ING Direct 2009 Annual Report Download - page 139

Changes in life insurance provisions
Provision net of reinsurance Reinsurance contracts
Insurance and
investment contracts
2009 2008 2009 2008 2009 2008
Opening balance 206,812 227,4 0 0 5,582 5,300 212,394 232,700
Changes in the composition of the group –2,864 –15,050 –65 –25 –2,929 –15,075
203,948 212,350 5,517 5,275 209,465 217,625
Current year provisions 21,598 33,078 574 884 22,172 33,962
Change in deferred profit sharing liability 1,476 –1,169 1,476 –1,169
Prior year provisions:
– benefit payments to policyholders –21,191 –24,626 –452 –719 –21,643 –25,345
– interest accrual 4,311 4,059 39 –15 4,350 4,044
– valuation changes for risk of policyholders 16,652 –32,408 16,652 –32,408
– effect of changes in discount rate assumptions –2 –1 –2 –1
– effect of changes in other assumptions 97 –32 –2 95 –32
–133 –53,008 –415 –734 –548 –53,742
Exchange rate differences –3,275 9,918 –124 259 –3,399 10,177
Other changes –2,972 5,643 –177 –102 –3,149 5,541
Closing balance 220,642 206,812 5,375 5,582 226,017 212,394
Changes in the composition of the group in 2009 relate mainly to the sale of the annuity and mortgage business of Chile. In 2008 it relates
mainly to the sale of ING Life Taiwan. Reference is made to Note 30 ‘Companies acquired and companies disposed’.
Where discounting is used in the calculation of life insurance provisions, the rate is within the range 2.8% to 5.8% (2008: 3.1% to 6.0%)
based on weighted averages.
Insurance provisions include a provision for the estimated cost of the agreement with regard to unit-linked policies. For more information
reference is made to Note 31 ‘Legal proceedings’.
ING transferred part of its life insurance business to Scottish Re in 2004 by means of a co-insurance contract. This business continues to be
included in Life insurance provisions. The related asset from the co-insurance contract is recognised under Reinsurance contracts. On 23
January 2009, Hannover Re and Scottish Re announced that Hannover Re has agreed to assume the ING individual life reinsurance business
originally transferred to Scottish Re in 2004.
To the extent that the assuming reinsurers are unable to meet their obligations, the Group remains liable to its policyholders for the portion
reinsured. Consequently, provisions are made for receivables on reinsurance contracts which are deemed uncollectible. The life reinsurance
market is highly concentrated and, therefore, diversification of exposure is inherently difficult. To minimise its exposure to significant losses
from reinsurer insolvencies, the Group evaluates the financial condition of its reinsurers, monitors concentrations of credit risk arising from
similar geographical regions, activities or economic characteristics of the reinsurer and maintains collateral. Reference is also made to the ‘Risk
management’ section.
As at 31 December 2009, the total Reinsurance exposure, including Reinsurance contracts and Receivables from reinsurers (presented in Other
assets) amounted to EUR 6,049 million (2008: EUR 6,539 million) after the provision for uncollectible reinsurance of EUR 1 million (2008: nil).
2.1 Consolidated annual accounts
ING Group Annual Report 2009 137
Notes to the consolidated balance sheet of ING Group (continued)