ING Direct 2002 Annual Report Download - page 74

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Additional information
NEW BUSINESS VALUE
amounts in millions of euros
PREMIUMS PREMIUMS
ANNUAL SINGLE IRR (1) VALUE ANNUAL SINGLE IRR (1) VALUE
2002 2001 (2)
Netherlands 191 909 8.6% 12 177 1,077 10.6% 29
South West Europe 72 1,789 19.0% 69 62 1,173 15.3% 32
Central Europe 165 150 12.8% 26 151 64 15.1% 18
Americas 1,807 17,010 9.8% 132 2,366 17,715 9.1% 9
Asia/Pacific 1,109 1,737 15.4% 280 1,306 814 14.9% 248
ING Group 3,344 21,595 11.5% 519 4,062 20,843 11.2% 336
(1) IRR = internal rate of return
(2) Minor restatements of 2001 premiums and new business value are reflected. Annual premiums were reduced by EUR 56 million and single premiums
increased by EUR 11 million. The new business value was reduced by EUR 10 million.
EMBEDDED VALUE OF THE LIFE OPERATIONS
in millions of euros
2002 2001
Free surplus 1,526 3,232
Value of business in force 21,753 22,595
Embedded value 23,279 25,827
EMBEDDED VALUE BY EXECUTIVE CENTRE/MANAGEMENT CENTRE
in millions of euros
2002 2001
Netherlands 9,476 10,819
South West Europe 1,064 1,063
Central Europe 1,253 806
Americas 9,122 10,274
Asia/Pacific 2,364 2,865
Embedded value 23,279 25,827
Annual Report 2002 · ING Group 71
Acquisition expense overruns represent the excess of the costs of acquiring new business over the
expense allowances provided in product pricing. Such overruns may exist while new operations are
achieving scale, while several businesses are integrating into one, or during a year when sales are
lower than anticipated.
Substantial progress has been made with respect to acquisition expense overruns. During 2002
acquisition expense overruns were EUR 133 million, representing an after-tax reduction of EUR 150
million compared to 2001. Most of the decrease is from the Americas, where overruns in 2002 were
EUR 68 million, a EUR 143 million reduction from the 2001 level. The overall internal rate of return
for ING’s life business is 12.7% excluding acquisition expense overruns.
The primary reasons for the decline in embedded value relate to the poor economic environment,
e.g. negative equity returns and low investment yields.