these funds. The investment income on alternative investments
shown below for the periods stated excludes the net investment income from
Lehman Recovery/LIHTC.

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While investment income on these assets can be volatile, based on current plans, we expect to earn 8.0% to 9.0% on these assets over the long-term.

The following table presents the investment income for the years ended December 31, 2016, 2015 and 2014, respectively, and the average assets of alternative investments as of the dates indicated:

                                       Year Ended December 31,
($ in millions)                     2016          2015        2014

Retirement:

Alternative investment income    $    16.2     $     9.2    $  28.8
Average alternative investments      438.4         406.7      310.6
Investment Management:
Alternative investment income(1)     (10.7 )         1.1       19.7
Average alternative investments      181.4         186.9      145.3
Annuities:
Alternative investment income          8.8           5.0       25.0

Average alternative investments 263.5 257.1 199.6 Individual Life: Alternative investment income 8.1

           5.3       19.8

Average alternative investments 188.3 171.9 143.0 Employee Benefits: Alternative investment income 1.7

           0.8        3.2

Average alternative investments 41.7 41.1 29.5 Corporate:(2) Alternative investment income

            -           3.6       20.8

Average alternative investments 5.7 53.9 139.9 Total Voya Financial, Inc.:(3) Alternative investment income $ 24.1 $ 25.0 $ 117.3 Average alternative investments $ 1,119.0 $ 1,117.6 $ 967.9



(1) Includes a reversal of previously accrued carried interest in the year ended
December 31, 2016 as a result of declines in the market value of a sponsored
private equity fund.
(2) Effective in the second quarter of 2015, approximately $110 million of
alternative assets previously allocated to excess capital in Corporate was
allocated to all segments in proportion to each segment's target statutory
capital.
(3) Our CBVA segment is managed to focus on protecting regulatory and rating
agency capital rather than achieving operating metrics and, therefore, its
results of operations are not reflected within investment income.

DAC/VOBA and Other Intangibles Unlocking


Changes in 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"). For Individual Life, changes in Operating earnings
before income taxes and net income (loss) are also influenced by increases and
decreases in amortization of net cost of reinsurance, as well as by changes in
reserves associated with UL and variable universal life ("VUL") secondary
guarantees and paid-up guarantees. Unlocking, described below, related to DAC,
VOBA, DSI and URR, as well as amortization of net cost of reinsurance and
reserve adjustments associated with UL and VUL secondary guarantees and paid-up
guarantees are referred to as "DAC/VOBA and other intangibles unlocking." See
the "Deferred Policy Acquisition Costs, Value of Business Acquired and Other
Intangibles," "Reinsurance," and "Future Policy Benefits and Contract Owner
Account Balances" sections in the Business, Basis of Presentation and
Significant Accounting Policies Note in our Consolidated Financial Statements in
Part II, Item 8. of this Annual Report on Form 10-K for more information.

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
for each of our segments except for the CBVA segment. Net cost of reinsurance is
amortized in a similar manner. For deferred annuity contracts within the CBVA
segment, we amortize DAC/VOBA and other intangibles in relation to the emergence
of estimated gross revenues.

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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 and net cost of
reinsurance 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 ("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 and net cost of reinsurance
due to contract changes or contract terminations higher than estimated are also
included in "unlocking." An unlocking event that results in a charge
("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.

Reserves for UL and VUL secondary guarantees and paid-up guarantees are
calculated by estimating the expected value of death benefits payable and
recognizing those benefits ratably over the accumulation period based on total
expected assessments. The reserve for such products recognizes the portion of
contract assessments received in early years used to compensate us for benefits
provided in later years. Assumptions used, such as the interest rate, lapse rate
and mortality, are consistent with assumptions used in estimating gross profits
for purposes of amortizing DAC. 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 except CBVA.

We also review the estimated gross profits for each of our blocks of business to
determine recoverability of DAC, VOBA and DSI balances each period. If these
assets are deemed to be unrecoverable, a write-down is recorded that is referred
to as loss recognition. During the year ended December 31, 2016, our reviews
resulted in loss recognition in our CBVA segment of $321.0 million before income
taxes, of which $85.1 million and $18.7 million related to DAC/VOBA and DSI,
respectively. There was no loss recognition for 2015 and 2014. Refer to Critical
Accounting Judgments and Estimates in Part II, Item 7. of this Annual Report on
Form 10-K for more information.

During the third quarter of 2016, we completed our annual review of the
assumptions, including projection model inputs, in each of our segments (except
for Investment Management segment and Corporate, for which assumption reviews
are not relevant). As a result of this review, we made a number of changes to
our assumptions resulting in a net unfavorable impact of $144.9 million to
Operating earnings before income taxes in the current period, compared to an
unfavorable impact of $82.0 million in the third quarter of 2015 and an
unfavorable impact of $19.3 million in the third quarter of 2014. These are
included in the DAC/VOBA and other intangibles unlocking.

The following table presents the amount of DAC/VOBA and other intangibles
unlocking that is included in segment Operating earnings before income taxes for
the periods indicated:
                                                             Year Ended December 31,
($ in millions)                                            2016        2015        2014
Retirement                                              $  (65.6 )   $ (37.2 )   $ (30.0 )
Annuities                                                   91.5        12.5        26.4
Individual Life                                           (143.5 )     (38.4 )     (10.2 )
Employee Benefits                                           (4.0 )     

(4.4 ) (7.8 ) Total DAC/VOBA and other intangibles unlocking(1)(2)(3) $ (121.6 ) $ (67.5 ) $ (21.6 )



(1) Includes unlocking related to cost of reinsurance and secondary and paid-up
guarantees.
(2) Includes the impacts of the annual review of assumptions.
(3) Unlocking related to the Net gain from Lehman Recovery is excluded
from DAC/VOBA and other intangibles unlocking for the year ended December 31,
2016.

In addition, we have DAC/VOBA and other intangibles unlocking that corresponds to items excluded from Operating earnings before income taxes, such as the results of our CBVA segment, investment gains (losses) and net guaranteed benefits hedging gains (losses).

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The following table presents the amount of DAC/VOBA and other intangibles unlocking that is included in Income before income taxes but excluded from Operating earnings before income taxes for the periods presented:

                                                        Year Ended December 31,
($ in millions)                                       2016        2015        2014
CBVA (1)                                           $ (103.0 )   $   1.7     $  34.4
All other segments                                    (37.4 )     (74.8 )      81.6

Total DAC/VOBA and other intangibles unlocking (2) $ (140.4 ) $ (73.1 ) $ 116.0

(1) Includes a portion of loss recognition for the year ended December 31, 2016 for the $103.8 million write-down of DAC/VOBA and other intangibles. (2) Includes the impacts of the annual review of assumptions.

Liquidity and Capital Resources


Liquidity is our ability to generate sufficient cash flows to meet the cash
requirements of operating, investing and financing activities. Capital refers to
our long-term financial resources available to support the business operations
and contribute to 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 alternate sources of liquidity and capital
described herein.

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, 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


In evaluating liquidity, it is important to distinguish the cash flow needs of
Voya Financial, Inc. from the cash flow needs of the Company as a whole. 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. These
sources of funds are currently supplemented by Voya Financial, Inc.'s access to
the $750.0 million revolving credit sublimit of its Second Amended and Restated
Credit Agreement and reciprocal borrowing facilities maintained with its
subsidiaries as well as other alternate sources of liquidity described below
either directly or indirectly through its insurance subsidiaries.


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

                                                         Year Ended December 31,
($ in millions)                                   2016             2015     

2014

Beginning cash and cash equivalents balance $ 378.1 $ 682.1

    $      640.2
Sources:
Proceeds from loans from subsidiaries, net
of repayments                                        10.5                -                -
Dividends and returns of capital from
subsidiaries                                        977.0          1,708.5  

902.0

Repayment of loans to subsidiaries, net of
new issuances                                        52.2                -             42.4
Proceeds from 2026 Notes offering                   498.6                -                -
Proceeds from 2046 Notes offering                   299.6                -                -
Amounts received from subsidiaries under tax
sharing agreements, net                                 -            109.2            248.4
Other, net                                            5.9                -             16.2
Total sources                                     1,843.8          1,817.7          1,209.0
Uses:
Repurchase of Senior Notes                          659.8                -                -
Premium paid and other fees related to debt
extinguishment                                       84.0                -                -
Payment of interest expense                         156.2            143.5  

141.1

Capital provided to subsidiaries                    215.0                -  

150.0

New issuances of loans to subsidiaries, net
of repayments                                           -            161.2                -
Amounts paid to subsidiaries under tax
sharing arrangements, net                            67.9                -                -
Payment of income taxes, net                         64.1             77.1             42.8
Debt issuance costs                                  16.0              6.8             16.8
Common stock acquired - Share repurchase            687.2          1,486.6            789.4
Share-based compensation                              6.5              4.5             16.9
Dividends paid                                        8.0              9.0             10.1
Acquisition of short term investments                   -            212.0                -
Other, net                                              -             21.0                -
Total uses                                        1,964.7          2,121.7          1,167.1
Net (decrease) increase in cash and cash
equivalents                                        (120.9 )         (304.0 )           41.9

Ending cash and cash equivalents balance $ 257.2 $ 378.1

$ 682.1

Share Repurchase Program and Dividends to Shareholders

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


Since 2014, our Board of Directors has periodically renewed our authority to
repurchase our shares. As of December 31, 2016, we are authorized to repurchase
shares up to an aggregate purchase price of $633.3 million, with such
authorization expiring (unless subsequently extended) December 31, 2017.

During the year ended December 31, 2014, we repurchased 19,447,847 shares of our
common stock from ING Group for an aggregate purchase price of $725.0
million, 1,125,558 shares of our common stock in open market repurchases for an
aggregate purchase price of $39.4 million and 655,457 shares of our common stock
under an accelerated share repurchase arrangement for an aggregate purchase
price $25.7 million.

During the year ended December 31, 2015, we repurchased 13,599,274 shares of our
common stock from ING Group for an aggregate purchase price of $600.0 million,
14,960,463 shares of our common stock in open market repurchases for an
aggregate purchase price of $640.3 million and 5,788,306 shares of our common
stock under an accelerated share repurchase arrangement for an aggregate
purchase price of $250.0 million.

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During the year ended December 31, 2016, we repurchased 11,313,031 shares of our
common stock in open market repurchases for an aggregate purchase price of
$337.0 million and 5,690,254 shares of our common stock under a share repurchase
arrangement with a third-party financial institution for an aggregate purchase
price of $150.0 million. In addition, on November 3, 2016, we entered into a
further share repurchase arrangement with a third-party financial institution,
pursuant to which we made an up-front payment of $200.0 million during the
fourth quarter of 2016, and received delivery of 5,216,025 shares during the
first quarter of 2017. This share repurchase arrangement reduced the remaining
amount of our share repurchase authorization to $633.3 million as of
December 31, 2016.

The following table summarizes our return of capital to common shareholders:
($ in millions)                             Year Ended December 31,
                                         2016         2015        2014
Dividends to shareholders              $    8.0    $     9.0    $  10.1
Repurchase of common shares               487.0      1,490.3      790.1

Total capital returned to shareholders $ 495.0 $ 1,499.3 $ 800.2

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, including variable products with guarantees. As
part of our liquidity management process, we model different scenarios to
determine whether existing assets are adequate to meet projected cash flows. Key
variables in the modeling process include interest rates, equity market
movements, quantity and type of interest and equity market hedges, anticipated
contract owner behavior, market value of general account assets, variable
separate account performance and implications of rating agency actions.

Description of Certain Indebtedness


We borrow funds to provide liquidity, invest in the growth of the business and
for general corporate purposes. Our ability to access these borrowings depends
on a variety of factors including, but not limited to, the credit rating of Voya
Financial, Inc. and of its insurance company subsidiaries and general
macroeconomic conditions.

We did not have any short-term debt borrowings outstanding as of December 31,
2016. The following table summarizes our borrowing activities for the year ended
December 31, 2016:
                           Beginning                       Maturities and
($ in millions)             Balance         Issuance         Repayment        Other Changes      Ending Balance
Long-Term Debt:
Debt securities          $    3,454.9     $     798.2     $     (708.3 )     $        (0.2 )   $        3,544.6
Windsor property loan             4.9               -                -                   -                  4.9
Subtotal                      3,459.8           798.2           (708.3 )              (0.2 )            3,549.5
Less: Current portion of
long-term debt                      -               -                -                   -                    -
Total long-term debt     $    3,459.8     $     798.2     $     (708.3 )     $        (0.2 )   $        3,549.5




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We did not have any short-term debt borrowings outstanding as of December 31,
2015. The following table summarizes our borrowing activities for the year ended
December 31, 2015:
                           Beginning                          Maturities and
($ in millions)             Balance          Issuance           Repayment          Other Changes       Ending Balance
Long-Term Debt:
Debt securities          $    3,481.6     $           -     $       (31.2 )      $           4.5     $        3,454.9
Windsor property loan             4.9                 -                 -                      -                  4.9
Subtotal                      3,486.5                 -             (31.2 )                  4.5              3,459.8
Less: Current portion of
long-term debt                      -                 -                 -                      -                    -
Total long-term debt     $    3,486.5     $           -     $       (31.2 )      $           4.5     $        3,459.8


As of December 31, 2016, we were in compliance with our debt covenants.

Debt Securities

Senior Notes


On July 13, 2012, Voya Financial, Inc. issued $850.0 million of unsecured 5.5%
Senior Notes due 2022 (the "2022 Notes") in a private placement with
registration rights. The 2022 Notes are guaranteed by Voya Holdings Inc. ("Voya
Holdings"), a wholly owned subsidiary of Voya Financial, Inc. Interest is paid
semi-annually, in arrears, on each January 15 and July 15.

On February 11, 2013, Voya Financial, Inc. issued $1.0 billion of unsecured 2.9%
Senior Notes due 2018 (the "2018 Notes") in a private placement with
registration rights. The 2018 Notes are guaranteed by Voya Holdings. Interest is
paid semi-annually, in arrears, on each February 15 and August 15.

On July 26, 2013, Voya Financial, Inc. issued $400.0 million of unsecured 5.7%
Senior Notes due 2043 (the "2043 Notes") in a private placement with
registration rights. The 2043 Notes are guaranteed by Voya Holdings. Interest is
paid semi-annually on each January 15 and July 15.

The 2022 Notes, 2018 Notes and 2043 Notes were the subject of SEC-registered
exchange offers during 2013, pursuant to which our registration obligations with
respect to each of these series were satisfied.

On June 13, 2016, Voya Financial, Inc. issued $500.0 million of unsecured 3.65%
Senior Notes due 2026 (the "2026 Notes") and $300.0 million of unsecured 4.8%
Senior Notes due 2046 (the "2046 Notes") in a registered public offering. The
2026 Notes and 2046 Notes are fully, irrevocably and unconditionally guaranteed
by Voya Holdings. Interest is paid semi-annually, in arrears, on each June 15
and December 15, commencing on December 15, 2016. We used the proceeds of the
Notes to repurchase $43.7 million aggregate face amount of the Aetna Notes (as
defined below) and $659.8 million aggregate face amount of the 2018 Notes and
2022 Notes on June 20, 2016 through a tender offer.

As of December 31, 2016, Voya Financial, Inc. had an aggregate principal amount
outstanding for 2018 Notes, 2022 Notes, 2026 Notes, 2043 Notes and 2046 Notes
(collectively, the "Senior Notes") of $2,390.2 million. We may elect to redeem
all or any portion of the Senior Notes at any time at a redemption price equal
to the principal amount redeemed, or, if greater, a "make-whole redemption
price," plus, in each case accrued and unpaid interest.

During the year ended December 31, 2016, Voya Financial, Inc. repurchased $486.8
million and $173.0 million of the outstanding principal amount of the 2022 Notes
and the 2018 Notes, respectively, all of which was repurchased in the tender
offer described above. In connection with these transactions, we incurred a loss
on debt extinguishment of $87.6 million for the year ended December 31, 2016,
which was recorded in Interest expense in the Consolidated Statements of
Operations.

Junior Subordinated Notes


On May 16, 2013, Voya Financial, Inc. issued $750.0 million of 5.65%
Fixed-to-Floating Rate Junior Subordinated Notes due 2053 (the "2053 Notes") in
a private placement with registration rights. The 2053 Notes are guaranteed on
an unsecured, junior subordinated basis by Voya Holdings. Interest is paid
semi-annually, in arrears, on each May 15 and November 15, at a fixed rate of
5.65% until May 15, 2023. From May 15, 2023, the 2053 Notes bear interest at an
annual rate equal to three-month London

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Interbank Offered Rates ("LIBOR") plus 3.58% payable quarterly, in arrears, on
February 15, May 15, August 15 and November 15. So long as no event of default
with respect to the 2053 Notes has occurred and is continuing, we have the right
on one or more occasions, to defer the payment of interest on the 2053 Notes for
one or more consecutive interest periods for up to five years. During the
deferral period, interest will continue to accrue at the then-applicable rate
and deferred interest will bear additional interest at the then-applicable rate.

At any time following notice of our plan to defer interest and during the period
interest is deferred, we and our subsidiaries generally, with certain
exceptions, may not make payments on or redeem or purchase any shares of our
common stock or any of the debt securities or guarantees that rank in
liquidation on a parity with or are junior to the 2053 Notes.

We may elect to redeem the 2053 Notes (i) in whole at any time or in part on or
after May 15, 2023 at a redemption price equal to the principal amount plus
accrued and unpaid interest. If the notes are not redeemed in whole, $25.0
million of aggregate principal (excluding the principal amount of the 2053 Notes
held by us or our affiliates) must remain outstanding after giving effect to the
redemption; or (ii) in whole, but not in part, at any time prior to May 15, 2023
within 90 days after the occurrence of a "tax event" or "rating agency event",
as defined in the 2053 Notes offering memorandum, at a redemption price equal to
the principal amount, or, if greater, a "make-whole redemption price," as
defined in the 2053 Notes offering memorandum, plus, in each case accrued and
unpaid interest.

The 2053 Notes were the subject of an SEC-registered exchange offer during 2013,
pursuant to which our registration obligations with respect to the 2053 Notes
were satisfied.

Put Option Agreement for Senior Debt Issuance


On March 17, 2015, we entered into an off-balance sheet ten-year put option
agreement with a Delaware trust that we formed, in connection with the
completion of the sale by the trust of $500.0 million aggregate amount of
pre-capitalized trust securities redeemable February 15, 2025 ("P-Caps") in a
Rule 144A private placement. The trust invested the proceeds from the sale of
the P-Caps in a portfolio of principal and interest strips of U.S. Treasury
securities. The put option agreement provides Voya Financial, Inc. the right to
sell to the trust at any time up to $500.0 million of its 3.976% Senior Notes
due 2025 ("3.976% Senior Notes") and receive in exchange a corresponding amount
of the principal and interest strips of U.S. Treasury securities held by the
trust. The 3.976% Senior Notes will not be issued unless and until the put
option is exercised. In return, we agreed to pay a semi-annual put premium to
the trust at a rate of 1.875% per annum applied to the unexercised portion of
the put option, and to reimburse the trust for its expenses. The put premium is
recorded in Operating expenses in the Consolidated Statements of Operations. The
3.976% Senior Notes will be fully, irrevocably and unconditionally guaranteed by
Voya Holdings. Our obligations under the put option agreement and the expense
reimbursement agreement with the trust are also guaranteed by Voya Holdings.

The put option agreement with the trust provides Voya Financial, Inc. with a source of liquid assets, which could be used to meet future financial obligations or to provide additional capital.


The put option described above will be exercised automatically in full if we
fail to make certain payments to the trust, including any failure to pay the put
option premium or expense reimbursements when due, if such failure is not cured
within 30 days, and upon certain bankruptcy event involving us or Voya Holdings.
We are also required to exercise the put option in full: (i) if we reasonably
believe that our consolidated shareholders' equity, calculated in accordance
with U.S. GAAP but excluding Accumulated other comprehensive income (loss) and
Noncontrolling interest, has fallen below $3.0 billion, subject to adjustment in
certain cases; (ii) upon the occurrence of an event of default under the 3.976%
Senior Notes; and (iii) if certain events occur relating to the trust's status
as an "investment company" under the Investment Company Act of 1940.

We have a one-time right to unwind a prior voluntary exercise of the put option
by repurchasing all of the 3.976% Senior Notes then held by the trust in
exchange for a corresponding amount of U.S. Treasury securities. If the put
option has been fully exercised, the 3.976% Senior Notes issued may be redeemed
by us prior to their maturity at par or, if greater, at a make-whole redemption
price, in each case plus accrued and unpaid interest to the date of redemption.
The P-Caps are to be redeemed by the trust on February 15, 2025 or upon any
early redemption of the 3.976% Senior Notes.

Aetna Notes


As of December 31, 2016 and December 31, 2015, Voya Holdings had outstanding
$145.7 million and $162.9 million principal amount of 7.25% Debentures due
August 15, 2023, respectively, $187.6 million and $204.0 million principal
amount of 7.63% Debentures due August 15, 2026, respectively, and $93.2 million
and $108.0 million principal amount of 6.97% Debentures due August 15, 2036
(collectively, the "Aetna Notes"), which were issued by a predecessor of Voya
Holdings and assumed in connection

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with our acquisition of Aetna's life insurance and related businesses. In
addition, Equitable of Iowa Capital Trust II, a limited purpose trust, has
outstanding $13.0 million principal amount of 8.42% Series B Capital Securities
due April 1, 2027 (the "Equitable Notes"). ING Group guarantees the Aetna Notes.
The Equitable Notes are guaranteed by Voya Financial, Inc.

During the year ended December 31, 2016, Voya Holdings repurchased $14.8
million, $16.4 million, and $17.3 million of the outstanding principal amount of
6.97% Debentures due August 15, 2036, 7.63% Debentures due August 15, 2026, and
7.25% Debentures due August 15, 2023, respectively. During the year ended
December 31, 2015, Voya Holdings repurchased $31.1 million of the outstanding
principal amount of 7.63% Debentures due August15, 2026 and $0.1 million of the
outstanding principal amount of 7.25% Debentures due August 15, 2023. In
connection with these transactions, we incurred a loss on debt extinguishment of
$17.0 million and $10.1 million for the years ended December 31, 2016 and 2015,
respectively, which was recorded in Interest expense in the Consolidated
Statements of Operations.

Concurrent with the completion of our Initial Public Offering ("IPO"), we
entered into a shareholder agreement with ING Group that governs certain aspects
of our continuing relationship. We agreed to reduce the aggregate outstanding
principal amount of Aetna Notes to:

• no more than $300.0 million as of December 31, 2016;

• no more than $200.0 million as of December 31, 2017;

• no more than $100.0 million as of December 31, 2018;

• and zero as of December 31, 2019.




The reduction in principal amount of Aetna Notes can be accomplished, at our
option, through redemptions, repurchases or other means, but will also be deemed
to have been reduced to the extent we post collateral with a third-party
collateral agent, for the benefit of ING Group, which may consist of cash
collateral; certain investment-grade debt instruments; LOCs meeting certain
requirements; or senior debt obligations of ING Group or a wholly owned
subsidiary of ING Group.

If we fail to reduce the outstanding principal amount of the Aetna Notes by the
means noted above, we agreed to pay a quarterly fee (ranging from 0.5% per
quarter for 2016 to 1.25% per quarter for 2019) to ING Group based on the
outstanding principal amount of Aetna Notes which exceed the limits set forth
above.

As of December 31, 2016 and 2015, the outstanding principal amounts of Aetna
Notes were $426.5 million and $474.9 million, respectively. For the years ended
December 31, 2016 and 2015, the amounts of collateral required to avoid the
payment of a fee to ING Group were $126.5 million and $74.9 million,
respectively. On December 30, 2015, we exercised our option to establish a
control account benefiting ING Group with a third-party collateral agent. On
December 31, 2015, we deposited $77.0 million of cash collateral into the
control account. During the year ended December 31, 2016, we deposited $50.4
million of collateral, increasing the remaining collateral balance to $127.4
million. The cash collateral may be exchanged at any time upon the posting of
any other form of acceptable collateral to the account.

Senior Unsecured Credit Facility


Effective May 6, 2016, we revised the terms of our Amended and Restated
Revolving Credit Agreement ("Amended Credit Agreement"), dated February 14,
2014, by entering into a Second Amended and Restated Revolving Credit Agreement
("Second Amended and Restated Credit Agreement") with a syndicate of banks, a
large majority of which participated in the Amended Credit Agreement. The Second
Amended and Restated Credit Agreement modifies the Amended Credit Agreement by
extending the term of the agreement to May 6, 2021 and reducing the total amount
of LOCs that may be issued from $3.0 billion to $2.25 billion. The revolving
credit sublimit of $750.0 million present in the Amended Credit Agreement
remains unchanged.

As of December 31, 2016, there were no amounts outstanding as revolving credit
borrowings and $297.2 million of LOCs outstanding under the senior unsecured
credit facility.

Other Credit Facilities

We use credit facilities primarily to provide collateral required under our
affiliated reinsurance transactions as well as certain third-party reinsurance
arrangements to which Security Life of Denver International Limited ("SLDI"),
one of our Arizona captives, is a party. We also issue guarantees and enter into
financing arrangements in connection with our affiliated reinsurance
transactions. These arrangements are primarily designed to facilitate the
financing of statutory reserve requirements. By reinsuring business to our
captive reinsurance subsidiaries and our Arizona captives, we are able to use
alternative sources of collateral to fund the statutory reserve requirements and
are generally able to secure longer term financing on a more capital efficient
basis.

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Effective January 1, 2009, we entered into a master asset purchase agreement
(the "MPA") with Scottish Re Group Limited, Scottish Holdings, Inc., Scottish Re
(U.S.), Inc. ("SRUS"), Scottish Re Life (Bermuda) Limited ("Scottish Bermuda")
and Scottish Re (Dublin) Limited (collectively, "Scottish Re") and Hannover Life
Reassurance Company of America ("Hannover US") and Hannover Re (Ireland) Limited
("HLRI") (collectively, "Hannover Re"). Pursuant to the MPA, we recaptured
individual life reinsurance business that had previously been reinsured to
Scottish Re and immediately ceded 100.0% of such business to Hannover Re on a
modified coinsurance, funds withheld and coinsurance basis, which resulted in no
gain or loss. We refer to this block as the Hannover Re block and its results
are reported as part of Corporate.

Prior to September 24, 2015, we were obligated to maintain collateral for the
statutory reserve requirements associated with Statutory Regulations XXX and
AG38 on the business transferred from us to Hannover Re. On September 24, 2015,
we entered into a Hannover Re Buyer Facility Agreement ("Buyer Facility
Agreement") among Hannover Life Reassurance Company of America, Hannover Re
(Ireland) Limited, Hannover Ruck SE, Voya Financial, Inc. and SLDI. Under the
Buyer Facility Agreement, the existing collateral, which had been provided by
SLDI supporting the reserves on the Hannover Re block, was replaced by a $2.9
billion senior unsecured floating rate note issued by Hannover Ruck SE and
deposited into a reserve credit trust established by SLDI for the benefit of
Security Life of Denver Insurance Company ("SLD"). Consequently, our financing
expenses associated with collateral for reinsurance between SLD and SLDI
covering individual reinsurance business have been eliminated and, therefore, we
anticipate future savings.

We may also utilize LOCs to provide credit for reinsurance on portions of the
CBVA segment liabilities reinsured to Roaring River II, Inc. ("RRII"), one of
our Arizona captives, in order to meet statutory reserve requirements at those
times when the assets and other capital backing the reinsurance liabilities may
be less than the statutory reserve requirement. With respect to the CBVA segment
liabilities, as of December 31, 2016, there were no LOC requirements or LOCs
issued, as the statutory reserves were fully supported by assets in trust.

In addition to the $3.0 billion of credit facilities utilized by Individual
Life, Retirement and Hannover Re block, $56.9 million of LOCs were outstanding
to support miscellaneous requirements. In total, $3.0 billion of credit
facilities were utilized as of December 31, 2016. As of December 31, 2016, the
capacity of our unsecured and uncommitted credit facilities totaled $300.5
million and the capacity of our unsecured and committed credit facilities
totaled $5.5 billion. We also have $205.0 million in secured facilities.


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The following table summarizes our credit facilities, including our senior unsecured credit facility, as of December 31, 2016: ($ in millions)

                                                                                                   Estimated amount
Obligor /     Business     Secured/     Committed/                                                   of Collateral
Applicant    Supported    Unsecured    Uncommitted    Expiration    Capacity       Utilization         Required          Unused Commitment
Voya
Financial,
Inc.                      Unsecured     Committed     05/06/2021   $ 2,250.0     $       297.2     $         297.2     $           1,952.8
             Individual
             Life                                                                        286.5               286.5
             Other                                                                        10.7                10.7
SLDI         Retirement   Unsecured     Committed     01/24/2018       175.0             164.0               164.0                    11.0
Voya
Financial,
Inc./
Langhorne
I, LLC       Retirement   Unsecured     Committed     01/15/2019       500.0                 -                   -                   500.0
             Hannover
SLDI         Re           Unsecured     Committed     10/29/2023       300.0             233.6               233.6                    66.4
Voya
Financial,
Inc. /       Individual
SLDI         Life         Unsecured     Committed     12/31/2025       475.0             475.0               475.0                       -
Voya
Financial,   Individual
Inc.         Life          Secured      Committed     02/11/2018       195.0             195.0               195.0                       -
Voya
Financial,
Inc.         Other        Unsecured    Uncommitted     Various           0.5               0.5                 0.5                       -
Voya
Financial,
Inc.         Other         Secured     Uncommitted     Various          10.0               0.7                 0.7                       -
Voya
Financial,
Inc. /
Roaring      Individual
River LLC    Life         Unsecured     Committed     10/01/2025       425.0             281.4               281.4                   143.6
Voya
Financial,
Inc. /
Roaring
River IV,    Individual
LLC          Life         Unsecured     Committed     12/31/2028       565.0             295.7               295.7                   269.3
Voya
Financial,
Inc. /       Individual
SLDI         Life/Other   Unsecured    Uncommitted    12/12/2017       300.0             300.0               300.0                       -
Voya
Financial,
Inc. /       Individual
SLDI         Life         Unsecured     Committed     12/15/2017       600.0             600.0               600.0                       -
Voya
Financial,   Individual
Inc.         Life/Other   Unsecured     Committed     12/09/2021       195.0             195.0               195.0                       -
Total                                                              $ 5,990.5     $     3,038.1     $       3,038.1     $           2,943.1



Total fees associated with credit facilities, including our senior unsecured
credit facility, for the years ended December 31, 2016, 2015 and 2014 were $46.0
million, $89.3 million and $120.6 million, respectively. The reduction in
expenses associated with credit facilities during the year ended December 31,
2016 is primarily attributed to the elimination of fees associated the
Individual Reinsurance business upon the completion of the Hannover Note
facility in September 2015 and the unwind of the financing arrangement
associated with certain term life business sold to Reinsurance Group of America,
Inc., ("RGA") during the fourth quarter of 2015.

The following summarizes the activity for our credit facilities for the year ended December 31, 2016.

• Effective April 15, 2016, SLDI, Voya Financial, Inc. and Voya Holdings

entered into a $300.0 million letter of credit facility agreement with a

       third party bank used to provide letters of credit associated with
       affiliated reinsurance treaties reinsured to SLDI.


• Effective December 9, 2016, Voya Financial, Inc. and Voya Holdings entered

into a $195.0 million letter of credit facility agreement with a third

party bank used to provide letters of credit associated with affiliated

       reinsurance treaties.




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• Effective December 15, 2016, SLDI and Voya Financial, Inc. entered into a

$600.0 million letter of credit facility agreement with a third party bank

used to provide letters of credit associated with an affiliated

reinsurance treaty covering Individual Life business reinsured to SLDI.




In addition, effective January 20, 2017, Voya Financial, Inc. and Voya Holdings
entered into an additional $195.0 million letter of credit facility agreement
with a third party bank used to provide letters of credit associated with
reinsurance treaties.

The following tables present our existing financing facilities for each of our
Individual Life, Retirement and Hannover Re blocks of business as of
December 31, 2016. While these tables present the current financing for each
block, these financing facilities will expire prior to the runoff of the reserve
liabilities they support. In addition, these liabilities will change over the
life of each block. As a result, we expect to periodically extend or replace and
increase, as necessary, the existing financing as each block grows toward the
peak reserve requirement noted below.

Individual Life
($ in millions)
                                                                                               Estimated amount
                          Financing                                                              of Collateral

Obligor / Applicant Structure Product Expiration Capacity

Utilization Required

                            Credit
Voya Financial, Inc.       Facility      XXX      05/06/2021   $   286.5     $       286.5     $         286.5
                            Credit
Voya Financial, Inc.       Facility    XXX/AG38   02/11/2018       195.0             195.0               195.0
Voya Financial, Inc. /       LOC
Roaring River LLC          Facility      XXX      10/01/2025       425.0             281.4               281.4
Voya Financial, Inc. /
Roaring River IV, LLC     Trust Note     AG38     12/31/2028       565.0             295.7               295.7
Voya Financial, Inc. /       LOC
SLDI                       Facility      AG38     12/31/2025       475.0             475.0               475.0
Voya Financial, Inc. /       LOC
SLDI                       Facility    XXX/AG38   12/12/2017       255.0             255.0               255.0
Voya Financial, Inc. /       LOC
SLDI                       Facility      XXX      12/15/2017       600.0             600.0               600.0
                             LOC
Voya Financial, Inc.       Facility      XXX      12/09/2021       195.0             195.0               195.0
Total                                                          $ 2,996.5     $     2,583.6     $       2,583.6


The peak financing requirement for the Individual Life block is expected to reach approximately $4.2 billion during the period 2020 - 2025.

Retirement

($ in millions)

                         Financing                                                               Estimated amount of

Obligor / Applicant Structure Product Expiration Capacity

      Utilization     Collateral Required
                                     Individual
                                       & Group
                            LOC       Deferred
SLDI                     Facility     Annuities    01/24/2018   $    175.0     $       164.0     $           164.0
Voya Financial, Inc./    Trust         Stable
Langhorne I, LLC         Note           Value      01/15/2019        500.0                 -                     -
Total                                                           $    675.0     $       164.0     $           164.0






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Hannover Re block
($ in millions)
                      Financing                                                              Estimated amount of

Obligor / Applicant Structure Product Expiration Capacity

 Utilization     Collateral Required
                         LOC
SLDI                  Facility    XXX/AG38    10/29/2023   $     300.0     $       233.6     $           233.6
Total                                                      $     300.0     $       233.6     $           233.6


Voya Financial, Inc. Credit Support of Subsidiaries

Voya Financial, Inc. maintains credit facilities with third-party banks to support the reinsurance obligations of our captive reinsurance subsidiaries. As of December 31, 2016, such facilities provided for up to $2.6 billion of capacity, of which $1,652.1 million was utilized.


In addition to providing credit facilities, we also provide credit support to
our captive reinsurance subsidiaries through surplus maintenance agreements,
pursuant to which we agree to cause these subsidiaries to maintain particular
levels of capital or surplus and which we entered into, in connection with
particular credit facility agreements. Since these obligations are not subject
to limitations, it is not possible to determine the maximum potential amount due
under these agreements.

• On January 1, 2014, Voya Financial, Inc. entered into a reimbursement

agreement with a third-party bank for its wholly owned subsidiary, Roaring

River IV, LLC ("Roaring River IV") to provide up to $565.0 million of

statutory reserve financing through a trust note which matures December

31, 2028. At inception, the reimbursement agreement requires Voya

Financial, Inc. to cause no less than $78.6 million of capital to be

maintained in Roaring River IV Holding LLC, the intermediate holding

company of Roaring River IV, and $45.0 million of capital to be maintained

       in Roaring River IV for a total of $123.6 million. This amount will vary
       over time based on a percentage of Roaring River IV in force life
       insurance. This surplus maintenance agreement is effective for the
       duration of the related credit facility agreement and the maximum
       potential obligations are not specified or applicable.


• Effective January 15, 2014, Voya Financial, Inc. entered into a surplus

maintenance agreement with Langhorne I, LLC ("Langhorne I"), a wholly

owned captive reinsurance subsidiary, whereby Voya Financial, Inc. agrees

to cause Langhorne I to maintain capital of at least $85.0 million. This

surplus maintenance agreement is effective for the duration of the related

       credit facility agreement and the maximum potential obligations are not
       specified or applicable.



Roaring River, LLC ("Roaring River") is party to a LOC facility agreement with a
third-party bank that provides up to $425.0 million of LOC capacity. Roaring
River has reimbursement obligations to the bank under this agreement, in an
aggregate amount of up to $425.0 million, which obligations are guaranteed by
Voya Financial, Inc. This agreement and the related guarantee were entered into
to facilitate collateral requirements supporting reinsurance. The guarantee is
effective for the duration of Roaring River's reimbursement obligations to the
bank.

Voya Financial, Inc. guarantees the obligations of one of its subsidiaries, Voya
Financial Products Inc. ("VFP"), under a credit default swap arrangement under
which VFP has written credit protection in the notional amount of $1.0 billion
with respect to a portfolio of investment grade corporate debt instruments.

Under the Buyer Facility Agreement put into place by Hannover Re, Voya
Financial, Inc. and SLDI have contingent reimbursement obligations and Voya
Financial, Inc. has guarantee obligations, up to the full principal amount of
the note issued pursuant to the agreement, if SLD or SLDI were to direct the
sale or liquidation of the note other than as permitted by the Buyer Facility
Agreement, or fail to return reinsurance collateral (including the note) upon
termination of the Buyer Facility Agreement or as otherwise required by the
Buyer Facility Agreement. In addition, Voya Financial, Inc. has agreed to
indemnify Hannover Re for any losses it incurs in the event that SLD or SLDI
were to exercise offset rights unrelated to the Hannover Re block.

Voya Financial, Inc. has also entered into a corporate guarantee agreement with
a third-party ceding insurer where it guarantees the reinsurance obligations of
our subsidiary, SLD, assumed under a reinsurance agreement with the third-party
cedent. SLD retrocedes the business to Hannover US who is the claim paying
party. The current amount of reserves outstanding as of December 31, 2016 is
$24.8 million. The maximum potential obligation is not specified or applicable.
Since these obligations are not subject to limitations, it is not possible to
determine the maximum potential amount due under these guarantees.

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Voya Financial, Inc. guarantees the obligations of Voya Holdings under the $13.0
million principal amount Equitable Notes maturing in 2027 as well as $426.5
million combined principal amount of Aetna Notes. For more information see "Debt
Securities" above. From time to time, Voya Financial, Inc. may also have
outstanding guarantees of various obligations of its subsidiaries.

Effective April 15, 2016, Voya Financial, Inc. and Voya Holdings entered into a
$300.0 million letter of credit facility agreement with a third party bank in
order to guarantee the reimbursement obligations of SLDI as borrower.

Effective December 15, 2016, Voya Financial, Inc. entered into a $600.0 million guaranty agreement with a third party bank in order to guarantee the reimbursement obligations of SLDI as borrower.


We did not recognize any asset or liability as of December 31, 2016 in relation
to intercompany indemnifications and support agreements. As of December 31,
2016, no circumstances existed in which we were required to currently perform
under these indemnifications and support agreements.

Securities Lending


We engage in securities lending whereby certain securities from its portfolio
are loaned to other institutions for short periods of time. We have the right to
approve any institution with whom the lending agent transacts on our behalf.
Initial collateral, primarily cash, is required at a rate of 102% of the market
value of the loaned securities. The lending agent retains the collateral and
invests it in short-term liquid assets on our behalf. 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 us against losses resulting from the failure of a
counterparty to return securities pledged where collateral is insufficient to
cover the loss. As of December 31, 2016 and 2015, the fair value of loaned
securities was $1,403.8 million and $466.4 million, respectively, and is
included in Securities pledged on the Consolidated Balance Sheets. As of
December 31, 2016 and 2015, collateral retained by the lending agent and
invested in liquid assets on our behalf was $535.9 million and $484.4 million,
respectively, and is recorded in Short-term investments under securities loan
agreements, including collateral delivered on the Consolidated Balance Sheets.
As of December 31, 2016 and 2015, liabilities to return collateral of $535.9
million and $484.4 million, respectively, are included in Payables under
securities loan agreements, including collateral held on the Consolidated
Balance Sheets.

Repurchase Agreements


We engage in dollar repurchase agreements with mortgage-backed securities
("dollar rolls") and repurchase agreements with other collateral types to
increase our return on investments and improve liquidity. Such arrangements meet
the requirements to be accounted for as financing arrangements. We enter into
dollar roll transactions by selling existing mortgage-backed securities ("MBS")
and concurrently entering into an agreement to repurchase similar securities
within a short time frame at a lower price. Under repurchase agreements, we
borrow cash from a counterparty at an agreed upon interest rate for an agreed
upon time frame and pledge collateral in the form of securities. At the end of
the agreement, the counterparty returns the collateral to us, and we, in turn,
repay the loan amount along with the additional agreed upon interest. We require
that, at all times during the term of the dollar roll and repurchase agreements,
cash or other collateral types obtained is sufficient to allow us to fund
substantially all of the cost of purchasing replacement assets. Cash received is
invested in short-term investments, with the offsetting obligation to repay the
loan included within Other liabilities on the Consolidated Balance Sheets. As
per the terms of the agreements, the market value of the loaned securities is
monitored with additional collateral obtained or refunded as the market value of
the loaned securities fluctuates due to changes in interest rates, spreads and
other risk factors.

The carrying value of the securities pledged in dollar rolls and repurchase
agreement transactions and the related repurchase obligation are included in
Securities pledged and Short-term debt, respectively, on the Consolidated
Balance Sheets. As of December 31, 2016 and 2015, we did not have any securities
pledged in dollar rolls or repurchase agreement transactions.

We also enter into reverse repurchase agreements. These transactions involve a
purchase of securities and an agreement to sell substantially the same
securities as those purchased. We require that, at all times during the term of
the reverse repurchase agreements, cash or other collateral types provided is
sufficient to allow the counterparty to fund substantially all of the cost of
purchasing the replacement assets. As of December 31, 2016 and 2015, we did not
have any securities pledged under reverse repurchase agreements.

The primary risk associated with short-term collateralized borrowings is that
the counterparty will be unable to perform under the terms of the contract. Our
exposure is limited to the excess of the net replacement cost of the securities
over the value of the short-

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term investments. We believe the counterparties to the dollar rolls, repurchase and reverse repurchase agreements are financially responsible and that the counterparty risk is minimal.

FHLB


We are currently a member of the FHLB of Des Moines and the FHLB of Topeka and
are required to maintain a collateral deposit to back any funding agreements
issued by the FHLB. We have the ability to obtain funding from the FHLBs based
on a percentage of the value of our assets and are subject to the availability
of eligible collateral. The limits across all programs are 20% of the total
assets of the general and separate accounts of VIAC and RLI and potentially up
to 40% of the total assets of the general account of SLD based on credit
approval from FHLB of Topeka. Furthermore, collateral is pledged based on the
outstanding balances of FHLB funding agreements. The amount varies based on the
type, rating and maturity of the collateral posted to the FHLB. Generally,
mortgage securities, commercial real estate and U.S. treasury securities are
pledged to the FHLBs. Market value fluctuations resulting from changes in
interest rates, spreads and other risk factors for each type of assets are
monitored and additional collateral is either pledged or released as needed.

Our maximum borrowing capacity under these credit facilities was $21.8 billion
as of December 31, 2016 and 2015, and does not have an expiration date as long
as we maintain a satisfactory level of creditworthiness based on the FHLBs'
credit assessment. As of December 31, 2016 and 2015, we had $0.3 billion and
$1.3 billion in non-putable funding agreements, respectively, which are included
in Contract owner account balances on the Consolidated Balance Sheets. As of
December 31, 2016 and 2015, we had assets with a market value of approximately
$0.4 billion and $1.5 billion, respectively, which collateralized the FHLB
funding agreements.

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 December 31, 2016, the aggregate amount that may be
borrowed or lent under agreements with life insurance subsidiaries was $2.6
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 December 31, 2016, Voya Financial, Inc. had $10.5 million in
outstanding borrowings from subsidiaries and had loaned $278.0 million to its
subsidiaries.

Collateral - Derivative Contracts


Under the terms of our over-the-counter ("OTC") Derivative ISDA agreements, we
may receive from, or deliver to, counterparties, collateral to assure that the
terms of the International Swaps and Derivatives Association, Inc. ("ISDA")
agreements will be met with regard to the Credit Support Annex ("CSA"). The
terms of the CSA call for us to pay interest on any cash received equal to the
Federal Funds rate. To the extent cash collateral is received and delivered, it
is included in Payables under securities loan agreements, including collateral
held and Short-term investments under securities loan agreements, including
collateral delivered, respectively, on the 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 us are the
source of noncash collateral posted, which is reported in Securities pledged on
the Consolidated Balance Sheets. As of December 31, 2016, we held $809.1 million
and $257.3 million of net cash collateral related to OTC derivative contracts
and cleared derivative contracts, respectively. As of December 31, 2015, we held
$640.9 million and $195.9 million of net cash collateral related to OTC
derivative contracts and cleared derivative contracts, respectively. In
addition, as of December 31, 2016, we delivered $753.3 million of securities and
held $71.7 million of securities as collateral. As of December 31, 2015, we
delivered $646.2 million of securities and held $24.8 million of securities as
collateral.

Ratings

Our access to funding and our related cost of borrowing, requirements for
derivatives collateral posting 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. The
credit ratings are also important for the ability to raise capital through the
issuance of debt and for the cost of such financing.


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A downgrade in our credit ratings or the credit or financial strength ratings of
our rated subsidiaries could potentially, among other things, limit our ability
to market products, reduce our competitiveness, increase the number or value of
policy surrenders and withdrawals, increase our borrowing costs and potentially
make it more difficult to borrow funds, adversely affect the availability of
financial guarantees or LOCs, cause additional collateral requirements or other
required payments under certain agreements, allow counterparties to terminate
derivative agreements and/or impair our relationships with creditors,
distributors or trading counterparties thereby potentially negatively affecting
our profitability, liquidity and/or capital. In addition, we consider
nonperformance risk in determining the fair value of our liabilities. Therefore,
changes in our credit or financial strength ratings may affect the fair value of
our liabilities.

Additionally, ratings of the Aetna Notes, which are guaranteed by ING Group, are
influenced by ING Group's ratings. A change in the credit ratings of ING Group
could result in a change in the ratings of these securities, as occurred during
April 2016.

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

The financial strength and credit ratings of Voya Financial, Inc. and its
principal subsidiaries as of the date of this Annual Report on Form 10-K are
summarized in the following table. In parentheses, following the initial
occurrence in the table of each rating, is an indication of that rating's
relative rank within the agency's rating categories. That ranking refers only to
the generic or major rating category and not to the modifiers appended to the
rating by the rating agencies to denote relative position within such generic or
major category. For each rating, the relative position of the rating within the
relevant rating agency's ratings scale is presented, with "1" representing the
highest rating in the scale.
                                                          Rating Agency
                                                                        Moody's
                                                                       Investors     Standard
                                     A.M. Best       Fitch, Inc.     Service, Inc.   & Poor's
            Company                ("A.M. Best")      ("Fitch")       ("Moody's")     ("S&P")
Voya Financial, Inc. (Long-term    bbb+ (4 of 10)   BBB+ (4 of 11)   Baa2 (4 of 9)   BBB (4 of
Issuer Credit)                                                                          11)
Voya Financial, Inc. (Senior       bbb+ (4 of 10)    BBB (4 of 9)    Baa2 (4 of 9)   BBB (4 of
Unsecured Debt)(1)                                                                      9)
Voya Financial, Inc. (Junior       bbb- (4 of 10)    BB+ (5 of 9)    Baa3 (hyb) (4   BB+ (5 of
Subordinated Debt)(2)                                                    of 9)          9)
Voya Retirement Insurance and
Annuity Company
                                    A (3 of 16)       A (3 of 9)      A2 (3 of 9)     A (3 of
Financial Strength Rating                                                               9)
Voya Insurance and Annuity
Company
                                    A (3 of 16)       A (3 of 9)      A2 (3 of 9)     A (3 of
Financial Strength Rating                                                               9)
Short-term Issuer Credit Rating         NR*               NR              NR            NR

ReliaStar Life Insurance Company

                                    A (3 of 16)       A (3 of 9)      A2 (3 of 9)     A (3 of
Financial Strength Rating                                                               9)
                                         NR               NR              NR         A-1 (1 of
Short-term Issuer Credit Rating                                                         8)
Security Life of Denver
Insurance Company
                                    A (3 of 16)       A (3 of 9)      A2 (3 of 9)     A (3 of
Financial Strength Rating                                                               9)
                                         NR               NR              NR         A-1 (1 of
Short-term Issuer Credit Rating                                                         8)
Midwestern United Life Insurance
Company
                                    A- (4 of 16)          NR              NR          A (3 of
Financial Strength Rating                                                               9)
Voya Holdings Inc.
                                         NR               NR         Baa2 (4 of 9)   BBB (4 of
Long-term Issuer Credit Rating                                                          11)
Backed Senior Unsecured Debt             NR               A+         Baa1 (4 of 9)   A- (3 of
Credit Rating(3)                                                                        9)


* "NR" indicates not rated.
(1) $363.2 million, $827.0 million, $400.0 million, $500.0 million and $300.0
million of our Senior Notes.
(2) $750.0 million of our Junior Subordinated Notes.
(3) $426.5 million of our Aetna Notes guaranteed by ING Group.


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                   Financial         Long-term      Senior Unsecured
                Strength Rating    Credit Rating       Debt Credit      Short-term Credit
Rating Agency        Scale             Scale          Rating Scale        Rating Scale
A.M. Best(1)     "A++" to "S"      "aaa" to "rs"      "aaa" to "d"       "AMB-1+" to "d"
Fitch(2)         "AAA" to "C"      "AAA" to "D"       "AAA" to "C"         "F1" to "D"
                                                                        "Prime-1" to "Not
Moody's(3)       "Aaa" to "C"      "Aaa" to "C"       "Aaa" to "C"           Prime"
S&P(4)           "AAA" to "R"      "AAA" to "D"       "AAA" to "D"        "A-1" to "D"


(1) A.M. Best's financial strength rating is an independent opinion of an
insurer's financial strength and ability to meet its ongoing insurance policy
and contract obligations. It is based on a comprehensive quantitative and
qualitative evaluation of a company's balance sheet strength, operating
performance and business profile. A.M. Best's long-term credit ratings reflect
its assessment of the ability of an obligor to pay interest and principal in
accordance with the terms of the obligation. Ratings from "aa" to "ccc" may be
enhanced with a "+" (plus) or "-" (minus) to indicate whether credit quality is
near the top or bottom of a category. A.M. Best's short-term credit rating is an
opinion to the ability of the rated entity to meet its senior financial
commitments on obligations maturing in generally less than one year.
(2) Fitch's financial strength ratings provide an assessment of the financial
strength of an insurance organization. The National Insurer Financial Strength
("IFS") Rating is assigned to the insurance company's policyholder obligations,
including assumed reinsurance obligations and contract holder obligations, such
as guaranteed investment contracts. Within long-term and short-term ratings, a
"+" or a "-" may be appended to a rating to denote relative status within major
rating categories.
(3) Moody's financial strength ratings are opinions of the ability of insurance
companies to repay punctually senior policyholder claims and obligations.
Moody's obligations append numerical modifiers 1, 2, and 3 to each generic
rating classification from Aa through Caa. The modifier 1 indicates that the
obligation ranks in the higher end of its generic rating category; the modifier
2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the
lower end of that generic rating category. Moody's long-term credit ratings are
opinions of the relative credit risk of fixed-income obligations with an
original maturity of one year or more. They address the possibility that a
financial obligation will not be honored as promised. Moody's short-term ratings
are opinions of the ability of issuers to honor short-term financial
obligations.
(4) S&P's insurer financial strength rating is a forward-looking opinion about
the financial security characteristics of an insurance organization with respect
to its ability to pay under its insurance policies and contracts in accordance
with their terms. A "+" or "-" indicates relative strength within a category. An
S&P credit rating is an assessment of default risk, but may incorporate an
assessment of relative seniority or ultimate recovery in the event of default.
Short-term issuer credit ratings reflect the obligor's creditworthiness over a
short-term time horizon.

Our ratings by A.M. Best, Fitch, Moody's and S&P reflect a broader view of how
the financial services industry is being challenged by the current economic
environment, but also are based on the rating agencies' specific views of our
financial strength. In making their ratings decisions, the agencies consider
past and expected future capital and earnings, asset quality and risk,
profitability and risk of existing liabilities and current products, market
share and product distribution capabilities and direct or implied support from
parent companies.

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. On November 15, 2016, Moody's revised
its outlook for the US life insurance industry to negative from stable. The
outlook change reflects Moody's expectation for fundamental business conditions
in the industry over the next 12 to 18 months including increasing pressures on
life insurers' profits, due to low interest rates, coupled with key shifts in
their regulatory and business environments. 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.

Ratings actions affirmation and outlook changes by A.M. Best, Fitch, Moody's and
S&P from December 31, 2015 through December 31, 2016 and subsequently through
the date of this Annual Report on Form 10-K are as follows:

• On November 17, 2016, A.M. Best affirmed the financial strength rating of

A of the key operating entities of Voya Financial, Inc. with a Stable

outlook. Concurrently, A.M. Best upgraded Voya's Long-Term Issuer Credit

       Rating to bbb+ from bbb as well as its Senior Unsecured Debt rating. Voya
       Financial, Inc.'s junior subordinated debt rating was also upgraded to

bbb- from bb+. The outlook of these Credit Ratings were revised to Stable

       from Positive.


• On September 20, 2016, Fitch affirmed Voya Financial, Inc.'s long-term

       issuer credit rating, senior debt ratings and junior subordinated debt
       rating. Fitch also affirmed the financial strength ratings of the key
       operating entities. The rating outlook for all ratings is Stable.


• On June 29, 2016, S&P affirmed Voya Financial, Inc.'s issuer credit rating

and debt ratings. The financial strength ratings of the key operating

entities were also affirmed. All ratings were assigned a Stable outlook.



•      On June 13, 2016, the following rating actions were taken upon the
       issuance of the 2026 Notes and 2046 Notes:


•S&P assigned its BBB issue-level rating to the 2026 Notes and 2046 Notes with
an outlook Stable.
•Moodys assigned a Baa2 senior unsecured debt rating to the 2026 Notes and 2046
Notes with an outlook Stable.
•Fitch assigned a BBB senior unsecured debt rating to the 2026 Notes and 2046
Notes with an outlook Stable.

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•A.M. Best assigned issue ratings of bbb to the 2026 Notes and 2046 Notes with an outlook Positive.

•      On April 15, 2016, Fitch upgraded the ratings of the Aetna Notes, which
       are guaranteed by ING Group, to A+ from A. The outlook is Stable. The

upgrade is a result of Fitch upgrading, on April 14, 2016, the long-term

       issuer debt rating of ING Group to A+ from A, outlook Stable.


• On April 8, 2016, Fitch affirmed Voya Financial, Inc.'s issuer credit

rating and debt ratings. The financial strength ratings of the key

operating entities were, also affirmed. All ratings were assigned a Stable

       outlook.



Potential Impact of a Ratings Downgrade


Our ability to borrow funds and the terms under which we borrow are sensitive to
our short- and long-term issuer credit ratings. A downgrade of either or both of
these credit ratings could increase our cost of borrowing. Additionally, a
downgrade of either or both of these credit ratings could decrease the total
amount of new debt that we are able to issue in the future or increase the costs
associated with an issuance.

With respect to our credit facility agreements, based on the amount of credit
outstanding as of December 31, 2016, no increase in collateral requirements
would result from a ratings downgrade of the credit ratings of Voya Financial,
Inc. by S&P or Moody's.

Certain of our derivative agreements contain provisions that are linked to the
financial strength ratings of certain of our insurance subsidiaries. If
financial strength ratings were downgraded in the future, these provisions might
be triggered and counterparties to the agreements could demand collateralization
which could negatively impact overall liquidity.

Based on the amount of credit outstanding as of December 31, 2016, a one-notch or two-notch downgrade in Voya Financial, Inc.'s credit ratings by S&P or Moody's would not have resulted in an additional increase in our collateral requirements.


Certain of our reinsurance agreements contain provisions that are linked to the
financial strength ratings of the individual insurance subsidiary that entered
into the reinsurance agreement. If the financial strength ratings of the
relevant insurance subsidiary were downgraded in the future, counterparties to
the credit facility agreements could in some cases demand collateralization,
which could negatively impact overall liquidity. Based on the amount of
reinsurance outstanding as of December 31, 2016 and December 31, 2015, a
two-notch downgrade of our insurance subsidiaries would have resulted in an
estimated increase in our collateral requirements by approximately $24.8 million
and $25.0 million, respectively. The nature of the collateral that we may be
required to post is principally in the form of cash, highly rated securities or
LOC.

Reinsurance

We have reinsurance treaties covering a portion of the mortality risks and guaranteed death and living benefits under our life insurance and annuity contracts. We remain liable to the extent our reinsurers do not meet their obligations under the reinsurance agreements.


We reinsure our business through a diversified group of well capitalized, highly
rated reinsurers. We monitor trends in arbitration and any litigation outcomes
with our reinsurers. Collectability of reinsurance balances are evaluated by
monitoring ratings and evaluating the financial strength of its reinsurers.
Large reinsurance recoverable balances with offshore or other non-accredited
reinsurers are secured through various forms of collateral, including secured
trusts, funds withheld accounts and irrevocable LOCs.

We utilize indemnity reinsurance agreements to reduce our exposure to losses
from unhedged GMDBs in our annuity insurance business. Reinsurance permits
recovery of a portion of losses from reinsurers, although it does not discharge
our primary liability as direct insurer of the risks. We evaluate the financial
strength of potential reinsurers and continually monitor the financial strength
and credit ratings of our reinsurers.

The S&P financial strength rating of our reinsurers with the two largest
reinsurance recoverable balances are AA- rated or better. These reinsurers are
(i) Lincoln National Life Insurance Company and Lincoln Life & Annuity Company
of New York, subsidiaries of Lincoln National Corporation ("Lincoln") and (ii)
Hannover Re. Only those reinsurance recoverable balances where recovery is
deemed probable are recognized as assets on our consolidated balance sheets.

In 1998, in order to divest of a block of individual life business, we entered into an indemnity reinsurance agreement with a subsidiary of Lincoln, which established a trust to secure its obligations to us under the reinsurance transaction. Of the reinsurance

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recoverable on the Consolidated Balance Sheets, $1.6 billion and $1.8 billion as of December 31, 2016 and 2015, respectively, is related to the reinsurance recoverable from the subsidiary of Lincoln under this reinsurance agreement.


On December 31, 2004, we reinsured the individual life reinsurance business (and
sold certain systems and operating assets used in the individual life
reinsurance business) to Scottish Re on a 100% coinsurance basis (the "2004
Transaction") through our wholly owned subsidiaries, SLD and SLDI. As part of
the 2004 Transaction, the ceding commission (net of taxes), along with other
reserve assets, was placed in trust for our benefit to secure Scottish Re's
obligations as reinsurers of the acquired business.

On November 19, 2008, an existing reinsurance agreement between SRUS and
Ballantyne Re, concerning a portion of the business that was originally ceded to
Scottish Re as part of the 2004 Transaction, was novated with the result that we
were substituted for SRUS as the ceding company to Ballantyne Re and made the
sole beneficiary of trust assets connected with the Ballantyne Re facility. The
trust assets support the reserve requirements of the business transferred from
SLD to Ballantyne Re. As of December 31, 2016, trust assets with a market value
of $958.9 million supported reserves of $260.7 million.

Effective January 1, 2009, we entered into the MPA with Scottish Re and Hannover
Re such that Hannover Re acquired the individual life reinsurance business from
Scottish Re. Of the Reinsurance recoverable on the Consolidated Balance Sheets,
$1.9 billion and $2.4 billion as of December 31, 2016 and 2015, respectively, is
related to the reinsurance recoverable from Hannover Re under this reinsurance
agreement.

Effective October 1, 2014, we disposed of, via reinsurance, an in-force block of
term life insurance policies to RGA Reinsurance Company, a subsidiary of
Reinsurance Group of America, Inc., ("RGA") for $448.1 million. We will continue
to administer and service the policies. On October 1, 2014, there were $1.5
billion of statutory reserves on approximately $100.0 billion of in-force life
insurance. During the year ended December 31, 2014, we recognized a
non-operating loss, before income taxes, of $89.4 million, composed of $32.8
million in Other net realized capital gains on assets included in the
transaction, $11.4 million related to intent impairments and $110.8 million of
transaction and ongoing expenses in the Consolidated Statements of Operations.
As of December 31, 2016 and 2015, the Reinsurance recoverable on the
Consolidated Balance Sheets related to this agreement was $499.0 million and
$517.8 million, respectively.

Effective April 1, 2015, we disposed of, via reinsurance, retained group
reinsurance policies to Enstar Group Ltd. for $304.5 million (the "Second
Quarter 2015 Reinsurance Transaction"). On April 1, 2015, there were $290.0
million of statutory reserves. In connection with this transaction, we
recognized a non-operating loss, before income taxes, of $39.2 million primarily
related to intent impairments of assets included in the transaction and other
transactions costs in the Consolidated Statement of Operations. As of December
31, 2016 and December 31, 2015, the Reinsurance recoverable on the Consolidated
Balance Sheets related to this transaction was $198.0 million and $263.4
million, respectively.

Effective October 1, 2015, we disposed of, via reinsurance, an in-force block of
term life insurance policies to RGA Reinsurance Company. We will continue to
administer and service the policies. On October 1, 2015, there were
approximately $1.4 billion of statutory reserves on approximately $90.0 billion
of in-force life insurance. During the year ended December 31, 2015, we
recognized a non-operating loss, before income taxes, of $109.8 million,
composed of $13.7 million in Other net realized capital gains on assets included
in the transaction, $3.6 million related to intent impairments and $119.9
million of transaction and ongoing expenses in the Consolidated Statements of
Operations. As of December 31, 2016 and December 31, 2015, the Reinsurance
recoverable on the Consolidated Balance Sheets related to this agreement was
$452.3 million and $462.3 million, respectively .

For additional information regarding our reinsurance recoverable balances, see
Quantitative and Qualitative Disclosures About Market Risk in Part II, Item 7A.
of this Annual Report on Form 10-K.

Pension and Postretirement Plans


When contributing to our qualified retirement plans we will take into
consideration the minimum and maximum amounts required by ERISA, the attained
funding target percentage of the plan, the variable-rate premiums that may be
required by the PBCG and any funding relief that might be enacted by Congress.
Contributions to our nonqualified plans and other postretirement and
post-employment plans are funded from general assets of the respective
sponsoring subsidiary company as benefits are paid.

For additional information on our pension and postretirement plan arrangements, see the Employee Benefit Arrangements Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K.

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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,
Iowa and Minnesota (these insurance subsidiaries, together with our insurance
subsidiary domiciled in Colorado, are referred to collectively, as our
"principal insurance subsidiaries"), no dividend or other distribution exceeding
an amount equal to an insurance company's earned surplus may be paid without the
domiciliary insurance regulator's prior approval. Our principal insurance
subsidiaries domiciled in Colorado, Connecticut and Iowa each have ordinary
dividend capacity for 2017. 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 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 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.

For a summary of applicable laws and regulations governing dividends, see the
Insurance Subsidiaries Dividend Restrictions section of the Insurance
Subsidiaries Note in our Consolidated Financial Statements in Part II, Item 8.
of this Annual Report on Form 10-K.

The following table summarizes dividends permitted to be paid by our 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

($ in millions)                              2017             2016          

2015

Subsidiary Name (State of domicile):
Voya Insurance and Annuity Company (IA) $      278.9      $     447.5      $     394.1
Voya Retirement Insurance and Annuity
Company (CT)                                   265.9            364.1       

321.8

Security Life of Denver Insurance
Company (CO)                                    73.6             54.9       

111.6

ReliaStar Life Insurance Company (MN)              -                -       

194.2




The following table summarizes dividends and extraordinary distributions paid by
each of the Company's principal insurance subsidiaries to Voya Financial, Inc.
or Voya Holdings for the periods indicated:
                                             Dividends Paid             

Extraordinary Distributions Paid

                                         Year Ended December 31,            Year Ended December 31,
($ in millions)                            2016             2015              2016               2015
Subsidiary Name (State of domicile):
Voya Insurance and Annuity Company
(IA)                                 $        373.0     $    394.0     $           -         $     98.0
Voya Retirement Insurance and
Annuity Company (CT)                          278.0          321.0                 -                  -
Security Life of Denver Insurance
Company (CO)                                   54.0          111.0                 -              130.0
ReliaStar Life Insurance Company
(MN)                                              -          194.0             100.0              280.0


Other Subsidiaries - Dividends, Returns of Capital, and Capital Contributions


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. For the years ended December 31, 2016 and
2015, dividends net of capital contributions received by Voya Financial, Inc.
and Voya Holdings from non-life subsidiaries were $189.5 million and $165.5
million, respectively.


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Statutory Capital and Risk-Based Capital of Principal Insurance Subsidiaries


Each of our wholly owned principal insurance subsidiaries is subject to minimum
risk based capital ("RBC") requirements established by the insurance departments
of their applicable state 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 NAIC, to RBC requirements, as defined by the NAIC. Each of our
U.S. insurance subsidiaries exceeded the minimum RBC requirements that would
require regulatory or corrective action for all periods presented herein. The
Company's estimated RBC ratio on a combined basis primarily for our principal
insurance subsidiaries, with adjustments for certain intercompany transactions,
was approximately 493% as of December 31, 2016.

Our wholly owned insurance subsidiaries are required to prepare statutory
financial statements in accordance with statutory accounting practices
prescribed or permitted by the insurance department of the state of domicile of
the respective insurance subsidiary. Statutory accounting practices primarily
differ from U.S. GAAP by charging policy acquisition costs to expense as
incurred, establishing future policy benefit liabilities 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 the state of
domicile, the entire amount or a portion of an asset balance can be non-admitted
depending on specific rules regarding admissibility. The most significant
non-admitted assets are typically deferred tax assets.

The following table summarizes the statutory capital and surplus of our principal insurance subsidiaries as of the dates indicated:

                                                      As of December 31,
($ in millions)                                       2016          2015
Subsidiary Name (State of domicile):
Voya Insurance and Annuity Company (IA)            $  1,906.2    $ 2,074.8

Voya Retirement Insurance and Annuity Company (CT) 1,959.3 2,030.2 Security Life of Denver Insurance Company (CO) 897.1 858.3 ReliaStar Life Insurance Company (MN)

                 1,662.0      1,609.2



We monitor the ratio of our insurance subsidiaries' TAC to Company Action Level
Risk-Based Capital ("CAL"). A ratio in excess of 125% indicates that the
insurance subsidiary is not required to take any corrective actions to increase
capital levels at the direction of the applicable state of domicile.

The following table summarizes the ratio of TAC to CAL on a combined basis primarily for our principal insurance subsidiaries, with adjustments for certain intercompany transactions, as of the dates indicated below: ($ in millions)

                     ($ in millions)
     As of December 31, 2016             As of December 31, 2015
    CAL          TAC       Ratio        CAL          TAC       Ratio
$  1,373.4    $ 6,766.5     493 %   $  1,414.0    $ 6,859.6     485 %



Statutory reserves established for variable annuity contracts and riders are
sensitive to changes in the equity markets and are affected by the level of
account values relative to the level of any guarantees, product design and
reinsurance arrangements. As a result, the relationship between reserve changes
and equity market performance is non-linear during any given reporting period.
Market conditions greatly influence the ultimate capital required due to its
effect on the valuation of reserves and derivative assets hedging these
reserves.

The sensitivity of our insurance subsidiaries' statutory reserves and surplus
established for variable annuity contracts and certain minimum interest rate
guarantees to changes in the interest rates, credit spreads and equity markets
will vary depending on the magnitude of the decline. The sensitivity will be
affected by the level of account values, the level of guaranteed amounts and
product design. Should statutory reserves increase, this could result in future
reductions in our insurance subsidiaries' surplus, which may also impact RBC.
Adverse changes in interest rates and the continued widening of credit spreads
may result in an increase in the reserves for product guarantees which adversely
impact statutory surplus, which may also impact RBC.


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RBC is also affected by the product mix of the in force book of business (i.e.,
the amount of business without guarantees is not subject to the same level of
reserves as the business with guarantees). RBC is an important factor in the
determination of the credit and financial strength ratings of Voya Financial,
Inc. and our insurance subsidiaries.

Captive Reinsurance Subsidiaries


Our 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 and reserve requirements. Each of our 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 $577.1 million and $590.6 million as of December 31, 2016 and 2015,
respectively. The aggregate statutory capital and surplus, including the
aforementioned prescribed practices, was $352.2 million and $351.5 million as of
December 31, 2016 and 2015, respectively.

Our 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 segment. Arizona state
insurance statutes and regulations require our 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 our
Arizona captives Shareholder's equity as of December 31, 2016 and 2015. In
addition, our 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 $441.1 million and $456.6 million as of
December 31, 2016 and 2015, respectively, but has no effect on our 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 $2,466.9
million as of December 31, 2016, but has no effect on SLDI or our Consolidated
total shareholders' equity.

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, our
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. Our Arizona captives do not expect to make any
dividend payments during calendar year 2017 and did not make any in 2016.
Uncertainties associated with our continued use of affiliated captive
reinsurance subsidiaries and our Arizona captives are primarily related to
potential regulatory changes. In June 2014, the NAIC adopted a new regulatory
framework for captives assuming business governed by Regulations XXX or AXXX,
called the "Rector Framework". In December 2014, the NAIC adopted Actuarial
Guideline 48 which established a new regulatory requirement applicable to XXX
and AXXX reserves ceded to reinsurers, including affiliated reinsurers, as the
first step in implementing the Rector framework. Actuarial Guideline 48 limits
the type of assets that may be used as collateral to back the XXX and AXXX
statutory reserves, and is applied prospectively to existing reinsurance
transactions that reinsure policies issued on or after January 1, 2015 and new
reinsurance transactions entered into on or after January 1, 2015. The purpose
of AG48 was to implement the substantive requirements of the Rector Framework,
effective January 1, 2015, pending development and adoption by the states of the
new Term and Universal Life Insurance Reserve Financing Model Regulation (the
"XXX/AXXX Regulation"). The NAIC charged multiple working groups with the
responsibility to prepare the XXX/AXXX regulations and in December 2016 the NAIC
adopted the XXX/AXXX Regulation and amended AG48 to align its provisions with
the XXX/AXXX Regulation. In 2014, the NAIC also considered a proposal to require
states to apply NAIC accreditation standards, applicable to traditional
insurers, to captive reinsurers. In 2015, the NAIC adopted such a proposal, in
the form of a revised preamble to the NAIC accreditation standards ("the
Standard"), with an effective date of January 1, 2016 for application of the
Standard to captives that assume XXX or AXXX business. Under the Standard, a
state will be deemed in compliance as it relates to XXX and AXXX captives if the
applicable reinsurance transaction satisfies Actuarial Guideline 48. In
addition, the Standard applies prospectively, so that XXX and AXXX captives will
not be subject to the Standard if reinsured

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policies were issued prior to January 1, 2015 and ceded so that they were part
of a reinsurance arrangement as of December 31, 2014. The NAIC left for future
action application of the Standard to captives that assume variable annuity
business. As drafted, it appears that the Standard would apply to our Arizona
captives. During 2015, the NAIC Financial Conditions (E) Committee (the "E
Committee") established the Variable Annuities Issues (E) Working Group
("VAIWG") to oversee the NAIC's effort's to study and address, as appropriate,
regulatory issues resulting in variable annuity captive reinsurance
transactions. In November 2015, upon the recommendation of the VAIWG, the E
Committee adopted a Variable Annuities Framework for Change (the "VA Framework
for Change") which recommends charges for NAIC working groups to adjust the
variable annuity statutory framework applicable to all insurers that have
written or are writing variable annuity business. The VA Framework for Change
contemplates a holistic set of reforms that would improve the current reserve
and capital framework and address root cause issues that result in the use of
captive arrangements but would not mandate recapture by insurers of VA cessions
to captives. In November 2015, the VAIWG engaged Oliver Wyman ("OW") to conduct
a quantitative impact study involving industry participants including the
Company, of various reforms outlined in the VA Framework for Change (the "QIS").
OW completed the QIS in July of 2016 and reported its initial findings to the
VAIWG in late August. The OW report proposed certain revisions to the current VA
reserve and capital framework and recommended a second quantitative impact study
be conducted so that testing can inform the proper calibration for certain
conceptual and/or preliminary parameters set out in the OW proposal. Following a
fourth quarter 2016 public comment period and several meetings on the OW
proposal, the VAIWG determined that a second quantitative impact study (the
"QIS2") involving industry participants including the Company, will be conducted
by OW. The QIS2 began in February 2017 and is expected to be completed by
September 2017, with NAIC deliberations on QIS2 results during the fourth
quarter of 2017. Although the QIS2 timetable indicates the VAIWG expects to
complete its work in 2017, timing for implementation of changes to the current
VA reserve and capital framework remains uncertain.
We cannot predict what revisions, if any, will be made to the XXX/AXXX
Regulation or the Standard for application to captives that assume XXX and AXXX
business, as states consider their adoption or undertake their implementation,
to the VA Framework for Change proposal as a result of QIS and ongoing NAIC
deliberations, or to the Standard, if adopted for variable annuity captives. It
is also unclear whether these or other proposals will be adopted by the NAIC, or
what additional actions and regulatory changes will result from the continued
captives scrutiny and reform efforts by the NAIC and other regulatory bodies.
Although we do not believe it to be likely, a potential outcome of the continued
captives scrutiny and reform efforts by the NAIC and other regulatory bodies is
that we will be limited in our ability to achieve desired benefits from using
our captive reinsurance subsidiaries to finance statutory reserves subject to
Regulations XXX and AG38. The extent of such a limitation would depend on the
specific changes to state regulations that are adopted, see "Item 1. Business -
Regulation - Financial Regulation - Recent Actions by the NAIC." The VA
Framework for Change is a proposal in the early stages of development and given
that its final terms are subject to QIS2 and ongoing NAIC deliberations, we
cannot predict what impact the final framework would have on our Arizona
captives. The Standard, if adopted for variable annuity captives as proposed
without grandfathering provisions for existing captive variable annuity
reinsurance entities, could also limit our ability to use reinsurance structures
involving our Arizona captives. Given the uncertainty around these matters, we
are unable to estimate the expected effects on our consolidated operations and
financial position of the limitation of the use of our captive reinsurance
subsidiaries and our Arizona captives to finance statutory reserves subject to
Regulations XXX and AG38 and statutory reserves associated with our reinsured
annuity business. If we are limited in our use of captive reinsurance
subsidiaries and our Arizona captives on a retroactive basis, the reasonably
likely impacts would include early termination fees payable with respect to
certain financing structures, higher operating or tax costs, an increase in
statutory reserves and diminished capital position. On a prospective basis,
limiting the use of captive reinsurance companies could impact the types,
amounts and pricing of products we offer and could result in potential
reductions in or discontinuance of new term or UL insurance sales, any of which
could adversely impact our consolidated results of operations and financial
condition. In addition, we cannot be certain that affordable alternative
financing would be available.

Off-Balance Sheet Arrangements


Through the normal course of investment operations, we commit 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 December 31, 2016, we had off-balance sheet commitments to acquire
mortgage loans of $1,070.3 million and purchase limited partnerships and private
placement investments of $1,391.0 million, of which $310.7 million related to
consolidated investment entities. As of December 31, 2015, we had off-balance
sheet commitments to acquire mortgage loans of $771.9 million and purchase
limited partnerships and private placement investments of $970.9 million, of
which $225.9 million related to consolidated investment entities.


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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 Consolidated
Balance Sheets. For information regarding obligations under this program, see
the Investments (excluding Consolidated Investment Entities) Note in our
Consolidated Financial Statements in Part II, Item 8. of this Annual Report on
Form 10-K. As of December 31, 2016, the fair value of securities retained as
collateral by the lending agent on our behalf was $911.7 million. As of
December 31, 2015, we did not retain any securities as collateral.

During 2015, we entered into a put option agreement with a Delaware trust that
gives Voya Financial, Inc. the right, at any time over a 10-year period, to
issue up to $500.0 million of senior notes to the trust in return for principal
and interest strips of U.S. Treasury securities that are held by the trust. In
return, we agreed to pay a semi-annual put premium to the trust at a rate of
1.875% per annum applied to the unexercised portion of the put option, and to
reimburse the trust for its expenses. See the Financing Agreements Note in our
Consolidated Financial Statements in Part II, Item 8. of this Annual Report on
Form 10-K for more information on this put option agreement.

Aggregate Contractual Obligations


As of December 31, 2016, we had certain contractual obligations due over a
period of time as summarized in the following table. The estimated payments
reflected in this table are based on our estimates and assumptions about these
obligations. Because these estimates and assumptions are necessarily subjective,
the actual cash outflows in future periods will vary, possibly materially, from
those presented in the table.
                                              Less than                                    More than
($ in millions)                  Total          1 Year       1-3 Years      3-5 Years       5 Years
Contractual Obligations
Purchase obligations(1)      $   2,461.3     $  2,324.6     $     83.7     $     53.0     $        -
Reserves for insurance
obligations(2)(3)              119,662.4        7,379.6       12,516.1       11,998.8       87,767.9
Retirement and other
plans(4)                         1,684.8          135.0          290.8          315.3          943.7
Short-term and long-term
debt obligations(5)              7,452.4          174.2        1,139.6          300.6        5,838.0
Operating leases(6)                157.9           33.7           43.6           34.4           46.2
Securities lending and
repurchase agreements(7)         1,447.6        1,447.6              -              -              -
Total(8)                     $ 132,866.4     $ 11,494.7     $ 14,073.8     $ 12,702.1     $ 94,595.8


(1) Purchase obligations consist primarily of outstanding commitments under
alternative investments that may occur any time within the terms of the
partnership and private loans. The exact timing, however, of funding these
commitments related to partnerships and private loans cannot be estimated.
Therefore, the amount of the commitments related to partnerships and private
loans is included in the category "Less than 1 Year."
(2) Reserves for insurance obligations consist of amounts required to meet our
future obligations for future policy benefits and contract owner account
balances. Amounts presented in the table represent estimated cash payments under
such contracts, including significant assumptions related to the receipt of
future premiums, mortality, morbidity, lapse, renewal, retirement, disability
and annuitization comparable with actual experience. These assumptions also
include market growth and interest crediting consistent with assumptions used in
amortizing DAC. Estimated cash payments are undiscounted for the time value of
money. Accordingly, the sum of cash flows presented of $119.7 billion
significantly exceeds the sum of Future policy benefits and Contract owner
account balances of $92.1 billion recorded on our Consolidated Balance Sheets as
of December 31, 2016. Estimated cash payments are also presented gross of
reinsurance. Due to the significance of the assumptions used, the amounts
presented could materially differ from actual results.
(3) Contractual obligations related to certain closed blocks, with reserves in
the amount of $5.0 billion, have been excluded from the table because the blocks
were divested through reinsurance contracts and collateral is provided by third
parties that is accessible by us. Although we are not relieved of legal
liability to the contract holder for these closed blocks, third-party collateral
of $8.3 billion has been provided for the payment of the related insurance
obligations. The sufficiency of collateral held for any individual block may
vary.
(4) Includes estimated benefit payments under our qualified and non-qualified
pension plans, estimated benefit payments under our other postretirement benefit
plans, and estimated payments of deferred compensation based on participant
elections and an average retirement age.
(5) The estimated payments due by period for long-term debt reflects the
contractual maturities of principal, as well as estimated future interest
payments. The payment of principal and estimated future interest for short-term
debt are reflected in estimated payments due in less than one year. See the
Financing Agreements Note in our Consolidated Financial Statements in Part II,
Item 8. of this Annual Report on Form 10-K for additional information concerning
the short-term and long-term debt obligations.
(6) Operating leases consist primarily of outstanding commitments for office
space, equipment and automobiles.
(7) Payables under securities loan agreements including collateral held
represent the liability to return collateral received from counterparties under
securities lending agreements. Securities lending agreements include provisions
which permit us to call back securities with minimal notice and accordingly, the
payable is classified as having a term of less than 1 year. Additionally,
Securities lending agreements include non-cash collateral of $911.7 million. See
the Investments (excluding Consolidated Investment Entities) Note in our
Consolidated Financial Statements in Part II, Item 8. of this Annual Report on
Form 10-K for additional information concerning Securities lending agreements.
(8) Unrecognized tax benefits are excluded from the table due to immateriality.


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Critical Accounting Judgments and Estimates

General


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.

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:

• Reserves for future policy benefits;


•      DAC, VOBA and other intangibles (collectively, "DAC/VOBA and other
       intangibles");

• Valuation of investments and derivatives;


• Impairments;


• Income taxes;


• Contingencies; and

• Employee benefit plans.




In developing these accounting estimates, we make subjective and complex
judgments that are inherently uncertain and subject to material changes as facts
and circumstances develop. Although variability is inherent in these estimates,
we believe the amounts provided are appropriate based on the facts available
upon preparation of the Consolidated Financial Statements.

The above critical accounting estimates are described in the Business, Basis of Presentation and Significant Accounting Policies Note in our Consolidated Financial Statements in Part II, Item 8. of this Annual Report on Form 10-K.

Reserves for Future Policy Benefits


The determination of future policy benefit reserves is dependent on actuarial
assumptions. The principal assumptions used to establish liabilities for future
policy benefits are based on our experience and periodically reviewed against
industry standards. These assumptions include mortality, morbidity, policy
lapse, contract renewal, payment of subsequent premiums or deposits by the
contract owner, retirement, investment returns, inflation, benefit utilization
and expenses. The assumptions used require considerable judgments. Changes in,
or deviations from, the assumptions used can significantly affect our reserve
levels and related results of operations.

• Mortality is the incidence of death among policyholders triggering the

payment of underlying insurance coverage by the insurer. In addition,

mortality also refers to the ceasing of payments on life-contingent

annuities due to the death of the annuitant. We utilize a combination

          of actual and industry experience when setting our mortality
          assumptions.


•         A lapse rate is the percentage of in-force policies surrendered by the
          policyholder or canceled by us due to non-payment of premiums. For
          certain of our variable products, the lapse rate assumption varies
          according to the current account value relative to guarantees
          associated with the product and applicable surrender charges. In
          general, policies with guarantees that are considered "in the money"
          (i.e., where the notional benefit amount is in excess of the account

value) are assumed to be less likely to lapse or surrender. Conversely,

          "out of the money" guarantees may be assumed to be more likely to lapse
          or surrender as the policyholder has less incentive to retain the
          policy.



See the Reserves for Future Policy Benefits and Contract Owner Account Balances
Note and the Guaranteed Benefit Features Note in our Consolidated Financial
Statements in Part II, Item 8. of this Annual Report on Form 10-K for further
information on our reserves for future policy benefits, contract owner account
balances and product guarantees.

Insurance and Other Reserves


Reserves for traditional life insurance contracts (term insurance, participating
and non-participating whole life insurance and traditional group life insurance)
and accident and health insurance represent the present value of future benefits
to be paid to or

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on behalf of contract owners and related expenses, less the present value of
future net premiums. Assumptions as to interest rates, mortality, expenses and
persistency are based on our estimates of anticipated experience at the period
the policy is sold or acquired, including a provision for adverse deviation.
Interest rates used to calculate the present value of these reserves ranged from
2.3% to 7.7%.

Reserves for payout contracts with life contingencies are equal to the present
value of expected future payments. Assumptions as to interest rates, mortality
and expenses are based on our estimates of anticipated experience at the period
the policy is sold or acquired, including a provision for adverse deviation.
Such assumptions generally vary by annuity plan type, year of issue and policy
duration. Interest rates used to calculate the present value of future benefits
ranged from 1.0% to 8.3%.

Although assumptions are "locked-in" upon the issuance of traditional life
insurance contracts, certain accident and health insurance contracts and payout
contracts with life contingencies, significant changes in experience or
assumptions may require us to provide for expected future losses on a product by
establishing premium deficiency reserves. Premium deficiency reserves are
determined based on best estimate assumptions that exist at the time the premium
deficiency reserve is established and do not include a provision for adverse
deviation. See Deferred Policy Acquisition Costs, Value of Business Acquired and
Other Intangibles below for premium deficiency reserve established during 2016.

Product Guarantees and Index-crediting Features


The assumptions used to establish the liabilities for our product guarantees
require considerable judgment and are established as management's best estimate
of future outcomes. We periodically review these assumptions and, if necessary,
update them based on additional information that becomes available. Changes in,
or deviations from, the assumptions used can significantly affect our reserve
levels and related results of operations.

GMDB and GMIB: Reserves for annuity GMDB and GMIB are determined by estimating
the value of expected benefits in excess of the projected account balance and
recognizing the excess ratably over the accumulation period based on total
expected assessments. Expected experience is based on a range of scenarios.
Assumptions used, such as the long-term equity market return, lapse rate and
mortality, are consistent with assumptions used in estimating gross revenues for
the purpose of amortizing DAC. In addition, the reserve for the GMIB
incorporates assumptions for the likelihood and timing of the potential
annuitizations that may be elected by the contract owner. In general, we assume
that GMIB annuitization rates will be higher for policies with more valuable
("in the money") guarantees.

GMAB, GMWB, GMWBL, FIA, IUL, Stabilizer and MCG: We also issue certain products
that contain embedded derivatives that are measured at estimated fair value
separately from the host contracts. These embedded derivatives include GMAB,
GMWB, GMWBL, FIA, IUL and Stabilizer. The managed custody guarantee product
("MCG") is a stand-alone derivative and is measured in its entirety at estimated
fair value.

At inception of the GMAB, GMWB and GMWBL contracts, we project a fee to be
attributed to the embedded derivative portion of the guarantee equal to the
present value of projected future guaranteed benefits. After inception, the
estimated fair value of the GMAB, GMWB and GMWBL contracts is determined based
on the present value of projected future guaranteed benefits, minus the present
value of projected attributed fees. A risk neutral valuation methodology is used
under which the cash flows from the guarantees are projected under multiple
capital market scenarios using observable risk free rates. The projection of
future guaranteed benefits and future attributed fees require the use of
assumptions for capital markets (e.g., implied volatilities, correlation among
indices, risk-free swap curve, etc.) and policyholder behavior (e.g., lapse,
benefit utilization, mortality, etc.).

The estimated fair value of the embedded derivative in the FIA contracts is
based on the present value of the excess of interest payments to the contract
owners over the growth in the minimum guaranteed contract value. The excess
interest payments are determined as the excess of projected index driven
benefits over the projected guaranteed benefits. The projection horizon is over
the anticipated life of the related contracts, which takes into account best
estimate actuarial assumptions, such as partial withdrawals, full surrenders,
deaths, annuitizations and maturities.

Certain FIA contracts contain guaranteed withdrawal benefit provisions.
Reserves for these benefits are calculated by estimating the value of expected
benefits in excess of the projected account balance and recognizing the excess
ratably over the accumulation period based on total expected assessments.

The estimated fair value of the embedded derivative in the IUL contracts is based on the present value of the excess of interest payments to the contract owners over the growth in the minimum guaranteed account value. The excess interest payments are determined as the excess of projected index driven benefits over the projected guaranteed benefits. The projection horizon is over


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the current indexed term of the related contracts, which takes into account best
estimate actuarial assumptions, such as partial withdrawals, full surrenders,
deaths and maturities.

The estimated fair value of the Stabilizer embedded derivative and MCG contracts
is determined based on the present value of projected future claims, minus the
present value of future guaranteed premiums. At inception of the contract, we
project a guaranteed premium to be equal to the present value of the projected
future claims. The income associated with the contracts is projected using
actuarial and capital market assumptions, including benefits and related
contract charges, over the anticipated life of the related contracts. The cash
flow estimates are projected under multiple capital market scenarios using
observable risk-free rates and other best estimate assumptions.

The liabilities for the GMAB, GMWB, GMWBL, FIA, IUL and Stabilizer embedded
derivatives and the MCG stand-alone derivative include a risk margin to capture
uncertainties related to policyholder behavior assumptions. The margin
represents additional compensation a market participant would require to assume
these risks.

The discount rate used to determine the fair value of the liabilities for our
GMAB, GMWB, GMWBL, FIA, IUL and Stabilizer embedded derivatives and the MCG
stand-alone derivative includes an adjustment to reflect the risk that these
obligations will not be fulfilled ("nonperformance risk"). Our nonperformance
risk adjustment is based on a blend of observable, similarly rated peer holding
company credit default swap ("CDS") spreads, adjusted to reflect the credit
quality of our individual insurance subsidiary that issued the guarantee, as
well as an adjustment to reflect the priority of policyholder claims. The table
below presents the increase (decrease) to the fair value of these liabilities
due to the nonperformance risk adjustment and the gain (loss) due to
nonperformance risk as of and for the periods indicated:
($ in millions)              Nonperformance Risk Adjustment         Gain 

(Loss) due to Nonperformance Risk

                                   As of December 31,                     

For the year ended December 31,

                          2016(2)         2015(2)       2014(2)          2016            2015          2014

GMAB / GMWB / GMWBL(1) $ (776.3 ) $ (700.9 ) $ (629.0 ) $

 75.4     $    71.9     $   327.7
FIA(1)                     (169.2 )        (101.4 )      (103.9 )            67.8          (2.5 )        55.0
IUL(1)                       (0.8 )          (0.7 )           -               0.1           0.7             -
Stabilizer(1)               (31.8 )         (25.3 )       (16.8 )             6.5           8.5          19.5
Total                  $   (978.1 )     $  (828.3 )   $  (749.7 )   $       149.8     $    78.6     $   402.2


(1) GMAB, GMWB and GMWBL are included in the results of operations of CBVA, FIA
is included in the results of operations of Annuities, IUL is included in the
results of operations of Individual Life and Stabilizer is included in the
results of operations of Retirement.
(2) Represents reduction to liabilities.

The favorable change of $149.8 million from $828.3 million as of December 31,
2015 to $978.1 million as of December 31, 2016 is primarily due to favorable
changes in observable credit spreads partially offset by decreases in associated
reserves due to model changes and changes in capital markets. The change of
$78.6 million from $749.7 million as of December 31, 2014 to $828.3 million as
of December 31, 2015 is primarily due to the increases in observable credit
spreads and an increase in the associated reserves. The change of $402.2 million
from $347.5 million as of January 1, 2014 to $749.7 million as of December 31,
2014 is primarily due to the increases in observable credit spreads and an
increase in the associated reserves.

UL and Variable Universal Life ("VUL"): Reserves for UL and VUL secondary
guarantees and paid-up guarantees are calculated by estimating the expected
value of death benefits payable and recognizing those benefits ratably over the
accumulation period based on total expected assessments. The reserve for such
products recognizes the portion of contract assessments received in early years
used to compensate us for benefits provided in later years. Assumptions used,
such as the interest rate, lapse rate and mortality, are consistent with
assumptions used in estimating gross profits for purposes of amortizing DAC.

Assumptions and Periodic Review


We have only minimal experience regarding the long-term implications of
policyholder behavior for our GMIB and, as a result, future experience could
lead to significant changes in our assumptions. Our GMIB contracts, most of
which were issued during the period from 2004 to 2006, have a ten-year waiting
period before annuitization is available. These contracts first became eligible
to annuitize during the period from 2014 through 2016, but contain significant
incentives to delay annuitization beyond the first eligibility date. In recent
years, we have made several income enhancement offers to holders of particular
series of GMIB contracts, under which policyholders were offered an incentive to
annuitize prior to the end of the waiting period, and we have waived the
remaining waiting period on these GMIB contracts. As a result, although we have
increased experience on policyholder behavior

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for the first opportunity to annuitize, including from the acceptance rates of
the income enhancement offers, we continue to have only a statistically small
sample of experience used to set annuitization rates beyond the maximum rollup
period. Therefore, we anticipate that observable experience data will become
statistically credible later in this decade, when a large volume of GMIB
benefits begin to reach their maximum rollup period over the period from 2019 to
2022.
Similarly, most of our GMWBL contracts were issued during the period from 2006
to 2009, so our assumptions for withdrawal from contracts with GMWBL benefits
may change as experience emerges. In addition, many of our GMWBL contracts
contain significant incentives to delay withdrawal, with the GMWBL benefits
reaching their maximum rollup over the period from 2016 to 2019. Our experience
for GMWBL contracts has recently become more credible; however, it is possible
that policyholders may choose to withdraw sooner or later than our current best
estimate assumes. We expect customers decisions on withdrawal will be influenced
by their financial plans and needs, as well as by market conditions over time,
and by the availability and features of competing products.
We also make estimates of expected lapse rates, which represent the probability
that a policy will not remain in force from one period to the next, for
contracts in the CBVA segment. Lapse rates of our variable annuity contracts may
be significantly impacted by the value of guaranteed minimum benefits relative
to the value of the underlying separate accounts (account value or account
balance). In general, policies with guarantees that are "in the money" are
assumed to be less likely to lapse. Conversely, "out of the money" guarantees
are assumed to be more likely to lapse as the policyholder has less incentive to
retain the policy. Lapse rates could also be adversely affected generally by
developments that affect customer perception of us.
Our variable annuity lapse rate experience has varied significantly over the
period from 2006 to the present, reflecting among other factors, both pre-and
post-financial crisis experience. Relative to our current expectations, actual
lapse rates have generally demonstrated a declining trend over the period from
2006 to the present. We analyze actual experience over that entire period, as we
believe that over the duration of the variable annuity policies we may
experience the full range of policyholder behavior and market conditions.
However, management's current best estimate of variable annuity policyholder
lapse behavior is weighted more heavily toward more recent experience, as the
last three years of data have shown a more consistent trend of lapse behavior.
Actual lapse rates that are lower than our lapse rate assumptions could have an
adverse effect on profitability in the later years of a block of business
because the anticipated claims experience may be higher than expected in these
later years, and, as discussed above, future reserve increases in connection
with experience updates could be material and adverse to our results of
operations or financial condition.

We review overall policyholder experience at least annually (including lapse,
annuitization, withdrawal and mortality) and update these assumptions when
deemed necessary, based on additional information that becomes available. If
policyholder experience is significantly different from that assumed, this could
have a significant effect on our reserve levels and related results of
operations.

During the third quarters of 2016, 2015 and 2014, we conducted our annual review of assumptions, including projection model inputs.


In our most recent annual review of assumptions related to our CBVA contracts in
the third quarter of 2016, annual assumption changes and revisions to projection
model inputs resulted in a loss of $95.5 million. This $95.5 million loss
included an unfavorable $250.2 million as a result of updates made to
assumptions principally related to expected earned rates on certain investment
options available to variable annuity contract holders, and discount rates
applicable to future cash flows from variable annuity contracts. This loss was
partially offset by $154.7 million of favorable policyholder behavior assumption
changes, driven by a favorable update to utilization rates on GMWBL contracts,
partially offset by an unfavorable update to lapse rates.

Annual assumption changes and revisions to projection model inputs implemented
during 2015 resulted in a loss of $86.0 million. This $86.0 million loss
included an unfavorable $43.0 million resulting from policyholder behavior
assumption changes primarily related to an update to lapse assumptions,
partially offset by a favorable $27.4 million resulting from changes to
mortality assumptions. The loss also included an unfavorable $70.4 million as a
result of updates we made to other assumptions, principally relating to expected
earned rates on certain investment options available to variable annuity
contract holders, discount rates applicable to future cash flows from variable
annuity contracts and long­-term volatility.

Annual assumption changes and revisions to projection model inputs implemented
during 2014 resulted in a gain of $102.3 million (excluding a gain of $37.9
million due to changes in the technique used to estimate nonperformance risk).
This $102.3 million gain included a favorable $170.2 million resulting from
policyholder behavior assumption changes partially offset by an unfavorable
$40.5 million resulting from changes to mortality assumptions. The gain from
policyholder behavior assumption changes was primarily due to an update to the
utilization assumption on GMWBL contracts, partially offset by an unfavorable
result from an update to lapse assumptions.

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As discussed above, our recent changes in lapse assumptions moved our
assumptions to be in line with lapse experience over the past three years. Also
as described above, future reserve increases in connection with experience
updates could be material and adverse to our results of operations or financial
condition.

See Quantitative and Qualitative Disclosures About Market Risk in Part II, Item
7A. of this Annual Report on Form 10-K for additional information regarding the
specific hedging strategies and reinsurance we utilize to mitigate risk for the
product guarantees, as well as sensitivities of the embedded derivative and
stand-alone derivative liabilities to changes in certain capital markets
assumptions.

Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles


DAC represents policy acquisition costs that have been capitalized and are
subject to amortization and interest.VOBA represents the outstanding value of
in-force business acquired and is subject to amortization and interest. DSI
represents benefits paid to contract owners for a specified period that are
incremental to the amounts we credit on similar contracts without sales
inducements and are higher than the contract's expected ongoing crediting rates
for periods after the inducement. URR relates to UL and VUL products and
represents policy charges for benefits or services to be provided in future
periods.

Collectively, we refer to DAC, VOBA, DSI and URR as "DAC/VOBA and other
intangibles". See the Deferred Policy Acquisition Costs and Value of Business
Acquired Note in our Consolidated Financial Statements in Part II, Item 8. of
this Annual Report on Form 10-K for additional information on DAC and VOBA.

Amortization Methodologies


We amortize DAC and VOBA related to certain traditional life insurance contracts
and certain accident and health insurance contracts over the premium payment
period in proportion to the present value of expected gross premiums.
Assumptions as to mortality, morbidity, persistency and interest rates, which
include provisions for adverse deviation, are consistent with the assumptions
used to calculate reserves for future policy benefits.

These assumptions are "locked-in" at issue and not revised unless the DAC or
VOBA balance is deemed to be unrecoverable from future expected profits.
Recoverability testing is performed for current issue year products to determine
if gross premiums are sufficient to cover DAC or VOBA, estimated benefits and
related expenses. In subsequent periods, the recoverability of DAC and VOBA is
determined by assessing whether future gross premiums are sufficient to amortize
DAC or VOBA, as well as provide for expected future benefits and related
expenses. If a premium deficiency is deemed to be present, charges will be
applied against the DAC and VOBA balances before an additional reserve is
established. Absent such a premium deficiency, variability in amortization after
policy issuance or acquisition relates only to variability in premium volumes.

We amortize DAC and VOBA related to universal life-type contracts and fixed and
variable deferred annuity contracts, except for deferred annuity contracts
within the CBVA segment, over the estimated lives of the contracts in relation
to the emergence of estimated gross profits. Assumptions as to mortality,
persistency, interest crediting rates, fee income, 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 overall 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
("unlocking"). If the update of assumptions causes estimated gross profits to
increase, DAC and VOBA amortization will decrease, resulting in a current period
increase to earnings. The opposite result occurs when the assumption update
causes estimated gross profits to decrease. We amortize the DSI and URR over the
estimated lives of the related contracts using the same methodology and
assumptions used to amortize DAC. For deferred annuity contracts within the CBVA
segment, we amortize DAC/VOBA and DSI in relation to the emergence of estimated
gross revenue.

For universal life-type contracts and fixed and variable deferred annuity
contracts, recoverability testing is performed for current issue year products
to determine if gross profits are sufficient to cover DAC/VOBA and other
intangibles, estimated benefits and related expenses. In subsequent periods, we
perform testing to assess the recoverability of DAC/VOBA and other intangibles
on an annual basis, or more frequently if circumstances indicate a potential
loss recognition issue exists. If DAC/VOBA or other intangibles are not deemed
recoverable from future gross profits, charges will be applied against the
DAC/VOBA or other intangible balances before an additional reserve is
established.


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During the year ended December 31, 2016, our reviews resulted in loss
recognition in our CBVA segment of $321.0 million, before income taxes, of which
$85.1 million and $18.7 million was recorded to Net amortization of DAC/VOBA and
Interest credited to contract owner account balances, respectively, in the
Consolidated Statements of Operations, with a corresponding decrease on the
Consolidated Balance Sheets to Deferred policy acquisition costs and Value of
business acquired and Sales inducements to contract owners. The loss recognition
also included the establishment of $217.2 million of premium deficiency reserves
related to the continued decline in earned rates in the current interest rate
environment, which was recorded as an increase in Policyholder benefits in the
Consolidated Statements of Operations, with a corresponding increase on the
Consolidated Balance Sheets to Future policy benefits. There was no loss
recognition for the years ended December 31, 2015 and 2014.

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.

• One significant assumption is the assumed return associated with the

variable account performance, which has historically had a greater impact

       on variable annuity than VUL products. To reflect the volatility in the
       equity markets, this assumption involves a combination of near-term
       expectations and long-term assumptions regarding market performance. The

overall return on the variable account is dependent on multiple factors,

including the relative mix of the underlying sub-accounts among bond funds

and equity funds, as well as equity sector weightings. We use a reversion

       to the mean approach, which assumes that the market returns over the
       entire mean reversion period are consistent with a long-term level of
       equity market appreciation. We monitor market events and only change the
       assumption when sustained deviations are expected. This methodology
       incorporates a 9% long-term equity return assumption, a 14% cap and a
       five-year look-forward period.

• Another significant assumption used in the estimation of gross profits for

       certain products is mortality. We utilize a combination of actual and
       industry experience when setting our mortality assumptions, which are

consistent with the assumptions used to calculate reserves for future

policy benefits.

• Assumptions related to interest rate spreads and credit losses also impact

       estimated gross profits for applicable products with credited rates. These
       assumptions are based on the current investment portfolio yields and
       credit quality, estimated future crediting rates, capital markets, and
       estimates of future interest rates and defaults.

• Other significant assumptions include estimated policyholder behavior

assumptions, such as surrender, lapse, and annuitization rates. We use a

combination of actual and industry experience when setting and updating

our policyholder behavior assumptions, and such assumptions require

considerable judgment. Estimated gross revenues and gross profits for our

       variable annuity contracts are particularly sensitive to these
       assumptions.



We include the impact of the change in value of the embedded derivative
associated with the FIA and IUL contracts in gross profits for purposes of
determining DAC amortization. When performing loss recognition testing on the
GMAB, GMWB and GMWBL contracts, we include the change in value of the associated
embedded derivatives in gross profits. In addition, we utilize the Variable
Annuity Hedge Program to mitigate the exposure of our CBVA segment to adverse
capital market results and economic downturns and seek to ensure that the
required assets are available to satisfy future death and living benefit
guarantees. In general, our Variable Annuity Hedge Program generates gains and
losses that mitigate our exposure to these guarantees. As our hedging program
does not explicitly hedge the U.S. GAAP liability, we typically experience
"breakage", or a difference between the change in the U.S. GAAP liability and
the change in the corresponding derivative instrument. We include the impact of
our hedging activities supporting our death and living benefit guarantees in
gross profits when performing loss recognition testing.

During the third quarter of 2016, 2015 and 2014, we conducted our annual review
of assumptions, including projection model inputs, and made a number of changes
to our assumptions which impacted the results of our segments, excluding CBVA.
During the third quarter of 2016, the impact of assumption changes resulted in a
loss of $226.5 million, of which $144.9 million was included in Operating
earnings before income taxes and reflects net unfavorable DAC/VOBA and other
intangibles unlocking. The remaining loss of $81.6 million mainly reflects
unfavorable DAC/VOBA and other intangibles unlocking associated with realized
investment gains and losses, including derivatives, as well as assumption
updates for guaranteed benefit derivatives. During the third quarter of 2015,
the impact of assumption changes resulted in a loss of $128.4 million, of which
$82.0 million was included in Operating earnings before income taxes and
reflects net unfavorable DAC/VOBA and other intangibles unlocking. The remaining
loss of $46.4 million mainly reflects changes in FIA policyholder behavior and
net unfavorable DAC/VOBA and other intangibles unlocking associated with
realized investment gains and losses, including derivatives, as well as
assumption updates for guaranteed benefit derivatives. During the third quarter
of 2014, the impact of assumption changes resulted in a loss of $19.3 million,
which was included in Operating earnings before income taxes and reflected net
unfavorable DAC/VOBA and

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other intangibles unlocking. The impact of assumption changes excluded from Operating earnings before income taxes for the segments, excluding CBVA, was immaterial.


In addition to the amounts above, gains of $25.1 million in the third quarter of
2014 resulted from changes in the projection model inputs related to the
technique used to estimate nonperformance risk in our segments, excluding CBVA.
These gains are excluded from Operating earnings before income taxes.

Sensitivity


We perform sensitivity analyses to assess the impact that certain assumptions
have on DAC/VOBA and other intangibles, as well as certain reserves. The
following table presents the estimated instantaneous net impact to income before
income taxes of various assumption changes on our DAC/VOBA and other intangible
balances and the impact on related reserves for future policy benefits and
reinsurance. The effects are not representative of the aggregate impacts that
could result if a combination of such changes to equity markets, interest rates
and other assumptions occurred.
($ in millions)                                           As of December 31, 2016
                                            All Segments,
                                            Excluding CBVA           CBVA               Total
Decrease in long-term equity rate of
return assumption by 100 basis points    $         (50.3 )      $     (172.0 )      $     (222.3 )
A change to the long-term interest rate                                     

(1)

assumption of -50 basis points                     (97.4 )            (243.5 )            (340.9 )
A change to the long-term interest rate
assumption of +50 basis points                      62.1               222.6               284.7
An assumed increase in future mortality
by 1%                                              (13.7 )              (5.7 )             (19.4 )


(1) Additionally the assumption changes would result in loss recognition of approximately $300 million to $400 million.




We generally assume that the rate of return on fixed income investments backing
CBVA contracts moves in a manner correlated with changes to our assumed
long-term rate of return. Furthermore, assumptions regarding shifts in market
factors may be overly simplistic and not indicative of actual market behavior in
stress scenarios.

Lower assumed equity rates of return, lower assumed interest rates, increased
assumed future mortality and decreases in equity market values generally
decrease DAC/VOBA and other intangibles and to increase future policy benefits,
thus decreasing income before income taxes. Higher assumed interest rates
generally increase DAC/VOBA and other intangibles and decrease future policy
benefits, thus increasing income before income taxes.

Valuation of Investments and Derivatives


Our investment portfolio consists of public and private fixed maturity
securities, commercial mortgage and other loans, equity securities, short-term
investments, other invested assets and derivative financial instruments. We
enter into interest rate, equity market, credit default and currency contracts,
including swaps, futures, forwards, caps, floors and options, to reduce and
manage various risks associated with changes in value, yield, price, cash flow
or exchange rates of assets or liabilities held or intended to be held, or to
assume or reduce credit exposure associated with a referenced asset, index or
pool. We also utilize options and futures on equity indices to reduce and manage
risks associated with our universal-life type and annuity products.

See the Investments (excluding Consolidated Investment Entities) Note and the
Derivative Financial Instruments Note in our Consolidated Financial Statements
in Part II, Item 8. of this Annual Report on Form 10-K for further information.

Investments


We measure the fair value of our financial assets and liabilities based on
assumptions used by market participants in pricing the asset or liability, which
may include inherent risk, restrictions on the sale or use of an asset, or
nonperformance risk, including our own credit risk. The estimate of fair value
is the price that would be received to sell an asset or transfer a liability
("exit price") in an orderly transaction between market participants in the
principal market, or the most advantageous market in the absence of a principal
market, for that asset or liability. We use a number of valuation sources to
determine the fair values of our financial assets and liabilities, including
quoted market prices, third-party commercial pricing services, third-party
brokers, industry-standard,

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vendor-provided software that models the value based on market observable inputs, and other internal modeling techniques based on projected cash flows.


We categorize our financial instruments into a three-level hierarchy based on
the priority of the inputs to the valuation technique. The fair value hierarchy
gives the highest priority to quoted prices in active markets for identical
assets or liabilities (Level 1) and the lowest priority to unobservable inputs
(Level 3). If the inputs used to measure fair value fall within different levels
of the hierarchy, the category level is based on the lowest priority level input
that is significant to the fair value measurement of the instrument.

When available, the estimated fair value of securities is based on quoted prices
in active markets that are readily and regularly obtainable. When quoted prices
in active markets are not available, the determination of estimated fair value
is based on market standard valuation methodologies, including discounted cash
flows, matrix pricing or other similar techniques. Inputs to these methodologies
include, but are not limited to, market observable inputs such as benchmark
yields, credit quality, issuer spreads, bids, offers and cash flow
characteristics of the security. For privately placed bonds, we also consider
such factors as the net worth of the borrower, value of the collateral, the
capital structure of the borrower, the presence of guarantees, and the
borrower's ability to compete in its relevant market. Valuations are reviewed
and validated monthly by an internal valuation committee using price variance
reports, comparisons to internal pricing models, back testing of recent trades,
and monitoring of trading volumes, as appropriate.

The valuation of financial assets and liabilities involves considerable
judgment, is subject to considerable variability, is established using
management's best estimate, and is revised as additional information becomes
available. As such, changes in, or deviations from, the assumptions used in such
valuations can significantly affect our results of operations. Financial markets
are subject to significant movements in valuation and liquidity, which can
impact our ability to liquidate and the selling price that can be realized for
our securities.

Derivatives

Derivatives are carried at fair value, which is determined by using observable
key financial data, such as yield curves, exchange rates, S&P 500 prices, LIBOR
and Overnight Index Swap Rates ("OIS") or through values established by
third-party sources, such as brokers. Valuations for our futures contracts are
based on unadjusted quoted prices from an active exchange. Counterparty credit
risk is considered and incorporated in our valuation process through
counterparty credit rating requirements and monitoring of overall exposure. Our
own credit risk is also considered and incorporated in our valuation process.

We have certain CDS and options that are priced using models that primarily use
market observable inputs, but contain inputs that are not observable to market
participants.

We also have investments in certain fixed maturities and have issued certain
universal life-type and annuity products that contain embedded derivatives for
which fair value is at least partially determined by levels of or changes in
domestic and/or foreign interest rates (short-term or long-term), exchange
rates, prepayment rates, equity markets, or credit ratings/spreads. The fair
values of these embedded derivatives are determined using prices or valuation
techniques that require inputs that are both unobservable and significant to the
overall fair value measurement. For additional information regarding the
valuation of and significant assumptions associated with embedded derivatives
and stand-alone derivatives associated with certain universal life-type and
annuity contracts, see Reserves for Future Policy Benefits above.

In addition, we have entered into coinsurance with funds withheld reinsurance
arrangements that contain embedded derivatives. The fair value of the embedded
derivatives is based on the change in the fair value of the underlying assets
held in the trust using the valuation methods and assumptions described for our
investments held.

The valuation of derivatives involves considerable judgment, is subject to
considerable variability, is established using management's best estimate and is
revised as additional information becomes available. As such, changes in, or
deviations from, these assumptions used in such valuations can have a
significant effect on the results of operations.

For additional information regarding the fair value of our investments and
derivatives, see the Fair Value Measurements (excluding Consolidated Investment
Entities) Note in our Consolidated Financial Statements in Part II, Item 8. of
this Annual Report on Form 10-K.


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Impairments


We evaluate our available-for-sale investments quarterly to determine whether
there has been an other-than-temporary decline in fair value below the amortized
cost basis. This evaluation process entails considerable judgment and
estimation. Factors considered in this analysis include, but are not limited to,
the length of time and the extent to which the fair value has been less than
amortized cost, the issuer's financial condition and near-term prospects, future
economic conditions and market forecasts, interest rate changes and changes in
ratings of the security. An extended and severe unrealized loss position on a
fixed maturity may not have any impact on: (a) the ability of the issuer to
service all scheduled interest and principal payments and (b) the evaluation of
recoverability of all contractual cash flows or the ability to recover an amount
at least equal to its amortized cost based on the present value of the expected
future cash flows to be collected. In contrast, for certain equity securities,
we give greater weight and consideration to a decline in market value and the
likelihood such market value decline will recover.

When assessing our intent to sell a security, or if it is more likely than not
we will be required to sell a security before recovery of its amortized cost
basis, we evaluate facts and circumstances such as, but not limited to,
decisions to rebalance the investment portfolio and sales of investments to meet
cash flow or capital needs.

We use the following methodology and significant inputs to determine the amount of the OTTI credit loss:

• When determining collectability and the period over which the value is

expected to recover for U.S. and foreign corporate securities, foreign

government securities and state and political subdivision securities, we

apply the same considerations utilized in our overall impairment

evaluation process, which incorporates information regarding the specific

security, the industry and geographic area in which the issuer operates

and overall macroeconomic conditions. Projected future cash flows are

estimated using assumptions derived from our best estimates of likely

scenario-based outcomes, after giving consideration to a variety of

variables that includes, but is not limited to: general payment terms of

the security; the likelihood that the issuer can service the scheduled

interest and principal payments; the quality and amount of any credit

enhancements; the security's position within the capital structure of the

issuer; possible corporate restructurings or asset sales by the issuer;

       and changes to the rating of the security or the issuer by rating
       agencies.

• Additional considerations are made when assessing the unique features that

apply to certain structured securities, such as subprime, Alt-A,

non-agency RMBS, CMBS and ABS. These additional factors for structured

securities include, but are not limited to: the quality of underlying

collateral; expected prepayment speeds; loan-to-value ratio; debt service

coverage ratios; current and forecasted loss severity; consideration of

the payment terms of the underlying assets backing a particular security;

and the payment priority within the tranche structure of the security.

• When determining the amount of the credit loss for U.S. and foreign

corporate securities, foreign government securities and state and

political subdivision securities, we consider the estimated fair value as

the recovery value when available information does not indicate that

another value is more appropriate. When information is identified that

indicates a recovery value other than estimated fair value, we consider in

the determination of recovery value the same considerations utilized in

its overall impairment evaluation process, which incorporates available

information and our best estimate of scenario-based outcomes regarding the

specific security and issuer; possible corporate restructurings or asset

sales by the issuer; the quality and amount of any credit enhancements;

the security's position within the capital structure of the issuer;

fundamentals of the industry and geographic area in which the security

issuer operates; and the overall macroeconomic conditions.

• We perform a discounted cash flow analysis comparing the current amortized

cost of a security to the present value of future cash flows expected to

be received, including estimated defaults and prepayments. The discount

       rate is generally the effective interest rate of the fixed maturity prior
       to impairment.



Mortgage loans on real estate are all commercial mortgage loans. If a mortgage
loan is determined to be impaired (i.e., when it is probable that we will be
unable to collect all amounts due according to the contractual terms of the loan
agreement), the carrying value of the mortgage loan is reduced to the lower of
either the present value of expected cash flows from the loan, discounted at the
loan's original purchase yield, or the fair value of the collateral. For those
mortgages that are determined to require foreclosure, the carrying value is
reduced to the fair value of the underlying collateral, net of estimated costs
to obtain and sell at the point of foreclosure.

Impairment analysis of the investment portfolio involves considerable judgment,
is subject to considerable variability, is established using management's best
estimate and is revised as additional information becomes available. As such,
changes in, or deviations from, the assumptions used in such analysis can have a
significant effect on the results of operations.

For additional information regarding the evaluation process for impairments, see
the Investments (excluding Consolidated Investment Entities) Note in our
Consolidated Financial Statements in Part II, Item 8. of this Annual Report on
Form 10-K.

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Income Taxes

Valuation Allowances

We use certain assumptions and estimates in determining the income taxes payable
or refundable for the current year, the deferred income tax liabilities and
assets for items recognized differently in our Consolidated Financial Statements
from amounts shown on our income tax returns and the federal income tax expense.
Determining these amounts requires analysis and interpretation of current tax
laws and regulations, including the loss limitation rules associated with change
in control. We exercise considerable judgment in evaluating the amount and
timing of recognition of the resulting income tax liabilities and assets. These
judgments and estimates are reevaluated on a periodic basis. We will continue to
evaluate as regulatory and business factors change.

Deferred tax assets represent the tax benefit of future deductible temporary
differences, net operating loss carryforwards and tax credit carryforwards. We
evaluate and test the recoverability of deferred tax assets. Deferred tax assets
are reduced by a valuation allowance if, based on the weight of evidence, it is
more likely than not that some portion, or all, of the deferred tax assets will
not be realized. Considerable judgment and the use of estimates are required in
determining whether a valuation allowance is necessary and, if so, the amount of
such valuation allowance. In evaluating the need for a valuation allowance, we
consider many factors, including:

• The nature, frequency and severity of book income or losses in recent years;

• The nature and character of the deferred tax assets and liabilities;

• The nature and character of income by life and non-life subgroups;


•      The recent cumulative book income (loss) position after adjustment for
       permanent differences;

• Taxable income in prior carryback years;


•      Projected future taxable income, exclusive of reversing temporary
       differences and carryforwards;

• Projected future reversals of existing temporary differences;

• The length of time carryforwards can be utilized;

• Prudent and feasible tax planning strategies we would employ to avoid a

tax benefit from expiring unused; and

• Tax rules that would impact the utilization of the deferred tax assets.




We have assessed whether it is more likely than not that the deferred tax assets
will be realized in the future. In making this assessment, we considered the
available sources of income and positive and negative evidence regarding our
ability to generate sufficient taxable income to realize our deferred tax
assets, which include net operating loss carryforwards ("NOLs"), capital loss
carryforwards and tax credit carryforwards.

Positive evidence includes a recent history of earnings, projected earnings
attributable to our insurance and investment businesses, plans or the ability to
sell certain assets and streams of revenues, plans to reduce future projected
losses by reduction of sales of certain products and predictable patterns of
loss and income recognition. Negative evidence includes operating losses in
certain years in certain life businesses, large losses in the non-life business
and the potential unpredictability of certain components of future projected
taxable income.

We use judgment in considering the relative impact of negative and positive
evidence. The weight given to the potential effect of negative and positive
evidence is commensurate with the extent to which it can be objectively
verified. The more negative evidence that exists, (a) the more positive evidence
is necessary and (b) the more difficult it is to support a conclusion that a
valuation allowance is not needed for some portion of or the entire deferred tax
asset.

During the three months ended December 31, 2014, we experienced significant
favorable developments, including continued strong results of operations of our
segments, excluding CBVA, reduction in the ING Group ownership to below 20%, the
sale of certain under-performing businesses via indemnity reinsurance, entry
into an Issue Resolution Agreement ("IA") with the Internal Revenue Service
("IRS") regarding the Internal Revenue Code ("IRC") Section 382 event (defined
below) calculation and emergence from a cumulative loss to cumulative income in
recent years. The IA with the IRS significantly reduced uncertainty in our
ability to use certain losses. During the fourth quarter of 2014, results were
positive after excluding losses from items not indicative of future
profitability, such as the $107.0 million loss from the sale of certain
businesses and a $372.7 million loss from the immediate recognition of net
actuarial losses related to pension and other postretirement benefit
obligations. These facts, coupled with strong full year results and projections
of sufficient taxable income, represent significant positive evidence. As of
December 31, 2014, the cumulative positive evidence outweighed the negative
evidence regarding the likelihood that certain of our deferred tax assets for
our U.S. consolidated income tax group will be realized. This assessment was
evidenced by our consideration of facts and circumstances (as noted above) and
resulted in our conclusion that $1.62 billion of the deferred tax asset

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valuation allowance for our U.S. consolidated income tax group should be
released in the fourth quarter of 2014. On a year-to-date basis, the total
decrease in the valuation allowance in 2014 was $1.83 billion. We determined
that deferred tax assets related to certain federal and state loss
carryforwards, state temporary differences and tax credits were not realizable
on a more-likely-than not basis prior to the expiration of their respective
carryforward periods. Thus, a corresponding valuation allowance remains against
these deferred tax assets.

In order to demonstrate the predictability and sufficiency of future taxable
income necessary to support the recognition of the temporary differences and NOL
carryforwards related to the $1.83 billion valuation release in 2014, we
considered our forecasts of future income using comparisons to historical
results and actual and planned business and operational changes, which included
assumptions about future macroeconomic and Company-specific conditions and
events. We also subjected the forecasts to stresses (considering various adverse
Company-specific and macroeconomic risks) of key assumptions and effectiveness
of relevant prudent and feasible tax planning strategies. We ultimately limited
our projections to amounts that were objectively verifiable. Our income
forecasts coupled with our tax planning strategies resulted in sufficient
taxable income to achieve realization of certain deferred tax assets (other than
amounts for certain federal and state loss carryforwards, state temporary
differences and certain tax credits prior to their expiration).

With the exception for changes in the deferred tax valuation allowance for state
taxes, certain credits and for certain capital deferred tax assets, there was no
change in the deferred tax valuation allowance for the years ended December 31,
2016 and December 31, 2015. We continued to rely on objectively verifiable
income and tax planning to support the remaining deferred tax assets. There was
no significant new evidence in 2016 and 2015 to warrant a change to the
valuation allowance.

The deferred tax valuation allowance was approximately $1.0 billion as of
December 31, 2016 and 2015. Pursuant to U.S. GAAP, we do not specifically
identify the valuation allowance with individual categories. However, as of
December 31, 2016 and 2015, we estimated that approximately $745 million and
$783 million, respectively, was related to federal net operating losses. The
remaining balances were attributable to various items including state taxes and
other deferred tax assets.

As of December 31, 2016, we have recognized $307.1 million deferred tax assets
based on tax planning strategies related to unrealized gains on investment
assets. These tax planning strategies support recognition of deferred tax
assets, which have been provided on deductible temporary differences. Future
changes, such as interest rate movements, could adversely impact such tax
planning strategies. To the extent unrealized gains decrease or to the extent
loss utilization is limited, the tax benefit will likely be reduced by
increasing the tax valuation allowance.

For further information on our income taxes see the Income Taxes Note to our
Consolidated Financial Statements in Part II, Item 8 of this Annual Report on
Form 10-K.



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As of December 31, 2016, we had approximately $4.1 billion of federal net
operating loss carryforwards and $58.4 million of capital loss carryforwards,
which expire as follows (the deferred tax asset and offsetting valuation
allowances, if any, are also presented).
($ in millions)
                                Life        Non-Life        Life       Non-Life
                              Ordinary      Ordinary      Capital      Capital          Total
Expiration                      Loss         Losses        Losses       Losses      Carryforward
2017                         $      -     $     (3.2 )   $       -    $  (28.1 )   $       (31.3 )
2018                                -           (5.3 )           -        (1.8 )            (7.1 )
2019                                -           (8.2 )           -       (27.5 )           (35.7 )
2020                                -          (24.9 )           -        (1.0 )           (25.9 )
2021                                -          (59.0 )           -           -             (59.0 )
2022                                -           (7.2 )           -           -              (7.2 )
2023                                -          (89.4 )           -           -             (89.4 )
2024                                -              -             -           -                 -
2025                                -         (510.2 )           -           -            (510.2 )
2026                                -         (355.0 )           -           -            (355.0 )
2027                                -         (168.4 )           -           -            (168.4 )
2028                            (43.6 )       (214.2 )           -           -            (257.8 )
2029                                -         (411.5 )           -           -            (411.5 )
2030                                -         (379.2 )           -           -            (379.2 )
2031                           (616.4 )        (59.4 )           -           -            (675.8 )
2032                                -         (130.7 )           -           -            (130.7 )
2033                                -         (167.0 )           -           -            (167.0 )
2034                                -         (477.8 )           -           -            (477.8 )
2035                                -         (196.6 )           -           -            (196.6 )
2036                                -         (184.3 )           -           -            (184.3 )
Total losses                 $ (660.0 )   $ (3,451.5 )   $       -    $  (58.4 )   $    (4,169.9 )

Gross deferred tax asset     $  231.0     $  1,208.0     $       -    $   20.4     $     1,459.4
Valuation allowance              15.3          729.4             -        20.4             765.1

Deferred tax asset on losses $ 215.7 $ 478.6 $ - $

- $ 694.3




During the three months ended March 31, 2014, we had an ownership
change-generally defined as when the ownership of a company, or its parent,
changes by more than 50% (measured by value) on a cumulative basis in any three
year period ("Section 382 event"). The deferred tax asset and the valuation
allowance did not change as a result of the IRC Section 382 event. As part of
our participation in the IRS's Compliance Assurance Process ("CAP"), in December
2014, we entered into an IA with the IRS relating to the IRC Section 382
calculation of the annual limitation on the use of certain of the Company's
federal tax attributes that will apply as a consequence of the Section 382
event. Under the IA, this annual limitation is estimated to be (i) approximately
$520.0 million per year through 2018, plus certain capital gains and (ii) $450.0
million per year for the 2019 and subsequent tax years. To the extent the annual
limitation is not met within any one year, the excess will be available in
subsequent years. The annual limitation under the IA will apply to an amount
estimated to be not greater than approximately $2.9 billion of the Company's
federal tax attributes related to net operating losses and capital losses and
approximately $270.0 million related to tax credits. As with IAs entered into
under the CAP, the matters addressed by the IA may be revisited by the IRS in
connection with a tax audit or other examination or inquiry of the Company's tax
position.

Tax Contingencies

In establishing unrecognized tax benefits, we determine whether a tax position
is more likely than not to be sustained under examination by the appropriate
taxing authority. We also consider positions which have been reviewed and agreed
to as part of an examination by the appropriate taxing authority. Tax positions
that do not meet the more likely than not standard are not recognized.

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Tax positions that meet this standard are recognized in our Consolidated Financial Statements. We measure the tax position as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate resolution with the taxing authority that has full knowledge of all relevant information.


Changes in Law

Certain changes or future events, such as changes in tax legislation, geographic mix of earnings, completion of tax audits, planning opportunities and expectations about future outcomes could have an impact on our estimates of valuation allowances, deferred taxes, tax provisions and effective tax rates.


For example, a reduction in the corporate tax rate would most likely result in a
tax expense based on the fact that, as of December 31, 2016, we have a deferred
tax asset. Conversely, an increase in the corporate tax rate would most likely
result in an additional tax benefit.

Contingencies


A loss contingency is an existing condition, situation or set of circumstances
involving uncertainty as to possible loss that will ultimately be resolved when
one or more future events occur or fail to occur. Examples of loss contingencies
include pending or threatened adverse litigation, threat of expropriation of
assets and actual or possible claims and assessments. Amounts related to loss
contingencies involve considerable judgments and are accrued if it is probable
that a loss has been incurred and the amount can be reasonably estimated, based
on our best estimate of the ultimate outcome. Reserves are established
reflecting management's best estimate, reviewed on a quarterly basis and revised
as additional information becomes available. When a loss contingency is
reasonably possible, but not probable, disclosure is made of our best estimate
of possible loss, or the range of possible loss, or a statement is made that
such an estimate cannot be made.

We are involved in threatened or pending lawsuits/arbitrations arising from the
normal conduct of business. Due to the climate in insurance and business
litigation/arbitration, suits against us sometimes include claims for
substantial compensatory, consequential or punitive damages and other types of
relief. Moreover, certain claims are asserted as class actions, purporting to
represent a group of similarly situated individuals. It is not always possible
to accurately estimate the outcome of such lawsuits/arbitrations. Therefore,
changes to such estimates could be material. As facts and circumstances change,
our estimates are revised accordingly. Our reserves reflect management's best
estimate of the ultimate resolution.

Employee Benefits Plans


We sponsor defined benefit pension and other postretirement benefit plans
covering eligible employees, sales representatives and other individuals. The
net periodic benefit cost and projected benefit obligations are calculated based
on assumptions such as the discount rate, rate of return on plan assets, rate of
future compensation increases and health care cost trend rates. These
assumptions require considerable judgment, are subject to considerable
variability and are established using our best estimate. Actual results could
vary significantly from assumptions based on changes such as economic and market
conditions, demographics of participants in the plans and amendments to benefits
provided under the plans. Differences between the expected return and the actual
return on plan assets and other actuarial changes, which could be significant,
are immediately recognized in the Consolidated Statements of Operations,
generally in the fourth quarter.

The table below illustrates the breakdown of the net actuarial (gains) losses
related to pension and other postretirement benefit obligations recognized
within Operating expenses in our Consolidated Statements of Operations for the
periods presented:
(Gain)/Loss Recognized ($ in millions)         2016        2015        2014
Discount Rate                                $ 69.5     $ (132.4 )   $ 200.2
Asset Returns                                  24.4        122.9       (42.4 )
Mortality Table Assumptions                   (22.4 )      (32.3 )     202.1
Demographic Data and other                    (16.3 )      (20.9 )      12.8

Total Net Actuarial (Gain)/Loss Recognized $ 55.2 $ (62.7 ) $ 372.7




For the year ended December 31, 2016, we decreased our pension and other
postretirement benefit plans discount rate by 0.26%, resulting in an increase in
our benefit obligations and a corresponding actuarial loss of $69.5 million.
This decrease in the discount rate was driven by a decrease in corporate AA
spreads of approximately 0.31%, offset by an increase of approximately 0.05% in
30-year Treasury yields. For the year ended December 31, 2015, we increased our
pension and other postretirement benefit plans

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discount rate by 0.45%, resulting in an decrease in our benefit obligation and a
corresponding actuarial gain of $(132.4) million. This increase in the discount
rate was driven by an increase in corporate AA spreads of approximately 0.95%,
offset by a decrease of approximately 0.50% in 30-year Treasury yields.

Our expected long-term rate of return on our Voya Retirement Plan (the
"Retirement Plan") assets was 7.5% for 2016 and 2015. Our expected return on
plan assets is calculated using 10-year forward looking assumptions based on the
long-term target asset allocation. In 2016, the actual return on our Retirement
Plan assets was approximately 6.8%, resulting in an actuarial loss of $24.4
million. In 2015, the actual return on our Retirement Plan assets was
approximately 1.0%, resulting in an actuarial loss of $122.9 million.

On an annual basis, the Society of Actuaries ("SOA") releases new mortality
improvement projection scales (MP-2016). This projection scale is applied to the
base table (RP-2014), which can be used in the valuations of pension and
postretirement plans. In reviewing our own plans' mortality experience and the
new tables produced by the SOA, we changed our assumption of our base table as
of December 31, 2014 from the RP-2000 blended table utilizing Scale AA to
project mortality improvements to the RP-2014 White Collar table utilizing
MP-2014 to project mortality improvements. During calendar year 2016, the SOA
released new mortality improvement projection scales (MP-2016) that projected a
lower rate of mortality improvement than what was issued in 2014. This change
lowered our total benefit liability by approximately 1.0% in 2016 and 1.5% in
2015. Changes in mortality assumptions in 2016 and 2015 contributed $(22.4)
million and $(32.3) million to the net actuarial loss and gain, respectively.

During the fourth quarter of 2015, terminated, vested participants of the
Retirement Plan were offered an opportunity to receive their retirement plan
benefit as a lump sum payment or an annuity. The lump sum payments and related
settlement were recorded in the fourth quarter of 2015 and are reflected in the
Demographic Data and other line in the table above.
The Retirement Plan is a tax qualified defined benefit plan, the benefits of
which are guaranteed (within certain specified legal limits) by the Pension
Benefit Guaranty Corporation ("PBGC"). Beginning January 1, 2012, the Retirement
Plan adopted a cash balance pension formula instead of a final average pay
("FAP") formula, allowing all eligible employees to participate in the
Retirement Plan. Participants earn an annual credit equal to 4% of eligible
compensation. Interest is credited monthly based on a 30-year U.S. Treasury
securities bond rate published by the IRS in the preceding August of each year.
The accrued vested cash pension balance benefit is portable; participants can
take it if they leave the Company.

Sensitivity


The discount rate and expected rate of return assumptions relating to our
defined benefit pension and other postretirement benefit plans have historically
had the most significant effect on our net periodic benefit costs and the
projected and accumulated projected benefit obligations associated with these
plans.

The discount rate is based on current market information provided by plan actuaries. The discount rate modeling process involves selecting a portfolio of high quality, non-callable bonds that will match the cash flows of the Retirement Plan. The weighted average discount rates in 2016 for the net periodic benefit cost and benefit obligation were 4.81% and 4.55%, respectively.

As of December 31, 2016, the sensitivities of the effect of a change in the discount rate are as presented below:

                                    Increase (Decrease) in           

Increase (Decrease) in

                                     Net Periodic Benefit        Net Periodic Benefit Cost-Other
($ in millions)                      Cost-Pension Plans(1)         Postretirement Benefits(1)
Increase in discount rate by 100
basis points                     $                  (241.5 )     $                     (1.4 )
Decrease in discount rate by 100
basis points                                         300.6                              1.6


(1) Represents the estimate of actuarial gains (losses) that would be recognized immediately through operating expenses.

Increase (Decrease) in

                                     Increase (Decrease) in          Accumulated Postretirement Benefit
($ in millions)                    Pension Benefit Obligation               

Obligation

Increase in discount rate by 100
basis points                     $                   (241.5 )      $                         (1.4 )
Decrease in discount rate by 100
basis points                                          300.6                                   1.6




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The expected rate of return considers the asset allocation, historical returns
on the types of assets held and current economic environment. Based on these
factors, we expect that the assets will earn an average percentage per year over
the long term. This estimation is based on an active return on a compound basis,
with a reduction for administrative expenses and manager fees paid to
non-affiliated companies from the assets. For estimation purposes, we assume the
long-term asset mix will be consistent with the current mix. Changes in the
asset mix could impact the amount of recorded pension income or expense, the
funded status of the Retirement Plan and the need for future cash contributions.

The expected rate of return for 2016 was 7.5%, net of expenses, for the
Retirement Plan. The expected rate of return assumption is only applicable to
the Retirement Plan as assets are not held by any of the other pension and other
postretirement plans.

As of December 31, 2016, the effect of a change in the actual rate of return on the net periodic benefit cost is presented in the table below:

                                                             Increase (Decrease) in
                                                        Net Periodic Benefit Cost-Pension
($ in millions)                                                     Plans(1)
Increase in actual rate of return by 100 basis points   $                      (13.9 )
Decrease in actual rate of return by 100 basis points                       

13.9

(1) Represents the estimate of actuarial gains (losses) that would be recognized immediately through operating expenses.


For more information related to our employee benefit plans, see the Employee
Benefit Arrangements Note in our Consolidated Financial Statements in Part II,
Item 8. of this Annual Report on Form 10-K.

Impact of New Accounting Pronouncements


For information regarding the impact of new accounting pronouncements, see the
Business, Basis of Presentation and Significant Accounting Policies Note in our
Consolidated Financial Statements in Part II, Item 8. of this Annual Report on
Form 10-K.

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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.

Investment Strategy


Our investment strategy seeks to achieve sustainable risk-adjusted returns by
focusing on principal preservation, disciplined matching of asset
characteristics with liability requirements and the diversification of risks.
Investment activities are undertaken according to investment policy statements
that contain internally established guidelines and risk tolerances and are
required to comply with applicable laws and insurance regulations. Risk
tolerances are established for credit risk, credit spread risk, market risk,
liquidity risk and concentration risk across issuers, sectors and asset types
that seek to mitigate the impact of cash flow variability arising from these
risks.

Segmented portfolios are established for groups of products with similar
liability characteristics. Our investment portfolio consists largely of high
quality fixed maturities and short-term investments, investments in commercial
mortgage loans, alternative investments and other instruments, including a small
amount of equity holdings. Fixed maturities include publicly issued corporate
bonds, government bonds, privately placed notes and bonds, bonds issued by
states and municipalities, ABS, traditional MBS and various CMO tranches managed
in combination with financial derivatives as part of a proprietary strategy
known as CMO-B.

We use derivatives for hedging purposes to reduce our exposure to the cash flow
variability of assets and liabilities, interest rate risk, credit risk and
market risk. In addition, we use credit derivatives to replicate exposure to
individual securities or pools of securities as a means of achieving credit
exposure similar to bonds of the underlying issuer(s) more efficiently.

See the Investments (excluding Consolidated Investment Entities) Note in our
Consolidated Financial Statements in Part II, Item 8. of this Annual Report on
Form 10-K.

Portfolio Composition

The following table presents the investment portfolio as of the dates indicated:
                                       December 31, 2016               December 31, 2015
                                    Carrying                        Carrying
($ in millions)                      Value             %             Value             %
Fixed maturities,
available-for-sale, excluding
securities pledged               $   69,468.7           75.0 %   $   67,733.4           76.5 %
Fixed maturities, at fair value
using the fair value option           3,712.3            4.0 %        3,226.6            3.6 %
Equity securities,
available-for-sale                      274.2            0.3 %          331.7            0.4 %
Short-term investments(1)               821.0            0.9 %        1,496.7            1.7 %
Mortgage loans on real estate        11,725.2           12.7 %       10,447.5           11.8 %
Policy loans                          1,961.5            2.1 %        2,002.7            2.3 %
Limited
partnerships/corporations               758.6            0.8 %          510.6            0.6 %
Derivatives                           1,712.4            1.8 %        1,538.5            1.7 %
Other investments                        47.4            0.1 %           91.6            0.1 %
Securities pledged                    2,157.1            2.3 %        1,112.6            1.3 %
Total investments                $   92,638.4          100.0 %   $   88,491.9          100.0 %

(1) Short-term investments include investments with remaining maturities of one year or less, but greater than 3 months, at the time of purchase.



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Fixed Maturities

Total fixed maturities by market sector, including securities pledged, were as presented below as of the dates indicated:

                                                         December 31, 2016
($ in millions)                    Amortized Cost      % of Total      Fair Value      % of Total
Fixed maturities:
U.S. Treasuries                  $        3,452.0            4.8 %   $    3,890.3            5.2 %
U.S. Government agencies and
authorities                                 253.9            0.3 %          298.0            0.4 %
State, municipalities and
political subdivisions                    2,153.9            3.0 %        2,135.6            2.8 %
U.S. corporate public securities         31,754.8           44.2 %       33,691.7           44.7 %
U.S. corporate private
securities                                7,724.9           10.8 %        7,808.0           10.4 %
Foreign corporate public
securities and foreign
governments(1)                            7,796.6           10.9 %        8,079.4           10.7 %
Foreign corporate private
securities(1)                             7,557.1           10.5 %        7,785.8           10.3 %
Residential mortgage-backed
securities                                6,407.0            8.9 %        6,814.8            9.0 %
Commercial mortgage-backed
securities                                3,320.7            4.6 %        3,358.9            4.5 %
Other asset-backed securities             1,433.9            2.0 %        1,475.6            2.0 %
Total fixed maturities,
including securities pledged     $       71,854.8          100.0 %   $   75,338.1          100.0 %

(1) Primarily U.S. dollar denominated.

                                                         December 31, 2015
($ in millions)                    Amortized Cost      % of Total      Fair Value      % of Total
Fixed maturities:
U.S. Treasuries                  $        3,136.4            4.5 %   $    3,649.0            5.1 %
U.S. Government agencies and
authorities                                 309.8            0.4 %          352.6            0.5 %
State, municipalities and
political subdivisions                    1,337.8            1.9 %        1,346.2            1.9 %
U.S. corporate public securities         32,794.3           47.0 %       33,616.0           46.6 %
U.S. corporate private
securities                                6,527.5            9.3 %        6,641.1            9.2 %
Foreign corporate public
securities and foreign
governments(1)                            8,129.1           11.6 %        8,023.6           11.1 %
Foreign corporate private
securities(1)                             7,252.5           10.4 %        7,348.6           10.2 %
Residential mortgage-backed
securities                                5,302.0            7.6 %        5,860.5            8.1 %
Commercial mortgage-backed
securities                                3,967.8            5.7 %        4,092.6            5.7 %
Other asset-backed securities             1,097.8            1.6 %        1,142.4            1.6 %
Total fixed maturities,
including securities pledged     $       69,855.0          100.0 %   $   72,072.6          100.0 %

(1) Primarily U.S. dollar denominated.

As of December 31, 2016, the average duration of our fixed maturities portfolio, including securities pledged, is between 7.5 and 8.0 years.

Fixed Maturities Credit Quality - Ratings


The Securities Valuation Office ("SVO") of the NAIC evaluates the fixed maturity
security investments of insurers for regulatory reporting and capital assessment
purposes and assigns securities to one of six credit quality categories called
"NAIC designations." An internally developed rating is used as permitted by the
NAIC if no rating is available. These designations are generally similar to the
credit quality designations of the NAIC acceptable rating organizations ("ARO")
for marketable fixed maturity securities, called rating agency designations
except for certain structured securities as described below. NAIC designations
of "1," highest quality and "2," high quality, include fixed maturity securities
generally considered investment grade by such rating organizations. NAIC
designations 3 through 6 include fixed maturity securities generally considered
below investment grade by such rating organizations.

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The NAIC designations for structured securities, including subprime and Alt-A
RMBS, are based upon a comparison of the bond's amortized cost to the NAIC's
loss expectation for each security. Securities where modeling results in no
expected loss in each scenario are considered to have the highest designation of
NAIC 1. A large percentage of our RMBS securities carry the NAIC 1 designation
while the ARO rating indicates below investment grade. This is primarily due to
the credit and intent impairments recorded by us that reduced the amortized cost
on these securities to a level resulting in no expected loss in any scenario,
which corresponds to the NAIC 1 designation. The methodology reduces regulatory
reliance on rating agencies and allows for greater regulatory input into the
assumptions used to estimate expected losses from such structured securities. In
the tables below, we present the rating of structured securities based on
ratings from the NAIC methodologies described above (which may not correspond to
rating agency designations). NAIC designations (e.g., NAIC 1-6) are based on the
NAIC methodologies.

As a result of time lags between the funding of investments, the finalization of
legal documents and the completion of the SVO filing process, the fixed maturity
portfolio generally includes securities, that have not yet been rated by the SVO
as of each balance sheet date, such as private placements. Pending receipt of
SVO ratings, the categorization of these securities by NAIC designation is based
on the expected ratings indicated by internal analysis.

Information about certain of our fixed maturity securities holdings by the NAIC
designation is set forth in the following tables. Corresponding rating agency
designation does not directly translate into NAIC designation, but represents
our best estimate of comparable ratings from rating agencies, including Moody's,
S&P and Fitch. If no rating is available from a rating agency, then an
internally developed rating is used. As of December 31, 2016 and 2015, the
weighted average NAIC quality rating of our fixed maturities portfolio was 1.5.

The fixed maturities in our portfolio are generally rated by external rating
agencies and, if not externally rated, are rated by us on a basis similar to
that used by the rating agencies. As of December 31, 2016 and 2015, the weighted
average quality rating of our fixed maturities portfolio was A. Ratings are
derived from three ARO ratings and are applied as follows, based on the number
of agency ratings received:

• when three ratings are received then the middle rating is applied; • when two ratings are received then the lower rating is applied; • when a single rating is received, the ARO rating is applied; and • when ratings are unavailable then an internal rating is applied.

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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)                                              December 31, 2016
NAIC Quality
Designation             1              2              3            4            5            6         Total Fair Value
U.S. Treasuries    $  3,890.3     $        -     $       -     $      -     $      -     $      -     $        3,890.3
U.S. Government
agencies and
authorities             298.0              -             -            -            -            -                298.0
State,
municipalities and
political
subdivisions          2,001.0          132.3           1.0            -          0.1          1.2              2,135.6
U.S. corporate
public securities    18,009.5       14,171.3       1,201.5        250.2         42.3         16.9             33,691.7
U.S. corporate
private securities    3,778.3        3,659.5         244.6        115.9          4.7          5.0              7,808.0
Foreign corporate
public securities
and foreign
governments(1)        3,936.3        3,412.6         602.0        107.3         20.7          0.5              8,079.4
Foreign corporate
private
securities(1)         1,191.2        5,967.1         593.7         15.8          4.8         13.2              7,785.8

Residential

mortgage-backed

securities            6,616.0           18.4          31.8          8.4         28.9        111.3              6,814.8
Commercial
mortgage-backed
securities            3,357.7              -             -          1.2            -            -              3,358.9
Other asset-backed
securities            1,309.4          108.0          24.5          2.7            -         31.0              1,475.6
Total fixed
maturities         $ 44,387.7     $ 27,469.2     $ 2,699.1     $  501.5     $  101.5     $  179.1     $       75,338.1
% of Fair Value          58.9 %         36.5 %         3.6 %        0.7 %        0.1 %        0.2 %              100.0 %


(1) Primarily U.S. dollar denominated.

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($ in millions)                                              December 31, 2015
NAIC Quality
Designation             1              2              3            4            5            6         Total Fair Value
U.S. Treasuries    $  3,649.0     $        -     $       -     $      -     $      -     $      -     $        3,649.0
U.S. Government
agencies and
authorities             352.6              -             -            -            -            -                352.6
State,
municipalities and
political
subdivisions          1,294.2           49.8           1.0            -          0.1          1.1              1,346.2
U.S. corporate
public securities    17,129.2       14,823.5       1,382.8        260.1            -         20.4             33,616.0
U.S. corporate
private securities    3,179.0        3,148.7         247.8         60.8          4.8            -              6,641.1
Foreign corporate
public securities
and foreign
governments(1)        4,018.2        3,355.2         620.3         25.5    
     2.6          1.8              8,023.6
Foreign corporate
private
securities(1)           904.6        6,116.8         290.5         35.0            -          1.7              7,348.6
Residential
mortgage-backed
securities            5,626.5           31.1           9.2         17.2         35.3        141.2              5,860.5
Commercial
mortgage-backed
securities            4,084.0            4.0           1.3          3.3            -            -              4,092.6
Other asset-backed
securities            1,078.1           24.8          18.8         19.1          1.2          0.4              1,142.4
Total fixed
maturities         $ 41,315.4     $ 27,553.9     $ 2,571.7     $  421.0     $   44.0     $  166.6     $       72,072.6
% of Fair Value          57.3 %         38.2 %         3.6 %        0.6 %        0.1 %        0.2 %              100.0 %


(1) Primarily U.S. dollar denominated.

The following tables present credit quality of fixed maturities, including securities pledged, using ARO ratings as of the dates indicated: ($ in millions)

                                                   December 31, 2016
ARO Quality Ratings            AAA            AA             A             BBB         BB and Below      Total Fair Value
U.S. Treasuries            $  3,890.3     $       -     $        -     $        -     $           -     $        3,890.3
U.S. Government agencies
and authorities                 289.8           8.2              -              -                 -                298.0

State, municipalities and political subdivisions 230.6 1,238.9 531.5 132.3

               2.3              2,135.6
U.S. corporate public
securities                      472.6       2,579.1       14,952.8       14,130.1           1,557.1             33,691.7
U.S. corporate private
securities                      288.8         410.3        2,815.5        3,852.9             440.5              7,808.0
Foreign corporate public
securities and foreign
governments(1)                  115.6         919.2        2,911.5        3,402.6             730.5              8,079.4
Foreign corporate private
securities(1)                       -             -        1,347.9        6,142.2             295.7              7,785.8

Residential

mortgage-backed securities    5,558.5           5.3           13.3           58.8           1,178.9              6,814.8
Commercial mortgage-backed
securities                    2,647.1         110.6          270.6           64.8             265.8              3,358.9
Other asset-backed
securities                      901.5          87.8           59.3          142.8             284.2              1,475.6
Total fixed maturities     $ 14,394.8     $ 5,359.4     $ 22,902.4     $ 27,926.5     $     4,755.0     $       75,338.1
% of Fair Value                  19.1 %         7.1 %         30.4 %         37.1 %             6.3 %              100.0 %

(1) Primarily U.S. dollar denominated.

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($ in millions)                                                   December 31, 2015
ARO Quality Ratings            AAA            AA             A             BBB         BB and Below      Total Fair Value
U.S. Treasuries            $  3,649.0     $       -     $        -     $        -     $           -     $        3,649.0
U.S. Government agencies
and authorities                 349.4           3.2              -              -                 -                352.6
State, municipalities and
political subdivisions          163.3         832.7          298.2           49.8               2.2              1,346.2
U.S. corporate public
securities                      585.1       1,984.1       14,507.2       14,839.6           1,700.0             33,616.0
U.S. corporate private
securities                      297.7         226.3        2,479.1        3,397.4             240.6              6,641.1
Foreign corporate public
securities and foreign
governments(1)                  121.5       1,201.0        2,709.1        3,341.8             650.2              8,023.6
Foreign corporate private
securities(1)                       -          21.8        1,144.0        5,895.8             287.0              7,348.6

Residential

mortgage-backed securities    4,902.7          20.7           16.0           61.8             859.3              5,860.5
Commercial mortgage-backed
securities                    2,516.0         423.7          331.8          339.0             482.1              4,092.6
Other asset-backed
securities                      616.5           9.2           28.9           88.4             399.4              1,142.4
Total fixed maturities     $ 13,201.2     $ 4,722.7     $ 21,514.3     $ 28,013.6     $     4,620.8     $       72,072.6
% of Fair Value                  18.3 %         6.6 %         29.9 %         38.8 %             6.4 %              100.0 %

(1) Primarily U.S. dollar denominated.


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

Unrealized Capital Losses


Gross unrealized capital losses on fixed maturities, including securities
pledged, decreased $838.5 million from $1,578.1 million to $739.6 million for
the year ended December 31, 2016. The decrease in gross unrealized capital
losses was primarily due to narrowing credit spreads. Gross unrealized losses on
fixed maturities, including securities pledged, increased $1,254.5 million from
$323.6 million to $1,578.1 million for the year ended December 31, 2015. The
increase in gross unrealized capital losses was primarily due to rising interest
rates and widening credit spreads.

As of December 31, 2016, we held four fixed maturities with unrealized capital
losses in excess of $10.0 million. The unrealized capital losses on these fixed
maturities equaled $54.3 million, or 7.3% of the total unrealized losses. As of
December 31, 2015, we held nineteen fixed maturities with unrealized capital
losses in excess of $10.0 million. The unrealized capital losses on these fixed
maturities equaled $239.0 million, or 15.1% of the total unrealized losses.

As of December 31, 2016 we held $6.5 billion of energy sector fixed maturity
securities, constituting 8.7% of the total fixed maturities portfolio, with
gross unrealized capital losses of $93.5 million, including one energy sector
fixed maturity securities with unrealized capital losses in excess of $10.0
million. The unrealized capital losses on these fixed maturity securities
equaled $19.9 million. As of December 31, 2016, our fixed maturity exposure to
the energy sector is comprised of 86.8% investment grade securities.

As of December 31, 2015, we held $7.3 billion of energy sector fixed maturity
securities, constituting 10.1% of the total fixed maturities portfolio, with
gross unrealized capital losses of $668.1 million including thirteen energy
sector fixed maturity securities with unrealized capital losses in excess of
$10.0 million each. The unrealized capital losses on these fixed maturity
securities equaled $163.7 million. As of December 31, 2015, our fixed maturity
exposure to the energy sector is comprised of 92.0% investment grade securities.









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The following table presents the U.S. and foreign corporate securities within
our energy holdings by sector as of the dates indicated:
($ in
millions)                       December 31, 2016                                     December 31, 2015
Sector Type      Amortized Cost       Fair Value     % Fair Value      Amortized Cost       Fair Value     % Fair Value
Midstream      $        2,241.4     $    2,390.4           36.6 %    $        2,675.9     $    2,511.6           34.3 %
Integrated
Energy                  1,638.5          1,697.5           26.0 %             1,735.5          1,687.5           23.0 %
Independent
Energy                  1,296.6          1,349.7           20.6 %             1,749.0          1,586.6           21.6 %
Oil Field
Services                  683.6            676.9           10.3 %             1,301.6          1,144.4           15.6 %
Refining                  390.1            422.9            6.5 %               409.5            401.2            5.5 %
Total          $        6,250.2     $    6,537.4          100.0 %    $        7,871.5     $    7,331.3          100.0 %



See Management's Discussion and Analysis of Financial Condition and Results of
Operations - Investments (excluding Consolidated Investment Entities -
Other-Than-Temporary Impairments section in Part II, Item 7. of this Annual
Report on Form 10-K for further information on energy sector investments. See
the Investments (excluding Consolidated Investment Entities) Note in our
Consolidated Financial Statements in Part II, Item 8. of this Annual Report on
Form 10-K for further information on unrealized capital losses.

CMO-B Portfolio


As part of our broadly diversified investment portfolio, we have a core holding
in a proprietary mortgage derivatives strategy known as CMO-B, which invests in
a variety of CMO securities in combination with interest rate derivatives in
targeting a specific type of exposure to the U.S. residential mortgage market.
Because of their relative complexity and generally small natural buyer base, we
believe certain types of CMO securities are consistently priced below their
intrinsic value, thereby providing a source of potential return for investors in
this strategy.

The CMO securities that are part of our CMO-B portfolio are either notional or
principal securities, backed by the interest and principal components,
respectively, of mortgages secured by single-family residential real estate.
There are many variations of these two types of securities including interest
only and principal only securities, as well as inverse-floating rate (principal)
securities and inverse interest only securities, all of which are part of our
CMO-B portfolio. This strategy has been in place for nearly two decades and thus
far has been a significant source of investment income while exhibiting
relatively low volatility and correlation compared to the other asset types in
the investment portfolio, although we cannot predict whether favorable returns
will continue in future periods.

To protect against the potential for credit loss associated with financially
troubled borrowers, investments in our CMO-B portfolio are primarily in CMO
securities backed by one of the government sponsored entities: the Federal
National Mortgage Association ("Fannie Mae"), the Federal Home Loan Mortgage
Corporation ("Freddie Mac") or Government National Mortgage Association ("Ginnie
Mae").

Because the timing of the receipt of the underlying cash flow is highly
dependent on the level and direction of interest rates, our CMO-B portfolio also
has exposure to both interest rate and convexity risk. The exposure to interest
rate risk-the potential for changes in value that results from changes in the
general level of interest rates-is managed to a defined target duration using
interest rate swaps and interest rate futures. The exposure to convexity
risk-the potential for changes in value that result from changes in duration
caused by changes in interest rates-is dynamically hedged using interest rate
swaps and at times, interest rate swaptions.

Prepayment risk represents the potential for adverse changes in portfolio value
resulting from changes in residential mortgage prepayment speed (actual and
projected), which in turn depends on a number of factors, including conditions
in both credit markets and housing markets. Changes in the prepayment behavior
of homeowners represent both a risk and potential source of return for our CMO-B
portfolio. As a result, we seek to invest in securities that are broadly
diversified by collateral type to take advantage of the uncorrelated prepayment
experiences of homeowners with unique characteristics that influence their
ability or desire to prepay their mortgage. We choose collateral types and
individual securities based on an in-depth quantitative analysis of prepayment
incentives across available borrower types.


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 The following table shows fixed maturities balances held in the CMO-B portfolio
by NAIC quality rating as of the dates indicated:
($ in
millions)                       December 31, 2016                                     December 31, 2015
NAIC Quality
Designation      Amortized Cost       Fair Value     % Fair Value      Amortized Cost       Fair Value     % Fair Value
     1         $        3,459.5     $    3,819.8           96.1 %    $        2,930.4     $    3,365.3           94.6 %
     2                      6.3              6.3            0.2 %                 0.9              1.0              - %
     3                      6.4              9.5            0.2 %                 0.7              4.4            0.1 %
     4                      0.6              0.8              - %                 6.4              8.9            0.3 %
     5                     19.3             29.0            0.7 %                24.7             34.9            1.0 %
     6                     67.7            111.3            2.8 %                85.3            141.2            4.0 %
   Total       $        3,559.8     $    3,976.7          100.0 %    $        3,048.4     $    3,555.7          100.0 %


For CMO securities where we elected the FVO, amortized cost represents the market values. For details on the NAIC designation methodology, please see "Fixed Maturities Credit Quality-Ratings" above.

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:

                                   December 31, 2016                            December 31, 2015
                                         Asset        Liability                       Asset        Liability
                         Notional        Fair           Fair          Notional        Fair           Fair
($ in millions)          Amount         Value          Value          Amount          Value         Value
           Derivatives
    non-qualifying for
     hedge accounting:
Interest Rate
Contracts              $ 27,088.0     $   258.7     $     139.4     $ 28,784.5     $   352.5     $     224.6



Starting in the second quarter of 2015, the Company implemented interest rate
futures contracts as a part of the CMO-B portfolio to hedge interest rate
risk. Historically only interest rate swaps were utilized for this purpose in
the CMO-B portfolio. Because of duration differences between interest rate swaps
and interest rate futures, a higher level of notional is necessary when
utilizing interest rate futures to achieve the same relative hedge
position. This change in the hedge program notional amount resulted in no
material change to the risk profile of the CMO-B Portfolio.

The following table presents our CMO-B fixed maturity securities balances and
tranche type as of the dates indicated:
($ in millions)                      December 31, 2016                                     December 31, 2015
Tranche Type          Amortized Cost       Fair Value     % Fair Value      Amortized Cost       Fair Value     % Fair Value
Inverse Floater     $          713.4     $      924.2           23.2 %    $          833.8     $    1,116.5           31.4 %
Interest Only
(IO)                           283.0            297.8            7.5 %               264.6            283.4            8.0 %
Inverse IO                   1,645.4          1,794.4           45.1 %             1,471.3          1,664.3           46.8 %
Principal Only
(PO)                           438.4            444.8           11.2 %               446.8            458.2           12.9 %
Floater                         23.2             22.5            0.6 %                28.1             28.4            0.8 %
Agency Credit
Risk Transfer                  453.8            488.9           12.3 %                   -                -              - %
Other                            2.6              4.1            0.1 %                 3.8              4.9            0.1 %
Total               $        3,559.8     $    3,976.7          100.0 %    $        3,048.4     $    3,555.7          100.0 %



Generally, a continued increase in valuations, as well as muted prepayments
despite low interest rates, led to a very strong performance for our CMO-B
portfolio in recent years. Based on fundamental prepayment analysis, we have
been able to increase the allocation to notional securities in a manner that was
diversified by borrower and mortgage characteristics without unduly increasing
portfolio risk because the underlying drivers of prepayment behavior across
collateral type are varied.


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For the year ended December 31, 2016, the market value of our CMO-B portfolio
increased mainly due to new purchase activity exceeding paydowns and
maturities.  Yields within the CMO-B portfolio continue to decline as higher
yielding historical CMO-B assets paydown or mature and are replaced with lower
yielding new assets.

The following table presents returns for our CMO-B portfolio for the periods
indicated:
                                            Year Ended December 31,
($ in millions)                          2016        2015        2014
Net investment income (loss)           $ 767.2     $ 737.9     $ 757.1

Net realized capital gains (losses)(1) (478.0 ) (474.7 ) (280.1 ) Total income (pre-tax)

                 $ 289.2     $ 263.2     $ 477.0


(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 operating earnings before income taxes and non-operating earnings
for our CMO-B portfolio, certain recharacterizations are recognized. As
indicated in footnote (1) above, derivatives activity, including net coupon
settlement on interest rate swaps, is included in Net realized capital gains
(losses). Since these swaps are hedging securities for which coupon payments are
reflected in Net investment income (loss) (operating earnings), it is
appropriate to represent the net swap coupons as operating income before income
taxes rather than non-operating income. Also included in Net realized capital
gains (losses) are the premium amortization and the change in fair value for
securities designated under the FVO, whereas the coupon for these securities is
included in Net investment income (loss). 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) (or non-operating income) to operating income.

After adjusting for the two items referenced immediately above, the following
table presents operating earnings before income taxes and non-operating income
for our CMO-B portfolio for the periods indicated:
                                            Year Ended December 31,
($ in millions)                           2016        2015        2014

Operating earnings before income taxes $ 340.4 $ 284.6 $ 283.6 Realized gains/losses including OTTI 4.5 5.0 5.4 Fair value adjustments

                    (55.7 )     (26.4 )     188.0
Non-operating income                   $  (51.2 )   $ (21.4 )   $ 193.4

Income (loss) before income taxes $ 289.2 $ 263.2 $ 477.0

Subprime and Alt-A Mortgage Exposure


Pre-2008 vintage subprime and Alt-A mortgage collateral continues to distance
itself from the credit crisis and payment performance reflects a housing market
firmly entrenched in recovery. While collateral losses continue to be realized,
the pace and magnitude at which losses are being realized are steadily
decreasing. Serious delinquencies and other measures of performance, like
prepayments and loan defaults, have also displayed sustained periods of
improvement. Reflecting these fundamental improvements, related bond prices and
sector liquidity have increased substantially since the credit crisis. More
broadly, home prices have moved steadily higher, further supporting bond payment
performance. Year-over-year home price measures, while at a lower magnitude than
experienced in the years following the trough in home prices, appear to have
stabilized at sustainable levels, when measured on a nationwide basis. This
backdrop remains supportive of continued improvement in overall borrower payment
behavior. Reflecting these fundamental improvements, related bond prices and
sector liquidity have increased substantially since the credit crisis. In
managing our risk exposure to subprime and Alt-A mortgages, we take into account
collateral performance and structural characteristics associated with our
various positions.

We do not originate or purchase subprime or Alt-A whole-loan mortgages. Subprime
lending is the origination of loans to customers with weaker credit profiles. We
define Alt-A mortgages to include the following: residential mortgage loans to
customers who have strong credit profiles but lack some element(s), such as
documentation to substantiate income; residential mortgage loans to borrowers
that would otherwise be classified as prime but for which loan structure
provides repayment options to the borrower that increase the risk of default;
and any securities backed by residential mortgage collateral not clearly
identifiable as prime or subprime.


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We have exposure to RMBS, CMBS and ABS. Our exposure to subprime mortgage-backed
securities is primarily in the form of ABS structures collateralized by subprime
residential mortgages, and the majority of these holdings were included in Other
ABS under "Fixed Maturities" above. As of December 31, 2016, the fair value,
amortized cost and gross unrealized losses related to our exposure to subprime
mortgage-backed securities totaled $288.0 million, $257.9 million and $6.1
million, respectively, representing 0.4% of total fixed maturities, including
securities pledged, based on fair value. As of December 31, 2015, the fair
value, amortized cost and gross unrealized losses related to our exposure to
subprime mortgage-backed securities totaled $461.2 million, $428.6 million and
$13.2 million, respectively, representing 0.6% of total fixed maturities,
including securities pledged, based on fair value.

The following table presents our exposure to subprime mortgage-backed securities
by credit quality using NAIC designations, ARO ratings and vintage year as of
the dates indicated:
                                   % of Total Subprime Mortgage-backed Securities
                   NAIC Quality Designation     ARO Quality Ratings               Vintage
December 31, 2016
                   1              92.6 %      AAA                0.3 %   2007               34.1 %
                   2               1.8 %      AA                 0.7 %   2006               21.9 %
                   3               5.3 %      A                  8.7 %   2005 and prior     44.0 %
                   4               0.3 %      BBB                1.2 %                     100.0 %
                   5                 - %      BB and below      89.1 %
                   6                 - %                       100.0 %
                                 100.0 %
December 31, 2015
                   1              91.4 %      AAA                  - %   2007               30.0 %
                   2               4.2 %      AA                 1.4 %   2006               26.4 %
                   3               2.5 %      A                  3.6 %   2005 and prior     43.6 %
                   4               1.5 %      BBB                8.0 %                     100.0 %
                   5               0.3 %      BB and below      87.0 %
                   6               0.1 %                       100.0 %
                                 100.0 %



Our exposure to Alt-A mortgages is included in the "RMBS" line item in the
"Fixed Maturities" table under "Fixed Maturities" above. As of December 31,
2016, the fair value, amortized cost and gross unrealized losses related to our
exposure to Alt-A RMBS totaled $306.2 million, $268.4 million and $3.8 million,
respectively, representing 0.4% of total fixed maturities, including securities
pledged, based on fair value. As of December 31, 2015, the fair value, amortized
cost and gross unrealized losses related to our exposure to Alt-A RMBS totaled
$332.0 million, $283.3 million and $4.5 million, respectively, representing 0.5%
of total fixed maturities, including securities pledged, based on fair value.


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The following table presents our exposure to Alt-A RMBS by credit quality using NAIC designations, ARO ratings and vintage year as of the dates indicated:

                                     % of Total Alt-A Mortgage-backed 

Securities

                   NAIC Quality Designation     ARO Quality Ratings               Vintage
December 31, 2016
                   1              96.4 %      AAA                  - %   2007               31.4 %
                   2               0.9 %      AA                 0.1 %   2006               35.9 %
                   3               1.8 %      A                  0.7 %   2005 and prior     32.7 %
                   4               0.3 %      BBB                2.0 %                     100.0 %
                   5                 - %      BB and below      97.2 %
                   6               0.6 %                       100.0 %
                                 100.0 %
December 31, 2015
                   1              96.1 %      AAA                  - %   2007               23.2 %
                   2               2.0 %      AA                 0.1 %   2006               34.0 %
                   3               1.0 %      A                  0.8 %   2005 and prior     42.8 %
                   4               0.1 %      BBB                2.7 %                     100.0 %
                   5               0.1 %      BB and below      96.4 %
                   6               0.7 %                       100.0 %
                                 100.0 %


Commercial Mortgage-backed and Other Asset-backed Securities


CMBS investments represent pools of commercial mortgages that are broadly
diversified across property types and geographical areas. Delinquency rates on
commercial mortgages increased over the course of 2009 through mid-2012. Since
then, the steep pace of increases observed in the early years following the
credit crisis has ceased, and the percentage of delinquent loans declined
through February 2016 (although certain months did post marginal increases).
Since then, the delinquency rate has increased slowly. Other performance metrics
like vacancies, property values and rent levels have posted sustained
improvement trends, although these metrics are not observed uniformly, differing
by dimensions such as geographic location and property type. These improvements
have been buoyed by some of the same macro-economic tailwinds alluded to in
regards to our subprime and Alt-A mortgage exposure. A robust environment for
property refinancing was particularly supportive of improving credit performance
metrics throughout much of the post-credit crisis period. In the first quarter
of 2016, however, this virtuous lending cycle was disrupted as the dislocation
in corporate credit markets negatively impacted liquidity conditions in CMBS. As
a result, the new issuance market for CMBS slowed considerably during the first
half of this year. This dynamic, should it resurface, is a risk for the overall
performance health of the sectors and is being monitored closely for potential
negative impacts. Spread performance in the first half of 2016 was volatile,
although signs of increased liquidity and more general stability in credit
spreads was observed over the course of the third quarter and into year end.

For non-student loan consumer ABS, delinquency and loss rates have been
maintained at levels considered low by historical standards and indicative of
high credit quality. Relative strength in various credit metrics across multiple
types of asset-backed loans have been observed on a sustained basis.

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The following table presents our exposure to CMBS holdings by credit quality using NAIC designations, ARO ratings and vintage year as of the dates indicated:

                                                  % of Total CMBS
                  NAIC Quality Designation     ARO Quality Ratings               Vintage
December 31, 2016
                  1             100.0%       AAA              78.8%     2016               11.0%
                  2                  -       AA                3.3%     2015               25.0%
                  3                  -       A                 8.1%     2014               19.7%
                  4                  -       BBB               1.9%     2013               17.6%
                  5                  -       BB and below      7.9%     2012                0.8%
                  6                  - %                     100.0%     2011                1.6%
                                100.0%                                  2010 and prior     24.3%
                                                                                          100.0%

December 31, 2015
                  1               99.8 %     AAA               61.4 %   2015                18.3 %
                  2                0.1 %     AA                10.4 %   2014                18.1 %
                  3                  -       A                  8.1 %   2013                13.6 %
                  4                0.1 %     BBB                8.3 %   2012                 0.5 %
                  5                  - %     BB and below      11.8 %   2011                1.1%
                  6                  - %                      100.0 %   2010                 0.4 %
                                 100.0 %                                2009 and prior      48.0 %
                                                                                           100.0 %



As of December 31, 2016, the fair value, amortized cost and gross unrealized
losses of our Other ABS, excluding subprime exposure, totaled $1,206.1 million,
$1,195.6 million and $2.6 million, respectively. As of December 31, 2015, the
fair value, amortized cost and gross unrealized losses of our Other ABS,
excluding subprime exposure, totaled $702.8 million, $691.4 million and $2.1
million, respectively.

As of December 31, 2016, Other ABS was broadly diversified both by type and
issuer with credit card receivables, nonconsolidated collateralized loan
obligations and automobile receivables, comprising 27.4%, 39.6% and 14.5%,
respectively, of total Other ABS, excluding subprime exposure. As of
December 31, 2015, Other ABS was broadly diversified both by type and issuer
with credit card receivables, nonconsolidated collateralized loan obligations
and automobile receivables, comprising 55.1%, 1.4% and 17.3%, respectively, of
total Other ABS, excluding subprime exposure.



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The following table presents our exposure to Other ABS holdings, excluding subprime exposure, by credit quality using NAIC designations, ARO ratings and vintage year as of the dates indicated:

                                                % of Total Other ABS
                  NAIC Quality Designation     ARO Quality Ratings               Vintage
December 31, 2016
                  1               87.0 %     AAA              74.7%     2016               51.4%
                  2                9.0 %     AA                7.1%     2015               10.2%
                  3                1.3 %     A                 2.9%     2014               11.0%
                  4                0.1 %     BBB              11.6%     2013                2.6%
                  5                  - %     BB and below      3.7%     2012                1.3%
                  6                2.6 %                     100.0%     2011                   -
                                100.0%                                  2010 and prior     23.5%
                                                                                          100.0%

December 31, 2015
                  1               95.5 %     AAA               87.7 %   2015                13.2 %
                  2                1.8 %     AA                 0.4 %   2014                20.3 %
                  3                1.0 %     A                  1.9 %   2013                 8.2 %
                  4                1.7 %     BBB                7.4 %   2012                 5.1 %
                  5                  - %     BB and below       2.6 %   2011                 0.0 %
                  6                  - %                      100.0 %   2010                 1.8 %
                                 100.0 %                                2009 and prior      51.4 %
                                                                                           100.0 %


Mortgage Loans on Real Estate


We rate commercial mortgages to quantify the level of risk. We place those loans
with higher risk on a watch list and closely monitor these loans for collateral
deficiency or other credit events that may lead to a potential loss of principal
and/or interest. If we determine the value of any mortgage loan to be OTTI
(i.e., when it is probable that we will be unable to collect on amounts due
according to the contractual terms of the loan agreement), the carrying value of
the mortgage loan is reduced to either the present value of expected cash flows
from the loan, discounted at the loan's effective interest rate, or fair value
of the collateral. For those mortgages that are determined to require
foreclosure, the carrying value is reduced to the fair value of the underlying
collateral, net of estimated costs to obtain and sell at the point of
foreclosure. The carrying value of the impaired loans is reduced by establishing
an other-than-temporary write-down recorded in Net realized capital gains
(losses) in the Consolidated Statements of Operations.

Loan-to-value ("LTV") and debt service coverage ("DSC") ratios are measures
commonly used to assess the risk and quality of commercial mortgage loans. The
LTV ratio, calculated at time of origination, is expressed as a percentage of
the amount of the loan relative to the value of the underlying property. An LTV
ratio in excess of 100% indicates the unpaid loan amount exceeds the value of
the underlying collateral. The DSC ratio, based upon the most recently received
financial statements, is expressed as a percentage of the amount of a property's
Net income (loss) to its debt service payments. A DSC ratio of less than 1.0
indicates that property's operations do not generate sufficient income to cover
debt payments. These ratios are utilized as part of the review process described
above.

As of December 31, 2016 and 2015, our mortgage loans on real estate portfolio
had a weighted average DSC of 2.2 times, and a weighted average LTV ratio of
60.6% and 60.0%, respectively. See the Investments (excluding Consolidated
Investment Entities) Note in our Consolidated Financial Statements in Part II,
Item 8. of this Annual Report on Form 10-K for further information on mortgage
loans on real estate.


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                                                                Recorded Investment
                                                            Debt Service Coverage Ratios
                                                                                    Commercial
                                                                                  mortgage loans
                                                                                  secured by land
                                                          >1.0x -          

or construction ($ in millions) > 1.5x >1.25x - 1.5x 1.25x < 1.0x loans

           Total       % of Total
December 31, 2016
Loan-to-Value Ratios:
0% - 50%              $ 1,264.9     $          71.1     $    22.6     $   7.6     $         0.1     $  1,366.3          11.6 %
>50% - 60%              2,469.6               241.2         164.3        49.9              25.1        2,950.1          25.2 %
>60% - 70%              5,178.3               658.4         606.4        98.8              18.8        6,560.7          56.0 %
>70% - 80%                385.6               276.6         104.1        11.1              56.4          833.8           7.1 %
>80% and above                -                   -           1.8        14.0               1.6           17.4           0.1 %
Total                 $ 9,298.4     $       1,247.3     $   899.2     $ 181.4     $       102.0     $ 11,728.3         100.0 %

                                                                Recorded Investment
                                                            Debt Service Coverage Ratios
                                                                                    Commercial
                                                                                  mortgage loans
                                                                                  secured by land
                                                          >1.0x -           

or construction ($ in millions) > 1.5x >1.25x - 1.5x 1.25x < 1.0x loans

           Total       % of Total
December 31, 2015
Loan-to-Value Ratios:
0% - 50%              $ 1,279.4     $          68.5     $    23.0     $  10.2     $         6.9     $  1,388.0          13.3 %
>50% - 60%              2,159.1               288.0         126.1        81.4              39.5        2,694.1          25.8 %
>60% - 70%              4,403.5               868.4         281.4        46.0              70.9        5,670.2          54.2 %
>70% - 80%                270.1               264.6         107.9        14.1              22.9          679.6           6.5 %
>80% and above                -                   -          11.9         6.9                 -           18.8           0.2 %
Total                 $ 8,112.1     $       1,489.5     $   550.3     $ 158.6     $       140.2     $ 10,450.7         100.0 %


Other-Than-Temporary Impairments


We evaluate available-for-sale fixed maturities and equity securities 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 this Annual Report on Form 10-K for the policy used to
evaluate whether the investments are other-than-temporarily impaired.

For the year ended December 31, 2016, we recorded $10.1 million of credit
related OTTI of which the primary contributor was $3.0 million of write-downs
recorded in the Foreign Private sector. For the year ended December 31, 2016, we
recorded $31.5 million of intent related OTTI, which were primarily related to
the intent to sell positions in energy sector public corporate credits either
because of a commitment to sell or an expectation that we may be required to
sell as a result of our investment guidelines. See the Investments (excluding
Consolidated Investment Entities) Note in our Consolidated Financial Statements
of Part II, Item 8. in this Annual Report on Form 10-K for further information
on OTTI.

Derivatives

We use derivatives for a variety of hedging purposes as further described below.
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 this Annual Report on Form 10-K for further information.


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Closed Block Variable Annuity Hedging

See Quantitative and Qualitative Disclosures About Market Risk in Part II, Item 7A. of this Annual Report on Form 10-K for further information.

Invested Asset and Credit Hedging


Interest rate caps and interest rate swaps are used to manage the interest rate
risk in our fixed maturities portfolio. Interest rate swaps include forward
starting swaps, which are used for anticipated purchases of fixed maturities.
They represent contracts that require the exchange of cash flows at regular
interim periods, typically monthly or quarterly.

Foreign exchange swaps are used to reduce the risk of a change in the value,
yield or cash flow with respect to invested assets. Foreign exchange swaps
represent contracts that require the exchange of foreign currency cash flows for
U.S. dollar cash flows at regular interim periods, typically quarterly or
semiannually.

Certain forwards are acquired to hedge certain CMO assets held by us against
movements in interest rates, particularly mortgage rates. On the settlement
date, we will either receive a payment (interest rate decreases on purchased
forwards or interest rate rises on sold forwards) or will be required to make a
payment (interest rate rises on purchased forwards or interest rate decreases on
sold forwards).


CDS are used to reduce the credit loss exposure with respect to certain assets
that we own, or to assume credit exposure on certain assets that we do not own.
Payments are made to or received from the counterparty at specified intervals
and amounts for the purchase or sale of credit protection. In the event of a
default on the underlying credit exposure, we will either receive an additional
payment (purchased credit protection) or will be required to make an additional
payment (sold credit protection) equal to par minus recovery value of the swap
contract.

European Exposures

We closely monitor our exposures to European sovereign debt in general, with a
primary focus on the sovereign debt of Greece, Ireland, Italy, Portugal and
Spain (which we refer to as "peripheral Europe"), as these countries have
applied for support from the European Financial Stability Facility or received
support from the European Central Bank via government bond purchases in the
secondary market.

The financial turmoil in Europe continues to be a potential threat to global
capital markets and remains a challenge to global financial stability.
Additionally, the possibility of capital market volatility spreading through a
highly integrated and interdependent banking system remains. Despite signs of
continuous improvement in the region, it is our view that the risk among
European sovereigns and financial institutions still warrants scrutiny, in
addition to our customary surveillance and risk monitoring, given how highly
correlated these sectors of the region have become.

The United States and European Union continue to maintain sanctions against select Russian businesses in response to the ongoing conflict in eastern Ukraine. We remain comfortable with our aggregate Russian exposure given its relatively small allocation in our total investment portfolio.


We quantify and allocate our exposure to the region, as described in the table
below, 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 all 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.


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The following table presents our European exposures, for selected countries based on risk, at fair value and amortized cost as of December 31, 2016:

                                  Selected Countries Fixed Maturities and Equity Securities
                                                  Financial            Non-Financial         Total (Fair      Total (Amortized
                               Sovereign         Institutions          Institutions            Value)              Cost)
Ireland                      $         -      $              -      $           218.3   (1)  $   218.3   (1)  $        203.2
Italy                                  -                     -                  233.1            233.1                 219.6
Portugal                               -                     -                   10.4             10.4                   8.7
Spain                                  -                     -                  162.3            162.3                 147.2
Total Peripheral Europe                -                     -                  624.1            624.1                 578.7
Russian Federation                  51.3                   5.1                   72.3            128.7                 116.0
Total                        $      51.3      $            5.1      $           696.4        $   752.8        $        694.7

(1) Includes $1.2 million derivative assets.


We do not have any exposure to Greece. Among the remaining $7,973.3 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 December 31, 2016, our sovereign exposure was $242.1
million, which consisted of fixed maturities. We also had $1,095.3 million in
net exposure to non-peripheral financial institutions, with a concentration in
Switzerland of $316.4 million and the United Kingdom of $388.5 million. The
balance of $6,635.9 million was invested across non-peripheral, non-financial
institutions.

In addition to aggregate concentration in the United Kingdom of $3,279.9
million, we had significant non-peripheral European total country exposures in
The Netherlands of $1,106.5 million, in Belgium of $464.4 million, in France of
$600.9 million, in Germany of $782.7 million and in Switzerland of $790.6
million. We place additional scrutiny on our financial exposure in the United
Kingdom, France, Switzerland and The Netherlands given our concern for the
potential for volatility to spread through the European banking system. 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 the recovery of economic conditions in Europe.

Consolidated Investment Entities


We provide investment management services to, and have transactions with,
various collateralized loan obligations ("CLO entities"), private equity funds,
single strategy hedge funds, registered investment companies, insurance
entities, securitizations and other investment entities in the normal course of
business. In certain instances, we serve as the investment manager, making
day-to-day investment decisions concerning the assets of these entities. These
entities are considered to be either variable interest entities ("VIEs") or
voting interest entities ("VOEs"), and we evaluate our involvement with each
entity to determine whether consolidation is required.

Certain investment entities are consolidated under consolidation guidance. We
consolidate certain entities under the VIE guidance when it is determined that
we are the primary beneficiary. We consolidate certain entities under the VOE
guidance when we act as the controlling general partner and the limited partners
have no substantive rights to impact ongoing governance and operating activities
of the entity, or when we otherwise have control through voting rights. In
February 2015, the FASB issued ASU 2015-02, "Consolidation (ASC Topic 810):
Amendments to the Consolidation Analysis" ("ASU 2015-02"), which significantly
amends the consolidation analysis required under current consolidation guidance.
The Company adopted the provisions of ASU 2015-02 on January 1, 2016 using the
modified retrospective approach.

We have no right to the benefits from, nor do we bear the risks associated with,
these investments beyond our direct equity and debt investments in and
management fees generated from these investment products. Such direct
investments amounted to approximately $587.4 million and $722.8 million as of
December 31, 2016 and 2015, respectively. If we were to liquidate, the assets
held by consolidated investment entities would not be available to our general
creditors as a result of the liquidation.

Fair Value Measurement


Upon consolidation of CLO entities, we elected to apply the FVO for financial
assets and financial liabilities held by these entities and have continued to
measure these assets (primarily corporate loans) and liabilities (debt
obligations issued by CLO entities) at fair value in subsequent periods. We have
elected the FVO to more closely align the accounting with the economics of the
transactions

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--------------------------------------------------------------------------------

and allow us to more effectively reflect changes in the fair value of CLO assets with a commensurate change in the fair value of CLO liabilities.


Investments held by consolidated private equity funds and single strategy hedge
funds are reported in our Consolidated Financial Statements. Changes in the fair
value of consolidated investment entities are recorded as a separate line item
within Income (loss) related to consolidated investment entities in our
Consolidated Financial Statements.

The methodology for measuring the fair value and fair value hierarchy
classification of financial assets and liabilities of consolidated investment
entities is consistent with the methodology and fair value hierarchy rules that
we apply to our investment portfolio. See the Fair Value Measurement section of
Business, Basis of Presentation and Significant Accounting Policies Note in our
Consolidated Financial Statements in Part II, Item 8. of this Annual Report on
Form 10-K.

Nonconsolidated VIEs

We also hold variable interest in certain CLO entities that we do not
consolidate because we have determined that we are not the primary beneficiary.
With these CLO entities, we serve as the investment manager and receive
investment management fees and contingent performance fees. Generally, we do not
hold any interest in the nonconsolidated CLO entities, but if we do, such
ownership has been deemed to be insignificant. We have not provided and are not
obligated to provide any financial or other support to these entities.

We manage or hold investments in certain private equity funds and hedge funds.
With these entities, we serve as the investment manager and are entitled to
receive investment management fees and contingent performance fees that are
generally expected to be insignificant. Although we have the power to direct the
activities that significantly impact the economic performance of the funds, we
do not hold a significant variable interest in any of these funds and, as such,
do not have the obligation to absorb losses or the right to receive benefits
from the entity that could potentially be significant to the entity.
Accordingly, we are not considered the primary beneficiary and did not
consolidate any of these investment funds.

In addition, we do not consolidate funds in which our involvement takes the form
of a limited partner interest and is restricted to a role of a passive investor,
as a limited partner's interest does not provide us with any substantive
kick-out or participating rights, which would overcome the presumption of
control by the general partner. See the Consolidated Investment Entities Note in
our Consolidated Financial Statements in Part II, Item 8. of this Annual Report
on Form 10-K for more information.

Securitizations


We invest in various tranches of securitization entities, including RMBS, CMBS
and ABS. Through our investments, we are not obligated to provide any financial
or other support to these entities. Each of the RMBS, CMBS and ABS entities are
thinly capitalized by design and considered VIEs. Our involvement with these
entities is limited to that of a passive investor. We have no unilateral right
to appoint or remove the servicer, special servicer or investment manager, which
are generally viewed to have the power to direct the activities that most
significantly impact the securitization entities' economic performance, in any
of these entities, nor do we function in any of these roles. We, through our
investments or other arrangements, do not have the obligation to absorb losses
or the right to receive benefits from the entity that could potentially be
significant to the entity. Therefore, we are not the primary beneficiary and
will not consolidate any of the RMBS, CMBS and ABS entities in which we hold
investments. These investments are accounted for as investments
available-for-sale as described in the Fair Value Measurements (excluding
Consolidated Investment Entities) Note in our Consolidated Financial Statements
in Part II, Item 8. of this Annual Report on Form 10-K and unrealized capital
gains (losses) on these securities are recorded directly in AOCI, except for
certain RMBS which are accounted for under the FVO whose change in fair value is
reflected in Other net realized gains (losses) in the Consolidated Statements of
Operations. Our maximum exposure to loss on these structured investments is
limited to the amount of our investment. Refer to the Investments (excluding
Consolidated Investment Entities) Note in our Consolidated Financial Statements
in Part II, Item 8. of this Annual Report on Form 10-K for details regarding the
carrying amounts and classifications of these assets.


169

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