ING Direct 2011 Annual Report Download - page 284

Capital management continued
ING INSURANCE
The table below shows the Insurance Group Directive position which represents the consolidated regulatory Solvency I position
of ING Insurance business. The Insurance companies complied with their respective local regulatory requirements.
Capital position of ING Insurance
2011 2010 (1)
Shareholders’ equity (parent) 23,475 20,159
Hybrids issued by ING Group (2) 2,604 2,094
Hybrids issued by ING Insurance (3) 1,726 2,207
Required regulatory adjustments –6,399 – 4,125
IGD capital (4) 21,406 20,335
EU required capital base (4) 9,515 8,826
IGD Solvency I ratio (4,5) 225% 230%
(1) These numbers have been restated to reflect the move towards fair value accounting for Guaranteed Minimum Withdrawal Benefits for life in the US closed
block VA as of 1 January 2011. Further details on the restatement are available in the Accounting Policies for the consolidated annual accounts of ING Group
under ‘Changes in accounting policies’.
(2) Hybrids issued by ING Group at notional value.
(3) Hybrids issued by ING Insurance at notional value capped at 25% of EU required capital.
(4) In the fourth quarter 2011, ING reviewed the calculation of the IGD ratio to ensure consistent application throughout the Group. As a consequence, several
changes have been made, mainly related to (i) certain provisions which are internally reinsured and for which required capitals were netted out in the past
and (ii) changes in the allocation of policyholder liabilities to the relevant capital requirement categories. The reported IGD Solvency I ratio in 2010 of 250%
has been adjusted for this change into 230%.
(5) The actual required regulatory adjustments for IGD capital and the EU required capital may be different from the estimate since the statutory results are
not final until filed with the regulators.
ING Insurance continues to aim that all operating entities are adequately capitalised based on local regulatory and rating agency requirements
and that on a consolidated basis, the financial leverage (hybrids, sub-debt and net financial debt) of ING Insurance isappropriate relative to
the capital base. The financial leverage decreased in 2011 mainly due to the divestment of the business in Latin America.
Capital base and financial leverage of ING Insurance
2011 2010 (1)
Shareholders’ equity (parent) 23,475 20,159
Revaluation reserve debt securities –4,379 –1,164
Revaluation reserve crediting to life policyholders 3,492 1,488
Revaluation reserve cash flow hedge –2,883 –1,567
Goodwill –786 –1,425
Minority interests 62 111
Capital base 18,981 17,6 02
Group Hybrid capital (2) 2,617 2,094
Insurance hybrid capital (3) 1,751 2,313
Total hybrids 4,368 4,407
External debt issued by ING Verzekeringen N.V. 2,855 3,347
External debt issued by US Holding companies 930 1,384
Other net financial debt (4) 1,686 2,273
Total financial debt 5,471 7, 0 0 4
(1) These numbers have been restated to reflect the move towards fair value accounting for Guaranteed Minimum Withdrawal Benefits for life in the US closed
block VA as of 1 January 2011. Further details on the restatement are available in the Accounting Policies for the consolidated annual accounts of ING Group
under ‘Changes in accounting policies’.
(2) Hybrids issued by ING Group at amortised cost value consistent with IFRS carrying value.
(3) Hybrids issued by ING Insurance at amortised cost value consistent with IFRS carrying value.
(4) Includes net internal borrowings from the operating subsidiaries, net of cash and current tax liability at the holding level and current tax liabilities
of the holding companies, mainly ING Verzekeringen N.V. and ING America Insurance Holdings Inc.
282 ING Group Annual Report 2011