ING Direct 2013 Annual Report Download - page 343

ING Life Japan’s capital ratio improved due to profits in the period from 1 April until 31 Dec 2013, growth of business volume driven by
continuous good sales for COLI business and lower required capital, reflecting decreasing SPVA minimum guarantee reserve, which is led
by favourable market developments and the increased SPVA lapse.
For NN Group, Available Financial Resources (AFR) continues to be important, especially as an evolving proxy for the Own Funds derivation
from our internal model under Solvency II. The SII regulations are not final and material deviations from our proxy could materialise; see
the risk management section for more details. AFR in the 2012 Annual Report of ING Verzekeringen N.V. was derived for ING Insurance
EurAsia excluding Asian Insurance and Investment Management businesses and the reinsured Japan VA guarantees to ING Re
(Netherlands) N.V. that were classified as held-for-sale operations. ING announced in 2013 that NN Group N.V. will be divested instead of
ING Insurance Eurasia N.V., and after carefully exploring and evaluating the options available for the divestment of ING Life Japan, it was
concluded that ING Life Japan will be included with NN Group’s insurance and investment management businesses in the base case IPO
of NN Group in 2014, subject to market and other conditions. As a result, ING Life Japan and the Japanese Closed Block VA guarantees
reinsured to ING Re (‘NN Group’s business in Japan’) are no longer classified as held-for-sale operations. All references to Asia in this
disclosure therefore, refer to the insurance and investment management businesses in Asia other than NN Group’s business in Japan.
The following table presents the reconciliation from the 2012 AFR for Insurance EurAsia excluding Asian held-for-sale operations as
reported in the Annual Report 2012, to the comparable basis for NN Group excluding US Insurance business. The impact of the change in
scope on EC is explained in detail in the Risk paragraph.
Change of scope of AFR 2012
amounts in billions of euros AFR
As reported for ING Insurance EurAsia (excluding held-for-sale
operations) in 2012 9.6
Change in model and methodology (1) –0.8
Include NN Group’s business in Japan as modelled business 2.4
Include the other Asian held-for-sale operations as unmodelled
business 4.0
Include legacy units and holding –3.8
NN Group 2012 excluding US Insurance business on a basis
comparable to 2013 11.4
(1) The change in model and methodology refers to the change in accounting policy for employee benefits as disclosed in the section ‘Changes in accounting
policies in 2013’ on page 98.
The table below provides AFR and EC on comparable basis for NN Group (excluding US operations).
AFR and EC positions
amounts in billions of euros 2013 2012
AFR 13.6 11.4
EC 7.0 8.7
Excess AFR over EC 6.6 2.7
AFR-EC ratio 193% 131%
The AFR-EC ratio for NN Group excluding US Insurance business increased in 2013 as a result of higher AFR and lower EC. AFR increased
from EUR 11.4 billion at the end 2012 to EUR 13.6 billion at the end of 2013. AFR increased mainly due to a capital injection from ING of
EUR 1.3 billion (EUR 1.0 billion to redeem ING Group loan and EUR 0.3 billion to acquire parts of WestlandUtrecht Bank) and the inclusion
of the ‘Ultimate Forward Rate’ (UFR) in the valuation curve of EUR 1.6 billion. This increase was partially offset by the change of treatment
of the pension asset (included in 2012 figures but excluded in 2013) of EUR 0.7 billion and the change in treatment of the external hybrid
of EUR 0.5 billion, which is not considered AFR as from January 1st, 2013 (consistent with IGD ratio). The change in EC during 2013 is
explained in detail in the Risk paragraph.
Capital management continued
341ING Group Annual Report 2013
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