UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2005
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________________ to
Commission file number: 333-114338
ReliaStar Life Insurance Company of New York
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(Exact name of registrant as specified in its charter)
New York 53-0242530
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(State or other jurisdiction (IRS employer identification no.)
of incorporation or organization)
1000 Woodbury Road, Suite 208, Woodbury, New York 11797
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (516) 682-8700
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Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [ X ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 1,377,863 shares of Common
Stock as of May 11, 2005, all of which were directly owned by ReliaStar Life
Insurance Company.
NOTE: WHEREAS RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK MEETS THE CONDITIONS
SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q, THIS FORM IS
BEING FILED WITH THE REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL INSTRUCTION
H(2).
1
ReliaStar Life Insurance Company of New York
(A wholly-owned subsidiary of ReliaStar Life Insurance Company)
Form 10-Q for the period ended March 31, 2005
INDEX
Page
----
PART I. FINANCIAL INFORMATION (Unaudited)
Item 1. Financial Statements:
Condensed Statements of Operations 3
Condensed Balance Sheets 4
Condensed Statements of Changes in Shareholder's Equity 6
Condensed Statements of Cash Flows 7
Notes to Condensed Financial Statements 8
Item 2. Management's Narrative Analysis of the Results of
Operations and Financial Condition 15
Item 4. Controls and Procedures 25
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 26
Item 6. Exhibits 26
Signatures 28
2
ReliaStar Life Insurance Company of New York
(A wholly-owned subsidiary of ReliaStar Life Insurance Company)
PART I. FINANCIAL INFORMATION (UNAUDITED)
Item 1. Financial Statements
Condensed Statements of Operations
(Unaudited)
(In millions)
Three months ended March 31,
2005 2004
----------------- -----------------
Revenues:
Net investment income $ 29.8 $ 30.1
Fee income 24.1 24.4
Premiums 18.2 16.1
Net realized capital gains 1.1 5.5
Other income 1.1 1.8
----------------- -----------------
Total revenue 74.3 77.9
----------------- -----------------
Benefits and expenses:
Interest credited and other benefits
to contractowners and policyholders 47.1 40.7
Operating expenses 16.3 12.5
Amortization of deferred policy acquisition costs
and value of business acquired 0.4 6.2
----------------- -----------------
Total benefits and expenses 63.8 59.4
----------------- -----------------
Income before income taxes and cumulative effect
of change in accounting principle 10.5 18.5
Income tax expense 3.6 6.4
----------------- -----------------
Income before cumulative effect of change
in accounting principle 6.9 12.1
Cumulative effect of change in accounting principle,
net of tax - 0.8
----------------- -----------------
Net income $ 6.9 $ 12.9
================= =================
The accompanying notes are an integral part of these financial statements.
3
ReliaStar Life Insurance Company of New York
(A wholly-owned subsidiary of ReliaStar Life Insurance Company)
Condensed Balance Sheets
(In millions, except share data)
As of As of
March 31, December 31,
2005 2004
----------------- -----------------
(Unaudited)
Assets
Investments:
Fixed maturities, available-for-sale, at fair value
(amortized cost of $1,548.6 at 2005 and $1,553.2 at 2004) $ 1,578.8 $ 1,613.1
Equity securities, available-for-sale, at fair value (cost of
$6.8 at 2005 and $6.9 at 2004) 7.4 7.6
Mortgage loans on real estate 211.6 213.0
Policy loans 90.3 90.9
Other investments 19.0 17.0
Securities pledged (amortized cost of $173.7 at 2005 and $149.7 at 2004) 170.5 148.5
----------------- -----------------
Total investments 2,077.6 2,090.1
Cash and cash equivalents 41.6 33.5
Short-term investments under securities loan agreement 72.9 49.0
Accrued investment income 18.3 19.2
Reinsurance recoverable 106.7 84.2
Deferred policy acquisition costs 83.2 77.7
Value of business acquired 39.8 33.7
Due from affiliates 2.2 1.4
Deferred income taxes 43.0 32.5
Other assets 14.6 13.2
Assets held in separate accounts 537.2 537.7
----------------- -----------------
Total assets $ 3,037.1 $ 2,972.2
================= =================
The accompanying notes are an integral part of these financial statements.
4
ReliaStar Life Insurance Company of New York
(A wholly-owned subsidiary of ReliaStar Life Insurance Company)
Condensed Balance Sheets
(In millions, except share data)
As of As of
March 31, December 31,
2005 2004
----------------- -----------------
(Unaudited)
Liabilities and Shareholder's Equity
Policy liabilities and accruals $ 1,803.6 $ 1,772.5
Due to affiliates 7.1 5.1
Notes payable 11.0 2.3
Borrowed money 99.7 100.4
Payable for securities purchased 25.8 -
Payables under securities loan agreement 72.9 49.0
Current income taxes 5.2 16.2
Other liabilities 36.9 37.4
Liabilities related to separate accounts 537.2 537.7
----------------- -----------------
Total liabilities 2,599.4 2,520.6
----------------- -----------------
Shareholder's equity:
Common stock (1,377,863 shares authorized, issued and outstanding,
$2.00 per share value) 2.8 2.8
Additional paid-in capital 1,167.6 1,172.7
Accumulated other comprehensive income 13.9 29.6
Retained earnings (deficit) (746.6) (753.5)
----------------- -----------------
Total shareholder's equity 437.7 451.6
----------------- -----------------
Total liabilities and shareholder's equity $ 3,037.1 $ 2,972.2
================= =================
The accompanying notes are an integral part of these financial statements.
5
ReliaStar Life Insurance Company of New York
(A wholly-owned subsidiary of ReliaStar Life Insurance Company)
Condensed Statements of Changes in Shareholder's Equity
(Unaudited)
(In millions)
Accumulated
Additional Other Retained Total
Common Paid-In Comprehensive Earnings Shareholder's
Stock Capital Income (Deficit) Equity
------------- ------------- ------------------ -------------- ----------------
Balance at December 31, 2003 $ 2.8 $ 1,200.1 $ 35.8 $ (784.1) $ 454.6
Dividends to shareholder - (6.8) - - (6.8)
Comprehensive income:
Net income - - - 12.9 12.9
Other comprehensive income,
net of tax:
Unrealized gain on securities
($20.4 pretax) - - 13.3 - 13.3
----------------
Comprehensive income 26.2
------------- ------------- ------------------ -------------- ----------------
Balance at March 31, 2004 $ 2.8 $ 1,193.3 $ 49.1 $ (771.2) $ 474.0
============= ============= ================== ============== ================
Balance at December 31, 2004 $ 2.8 $ 1,172.7 $ 29.6 $ (753.5) $ 451.6
Dividends to shareholder - (5.2) - - (5.2)
Comprehensive loss:
Net income - - - 6.9 6.9
Other comprehensive loss,
net of tax:
Unrealized loss on securities
($(24.1) pretax) - - (15.7) - (15.7)
----------------
Comprehensive loss (8.8)
----------------
Employee share based payments - 0.1 - - 0.1
------------- ------------- ------------------ -------------- ----------------
Balance at March 31, 2005 $ 2.8 $ 1,167.6 $ 13.9 $ (746.6) $ 437.7
============= ============= ================== ============== ================
The accompanying notes are an integral part of these financial statements.
6
ReliaStar Life Insurance Company of New York
(A wholly-owned subsidiary of ReliaStar Life Insurance Company)
Statements of Cash Flows
(Unaudited)
(In millions)
Three months ended March 31,
2005 2004
----------------- ------------------
(Restated)
Net cash provided by operating activities $ 10.4 $ 51.3
Cash Flows from Investing Activities:
Proceeds from the sale, maturity or redemption of:
Fixed maturities, available-for-sale 536.8 719.3
Mortgage loans on real estate 5.5 7.7
Acquisition of:
Fixed maturities, available-for-sale (555.2) (774.2)
Mortgage loans on real estate (4.0) (12.8)
Other, net (1.3) (1.0)
----------------- ------------------
Net cash used for investing activities (18.2) (61.0)
----------------- ------------------
Cash Flows from Financing Activities:
Deposits received for investment contracts $ 53.2 $ 52.7
Maturities and withdrawals from investment contracts (40.1) (40.3)
Short-term borrowings, net 8.0 2.2
Dividends to shareholder (5.2) (6.8)
Other - (0.4)
----------------- ------------------
Net cash provided by financing activities 15.9 7.4
----------------- ------------------
Net increase (decrease) in cash and cash equivalents 8.1 (2.3)
Cash and cash equivalents, beginning of period 33.5 10.5
----------------- ------------------
Cash and cash equivalents, end of period $ 41.6 $ 8.2
================= ==================
The accompanying notes are an integral part of these financial statements.
7
ReliaStar Life Insurance Company of New York
(A wholly-owned subsidiary of ReliaStar Life Insurance Company)
Notes to Condensed Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
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1. Organization and Significant Accounting Policies
Basis of Presentation
ReliaStar Life Insurance Company of New York ("RLNY" or the "Company"), a
direct, wholly-owned subsidiary of ReliaStar Life Insurance Company
("ReliaStar Life"), is a stock life insurance company organized under the
laws of the State of New York. ReliaStar Life is a wholly-owned subsidiary
of Lion Connecticut Holdings Inc. ("Lion"), a Connecticut holding and
management company. Lion is an indirect, wholly-owned subsidiary of ING
Groep N.V. ("ING"), a global financial services holding company based in
The Netherlands, with American Depository Shares listed on the New York
Stock Exchange under the symbol "ING."
The condensed financial statements and notes as of March 31, 2005 and
December 31, 2004 and for the three month periods ended March 31, 2005 and
2004 ("interim periods") have been prepared in accordance with generally
accepted accounting principles in the United States and are unaudited. The
condensed financial statements reflect all adjustments (consisting only of
normal recurring accruals) which are, in the opinion of management,
necessary for the fair presentation of the financial position, results of
operations and cash flows for the interim periods. These condensed
financial statements and notes should be read in conjunction with the
financial statements and related notes as presented in the Company's 2004
Annual Report on Form 10-K. The results of operations for the interim
periods may not be considered indicative of results to be expected for the
full year.
Description of Business
The Company is principally engaged in the business of providing life
insurance and related financial services products. The Company provides and
distributes individual life insurance and annuities; employee benefit
products and services; and retirement plans. The Company operates primarily
in the United States and is authorized to conduct business in all 50 states
and the District of Columbia.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to
make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ
from reported results using those estimates.
8
ReliaStar Life Insurance Company of New York
(A wholly-owned subsidiary of ReliaStar Life Insurance Company)
Notes to Condensed Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
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Reclassifications
Certain reclassifications have been made to prior year financial
information to conform to the current year classifications (see footnote
8).
Significant Accounting Policies
For a description of significant accounting policies, see Note 1 to the
Financial Statements included in the Company's 2004 Annual Report on Form
10-K.
2. Recently Adopted Accounting Standards
Share-Based Payment
In December 2004, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Standard ("FAS") No. 123 (revised 2004),
"Share-Based Payment" ("FAS 123R"), which requires all share-based payments
to employees be recognized in the financial statements based upon the fair
value. As a result of Securities and Exchange Commission ("SEC") Release
No. 33-8568: Amendment to Rule 4-01(a) of Regulation S-X Regarding the
Compliance Date for Statement of Financial Accounting Standards No. 123
(Revised 2004), "Share-Based Payment", adopted on April 14, 2005, FAS 123R
is effective at the beginning of the first annual period beginning after
June 15, 2005 for registrants. Earlier adoption is encouraged. FAS 123R
provides two transition methods, modified-prospective and
modified-retrospective.
The Company early adopted the provisions of FAS 123R on January 1, 2005,
using the modified-prospective method. Under the modified-prospective
method, compensation cost recognized in the first three months of 2005
includes: (a) compensation cost for all share-based payments granted prior
to, but not yet vested as of January 1, 2005, based on the grant date fair
value estimated in accordance with the original provisions of FASB
Statement No. 123, "Accounting for Stock-Based Compensation," and (b)
compensation cost for all share-based payments granted subsequent to
January 1, 2005, based on the grant-date fair value in accordance with the
provisions of FAS 123R. Results for prior periods are not restated. Prior
to January 1, 2005, the Company applied the intrinsic value-based
provisions set forth in APB Opinion No. 25, "Accounting for Stock Issued to
Employees" ("APB 25"), and related Interpretations, as permitted by FAS No.
123. No stock based employee compensation cost was recognized in the
Statement of Operations during 2004, as all options granted during the year
had an exercise price equal to the market value of the underlying common
stock on the date of grant. All shares granted during 2005 and 2004 were
those of ING, the Company's ultimate parent. As a result of adopting FAS
123R, there was a minimal reduction to the Company's income before income
taxes and net income for the three months ended March 31, 2005.
9
ReliaStar Life Insurance Company of New York
(A wholly-owned subsidiary of ReliaStar Life Insurance Company)
Notes to Condensed Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
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Accounting and Reporting by Insurance Enterprises for Certain
Nontraditional Long-Duration Contracts and for Separate Accounts
The Company adopted Statement of Position ("SOP") 03-1, "Accounting and
Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration
Contracts and for Separate Accounts," on January 1, 2004. The Company
determined that it was affected by the SOP's requirements to establish
additional liabilities for certain guaranteed benefits and products with
patterns of cost of insurance charges resulting in losses in later policy
durations from the insurance benefit function and to defer, amortize, and
recognize separately, sales inducements to contractowners and
policyholders.
In the fourth quarter of 2004, the Company implemented Technical Practice
Aid 6300.05 - 6300.08, "Q&As Related to the Implementation of SOP 03-1,
`Accounting and Reporting by Insurance Enterprises for Certain
Nontraditional Long-Duration Contracts and for Separate Accounts"' (the
"TPA"). The TPA was implemented retroactive to the original implementation
date of SOP 03-1, January 1, 2004 and reported as an adjustment to the SOP
03-1 cumulative effect of change in accounting principle.
The adoptions of SOP 03-1 and the TPA resulted in a cumulative effect of a
change in accounting principles of $1.2, before tax or $0.8, net of $0.4 of
income taxes, and increased 2004 net income of $4.0, approximately $1.0 in
each quarter.
In addition, on July 1, 2004, the Company adopted the Financial Accounting
Standards Board ("FASB") Staff Position No. FAS 97-1 ("FSP FAS 97-1"),
"Situations in Which Paragraphs 17(b) and 20 of FASB Statement No. 97,
`Accounting and Reporting by Insurance Enterprises for Certain
Long-Duration Contracts and for Realized Gains and Losses from the Sale of
Investments,' Permit or Require Accrual of an Unearned Revenue Liability,"
effective for fiscal periods beginning subsequent to the date the guidance
was issued, June 18, 2004.
3. Deferred Policy Acquisition Costs and Value of Business Acquired
Deferred Policy Acquisition Costs ("DAC") represent policy acquisition
costs that have been capitalized and are subject to amortization. Such
costs consist principally of certain commissions, underwriting, contract
issuance, and agency expenses, related to the production of new and renewal
business.
Value of Business Acquired ("VOBA") represents the outstanding value of in
force business capitalized and is subject to amortization in purchase
accounting when the Company was acquired. The value is based on the present
value of estimated net cash flows embedded in the Company's contracts.
10
ReliaStar Life Insurance Company of New York
(A wholly-owned subsidiary of ReliaStar Life Insurance Company)
Notes to Condensed Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
- --------------------------------------------------------------------------------
The amortization methodology used for DAC and VOBA varies by product type.
FAS No. 97, "Accounting and Reporting by Insurance Enterprises for Certain
Long-Duration Contracts and for Realized Gains and Losses from the Sale of
Investments" ("FAS No. 97"), applies to universal life and investment-type
products, such as fixed and variable deferred annuities. Under FAS No. 97,
DAC and VOBA are amortized, with interest, over the life of the related
contracts (usually 25 years) in relation to the present value of estimated
future gross profits from investment, mortality, and expense margins;
asset-based fees, policy administration, and surrender charges; less policy
maintenance fees and non-capitalized commissions, as well as realized gains
and losses on investments.
FAS No. 60, "Accounting and Reporting by Insurance Enterprises" ("FAS No.
60"), applies to traditional life insurance products, primarily traditional
whole life and term life insurance contracts. Under FAS No. 60, DAC and
VOBA are amortized over the premium payment period, in proportion to the
premium revenue recognized.
Activity for the three months ended March 31, 2005 and 2004, within VOBA
was as follows:
2004
-----------------
Balance at December 31, 2003 $ 36.4
Adjustment for FAS No. 115 1.5
Additions 0.6
Interest accrued at 5% - 7% 0.7
Amortization (18.0)
-----------------
Balance at March 31, 2004 $ 21.2
=================
2005
-----------------
Balance at December 31, 2004 $ 33.7
Adjustment for FAS No. 115 7.4
Additions 0.2
Interest accrued at 5% - 7% 0.7
Amortization (2.2)
-----------------
Balance at March 31, 2005 $ 39.8
=================
4. Income Taxes
The effective tax rates for the three months ended March 31, 2005 and 2004,
were 34.3% and 34.6%, respectively. These rates approximate the federal
income tax rate of 35.0%.
11
ReliaStar Life Insurance Company of New York
(A wholly-owned subsidiary of ReliaStar Life Insurance Company)
Notes to Condensed Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
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5. Financing Agreements
The Company maintains a revolving loan agreement with SunTrust Bank,
Atlanta (the "Bank"). Under this agreement, which is due on demand, the
Company can borrow up to $30.0 from the Bank. Interest on any borrowing
accrues at an annual rate equal to a rate quoted by the Bank to the Company
for the borrowing. Under the agreement, the Company did not incur
significant interest expense for the three months ended March 31, 2005 and
2004, respectively. At March 31, 2005 and December 31, 2004, the Company
had $11.0 and $2.3 balances payable to the Bank, respectively. The
outstanding balance of $11.0 at March 31, 2005 was repaid on April 4, 2005.
6. Commitments and Contingent Liabilities
Commitments
Through the normal course of investment operations, the Company commits to
either purchase or sell securities, commercial mortgage loans, or money
market instruments at a specified future date and at a specified price or
yield. The inability of counterparties to honor these commitments may
result in either a higher or lower replacement cost. Also, there is likely
to be a change in the value of the securities underlying the commitments.
At March 31, 2005 and December 31, 2004, the Company had off-balance sheet
commitments to purchase investments equal to their fair value of $13.6 and
$15.4, respectively.
Litigation
The Company is a party to threatened or pending lawsuits/arbitrations
arising from the normal conduct of business. Due to the climate in
insurance and business litigation/arbitrations, suits against the Company
sometimes include claims for substantial compensatory, consequential, or
punitive damages and other types of relief. Moreover, certain claims are
asserted as class actions, purporting to represent a group of similarly
situated individuals. While it is not possible to forecast the outcome of
such lawsuits/arbitrations, in light of existing insurance, reinsurance and
established reserves, it is the opinion of management that the disposition
of such lawsuits/arbitrations will not have a materially adverse effect on
the Company's operations or financial position.
12
ReliaStar Life Insurance Company of New York
(A wholly-owned subsidiary of ReliaStar Life Insurance Company)
Notes to Condensed Financial Statements (Unaudited)
(Dollar amounts in millions, unless otherwise stated)
- --------------------------------------------------------------------------------
7. Accumulated Other Comprehensive Income
Shareholder's equity included the following accumulated other comprehensive
income (loss):
As of March 31,
2005 2004
----------------- ------------------
Net unrealized capital gains:
Fixed maturities $ 27.0 $ 96.9
Equity securities 0.6 0.2
DAC/VOBA (6.4) (19.7)
----------------- ------------------
Subtotal 21.2 77.4
Less: Deferred income taxes 7.3 27.1
----------------- ------------------
Net unrealized capital gains 13.9 50.3
Other - (1.2)
----------------- ------------------
Net accumulated other comprehensive
income $ 13.9 $ 49.1
================= ==================
Changes in accumulated other comprehensive income related to changes in
unrealized gains (losses) on securities, including securities pledged, were
as follows:
Three months ended March 31,
2005 2004
----------------- -----------------
Unrealized holding (losses) gains arising
the year (1) $ (13.9) $ 16.4
Less: reclassification adjustment for gains
(losses) and other items included in
net income (2) 1.8 3.1
----------------- -----------------
Net unrealized (losses) gains on securities $ (15.7) $ 13.3
================= =================
(1) Pretax unrealized holding (losses) gains were $(21.3) and $25.1, for
the three months ended March 31, 2005 and 2004, respectively.
(2) Pretax reclassification adjustments for gains (losses) and other items
included in net income were $2.8 and $4.7, for the three months years
ended March 31, 2005 and 2004, respectively.
13
8. Reclassifications and Changes to Prior Year Presentation
During the three months ended March 31, 2005, certain changes were made to
the Statements of Cash Flows for the three months ended March 31, 2004 to
reflect the correct balances primarily related to short-term investments
and short-term loans. As a result of these adjustments, the Company has
labeled the Statement of Cash Flows for the three months ended March 31,
2004 as restated. The following summarizes the adjustments:
Previously
Three months ended March 31, 2004 Reported Adjustment Restated
------------ ------------- -----------
Net cash provided by operating activities $ 48.3 $ 3.0 $ 51.3
Net cash used for investing activities (178.6) 117.6 (61.0)
Net cash provided by financing activities 127.9 (120.5) 7.4
14
Item 2. Management's Narrative Analysis of the Results of Operations
and Financial Condition
(Dollar amounts in millions, unless otherwise stated).
Overview
The following narrative analysis presents a review of the results of
operations of ReliaStar Life Insurance Company of New York ("RLNY" or
the "Company") for the three-month periods ended March 31, 2005 and
2004 and of the financial condition as of March 31, 2005 and December
31, 2004. This review should be read in its entirety and in
conjunction with the condensed financial statements and related notes,
which can be found under Part I, Item 1 contained herein, as well as
the "Management's Narrative Analysis of the Results of Operations and
Financial Condition" section included in the Company's 2004 Annual
Report on Form 10-K.
Forward-Looking Information/Risk Factors
In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the Company cautions readers
regarding certain forward-looking statements contained in this report
and in any other statements made by, or on behalf of, the Company,
whether or not in future filings with the Securities and Exchange
Commission ("SEC"). Forward-looking statements are statements not
based on historical information and which relate to future operations,
strategies, financial results, or other developments. Statements using
verbs such as "expect," "anticipate," "believe", or words of similar
import generally involve forward-looking statements. Without limiting
the foregoing, forward-looking statements include statements which
represent the Company's beliefs concerning future levels of sales and
redemptions of the Company's products, investment spreads and yields,
or the earnings and profitability of the Company's activities.
Forward-looking statements are necessarily based on estimates and
assumptions that are inherently subject to significant business,
economic, and competitive uncertainties and contingencies, many of
which are beyond the Company's control and many of which are subject
to change. These uncertainties and contingencies could cause actual
results to differ materially from those expressed in any
forward-looking statements made by, or on behalf of, the Company.
Whether or not actual results differ materially from forward-looking
statements may depend on numerous foreseeable and unforeseeable
developments. Some may be national in scope, such as general economic
conditions, changes in tax law, and changes in interest rates. Some
may be related to the insurance industry generally, such as pricing
competition, regulatory developments, and industry consolidation.
Others may relate to the Company specifically, such as litigation,
regulatory action, and risks associated with the Company's investment
portfolio, such as change in credit quality, price volatility and
liquidity. Investors are also directed to consider other risks and
uncertainties discussed in other documents filed by the Company with
the SEC. Except as may be required by the federal securities laws, the
Company disclaims any obligation to update forward-looking
information.
15
Results of Operations
Income: Income before cumulative effect of change in accounting
principles decreased by $5.2 to $6.9 for three months ended March 31,
2005 from $12.1 for three months ended March 31, 2004. The decrease in
net income was primarily related to lower capital gains, higher
benefits cost and operating expenses, partially offset by a decrease
in the amortization of DAC/VOBA.
Net Investment Income: Net investment income decreased by $0.3 to
$29.8 for three months ended March 31, 2005 from $30.1 for three
months ended March 31, 2004. The decrease is primarily due to lower
investment yields experienced in 2005.
Fee Income: Fee income is primarily generated through cost of
insurance charges assessed to policyholders and contractowners. Fee
income decreased by $0.3 to $24.1 for three months ended March 31,
2005 from $24.4 for three months ended March 31, 2004 primarily due to
lower margins on retirement products.
Premiums: Premiums increased by $2.1 to $18.2 for three months ended
March 31, 2005 from $16.1 for three months ended March 31, 2004. The
increase was primarily due to higher sales of group products.
Net Realized Capital Gains: Net realized capital gains decreased by
$4.4 to $1.1 for three months ended March 31, 2005 from $5.5 for three
months ended March 31, 2004. The reduction in net realized gains was
primarily due to the increasing interest rate environment in 2005 that
negatively affected the market value of fixed maturities and led to
lower realized gains upon sales.
Interest Credited and Other Benefits to Contractowners and
Policyholders: Interest credited and other benefits to contractowners
and policyholders increased by $6.4 to $47.1 for three months ended
March 31, 2005 from $40.7 for three months ended March 31, 2004. The
increase is primarily related to the release of reserves on
discontinued group products in the first quarter of 2004.
Operating Expenses: Operating expenses increased by $3.8 to $16.3 for
three months ended March 31, 2005 from $12.5 for three months ended
March 31, 2004. The increase in operating expenses is primarily
related to the lower percentage of commission deferrals on life
products and the higher strategic spending related to the
implementation of Sarbanes-Oxley Act of 2002 and sales and marketing.
Amortization of DAC and VOBA: Amortization of DAC and VOBA decreased
by $5.8 to $0.4 for three months ended March 31, 2005 from $6.2 for
three months ended March 31, 2004. The reduction in DAC and VOBA
amortization is primarily related to the continued use of lower
amortization rates resulted from the assumption changes that took
place in the second half of 2004 and disclosed in the Company's 2004
annual report on the Form 10-K. In addition, in the first quarter of
2004, the Company identified the overstatement of DAC/VOBA of $4.5
before taxes. The overstatement was fully amortized in the first
quarter of 2004 and disclosed in the Company's quarterly report on the
Form 10-Q for the period ended March 31, 2004.
16
Critical Accounting Policies
There have been no material changes to the Company's critical
accounting policies since the filing of the Company's 2004 Form 10-K
Annual Report.
Financial Condition
Investments
Investment Strategy
The Company's investment strategy for its general account investments
involves diversification by asset class, and seeks to add economic
diversification and to reduce the risks of credit, liquidity, and
embedded options within certain investment products, such as convexity
risk on collateralized mortgage obligations and call options. The
investment management function is centralized under ING Investment
Management, LLC ("IIM"), an affiliate of the Company, pursuant to an
investment advisory agreement. Separate portfolios are established for
each general type of product within RLNY.
Portfolio Composition
The following table presents the investment portfolio at March 31,
2005 and December 31, 2004:
2005 2004
---------------------------- ----------------------------
Carrying Value % Carrying Value %
----------------- --------- ----------------- ---------
Fixed maturities, including
securities pledged $ 1,749.3 84.2% $ 1,761.6 84.3%
Equity securities 7.4 0.4% 7.6 0.4%
Mortgage loans on real estate 211.6 10.2% 213.0 10.2%
Policy loans 90.3 4.3% 90.9 4.3%
Other investments 19.0 0.9% 17.0 0.8%
----------------- --------- ----------------- ---------
$ 2,077.6 100.0% $ 2,090.1 100.0%
================= ========= ================= =========
17
Fixed Maturities
Fixed maturities available-for-sale as of March 31, 2005, were as
follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------------- ------------- ------------- -------------
Fixed maturities:
U.S. government and government
agencies and authorities $ 79.7 $ 0.6 $ 0.4 $ 79.9
States, municipalities and political
subdivisions 1.5 0.1 - 1.6
U.S. corporate securities:
Public utilities 154.8 5.6 1.9 158.5
Other corporate securities 665.0 25.0 8.7 681.3
------------- ------------- ------------- -------------
Total U.S. corporate securities 819.8 30.6 10.6 839.8
------------- ------------- ------------- -------------
Foreign securities:
Government 6.9 0.5 0.1 7.3
Other 171.4 5.6 3.5 173.5
------------- ------------- ------------- -------------
Total foreign securities 178.3 6.1 3.6 180.8
------------- ------------- ------------- -------------
Residential mortgage-backed securities 413.5 1.1 4.5 410.1
Commercial mortgage-backed securities 122.8 5.8 0.8 127.8
Other asset-backed securities 106.7 4.3 1.7 109.3
------------- ------------- ------------- -------------
Total fixed maturities, including
fixed maturities pledged 1,722.3 48.6 21.6 1,749.3
Less: Fixed maturities pledged 173.7 0.1 3.3 170.5
------------- ------------- ------------- -------------
Total fixed maturities $ 1,548.6 $ 48.5 $ 18.3 $ 1,578.8
============= ============= ============= =============
18
Fixed maturities available-for-sale as of December 31, 2004, were as
follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---------------- ---------------- ---------------- ----------------
Fixed maturities:
U.S. government and government
agencies and authorities $ 56.2 $ 0.4 $ 0.2 $ 56.4
States, municipalities and political
subdivisions 1.6 0.1 - 1.7
U.S. corporate securities:
Public utilities 154.3 7.9 0.8 161.4
Other corporate securities 695.2 35.9 3.0 728.1
---------------- ---------------- ---------------- ----------------
Total U.S. corporate securities 849.5 43.8 3.8 889.5
---------------- ---------------- ---------------- ----------------
Foreign securities:
Government 28.0 0.6 0.2 28.4
Other 168.0 6.6 1.9 172.7
---------------- ---------------- ---------------- ----------------
Total foreign securities 196.0 7.2 2.1 201.1
---------------- ---------------- ---------------- ----------------
Residential mortgage-backed securities 373.5 2.5 2.1 373.9
Commercial mortgage-backed securities 119.0 8.2 0.3 126.9
Other asset-backed securities 107.1 6.1 1.1 112.1
---------------- ---------------- ---------------- ----------------
Total fixed maturities, including
fixed maturities pledged 1,702.9 68.3 9.6 1,761.6
Less: fixed maturities pledged 149.7 0.3 1.5 148.5
---------------- ---------------- ---------------- ----------------
Total fixed maturities $ 1,553.2 $ 68.0 $ 8.1 $ 1,613.1
================ ================ ================ ================
It is management's objective that the portfolio of fixed maturities be
of high quality and be well diversified by market sector. The fixed
maturities in the Company's portfolio are generally rated by external
rating agencies and, if not externally rated, are rated by the Company
on a basis believed to be similar to that used by the rating agencies.
The average quality rating of the Company's fixed maturities portfolio
was an AA- at March 31, 2005 and A+ December 31, 2004. Ratings are
calculated using a rating hierarchy that considers S&P, Moody's and
internal ratings.
19
Total fixed maturities by quality rating category including fixed
maturities pledged to creditors, were as follows at March 31, 2005 and
December 31, 2004:
2005 2004
---------------------------- ---------------------------
Fair % of Fair % of
Value Total Value Total
------------- ------------- ------------- -------------
AAA $ 699.8 40.0% $ 670.6 38.1%
AA 104.6 6.0% 94.3 5.4%
A 403.0 23.0% 408.7 23.2%
BBB 480.6 27.5% 513.4 29.1%
BB 49.0 2.8% 59.9 3.4%
B and below 12.3 0.7% 14.7 0.8%
------------- ------------- ------------- -------------
Total $ 1,749.3 100.0% $ 1,761.6 100.0%
============= ============= ============= =============
96.5% and 95.8% of the fixed maturities were invested in securities
rated BBB and above (Investment Grade) at March 31, 2005 and December
31, 2004, respectively.
Fixed maturities rated BB and below (Below Investment Grade) may have
speculative characteristics and changes in economic conditions or
other circumstances are more likely to lead to a weakened capacity of
the issuer to make principal and interest payments than is the case
with higher rated fixed maturities.
Total fixed maturities by market sector, including fixed maturities
pledged to creditors, were as follows at March 31, 2005 and December
31, 2004:
2005 2004
---------------------------- ---------------------------
Fair % of Fair % of
Value Total Value Total
------------- ------------- ------------- -------------
U.S. Corporate $ 841.4 48.1% $ 891.2 50.6%
Residential Mortgage-backed 410.1 23.4% 373.9 21.2%
Commercial/Multifamily Mortgage-backed 127.8 7.3% 126.9 7.2%
Foreign (1) 180.8 10.3% 201.1 11.4%
U.S. Treasuries/Agencies 79.9 4.6% 56.4 3.2%
Asset-backed 109.3 6.3% 112.1 6.4%
------------- ------------- ------------- -------------
Total $ 1,749.3 100.0% $ 1,761.6 100.0%
============= ============= ============= =============
(1) Primarily U.S. dollar denominated
The Company did not have any investments in a single issuer, other
than obligations of the U.S. government, with a carrying value in
excess of 10% of the Company's shareholder's equity at March 31, 2005.
Mortgage Loans
Mortgage loans, primarily commercial mortgage loans, totaled $211.6 at
March 31, 2005 and $213.0 at December 31, 2004. These loans are
reported at amortized cost less impairment writedowns. If the value of
any mortgage loan is determined to be impaired (i.e., when it is
probable that the Company will be unable to collect on all amounts due
20
according to the contractual terms of the loan agreement), the
carrying value of the mortgage loan is reduced to either the present
value of expected cash flows, cash flows from the loan (discounted at
the loan's effective interest rate), or fair value of the collateral.
If the loan is in foreclosure, the carrying value is reduced to the
fair value of the underlying collateral, net of estimated costs to
obtain and sell. The carrying value of the impaired loans is reduced
by establishing a permanent write down charged to realized loss. At
March 31, 2005 and December 31, 2004, the Company had no allowance for
mortgage loan credit losses.
Unrealized Losses
Fixed maturities, including securities pledged to creditors, comprise
84.2% and 84.3% of the Company's total investment portfolio at March
31, 2005 and December 31, 2004, respectively. Unrealized losses
related to fixed maturities are analyzed in detail in the following
tables.
Fixed maturities, including securities pledged to creditors, in
unrealized loss positions for Investment Grade ("IG") and Below
Investment Grade ("BIG") securities by duration were as follows at
March 31, 2005 and December 31, 2004:
2005 2004
---------------------------------------- ----------------------------------------
% of IG % of IG % of IG % of IG
IG and BIG BIG and BIG IG and BIG BIG and BIG
--------- --------- --------- --------- --------- --------- --------- ---------
Less than six months below
amortized cost $ 10.9 50.4% $ 0.2 0.9% $ 2.7 28.1% $ - 0.0%
More than six months
and less than twelve months
below amortized cost 3.9 18.1% 0.1 0.5% 2.5 26.0% - 0.0%
More than twelve months
below amortized cost 5.1 23.6% 1.4 6.5% 3.0 31.3% 1.4 14.6%
--------- --------- --------- --------- --------- --------- --------- ---------
Total unrealized loss $ 19.9 92.1% $ 1.7 7.9% $ 8.2 85.4% $ 1.4 14.6%
========= ========= ========= ========= ========= ========= ========= =========
Unrealized losses at March 31, 2005 were primarily related to interest
rate movement or spread widening for other than credit-related reasons
and to securities under the guidance prescribed by Emerging Issues
Task Force ("EITF") Issue No. 99-20, "Recognition of Interest Income
and Impairment on Purchased and Retained Beneficial Interests in
Securitized Financial Assets". Securities affected by EITF Issue No.
99-20 include U.S. government backed securities, principal protected
securities, and structured securities, which did not have an adverse
change in cash flows. The following table summarizes the unrealized
21
losses by duration and reason, along with the carrying amount of
securities with unrealized losses at March 31, 2005:
More than
six months
Less than and less than More than
six months twelve months Twelve Months
----------------- ----------------- -----------------
Interest rate or spread widening $ 6.5 $ 3.1 $ 5.0
EITF Issue No. 99-20 4.6 0.9 1.5
----------------- ----------------- -----------------
Total unrealized loss $ 11.1 $ 4.0 $ 6.5
================= ================= =================
Carrying amount $ 672.6 $ 112.8 $ 102.4
================= ================= =================
Fixed maturities, including securities pledged to creditors, in
unrealized loss positions by market sector and duration were as
follows at March 31, 2005:
Commercial/
Residential Multi-family U.S.
U.S. Mortgage- Mortgage- Treasuries/ Asset-
Corporate Backed Backed Foreign Agencies Backed Total
--------- ----------- ------------- --------- ---------- --------- -----------
Less than six months below
amortized cost $ 5.6 $ 3.9 $ 0.4 $ 0.6 $ 0.3 $ 0.3 $ 11.1
More than six month and less than
twelve months below
amortized cost 1.8 0.5 0.1 1.1 0.1 0.4 4.0
More than twelve months
below amortized cost 3.2 0.1 0.3 1.9 - 1.0 6.5
--------- ----------- ------------- --------- ---------- --------- -----------
Total unrealized loss $ 10.6 $ 4.5 $ 0.8 $ 3.6 $ 0.4 $ 1.7 $ 21.6
========= =========== ============= ========= ========== ========= ===========
Other-Than-Temporary-Impairments
The Company analyzes the general account investments to determine
whether there has been an other-than-temporary decline in fair value
below the amortized cost basis. Management considers the length of the
time and the extent to which the market value has been less than cost;
the financial condition and near-term prospects of the issuer; future
economic conditions and market forecasts; and the Company's intent and
ability to retain the investment in the issuer for a period of time
sufficient to allow for recovery in market value. If it is probable
that all amounts due according to the contractual terms of an
investment will not be collected, an other-than-temporary impairment
is considered to have occurred.
In addition, the Company invests in structured securities that meet
the criteria of EITF Issue No. 99-20. Under EITF Issue No. 99-20, a
determination of the required impairment is based on credit risk and
the possibility of significant prepayment risk that restricts the
Company's ability to recover the investment. An impairment is
recognized if the market value of the security is less than book value
and there has been an adverse change in cash flow since the last
remeasurement date.
22
When a decline in fair value is determined to be other-than-temporary,
the individual security is written down to fair value and the loss is
accounted for as a realized loss.
The Company did not have any other-than-temporary impairments during
the three months ended March 31, 2005 and 2004.
Net Realized Capital Gains and Losses
Net realized capital gains (losses) are comprised of the difference
between the carrying value of investments and proceeds from sale,
maturity, and redemption, as well as losses incurred due to the
other-than-temporary impairment of investments. Net realized capital
gains (losses) on investments were as follows:
Three months ended March 31,
2005 2004
----------------- -----------------
Fixed maturities $ 1.0 $ 5.5
Equity securities 0.1 -
----------------- -----------------
Pretax net realized capital gains $ 1.1 $ 5.5
================= =================
After-tax net realized capital gains $ 0.7 $ 3.6
================= =================
Liquidity and Capital Resources
Liquidity is the ability of the Company to generate sufficient cash
flows to meet the cash requirements of operating, investing, and
financing activities.
Sources and Uses of Liquidity
The Company's principal sources of liquidity are premiums, product
charges, investment income, proceeds from the maturing and sale of
investments, proceeds from debt issuance, and capital contributions.
Primary uses of these funds are payments of commissions and operating
expenses, interest and premium credits, investment purchases and
repayment of debt, as well as contract maturities, withdrawals and
surrenders.
The Company's liquidity position is managed by maintaining adequate
levels of liquid assets, such as cash or cash equivalents and
short-term investments. Asset/liability management is integrated into
many aspects of the Company's operations, including investment
decisions, product development, and determination of crediting rates.
As part of the risk management process, different economic scenarios
are modeled, including cash flow testing required for insurance
regulatory purposes, to determine that existing assets are adequate to
meet projected liability cash flows. Key variables in the modeling
process include interest rates, anticipated contractowner or
policyholder behavior, and variable separate account performance.
Contractowners and policyholders bear the majority of the investment
risk related to variable insurance products.
23
The fixed account liabilities are supported by a general account
portfolio principally composed of fixed rate investments with matching
duration characteristics that can generate predictable, steady rates
of return. The portfolio management strategy for the fixed account
considers the assets available-for-sale. This enables the Company to
respond to changes in market interest rates, prepayment risk, relative
values of asset sectors and individual securities and loans, credit
quality outlook, and other relevant factors. The objective of
portfolio management is to maximize returns, taking into account
interest rate and credit risk, as well as other risks. The Company's
asset/liability management discipline includes strategies to minimize
exposure to loss as interest rates and economic and market conditions
change.
Additional sources of liquidity include borrowing facilities to meet
short-term cash requirements. The Company maintains a reciprocal loan
agreement with ING America Insurance Holdings, Inc. ("ING AIH"), a
Delaware corporation and affiliate, whereby either party can borrow
from the other up to 5% of RLNY's statutory admitted assets as of the
preceding December 31. The Company also maintains a perpetual $30.0
revolving note facility with Bank of New York and a $30.0 revolving
note facility with SunTrust Bank. At March 31, 2005 and December 31,
2004, the Company had a $11.0 and $2.3 balances payable to SunTrust
Bank, respectively. The outstanding balance of $11.0 at March 31, 2005
was repaid on April 4, 2005. Aside from the payable to SunTrust, the
Company had no other outstanding balances under any of these
facilities as of March 31, 2005 and December 31, 2004. Management
believes that these sources of liquidity are adequate to meet the
Company's short-term cash obligations.
Capital Contributions and Dividends
The Company paid $5.2 and $6.8 in cash dividends to ReliaStar Life
Insurance Company ("ReliaStar Life" or "Parent") during the three
months ended March 31, 2005 and 2004, respectively.
The Company did not receive capital contributions from its Parent
during the three months ended March 31, 2005 and 2004.
Recently Adopted Accounting Standards
(See Recently Adopted Accounting Standards Footnote to the Condensed
Financial Statements for further information.)
Legislative Initiatives
Legislative proposals which have been or are being considered by
Congress include repealing the estate tax, reducing the taxation on
annuity benefits, changing the tax treatment of insurance products
relative to other financial products, and changing life insurance
company taxation. Some of these proposals, if enacted, could have a
material effect on life insurance, annuity, and other retirement
savings product sales. The President has also established an advisory
panel to study reform of the Internal Revenue Code. The panel is
scheduled to report its findings and make recommendations to the
Secretary of Treasury by the end of July, 2005. The recommendations of
24
this panel, if enacted by Congress, could effect the tax treatment of
life insurance companies and products. Legislation to restructure the
Social Security System and expand private pension plan incentives also
may be considered. Prospects for enactment and the ultimate effect of
these proposals are uncertain.
Item 4. Controls and Procedures
(a) The Company carried out an evaluation, under the supervision and
with the participation of its management, including its Chief
Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of the Company's
disclosure controls and procedures (as defined in Rule 13a-15(e)
and 15d-15e of the Securities Exchange Act of 1934) as of the end
of the period covered by this report. Based on that evaluation,
the Chief Executive Officer and the Chief Financial Officer have
concluded that the Company's current disclosure controls and
procedures are effective in ensuring that material information
relating to the Company required to be disclosed in the Company's
periodic SEC filings is made known to them in a timely manner.
(b) There has not been any change in the internal controls over
financial reporting of the Company that occurred during the
period covered by this report that has materially affected or is
reasonably likely to materially affect these internal controls.
25
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is a party to threatened or pending lawsuits/arbitrations,
arising from the normal conduct of business. Due to the climate in
insurance and business litigation/arbitrations, suits against the
Company sometimes include claims for substantial compensatory,
consequential, or punitive damages and other types of relief.
Moreover, certain claims are asserted as class actions, purporting to
represent a group of similarly situated individuals. While it is not
possible to forecast the outcome of such lawsuits/arbitrations, in
light of existing insurance, reinsurance and established reserves, it
is the opinion of management that the disposition of such
lawsuits/arbitrations, will not have a materially adverse effect on
the Company's operations or financial position.
As with many financial services companies, the Company and its
affiliates have received informal and formal requests for information
from various state and federal governmental agencies and
self-regulatory organizations in connection with inquiries and
investigations of the products and practices of the financial services
industry. In each case, the Company and its affiliates have been and
are providing full cooperation. This discussion should be read in
conjunction with the "Other Regulatory Matters" section of
"Management's Narrative Analysis of the Results of Operations and
Financial Condition" included in the Company's 2004 Form 10-K Annual
Report.
Item 6. Exhibits
3.(i)Articles of Incorporation of ReliaStar Life Insurance Company of
New York ("RLNY" or "Registrant"), incorporated by reference from
Exhibit 3 (a) to a Pre-Effective Amendment No. 1 of Registrant's
Registration Statement on Form S-1 filed with the Security and
Exchange Commission ("SEC") on or about April 1, 2002 (File No.
333-75938).
(ii) By-laws of RLNY, incorporated by reference from Exhibit 3(b) to a
Pre-Effective Amendment No. 1 of Registrant's Registration
Statement on Form S-1 filed with the SEC on or about April 1,
2002 (File No. 333-75938).
4.(a)Instruments Defining the Rights of Security Holders, Including
Indentures (Annuity Contracts).
Interests in Fixed Account I under Variable Annuity Contracts,
incorporated herein by reference to the initial Registration
Statement for RLNY as filed with the SEC on April 16, 2002 (File
No. 333-86352).
10. Reciprocal Loan Agreement between RLNY and ING America Insurance
Holdings, Inc., effective February 22, 2005.
26
31.1 Certificate of David A. Wheat pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31.2 Certificate of James R. Gelder pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
32.1 Certificate of David A. Wheat pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32.2 Certificate of James R. Gelder pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
27
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
ReliaStar Life Insurance Company of New York
(Registrant)
May 11, 2005 By /s/ David A. Wheat
- ------------- ------------------------------------------------------
(Date) David A. Wheat
Director, Senior Vice President and
Chief Financial Officer
(Duly Authorized Officer and Principal Financial
Officer)
28
Exhibit 10.
RECIPROCAL LOAN AGREEMENT
This RECIPROCAL LOAN AGREEMENT (this "Agreement"), dated as of February 22,
2005, between ReliaStar Life Insurance Company of New York, a New York life
insurance company ("RLNY" or "Company"), and ING America Insurance Holdings,
Inc., a Delaware corporation ("INGAIH" or "Company") located at 1105 North
Market Street, Wilmington, Delaware 19809 (collectively referred to as the
"Companies").
WITNESSETH:
WHEREAS, each of the Companies may have, from time to time, a need to
borrow funds on a revolving basis; and
WHEREAS, each of the Companies may have, from time to time, excess cash
available to lend to the other on a revolving basis; and
WHEREAS, the Companies are affiliated entities and as such are willing to
extend financing to, and borrow from each other as provided herein; and
WHEREAS, each of the Companies desires to enter into this Agreement
providing for, among other things, the making of such Loans by and among each
other.
NOW, THEREFORE, for and in consideration of the foregoing and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Companies agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1. Defined Terms. For purposes of this Agreement:
"Agreement" shall have the meaning set forth in the preamble hereto.
"Authorized Person" shall mean the CFO, Treasurer, Assistant Treasurer,
Treasury Officer, or Treasury Manager of the Borrowing Company, or a person so
designated.
"Borrowing Company" shall mean each of the Companies to which a Loan is
outstanding or is to be made pursuant to a Request for Borrowing.
"Business Day" shall mean a day on which U.S. financial markets are open
for the transaction of business required for this Agreement.
"Companies" shall have the meaning set forth in the preamble hereto.
1
"Company" shall have the meaning set forth in the preamble hereto.
"Default" shall mean any of the events specified in Section 6.1, regardless
of whether there shall have occurred any passage of time or giving of notice, or
both, that would be necessary in order to constitute such an Event of Default.
"Event of Default" shall mean any of the events specified in Section 6.1.
"INGAIH" shall have the meaning set forth in the preamble hereto.
"Interest Period" shall mean the number of days or months that a particular
interest rate applies to a particular Loan advanced hereunder.
"Lending Company" shall mean each of the Companies that has made, or is
obligated to make, in accordance with a Request for Borrowing one or more Loans
hereunder.
"Loans" shall mean the amounts advanced by a Lending Company to a Borrowing
Company under this Agreement.
"Notice of Borrowing" shall have the meaning set forth in Section 2.2(b) of
this Agreement.
"Obligations" shall mean all payment and performance obligations of every
kind, nature and description of each Borrowing Company to the Lending Company,
or either of them, under this Agreement (including any interest, fees and other
charges on the Loans or otherwise), whether such obligations are direct or
indirect, absolute or contingent, due or not due, contractual or tortuous,
liquidated or unliquidated, arising by operation of law or otherwise, now
existing or hereafter arising.
"Regional Treasury Office" ("RTO") shall mean the Treasurer's office of ING
America Insurance Holdings, Inc.
"Request for Borrowing" shall have the meaning set forth in Section 2.2(a)
of this Agreement.
"Revolving Loan Commitment" shall mean the maximum outstanding amount to be
funded by the Lending Company to the Borrowing Company. The aggregate sum, which
shall include both principal and accrued interest, that the Lending Company may
loan to the Borrowing Company under this Agreement shall not exceed 5% of the
admitted assets of RLNY as of December 31 of the applicable preceding year and
as determined by New York Insurance Law Sections 107(a)(3) and 1301.
"RLNY" shall have the meaning set forth in the preamble hereto.
"Termination Date" shall mean February 21, 2006, or such earlier date as
payment of the Obligations shall be due (whether by acceleration or otherwise).
2
"U.S. Commercial Paper" shall mean an unsecured promissory note, which has a
maturity of 270 days or less, that a company issues to finance short-term
capital needs of the company and is usually issued at a discount.
Section 1.2. Terminology. Each definition of a document in this Article 1
shall include such document as amended, modified, or supplemented from time to
time, and, except where the context otherwise requires, definitions imparting
the singular shall include the plural and visa versa. Except where specifically
restricted, reference to a party shall include that party and its successors and
assigns. All personal pronouns used in this Agreement, whether used in the
masculine, feminine, or neuter gender, shall include all other genders. Titles
of articles and sections in this Agreement are for convenience only, and neither
limit nor amplify the provisions of this Agreement, and all references in this
Agreement to articles, sections, subsections, paragraphs, clauses, subclauses or
exhibits shall refer to the corresponding article, section, subsection,
paragraph, clause, subclause of, or exhibit attached to, this Agreement, unless
otherwise provided.
Section 1.3. Accounting Terms. Except as otherwise expressly provided
herein, all accounting terms used herein shall be interpreted in accordance with
generally accepted accounting principles consistently applied.
ARTICLE 2
TERMS OF THE LOANS
Section 2.1. Revolving Credit.
(a) Subject to and upon the terms and conditions set forth in this
Agreement, each Lending Company agrees to advance to the Borrowing
Company, from time to time prior to the Termination Date, Loans. Loans
advanced under the Revolving Loan Commitment shall be repaid in
accordance with Section 2.4 and may be reborrowed from time to time on
a revolving basis. In no event shall RLNY borrow from a Company that
owes money to RLNY.
(b) Each Borrowing Company's obligation to pay to the Lending Company the
principal of and interest on the Loans shall be evidenced by the
records of the RTO in lieu of a promissory note or notes.
Section 2.2. Notice and Manner of Borrowing.
(a) Whenever the Borrowing Company desires to borrow money hereunder, it
shall prepare a written trade ticket of such borrowing or reborrowing
(a "Request for Borrowing"). Such Request for Borrowing shall be
prepared by an Authorized Person of the RTO prior to 6:00 p.m.
(Wilmington, Delaware time). Any Request for Borrowing received after
6:00 p.m. shall be deemed received on the next Business Day.
3
(b) A RTO manager shall determine if the requested funds are available and
the interest rates in accordance with Section 2.3(a) of this Agreement
(and related Interest Periods, if any) at which the Borrowing Company
can borrow money in a principal amount equal to, and on the date of,
the proposed borrowing or reborrowing described in each such Request
for Borrowing, and shall notify the Lending Company of such interest
rates and the related Interest Periods, if any, and the principal
amount and maturity date of the proposed borrowing or reborrowing (a
"Notice of Borrowing") by copy of the trade ticket no later than 6:00
p.m. (Wilmington, Delaware time) on the Business Day of the requested
borrowing or reborrowing. The RTO shall promptly convey to the
Borrowing Company the information contained in the Notice of Borrowing
by copy of the trade ticket.
(c) On the date of each borrowing, the Lending Company will make available
the amount of such borrowing or reborrowing in immediately available
funds to the Borrowing Company by depositing such amount in the
account of the Borrowing Company by wire transfer via electronic funds
transfer (EFT).
(d) The RTO shall maintain on its books a control account for each Company
in which shall be recorded (i) the amount of each Loan made hereunder
to each such Company and the maturity date of each such Loan, (ii) the
interest rate applicable with respect to each Loan, (iii) the amount
of any principal, interest or fees due or to become due from each
Borrowing Company with respect to the Loans, and (iv) the amount of
any sum received by each Lending Company hereunder in respect of any
such principal, interest or fees due on such Loans. The entries made
in the RTO's control accounts shall be prima facie evidence, in the
absence of manifest error, of the existence and amounts of Obligations
therein recorded and any payments thereon.
(e) The RTO shall account to each Company on a at least a quarterly basis
with a statement of borrowings, interest rates, charges and payments
made pursuant to this Agreement with respect to the Loans and
Revolving Loan Commitment. An Authorized Person of the Companies shall
review each quarterly accounting for accuracy within thirty days of
receipt thereof from the RTO. Each such account rendered by the RTO
shall be deemed final, binding and conclusive unless the RTO is
notified by the Lending Company or the Borrowing Company within thirty
days after the date the account is so rendered that either the Lending
Company or the Borrowing Company disputes any item thereof.
(f) The RTO shall be justified in assuming, for purposes of carrying out
its duties and obligations under this Agreement, including, without
limitation, its obligation to maintain accounts and provide
accountings of the Loans pursuant to Section 2.2(d) and (e) above,
that (1) Loans are disbursed by the Lending Company to the Borrowing
Company in accordance with the terms of the Notice of Borrowing, (2)
payments on the Loans are made to the Lending Company when due, and
(3) no prepayments of any Loans prior to the date that they are due
and payable under Section 2.4(a) have occurred, unless the RTO is
4
otherwise notified by either Company of any such delayed disbursement,
overdue payment, or receipt of a prepayment.
Section 2.3. Interest.
(a) The Borrowing Company agrees to pay interest in respect of all unpaid
principal amounts of the Loans from the respective dates such
principal amounts were advanced until the respective dates such
principal amounts are repaid at a per annum rate determined by the RTO
in accordance with its usual and customary practices of obtaining
quotes of the prevailing U.S. commercial paper rates for INGAIH from
recognized dealers of U.S. commercial paper (e.g. ING Barings, BancOne
Capital Markets and CS First Boston) and determining the lowest rate
among the quotes for the applicable term of the Loan. The actual
interest rate charged to the Borrowing Company shall be the lowest
quoted effective rate of U.S. commercial paper for the applicable term
of the Loan. Documentation of such quotes and the rate so determined
shall be maintained by INGAIH in accordance with Section 2.5.
(b) Overdue principal and, to the extent not prohibited by applicable law,
overdue interest in respect of any of the Loans and all other overdue
amounts owing hereunder shall bear interest from each date that such
amounts are overdue at the rate otherwise applicable to such
underlying Loans plus an additional 2% per annum. Interest on each
Loan shall accrue from and including the date of such Loan to, but
excluding, the date of any repayment thereof; provided, however, that
if a Loan is repaid on the same day it is made, one day's interest
shall be paid on such Loan. Interest shall be computed on the basis of
a year of 360 days for the actual number of days elapsed.
(c) The Companies hereby agree that the only charges imposed or to be
imposed by the Lending Company hereunder for the use of money in
connection with the Loans is and will be the interest required to
be paid under the provisions of Sections 2.2(b). In no event shall
the amount of interest due and payable under this Agreement or any
other documents executed in connection herewith exceed the maximum
rate of interest allowed by applicable law and, in the event any
such payment is made by the Borrowing Company or received by the
Lending Company, such excess sum shall be credited as a payment of
principal. It is the express intent hereof that the Borrowing
Company not pay and the Lending Company not receive, directly or
indirectly in any manner, interest in excess of that which may be
lawfully paid under applicable law.
Section 2.4. Repayment of Principal and Interest.
(a) Repayment of the entire outstanding principal balance of the Loans
shall be initiated no later than 12:00 p.m. (Wilmington, Delaware
time) on the Business Day on which the Loan is due, together with all
remaining accrued and unpaid interest thereon, unless an extension of
no more than three additional days is authorized by the Lending
Company.
5
(b) Any of the Loans may be prepaid in whole or in part at any time
without premium or penalty. Any such prepayment made on any Loan shall
be applied, first, to interest accrued thereon through the date
thereof and then to the principal balance thereof.
(c) Each payment and prepayment of principal of any Loan and each payment
of interest on any Loan shall be made to the Lending Company and
applied to outstanding Loan balances in the following order; first,
toward any Loan or Loans then due and payable; and, second, towards
the Loan or Loans which are next due and payable at the time of such
prepayment.
Section 2.5. Documentation
(a) The obligations of any Company to repay all principal of and interest
on Loans made pursuant to this Agreement are set forth in this
Agreement and shall be fully binding and enforceable without the
execution of any promissory note or other evidence of indebtedness.
Expenses incurred and payment received shall be allocated to each
Company in conformity with customary insurance accounting practices
consistently applied and the books, accounts and records of each
Company shall be so maintained as to clearly and accurately disclose
the precise nature and details of the transactions, including such
accounting information as is necessary to support the reasonableness
of the charges or fees to the respective parties.
(b) Records of all Loans that are made under this Agreement and all monies
paid back shall be kept by INGAIH on behalf of the parties.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties. In order to induce the
Lending Company to enter into this Agreement, the Borrowing Company hereby
represents and warrants as set forth below:
(a) Organization; Power; Qualification. The Borrowing Company is a
corporation or life insurance company, as the case may be, duly
organized, validly existing and in good standing under the laws of the
state of its organization, has the power and authority to own or lease
and operate its properties and to carry on its business as now being
conducted, and is duly qualified and in good standing, and authorized
to do business, in each jurisdiction in which the character of its
properties or the nature of its business require such qualification or
authorization.
(b) Authorization; Enforceability. The Borrowing Company has the power and
has taken all necessary action, including the approval of RLNY's Board
of Directors, to authorize it to execute, deliver and perform this
Agreement in accordance with the terms hereof and to consummate the
transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Borrowing Company and is a legal, valid
6
and binding obligation of the Borrowing Company, enforceable in
accordance with its respective terms, (i) subject to limitations
imposed by general principles of equity and (ii) subject to applicable
bankruptcy, reorganization, insolvency and other similar laws
affecting creditors' rights generally and to moratorium laws from time
to time in effect.
(c) No Conflict. The execution, delivery and performance of this Agreement
in accordance with its terms and the consummation of the transactions
contemplated hereby do not and will not (i) violate any applicable law
or regulation, (ii) conflict with, result in a breach of, or
constitute a default under the charter or by-laws of the Borrowing
Company or under any indenture, agreement or other instrument to which
the Borrowing Company is a party or by which it or any of its
properties may be bound, or (iii) result in or require the creation or
imposition of any lien upon or with respect to any property now owned
or hereafter acquired by the Borrowing Company.
(d) Compliance with Law; Absence of Default. The Borrowing Company is in
compliance with all applicable laws the failure to comply with which
has or could reasonably be expected to have a materially adverse
effect on the business, assets, liabilities, financial condition or
results of operations of the Borrowing Company, and no event has
occurred or has failed to occur which has not been remedied or waived,
the occurrence or non-occurrence of which constitutes a Default.
Section 3.2. Survival of Representations and Warranties. All
representations and warranties made under this Agreement shall be deemed to be
made, and shall be true and correct, as of the date hereof and as of the date of
each Loan.
ARTICLE 4
AFFIRMATIVE COVENANTS
So long as this Agreement is in effect:
Section 4.1. Preservation of Existence. The Borrowing Company will (a)
preserve and maintain its existence, rights, franchises, licenses and privileges
in its jurisdiction of organization and (b) qualify and remain qualified and
authorized to do business in each jurisdiction in which the character of its
properties or the nature of its business requires such qualification or
authorization.
Section 4.2. Compliance with Applicable Laws and Regulations. The Borrowing
Company will comply with the requirements of all applicable laws and regulations
the failure with which to comply could have a materially adverse effect on the
business, assets, liabilities, financial condition or results of operations of
the Borrowing Company.
7
Section 4.3. Visits and Inspections.
(a) Upon reasonable advance notice from the Lending Company, the Borrowing
Company will permit representatives of the Lending Company to (a)
visit and inspect the properties of the Borrowing Company during
normal business hours, (b) inspect and make extracts from and copies
of its books and records, and (c) discuss with its principal officers
its businesses, assets, liabilities, financial positions and results
of operations.
(b) Each Company agrees that upon reasonable advance notice from an
auditor of either Company or any regulatory official employed by the
Department of Insurance of any state in which either Company is
engaged in business, each Company will prepare and deliver to such
auditor or regulatory official, within a reasonable time following
such request, a written verification of all Loans made to and by the
relevant Company. Upon reasonable advance notice to each Company, the
books and records of the RTO and each Company relating to the subject
matter of this Agreement shall be available for inspection by any
auditor of either Company or any regulatory official during normal
business hours, and the RTO and each Company will cooperate with said
auditor or regulatory official in making any audit which requires
inspection of said books and records.
ARTICLE 5
NEGATIVE COVENANTS
So long as this Agreement is in effect:
Section 5.1. Liquidation; Merger; Sale of Assets; Change of Business. The
Borrowing Company shall not at any time, without proper notice to the Lending
Company:
(a) Liquidate or dissolve itself (or suffer any liquidation or
dissolution) or otherwise wind up;
(b) Merge or consolidate with any other person or entity;
(c) Sell, lease, abandon or otherwise dispose of or transfer all or
substantially all of its assets other than in the ordinary course of
business; or
(d) Make any substantial change in the type of business conducted by the
Borrowing Company as of the date hereof without the prior written
consent of the Lending Company if such action would have a material
adverse effect on the business, assets, liabilities, financial
condition or results of operations of the Borrowing Company.
Any corporation into which either Company may be merged, converted or
with which either Company may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which either Company shall
8
be a party, shall succeed to all either Company's rights, obligations and
immunities hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding.
ARTICLE 6
DEFAULT
Section 6.1. Events of Default. Each of the following shall constitute
an Event of Default:
(a) Any representation or warranty made by the Borrowing Company under
this Agreement shall prove incorrect or misleading in any material
respect when made;
(b) The Borrowing Company shall default in the payment of (i) any interest
payable under this Agreement within five days of when due, or (ii) any
principal payable under this Agreement within three days of when due;
(c) The Borrowing Company shall default in the performance or observance
of any agreement or covenant contained in this Agreement, and such
Default shall not be cured within a period of 30 days from the
occurrence of such Default;
(d) The Borrowing Company shall default under any other agreement or
instrument evidencing or relating to any indebtedness which Default
shall not have been cured within any applicable grace period set forth
therein;
(e) There shall be entered a decree or order by a court having
jurisdiction in the premises constituting an order for relief in
respect of the Borrowing Company under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other applicable
federal or state bankruptcy law or similar law, or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator, or
similar official of the Borrowing Company or of any substantial part
of its properties, or ordering the winding-up or liquidation of the
affairs of the Borrowing Company and any such decree or order shall
continue in effect for a period of 60 consecutive days;
(f) The Borrowing Company shall file a petition, answer or consent seeking
relief under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other applicable federal or state bankruptcy
law or other similar law, or the Borrowing Company shall consent to
the institution of proceedings thereunder or to the filing of any such
petition or to the appointment or taking of possession of a receiver,
liquidator, assignee, trustee, custodian, sequestrator, or other
similar official of the Borrowing Company or of any substantial part
of its properties, or the Borrowing Company shall fail generally to
pay its debts as such debts become due, or the Borrowing Company shall
take any corporate action in furtherance of any such action; or
9
(g) This Agreement or any provision hereof shall at any time and for any
reason be declared by a court of competent jurisdiction to be null and
void, or a proceeding shall be commenced by the Borrowing Company or
any other person or entity seeking to establish the invalidity or
unenforceability thereof, or the Borrowing Company shall deny that it
has any liability or any obligation for the payment of principal or
interest purported to be created under this Agreement.
Section 6.2. Remedies. If an Event of Default shall have occurred and
shall be continuing,
(a) The obligation of the Lending Company to make Loans hereunder shall
immediately cease;
(b) With the exception of an Event of Default specified in Section 6.1(e)
or (f), the Lending Company, shall declare the principal of and
interest on the Loans and all other amounts owed under this Agreement
to be forthwith due and payable, whereupon all such amounts shall
immediately become absolute and due and payable, without presentment,
demand, protest, or notice of any kind, all of which are hereby
expressly waived, anything in this Agreement to the contrary
notwithstanding, and whereupon all such amounts shall be immediately
due and payable;
(c) Upon the occurrence and continuance of an Event of Default specified
in Section 6.1(e) or (f), such principal, interest and other amounts
shall thereupon and concurrently therewith become absolute and due and
payable, all without any action by the Lending Company, all of which
are hereby expressly waived, anything in this Agreement to the
contrary notwithstanding;
(d) The Lending Company shall have the right and option to exercise all of
the post-default rights granted to them hereunder; and
(e) The Lending Company shall have the right and option to exercise all
rights and remedies available to them at law or in equity.
ARTICLE 7
MISCELLANEOUS
Section 8.1. Notices. Except as otherwise provided herein, all notices
and other communications required or permitted under this Agreement shall
be in writing and, if mailed, shall be deemed to have been received on the
earlier of the date shown on the receipt or three Business Days after the
postmarked date thereof and, if sent by facsimile, shall be followed
forthwith by letter and shall be deemed to have been received on the next
Business Day following dispatch and acknowledgment of receipt by the
recipient's facsimile machine. In addition, notices hereunder may be
delivered by hand or overnight courier, in which event the notice shall be
deemed effective when delivered. All notices and other communications under
this Agreement shall be given to the parties at the address or facsimile
10
number listed below such party's signature line hereto, or such other
address or facsimile number as may be specified by any party in a writing
addressed to the other parties hereto.
Section 8.2. Waivers. The rights and remedies of the Lending Company
under this Agreement shall be cumulative and not exclusive of any rights or
remedies which they would otherwise have. No failure or delay by the
Lending Company in exercising any right shall operate as a waiver of it.
The Lending Company expressly reserves the right to require strict
compliance with the terms of this Agreement. In the event the Lending
Company decides to fund a request for a Loan at a time when the Borrowing
Company is not in strict compliance with the terms of this Agreement, such
decision by the Lending Company shall not be deemed to constitute an
undertaking by the Lending Company to fund any further requests for Loans
or precluding the Lending Company from exercising any rights available to
it under the Agreement or at law or equity with respect to the Borrowing
Company. Any waiver or indulgence granted by the Lending Company shall not
constitute a modification of this Agreement, except to the extent expressly
provided in such waiver or indulgence, or constitute a course of dealing by
the Lending Company at variance with the terms of this Agreement such as to
require further notice by the Lending Company of its intent to require
strict adherence to the terms of this Agreement in the future. Any such
actions shall not in any way affect the ability of the Lending Company, in
their respective sole discretion, to exercise any of their respective
rights under this Agreement or under any other agreement.
Section 8.3. Assignment; Successors.
(a) The Borrowing Company may not assign or transfer any of its rights or
obligations hereunder without notice to the Lending Company.
(b) The Lending Company may not at any time assign or participate its
interest under this Agreement without notice to the Borrowing Company.
Any holder of a participation in, and any assignee or transferee of,
all or any portion of any amount owed by the Borrowing Company under
this Agreement may exercise any and all rights provided in this
Agreement with respect to any and all amounts owed by the Borrowing
Company to such assignee, transferee or holder as fully as if such
assignee, transferee or holder had made the Loans in the amount of the
obligation in which its holds a participation or which is assigned or
transferred to it.
(c) This Agreement shall be binding upon, and inure to the benefit of, the
Borrowing Company, the Lending Company, and the permitted successors
and assigns of each party hereto.
Section 8.4. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
11
Section 8.5. Severability. Any provision of this Agreement which is
prohibited or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof in that jurisdiction or affecting the validity or enforceability of such
provision in any other jurisdiction.
Section 8.6. Entire Agreement; Amendments. This Agreement represents the
entire agreement among the parties hereto with respect to the subject matter of
this transaction. No amendment or modification of the terms and provisions of
this Agreement shall be effective unless in writing and signed by both
Companies.
Section 8.7. Payment on Non-Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a non-Business Day, such payment may be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest hereunder.
Section 8.8. Termination. Unless earlier terminated, this Agreement will
expire one year from its date unless sooner extended by written agreement of
both parties for an additional annual term. The renewal of this Agreement for
any additional one year terms shall be approved by the Board of Directors of
RLNY. Any such annual extension must have the prior review and approval of the
New York Insurance Department. Each annual submission to the New York Insurance
Department shall include a history of RLNY's borrowings under this Agreement for
the previous year. This Agreement may be terminated with respect to any party
hereto by such party upon its giving the other parties 30 days notice of its
intent to terminate. In the event of termination as provided in this paragraph,
the Lending Company's obligation to make Loans to the Borrowing Company shall
cease; provided, however, that the Borrowing Company shall continue to be
obligated to make all repayments of Loans and all other amounts due and payable
by it as provided under this Agreement.
Section 8.9. Prior Agreements. This Agreement replaces and supercedes all
other intercompany credit agreements, and is effective as of the day and year
first above written, subject to any required regulatory notifications and
approvals.
12
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused it to be executed by their duly authorized officers, all as of the day
and year first above written.
RELIASTAR LIFE INSURANCE COMPANY
OF NEW YORK
By:/s/ William D. Bonneville
------------------------------------------
William D. Bonneville
Title: Executive Vice President and Chief
Administrative Officer
Address for notices:
1000 Woodbury Road, Suite 208
Woodbury, New York 11797
Phone:516-682-8780
Fax: 516-682-8852
ING AMERICA INSURANCE HOLDINGS, INC.
By:/s/ David S. Pendergrass
------------------------------------------
David S. Pendergrass
Title: Treasurer
Address for notices:
1105 N. Market Street
Wilmington, DE 19809
Phone: 770/980-3300
Fax: 770/980-3301
13
Exhibit 31.1
CERTIFICATION
I, David A. Wheat, certify that:
1. I have reviewed this quarterly report on Form 10-Q of ReliaStar Life
Insurance Company of New York;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
c) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board
of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: May 11, 2005
------------
By /s/ David A. Wheat
-----------------------------------------------------------------
David A. Wheat
Director, Senior Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)
Exhibit 31.2
CERTIFICATION
I, James R. Gelder, certify that:
1. I have reviewed this quarterly report on Form 10-Q of ReliaStar Life
Insurance Company of New York;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
c) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board
of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date May 11, 2005
------------
By /s/ James R. Gelder
------------------------------------------------------------------
James R. Gelder
Director and Chairman, President and Chief Executive Officer
(Duly Authorized Officer and Principal Executive Officer)