ING Direct 2011 Annual Report Download - page 47

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
MANAGEMENT BOARD INSURANCE
45ING Group Annual Report 2011
Insurance overview
Financial overview*
in EUR million 2011 2010
Total operating result 2,206 1,560
Gains/losses and impairments –550 –512
Revaluations 205 449
Market and other impacts –1,547 –2,569
Underlying result before tax 314 –1,072
New sales 4,200 4,169
Administrative expenses/operating income 39.8% 43.7%
Life general account assets (in EUR billion) 175 162
Administrative expenses (total) 3,428 3,443
Underlying Return on equity based on
IFRS-EU Equity 1.4% –5.1%
Employees (FTEs, year-end, adjusted
for divestments) 26,463 27,755
* Underlying numbers are derived from IFRS-EU, excluding the impact of
divestments and special items.
Underlying result before tax
in EUR million 2011 2010
Benelux 739 775
Central and Rest of Europe –198 253
United States (excl. US Closed Block VA) 618 308
US Closed Block VA –1,273 –2,075
Asia/Pacific 588 517
ING Investment Management 204 150
Corporate Line insurance –364 –1,000
Total 314 –1,072
Operating result**
in EUR million 2011 2010
Benelux 974 677
Central and Rest of Europe 207 292
United States (excl. US Closed Block VA) 661 559
US Closed Block VA 19 49
Asia/Pacific 554 473
ING Investment Management 193 143
Corporate Line insurance –402 –633
Total 2,206 1,560
** Operating result is underlying result before tax excluding gains/losses and
impairments, revaluations, market and other impacts.
Jan Hommen
chief executive officer
Patrick Flynn
chief financial officer
Wilfred Nagel (from 5 October 2011)
chief risk officer
Koos Timmermans (until 1 October 2011)
chief risk officer
Lard Friese (until 3 November 2011)
responsible for Insurance Europe and Asia
Matthew Rider (until 3 November 2011)
chief administrative officer
Gilbert Van Hassel (until 3 November 2011)
responsible for ING Investment Management
2011 was a year of gradual improvement in operations at
INGInsurance/Investment Management (IM). Although the year
was marked by difficult economic circumstances such as low
interest ratesand the European sovereign debt crisis, sales at
Insurance/IM remained resilient. ING Insurance/IM proved that
itisable to perform in a challenging economic environment by
strengthening the business focusing on its customers and
distributors, while also making progress on preparing the
businesses for a stand-alone future.
FINANCIAL DEVELOPMENTS
Operating conditions were challenging in 2011, as financial markets
continued to be volatile and the macroeconomic environment
deteriorated. The underlying result before tax of Insurance/IM was
EUR 314 million, up from a loss of EUR 1,072 million in 2010. The
increase was primarily driven by an improvement in market and
other impacts as a result of lower deferred acquisition costs (DAC)
write downs in the US Closed Block VA business and in Japan’s
Single Premium Variable Annuity (SPVA) business. This is, however,
partially offset by a charge of EUR 1.1 billion due to the completion
of a comprehensive policyholder behaviour assumption review for
the US Closed Block VA. Capital losses, reflecting de-risking, and
impairments were in line with the previous year. Further,
revaluations were lower, largely related to Collateralised Mortgage
Obligations (CMOs) in the US. Hence, underlying results per
business line diverged, with strong recoveries in the US and Asia/
Pacific (excluding Japan variable annuities), compared with lower
underlying results in the Benelux and Central and Rest of Europe.
The operating result of Insurance/IM increased to EUR 2,206 million
from EUR 1,560 million in 2010, mostly driven by higher investment
margins and higher fees and premium-based revenues in the life and
the investment management business. The investment spread on life
general account assets increased 16 basis points to 106 basis points
in 2011 following cautious re-risking of the investment portfolios in
the first half of 2011, which was partially offset by de-risking in the
second half. The increase in operating income was partly offset by
higher expenses. Operating results improved in nearly every business
line, with the exception of Central and Rest of Europe given the
harsh economic conditions and in US Closed Block VA.
The Life/IM administrative expenses ratio improved from 43.7% in
2010 to 39.8% in 2011 as a result of 6.9% higher Life/IM income
and 2.6% lower administrative expenses. Expenses especially in the
US were lower as a result of cost savings and pension plan changes.
New life sales (APE) amounted to EUR 4,200 million, an increase
ofEUR 31 million or 0.7% compared with 2010. Higher sales,
mainly in Asia/Pacific, were partly offset by lower sales in the US.
BUSINESS DEVELOPMENTS
The restructuring of ING Group is on track, following the
operational separation of Insurance/IM from Banking at the end
of2010. In 2011, Insurance/IM focused on preparing the businesses
for a stand-alone future.
In July 2011, ING announced an agreement to sell its Latin
American pension, life insurance and investment management
businesses to Grupo de Inversiones Suramericana (GrupoSura).
Thetransaction was closed in December 2011. ING has retained its
36% stake in Brazilian insurer SulAmérica SA, which was not part
of the transaction.