ING Direct 2011 Annual Report Download - page 53

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
INSURANCE US
> Solid business performance
> Preparations continue for stand-alone future
> Focus remains on customers and
distribution partners
Insurance US continued to make steady progress on its key
objectives: improving business performance, focusing on
customersand distribution partners and preparing to become an
independent, stand-alone operation. Despite flat equity markets
and record low interest rates presenting significant challenges for
the business, ING US delivered strong overall operating results from
its core retirement and insurance businesses.
FINANCIAL DEVELOPMENTS
The underlying result before tax of Insurance US more than
doubled to EUR 618 million from EUR 308 million in 2010. The
increase was driven by higher operating results, lower impairments,
and favourable DAC unlocking, partially offset by lower
revaluations and a non-recurring increase in reserves related to
thecompany’s use of the US Social Security Death Master File
toidentify potential claims.
The operating result for Insurance US increased 18.3%, as higher
investment margins and lower administrative expenses were
partially offset by a lower technical margin. The investment margin
increased by 7.8% primarily due to reinvestment of cash balances
and a reduction in average interest credited.
The technical margin decreased by 63.1% compared with 2010, in
part due to lower amortisation of a gain related to the transfer of
the US group reinsurance business as well as a non-recurring life
insurance reserve reduction in the prior year.
Administrative expenses were 17.9% lower than in 2010 due to
the implementation and completion of a significant cost reduction
programme and due to a one-off benefit from changes in the
company’s pension plan.
New sales (APE) in full service retirement plans and individual life
business generated strong growth in 2011. Overall APE declined
5.9%, reflecting the de-emphasis of Stable Value and Fixed
Annuities, as Insurance US maintained its disciplined pricing and
risk standards.
Insurance US also continued to de-risk its investment portfolio by
shedding EUR 1.5 billion of subprime RMBS and CMBS exposure
and reducing super senior CDS exposure by 67% in 2011. This was
accomplished while Insurance US increased its risk-based capital
ratio from 426% to approximately 488% during the year.
BUSINESS DEVELOPMENTS
In 2011, the business concentrated on tightening and focusing its
business strategy, strengthening the capital position, containing
expenses, and developing products and services to help individual
and institutional customers accumulate and protect their wealth.
Insurance US is a market leader in providing retirement and life
insurance services and products.
Retirement
ING is the third largest provider ofdefined contribution (DC)
retirement plans in the US based on assets under management and
administration, and the second largest based on the number of
retirement plans administered and participants served. In a Cogent
research survey, 84% of employer plan clients surveyed rated ING
favourably, more than any other of the 36 providers in the survey.
In the US, ING is one of the few providers of retirement services
with a major presence in all industry sectors of the employer-
sponsored retirement plan market. The business has more than six
million retirement plan (defined contribution and defined benefit)
participants and a major presence in the corporate, education,
government and healthcare markets, with 55,000 institutions that
have an ING-administered retirement plan. ING offers the full
spectrum of retirement plans from full-service plans to record-
keeping services only. It also offers retail solutions to help plan
participants and individuals supplement their employer-sponsored
retirement savings, consolidate their assets and later manage the
transition from retirement investment to retirement income-
generation.
ING offers fixed and indexed annuities as well as tax-qualified
Individual Retirement Accounts (IRAs). These products can be tailored
to meet individual retirement needs. ING’s annuities appeal to a
broad range of consumers seeking asset accumulation and income,
including those rolling from defined contribution plans provided by
ING as well as individuals seeking retirement income options through
financial advisors.
During 2011, ING added several significant new retirement plan
clients and retained others, including numerous states and
municipalities, well-known colleges and universities, and
household-name companies.
Making retirement easier
According to a study by the ING Retirement Research Institute in
2011, a majority of Americans, while highly valuing the opportunity
to save for retirement via the workplace, find retirement planning
confusing and difficult to understand, and are seeking assistance.
ING is dedicated to helping individuals make beneficial retirement
decisions and encouraging them to take ownership of their
retirement funding needs. It does this by providing advice, guidance
and planning services.
In 2011, a number of initiatives were introduced to make retirement
saving easier.
A programme was launched which allows employees to instantly
enroll in their employer’s DC plan using a hand-held or tablet device.
Strong initial results demonstrate the effectiveness of this innovative
enrolment strategy.
A new website, RetireWithING.com, which helps people make
informed decisions about retirement saving and income planning and
connects them with ING retirement professionals for additional
guidance, was also introduced. The site uses clear language with
minimal jargon and is part of ING’s commitment to making
retirement easier for people.
51ING Group Annual Report 2011
Insurance continued