false--12-31Q120192019-03-310000837010falseNon-accelerated FilerVOYA RETIREMENT INSURANCE & ANNUITY COfalse45000000750000005050100000100000550005500055000550003700000077000000000000.0700.05510228600000002269400000086700000094800000000.070000.000.0700.0000.250.500.500000.500.42000.250.500.5000.500.5600.000.000.0000.850.850.150.300.300000.150.300.300.000.000.000.300.500.5000000.500000.300.5000.500.5000.000.000.000.850.850.150.250.250000.150.250.250.000.000.0000.06500.00100.0580.000.00100.0120.0120.00380.00380.00990.00990.00250.00251.0011.001.251.501.001.251.500.001.501.001.250.001.501.001.250.80.50.70.60.80.50.70.60.80.700.60.50.80.700.60.50<div class="jf2"><div class="jf3"><font class="jf4"><br clear="none"/></font></div><div class="jf5"><font class="jf4"><br clear="none"/></font></div><div class="jf5"><font class="jf6"></font></div></div>0000837010 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember vriac:StabilizerInvestmentOnlyAndMcgContractsMember 2019-09-30

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 ~~March 31,~~September 30, 2019



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: 033-23376

~~Voya Retirement Insurance and Annuity Company~~VOYA RETIREMENT INSURANCE & ANNUITY CO

(Exact name of registrant as specified in its charter)



Connecticut	71-0294708
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)



One Orange Way
Windsor	Connecticut	06095-4774
(Address of principal executive offices)		(Zip Code)

~~(860)~~ (860) 580-4646

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

None

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. ý Yes o No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ý Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filero	☐	Accelerated filer o	☐
Non-accelerated filerx	x	Smaller reporting company o	☐
		Emerging growth company o	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o			☐

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. o☐ Yes o☐ No

~~Securities registered pursuant to Section 12(b) of the Act:~~

~~None~~

APPLICABLE ONLY TO CORPORATE ISSUERS:

As of ~~May 8,~~November 6, 2019, 55,000 shares of Common Stock, $50 par value were outstanding, all of which were directly owned by Voya Holdings Inc.

NOTE: WHEREAS VOYA RETIREMENT INSURANCE AND ANNUITY COMPANY MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q, THIS FORM IS BEING FILED WITH THE REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL INSTRUCTION H(2).



	1

Voya Retirement Insurance and Annuity Company and ~~Subsidiaries~~Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Form 10-Q for the period ended ~~March 31,~~September 30, 2019

INDEX

		PAGE
PART I.	FINANCIAL INFORMATION (UNAUDITED)


Item 1.	Financial Statements:
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	6
	Condensed Consolidated Statements of Comprehensive Income	7
	Condensed Consolidated Statements of Changes in Shareholder's Equity	8
	Condensed Consolidated Statements of Cash Flows	910
	Notes to Condensed Consolidated Financial Statements:	1011
	1. Business, Basis of Presentation and Significant Accounting Policies	1011
	2. Investments	1718
	3. Derivative Financial Instruments	3231
	4. Fair Value Measurements	37
	5. Deferred Policy Acquisition Costs and Value of Business Acquired	5048
	6. Accumulated Other Comprehensive Income (Loss)	5149
	7. Income Taxes	54
	8. Financing Agreements	54
	9. Commitments and Contingencies	5455
	10. Related Party Transactions	56

Item 2.	Management's Narrative Analysis of the Results of Operations and Financial Condition	5857

Item 4.	Controls and Procedures	7475


PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	7576

Item 1A.	Risk Factors	7576

Item 6.	Exhibits	7576

Exhibit Index		7677

Signature		7778



	2

Table of Contents

As used in this Quarterly Report on Form 10-Q, "VRIAC" refers to Voya Retirement Insurance and Annuity Company and the "Company," "we," "our" and "us" refer to VRIAC and its wholly owned ~~subsidiaries.~~subsidiary.

NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including "Risk Factors" and "Management’s Narrative Analysis of the 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, including those relating to insurance regulatory reform initiatives applicable to captive reinsurance entities and those made pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act or the U.S. Department of Labor's final rules and exemptions pertaining to the fiduciary status of providers of investment advice; and (x) changes in the policies of governments and/or regulatory authorities; and (xi) our parent company, Voya Financial, Inc.'s ability to successfully manage the separation of Venerable (as defined below), including the transition services on the expected timeline and economic terms. Factors that may cause actual results to differ from those in any forward-looking statement also include those described under "Risk Factors" and "Management’s Narrative Analysis of the Results of Operations and Financial Condition" in the Annual Report on Form 10-K for the year ended December 31, 2018 (File No. 033-23376) (the "~~Annual~~"Annual Report on Form ~~10-K~~"10-K").

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



	3

Table of Contents

PART I. FINANCIAL INFORMATION (UNAUDITED)

Item 1. Financial Statements

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Condensed Consolidated Balance Sheets

~~March 31,~~September 30, 2019 (Unaudited) and December 31, 2018

(In millions, except share and per share data)


	March 31, 2019		December 31, 2018		September 30, 2019		December 31, 2018
Assets
Investments:
Fixed maturities, available-for-sale, at fair value (amortized cost of $22,694 as of 2019 and $22,860 as of 2018)	$	23,663	$	22,981
Fixed maturities, available-for-sale, at fair value (amortized cost of $22,968 as of 2019 and $22,860 as of 2018)					$	25,072	$	22,981
Fixed maturities, at fair value using the fair value option	1,221		1,171		1,448		1,171
Equity securities, at fair value (cost of $75 as of 2019 and $45 as of 2018)	87		57		90		57
Short-term investments	50		50		50		50
Mortgage loans on real estate, net of valuation allowance of $1 as of 2019 and 2018	4,811		4,918
Mortgage loans on real estate, net of valuation allowance of $0 as of 2019 and $1 as of 2018					4,682		4,918
Policy loans	207		210		207		210
Limited partnerships/corporations	587		583		702		583
Derivatives	122		128		331		128
Securities pledged (amortized cost of $948 as of 2019 and $867 as of 2018)	1,018		882
Securities pledged (amortized cost of $860 as of 2019 and $867 as of 2018)					979		882
Other investments	35		40		42		40
Total investments	31,801		31,020		33,603		31,020
Cash and cash equivalents	381		364		331		364
Short-term investments under securities loan agreements, including collateral delivered	969		793		1,105		793
Accrued investment income	328		301		320		301
Premiums receivable and reinsurance recoverable	1,390		1,409		1,330		1,409
Deferred policy acquisition costs, Value of business acquired and Sales inducements to contract owners	892		1,104		576		1,104
Short-term loan to affiliate	103		—		129		—
Current income tax recoverable	2		35		—		35
Due from affiliates	48		54		62		54
Property and equipment	62		62		61		62
Other assets	179		251		184		251
Assets held in separate accounts	73,369		67,323		75,898		67,323
Total assets	$	109,524	$	102,716	$	113,599	$	102,716



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

	4

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Condensed Consolidated Balance Sheets

~~March 31,~~September 30, 2019 (Unaudited) and December 31, 2018

(In millions, except share and per share data)


	March 31, 2019		December 31, 2018		September 30, 2019		December 31, 2018
Liabilities and Shareholder's Equity
Future policy benefits and contract owner account balances	$	30,563	$	30,695	$	31,101	$	30,695
Payable for securities purchased	65		49		60		49
Payables under securities loan agreements, including collateral held	916		827		1,033		827
Due to affiliates	83		73		69		73
Derivatives	182		99		395		99
Current income tax payable to Parent					3		—
Deferred income taxes	199		64		365		64
Other liabilities	258		264		324		264
Liabilities related to separate accounts	73,369		67,323		75,898		67,323
Total liabilities	105,635		99,394		109,248		99,394

Commitments and Contingencies (Note 9)

Shareholder's equity:
Common stock (100,000 shares authorized, 55,000 issued and outstanding as of 2019 and 2018; $50 par value per share)	3		3		3		3
Additional paid-in capital	2,728		2,728		2,728		2,728
Accumulated other comprehensive income (loss)	747		108		1,366		108
Retained earnings (deficit)	411		483		254		483
Total shareholder's equity	3,889		3,322		4,351		3,322
Total liabilities and shareholder's equity	$	109,524	$	102,716	$	113,599	$	102,716



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

	5

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Condensed Consolidated Statements of Operations

For the Three and Nine Months Ended ~~March 31,~~September 30, 2019 and 2018 (Unaudited)

(In millions)


	Three Months Ended March 31,						Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018			2019			2018
Revenues:
Net investment income	$	394		$	382		$	413		$	425		$	1,235		$	1,204
Fee income	165			174			181			177			522			526
Premiums	9			14			5			13			24			35
Broker-dealer commission revenue	1			41			1			1			2			69
Net realized capital gains (losses):
Total other-than-temporary impairments	(20		)	(9		)	(3		)	(6		)	(24		)	(15		)
Less: Portion of other-than-temporary impairments recognized in Other comprehensive income (loss)	—			—			—			—			—			1
Net other-than-temporary impairments recognized in earnings	(20		)	(9		)	(3		)	(6		)	(24		)	(16		)
Other net realized capital gains (losses)	(4		)	(78		)	7			(38		)	2			(198		)
Total net realized capital gains (losses)	(24		)	(87		)	4			(44		)	(22		)	(214		)
Other revenue	4			—			3			6			8			8
Total revenues	549			524			607			578			1,769			1,628
Benefits and expenses:
Interest credited and other benefits to contract owners/policyholders	255			198			262			227			786			625
Operating expenses	217			108			197			183			607			469
Broker-dealer commission expense	1			41			1			1			2			69
Net amortization of Deferred policy acquisition costs and Value of business acquired	6			65			31			(28		)	40			54
Total benefits and expenses	479			412			491			383			1,435			1,217
Income (loss) before income taxes	70			112			116			195			334			411
Income tax expense (benefit)	5			25			6			34			30			64
Net income (loss)	$	65		$	87		$	110		$	161		$	304		$	347



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

	6

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Condensed Consolidated Statements of Comprehensive Income

For the Three and Nine Months Ended ~~March 31,~~September 30, 2019 and 2018 (Unaudited)

(In millions)


	Three Months Ended March 31,					Three Months Ended September 30,					Nine Months Ended September 30,
	2019		2018			2019		2018			2019			2018
Net income (loss)	$	65	$	87		$	110	$	161		$	304		$	347
Other comprehensive income (loss), before tax:
Unrealized gains/losses on securities	633		(482		)
Unrealized gains (losses) on securities						286		(83		)	1,417			(783		)
Other-than-temporary impairments	—		7			—		1			1			8
Pension and other postretirement benefits liability	—		(1		)	—		(1		)	(1		)	(2		)
Other comprehensive income (loss), before tax	633		(476		)	286		(83		)	1,417			(777		)
Income tax expense (benefit) related to items of other comprehensive income (loss)	131		(108		)	60		(24		)	296			(172		)
Other comprehensive income (loss), after tax	502		(368		)	226		(59		)	1,121			(605		)
Comprehensive income (loss)	$	567	$	(281	)	$	336	$	102		$	1,425		$	(258	)



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

	7

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Condensed Consolidated Statements of Changes in Shareholder’s Equity

For the Three and Nine Months Ended ~~March 31,~~September 30, 2019 ~~and~~ ~~2018~~ (Unaudited)

(In millions)



	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings (Deficit)			Total Shareholder's Equity
Balance as of July 1, 2019	$	3	$	2,728	$	1,140	$	144		$	4,015
Adjustment for adoption of ASU 2018-02	—		—		—		—			—
Comprehensive income (loss):
Net income (loss)	—		—		—		110			110
Other comprehensive income (loss), after tax	—		—		226		—			226
Total comprehensive income (loss)										336
Dividends paid and distributions of capital	—		—		—		—			—
Balance as of September 30, 2019	$	3	$	2,728	$	1,366	$	254		$	4,351


Balance as of January 1, 2019	$	3	$	2,728	$	108	$	483		$	3,322
Adjustment for adoption of ASU 2018-02	—		—		137		(137		)	—
Comprehensive income (loss):
Net income (loss)	—		—		—		304			304
Other comprehensive income (loss), after tax	—		—		1,121		—			1,121
Total comprehensive income (loss)										1,425
Dividends paid and distributions of capital	—		—		—		(396		)	(396		)
Employee related benefits	—		—		—		—			—
Balance as of September 30, 2019	$	3	$	2,728	$	1,366	$	254		$	4,351

Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings (Deficit) Total Shareholder's Equity
Balance as of January 1, 2019 $ 3
$ 2,728
$ 108
$ 483
$ 3,322
Adoption of ASU 2018-02 —
—
137
(137 ) —
Comprehensive income (loss):
Net income (loss) —
—
—
65
65
Other comprehensive income (loss), after tax —
—
502
—
502
Total comprehensive income (loss) 567
Balance as of March 31, 2019 $ 3
$ 2,728
$ 747
$ 411
$ 3,889

Balance as of January 1, 2018 $ 3
$ 2,730
$ 818
$ 30
$ 3,581
Cumulative effect of changes in accounting:
Adjustment for adoption of ASU 2014-09 —
—
—
72
72
Adjustment for adoption of ASU 2016-01 —
—
(12 ) 12
—
Balance as of January 1, 2018 - As adjusted 3
2,730
806
114
3,653
Comprehensive income (loss):
Net income (loss) —
—
—
87
87
Other comprehensive income (loss), after tax —
—
(368 ) —
(368 )
Total comprehensive income (loss) (281 )
Balance as of March 31, 2018 $ 3
$ 2,730
$ 438
$ 201
$ 3,372



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

	8

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Condensed Consolidated Statements of Changes in Shareholder’s Equity

For the Three and Nine Months Ended September 30, 2018 (Unaudited)

(In millions)



	Common Stock		Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings (Deficit)			Total Shareholder's Equity
Balance as of July 1, 2018	$	3	$	2,729		$	260		$	174		$	3,166
Comprehensive income (loss):
Net income (loss)	—		—			—			161			161
Other comprehensive income (loss), after tax	—		—			(59		)	—			(59		)
Total comprehensive income (loss)												102
Employee related benefits	—		(1		)	—			—			(1		)
Balance as of September 30, 2018	$	3	$	2,728		$	201		$	335		$	3,267


Balance as of January 1, 2018	$	3	$	2,730		$	818		$	30		$	3,581
Cumulative effect of changes in accounting:
Adjustment for adoption of ASU 2014-09	—		—			—			72			72
Adjustment for adoption of ASU 2016-01	—		—			(12		)	12			—
Balance as of January 1, 2018 - As adjusted	3		2,730			806			114			3,653
Comprehensive income (loss):
Net income (loss)	—		—			—			347			347
Other comprehensive income (loss), after tax	—		—			(605		)	—			(605		)
Total comprehensive income (loss)												(258		)
Dividends paid and distributions of capital	—		—			—			(126		)	(126		)
Employee related benefits	—		(2		)	—			—			(2		)
Balance as of September 30, 2018	$	3	$	2,728		$	201		$	335		$	3,267



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

	9

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Condensed Consolidated Statements of Cash Flows

For the ~~Three~~Nine Months Ended ~~March 31,~~September 30, 2019 and 2018 (Unaudited)

(In millions)


	Three Months Ended March 31,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net cash provided by operating activities	$	346		$	320		$	1,014		$	944
Cash Flows from Investing Activities:
Proceeds from the sale, maturity, disposal or redemption of:
Fixed maturities	1,401			903			3,068			2,976
Mortgage loans on real estate	213			167			542			429
Limited partnerships/corporations	17			11			42			63
Acquisition of:
Fixed maturities	(1,383		)	(1,217		)	(3,456		)	(3,881		)
Equity securities							—			(3		)
Mortgage loans on real estate	(108		)	(148		)	(312		)	(535		)
Limited partnerships/corporations	(29		)	(17		)	(144		)	(209		)
Derivatives, net	56			(15		)	73			(10		)
Policy loans, net	3			2			3			2
Short-term investments, net	—			(50		)	—			25
Short-term loan to affiliate, net	(103		)	80			(129		)	80
Collateral received (delivered), net	(87		)	23			(106		)	54
Other investments, net	5			(22		)	3			(41		)
Net cash used in investing activities	(15		)	(283		)
Net cash provided by (used in) investing activities							(416		)	(1,050		)
Cash Flows from Financing Activities:
Deposits received for investment contracts	791			816			2,661			2,560
Maturities and withdrawals from investment contracts	(1,104		)	(782		)	(2,893		)	(2,379		)
Settlements on deposit contracts	(1		)	(15		)	(3		)	(20		)
Net cash provided by (used in) financing activities	(314		)	19
Dividends paid and distributions of capital							(396		)	(126		)
Net cash provided by (used in) provided by financing activities							(631		)	35
Net decrease in cash and cash equivalents	17			56			(33		)	(71		)
Cash and cash equivalents, beginning of period	364			288			364			288
Cash and cash equivalents, end of period	$	381		$	344		$	331		$	217



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

	910

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

1. Business, Basis of Presentation and Significant Accounting Policies

Business

Voya Retirement Insurance and Annuity Company ("VRIAC") is a stock life insurance company domiciled in the State of Connecticut. VRIAC and its wholly owned ~~subsidiaries~~subsidiary (collectively, the "Company") provide financial products and services in the United States. VRIAC is authorized to conduct its insurance business in all states and in the District of Columbia and in Guam, Puerto Rico and the Virgin Islands.

Prior to May 2013, Voya Financial, Inc. ("Voya Financial"), together with its subsidiaries, including the Company was an indirect, ~~wholly-owned~~wholly owned subsidiary of ING Groep N.V. ("ING Group" or "ING"), a global financial services holding company based in The Netherlands. In May 2013, Voya Financial, Inc., completed its initial public offering of common stock, including the issuance and sale of common stock by Voya Financial, Inc. and the sale of shares of common stock owned indirectly by ING Group. Between October 2013 and March 2015, ING Group completed the sale of its remaining shares of common stock of Voya Financial, Inc. in a series of registered public offerings.

VRIAC is a direct, wholly owned subsidiary of Voya Holdings Inc. ("Parent"), which is a direct, wholly owned subsidiary of Voya Financial, Inc.

As of June 1, 2018, Directed Services LLC ("DSL") was divested pursuant to the ~~transaction~~2018 Transaction described below. Subsequent to the ~~transaction,~~2018 Transaction, VRIAC has ~~one~~1 wholly owned non-insurance subsidiary, Voya Financial Partners, LLC ("VFP").

On June 1, 2018, VRIAC's ultimate parent, Voya Financial, consummated a series of transactions (collectively, the ~~"Transaction'~~"2018 Transaction'') pursuant to a Master Transaction Agreement dated December 20, 2017 (the "MTA") with VA Capital Company LLC ("VA Capital") and Athene Holding Ltd. ("Athene"). As part of the 2018 Transaction, VA Capital's wholly owned subsidiary Venerable Holdings Inc. ("Venerable") acquired certain of Voya Financial's assets, including all of the shares of capital stock of Voya Insurance and Annuity Company ("VIAC"), the Company's Iowa-domiciled insurance affiliate, as well as the membership interests of DSL, the Company's broker-dealer subsidiary. Following the closing of the 2018 Transaction, VRIAC acquired a 9.99% equity interest in VA Capital.

The Company offers qualified and nonqualified annuity contracts that include a variety of funding and payout options for employer-sponsored retirement plans as well as some individual plans qualified under Internal Revenue Code Sections 401, 403, 408, 457 and 501, as well as nonqualified deferred compensation plans and related services. The Company's products are offered primarily to employer-sponsored groups in the health care, government and education markets (collectively "tax exempt markets"), small to mid-sized corporations and individuals. The Company also provides stable value investment options, including separate account guaranteed investment contracts (e.g., GICs) and synthetic GICs, to institutional clients. Pension risk transfer group annuity solutions were previously offered to institutional plan sponsors who needed to transfer their defined benefit plan obligations to the Company. The Company discontinued sales of these solutions in late 2016 to better align business activities to the Company's priorities. The Company's products are generally distributed through pension professionals, independent brokers and advisors, third-party administrators, consultants, dedicated financial guidance, planning and advisory representatives associated with Voya Financial, Inc.'s retail broker-dealer, Voya Financial Advisors, Inc. ("Voya Financial Advisors").

Products offered by the Company include deferred and immediate (i.e., payout) annuity contracts. Company products also include programs offered to qualified plans and nonqualified deferred compensation plans that package administrative and record-keeping services, participant education, and a broad suite of financial wellness offerings including retirement and financial planning guidance and advisory products, tools and services along with a variety of investment options, including proprietary and non-proprietary mutual funds and variable and fixed investment options. In addition, the Company offers wrapper agreements entered into with retirement plans, which contain certain benefit responsive guarantees (i.e., guarantees of principal and previously accrued interest for benefits paid under the terms of the plan) with respect to portfolios of plan-owned assets not invested with the Company. Stable value products are also provided to institutional plan sponsors where the Company may or may not be providing other employer sponsored products and services.

The Company has ~~one~~1 operating segment.



	1011

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Basis of Presentation

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

The Condensed Consolidated Financial Statements include the accounts of VRIAC and its wholly owned subsidiary VFP. Intercompany transactions and balances have been eliminated.

The accompanying Condensed Consolidated Financial Statements reflect adjustments (including normal, recurring adjustments) necessary to present fairly the financial position of the Company as of ~~March 31,~~September 30, 2019, its results of operations, comprehensive income ~~its~~and changes in shareholder's equity for the three and nine months ended September 30, 2019 and 2018, and its statements of cash flows for the ~~three~~nine months ended ~~March 31,~~September 30, 2019 and 2018, in conformity with U.S. GAAP. Interim results are not necessarily indicative of full year performance.

The December 31, 2018 Consolidated Balance Sheet is from the audited Consolidated Financial Statements included in the Company's Annual Report on Form 10-K, filed with the SEC. Therefore, these unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and related notes included in the Company's Annual Report on Form 10-K.

Adoption of New Pronouncements

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



Standard	Description of Requirements	Effective date and ~~method~~Method of ~~adoption~~Adoption	Effect on the ~~financial statements~~Financial Statements or ~~other significant matters~~Other Significant Matters
ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income	This standard, issued in February 2018, permits a reclassification from accumulated other comprehensive income ("AOCI") to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 ("Tax Reform"). Stranded tax effects arise because U.S. GAAP requires that the impact of a change in tax laws or rates on deferred tax liabilities and assets be reported in net income, even if related to items recognized within accumulated other comprehensive income. The amount of the reclassification would be based on the difference between the historical corporate income tax rate and the newly enacted 21% corporate income tax rate, applied to deferred tax liabilities and assets reported within accumulated other comprehensive income.	January 1, 2019, with the change reported in the period of adoption.	The impact to the January 1, 2019 Condensed Consolidated Balance Sheet was an increase to ~~Accumulated other comprehensive income~~AOCI of $137, with a corresponding decrease to Retained earnings. The ASU did not have a material impact on the Company's results of operations, cash flows, or disclosures.



	1112

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)



Standard	Description of Requirements	Effective date and ~~method~~Method of ~~adoption~~Adoption	Effect on the ~~financial statements~~Financial Statements or ~~other significant matters~~Other Significant Matters
ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities	This standard, issued in August 2017, enables entities to better portray risk management activities in their financial statements, as follows: • Expands an entity's ability to hedge nonfinancial and financial risk components and reduces complexity in accounting for fair value hedges of interest rate risk, • Eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item, and • Eases certain documentation and assessment requirements and modifies the accounting for components excluded from the assessment of hedge effectiveness, and modifies required disclosures. In October 2018, the FASB issued an amendment which expands the list of U.S. benchmark interest rates permitted in the application of hedge accounting.	January 1, 2019, using the modified retrospective method, with the exception of the presentation and disclosure requirements which were adopted prospectively.	The adoption had no effect on the Company's financial condition, results of operations, or cash flows. The adoption resulted in a change to the Company's significant accounting policy with respect to Derivatives, as follows: Fair Value Hedge: For derivative instruments that are designated and qualify as a fair value hedge, the entire change in the fair value of the hedging instrument included in the assessment of hedge effectiveness is recorded in the same line item in the Condensed Consolidated Statements of Operations as impacted by the hedged item. Cash Flow Hedge: For derivative instruments that are designated and qualify as a cash flow hedge, the entire change in the fair value of the hedging instrument included in the assessment of hedge effectiveness is reported as a component of AOCI. Those amounts are subsequently reclassified to earnings when the hedged item affects earnings, and are reported in the same line item in the Condensed Consolidated Statements of Operations as impacted by the hedged item. Other required disclosure changes have been included in Note 3, Derivative Financial Instruments.



	1213

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)



Standard	Description of Requirements	Effective date and ~~method~~Method of ~~adoption~~Adoption	Effect on the ~~financial statements~~Financial Statements or ~~other significant matters~~Other Significant Matters
ASU 2016-02, Leases	This standard, issued in February 2016, requires lessees to recognize a right-of-use asset and a lease liability for all leases with terms of more than 12 months. The lease liability will be measured as the present value of the lease payments, and the asset will be based on the liability. For income statement purposes, expense recognition will depend on the lessee's classification of the lease as either finance, with a front-loaded amortization expense pattern similar to current capital leases, or operating, with a straight-line expense pattern similar to current operating leases. Lessor accounting will be similar to the current model, and lessors will be required to classify leases as operating, direct financing, or sales-type. ASU 2016-02 also replaces the sale-leaseback guidance to align with the new revenue recognition standard, addresses statement of operation and statement of cash flow classification, and requires additional disclosures for all leases. In addition, the FASB issued various amendments during 2018 to clarify and simplify the provisions and implementation guidance of ASU 2016-02.	January 1, 2019 using the modified retrospective method.	The adoption did not have a material impact on the Company's financial condition, results of operations, or cash flows.

Future Adoption of Accounting Pronouncements

Long-Duration Contracts

In August 2018, the FASB issued ASU 2018-12, "Financial Services - Insurance (Topic 944) Targeted Improvements to the Accounting for Long-Duration Contracts" ("ASU 2018-12"), which changes the measurement and disclosures of insurance liabilities and deferred acquisition costs ("DAC") for long-duration contracts issued by insurers. ~~The provisions~~In October, 2019, the FASB voted to amend the effective date of ASU 2018-12 for public business entities that are ~~effective for~~required to file with the SEC to fiscal years beginning after December 15, ~~2020,~~2021, including interim periods, with early adoption permitted. The Company is currently in the process of evaluating the provisions of ASU 2018-12. While it is not possible to estimate the expected impact of adoption at this time, the Company believes there is a reasonable possibility that implementation of ASU 2018-12 may result in a significant impact on Shareholders’ equity and future earnings patterns.

In addition to requiring significantly expanded interim and annual disclosures regarding long-duration insurance contract assets and liabilities, ASU 2018-12's provisions include modifications to the accounting for such contracts in the following areas:



	1314

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)



ASU 2018-12 Subject Area	Description of Requirements	Transition Provisions	Effect on the ~~financial statements~~Financial Statements or ~~other significant matters~~Other Significant Matters
Assumptions used to measure the liability for future policy benefits for nonparticipating traditional and limited payment insurance contracts	Requires insurers to review and, if necessary, update cash flow assumptions at least annually. The effect of updating cash flow assumptions will be measured on a retrospective catch-up basis and presented in the Statement of ~~operations~~Operations in the period in which the update is made. The rate used to discount the liability for future policy benefits will be required to be updated quarterly, with related changes in the liability recorded in ~~Accumulated other comprehensive income.~~AOCI. The discount rate will be based on an upper-medium grade fixed-income corporate instrument yield reflecting the duration characteristics of the relevant liabilities.	Initial adoption is required to be reported using either a full retrospective or modified retrospective approach. Under either method, upon adoption the liability for future policy benefits will be remeasured using current discount rates as of the beginning of the earliest period presented with the impact recorded as a cumulative effect adjustment to AOCI.	The application of periodic assumption updates for nonparticipating traditional and limited payment insurance contracts is significantly different from the current accounting approach for such liabilities, which is based on assumptions that are locked in at contract inception unless a premium deficiency occurs. Under the current accounting guidance, the liability discount rate is based on expected yields on the underlying investment portfolio held by the insurer. The implications of these requirements, including transition options, and related potential financial statement impacts are currently being evaluated.
Measurement of market risk benefits	Creates a new category of benefit features called market risk benefits, defined as features that protect contract holders from capital market risk and expose the insurers to that risk. Market risk benefits will be required to be measured at fair value, with changes in fair value recognized in the Statement of ~~operations,~~Operations, except for changes in fair value attributable to changes in the instrument-specific credit risk, which will be recorded in ~~Accumulated other comprehensive income.~~AOCI.	Full retrospective application is required. Upon adoption, any difference between the fair value and pre-adoption carrying value of market risk benefits not currently measured at fair value will be recorded to retained earnings. In addition, the cumulative effect of changes in instrument-specific credit risk will be reclassified from retained earnings to AOCI.	Under the current accounting guidance, certain features that are expected to meet the definition of market risk benefits are accounted for as either insurance liabilities or embedded derivatives. The implications of these requirements and related potential financial statement impacts are currently being evaluated.



	1415

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)



ASU 2018-12 Subject Area	Description of Requirements	Transition Provisions	Effect on the ~~financial statements~~Financial Statements or ~~other significant matters~~Other Significant Matters
Amortization of DAC and other balances	Requires DAC (and other balances that refer to the DAC model, such as deferred sales inducement costs and unearned revenue liabilities) for all long-duration contracts to be measured on a constant level basis over the expected life of the contract.	Initial adoption is required to be reported using either a full retrospective or modified retrospective approach. The method of transition applied for DAC and other balances must be consistent with the transition method selected for future policy benefit liabilities, as described above.	This approach is intended to approximate straight-line amortization and cannot be based on revenue or profits as it is under the current accounting model. Related amounts in AOCI will be eliminated upon adoption. ASU 2018-12 did not change the existing accounting guidance related to ~~VOBA~~value of business acquired ("VOBA") and net cost of reinsurance, which allows, but does not require, insurers to amortize such balances on a basis consistent with DAC. The implications of these requirements, including transition options, and related potential financial statement impacts are currently being evaluated.



	15

~~Table of Contents~~

~~Voya Retirement Insurance and Annuity Company and Subsidiary~~

~~(A wholly owned subsidiary of Voya Holdings Inc.)~~

~~Notes to the Condensed Consolidated Financial Statements (Unaudited)~~

~~(Dollar amounts in millions, unless otherwise stated)~~

The following table provides a description of future adoptions of other new accounting standards that may have an impact on the Company's financial statements when adopted:



Standard	Description of Requirements	Effective date and transition provisions	Effect on the financial statements or other significant matters
ASU 2019-04, Codification Improvements to Financial Instruments	This standard, issued in April 2019, represents changes to clarify, correct errors in, and improve the financial instruments guidance in the following areas: • Topic 326, Financial Instruments-Credit Losses, • Topic 815, Derivatives and Hedging, and • Topic 825, Financial Instruments.	Generally January 1, 2020, including interim periods, with early adoption permitted. The effective dates and transition methods vary by provision.	The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2019-04.
ASU 2018-15, Customer's Accounting for Implementation ~~costs~~Costs in a ~~cloud computing arrangement that~~Cloud Computing Arrangement That is a ~~service contract~~Service Contract	This standard, issued in August 2018, requires a customer in a hosting arrangement that is a service contract to follow the guidance for internal-use software projects to determine which implementation costs to capitalize as an asset. Capitalized implementation costs are required to be expensed over the term of the hosting arrangement. In addition, a customer is required to apply the impairment and abandonment guidance for long-lived assets to the capitalized implementation costs. Balances related to capitalized implementation costs must be presented in the same financial statement line items as other hosting arrangement balances, and additional disclosures are required.	January 1, 2020 with early adoption permitted. Initial adoption of ASU 2018-15 may be reported either on a prospective or retrospective basis.	The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2018-15.
ASU 2018-14, Changes to the Disclosure Requirements for Defined Benefit Plans	This standard, issued in August 2018, eliminates certain disclosure requirements that are no longer considered cost beneficial and requires new disclosures that are considered relevant.	January 1, 2021 with early adoption permitted. Initial adoption of ASU 2018-14 is required to be reported on a retrospective basis for all periods presented.	The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2018-14.



	16

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)



Standard	Description of Requirements	Effective date and transition provisions	Effect on the financial statements or other significant matters
ASU 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement	This standard, issued in August 2018, simplifies certain disclosure requirements for fair value measurement.	January 1, 2020 with early adoption permitted. The transition method varies by provision.	The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2018-13.
ASU 2016-13, Measurement of Credit Losses on Financial Instruments	This standard, issued in June 2016: • Introduces a new current expected credit loss ("CECL") model to measure impairment on certain types of financial instruments, • Requires an entity to estimate lifetime expected credit losses, under the new CECL model, based on relevant information about historical events, current conditions, and reasonable and supportable forecasts, • Modifies the impairment model for ~~available-for-sale~~available for-sale debt securities, and • Provides a simplified accounting model for purchased financial assets with credit deterioration since their origination. In addition, the FASB issued various amendments during 2018 and 2019 to clarify the provisions of ASU 2016-13.	January 1, 2020, including interim periods, with early adoption permitted. Initial adoption of ASU 2016-13 is required to be reported on a modified retrospective basis, with a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption, except for certain provisions that are required to be applied prospectively.	The Company is does not expect the adoption of this guidance to have a material impact on the Company’s financial condition, results of operations or cash flows; however, implementation efforts are ongoing. The CECL requirements apply to financial assets held at amortized cost, the most significant of which, for the Company, are mortgage loans and reinsurance recoverable balances. Implementation efforts currently in progress include the ~~process~~finalization of ~~determining the impact~~ CECL models and continuing analysis of ~~adoption~~ model output, as well as development of ~~the provisions of ASU 2016-13.~~related processes, controls, and disclosures.



	1617

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

2. Investments

Fixed Maturities ~~and Equity Securities~~

Available-for-sale and fair value option ("FVO") fixed maturities were as follows as of ~~March 31,~~September 30, 2019:


	Amortized Cost		Gross Unrealized Capital Gains		Gross Unrealized Capital Losses		Embedded Derivatives⁽²⁾		Fair Value		OTTI⁽³⁾⁽⁴⁾		Amortized Cost		Gross Unrealized Capital Gains		Gross Unrealized Capital Losses		Embedded Derivatives⁽²⁾		Fair Value		OTTI⁽³⁾⁽⁴⁾
Fixed maturities:
U.S. Treasuries	$	464	$	103	$	—	$	—	$	567	$	—	$	564	$	152	$	—	$	—	$	716	$	—
U.S. Government agencies and authorities	—		—		—		—		—		—		19		—		—		—		19		—
State, municipalities and political subdivisions	755		37		3		—		789		—		750		89		—		—		839		—
U.S. corporate public securities	7,511		516		55		—		7,972		—		7,219		945		29		—		8,135		—
U.S. corporate private securities	3,753		175		42		—		3,886		—		3,742		325		20		—		4,047		—
Foreign corporate public securities and foreign governments⁽¹⁾	2,536		132		32		—		2,636		—		2,453		263		11		—		2,705		—
Foreign corporate private securities⁽¹⁾	3,237		105		17		—		3,325		—		3,151		188		8		—		3,331		—
Residential mortgage-backed securities:
Agency	2,022		66		11		4		2,081		—
Non-Agency	1,123		43		7		5		1,164		3
Total Residential mortgage-backed securities	3,145		109		18		9		3,245		3
Residential mortgage-backed securities													3,674		151		15		12		3,822		3
Commercial mortgage-backed securities	2,126		41		14		—		2,153		—		2,195		178		—		—		2,373		—
Other asset-backed securities	1,336		9		16		—		1,329		1		1,509		20		17		—		1,512		1
Total fixed maturities, including securities pledged	24,863		1,227		197		9		25,902		4		25,276		2,311		100		12		27,499		4
Less: Securities pledged	948		81		11		—		1,018		—		860		127		8		—		979		—
Total fixed maturities	$	23,915	$	1,146	$	186	$	9	$	24,884	$	4	$	24,416	$	2,184	$	92	$	12	$	26,520	$	4

⁽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 (loss).

⁽⁴⁾ Amount excludes ~~$160~~$214 of net unrealized gains on impaired available-for-sale securities.



	1718

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Available-for-sale and FVO fixed maturities were as follows as of December 31, 2018:


	Amortized Cost		Gross Unrealized Capital Gains		Gross Unrealized Capital Losses		Embedded Derivatives⁽²⁾		Fair Value		OTTI⁽³⁾⁽⁴⁾		Amortized Cost		Gross Unrealized Capital Gains		Gross Unrealized Capital Losses		Embedded Derivatives⁽²⁾		Fair Value		OTTI⁽³⁾⁽⁴⁾
Fixed maturities:
U.S. Treasuries	$	651	$	87	$	—	$	—	$	738	$	—	$	651	$	87	$	—	$	—	$	738	$	—
U.S. Government agencies and authorities	—		—		—		—		—		—
State, municipalities and political subdivisions	754		18		8		—		764		—		754		18		8		—		764		—
U.S. corporate public securities	7,908		288		181		—		8,015		—		7,908		288		181		—		8,015		—
U.S. corporate private securities	3,686		73		106		—		3,653		—		3,686		73		106		—		3,653		—
Foreign corporate public securities and foreign governments⁽¹⁾	2,551		69		80		—		2,540		—		2,551		69		80		—		2,540		—
Foreign corporate private securities⁽¹⁾	3,235		37		97		—		3,175		—		3,235		37		97		—		3,175		—
Residential mortgage-backed securities:
Agency	1,989		54		20		4		2,027		—
Non-Agency	977		39		12		5		1,009		3
Total Residential mortgage-backed securities	2,966		93		32		9		3,036		3
Residential mortgage-backed securities													2,966		93		32		9		3,036		3
Commercial mortgage-backed securities	1,917		16		28		—		1,905		—		1,917		16		28		—		1,905		—
Other asset-backed securities	1,230		6		28		—		1,208		2		1,230		6		28		—		1,208		2
Total fixed maturities, including securities pledged	24,898		687		560		9		25,034		5		24,898		687		560		9		25,034		5
Less: Securities pledged	867		45		30		—		882		—		867		45		30		—		882		—
Total fixed maturities	$	24,031	$	642	$	530	$	9	$	24,152	$	5	$	24,031	$	642	$	530	$	9	$	24,152	$	5

⁽¹⁾ Primarily U.S. dollar denominated.

⁽³⁾ Represents OTTI reported as a component of Other comprehensive income (loss).

⁽⁴⁾ Amount excludes $137 of net unrealized gains on impaired available-for-sale securities.



	18

~~Table of Contents~~

~~Voya Retirement Insurance and Annuity Company and Subsidiary~~

~~(A wholly owned subsidiary of Voya Holdings 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 ~~March 31,~~September 30, 2019, 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		Amortized Cost		Fair Value
Due to mature:
One year or less	$	563	$	568	$	483	$	488
After one year through five years	3,738		3,845		3,741		3,892
After five years through ten years	5,758		5,911		5,531		5,935
After ten years	8,197		8,851		8,143		9,477
Mortgage-backed securities	5,271		5,398		5,869		6,195
Other asset-backed securities	1,336		1,329		1,509		1,512
Fixed maturities, including securities pledged	$	24,863	$	25,902	$	25,276	$	27,499

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 March 31, 2019 and December 31, 2018, the Company did not have any investments in a single issuer, other than obligations of the U.S. Government and government agencies, with a carrying value in excess of 10% of the Company's Total shareholder's equity.

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

Amortized
Cost
Gross Unrealized Capital Gains Gross Unrealized Capital Losses Fair Value
March 31, 2019
Communications $ 1,064
$ 94
$ 5
$ 1,153
Financial 2,695
174
12
2,857
Industrial and other companies 7,404
327
54
7,677
Energy 1,808
116
42
1,882
Utilities 2,914
156
22
3,048
Transportation 810
42
6
846
Total $ 16,695
$ 909
$ 141
$ 17,463

December 31, 2018
Communications $ 1,139
$ 55
$ 21
$ 1,173
Financial 2,707
101
47
2,761
Industrial and other companies 7,604
152
214
7,542
Energy 1,884
55
81
1,858
Utilities 2,974
80
74
2,980
Transportation 729
14
17
726
Total $ 17,037
$ 457
$ 454
$ 17,040



	19

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

As of September 30, 2019 and December 31, 2018, the Company did not have any investments in a single issuer, other than obligations of the U.S. Government and government agencies, with a carrying value in excess of 10% of the Company's Total shareholder's equity.

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



	Amortized Cost		Gross Unrealized Capital Gains		Gross Unrealized Capital Losses		Fair Value
September 30, 2019
Communications	$	1,026	$	153	$	—	$	1,179
Financial	2,614		281		1		2,894
Industrial and other companies	7,150		680		21		7,809
Energy	1,710		191		36		1,865
Utilities	2,888		304		5		3,187
Transportation	846		78		2		922
Total	$	16,234	$	1,687	$	65	$	17,856

December 31, 2018
Communications	$	1,139	$	55	$	21	$	1,173
Financial	2,707		101		47		2,761
Industrial and other companies	7,604		152		214		7,542
Energy	1,884		55		81		1,858
Utilities	2,974		80		74		2,980
Transportation	729		14		17		726
Total	$	17,037	$	457	$	454	$	17,040

~~Fixed Maturities:~~

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 reported 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"),~~CMOs, including CMOs that are not agency-backed, that are subject to different degrees of risk from changes in interest rates and defaults. The principal risks inherent in holding CMOs are prepayment and extension risks related to significant decreases and increases in interest rates resulting in the prepayment of principal from the underlying mortgages, either earlier or later than originally anticipated. As of ~~March 31,~~September 30, 2019 and December 31, 2018, approximately ~~50.8%~~48.7% and 52.5%, respectively, of the Company’s CMO holdings, were invested in the above mentioned types of CMOs such as interest-only or principal-only strips, that are subject to more prepayment and extension risk than traditional CMOs.

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

Repurchase Agreements

As of ~~March 31,~~September 30, 2019 and December 31, 2018, the Company did not have any securities pledged in dollar rolls, repurchase agreement transactions or reverse repurchase agreements.



	20

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Securities Lending

The Company engages in securities lending whereby the initial collateral 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 high quality liquid assets on behalf of the Company. The market value of the loaned securities is monitored on a daily basis with additional collateral obtained or refunded as the market value of the loaned securities fluctuates. The lending agent indemnifies the Company against losses resulting from the failure of a counterparty to return securities pledged where collateral is insufficient to cover the loss. As of ~~March 31,~~September 30, 2019 and December 31, 2018, the fair value of loaned securities was ~~$887~~$851 and $759, respectively, and is included in Securities pledged on the Condensed Consolidated Balance Sheets.

If cash is received as collateral, the lending agent retains the cash collateral and invests it in short-term liquid assets on behalf of the Company. As of ~~March 31,~~September 30, 2019 and December 31, 2018, cash collateral retained by the lending agent and invested in short-term liquid assets on the Company's behalf was ~~$811~~$712 and $719, respectively, and is recorded in Short-term investments under securities loan agreements, including collateral delivered on the Condensed Consolidated Balance Sheets. As of ~~March 31,~~September 30, 2019 and December 31, 2018, liabilities to return collateral of ~~$811~~$712 and $719, respectively, are included in Payables under securities loan agreements, including collateral held, on the Condensed Consolidated Balance Sheets.

The Company accepts non-cash collateral in the form of securities. The securities retained as collateral by the lending agent may not be sold or re-pledged, except in the event of default, and are not reflected on the Company’s Condensed Consolidated Balance Sheets. This collateral generally consists of U.S. Treasury, U.S. Government agency securities and MBS pools. As of ~~March 31,~~September 30, 2019 and December 31, 2018, the fair value of securities retained as collateral by the lending agent on the Company’s behalf was ~~$106~~$170 and $67, respectively.



	20

~~Table of Contents~~

~~Voya Retirement Insurance and Annuity Company and Subsidiary~~

~~(A wholly owned subsidiary of Voya Holdings Inc.)~~

~~Notes to the Condensed Consolidated Financial Statements (Unaudited)~~

~~(Dollar amounts in millions, unless otherwise stated)~~

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


	March 31, 2019 ⁽¹⁾⁽²⁾		December 31, 2018 ⁽¹⁾⁽²⁾		September 30, 2019 ⁽¹⁾⁽²⁾		December 31, 2018 ⁽¹⁾⁽²⁾
U.S. Treasuries	$	118	$	92	$	172	$	92
U.S. corporate public securities	603		523		480		523
Short-term Investments					51		—
Foreign corporate public securities and foreign governments	196		170		179		170
Equity Securities	—		1		—		1
Payables under securities loan agreements	$	917	$	786	$	882	$	786

⁽¹⁾As of ~~March 31,~~September 30, 2019 and December 31, 2018, borrowings under securities lending transactions include cash collateral of ~~$811~~$712 and $719, respectively.

⁽²⁾As of ~~March 31,~~September 30, 2019 and December 31, 2018, borrowings under securities lending transactions include non-cash collateral of ~~$106~~$170 and $67, respectively.

The Company's securities lending activities are conducted on an overnight basis, and all securities loaned can be recalled at any time. The Company does not offset assets and liabilities associated with its securities lending program.

Variable Interest Entities ("VIEs")

The Company holds certain VIEs for investment purposes. VIEs may be in the form of private placement securities, structured securities, securitization transactions or limited partnerships. The Company has reviewed each of its holdings and determined that consolidation of these investments in the Company’s financial statements is not required, as the Company is not the primary beneficiary, because the Company does not have both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation or right to potentially significant losses or benefits, for any of its investments in VIEs. The Company did not provide any non-contractual financial support and its carrying value represents the Company’s exposure to loss. The carrying value of the investments in VIEs was ~~$587~~$702 and $583 as of ~~March 31,~~September 30, 2019 and December 31, 2018, respectively; these investments are included in Limited partnerships/corporations on the Condensed Consolidated Balance Sheets. Income and losses recognized on these investments are reported in Net investment income in the Condensed Consolidated Statements of Operations.



	21

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Securitizations

The Company invests in various tranches of securitization entities, including Residential mortgage-backed securities ("RMBS"), Commercial mortgage-backed securities ("CMBS") and ABS. Through its investments, the Company is not obligated to provide any financial or other support to these entities. Each of the RMBS, CMBS and ABS entities are thinly capitalized by design and considered VIEs. The Company's involvement with these entities is limited to that of a passive investor. The Company has no unilateral right to appoint or remove the servicer, special servicer or investment manager, which are generally viewed to have the power to direct the activities that most significantly impact the securitization entities' economic performance, in any of these entities, nor does the Company function in any of these roles. The Company, through its investments or other arrangements, does not have the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the entity. Therefore, the Company is not the primary beneficiary and does not consolidate any of the RMBS, CMBS and ABS entities in which it holds investments. These investments are accounted for as investments available-for-sale as described in the Fair Value Measurements Note to these Condensed Consolidated Financial Statements and unrealized capital gains (losses) on these securities are recorded directly in AOCI, except for certain RMBS that are accounted for under the FVO, for which changes in fair value are reflected in Other net realized capital gains (losses) in the Condensed Consolidated Statements of Operations. The Company’s maximum exposure to loss on these structured investments is limited to the amount of its investment.



	21

~~Table of Contents~~

~~Voya Retirement Insurance and Annuity Company and Subsidiary~~

~~(A wholly owned subsidiary of Voya Holdings 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 ~~March 31,~~September 30, 2019:


	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				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		Fair Value		Unrealized Capital Losses			Fair Value		Unrealized Capital Losses			Fair Value		Unrealized Capital Losses
U.S. Treasuries	$	—	$	—	$	—	$	—	$	15	$	—	$	15	$	—	$	—	$	—		$	13	$	—	*	$	13	$	—	*
State, municipalities and political subdivisions	3		—		—		—		93		3		96		3		—		—		*	—					—		—
U.S. corporate public securities	132		3		283		6		883		46		1,298		55		175		3			176		26			351		29
U.S. corporate private securities	140		3		14		—		764		39		918		42		148		3			97		17			245		20
Foreign corporate public securities and foreign governments	67		1		85		3		495		28		647		32		24		—			92		11			116		11
Foreign corporate private securities	24		—		186		4		463		13		673		17		73		2			183		6			256		8
Residential mortgage-backed	313		4		45		—		463		14		821		18		695		11			103		4			798		15
Commercial mortgage-backed	237		2		79		1		355		11		671		14		99		—			5		—			104		—
Other asset-backed	318		4		389		9		95		3		802		16		394		5			376		12			770		17
Total	$	1,234	$	17	$	1,081	$	23	$	3,626	$	157	$	5,941	$	197	$	1,608	$	24		$	1,045	$	76		$	2,653	$	100
Total number of securities in an unrealized loss position																	318					271					589

*Less than $1.



	22

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)


	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				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		Fair Value		Unrealized Capital Losses		Fair Value		Unrealized Capital Losses			Fair Value		Unrealized Capital Losses
U.S. Treasuries	$	—	$	—	$	—	$	—	$	15	$	—	$	15	$	—	$	—	$	—	$	15	$	—	*	$	15	$	—	*
State, municipalities and political subdivisions	60		—		131		3		88		5		279		8		191		3		88		5			279		8
U.S. corporate public securities	1,285		37		1,775		94		535		50		3,595		181		3,060		131		535		50			3,595		181
U.S. corporate private securities	639		13		863		27		579		66		2,081		106		1,502		40		579		66			2,081		106
Foreign corporate public securities and foreign governments	503		12		656		42		169		26		1,328		80		1,159		54		169		26			1,328		80
Foreign corporate private securities	604		10		900		67		221		20		1,725		97		1,504		77		221		20			1,725		97
Residential mortgage-backed	345		6		215		5		412		21		972		32		560		11		412		21			972		32
Commercial mortgage-backed	447		6		418		10		312		12		1,177		28		865		16		312		12			1,177		28
Other asset-backed	476		11		416		16		61		1		953		28		892		27		61		1			953		28
Total	$	4,359	$	95	$	5,374	$	264	$	2,392	$	201	$	12,125	$	560	$	9,733	$	359	$	2,392	$	201		$	12,125	$	560
Total number of securities in an unrealized loss position																	1,894				550					2,444

*Less than $1.

OfBased on the Company's quarterly evaluation of its securities in a unrealized loss position, described below, the Company concluded that these securities were not other-than-temporarily impaired as of September 30, 2019. The Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases.

On a quarterly basis, the Company evaluates its available-for-sale investment portfolio to determine whether there has been an other-than-temporary decline in fair value below the amortized cost basis. All available-for-sale securities with fair values less than amortized cost are included in the Company’s evaluation. Generally, for non-structured securities, management considers 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, management considers in the determination of recovery value the same consideration utilized in its overall impairment evaluation process, which incorporates available information and the Company’s best estimate of scenario based outcomes regarding the specific security and issuer. The Company also considers quality and amount of any credit enhancement; 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. For structured securities, such as non-agency RMBS, CMBS, and ABS, the Company evaluates other-than-temporary impairments based on actual and projected cash flows, after considering the quality and updated loan-to-value ratios, reflecting current home prices of the underlying collateral, forecasted loss severity, the payment priority in the tranche and any credit enhancement within the structure. In assessing credit impairment, the Company performs discounted cash flow analysis comparing the current amortized cost of a security to the present value of the expected future cash flows, including estimated defaults, and prepayments. The discount rate is generally the effective interest rate of the fixed maturity prior to the impairment.

See the Business, Basis of Presentation and Significant Accounting Policies Note to our Consolidated Financial Statements in Part II, Item 8. in our Annual Report on Form 10-K for the policy used to evaluate whether the investments are other-than-temporarily impaired.

Gross unrealized capital losses ~~aged more than twelve months, the average market value of the related~~on fixed maturities, including securities pledged, decreased $460 from $560 to $100 for the nine months ended September 30, 2019. The decrease in gross unrealized capital losses was ~~95.9% and 92.2% of the average book value as of~~ ~~March 31, 2019~~ ~~and~~ ~~December 31, 2018, respectively.~~

primarily due to declining interest rates.



	23

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

~~Unrealized capital~~

At September 30, 2019, $30 of the total $100 of gross unrealized losses ~~(including noncredit impairments)~~were from 6 available-for-sale fixed maturity securities with an unrealized loss position of 20% or more of amortized cost for 12 months or greater.

Evaluating Securities for Other-Than-Temporary Impairments

The Company performs a regular evaluation, on a security-by-security basis, of its available-for-sale securities holdings, including fixed maturity securities in ~~fixed maturities, including~~accordance with its impairment policy in order to evaluate whether such investments are other-than-temporarily impaired.

The following tables identify the Company's impairments included in the Condensed Consolidated Statements of Operations, excluding impairments included in Other comprehensive income (loss) by type for the periods indicated:



	Three Months Ended September 30,
	2019				2018
	Impairment			No. of Securities	Impairment		No. of Securities
U.S. corporate public securities	$	—		—	$	5	2
Foreign corporate public securities and foreign governments⁽¹⁾	1		*	2	$	—	—
Foreign corporate private securities⁽¹⁾	—		*	1	—		—
Residential mortgage-backed	2			11	1		20
Other asset-backed	—		*	1	—		—
Total	$	3		15	$	6	22
Credit Impairments	$	1
Intent Impairments	$	2
⁽¹⁾ Primarily U.S. dollar denominated.
*Less than $1.
	Nine Months Ended September 30,
	2019				2018
	Impairment			No. of Securities	Impairment		No. of Securities
U.S. corporate public securities	$	—		—	$	5	2
Foreign corporate public securities and foreign governments⁽¹⁾	2			3	—		—
Foreign corporate private securities⁽¹⁾	18			4	9		1
Residential mortgage-backed	2			21	2		40
Other asset-backed	—		*	4	—		—
Total	$	22		32	$	16	43
Credit Impairments	$	19
Intent Impairments	$	3
⁽¹⁾ Primarily U.S. dollar denominated.
*Less than $1.

The Company may sell securities ~~pledged, for instances~~during the period in which fair value has declined below amortized cost ~~by greater than or less than 20%~~ for ~~consecutive months as indicated~~fixed maturities. In certain situations, new factors, including changes in the ~~tables below, were as follows as of~~business environment, can change the ~~dates indicated:~~

Amortized Cost Unrealized Capital Losses Number of Securities
< 20% > 20% < 20% > 20% < 20% > 20%
March 31, 2019
Six months or less below amortized cost $ 1,405
$ 22
$ 34
$ 5
277
10
More than six months and twelve months or less below amortized cost 1,108
—
24
—
218
6
More than twelve months below amortized cost 3,509
94
106
28
743
5
Total $ 6,022
$ 116
$ 164
$ 33
1,238
21

December 31, 2018
Six months or less below amortized cost $ 4,531
$ 88
$ 106
$ 21
826
25
More than six months and twelve months or less below amortized cost 5,535
73
235
27
1,063
6
More than twelve months below amortized cost 2,378
80
144
27
519
5
Total $ 12,444
$ 241
$ 485
$ 75
2,408
36

Company’s previous intent to continue holding a security. Accordingly, these factors may lead the Company to record additional intent related capital losses.



	24

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

~~Unrealized capital losses (including noncredit impairments) in~~The following tables present the amount of credit impairments on 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~~a portion of the ~~dates~~OTTI loss was recognized in Other comprehensive income (loss) and the corresponding changes in such amounts for the periods indicated:



	Three Months Ended September 30,
	2019		2018
Balance at July 1	$	5	$	5
Additional credit impairments:
On securities not previously impaired	—		—
On securities previously impaired	—		1
Reductions:
Securities intent impaired	—		—
Increase in cash flows	—		—
Securities sold, matured, prepaid or paid down	1		1
Balance at September 30	$	4	$	5

	Nine Months Ended September 30,
	2019		2018
Balance at January 1	$	5	$	16
Additional credit impairments:
On securities previously impaired	—		1
Reductions:
Increase in cash flows	—		—
Securities sold, matured, prepaid or paid down	1		12
Balance at September 30	$	4	$	5

Amortized Cost Unrealized Capital Losses Number of Securities
< 20% > 20% < 20% > 20% < 20% > 20%
March 31, 2019
U.S. Treasuries $ 15
$ —
$ —
$ —
5
—
State, municipalities and political subdivisions 99
—
3
—
51
—
U.S. corporate public securities 1,328
25
46
9
286
3
U.S. corporate private securities 894
66
24
18
105
2
Foreign corporate public securities and foreign governments 656
23
26
6
132
6
Foreign corporate private securities 690
—
17
—
64
—
Residential mortgage-backed 837
2
18
—
250
10
Commercial mortgage-backed 685
—
14
—
129
—
Other asset-backed 818
—
16
—
216
—
Total $ 6,022
$ 116
$ 164
$ 33
1,238
21

December 31, 2018
U.S. Treasuries $ 15
$ —
$ —
$ —
5
—
State, municipalities and political subdivisions 287
—
8
—
132
—
U.S. corporate public securities 3,721
55
164
17
796
8
U.S. corporate private securities 2,120
67
84
22
245
2
Foreign corporate public securities and foreign governments 1,348
60
65
15
307
9
Foreign corporate private securities 1,765
57
76
21
157
6
Residential mortgage-backed 1,004
—
32
—
301
8
Commercial mortgage-backed 1,205
—
28
—
228
—
Other asset-backed 979
2
28
—
237
3
Total $ 12,444
$ 241
$ 485
$ 75
2,408
36

Investments with fair values less than amortized cost are included in the Company's other-than-temporary impairments analysis. Impairments were recognized as disclosed in the "Evaluating Securities for Other-Than-Temporary Impairments" section below. The Company evaluates non-agency RMBS and ABS for "other-than-temporary impairments" each quarter based on actual and projected cash flows, after considering the quality and updated loan-to-value ratios reflecting current home prices of underlying collateral, forecasted loss severity, the payment priority within the tranche structure of the security and amount of any credit enhancements. The Company's assessment of current levels of cash flows compared to estimated cash flows at the time the securities were acquired (typically pre-2008) indicates the amount and the pace of projected cash flows from the underlying collateral has generally been lower and slower, respectively. However, since cash flows are typically projected at a trust level, the impairment review incorporates the security's position within the trust structure as well as credit enhancement remaining in the trust to determine whether an impairment is warranted. Therefore, while lower and slower cash flows will impact the trust, the effect on the valuation of a particular security within the trust will also be dependent upon the trust structure. Where the assessment continues to project full recovery of principal and interest on schedule, the Company has not recorded an impairment. Based on this analysis, the Company determined that the remaining investments in an unrealized loss position were not other-than-temporarily impaired and therefore no further other-than-temporary impairment was necessary.



	25

~~Table of Contents~~

~~Voya Retirement Insurance and Annuity Company and Subsidiary~~

~~(A wholly owned subsidiary of Voya Holdings Inc.)~~

~~Notes to the Condensed Consolidated Financial Statements (Unaudited)~~

~~(Dollar amounts in millions, unless otherwise stated)~~

Troubled Debt Restructuring

The Company invests in high quality, well performing portfolios of commercial mortgage loans and private placements. Under certain circumstances, modifications are granted to these contracts. Each modification is evaluated as to whether a troubled debt restructuring has occurred. A modification is a troubled debt restructuring when the borrower is in financial difficulty and the creditor makes concessions. Generally, the types of concessions may include reducing the face amount or maturity amount of the debt as originally stated, reducing the contractual interest rate, extending the maturity date at an interest rate lower than current market interest rates and/or reducing accrued interest. The Company considers the amount, timing and extent of the concession granted in determining any impairment or changes in the specific valuation allowance recorded in connection with the troubled debt restructuring. A valuation allowance may have been recorded prior to the quarter when the loan is modified in a troubled debt restructuring. Accordingly, the carrying value (net of the specific valuation allowance) before and after modification through a troubled debt restructuring may not change significantly, or may increase if the expected recovery is higher than the pre-modification recovery assessment. ~~As of March 31,~~For the three and nine months ended September 30, 2019, the Company ~~did not have any~~had 1 new commercial mortgage loan troubled debt restructuring with a pre-modification and post-modification carrying value of $2. For the three months ended September 30, 2019, the Company did 0t have any new private placement troubled debt restructuring. For the nine months ended September 30, 2019, the Company had ~~one~~1 new private placement troubled debt restructuring with a pre-modification cost basis of $74 and post-modification carrying value of ~~$57. As of December 31,~~$54. For the three and nine months ended September 30, 2018, the Company did ~~not~~0t have any new commercial mortgage loan or private placement troubled debt restructuring.

~~As of March 31,~~For the three and nine months ended September 30, 2019 and ~~December 31,~~September 30, 2018, the Company did ~~not~~0t have any commercial mortgage loans or private placements modified in a troubled debt restructuring with a subsequent payment default.



	25

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Mortgage Loans on Real Estate

The Company diversifies its commercial mortgage loan portfolio by geographic region and property type to reduce concentration risk. The Company manages risk when originating commercial mortgage loans by generally lending only up to 75% of the estimated fair value of the underlying real estate. Subsequently, the Company continuously evaluates mortgage loans based on relevant current information including a review of loan-specific credit quality, property characteristics and market trends. Loan performance is monitored on a loan specific basis through the review of submitted appraisals, operating statements, rent revenues and annual inspection reports, among other items. This review ensures properties are performing at a consistent and acceptable level to secure the debt. The components to evaluate debt service coverage are received and reviewed at least annually to determine the level of risk.

The following table summarizes the Company's investment in mortgage loans as of the dates indicated:



	September 30, 2019						December 31, 2018
	Impaired		Non Impaired		Total		Impaired		Non Impaired			Total
Commercial mortgage loans	$	4	$	4,678	$	4,682	$	4	$	4,915		$	4,919
Collective valuation allowance for losses	—		—		—		N/A		(1		)	(1		)
Total net commercial mortgage loans	$	4	$	4,678	$	4,682	$	4	$	4,914		$	4,918
N/A- Not Applicable

March 31, 2019 December 31, 2018
Impaired Non Impaired Total Impaired Non Impaired Total
Commercial mortgage loans $ 8
$ 4,804
$ 4,812
$ 4
$ 4,915
$ 4,919
Collective valuation allowance for losses N/A
(1 ) (1 ) N/A
(1 ) (1 )
Total net commercial mortgage loans $ 8
$ 4,803
$ 4,811
$ 4
$ 4,914
$ 4,918
N/A- Not Applicable

There ~~was one impairment of $2 on the mortgage loan portfolio for the~~ ~~three months~~ ~~ended~~ ~~March 31, 2019. There~~ were no0 impairments on the mortgage loan portfolio for the three months ended ~~March 31,~~September 30, 2019. There was 1 impairment of $2 on the mortgage loan portfolio for the nine months ended September 30, 2019. There were 0 impairments on the mortgage loan portfolio for the three and nine months ended September 30, 2018.

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



	September 30, 2019			December 31, 2018
Collective valuation allowance for losses, balance at January 1	$	1		$	1
Addition to (reduction of) allowance for losses	(1		)	—
Collective valuation allowance for losses, end of period	$	—		$	1

March 31, 2019 December 31, 2018
Collective valuation allowance for losses, balance at January 1 $ 1
$ 1
Addition to (reduction of) allowance for losses —
—
Collective valuation allowance for losses, end of period $ 1
$ 1

The carrying values and unpaid principal balances of impaired mortgage loans were as follows as of the dates indicated:



	September 30, 2019		December 31, 2018
Impaired loans, gross	$	4	$	4
Less: Allowances for losses on impaired loans	—		—
Impaired loans, net	$	4	$	4
Unpaid principal balance of impaired loans	$	5	$	5

As of September 30, 2019 and December 31, 2018 the Company did not have any impaired loans with allowances for losses.

Commercial loans are placed on non-accrual status when 90 days in arrears if the Company has concerns regarding the collectability of future payments, or if a loan has matured without being paid off or extended.

As of September 30, 2019 and December 31, 2018, the Company had 0 loan greater than 60 days in arrears and there were 0 mortgage loans in the Company's portfolio in process of foreclosure. The Company foreclosed on 1 loan during the nine months ended September 30, 2019 with a carrying value of $4.



	26

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The ~~carrying values and unpaid principal balances of impaired mortgage loans were as follows as of the dates indicated:~~

March 31, 2019 December 31, 2018
Impaired loans without allowances for losses $ 8
$ 4
Less: Allowances for losses on impaired loans —
—
Impaired loans, net $ 8
$ 4
Unpaid principal balance of impaired loans $ 12
$ 5

~~As of March 31, 2019 and December 31, 2018 the Company did not have any impaired loans with allowances for losses.~~

As of March 31, 2019, the Company had one loan greater than 60 days in arrears, which is also in non-accrual status and in process of foreclosure, with an amortized cost of $4. There were no loans greater than 60 days in arrears and no mortgage loans in the Company's portfolio in process of foreclosure as of December 31, 2018.

~~The~~ following ~~table presents~~tables present information on the average investment during the period in impaired loans and interest income recognized on impaired and troubled debt restructured loans for the periods indicated:



	Three Months Ended September 30,
	2019		2018
Impaired loans, average investment during the period (amortized cost)⁽¹⁾	$	4	$	4
Interest income recognized on impaired loans, on an accrual basis⁽¹⁾	—		—
Interest income recognized on impaired loans, on a cash basis⁽¹⁾	—		—
Interest income recognized on troubled debt restructured loans, on an accrual basis	—		—
⁽¹⁾Includes amounts for Troubled debt restructured loans.
	Nine Months Ended September 30,
	2019		2018
Impaired loans, average investment during the period (amortized cost)⁽¹⁾	$	6	$	4
Interest income recognized on impaired loans, on an accrual basis⁽¹⁾	—		—
Interest income recognized on impaired loans, on a cash basis⁽¹⁾	—		—
Interest income recognized on troubled debt restructured loans, on an accrual basis	—		—
⁽¹⁾Includes amounts for Troubled debt restructured loans.

Three Months Ended March 31,
2019 2018
Impaired loans, average investment during the period (amortized cost)⁽¹⁾
$ 6
$ 4
Interest income recognized on impaired loans, on an accrual basis⁽¹⁾
—
—
Interest income recognized on impaired loans, on a cash basis⁽¹⁾
—
—
Interest income recognized on troubled debt restructured loans, on an accrual basis —
—
⁽¹⁾Includes amounts for Troubled debt restructured loans.

Loan-to-value ("LTV") and debt service coverage ("DSC") ratios are measures commonly used to assess the risk and quality of mortgage loans. The LTV ratio, calculated at time of origination, is expressed as a percentage of the amount of the loan relative to the value of the underlying property. A LTV ratio in excess of 100% indicates the unpaid loan amount exceeds the underlying collateral. The DSC ratio, based upon the most recently received financial statements, is expressed as a percentage of the amount of a property’s net income to its debt service payments. A DSC ratio of less than 1.0 indicates that a property’s operations do not generate sufficient income to cover debt payments. These ratios are utilized as part of the review process described above.



	27

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The following tables present the LTV and DSC ratios as of the dates indicated:


	Recorded Investment														Recorded Investment
	Debt Service Coverage Ratios														Debt Service Coverage Ratios
	> 1.5x		>1.25x - 1.5x		>1.0x - 1.25x		< 1.0x		Commercial mortgage loans secured by land or construction loans		Total		% of Total		> 1.5x		>1.25x - 1.5x		>1.0x - 1.25x		< 1.0x		Commercial mortgage loans secured by land or construction loans		Total		% of Total
March 31, 2019 ⁽¹⁾
September 30, 2019 ⁽¹⁾
Loan-to-Value Ratios:
0% - 50%	$	273	$	24	$	23	$	—	$	—	$	320	6.6	%	$	268	$	26	$	8	$	—	$	—	$	302	6.5	%
>50% - 60%	1,107		19		24		4		—		1,154		24.0	%	1,087		42		23		28		—		1,180		25.2	%
>60% - 70%	1,912		345		441		129		31		2,858		59.4	%	1,887		423		271		100		—		2,681		57.2	%
>70% - 80%	181		153		49		34		6		423		8.8	%	193		139		54		79		8		473		10.1	%
>80% and above	5		21		10		—		21		57		1.2	%	24		22		—		—		—		46		1.0	%
Total	$	3,478	$	562	$	547	$	167	$	58	$	4,812	100.0	%	$	3,459	$	652	$	356	$	207	$	8	$	4,682	100.0	%
⁽¹⁾ Balances do not include collective valuation allowance for losses.	⁽¹⁾ Balances do not include collective valuation allowance for losses.														⁽¹⁾ Balances do not include collective valuation allowance for losses.
	Recorded Investment														Recorded Investment
	Debt Service Coverage Ratios														Debt Service Coverage Ratios
	> 1.5x		>1.25x - 1.5x		>1.0x - 1.25x		< 1.0x		Commercial mortgage loans secured by land or construction loans		Total		% of Total		> 1.5x		>1.25x - 1.5x		>1.0x - 1.25x		< 1.0x		Commercial mortgage loans secured by land or construction loans		Total		% of Total
December 31, 2018 ⁽¹⁾
Loan-to-Value Ratios:
0% - 50%	$	284	$	24	$	23	$	—	$	—	$	331	6.7	%	$	284	$	24	$	23	$	—	$	—	$	331	6.7	%
>50% - 60%	1,133		40		11		—		—		1,184		24.1	%	1,133		40		11		—		—		1,184		24.1	%
>60% - 70%	2,070		328		503		34		26		2,961		60.2	%	2,070		328		503		34		26		2,961		60.2	%
>70% - 80%	213		87		66		19		4		389		7.9	%	213		87		66		19		4		389		7.9	%
>80% and above	18		5		10		—		21		54		1.1	%	18		5		10		—		21		54		1.1	%
Total	$	3,718	$	484	$	613	$	53	$	51	$	4,919	100.0	%	$	3,718	$	484	$	613	$	53	$	51	$	4,919	100.0	%
(1) Balances do not include collective valuation allowance for losses.



	28

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Properties collateralizing mortgage loans are geographically dispersed throughout the United States, as well as diversified by property type, as reflected in the following tables as of the dates indicated:

March 31, 2019 December 31, 2018

Gross
Carrying Value

% of
Total

Gross
Carrying Value

% of
Total
Commercial Mortgage Loans by U.S. Region:
Pacific $ 1,003
20.8 % $ 994
20.2 %
South Atlantic 943
19.6 % 1,011
20.5 %
Middle Atlantic 1,033
21.5 % 1,039
21.2 %
West South Central 563
11.7 % 566
11.5 %
Mountain 459
9.5 % 458
9.3 %
East North Central 436
9.1 % 465
9.5 %
New England 90
1.9 % 75
1.5 %
West North Central 231
4.8 % 258
5.2 %
East South Central 54
1.1 % 53
1.1 %
Total Commercial mortgage loans $ 4,812
100.0 % $ 4,919
100.0 %

March 31, 2019 December 31, 2018

Gross
Carrying Value

% of
Total

Gross
Carrying Value

% of
Total
Commercial Mortgage Loans by Property Type:
Retail $ 1,308
27.2 % $ 1,335
27.2 %
Industrial 1,299
27.0 % 1,323
26.9 %
Apartments 1,088
22.6 % 1,104
22.4 %
Office 747
15.5 % 791
16.1 %
Hotel/Motel 118
2.5 % 111
2.3 %
Mixed Use 45
0.9 % 46
0.9 %
Other 207
4.3 % 209
4.2 %
Total Commercial mortgage loans $ 4,812
100.0 % $ 4,919
100.0 %



	September 30, 2019				December 31, 2018
	Gross Carrying Value		% of Total		Gross Carrying Value		% of Total
Commercial Mortgage Loans by U.S. Region:
Pacific	$	995	21.3	%	$	994	20.2	%
South Atlantic	930		19.9	%	1,011		20.5	%
Middle Atlantic	1,014		21.6	%	1,039		21.2	%
West South Central	507		10.8	%	566		11.5	%
Mountain	471		10.1	%	458		9.3	%
East North Central	393		8.4	%	465		9.5	%
New England	84		1.8	%	75		1.5	%
West North Central	222		4.7	%	258		5.2	%
East South Central	66		1.4	%	53		1.1	%
Total Commercial mortgage loans	$	4,682	100.0	%	$	4,919	100.0	%

~~The following table presents mortgages by year of origination as of the dates indicated:~~



	September 30, 2019				December 31, 2018
	Gross Carrying Value		% of Total		Gross Carrying Value		% of Total
Commercial Mortgage Loans by Property Type:
Retail	$	1,211	25.9	%	$	1,335	27.2	%
Industrial	1,278		27.2	%	1,323		26.9	%
Apartments	1,142		24.4	%	1,104		22.4	%
Office	684		14.6	%	791		16.1	%
Hotel/Motel	122		2.6	%	111		2.3	%
Mixed Use	45		1.0	%	46		0.9	%
Other	200		4.3	%	209		4.2	%
Total Commercial mortgage loans	$	4,682	100.0	%	$	4,919	100.0	%

March 31, 2019 ⁽¹⁾

December 31, 2018 ⁽¹⁾
Year of Origination:
2019 $ 97
$ —
2018 377
375
2017 1,066
1,108
2016 849
906
2015 586
589
2014 479
490
2013 and prior 1,358
1,451
Total Commercial mortgage loans $ 4,812
$ 4,919

⁽¹⁾ ~~Balances do not include collective valuation allowance for losses.~~



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~~Table of Contents~~

~~Voya Retirement Insurance and Annuity Company and Subsidiary~~

~~(A wholly owned subsidiary of Voya Holdings Inc.)~~

~~Notes to the Condensed Consolidated Financial Statements (Unaudited)~~

~~(Dollar amounts in millions, unless otherwise stated)~~

~~Evaluating Securities for Other-Than-Temporary Impairments~~

The Company performs a regular evaluation, on a security-by-security basis, of its available-for-sale securities holdings, including fixed maturity securities in accordance with its impairment policy in order to evaluate whether such investments are other-than-temporarily impaired.

The following table identifies the Company's credit-related and intent-related impairments included in the Condensed Consolidated Statements of Operations, excluding impairments included in Other comprehensive income (loss) by type for the periods indicated:

Three Months Ended March 31,
2019 2018
Impairment No. of Securities Impairment No. of Securities
Foreign corporate private securities⁽¹⁾
$ 18
3
$ 9
1
Residential mortgage-backed —
* 10
—
* 6
Other asset-backed —
* 2
—
—
Total $ 18
15
$ 9
7
⁽¹⁾ Primarily U.S. dollar denominated.

*Less than $1.

The above table includes $18 and $9 of write-downs related to credit impairments for the three months ended March 31, 2019 and March 31, 2018, respectively, in other-than-temporary impairments, which are recognized in the Condensed Consolidated Statements of Operations. The remaining write-downs for the three months ended March 31, 2019 and March 31, 2018 related to intent impairments are immaterial.

The Company may sell securities during the period in which fair value has declined below amortized cost for fixed maturities. In certain situations, new factors, including changes in the business environment, can change the Company’s previous intent to continue holding a security. Accordingly, these factors may lead the Company to record additional intent related capital losses.

The following table presents the amount of credit impairments on fixed maturities for which a portion of the OTTI loss was recognized in Other comprehensive income (loss) and the corresponding changes in such amounts for the periods indicated:

Three Months Ended March 31,
2019 2018
Balance at January 1 $ 5
$ 16
Additional credit impairments:
On securities previously impaired —
—
Reductions:
Increase in cash flows —
—
Securities sold, matured, prepaid or paid down —
10
Balance at March 31 $ 5
$ 6



	30

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Net Investment Income

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



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Fixed maturities	$	352	$	347	$	1,058	$	1,011
Equity securities	2		2		5		4
Mortgage loans on real estate	54		57		163		164
Policy loans	—		2		4		7
Short-term investments and cash equivalents	1		—		3		2
Other	22		37		55		71
Gross investment income	431		445		1,288		1,259
Less: Investment expenses	18		20		53		55
Net investment income	$	413	$	425	$	1,235	$	1,204

Three Months Ended March 31,
2019 2018
Fixed maturities $ 352
$ 323
Equity securities 2
1
Mortgage loans on real estate 54
53
Policy loans 2
2
Short-term investments and cash equivalents 1
1
Other 1
19
Gross investment income 412
399
Less: Investment expenses 18
17
Net investment income $ 394
$ 382

As of ~~March 31,~~September 30, 2019 and December 31, 2018, the Company had ~~$1 and~~ $1, respectively, of investments in fixed maturities that did not produce net investment income. Fixed maturities are moved to a non-accrual status when the investment defaults.

Interest income on fixed maturities is recorded when earned using an effective yield method, giving effect to amortization of premiums and accretion of discounts. Such interest income is recorded in Net investment income in the Condensed Consolidated Statements of Operations.

Net Realized Capital Gains (Losses)

Net realized capital gains (losses) comprise the difference between the amortized cost of investments and proceeds from sale and redemption, as well as losses incurred due to the credit-related and intent-related other-than-temporary impairment of investments. Realized investment gains and losses are also primarily generated from changes in fair value of embedded derivatives within products and fixed maturities, changes in fair value of fixed maturities recorded at FVO and changes in fair value including accruals on derivative instruments, except for effective cash flow hedges. ~~Upon the adoption of ASU 2016-01 as of January 1, 2018,~~Net realized capital gains (losses) also ~~includes~~include changes in fair value of equity securities.The cost of the investments on disposal is generally determined based on first-in-first-out ("FIFO") methodology.

Net realized capital gains (losses) were as follows for the periods indicated:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Fixed maturities, available-for-sale, including securities pledged	$	44		$	(9	)	$	31		$	(42	)
Fixed maturities, at fair value option	(18		)	(80		)	59			(261		)
Equity securities	—			(1		)	4			(1		)
Derivatives	13			23			(69		)	34
Embedded derivatives - fixed maturities	2			(1		)	4			(5		)
Guaranteed benefit derivatives	(36		)	24			(49		)	56
Other investments	(1		)	—			(2		)	5
Net realized capital gains (losses)	$	4		$	(44	)	$	(22	)	$	(214	)

Three Months Ended March 31,
2019 2018
Fixed maturities, available-for-sale, including securities pledged $ (16 ) $ (14 )
Fixed maturities, at fair value option 24
(99 )
Equity securities 1
(2 )
Derivatives (32 ) 5
Embedded derivatives - fixed maturities 1
(2 )
Guaranteed benefit derivatives —
20
Other investments (2 ) 5
Net realized capital gains (losses) $ (24 ) $ (87 )

~~For the three months ended March 31, 2019 and 2018, the change in fair value of equity securities still held as of March 31, 2019 and 2018 was $1 and $(2), respectively.~~



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Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

For the three and nine months ended September 30, 2019 , the change in fair value of equity securities still held as of September 30, 2019 was $0 and $4, respectively. For the three and nine months ended September 30, 2018, the change in fair value of equity securities still held as of September 30, 2018 was $(1).

Proceeds from the sale of fixed maturities, available-for-sale, and equity securities and the related gross realized gains and losses, before tax, were as follows for the periods indicated:


	Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018		2019		2018
Proceeds on sales	$	1,223	$	660	$	340	$	120	$	1,915	$	1,960
Gross gains	12		4		6		1		25		12
Gross losses	11		7		4		4		18		31

3. Derivative Financial Instruments

The Company enters into the following types of derivatives:

Interest rate caps: The Company uses interest rate cap contracts to hedge the interest rate exposure arising from duration mismatches between assets and liabilities. Interest rate caps are also used to hedge interest rate exposure if rates rise above a specified level. Such increases in rates will require the Company to incur additional expenses. The future payout from the interest rate caps fund this increased exposure. The Company pays an upfront premium to purchase these caps. The Company utilizes these contracts in non-qualifying hedging relationships.

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

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

Credit default swaps: Credit default swaps are used to reduce credit loss exposure with respect to certain assets that the Company owns, or to assume credit exposure on certain assets that the Company does not own. Payments are made to, or received from, the counterparty at specified intervals. In the event of a default on the underlying credit exposure, the Company will either receive a payment (purchased credit protection) or will be required to make a payment (sold credit protection) equal to the par minus recovery value of the swap contract. The Company utilizes these contracts in non-qualifying hedging relationships.

Currency forwards: The Company utilizes currency forward contracts to hedge currency exposure related to invested assets. The Company utilizes these contracts in non-qualifying hedging relationships.

Forwards: The Company uses forward contracts to hedge certain invested assets against movement in interest rates, particularly mortgage rates. The Company uses To Be Announced mortgage-backed securities as an economic hedge against rate movements. The Company utilizes forward contracts in non-qualifying hedging relationships.

Futures: The Company uses interest rate futures contracts to hedge its exposure to market risks due to changes in interest rates. The Company enters into exchange traded futures with regulated futures commissions that are members of the exchange. The Company also posts initial and variation margins, with the exchange, on a daily basis. The Company utilizes exchange-traded futures in non-qualifying hedging relationships. The Company may also use futures contracts as a hedge against an increase in certain equity indices. Such increases may result in increased payments to the holders of fixed index annuity ("FIA") contracts.



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Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

futures in non-qualifying hedging relationships. The Company may also use futures contracts as a hedge against an increase in certain equity indices.

Swaptions: A swaption is an option to enter into a swap with a forward starting effective date. The Company uses swaptions to hedge the interest rate exposure associated with the minimum crediting rate and book value guarantees embedded in the retirement products that the Company offers. Increases in interest rates will generate losses on assets that are backing such liabilities. In certain instances, the Company locks in the economic impact of existing purchased swaptions by entering into offsetting written swaptions. The Company pays a premium when it purchases the swaption. The Company utilizes these contracts in non-qualifying hedging relationships.

Options: The Company uses equity options to hedge against an increase in various equity indices. Such increases may result in increased payments to the holders of the FIA contracts. The Company pays an upfront premium to purchase these options. The Company utilizes these options in non-qualifying hedging relationships.

Managed custody guarantees ("MCGs"): The Company issues certain credited rate guarantees on variable fixed income portfolios that represent stand-alone derivatives. The market value is partially determined by, among other things, levels of or changes in interest rates, prepayment rates and credit ratings/spreads.

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

The Company's use of derivatives is limited mainly to economic hedging to reduce the Company's exposure to cash flow variability of assets and liabilities, interest rate risk, credit risk, exchange rate risk and equity market risk. It is the Company's policy not to offset amounts recognized for derivative instruments and amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral arising from derivative instruments executed with the same counterparty under a master netting arrangement, which provides the Company with the legal right of offset. However, in accordance with the Chicago Mercantile Exchange ("CME") rules related to the variation margin payments, the Company is required to adjust the derivative balances with the variation margin payments related to its cleared derivatives executed through CME.



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Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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


	March 31, 2019							December 31, 2018							September 30, 2019						December 31, 2018
	Notional Amount		Asset Fair Value		Liability Fair Value			Notional Amount		Asset Fair Value		Liability Fair Value			Notional Amount		Asset Fair Value		Liability Fair Value		Notional Amount		Asset Fair Value		Liability Fair Value
Derivatives: Qualifying for hedge accounting⁽¹⁾
Cash flow hedges:
Interest rate contracts	$	35	$	—	$	—		$	35	$	—	$	—		$	23	$	—	$	—	$	35	$	—	$	—
Foreign exchange contracts	648		6		22			620		10		20			652		31		3		620		10		20
Derivatives: Non-qualifying for hedge accounting⁽¹⁾
Interest rate contracts	18,178		113		156			19,280		117		76			18,324		297		388		19,280		117		76
Foreign exchange contracts	58		1		—			12		—		—			53		1		—		12		—		—
Equity contracts	88		2		2			98		1		1			60		2		2		98		1		1
Credit contracts	193		—		2			201		—		2			159		—		2		201		—		2
Embedded derivatives and Managed custody guarantees:
Within fixed maturity investments	N/A		9		—			N/A		9		—			N/A		12		—		N/A		9		—
Within products	N/A		—		15			N/A		—		15			N/A		—		63		N/A		—		15
Within reinsurance agreements	N/A		—		(41		)	N/A		—		(80		)	N/A		—		26		N/A		—		(80		)
Managed custody guarantees	N/A		—		—			N/A		—		—			N/A		—		4		N/A		—		—
Total			$	131	$	156				$	137	$	34				$	343	$	488			$	137	$	34

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

N/A - Not Applicable

Based on the notional amounts, a substantial portion of the Company’s derivative positions was not designated or did not qualify for hedge accounting as part of a hedging relationship as of ~~March 31,~~September 30, 2019 and December 31, 2018. The Company utilizes derivative contracts mainly to hedge exposure to variability in cash flows, interest rate risk, credit risk, foreign exchange risk and equity market risk. The majority of derivatives used by the Company are designated as product hedges, which hedge the exposure arising from insurance liabilities or guarantees embedded in the contracts the Company offers through various product lines. These derivatives do not qualify for hedge accounting as they do not meet the criteria of being "highly effective" as outlined in ASC Topic 815, but do provide an economic hedge, which is in line with the Company’s risk management objectives. The Company also uses derivatives contracts to hedge its exposure to various risks associated with the investment portfolio. The Company does not seek hedge accounting treatment for certain of these derivatives as they generally do not qualify for hedge accounting due to the criteria required under the portfolio hedging rules outlined in ASC Topic 815. The Company also uses credit default swaps coupled with other investments in order to produce the investment characteristics of otherwise permissible investments that do not qualify as effective accounting hedges under ASC Topic 815.



	3433

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Although the Company has not elected to net its derivative exposures, the notional amounts and fair values of Over-The-Counter ("OTC") and cleared derivatives excluding exchange traded contracts ~~and forward contracts (To Be Announced mortgage-backed securities)~~ are presented in the tables below as of the dates indicated:


	March 31, 2019								September 30, 2019
	Notional Amount		Asset Fair Value			Liability Fair Value			Notional Amount		Asset Fair Value			Liability Fair Value
Credit contracts	$	193	$	—		$	2		$	159	$	—		$	2
Equity contracts	88		2			2			60		2			2
Foreign exchange contracts	706		7			22			705		32			3
Interest rate contracts	16,559		112			156			17,033		297			388
			121			182					331			395
Counterparty netting⁽¹⁾			(101		)	(101		)			(297		)	(297		)
Cash collateral netting⁽¹⁾			(17		)	(67		)			(30		)	(98		)
Securities collateral netting⁽¹⁾			—			(13		)			(1		)	—
Net receivables/payables			$	3		$	1				$	3		$	—

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



	December 31, 2018
	Notional Amount		Asset Fair Value			Liability Fair Value
Credit contracts	$	201	$	—		$	2
Equity contracts	98		1			1
Foreign exchange contracts	632		10			20
Interest rate contracts	17,478		117			76
			128			99
Counterparty netting⁽¹⁾			(88		)	(88		)
Cash collateral netting⁽¹⁾			(37		)	(2		)
Securities collateral netting⁽¹⁾			—			(9		)
Net receivables/payables			$	3		$	—

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

Collateral

Under the terms of the OTC Derivative International Swaps and Derivatives Association, Inc. ("ISDA") agreements, the Company may receive from, or deliver to, counterparties, collateral to assure that terms of the ISDA agreements will be met with regard to the Credit Support Annex ("CSA"). The terms of the CSA call for the Company to pay interest on any cash received equal to the Federal Funds rate. To the extent cash collateral is received and delivered, it is included in Payables under securities loan agreements, including collateral held and Short-term investments under securities loan agreements, including collateral delivered, respectively, on the Condensed Consolidated Balance Sheets and is reinvested in short-term investments. Collateral held is used in accordance with the CSA to satisfy any obligations. Investment grade bonds owned by the Company are the source of noncash collateral posted, which is reported in Securities pledged on the Condensed Consolidated Balance Sheets. As of ~~March 31,~~September 30, 2019, the Company held $8$28 and pledged ~~$57~~$97 of net cash collateral related to OTC derivative contracts and cleared derivative contracts, respectively. As of December 31, 2018, the Company held $17 and $21 of net cash collateral related to OTC derivative contracts and cleared derivative contracts, respectively. In addition, as of ~~March 31,~~September 30, 2019, the Company delivered ~~$131~~$128 of securities and held no$1 of securities as collateral. As of December 31, 2018, the Company delivered $123 of securities and held no0 securities as collateral.



	3534

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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

Three Months Ended March 31, 2019
Amount of Gain or (Loss) Recognized in Other Comprehensive Income Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income
Derivatives: Qualifying for hedge accounting
Cash flow hedges:
Interest Rate Contracts $ 1
Net investment income $ —
Foreign Exchange Contracts (8 ) Net investment income 2



	Interest Rate Contracts		Foreign Exchange Contracts
Derivatives: Qualifying for hedge accounting
Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Net Investment Income		Net Investment Income
Three Months Ended September 30, 2019
Amount of Gain or (Loss) Recognized in Other Comprehensive Income	$	—	$	28
Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income	—		2
Nine Months Ended September 30, 2019
Amount of Gain or (Loss) Recognized in Other Comprehensive Income	$	2	$	36
Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income	—		7

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


	Three Months Ended March 31, 2019					Three Months Ended September 30, 2019
	Net Investment Income		Other net realized capital gains/(losses)			Net Investment Income		Other net realized capital gains/(losses)
Total amounts of line items presented in the statement of operations in which the effects of cash flow hedges are recorded	$	394	$	(4	)	$	413	$	7
Derivatives: Qualifying for hedge accounting
Cash flow hedges:
Interest rate contracts:
Gain (loss) reclassified from accumulated other comprehensive income into income	—		—			—		—
Foreign exchange contracts:
Gain (loss) reclassified from accumulated other comprehensive income into income	2		—			$	2	$	—



	Nine Months Ended September 30, 2019
	Net Investment Income		Other net realized capital gains/(losses)
Total amounts of line items presented in the statement of operations in which the effects of cash flow hedges are recorded	$	1,235	$	2
Derivatives: Qualifying for hedge accounting
Cash flow hedges:
Interest rate contracts:
Gain (loss) reclassified from accumulated other comprehensive income into income	—		—
Foreign exchange contracts:
Gain (loss) reclassified from accumulated other comprehensive income into income	$	7	$	—



	3635

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The location and effect of derivatives not designated as hedging instruments on the Condensed Consolidated Statements of Operations are as follows for the ~~period~~periods indicated:

Location of Gain or (Loss) Recognized in Income on Derivative Three Months Ended March 31,
2019 2018
Derivatives: Non-qualifying for hedge accounting
Interest rate contracts Other net realized capital gains (losses) $ (36 ) $ 5
Foreign exchange contracts Other net realized capital gains (losses) 1
(1 )
Equity contracts Other net realized capital gains (losses) 1
—
Credit contracts Other net realized capital gains (losses) 1
—
Embedded derivatives and Managed custody guarantees:
Within fixed maturity investments Other net realized capital gains (losses) 1
(2 )
Within products Other net realized capital gains (losses) —
20
Within reinsurance agreements Policyholder benefits (38 ) 29
Total $ (70 ) $ 51



	Location of Gain or (Loss) Recognized in Income on Derivative	Three Months Ended September 30,
		2019			2018
Derivatives: Non-qualifying for hedge accounting
Interest rate contracts	Other net realized capital gains (losses)	$	10		$	19
Foreign exchange contracts	Other net realized capital gains (losses)	2			—
Equity contracts	Other net realized capital gains (losses)	—			—
Credit contracts	Other net realized capital gains (losses)	1			2
Embedded derivatives and Managed custody guarantees:
Within fixed maturity investments	Other net realized capital gains (losses)	2			(1		)
Within products	Other net realized capital gains (losses)	(36		)	24
Within reinsurance agreements	Policyholder benefits	(29		)	4
Total		$	(50	)	$	48



	Location of Gain or (Loss) Recognized in Income on Derivative	Nine Months Ended September 30,
		2019			2018
Derivatives: Non-qualifying for hedge accounting
Interest rate contracts	Other net realized capital gains (losses)	$	(76	)	$	26
Foreign exchange contracts	Other net realized capital gains (losses)	4			—
Equity contracts	Other net realized capital gains (losses)	1			—
Credit contracts	Other net realized capital gains (losses)	2			2
Embedded derivatives and Managed custody guarantees:
Within fixed maturity investments	Other net realized capital gains (losses)	4			(5		)
Within products	Other net realized capital gains (losses)	(49		)	56
Within reinsurance agreements	Policyholder benefits	(106		)	53
Total		$	(220	)	$	132



	36

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

4. Fair Value Measurements

Fair Value Measurement

The ~~Company categorizes~~following table presents the Company’s hierarchy for its financial instruments into a three-level hierarchy based on the priority of the inputs to the valuation technique. 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. Financial assets and liabilities ~~recorded~~measured at fair value on ~~the Consolidated Balance Sheets are categorized~~a recurring basis as ~~follows:~~of September 30, 2019:

Level 1 - Unadjusted quoted prices for identical assets or liabilities in an active market. The Company defines an active market as a market in which transactions take place with sufficient frequency and volume to provide pricing information on an ongoing basis.



	Level 1			Level 2			Level 3			Total
Assets:
Fixed maturities, including securities pledged:
U.S. Treasuries	$	558		$	158		$	—		$	716
U.S. Government agencies and authorities	—			19			—			19
State, municipalities and political subdivisions	—			839			—			839
U.S. corporate public securities	—			8,087			48			8,135
U.S. corporate private securities	—			3,068			979			4,047
Foreign corporate public securities and foreign governments⁽¹⁾	—			2,705			—			2,705
Foreign corporate private securities ⁽¹⁾	—			3,150			181			3,331
Residential mortgage-backed securities	—			3,801			21			3,822
Commercial mortgage-backed securities	—			2,363			10			2,373
Other asset-backed securities	—			1,442			70			1,512
Total fixed maturities, including securities pledged	558			25,632			1,309			27,499
Equity securities	7			—			83			90
Derivatives:
Interest rate contracts	1			296			—			297
Foreign exchange contracts	—			32			—			32
Equity contracts	—			2			—			2
Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements	1,486			—			—			1,486
Assets held in separate accounts	69,981			5,817			100			75,898
Total assets	$	72,033		$	31,779		$	1,492		$	105,304
Percentage of Level to Total	69		%	30		%	1		%	100		%
Liabilities:
Derivatives:
Guaranteed benefit derivatives:
FIA	$	—		$	—		$	10		$	10
Stabilizer and MCGs	—			—			57			57
Other derivatives:
Interest rate contracts	—			388			—			388
Foreign exchange contracts	—			3			—			3
Equity contracts	—			2			—			2
Credit contracts	—			2			—			2
Embedded derivative on reinsurance	—			26			—			26
Total liabilities	$	—		$	421		$	67		$	488

Level 2 - Quoted prices in markets that are not active or valuation techniques that require inputs that are observable either directly or indirectly for substantially the full term of the asset or liability.

Level 3 - Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These valuations, whether derived internally or obtained from a third party, use critical assumptions that are not widely available to estimate market participant expectations in valuing the asset or liability.

⁽¹⁾Primarily U.S. dollar denominated.



	37

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

~~The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of~~ ~~March 31, 2019~~:

Level 1 Level 2 Level 3 Total
Assets:
Fixed maturities, including securities pledged:
U.S. Treasuries $ 506
$ 61
$ —
$ 567
State, municipalities and political subdivisions —
789
—
789
U.S. corporate public securities —
7,920
52
7,972
U.S. corporate private securities —
2,998
888
3,886
Foreign corporate public securities and foreign governments⁽¹⁾
—
2,636
—
2,636
Foreign corporate private securities ⁽¹⁾
—
3,203
122
3,325
Residential mortgage-backed securities —
3,214
31
3,245
Commercial mortgage-backed securities —
2,142
11
2,153
Other asset-backed securities —
1,240
89
1,329
Total fixed maturities, including securities pledged 506
24,203
1,193
25,902
Equity securities 7
—
80
87
Derivatives:

Interest rate contracts 1
112
—
113
Foreign exchange contracts —
7
—
7
Equity contracts —
2
—
2
Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements 1,400
—
—
1,400
Assets held in separate accounts 67,616
5,686
67
73,369
Total assets $ 69,530
$ 30,010
$ 1,340
$ 100,880
Percentage of Level to Total 69 % 30 % 1 % 100 %
Liabilities:
Derivatives:
Guaranteed benefit derivatives:
FIA $ —
$ —
$ 11
$ 11
Stabilizer and MCGs —
—
4
4
Other derivatives:
Interest rate contracts —
156
—
156
Foreign exchange contracts —
22
—
22
Equity contracts —
2
—
2
Credit contracts —
2
—
2
Embedded derivative on reinsurance —
(41 ) —
(41 )
Total liabilities $ —
$ 141
$ 15
$ 156

⁽¹⁾~~Primarily U.S. dollar denominated.~~



	38

~~Table of Contents~~

~~Voya Retirement Insurance and Annuity Company and Subsidiary~~

~~(A wholly owned subsidiary of Voya Holdings Inc.)~~

~~Notes to the Condensed Consolidated Financial Statements (Unaudited)~~

~~(Dollar amounts in millions, unless otherwise stated)~~

The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of December 31, 2018:



	Level 1			Level 2			Level 3			Total
Assets:
Fixed maturities, including securities pledged:
U.S. Treasuries	$	679		$	59		$	—		$	738
State, municipalities and political subdivisions	—			764			—			764
U.S. corporate public securities	—			7,987			28			8,015
U.S. corporate private securities	—			2,882			771			3,653
Foreign corporate public securities and foreign governments⁽¹⁾	—			2,540			—			2,540
Foreign corporate private securities ⁽¹⁾	—			3,051			124			3,175
Residential mortgage-backed securities	—			3,026			10			3,036
Commercial mortgage-backed securities	—			1,893			12			1,905
Other asset-backed securities	—			1,114			94			1,208
Total fixed maturities, including securities pledged	679			23,316			1,039			25,034
Equity securities, available-for-sale	7			—			50			57
Derivatives:
Interest rate contracts	—			117			—			117
Foreign exchange contracts	—			10			—			10
Equity contracts	—			1			—			1
Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements	1,207			—			—			1,207
Assets held in separate accounts	61,457			5,805			61			67,323
Total assets	$	63,350		$	29,249		$	1,150		$	93,749
Percentage of Level to total	68		%	31		%	1		%	100		%
Liabilities:
Derivatives:
Guaranteed benefit derivatives:
FIA	$	—		$	—		$	11		$	11
Stabilizer and MCGs	—			—			4			4
Other derivatives:
Interest rate contracts	—			76			—			76
Foreign exchange contracts	—			20			—			20
Equity contracts	—			1			—			1
Credit contracts	—			2			—			2
Embedded derivative on reinsurance	—			(80		)	—			(80		)
Total liabilities	$	—		$	19		$	15		$	34

⁽¹⁾Primarily U.S. dollar denominated.



	3938

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Valuation of Financial Assets and Liabilities at Fair Value

Certain assets and liabilities are measured at estimated fair value on the Company's Condensed Consolidated Balance Sheets. The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The exit price and the transaction (or entry) price will be the same at initial recognition in many circumstances. However, in certain cases, the transaction price may not represent fair value. The fair value of a liability is based on the amount that would be paid to transfer a liability to a third-party with an equal credit standing. Fair value is required to be a market-based measurement that is determined based on a hypothetical transaction at the measurement date, from a market participant's perspective. The Company considers three broad valuation approaches when a quoted price is unavailable: (i) the market approach, (ii) the income approach and (iii) the cost approach. The Company determines the most appropriate valuation technique to use, given the instrument being measured and the availability of sufficient inputs. The Company prioritizes the inputs to fair valuation approaches and allows for the use of unobservable inputs to the extent that observable inputs are not available.

The Company utilizes a number of valuation methodologies to determine the fair values of its financial assets and liabilities in conformity with the concepts of exit price and the fair value hierarchy as prescribed in ASC Topic 820. Valuations are obtained from third-party commercial pricing services, brokers and industry-standard, vendor-provided software that models the value based on market observable inputs. The valuations obtained from third-party commercial pricing services are non-binding. The Company reviews the assumptions and inputs used by third-party commercial pricing services for each reporting period in order to determine an appropriate fair value hierarchy level. The documentation and analysis obtained from third-party commercial pricing services are reviewed by the Company, including in-depth validation procedures confirming the observability of inputs. The valuations are reviewed and validated monthly through the internal valuation committee price variance review, comparisons to internal pricing models, back testing to recent trades or monitoring of trading volumes.

~~Fixed maturities:~~The ~~fair values~~valuation approaches and key inputs for ~~actively traded marketable bonds are determined based upon the quoted market prices and~~each category of assets or liabilities that are classified aswithin Level ~~1 assets. Assets in this category primarily include certain U.S. Treasury securities.~~2 and Level 3 of the fair value hierarchy are presented below.

For fixed maturities classified as Level 2 assets, fair values are determined using a matrix-based market approach, based on prices obtained from third-party commercial pricing services and the Company’s matrix and analytics-based pricing models, which in each case incorporate a variety of market observable information as valuation inputs. The market observable inputs used for these fair value measurements, by fixed maturity asset class, are as follows:

U.S. Treasuries: Fair value is determined using third-party commercial pricing services, with the primary inputs being stripped interest and principal U.S. Treasury yield curves that represent a U.S. Treasury zero-coupon curve.

U.S. government agencies and authorities, State, municipalities and political subdivisions: Fair value is determined using third-party commercial pricing services, with the primary inputs being U.S. Treasury yield curves, trades of comparable securities, credit spreads off benchmark yields and issuer ratings.

U.S. corporate public securities, Foreign corporate public securities and foreign governments: Fair value is determined using third-party commercial pricing services, with the primary inputs being benchmark yields, trades of comparable securities, issuer ratings, bids and credit spreads off benchmark yields.

U.S. corporate private securities and Foreign corporate private securities: Fair values are determined using a matrix and analytics-based pricing model. The model incorporates the current level of risk-free interest rates, current corporate credit spreads, credit quality of the issuer and cash flow characteristics of the security. The model also considers a liquidity spread, the value of any collateral, the capital structure of the issuer, the presence of guarantees, and prices and quotes for comparably rated publicly traded securities.

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



	4039

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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

Broker quotes and prices obtained from pricing services are reviewed and validated through an internal valuation committee price variance review, comparisons to internal pricing models, back testing to recent trades or monitoring of trading volumes.

Fair values of privately placed bonds are determined primarily using a matrix-based pricing model and are generally classified as Level 2 assets. The model considers the current level of risk-free interest rates, current corporate spreads, the credit quality of the issuer and cash flow characteristics of the security. Also considered are factors such as the net worth of the borrower, the value of collateral, the capital structure of the borrower, the presence of guarantees and the Company's evaluation of the borrower's ability to compete in its relevant market. Using this data, the model generates estimated market values which the Company considers reflective of the fair value of each privately placed bond.

Equity securities: ~~Fair values of publicly traded equity securities are based upon quoted market price~~Level 2 and ~~are classified as~~ Level ~~1 assets. Other~~3 equity securities, typically private equities or equity securities not traded on an exchange, are valued by other sources such as analytics or ~~brokers and are classified as Level 2 or Level 3 assets.~~brokers.

Derivatives: Derivatives are carried at fair value, which is determined using the Company's derivative accounting system in conjunction with observable key financial data from third party sources, such as yield curves, exchange rates, S&P 500 Index prices, London Interbank Offered Rates ("LIBOR") and Overnight Index Swap ("OIS") rates. The Company uses OIS for valuations of collateralized interest rate derivatives, which are obtained from third-party sources. For those derivatives that are unable to be valued by the accounting system, the Company typically utilizes values established by third-party brokers. Counterparty credit risk is considered and incorporated in the Company's valuation process through counterparty credit rating requirements and monitoring of overall exposure. It is the Company's policy to transact only with investment grade counterparties with a credit rating of A- or better. The Company's nonperformance risk is also considered and incorporated in the Company's valuation process. ~~Valuations for the Company's futures and interest rate forward contracts are based on unadjusted quoted prices from an active exchange and, therefore, are classified as Level 1.~~ The Company also has certain credit default swaps and options that are priced by third party vendors or by using models that primarily use market observable inputs, but contain inputs that are not observable to market participants, which have been classified as Level 3. The remaining derivative instruments are valued based on market observable inputs and are classified as Level 2.

~~Cash and cash equivalents, Short-term investments and Short-term investments under securities loan agreement~~: The carrying amounts for cash reflect the assets' fair values. The fair values for cash equivalents and most short-term investments are determined based on quoted market prices. These assets are classified as Level 1. Other short-term investments are valued and classified in the fair value hierarchy consistent with the policies described herein, depending on investment type.

~~Assets held in separate accounts~~: Assets held in separate accounts are reported at the quoted fair values of the underlying investments in the separate accounts. The underlying investments include mutual funds, short-term investments and cash, the valuations of which are based upon a quoted market price and are included in Level 1. Fixed maturity valuations are obtained from third-party commercial pricing services and brokers and are classified in the fair value hierarchy consistent with the policy described above for fixed maturities.

Guaranteed benefit derivatives: The index-crediting feature in the Company's FIA contract is an embedded derivative that is required to be accounted for separately from the host contract. The fair value of the obligation is calculated based on actuarial and capital market assumptions related to the projected cash flows, including benefits and related contract charges, over the anticipated life of the related contracts. The cash flow estimates are produced by market implied assumptions. These derivatives are classified as Level 3 liabilities in the fair value hierarchy.



	41

~~Table of Contents~~

~~Voya Retirement Insurance and Annuity Company and Subsidiary~~

~~(A wholly owned subsidiary of Voya Holdings Inc.)~~

~~Notes to the Condensed Consolidated Financial Statements (Unaudited)~~

~~(Dollar amounts in millions, unless otherwise stated)~~

The Company records reserves for Stabilizer and MCG contracts containing guaranteed credited rates. The guarantee is treated as an embedded derivative or a stand-alone derivative (depending on the underlying product) and is required to be reported at fair value. The estimated fair value is determined based on the present value of projected future claims, minus the present value of future guaranteed premiums. At inception of the contract, the Company projects a guaranteed premium to be equal to the present value of the projected future claims. The income associated with the contracts is projected using relevant actuarial and capital market assumptions, including benefits and related contract charges, over the anticipated life of the related contracts. The cash flow estimates are produced by using stochastic techniques under a variety of risk neutral scenarios and other market implied assumptions. These derivatives are classified as Level 3 liabilities.

The discount rate used to determine the fair value of the embedded derivatives and stand-alone derivative includes an adjustment for nonperformance risk. The nonperformance risk adjustment incorporates a blend of observable, similarly rated peer holding company credit spreads, adjusted to reflect the credit quality of the Company, as well as an adjustment to reflect the non-default spreads and the priority and recovery rates of policyholder claims.

The Company's valuation actuaries are responsible for the policies and procedures for valuing the embedded derivatives, reflecting the capital markets and actuarial valuation inputs and nonperformance risk in the estimate of the fair value of the embedded derivatives. The actuarial and capital market assumptions for each liability are approved by each product's Chief Risk Officer



	40

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

("CRO"), including an independent annual review by the CRO. Models used to value the embedded derivatives must comply with the Company's governance policies.

Quarterly, an attribution analysis is performed to quantify changes in fair value measurements and a sensitivity analysis is used to analyze the changes. The changes in fair value measurements are also compared to corresponding movements in the hedge target to assess the validity of the attributions. The results of the attribution analysis are reviewed by the valuation actuaries, responsible CFOs, Controllers, CROs and/or others as nominated by management.

Embedded derivatives on reinsurance: The carrying value of embedded derivatives is estimated based upon the change in the fair value of the assets supporting the funds withheld payable under reinsurance agreements. The fair value of the embedded derivatives is based on market observable inputs and is classified as Level 2.

Transfers in and out of Level 1 and 2

There were no securities transferred between Level 1 and Level 2 for the three and nine months ended ~~March 31,~~September 30, 2019 and 2018. The Company’s policy is to recognize transfers in and transfers out as of the beginning of the reporting period.

Level 3 Financial Instruments

The fair values of certain assets and liabilities are determined using prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement (i.e., Level 3 as defined by ASC Topic 820), including but not limited to liquidity spreads for investments within markets deemed not currently active. These valuations, whether derived internally or obtained from a third-party, use critical assumptions that are not widely available to estimate market participant expectations in valuing the asset or liability. In addition, the Company has determined, for certain financial instruments, an active market is such a significant input to determine fair value that the presence of an inactive market may lead to classification in Level 3. In light of the methodologies employed to obtain the fair values of financial assets and liabilities classified as Level 3, additional information is presented below.



	4241

Table of Contents

Voya Retirement Insurance and Annuity Company and ~~Subsidiaries~~Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The following ~~table summarizes~~tables summarize the change in fair value of the Company’s Level 3 assets and liabilities and transfers in and out of Level 3 for the ~~period~~periods indicated:


	Three Months Ended March 31, 2019																														Three Months Ended September 30, 2019
	Fair Value as of January 1			Total Realized/Unrealized Gains (Losses) Included in:					Purchases		Issuances			Sales			Settlements			Transfers into Level 3⁽³⁾		Transfers out of Level 3⁽³⁾			Fair Value as of March 31			Change In Unrealized Gains (Losses) Included in Earnings⁽⁴⁾			Fair Value as of July 1			Total Realized/Unrealized Gains (Losses) Included in:					Purchases		Issuances			Sales			Settlements			Transfers into Level 3⁽³⁾		Transfers out of Level 3⁽³⁾			Fair Value as of September 30			Change In Unrealized Gains (Losses) Included in Earnings⁽⁴⁾
				Net Income			OCI																											Net Income			OCI
Fixed maturities, including securities pledged:
U.S. Corporate public securities	$	28		$	—		$	1	$	—	$	—		$	—		$	—		$	23	$	—		$	52		$	—		$	47		$	—		$	2	$	—	$	—		$	—		$	(1	)	$	—	$	—		$	48		$	—
U.S. Corporate private securities	771			—			29		102		—			(6		)	(8		)	—		—			888			—			893			—			23		103		—			—			(46		)	6		—			979			—
Foreign corporate private securities⁽¹⁾	124			(17		)	23		48		—			(56		)	—			—		—			122			—			174			—			2		5		—			—			—			—		—			181			—
Residential mortgage-backed securities	10			(1		)	—		22		—			—			—			—		—			31			(1		)	16			(1		)	—		13		—			—			—			—		(7		)	21			(1		)
Commercial mortgage-backed securities	12			—			—		—		—			—			(1		)	—		—			11			—			—			—			—		10		—			—			—			—		—			10			—
Other asset-backed securities	94			—			—		16		—			—			(1		)	—		(20		)	89			—			60			—			1		22		—			—			(1		)	—		(12		)	70			—
Total fixed maturities, including securities pledged	1,039			(18		)	53		188		—			(62		)	(10		)	23		(20		)	1,193			(1		)	1,190			(1		)	28		153		—			—			(48		)	6		(19		)	1,309			(1		)
Equity securities	50			1			—		29		—			—			—			—		—			80			1			83			—			—		—		—			—			—			—		—			83			—
Derivatives:
Guaranteed benefit derivatives:
Stabilizer and MCGs⁽²⁾	(4		)	1			—		—		(1		)	—			—			—		—			(4		)	—			(19		)	(37		)	—		—		(1		)	—			—			—		—			(57		)	—
FIA⁽²⁾	(11		)	(1		)	—		—		—			—			1			—		—			(11		)	—			(11		)	1			—		—		(1		)	—			1			—		—			(10		)	—
Assets held in separate accounts⁽⁵⁾	61			1			—		6		—			—			—			3		(4		)	67			—			102			1			—		12		—			(1		)	—			—		(14		)	100			—
⁽¹⁾Primarily U.S. dollar denominated.	⁽¹⁾Primarily U.S. dollar denominated.																														⁽¹⁾Primarily U.S. dollar denominated.
⁽²⁾All gains and losses on Level 3 liabilities are classified as realized gains (losses) for the purpose of this disclosure because it is impracticable to track realized and unrealized gains (losses) separately on a contract-by-contract basis. These amounts are included in Other net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.	⁽²⁾All gains and losses on Level 3 liabilities are classified as realized gains (losses) for the purpose of this disclosure because it is impracticable to track realized and unrealized gains (losses) separately on a contract-by-contract basis. These amounts are included in Other net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.																														⁽²⁾All gains and losses on Level 3 liabilities are classified as realized gains (losses) for the purpose of this disclosure because it is impracticable to track realized and unrealized gains (losses) separately on a contract-by-contract basis. These amounts are included in Other net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.
⁽³⁾ The Company’s policy is to recognize transfers in and transfers out as of the beginning of the reporting period.	⁽³⁾ The Company’s policy is to recognize transfers in and transfers out as of the beginning of the reporting period.																														⁽³⁾ The Company’s policy is to recognize transfers in and transfers out as of the beginning of the reporting period.
⁽⁴⁾ For financial instruments still held as of March 31, amounts are included in Net investment income and Total net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.
⁽⁴⁾ For financial instruments still held as of September 30, amounts are included in Net investment income and Total net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.																															⁽⁴⁾ For financial instruments still held as of September 30, amounts are included in Net investment income and Total net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.
⁽⁵⁾ The investment income and realized gains (losses) and change in unrealized gains (losses) included in net income (loss) for separate account assets are offset by an equal amount for separate account liabilities, which results in a net zero impact on Net income (loss) for the Company.	⁽⁵⁾ The investment income and realized gains (losses) and change in unrealized gains (losses) included in net income (loss) for separate account assets are offset by an equal amount for separate account liabilities, which results in a net zero impact on Net income (loss) for the Company.																														⁽⁵⁾ The investment income and realized gains (losses) and change in unrealized gains (losses) included in net income (loss) for separate account assets are offset by an equal amount for separate account liabilities, which results in a net zero impact on Net income (loss) for the Company.



	42

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)



	Nine Months Ended September 30, 2019
	Fair Value as of January 1			Total Realized/Unrealized Gains (Losses) Included in:					Purchases		Issuances			Sales			Settlements			Transfers into Level 3⁽³⁾		Transfers out of Level 3⁽³⁾			Fair Value as of September 30			Change in Unrealized Gains (Losses) Included in Earnings⁽⁴⁾
				Net Income			OCI
Fixed maturities, including securities pledged:
U.S. Corporate public securities	$	28		$	—		$	3	$	—	$	—		$	—		$	(6	)	$	23	$	—		$	48		$	—
U.S. Corporate private securities	771			—			68		205		—			(6		)	(55		)	5		(9		)	979			—
Foreign corporate private securities⁽¹⁾	124			(17		)	28		102		—			(56		)	—			—		—			181			—
Residential mortgage-backed securities	10			(3		)	—		14		—			—			—			—		—			21			(3		)
Commercial mortgage-backed securities	12			—			—		10		—			—			—			—		(12		)	10			—
Other asset-backed securities	94			—			1		21		—			—			(2		)	—		(44		)	70			—
Total fixed maturities, including securities pledged	1,039			(20		)	100		352		—			(62		)	(63		)	28		(65		)	1,309			(3		)
Equity securities	50			4			—		29		—			—			—			—		—			83			4
Derivatives:
Guaranteed benefit derivatives:
Stabilizer and MCGs⁽²⁾	(4		)	(51		)	—		—		(2		)	—			—			—		—			(57		)	—
FIA⁽²⁾	(11		)	2			—		—		(4		)	—			3			—		—			(10		)	—
Assets held in separate accounts⁽⁵⁾	61			4			—		51		—			(1		)	—			3		(18		)	100			—
⁽¹⁾Primarily U.S. dollar denominated.
⁽²⁾All gains and losses on Level 3 liabilities are classified as realized gains (losses) for the purpose of this disclosure because it is impracticable to track realized and unrealized gains (losses) separately on a contract-by-contract basis. These amounts are included in Other net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.
⁽³⁾ The Company’s policy is to recognize transfers in and transfers out as of the beginning of the reporting period.
⁽⁴⁾ For financial instruments still held as of September 30, amounts are included in Net investment income and Total net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.
⁽⁵⁾ The investment income and realized gains (losses) and change in unrealized gains (losses) included in net income (loss) for separate account assets are offset by an equal amount for separate account liabilities, which results in a net zero impact on Net income (loss) for the Company.



	43

Table of Contents

Voya Retirement Insurance and Annuity Company and ~~Subsidiaries~~Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

The following ~~table summarizes~~tables summarize the change in fair value of the Company’s Level 3 assets and liabilities and transfers in and out of Level 3 for the periods indicated:


	Three Months Ended March 31, 2018																																Three Months Ended September 30, 2018
	Fair Value as of January 1			Total Realized/Unrealized Gains (Losses) Included in:						Purchases		Issuances				Sales			Settlements			Transfers into Level 3⁽³⁾			Transfers out of Level 3⁽³⁾			Fair Value as of March 31			Change In Unrealized Gains (Losses) Included in Earnings⁽⁴⁾		Fair Value as of July 1			Total Realized/Unrealized Gains (Losses) Included in:						Purchases			Issuances			Sales			Settlements			Transfers into Level 3⁽³⁾			Transfers out of Level 3⁽³⁾			Fair Value as of September 30			Change In Unrealized Gains (Losses) Included in Earnings⁽⁴⁾
				Net Income			OCI								Net Income																				OCI
Fixed maturities, including securities pledged:
U.S. Corporate public securities	$	26		$	—		$	—		$	—	$	—				$	(11	)	$	—		$	—		$	—		$	15		$	—	$	18		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	18		$	—
U.S. Corporate private securities	642			—			(15		)	12		—				—			(2	)		14			—			651			—		738			—			(7	)		62			—			—			(5	)		60			(8	)		840			—
Foreign corporate public securities and foreign governments⁽¹⁾																																	—			—			—			10			—			—			—			—			—			10			—
Foreign corporate private securities⁽¹⁾	92			(9		)	18			—		—				—			—			—			—			101			(9	)	122			—			(4	)		8			—			—			(9	)		4			—			121			—
Residential mortgage-backed securities	21			(1		)	—			58		—				—			—			—			(5	)		73			(2	)	33			(2	)		—			20			—			—			—			—			(9	)		42			(2	)
Commercial mortgage-backed securities	7			—			—			—		—				—			—			—			(7	)		—			—		16			—			—			13			—			—			—			—			(16	)		13			—
Other asset-backed securities	43			—			—			100		—				—			(1	)		—			(16	)		126			—		97			—			—			11			—			—			(1	)		—			(26	)		81			—
Total fixed maturities, including securities pledged	831			(10		)	3			170		—				(11	)		(3	)		14			(28	)		966			(11	)	1,024			(2	)		(11	)		124			—			—			(15	)		64			(59	)		1,125			(2	)
Equity securities, available-for-sale	50			(2		)	—			—		—				—			—			—			—			48			(2	)	53			(1	)		—			—			—			—			—			—			—			52			(1	)
Derivatives:
Guaranteed benefit derivatives:
Stabilizer and MCGs⁽²⁾	(97		)	21			—			—		(1		)		—			—			—			—			(77	)		—		(63	)		24			—			—			(1	)		—			(1	)		—			—			(41	)		—
FIA⁽²⁾	(20		)	(1		)	—			—		1				—			2			—			—			(18	)		—		(16	)		—			—			—			—			—			3			—			—			(13	)		—
Cash and cash equivalents, short-term investments, and short-term investments under securities loan agreement																																	1			—			—			—			—			(1	)		—			—			—			—			—
Assets held in separate accounts⁽⁵⁾	11			—			—			—		—				—			—			—			—			11			—		38			—			—			23			—			—			—			—			(5	)		56			—
⁽¹⁾Primarily U.S. dollar denominated.	⁽¹⁾Primarily U.S. dollar denominated.																																⁽¹⁾Primarily U.S. dollar denominated.
⁽²⁾All gains and losses on Level 3 liabilities are classified as realized gains (losses) for the purpose of this disclosure because it is impracticable to track realized and unrealized gains (losses) separately on a contract-by-contract basis. These amounts are included in Other net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.	⁽²⁾All gains and losses on Level 3 liabilities are classified as realized gains (losses) for the purpose of this disclosure because it is impracticable to track realized and unrealized gains (losses) separately on a contract-by-contract basis. These amounts are included in Other net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.																																⁽²⁾All gains and losses on Level 3 liabilities are classified as realized gains (losses) for the purpose of this disclosure because it is impracticable to track realized and unrealized gains (losses) separately on a contract-by-contract basis. These amounts are included in Other net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.
⁽³⁾ The Company’s policy is to recognize transfers in and transfers out as of the beginning of the reporting period.	⁽³⁾ The Company’s policy is to recognize transfers in and transfers out as of the beginning of the reporting period.																																⁽³⁾ The Company’s policy is to recognize transfers in and transfers out as of the beginning of the reporting period.
⁽⁴⁾ For financial instruments still held as of March 31, amounts are included in Net investment income and Total net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.
⁽⁴⁾ For financial instruments still held as of September 30, amounts are included in Net investment income and Total net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.																																	⁽⁴⁾ For financial instruments still held as of September 30, amounts are included in Net investment income and Total net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.
⁽⁵⁾ The investment income and realized gains (losses) and change in unrealized gains (losses) included in net income (loss) for separate account assets are offset by an equal amount for separate account liabilities, which results in a net zero impact on Net income (loss) for the Company.	⁽⁵⁾ The investment income and realized gains (losses) and change in unrealized gains (losses) included in net income (loss) for separate account assets are offset by an equal amount for separate account liabilities, which results in a net zero impact on Net income (loss) for the Company.																																⁽⁵⁾ The investment income and realized gains (losses) and change in unrealized gains (losses) included in net income (loss) for separate account assets are offset by an equal amount for separate account liabilities, which results in a net zero impact on Net income (loss) for the Company.



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Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)



	Nine Months Ended September 30, 2018
	Fair Value as of January 1			Total Realized/Unrealized Gains (Losses) Included in:						Purchases		Issuances			Sales			Settlements			Transfers into Level 3⁽³⁾		Transfers out of Level 3⁽³⁾			Fair Value as of September 30			Change in Unrealized Gains (Losses) Included in Earnings⁽⁴⁾
				Net Income			OCI
Fixed maturities, including securities pledged:
U.S. Corporate public securities	$	26		$	—		$	—		$	3	$	—		$	(5	)	$	—		$	—	$	(6	)	$	18		$	—
U.S. Corporate private securities	642			—			(29		)	165		—			(5		)	(9		)	84		(8		)	840			—
Foreign corporate public securities and foreign governments⁽¹⁾	—			—			—			10		—			—			—			—		—			10			—
Foreign corporate private securities⁽¹⁾	92			(8		)	17			86		—			(56		)	(10		)	—		—			121			(8		)
Residential mortgage-backed securities	21			(5		)	—			71		—			(40		)	—			—		(5		)	42			(5		)
Commercial mortgage-backed securities	7			—			—			13		—			—			—			—		(7		)	13			—
Other asset-backed securities	43			—			(2		)	43		—			—			(3		)	21		(21		)	81			—
Total fixed maturities, including securities pledged	831			(13		)	(14		)	391		—			(106		)	(22		)	105		(47		)	1,125			(13		)
Equity securities, available-for-sale	50			(1		)	—			3		—			—			—			—		—			52			(1		)
Derivatives:
Guaranteed benefit derivatives:
Stabilizer and MCGs⁽²⁾	(97		)	58			—			—		(2		)	—			—			—		—			(41		)	—
FIA⁽²⁾	(20		)	(2		)	—			—		1			—			8			—		—			(13		)	—
Cash and cash equivalents, short-term investments, and short-term investments under securities loan agreements	—			—			—			1		—			(1		)	—			—		—			—			—
Assets held in separate accounts⁽⁵⁾	11			—			—			50		—			—			—			—		(5		)	56			—
⁽¹⁾Primarily U.S. dollar denominated.
⁽²⁾All gains and losses on Level 3 liabilities are classified as realized gains (losses) for the purpose of this disclosure because it is impracticable to track realized and unrealized gains (losses) separately on a contract-by-contract basis. These amounts are included in Other net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.
⁽³⁾ The Company’s policy is to recognize transfers in and transfers out as of the beginning of the reporting period.
⁽⁴⁾ For financial instruments still held as of September 30, amounts are included in Net investment income and Total net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.
⁽⁵⁾ The investment income and realized gains (losses) and change in unrealized gains (losses) included in net income (loss) for separate account assets are offset by an equal amount for separate account liabilities, which results in a net zero impact on Net income (loss) for the Company.



	45

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

For the three and nine months ended ~~March 31,~~September 30, 2019 and 2018, the transfers in and out of Level 3 for fixed maturities and separate accounts were due to the variation in inputs relied upon for valuation each quarter. Securities that are primarily valued using independent broker quotes when prices are not available from one of the commercial pricing services are reflected as transfers into Level 3. When securities are valued using more widely available information, the securities are transferred out of Level 3 and into Level 1 or 2, as appropriate.

Significant Unobservable Inputs

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

Quantitative information about the significant unobservable inputs used in the Company's Level 3 fair value measurements of its guaranteed benefit derivatives is presented in the following sections and table.

Significant unobservable inputs used in the fair value measurements of FIAs include nonperformance risk and policyholder behavior assumptions, such as lapses and partial withdrawals. Such inputs are monitored quarterly.

The significant unobservable inputs used in the fair value measurement of the Stabilizer embedded derivatives and MCG derivative are interest rate implied volatility, nonperformance risk, lapses and policyholder deposits. Such inputs are monitored quarterly.

~~Following is a description of selected inputs:~~

~~Interest Rate Volatility:~~ A term-structure model is used to approximate implied volatility for the swap rates for the Stabilizer and MCG fair value measurements. Where no implied volatility is readily available in the market, an alternative approach is applied based on historical volatility.

~~Nonperformance Risk:~~ For the estimate of the fair value of embedded derivatives associated with the Company's product guarantees, the Company uses a blend of observable, similarly rated peer holding company credit spreads, adjusted to reflect the credit quality of the Company, as well as an adjustment to reflect the non-default spreads and the priority and recovery rates of policyholder claims.

~~Actuarial Assumptions:~~ Management regularly reviews actuarial assumptions, which are based on the Company's experience and periodically reviewed against industry standards. Industry standards and Company experience may be limited on certain products.



	45

~~Table of Contents~~

~~Voya Retirement Insurance and Annuity Company and Subsidiary~~

~~(A wholly owned subsidiary of Voya Holdings Inc.)~~

~~Notes to the Condensed Consolidated Financial Statements (Unaudited)~~

~~(Dollar amounts in millions, unless otherwise stated)~~

~~The following table presents the unobservable inputs for Level 3 fair value measurements as of~~ ~~March 31, 2019~~:



	~~Range~~⁽¹⁾
~~Unobservable Input~~	~~FIA~~		~~Stabilizer / MCG~~
~~Interest rate implied volatility~~	—		~~0.1% to 5.8%~~
~~Nonperformance risk~~	~~0.25% to 0.99%~~		~~0.25% to 0.99%~~
~~Actuarial Assumptions:~~
~~Partial Withdrawals~~	~~0% to 7%~~		—
~~Lapses~~	~~0% to 56%~~	⁽²⁾	~~0% to 50%~~	⁽³⁾
~~Policyholder Deposits~~⁽⁴⁾	—		~~0% to 50%~~	⁽³⁾

⁽¹⁾ ~~Represents the range of reasonable assumptions that management has used in its fair value calculations.~~

⁽²⁾ Lapse rates tend to be lower during the contractual surrender charge period and higher after the surrender charge period ends; the highest lapse rates occur in the year immediately after the end of the surrender charge period.

⁽³⁾ ~~Stabilizer contracts with recordkeeping agreements have different range of lapse and policyholder deposit assumptions from Stabilizer (Investment only) and MCG contracts as shown below:~~



	~~Percentage of Plans~~		~~Overall Range of Lapse Rates~~	~~Range of Lapse Rates for 85% of Plans~~	~~Overall Range of Policyholder Deposits~~	~~Range of Policyholder Deposits for 85% of Plans~~
~~Stabilizer (Investment Only) and MCG Contracts~~	92	%	~~0-25%~~	~~0-15%~~	~~0-30%~~	~~0-15%~~
~~Stabilizer with Recordkeeping Agreements~~	8	%	~~0-50%~~	~~0-30%~~	~~0-50%~~	~~0-25%~~
~~Aggregate of all plans~~	~~100~~	%	~~0-50%~~	~~0-30%~~	~~0-50%~~	~~0-25%~~

⁽⁴⁾ ~~Measured as a percentage of assets under management or assets under administration.~~

~~The following table presents the unobservable inputs for Level 3 fair value measurements as of~~ ~~December 31, 2018~~:



	~~Range~~⁽¹⁾
~~Unobservable Input~~	~~FIA~~		~~Stabilizer / MCG~~
~~Interest rate implied volatility~~	—		~~0.1% to 6.5%~~
~~Nonperformance risk~~	~~0.38% to 1.2%~~		~~0.38% to 1.2%~~
~~Actuarial Assumptions:~~
~~Partial Withdrawals~~	~~0% to 7%~~		—
~~Lapses~~	~~0% to 42%~~	⁽²⁾	~~0% to 50%~~	⁽³⁾
~~Policyholder Deposits~~⁽⁴⁾	—		~~0% to 50%~~	⁽³⁾

⁽¹⁾ ~~Represents the range of reasonable assumptions that management has used in its fair value calculations.~~

⁽³⁾ ~~Stabilizer contracts with recordkeeping agreements have different range of lapse and policyholder deposit assumptions from Stabilizer (Investment only) and MCG contracts as shown below:~~



	~~Percentage of Plans~~		~~Overall Range of Lapse Rates~~	~~Range of Lapse Rates for 85% of Plans~~	~~Overall Range of Policyholder Deposits~~	~~Range of Policyholder Deposits for 85% of Plans~~
~~Stabilizer (Investment Only) and MCG Contracts~~	92	%	~~0-25%~~	~~0-15%~~	~~0-30%~~	~~0-15%~~
~~Stabilizer with Recordkeeping Agreements~~	8	%	~~0-50%~~	~~0-30%~~	~~0-50%~~	~~0-25%~~
~~Aggregate of all plans~~	~~100~~	%	~~0-50%~~	~~0-30%~~	~~0-50%~~	~~0-25%~~

⁽⁴⁾ ~~Measured as a percentage of assets under management or assets under administration.~~

~~Generally, the following will cause an increase (decrease) in the FIA embedded derivative fair value liability:~~

~~A decrease (increase) in nonperformance risk~~

~~A decrease (increase) in lapses~~



	46

~~Table of Contents~~

~~Voya Retirement Insurance and Annuity Company and Subsidiary~~

~~(A wholly owned subsidiary of Voya Holdings Inc.)~~

~~Notes to the Condensed Consolidated Financial Statements (Unaudited)~~

~~(Dollar amounts in millions, unless otherwise stated)~~

~~Generally, the following will cause an increase (decrease) in the derivative and embedded derivative fair value liabilities related to Stabilizer and MCG contracts:~~

~~An increase (decrease) in interest rate implied volatility~~

~~A decrease (increase) in nonperformance risk~~

~~A decrease (increase) in lapses~~

~~A decrease (increase) in policyholder deposits~~

~~The Company notes the following interrelationships:~~

~~Generally, an increase (decrease) in interest rate volatility will increase (decrease) lapses of Stabilizer and MCG contracts due to dynamic participant behavior.~~

Other Financial Instruments

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

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



	4746

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

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


	March 31, 2019						December 31, 2018						September 30, 2019				December 31, 2018
	Carrying Value			Fair Value			Carrying Value			Fair Value			Carrying Value		Fair Value		Carrying Value			Fair Value
Assets:
Fixed maturities, including securities pledged	$	25,902		$	25,902		$	25,034		$	25,034		$	27,499	$	27,499	$	25,034		$	25,034
Equity securities	87			87			57			57			90		90		57			57
Mortgage loans on real estate	4,811			4,930			4,918			4,983			4,682		4,925		4,918			4,983
Policy loans	207			207			210			210			207		207		210			210
Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements	1,400			1,400			1,207			1,207			1,486		1,486		1,207			1,207
Derivatives	122			122			128			128			331		331		128			128
Short-term loan to affiliate	103			103			—			—
Other Investments	35			35			40			40			42		42		40			40
Assets held in separate accounts	73,369			73,369			67,323			67,323			75,898		75,898		67,323			67,323
Liabilities:
Investment contract liabilities:
Funding agreements without fixed maturities and deferred annuities⁽¹⁾	25,920			29,990			26,068			29,108			26,250		32,949		26,068			29,108
Funding agreements with fixed maturities	687			685			658			652			828		826		658			652
Supplementary contracts, immediate annuities and other	579			679			333			354			316		383		333			354
Deposit liabilities	77			126			77			122			76		152		77			122
Derivatives:
Guaranteed benefit derivatives:
FIA	11			11			11			11			10		10		11			11
Stabilizer and MCGs	4			4			4			4			57		57		4			4
Other derivatives	182			182			99			99			395		395		99			99
Short-term debt⁽²⁾	1			1			1			1			1		1		1			1
Long-term debt⁽²⁾	4			4			4			4			4		4		4			4
Embedded derivatives on reinsurance	(41		)	(41		)	(80		)	(80		)	26		26		(80		)	(80		)

⁽¹⁾ Certain amounts included in Funding agreements without fixed maturities and deferred annuities are also reflected within the Guaranteed benefit derivatives section of the table above.

⁽²⁾ Included in Other Liabilities on the Consolidated Balance Sheets.



	48

~~Table of Contents~~

~~Voya Retirement Insurance and Annuity Company and Subsidiary~~

~~(A wholly owned subsidiary of Voya Holdings Inc.)~~

~~Notes to the Condensed Consolidated Financial Statements (Unaudited)~~

~~(Dollar amounts in millions, unless otherwise stated)~~

The following table presents the classification of financial instruments which are not carried at fair value on the Condensed Consolidated Balance Sheets:



Financial Instrument	Classification
Mortgage loans on real estate	Level 3
Policy loans	~~Level 2~~
~~Short-term loan to affiliate~~	Level 2
Other investments	Level 2
Funding agreements without fixed maturities and deferred annuities	Level 3
Funding agreements with fixed maturities	Level 2
Supplementary contracts, immediate annuities and other	Level 3
Deposit liabilities	Level 3
Short-term debt and Long-term debt	Level 2



	4947

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

5. Deferred Policy Acquisition Costs and Value of Business Acquired

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


	2019											2019
	DAC				VOBA				Total			DAC			VOBA				Total
Balance as of January 1, 2019	$	536			$	551			$	1,087		$	536		$	551			$	1,087
Deferrals of commissions and expenses	13				2				15			29			4				33
Amortization:
Amortization, excluding unlocking	(17		)		(16		)		(33		)	(52		)	(50		)		(102		)
Unlocking ⁽¹⁾	—			*	9				9			5			2				7
Interest accrued	9				9			⁽²⁾	18			26			29			⁽²⁾	55
Net amortization included in the Condensed Consolidated Statements of Operations	(8		)		2				(6		)	(21		)	(19		)		(40		)
Change due to unrealized capital gains/losses on available-for-sale securities	(113		)		(107		)		(220		)	(274		)	(246		)		(520		)
Balance as of March 31, 2019	$	428			$	448			$	876
Balance as of September 30, 2019												$	270		$	290			$	560


	2018										2018
	DAC			VOBA				Total			DAC			VOBA				Total
Balance as of January 1, 2018	$	385		$	367			$	752		$	385		$	367			$	752
Deferrals of commissions and expenses	15			2				17			40			5				45
Amortization:
Amortization, excluding unlocking	(18		)	(20		)		(38		)	(55		)	(55		)		(110		)
Unlocking ⁽¹⁾	(29		)	(17		)		(46		)	(25		)	26				1
Interest accrued	9			10			⁽²⁾	19			26			29			⁽²⁾	55
Net amortization included in the Condensed Consolidated Statements of Operations	(38		)	(27		)		(65		)	(54		)	—				(54		)
Change due to unrealized capital gains/losses on available-for-sale securities	85			108				193			144			174				318
Balance as of March 31, 2018	$	447		$	450			$	897
Balance as of September 30, 2018											$	515		$	546			$	1,061

⁽¹⁾ Includes the impacts of annual review of assumptions which typically occurs in the third quarter; and retrospective and prospective unlocking.Additionally, the 2018 amounts include unfavorable unlocking of DAC and VOBA of $25 and ~~$18,~~$26, respectively, associated with an update to assumptions related to customer consents of changes to guaranteed minimum interest rate provisions.

⁽²⁾Interest accrued at the following rates for VOBA: 5.5% to 7.0% during 2019 and 2018.

*Less than $1.



	5048

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

6. Accumulated Other Comprehensive Income (Loss)

Shareholder’s equity included the following components of AOCI as of the dates indicated:


	March 31,						September 30,
	2019			2018			2019			2018
Fixed maturities, net of OTTI	$	1,030		$	786		$	2,211		$	312
Derivatives(1)	126			93			159			117
DAC/VOBA and Sales inducements adjustment on available-for-sale securities	(293		)	(240		)	(593		)	(114		)
Premium deficiency reserve adjustment	(86		)	(82		)	(216		)	(58		)
Unrealized capital gains (losses), before tax	777			557			1,561			257
Deferred income tax asset (liability)	(35		)	(123		)	(199		)	(59		)
Unrealized capital gains (losses), after tax	742			434			1,362			198
Pension and other postretirement benefits liability, net of tax	5			4			4			3
AOCI	$	747		$	438		$	1,366		$	201

⁽¹⁾ Gains and losses reported in Accumulated Other Comprehensive Income (AOCI) from hedge transactions that resulted in the acquisition of an identified asset are reclassified into earnings in the same period or periods during which the asset acquired affects earnings. As of September 30, 2019, the portion of the AOCI that is expected to be reclassified into earnings within the next twelve months is $25.



	49

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Changes in AOCI, including reclassification adjustments recognized in the Condensed Consolidated Statements of Operations were as follows for the periods indicated:



	Three Months Ended September 30, 2019
	Before-Tax Amount				Income Tax			After-Tax Amount
Available-for-sale securities:
Fixed maturities	$	540			$	(115	)	$	425
Other	—				—			—
OTTI	—				—			—
Adjustments for amounts recognized in Net realized capital gains (losses) in the Condensed Consolidated Statements of Operations	(44		)		10			(34		)
DAC/VOBA and Sales inducements	(134		)		28			(106		)
Premium deficiency reserve adjustment	(98		)		21			(77		)
Change in unrealized gains/losses on available-for-sale securities	264				(56		)	208

Derivatives:
Derivatives	27			⁽¹⁾	(6		)	21
Adjustments related to effective cash flow hedges for amounts recognized in Net investment income in the Condensed Consolidated Statements of Operations	(5		)		1			(4		)
Change in unrealized gains/losses on derivatives	22				(5		)	17

Pension and other postretirement benefits liability:
Amortization of prior service cost recognized in Operating expenses in the Condensed Consolidated Statements of Operations	—				1			1
Change in pension and other postretirement benefits liability	—				1			1
Change in Other comprehensive income (loss)	$	286			$	(60	)	$	226

⁽¹⁾ See the Derivative Financial Instruments Note to these Condensed Consolidated Financial Statements for additional information.



	50

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)



	Nine Months Ended September 30, 2019
	Before-Tax Amount				Income Tax			After-Tax Amount
Available-for-sale securities:
Fixed maturities	$	2,114			$	(444	)	$	1,670
Other	—				—			—
OTTI	1				—			1
Adjustments for amounts recognized in Net realized capital gains (losses) in the Condensed Consolidated Statements of Operations	(31		)		7			(24		)
DAC/VOBA and Sales inducements	(520		)	⁽¹⁾	109			(411		)
Premium deficiency reserve adjustment	(165		)		35			(130		)
Change in unrealized gains/losses on available-for-sale securities	1,399				(293		)	1,106

Derivatives:
Derivatives	36			⁽²⁾	(8		)	28
Adjustments related to effective cash flow hedges for amounts recognized in Net investment income in the Condensed Consolidated Statements of Operations	(17		)		4			(13		)
Change in unrealized gains/losses on derivatives	19				(4		)	15

Pension and other postretirement benefits liability:
Amortization of prior service cost recognized in Operating expenses in the Condensed Consolidated Statements of Operations	(1		)		1			—
Change in pension and other postretirement benefits liability	(1		)		1			—
Change in Other comprehensive income (loss)	$	1,417			$	(296	)	$	1,121

⁽¹⁾See the Deferred Policy Acquisition Costs and Value of Business Acquired Note to these Condensed Consolidated Financial Statements for additional information.

⁽²⁾ See the Derivative Financial Instruments Note to these Condensed Consolidated Financial Statements for additional information.



	51

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

~~Changes in AOCI, including the reclassification adjustments recognized in the Condensed Consolidated Statements of Operations were as follows for the periods indicated:~~



	Three Months Ended September 30, 2018
	Before-Tax Amount				Income Tax			After-Tax Amount
Available-for-sale securities:
Fixed maturities	$	(124	)		$	35		$	(89	)
Other	—				—			—
OTTI	1				(1		)	—
Adjustments for amounts recognized in Net realized capital gains (losses) in the Condensed Consolidated Statements of Operations	9				(2		)	7
DAC/VOBA and Sales inducements	31				(7		)	24
Premium deficiency reserve adjustment	3				(1		)	2
Change in unrealized gains/losses on available-for-sale securities	(80		)		24			(56		)

Derivatives:
Derivatives	4			⁽¹⁾	(1		)	3
Adjustments related to effective cash flow hedges for amounts recognized in Net investment income in the Condensed Consolidated Statements of Operations	(6		)		1			(5		)
Change in unrealized gains/losses on derivatives	(2		)		—			(2		)

Pension and other postretirement benefits liability:
Amortization of prior service cost recognized in Operating expenses in the Condensed Consolidated Statements of Operations	(1		)		—			(1		)
Change in pension and other postretirement benefits liability	(1		)		—			(1		)
Change in Other comprehensive income (loss)	$	(83	)		$	24		$	(59	)

Three Months Ended March 31, 2019
Before-Tax Amount Income Tax After-Tax Amount
Available-for-sale securities:
Fixed maturities $ 887
$ (184 ) $ 703
Other —
—
—
OTTI —
—
—
Adjustments for amounts recognized in Net realized capital gains (losses) in the Condensed Consolidated Statements of Operations 15
(3 ) 12
DAC/VOBA and Sales inducements (220 )
⁽¹⁾
46
(174 )
Premium deficiency reserve adjustment (35 ) 7
(28 )
Change in unrealized gains/losses on available-for-sale securities 647
(134 ) 513

Derivatives:
Derivatives (8 )
⁽²⁾
2
(6 )
Adjustments related to effective cash flow hedges for amounts recognized in Net investment income in the Condensed Consolidated Statements of Operations (6 ) 1
(5 )
Change in unrealized gains/losses on derivatives (14 ) 3
(11 )

Pension and other postretirement benefits liability:
Amortization of prior service cost recognized in Operating expenses in the Condensed Consolidated Statements of Operations —
—
—
Change in pension and other postretirement benefits liability —
—
—
Change in Other comprehensive income (loss) $ 633
$ (131 ) $ 502

⁽¹⁾~~See the~~ ~~Deferred Policy Acquisition Costs and Value of Business Acquired~~ ~~Note to these Condensed Consolidated Financial Statements for additional information.~~

⁽²⁾ See the Derivative Financial Instruments Note to these Condensed Consolidated Financial Statements for additional information.



	52

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)


	Three Months Ended March 31, 2018											Nine Months Ended September 30, 2018
	Before-Tax Amount				Income Tax				After-Tax Amount			Before-Tax Amount				Income Tax				After-Tax Amount
Available-for-sale securities:
Fixed maturities	$	(687	)		$	153		⁽³⁾	$	(534	)	$	(1,188	)		$	259		⁽³⁾	$	(929	)
Other	(5		)		1				(4		)	(5		)		1				(4		)
OTTI	7				(1		)		6			8				(2		)		6
Adjustments for amounts recognized in Net realized capital gains (losses) in the Condensed Consolidated Statements of Operations	14				(3		)		11			42				(9		)		33
DAC/VOBA and Sales inducements	194			⁽¹⁾	(41		)		153			318			⁽¹⁾	(67		)		251
Premium deficiency reserve adjustment	33				(7		)		26			57				(12		)		45
Change in unrealized gains/losses on available-for-sale securities	(444		)		102				(342		)	(768		)		170				(598		)

Derivatives:
Derivatives	(25		)	⁽²⁾	5				(20		)	11			⁽²⁾	(2		)		9
Adjustments related to effective cash flow hedges for amounts recognized in Net investment income in the Condensed Consolidated Statements of Operations	(6		)		1				(5		)	(18		)		4				(14		)
Change in unrealized gains/losses on derivatives	(31		)		6				(25		)	(7		)		2				(5		)

Pension and other postretirement benefits liability:
Amortization of prior service cost recognized in Operating expenses in the Condensed Consolidated Statements of Operations	(1		)		—				(1		)	(2		)		—				(2		)
Change in pension and other postretirement benefits liability	(1		)		—				(1		)	(2		)		—				(2		)
Change in Other comprehensive income (loss)	$	(476	)		$	108			$	(368	)	$	(777	)		$	172			$	(605	)

⁽¹⁾See the Deferred Policy Acquisition Costs and Value of Business Acquired Note to these Condensed Consolidated Financial Statements for additional information.

⁽²⁾ See the Derivative Financial Instruments Note to these Condensed Consolidated Financial Statements for additional information.

⁽³⁾ Amount includes ~~$11~~$12 valuation allowance. See the Income Taxes Note to these Condensed Consolidated Financial Statements for additional information.



	53

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

7. Income Taxes

The Company's effective tax rate for the three and nine months ended ~~March 31,~~September 30, 2019 was ~~7.3%.~~5.2% and 9.0%, respectively. The effective tax ~~rate~~rates differed from the statutory rate of 21% primarily due to the effect of the dividends received deduction ("DRD"). and tax credits.

The Company's effective tax rate for the three and nine months ended ~~March 31,~~September 30, 2018 was ~~22.0%.~~17.4% and 15.6%, respectively. The effective tax ~~rate~~rates differed from the statutory rate of 21% primarily due to the ~~intraperiod tax allocation~~effect of the ~~valuation allowance related to realized capital losses,~~DRD, partially offset by the ~~benefit of~~change in the ~~DRD.~~valuation allowance.

Tax Sharing Agreement

The results of the Company's operations are included in the consolidated tax return of Voya Financial, Inc. Generally, the Company's consolidated financial statements recognize the current and deferred income tax consequences that result from the Company's activities during the current and preceding periods pursuant to the provisions of Income Taxes (ASC Topic 740) as if the Company were a separate taxpayer rather than a member of Voya Financial, Inc.'s consolidated income tax return group with the exception of any net operating loss carryforwards and capital loss carryforwards, which are recorded pursuant to the tax sharing agreement. If the Company instead were to follow a separate taxpayer approach without any exceptions, there would be no impact to income tax expense (benefit) for the periods indicated above. Also, any current tax benefit related to the Company's tax attributes realized by virtue of its inclusion in the consolidated tax return of Voya Financial, Inc. would have been recorded directly to equity rather than income. Under the tax sharing agreement, Voya Financial, Inc. will pay the Company for the tax benefits of ordinary and capital losses only in the event that the consolidated tax group actually uses the tax benefit of losses generated.

Tax Regulatory Matters

For the tax years 2017 through 2019, Voya Financial, Inc. (including the Company) participates in the ~~IRS~~Internal Revenue Service ("IRS") Compliance Assurance Process ~~(CAP)~~("CAP"), which is a continuous audit program provided by the IRS. During 2019, the IRS finalized the audit of Voya Financial, Inc. (including the Company) for the period ended December 31, 2017. Voya Financial, Inc. (including the Company) is under examination for the ~~periods ended December 31, 2017 and December 31, 2018. For the~~ period ended December 31, ~~2017,~~2018. Voya Financial, Inc. (including the Company) expects the examination to be finalized within the next twelve months.

8. Financing Agreements

Reciprocal Loan Agreement

The Company maintains a reciprocal loan agreement with Voya Financial, Inc., an affiliate, to facilitate the handling of unanticipated short-term cash requirements that arise in the ordinary course of business. Under this agreement, which became effective in June 2001 and expires on April 1, 2021, either party can borrow from the other up to 3.0% of the Company’s statutory admitted assets as of the preceding December 31. Effective January 2014, interest on any borrowing by either the Company or Voya Financial, Inc. is charged at a rate based on the prevailing market rate for similar third-party borrowings or securities.

Under this agreement, the Company incurred immaterial interest expense for the three and nine months ended September 30, 2019 . The company earned immaterial ~~interest~~ income for the three months ended ~~March 31,~~September 30, 2019 and earned $2 for the nine months ended September 30, 2019. The Company incurred and earned immaterial interest expense and interest income for the three and nine months ended September 30, 2018. As of ~~March 31,~~September 30, 2019 the Company had an outstanding receivable of ~~$103~~$129 and ~~no outstanding payable. As~~as of December 31, 2018, the Company did not have an outstanding receivable/payable from/to Voya Financial, Inc. under the reciprocal loan agreement.



	54

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

9. Commitments and Contingencies

Commitments

Through the normal course of investment operations, the Company commits to either purchase or sell securities, mortgage loans, or money market instruments, at a specified future date and at a specified price or yield. The inability of counterparties to honor these commitments may result in either a higher or lower replacement cost. Also, there is likely to be a change in the value of the securities underlying the commitments. As of ~~March 31,~~September 30, 2019, the Company had off-balance sheet commitments to acquire mortgage loans of ~~$37~~$59 and purchase limited partnerships and private placement investments of ~~$489.~~$559.



	54

~~Table of Contents~~

~~Voya Retirement Insurance and Annuity Company and Subsidiary~~

~~(A wholly owned subsidiary of Voya Holdings Inc.)~~

~~Notes to the Condensed Consolidated Financial Statements (Unaudited)~~

~~(Dollar amounts in millions, unless otherwise stated)~~

Restricted Assets

The Company is required to maintain assets on deposit with various regulatory authorities to support its insurance operations. The Company may also post collateral in connection with certain securities lending, repurchase agreements, funding agreements, letter of credit ("LOC") and derivative transactions as described further in this note. The components of the fair value of the restricted assets were as follows as of the dates indicated:


	March 31, 2019		December 31, 2018		September 30, 2019		December 31, 2018
Fixed maturity collateral pledged to FHLB⁽¹⁾	$	801	$	771	$	1,028	$	771
FHLB restricted stock⁽²⁾	35		40		42		40
Other fixed maturities-state deposits	14		13		14		13
Cash and cash equivalents	5		5		5		5
Securities pledged⁽³⁾	1,018		882		979		882
Total restricted assets	$	1,873	$	1,711	$	2,068	$	1,711

⁽¹⁾ Included in Fixed maturities, available for sale, at fair value on the Condensed Consolidated Balance Sheets.

⁽²⁾ Included in Other investments on the Condensed Consolidated Balance Sheets.

⁽³⁾ Includes the fair value of loaned securities of ~~$887~~$851 and $759 as of ~~March 31,~~September 30, 2019 and December 31, 2018, respectively. In addition, as of ~~March 31,~~September 30, 2019 and December 31, 2018, the Company delivered securities as collateral of ~~$131~~$128 and $123, respectively. Loaned securities and securities delivered as collateral are included in Securities pledged on the Condensed Consolidated Balance Sheets.

Federal Home Loan Bank Funding

On January 18, 2018, the Company became a member of the Federal Home Loan Bank of Boston ("FHLB"). The Company is required to pledge collateral to back funding agreements issued to the FHLB. As of ~~March 31,~~September 30, 2019 and December 31, 2018, the Company had ~~$687~~$827 and $657, respectively, in non-putable funding agreements, which are included in Future policy benefits and contract owner account balances on the Condensed Consolidated Balance Sheets. As of ~~March 31,~~September 30, 2019 and December 31, 2018, assets with a market value of approximately ~~$801~~$1,028 and $771, respectively, collateralized the FHLB funding agreements. Assets pledged to the FHLB are included in Fixed maturities, available-for-sale, at fair value on the Condensed Consolidated Balance Sheets.



	55

Table of Contents

Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Dollar amounts in millions, unless otherwise stated)

Litigation, Regulatory Matters and Loss Contingencies

Litigation, regulatory and other loss contingencies arise in connection with the Company's activities as a diversified financial services firm. The Company is a defendant in a number of litigation matters arising from the conduct of its business, both in the ordinary course and otherwise. In some of these matters, claimants seek to recover very large or indeterminate amounts, including compensatory, punitive, treble and exemplary damages. Modern pleading practice in the U.S. permits considerable variation in the assertion of monetary damages and other relief. Claimants are not always required to specify the monetary damages they seek or they may be required only to state an amount sufficient to meet a court's jurisdictional requirements. Moreover, some jurisdictions allow claimants to allege monetary damages that far exceed any reasonably possible verdict. The variability in pleading requirements and past experience demonstrates that the monetary and other relief that may be requested in a lawsuit or claim often bears little relevance to the merits or potential value of a claim. Litigation against the Company includes a variety of claims including negligence, breach of contract, fraud, violation of regulation or statute, breach of fiduciary duty, negligent misrepresentation, failure to supervise, elder abuse and other torts.

As with other financial services companies, the Company periodically receives informal and formal requests for information from various state and federal governmental agencies and self-regulatory organizations in connection with inquiries and investigations of the products and practices of the Company or the financial services industry. It is the practice of the Company to cooperate fully in these matters.

The outcome of a litigation or regulatory matter is difficult to predict and the amount or range of potential losses associated with these or other loss contingencies requires significant management judgment. It is not possible to predict the ultimate outcome or to provide reasonably possible losses or ranges of losses for all pending regulatory matters, litigation, and other loss contingencies.



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~~Voya Retirement Insurance and Annuity Company and Subsidiary~~

~~(A wholly owned subsidiary of Voya Holdings Inc.)~~

~~Notes to the Condensed Consolidated Financial Statements (Unaudited)~~

~~(Dollar amounts in millions, unless otherwise stated)~~

While it is possible that an adverse outcome in certain cases could have a material adverse effect upon the Company's financial position, based on information currently known, management believes that neither the outcome of pending litigation and regulatory matters, nor potential liabilities associated with other loss contingencies, are likely to have such an effect. However, given the large and indeterminate amounts sought in certain litigation and the inherent unpredictability of all such matters, it is possible that an adverse outcome in certain of the Company's litigation or regulatory matters, or liabilities arising from other loss contingencies, could, from time to time, have a material adverse effect upon the Company's results of operations or cash flows in a particular quarterly or annual period.

For some matters, the Company is able to estimate a possible range of loss. For such matters in which a loss is probable, an accrual has been made. For matters where the Company, however, believes a loss is reasonably possible, but not probable, no accrual is required. For matters for which an accrual has been made, but there remains a reasonably possible range of loss in excess of the amounts accrued or for matters where no accrual is required, the Company develops an estimate of the unaccrued amounts of the reasonably possible range of losses. As of ~~March 31,~~September 30, 2019, the Company estimates the aggregate range of reasonably possible losses, in excess of any amounts accrued for these matters as of such date, is not material to the Company.

For other matters, the Company is currently not able to estimate the reasonably possible loss or range of loss. The Company is often unable to estimate the possible loss or range of loss until developments in such matters have provided sufficient information to support an assessment of the range of possible loss, such as quantification of a damage demand from plaintiffs, discovery from plaintiffs and other parties, investigation of factual allegations, rulings by a court on motions or appeals, analysis by experts and the progress of settlement discussions. On a quarterly and annual basis, the Company reviews relevant information with respect to litigation and regulatory contingencies and updates the Company's accruals, disclosures and reasonably possible losses or ranges of loss based on such reviews.

Litigation includes Goetz v. Voya Financial and Voya Retirement Insurance and Annuity Company (USDC District of Delaware, No. 1:17-cv-1289) (filed September 8, 2017), a putative class action in which plaintiff, a participant in a 401(k) plan, seeks to represent other participants in the plan as well as a class of similarly situated plans that "contract with [Voya] for recordkeeping and other services." Plaintiff alleges that "Voya" breached its fiduciary duty to the plan and other plan participants by charging unreasonable and excessive recordkeeping fees, and that "Voya" distributed materially false and misleading 404a-5 administrative and fund fee disclosures to conceal its excessive fees. The Company denies the allegations, which it believes are without merit, and intends to defend the case vigorously. ~~Plaintiff filed an amended complaint on January 4, 2018, and the Company filed a motion to dismiss the amended complaint of February 8, 2018.~~

10. Related Party Transactions

Operating Agreements

Prior to May 1, 2017, DSL was the investment adviser to certain U.S. registered investment companies that are investment options under certain of the Company’s variable insurance products. Consequently, DSL was party to various intercompany management and revenue sharing agreements, whereby DSL earned revenues and incurred expenses associated with these intercompany agreements. Effective May 1, 2017, Voya Investments, LLC, ("VIL") an affiliate, was appointed as investment adviser to these U.S. registered investment companies and DSL no longer provided these advisory and certain other related services to its affiliates. While this change has an impact on the Company’s and DSL’s total revenues and total expenses, the net impact on the Company’s Net income (loss) is expected to be insignificant. As of June 1, 2018, DSL was divested pursuant to the Transaction.

The Company has ~~currently~~ operating agreements whereby the Company provides or receives services from affiliated entities. For the three and nine months ended ~~March 31,~~September 30, 2019, revenues with affiliated entities related to these agreements were $23 and $68, respectively. For the three and nine months ended September 30, 2018, revenues with affiliated entities related to these agreements were ~~$22~~$25 and ~~$86,~~$169, respectively. For the three and nine months ended ~~March 31,~~September 30, 2019, expenses with affiliated entities related to the aforementioned operating agreements, as amended, were $118 and $382, respectively. For the three and nine months ended September 30, 2018, expenses with affiliated entities related to the aforementioned operating agreements, as amended, were ~~$146~~$117 and ~~$210,~~$428, respectively.

Reinsurance Agreements

Effective January 1, 2018, the Company recaptured its coinsurance agreement with Langhorne I, LLC ("Langhorne") to manage the reserve and capital requirements in connection with a portion of its Stabilizer and Managed Custody Guarantee, which resulted



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~~Voya Retirement Insurance and Annuity Company and Subsidiary~~

~~(A wholly owned subsidiary of Voya Holdings Inc.)~~

~~Notes to the Condensed Consolidated Financial Statements (Unaudited)~~

~~(Dollar amounts in millions, unless otherwise stated)~~

in the Company recording a $74 pre-tax gain on recapture of reinsured business that was reported in Operating expenses in the Condensed Consolidated Statement of Operations. This agreement was accounted for under the deposit method.

As of ~~March 31,~~September 30, 2019 and December 31, 2018, the Company had deposit assets of approximately $36 and $37 and deposit liabilities of $76 and $77. Deposit assets and liabilities are included in Other assets and Other liabilities, respectively, on the Condensed Consolidated Balance Sheets.



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Item 2. Management’s Narrative Analysis of the Results of Operations and Financial Condition

(Dollar amounts in millions, unless otherwise stated)

For the purposes of the discussion in this Quarterly Report on Form 10-Q, the term "VRIAC" refers to Voya Retirement Insurance and Annuity Company, and the terms "Company," "we," "our," "us" refer to Voya Retirement Insurance and Annuity Company and its ~~subsidiaries.~~subsidiary. We are a direct, wholly owned subsidiary of Voya Holdings Inc., which is a direct, wholly owned subsidiary of Voya Financial, Inc.

The following discussion and analysis presents a review of our results of operations for the three and nine months ended ~~March 31,~~September 30, 2019 and 2018 and financial condition as of ~~March 31,~~September 30, 2019 and December 31, 2018. This item should be read in its entirety and in conjunction with the Condensed Consolidated Financial Statements and related notes contained in Part I., Item 1. of this Quarterly Report on Form 10-Q, as well as "Management's Narrative Analysis of the Results of Operations and Financial Condition" section contained in our Annual Report on Form 10-K for the year ended December 31, 2018 ("Annual Report on Form ~~10-K~~"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 "Note Concerning Forward-Looking Statements."

Overview

VRIAC is a stock life insurance company domiciled in the State of Connecticut. VRIAC and its wholly owned subsidiary (collectively, the "Company") provide financial products and services in the United States. VRIAC is authorized to conduct its insurance business in all states and in the District of Columbia, Guam, Puerto Rico and the Virgin Islands.

As of June 1, 2018, Directed Services LLC ("DSL") was divested pursuant to the ~~transaction~~2018 Transaction described below. Subsequent to the ~~transaction,~~2018 Transaction, VRIAC has one wholly owned non-insurance subsidiary, Voya Financial Partners, LLC ("VFP").

On June 1, 2018, VRIAC's ultimate parent, Voya Financial, consummated a series of transactions (collectively, the ~~"Transaction'~~"2018 Transaction'') pursuant to a Master Transaction Agreement dated December 20, 2017 (the "MTA") with VA Capital Company LLC ("VA Capital") and Athene Holding Ltd ("Athene"). As part of the 2018 Transaction, VA Capital's wholly owned subsidiary Venerable Holdings Inc. ("Venerable") acquired certain of Voya Financial's assets, including all of the shares of capital stock of Voya Insurance and Annuity Company ("VIAC"), the Company's Iowa-domiciled insurance affiliate, as well as the membership interests of DSL, the Company's broker-dealer subsidiary. Following the closing of the 2018 Transaction, VRIAC acquired a 9.99% equity interest in VA Capital.

Our Business

Our products include qualified and nonqualified annuity contracts that include a variety of funding and payout options for individuals and employer-sponsored retirement plans qualified under Internal Revenue Code Sections 401, 403, 408, 457 and 501, as well as nonqualified deferred compensation plans and related services. Our products are offered primarily to employer-sponsored groups in the health care, government and education markets (collectively "tax exempt markets"), small to mid-sized corporations and individuals. We also provide stable value investment options, including separate account guaranteed investment contracts (e.g. GICs) and synthetic GICs, to institutional clients. Our products are generally distributed through pension professionals, independent agents and brokers, third party administrators, banks, consultants, dedicated financial guidance, planning and advisory representatives associated with Voya Financial, Inc.'s retail broker-dealer, Voya Financial Advisors, Inc. ("VFA").

We derive our revenue mainly from (a) investment income earned on investments, (b) Fee income generated from separate account assets supporting variable options under variable annuity contract investments, as designated by contract owners, (c) Premiums, (d) realized capital gains (losses) on investments and changes in fair value of embedded derivatives on product guarantees, and (e) Other revenue which includes certain other fees. Our Benefits and expenses primarily consist of (a) Interest credited and other benefits to contract owners/policyholders, (b) Operating expenses, which include expenses related to the selling and servicing of the various products offered by us and other general business expenses, and (c) amortization of DAC and VOBA. In addition, we collect broker-dealer commission revenues through VFP, which are, in turn, paid to broker-dealers and expensed.

We have one operating segment.



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Impact of New Accounting Pronouncements

For information regarding the impact of new accounting pronouncements, see the Business, Basis of Presentation and Significant Accounting Policies Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.

Critical Accounting Judgments and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States ("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;

•Deferred policy acquisition costs ("DAC") and value of business acquired ("VOBA");

•Valuation of investments and derivatives;

•Impairments;

•Income taxes; and

•Contingencies.

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

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

Assumptions and Periodic Review

Changes in assumptions can have a significant impact on DAC and 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 and VOBA and other intangibles, reserves and the related results of operations.

During the third quarter of 2019 and 2018, we conducted our annual review of assumptions, market conditions and other projection model inputs. These reviews resulted in net unfavorable unlocking of DAC and VOBA of $13 million in the current period compared to net favorable unlocking of DAC and VOBA of $42 million in the prior period. Unlocking in the third quarter 2019 reflects impacts related to a reduction in the long-term interest rate and lower net margins partially offset by changes to earned rates and reinsurance costs. Unlocking in the third quarter 2018 reflects changes in equity market assumptions partially offset by an unfavorable adjustment related to the GMIR initiatives.



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In 2017, we began soliciting customer consents to execute a change to reduce the guaranteed minimum interest rate ("GMIR initiative") applicable to future deposits and transfers into fixed investment options for certain retirement plan contracts with above-market GMIRs. This change reduces our interest rate exposure on new deposits, transfers and in certain plans existing fixed account assets and will favorably impact the DAC and VOBA amortization rate and operating earnings over time. There was no unlocking of DAC and VOBA related to GMIR initiative for the ~~three~~nine months ended ~~March 31,~~September 30, 2019. For the ~~three~~nine months ended ~~March 31,~~September 30, 2018, unfavorable unlocking of DAC and VOBA related to GMIR provisions was ~~$43~~$51 million, of which $8 million was included in ~~Net amortization~~the results of ~~DAC and VOBA in~~ the ~~Condensed Consolidated Financial Statements.~~annual review of assumptions referenced above.



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Income Taxes

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



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Results of Operations


_{($ in millions)}	Three Months Ended March 31,						Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018			2019			2018
Revenues:
Net investment income	$	394		$	382		$	413		$	425		$	1,235		$	1,204
Fee income	165			174			181			177			522			526
Premiums	9			14			5			13			24			35
Broker-dealer commission revenue	1			41			1			1			2			69
Net realized capital gains (losses):
Total other-than-temporary impairments	(20		)	(9		)	(3		)	(6		)	(24		)	(15		)
Less: Portion of other-than-temporary impairments recognized in Other comprehensive income (loss)	—			—			—			—			—			1
Net other-than-temporary impairments recognized in earnings	(20		)	(9		)	(3		)	(6		)	(24		)	(16		)
Other net realized capital gains (losses)	(4		)	(78		)	7			(38		)	2			(198		)
Total net realized capital gains (losses)	(24		)	(87		)	4			(44		)	(22		)	(214		)
Other revenue	4			—			3			6			8			8
Total revenues	549			524			607			578			1,769			1,628
Benefits and expenses:
Interest credited and other benefits to contract owners/policyholders	255			198			262			227			786			625
Operating expenses	217			108			197			183			607			469
Broker-dealer commission expense	1			41			1			1			2			69
Net amortization of Deferred policy acquisition costs and Value of business acquired	6			65			31			(28		)	40			54
Total benefits and expenses	479			412			491			383			1,435			1,217
Income (loss) before income taxes	70			112			116			195			334			411
Income tax expense (benefit)	5			25			6			34			30			64
Net income (loss)	$	65		$	87		$	110		$	161		$	304		$	347

Three Months Ended ~~March 31,~~September 30, 2019 compared to Three Months Ended ~~March 31,~~September 30, 2018

Revenues

Net investment income decreased by $12 million from $425 million to $413 million primarily due to:

lower prepayment fee income; and

lower alternative investment income.

The decrease was partially offset by:

growth in the general account assets driven by positive net flows.

Total net realized capital gains (losses) increased by $48 million from a loss of $(44) million to a gain of $4 million primarily due to:

favorable changes in fixed maturities using the fair value option due to interest rate movements and spread changes; and

favorable changes in fixed maturities due to market change.

The increase was partially offset by:



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unfavorable changes in the fair values of derivatives due to interest rate movements; and

unfavorable changes in the fair value of embedded derivatives on product guarantees primarily due to the favorable impact of non-performance risk which was partially offset by the results of interest rate movements.

Benefits and Expenses

Interest credited and other benefits to contract owners/policyholders increased by $35 million from $227 million to $262 million primarily due to unfavorable changes in the fair value of embedded derivatives.

Operating expenses increased by $14 million from $183 million to $197 million primarily due to higher expenses primarily resulting from business growth and the write-off of previously deferred expenses related to policy acquisition costs.

Net amortization of DAC and VOBA increased by $59 million from $(28) million to $31 million primarily due to:

unfavorable unlocking in the current period compared to favorable unlocking in the prior period due to annual assumption updates;

higher amortization due to higher gross profits

The increase was partially offset by:

lower amortization driven by the change in embedded derivative associated with a reinsurance agreement; and

favorable unlocking due to revaluations of assets.

Income tax expense decreased by $28 million from $34 million to $6 million primarily due to:

a decrease in income before income taxes;

tax credits; and

the intraperiod tax allocation of the valuation allowance related to realized capital losses in 2018 that did not recur in 2019.

The decrease was partially offset by:

a change in the dividends received deduction ("DRD").

Net income decreased by $51 million from $161 million to $110 million primarily due to:

higher Net amortization of DAC and VOBA;

higher Interest credited and other benefits to contract owners/policyholders;

higher Operating expenses; and

lower Net investment income.

The decrease was partially offset by:

favorable change in Net realized capital gains (losses); and

lower Income tax expense.

Nine Months Ended September 30, 2019 compared to Nine Months Ended September 30, 2018

Revenues

Net investment income increased by ~~$12~~$31 million from ~~$382~~$1,204 million to ~~$394~~$1,235 million primarily due to:

higher prepayment fee income; and

growth in the general ~~accounts~~account assets driven by positive net ~~flows; and~~

~~higher prepayment fee income.~~flows.

The increase was partially offset by:

~~decrease in alternative investment income.~~

~~Fee income~~ ~~decreased by $9 million from $174 million to $165 million primarily due to:~~

~~the shift in business mix.~~

~~Broker-dealer commission revenue~~ ~~decreased by $40 million from $41 million to $1 million primarily due to:~~


•	~~the divestment of DSL pursuant to the Transaction described in the~~ ~~Business, Basis of Presentation and Significant Accounting Policies~~ ~~Note in the Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.~~



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lower alternative investment income.

Broker-dealer commission revenue decreased by $67 million from $69 million to $2 million primarily due to:


•	the divestment of DSL pursuant to the 2018 Transaction described in the Business, Basis of Presentation and Significant Accounting Policies Note in the Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.

Total net realized capital losses decreased by ~~$63~~$192 million from ~~$87~~$214 million to ~~$24~~$22 million primarily due toto:

favorable changes in fixed maturities using the fair value option due to interest rate movements and spread changes; and

favorable changes in fixed maturities due to market changes.

The decrease was partially offset by:

unfavorable changes in the fair ~~value~~values of derivatives due to interest rate movements; and

unfavorable changes in the fair value of embedded derivatives on product guarantees primarily due to the ~~result~~favorable impact of non-performance risk which was partially offset by the results of interest rate ~~movements including the impact of non-performance risk.~~movements.

Benefits and Expenses

Interest credited and other benefits to contract owners/policyholders increased by ~~$57~~$161 million from ~~$198~~$625 million to ~~$255~~$786 million primarily due ~~to:~~

to unfavorable changes in the fair value of embedded derivatives on reinsurance.

Operating expenses increased by ~~$109~~$138 million from ~~$108~~$469 million to ~~$217~~$607 million primarily due to:

a gain on the recapture of a reinsurance agreement in the prior year that did not reoccur in the current ~~period.~~period;

higher expenses primarily resulting from business growth and the write-off of previously deferred expenses related to policy acquisition costs;

higher consulting costs;

higher employee related costs; and

The increase was partially offset by:

lower technology costs.

Broker-dealer commission expense decreased by ~~$40~~$67 million from ~~$41~~$69 million to $1$2 million primarily due to:


•	the divestment of DSL pursuant to the 2018 Transaction described in the Business, Basis of Presentation and Significant Accounting Policies Note to the Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.

Net amortization of DAC and VOBA decreased by ~~$59~~$14 million from ~~$65~~$54 million to $6$40 million primarily due to:

unfavorable ~~DAC and VOBA~~ unlocking in the prior period due to an update to the assumptions related to the GMIR initiative; ~~and~~

~~unfavorable DAC and VOBA~~lower amortization driven by the change in embedded derivative ~~associated with a reinsurance agreement.~~on reinsurance; and

higher favorable unlocking due to separate account performance.

The decrease was partially offset by:

higher amortization due to higher gross profits; and

unfavorable unlocking in the current period compared to favorable unlocking in the prior period due to annual assumption updates.

Income tax expense decreased by ~~$20~~$34 million from ~~$25~~$64 million to $5$30 million primarily due to:

a decrease in income before income taxes;

tax credits; and



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the intraperiod tax allocation of the valuation allowance related to realized capital losses in 2018 that did not recur in 2019.

The decrease was partially offset by:

a change in the DRD.

Net income ~~(loss)~~ decreased by ~~$22~~$43 million from ~~$87~~$347 million to ~~$65~~$304 million primarily due to:

higher Interest credited and other benefits to contract owners/policyholders; and

higher Operating expenses.

The decrease was partially offset by:

~~higher~~lower Net ~~investment income;~~

~~lower Total net~~ realized capital losses;

lower Income tax expense;

higher Net investment income; and

lower Net amortization of ~~DAC/VOBA;~~DAC and VOBA.

~~lower Income tax expense.~~



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Financial Condition

Investments

See Management's Narrative Analysis of the Results of Operations and Financial Condition in Part II, Item. 7. of our Annual Report on Form 10-K for information on our investment strategy.

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

Portfolio Composition

The following table presents the investment portfolio as of the dates indicated:


	March 31, 2019				December 31, 2018				September 30, 2019				December 31, 2018
($ in millions)	Carrying Value		% of Total		Carrying Value		% of Total		Carrying Value		% of Total		Carrying Value		% of Total
Fixed maturities, available-for-sale, excluding securities pledged	$	23,663	74.4	%	$	22,981	74.0	%	$	25,072	74.6	%	$	22,981	74.0	%
Fixed maturities, at fair value using the fair value option	1,221		3.8	%	1,171		3.8	%	1,448		4.3	%	1,171		3.8	%
Equity securities, at fair value	87		0.3	%	57		0.2	%	90		0.3	%	57		0.2	%
Short-term investments⁽¹⁾	50		0.2	%	50		0.2	%	50		0.1	%	50		0.2	%
Mortgage loans on real estate	4,811		15.1	%	4,918		15.9	%	4,682		14.0	%	4,918		15.9	%
Policy loans	207		0.7	%	210		0.7	%	207		0.6	%	210		0.7	%
Limited partnerships/corporations	587		1.8	%	583		1.9	%	702		2.1	%	583		1.9	%
Derivatives	122		0.4	%	128		0.4	%	331		1.0	%	128		0.4	%
Securities pledged	1,018		3.2	%	882		2.8	%	979		2.9	%	882		2.8	%
Other investments	35		0.1	%	40		0.1	%	42		0.1	%	40		0.1	%
Total investments	$	31,801	100.0	%	$	31,020	100.0	%	$	33,603	100.0	%	$	31,020	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

The following tables present total fixed maturities, including securities pledged, by market sector as of the dates indicated:


	March 31, 2019								September 30, 2019
($ in millions)	Amortized Cost		% of Total		Fair Value		% of Total		Amortized Cost		% of Total		Fair Value		% of Total
Fixed maturities:
U.S. Treasuries	$	464	1.9	%	$	567	2.2	%	$	564	2.2	%	$	716	2.6	%
U.S. Government agencies and authorities	—		—	%	—		—	%	19		0.1	%	19		0.1	%
State, municipalities, and political subdivisions	755		3.0	%	789		3.0	%	750		3.0	%	839		3.1	%
U.S. corporate public securities	7,511		30.1	%	7,972		30.8	%	7,219		28.5	%	8,135		29.6	%
U.S. corporate private securities	3,753		15.1	%	3,886		15.0	%	3,742		14.8	%	4,047		14.7	%
Foreign corporate public securities and foreign governments⁽¹⁾	2,536		10.2	%	2,636		10.2	%	2,453		9.7	%	2,705		9.8	%
Foreign corporate private securities⁽¹⁾	3,237		13.1	%	3,325		12.8	%	3,151		12.5	%	3,331		12.1	%
Residential mortgage-backed securities	3,145		12.6	%	3,245		12.6	%	3,674		14.5	%	3,822		13.9	%
Commercial mortgage-backed securities	2,126		8.6	%	2,153		8.3	%	2,195		8.7	%	2,373		8.6	%
Other asset-backed securities	1,336		5.4	%	1,329		5.1	%	1,509		6.0	%	1,512		5.5	%
Total fixed maturities, including securities pledged	$	24,863	100.0	%	$	25,902	100.0	%	$	25,276	100.0	%	$	27,499	100.0	%

⁽¹⁾ Primarily U.S. dollar denominated.


	December 31, 2018								December 31, 2018
($ in millions)	Amortized Cost		% of Total		Fair Value		% of Total		Amortized Cost		% of Total		Fair Value		% of Total
Fixed maturities:
U.S. Treasuries	$	651	2.6	%	$	738	2.9	%	$	651	2.6	%	$	738	2.9	%
U.S. Government agencies and authorities	—		—	%	—		—	%
State, municipalities, and political subdivisions	754		3.0	%	764		3.1	%	754		3.0	%	764		3.1	%
U.S. corporate public securities	7,908		31.7	%	8,015		32.0	%	7,908		31.7	%	8,015		32.0	%
U.S. corporate private securities	3,686		14.8	%	3,653		14.6	%	3,686		14.8	%	3,653		14.6	%
Foreign corporate public securities and foreign governments⁽¹⁾	2,551		10.3	%	2,540		10.1	%	2,551		10.3	%	2,540		10.1	%
Foreign corporate private securities⁽¹⁾	3,235		13.1	%	3,175		12.7	%	3,235		13.1	%	3,175		12.7	%
Residential mortgage-backed securities	2,966		11.9	%	3,036		12.2	%	2,966		11.9	%	3,036		12.2	%
Commercial mortgage-backed securities	1,917		7.7	%	1,905		7.6	%	1,917		7.7	%	1,905		7.6	%
Other asset-backed securities	1,230		4.9	%	1,208		4.8	%	1,230		4.9	%	1,208		4.8	%
Total fixed maturities, including securities pledged	$	24,898	100.0	%	$	25,034	100.0	%	$	24,898	100.0	%	$	25,034	100.0	%

⁽¹⁾ Primarily U.S. dollar denominated.

As of ~~March 31,~~September 30, 2019, the average duration of our fixed maturities portfolio, including securities pledged, is between ~~7.0~~6.5 and ~~7.5~~7.0 years.

Fixed Maturities Credit Quality - Ratings

For information regarding our fixed maturities credit quality ratings, see the Management's Narrative Analysis of the Results of Operations and Financial Condition in Part II, Item. 7. of our Annual Report on Form 10-K.



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The following tables present credit quality of fixed maturities, including securities pledged, using NAIC designations as of the dates indicated:


($ in millions)	March 31, 2019																					September 30, 2019
NAIC Quality Designation	1			2			3			4			5			6			Total Fair Value			1			2			3			4			5			6			Total Fair Value
U.S. Treasuries	$	567		$	—		$	—		$	—		$	—		$	—		$	567		$	716		$	—		$	—		$	—		$	—		$	—		$	716
U.S. Government agencies and authorities	—			—			—			—			—			—			—			19			—			—			—			—			—			19
State, municipalities and political subdivisions	736			52			—			—			—			1			789			778			60			—			—			—			1			839
U.S. corporate public securities	3,475			3,945			465			77			10			—			7,972			3,386			4,232			447			60			10			—			8,135
U.S. corporate private securities	1,449			2,261			94			72			10			—			3,886			1,404			2,367			167			99			10			—			4,047
Foreign corporate public securities and foreign governments⁽¹⁾	1,133			1,370			113			19			—			1			2,636			1,115			1,474			97			15			3			1			2,705
Foreign corporate private securities⁽¹⁾	351			2,743			194			22			15			—			3,325			342			2,811			146			32			—			—			3,331
Residential mortgage-backed securities	3,156			50			2			3			3			31			3,245			3,709			73			1			3			13			23			3,822
Commercial mortgage-backed securities	2,066			87			—			—			—			—			2,153			2,281			83			9			—			—			—			2,373
Other asset-backed securities	1,189			119			8			2			7			4			1,329			1,359			131			11			2			9			—			1,512
Total fixed maturities	$	14,122		$	10,627		$	876		$	195		$	45		$	37		$	25,902		$	15,109		$	11,231		$	878		$	211		$	45		$	25		$	27,499
% of Fair Value	54.5		%	41.0		%	3.4		%	0.8		%	0.2		%	0.1		%	100.0		%	54.9		%	40.8		%	3.2		%	0.8		%	0.2		%	0.1		%	100.0		%
⁽¹⁾ Primarily U.S. dollar denominated.	⁽¹⁾ Primarily U.S. dollar denominated.																					⁽¹⁾ Primarily U.S. dollar denominated.

($ in millions)	December 31, 2018																					December 31, 2018
NAIC Quality Designation	1			2			3			4			5			6			Total Fair Value			1			2			3			4			5			6			Total Fair Value
U.S. Treasuries	$	738		$	—		$	—		$	—		$	—		$	—		$	738		$	738		$	—		$	—		$	—		$	—		$	—		$	738
U.S. Government agencies and authorities	—			—			—			—			—			—			—			—			—			—			—			—			—			—
State, municipalities and political subdivisions	715			48			—			—			—			1			764			715			48			—			—			—			1			764
U.S. corporate public securities	3,285			4,152			491			78			9			—			8,015			3,285			4,152			491			78			9			—			8,015
U.S. corporate private securities	1,420			2,042			79			102			10			—			3,653			1,420			2,042			79			102			10			—			3,653
Foreign corporate public securities and foreign governments⁽¹⁾	1,105			1,267			146			21			—			1			2,540			1,105			1,267			146			21			—			1			2,540
Foreign corporate private securities⁽¹⁾	405			2,520			188			46			16			—			3,175			405			2,520			188			46			16			—			3,175
Residential mortgage-backed securities	2,981			16			4			1			4			30			3,036			2,981			16			4			1			4			30			3,036
Commercial mortgage-backed securities	1,840			57			8			—			—			—			1,905			1,840			57			8			—			—			—			1,905
Other asset-backed securities	1,081			100			11			5			7			4			1,208			1,081			100			11			5			7			4			1,208
Total fixed maturities	$	13,570		$	10,202		$	927		$	253		$	46		$	36		$	25,034		$	13,570		$	10,202		$	927		$	253		$	46		$	36		$	25,034
% of Fair Value	54.2		%	40.8		%	3.7		%	1.0		%	0.2		%	0.1		%	100.0		%	54.2		%	40.8		%	3.7		%	1.0		%	0.2		%	0.1		%	100.0		%
⁽¹⁾ Primarily U.S. dollar denominated.	⁽¹⁾ Primarily U.S. dollar denominated.																					⁽¹⁾ Primarily U.S. dollar denominated.



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The following tables present credit quality of fixed maturities, including securities pledged, using NAIC acceptable rating organizations ("ARO") ratings as of the dates indicated:


($ in millions)		March 31, 2019																			September 30, 2019
ARO Quality Ratings		AAA			AA			A			BBB			BB and Below			Total Fair Value				AAA			AA			A			BBB			BB and Below			Total Fair Value
U.S. Treasuries		$	567		$	—		$	—		$	—		$	—		$	567			$	716		$	—		$	—		$	—		$	—		$	716
U.S. Government agencies and authorities		—			—			—			—			—			—				19			—			—			—			—			19
State, municipalities and political subdivisions		60			469			207			52			1			789				58			509			211			60			1			839
U.S. corporate public securities		79			406			3,011			3,940			536			7,972				82			442			2,883			4,234			494			8,135
U.S. corporate private securities		88			144			1,310			2,159			185			3,886				90			120			1,317			2,342			178			4,047
Foreign corporate public securities and foreign governments⁽¹⁾		21			290			867			1,311			147			2,636				8			274			881			1,412			130			2,705
Foreign corporate private securities⁽¹⁾		—			—			429			2,760			136			3,325				—			—			394			2,820			117			3,331
Residential mortgage-backed securities		2,434			82			80			160			489			3,245				2,784			122			68			333			515			3,822
Commercial mortgage-backed securities		1,052			185			456			364			96			2,153				1,051			194			582			440			106			2,373
Other asset-backed securities		488			146			525			122			48			1,329				390			280			665			137			40			1,512
Total fixed maturities		$	4,789		$	1,722		$	6,885		$	10,868		$	1,638		$	25,902			$	5,198		$	1,941		$	7,001		$	11,778		$	1,581		$	27,499
% of Fair Value		18.5		%	6.6		%	26.6		%	42.0		%	6.3		%	100.0		%		18.9		%	7.1		%	25.5		%	42.8		%	5.7		%	100.0		%
⁽¹⁾ Primarily U.S. dollar denominated.	⁽¹⁾ Primarily U.S. dollar denominated.																			⁽¹⁾ Primarily U.S. dollar denominated.

($ in millions)		December 31, 2018																			December 31, 2018
ARO Quality Ratings		AAA			AA			A			BBB			BB and Below			Total Fair Value				AAA			AA			A			BBB			BB and Below			Total Fair Value
U.S. Treasuries		$	738		$	—		$	—		$	—		$	—		$	738			$	738		$	—		$	—		$	—		$	—		$	738
U.S. Government agencies and authorities		—			—			—			—			—			—				—			—			—			—			—			—
State, municipalities and political subdivisions		59			461			195			48			1			764				59			461			195			48			1			764
U.S. corporate public securities		74			385			2,826			4,164			566			8,015				74			385			2,826			4,164			566			8,015
U.S. corporate private securities		92			142			1,296			1,940			183			3,653				92			142			1,296			1,940			183			3,653
Foreign corporate public securities and foreign governments⁽¹⁾		21			276			849			1,226			168			2,540				21			276			849			1,226			168			2,540
Foreign corporate private securities⁽¹⁾		—			—			447			2,579			149			3,175				—			—			447			2,579			149			3,175
Residential mortgage-backed securities		2,272			59			42			104			559			3,036				2,272			59			42			104			559			3,036
Commercial mortgage-backed securities		949			202			364			297			93			1,905				949			202			364			297			93			1,905
Other asset-backed securities		484			122			441			113			48			1,208				484			122			441			113			48			1,208
Total fixed maturities		$	4,689		$	1,647		$	6,460		$	10,471		$	1,767		$	25,034			$	4,689		$	1,647		$	6,460		$	10,471		$	1,767		$	25,034
% of Fair Value		18.7		%	6.6		%	25.8		%	41.8		%	7.1		%	100.0		%		18.7		%	6.6		%	25.8		%	41.8		%	7.1		%	100.0		%
⁽¹⁾ Primarily U.S. dollar denominated.	⁽¹⁾ Primarily U.S. dollar denominated.																			⁽¹⁾ Primarily U.S. dollar denominated.



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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 losses on fixed maturities, including securities pledged, decreased ~~$363~~$460 million from $560 million to ~~$197~~$100 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2019. The decrease in gross unrealized losses was primarily due to declining interest ~~rates and tightening credit spreads.~~rates.

As of ~~March 31,~~September 30, 2019, we held one fixed maturity with unrealized capital loss in excess of $10 million. As of ~~March 31,~~September 30, 2019, the unrealized capital loss on this fixed maturity equaled ~~$12~~$10 million, or ~~6.4%~~10.3% of the total unrealized losses. As of December 31, 2018, we held one fixed maturity with unrealized capital loss in excess of $10 million. As of December 31, 2018, the unrealized capital loss on this fixed maturity equaled $15 million, or 2.7% of the total unrealized losses.

As of ~~March 31,~~September 30, 2019, we had $1.9 billion of energy sector fixed maturity securities, constituting ~~7.3%~~6.8% of the total fixed maturities portfolio, with gross unrealized capital losses of ~~$42~~$36 million, including one energy sector fixed maturity security with unrealized capital loss in excess of $10 million. The unrealized capital loss on this fixed maturity security equaled ~~$12~~$10 million. As of ~~March 31,~~September 30, 2019, our fixed maturity exposure to the energy sector is comprised of ~~87.9%~~91.4% investment grade securities.

As of December 31, 2018, we held $1.9 billion of energy sector fixed maturity securities, constituting 7.4% of the total fixed maturities portfolio, with gross unrealized capital losses of $81 million, including one energy sector fixed maturity security with unrealized capital loss in excess of $10 million. The unrealized capital loss on this fixed maturity security equaled $15 million. As of December 31, 2018, our fixed maturity exposure to the energy sector is comprised of 88.5% investment grade securities.

See the Investments Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for further information on unrealized capital losses.

Residential Mortgage-Backed Securities

The following ~~table presents~~tables present our residential mortgage-backed securities as of ~~March 31,~~September 30, 2019 and December 31, 2018:


	March 31, 2019										September 30, 2019
($ in millions)	Amortized Cost		Gross Unrealized Capital Gains		Gross Unrealized Capital Losses		Embedded Derivatives		Fair Value		Amortized Cost		Gross Unrealized Capital Gains		Gross Unrealized Capital Losses		Embedded Derivatives		Fair Value
Prime Agency	$	2,022	$	66	$	11	$	4	$	2,081	$	2,154	$	100	$	3	$	6	$	2,257
Prime Non-Agency	1,055		34		6		1		1,084		1,458		42		11		1		1,490
Alt-A	53		8		—		4		65		48		9		1		5		61
Sub-Prime⁽¹⁾	37		4		—		—		41		31		4		—		—		35
Total RMBS	$	3,167	$	112	$	17	$	9	$	3,271	$	3,691	$	155	$	15	$	12	$	3,843
⁽¹⁾ Includes subprime other asset backed securities.	⁽¹⁾ Includes subprime other asset backed securities.										⁽¹⁾ Includes subprime other asset backed securities.
	December 31, 2018										December 31, 2018
($ in millions)	Amortized Cost		Gross Unrealized Capital Gains		Gross Unrealized Capital Losses		Embedded Derivatives		Fair Value		Amortized Cost		Gross Unrealized Capital Gains		Gross Unrealized Capital Losses		Embedded Derivatives		Fair Value
Prime Agency	$	1,989	$	54	$	20	$	4	$	2,027	$	1,989	$	54	$	20	$	4	$	2,027
Prime Non-Agency	917		31		12		1		937		917		31		12		1		937
Alt-A	46		8		—		4		58		46		8		—		4		58
Sub-Prime⁽¹⁾	38		4		—		—		42		38		4		—		—		42
Total RMBS	$	2,990	$	97	$	32	$	9	$	3,064	$	2,990	$	97	$	32	$	9	$	3,064
⁽¹⁾ Includes subprime other asset backed securities.	⁽¹⁾ Includes subprime other asset backed securities.										⁽¹⁾ Includes subprime other asset backed securities.



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Commercial Mortgage-backed Securities

The following ~~table presents~~tables present our commercial mortgage-backed securities as of ~~March 31,~~September 30, 2019 and December 31, 2018:


	March 31, 2019																								September 30, 2019
($ in millions)					AA				A				BBB				BB and Below				Total				AAA				AA				A				BBB				BB and Below				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
2013 and prior	$	221	$	229	$	20	$	20	$	74	$	75	$	78	$	81	$	2	$	3	$	395	$	408	$	192	$	217	$	19	$	20	$	66	$	68	$	86	$	92	$	2	$	3	$	365	$	400
2014	286		293		18		18		32		32		12		12		33		33		381		388		250		284		17		18		38		39		12		13		33		33		350		387
2015	220		217		69		70		24		24		90		91		20		21		423		423		187		207		69		74		49		51		90		94		24		25		419		451
2016	32		30		7		7		21		22		31		32		6		6		97		97		27		30		11		11		23		25		37		40		6		6		104		112
2017	108		103		45		45		88		89		30		30		22		23		293		290		75		81		35		36		99		104		40		41		26		28		275		290
2018	84		86		25		25		181		184		101		102		10		10		401		407		84		99		25		25		174		183		78		81		10		11		371		399
2019	92		95		—		—		29		30		15		15		—		—		136		140		114		133		10		10		109		112		78		79		—		—		311		334
Total CMBS	$	1,043	$	1,053	$	184	$	185	$	449	$	456	$	357	$	363	$	93	$	96	$	2,126	$	2,153	$	929	$	1,051	$	186	$	194	$	558	$	582	$	421	$	440	$	101	$	106	$	2,195	$	2,373

	December 31, 2018																								December 31, 2018
($ in millions)	AAA				AA				A				BBB				BB and Below				Total				AAA				AA				A				BBB				BB and Below				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
2013 and prior	$	255	$	261	$	39	$	39	$	61	$	60	$	55	$	56	$	6	$	6	$	416	$	422	$	255	$	261	$	39	$	39	$	61	$	60	$	55	$	56	$	6	$	6	$	416	$	422
2014	285		285		21		21		19		19		16		16		31		31		372		372		285		285		21		21		19		19		16		16		31		31		372		372
2015	231		226		69		69		25		25		81		81		16		16		422		417		231		226		69		69		25		25		81		81		16		16		422		417
2016	32		31		8		7		21		21		31		31		6		6		98		96		32		31		8		7		21		21		31		31		6		6		98		96
2017	113		107		46		45		62		61		30		29		22		22		273		264		113		107		46		45		62		61		30		29		22		22		273		264
2018	39		39		21		21		179		178		84		83		13		13		336		334		39		39		21		21		179		178		84		83		13		13		336		334
2019	—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total CMBS	$	955	$	949	$	204	$	202	$	367	$	364	$	297	$	296	$	94	$	94	$	1,917	$	1,905	$	955	$	949	$	204	$	202	$	367	$	364	$	297	$	296	$	94	$	94	$	1,917	$	1,905

As of ~~March 31,~~September 30, 2019, ~~96.0%~~96.1% and ~~4.0%~~3.5% of CMBS investments were designated as NAIC-1 and NAIC-2, respectively. As of December 31, 2018, 96.6% and 3.0% of CMBS investments were designated as NAIC-1 and NAIC-2, respectively.



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Other Asset-backed Securities

The following ~~table presents~~tables present our other asset-backed securities as of ~~March 31,~~September 30, 2019 and December 31, 2018:


	March 31, 2019																								September 30, 2019
($ in millions)	AAA				AA				A				BBB				BB and Below				Total				AAA				AA				A				BBB				BB and Below				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Collateralized Obligation	$	426	$	423	$	80	$	79	$	373	$	367	$	12	$	11	$	21	$	20	$	912	$	900	$	301	$	298	$	214	$	214	$	505	$	497	$	12	$	11	$	21	$	18	$	1,053	$	1,038
Auto-Loans	5		5		10		10		5		5		—		—		—		—		20		20		19		19		10		10		5		5		—		—		—		—		34		34
Student Loans	9		9		56		57		82		83		—		—		—		—		147		149		18		19		53		56		80		82		2		2		—		—		153		159
Credit Card loans	—		—		—		—		—		—		—		—		—		—		—		—		2		3		—		—		—		—		—		—		—		—		2		3
Other Loans	52		51		—		—		69		69		110		111		3		3		234		234		49		51		—		—		78		79		120		124		3		3		250		257
Total Other ABS⁽¹⁾	$	492	$	488	$	146	$	146	$	529	$	524	$	122	$	122	$	24	$	23	$	1,313	$	1,303	$	389	$	390	$	277	$	280	$	668	$	663	$	134	$	137	$	24	$	21	$	1,492	$	1,491
⁽¹⁾Excludes subprime other asset backed securities	⁽¹⁾Excludes subprime other asset backed securities																								⁽¹⁾Excludes subprime other asset backed securities
	December 31, 2018																								December 31, 2018
($ in millions)	AAA				AA				A				BBB				BB and Below				Total				AAA				AA				A				BBB				BB and Below				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Collateralized Obligation	$	427	$	420	$	64	$	62	$	314	$	301	$	12	$	12	$	21	$	19	$	838	$	814	$	427	$	420	$	64	$	62	$	314	$	301	$	12	$	12	$	21	$	19	$	838	$	814
Auto-Loans	1		2		10		10		5		5		—		—		—		—		16		17		1		2		10		10		5		5		—		—		—		—		16		17
Student Loans	9		9		49		49		73		73		—		—		—		—		131		131		9		9		49		49		73		73		—		—		—		—		131		131
Credit Card loans	—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Other Loans	53		52		1		—		61		61		103		101		3		4		221		218		53		52		1		—		61		61		103		101		3		4		221		218
Total Other ABS⁽¹⁾	$	490	$	483	$	124	$	121	$	453	$	440	$	115	$	113	$	24	$	23	$	1,206	$	1,180	$	490	$	483	$	124	$	121	$	453	$	440	$	115	$	113	$	24	$	23	$	1,206	$	1,180
⁽¹⁾ Excludes subprime other asset backed securities	⁽¹⁾ Excludes subprime other asset backed securities																								⁽¹⁾ Excludes subprime other asset backed securities

As of ~~March 31,~~September 30, 2019, ~~89.4%~~89.9% and ~~9.1%~~8.7% of Other ABS investments were designated as NAIC-1 and NAIC-2, respectively. As of December 31, 2018, 89.3% and 8.5% of Other ABS investments were designated as NAIC-1 and NAIC-2, respectively.

Mortgage Loans on Real Estate

We rate all 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 other-than-temporarily impaired ("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 Condensed 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



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that a property's operations do not generate sufficient income to cover debt payments. These ratios are utilized as part of the review process described above.



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As of ~~March 31,~~September 30, 2019, our mortgage loans on real estate portfolio had a weighted average DSC of ~~2.0~~2.1 times and a weighted average LTV ratio of ~~62.5%~~62.6%. As of December 31, 2018, our mortgage loans on real estate portfolio had a weighted average DSC of 2.1 times and a weighted average LTV ratio of 62.4%. See the Investments Note to our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q for further information on mortgage loans on real estate.

Other-Than-Temporary Impairments

We evaluate available-for-sale fixed maturities for impairment on a regular basis. The assessment of whether impairments have occurred is based on a case-by-case evaluation of the underlying reasons for the decline in estimated fair value. See the Business, Basis of Presentation and Significant Accounting Policies Note to our Consolidated Financial Statements in Part II, Item 8. of our Annual Report on Form 10-K for the policy used to evaluate whether the investments are other-than-temporarily impaired.

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

European Exposures

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

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

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

As of ~~March 31,~~September 30, 2019, the Company's total European exposure had an amortized cost and fair value of ~~$2,762~~$2,754 million and ~~$2,865~~$2,971 million, respectively. European exposure with a primary focus on Greece, Ireland, Italy, Portugal and Spain (which we refer to as "peripheral Europe") amounts to ~~$273~~$284 million, which includes non-financial institutions exposure in Ireland of ~~$81~~$84 million, in Italy of ~~$100~~$105 million, and in Spain of $59 million. We also had financial institutions exposure in Ireland of $9$10 million, in Italy of $5$6 million and in Spain of ~~$19~~$20 million. We did not have any exposure to Greece or Portugal.

Among the remaining ~~$2,592~~$2,687 million of total non-peripheral European exposure, we had a portfolio of credit-related assets similarly diversified by country and sector across developed and developing Europe. As of ~~March 31,~~September 30, 2019, our non-peripheral sovereign exposure was ~~$103~~$105 million, which consisted of fixed maturities. We also had ~~$439~~$445 million in net exposure to non-peripheral financial institutions with a concentration in France of ~~$72~~$73 million, The Netherlands of $51 million, Switzerland of ~~$73~~$70 million and the United Kingdom of ~~$217~~$224 million. The balance of ~~$2,050~~$2,137 million was invested across non-peripheral, non-financial institutions.

Some of the major country level exposures were in the United Kingdom of ~~$1,332~~$1,357 million, in The Netherlands of ~~$279~~$266 million, in Belgium of ~~$140~~$153 million, in France of ~~$161~~$219 million, in Germany of ~~$116~~$133 million, in Switzerland of ~~$199~~$180 million and in Russia of ~~$57~~$61 million. We believe the primary risk results from market value fluctuations resulting from spread volatility and the secondary risk is default risk, dependent upon the strength of continued recovery of economic conditions in Europe.



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Liquidity and Capital Resources

Liquidity refers to our ability to access sufficient sources of cash to meet the requirements of our operating, investing and financing activities. Capital refers to our long-term financial resources available to support business operations and future growth. Our ability to generate and maintain sufficient liquidity and capital depends on the profitability of the businesses, timing of cash flows on investments and products, general economic conditions and access to the capital markets and the other sources of liquidity and capital described herein.

Liquidity Management

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, securities lending and capital contributions. Primary uses of these funds are payments of commissions and operating expenses, interest credits, investment purchases and contract maturities, withdrawals and surrenders and payment of dividends.

Our liquidity position is managed by maintaining adequate levels of liquid assets, such as cash, cash equivalents and short-term investments. As part of the liquidity management process, different scenarios are modeled 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 the general account assets, variable separate account performance and implications of rating agency actions.

The fixed account liabilities are supported by a general account portfolio, principally composed of fixed rate investments with matching duration characteristics that can generate predictable, steady rates of return. The portfolio management strategy for the fixed account considers the assets available-for-sale. This strategy enables us to respond to changes in market interest rates, prepayment risk, relative values of asset sectors and individual securities and loans, credit quality outlook and other relevant factors. The objective of portfolio management is to maximize returns, taking into account interest rate and credit risk, as well as other risks. Our asset/liability management discipline includes strategies to minimize exposure to loss as interest rates and economic and market conditions change. In executing this strategy, we use derivative instruments to manage these risks. Our derivative counterparties are of high credit quality.

Liquidity and Capital Resources

Additional sources of liquidity include borrowing facilities to meet short-term cash requirements that arise in the ordinary course of business. We maintain the following agreements:

•

A reciprocal loan agreement with Voya Financial, Inc., an affiliate, whereby either party can borrow from the other up to 3.0% of VRIAC's statutory admitted assets as of the prior December 31. As of ~~March 31,~~September 30, 2019, we had an outstanding receivable of ~~$103~~$129 million and no outstanding payable. As of December 31, 2018 , we did not have an outstanding receivable/payable from/to Voya Financial, Inc. under the reciprocal loan ~~agreement. We~~agreement.We and Voya Financial, Inc. continue to maintain the reciprocal loan agreement and future borrowings by either party will be subjected to the reciprocal loan terms summarized above. Effective January 2014, interest on any borrowing by either us or Voya Financial, Inc. is charged at a rate based on the prevailing market rate for similar third-party borrowings or securities.

We hold approximately ~~49.9%~~50.2% of our assets in marketable securities. These assets include cash, U.S. Treasuries, Agencies, Corporate Bonds, ABS, CMBS and collateralized mortgage obligations ("CMO") and Equity securities. In the event of a temporary liquidity need, cash may be raised by entering into repurchase agreements, dollar rolls and/or security lending agreements by temporarily lending securities and receiving cash collateral. Under our Liquidity Plan, up to 12% of our general account statutory admitted assets may be allocated to repurchase, securities lending and dollar roll programs. At the time a temporary cash need arises, the actual percentage of admitted assets available for repurchase transactions will depend upon outstanding allocations to the three programs. As of ~~March 31,~~September 30, 2019, VRIAC had securities lending collateral assets of ~~$796~~$696 million, which represents approximately ~~0.7%~~64.0% of its general account statutory admitted assets. As of December 31, 2018, VRIAC had securities lending collateral assets of $702 million, which represents approximately 0.7% of its general account statutory admitted assets.

Management believes that our sources of liquidity are adequate to meet our short-term cash obligations.



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Capital Contributions and Dividends

During the ~~three~~nine months ended ~~March 31,~~September 30, 2019 and 2018, VRIAC did not receive any capital contributions from its Parent.

During the nine months ended September 30, 2019, VRIAC declared ordinary dividends to its Parent in the aggregate amount of $396 million, of which $270 million was paid on April 18, 2019 and $126 million was paid on May 28, 2019. During the ~~three~~nine months ended ~~March 31, 2019 and~~September 30, 2018, VRIAC ~~did not pay a~~paid an ordinary dividend ~~or return~~in the amount of ~~capital on its common stock~~$126 million to its Parent.

On March 27, 2019, VFP paid a $20 million dividend to VRIAC, its ~~Parent.~~Parent, on June 26, 2019, VFP paid a $20 million dividend to VRIAC and on September 27, 2019, VFP paid a $20 million dividend to VRIAC. During the ~~three~~nine months ended ~~March 31,~~September 30, 2018, VFP paid dividends of ~~$20~~$60 million to VRIAC.

~~On April 4, 2019, VRIAC declared an ordinary dividend in the amount of $270 million, which was paid on April 18, 2019.~~

~~On May 9, 2019, VRIAC declared an ordinary dividend in the amount of $126 million, payable on or after May 28, 2019.~~

Ratings

Our access to funding and our related cost of borrowing, collateral requirements for derivative instruments and the attractiveness of certain of our products to customers are affected by our credit ratings and insurance financial strength ratings, which are periodically reviewed by the rating agencies. Financial strength ratings and credit ratings are important factors affecting public confidence in an insurer and its competitive position in marketing products. Credit ratings are also important to our ability to raise capital through the issuance of debt and for the cost of such financing.

A downgrade in our credit ratings or the credit or financial strength ratings of our Parent or rated affiliates could have a material adverse effect on our results of operations and financial condition. See Risk Factors- A downgrade or a potential downgrade in our financial strength or credit ratings could result in a loss of business and adversely affect our results of operations and financial condition in Part I, Item 1A. of our Annual Report on Form 10-K for additional information.

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

Our financial strength and credit ratings as of the date of this Quarterly Report on Form 10-Q are summarized in the following table.



Company	A.M. Best	Fitch	Moody's	S&P
Voya Retirement Insurance and Annuity Company
Financial Strength Rating	withdrawn	A (3 of 9)	A2 (3 of 9)	AA+ (3 of 9)



Rating Agency		Financial Strength Rating Scale
A.M. Best⁽¹⁾		"A++" to "S"
Fitch⁽²⁾		"AAA" to "C"
Moody's⁽³⁾		"Aaa" to "C"
S&P⁽⁴⁾		"AAA" to "R"

⁽¹⁾ A.M. Best's financial strength ratings for insurance companies range from "A++ (superior)" to "s (suspended)." Long-term credit ratings range from "aaa (exceptional)" to "s (suspended)."

⁽²⁾ Fitch's financial strength ratings for insurance companies range from "AAA (exceptionally strong)" to "C (distressed)." Long-term credit ratings range from "AAA (highest credit quality)," which denotes exceptionally strong capacity for timely payment of financial commitments, to "D (default)."

⁽³⁾ Moody’s financial strength ratings for insurance companies range from "Aaa (exceptional)" to "C (lowest)." Numeric modifiers are used to refer to the ranking within the group- with 1 being the highest and 3 being the lowest. These modifiers are used to indicate relative strength within a category. Long-term credit ratings range from "Aaa (highest)" to "C (default)."

⁽⁴⁾S&P's financial strength ratings for insurance companies range from "AAA (extremely strong)" to "D (default)." Long-term credit ratings range from "AAA (extremely strong)" to "D (default)."

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



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companies in the sector. For a particular company, an outlook generally indicates a medium- or long-term trend in credit fundamentals, which if continued, may lead to a rating change.



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Ratings actions affirmation or outlook changes by S&P, Fitch, Moody’s or A.M. Best from December 31, 2018 through ~~March 31,~~September 30, 2019 and subsequently through the date of this Quarterly Report on Form 10-Q are as follows:

On April 11, 2019, A.M. Best affirmed VRIAC’s financial strength rating of A with a Stable outlook. Concurrently, A.M. Best withdrew the ratings of VRIAC at our request to no longer participate in A.M. Best’s rating process.

On June 11, 2019, S&P upgraded the financial strength rating of VRIAC from A, Positive to A+, Stable.

Reinsurance

Effective January 1, 2018, we recaptured our coinsurance agreement with Langhorne I, LLC ("Langhorne") to manage the reserve and capital requirements in connection with a portion of our Stabilizer and Managed Custody Guarantee, which resulted in us recording a $74 million pre-tax gain on recapture of reinsured business that was reported in Operating expenses in the Condensed Consolidated Statement of Operations.

Derivatives

Our use of derivatives is limited mainly to economic hedging to reduce our exposure to cash flow variability of assets and liabilities, interest rate risk, credit risk, exchange rate risk and market risk. It is our policy not to offset amounts recognized for derivative instruments and amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral arising from derivative instruments executed with the same counterparty under a master netting arrangement.

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 annuity products. Derivative contracts are reported as Derivatives assets or liabilities on the Condensed Consolidated Balance Sheets at fair value. Changes in the fair value of derivatives are recorded in Other net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.

We also have investments in certain fixed maturities and have issued certain 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. Embedded derivatives within fixed maturities are included with the host contract on the Condensed Consolidated Balance Sheets and changes in fair value of the embedded derivatives are recorded in Other net realized capital gains (losses) in the Condensed Consolidated Statements of Operations. Embedded derivatives within certain annuity products are included in Future policy benefits and contract owner account balances on the Condensed Consolidated Balance Sheets and changes in the fair value of the embedded derivatives are recorded in Other net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.

In addition, we have entered into a reinsurance agreement, accounted for under the deposit method, that contains an embedded derivative, the fair value of which is based on the change in the fair value of the underlying assets held in trust. The embedded derivatives within the reinsurance agreements are reported in Other liabilities on the Condensed Consolidated Balance Sheets, and changes in the fair value of the embedded derivative are recorded in Interest credited and other benefit to contract owners/policyholders in the Condensed Consolidated Statements of Operations.

Off-Balance Sheet Arrangements

~~The Company has~~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 ~~the Company's~~our Condensed Consolidated Balance Sheets. For information regarding obligations under this program, see the Investments Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.

For changes in commitments related to the acquisition of mortgage loans and the purchase of limited partnerships and private placement investments, see the Commitments and Contingencies Note in our Condensed Consolidated Financial Statements in Part I, Item 1. of this Quarterly Report on Form 10-Q.



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Item 4. Controls and Procedures

Disclosure Controls and Procedures

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

Changes in Internal Control Over Financial Reporting

There were no changes to the Company's internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the quarter ended ~~March 31,~~September 30, 2019 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.



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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 1A. Risk Factors

For a discussion of the Company's potential risks or uncertainties, please see "Risk Factors" in Part I, Item 1A. in our Annual Report on Form 10-K for the year ended December 31, 2018 (the "~~Annual~~"Annual Report on Form ~~10-K~~"10-K") filed with the Securities and Exchange Commission. In addition, please see "Management’s Narrative Analysis of the Results of Operations and Financial Condition" Part I, Item 2. of this Quarterly Report on Form 10-Q.

Item 6. Exhibits

See Exhibit Index on page 7678 hereof.



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Voya Retirement Insurance and Annuity Company ("VRIAC")



Exhibit Index
Exhibit Number		Description of Exhibit
~~10.1+~~		~~Second Amended and Restated Services Agreement, dated as of March 1, 2019, between VRIAC, the affiliated companies and certain other affiliated companies in exhibit B of the Agreement.~~
31.1+		Certificate of Francis G. O'Neill pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2+		Certificate of Charles P. Nelson pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1+		Certificate of Francis G. O'Neill pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2+		Certificate of Charles P. Nelson pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS+		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH+		Inline XBRL Taxonomy Extension Schema
101.CAL+		Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF+		Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB+		Inline XBRL Taxonomy Extension Label Linkbase
101.PRE+		Inline XBRL Taxonomy Extension Presentation Linkbase
104		Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101).

+Filed herewith.



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SIGNATURE

Pursuant to the requirements ~~of Section 13 or 15(d)~~ of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



~~May 9,~~November 7, 2019			Voya Retirement Insurance and Annuity Company
(Date)			(Registrant)

	By:	/s/	Francis G. O'Neill
			Francis G. O'Neill
			Senior Vice President and
			Chief Financial Officer
			(Duly Authorized Officer and Principal Financial Officer)



	7778



	Amortized Cost				Unrealized Capital Losses				Number of Securities
	< 20%		> 20%		< 20%		> 20%		< 20%	> 20%
March 31, 2019
Six months or less below amortized cost	$	1,405	$	22	$	34	$	5	277	10
More than six months and twelve months or less below amortized cost	1,108		—		24		—		218	6
More than twelve months below amortized cost	3,509		94		106		28		743	5
Total	$	6,022	$	116	$	164	$	33	1,238	21

December 31, 2018
Six months or less below amortized cost	$	4,531	$	88	$	106	$	21	826	25
More than six months and twelve months or less below amortized cost	5,535		73		235		27		1,063	6
More than twelve months below amortized cost	2,378		80		144		27		519	5
Total	$	12,444	$	241	$	485	$	75	2,408	36



	March 31, 2019		December 31, 2018
Impaired loans without allowances for losses	$	8	$	4
Less: Allowances for losses on impaired loans	—		—
Impaired loans, net	$	8	$	4
Unpaid principal balance of impaired loans	$	12	$	5



	March 31, 2019 ⁽¹⁾		December 31, 2018 ⁽¹⁾
Year of Origination:
2019	$	97	$	—
2018	377		375
2017	1,066		1,108
2016	849		906
2015	586		589
2014	479		490
2013 and prior	1,358		1,451
Total Commercial mortgage loans	$	4,812	$	4,919