ING INSURANCE CO OF AMERICA - 10-Q Quarterly Report

Back to GetFilings.com

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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 June 30, 2003

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: 333-49581, 033-63657

ING Insurance Company of America
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

Florida 06-1286272
- ------------------------------------------------------------------------------------------------------
(State or other jurisdiction of (IRS employer identification no.)
incorporation or organization)

Corporate Center One, 2202 North Westshore
Boulevard, #350, Tampa, Florida 33607
- ------------------------------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)

Registrant's telephone number, including area code (813) 281-3773

- --------------------------------------------------------------------------------
Former name, former address and formal 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 ______

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: 25,500 shares of Common Stock
as of August 12, 2003, all of which were directly owned by ING Life Insurance
and Annuity Company.

NOTE: WHEREAS ING INSURANCE COMPANY OF AMERICA MEETS THE CONDITIONS SET FORTH IN
GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10Q, THIS FORM IS BEING FILED WITH
THE REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL INSTRUCTION H(2).

ING INSURANCE COMPANY OF AMERICA
(A wholly-owned subsidiary of ING Life Insurance and Annuity Company)
Form 10-Q for the period ended June 30, 2003

INDEX

2

PART I. FINANCIAL INFORMATION (UNAUDITED)

ITEM 1. FINANCIAL STATEMENTS

ING INSURANCE COMPANY OF AMERICA
(A wholly-owned subsidiary of ING Life Insurance and Annuity Company)

CONDENSED STATEMENTS OF INCOME
(Unaudited)
(Millions)

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

3

ITEM 1. FINANCIAL STATEMENTS (continued)
ING INSURANCE COMPANY OF AMERICA
(A wholly-owned subsidiary of ING Life Insurance and Annuity Company)

CONDENSED BALANCE SHEETS
(Millions, except share data)

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

4

ITEM 1. FINANCIAL STATEMENTS (continued)

ING INSURANCE COMPANY OF AMERICA
(A wholly-owned subsidiary of ING Life Insurance and Annuity Company)

CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
(Unaudited)
(Millions)

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

5

ITEM 1. FINANCIAL STATEMENTS (continued)
ING INSURANCE COMPANY OF AMERICA
(A wholly-owned subsidiary of ING Life Insurance and Annuity Company)

CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Millions)

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

6

ING INSURANCE COMPANY OF AMERICA
(A WHOLLY-OWNED SUBSIDIARY OF ING LIFE INSURANCE AND ANNUITY COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

1. BASIS OF PRESENTATION

ING Insurance Company of America ("IICA", or the "Company"), is a provider
of financial products and services in the United States. The Company is a
wholly-owned subsidiary of ING Life Insurance and Annuity Company ("ILIAC").
ILIAC is a wholly-owned subsidiary of Lion Connecticut Holdings, Inc. ("Lion
Connecticut"). Lion Connecticut's ultimate parent is ING Groep N.V. ("ING"),
a financial services company based in The Netherlands.

The condensed financial statements and notes as of June 30, 2003 and
December 31, 2002 and for the three and six-month periods ended June 30,
2003 and 2002 ("interim periods") have been prepared in accordance with
accounting principles generally accepted in the United States of America 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
2002 Annual Report on Form 10-K. The results of operations for the interim
periods should not be considered indicative of results to be expected for
the full year. Certain reclassifications have been made to 2002 financial
information to conform to the 2003 presentation.

The Company conducts its business through one operating segment, U.S.
Financial Services ("USFS"), and revenue reported by the Company is
predominantly derived from external customers.

2. RECENTLY ADOPTED ACCOUNTING STANDARDS

ACCOUNTING FOR GOODWILL AND OTHER INTANGIBLE ASSETS

During 2002, the Company adopted Financial Accounting Standards Board
("FASB") Statement of Financial Accounting Standards ("FAS") No. 142,
"Goodwill and Other Intangible Assets" ("FAS No.142"). The adoption of this
standard resulted in an impairment loss of $101.8 million which was recorded
by the Company in the fourth quarter of 2002. This impairment loss
represented the entire carrying amount of goodwill, net of accumulated
amortization. This impairment charge was shown as a change in accounting
principle on the December 31, 2002 Income Statement. Effective January 1,
2002, the Company applied the non-amortization provision of the new
standard, therefore, the Company's net income is comparable for all periods
presented.

3. NEW ACCOUNTING PRONOUNCEMENTS

In July 2003, the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position (SOP) 03-1, ACCOUNTING AND REPORTING BY
INSURANCE ENTERPRISES FOR CERTAIN NONTRADITIONAL LONG-DURATION CONTRACTS AND
FOR SEPARATE ACCOUNTS, which the Company intends to adopt on January 1,
2004. The impact on the financial statements is not known at this time.

7

ING INSURANCE COMPANY OF AMERICA
(A WHOLLY-OWNED SUBSIDIARY OF ING LIFE INSURANCE AND ANNUITY COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (continued)

4. DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED

Deferred Policy Acquisition Costs ("DAC") is an asset, which represents
certain costs of acquiring certain insurance business, which are deferred
and amortized. These costs, all of which vary with and are primarily related
to the production of new and renewal business, consist principally of
commissions, certain underwriting and contract issuance expenses, and
certain agency expenses. Value of business acquired ("VOBA") is an asset,
which represents the present value of estimated net cash flows embedded in
the Company's contracts, which existed at the time the Company was acquired
by ING. DAC and VOBA are evaluated for recoverability at each balance sheet
date and these assets would be reduced to the extent that gross profits are
inadequate to recover the asset.

The amortization methodology varies by product type based upon two
accounting standards: FAS No. 60, "Accounting and Reporting by Insurance
Enterprises" ("FAS No. 60") and FAS No. 97, "Accounting and Reporting by
Insurance Enterprises for Certain Long-Duration Contracts and Realized Gains
and Losses from the Sale of Investments" ("FAS No. 97").

Under FAS No. 60, acquisition costs for traditional life insurance products,
which primarily include whole life and term life insurance contracts, are
amortized over the premium payment period in proportion to the premium
revenue recognition.

Under FAS No. 97, acquisition costs for universal life and investment-type
products, which include universal life policies and fixed and variable
deferred annuities, are amortized over the life of the blocks of policies
(usually 25 years) in relation to the emergence of estimated gross profits
from surrender charges, investment margins, mortality and expense margins,
asset-based fee income, and actual realized gains (losses) on investments.
Amortization is adjusted retrospectively when estimates of current or future
gross profits to be realized from a group of products are revised. VOBA
activity for the six months ended June 30, 2003 was as follows:

5. INCOME TAXES

The Company's effective tax rates for the three months ended June 30, 2003
and June 30, 2002 were 22.9% and 30.8%, respectively. The Company's
effective tax rates for the six months ended June 30, 2003 and 2002 were
21.6% and 33.3%, respectively. The decreases in effective tax rates resulted
primarily from an increase in the deduction allowed for dividends received.

8

ING INSURANCE COMPANY OF AMERICA
(A WHOLLY-OWNED SUBSIDIARY OF ING LIFE INSURANCE AND ANNUITY COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (continued)

6. COMMITMENTS AND CONTINGENT LIABILITIES

LITIGATION

The Company is a party to threatened or pending lawsuits arising from the
normal conduct of business. Due to the climate in insurance and business
litigation, 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, in light of
existing insurance, reinsurance and established reserves, it is the opinion
of management that the disposition of such lawsuits will not have a
materially adverse effect on the Company's operations or financial position.

9

ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION

OVERVIEW

The following narrative analysis of the results of operations and financial
condition presents a review of the ING Insurance Company of America ("IICA", or
the "Company") as of June 30, 2003 and December 31, 2002 and for the three and
six-month periods ended June 30, 2003 and 2002. This review should be read in
conjunction with the condensed financial statements and other data presented
herein, as well as the "Management's Narrative Analysis of the Results of
Operations and Financial Condition" section contained in the Company's 2002
Annual Report on Form 10-K.

NATURE OF BUSINESS

The Company offers qualified and nonqualified annuity contracts that include a
variety of funding and payout options for individuals and employer sponsored
retirement plans qualified under Internal Revenue Code Section 403(b), as well
as nonqualified deferred compensation plans. Annuity contracts may be deferred
or immediate (payout annuities). These products also include programs offered to
qualified plans and nonqualified deferred compensation plans that package
administrative and record-keeping services along with a variety of investment
options, including affiliated and nonaffiliated mutual funds and variable and
fixed investment options.

RECENTLY ADOPTED ACCOUNTING STANDARDS

ACCOUNTING FOR GOODWILL AND OTHER INTANGIBLE ASSETS

During 2002, the Company adopted Financial Accounting Standards Board ("FASB")
Statement of Financial Accounting Standards ("FAS") No. 142, "Goodwill and Other
Intangible Assets" ("FAS No.142"). The adoption of this standard resulted in an
impairment loss of $101.8 million which was recorded by the Company in the
fourth quarter of 2002. This impairment loss represented the entire carrying
amount of goodwill, net of accumulated amortization. This impairment charge was
shown as a change in accounting principle on the December 31, 2002 Income
Statement. Effective January 1, 2002, the Company applied the non-amortization
provision of the new standard, therefore, the Company's net income is comparable
for all periods presented.

NEW ACCOUNTING PRONOUNCEMENTS

In July 2003, the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position (SOP) 03-1, ACCOUNTING AND REPORTING BY INSURANCE
ENTERPRISES FOR CERTAIN NONTRADITIONAL LONG-DURATION CONTRACTS AND FOR SEPARATE
ACCOUNTS, which the Company intends to adopt on January 1, 2004. The impact on
the financial statements is not known at this time.

CRITICAL ACCOUNTING POLICIES

GENERAL

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires the use of estimates and
assumptions in certain circumstances that affect amounts reported in the
accompanying condensed financial statements and related footnotes. These

10

ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
CRITICAL ACCOUNTING POLICIES (continued)
estimates and assumptions are evaluated on an on-going basis based on historical
developments, market conditions, industry trends and other information that is
reasonable under the circumstances. There can be no assurance that actual
results will conform to estimates and assumptions, and that reported results of
operations will not be materially adversely affected by the need to make future
accounting adjustments to reflect changes in these estimates and assumptions
from time to time.

The Company has identified the following estimates as critical in that they
involve a higher degree of judgment and are subject to a significant degree of
variability. In developing these estimates management makes subjective and
complex judgments that are inherently uncertain and subject to material change
as facts and circumstances develop. Although variability is inherent in these
estimates, management believes the amounts provided are appropriate based upon
the facts available upon compilation of the condensed financial statements.

INVESTMENT IMPAIRMENT TESTING

The Company reviews the general account investments for impairments by
considering the length of the time and the extent to which the fair value has
been less than amortized 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 fair value. Based on the facts and
circumstances of each case, management uses judgment in deciding whether any
calculated impairments are temporary or other than temporary. For those
impairments judged to be other than temporary, the Company reduces the carrying
value of those investments to the current fair value and records impairment
losses for the difference.

AMORTIZATION OF DEFERRED ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED

Deferred policy acquisition costs ("DAC") and value of business acquired
("VOBA") are amortized with interest over the life of the contracts (usually
25 years) in relation to the present value of estimated gross profits from
projected interest margins, asset-based fees, policy administration and
surrender charges less policy maintenance fees.

Changes in assumptions can have a significant impact on the calculation of
DAC/VOBA and its related amortization patterns. Due to the relative size of the
DAC/VOBA balance and the sensitivity of the calculation to minor changes in the
underlying assumptions and the related volatility that could result in the
reported DAC/VOBA balance, the Company performs a quarterly analysis of DAC/
VOBA. At each balance sheet date, actual historical gross profits are reflected
and expected future gross profits and related assumptions are evaluated for
continued reasonableness.

Any adjustment in estimated profit requires that the amortization rate be
revised retroactively to the date of policy or contract issuance ("unlocking"),
which could be significant. The cumulative difference related to prior periods
is recognized as a component of the current period's amortization, along with
amortization associated with the actual gross profits of the period. In general,
increases in estimated returns result in increased expected future profitability
and may lower the rate of

11

ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
CRITICAL ACCOUNTING POLICIES (continued)
amortization, while increases in lapse/surrender and mortality assumptions or
decreases in returns reduce the expected future profitability of the underlying
business and may increase the rate of amortization.

One of the most significant assumptions involved in the estimation of future
gross profits for variable universal life and deferred annuity products is the
assumed return associated with future separate account performance. To reflect
the near-term and long-term volatility in the equity markets this assumption
involves a combination of near-term expectations and a long-term assumption
about market performance. The overall return generated by the separate account
is dependent on several factors, including the relative mix of the underlying
sub-accounts among bond funds and equity funds as well as equity sector
weightings.

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 (for additional information, see the Legal Initiatives
section below). 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 credit, volatility and other
risks associated with the Company's investment portfolio. Investors are also
directed to consider other risks and uncertainties discussed in documents filed
by the Company with the SEC. The Company disclaims any obligation to update
forward-looking information.

RESULTS OF OPERATIONS

Fee income for the three and six month periods ended June 30, 2003 decreased by
$1.2 million and $2.2 million, respectively, compared to the same periods in
2002. The decrease in fee income was

12

ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
RESULTS OF OPERATIONS (continued)
primarily due to the decrease in average variable assets under management by the
Company. Substantially all of the fee income on variable assets is calculated
based on average assets under management, which decreased primarily due to the
continued decline in the equity markets.

Net investment income decreased $0.8 million and $0.2 million for the three and
six months ended June 30, 2003, respectively, compared to the same periods in
2002. The decrease in net investment income is primarily due to lower
investments yields and a decrease in average assets under management with fixed
options.

Net realized capital gains for the three and six month periods ended June 30,
2003 increased by $4.0 million and $4.4 million, respectively, compared to the
same periods in 2002. Net realized gains were primarily affected by a decrease
in the 10-year treasury rate between the comparative periods. A significant
variable affecting realized gains and losses is the 10-year treasury yield. This
rate decreased from 4.8% to 3.5% between June 30, 2002 and 2003. In a declining
rate environment, the market value of fixed maturities held in the Company's
portfolio increases assuming no credit deterioration. The increase in net
realized gains reflects the impact of this variable on the overall sale of fixed
maturities.

Interest credited and other benefits to contractholders for the six months ended
June 30, 2003 in contrast to the comparative period in 2002, remained flat. A
decrease of $0.9 million between the three months ended June 30, 2003 and three
months ended June 30, 2002, was primarily due to a decrease in credited rates to
contractholders and a decline in average assets under management with fixed
options.

Underwriting, acquisition, and insurance expenses for the three months ended
June 30, 2003 decreased by $0.5 million compared to the same period in 2002, the
lower expenses are primarily due to a decrease in general expenses and
commissions. A decrease of $0.4 million in the six months ended June 30, 2003
compared to the six months ended June 30, 2002, was due to a decrease in general
expenses and commissions partially offset by a decrease in policy acquisition
costs. The reduction in general expenses was a result of lower allocation of
expenses by ILIAC to the Company due to lower new and renewal business and
increased efficiencies. Commissions decreased during the periods as a result of
decreases in new and renewal business (fee income) generated during the three
and six months ended June 30, 2003 as compared to the same periods in 2002.

Amortization of deferred policy acquisition costs and value of business acquired
for the three and six months ended June 30, 2003, decreased by $1.4 million and
$2.2 million, respectively, compared to the same periods in 2002. Decreased
amortization during the three and six month periods ended June 30, 2003, was
primarily due to improved stock market and fund performance. Amortization of
long-duration products is recorded in proportion to actual and estimated future
gross profits. Estimated gross profits are computed based on underlying
assumptions related to the underlying contracts, including but not limited to
interest margins, mortality, lapse, premium persistency, expenses, and asset
growth. The decrease in the amortization of deferred policy acquisition costs
and value of insurance acquired reflects the impact of these variables on the
overall book of business.

13

ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
RESULTS OF OPERATIONS (continued)
Net income increased by $3.6 million and $3.5 million for the three and six
months ended June 30, 2003, as compared to the three and months ended June 30,
2002. Improved earnings are primarily the result of increased net realized gains
and a decrease in total benefits, losses and expenses partially offset by a
decrease in fee income and net investment income.

The Company's annuity deposits and assets under management are as follows:

(1) Excludes net unrealized capital gains of $9.3 million and $4.2 million at
June 30, 2003 and 2002, respectively.
(2) Includes $408.5 million and $484.5 million at June 30, 2003 and 2002,
respectively, of assets invested through the Company's products in
unaffiliated mutual funds.

FINANCIAL CONDITION

INVESTMENTS

FIXED MATURITIES

At June 30, 2003 and December 31, 2002, the Company's carrying value of
available for sale fixed maturities including securities pledged to creditors
(hereinafter referred to as "total fixed maturities") represented 100% of the
total general account invested assets for both periods. For the same periods,
$100.9 million, or 72% of total fixed maturities, and $118.2 million, or 91% of
total fixed maturities, respectively, supported experience-rated products. Total
fixed maturities reflected net unrealized capital gains of $9.3 million and
$8.0 million at June 30, 2003 and December 31, 2002, respectively.

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 AA- at June 30, 2003 and December 31, 2002.

Fixed maturities rated BBB and below 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.

14

ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
INVESTMENTS (continued)
The percentage of total fixed maturities by quality rating category is as
follows:

The percentage of total fixed maturities by market sector is as follows:

(1) Primarily U.S. dollar denominated

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 in accordance with FAS No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." Management considers the length of the time and the
extent to which the fair value has been less than amortized 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 fair
value. If it is probable that all amounts due according to the contractual terms
of a debt security will not be collected, an other than temporary impairment is
considered to have occurred.

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 accounted for as
a realized loss.

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.
The Company's principal sources of liquidity are product charges, investment
income and maturing investments. Primary uses of these funds are payments of
commissions and operating expenses, interest credits, investment purchases, as
well as withdrawals and surrenders.

15

ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
LIQUIDITY AND CAPITAL RESOURCES (continued)
The Company's liquidity position is managed by maintaining adequate levels of
liquid assets, such as cash or cash equivalents and short-term investments. The
Company has entered into agreements with ILIAC under which ILIAC has agreed to
cause the Company to have sufficient capital to meet certain capital and surplus
levels. Management believes that its sources of liquidity are adequate to meet
the Company's short-term cash obligations.

The National Association of Insurance Commissioners' ("NAIC") risk-based capital
requirements require insurance companies to calculate and report information
under a risk-based capital formula. These requirements are intended to allow
insurance regulators to monitor the capitalization of insurance companies based
upon the type and mixture of risks inherent in a Company's operations. The
formula includes components for asset risk, liability risk, interest rate
exposure, and other factors. The Company has complied with the NAIC's risk-based
capital reporting requirements. Amounts reported indicate that the Company has
total adjusted capital above all required capital levels.

LEGISLATIVE INITIATIVES

The Jobs and Growth Tax Relief Reconciliation Act of 2003 which was enacted in
the second quarter may impact the Company. The Act's provisions, which reduce
the tax rates on long-term capital gains and corporate dividends, impact the
relative competitiveness of the Company's products especially variable
annuities.

Other legislative proposals under consideration include repealing the estate
tax, changing the taxation of products, changing life insurance company taxation
and making changes to nonqualified deferred compensation arrangements. Some of
these proposals, if enacted, could have a material effect on life insurance,
annuity and other retirement savings product sales.

The impact on the Company's tax position and products cannot be predicted.

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 Company's disclosure
controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e)) 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.

16

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is a party to threatened or pending lawsuits arising from the normal
conduct of business. Due to the climate in insurance and business litigation,
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, in light of existing insurance, reinsurance and established
reserves, it is the opinion of management that the disposition of such lawsuits
will not have a materially adverse effect on the Company's operations or
financial position.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a) Exhibits

None.

b) Reports on Form 8-K.

None.

17

SIGNATURES

Pursuant to the requirements 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.

ING INSURANCE COMPANY OF AMERICA
(Registrant)

August 12, 2003 By /s/ Cheryl L. Price
- ------------------- -----------------------
(Date) Cheryl L. Price
Vice President and Chief Accounting Officer

By /s/ David A. Wheat
-----------------------
David A. Wheat
Senior Vice President and Chief
Financial Officer

18

CERTIFICATION

I, David A. Wheat, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ING Insurance Company
of America;
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: August 12, 2003

By /s/ David A. Wheat
- --------------------------------------------------
David A. Wheat
Senior Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial
Officer)

19

CERTIFICATION

I, Keith Gubbay, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ING Insurance Company
of America;
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 August 12, 2003

By /s/ Keith Gubbay
- --------------------------------------------------
Keith Gubbay
President
(Duly Authorized Officer and Principal Executive
Officer)

20

CERTIFICATION

Pursuant to 18 U.S.C. Section 1350, the undersigned officer of ING Insurance
Company of America (the "Company") hereby certifies that, to the officer's
knowledge, the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2003 (the "Report") fully complies with the requirements of Section
13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that
the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.

August 12, 2003 By /s/ David A. Wheat
- ---------------------------------------- -------------------------------------------------
(Date) David A. Wheat
Senior Vice President and Chief Financial Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C.
Section 1350 and is not being filed as part of the Report or as a separate
disclosure document.

21

CERTIFICATION

Pursuant to 18 U.S.C. Section 1350, the undersigned officer of ING Insurance
Company of America (the "Company") hereby certifies that, to the officer's
knowledge, the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2003 (the "Report") fully complies with the requirements of Section
13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that
the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.

August 12, 2003 By /s/ Keith Gubbay
- ---------------------------------------- -------------------------------------------------
(Date) Keith Gubbay
President

The foregoing certification is being furnished solely pursuant to 18 U.S.C.
Section 1350 and is not being filed as part of the Report or as a separate
disclosure document.

22