ING Direct 2004 Annual Report Download - page 178

INTEREST-RATE REBATES
Profit sharing for group life insurance business. A rebate
granted to policyholders based on the discounted value of the
difference between the interest rate used for calculating the
premiums and the expected yield on investment. The profit
sharing is granted by means of a premium discount related to
the yield on government bonds.
IN THE MONEY
A call option is said to be in the money if the exercise price is
lower than the price of the underlying value; a put option is
said to be in the money if the exercise price is higher than the
price of the underlying value.
INVESTMENT PORTFOLIO
The investment portfolio comprises those assets which are
intended for use on a continuing basis, and have been
identified as such. These investments are held in order to
cover the insurance provisions and to manage interest rate,
capital and liquidity risks.
IRREVOCABLE FACILITY
Irrevocable facilities mainly constitute unused portions of
irrevocable credit facilities granted to corporate clients and
commitments made to purchase securities to be issued by
governments and private issuers.
IRREVOCABLE LETTERS OF CREDIT
An irrevocable letter of credit concerns an obligation on
behalf of a client to, within certain conditions, pay an amount
of money under submission of a specific document or to
accept a bill of exchange.
An irrevocable letter of credit cannot be cancelled or adjusted
by the bank that has granted it during the duration of the
agreement unless all those concerned agree.
JOINT VENTURE
A contractual arrangement whereby two or more parties
undertake an economic activity which is subject to joint
control.
MONETARY ASSETS AND LIABILITIES
Monetary assets and liabilities are assets and liabilities whose
amounts are fixed in terms of units of currency by contract or
otherwise. Examples are cash, short or long-term accounts,
notes receivable in cash and notes payable in cash.
NET ASSET VALUE
The net asset value is used in the equity method of
accounting. The initial net asset value of the investment is
determined by the fair value of the assets and liabilities of the
investee. After the initial valuation of assets and liabilities
of the investee at fair value, the assets and liabilities of the
investee are valued in accordance with the accounting
principles of the investor. The income statement reflects the
investor’s share in the results of operations of the investee.
176 ING Group Annual Report 2004
GENERAL PROVISION
A general provision is a liability carried in the balance sheet
for a present obligation arising from past events, the
settlement of which is expected to result in an outflow from
the company of resources embodying economic benefits,
whereas the timing or amount of the outflow is uncertain.
The settlement, which will take place in the future, should be
reliably measurable. The settlement can be enforced by law or
the event creates valid expectations in other parties that the
company will discharge the obligation.
GOODWILL
Goodwill is the difference between the cost of the acquisition
and the net asset value of a participating interest. The net
asset value is calculated according to the fair value of the
assets and liabilities of the participating interest at the
moment of acquisition.
GROSS PREMIUMS WRITTEN
Total premiums (whether or not earned) for insurance
contracts written or assumed (including deposits for
investment contracts with limited or no life contingencies
written) during a specific period, without deduction for
premiums ceded.
GROUP COMPANY
Corporations, i.e. public limited liability companies, private
limited liability companies, general partnerships or limited
partnerships, that form an organisational and economic entity
and are controlled by ING Group.
HEDGE ACCOUNTING
Transactions qualify as hedges if they are identified as such
and there is a negative correlation between the hedging
results and the results of the positions being hedged.
Hedging instruments are accounted for in accordance
with the accounting principles of the hedged item.
IMPAIRMENT
An impairment is a permanent diminution in value, i.e. the
recoverable amount is less than the carrying amount of
the asset. In such circumstances a write-down of the asset
is necessary.
INTEREST BEARING INSTRUMENT
An interest bearing instrument is a financial asset or a liability
for which a time-proportionate compensation is paid or
received, in relation to a notional amount.
INTEREST-RATE ARBITRAGE
Taking advantage of interest-rate differences between
separate markets.
FINANCIAL GLOSSARY
(continued)
2.4
GENERAL
INFORMATION