ING U.S. 2013 Q3


 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
——————————————————————
FORM 10-Q
(Mark One)
 
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2013

OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from        _                   to  _                        

Commission File Number: _001-35897______________________________________

ING U.S., Inc.
(Exact name of registrant as specified in its charter)
Delaware
52-1222820
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
230 Park Avenue
 
New York, New York
10169
(Address of principal executive offices)
(Zip Code)
(212) 309-8200
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrant (1) has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes   x     No   o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer    o
Accelerated filer    o
Non-accelerated filer    x
Smaller reporting company     o
(Do not check if a smaller reporting company)
 

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

APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: At November 5, 2013 260,809,371 shares of Common Stock, $.01 par value, were outstanding.
 

 
 


ING U.S., Inc.
Form 10-Q for the period ended September 30, 2013


INDEX
 
 
PAGE
PART I.
FINANCIAL INFORMATION (UNAUDITED)
 
 
 
 
Item 1.
Financial Statements:
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
PART II.
OTHER INFORMATION
 
 
 
 
Item 1.
 
 
 
Item 5.
 
 
 
Item 6.
 
 
 
 
 
 
 
 


 
2
 


NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including "Management's Discussion and Analysis of Results of Operations and Financial Condition," contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements relating to future developments in our business or expectations for our future financial performance and any statement not involving a historical fact. Forward-looking statements use words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” and other words and terms of similar meaning in connection with a discussion of future operating or financial performance. Actual results, performance or events may differ materially from those projected in any forward-looking statement due to, among other things, (i) general economic conditions, particularly economic conditions in our core markets, (ii) performance of financial markets, including emerging markets, (iii) the frequency and severity of insured loss events, (iv) mortality and morbidity levels, (v) persistency and lapse levels, (vi) interest rates, (vii) currency exchange rates, (viii) general competitive factors, (ix) changes in laws and regulations and (x) changes in the policies of governments and/or regulatory authorities. Factors that may cause actual results to differ from those in any forward-looking statement also include those described under “Risk Factors,” “Management’s Discussion and Analysis of Results of Operations and Financial Condition-Trends and Uncertainties” and “Business-Closed Blocks-Closed Block Variable Annuity” in our Registration Statement on Form S-1 (file no. 191163), filed with the Securities and Exchange Commission on October 23, 2013 (the “Registration Statement”).

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



 
3
 


PART I.        FINANCIAL INFORMATION

Item 1.        Financial Statements

ING U.S., Inc.
Condensed Consolidated Balance Sheets
September 30, 2013 (Unaudited) and December 31, 2012
(In millions, except share and per share data)

 
September 30,
2013
 
December 31,
2012
Assets:
 
 
 
Investments:
 
 
 
Fixed maturities, available-for-sale, at fair value (amortized cost of $65,540.6 at 2013 and $62,955.4 at 2012)
$
69,171.4

 
$
70,910.3

Fixed maturities, at fair value using the fair value option
2,910.2

 
2,771.3

Equity securities, available-for-sale, at fair value (cost of $238.2 at 2013 and $297.9 at 2012)
279.6

 
340.1

Short-term investments
2,547.3

 
5,991.2

Mortgage loans on real estate, net of valuation allowance of $4.0 at 2013 and $3.9 at 2012
9,015.6

 
8,662.3

Policy loans
2,147.5

 
2,200.3

Limited partnerships/corporations
390.0

 
465.1

Derivatives
1,087.4

 
2,374.5

Other investments
145.7

 
167.0

Securities pledged (amortized cost of $1,280.4 at 2013 and $1,470.0 at 2012)
1,312.6

 
1,605.5

Total investments
89,007.3

 
95,487.6

Cash and cash equivalents
1,716.6

 
1,786.8

Short-term investments under securities loan agreements, including collateral delivered
482.4

 
664.0

Accrued investment income
913.2

 
863.5

Reinsurance recoverable
6,755.6

 
7,379.3

Deferred policy acquisition costs and Value of business acquired
5,265.0

 
3,656.3

Sales inducements to contract holders
278.9

 
212.7

Goodwill and other intangible assets
323.4

 
348.5

Other assets
1,137.7

 
1,362.5

Assets related to consolidated investment entities:
 
 
 
Limited partnerships/corporations, at fair value
2,912.3

 
2,931.2

Cash and cash equivalents
313.4

 
440.8

Corporate loans, at fair value using the fair value option
4,670.9

 
3,559.3

Other assets
27.9

 
34.3

Assets held in separate accounts
103,853.6

 
97,667.4

Total assets
$
217,658.2

 
$
216,394.2




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


4
 

ING U.S., Inc.
Condensed Consolidated Balance Sheets
September 30, 2013 (Unaudited) and December 31, 2012
(In millions, except share and per share data)

 
September 30,
2013
 
December 31,
2012
Liabilities and Shareholders' Equity:
 
 
 
Future policy benefits
$
14,477.5

 
$
15,493.6

Contract owner account balances
70,410.4

 
70,562.1

Payables under securities loan agreement, including collateral held
576.7

 
1,509.8

Short-term debt
—

 
1,064.6

Long-term debt
3,514.5

 
3,171.1

Funds held under reinsurance agreements
1,212.1

 
1,236.6

Derivatives
1,222.3

 
1,944.2

Pension and other post-employment provisions
876.1

 
903.2

Current income taxes
52.9

 
11.7

Deferred income taxes
59.7

 
1,042.7

Other liabilities
1,387.9

 
1,604.2

Liabilities related to consolidated investment entities:
 
 
 
Collateralized loan obligations notes, at fair value using the fair value option
4,627.1

 
3,829.4

Other liabilities
522.9

 
292.4

Liabilities related to separate accounts
103,853.6

 
97,667.4

Total liabilities
202,793.7

 
200,333.0

 
 
 
 
Shareholders' equity:
 
 
 
Common stock (900,000,000 shares authorized, 260,882,850 and 230,079,120 issued as of September 30, 2013 and December 31, 2012, respectively, and 260,803,730 and 230,000,000 outstanding as of September 30, 2013 and December 31, 2012, respectively, net of 79,120 of Treasury shares as of September 30, 2013 and December 31, 2012, respectively; $0.01 par value per share )
2.6

 
2.3

Additional paid-in capital
23,524.7

 
22,917.6

Accumulated other comprehensive income (loss)
1,950.0

 
3,710.7

Retained earnings (deficit):
 
 
 
Appropriated-consolidated investment entities
2.4

 
6.4

Unappropriated
(12,709.7
)
 
(12,762.1
)
Total ING U.S., Inc. shareholders' equity
12,770.0

 
13,874.9

Noncontrolling interest
2,094.5

 
2,186.3

Total shareholders' equity
14,864.5

 
16,061.2

Total liabilities and shareholders' equity
$
217,658.2

 
$
216,394.2



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


5
 

ING U.S., Inc.
Condensed Consolidated Statements of Operations
For the Three and Nine Months Ended September 30, 2013 and 2012 (Unaudited)
(In millions, except per share data)

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2013
 
2012
 
2013
 
2012
Revenues:
 
 
 
 
 
 
 
Net investment income
$
1,221.6

 
$
1,226.2

 
$
3,532.5

 
$
3,642.5

Fee income
920.8

 
872.9

 
2,722.4

 
2,624.8

Premiums
494.2

 
453.5

 
1,440.9

 
1,389.9

Net realized gains (losses):
 
 
 
 
 
 
 
Total other-than-temporary impairments
(5.6
)
 
(13.3
)
 
(26.9
)
 
(30.7
)
Less: Portion of other-than-temporary impairments recognized in Other comprehensive income (loss)
(1.2
)
 
(0.5
)
 
(4.3
)
 
(4.9
)
Net other-than-temporary impairments recognized in earnings
(4.4
)
 
(12.8
)
 
(22.6
)
 
(25.8
)
Other net realized capital gains (losses)
(512.7
)
 
(119.6
)
 
(1,935.2
)
 
(870.8
)
Total net realized capital gains (losses)
(517.1
)
 
(132.4
)
 
(1,957.8
)
 
(896.6
)
Other revenue
119.6

 
97.2

 
321.3

 
286.7

Income (loss) related to consolidated investment entities:
 
 
 
 
 
 
 
Net investment income (loss)
135.3

 
32.5

 
346.3

 
435.5

Changes in fair value related to collateralized loan obligations
60.9

 
14.4

 
(11.1
)
 
(71.3
)
Total revenues
2,435.3

 
2,564.3

 
6,394.5

 
7,411.5

Benefits and expenses:
 
 
 
 
 
 
 
Policyholder benefits
570.7

 
573.4

 
1,822.2

 
1,946.3

Interest credited to contract owner account balance
517.0

 
533.1

 
1,556.8

 
1,690.0

Operating expenses
762.8

 
858.9

 
2,292.1

 
2,330.9

Net amortization of deferred policy acquisition costs and value of business acquired
64.6

 
150.0

 
319.6

 
539.9

Interest expense
48.4

 
46.6

 
136.6

 
109.0

Operating expenses related to consolidated investment entities:
 
 
 
 
 
 
 
Interest expense
50.4

 
26.2

 
130.6

 
74.0

Other expense
1.4

 
2.2

 
6.1

 
7.3

Total benefits and expenses
2,015.3

 
2,190.4

 
6,264.0

 
6,697.4

Income (loss) before income taxes
420.0

 
373.9

 
130.5

 
714.1

Income tax expense (benefit)
(27.7
)
 
(12.9
)
 
(6.4
)
 
(4.0
)
Net income (loss)
447.7

 
386.8

 
136.9

 
718.1

Less: Net income (loss) attributable to noncontrolling interest
101.1

 
20.3

 
84.5

 
222.4

Net income (loss) available to ING U.S., Inc.'s common shareholders
$
346.6

 
$
366.5

 
$
52.4

 
$
495.7

Net income (loss) available to ING U.S., Inc.'s common shareholders per common share:
 
 
 
 
 
 
 
Basic
$
1.33

 
$
1.59

 
$
0.21

 
$
2.16

Diluted
$
1.32

 
$
1.59

 
$
0.21

 
$
2.16

Cash dividends declared per share of common stock
$
0.01

 
$
—

 
$
0.01

 
$
—



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


6
 

ING U.S., Inc.
Condensed Consolidated Statements of Comprehensive Income
For the Three and Nine Months Ended September 30, 2013 and 2012 (Unaudited)
(In millions)

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2013
 
2012
 
2013
 
2012
Net income (loss)
$
447.7

 
$
386.8

 
$
136.9

 
$
718.1

Other comprehensive income (loss), before tax:
 
 
 
 
 
 
 
Unrealized gains (losses) on securities
(223.2
)
 
1,069.3

 
(2,733.4
)
 
1,643.4

Other-than-temporary impairments
13.5

 
26.3

 
44.8

 
50.2

Pension and other postretirement benefits liability
(3.4
)
 
(3.5
)
 
(10.3
)
 
(11.0
)
Other comprehensive income (loss), before tax
(213.1
)
 
1,092.1

 
(2,698.9
)
 
1,682.6

Income tax expense (benefit) related to items of other comprehensive income (loss)
(75.3
)
 
412.1

 
(938.2
)
 
576.1

Other comprehensive income (loss), after tax
(137.8
)
 
680.0

 
(1,760.7
)
 
1,106.5

Comprehensive income (loss)
309.9

 
1,066.8

 
(1,623.8
)
 
1,824.6

Less: Comprehensive income (loss) attributable to the noncontrolling interest
101.1

 
20.3

 
84.5

 
222.4

Comprehensive income (loss) attributable to ING U.S., Inc.'s common shareholders
$
208.8

 
$
1,046.5

 
$
(1,708.3
)
 
$
1,602.2



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


7
 

ING U.S., Inc.
 Condensed Consolidated Statements of Changes in Shareholders' Equity
For the Nine Months Ended September 30, 2013 and 2012 (Unaudited)
(In millions)
 
Common
Stock
 
Additional
Paid-In
Capital
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Retained Earnings (Deficit)
 
Total
ING U.S., Inc.
Shareholders'
Equity
 
Noncontrolling
Interest
 
Total
Shareholders'
Equity
 
 
 
 
Appropriated
 
Unappropriated
 
 
 
Balance at January 1, 2013
$
2.3

 
$
22,917.6

 
$
3,710.7

 
$
6.4

 
$
(12,762.1
)
 
$
13,874.9

 
$
2,186.3

 
$
16,061.2

Comprehensive income (loss):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
—

 
—

 
—

 
—

 
52.4

 
52.4

 
84.5

 
136.9

Other comprehensive income (loss), after tax
—

 
—

 
(1,760.7
)
 
—

 
—

 
(1,760.7
)
 
—

 
(1,760.7
)
Total comprehensive income (loss)
 
 


 


 


 


 
(1,708.3
)
 
84.5

 
(1,623.8
)
Reclassification of noncontrolling interest
—

 
—

 
—

 
(4.0
)
 
—

 
(4.0
)
 
4.0

 
—

Common Stock Issuance
0.3

 
571.3

 
—

 
—

 
—

 
571.6

 
—

 
571.6

Dividends on common stock
—

 
(2.6
)
 
—

 
—

 
—

 
(2.6
)
 
—

 
(2.6
)
Employee related benefits
—

 
38.4

 
—

 
—

 
—

 
38.4

 
—

 
38.4

Contribution from (Distribution to) noncontrolling interest, net
—

 
—

 
—

 
—

 
—

 
—

 
(180.3
)
 
(180.3
)
Balance at September 30, 2013
$
2.6

 
$
23,524.7

 
$
1,950.0

 
$
2.4

 
$
(12,709.7
)
 
$
12,770.0

 
$
2,094.5

 
$
14,864.5



 
Common
Stock
 
Additional
Paid-In
Capital
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Retained Earnings (Deficit)
 
Total
ING U.S., Inc.
Shareholder's
Equity
 
Noncontrolling
Interest
 
Total
Shareholder's
Equity
 
 
 
 
Appropriated
 
Unappropriated
 
 
 
Balance at January 1, 2012
$
2.3

 
$
22,865.2

 
$
2,595.0

 
$
126.5

 
$
(13,235.1
)
 
$
12,353.9

 
$
1,572.2

 
$
13,926.1

Comprehensive income (loss):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
—

 
—

 
—

 
—

 
495.7

 
495.7

 
222.4

 
718.1

Other comprehensive income (loss), after tax
—

 
—

 
1,106.5

 
—

 
—

 
1,106.5

 
—

 
1,106.5

Total comprehensive income (loss)
 
 
 
 
 
 
 
 
 
 
1,602.2

 
222.4

 
1,824.6

Reclassification of noncontrolling interest
—

 
—

 
—

 
(78.1
)
 
—

 
(78.1
)
 
78.1

 
—

Common Stock Issuance
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Dividends on common stock
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Employee related benefits
—

 
32.5

 
—

 
—

 
—

 
32.5

 
—

 
32.5

Contribution from (Distribution to) noncontrolling interest, net
—

 
—

 
—

 
—

 
—

 
—

 
168.3

 
168.3

Balance at September 30, 2012
$
2.3

 
$
22,897.7

 
$
3,701.5

 
$
48.4

 
$
(12,739.4
)
 
$
13,910.5

 
$
2,041.0

 
$
15,951.5



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


8
 

ING U.S., Inc.
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2013 and 2012 (Unaudited)
(In millions)

 
Nine Months Ended September 30,
 
2013
 
2012
Net cash provided by operating activities
$
2,942.1

 
$
2,422.0

Cash Flows from Investing Activities:
 
 
 
Proceeds from the sale, maturity, disposal or redemption of:
 
 
 
Fixed maturities
11,626.7

 
13,430.6

Equity securities, available-for-sale
47.1

 
57.6

Mortgage loans on real estate
1,253.5

 
1,258.1

Loan - Dutch State obligation
—

 
284.0

Limited partnerships/corporations
274.8

 
318.0

Acquisition of:
 
 
 
Fixed maturities
(14,281.7
)
 
(13,636.4
)
Equity securities, available-for-sale
(17.9
)
 
(17.4
)
Mortgage loans on real estate
(1,583.2
)
 
(1,248.9
)
Limited partnerships/corporations
(81.0
)
 
(44.5
)
Short-term investments, net
3,443.2

 
(63.5
)
Policy loans, net
52.8

 
51.0

Derivatives, net
(1,981.6
)
 
(1,458.8
)
Other investments, net
34.3

 
4.6

Sales from consolidated investment entities
2,518.7

 
1,222.2

Purchase of consolidated investment entities
(3,352.2
)
 
(1,528.1
)
Collateral (delivered) received, net
(751.5
)
 
181.5

Purchases of fixed assets, net
(25.7
)
 
(18.8
)
Net cash used in investing activities
(2,823.7
)
 
(1,208.8
)

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


9
 

ING U.S., Inc.
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2013 and 2012 (Unaudited)
(In millions)

 
Nine Months Ended September 30,
 
2013
 
2012
Cash Flows from Financing Activities:
 
 
 
Deposits received for investment contracts
8,985.2

 
12,910.8

Maturities and withdrawals from investment contracts
(9,648.9
)
 
(15,278.5
)
Proceeds from issuance of debt with maturities of more than three months
2,147.1

 
2,911.5

Repayment of debt with maturities of more than three months
(2,697.4
)
 
(649.2
)
Short-term debt, net
(171.6
)
 
(242.4
)
Debt issuance costs
(24.8
)
 
(30.3
)
Borrowings of consolidated investment entities
32.0

 
54.3

Repayments of debt of consolidated investment entities
(8.5
)
 
(50.4
)
Contributions from participants in consolidated investment entities
626.7

 
601.7

Proceeds from issuance of common stock, net
571.6

 
—

Net cash (used in) provided by financing activities
(188.6
)
 
227.5

Net (decrease) increase in cash and cash equivalents
(70.2
)
 
1,440.7

Cash and cash equivalents, beginning of period
1,786.8

 
638.0

Cash and cash equivalents, end of period
$
1,716.6

 
$
2,078.7

Supplemental cash flow information:
 
 
 
Income taxes paid (received), net
$
(2.8
)
 
$
(27.6
)
Interest paid
126.3

 
98.7


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


10
 


ING U.S., Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
 
 
 




1.    Business, Basis of Presentation and Significant Accounting Policies

Business

ING U.S., Inc. and its subsidiaries (collectively the "Company") is a financial services organization in the United States that offers a broad range of retirement services, annuities, investment management services, mutual funds, life insurance, group insurance and supplemental health products, guaranteed investment contracts and funding agreements. The Company provides its principal products and services in three businesses (Retirement Solutions, Investment Management and Insurance Solutions) and reports results through five ongoing operating segments, including Retirement, Annuities, Investment Management, Individual Life and Employee Benefits. The Company also has a Corporate segment, which includes the financial data not directly related to the businesses, and Closed Block segments. See the Segments Note to these Condensed Consolidated Financial Statements.

In 2009, ING Groep N.V. ("ING Group" or "ING"), a global financial services holding company based in The Netherlands, with American Depository Shares listed on the New York Stock Exchange, announced the anticipated separation of its global banking and insurance businesses, including the divestiture of the Company. On April 11, 2013, the Company announced plans to rebrand in the future as Voya Financial. On May 2, 2013, the common stock of ING U.S., Inc. began trading on the New York Stock Exchange under the symbol "VOYA." On May 7, 2013 and May 31, 2013, ING U.S., Inc. completed its initial public offering of common stock, including the issuance and sale by ING U.S., Inc. of 30,769,230 shares of common stock and the sale by ING Insurance International B.V. ("ING International"), an indirect wholly owned subsidiary of ING Group and previously the sole stockholder of ING U.S., Inc., of 44,201,773 shares of outstanding common stock of ING U.S., Inc. (collectively, the "IPO"). On September 30, 2013, ING International transferred all of its shares of ING U.S., Inc. common stock to ING Group.

On October 29, 2013, ING Group completed a sale of 37,950,000 shares of common stock of the Company in a registered public offering ("Secondary Offering"), reducing ING Group's ownership in the Company to 57%.
  
Basis of Presentation

On April 11, 2013, the Company filed an amended restated certificate of incorporation which provides for an authorized capital stock consisting of 1,000,000,000 shares, of which 900,000,000 shares (par value $0.01 per share) are designated as common stock and 100,000,000 shares (par value $0.01 per share) are designated as preferred stock. In addition, the amended and restated certificate of incorporation effected a 2,295.248835-for-1 split of the Company's then outstanding common stock, resulting in 230,079,120 shares of common stock issued, including 79,120 shares of Treasury stock, and 230,000,000 shares of common stock outstanding and held by ING International, prior to the IPO. The accompanying Condensed Consolidated Financial Statements and Notes to Condensed Consolidated Financial Statements give retroactive effect to the stock split for all periods presented. There are no preferred shares issued or outstanding.

The accompanying Condensed Consolidated Financial Statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") and are unaudited. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Those estimates are inherently subject to change and actual results could differ from those estimates.

The Condensed Consolidated Financial Statements include the accounts of ING U.S., Inc. and its subsidiaries, as well as partnerships (voting interest entities ("VOEs")) in which the Company has control and variable interest entities ("VIEs") for which the Company is the primary beneficiary. See the Consolidated Investment Entities Note to these Condensed Consolidated Financial Statements. Intercompany transactions and balances have been eliminated.

Certain immaterial reclassifications have been made to prior year financial information to conform to the current year classifications.

The accompanying Condensed Consolidated Financial Statements reflect all adjustments (including normal, recurring adjustments) necessary to present fairly the financial position of the Company as of September 30, 2013, its results of operations and comprehensive income for the three and nine months ended September 30, 2013 and 2012 and its changes in shareholders' equity

 
11
 


ING U.S., Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
 
 
 



and statements of cash flows for the nine months ended September 30, 2013 and 2012, in conformity with U.S. GAAP. Interim results are not necessarily indicative of full year performance. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements included in the Company's Amendment No. 2 to its Registration Statement on Form S-1, filed with the SEC on October 21, 2013 (the "Registration Statement").

Adoption of New Pronouncements

Derivatives and Hedging
In July 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2013-10, "Derivatives and Hedging (Accounting Standards Codification ("ASC") Topic 815): Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes" ("ASU 2013-10"), which permits an entity to use the Fed Funds Effective Swap Rate ("OIS") to be used as a U.S. benchmark interest rate for hedge accounting purposes. In addition, the guidance removes the restriction on using different benchmark rates for similar hedges.

The provisions of ASU 2013-10 were adopted by the Company on July 17, 2013 for qualifying new or redesigned hedges entered into on or after that date. The adoption had no effect on the Company's financial condition, results of operations or cash flows.

Disclosures about Offsetting Assets and Liabilities
In December 2011, FASB issued ASU 2011-11, "Balance Sheet (ASC Topic 210): Disclosures about Offsetting Assets and Liabilities" ("ASU 2011-11"), which requires an entity to disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position, as well as instruments and transactions subject to an agreement similar to a master netting arrangement. In addition, the standard requires disclosure of collateral received and posted in connection with master netting agreements or similar arrangements.

In January 2013, the FASB issued ASU 2013-01, "Balance Sheet (ASC Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities" ("ASU 2013-01"), which clarifies that the scope of ASU 2011-11 applies to derivatives accounted for in accordance with ASU Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or subject to an enforceable master netting arrangement or similar agreement.

The provisions of ASU 2013-01 and ASU 2011-11 were adopted retrospectively by the Company on January 1, 2013. The adoption had no effect on the Company's financial condition, results of operations or cash flows, as the pronouncement only pertains to additional disclosure. The disclosures required by ASU 2011-11 and ASU 2013-01 are included in the Derivative Financial Instruments Note to these Condensed Consolidated Financial Statements.

Disclosures about Amounts Reclassified out of Accumulated Other Comprehensive Income
In January 2013, the FASB issued ASU 2013-02, "Comprehensive Income (ASC Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income" ("ASU 2013-02"), which requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income, but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts.

The provisions of ASU 2013-02 were adopted by the Company on January 1, 2013. The adoption had no effect on the Company's financial condition, results of operations or cash flows, as the pronouncement only pertains to additional disclosure. The disclosures required by ASU 2013-02, including comparative period disclosures, are included in the Accumulated Other Comprehensive Income Note to these Condensed Consolidated Financial Statements.


 
12
 


ING U.S., Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
 
 
 



Future Adoption of Accounting Pronouncements

Fees Paid to the Federal Government by Health Insurers
In July 2011, the FASB issued ASU 2011-06, "Other Expenses (Topic 720): Fees Paid to the Federal Government by Health Insurers" ("ASU 2011-06"), which specifies how health insurers should recognize and classify the annual fee imposed by the Patient Protection and Affordable Care Act as amended by the Health Care Education Reconciliation Act (the "Acts"). The liability for the fee should be estimated and recorded in full at the time the entity provides qualifying health insurance in the year in which the fee is payable, with a corresponding deferred cost that is amortized to expense.

The provisions of ASU 2011-06 are effective for calendar years beginning after December 31, 2013, when the fee initially becomes effective. The Company does not expect ASU 2011-06 to have an impact on its financial condition, results of operations or cash flows, as the amount of net premium written for qualifying health insurance by the Company is expected to be below the $25.0 threshold as defined by the Acts and, thus, not subject to the fee.

Joint and Several Liability Arrangements
In February 2013, the FASB issued ASU 2013-04, "Liabilities (ASC Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date" ("ASU 2013-04"), which requires an entity to measure obligations resulting from joint and several liable arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, as the sum of (1) the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and (2) any additional amount it expects to pay on behalf of its co-obligors. ASU 2013-04 also requires an entity to disclose the nature and amount of the obligation, as well as other information about those obligations.

The provisions of ASU 2013-04 are effective for years, and interim periods within those years, beginning after December 15, 2013. The amendments should be applied retrospectively for those obligations resulting from joint and several liability arrangements that exist at the beginning of an entity's year of adoption. The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2013-04.

Investment Companies
In June 2013, the FASB issued ASU 2013-08, "Financial Services-Investment Companies (ASC Topic 946): Amendments to the Scope, Measurement, and Disclosure Requirements" ("ASU 2013-08"), which provides comprehensive guidance for assessing whether an entity is an investment company and requires an investment company to measure noncontrolling ownership interests in other investment companies at fair value. ASU 2013-08 also requires an entity to disclose that it is an investment company and any changes to that status, as well as information about financial support provided or required to be provided to investees.

The provisions of ASU 2013-08 are effective for interim and annual reporting periods in years beginning after December 15, 2013, and should be applied prospectively for entities that are investment companies upon the effective date of the amendments. The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2013-08.

Income Taxes
In July 2013, the FASB issued ASU 2013-11, "Income Taxes (ASC Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists" ("ASU 2013-11"), which clarifies that:
•
An unrecognized tax benefit should be presented as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward, except,
•
An unrecognized tax benefit should be presented as a liability and not be combined with a deferred tax asset (i) to the extent a net operating loss carryforward, a similar tax loss or a tax credit carryforward is not available at the reporting date to settle any additional income taxes that would result from the disallowance of a tax position or (ii) the tax law does not require the entity to use, or the entity does not intend to use, the deferred tax asset for such a purpose.
•
The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date.

The provisions of ASU 2013-11 are effective for years, and interim periods within those years, beginning after December 15, 2013, and should be applied prospectively to all unrecognized tax benefits that exist at the effective date. The Company does not expect

 
13
 


ING U.S., Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
 
 
 



ASU 2013-11 to have an impact on its financial condition, results of operations or cash flows, as the guidance is consistent with that currently applied.

2.    Investments (excluding Consolidated Investment Entities)

Fixed Maturities and Equity Securities

Available-for-sale and fair value option ("FVO") fixed maturities and equity securities were as follows as of September 30, 2013:
 
Amortized Cost
 
Gross Unrealized Capital Gains
 
Gross Unrealized Capital Losses
 
Embedded Derivatives(2)
 
Fair Value
 
OTTI(3)
Fixed maturities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasuries
$
5,518.0

 
$
283.5

 
$
58.8

 
$
—

 
$
5,742.7

 
$
—

U.S. Government agencies and authorities
562.7

 
31.7

 
0.7

 
—

 
593.7

 
—

State, municipalities and political subdivisions
274.0

 
12.8

 
1.8

 
—

 
285.0

 
—

U.S. corporate securities
35,818.8

 
2,243.4

 
651.0

 
—

 
37,411.2

 
12.8

 
 
 
 
 
 
 
 
 
 
 
 
Foreign securities:(1)
 
 
 
 
 
 
 
 
 
 
 
Government
1,045.6

 
53.7

 
41.8

 
—

 
1,057.5

 
—

Other
14,419.5

 
897.9

 
185.9

 
—

 
15,131.5

 
—

Total foreign securities
15,465.1

 
951.6

 
227.7

 
—

 
16,189.0

 
—

 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
Agency
5,411.9

 
457.9

 
47.8

 
90.5

 
5,912.5

 
1.1

Non-Agency
1,205.7

 
163.9

 
33.7

 
54.1

 
1,390.0

 
105.8

Total Residential mortgage-backed securities
6,617.6

 
621.8

 
81.5

 
144.6

 
7,302.5

 
106.9

Commercial mortgage-backed securities
3,509.3

 
360.9

 
2.6

 
—

 
3,867.6

 
4.4

Other asset-backed securities
1,965.7

 
88.5

 
44.9

 
(6.8
)
 
2,002.5

 
5.1

 
 
 
 
 
 
 
 
 
 
 
 
Total fixed maturities, including securities pledged
69,731.2

 
4,594.2

 
1,069.0

 
137.8

 
73,394.2

 
129.2

Less: Securities pledged
1,280.4

 
53.0

 
20.8

 
—

 
1,312.6

 
—

Total fixed maturities
68,450.8

 
4,541.2

 
1,048.2

 
137.8

 
72,081.6

 
129.2

 
 
 
 
 
 
 
 
 
 
 
 
Equity securities:
 
 
 
 
 
 
 
 
 
 
 
Common stock
185.1

 
2.3

 
0.1

 
—

 
187.3

 
—

Preferred stock
53.1

 
39.2

 
—

 
—

 
92.3

 
—

Total equity securities
238.2

 
41.5

 
0.1

 
—

 
279.6

 
—

 
 
 
 
 
 
 
 
 
 
 
 
Total fixed maturities and equity securities investments
$
68,689.0

 
$
4,582.7

 
$
1,048.3

 
$
137.8

 
$
72,361.2

 
$
129.2

(1) Primarily U.S. dollar denominated.
(2) Embedded derivatives within fixed maturity securities are reported with the host investment. The changes in fair value of embedded derivatives are reported in Other net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.
(3) Represents Other-than-Temporary-Impairments ("OTTI") reported as a component of Other comprehensive income.

 
14
 


ING U.S., Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
 
 
 




Available-for-sale and FVO fixed maturities and equity securities were as follows as of December 31, 2012:
 
Amortized
Cost
 
Gross
Unrealized
Capital
Gains
 
Gross
Unrealized
Capital
Losses
 
Embedded
Derivatives (2)
 
Fair
 Value
 
OTTI(3)
Fixed maturities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasuries
$
5,194.3

 
$
691.2

 
$
1.8

 
$
—

 
$
5,883.7

 
$
—

U.S. Government agencies and authorities
645.4

 
78.8

 
—

 
—

 
724.2

 
—

State, municipalities and political subdivisions
320.2

 
32.6

 
—

 
—

 
352.8

 
—

U.S. corporate securities
32,986.1

 
4,226.6

 
48.8

 
—

 
37,163.9

 
13.4

 
 
 
 
 
 
 
 
 
 
 
 
Foreign securities(1):
 
 
 
 
 
 
 
 
 
 
 
Government
1,069.4

 
125.2

 
4.6

 
—

 
1,190.0

 
—

Other
13,321.8

 
1,527.4

 
54.7

 
—

 
14,794.5

 
—

Total foreign securities
14,391.2

 
1,652.6

 
59.3

 
—

 
15,984.5

 
—

 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
Agency
5,071.6

 
633.3

 
14.8

 
156.0

 
5,846.1

 
1.2

Non-Agency
1,612.6

 
198.6

 
71.9

 
81.6

 
1,820.9

 
139.6

Total Residential mortgage-backed securities
6,684.2

 
831.9

 
86.7

 
237.6

 
7,667.0

 
140.8

Commercial mortgage-backed securities
4,438.9

 
513.6

 
6.1

 
—

 
4,946.4

 
4.4

Other asset-backed securities
2,536.4

 
128.4

 
90.0

 
(10.2
)
 
2,564.6

 
15.4

 
 
 
 
 
 
 
 
 
 
 
 
Total fixed maturities, including securities pledged
67,196.7

 
8,155.7

 
292.7

 
227.4

 
75,287.1

 
174.0

Less: Securities pledged
1,470.0

 
139.6

 
4.1

 
—

 
1,605.5

 
—

Total fixed maturities
65,726.7

 
8,016.1

 
288.6

 
227.4

 
73,681.6

 
174.0

 
 
 
 
 
 
 
 
 
 
 
 
Equity securities:
 
 
 
 
 
 
 
 
 
 
 
Common stock
194.4

 
13.2

 
1.0

 
—

 
206.6

 
—

Preferred stock
103.5

 
30.0

 
—

 
—

 
133.5

 
—

Total equity securities
297.9

 
43.2

 
1.0

 
—

 
340.1

 
—

 
 
 
 
 
 
 
 
 
 
 
 
Total fixed maturities and equity securities investments
$
66,024.6

 
$
8,059.3

 
$
289.6

 
$
227.4

 
$
74,021.7

 
$
174.0

(1) Primarily U.S. dollar denominated.
(2) Embedded derivatives within fixed maturity securities are reported with the host investment. The changes in fair value of embedded derivatives are reported in Other net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.
(3) Represents OTTI reported as a component of Other comprehensive income.


 
15
 


ING U.S., Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
 
 
 



The amortized cost and fair value of fixed maturities, including securities pledged, as of September 30, 2013, are shown below by contractual maturity. Actual maturities may differ from contractual maturities as securities may be restructured, called, or prepaid. Mortgage-backed securities ("MBS") and Other asset-backed securities ("ABS") are shown separately because they are not due at a single maturity date.
 
Amortized
Cost
 
Fair
Value
Due to mature:
 
 
 
One year or less
$
2,341.3

 
$
2,423.9

After one year through five years
15,201.6

 
16,036.2

After five years through ten years
19,660.3

 
20,113.5

After ten years
20,435.4

 
21,648.0

Mortgage-backed securities
10,126.9

 
11,170.1

Other asset-backed securities
1,965.7

 
2,002.5

Fixed maturities, including securities pledged
$
69,731.2

 
$
73,394.2


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

As of September 30, 2013 and December 31, 2012, the Company did not have any investments in a single issuer, other than obligations of the U.S. Government and government agencies, with a carrying value in excess of 10% of the Company’s consolidated Shareholders' equity.

The following tables set forth the composition of the U.S. and foreign corporate securities within the fixed maturity portfolio by industry category as of the dates indicated:
 
Amortized
Cost
 
Gross
Unrealized
Capital
Gains
 
Gross
Unrealized
Capital
Losses
 
Fair
Value
September 30, 2013
 
 
 
 
 
 
 
Communications
$
4,055.9

 
$
278.6

 
$
80.0

 
$
4,254.5

Financial
6,419.0

 
551.9

 
72.4

 
6,898.5

Industrial and other companies
29,424.9

 
1,619.1

 
531.6

 
30,512.4

Utilities
8,890.2

 
600.7

 
125.0

 
9,365.9

Transportation
1,448.3

 
91.0

 
27.9

 
1,511.4

Total
$
50,238.3

 
$
3,141.3

 
$
836.9

 
$
52,542.7

 
 
 
 
 
 
 
 
December 31, 2012
 
 
 
 
 
 
 
Communications
$
3,609.5

 
$
563.4

 
$
2.4

 
$
4,170.5

Financial
5,912.9

 
749.4

 
46.7

 
6,615.6

Industrial and other companies
26,613.3

 
3,063.3

 
24.2

 
29,652.4

Utilities
8,893.1

 
1,210.5

 
28.9

 
10,074.7

Transportation
1,279.1

 
167.4

 
1.3

 
1,445.2

Total
$
46,307.9

 
$
5,754.0

 
$
103.5

 
$
51,958.4






 
16
 


ING U.S., Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
 
 
 



Fixed Maturities and Equity Securities

The Company's fixed maturities and equity securities are currently designated as available-for-sale, except those accounted for using the fair value option ("FVO"). Available-for-sale securities are reported at fair value and unrealized capital gains (losses) on these securities are recorded directly in Accumulated other comprehensive income (loss) ("AOCI"), and presented net of related changes in DAC, VOBA, and deferred income taxes. In addition, certain fixed maturities have embedded derivatives, which are reported with the host contract on the Condensed Consolidated Balance Sheets.

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

The Company invests in various categories of Collateralized mortgage obligations ("CMOs"), including CMOs that are not agency-backed, that are subject to different degrees of risk from changes in interest rates and defaults. The principal risks inherent in holding CMOs are prepayment and extension risks related to significant decreases and increases in interest rates resulting in the prepayment of principal from the underlying mortgages, either earlier or later than originally anticipated. As of September 30, 2013 and December 31, 2012, approximately 35.5% and 33.1%, respectively, of the Company’s CMO holdings, such as interest-only or principal-only strips were invested in those types of CMOs that are subject to more prepayment and extension risk than traditional CMOs.

Repurchase Agreements

The Company engages in dollar repurchase agreements with mortgage-backed securities ("dollar rolls") and repurchase agreements with other collateral types to increase its return on investments and improve liquidity. Such arrangements meet the requirements to be accounted for as financing arrangements. As of September 30, 2013 and December 31, 2012, the Company did not have any securities pledged in dollar rolls and repurchase agreement transactions. The Company also enters into reverse repurchase agreements. These transactions involve a purchase of securities and an agreement to sell substantially the same securities as those purchased. As of September 30, 2013 and December 31, 2012, the Company did not have any securities pledged under reverse repurchase agreements.

Securities Lending

The Company engages in securities lending whereby certain domestic securities from its portfolio are loaned to other institutions for short periods of time. Initial collateral, primarily cash, is required at a rate of 102% of the market value of the loaned securities. For portions of the program, the lending agent retains the cash collateral. For other portions of the program, a lending agent, if used, may retain up to 5% of the collateral deposited by the borrower and the remaining cash collateral is received by the Company. Collateral retained by the agent is invested in liquid assets on behalf of the Company. The market value of the loaned securities is monitored on a daily basis with additional collateral obtained or refunded as the market value of the loaned securities fluctuates. As of September 30, 2013 and December 31, 2012, the fair value of loaned securities was $396.1 and $601.8, respectively, and is included in Securities pledged on the Condensed Consolidated Balance Sheets. As of September 30, 2013 and December 31, 2012, collateral retained by the lending agent and invested in liquid assets on the Company's behalf was $414.3 and $619.5, respectively, and recorded in Short-term investments under securities loan agreement, including collateral delivered on the Condensed Consolidated Balance Sheets. As of September 30, 2013 and December 31, 2012, liabilities to return collateral of $414.3 and $619.5, respectively, were included in Payables under securities loan agreement, including collateral held on the Condensed Consolidated Balance Sheets.









 
17
 


ING U.S., Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
 
 
 




Unrealized Capital Losses

Unrealized capital losses (including noncredit impairments), along with the fair value of fixed maturity securities, including securities pledged, by market sector and duration were as follows as of September 30, 2013:
 
Six Months or Less
Below Amortized Cost
 
More Than Six
Months and Twelve Months or Less
Below Amortized Cost
 
More Than Twelve
Months Below
Amortized Cost
 
Total
 
Fair Value
 
Unrealized Capital Losses
 
Fair Value
 
Unrealized Capital Losses
 
Fair Value
 
Unrealized Capital Losses
 
Fair Value
 
Unrealized Capital Losses
U.S. Treasuries
$
2,109.3

 
$
50.7

 
$
43.8

 
$
8.1

 
$
—

 
$
—

 
$
2,153.1

 
$
58.8

U.S. Government agencies and authorities
57.0

 
0.7

 
—

 
—

 
—

 
—

 
57.0

 
0.7

U.S. corporate, state and municipalities
9,214.3

 
502.6

 
930.4

 
111.5

 
291.3

 
38.7

 
10,436.0

 
652.8

Foreign
3,118.3

 
181.7

 
231.2

 
26.9

 
170.7

 
19.1

 
3,520.2

 
227.7

Residential mortgage-backed
1,445.8

 
32.3

 
241.6

 
7.2

 
368.7

 
42.0

 
2,056.1

 
81.5

Commercial mortgage-backed (1)
24.2

 
0.5

 
2.0

 
—

*
18.3

 
2.1

 
44.5

 
2.6

Other asset-backed
224.8

 
3.0

 
20.2

 
—

*
293.6

 
41.9

 
538.6

 
44.9

Total
$
16,193.7

 
$
771.5

 
$
1,469.2

 
$
153.7

 
$
1,142.6

 
$
143.8

 
$
18,805.5

 
$
1,069.0

*Less than $0.1

 
18
 


ING U.S., Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
 
 
 




Unrealized capital losses (including noncredit impairments), along with the fair value of fixed maturity securities, including securities pledged, by market sector and duration were as follows as of December 31, 2012:
 
Six Months or Less
Below Amortized Cost
 
More Than Six
Months and Twelve Months or Less
Below Amortized Cost
 
More Than Twelve
Months Below
Amortized Cost
 
Total
 
Fair Value
 
Unrealized Capital Losses
 
Fair Value
 
Unrealized Capital Losses
 
Fair Value
 
Unrealized Capital Losses
 
Fair Value
 
Unrealized Capital Losses
U.S. Treasuries
$
451.2

 
$
1.8

 
$
—

 
$
—

 
$
—

 
$
—

 
$
451.2

 
$
1.8

U.S. Government agencies and authorities
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

U.S. corporate, state and municipalities
1,333.4

 
19.2

 
116.5

 
3.0

 
231.2

 
26.6

 
1,681.1

 
48.8

Foreign
360.2

 
12.7

 
59.8

 
7.4

 
314.9

 
39.2

 
734.9

 
59.3

Residential mortgage-backed
369.3

 
6.4

 
42.0

 
2.1

 
585.1

 
78.2

 
996.4

 
86.7

Commercial mortgage-backed
22.0

 
0.2

 
15.3

 
1.7

 
44.4

 
4.2

 
81.7

 
6.1

Other asset-backed
70.2

 
—

*
7.0

 
1.2

 
609.2

 
88.8

 
686.4

 
90.0

Total
$
2,606.3

 
$
40.3

 
$
240.6

 
$
15.4

 
$
1,784.8

 
$
237.0

 
$
4,631.7

 
$
292.7

*Less than $0.1

Of the unrealized capital losses aged more than twelve months, the average market value of the related fixed maturities was 88.8% and 88.3% of the average book value as of September 30, 2013 and December 31, 2012, respectively.


 
19
 


ING U.S., Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
 
 
 



Unrealized capital losses (including noncredit impairments) in fixed maturities, including securities pledged, for instances in which fair value declined below amortized cost by greater than or less than 20% for consecutive months as indicated in the tables below, were as follows as of the dates indicated:
 
Amortized Cost
 
Unrealized Capital Losses
 
Number of Securities
 
< 20%
 
> 20%
 
< 20%
 
> 20%
 
< 20%
 
> 20%
September 30, 2013
 
 
 
 
 
 
 
 
 
 
 
Six months or less below amortized cost
$
17,030.2

 
$
197.7

 
$
779.2

 
$
47.3

 
1,137

 
31

More than six months and twelve months or less below amortized cost
1,710.8

 
3.3

 
154.5

 
1.1

 
182

 
5

More than twelve months below amortized cost
822.3

 
110.2

 
58.9

 
28.0

 
252

 
29

Total
$
19,563.3

 
$
311.2

 
$
992.6

 
$
76.4

 
1,571

 
65

 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2012
 
 
 
 
 
 
 
 
 
 
 
Six months or less below amortized cost
$
3,154.6

 
$
42.1

 
$
95.2

 
$
11.4

 
308

 
21

More than six months and twelve months or less below amortized cost
363.3

 
30.2

 
19.5

 
10.3

 
83

 
9

More than twelve months below amortized cost
940.1

 
394.1

 
35.9

 
120.4

 
221

 
95

Total
$
4,458.0

 
$
466.4

 
$
150.6

 
$
142.1

 
612

 
125


 
20
 


ING U.S., Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
 
 
 



Unrealized capital losses (including noncredit impairments) in fixed maturities, including securities pledged, by market sector for instances in which fair value declined below amortized cost by greater than or less than 20% were as follows as of the dates indicated:
 
Amortized Cost
 
Unrealized Capital Losses
 
Number of Securities
 
< 20%
 
> 20%
 
< 20%
 
> 20%
 
< 20%
 
> 20%
September 30, 2013
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasuries
$
2,211.9

 
$
—

 
$
58.8

 
$
—

 
20

 
—

U.S. Government agencies and authorities
57.7

 
—

 
0.7

 
—

 
2

 
—

U.S. corporate, state and municipalities
10,976.6

 
112.2

 
625.5

 
27.3

 
684

 
7

Foreign
3,665.0

 
82.9

 
209.5

 
18.2

 
284

 
9

Residential mortgage-backed
2,084.1

 
53.5

 
66.6

 
14.9

 
470

 
35

Commercial mortgage-backed
47.1

 
—

 
2.6

 
—

 
9

 
—

Other asset-backed
520.9

 
62.6

 
28.9

 
16.0

 
102

 
14

Total
$
19,563.3