LIFE AND ACCIDENT AND HEALTH COMPANIES - ASSOCIATION EDITION ANNUAL STATEMENT FOR THE YEAR ENDED DECEMBER, 0 OF THE CONDITION AND AFFAIRS OF THE ING Life Insurance and Annuity Company NAIC Group Code 09 09 NAIC Company Code 86509 Employer's ID Number 7-094708 (Current) (Prior) Organized under the Laws of Connecticut, State of Domicile or Port of Entry Connecticut Country of Domicile United States of America Incorporated/Organized 0//976 Commenced Business 04/06/976 Statutory Home Office One Orange Way, Windsor, CT, US 06095-4774 (Street and Number) (City or Town, State, Country and Zip Code) Main Administrative Office 5780 Powers Ferry Road, NW (Street and Number) Atlanta, GA, US 07-490, 770-980-500 (City or Town, State, Country and Zip Code) (Area Code) (Telephone Number) Mail Address 5780 Powers Ferry Road, NW, Atlanta, GA, US 07-490 (Street and Number or P.O. Box) (City or Town, State, Country and Zip Code) Primary Location of Books and Records One Orange Way (Street and Number) Windsor, CT, US 06095-4774, 860-580-4646 (City or Town, State, Country and Zip Code) (Area Code) (Telephone Number) Internet Website Address www.ing.com/us Statutory Statement Contact Robin Proud, 770-54-48 (Name) (Area Code) (Telephone Number) FSSC_Compliance@us.ing.com, 770-980-5800 (E-mail Address) (FAX Number) OFFICERS President Mary Elizabeth Beams SVP and Treasurer David Scott Pendergrass SVP and Secretary Megan Ann Huddleston # SVP and Appointed Actuary Patrick Dearyl Lusk # OTHER Boyd George Combs Senior Vice President, Tax Tina Angela Campbell # Senior Vice President Ralph Robert Ferraro Senior Vice President Michael Joseph Gioffre # Senior Vice President Howard Frank Greene # Senior Vice President Christine Lynn Hurtsellers # Senior Vice President Mark Bradley Kaye # SVP and Chief Financial Officer Richard Thomas Mason Senior Vice President Gilbert Edward Mathis Senior Vice President Diane Mulherrin McCarthy # Senior Vice President Steven Todd Pierson SVP and Chief Accounting Officer Michael Scott Smith # Executive Vice President Ewout Lucien Steenbergen Executive Vice President DIRECTORS OR TRUSTEES Mary Elizabeth Beams Donald Wayne Britton Patrick Gerard Flynn Alain Maurice Karaoglan Rodney Owen Martin Jr. Michael Scott Smith Ewout Lucien Steenbergen State of County of Connecticut/Georgia Hartford/Fulton SS: The officers of this reporting entity being duly sworn, each depose and say that they are the described officers of said reporting entity, and that on the reporting period stated above, all of the herein described assets were the absolute property of the said reporting entity, free and clear from any liens or claims thereon, except as herein stated, and that this statement, together with related exhibits, schedules and explanations therein contained, annexed or referred to, is a full and true statement of all the assets and liabilities and of the condition and affairs of the said reporting entity as of the reporting period stated above, and of its income and deductions therefrom for the period ended, and have been completed in accordance with the NAIC Annual Statement Instructions and Accounting Practices and Procedures manual except to the extent that: () state law may differ; or, () that state rules or regulations require differences in reporting not related to accounting practices and procedures, according to the best of their information, knowledge and belief, respectively. Furthermore, the scope of this attestation by the described officers also includes the related corresponding electronic filing with the NAIC, when required, that is an exact copy (except for formatting differences due to electronic filing) of the enclosed statement. The electronic filing may be requested by various regulators in lieu of or in addition to the enclosed statement. Mary Elizabeth Beams Megan Ann Huddleston David Scott Pendergrass President Secretary Treasurer a. Is this an original filing? Yes [ X ] No [ ] Subscribed and sworn to before me this b. If no, day of. State the amendment number. Date filed. Number of pages attached
ASSETS Assets Current Year Nonadmitted Assets Net Admitted Assets (Cols. - ) Prior Year 4 Net Admitted Assets. Bonds (Schedule D). Stocks (Schedule D):. Preferred stocks. Common stocks. Mortgage loans on real estate (Schedule B):. First liens. Other than first liens 4. Real estate (Schedule A): 4. Properties occupied by the company (less $ encumbrances) 4. Properties held for the production of income (less $ encumbrances) 4. Properties held for sale (less $ encumbrances) 5. Cash ($, Schedule E - Part ), cash equivalents ($, Schedule E - Part ) and short-term investments ($, Schedule DA) 6. Contract loans (including $ premium notes) 7. Derivatives (Schedule DB) 8. Other invested assets (Schedule BA) 9. Receivables for securities 0. Securities lending reinvested collateral assets (Schedule DL). Aggregate write-ins for invested assets. Subtotals, cash and invested assets (Lines to ). Title plants less $ charged off (for Title insurers only) 4. Investment income due and accrued 5. Premiums and considerations: 5. Uncollected premiums and agents' balances in the course of collection 5. Deferred premiums and agents' balances and installments booked but deferred and not yet due (including $ earned but unbilled premiums) 5. Accrued retrospective premiums 6. Reinsurance: 6. Amounts recoverable from reinsurers 6. Funds held by or deposited with reinsured companies 6. Other amounts receivable under reinsurance contracts 7. Amounts receivable relating to uninsured plans 8. Current federal and foreign income tax recoverable and interest thereon 8. Net deferred tax asset 9. Guaranty funds receivable or on deposit 0. Electronic data processing equipment and software. Furniture and equipment, including health care delivery assets ($ ). Net adjustment in assets and liabilities due to foreign exchange rates. Receivables from parent, subsidiaries and affiliates 4. Health care ($ ) and other amounts receivable 5. Aggregate write-ins for other than invested assets 6. Total assets excluding Separate Accounts, Segregated Accounts and Protected Cell Accounts (Lines to 5) 7. From Separate Accounts, Segregated Accounts and Protected Cell Accounts 8. Total (Lines 6 and 7) DETAILS OF WRITE-INS 0. 0. 0. 98. Summary of remaining write-ins for Line from overflow page 99. Totals (Lines 0 thru 0 plus 98)(Line above) 50. 50.! 50. 598. Summary of remaining write-ins for Line 5 from overflow page 599. Totals (Lines 50 thru 50 plus 598)(Line 5 above)
LIABILITIES, SURPLUS AND OTHER FUNDS Current Year Prior Year. Aggregate reserve for life contracts $ (Exh. 5, Line 9999999) less $ included in Line 6. (including $ Modco Reserve). Aggregate reserve for accident and health contracts (including $ Modco Reserve). Liability for deposit-type contracts (Exhibit 7, Line 4, Col. ) (including $ Modco Reserve) 4. Contract claims: 4. Life (Exhibit 8, Part, Line 4.4, Col. less sum of Cols. 9, 0 and ) 4. Accident and health (Exhibit 8, Part, Line 4.4, sum of Cols. 9, 0 and ) 5. Policyholders dividends $ and coupons $ due and unpaid (Exhibit 4, Line 0) 6. Provision for policyholders dividends and coupons payable in following calendar year - estimated amounts: 6. Dividends apportioned for payment (including $ Modco) 6. Dividends not yet apportioned (including $ Modco) 6. Coupons and similar benefits (including $ Modco) 7. Amount provisionally held for deferred dividend policies not included in Line 6 8. Premiums and annuity considerations for life and accident and health contracts received in advance less $ discount; including $ accident and health premiums (Exhibit, Part, Col., sum of lines 4 and 4) 9. Contract liabilities not included elsewhere: 9. Surrender values on canceled contracts 9. Provision for experience rating refunds, including the liability of $ accident and health experience rating refunds of which $ is for medical loss ratio rebate per the Public Health Service Act 9. Other amounts payable on reinsurance including $ assumed and $ ceded 9.4 Interest maintenance reserve (IMR, Line 6) 0. Commissions to agents due or accrued-life and annuity contracts $ accident and health $ and deposit-type contract funds $. Commissions and expense allowances payable on reinsurance assumed. General expenses due or accrued (Exhibit, Line, Col. 6). Transfers to Separate Accounts due or accrued (net) (including $ accrued for expense allowances recognized in reserves, net of reinsured allowances) 4. Taxes, licenses and fees due or accrued, excluding federal income taxes (Exhibit, Line 9, Col. 5) 5. Current federal and foreign income taxes including $ on realized capital gains (losses) 5. Net deferred tax liability 6. Unearned investment income 7. Amounts withheld or retained by company as agent or trustee 8. Amounts held for agents'account, including $ agents'credit balances 9. Remittances and items not allocated 0. Net adjustment in assets and liabilities due to foreign exchange rates. Liability for benefits for employees and agents if not included above. Borrowed money $ and interest thereon $. Dividends to stockholders declared and unpaid 4. Miscellaneous liabilities: 4.0 Asset valuation reserve (AVR, Line 6, Col. 7) 4.0 Reinsurance in unauthorized and certified ($ ) companies 4.0 Funds held under reinsurance treaties with unauthorized and certified ($ ) reinsurers 4.04 Payable to parent, subsidiaries and affiliates 4.05 Drafts outstanding 4.06 Liability for amounts held under uninsured plans 4.07 Funds held under coinsurance 4.08 Derivatives 4.09 Payable for securities 4.0 Payable for securities lending 4. Capital notes $ and interest thereon $ 5. Aggregate write-ins for liabilities 6. Total Liabilities excluding Separate Accounts business (Lines to 5) 7. From Separate Accounts Statement 8. Total Liabilities (Lines 6 and 7) 9. Common capital stock 0. Preferred capital stock. Aggregate write-ins for other than special surplus funds. Surplus notes. Gross paid in and contributed surplus (Page, Line, Col. plus Page 4, Line 5., Col. ) 4. Aggregate write-ins for special surplus funds 5. Unassigned funds (surplus) 6. Less treasury stock, at cost: 6. shares common (value included in Line 9 $ ) 6. shares preferred (value included in Line 0 $ ) 7. Surplus (Total Lines +++4+5-6) (including $ in Separate Accounts Statement) 8. Totals of Lines 9, 0 and 7 (Page 4, Line 55) 9. Totals of Lines 8 and 8 (Page, Line 8, Col. ) DETAILS OF WRITE-INS 50. 50. 50.!!"#$% 598. Summary of remaining write-ins for Line 5 from overflow page 599. Totals (Lines 50 thru 50 plus 598)(Line 5 above) 0. &###'$ 0. 0. 98. Summary of remaining write-ins for Line from overflow page 99. Totals (Lines 0 thru 0 plus 98)(Line above) 40. (!#'()* 40. (%+ 40. 498. Summary of remaining write-ins for Line 4 from overflow page 499. Totals (Lines 40 thru 40 plus 498)(Line 4 above)
SUMMARY OF OPERATIONS Current Year Prior Year. Premiums and annuity considerations for life and accident and health contracts (Exhibit, Part, Line 0.4, Col., less Col. ). Considerations for supplementary contracts with life contingencies. Net investment income (Exhibit of Net Investment Income, Line 7) 4. Amortization of interest maintenance reserve (IMR, Line 5) 5. Separate Accounts net gain from operations excluding unrealized gains or losses 6. Commissions and expense allowances on reinsurance ceded (Exhibit, Part, Line 6., Col. ) 7. Reserve adjustments on reinsurance ceded 8. Miscellaneous Income: 8. Income from fees associated with investment management, administration and contract guarantees from Separate Accounts 8. Charges and fees for deposit-type contracts 8. Aggregate write-ins for miscellaneous income 9. Total (Lines to 8.) 0. Death benefits. Matured endowments (excluding guaranteed annual pure endowments). Annuity benefits (Exhibit 8, Part, Line 6.4, Cols. 4 + 8). Disability benefits and benefits under accident and health contracts 4. Coupons, guaranteed annual pure endowments and similar benefits 5. Surrender benefits and withdrawals for life contracts 6. Group conversions 7. Interest and adjustments on contract or deposit-type contract funds 8. Payments on supplementary contracts with life contingencies 9. Increase in aggregate reserves for life and accident and health contracts 0. Totals (Lines 0 to 9). Commissions on premiums, annuity considerations, and deposit-type contract funds (direct business only) (Exhibit, Part, Line, Col. ). Commissions and expense allowances on reinsurance assumed (Exhibit, Part, Line 6., Col. ). General insurance expenses (Exhibit, Line 0, Cols.,, and 4) 4. Insurance taxes, licenses and fees, excluding federal income taxes (Exhibit, Line 7, Cols. + + ) 5. Increase in loading on deferred and uncollected premiums 6. Net transfers to or (from) Separate Accounts net of reinsurance 7. Aggregate write-ins for deductions 8. Totals (Lines 0 to 7) 9. Net gain from operations before dividends to policyholders and federal income taxes (Line 9 minus Line 8) 0. Dividends to policyholders. Net gain from operations after dividends to policyholders and before federal income taxes (Line 9 minus Line 0). Federal and foreign income taxes incurred (excluding tax on capital gains). Net gain from operations after dividends to policyholders and federal income taxes and before realized capital gains or (losses) (Line minus Line ) 4. Net realized capital gains (losses) (excluding gains (losses) transferred to the IMR) less capital gains tax of $ (excluding taxes of $ transferred to the IMR) 5. Net income (Line plus Line 4) CAPITAL AND SURPLUS ACCOUNT 6. Capital and surplus, December, prior year (Page, Line 8, Col. ) 7. Net income (Line 5) 8. Change in net unrealized capital gains (losses) less capital gains tax of $ 9. Change in net unrealized foreign exchange capital gain (loss) 40. Change in net deferred income tax 4. Change in nonadmitted assets 4. Change in liability for reinsurance in unauthorized and certified companies 4. Change in reserve on account of change in valuation basis, (increase) or decrease (Exh. 5A, Line 9999999, Col. 4) 44. Change in asset valuation reserve 45. Change in treasury stock (Page, Lines 6. and 6., Col. minus Col. ) 46. Surplus (contributed to) withdrawn from Separate Accounts during period 47. Other changes in surplus in Separate Accounts Statement 48. Change in surplus notes 49. Cumulative effect of changes in accounting principles 50. Capital changes: 50. Paid in 50. Transferred from surplus (Stock Dividend) 50. Transferred to surplus 5. Surplus adjustment: 5. Paid in 5. Transferred to capital (Stock Dividend) 5. Transferred from capital 5.4 Change in surplus as a result of reinsurance 5. Dividends to stockholders 5. Aggregate write-ins for gains and losses in surplus 54. Net change in capital and surplus for the year (Lines 7 through 5) 55. Capital and surplus, December, current year (Lines 6 + 54) (Page, Line 8) DETAILS OF WRITE-INS 08.0. 08.0. 08.0. 08.98. Summary of remaining write-ins for Line 8. from overflow page 08.99. Totals (Lines 08.0 thru 08.0 plus 08.98)(Line 8. above) 70.!"#$ 70. " 70. 798. Summary of remaining write-ins for Line 7 from overflow page 799. Totals (Lines 70 thru 70 plus 798)(Line 7 above) 50. %& ###"''() 50. )#"*# # 50. # $#+ 598. Summary of remaining write-ins for Line 5 from overflow page 599. Totals (Lines 50 thru 50 plus 598)(Line 5 above) 4
CASH FLOW Current Year Prior Year Cash from Operations. Premiums collected net of reinsurance. Net investment income. Miscellaneous income 4. Total (Lines through ) 5. Benefit and loss related payments 6. Net transfers to Separate Accounts, Segregated Accounts and Protected Cell Accounts 7. Commissions, expenses paid and aggregate write-ins for deductions 8. Dividends paid to policyholders 9. Federal and foreign income taxes paid (recovered) net of $ tax on capital gains (losses) 0. Total (Lines 5 through 9). Net cash from operations (Line 4 minus Line 0) Cash from Investments. Proceeds from investments sold, matured or repaid:. Bonds. Stocks. Mortgage loans.4 Real estate.5 Other invested assets.6 Net gains or (losses) on cash, cash equivalents and short-term investments.7 Miscellaneous proceeds.8 Total investment proceeds (Lines. to.7). Cost of investments acquired (long-term only):. Bonds. Stocks. Mortgage loans.4 Real estate.5 Other invested assets.6 Miscellaneous applications.7 Total investments acquired (Lines. to.6) 4. Net increase (decrease) in contract loans and premium notes 5. Net cash from investments (Line.8 minus Line.7 minus Line 4) Cash from Financing and Miscellaneous Sources 6. Cash provided (applied): 6. Surplus notes, capital notes 6. Capital and paid in surplus, less treasury stock 6. Borrowed funds 6.4 Net deposits on deposit-type contracts and other insurance liabilities 6.5 Dividends to stockholders 6.6 Other cash provided (applied) 7. Net cash from financing and miscellaneous sources (Lines 6. to 6.4 minus Line 6.5 plus Line 6.6) RECONCILIATION OF CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS 8. Net change in cash, cash equivalents and short-term investments (Line, plus Lines 5 and 7) 9. Cash, cash equivalents and short-term investments: 9. Beginning of year 9. End of year (Line 8 plus Line 9.) Note: Supplemental disclosures of cash flow information for non-cash transactions: 5
6 ANNUAL STATEMENT FOR THE YEAR 0 OF THE ING Life Insurance and Annuity Company ANALYSIS OF OPERATIONS BY LINES OF BUSINESS Ordinary 6 Group Accident and Health 4 5 7 8 9 0 Aggregate of All Total Industrial Life Life Insurance Individual Annuities Supplementary Contracts Credit Life (Group and Individual) Life Insurance (a) Annuities Group Credit (Group and Individual) Other Other Lines of Business. Premiums and annuity considerations for life and accident and health contracts. Considerations for supplementary contracts with life contingencies. Net investment income 4. Amortization of Interest Maintenance Reserve (IMR) 5. Separate Accounts net gain from operations excluding unrealized gains or losses 6. Commissions and expense allowances on reinsurance ceded 7. Reserve adjustments on reinsurance ceded 8. Miscellaneous Income: 8. Fees associated with income from investment management, administration and contract guarantees from Separate Accounts 8. Charges and fees for deposit-type contracts 8. Aggregate write-ins for miscellaneous income 9. Totals (Lines to 8.) 0. Death benefits. Matured endowments (excluding guaranteed annual pure endowments). Annuity benefits. Disability benefits and benefits under accident and health contracts 4. Coupons, guaranteed annual pure endowments and similar benefits 5. Surrender benefits and withdrawals for life contracts 6. Group conversions 7. Interest and adjustments on contract or deposit-type contract funds 8. Payments on supplementary contracts with life contingencies 9. Increase in aggregate reserves for life and accident and health contracts 0. Totals (Lines 0 to 9). Commissions on premiums, annuity considerations and deposit-type contract funds (direct business only). Commissions and expense allowances on reinsurance assumed. General insurance expenses 4. Insurance taxes, licenses and fees, excluding federal income taxes 5. Increase in loading on deferred and uncollected premiums 6. Net transfers to or (from) Separate Accounts net of reinsurance 7. Aggregate write-ins for deductions 8. Totals (Lines 0 to 7) 9. Net gain from operations before dividends to policyholders and federal income taxes (Line 9 minus Line 8) 0. Dividends to policyholders. Net gain from operations after dividends to policyholders and before federal income taxes (Line 9 minus Line 0). Federal income taxes incurred (excluding tax on capital gains). Net gain from operations after dividends to policyholders and federal income taxes and before realized capital gains or (losses) (Line minus Line ) DETAILS OF WRITE-INS 08.0. 08.0. 08.0. 08.98. Summary of remaining write-ins for Line 8. from overflow page 08.99. Totals (Lines 08.0 thru 08.0 plus 08.98) (Line 8. above) 70.! 70. "!#$ 70. 798. Summary of remaining write-ins for Line 7 from overflow page 799. Totals (Lines 70 thru 70 plus 798) (Line 7 above) (a) Includes the following amounts for FEGLI/SGLI: Line, Line 0, Line 6, Line, Line 4
ANALYSIS OF INCREASE IN RESERVES DURING THE YEAR Ordinary 6 Group 4 5 7 Total Industrial Life Life Insurance Individual Annuities Supplementary Contracts Credit Life (Group and Individual) Life Insurance 8 Annuities Involving Life or Disability Contingencies (Reserves) (Net of Reinsurance Ceded). Reserve December, prior year. Tabular net premiums or considerations. Present value of disability claims incurred XXX 4. Tabular interest 5. Tabular less actual reserve released 7 6. Increase in reserve on account of change in valuation basis 7. Other increases (net) 8. Totals (Lines to 7) 9. Tabular cost XXX 0. Reserves released by death XXX XXX XXX. Reserves released by other terminations (net). Annuity, supplementary contract and disability payments involving life contingencies. Net transfers to or (from) Separate Accounts 4. Total Deductions (Lines 9 to ) 5. Reserve December, current year
EXHIBIT OF NET INVESTMENT INCOME Collected During Year Earned During Year. U.S. Government bonds (a). Bonds exempt from U.S. tax (a). Other bonds (unaffiliated) (a). Bonds of affiliates (a). Preferred stocks (unaffiliated) (b). Preferred stocks of affiliates (b). Common stocks (unaffiliated). Common stocks of affiliates. Mortgage loans (c) 4. Real estate (d) 5 Contract loans 6 Cash, cash equivalents and short-term investments (e) 7 Derivative instruments (f) 8. Other invested assets 9. Aggregate write-ins for investment income 0. Total gross investment income. Investment expenses (g). Investment taxes, licenses and fees, excluding federal income taxes (g). Interest expense (h) 4. Depreciation on real estate and other invested assets (i) 5. Aggregate write-ins for deductions from investment income 6. Total deductions (Lines through 5) 7. Net investment income (Line 0 minus Line 6) DETAILS OF WRITE-INS 090. 090. 090. 0998. Summary of remaining write-ins for Line 9 from overflow page 0999. Totals (Lines 090 thru 090 plus 0998) (Line 9, above) 50. 50. 50. 598. Summary of remaining write-ins for Line 5 from overflow page 599. Totals (Lines 50 thru 50 plus 598) (Line 5, above) (a) Includes $ accrual of discount less $ amortization of premium and less $ paid for accrued interest on purchases. (b) Includes $ accrual of discount less $ amortization of premium and less $ paid for accrued dividends on purchases. (c) Includes $ accrual of discount less $ amortization of premium and less $ paid for accrued interest on purchases. (d) Includes $ for company s occupancy of its own buildings; and excludes $ interest on encumbrances. (e) Includes $ accrual of discount less $ amortization of premium and less $ paid for accrued interest on purchases. (f) Includes $ accrual of discount less $ amortization of premium. (g) Includes $ investment expenses and $ investment taxes, licenses and fees, excluding federal income taxes, attributable to segregated and Separate Accounts. (h) Includes $ interest on surplus notes and $ interest on capital notes. (i) Includes $ depreciation on real estate and $ depreciation on other invested assets. EXHIBIT OF CAPITAL GAINS (LOSSES) 4 5 Total Realized Capital Gain (Loss) (Columns + ) Change in Unrealized Capital Gain (Loss) Change in Unrealized Foreign Exchange Capital Gain (Loss) Realized Gain (Loss) On Sales or Maturity Other Realized Adjustments. U.S. Government bonds. Bonds exempt from U.S. tax. Other bonds (unaffiliated). Bonds of affiliates. Preferred stocks (unaffiliated). Preferred stocks of affiliates. Common stocks (unaffiliated). Common stocks of affiliates. Mortgage loans 4. Real estate 5. Contract loans 6. Cash, cash equivalents and short-term investments 7. Derivative instruments 8. Other invested assets 9. Aggregate write-ins for capital gains (losses) 0. Total capital gains (losses) DETAILS OF WRITE-INS 090. 090. 090. 0998. Summary of remaining write-ins for Line 9 from overflow page 0999. Totals (Lines 090 thru 090 plus 0998) (Line 9, above) 8
9 ANNUAL STATEMENT FOR THE YEAR 0 OF THE ING Life Insurance and Annuity Company EXHIBIT - PART - PREMIUMS AND ANNUITY CONSIDERATIONS FOR LIFE AND ACCIDENT AND HEALTH CONTRACTS Ordinary 5 Group Accident and Health 4 6 7 8 9 0 Aggregate of All Total Industrial Life Life Insurance Individual Annuities Credit Life (Group and Individual) Life Insurance Annuities Group Credit (Group and Individual) Other Other Lines of Business FIRST YEAR (other than single). Uncollected. Deferred and accrued. Deferred, accrued and uncollected:. Direct. Reinsurance assumed. Reinsurance ceded.4 Net (Line + Line ) 4. Advance 5. Line.4 - Line 4 6. Collected during year: 6. Direct 6. Reinsurance assumed 6. Reinsurance ceded 6.4 Net 7. Line 5 + Line 6.4 8. Prior year (uncollected + deferred and accrued - advance) 9. First year premiums and considerations: 9. Direct 9. Reinsurance assumed 9. Reinsurance ceded 9.4 Net (Line 7 - Line 8) SINGLE 0. Single premiums and considerations: 0. Direct 0. Reinsurance assumed 0. Reinsurance ceded 0.4 Net RENEWAL. Uncollected. Deferred and accrued. Deferred, accrued and uncollected:. Direct. Reinsurance assumed. Reinsurance ceded.4 Net (Line + Line ) 4. Advance 5. Line.4 - Line 4 6. Collected during year: 6. Direct 6. Reinsurance assumed 6. Reinsurance ceded 6.4 Net 7. Line 5 + Line 6.4 8. Prior year (uncollected + deferred and accrued - advance) 9. Renewal premiums and considerations: 9. Direct 9. Reinsurance assumed 9. Reinsurance ceded 9.4 Net (Line 7 - Line 8) TOTAL 0. Total premiums and annuity considerations: 0. Direct 0. Reinsurance assumed 0. Reinsurance ceded 0.4 Net (Lines 9.4 + 0.4 + 9.4)
0 DIVIDENDS AND COUPONS APPLIED (included in Part ) ANNUAL STATEMENT FOR THE YEAR 0 OF THE ING Life Insurance and Annuity Company EXHIBIT - PART - DIVIDENDS AND COUPONS APPLIED, REINSURANCE COMMISSIONS AND EXPENSE ALLOWANCES AND COMMISSIONS INCURRED (Direct Business Only) Ordinary 5 Group Accident and Health 4 6 7 8 9 0 Total Industrial Life Life Insurance Individual Annuities Credit Life (Group and Individual) Life Insurance Annuities Group Credit (Group and Individual) Other Aggregate of All Other Lines of Business. To pay renewal premiums. All other REINSURANCE COMMISSIONS AND EXPENSE ALLOWANCES INCURRED. First year (other than single):. Reinsurance ceded. Reinsurance assumed. Net ceded less assumed 4. Single: 4. Reinsurance ceded 4. Reinsurance assumed 4. Net ceded less assumed 5. Renewal: 5. Reinsurance ceded 5. Reinsurance assumed 5. Net ceded less assumed 6. Totals: 6. Reinsurance ceded (Page 6, Line 6) 6. Reinsurance assumed (Page 6, Line ) 6. Net ceded less assumed COMMISSIONS INCURRED (direct business only) 7. First year (other than single) 8. Single 9. Renewal 0. Deposit-type contract funds. Totals (to agree with Page 6, Line )
EXHIBIT - GENERAL EXPENSES Insurance 5 6 Accident and Health 4 Life Cost Containment All Other All Other Lines of Business Investment Total. Rent. Salaries and wages. Contributions for benefit plans for employees. Contributions for benefit plans for agents. Payments to employees under non-funded benefit plans. Payments to agents under non-funded benefit plans. Other employee welfare. Other agent welfare 4. Legal fees and expenses 4. Medical examination fees 4. Inspection report fees 4.4 Fees of public accountants and consulting actuaries 4.5 Expense of investigation and settlement of policy claims 5. Traveling expenses 5. Advertising 5. Postage, express, telegraph and telephone 5.4 Printing and stationery 5.5 Cost or depreciation of furniture and equipment 5.6 Rental of equipment 5.7 Cost or depreciation of EDP equipment and software 6. Books and periodicals 6. Bureau and association fees 6. Insurance, except on real estate 6.4 Miscellaneous losses 6.5 Collection and bank service charges 6.6 Sundry general expenses 6.7 Group service and administration fees 6.8 Reimbursements by uninsured plans 7. Agency expense allowance 7. Agents balances charged off (less $ recovered) 7. Agency conferences other than local meetings 9. Real estate expenses 9. Investment expenses not included elsewhere 9. Aggregate write-ins for expenses 0. General expenses incurred (a). General expenses unpaid December, prior year. General expenses unpaid December, current year. Amounts receivable relating to uninsured plans, prior year 4. Amounts receivable relating to uninsured plans, current year 5. General expenses paid during year (Lines 0+--+4) DETAILS OF WRITE-INS 09.0. 09.0. 09.0. 09.98. Summary of remaining write-ins for Line 9. from overflow page 09.99. Totals (Lines 09.0 thru 09.0 plus 09.98) (Line 9. above) (a) Includes management fees of $ to affiliates and $ to non-affiliates. EXHIBIT - TAXES, LICENSES AND FEES (EXCLUDING FEDERAL INCOME TAXES) Insurance 4 5 Life Accident and Health All Other Lines of Business Investment Total. Real estate taxes. State insurance department licenses and fees. State taxes on premiums 4. Other state taxes, including $ for employee benefits 5. U.S. Social Security taxes 6. All other taxes 7. Taxes, licenses and fees incurred 8. Taxes, licenses and fees unpaid December, prior year 9. Taxes, licenses and fees unpaid December, current year 0. Taxes, licenses and fees paid during year (Lines 7 + 8-9) EXHIBIT 4 - DIVIDENDS OR REFUNDS. Applied to pay renewal premiums. Applied to shorten the endowment or premium-paying period. Applied to provide paid-up additions 4. Applied to provide paid-up annuities 5. Total Lines through 4 6. Paid in cash 7. Left on deposit 8. Aggregate write-ins for dividend or refund options 9. Total Lines 5 through 8 0. Amount due and unpaid NONE. Provision for dividends or refunds payable in the following calendar year. Terminal dividends. Provision for deferred dividend contracts 4. Amount provisionally held for deferred dividend contracts not included in Line 5. Total Lines 0 through 4 6. Total from prior year 7. Total dividends or refunds (Lines 9 + 5-6) DETAILS OF WRITE-INS 080. 080. 080. 0898. Summary of remaining write-ins for Line 8 from overflow page 0899. Totals (Lines 080 thru 080 plus 0898) (Line 8 above) Life Accident and Health
EXHIBIT 5 - AGGREGATE RESERVE FOR LIFE CONTRACTS Valuation Standard Total Industrial 4 Ordinary 5 Credit (Group and Individual) 6 Group 00000. 00000. 00000. 000004. 000005. 000006. 000007. 000008. 000009. 00000. 0000. 0000. 0000. 00004. 00005. 00006. 00007. 00008. 00009. 00000. 0000. 0000. 0000. 00004. 00005. 00006. 00007. 00008. 00009. 00000. 0000. 0000. 0000. 00004. 00005. 00006. 00007. 00008. 00009. 000040. 00004. 00004. 00004. 000044. 000045. 000046. 000047. 000048. 000049. 000050. 00005. 00005. 00005. 099997. Totals (Gross) 099998. Reinsurance ceded 099999. Life Insurance: Totals (Net) 00000. XXX XXX 00000. XXX XXX 00000. XXX XXX 000004. XXX XXX 000005. XXX XXX 000006. XXX XXX 000007. XXX XXX 000008. XXX XXX 000009. XXX XXX 00000. XXX XXX 0000. XXX XXX 0000. XXX XXX 0000. XXX XXX 00004. XXX XXX 00005. XXX XXX 00006. XXX XXX 00007. XXX XXX 00008. XXX XXX 00009. XXX XXX 00000. XXX XXX 0000. XXX XXX 0000. XXX XXX 0000. XXX XXX 00004. XXX XXX 00005. XXX XXX 00006. XXX XXX 00007. XXX XXX 00008. XXX XXX 00009. XXX XXX 00000. XXX XXX 0000. XXX XXX 0000. XXX XXX 0000. XXX XXX 00004.! XXX XXX 00005.! XXX XXX 00006.! XXX XXX 00007.! XXX XXX 00008.! XXX XXX 00009.! XXX XXX
EXHIBIT 5 - AGGREGATE RESERVE FOR LIFE CONTRACTS Valuation Standard Total Industrial 4 Ordinary 5 Credit (Group and Individual) 6 Group 000040. XXX XXX 00004. XXX XXX 00004. XXX XXX 00004. XXX XXX 000044. XXX XXX 000045. XXX XXX 000046. XXX XXX 000047. XXX XXX 000048. XXX XXX 000049. XXX XXX 000050. XXX XXX 00005. XXX XXX 00005. XXX XXX 00005. XXX XXX 000054. XXX XXX 000055. XXX XXX 099997. Totals (Gross) XXX XXX 099998. Reinsurance ceded XXX XXX 099999. Annuities: Totals (Net) XXX XXX 00000. 00000. 00000. 000004. 000005. 000006. 000007. 000008. 000009. 00000. 0000. 0000. 0000. 00004. 00005. 00006. 00007. 00008. 00009. 00000. 0000. 0000. 0000. 00004. 099997. Totals (Gross) 099998. Reinsurance ceded 099999. SCWLC: Totals (Net) 040000.!!"!# 040000.!!"!# 040000. $%!!"!# 0400004. 0400005.!!# 0400006.!!"!# 0400007.!!# 0400008.!""!# 0400009.!!"!# 040000.!!# 04000.!""!# 04000.!!"!# 04000.! 040004.!!# 040005.!""!# 040006.!!"!# 040007.!!# 040008.!!# 0499997. Totals (Gross) 0499998. Reinsurance ceded 0499999. Accidental Death Benefits: Totals (Net) 050000. "%&%'&!!"!# 050000. "%&%'&!!"!# 050000. "%&%'& 0500004. "%&%'&! 0500005. "%&%'&!!"!# 0500006. "%&%'&!!# 0500007. "%&%'&!""!# 0500008. "%&%'&!!"!# 0500009. "%&%'&!!# 050000. "%&%'&!""!# 05000. "%&%'&!!# 05000. "%&%'&!""!# 05000. "%&%'&!!# 050004. "%&%'&!!#.
EXHIBIT 5 - AGGREGATE RESERVE FOR LIFE CONTRACTS Valuation Standard Total Industrial 4 Ordinary 5 Credit (Group and Individual) 6 Group 050005. 0599997. Totals (Gross) 0599998. Reinsurance ceded 0599999. Disability-Active Lives: Totals (Net) 060000. 060000. 060000. 0600004. 0600005. 0600006. 0600007. 0600008. 0600009. 060000. 06000. 06000. 06000. 060004. 060005. 060006. 060007. 060008. 060009. 060000. 0699997. Totals (Gross) 0699998. Reinsurance ceded 0699999. Disability-Disabled Lives: Totals (Net) 070000.!"#"$$"% &&'()*+,-".."."$/". 070000.! 0*')+,-".."."$/". 070000. $",-"..#/0'0)(&&")$"4('4./"$ -$$".&%(&55$..$"4('4.&$"."-)(/" (-(".-4')"%0--$%(&5))6".)0&%0$%# /0'0)(&$"7'($"%8*)6(..)0)" 0700004. $&&%"%'-)(&#%"#"$$"%#$0-)(&0 $"4('4.$$")'$&#$"4('4.0))6"%"0)6# )6"(&.'$"% 0700005. $.'$$"&%"$/0'".(&",-"..#$"."$/". )6"$9(."$"7'($"%0&%-0$$("%(&)6(..-6"%'" 0700006.!"&"$0)$.0&05"%'.)%* --'&) 0700007. (#"+,-".."."$/". 0700008. "5+,-".."."$/". 0700009. "."$/".#$""$0)" --'&)!'0$0&)"". 0799997. Totals (Gross) 0799998. Reinsurance ceded 0799999. Miscellaneous Reserves: Totals (Net) 9999999. Totals (Net) - Page, Line.
EXHIBIT 5 - INTERROGATORIES. Has the reporting entity ever issued both participating and non-participating contracts?. If not, state which kind is issued.. Does the reporting entity at present issue both participating and non-participating contracts?. If not, state which kind is issued.. Does the reporting entity at present issue or have in force contracts that contain non-guaranteed elements? If so, attach a statement that contains the determination procedures, answers to the interrogatories and an actuarial opinion as described in the instructions. 4. Has the reporting entity any assessment or stipulated premium contracts in force? If so, state: 4. Amount of insurance? $ 4. Amount of reserve? $ 4. Basis of reserve: 4.4 Basis of regular assessments: 4.5 Basis of special assessments: 4.6 Assessments collected during the year $ 5. If the contract loan interest rate guaranteed in any one or more of its currently issued contracts is less than 5%, not in advance, state the contract loan rate guarantees on any such contracts. 6. Does the reporting entity hold reserves for any annuity contracts that are less than the reserves that would be held on a standard basis? 6. If so, state the amount of reserve on such contracts on the basis actually held: $ 6. That would have been held (on an exact or approximate basis) using the actual ages of the annuitants; the interest rate(s) used in 6.; and the same mortality basis used by the reporting entity for the valuation of comparable annuity benefits issued to standard lives. If the reporting entity has no comparable annuity benefits for standard lives to be valued, the mortality basis shall be the table most recently approved by the state of domicile for valuing individual annuity benefits: $ Attach statement of methods employed in their valuation. 7. Does the reporting entity have any Synthetic GIC contracts or agreements in effect as of December of the current year? 7. If yes, state the total dollar amount of assets covered by these contracts or agreements $ 7. Specify the basis (fair value, amortized cost, etc.) for determining the amount:! 7. State the amount of reserves established for this business: $ 7.4 Identify where the reserves are reported in the blank: "#$%&! 8. Does the reporting entity have any Contingent Deferred Annuity contracts or agreements in effect as of December of the current year? 8. If yes, state the total dollar amount of account value covered by these contracts or agreements: $ 8. State the amount of reserves established for this business: $ 8. Identify where the reserves are reported in the blank: 9. Does the reporting entity have any Guaranteed Lifetime Income Benefit contracts, agreements or riders in effect as of December of the current year? 9. If yes, state the total dollar amount of any account value associated with these contracts, agreements or riders: $ 9. State the amount of reserves established for this business: $ 9. Identify where the reserves are reported in the blank: EXHIBIT 5A - CHANGES IN BASES OF VALUATION DURING THE YEAR Valuation Basis 4 Increase in Actuarial Reserve Due to Description of Valuation Class NONE Changed From Changed To Change 9999999 - Total (Column 4, only)
4 ANNUAL STATEMENT FOR THE YEAR 0 OF THE ING Life Insurance and Annuity Company EXHIBIT 6 - AGGREGATE RESERVES FOR ACCIDENT AND HEALTH CONTRACTS 4 Other Individual Contracts Credit Accident 5 6 7 8 Total Group Accident and Health and Health (Group and Individual) Collectively Renewable Non-Cancelable Guaranteed Renewable Non-Renewable for Stated Reasons Only Other Accident Only ACTIVE LIFE RESERVE. Unearned premium reserves. Additional contract reserves (a). Additional actuarial reserves-asset/liability analysis 4. Reserve for future contingent benefits 5. Reserve for rate credits 6. Aggregate write-ins for reserves 7. Totals (Gross) 8. Reinsurance ceded 9. Totals (Net) CLAIM RESERVE 0. Present value of amounts not yet due on claims. Additional actuarial reserves-asset/liability analysis. Reserve for future contingent benefits. Aggregate write-ins for reserves 4. Totals (Gross) 5. Reinsurance ceded 6. Totals (Net) 7. TOTAL (Net) 8. TABULAR FUND INTEREST DETAILS OF WRITE-INS 060. 060. 060. 0698. Summary of remaining write-ins for Line 6 from overflow page 0699. TOTALS (Lines 060 thru 060 plus 0698) (Line 6 above) 0. 0. 0. 98. Summary of remaining write-ins for Line from overflow page 99. TOTALS (Lines 0 thru 0 plus 98) (Line above) (a) Attach statement as to valuation standard used in calculating this reserve, specifying reserve bases, interest rates and methods. 988 Long Term Care Table with 980 CSO Mortality and 5.5% interest Two Year Preliminary Term Method - $5,0,60 9 All Other 986 MSE Table with 980 CSO Mortality and 5% interest Two year preliminary term method - $4,74
EXHIBIT 7 - DEPOSIT TYPE CONTRACTS Total Guaranteed Interest Contracts Annuities Certain 4 Supplemental Contracts 5 Dividend Accumulations or Refunds 6 Premium and Other Deposit Funds. Balance at the beginning of the year before reinsurance. Deposits received during the year. Investment earnings credited to the account 4. Other net change in reserves 5. Fees and other charges assessed 6. Surrender charges 7. Net surrender or withdrawal payments 8. Other net transfers to or (from) Separate Accounts 5 9. Balance at the end of current year before reinsurance (Lines +++4-5-6-7-8) 0. Reinsurance balance at the beginning of the year. Net change in reinsurance assumed. Net change in reinsurance ceded. Reinsurance balance at the end of the year (Lines 0+-) 4. Net balance at the end of current year after reinsurance (Lines 9 + )
. Due and unpaid:. In course of settlement: ANNUAL STATEMENT FOR THE YEAR 0 OF THE ING Life Insurance and Annuity Company EXHIBIT 8 - CLAIMS FOR LIFE AND ACCIDENT AND HEALTH CONTRACTS PART - Liability End of Current Year Ordinary 6 Group Accident and Health 4 5 7 8 9 0 Total Industrial Life Life Insurance Individual Annuities Supplementary Contracts Credit Life (Group and Individual) Life Insurance Annuities Group Credit (Group and Individual). Direct. Reinsurance assumed. Reinsurance ceded.4 Net. Resisted. Direct. Reinsurance assumed. Reinsurance ceded.4 Net (b) (b) (b) (b) Other 6. Other. Direct. Reinsurance assumed. Reinsurance ceded.4 Net (b) (b) (b) (b) (b) (b) (b). Incurred but unreported:. Direct. Reinsurance assumed. Reinsurance ceded.4 Net (b) (b) (b) (b) (b) (b) (b) 4. TOTALS 4. Direct 4. Reinsurance assumed 4. Reinsurance ceded 4.4 Net (a) (a) (a) (a) Including matured endowments (but not guaranteed annual pure endowments) unpaid amounting to $ in Column, $ in Column and $ in Column 7. (b) Include only portion of disability and accident and health claim liabilities applicable to assumed "accrued" benefits. Reserves (including reinsurance assumed and net of reinsurance ceded) for unaccrued benefits for Ordinary Life Insurance $ Individual Annuities $, Credit Life (Group and Individual) $, and Group Life $, are included in Page, Line, (See Exhibit 5, Section on Disability Disabled Lives); and for Group Accident and Health $ Credit (Group and Individual) Accident and Health $, and Other Accident and Health $ are included in Page, Line (See Exhibit 6, Claim Reserve).
7 ANNUAL STATEMENT FOR THE YEAR 0 OF THE ING Life Insurance and Annuity Company EXHIBIT 8 - CLAIMS FOR LIFE AND ACCIDENT AND HEALTH CONTRACTS PART - Incurred During the Year Ordinary 6 Group Accident and Health 4 5 7 8 9 0 Total Industrial Life (a) Life Insurance (b) Individual Annuities Supplementary Contracts Credit Life (Group and Individual) Life Insurance (c) Annuities Group Credit (Group and Individual). Settlements During the Year:. Direct. Reinsurance assumed. Reinsurance ceded.4 Net (d). Liability December, current year from Part :. Direct. Reinsurance assumed. Reinsurance ceded.4 Net. Amounts recoverable from reinsurers December, current year 4. Liability December, prior year: 4. Direct 4. Reinsurance assumed 4. Reinsurance ceded 4.4 Net 5. Amounts recoverable from reinsurers December, prior year 6. Incurred Benefits 6. Direct 6. Reinsurance assumed 6. Reinsurance ceded 6.4 Net (a) Including matured endowments (but not guaranteed annual pure endowments) amounting to $ in Line., $ in Line.4. $ in Line 6., and $ in Line 6.4. (b) Including matured endowments (but not guaranteed annual pure endowments) amounting to $ in Line., $ in Line.4. $ in Line 6., and $ in Line 6.4. (c) Including matured endowments (but not guaranteed annual pure endowments) amounting to $ in Line., $ in Line.4. $ in Line 6., and $ in Line 6.4. (d) Includes $ premiums waived under total and permanent disability benefits. Other
EXHIBIT OF NON-ADMITTED ASSETS Current Year Total Nonadmitted Assets Prior Year Total Nonadmitted Assets Change in Total Nonadmitted Assets (Col. - Col. ). Bonds (Schedule D). Stocks (Schedule D):. Preferred stocks. Common stocks. Mortgage loans on real estate (Schedule B):. First liens. Other than first liens 4. Real estate (Schedule A): 4. Properties occupied by the company 4. Properties held for the production of income 4. Properties held for sale 5. Cash (Schedule E - Part ), cash equivalents (Schedule E - Part ) and short-term investments (Schedule DA) 6. Contract loans 7. Derivatives (Schedule DB) 8. Other invested assets (Schedule BA) 9. Receivables for securities 0. Securities lending reinvested collateral assets (Schedule DL). Aggregate write-ins for invested assets. Subtotals, cash and invested assets (Lines to ). Title plants (for Title insurers only) 4. Investment income due and accrued 5. Premiums and considerations: 5. Uncollected premiums and agents'balances in the course of collection 5. Deferred premiums, agents'balances and installments booked but deferred and not yet due 5. Accrued retrospective premiums 6. Reinsurance: 6. Amounts recoverable from reinsurers 6. Funds held by or deposited with reinsured companies 6. Other amounts receivable under reinsurance contracts 7. Amounts receivable relating to uninsured plans 8. Current federal and foreign income tax recoverable and interest thereon 8. Net deferred tax asset 9. Guaranty funds receivable or on deposit 0. Electronic data processing equipment and software. Furniture and equipment, including health care delivery assets. Net adjustment in assets and liabilities due to foreign exchange rates. Receivables from parent, subsidiaries and affiliates 4. Health care and other amounts receivable 5. Aggregate write-ins for other than invested assets 6. Total assets excluding Separate Accounts, Segregated Accounts and Protected Cell Accounts (Lines to 5) 7. From Separate Accounts, Segregated Accounts and Protected Cell Accounts 8. Total (Lines 6 and 7) 0. 0. 0. DETAILS OF WRITE-INS 98. Summary of remaining write-ins for Line from overflow page 99. Totals (Lines 0 thru 0 plus 98)(Line above) 50. 50. 50. 598. Summary of remaining write-ins for Line 5 from overflow page 599. Totals (Lines 50 thru 50 plus 598)(Line 5 above) 8
NOTES TO FINANCIAL STATEMENTS. Summary of Significant Accounting Policies A. Accounting Practices The financial statements of ING Life Insurance and Annuity Company ( the Company ) are presented on the basis of accounting practices prescribed or permitted by the Connecticut Insurance Department. The Connecticut Insurance Department recognizes only statutory accounting practices prescribed or permitted by the State of Connecticut for determining and reporting the financial condition and results of operations of an insurance company, and for determining its solvency under the Connecticut Insurance Law. The National Association of Insurance Commissioners' ( NAIC ) Accounting Practices and Procedures Manual has been adopted as a component of prescribed or permitted practices by the State of Connecticut. The Commissioner of the Connecticut Insurance Department has the right to permit other specific practices that deviate from prescribed practices. B. Use of Estimates in the Preparation of the Financial Statements The preparation of financial statements in conformity with NAIC Statements of Statutory Accounting Principles ( SSAP ) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. It also requires disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. C. Accounting Policy Life premiums are recognized as income over the premium paying period of the related policies. Annuity considerations are recognized as revenue when received. Health premiums are earned ratably over the terms of the related insurance and reinsurance contracts or policies. Expenses incurred in connection with acquiring new insurance business, including acquisition costs such as sales commissions, are charged to operations as incurred. In addition, the Company uses the following accounting policies: () Short-term investments are stated at amortized cost. () Bonds not backed by other loans are stated at either amortized cost using the interest method or the lower of cost or fair market value. () Common stocks are stated at market except that investments in stocks of uncombined subsidiaries and affiliates in which the Company has an interest of 0% or more are carried on the equity basis. (4) Preferred stocks are stated in accordance with SSAP No., Investments in Preferred Stock. (5) Mortgage loans on real estate are stated at amortized cost, less adjustments for impairments. (6) Loan-backed securities are stated at either amortized cost or the lower of amortized cost or fair market value. Amortized cost is determined using the interest method and includes anticipated prepayments. The retrospective adjustment method is used to determine the amortized cost for the majority of loanbacked and structured securities. For certain securities, the prospective adjustments methodology is utilized, including interest-only securities and securities that have experienced an other-than-temporary impairment. (7) The Company carries investments in subsidiaries, controlled, and affiliated companies on an equity basis. (8) The Company has minor ownership interests in joint ventures. The Company carries these interests based on the underlying audited GAAP equity of the investee. (9) Derivatives which qualify for hedge accounting are reported in a manner that is consistent with the hedged asset or liability. All effective derivatives are carried at amortized cost. Ineffective hedges are carried at fair value. (0) The Company anticipates investment income as a factor in the premium deficiency calculation, in accordance with SSAP No. 54, Individual and Group Accident and Health Contracts. () Unpaid losses and loss adjustment expenses include an amount determined from individual case estimates and loss reports and an amount, based on past experience, for losses incurred but not reported. Such liabilities are necessarily based on assumptions and estimates and while management believes the amount is adequate, the ultimate liability may be in excess of or less than the amount provided. The methods for making such estimates and establishing the resulting liability are continually reviewed and any adjustments are reflected in the period determined. () The Company has not modified its capitalization policy from the prior period. () The Company has no pharmaceutical rebate receivables. 9
NOTES TO FINANCIAL STATEMENTS. Accounting Changes and Corrections of Errors A. Correction of Errors None B. Accounting Changes Effective January, 0, the Company adopted SSAP No. 0, Income Taxes, A replacement of SSAP No. 0R and SSAP No. 0 ( SSAP No. 0 ). SSAP No. 0 changes statutory accounting for income taxes in two key areas () tax contingencies and () the admissibility of deferred tax assets. Under SSAP No.0, federal and foreign income tax contingencies are now determined under a modified version of SSAP No. 5R, Liabilities, Contingencies and Impairment of Assets - Revised ( SSAP No. 5R ). Under this standard, the recognition of tax loss contingencies uses a more likely than not model. SSAP No. 0 also provides for a three-step calculation to determine the admitted portion of adjusted gross deferred tax assets. In the first part of the admissibility test, all filers will be allowed to use a reversal period that corresponds to the tax loss carryback provisions of the Internal Revenue Code (not to exceed three years). In the second part of the admissibility test, the reversal period and surplus limitation parameters (one year & 0 percent or three years & 5 percent) are determined based upon risk-based capital ( RBC ) levels. Companies not meeting the minimum threshold are prohibited from admitting anything in this part of the admissibility test. For purposes of determining test parameters, calculations of RBC or surplus thresholds will use current reporting period information. In step of the admissibility calculation, SSAP No. 0 allows the admittance of adjusted gross deferred tax assets (after application of steps and ) to the extent that offsetting by deferred tax liabilities of the same tax character (i.e. ordinary versus capital) would be permitted in the tax return under current tax laws. Additionally, an entity would have to consider the reversal patterns of temporary differences. Whether or not scheduling of reversing deferred tax assets and liabilities is necessary is a matter of judgment based on the specific facts and circumstances. The third part of the admissibility calculation under SSAP No. 0 is consistent with SSAP No. 0R, Income Taxes A Temporary Replacement of SSAP No. 0 ( SSAP No. 0R ), except the consideration of reversal patterns of temporary differences was not explicitly stated. There was no effect on the Company s 0 financial statements from adopting this change in accounting principle at January, 0. Effective December, 0, the Company adopted SSAP No. 5R. This statement defines and establishes accounting for liabilities, contingencies and impairments of assets, particularly contingencies related to or on behalf of direct or indirect wholly owned subsidiaries. The new pronouncement requires the Company to record a liability for ) the contingent liability for payments required by the guarantee based on the current underlying risk in the transaction, or ) the non-contingent liability for the on-going obligation to provide the guarantee. At inception, the liability should be recorded at the greater of the fair value of the guarantee or the undiscounted future payments required under the guarantee. The Company s 0 financial statements were not impacted as a result of the adoption of this change in accounting principle. See Note 4 for additional disclosures required by this statement. Effective December, 0, the Company adopted the modifications made to SSAP No., Leases ( SSAP No. ), as they relate to modification and early termination of leases. Under the provisions of the statement, early termination or non-use of leased property benefits, are recognized at fair value as follows:. Liabilities for costs to terminate a contract before the end of its term are recognized when the Company terminated in accordance with the contract terms.. Liabilities for costs that will continue to be incurred under a contract for its remaining term without economic benefit are recognized as of the date the Company no longer has the right to use the leased property. The fair value of the liability on that date will be determined based on the remaining lease rentals, adjusted for the effects of any prepaid or deferred items recognized under the lease, and reduced by estimated sublease rentals that could be reasonably obtained for the property, even if there is no intent to enter into a sublease. The Company recognized a liability of $0 as a result of the adoption of this statement. There was no impact to net income. See Note 5 for additional disclosures required by this statement. Effective January, 0, the Company adopted SSAP No. 5R, Guaranty Fund and Other Assessments ( SSAP No. 5R ). This statement establishes statutory accounting principles for guaranty fund and other assessments. Guaranty fund and other assessments will be expensed and a liability accrued by the Company when the following conditions are met:. An assessment has been imposed or information available prior to issuance of the statutory financial statement indicates that it is probable that an assessment will be imposed.. The event obligating an entity to pay an imposed or probable assessment has occurred on or before the date of the financial statements.. The amount of the assessment can be reasonably estimated. 9.