ING Direct 2008 Annual Report Download - page 279

HELD-TO-MATURITY INVESTMENTS
Non-derivative financial assets with fixed or determinable payments and
fixed maturity that ING Group has the positive intention and ability to hold
to maturity other than:
a. those that ING Group upon initial recognition designates
as at fair value through profit and loss;
b. those that ING Group designates as available for sale; and
c. those that meet the definition of loans and receivables.
HISTORICAL SIMULATION
A model to calculate Value at Risk, assuming that future changes in risk
factors will have the same distribution as they had in the past taking into
account the non-linear behaviour of financial products.
IMPAIRMENT LOSS
The amount by which the carrying amount of an asset exceeds its
recoverable amount.
INTEREST BEARING INSTRUMENT
A financial asset or a liability for which a time-proportionate compensation
is paid or received in relation to a notional amount.
INTERNAL RATE OF RETURN (IRR)
Internal rate of return is the discount rate at which the present value of
distributable earnings from new business equals the investment in new
business (i.e. the projected return on the investment in new business) is
calculated.
INTEREST-RATE REBATES
Profit sharing for group life insurance business. A rebate granted to
policyholders based on the discounted value of the difference between
the interest rate used to calculate the premiums and the expected yield on
investment. The profit sharing is granted by means of a premium discount
related to the yield on government bonds.
INTEREST RATE RISK
Probability that the market interest rates will rise significantly higher than
the interest rate earned on investments such as bonds, resulting in their
lower market value.
IN THE MONEY
A call option is said to be in the money if the exercise price is lower than
the price of the underlying value; a put option is said to be in the money
if the exercise price is higher than the price of the underlying value.
INVESTMENT RISK
Investment risk is the credit default and migration risk that is associated
with ING’s investments in bonds, commercial paper, securitisations, and
other similar publicly traded securities.
INVESTMENT PORTFOLIO
Comprises those assets which are intended for use on a continuing basis,
and have been identified as such. These investments are held in order to
cover the insurance provisions and to manage interest rate, capital and
liquidity risks.
IRREVOCABLE FACILITIES
Mainly constitute unused portions of irrevocable credit facilities granted to
corporate clients and commitments made to purchase securities to be
issued by governments and private issuers.
IRREVOCABLE LETTERS OF CREDIT
Concerns an obligation on behalf of a client to pay an amount of money
under submission of a specific document or to accept a bill of exchange,
subject to certain conditions. An irrevocable letter of credit cannot be
cancelled or adjusted by the bank that has granted it during the duration
of the agreement unless all those concerned agree.
EMBEDDED VALUE (EV)
Embedded value is the present value of all future cash flows from the
contracts being owned today (embedded value does not take into account
future sales). The discount rate used is equal to WACC.
EMBEDDED VALUE PROFIT (EVP)
Embedded value profit is the change in embedded value over a given
period over and above the amount related to the unwinding of the
discount rate.
EMPLOYEE BENEFITS
All forms of consideration given by a company in exchange for service
rendered by (current and former) employees.
FAIR VALUE
The amount for which an asset could be exchanged, or a liability settled,
between knowledgeable, willing parties in an arm’s length transaction.
FINANCE LEASE
A lease that transfers substantially all the risks and rewards associated with
ownership of an asset to the lessee. Title may or may not eventually be
transferred.
FINANCIAL ASSET
Any asset that is:
cash;•
an equity instrument of another company;•
a contractual right to;•
receive cash or another financial asset from another company; or•
exchange financial instruments with another company under •
conditions that are potentially favourable; or
certain contract that will or may be settled in ING’s own equity •
instruments.
FINANCIAL INSTRUMENTS
Contracts that give rise to both a financial asset for one company and
a financial liability or equity instrument for another company.
FINANCIAL LIABILITY
Any liability that is a contractual obligation:
to deliver cash or another financial asset to another company; or•
to exchange financial instruments with another company under •
conditions that are potentially unfavourable; or
certain contracts that will or may be settled in ING’s own •
equity instruments.
FOREIGN EXCHANGE RATE RISK
Probability of loss occurring from an adverse movement in foreign
exchange rates.
FORWARD CONTRACTS
Commitments to exchange currencies or to buy or sell other financial
instruments at specified future dates.
FUTURE CONTRACTS
Commitments to exchange currencies or to buy or sell other financial
instruments at specified future dates. Exchanges act as intermediaries and
require daily cash settlement and collateral deposits.
GROSS PREMIUMS WRITTEN
Total premiums (whether or not earned) for insurance contracts written or
assumed (including deposits for investment contracts with limited or no life
contingencies written) during a specific period, without deduction for
premiums ceded.
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ING Group Annual Report 2008