ING Direct 2011 Annual Report Download - page 265

Risk management continued
ING Insurance Eurasia
Outstandings – Cover values including guarantees received
31 December 2010
Outstandings Mortgages Cash Guarantees Other
Total Credit
Covers
Investment Financial Institutions 22,023 194 194
Other 56,167 1 1
Lending Residential Mortgages 5,835 7,197 475 491 8,163
Financial Institutions Lending 260
Commercial Lending 2,910 352 352
Government Lending 326
Other
Reinsurance Financial Institutions 475 47 63 110
Other Financial Institutions 6,059 10 10
Total 94,055 7,5 49 47 475 759 8,830
The credit covers in the above table represent the sum of all existing covers, however excess cover amounts on specific assets cannot be
put in place for other assets without covers, or with a cover amount that is smaller than the underlying exposure. The valuation methods
for covers may vary per cover.
In comparison to 2010 figures, the overall cover amount remained largely unchanged. The increase in cash collateral is due to the data
quality improvements with regards to reinsurance exposures and bond repo positions in the Hong Kong life business. For residential
mortgage lending, the total loan amount decreased nearly 4%, while the total cover amount for residential mortgages decreased
approximately by 2%. The decrease was most notable in the category ‘other cover’ (which comprises of insurance policies received and
pledged securities), mainly due to a decrease in the number of covers and the average cover value. The guaranteed value of the Dutch
National Mortgage Guarantee scheme (NHG) is estimated to be EUR 1.6 billion. The estimated value of the guarantee can differ depending
on the number and amount of rejected NHG claims under the scheme (rejection of claims can occur in case the lending institution does
not fully comply with the NHG rules).
Loan-to-Value
The LTV ratio relates the total loan amount to the market value of the collateral. The market value is the registered value as adopted from
the valuation report of a qualified appraiser or valuer. For example, the LTV of portfolio invested in The Netherlands is based on foreclosure
value. When available, indexation is applied to revalue the collateral to the present value. In the LTV calculation the following property
covers are included: residential and industrial/commercial properties, land and applicable other fixed assets. All other covers are excluded.
In some countries residential mortgages are covered by governmental or commercial sponsors. For example the NHG (see previous section)
in the Netherlands guarantees the repayment of a loan in case of a forced property sale. These covered mortgages are included in the
calculation of the weighted average LTV. The ING Insurance Eurasia residential mortgage portfolio amounts to EUR 5.6 billion, making up
5% of the total ING Insurance Eurasia outstandings. The residential mortgage portfolio is for 97% concentrated in the Netherlands
(Nationale-Nederlanden). The average LTV ofthe Dutch residential mortgage portfolio amounts to 86%.
Problem loans
At 31 December 2011 EUR 65 million was classified as a problem loan (2010: EUR 73 million).
Past-due obligations
ING Insurance Eurasia continually measures its portfolio in terms of payment arrears. Particularly the retail residential portfolios are closely
monitored on a monthly basis to determine if there are any significant changes in the level of arrears. Generally, an obligation is considered
‘past-due’ if a payment of interest or principal is more than one day late. In practice, the first 15 days after an obligation becomes past due
are considered to be operational in nature for the retail loans and small businesses. After this period, letters are sent to the obligor reminding
the obligor of its (past due) payment obligations. If the arrear still exists after 60 days, the obligation is transferred to one of the departments
that deals with these problem loans.
Aging analysis (past due but not impaired): outstandings (1) (2)
2011 2010
Past due for 1–30 days 82 88
Past due for 31–60 days 24 28
Past due for 61–90 days 17 14
Total 123 130
(1) Based on residential mortgages only.
(2) The amount of past due but not impaired financial assets in respect of non-lending activities was not material.
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
263ING Group Annual Report 2011