ThZeal - The Zeal

vriac-20210331

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

——————————————————————

FORM 10-Q


(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021


☐			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 & 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) 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 filer	☐	Accelerated filer	☐
Non-accelerated filer	x	Smaller reporting company	☐
		Emerging growth company	☐
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.			☐

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

APPLICABLE ONLY TO CORPORATE ISSUERS:

As of May 7, 2021, 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).


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Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Form 10-Q for the period ended March 31, 2021

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	9
	Notes to Condensed Consolidated Financial Statements:	9
	1. Business, Basis of Presentation and Significant Accounting Policies	10
	2. Investments	14
	3. Derivative Financial Instruments	27
	4. Fair Value Measurements	32
	5. Deferred Policy Acquisition Costs and Value of Business Acquired	41
	6. Accumulated Other Comprehensive Income (Loss)	42
	7. Income Taxes	44
	8. Financing Agreements	45
	9. Commitments and Contingencies	45
	10. Related Party Transactions	47

Item 2.	Management's Narrative Analysis of the Results of Operations and Financial Condition	48

Item 4.	Controls and Procedures	63


PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	63

Item 1A.	Risk Factors	63



Item 6.	Exhibits	63

Exhibit Index		64

Signature		65


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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 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) the effects of natural or man-made disasters, including pandemic events and specifically the current COVID-19 pandemic event, (v) mortality and morbidity levels, (vi) persistency and lapse levels, (vii) interest rates, (viii) currency exchange rates, (ix) general competitive factors, (x) 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 (xi) changes in the policies of governments and/or regulatory authorities; and (xii) our parent company, Voya Financial, Inc.'s ability to successfully manage the separation of the Individual Life business that closed on January 4, 2021, 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, 2020 (File No. 033-23376) (the "Annual Report on Form 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.


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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, 2021 (Unaudited) and December 31, 2020

(In millions, except share and per share data)


	March 31, 2021		December 31, 2020
Assets
Investments:
Fixed maturities, available-for-sale, at fair value (amortized cost of $22,230 as of 2021 and $24,667 as of 2020; allowance for credit losses of $12 as of 2021 and $14 as of 2020)	$	24,058	$	28,043
Fixed maturities, at fair value using the fair value option	1,513		1,730
Equity securities, at fair value (cost of $234 as of 2021 and $116 as of 2020)	234		116
Short-term investments	16		17
Mortgage loans on real estate	4,198		4,694
Less: Allowance for credit losses	47		67
Mortgage loans on real estate, net	4,151		4,627

Policy loans	183		187
Limited partnerships/corporations	847		815
Derivatives	170		145
Securities pledged (amortized cost of $547 as of 2021 and $169 as of 2020)	613		220

Other investments	125		43
Total investments	31,910		35,943
Cash and cash equivalents	257		360
Short-term investments under securities loan agreements, including collateral delivered	617		249
Accrued investment income	308		304


Premiums receivable and reinsurance recoverable	3,783		1,219
Less: Allowance for credit losses	—		—
Premiums receivable and reinsurance recoverable, net	3,783		1,219
Deferred policy acquisition costs, Value of business acquired and Sales inducements to contract owners	488		173

Short-term loan to affiliate	170		653
Current income tax recoverable	109		5

Due from affiliates	122		118
Property and equipment	66		63
Other assets	1,679		242
Assets held in separate accounts	89,719		87,319
Total assets	$	129,228	$	126,648


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

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Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Condensed Consolidated Balance Sheets

March 31, 2021 (Unaudited) and December 31, 2020

(In millions, except share and per share data)


	March 31, 2021		December 31, 2020
Liabilities and Shareholder's Equity
Future policy benefits and contract owner account balances	$	32,867	$	33,127
Payable for securities purchased	251		26
Payables under securities loan agreements, including collateral held	607		208



Due to affiliates	97		125
Derivatives	221		216

Deferred income taxes	174		439
Other liabilities	366		291
Liabilities related to separate accounts	89,719		87,319
Total liabilities	124,302		121,751

Commitments and Contingencies (Note 9)

Shareholder's equity:
Common stock (100,000 shares authorized, 55,000 issued and outstanding as of 2021 and 2020, respectively; $50 par value per share)	3		3
Additional paid-in capital	3,196		2,873
Accumulated other comprehensive income (loss)	1,283		1,882
Retained earnings (deficit)	444		139
Total shareholder's equity	4,926		4,897
Total liabilities and shareholder's equity	$	129,228	$	126,648


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

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Voya Retirement Insurance and Annuity Company and Subsidiary

(A wholly owned subsidiary of Voya Holdings Inc.)

Condensed Consolidated Statements of Operations

For the Three Months Ended March 31, 2021 and 2020 (Unaudited)

(In millions)


	Three Months Ended March 31,
		2021		2020

Revenues:
Net investment income		$	489	$	439
Fee income		259		222
Premiums		(2,447)		5
Broker-dealer commission revenue		1		1
Net realized capital gains (losses):
Total impairments		—		(7)


Other net realized capital gains (losses)		440		(85)
Total net realized capital gains (losses)		440		(92)
Other revenue		7		(1)
Total revenues		(1,251)		574
Benefits and expenses:
Interest credited and other benefits to contract owners/policyholders		(2,056)		209
Operating expenses		285		298
Broker-dealer commission expense		1		1
Net amortization of Deferred policy acquisition costs and Value of business acquired		49		37


Total benefits and expenses		(1,721)		545
Income (loss) before income taxes		470		29
Income tax expense (benefit)		87		(5)
Net income (loss)		$	383	$	34


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

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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 Months Ended March 31, 2021 and 2020 (Unaudited)

(In millions)


	Three Months Ended March 31,
		2021		2020
Net income (loss)		$	383	$	34
Other comprehensive income (loss), before tax:
Unrealized gains (losses) on securities		(758)		(960)


Other comprehensive income (loss), before tax		(758)		(960)
Income tax expense (benefit) related to items of other comprehensive income (loss)		(159)		(201)
Other comprehensive income (loss), after tax		(599)		(759)
Comprehensive income (loss)		$	(216)	$	(725)


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

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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 Months Ended March 31, 2021 and 2020 (Unaudited)

(In millions)



	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings (Deficit)		Total Shareholder's Equity
Balance as of January 1, 2021	$	3	$	2,873	$	1,882	$	139	4,897





Comprehensive income (loss):
Net income (loss)	—		—		—		383		383
Other comprehensive income (loss), after tax	—		—		(599)		—		(599)
Total comprehensive income (loss)									(216)
Dividends paid and distributions of capital	—		—		—		(78)		(78)
Contribution of capital	—		323		—		—		323


Balance as of March 31, 2021	$	3	$	3,196	$	1,283	$	444	$	4,926


Balance as of January 1, 2020	$	3	$	2,873	$	1,292	$	275	4,443



Adjustment for adoption of ASU 2016-13	—		—		—		(8)		(8)

Comprehensive income (loss):
Net income (loss)	—		—		—		34		34
Other comprehensive income (loss), after tax	—		—		(759)		—		(759)
Total comprehensive income (loss)									(725)



Balance as of March 31, 2020	$	3	$	2,873	$	533	$	301	$	3,710


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

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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 Months Ended March 31, 2021 and 2020 (Unaudited)

(In millions)


	Three Months Ended March 31,
	2021		2020
Net cash provided by operating activities	$	30	$	176
Cash Flows from Investing Activities:
Proceeds from the sale, maturity, disposal or redemption of:
Fixed maturities	1,364		703
Equity securities	46		—
Mortgage loans on real estate	114		91
Limited partnerships/corporations	61		23
Acquisition of:
Fixed maturities	(1,601)		(1,130)
Equity securities	(161)		—
Mortgage loans on real estate	(160)		(200)
Limited partnerships/corporations	(30)		(53)
Derivatives, net	(53)		142
Policy loans, net	4		4

Short-term loan to affiliate, net	483		(557)
Collateral received (delivered), net	31		(16)
Other investments, net	(85)		1
Net cash provided by (used in) investing activities	13		(992)
Cash Flows from Financing Activities:
Deposits received for investment contracts	1,036		1,775
Maturities and withdrawals from investment contracts	(1,140)		(1,018)

Settlements on deposit contracts	—		(1)

Proceeds from loans with affiliates, net	16		28


Dividends paid and distributions of capital	(78)		—
Capital contribution from parent	20		—
Net cash (used in) provided by financing activities	(146)		784
Net decrease in cash and cash equivalents	(103)		(32)
Cash and cash equivalents, beginning of period	360		512
Cash and cash equivalents, end of period	$	257	$	480

Supplemental Cash flow information:
Noncash capital contribution from parent	$	303	$	—


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

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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)

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 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.

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

The Company derives its 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. The Company's 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, the Company collect broker-dealer commission revenues through VFP, which are, in turn, paid to broker-dealers and expensed.

The Company offers 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. The Company's products are offered primarily to public and private school systems, higher education institutions, hospitals and healthcare facilities, not-for-profit organizations, state and local governments, 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. This business was transferred as part of the Individual Life Transaction described below. The Company's products are generally distributed through independent brokers and advisors, third-party administrators, consultants, and representatives associated with Voya Financial's broker-dealer and investment advisor, Voya Financial Advisors, Inc. ("VFA").

Products offered by the Company include deferred and immediate (i.e., payout) annuity contracts. The Company's products also include programs offered to qualified plans and nonqualified deferred compensation plans that package administrative and record-keeping services, participant education, and retirement readiness planning tools 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 operating segment.

Effective as of March 1, 2021, Voya Retirement Insurance and Annuity Company acquired 49.9% of the issued and outstanding common stock of Voya Special Investments, Inc. from Voya Financial, Inc. The investment has been accounted for as an equity method investment and recognized within Other investments in Consolidated Balance Sheets. Also, effective as of March 1, 2021, the Company acquired $80 of Security Life of Denver Company ("SLD") issued surplus notes and $73 of Resolution (Life U.S. Intermediate Holdings Ltd.) issued preferred shares from affiliated entities, which were received in connection with the Individual Life Transaction.

On January 4, 2021, VRIAC's ultimate parent, Voya Financial Inc. ("Voya Financial"), completed a series of transactions pursuant to a Master Transaction Agreement (the “Resolution MTA”) entered into on December 18, 2019 with Resolution Life


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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)

U.S. Holdings Inc., a Delaware corporation (“Resolution Life US”), pursuant to which Resolution Life US acquired all of the shares of the capital stock of SLD and Security Life of Denver International Limited ("SLDI"), including the capital stock of several subsidiaries of SLD and SLDI.

Concurrently with the sale, SLD entered into reinsurance agreements with ReliaStar Life Insurance Company ("RLI"), ReliaStar Life Insurance Company of New York (“RLNY”), and VRIAC, each of which is a direct or indirect wholly owned subsidiary of Voya Financial. Pursuant to these agreements, RLI and VRIAC reinsured to SLD a 100% quota share, and RLNY reinsured to SLD a 75% quota share, of their respective individual life insurance and annuities businesses. The reinsurance agreements along with the sale of the legal entities noted above (referred to as the "Individual Life Transaction") resulted in the disposition of substantially all of Voya Financial's life insurance and legacy non-retirement annuity businesses and related assets. Pursuant to the Individual Life Transaction, VRIAC's reserves related to legacy non-retirement annuity business as well as pension risk transfer products were ceded to SLD and related assets transferred. The reinsurance obligation with counterparty SLD are secured by collateralized assets held in a trust. RLI, RLNY, and VRIAC continue to be subsidiaries of the Company. The reinsurance transaction does not extinguish the Company’s primary liability to its policyholders. As a result of the reinsurance transactions on January 4, 2021, the Company reinsured $3.5 billion of policyholder liabilities under indemnity coinsurance and modified coinsurance arrangements. As of January 4, 2021, reinsurance recoverable associated with these transactions was $2.5 billion. The Company ceded $2.4 billion in premiums and $2.5 billion in policyholder benefits. The Company transferred assets with a fair market value of $3.7 billion as consideration for the reinsurance arrangements. As a result of the transfer of invested assets the Company recognized $0.5 billion in pre-tax realized gains. The Company also recognized non-cash liability of $73 and $1.5 billion relating to the pretax net cost of reinsurance liability and deposit asset, respectively, on January 4, 2021 as a result of entering into the reinsurance agreements. The aggregate deferred intangibles will be amortized as a charge to earnings over the life of the underlying policies.The deposit relates to liabilities related to Contract owner account balances that currently exist for the related underlying policies.

Effective December 31, 2019, VRIAC’s sole shareholder, Voya Holdings, Inc., transferred ownership of Voya Institutional Plan Services, LLC (“VIPS”) and Voya Retirement Advisors, LLC (“VRA”) to VRIAC for no cash consideration. VIPS and VRA provide retirement recordkeeping and investment advisory services, respectively, and the transfer was made to more closely align recordkeeping and related activities of VRIAC’s retirement business. It also had the effect of reducing VRIAC's tax liability. In addition to these non-insurance subsidiaries, VRIAC also has the 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 "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 former broker-dealer subsidiary. Following the closing of the 2018 Transaction, VRIAC acquired a 9.99% equity interest in VA Capital.

On February 8, 2021, VFA entered into an agreement with Cetera Financial Group, Inc. (“Cetera”), one of the nation’s largest networks of independently managed broker-dealers, pursuant to which Cetera will acquire the independent financial planning channel of VFA, which is one of the channels through which VRIAC distributes its products. In connection with this transaction, VFA expects to transfer approximately 900 independent financial professionals serving retail customers with approximately $40 billion in assets to Cetera, while retaining approximately 600 field and phone-based financial professionals who support our business. The transaction is expected to close in the second or third quarter of 2021. The closing is subject to certain conditions, including the receipt of required regulatory approvals.


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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)

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. The inputs into the Company's estimates and assumptions consider the economic implications of COVID-19 on the Company's critical and significant accounting estimates. Those estimates are inherently subject to change and actual results could differ from those estimates, and the differences may be material to the Condensed Consolidated Financial Statements.

The Condensed Consolidated Financial Statements include the accounts of VRIAC and its wholly owned subsidiaries VFP, VIPS and VRA. 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, 2021, its results of operations, comprehensive income and changes in shareholder's equity for the three months ended March 31, 2021 and 2020, and its statements of cash flows for the three months ended March 31, 2021 and 2020, in conformity with U.S. GAAP. Interim results are not necessarily indicative of full year performance.

The December 31, 2020 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 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 of Adoption	Effect on the Financial Statements or Other Significant Matters
ASU 2019-12, Simplifying the Accounting for Income Taxes	This standard, issued in December 2019, simplifies the accounting for income taxes by eliminating certain exceptions to the general principles and simplifying several aspects of ASC 740, Income taxes, including requirements related to the following: • The intraperiod tax allocation exception to the incremental approach, • The tax basis step-up in goodwill obtained in a transaction that is not a business combination, • Hybrid tax regimes, • Ownership changes in investments - changes from a subsidiary to an equity method investment, • Separate financial statements of entities not subject to tax, • Interim-period accounting for enacted changes in tax law, and • The year-to-date loss limitation in interim-period tax accounting.	January 1, 2021 on a prospective basis, except for those provisions that required retrospective or modified retrospective method.	Adoption of the ASU did not have an impact on the Company's financial condition, results of operations, or cash flows.


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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)

Future Adoption of Accounting Pronouncements

The following table provides a description of future adoptions of 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 2020-04, Reference Rate Reform	This standard, issued in March 2020, provides temporary optional expedients and exceptions for applying U.S. GAAP principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In January, 2021, the FASB issued ASU 2021-01 which clarified the scope of relief related to ASU 2020-04.	The amendments are effective as of March 12, 2020, the issuance date of the ASU. An entity may elect to apply the amendments prospectively through December 31, 2022.	The Company expects that it will elect to apply some of the expedients and exceptions provided in ASU 2020-04; however, the Company is still evaluating the guidance, and therefore, the impact of the adoption of ASU 2020-04 on the Company’s financial condition and results of operations has not yet been determined.
ASU 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts	This standard, issued in August 2018, changes the measurement and disclosures of insurance liabilities and deferred acquisition costs ("DAC") for long-duration contracts issued by insurers.	On November 5, 2020, the FASB issued ASU 2020-11, which deferred the effective date of the amendments in ASU 2018-12 for SEC filers to fiscal years ending after December 15, 2022, including interim periods within those fiscal years. Initial adoption for the liability for future policy benefits and DAC is required to be reported using either a full retrospective or modified retrospective approach. For market risk benefits, full retrospective application is required.	The implications of these requirements, including transition options, and related potential financial statement impacts are currently being evaluated. 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 Shareholder’s equity and future earnings patterns.


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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)

2. Investments

Fixed Maturities

Available-for-sale and fair value option ("FVO") fixed maturities were as follows as of March 31, 2021:


	Amortized Cost		Gross Unrealized Capital Gains		Gross Unrealized Capital Losses		Embedded Derivatives(2)		Fair Value		Allowance for credit losses
Fixed maturities:
U.S. Treasuries	$	535	$	118	$	2	$	—	$	651	$	—
U.S. Government agencies and authorities	18		—		—		—		18		—
State, municipalities and political subdivisions	630		67		1		—		696		—
U.S. corporate public securities	7,113		870		95		—		7,888		—
U.S. corporate private securities	3,498		316		34		—		3,780		—
Foreign corporate public securities and foreign governments(1)	2,302		240		22		—		2,520		—
Foreign corporate private securities(1)	2,649		230		28		—		2,840		11




Residential mortgage-backed securities	3,604		127		16		9		3,724		—
Commercial mortgage-backed securities	2,529		125		16		—		2,638		—
Other asset-backed securities	1,412		22		4		—		1,429		1

Total fixed maturities, including securities pledged	24,290		2,115		218		9		26,184		12
Less: Securities pledged	547		133		67		—		613		—
Total fixed maturities	$	23,743	$	1,982	$	151	$	9	$	25,571	$	12

(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.


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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)

Available-for-sale and FVO fixed maturities were as follows as of December 31, 2020:


	Amortized Cost		Gross Unrealized Capital Gains		Gross Unrealized Capital Losses		Embedded Derivatives(2)		Fair Value		Allowance for credit losses
Fixed maturities:
U.S. Treasuries	$	535	$	186	$	—	$	—	$	721	$	—
U.S. Government agencies and authorities	18		1		—		—		19		—
State, municipalities and political subdivisions	698		116		—		—		814		—
U.S. corporate public securities	7,632		1,531		7		—		9,156		—
U.S. corporate private securities	3,870		536		27		—		4,379		—
Foreign corporate public securities and foreign governments(1)	2,539		413		1		—		2,951		—
Foreign corporate private securities(1)	2,991		348		25		—		3,303		11




Residential mortgage-backed securities	4,071		171		15		11		4,237		1
Commercial mortgage-backed securities	2,712		207		26		—		2,893		—
Other asset-backed securities	1,500		28		6		—		1,520		2

Total fixed maturities, including securities pledged	26,566		3,537		107		11		29,993		14
Less: Securities pledged	169		52		1		—		220		—
Total fixed maturities	$	26,397	$	3,485	$	106	$	11	$	29,773	$	14

(1) Primarily U.S. dollar denominated.

The amortized cost and fair value of fixed maturities, including securities pledged, as of March 31, 2021, are shown below by contractual maturity. Actual maturities may differ from contractual maturities as securities may be restructured, called or prepaid. Mortgage-backed securities ("MBS") and Other asset-backed securities ("ABS") are shown separately because they are not due at a single maturity date.


	Amortized Cost		Fair Value
Due to mature:
One year or less	$	392	$	398
After one year through five years	3,013		3,207
After five years through ten years	4,657		5,086
After ten years	8,683		9,702
Mortgage-backed securities	6,133		6,362
Other asset-backed securities	1,412		1,429
Fixed maturities, including securities pledged	$	24,290	$	26,184

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.


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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)

As of March 31, 2021 and December 31, 2020, 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, 2021
Communications	$	864	$	135	$	4	$	995
Financial	2,522		273		31		2,764
Industrial and other companies	6,880		658		70		7,468
Energy	1,404		187		20		1,571
Utilities	2,684		296		18		2,962
Transportation	915		76		30		961
Total	$	15,269	$	1,625	$	173	$	16,721

December 31, 2020
Communications	$	950	$	231	$	1	$	1,180
Financial	2,921		472		2		3,391
Industrial and other companies	7,284		1,155		13		8,426
Energy	1,571		259		22		1,808
Utilities	3,025		530		1		3,554
Transportation	929		128		20		1,037
Total	$	16,680	$	2,775	$	59	$	19,396

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 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, 2021 and December 31, 2020, approximately 47.1% and 48.2%, 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.


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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)

Repurchase Agreements

As of March 31, 2021 and December 31, 2020, the Company did not have any securities pledged in dollar rolls, repurchase agreement transactions or reverse repurchase agreements.

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, 2021 and December 31, 2020, the fair value of loaned securities was $476 and $143, 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, 2021 and December 31, 2020, cash collateral retained by the lending agent and invested in short-term liquid assets on the Company's behalf was $447 and $74, 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, 2021 and December 31, 2020, liabilities to return collateral of $447 and $74, 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, 2021 and December 31, 2020, the fair value of securities retained as collateral by the lending agent on the Company’s behalf was $43 and $70, respectively.

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


	March 31, 2021		December 31, 2020
U.S. Treasuries	$	32	$	70

U.S. corporate public securities	256		54

Foreign corporate public securities and foreign governments	129		20
Equity Securities	73		—
Payables under securities loan agreements	$	490	$	144

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 and ownership interest of 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.


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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)

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.

Allowance for credit losses

The following table presents a rollforward of the allowance for credit losses on available-for-sale fixed maturity securities for the period presented:


	Three Months Ended March 31, 2021
	Residential mortgage-backed securities		Commercial mortgage-backed securities		Foreign corporate private securities		Other asset-backed securities		Total
Balance as of January 1, 2021	$	1	$	—	$	11	$	2	$	14
Credit losses on securities for which credit losses were not previously recorded	—		—		—		—		—
Initial allowance for credit losses recognized on financial assets accounted for as PCD	—		—		—		—		—
Reductions for securities sold during the period	—		—		—		—		—
Reductions for intent to sell or more likely than not will be required to sell securities prior to recovery of amortized cost	—		—		—		—		—
Increase (decrease) on securities with allowance recorded in previous period	(1)		—		—		(1)		(2)
Write-offs	—		—		—		—		—
Recoveries of amounts previously written-off	—		—		—		—		—
Balance at March 31, 2021	$	—	$	—	$	11	$	1	$	12


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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)


	Year Ended December 31, 2020
	Residential mortgage-backed securities		Commercial mortgage-backed securities		Foreign corporate private securities		Other asset-backed securities		Total
Balance as of January 1, 2020	$	—	$	—	$	—	$	—	$	—
Credit losses on securities for which credit losses were not previously recorded	1		—		11		2		14
Initial allowance for credit losses recognized on financial assets accounted for as PCD	—		—		—		—		—
Reductions for securities sold during the period	—		—		—		—		—
Reductions for intent to sell or more likely than not will be required to sell securities prior to recovery of amortized cost	—		—		—		—		—
Increase (decrease) on securities with allowance recorded in previous period	—		—		—		—		—
Write-offs	—		—		—		—		—
Recoveries of amounts previously written-off	—		—		—		—		—
Balance as of December 31, 2020	$	1	$	—	$	11	$	2	$	14

Unrealized Capital Losses

The following table presents available-for-sale fixed maturities, including securities pledged, for which an allowance for credit losses has not been recorded by market sector and duration as of March 31, 2021:


	Twelve Months or Less Below Amortized Cost					More Than Twelve Months Below Amortized Cost					Total
		Fair Value		Unrealized Capital Losses		Number of securities	Fair Value		Unrealized Capital Losses		Number of securities	Fair Value		Unrealized Capital Losses		Number of securities
U.S. Treasuries		$	82	$	2	9	$	—	$	—	—	$	82	$	2	9

State, municipalities and political subdivisions		38		1		14	—		—		—	38		1		14
U.S. corporate public securities		1,439		91		469	29		4		5	1,468		95		474
U.S. corporate private securities		353		15		40	129		19		10	482		34		50
Foreign corporate public securities and foreign governments		399		21		93	8		1		4	407		22		97
Foreign corporate private securities		118		27		13	37		1		6	155		28		19
Residential mortgage-backed		379		7		132	385		9		84	764		16		216
Commercial mortgage-backed		297		3		60	309		13		52	606		16		112
Other asset-backed		145		2		49	128		2		60	273		4		109
Total		$	3,250	$	169	879	$	1,025	$	49	221	$	4,275	$	218	1,100

The Company concluded that an allowance for credit losses was unnecessary for these securities because the unrealized losses are not credit related.


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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)


	Twelve Months or Less Below Amortized Cost				More Than Twelve Months Below Amortized Cost				Total
	Fair Value		Unrealized Capital Losses			Number of securities	Fair Value		Unrealized Capital Losses		Number of securities	Fair Value		Unrealized Capital Losses		Number of securities
U.S. Treasuries	$	8	$	—		2	$	—	$	—	—	$	8	$	—	2

State, municipalities and political subdivisions	5		—			2	—		—		—	5		—		2
U.S. corporate public securities	199		5			182	22		2		4	221		7		186
U.S. corporate private securities	316		10			29	71		17		7	387		27		36
Foreign corporate public securities and foreign governments	32		1			22	6		—		2	38		1		24
Foreign corporate private securities	176		25			20	3		—		1	179		25		21
Residential mortgage-backed	613		11			134	119		4		54	732		15		188
Commercial mortgage-backed	579		25			105	33		1		7	612		26		112
Other asset-backed	206		1			59	265		5		88	471		6		147
Total	$	2,134	$	78		555	$	519	$	29	163	$	2,653	$	107	718

Based on the Company's quarterly evaluation of its securities in a unrealized loss position, described below, the Company concluded that these securities were not impaired as of March 31, 2021. 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.

Gross unrealized capital losses on fixed maturities, including securities pledged, increased $111 from $107 to $218 for the three months ended March 31, 2021. The increase in gross unrealized capital losses was primarily due to non-credit related market factors. As of March 31, 2021, $17 of the total $218 of gross unrealized losses were from 5 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 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 impaired.


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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)

The following table identifies 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 March 31,
	2021				2020
	Impairment			No. of Securities	Impairment			No. of Securities


U.S. corporate public securities	—			—	6			2



Residential mortgage-backed	—		*	6	1			7
Commercial mortgage-backed	—		*	1	—		*	1




Total	$	—	*	7	$	7		10
Credit Impairments	$	—			$	—
Intent Impairments	$	—	*		$	7

*Less than $1.

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.

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 credit allowance recorded in connection with the troubled debt restructuring. A credit 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 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. For the three months ended March 31, 2021 and March 31, 2020, the Company did not have any new commercial mortgage loan troubled debt restructuring or new private placement troubled debt restructuring.

For the three months ended March 31, 2021 and March 31, 2020, the Company did not have any commercial mortgage loans or private placements modified in a troubled debt restructuring with a subsequent payment default.

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 performance, 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.

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


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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)

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.

The following tables present commercial mortgage loans by year of origination and LTV ratio as of the dates indicated:


	As of March 31, 2021
	Loan-to-Value Ratios
Year of Origination	0% - 50%		>50% - 60%		>60% - 70%		>70% - 80%		>80% and above		Total
2021	$	28	$	91	$	36	$	—	$	—	$	155
2020	140		196		64		—		—		400
2019	176		177		84		—		—		437
2018	119		64		48		—		—		231
2017	484		297		4		—		—		785
2016	341		244		1		—		—		586
2015 and prior	1,305		284		15		—		—		1,604
Total	$	2,593	$	1,353	$	252	$	—	$	—	$	4,198


	As of December 31, 2020
	Loan-to-Value Ratios
Year of Origination	0% - 50%		>50% - 60%		>60% - 70%		>70% - 80%		>80% and above		Total
2020	$	164	$	206	$	39	$	—	$	—	$	409
2019	209		165		107		—		—		481
2018	124		91		73		—		—		288
2017	499		356		6		—		—		861
2016	399		275		1		—		—		675
2015 and prior	1,574		391		15		—		—		1,980
Total	$	2,969	$	1,484	$	241	$	—	$	—	$	4,694


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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)

The following tables present commercial mortgage loans by year of origination and DSC ratio as of the dates indicated:


	As of March 31, 2021
	Debt Service Coverage Ratios
Year of Origination	>1.5x		>1.25x - 1.5x		>1.0x - 1.25x		<1.0x		Commercial mortgage loans secured by land or construction loans		Total
2021	$	99	$	56	—		$	—	$	—	$	155
2020	322		68		10		—		—		400
2019	291		70		33		43		—		437
2018	81		58		63		29		—		231
2017	436		195		98		56		—		785
2016	482		85		19		—		—		586
2015 and prior	1,361		145		62		36		—		1,604
Total	$	3,072	$	677	$	285	$	164	$	—	$	4,198


	As of December 31, 2020
	Debt Service Coverage Ratios
Year of Origination	>1.5x		>1.25x - 1.5x		>1.0x - 1.25x		<1.0x		Commercial mortgage loans secured by land or construction loans		Total
2020	$	298	$	93	$	18	$	—	$	—	$	409
2019	319		77		36		49		—		481
2018	102		79		60		47		—		288
2017	494		204		103		60		—		861
2016	591		53		31		—		—		675
2015 and prior	1,676		178		72		54		—		1,980
Total	$	3,480	$	684	$	320	$	210	$	—	$	4,694


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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)

The following tables present the commercial mortgage loans by year of origination and U.S. region as of the dates indicated:


	As of March 31, 2021
	U.S. Region
Year of Origination	Pacific		South Atlantic		Middle Atlantic		West South Central		Mountain		East North Central		New England		West North Central		East South Central		Total
2021	$	50	$	6	$	5	$	9	$	25	$	39	$	—	$	—	$	21	$	155
2020	75		159		36		36		32		29		1		11		21		400
2019	57		106		10		124		52		37		15		11		25		437
2018	44		87		55		15		14		10		—		6		—		231
2017	90		84		330		131		54		55		5		36		—		785
2016	123		122		172		29		48		64		7		15		6		586
2015 and prior	407		360		256		104		165		144		46		96		26		1,604
Total	$	846	$	924	$	864	$	448	$	390	$	378	$	74	$	175	$	99	$	4,198


	As of December 31, 2020
	U.S. Region
Year of Origination	Pacific		South Atlantic		Middle Atlantic		West South Central		Mountain		East North Central		New England		West North Central		East South Central		Total
2020	$	84	$	159	$	35	$	37	$	32	$	29	$	1	$	12	$	20	$	409
2019	63		122		11		137		54		39		17		11		27		481
2018	49		98		57		34		26		11		—		13		—		288
2017	99		98		352		136		74		60		5		37		—		861
2016	156		127		180		32		72		72		9		21		6		675
2015 and prior	526		423		326		141		198		180		49		108		29		1,980
Total	$	977	$	1,027	$	961	$	517	$	456	$	391	$	81	$	202	$	82	$	4,694


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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)

The following tables present the commercial mortgage loans by year of origination and property type as of the dates indicated:


	As of March 31, 2021
	Property Type
Year of Origination	Retail		Industrial		Apartments		Office		Hotel/Motel		Other		Mixed Use		Total
2021	$	5	$	19	$	65	$	66	$	—	$	—	$	—	$	155
2020	51		73		140		136		—		—		—		400
2019	30		66		253		67		21		—		—		437
2018	44		75		77		15		3		17		—		231
2017	92		381		186		123		3		—		—		785
2016	104		226		109		130		8		5		4		586
2015 and prior	610		245		292		208		65		146		38		1,604
Total	$	936	$	1,085	$	1,122	$	745	$	100	$	168	$	42	$	4,198


	As of December 31, 2020
	Property Type
Year of Origination	Retail		Industrial		Apartments		Office		Hotel/Motel		Other		Mixed Use		Total
2020	$	51	$	73	$	141	$	144	$	—	$	—	$	—	$	409
2019	32		73		283		71		22		—		—		481
2018	49		78		124		17		3		17		—		288
2017	102		415		204		136		4		—		—		861
2016	129		244		138		144		9		7		4		675
2015 and prior	792		305		338		261		79		166		39		1,980
Total	$	1,155	$	1,188	$	1,228	$	773	$	117	$	190	$	43	$	4,694

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


	March 31, 2021		December 31, 2020
Allowance for credit losses, beginning of the period	$	67	$	12	(1)
Credit losses on mortgage loans for which credit losses were not previously recorded	1		5

Change in allowance due to transfer of loans from Voya Reinsurance portfolios to Resolution	(7)		—
Increase (decrease) on mortgage loans with allowance recorded in previous period	(14)		52
Provision for expected credit losses	47		69
Write-offs	—		(2)
Recoveries of amounts previously written off	—		—

Allowance for credit losses, end of period	$	47	$	67

(1) On January 1, 2020, as a result of implementing ASU 2016-13 Measurement of Credit Losses of Financial Instruments, the Company recorded a transition adjustment on a continuing basis for Allowance for credit losses on mortgage loans on real estate of $12.


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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)

While still heavily impacted by COVID-19, the Commercial Mortgage Loan portfolio allowance decreased during the quarter as certain sectors of the economy resumed operations, albeit at lower than pre-pandemic levels. We continue to observe distress in the hotel sector.

To provide temporary financial assistance to our commercial mortgage loans borrowers adversely effected by COVID-19 related stress, the Company has provided payment forbearance to approximately 7% of the outstanding principal amount of our commercial mortgage loans. Deferred payment amounts are expected to be repaid across the 12 months following the end of the agreed upon forbearance period. No modifications to any commercial mortgage loans have been made as of the issuance date of this filing.

The following table presents past due commercial mortgage loans as of the dates indicated:


	March 31, 2021		December 31, 2020
Delinquency:
Current	$	4,195	$	4,691
30-59 days past due	—		—
60-89 days past due	—		—
Greater than 90 days past due	3		3
Total	$	4,198	$	4,694

Commercial mortgage 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 March 31, 2021, the Company had one commercial mortgage loan in non-accrual status. As of December 31, 2020, the Company had one commercial mortgage loan in non-accrual status. There was no interest income recognized on loans in non-accrual status for the three months ended March 31, 2021 and year ended December 31, 2020.

As of March 31, 2021 and December 31, 2020, the Company had no commercial mortgage loans that were over 90 days or more past due but are not on non-accrual status. The Company had no commercial mortgage loans on non-accrual status for which there is no related allowance for credit losses as of March 31, 2021.

Net Investment Income

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


	Three Months Ended March 31,
		2021		2020
Fixed maturities		$	376	$	373
Equity securities		3		2
Mortgage loans on real estate		44		50
Policy loans		1		2
Short-term investments and cash equivalents		1		1
Other		82		30
Gross investment income		507		458
Less: Investment expenses		18		19
Net investment income		$	489	$	439

As of March 31, 2021 and December 31, 2020, the Company had $1 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.


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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)

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 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. Net realized capital gains (losses) also 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 March 31,
		2021		2020
Fixed maturities, available-for-sale, including securities pledged		$	509	$	(18)
Fixed maturities, at fair value option		(142)		55
Equity securities		3		(5)
Derivatives		(40)		46
Embedded derivatives - fixed maturities		(2)		4
Guaranteed benefit derivatives		49		(169)
Mortgage Loans		63		—
Other investments		—		(5)
Net realized capital gains (losses)		$	440	$	(92)

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,
		2021		2020
Proceeds on sales		$	3,442	$	277
Gross gains		492		5
Gross losses		1		13

3. Derivative Financial Instruments

The Company primarily enters into the following types of derivatives:

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.


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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)

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.

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.

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


	March 31, 2021						December 31, 2020
	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	$	18	$	—	$	—	$	18	$	—	$	—
Foreign exchange contracts	566		3		32		628		3		36
Derivatives: Non-qualifying for hedge accounting(1)
Interest rate contracts	15,247		166		187		14,155		137		171
Foreign exchange contracts	126		1		1		83		—		3
Equity contracts	—		—		—		55		5		5
Credit contracts	170		—		1		188		—		1

Embedded derivatives and Managed custody guarantees:
Within fixed maturity investments	N/A		9		—		N/A		11		—
Within products	N/A		—		13		N/A		—		59

Managed custody guarantees	N/A		—		—		N/A		—		4
Total			$	179	$	234			$	156	$	279

(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, 2021 and December 31, 2020. 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


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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 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.

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 are presented in the tables below as of the dates

indicated:


	March 31, 2021
	Notional Amount		Asset Fair Value		Liability Fair Value
Credit contracts	$	170	$	—	$	1
Equity contracts	—		—		—
Foreign exchange contracts	692		4		33
Interest rate contracts	13,693		166		187
			170		221

Counterparty netting(1)			(169)		(169)
Cash collateral netting(1)			—		(7)
Securities collateral netting(1)			—		(29)
Net receivables/payables			$	1	$	16

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


	December 31, 2020
	Notional Amount		Asset Fair Value		Liability Fair Value
Credit contracts	$	188	$	—	$	1
Equity contracts	55		5		5
Foreign exchange contracts	711		3		39
Interest rate contracts	12,567		137		171
			145		216

Counterparty netting(1)			(141)		(141)
Cash collateral netting(1)			(1)		(43)
Securities collateral netting(1)			—		(28)
Net receivables/payables			$	3	$	4

(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


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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)

Sheets. As of March 31, 2021, the Company held $0 and pledged $7 of net cash collateral related to OTC derivative contracts and cleared derivative contracts, respectively. As of December 31, 2020, the Company held $5 and delivered $43 of net cash collateral related to OTC derivative contracts and cleared derivative contracts, respectively. In addition, as of March 31, 2021, the Company delivered $137 of securities and held $1 of securities as collateral. As of December 31, 2020, the Company delivered $77 of securities and held no securities as collateral.

The location and effect of 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,
	2021				2020
	Interest Rate Contracts		Foreign Exchange Contracts		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 and Other net realized capital gains/(losses)		Net investment income		Net Investment Income and Other net realized capital gains/(losses)
Amount of Gain or (Loss) Recognized in Other Comprehensive Income	$	(1)	$	5	$	1	$	77
Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income	—		(3)		—		3

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 periods indicated:


	Three Months Ended March 31,
	2021				2020
	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	$	489	$	440	$	439	$	(85)
Derivatives: Qualifying for hedge accounting

Cash flow hedges:




Foreign exchange contracts:
Gain (loss) reclassified from accumulated other comprehensive income into income	2		(5)		3		—


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


	Location of Gain or (Loss) Recognized in Income on Derivative	Three Months Ended March 31,
		2021		2020
Derivatives: Non-qualifying for hedge accounting
Interest rate contracts	Other net realized capital gains (losses)	$	(35)	$	42
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)	—		1
Embedded derivatives and Managed custody guarantees:
Within fixed maturity investments	Other net realized capital gains (losses)	(2)		(26)
Within products	Other net realized capital gains (losses)	45		(143)
Within reinsurance agreements	Policyholder benefits	—		23
Managed custody guarantees	Other net realized capital gains (losses)	4		—
Total		$	12	$	(100)


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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)

4. Fair Value Measurements

Fair Value Measurement

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, 2021:


	Level 1			Level 2			Level 3			Total
Assets:
Fixed maturities, including securities pledged:
U.S. Treasuries	$	489		$	162		$	—		$	651
U.S. Government agencies and authorities	—			18			—			18
State, municipalities and political subdivisions	—			696			—			696
U.S. corporate public securities	—			7,842			46			7,888
U.S. corporate private securities	—			2,580			1,200			3,780
Foreign corporate public securities and foreign governments(1)	—			2,515			5			2,520
Foreign corporate private securities (1)	—			2,566			274			2,840
Residential mortgage-backed securities	—			3,691			33			3,724
Commercial mortgage-backed securities	—			2,638			—			2,638
Other asset-backed securities	—			1,382			47			1,429
Total fixed maturities, including securities pledged	489			24,090			1,605			26,184
Equity securities	86			—			148			234
Derivatives:
Interest rate contracts	1			165			—			166
Foreign exchange contracts	—			4			—			4
Equity contracts	—			—			—			—


Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements	874			16			—			890
Assets held in separate accounts	83,627			5,855			237			89,719
Total assets	$	85,077		$	30,130		$	1,990		$	117,197
Percentage of Level to Total	72		%	26		%	2		%	100		%
Liabilities:
Derivatives:
Guaranteed benefit derivatives:
FIA	$	—		$	—		$	10		$	10
Stabilizer and MCGs	—			—			3			3
Other derivatives:
Interest rate contracts	18			169			—			187
Foreign exchange contracts	—			33			—			33
Equity contracts	—			—			—			—
Credit contracts	—			1			—			1

Total liabilities	$	18		$	203		$	13		$	234

(1) Primarily U.S. dollar denominated.


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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 following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of December 31, 2020:


	Level 1			Level 2			Level 3			Total
Assets:
Fixed maturities, including securities pledged:
U.S. Treasuries	$	548		$	173		$	—		$	721
U.S. Government agencies and authorities	—			19			—			19
State, municipalities and political subdivisions	—			814			—			814
U.S. corporate public securities	—			9,099			57			9,156
U.S. corporate private securities	—			3,093			1,286			4,379
Foreign corporate public securities and foreign governments(1)	—			2,951			—			2,951
Foreign corporate private securities (1)	—			3,008			295			3,303
Residential mortgage-backed securities	—			4,204			33			4,237
Commercial mortgage-backed securities	—			2,893			—			2,893
Other asset-backed securities	—			1,483			37			1,520
Total fixed maturities, including securities pledged	548			27,737			1,708			29,993
Equity securities, available-for-sale	17			—			99			116
Derivatives:
Interest rate contracts	7			130			—			137
Foreign exchange contracts	—			3			—			3
Equity contracts	—			5			—			5


Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements	610			16			—			626
Assets held in separate accounts	81,096			6,001			222			87,319
Total assets	$	82,278		$	33,892		$	2,029		$	118,199
Percentage of Level to total	69		%	29		%	2		%	100		%
Liabilities:
Derivatives:
Guaranteed benefit derivatives:
FIA	$	—		$	—		$	10		$	10
Stabilizer and MCGs	—			—			53			53
Other derivatives:
Interest rate contracts	—			171			—			171
Foreign exchange contracts	—			39			—			39
Equity contracts	—			5			—			5
Credit contracts	—			1			—			1

Total liabilities	$	—		$	216		$	63		$	279

(1) Primarily U.S. dollar denominated.


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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)

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.

The valuation approaches and key inputs for each category of assets or liabilities that are classified within Level 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.


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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)

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.

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: Level 2 and Level 3 equity securities, typically private equities or equity securities not traded on an exchange, are valued by other sources such as analytics or 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. 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.

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.

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.

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.


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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)

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.


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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 following 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, 2021
	Fair Value as of January 1		Total Realized/Unrealized Gains (Losses) Included in:				Purchases		Issuances		Sales		Settlements		Transfers into Level 3		Transfers out of Level 3		Fair Value as of March 31		Change in Unrealized Gains (Losses) Included in Earnings(3)		Change in Unrealized Gains (Losses) Included in OCI(3)
			Net Income		OCI
Fixed maturities, including securities pledged:

U.S. Corporate public securities	$	57	$	—	$	(2)	$	—	$	—	$	(9)	$	—	$	—	$	—	$	46	$	—	$	(2)
U.S. Corporate private securities	1,286		13		(48)		16		—		(88)		(27)		65		(17)		1,200		—		(39)

Foreign corporate public securities and foreign governments(1)	—		—		—		5		—		—		—		—		—		5		—		—
Foreign corporate private securities(1)	295		2		(7)		—		—		(5)		(11)		—		—		274		1		(6)
Residential mortgage-backed securities	33		(2)		—		11		—		(7)		—		—		(2)		33		(2)		—
Commercial mortgage-backed securities	—		—		—		—		—		—		—		—		—		—		—		—
Other asset-backed securities	37		—		(2)		5		—		—		(10)		17		—		47		—		(1)
Total fixed maturities, including securities pledged	1,708		13		(59)		37		—		(109)		(48)		82		(19)		1,605		(1)		(48)
Equity securities	99		6		—		74		—		(24)		(7)		—		—		148		6		—
Derivatives:
Guaranteed benefit derivatives:
Stabilizer and MCGs(2)	(53)		49		—		—		—		—		1		—		—		(3)		—		—
FIA(2)	(10)		—		—		—		—		—		—		—		—		(10)		—		—

Assets held in separate accounts(4)	222		1		—		33		—		(1)		—		—		(18)		237		—		—
(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) 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 or Unrealized gains (losses) on securities in the Condensed Consolidated Statements of Comprehensive Income.
(4) 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)

The following 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, 2020
	Fair Value as of January 1		Total Realized/Unrealized Gains (Losses) Included in:				Purchases		Issuances		Sales		Settlements		Transfers into Level 3		Transfers out of Level 3		Fair Value as of March 31		Change in Unrealized Gains (Losses) Included in Earnings(3)		Change in Unrealized Gains (Losses) Included in OCI(3)
			Net Income		OCI
Fixed maturities, including securities pledged:


U.S. Corporate public securities	$	47	$	—	$	(1)	$	—	$	—	$	—	$	(2)	$	—	$	—	$	44	$	—	$	(1)
U.S. Corporate private securities	1,002		—		(51)		26		—		(1)		(43)		—		(42)		891		—		(51)
Foreign corporate public securities and foreign governments(1)	—		—		—		3		—		—		—		—		—		3		—		—
Foreign corporate private securities(1)	190		(1)		(27)		2		—		(3)		—		3		(5)		159		—		(27)
Residential mortgage-backed securities	16		(1)		—		8		—		—		—		—		(8)		15		(1)		—

Other asset-backed securities	48		—		—		8		—		—		(1)		—		—		55		—		—
Total fixed maturities, including securities pledged	1,303		(2)		(79)		47		—		(4)		(46)		3		(55)		1,167		(1)		(79)
Equity securities, available-for-sale	63		(5)		—		—		—		—		—		—		—		58		(5)		—
Derivatives:
Guaranteed benefit derivatives:
Stabilizer and MCGs(2)	(22)		(171)		—		—		—		—		—		—		—		(193)		—		—
FIA(2)	(11)		2		—		—		—		—		—		—		—		(9)		—		—

Assets held in separate accounts(4)	115		(2)		—		47		—		(1)		—		—		(18)		141		—		—
(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) 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) 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)

For the three months ended March 31, 2021 and 2020, 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.

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 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.


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


	March 31, 2021				December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Fixed maturities, including securities pledged	$	26,184	$	26,184	$	29,993	$	29,993
Equity securities	234		234		116		116
Mortgage loans on real estate	4,198		4,474		4,694		5,013
Policy loans	183		183		187		187

Cash and cash equivalents, short-term investments and short-term investments under securities loan agreements	890		890		626		626
Deposit assets(2)	1,439		1,510		—		—
Derivatives	170		170		145		145

Short-term loan to affiliate	170		170		653		653
Other Investments	125		125		43		43
Assets held in separate accounts	89,719		89,719		87,319		87,319
Liabilities:
Investment contract liabilities:
Funding agreements without fixed maturities and deferred annuities(1)	28,125		34,217		28,169		36,741
Funding agreements with fixed maturities	875		875		795		796
Supplementary contracts, immediate annuities and other	281		287		288		345

Derivatives:
Guaranteed benefit derivatives:
FIA	10		10		10		10
Stabilizer and MCGs	3		3		53		53
Other derivatives	221		221		216		216
Short-term debt(3)	24		24		8		8
Long-term debt(3)	3		3		3		3

(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 Assets on the Consolidated Balance Sheets.

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

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


Deposit assets			Level 3
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

Short-term debt and Long-term debt			Level 2


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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)

5. Deferred Policy Acquisition Costs and Value of Business Acquired

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


	2021
	DAC		VOBA			Total
Balance as of January 1, 2021	$	122	$	40		$	162
Impact of ASU 2016-13	—		—			—
Deferrals of commissions and expenses	13		1			14
Amortization: (2) (3)
Amortization, excluding unlocking	(34)		(30)			(64)
Unlocking (1)	(1)		1			—
Interest accrued	9		6		(3)	15
Net amortization included in the Condensed Consolidated Statements of Operations	(26)		(23)			(49)
Change due to unrealized capital gains/losses on available-for-sale securities	184		163			347
Balance as of March 31, 2021	$	293	$	181		$	474


	2020
	DAC		VOBA			Total
Balance as of January 1, 2020	$	288	$	305		$	593
Impact of ASU 2016-13	2		—			2
Deferrals of commissions and expenses	13		—			13
Amortization:
Amortization, excluding unlocking	(22)		(21)			(43)
Unlocking (1)	(3)		(9)			(12)
Interest accrued	9		9		(3)	18
Net amortization included in the Condensed Consolidated Statements of Operations	(16)		(21)			(37)
Change due to unrealized capital gains/losses on available-for-sale securities	177		178			355
Balance as of March 31, 2020	$	464	$	462		$	926

(1) Includes the impacts of annual review of assumptions which typically occurs in the third quarter; and retrospective and prospective unlocking.

(2) During the three months ended March 31, 2021 the Company recognized $2 of loss recognition related to DAC. There was no loss recognition during the three months ended March 31, 2020.

(3) Interest accrued at the following rates for VOBA: 5.5% to 7.0% during 2021 and 2020.


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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)

6. Accumulated Other Comprehensive Income (Loss)

Shareholder’s equity included the following components of Accumulated Other Comprehensive Income (AOCI) as of the dates indicated:


	March 31,
	2021		2020
Fixed maturities, net of impairments	$	1,896	$	624

Derivatives(1)	66		190
DAC/VOBA and Sales inducements adjustment on available-for-sale securities	(505)		(196)
Premium deficiency reserve adjustment	—		(110)
Other	1		—
Unrealized capital gains (losses), before tax	1,458		508
Deferred income tax asset (liability)	(178)		21
Unrealized capital gains (losses), after tax	1,280		529
Pension and other postretirement benefits liability, net of tax	3		4
AOCI	$	1,283	$	533

(1) Gains and losses reported in 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 March 31, 2021, the portion of the AOCI that is expected to be reclassified into earnings within the next twelve months is $20.


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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)

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 March 31, 2021
	Before-Tax Amount			Income Tax		After-Tax Amount
Available-for-sale securities:
Fixed maturities	$	(1,028)		$	217	$	(811)



Adjustments for amounts recognized in Net realized capital gains (losses) in the Condensed Consolidated Statements of Operations	(506)			106		(400)
DAC/VOBA and Sales inducements	349		(1)	(74)		275
Premium deficiency reserve adjustment	434			(91)		343
Change in unrealized gains (losses) on available-for-sale securities	(751)			158		(593)

Derivatives:
Derivatives	(1)		(2)	—		(1)
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	(7)			1		(6)

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 accumulated other comprehensive income (loss)	$	(758)		$	159	$	(599)

(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.


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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)


	Three Months Ended March 31, 2020
	Before-Tax Amount			Income Tax		After-Tax Amount
Available-for-sale securities:
Fixed maturities	$	(1,504)		$	315	$	(1,189)



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	355		(1)	(74)		281
Premium deficiency reserve adjustment	101			(21)		80
Change in unrealized gains (losses) on available-for-sale securities	(1,033)			217		(816)

Derivatives:
Derivatives	79		(2)	(17)		62
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	73			(16)		57

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 accumulated other comprehensive income (loss)	$	(960)		$	201	$	(759)

(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.

7. Income Taxes

The Company's effective tax rate for the three months ended March 31, 2021 was 18.5%. The effective tax rate 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 months ended March 31, 2020 was (17.2)%. The effective tax rate differed from the statutory rate of 21% primarily due to the effect of the DRD and tax credits.

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.


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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)

Tax Regulatory Matters

For the tax years 2019 through 2021, the Company participated in the Internal Revenue Service ("IRS") Compliance Assurance Process ("CAP"), which is a continuous audit program provided by the IRS. For the 2019 and 2020 tax years, the Company was in the Compliance Maintenance Bridge ("Bridge") phase of CAP. In the Bridge phase, the IRS did not conduct any review or provide any letters of assurance for those tax years.

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 on April 1, 2021 and expires on April 1, 2026, 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 months ended March 31, 2021. The Company earned $1 interest income for the three months ended March 31, 2021. The Company incurred immaterial interest expense and earned immaterial interest income for the three months ended March 31, 2020. As of March 31, 2021, VRIAC had an outstanding receivable of $170, and VIPS had an outstanding payable of $23. As of December 31, 2020, VRIAC had an outstanding receivable of $653 and VIPS had a $7 outstanding payable from/to Voya Financial, Inc. under the reciprocal loan agreement.

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, 2021, the Company had off-balance sheet commitments to acquire mortgage loans of $53 and purchase limited partnerships and private placement investments of $530.

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.


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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 components of the fair value of the restricted assets were as follows as of the dates indicated:


	March 31, 2021		December 31, 2020
Fixed maturity collateral pledged to FHLB(1)	$	1,073	$	997
FHLB restricted stock(2)	45		44
Other fixed maturities-state deposits	14		14
Cash and cash equivalents	4		4
Securities pledged(3)	613		220
Total restricted assets	$	1,749	$	1,279

(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 $476 and $143 as of March 31, 2021 and December 31, 2020, respectively. In addition, as of March 31, 2021 and December 31, 2020, the Company delivered securities as collateral of $137 and $77, 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, 2021 and December 31, 2020, the Company had $875 and $795, 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, 2021 and December 31, 2020, assets with a market value of approximately $1,073 and $997, 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.

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.

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


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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)

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, 2021, the Company estimates the aggregate range of reasonably possible losses, in excess of any amounts accrued for these matters as of such date, as 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.

Finally, industry wide, life insurers continue to be exposed to class action litigation related to the cost of insurance rates and periodic deductions from cash value. Common allegations include that insurance companies have breached the terms of their universal life insurance policies by establishing or increasing the cost of insurance rates using cost factors not permitted by the contract, thereby unjustly enriching themselves. This litigation is generally known as cost of insurance litigation.

10. Related Party Transactions

Operating Agreements

The Company has operating agreements whereby the Company provides or receives services from affiliated entities. For the three months ended March 31, 2021, revenues with affiliated entities related to these agreements were $23. For the three months ended March 31, 2020, revenues with affiliated entities related to these agreements were $23. For the three months ended March 31, 2021, expenses with affiliated entities related to the aforementioned operating agreements, as amended, were $164. For the three months ended March 31, 2020, expenses with affiliated entities related to the aforementioned operating agreements, as amended, were $154.

Reinsurance Agreements

Effective December 31, 2012, the Company entered into an automatic reinsurance agreement with SLDI which was an affiliate prior to January 4, 2021, to manage the reserve and capital requirements in connection with a portion of its deferred annuities business. Under the terms of the agreement, the Company reinsured to SLDI, on an indemnity reinsurance basis, a quota share of its liabilities on certain contracts. On March 26, 2020, this agreement was recaptured and resulted in a loss of $20 that was recorded in the first quarter of 2020.


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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 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 months ended March 31, 2021 and 2020 and financial condition as of March 31, 2021 and December 31, 2020. 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, 2020 ("Annual Report on Form 10-K").

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

Overview

VRIAC is a stock life insurance company domiciled in the State of Connecticut. VRIAC and its wholly owned subsidiaries (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.

Effective as of March 1, 2021, Voya Retirement Insurance and Annuity Company acquired 49.9% of the issued and outstanding common stock of Voya Special Investments, Inc. from Voya Financial, Inc. The investment has been accounted for as an equity method investment and recognized within Other investments in Consolidated Balance Sheets. Also, effective as of March 1, 2021, the Company acquired $80 of SLD issued surplus notes and $73 of Resolution (Life U.S. Intermediate Holdings Ltd.) issued preferred shares from affiliated entities, which were received in connection with the Individual Life Transaction.

On January 4, 2021, VRIAC's ultimate parent, Voya Financial Inc. ("Voya Financial"), consummated a series of transactions pursuant to a Master Transaction Agreement (the “Resolution MTA”) entered into on December 18, 2019 with Resolution Life U.S. Holdings Inc., a Delaware corporation (“Resolution Life US”), pursuant to which Resolution Life US acquired all of the shares of the capital stock of Security Life of Denver Company ("SLD") and Security Life of Denver International Limited ("SLDI"), including the capital stock of several subsidiaries of SLD and SLDI.

Furthermore, upon closing of the Individual Life Transaction on January 4, 2021, we have $63 million of pre-tax deferred intangibles associated with the divested businesses. The deferred intangibles will consist of (1) existing DAC and VOBA


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balances for the portion of the transaction that involves a sale through reinsurance and (2) deferred Cost or reinsurance ("COR") established as a result of the Individual Life transaction. The aggregate deferred intangibles will be amortized as a charge to earnings over the life of the underlying policies. Additionally, for the portion of the reinsurance transactions that involve policies that do not meet risk transfer, a deposit asset was established in the amount of $1.5 billion on a pre-tax basis. This compares to liabilities related to Contract owner account balances that currently exist for the related underlying policies.

On June 1, 2018, Voya Financial consummated a series of transactions (collectively, the "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 the 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.

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. The inputs into our estimates and assumptions consider the economic implications of COVID-19 on our critical and significant accounting estimates. Those estimates are inherently subject to change and actual results could differ from those estimates, and the differences may be material to the accompanying Condensed Consolidated Financial Statements.

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.


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Assumptions and Periodic Review

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

During the three months ended March 31, 2021 and as a result of the close of the Individual Life transaction, we have reviewed our blocks of business to determine recoverability of DAC, VOBA and other intangibles. This review, referred to as loss recognition testing, has resulted in the write down of DAC/VOBA of $2 million and increase in reserves of $216 million in our divested businesses, The loss recognition was recorded in the Consolidated Statements of Operations for the quarter ended March 31, 2021.

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.

Recent Developments

All statements in this section, other than statements of historical fact, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. For a discussion of factors that could cause actual results, performance, or events to differ from those discussed in any forward-looking statement, including in a material manner, see “Note Concerning Forward-Looking Statements” in this Quarterly Report on Form 10-Q.

COVID-19 and its Effect on the Global Economy

COVID-19, the disease caused by the novel coronavirus, has had a significant adverse effect on the global economy since March of 2020. Even though the pace of vaccinations are increasing in certain countries, including the United States, the disease continues to spread widely across the United States and in many countries throughout the world. The persistence of new infections, including the introduction of new variants that may decrease the effectiveness of vaccines, has slowed the reopening of the U.S. economy and, even in regions where restrictions have largely been lifted, economic activity has been slow to recover. Longer-term, the economic outlook is uncertain, but may depend in significant part on progress with respect to effective therapies to treat COVID-19 or the approval of additional vaccines and the pace at which they are administered globally.

Effect on VRIAC - Financial Condition, Capital and Liquidity

Because both public health and economic circumstances are changing so rapidly at present, it is impossible to predict how COVID-19 will affect VRIAC’s future financial condition. Absent a further significant and prolonged market shock, however, we do not anticipate a material effect on our balance sheet or liquidity. Our capital levels remain strong and significantly above our targets.

Effect on VRIAC - Results of Operations

Predicting with accuracy the consequences of COVID-19 on our results of operations is impossible. Based on current information, however, we believe that the most significant effects of adverse economic conditions will be on our fee-based income, with net investment income experiencing milder effects. Underwriting income, which will principally be affected by increases to mortality and morbidity due to the disease, could also face significant declines, particularly under severe epidemiological scenarios.

We've experienced pressure on earnings, driven by equity market volatility as well as lower interest rates, with effects weighted more heavily towards our full-service corporate markets business and less on our recordkeeping business. Longer-term effects will depend significantly on equity market performance and prevailing interest rate levels, as well as the magnitude and duration of elevated unemployment levels. We believe that expense reductions and other management actions would be available to offset a portion of any impact.


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Results of Operations


($ in millions)	Three Months Ended March 31,
	2021		2020		Change
Revenues:
Net investment income	$	489	$	439	$	50
Fee income	259		222		37
Premiums	(2,447)		5		(2,452)
Broker-dealer commission revenue	1		1		—
Net realized capital gains (losses):
Total impairments	—		(7)		7


Other net realized capital gains (losses)	440		(85)		525
Total net realized capital gains (losses)	440		(92)		532
Other revenue	7		(1)		8
Total revenues	(1,251)		574		(1,825)
Benefits and expenses:
Interest credited and other benefits to contract owners/policyholders	(2,056)		209		(2,265)
Operating expenses	285		298		(13)
Broker-dealer commission expense	1		1		—
Net amortization of Deferred policy acquisition costs and Value of business acquired	49		37		12


Total benefits and expenses	(1,721)		545		(2,266)
Income (loss) before income taxes	470		29		441
Income tax expense (benefit)	87		(5)		92
Net income (loss)	$	383	$	34	$	349

Three Months Ended March 31, 2021 compared to Three Months Ended March 31, 2020

Revenues

Net investment income increased by $50 million from $439 million to $489 million primarily due to:

•increased limited partnership income driven by a valuation increase due to a reduction in discount rates; and

•higher income due to Private Equity Funds which generated strong returns from the continued favorable market environment.

Fee income increased $37 million from $222 million to $259 million primarily due to:

•an increase in separate account and institutional/mutual fund assets under management driven by equity market performance.

Premiums decreased by $2,452 million from $5 million to and unfavorable $2,447 million primarily due to:

•the ceding of the Pension Risk Transfer (PRT) and annuity business to Resolution as part of the Life Transaction.

Total net realized capital gains (losses) changed by $532 million from a loss of $92 million to a gain of $440 million primarily due to:

•favorable changes in fixed maturities, including securities pledged primarily due to reinsurance agreements related to the Life Transaction and normal portfolio management activity;


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•favorable changes in the embedded derivatives on product guarantees primarily due to interest rate movements, partially offset by the impact of nonperformance risk in the current period compared to prior period;

•favorable changes within commercial mortgage loans due to the sale of mortgage loans to Resolution as part of the Life Transaction and a favorable change in the CECL allowance, which was driven by improvement in the CRE price index forecast and improved borrower quality (probability of default); and

•favorable changes in equity securities due to trading gains on Coso Geothermal common stock offset by lower market values on the remaining holdings at Q1 2021. The prior year was impacted by negative valuation changes on Interserve common and preferred stock holdings.

These increases were partially offset by:

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

•unfavorable changes in derivatives - VIM (including embedded derivatives) due to interest rate changes.

Benefits and Expenses

Interest credited and other benefits to contract owners/policyholders decreased by $2,265 million from $209 million to $2,056 million primarily due to:

•the ceding of the Pension Risk Transfer (PRT) and annuity business to Resolution as part of the Life Transaction.

Net amortization of DAC and VOBA increased by $12 million from $37 million to $49 million primarily due to:

•favorable DAC/VOBA unlocking in the current period compared to unfavorable unlocking in the prior period due to separate account performance. This decrease was partially offset by lower favorable DAC/VOBA unlocking in the current period due to lower transfers from variable investment options to fixed investment options; and

•DAC/VOBA balance within the Annuities business being written down to zero as the block did not pass Loss Recognition Testing (LRT).

Income tax expense (benefit) changed by $92 million from a benefit of $5 million to an expense of $87 million primarily due to:

•an increase in income before income taxes.

Net income increased by $349 million from a net income of $34 million to $383 million primarily due to:

•lower Interest credited and other benefits to contract owners/policyholders;

•higher Net realized capital gains;

•higher Net investment income; and

•higher Fee income.

These favorable changes were partially offset by:

•lower Premiums;

•higher Income tax expense; and

•higher Net amortization of DAC and VOBA.

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.


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Portfolio Composition

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


	March 31, 2021				December 31, 2020
($ in millions)	Carrying Value		% of Total		Carrying Value		% of Total
Fixed maturities, available-for-sale, excluding securities pledged	$	24,058	75.4	%	$	28,043	77.9	%
Fixed maturities, at fair value using the fair value option	1,513		4.7	%	1,730		4.8	%
Equity securities, at fair value	234		0.7	%	116		0.3	%
Short-term investments(1)	16		0.1	%	17		—	%
Mortgage loans on real estate	4,151		13.0	%	4,627		12.9	%

Policy loans	183		0.6	%	187		0.5	%
Limited partnerships/corporations	847		2.7	%	815		2.3	%
Derivatives	170		0.5	%	145		0.4	%
Securities pledged	613		1.9	%	220		0.7	%
Other investments	125		0.4	%	43		0.2	%
Total investments	$	31,910	100.0	%	$	35,943	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, 2021
($ in millions)	Amortized Cost		% of Total		Fair Value		% of Total
Fixed maturities:
U.S. Treasuries	$	535	2.2	%	$	651	2.5	%
U.S. Government agencies and authorities	18		0.1	%	18		0.1	%
State, municipalities, and political subdivisions	630		2.6	%	696		2.7	%
U.S. corporate public securities	7,113		29.3	%	7,888		30.1	%
U.S. corporate private securities	3,498		14.4	%	3,780		14.4	%
Foreign corporate public securities and foreign governments(1)	2,302		9.5	%	2,520		9.6	%
Foreign corporate private securities(1)	2,649		10.9	%	2,840		10.8	%
Residential mortgage-backed securities	3,604		14.8	%	3,724		14.2	%
Commercial mortgage-backed securities	2,529		10.4	%	2,638		10.1	%
Other asset-backed securities	1,412		5.8	%	1,429		5.5	%
Total fixed maturities, including securities pledged	$	24,290	100.0	%	$	26,184	100.0	%

(1) Primarily U.S. dollar denominated.


	December 31, 2020
($ in millions)	Amortized Cost		% of Total		Fair Value		% of Total
Fixed maturities:
U.S. Treasuries	$	535	2.0	%	$	721	2.4	%
U.S. Government agencies and authorities	18		0.1	%	19		0.1	%
State, municipalities, and political subdivisions	698		2.6	%	814		2.7	%
U.S. corporate public securities	7,632		28.7	%	9,156		30.6	%
U.S. corporate private securities	3,870		14.6	%	4,379		14.6	%
Foreign corporate public securities and foreign governments(1)	2,539		9.6	%	2,951		9.8	%
Foreign corporate private securities(1)	2,991		11.3	%	3,303		11.0	%
Residential mortgage-backed securities	4,071		15.3	%	4,237		14.1	%
Commercial mortgage-backed securities	2,712		10.2	%	2,893		9.6	%
Other asset-backed securities	1,500		5.6	%	1,520		5.1	%
Total fixed maturities, including securities pledged	$	26,566	100.0	%	$	29,993	100.0	%

(1) Primarily U.S. dollar denominated.

As of March 31, 2021, the average duration of our fixed maturities portfolio, including securities pledged, is between 7.0 and 7.5 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, 2021
NAIC Quality Designation	1			2			3			4			5			6			Total Fair Value
U.S. Treasuries	$	651		$	—		$	—		$	—		$	—		$	—		$	651
U.S. Government agencies and authorities	18			—			—			—			—			—			18
State, municipalities and political subdivisions	633			62			1			—			—			—			696
U.S. corporate public securities	2,602			4,885			356			34			11			—			7,888
U.S. corporate private securities	1,226			2,136			333			76			9			—			3,780
Foreign corporate public securities and foreign governments(1)	831			1,580			102			7			—			—			2,520
Foreign corporate private securities(1)	208			2,326			152			154			—			—			2,840
Residential mortgage-backed securities	3,421			231			42			—			12			18			3,724
Commercial mortgage-backed securities	2,373			212			43			10			—			—			2,638
Other asset-backed securities	1,280			130			4			7			8			—			1,429
Total fixed maturities	$	13,243		$	11,562		$	1,033		$	288		$	40		$	18		$	26,184
% of Fair Value	50.5		%	44.2		%	3.9		%	1.1		%	0.2		%	0.1		%	100.0		%
(1) Primarily U.S. dollar denominated.

($ in millions)	December 31, 2020
NAIC Quality Designation	1			2			3			4			5			6			Total Fair Value
U.S. Treasuries	$	721		$	—		$	—		$	—		$	—		$	—		$	721
U.S. Government agencies and authorities	19			—			—			—			—			—			19
State, municipalities and political subdivisions	750			63			1			—			—			—			814
U.S. corporate public securities	3,198			5,468			450			35			5			—			9,156
U.S. corporate private securities	1,528			2,472			285			85			9			—			4,379
Foreign corporate public securities and foreign governments(1)	1,108			1,704			128			11			—			—			2,951
Foreign corporate private securities(1)	276			2,763			94			170			—			—			3,303
Residential mortgage-backed securities	3,947			188			68			—			13			21			4,237
Commercial mortgage-backed securities	2,648			203			38			4			—			—			2,893
Other asset-backed securities	1,353			147			5			7			8			—			1,520
Total fixed maturities	$	15,548		$	13,008		$	1,069		$	312		$	35		$	21		$	29,993
% of Fair Value	51.8		%	43.4		%	3.6		%	1.0		%	0.1		%	0.1		%	100.0		%
(1) Primarily U.S. dollar denominated.


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The following tables present credit quality of fixed maturities, including securities pledged, using ARO ratings as of the dates

indicated:


($ in millions)	March 31, 2021
ARO Quality Ratings	AAA			AA			A			BBB			BB and Below			Total Fair Value
U.S. Treasuries	$	651		$	—		$	—		$	—		$	—		$	651
U.S. Government agencies and authorities	18			—			—			—			—			18
State, municipalities and political subdivisions	46			399			183			67			1			696
U.S. corporate public securities	49			426			2,453			4,594			366			7,888
U.S. corporate private securities	64			75			1,026			2,275			340			3,780
Foreign corporate public securities and foreign governments(1)	9			200			696			1,492			123			2,520
Foreign corporate private securities(1)	—			30			224			2,332			254			2,840
Residential mortgage-backed securities	2,531			231			101			278			583			3,724
Commercial mortgage-backed securities	1,061			298			522			664			93			2,638
Other asset-backed securities	268			360			638			128			35			1,429
Total fixed maturities	$	4,697		$	2,019		$	5,843		$	11,830		$	1,795		$26,184
% of Fair Value	17.9		%	7.7		%	22.3		%	45.2		%	6.9		%	100.0		%
(1) Primarily U.S. dollar denominated.

($ in millions)	December 31, 2020
ARO Quality Ratings	AAA			AA			A			BBB			BB and Below			Total Fair Value
U.S. Treasuries	$	721		$	—		$	—		$	—		$	—		$	721
U.S. Government agencies and authorities	19			—			—			—			—			19
State, municipalities and political subdivisions	56			489			201			67			1			814
U.S. corporate public securities	80			469			3,044			5,118			445			9,156
U.S. corporate private securities	65			105			1,384			2,478			347			4,379
Foreign corporate public securities and foreign governments(1)	8			283			914			1,586			160			2,951
Foreign corporate private securities(1)	—			30			276			2,760			237			3,303
Residential mortgage-backed securities	3,006			266			115			215			635			4,237
Commercial mortgage-backed securities	1,128			333			589			724			119			2,893
Other asset-backed securities	297			361			680			146			36			1,520
Total fixed maturities	$	5,380		$	2,336		$	7,203		$	13,094		$	1,980		$	29,993
% of Fair Value	17.9		%	7.8		%	24.0		%	43.7		%	6.6		%	100.0		%
(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, increased $111 million from $107 million to $218 million for the three months ended March 31, 2021. A modest steepening of the yield curve, that included higher interest rates in the long-end, increased unrealized losses on a small portion of the portfolio. Tighter spreads on the quarter and historically low interest rates continue to limit the overall amount of unrealized losses.

As of March 31, 2021, we held two fixed maturity securities with unrealized capital loss in excess of $10 million. As of March 31, 2021, the unrealized capital loss on these fixed maturity securities equaled $26 million, or 11.7% of the total unrealized losses. As of December 31, 2020, we held three fixed maturity securities with unrealized capital loss in excess of $10 million.

As of March 31, 2021, we had $1.6 billion of energy sector fixed maturity securities, constituting 6.0% of the total fixed maturities portfolio, with gross unrealized capital losses of $20 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 $11 million. As of March 31, 2021, our fixed maturity exposure to the energy sector is comprised of 81.1% investment grade securities.

As of December 31, 2020, we held $1.8 billion of energy sector fixed maturity securities, constituting 6.0% of the total fixed maturities portfolio, with gross unrealized capital losses of $22 million, including zero 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 million. As of December 31, 2020, our fixed maturity exposure to the energy sector is comprised of 83.3% 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 tables present our residential mortgage-backed securities as of March 31, 2021 and December 31, 2020:


	March 31, 2021
($ in millions)	Amortized Cost		Gross Unrealized Capital Gains		Gross Unrealized Capital Losses		Embedded Derivatives		Fair Value
Prime Agency	$	1,942	$	77	$	1	$	5	$	2,023
Prime Non-Agency	1,614		42		13		1		1,644
Alt-A	36		5		1		3		43
Sub-Prime(1)	27		4		—		—		31
Total RMBS	$	3,619	$	128	$	15	$	9	$	3,741
(1) Includes subprime other asset backed securities.
	December 31, 2020
($ in millions)	Amortized Cost		Gross Unrealized Capital Gains		Gross Unrealized Capital Losses		Embedded Derivatives		Fair Value
Prime Agency	$	2,286	$	110	$	2	$	6	$	2,400
Prime Non-Agency	1,732		55		12		1		1,776
Alt-A	39		5		1		4		47
Sub-Prime(1)	28		4		—		—		32
Total RMBS	$	4,085	$	174	$	15	$	11	$	4,255
(1) Includes subprime other asset backed securities.


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Commercial Mortgage-backed Securities

The following tables present our commercial mortgage-backed securities as of March 31, 2021 and December 31, 2020:


	March 31, 2021
($ in millions)	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
2014 and prior	$	446	$	489	$	54	$	56	$	97	$	102	$	79	$	79	$	28	$	27	$	704	$	753
2015	140		150		70		75		34		34		53		54		15		15		312		328
2016	23		24		17		18		22		24		25		26		—		—		87		92
2017	54		57		27		27		54		54		41		42		27		27		203		207
2018	72		79		31		31		87		88		84		86		13		14		287		298
2019	138		153		41		42		138		139		232		234		9		9		558		577
2020	76		77		26		27		66		67		122		123		—		—		290		294
2021	32		32		21		22		15		15		20		20		—		—		88		89
Total CMBS	$	981	$	1,061	$	287	$	298	$	513	$	523	$	656	$	664	$	92	$	92	$	2,529	$	2,638

	December 31, 2020
($ in millions)	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
2014 and prior	$	448	$	525	$	93	$	95	$	109	$	113	$	80	$	81	$	41	$	41	$	771	$	855
2015	162		187		89		96		41		42		72		74		21		21		385		420
2016	30		33		17		18		29		32		25		25		—		—		101		108
2017	56		63		31		31		61		61		49		50		35		35		232		240
2018	74		86		26		26		141		144		101		100		13		14		355		370
2019	138		162		39		39		133		130		269		274		8		8		587		613
2020	70		72		27		28		66		67		118		120		—		—		281		287
Total CMBS	$	978	$	1,128	$	322	$	333	$	580	$	589	$	714	$	724	$	118	$	119	$	2,712	$	2,893

As of March 31, 2021, 89.5% and 9.2% of CMBS investments were designated as NAIC-1 and NAIC-2, respectively. As of December 31, 2020, 91.5% and 7.0% of CMBS investments were designated as NAIC-1 and NAIC-2, respectively.


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Other Asset-backed Securities

The following tables present our other asset-backed securities as of March 31, 2021 and December 31, 2020:


	March 31, 2021
($ in millions)	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
Collateralized Obligation	$	215	$	216	$	273	$	274	$	540	$	541	$	8	$	8	$	21	$	18	$	1,057	$	1,057
Auto-Loans	—		—		—		1		6		6		—		—		—		—		6		7
Student Loans	15		16		75		77		11		12		1		2		—		—		102		107

Other Loans	35		36		8		8		76		79		112		118		—		—		231		241
Total Other ABS(1)	$	265	$	268	$	356	$	360	$	633	$	638	$	121	$	128	$	21	$	18	$	1,396	$	1,412
(1) Excludes subprime other asset backed securities
	December 31, 2020
($ in millions)	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
Collateralized Obligation	$	224	$	223	$	258	$	259	$	556	$	554	$	8	$	8	$	22	$	19	$	1,068	$	1,063
Auto-Loans	1		1		10		10		7		7		—		—		—		—		18		18
Student Loans	30		31		80		84		32		33		1		2		—		—		143		150

Other Loans	37		41		9		9		81		85		129		136		—		—		256		271
Total Other ABS(1)	$	292	$	296	$	357	$	362	$	676	$	679	$	138	$	146	$	22	$	19	$	1,485	$	1,502
(1) Excludes subprime other asset backed securities

As of March 31, 2021, 89.9% and 8.1% of Other ABS investments were designated as NAIC-1 and NAIC-2, respectively. As of December 31, 2020, 88.9% and 9.8% of Other ABS investments were designated as NAIC-1 and NAIC-2, respectively.

Mortgage Loans on Real Estate

As of March 31, 2021, there was one commercial mortgage loan with a pre and post carrying value of $4 and $3 respectively, for which repayment is expected to be provided substantially through the operation or sale of collateral and the borrower is experiencing financial difficulty. The collateral is Office/Retail space and Hotel. The expected credit loss was based on the fair value of the underlying collateral and there was a prior period write off against the allowance of $1 as of December 31, 2020.

As of March 31, 2021, our mortgage loans on real estate portfolio had a weighted average DSC of 2.1 times and a weighted average LTV ratio of 46.8%. As of December 31, 2020, our mortgage loans on real estate portfolio had a weighted average DSC of 2.2 times and a weighted average LTV ratio of 46.0%. While still heavily impacted by COVID-19, the Commercial Mortgage Loan portfolio allowance decreased during the quarter as certain sectors of the economy resumed operations, albeit at lower than pre-pandemic levels. We continue to observe distress in the hotel sector.

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.

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 impaired.


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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 impairments.

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.

As of March 31, 2021, the Company's total European exposure had an amortized cost and fair value of $2,445 million and $2,625 million, respectively. European exposure with a primary focus on Greece, Ireland, Italy, Portugal and Spain (which we refer to as "peripheral Europe") amounts to $206 million, which includes non-financial institutions exposure in Ireland of $46 million, in Italy of $92 million, and in Spain of $51 million. We also had financial institutions exposure in Italy of $5 million and in Spain of $12 million. We did not have any exposure to Greece or Portugal.

Among the remaining $2,419 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, 2021, our non-peripheral sovereign exposure was $67 million, which consisted of fixed maturities. We also had $407 million in net exposure to non-peripheral financial institutions with a concentration in France of $82 million, The Netherlands of $41 million, Switzerland of $73 million and the United Kingdom of $184 million. The balance of $1,945 million was invested across non-peripheral, non-financial institutions.

Some of the major country level exposures were in the United Kingdom of $1,302 million, in The Netherlands of $194 million, in Belgium of $119 million, in France of $228 million, in Germany of $147 million, in Switzerland of $181 million and in Russia of $48 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.

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 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


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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, 2021, VRIAC had an outstanding receivable of $170 million, and VIPS had a $23 million outstanding payable. As of December 31, 2020, we had an outstanding receivable of $653 million and VIPS had a $7 million outstanding payable from/to Voya Financial, Inc. under the reciprocal loan 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 48.9% 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, 2021, VRIAC had securities lending collateral assets of $447 million, which represents approximately 0.4% of its general account statutory admitted assets. As of December 31, 2020, VRIAC had securities lending collateral assets of $74 million, which represents approximately 0.1% of its general account statutory admitted assets.

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

Capital Contributions and Dividends

During the three months ended March 31, 2021, VRIAC received a $323 million capital contribution from its Parent. During the three months ended March 31, 2020, VRIAC did not receive any capital contributions from its Parent.

During the three months ended March 31, 2021, VRIAC paid an ordinary dividend to its Parent in the aggregate amount of $78 million. During the three months ended March 31, 2020, VRIAC did not pay a dividend or return of capital on its common stock to its Parent.

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


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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

Fitch

Moody's

S&P

Voya Retirement Insurance and Annuity Company

Financial Strength Rating

A
(3 of 9)

A2
(3 of 9)

A+
(3 of 9)

Rating Agency

Financial Strength Rating Scale

Fitch(1)

"AAA" to "C"

Moody's(2)

"Aaa" to "C"

S&P(3)

"AAA" to "R"

(1) 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)."

(2) 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)."

(3) 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 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. On April 1, 2020, Moody’s changed its outlook for the U.S. life insurance sector to negative from stable. In December 2019, Fitch revised its outlook on the life insurance sector to negative from stable. Subsequently, in March of 2020, Fitch revised its rating outlook for the U.S. life insurance sector to negative from stable.

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,


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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

We have obligations for the return of non-cash collateral under an amendment to our securities lending program. Non-cash collateral received in connection with the securities lending program may not be sold or re-pledged by our lending agent, except in the event of default, and is not reflected on our 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.

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, 2021 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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, 2020 (the "Annual Report on Form 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 the following page.


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Voya Retirement Insurance and Annuity Company ("VRIAC")


Exhibit Index
Exhibit Number						Description of Exhibit





































































31.1+						Certificate of Michael Katz 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 Michael Katz 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 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 17, 2021			Voya Retirement Insurance and Annuity Company
(Date)			(Registrant)

	By:	/s/	Michael Katz
			Michael Katz

			Chief Financial Officer
			(Duly Authorized Officer and Principal Financial Officer)


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