ING Direct 2011 Annual Report Download - page 147

The deferred profit sharing amount on unrealised revaluation is included in Provision for (deferred) profit sharing and rebates and amounts
to EUR 3,721 million as at 31 December 2011 (2010: EUR 1,706 million).
Changes in life insurance provisions
Provision
net of reinsurance
(excluding provision for
life insurance for risk
of policyholders)
Provision for life
insurance for risk of
policyholders
(net of reinsurance) Reinsurance contracts
Life insurance
provisions
2011 2010 2011 2010 2011 2010 2011 2010
Opening balance 135,314 121,491 114,603 99,299 5,685 5,376 255,602 226,166
Changes in the composition
of the group –495 –24 –267 –2 –2 –764 –26
134,819 121,467 114,336 99,297 5,683 5,376 254,838 226,140
Current year provisions 13,774 11, 8 43 7,623 7, 50 0 636 415 22,033 19,758
Change in deferred profit
sharing liability 1,963 1,422 1,963 1,422
Prior year provisions
– benefit payments
to policyholders –13,872 –11,938 –12,548 –10,681 –700 –557 –27,120 –23,176
– interest accrual and changes
in fair value of liabilities 6,302 4,884 35 35 6,337 4,919
– valuation changes for risk
of policyholders –1,190 10,468 –1,190 10,468
– effect of changes in discount
rateassumptions 5 5
– effect of changes in
other assumptions 635 356 –17 21 –2 6616 383
–6,935 –6,693 –13,755 –192 –667 –516 –21,357 –7,401
Exchange rate differences 3,087 7,203 2,797 8,488 185 374 6,069 16,065
Other changes 160 72 –1,514 –490 –63 36 –1,417 –382
Closing balance 146,868 135,314 109,487 114,603 5,774 5,685 262,129 255,602
Where discounting is used in the calculation of life insurance provisions, the rate is within the range 2.8% to 5.5% (2010: 2.3% to 4.7%)
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’.
In 2011, Effect of changes in other assumptions includes EUR 611 million relating to the assumption review for the Insurance US Closed
Block Variable Annuity (VA) business. Reference is made to Note 43 ‘Underwriting expenditure’.
In 2011, Other changes with regard to Provision for life insurance for risk of policyholders (net of reinsurance) include the transfers of
certain insurance contracts outside ING.
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.
ING transferred its US group reinsurance business to Reinsurance Group of America Inc. in 2010 by means of a reinsurance agreement.
Thisbusiness continues to be included in Life insurance provisions. The related asset from the reinsurance contract is recognised under
Reinsurance contracts.
To the extent that the assuming reinsurers are unable to meet their obligations, the Group is 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.
Notes to the consolidated annual accounts of ING Group continued
1 Who we are 2 Report of the Executive Board 3 Corporate governance 4 Consolidated annual accounts 5 Parent company annual accounts 6 Other information 7 Additional information
145ING Group Annual Report 2011