ING INSURANCE CO OF AMERICA - 10-K Annual Report

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

Form 10-K

Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

For the fiscal year ended December 31, 2004 Commission file number: 333-49581, 033-63657
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ING Insurance Company of America
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(Exact name of registrant as specified in its charter)

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

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

Registrant's telephone number, including area code (813) 281-3773
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Former name, former address and former fiscal year, if changed since last report

Securities registered pursuant to Section 12(b) of Act: None
Securities registered pursuant to Section 12(g) of Act: None

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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this form 10-K or any amendment to this
Form 10-K.

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: 25,500 shares of Common Stock
as of March 28, 2005, 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 I(1)(a) AND (b) OF FORM 10-K, THIS FORM IS BEING FILED WITH
THE REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL INSTRUCTION I(2).

ING INSURANCE COMPANY OF AMERICA
(A wholly-owned subsidiary of ING Life Insurance and Annuity Company)
Annual Report on Form 10-K
For the Year Ended December 31, 2004

TABLE OF CONTENTS

* Item prepared in accordance with General Instruction I(2) of Form 10-K.
** Item omitted pursuant to General Instruction I(2) of Form 10-K, except as to
Part III, Item 10 with respect to compliance with Sections 406 and 407 of
the Sarbanes-Oxley Act of 2002.
*** Although item may be omitted pursuant to General Instruction I(2) of Form
10-K, the Company has provided certain disclosures under this item.

PART I

ITEM 1. BUSINESS
(Dollar amounts in millions, unless otherwise stated)

ORGANIZATION OF BUSINESS

ING Insurance Company of America ("IICA" or the "Company") is a stock life
insurance company organized in 1990 under the insurance laws of Connecticut.
Effective January 5, 2000, the Company's state of domicile changed from
Connecticut to Florida. The Company is a wholly-owned subsidiary of ING Life
Insurance and Annuity Company ("ILIAC"). ILIAC was a wholly-owned subsidiary of
ING Retirement Holdings, Inc. ("HOLDCO"), which was a wholly-owned subsidiary of
ING Retirement Services, Inc. ("IRSI") until March 30, 2003. IRSI was a
wholly-owned subsidiary of Lion Connecticut Holdings Inc. ("Lion") until March
30, 2003, which in turn was ultimately owned by ING Groep N.V. ("ING"). On March
30, 2003, a series of mergers occurred in the following order: IRSI merged into
Lion, and HOLDCO merged into Lion. As a result, ILIAC is now a direct
wholly-owned subsidiary of Lion, which, in turn, is an indirect, wholly-owned
subsidiary of ING. ING is a global financial services company based in The
Netherlands, with American Depository Shares listed on the New York Stock
Exchange under the symbol "ING."

DESCRIPTION OF BUSINESS

The Company principally offers annuity contracts in the education market to
individuals on a qualified and non-qualified basis and to employer-sponsored
retirement plans qualified under Internal Revenue Code Sections 401, 403, and
408. These contracts may be deferred or immediate ("payout annuities").

The Company has one operating segment, ING U.S. Financial Services ("USFS").

PRODUCTS AND SERVICES

The Company's products provide customers with variable and/or fixed investment
options. Variable options generally provide for full assumption by the customer
of investment risks. Assets supporting variable options are held in Separate
Accounts that invest in mutual funds managed and/or distributed by the Company
or its affiliates or advised and/or distributed by non-affiliates. Variable
Separate Account investment income and realized capital gains and losses are not
reflected in the Statements of Operations.

Fixed options are either "fully guaranteed" or "experience-rated". Fully
guaranteed fixed options provide guarantees on investment returns, maturity
values, and, if applicable, benefit payments. Other fixed options are
"experience-rated" and require the customer to assume investment (including
realized capital gains and losses on the sale of invested assets) and other
risks subject to, among other things, principal and interest guarantees. The
Company has not issued these experience-rated fixed options since 2001.

FEES AND MARGINS

Insurance and expense charges, investment management fees and other fees earned
by the Company vary by product and depend, among other factors, on the funding
option selected by the customer under the product. For annuity products where
assets are allocated to variable funding options, the Company may charge the
Separate Account asset-based insurance and expense fees.

3

ITEM 1. BUSINESS (continued)

In addition, when a customer selects a variable funding option, the Company
may receive compensation from the fund's adviser, administrator, or other
affiliated entity for the performance of certain shareholder services. The
Company may also receive administrative service, distribution (12b-1), and/or
service plan fees from funds in which customers invest, in addition to
compensation from the fund's adviser, administrator, or other affiliated
entity. For fixed funding options, the Company earns a margin, which is based
on the difference between income earned on the investments supporting the
liability and interest credited to customers. The Company may also receive
other fees or charges depending on the nature of the products.

PRINCIPAL MARKETS AND METHOD OF DISTRIBUTION

The Company's products are offered primarily to individuals and
employer-sponsored groups in the education market. The Company's products
generally are sold through a managed network of broker/dealers and dedicated
career agents.

The Company is not dependent upon any single customer and no single customer
accounted for 10% or more of revenue in 2004. In addition, the loss of business
from any one, or a few, independent brokers or agents would not have a material
adverse effect on the earnings of the Company.

ASSETS UNDER MANAGEMENT

A substantial portion of fees or other charges and margins is based on assets
under management. Assets under management are principally affected by net
deposits (i.e., new deposits less surrenders), investment performance (i.e.,
interest credited to customer accounts for fixed options or market performance
for variable options) and customer retention. Assets under management were as
follows at December 31:

Assets under management are available for contractowner withdrawal and are
generally subject to fair value adjustments and/or deferred surrender charges.
To encourage customer retention and recover acquisition expenses, contracts
typically impose a surrender charge on contractowner balances withdrawn within a
period of time after the contract's inception. The period of time and level of
the charge vary by product. More favorable credited rates may also be offered
after policies have been in force for a period of time. Existing tax penalties
on annuity distributions prior to age 59-1/2 provide further disincentive to
customers for premature surrenders of account balances, but generally do not
impede transfers of those balances to products of competitors.

4

ITEM 1. BUSINESS (continued)

COMPETITION

Competition arises from an array of financial services companies including other
insurance companies, banks, mutual funds, and other investment managers.
Principal competitive factors are reputation for investment performance, product
features, service, cost, and the perceived financial strength of the investment
manager or sponsor. Competition may affect, among other matters, both business
growth and the pricing of the Company's products and services.

INVESTMENT OVERVIEW AND STRATEGY

The Company's investment strategy 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 the Company.

The Company's General Account invests primarily in fixed maturity investments,
including publicly issued bonds (including government bonds), privately placed
notes and bonds, mortgage-backed securities, and asset-backed securities. The
primary investment strategy is to optimize the risk-adjusted return through
superior asset selection predicated on a developed relative value approach,
solid credit research and monitoring, superior management of interest rate risk,
and active exploration into new investment product opportunities. Investments
are purchased when market returns, adjusted for risk and expenses, are
sufficient to profitably support growth of the liability block of business. In
addition, assets and liabilities are analyzed and reported for internal
management purposes on an option-adjusted basis. The level of required capital
of given transactions is a primary factor in determining relative value among
different investment and liability alternatives, within the scope of each
product type's objective. An active review of existing holdings identifies
specific assets that could be effectively traded in order to enhance the
risk-adjusted returns of the portfolio, while minimizing adverse tax and
accounting impacts. The Company strives to maintain a portfolio average asset
quality rating of A, excluding mortgage loans, but including mortgage-backed
securities, which are reported with bonds, based on Standard & Poor's ("S&P")
ratings classifications.

RATINGS

On December 15, 2004, S&P reaffirmed its AA (Very Strong) counterparty credit
and financial strength rating of ING's primary U.S. insurance operating
companies ("ING U.S."), including the Company. S&P, also on this date, revised
the outlook on the core insurance operating companies from negative to stable,
reflecting ING's commercial position and diversification, financial flexibility,
reduced capital leverage, and improved profitability. The outlook revisions
recognize ING's progress in setting a more focused and decisive strategic
direction and implementing more integrated financial management across banking
and insurance.

On December 17, 2004, Moody's Investor's Service, Inc. ("Moody's") issued a
credit opinion affirming the financial strength rating of ING U.S., including
the Company, of Aa3 (Excellent) with a stable outlook. The rating is based on
the strong implicit support and financial strength of the parent company, ING.
Furthermore, Moody's noted that ING U.S. has built a leading market share in the
domestic individual life insurance,

5

ITEM 1. BUSINESS (continued)

annuity, and retirement plan businesses. ING U.S. enjoys product diversity,
further enhancing its credit profile through the use of these multiple
distribution channels.

On December 22, 2004, A.M. Best Company, Inc. ("A.M. Best") reaffirmed the
financial strength rating of A+ (Superior) of ING U.S., including the
Company, while maintaining its negative outlook for ING U.S. These rating
actions follow ING's announcement of its intention to sell Life Insurance
Company of Georgia ("LOG"), as well as the conclusion of A.M. Best's review
of ING's plan to exit the U.S. individual reinsurance business. ING closed
the transaction to exit the U.S. individual life reinsurance business on
December 31, 2004, and the sale of LOG is expected to be completed during the
second quarter of 2005, subject to regulatory approval. Neither of these
transactions directly impact the Company.

REGULATION

The Company's operations are subject to comprehensive regulation throughout the
United States. The laws of the various jurisdictions establish supervisory
agencies, including the state insurance departments, with broad authority to
grant licenses to transact business and regulate many aspects of the products
and services offered by the Company, as well as solvency and reserve adequacy.
Many agencies also regulate the investment activities of insurance companies on
the basis of quality, diversification, and other quantitative criteria. The
Company's operations and accounts are subject to examination at regular
intervals by certain of these regulators.

Operations conducted by the Company are subject to regulation by various state
insurance departments in the states where the Company conducts business. The
Company is domiciled in Florida. Among other matters, these agencies may
regulate premium rates, trade practices, agent licensing, policy forms,
underwriting and claims practices, and minimum interest rates to be credited to
fixed annuity customer accounts.

The Securities and Exchange Commission ("SEC"), the National Association of
Securities Dealers ("NASD") and, to a lesser extent, the states regulate the
sales and investment management activities and operations of the Company.
Generally, the Company's variable annuity products and certain of its fixed
annuities are registered as securities with the SEC. Regulations of the SEC,
Department of Labor ("DOL"), and Internal Revenue Service ("IRS") also impact
certain of the Company's annuity and other investment and retirement products.
These products may involve Separate Accounts and mutual funds registered under
the Investment Company Act of 1940.

INSURANCE HOLDING COMPANY LAWS

A number of states regulate affiliated groups of insurers such as the Company
under holding company statutes. These laws, among other things, place certain
restrictions on transactions between affiliates such as dividends and other
distributions that may be paid to the Company's parent corporation.

INSURANCE COMPANY GUARANTY FUND ASSESSMENTS

Insurance companies are assessed the costs of funding the insolvencies of other
insurance companies by the various state guaranty associations, generally based
on the amount of premiums companies collect in that state.

6

ITEM 1. BUSINESS (continued)

The Company accrues the cost of future guaranty fund assessments based on
estimates of insurance company insolvencies provided by the National
Organization of Life and Health Insurance Guaranty Association ("NOLHGA") and
the amount of premiums written in each state. The Company has recorded $0.2 and
$0.4 for this liability as of December 31, 2004 and 2003, respectively.

For information regarding certain other potential regulatory changes relating to
the Company's businesses, see "Risk Factors" in Item 1 "Business".

EMPLOYEES

The Company utilizes the employees of ING North America Insurance Corporation,
Inc. and other affiliates. Services provided by the employees of affiliated
companies include underwriting, new business processing, customer service,
actuarial, risk management, human resources, investment management, finance,
information technology, and legal and compliance services. The Company receives
an expense allocation, at cost, based on its utilization of employees of
affiliates.

RISK FACTORS

In addition to the normal risks of business, the Company is subject to
significant risks and uncertainties, including those which are described below.

EQUITY MARKET VOLATILITY COULD NEGATIVELY IMPACT THE COMPANY'S PROFITABILITY
AND FINANCIAL CONDITION

The sales and profitability of the Company's variable annuity products could be
impacted by declines in the equity markets. Generally, sales of variable
annuities decrease when equity markets decline over an extended period of time.
The amount of fees the Company receives on its variable annuity products is
based on the account values of the Separate Accounts which support such variable
earnings. A decline in the equity markets will likely result in a decrease in
such account values and therefore a decrease in the fees the Company receives on
its variable annuities. To the extent that the actual performance of the equity
markets and the Company's expectations of future performance decrease its future
profit expectations, the Company may be required to accelerate the amount of
deferred acquisition cost amortization in a given period, potentially negatively
impacting its net income in a period.

THE COMPANY'S EFFORTS TO REDUCE THE IMPACT OF INTEREST RATE CHANGES ON ITS
PROFITABILITY AND FINANCIAL CONDITION MAY NOT BE EFFECTIVE

The Company attempts to reduce the impact of changes in interest rates on the
profitability and financial condition of its fixed annuity operations. The
Company accomplishes this reduction primarily by managing the duration of its
assets relative to the duration of its liabilities. During a period of rising
interest rates, annuity contract surrenders and withdrawals may increase as
customers seek to achieve higher returns. Despite its efforts to reduce the
impact of rising interest rates, the Company may be required to sell assets to
raise the cash necessary to respond to such surrenders and withdrawals, thereby
realizing capital losses on the assets sold. An increase in policy surrenders
and withdrawals may also require the Company to accelerate amortization of
policy acquisition costs relating to these contracts, which would further reduce
its net income.

7

ITEM 1. BUSINESS (continued)

During periods of declining interest rates, borrowers may prepay or redeem
mortgages and bonds that the Company owns, which would force it to reinvest the
proceeds at lower interest rates. The Company's General Account products
generally contain minimum interest rate guarantees. These minimum guarantees may
constrain the Company's ability to lower credited interest rates in response to
lower investment returns. Therefore, it may be more difficult for the Company to
maintain its desired spread between the investment income it earns and the
interest it credits to its customers, thereby reducing its profitability.

A DOWNGRADE IN ANY OF THE RATINGS FOR THE COMPANY MAY, AMONG OTHER THINGS,
INCREASE POLICY SURRENDERS AND WITHDRAWALS, REDUCE NEW SALES, AND TERMINATE
RELATIONSHIPS WITH DISTRIBUTORS, ANY OF WHICH COULD ADVERSELY AFFECT ITS
PROFITABILITY AND FINANCIAL CONDITION

Ratings are important factors in establishing the competitive position of
insurance companies. A downgrade, or the potential for such a downgrade, of any
of the ratings for the Company could, among other things:

- - Materially increase the number of annuity contract surrenders and
withdrawals;

- - Result in the termination of relationships with broker-dealers, banks,
agents, wholesalers, and other distributors of the Company's products and
services; and

- - Reduce new sales of annuity contracts.

Any of these consequences could adversely affect the Company's profitability and
financial condition.

Rating organizations assign ratings based upon several factors. While most of
the factors relate to the rated company, some of the factors relate to the views
of the rating organization, general economic conditions, and circumstances
outside the rated company's control. In addition, rating organizations may
employ different models and formulas to assess financial strength of a rated
company, and from time to time rating organizations have, in their discretion,
altered the models. Changes to the models, general economic conditions, or
circumstances outside the Company's control could impact a rating organization's
judgment of its rating and the subsequent rating it assigns the Company. The
Company cannot predict what actions rating organizations may take, or what
actions it may be required to take in response to the actions of rating
organizations, which could adversely affect the Company.

THE COMPANY'S INVESTMENT PORTFOLIO IS SUBJECT TO SEVERAL RISKS THAT MAY
DIMINISH THE VALUE OF ITS INVESTED ASSETS AND ADVERSELY AFFECT ITS SALES,
PROFITABILITY AND THE INVESTMENT RETURNS CREDITED TO CERTAIN OF ITS CUSTOMERS

The Company's investment portfolio is subject to several risks, including, among
other things:

- - The Company may experience an increase in defaults or delinquency in the
investment portfolios.

- - The Company may have greater difficulty selling privately placed fixed
maturity securities in a timely manner, because they are less liquid than
publicly traded fixed maturity securities.

- - During periods of declining interest rates, borrowers may prepay or redeem
prior to maturity (i) mortgages that back certain mortgage-backed securities
and (ii) bonds with embedded call options that the Company owns which would
force it to reinvest the proceeds received at lower interest rates.

8

ITEM 1. BUSINESS (continued)

Any of these consequences may diminish the value of the Company's invested
assets and adversely affect its sales, profitability, or the investment returns
credited to its customers.

CHANGES IN REGULATION IN THE UNITED STATES MAY REDUCE THE COMPANY'S
PROFITABILITY

The Company's insurance business is subject to comprehensive regulation and
supervision throughout the United States by both state and federal regulators.
The primary purpose of state regulation of the insurance business is to protect
contractowners, and not necessarily to protect other constituencies such as
creditors or investors. State insurance regulators, state attorneys general, the
National Association of Insurance Commissioners, the SEC, and the NASD
continually reexamine existing laws and regulations and may impose changes in
the future. Changes in federal legislation and administrative policies in areas
such as employee benefit plan regulation, financial services regulation, and
federal taxation could lessen the advantages of certain of the Company's
products as compared to competing products, or possibly result in the surrender
of some existing contracts and policies or reduced sales of new products and,
therefore, could reduce the Company's profitability.

The insurance industry has recently become the focus of greater regulatory
scrutiny due to questionable business practices relating to trading and pricing
within the mutual fund and variable annuity industries, allegations related to
improper special payments, price-fixing, conflicts of interest and improper
accounting practices, and other misconduct alleged by and initiatives of the New
York Attorney General, state insurance departments, and in related litigation.
As a result, a large number of insurance companies, including certain ING
affiliates, have been requested to provide information to regulatory
authorities. In some cases, this regulatory scrutiny has led to new proposed
legislation regulating insurance companies, regulatory penalties and related
litigation. At this time, the Company does not believe that any such regulatory
scrutiny will materially impact it; however, the Company cannot guarantee that
new laws, regulations, or other regulatory action aimed at the business
practices under scrutiny would not adversely affect its business. The adoption
of new laws or regulations, enforcement action or litigation, whether or not
involving the Company, could influence the manner in which it distributes its
insurance products, which could adversely impact the Company.

ITEM 2. PROPERTIES

The Company's principal executive office is located at Corporate Center One,
2202 North Westshore Boulevard #350, Tampa, Florida 33607 and its principal
office for operations is located at 151 Farmington Avenue, Hartford, Connecticut
06156. The Company occupies office space that is leased by ILIAC or other
affiliates. Expenses associated with these offices are allocated on a direct and
indirect basis to the Company. Affiliates within ING's U.S. operations also
provide the Company with various management, finance, investment management and
other administrative services, from facilities located at 5780 Powers Ferry
Road, N.W., Atlanta, Georgia 30327-4390. Affiliates also provide the Company
with product management, sales, marketing, customer and other administrative
services for its annuity business from facilities located in West Chester,
Pennsylvania and Des Moines, Iowa. The affiliated companies are reimbursed for
the Company's use of these services and facilities under a variety of
intercompany agreements.

9

ITEM 3. 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/arbitration, 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.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Omitted pursuant to General Instruction I(2)(c) of Form 10-K.

10

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

There is no public trading market for the Company's Common Stock. All of the
Company's outstanding common stock is owned by ILIAC, which is a wholly-owned
subsidiary of Lion, which is ultimately owned by ING.

The Company's ability to pay dividends is subject to the prior approval of the
insurance regulatory authorities of the State of Florida for payment of any
dividend which exceeds certain statutorily prescribed thresholds that are
calculated in relation to a company's statutory surplus and/or its net gains
from operations.

The Company did not pay dividends to its parent or receive capital contributions
from its parent in 2004, 2003, or 2002.

ITEM 6. SELECTED FINANCIAL DATA
(Dollar amounts in millions, unless otherwise stated)

ING INSURANCE COMPANY OF AMERICA
3-YEAR SUMMARY OF SELECTED FINANCIAL DATA

ITEM 7. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
(Dollar amounts in millions, unless otherwise stated)

OVERVIEW

The following narrative analysis of the results of operations presents a review
of ING Insurance Company of America ("IICA" or the "Company") for each of the
two years ended December 31, 2004 and 2003 and financial condition as of
December 31, 2004 versus 2003. This overview should be read in its entirety and
in conjunction with the selected financial data, financial statements, related
notes and other data found under Part II, Item 6 and Item 8 contained herein.

11

ITEM 7. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)

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 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 changes in
credit quality, price volatility, and liquidity. Investors are also directed to
consider other risks and uncertainties discussed in 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.

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 financial statements and related footnotes. These 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: reserves, other-than-temporary impairment testing, and amortization
of value of business acquired ("VOBA"). In developing these estimates,
management makes subjective and complex judgments that are inherently uncertain
and subject to material changes 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
financial statements.

12

ITEM 7. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
CRITICAL ACCOUNTING POLICIES (continued)

RESERVES

The Company establishes and carries actuarially determined reserve liabilities
which are calculated to meet its future obligations. Changes in or deviations
from the assumptions used can significantly affect the Company's reserve levels
and related future operations.

Reserves for deferred annuity investment contracts and immediate annuities
without life contingent benefits are equal to cumulative deposits less charges
and withdrawals plus credited interest thereon (rates range from 3.0% to 7.8.%
for all years presented) net of adjustments for investment experience that the
Company is entitled to reflect in future credited interest. These reserves also
include unrealized gains/losses related to investments and unamortized realized
gains/losses on investments for experience-rated contracts. Reserves on
experience-rated contracts reflect the rights of contractowners, plan
participants, and the Company.

Reserves for immediate annuities with life contingent benefits are computed on
the basis of assumed interest discount rates, mortality, and expenses, including
a margin for adverse deviations. Such assumptions generally vary by plan, year
of issue and policy duration. Reserve interest rates range from 4.9% to 8.0% for
all years presented.

OTHER-THAN-TEMPORARY IMPAIRMENT TESTING

The Company's accounting policy requires that a decline in the value of an
investment below its amortized cost basis be assessed to determine if the
decline is other-than-temporary. If so, the investment is deemed to be
other-than-temporarily impaired, and a charge is recorded in net realized
capital losses equal to the difference between fair value and the amortized cost
basis of the investment. The fair value of the other-than-temporarily impaired
investment becomes its new cost basis.

In addition, the Company invests in structured securities that meet the criteria
of 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." 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 fair value of the security is
less than amortized cost and there has been an adverse change in cash flow since
the remeasurement date. 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 evaluation of other-than-temporary impairments included in the General
Account is a quantitative and qualitative process, which is subject to risks and
uncertainties and is intended to determine whether declines in the fair value of
investments should be recognized in current period earnings. The risks and
uncertainties include the length of time and extent to which the fair value has
been less than amortized cost, changes in general economic conditions, the
issuer's financial condition or near-term recovery prospects, and the effects of
changes in interest rates.

13

ITEM 7. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
CRITICAL ACCOUNTING POLICIES (continued)

AMORTIZATION OF 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.

The amortization methodology used for VOBA varies by product type. Statement of
Financial Accounting Standards ("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 97") applies to universal life
and investment-type products, such as fixed and variable deferred annuities.
Under FAS No. 97, VOBA is 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.

Changes in assumptions can have a significant impact on VOBA balances and
amortization rates. Several assumptions are considered significant in the
estimation of future gross profits associated with variable deferred annuity
products. One of the most significant assumptions involved in the estimation of
future gross profits is the assumed return associated with the variable account
performance. To reflect the volatility in the equity markets, this assumption
involves a combination of near-term expectations and long-term assumptions
regarding market performance. The overall return on the variable account is
dependent on multiple factors, including the relative mix of the underlying
sub-accounts among bond funds and equity funds, as well as equity sector
weightings. Other significant assumptions include surrender and lapse rates,
estimated interest spread, and estimated mortality.

Due to the relative size and sensitivity to minor changes in underlying
assumptions of VOBA balances, the Company performs a quarterly and annual
analysis of VOBA for the annuity business. The VOBA balances are evaluated for
recoverability and are reduced to the extent that estimated future gross profits
are inadequate to recover the asset.

At each evaluation date, actual historical gross profits are reflected, and
estimated future gross profits and related assumptions are evaluated for
continued reasonableness. Any adjustment in estimated profit requires that the
amortization rate be revised ("unlocking"), retroactively to the date of the
policy or contract issuance. The cumulative prior period adjustment is
recognized as a component of current period amortization. In general, increases
in investment, mortality, and expense margins, and thus estimated future
profits, lower the rate of amortization. However, decreases in investment,
mortality, and expense margins, and thus estimated future profits, increase the
rate of amortization.

Deferred policy acquisition costs ("DAC") represents 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.
DAC, in the amount of $0.9 as of December 31, 2004 and 2003, is included in
other assets on the Balance Sheets and the related amortization is included
in VOBA amortization.

14

ITEM 7. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
CRITICAL ACCOUNTING POLICIES (continued)

ANALYSIS OF VOBA

During 2004, VOBA amortization increased principally due to a decrease in
estimated future profits, due to higher surrenders and a decrease in assets
under management.

During 2003 the Company reset long-term assumptions for the Separate Account
returns from 9.0% to 8.5% (gross before fund management fees and mortality,
expense, and other policy charges), reflecting a blended return of equity and
other sub-accounts. The 2003 unlocking adjustment was primarily driven by
improved market performance compared to expected performance during 2003. For
the year ended December 31, 2003, the Company recorded a deceleration of VOBA
amortization totaling $1.1 before tax, or $0.7, net of $0.4 of federal income
tax expense.

As part of the regular analysis of VOBA, at the end of 2002, the Company
unlocked its long-term rate of return assumptions. The Company reset long-term
return assumptions for the Separate Account returns to 9.0% (gross before fund
management fees and mortality and expense and other policy charges), as of
December 31, 2002, reflecting a blended return of equity and other sub-accounts.
The unlocking adjustment in 2002 was primarily driven by the sustained downturn
in the equity markets and revised expectations for future returns. During 2002,
the Company recorded an acceleration of VOBA amortization totaling $3.5 before
tax, or $2.3, net of $1.2 of federal income tax benefit.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2004 COMPARED TO YEAR ENDED DECEMBER 31, 2003

NET INCOME: Net income decreased by $0.4 to $5.9 for 2004, as compared to $6.3
for 2003. Decreased net income is primarily the result of an increase in
amortization of VOBA partially offset by an increase in net investment income in
excess of interest credited.

NET INVESTMENT INCOME: Net investment income from General Account assets
increased $2.9 to $9.5 for 2004 from $6.6 for 2003. The increase is primarily
due to the inclusion of interest income of $3.0 on the guaranteed portion of the
separate accounts beginning in 2004 as required with the adoption of Statement
of Position ("SOP") 03-1, "Accounting and Reporting by Insurance Enterprises for
Certain Nontraditional Long-Duration Contracts and for Separate Accounts".

FEE INCOME: Fee income for 2004 decreased by $0.2 to $8.1 from $8.3 for 2003. A
substantial portion of fee income is calculated based on variable assets under
management. The decrease in fee income was primarily due to a decrease in the
Company's average variable assets under management by 7.5%.

15

ITEM 7. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
RESULTS OF OPERATIONS (continued)

NET REALIZED CAPITAL GAINS: Net realized capital gains for 2004 decreased by
$1.0 to $1.3 from $2.3 for 2003. The decrease in gains is primarily due to
rising interest rates in 2004. In an increasing rate environment, the market
value of fixed maturities in the portfolios decreases, which in turn, results in
lower realized gains upon sale.

INTEREST CREDITED AND OTHER BENEFITS TO CONTRACTOWNERS: Interest credited and
other benefits to contractowners increased $1.8 to $3.7 from $1.9 for 2003. The
increase is primarily due to the inclusion of interest credited to
contractowners on the guaranteed portion of the separate accounts, as required
by SOP 03-1.

OPERATING EXPENSES: Operating expenses for 2004 decreased by $0.7 to $2.7 from
$3.4 for 2003. The decrease is principally related to reductions in premium tax
expenses, guarantee fund assessments and the overall decrease in assets under
management by 9%.

AMORTIZATION OF VOBA: Amortization of VOBA for 2004, increased by $1.5 to $5.1
from $3.6 for 2003. Amortization of long-duration products is recorded in
proportion to actual and estimated future gross profits. Estimated gross profits
are computed based on assumptions related to the underlying contracts, including
but not limited to interest margins, surrenders, withdrawals, expenses, and
asset growth. Due to higher surrenders and a decrease in assets under
management, the Company's estimate of future profits decreased.

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"), pursuant to an investment advisory
agreement. Separate portfolios are established for each general type of product
within IICA.

The Company invests its General Account primarily in fixed maturity
investments, including publicly issued bonds (including government bonds),
privately placed notes and bonds, mortgage-backed securities, and
asset-backed securities. The primary investment strategy is to optimize the
risk-adjusted return through superior asset selection predicated on a
developed relative value approach, credit research and monitoring, superior
management of interest rate risk, and active exploration into new investment
product opportunities. Investments are purchased when market returns,
adjusted for risk and expenses, are sufficient to profitably support growth
of the liability block of business. In addition, assets and liabilities are
analyzed and reported for internal management purposes on an option-adjusted
basis. The level of required capital of given transactions is a primary
factor in determining relative value among different investment and liability
alternatives, within the scope of each product type's objective. An active
review of existing holdings identifies specific assets that could be
effectively traded in order to enhance the risk-adjusted returns of the
portfolio, while minimizing adverse tax and accounting impacts. The Company
strives to maintain a portfolio average asset quality rating of A,

16

ITEM 7. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
FINANCIAL CONDITION (continued)

excluding mortgage loans, but including mortgage-backed securities that are
reported with bonds, based on Standard & Poor's ratings classifications.

PORTFOLIO COMPOSITION

The following table presents the investment portfolio at December 31, 2004 and
2003.

FIXED MATURITIES

Fixed maturities available-for-sale as of December 31, 2004 were as follows:

17

ITEM 7. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
FINANCIAL CONDITION (continued)

Fixed maturities available-for-sale as of December 31, 2003 were as follows:

At December 31, 2004 and 2003, respectively, the Company's carrying value of
available-for-sale fixed maturities, including fixed maturities pledged to
creditors (hereinafter referred to as "total fixed maturities") represented 100%
of the total general account invested assets. For the same periods, $61.1, or
33.0% of total fixed maturities, and $92.3, or 69.3% of total fixed maturities,
respectively, supported experience-rated products. Total fixed maturities
reflected net unrealized capital gains of $3.3 and $5.2 at December 31, 2004 and
2003, 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 and AA- at December 31, 2004 and 2003,
respectively. Ratings are calculated using a rating hierarchy that considers
S&P, Moody's, and internal ratings.

Total fixed maturities by quality rating category, including fixed maturities
pledged to creditors, were as follows at December 31:

18

ITEM 7. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
FINANCIAL CONDITION (continued)

97.6% and 99.2% of fixed maturities were invested in securities rated BBB and
above (Investment Grade) at December 31, 2004 and 2003, 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 December 31:

(1) Primarily U.S. dollar denominated

The amortized cost and fair value of total fixed maturities for the year-ended
December 31, 2004 are shown below by contractual maturity. Actual maturities may
differ from contractual maturities because securities may be restructured,
called, or prepaid.

At December 31, 2004 and 2003, fixed maturities with carrying values of $6.6 and
$6.7 were on deposit as required by regulatory authorities.

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 December 31, 2004 or 2003.

19

ITEM 7. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
FINANCIAL CONDITION (continued)

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
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 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 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." 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 fair value of the security is
less than amortized cost and there has been an adverse change in cash flow since
the last remeasurement date.

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. The Company had no other-than-temporary impairments for the
years ended December 31, 2004 and 2003.

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.

SOURCE AND USES OF LIQUIDITY

The Company's principal sources of liquidity are product charges, investment
income, proceeds from the maturing and sale of investments, and capital
contributions. Primary uses of liquidity are payments of commissions and
operating expenses, interest and premium credits, investment purchases, 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. For
a description of the Company's asset/liability management strategy, see Item 7A
"Quantitative and Qualitative Disclosures About Market Risk." 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.

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"), an affiliate
of the Company, whereby either party can borrow from the other up to 0.5% of
IICA's statutory admitted assets as of the prior December 31 from one
another. IICA also maintains a $30.0 revolving loan agreement with SunTrust
Bank and a $30.0 revolving loan agreement with the Bank of New York. The
Company had no outstanding balance under any

20

ITEM 7. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
LIQUIDITY AND CAPITAL RESOURCES (continued)

of these facilities as of December 31, 2004 or 2003. Management believes that
these sources of liquidity are adequate to meet the Company's short-term cash
obligations.

CAPITAL CONTRIBUTIONS AND DIVIDENDS

The Company's ability to pay dividends is subject to the prior approval of the
insurance regulatory authorities of the State of Florida for payment of any
dividend, which exceeds certain statutorily prescribed thresholds that are
calculated in relation to a company's statutory surplus and/or its net gains
from operations.

The Company did not pay dividends to its parent or receive capital contributions
from its parent in 2004, 2003, or 2002.

SEPARATE ACCOUNTS

Separate Account assets and liabilities generally represent funds maintained to
meet specific investment objectives of contractowners who bear the investment
risk, subject, in limited cases, to minimum guaranteed rates. Investment income
and investment gains and losses generally accrue directly to such
contractowners. The assets of each account are legally segregated and are not
subject to claims that arise out of any other business of the Company or its
affiliates.

Separate Account assets supporting variable options under annuity contracts are
invested, as designated by the contractowner or participant (who bears the
investment risk subject, in limited cases, to certain minimum guarantees) under
a contract, in shares of mutual funds which are managed by its affiliates, or
other selected mutual funds not managed by the Company or its affiliates.

Separate Account assets and liabilities are carried at fair value and shown as
separate captions in the Balance Sheets. Deposits, investment income, and net
realized and unrealized capital gains and losses of the Separate Accounts are
not reflected in the Financial Statements (with the exception of realized and
unrealized capital gains and losses on the assets supporting the guaranteed
interest option). The Statements of Cash Flows do not reflect investment
activity of the Separate Accounts.

Assets and liabilities of separate account arrangements that do not meet the
criteria in SOP 03-1 for presentation in the separate caption in the Balance
Sheets (primarily guaranteed interest options) and revenue and expenses related
to such arrangements, are consolidated in the financial statements in the
general account. At December 31, 2004 and 2003, unrealized gains (losses) of
$(0.1) and $5.0, respectively, on assets supporting a guaranteed interest option
are reflected in shareholder's equity.

OFF-BALANCE SHEET ARRANGEMENTS AND AGGREGATE CONTRACTUAL OBLIGATIONS

Through the normal course of investment operations, the Company commits to
either purchase or sell securities 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 December 31, 2004 and 2003, the Company had no
off-balance sheet commitments to purchase investments.

21

ITEM 7. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
LIQUIDITY AND CAPITAL RESOURCES (continued)

As of December 31, 2004, the Company had certain contractual obligations due
over a period of time as summarized in the following table:

Reserves for insurance contract obligations consist of actuarially determined
liabilities for the Company to meet its further obligations under its variable
annuity, fixed annuity, and other investment or retirement products. At December
31, 2004, the Company had no outstanding contractual obligations associated with
long term debt, operating leases, or purchase obligations.

REINSURANCE

The Company utilizes indemnity reinsurance agreements to reduce its exposure to
large losses in all aspects of its insurance business. Such reinsurance permits
recovery of a portion of losses from reinsurers, although it does not discharge
the primary liability of the Company as direct insurer of the risks reinsured.
The Company evaluates the financial strength of potential reinsurers and
continually monitors the financial condition of reinsurers. Only those
reinsurance recoverable balances deemed probable of recovery are reflected as
assets on the Company's Balance Sheets.

SECURITIES LENDING

The Company engages in securities lending whereby certain securities from its
portfolio are loaned to other institutions for short periods of time. Initial
collateral, primarily cash, is required at a rate of 102% of the market value of
the loaned domestic securities. The collateral is deposited by the borrower with
a lending agent, and retained and invested by the lending agent according to the
Company's guidelines to generate additional income. The market value of the
loaned securities is monitored on a daily basis with additional collateral
obtained or refunded as the market value of the loaned securities fluctuates.

RISK-BASED CAPITAL

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.

22

ITEM 7. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)

RECENTLY ADOPTED ACCOUNTING STANDARDS

(See Significant Accounting Policies in Notes to the Financial Statements for
further information.)

ACCOUNTING AND REPORTING BY INSURANCE ENTERPRISES FOR CERTAIN NONTRADITIONAL
LONG-DURATION CONTRACTS AND FOR SEPARATE ACCOUNTS

The Company adopted SOP 03-1 on January 1, 2004. SOP 03-1 establishes several
new accounting and disclosure requirements for certain nontraditional
long-duration contracts and for separate accounts including, among other things,
a requirement that assets and liabilities of separate account arrangements that
do not meet certain criteria be accounted for as general account assets and
liabilities, and that revenues and expenses related to such arrangements, be
consolidated with the respective lines in the Statements of Operations. In
addition, SOP 03-1 requires that additional liabilities be established for
certain guaranteed death and other benefits and for products with certain
patterns of cost of insurance charges. In addition, sales inducements provided
to contractholders must be recognized on the Balance Sheets separately from
deferred acquisition costs and amortized as a component of benefits expense
using methodology and assumptions consistent with those used for amortization of
deferred policy acquisition costs.

The Company evaluated all requirements of SOP 03-1 which resulted in the
consolidation of the Separate Account supporting the guarantee option into the
General Account. Requirements to establish additional liabilities for minimum
guarantee benefits are applicable to the Company, however, the Company's
policies on contract liabilities have historically been, and continue to be, in
conformity with the newly established requirements. Requirements for recognition
of additional liabilities for products with certain patterns of cost of
insurance charges are not applicable to the Company. The adoption of SOP 03-1
did not have a significant effect on the Company's financial position, results
of operations, or cash flows.

In the fourth quarter of 2004, the Company inplemented 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 Accounting" (the "TPA").

The TPA, which was approved in September 2004, provides additional guidance
regarding certain implicit assessments that may be used in the testing of the
base mortality function on contracts, which is performed to determine whether
additional liabilities are required in conjunction with SOP 03-1. In
addition, the TPA provides additional guidance surrounding the allowed level
of aggregation of additional liabilities determined under SOP 03-1. The
adoption of the TPA did not have an impact on the Company's financial
position, results of operations, or cash flows.

The implementation of SOP 03-1 also raised questions regarding the
interpretation of the requirements of Statement of Financial Accounting
Standards ("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," concerning when it is appropriate to record an unearned revenue
liability related to the insurance benefit function. To clarify its position,
the Financial Accounting Standards Board ("FASB") issued FASB Staff Position No.
FAS 97-1 ("FSP FAS 97-1"), "Situations in Which Paragraphs 17(b) and 20 of FASB
Statement

23

ITEM 7. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
RECENTLY ADOPTED ACCOUNTING STANDARDS (continued)

No. 97 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. The Company adopted FSP FAS 97-1 on July 1, 2004. The
adoption of FSP FAS 97-1 did not have an impact on the Company's financial
position, results of operations, or cash flows.

LEGISLATIVE INITIATIVES

Certain elements of the Jobs and Growth Tax Relief Reconciliation Act of
2003, in particular the reduction in the tax rates on long-term capital gains
and corporate dividends, impact the relative competitiveness of the Company's
products, especially variable annuities. While sales of products do not
appear to have been reduced to date, the long-term effect of the Jobs and
Growth Act of 2003 on the Company's financial condition or results of
operation cannot be reasonably estimated at this time.

Other legislative proposals under consideration include repealing the estate
tax, reducing the taxation on annuity benefits, changing the taxation of
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 impact on the
Company's products cannot be predicted.

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.

REGULATORY MATTERS

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.

FUND REGULATORY ISSUES

Since 2002, there has been increased governmental and regulatory activity
relating to mutual funds and variable insurance products. This activity has
primarily focused on inappropriate trading of fund shares, revenue sharing and
directed brokerage, compensation, sales practices and suitability, arrangements
with service providers, pricing, compliance and controls, and adequacy of
disclosure.

In addition to responding to governmental and regulatory requests on fund
regulatory issues, ING management, on its own initiative, conducted, through
special counsel and a national accounting firm, an extensive internal review of
mutual fund trading in ING insurance, retirement, and mutual fund products. The
goal of this review was to identify any instances of inappropriate trading in
those products by third parties or by ING investment professionals and other ING
personnel.

The internal review identified several isolated arrangements allowing third
parties to engage in frequent trading of mutual funds within the variable
insurance and mutual fund products of certain affiliates of the Company, and
identified other circumstances where frequent trading occurred despite measures
taken by ING intended to combat market timing. Each of the arrangements has been
terminated and disclosed to regulators, to the independent trustees of ING Funds
(U.S.) and in Company reports previously filed with the Securities and Exchange
Commission ("SEC") pursuant to the Securities Exchange Act of 1934, as
amended.

24

ITEM 7. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
REGULATORY MATTERS (continued)

An affiliate of the Company, ING Funds Distributors, LLC ("IFD") has received
notice from the staff of the National Association of Securities Dealers ("NASD")
that the staff has made a preliminary determination to recommend that
disciplinary action be brought against IFD and one of its registered persons for
violations of the NASD Conduct Rules and federal securities laws in connection
with frequent trading arrangements.

Other regulators, including the SEC and the New York Attorney General, are also
likely to take some action with respect to certain ING affiliates before
concluding their investigation of ING relating to fund trading. The potential
outcome of such action is difficult to predict but could subject certain
affiliates to adverse consequences, including, but not limited to, settlement
payments, penalties, and other financial liability. It is not currently
anticipated, however, that the actual outcome of such action will have a
material adverse effect on ING or ING's U.S.-based operations, including the
Company.

ING has agreed to indemnify and hold harmless the ING Funds from all damages
resulting from wrongful conduct by ING or its employees or from ING's
internal investigation, any investigations conducted by any governmental or
self-regulatory agencies, litigation or other formal proceedings, including
any proceedings by the SEC. Management reported to the ING Funds Board that
ING management believes that the total amount of any indemnification
obligations will not be material to ING or ING's U.S.-based operations,
including the Company.

OTHER REGULATORY MATTERS

The New York Attorney General and other regulators are also conducting broad
inquiries and investigations involving the insurance industry. These initiatives
currently focus on, among other things, compensation and other sales incentives,
potential conflicts of interest, potential anti-competitive activity, marketing
practices, certain financial reinsurance arrangements, and disclosure. It is
likely that the scope of these investigations will further broaden before the
investigations are concluded. U.S. affiliates of ING have received formal and
informal requests in connection with such investigations, and are cooperating
fully with each request for information.

These initiatives may result in new legislation and regulation that could
significantly affect the financial services industry, including businesses in
which the Company is engaged.

In light of these and other developments, U.S. affiliates of ING, including the
Company, periodically review whether modifications to their business practices
are appropriate.

For further discussion of the Company's regulatory matters, see "Risk Factors"
in Part 1, Item 1 "Business."

25

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

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 contractowners behavior, and
variable separate account performance. Contractowners bear the investment risk
related to variable insurance products, subject, in limited cases, to certain
minimum guaranteed rates.

The fixed account liabilities are supported by a portfolio principally composed
of fixed rate investments 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, changes in prepayment risk, changes in relative values of asset
sectors and individual securities and loans, changes in 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.

On the basis of these analyses, management believes there is currently no
material solvency risk to the Company.

INTEREST RATE RISK

The Company defines interest rate risk as the risk of an economic loss due to
adverse changes in interest rates. This risk arises from the Company's primary
activity of investing fixed annuity premiums received in interest-sensitive
assets and carrying these funds as interest-sensitive liabilities. The Company
manages the interest rate risk in its assets relative to the interest rate risk
in its liabilities. A key measure used to quantify this exposure is duration.
Duration measures the sensitivity of the assets and liabilities to changes in
interest rates.

To calculate duration related to annuities, the Company projects asset and
liability cash flows under stochastic arbitrage free interest rate scenarios and
calculates their net present value using LIBOR/swap spot rates. Duration is
calculated by revaluing these cash flows given a small change in interest rates
and determining the percentage change in the fair value. The cash flows used in
this calculation include the expected coupon and principal payments on the
assets and all benefit cash flows on the interest-sensitive liabilities. The
projections include assumptions that reflect the effect of changing interest
rates on the prepayment, lapse, leverage, and/or option features of instruments,
where applicable. Such assumptions relate primarily to mortgage-backed
securities, collateralized mortgage obligations, callable corporate obligations,
and fixed rate deferred and immediate annuities.

For further discussion of the Company's interest rate risks, see "Risk Factors"
in Part 1, Item 1 "Business".

26

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK (continued)

MARKET RISK

The Company's operations are significantly influenced by changes in the
equity markets. The Company's profitability depends largely on the amount of
assets under management, which is primarily driven by the level of sales,
equity market appreciation and depreciation, and the persistency of the in
force block of business. Prolonged and precipitous declines in the equity
markets can have a significant impact on the Company's operations. As a
result, sales of variable products may decline and surrender activity may
increase, as customer sentiment towards the equity market turns negative.
Lower assets under management will have a negative impact on the Company's
financial results, primarily due to lower fee income on variable annuities.
Furthermore, the Company may experience a reduction in profit margins if a
significant portion of the assets held in the variable annuity separate
account move to the general account and the Company is unable to earn an
acceptable investment spread, particularly in light of the low interest rate
environment and the presence of contractually guaranteed interest credited
rates.

In addition, prolonged declines in the equity market may also decrease the
Company's expectations of future gross profits, which are utilized to
determine the amount of DAC/VOBA to be amortized in a given financial
statement period. A significant decrease in the Company's estimated gross
profits would require the Company to accelerate the amount of DAC/VOBA
amortization in a given period, potentially causing a material adverse
deviation in the period's net income. Although an acceleration of DAC
amortization would have a negative impact on the Company's earnings, it would
not affect the Company's cash flow or liquidity position. For further
discussion, see "Risk Factors" in Part 1, Item 1 "Business."

27

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS

28

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors
ING Insurance Company of America

We have audited the accompanying balance sheets of ING Insurance Company of
America as of December 31, 2004 and 2003, and the related statements of
operations, changes in shareholder's equity, and cash flows for each of the
three years in the period ended December 31, 2004. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. We are
not engaged to perform an audit of the Company's internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of an opinion on
the effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ING Insurance Company of
America as of December 31, 2004 and 2003, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
2004, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 1 to the financial statements, the Company changed the
accounting principle for goodwill and other intangible assets effective
January 1, 2002. As discussed in Note 2 to the financial statements, the
Company restated certain amounts presented in the statements of cash flows
related to its interest credited to contractowners for investment type
contracts for the years ended December 31, 2003 and 2002.

/s/ Ernst & Young LLP

Atlanta, Georgia
March 31, 2005

29

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

STATEMENTS OF OPERATIONS
(In millions)

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

30

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

BALANCE SHEETS
(In millions, except share data)

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

31

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

STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
(In millions)

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

32

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

STATEMENTS OF CASH FLOWS
(In millions)

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

33

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

NOTES TO FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED)

1. SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

ING Insurance Company of America ("IICA" or the "Company"), a stock life
insurance company domiciled in the state of Florida, is a provider of
financial services in the United States. The Company is a wholly-owned
subsidiary of ING Life Insurance and Annuity Company ("ILIAC"). ILIAC was a
wholly-owned subsidiary of ING Retirement Holdings, Inc. ("HOLDCO"), which
was a wholly-owned subsidiary of ING Retirement Services, Inc. ("IRSI")
until March 30, 2003. IRSI was a wholly-owned subsidiary of Lion
Connecticut Holdings Inc. ("Lion") until March 30, 2003, which in turn was
ultimately owned by ING Groep N.V. ("ING"). On March 30, 2003, a series of
mergers occurred in the following order: IRSI merged into Lion and HOLDCO
merged into Lion. As a result, ILIAC is now a direct wholly-owned
subsidiary of Lion, which in turn is an indirect wholly-owned subsidiary of
ING. ING is a global financial services company based in The Netherlands,
with American Depository Shares listed on the New York Stock Exchange under
the symbol "ING".

DESCRIPTION OF BUSINESS

The Company principally offers annuity contracts in the education market to
individuals on a qualified and non-qualified basis and to
employer-sponsored retirement plans qualified under Internal Revenue Code
Sections 401, 403, and 408. The Company's products are generally
distributed through a managed network of broker/dealers and dedicated
career agents.

The Company has one operating segment, ING U.S. Financial Services
("USFS"), and all revenue reported by the Company comes from external
customers.

RECENTLY ADOPTED ACCOUNTING STANDARDS

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. SOP 03-1
establishes several new accounting and disclosure requirements for certain
nontraditional long-duration contracts and for separate accounts including,
among other things, a requirement that assets and liabilities of separate
account arrangements that do not meet certain criteria be accounted for as
general account assets and liabilities, and that revenues and expenses
related to such arrangements, be consolidated with the respective lines in
the Statements of Operations. In addition, the SOP requires that additional
liabilities be established for certain guaranteed death and other benefits
and for products with certain patterns of cost of insurance charges. In
addition, sales inducements provided to contractholders must be recognized
on the Balance Sheet separately from deferred acquisition costs and
amortized as a component of benefits expense using methodology and
assumptions consistent with those used for amortization of deferred policy
acquisition costs ("DAC").

34

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

NOTES TO FINANCIAL STATEMENTS (continued)
(DOLLAR AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED)

1. SIGNIFICANT ACCOUNTING POLICIES (continued)

The Company evaluated all requirements of SOP 03-1, which resulted in the
consolidation of the Company's Separate Account supporting the guarantee
option into the General Account. Requirements to establish additional
liabilities for minimum guarantee benefits are applicable to the Company,
however, the Company's policies on contract liabilities have historically
been, and continue to be, in conformity with the newly established
requirements. Requirements for recognition of additional liabilities for
products with certain patterns of cost of insurance charges are not
applicable to the Company. The adoption had no significant effect on the
Company's financial position, results of operations, or cash flows.

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, which was approved in September 2004, provides additional guidance
regarding certain implicit assessments that may be used in the testing of
the base mortality function on contracts, which is performed to determine
whether additional liabilities are required in conjunction with SOP 03-1.
In addition, the TPA provides additional guidance surrounding the allowed
level of aggregation of additional liabilities determined under SOP 03-1.
The adoption of the TPA did not have an impact on the Company's financial
position, results of operations, or cash flows.

The implementation of SOP 03-1 raised questions regarding the
interpretation of the requirements of Statement of Financial Accounting
Standards ("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 97") concerning when it is
appropriate to record an unearned revenue liability related to the
insurance benefit function. To clarify its position, the Financial
Accounting Standards Board ("FASB") issued FASB Staff Position No. FAS 97-1
("FSP FAS 97-1"), "Situations in Which Paragraphs 17(b) and 20 of FASB
Statement No. 97 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. The Company adopted FSP FAS 97-1 on
July 1, 2004. The adoption of FSP FAS 97-1 did not have an impact on the
Company's financial position, results of operations, or cash flows.

THE MEANING OF OTHER-THAN-TEMPORARY IMPAIRMENT AND ITS APPLICATION TO
CERTAIN INVESTMENTS

In March 2004, the Emerging Issues Task Force ("EITF") reached a final
consensus on EITF Issue No. 03-1, "The Meaning of Other-Than-Temporary
Impairment and Its Application to Certain Investments," requiring that a
three-step impairment model be applied to securities within its scope. The
three-step model is to be applied on a security-by-security basis as
follows:

Step 1: Determine whether an investment is impaired. An investment is
impaired if the fair value of the investment is less than its cost
basis.
Step 2: Evaluate whether an impairment is other-than-temporary.
Step 3: If the impairment is other-than-temporary, recognize an impairment
loss equal to the difference between the investment's cost and its
fair value.

35

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

NOTES TO FINANCIAL STATEMENTS (continued)
(DOLLAR AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED)

1. SIGNIFICANT ACCOUNTING POLICIES (continued)

On September 30, 2004, the FASB issued FASB Staff Position No. EITF Issue
03-1-1 ("FSP EITF 03-1-1"), "Effective Date of Paragraphs 10-20 of EITF
Issue No. 03-1, 'The Meaning of Other-Than-Temporary Impairment and Its
Application to Certain Investments,'" which delayed the EITF Issue No. 03-1
original effective date of July 1, 2004 related to steps two and three of
the impairment model introduced. The delay is in effect until a final
consensus can be reached on such guidance. Despite the delay of the
implementation of steps two and three, other-than-temporary impairments are
still to be recognized as required by existing guidance.

Earlier consensus reached by the EITF on this issue required that certain
quantitative and qualitative disclosures be made for unrealized losses on
debt and equity securities that have not been recognized as
other-than-temporary impairments. These disclosures were adopted by the
Company, effective December 31, 2003, and are included in the Investments
footnote.

ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Derivative Implementation Group ("DIG"), responsible for issuing
guidance on behalf of the FASB for implementation of FAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," issued
Statement No. 133 Implementation Issue No. B36, "Embedded Derivatives:
Modified Coinsurance Arrangements and Debt Instruments That Incorporate
Credit Risk Exposures That Are Unrelated or Only Partially Related to the
Credit Worthiness of the Obligor under Those Instruments" ("DIG B36").
Under this interpretation, modified coinsurance and coinsurance with funds
withheld reinsurance agreements as well as other types of receivables and
payables where interest is determined by reference to a pool of fixed
maturity assets or a total return debt index may be determined to contain
embedded derivatives that are required to be bifurcated from the host
instrument. The required date of adoption of DIG B36 for the Company was
October 1, 2003. The adoption did not have an impact on the Company's
financial position, results of operations, or cash flows.

VARIABLE INTEREST ENTITIES

In January 2003, the FASB issued FASB Interpretation 46, "Consolidation of
Variable Interest Entities, an Interpretation of ARB No. 51" ("FIN 46"). In
December 2003, the FASB modified FIN 46 to make certain technical revisions
and address certain implementation issues that had arisen. FIN 46 provides
a new framework for identifying variable interest entities ("VIEs") and
determining when a company should include the assets, liabilities,
noncontrolling interests, and results of activities of a VIE in its
consolidated financial statements.

In general, a VIE is a corporation, partnership, limited-liability
corporation, trust, or any other legal structure used to conduct activities
or hold assets that either (1) has an insufficient amount of equity to
carry out its principal activities without additional subordinated
financial support, (2) has a group of equity owners that are unable to make
significant decisions about its activities, or (3) has a group of equity
owners that do not have the obligation to absorb losses or the right to
receive returns generated by its operations.

FIN 46 requires a VIE to be consolidated if a party with an ownership,
contractual, or other financial interest in the VIE (a variable interest
holder) is obligated to absorb a majority of the risk of loss from the

36

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

NOTES TO FINANCIAL STATEMENTS (continued)
(DOLLAR AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED)

1. SIGNIFICANT ACCOUNTING POLICIES (continued)

VIE's activities, is entitled to receive a majority of the VIE's residual
returns (if no party absorbs a majority of the VIE's losses), or both. A
variable interest holder that consolidates the VIE is called the primary
beneficiary. Upon consolidation, the primary beneficiary generally must
initially record all of the VIE's assets, liabilities, and noncontrolling
interests at fair value and subsequently account for the VIE as if it were
consolidated based on majority voting interest. FIN 46 also requires
disclosures about VIEs that the variable interest holder is required to
consolidate and those VIEs it is not required to consolidate, but in which
it has a significant variable interest.

The Company holds investments in VIEs in the form of private placement
securities, structured securities, securitization transactions, and limited
partnerships with an aggregate fair value of $53.2 as of December 31, 2004.
These VIEs are held by the Company for investment purposes. Consolidation
of these investments in the Company's financial statements is not required
as the Company is not the primary beneficiary for any of these VIEs. Book
value as of December 31, 2004 of $52.7 represents the maximum exposure to
loss except for those structures for which the Company also receives asset
management fees.

GUARANTEES

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" ("FIN 45"), to clarify accounting and
disclosure requirements relating to a guarantor's issuance of certain types
of guarantees or groups of similar guarantees, even if the likelihood of
the guarantor's having to make any payments under the guarantee is remote.
The disclosure provisions are effective for financial statements for fiscal
years ended after December 15, 2002. For certain guarantees, the
interpretation also requires that guarantors recognize a liability equal to
the fair value of the guarantee upon its issuance. This initial recognition
and measurement provision is to be applied only on a prospective basis to
guarantees issued or modified after December 31, 2002. The Company has
performed an assessment of its guarantees and believes that all of its
guarantees are excluded from the scope of this interpretation.

GOODWILL IMPAIRMENT

During 2002, the Company adopted FAS No. 142, "Goodwill and Other
Intangible Assets." The adoption of this standard resulted in recognition
of an impairment loss of $101.8, net of taxes of $54.8, recorded
retroactive to the first quarter of 2002. Prior quarters of 2002 were
restated accordingly. This impairment loss represented the entire carrying
amount of goodwill, net of accumulated amortization, related to prior
acquisitions. This impairment charge was shown as a change in accounting
principle on the Statement of Operations for the year ended December 31,
2002.

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.

37

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

NOTES TO FINANCIAL STATEMENTS (continued)
(DOLLAR AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED)

1. SIGNIFICANT ACCOUNTING POLICIES (continued)

RECLASSIFICATIONS

Certain reclassifications have been made to prior year financial
information to conform to the current year presentation (see
footnote 2).

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash on hand, money market instruments
and other debt issues with a maturity of 90 days or less when purchased.

INVESTMENTS

All of the Company's fixed maturity and equity securities are currently
designated as available-for-sale. Available-for-sale securities are
reported at fair value and unrealized gains and losses on these securities
are included directly in shareholder's equity, after adjustment for related
changes in value of business acquired ("VOBA"), and deferred income taxes.

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 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 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 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.

In addition, the Company invests in structured securities that meet the
criteria of EITF Issue No. 99-20, "Recognition of Interest Income and
Impairment on Purchased and Retained Beneficial Interests in Securitized
Financial Assets." 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 fair value of the
security is less than amortized cost and there has been an adverse change
in cash flow since the last remeasurement date.

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.

EXPERIENCE-RATED PRODUCTS

Included in available-for-sale securities are investments that support
experience-rated products. Experience-rated products are products where the
customer, not the Company, assumes investment (including realized capital
gains and losses) and other risks, subject to, among other things, minimum
principal and interest rate guarantees. Unamortized realized gains and
losses on the sale of, and unrealized

38

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

NOTES TO FINANCIAL STATEMENTS (continued)
(DOLLAR AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED)

1. SIGNIFICANT ACCOUNTING POLICIES (continued)

capital gains and losses on, investments supporting these products, are
included in future policy benefits and claim reserves on the Balance
Sheets. Realized capital gains and losses on all other investments are
included in the Statements of Operations. Unrealized capital gains and
losses on all other investments are reflected in shareholder's equity, net
of related income taxes.

PURCHASES AND SALES

Purchases and sales of fixed maturities (excluding private placements) are
recorded on the trade date. Purchases and sales of private placements are
recorded on the closing date.

VALUATION

Fair values for fixed maturities are obtained from independent pricing
services or broker/dealer quotations. Fair values for privately placed
bonds are determined using a matrix-based model. The matrix-based model
considers the level of risk-free interest rates, current corporate spreads,
the credit quality of the issuer, and cash flow characteristics of the
security.

Short-term investments, consisting primarily of money market instruments
and other fixed maturities issues purchased with an original maturity of 91
days to one year, are considered available-for-sale and are carried at fair
value, which approximates amortized cost.

SECURITIES LENDING

The Company engages in securities lending whereby certain securities from
its portfolio are loaned to other institutions for short periods of time.
Initial collateral, primarily cash, is required at a rate of 102% of the
market value of the loaned domestic securities. The collateral is deposited
by the borrower with a lending agent, and retained and invested by the
lending agent according to the Company's guidelines to generate additional
income. The market value of the loaned securities is monitored on a daily
basis with additional collateral obtained or refunded as the market value
of the loaned securities fluctuates.

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.

The amortization methodology used for VOBA varies by product type.
Statement of Financial Accounting Standards ("FAS") No. 97 applies to
universal life and investment-type products, such as fixed and variable
deferred annuities. Under FAS No. 97, VOBA is 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.

39

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

NOTES TO FINANCIAL STATEMENTS (continued)
(DOLLAR AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED)

1. SIGNIFICANT ACCOUNTING POLICIES (continued)

Changes in assumptions can have a significant impact on VOBA balances and
amortization rates. Several assumptions are considered significant in the
estimation of future gross profits associated with variable deferred
annuity products. One of the most significant assumptions involved in the
estimation of future gross profits is the assumed return associated with
the variable account performance. To reflect the volatility in the equity
markets, this assumption involves a combination of near-term expectations
and long-term assumptions regarding market performance. The overall return
on the variable account is dependent on multiple factors, including the
relative mix of the underlying sub-accounts among bond funds and equity
funds, as well as equity sector weightings. Other significant assumptions
include surrender and lapse rates, estimated interest spread, and estimated
mortality.

Due to the relative size and sensitivity to minor changes in underlying
assumptions of VOBA balances, the Company performs a quarterly and annual
analysis of VOBA for the annuity and life businesses, respectively. The
VOBA balances are evaluated for recoverability and are reduced to the
extent that estimated future gross profits are inadequate to recover the
asset.

At each evaluation date, actual historical gross profits are reflected, and
estimated future gross profits and related assumptions are evaluated for
continued reasonableness. Any adjustment in estimated profit requires that
the amortization rate be revised ("unlocking"), retroactively to the date
of the policy or contract issuance. The cumulative prior period adjustment
is recognized as a component of current period amortization. In general,
increases in investment, mortality, and expense margins, and thus estimated
future profits, lower the rate of amortization. However, decreases in
investment, mortality, and expense margins, and thus estimated future
profits, increase the rate of amortization.

Deferred policy acquisition costs ("DAC") represents 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. DAC, in the amount of $0.9 as of December 31, 2004 and 2003, is
included in other assets on the Balance Sheets and the related amortization
is included in VOBA amortization.

RESERVES

The Company establishes and carries actuarially determined reserve
liabilities which are calculated to meet its future obligations. Changes in
or deviations from the assumptions used can significantly affect the
Company's reserve levels and related future operations.

Reserves for deferred annuity investment contracts and immediate annuities
without life contingent benefits are equal to cumulative deposits less
charges and withdrawals plus credited interest thereon (rates range from
3.0% to 7.8% for all years presented) net of adjustments for investment
experience that the Company is entitled to reflect in future credited
interest. These reserves also include unrealized gains/losses related to
investments and unamortized realized gains/losses on investments for
experience-rated contracts. Reserves on experience-rated contracts reflect
the rights of contractowners, plan participants, and the Company.

40

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

NOTES TO FINANCIAL STATEMENTS (continued)
(DOLLAR AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED)

1. SIGNIFICANT ACCOUNTING POLICIES (continued)

Reserves for immediate annuities with life contingent benefits are computed
on the basis of assumed interest discount rates, mortality, and expenses,
including a margin for adverse deviations. Such assumptions generally vary
by plan, year of issue and policy duration. Reserve interest rates range
from 4.9% to 8.0% for all years presented.

REVENUE RECOGNITION

For most annuity contracts, fee income for the cost of insurance,
surrenders, expenses, and other fees are recorded as revenue as charges are
assessed against contractowners. Other amounts received for these contracts
are reflected as deposits and are not recorded as premiums or revenue.
Related policy benefits are recorded in relation to the associated premiums
or gross profit so that profits are recognized over the expected lives of
the contracts. When annuity payments with life contingencies begin under
contracts that were initially investment contracts, the accumulated balance
in the account is treated as a single premium for the purchase of an
annuity and reflected as an offsetting amount in both premiums and current
and future benefits in the Statements of Operations.

SEPARATE ACCOUNTS

Separate Account assets and liabilities generally represent funds
maintained to meet specific investment objectives of contractowners who
bear the investment risk, subject, in limited cases, to minimum guaranteed
rates. Investment income and investment gains and losses generally accrue
directly to such contractowners. The assets of each account are legally
segregated and are not subject to claims that arise out of any other
business of the Company or its affiliates.

Separate Account assets supporting variable options under annuity contracts
are invested, as designated by the contractowner or participant (who bears
the investment risk subject, in limited cases, to minimum guaranteed rates)
under a contract in shares of mutual funds which are managed by its
affiliates, or other selected mutual funds not managed by the Company or
its affiliates.

Separate Account assets and liabilities are carried at fair value and shown
as separate captions in the Balance Sheets. Deposits, investment income,
and net realized and unrealized capital gains and losses of the Separate
Accounts are not reflected in the Financial Statements (with the exception
of realized and unrealized capital gains and losses on the assets
supporting the guaranteed interest option). The Statements of Cash Flows do
not reflect investment activity of the Separate Accounts.

Assets and liabilities of separate account arrangements that do not meet
the criteria in SOP 03-1 for presentation in the separate caption in the
Balance Sheets (primarily guaranteed interest options), and revenue and
expenses related to such arrangements, are consolidated in the financial
statements with the General Account. At December 31, 2004 and 2003,
unrealized gains (losses) of $(0.1) and $5.0, respectively, on assets
supporting a guaranteed interest option are reflected in shareholder's
equity.

41

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

NOTES TO FINANCIAL STATEMENTS (continued)
(DOLLAR AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED)

1. SIGNIFICANT ACCOUNTING POLICIES (continued)

REINSURANCE

The Company utilizes indemnity reinsurance agreements to reduce its
exposure to large losses in all aspects of its insurance business. Such
reinsurance permits recovery of a portion of losses from reinsurers,
although it does not discharge the primary liability of the Company as
direct insurer of the risks reinsured. The Company evaluates the financial
strength of potential reinsurers and continually monitors the financial
condition of reinsurers. Only those reinsurance recoverable balances deemed
probable of recovery are reflected as assets on the Balance Sheets.

INCOME TAXES

The Company is taxed at regular corporate rates after adjusting income
reported for financial statement purposes for certain items. Deferred
income tax expenses/benefits result from changes during the year in
cumulative temporary differences between the tax basis and book basis of
assets and liabilities.

2. RECLASSIFICATIONS AND CHANGES TO PRIOR YEAR PRESENTATION

During 2004, certain changes were made to the 2003 and 2002 Statements of
Operations to reflect the correct balances, as follows:

- Certain changes were made to the classification of guaranteed minimum
death benefit ("GMDB") excess reserves, which were included as a
reduction to fee income.

- Certain changes were made to the classification of reinsurance ceded
related to certain products, which were included in interest credited
and other benefits to contractowners.

In addition, certain reclassifications have been made to financial
information to conform to the current year presentation.

These changes had no impact on net income or shareholder's equity of the
Company. We deemed these changes to the Statement of Operations as
immaterial, and, as such, have not labeled the Statement of Operations
as restated. The following summarizes the corrections to each financial
statement line item:

42

Also, during 2004, certain changes were made to the 2003 and 2002 Statements
of Cash Flows to reflect the correct balances, primarily related to interest
credited to contractowners for investment type contracts. As a result of
these adjustments, we have labeled the Statements of Cash Flows for 2003 and
2002 as restated. The following summarizes the adjustments:

43

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

NOTES TO FINANCIAL STATEMENTS (continued)
(DOLLAR AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED)

3. INVESTMENTS

Fixed maturities available-for-sale as of December 31, 2004, were as
follows:

Fixed maturities available-for-sale as of December 31, 2003, were as
follows:

44

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

NOTES TO FINANCIAL STATEMENTS (continued)
(DOLLAR AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED)

3. INVESTMENTS (continued)

At December 31, 2004 and 2003, net unrealized appreciation of $3.3 and
$5.2, respectively, on total fixed maturities, including fixed maturities
pledged to creditors, included $2.8 and $5.1, related to experience-rated
contracts, which were not reflected in shareholder's equity but in future
policy benefits and claim reserves.

The aggregate unrealized losses and related fair values of investments with
unrealized losses as of December 31, 2004, are shown below by duration:

Of the unrealized losses, less than 6 months in duration, of $0.6, there
were $0.5 in unrealized losses that are primarily related to interest rate
movement or spread widening for other than credit-related reasons. The
remaining unrealized losses of $0.1, as of December 31, 2004, related to
securities reviewed for impairment under the guidance proscribed by EITF
Issue No. 99-20. This category includes U.S. government-backed securities,
principal protected securities, and structured securities which did not
have an adverse change in cash flows for which the carrying amount was
$10.9.

Of the unrealized losses, more than 6 months and less than 12 months in
duration, of $0.3, there were $0.2 in unrealized losses that are primarily
related to interest rate movement or spread widening for other than
credit-related reasons. The remaining unrealized losses of $0.1 million, as
of December 31, 2004, related to securities reviewed for impairment under
the guidance proscribed by EITF Issue No. 99-20. This category includes
U.S. government-backed securities, principal protected securities, and
structured securities which did not have an adverse change in cash flows
for which the carrying amount was $3.9.

Of the unrealized losses, more than 12 months in duration, of $0.3. There
were $0.1 in unrealized losses that are primarily related to interest rate
movement or spread widening for other than credit-related reasons. The
remaining unrealized losses of $0.2, as of December 31, 2004, related to
securities reviewed for impairment under the guidance proscribed by EITF
Issue No. 99-20. This category includes U.S. government-backed securities,
principal protected securities, and structured securities which did not
have an adverse change in cash flows for which the carrying amount was
$18.6.

45

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

NOTES TO FINANCIAL STATEMENTS (continued)
(DOLLAR AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED)

3. INVESTMENTS (continued)

The amortized cost and fair value of total fixed maturities for the
year-ended December 31, 2004 are shown below by contractual maturity.
Actual maturities may differ from contractual maturities because securities
may be restructured, called, or prepaid.

46

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

NOTES TO FINANCIAL STATEMENTS (continued)
(DOLLAR AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED)

3. INVESTMENTS (continued)

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. Net realized capital gains (losses) on investments were as
follows:

Net realized capital gains, allocable to experience-rated contracts of
$0.6, $1.6 and $1.7, for the years ended December 31, 2004, 2003 and 2002,
respectively, were deducted from net realized capital gains (losses) and an
offsetting amount was reflected in future policy benefits and claim
reserves on the Balance Sheets. Net unamortized realized capital gains
allocable to experience-rated contractowners were $1.4, $1.3, and $0.1 at
December 31, 2004, 2003 and 2002, respectively.

Proceeds from the sale of total fixed maturities and the related gross
gains and losses, excluding those related to experience-related
policyholders, were as follows:

Changes in shareholder's equity related to changes in accumulated other
comprehensive income (net unrealized capital gains and losses on
securities, including securities pledged, excluding those related to
experience-rated contractowners) were as follows:

47

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

NOTES TO FINANCIAL STATEMENTS (continued)
(DOLLAR AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED)

3. INVESTMENTS (continued)

Net unrealized capital gains (losses) allocable to experience-rated
contracts of $2.8 and $5.1, at December 31, 2004 and 2003, respectively,
are reflected on the Balance Sheets in other future policy benefits and
claim reserves and are not included in shareholder's equity. Shareholder's
equity included the following accumulated other comprehensive income, net
of amounts allocated to experience-rated policyholders:

Changes in accumulated other comprehensive income related to changes in net
unrealized gains (losses) on securities; including securities pledged and
excluding those related to experience-rated contractowners, were as
follows:

(1) Pretax unrealized holding gains (losses) were $(1.8), $0.9 and $1.2,
for the years ended December 31, 2004, 2003, and 2002, respectively.

(2) Pretax reclassification adjustments for gains (losses) and other items
included in net income were $1.5, $0.3, and $0.5, for the years ended
December 31, 2004, 2003, and 2002, respectively.

4. FINANCIAL INSTRUMENTS

ESTIMATED FAIR VALUE

The following disclosures are made in accordance with the requirements of
FAS No. 107, "Disclosures about Fair Value of Financial Instruments." FAS
No. 107 requires disclosure of fair value information about financial
instruments, whether or not recognized in the balance sheet, for which it
is practicable to estimate that value. In cases where quoted market prices
are not available, fair values are based on

48

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

NOTES TO FINANCIAL STATEMENTS (continued)
(DOLLAR AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED)

4. FINANCIAL INSTRUMENTS (continued)

estimates using present value or other valuation techniques. Those
techniques are significantly affected by the assumptions used, including
the discount rate and estimates of future cash flows. In that regard, the
derived fair value estimates, in many cases, could not be realized in
immediate settlement of the instrument.

FAS No. 107 excludes certain financial instruments, including insurance
contracts, and all nonfinancial instruments from its disclosure
requirements. Accordingly, the aggregate fair value amounts presented do
not represent the underlying value of the Company.

The following valuation methods and assumptions were used by the Company in
estimating the fair value of the following financial instruments:

FIXED MATURITIES: The fair values for the actively traded marketable bonds
are determined based upon the quoted market prices. The fair values for
marketable bonds without an active market are obtained through several
commercial pricing services which provide the estimated fair values. Fair
values of privately placed bonds are determined using a matrix-based
pricing model. The model considers the current level of risk-free interest
rates, current corporate spreads, the credit quality of the issuer, and
cash flow characteristics of the security. Also considered are factors such
as the net worth of the borrower, the value of collateral, the capital
structure of the borrower, the presence of guarantees, and the Company's
evaluation of the borrower's ability to compete in their relevant market.
Using this data, the model generates estimated market values which the
Company considers reflective of the fair value of each privately placed
bond.

CASH AND CASH EQUIVALENTS: The carrying amounts for these assets
approximate the assets' fair value.

ASSETS HELD IN SEPARATE ACCOUNTS: Assets held in separate accounts are
reported at the quoted fair values of the individual securities in the
separate accounts.

INVESTMENT CONTRACT LIABILITIES (INCLUDED IN FUTURE POLICY BENEFITS AND
CLAIM RESERVES):

WITH A FIXED MATURITY: Fair value is estimated by discounting cash flows at
interest rates currently being offered by, or available to, the Company for
similar contracts.

WITHOUT A FIXED MATURITY: Fair value is estimated as the amount payable to
the contractowner upon demand. However, the Company has the right under
such contracts to delay payment of withdrawals which may ultimately result
in paying an amount different than that determined to be payable on demand.

LIABILITIES RELATED TO SEPARATE ACCOUNTS: The carrying amounts for these
liabilities approximate the fair value.

49

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

NOTES TO FINANCIAL STATEMENTS (continued)
(DOLLAR AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED)

4. FINANCIAL INSTRUMENTS (continued)

The carrying values and estimated fair values of certain of the Company's
financial instruments at December 31, 2004 and 2003 were as follows:

Fair value estimates are made at a specific point in time, based on
available market information and judgments about various financial
instruments, such as estimates of timing and amounts of future cash flows.
Such estimates do not reflect any premium or discount that could result
from offering for sale at one time the Company's entire holdings of a
particular financial instrument, nor do they consider the tax impact of the
realization of unrealized gains or losses. In many cases, the fair value
estimates cannot be substantiated by comparison to independent markets, nor
can the disclosed value be realized in immediate settlement of the
instruments. In evaluating the Company's management of interest rate, price
and liquidity risks, the fair values of all assets and liabilities should
be taken into consideration, not only those presented above.

5. VALUE OF BUSINESS ACQUIRED

Activity for the years ended December 31, 2004, 2003 and 2002 within VOBA
were as follows:

Balance at December 31, 2001 $ 46.5
Adjustment for unrealized gain (loss) (2.1)
Additions 0.2
Amortization (10.4)
----------------------------------------------------------------------------
Balance at December 31, 2002 34.2
Adjustment for unrealized gain (loss) 0.6
Interest accrued at 5%-7% 1.7
Amortization (4.9)
----------------------------------------------------------------------------
Balance at December 31, 2003 31.6
Adjustment for unrealized gain (loss) 1.0
Interest accrued at 6% 1.8
Amortization (6.2)
----------------------------------------------------------------------------
Balance at December 31, 2004 $ 28.2
============================================================================

50

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

NOTES TO FINANCIAL STATEMENTS (continued)
(DOLLAR AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED)

5. VALUE OF BUSINESS ACQUIRED (continued)

The estimated amount of VOBA to be amortized, net of interest, over the
next five years is $5.0, $4.6, $3.3, $2.5 and $2.2, for the years 2005,
2006, 2007, 2008 and 2009, respectively. Actual amortization incurred
during these years may vary as assumptions are modified to incorporate
actual results.

During 2004, VOBA amortization increased principally due to a decrease in
estimated future profits, due to higher surrenders and a decrease in assets
under management.

During 2003 the Company reset long-term assumptions for the Separate
Account returns from 9.0% to 8.5% (gross before fund management fees and
mortality, expense, and other policy charges), reflecting a blended return
of equity and other sub-accounts. The 2003 unlocking adjustment was
primarily driven by improved market performance compared to expected
performance during 2003. For the year ended December 31, 2003, the Company
recorded a deceleration of VOBA amortization totaling $1.1 before tax, or
$0.7, net of $0.4 of federal income tax expense.

As part of the regular analysis of VOBA, at the end of 2002, the Company
unlocked its long-term rate of return assumptions. The Company reset
long-term return assumptions for the Separate Account returns to 9.0%
(gross before fund management fees and mortality, expense, and other policy
charges), as of December 31, 2002, reflecting a blended return of equity
and other sub-accounts. The unlocking adjustment in 2002 was primarily
driven by the sustained downturn in the equity markets and revised
expectations for future returns. During 2002, the Company recorded an
acceleration of VOBA amortization totaling $3.5 before tax, or $2.3, net of
$1.2 of federal income tax benefit.

6. DIVIDEND RESTRICTIONS AND SHAREHOLDER'S EQUITY

The Company's ability to pay dividends is subject to the prior approval of
the insurance regulatory authorities of the State of Florida for payment of
any dividend, which exceeds certain statutorily prescribed thresholds that
are calculated in relation to a company's statutory surplus and/or its net
gains from operations.

The Company did not pay dividends to its parent or receive capital
contributions from its parent in 2004, 2003, or 2002.

The Insurance Departments of the State of Florida and the State of
Connecticut (the "Departments") recognize as net income and capital and
surplus those amounts determined in conformity with statutory accounting
practices prescribed or permitted by the Department, which differ in
certain respects from accounting principles generally accepted in the
United States. Statutory net income was $6.2, $5.0, and $2.5, for the years
ended December 31, 2004, 2003, and 2002, respectively. Statutory capital
and surplus was $75.2 and $68.3 as of December 31, 2004 and 2003,
respectively.

51

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

NOTES TO FINANCIAL STATEMENTS (continued)
(DOLLAR AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED)

6. DIVIDEND RESTRICTIONS AND SHAREHOLDER'S EQUITY (continued)

As of December 31, 2004, the Company does not utilize any statutory
accounting practices, which are not prescribed by state regulatory
authorities that, individually or in the aggregate, materially affect
statutory capital and surplus.

7. ADDITIONAL INSURANCE BENEFITS AND MINIMUM GUARANTEES

Under SOP 03-1, the Company calculates an additional liability (the "SOP
reserve") for certain GMDBs in order to recognize the expected value of
death benefits in excess of the projected account balance over the
accumulation period based on total expected assessments.

The Company regularly evaluates estimates used and adjusts the SOP reserve,
with a related charge or credit to benefit expense, if actual experience or
other evidence suggests that earlier assumptions should be revised.

As of December 31, 2004, the separate account liability subject to SOP 03-1
for GMDBs and the additional liability recognized related to GMDBs was
$500.2 and $0.1, respectively.

The aggregate fair value of equity securities (including mutual funds)
supporting separate accounts with additional insurance benefits and minimum
investment return guarantees as of December 31, 2004 was $500.2.

8. INCOME TAXES

IICA files a consolidated federal income tax return with its parent, ILIAC.
IICA has a federal tax allocation agreement with its parent whereby the
Company is charged for federal taxes it would have incurred were it not a
member of a consolidated group and is credited for losses at the federal
statutory tax rate.

Income taxes (benefits) from continuing operations consist of the
following:

52

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

NOTES TO FINANCIAL STATEMENTS (continued)
(DOLLAR AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED)

8. INCOME TAXES (continued)

Income taxes were different from the amount computed by applying the
federal income tax rate to income from continuing operations before income
taxes for the following reasons:

The tax effects of temporary differences that give rise to deferred tax
assets and deferred tax liabilities at December 31, are presented below:

Net unrealized capital gains and losses are presented as a component of
Other Comprehensive Income in shareholder's equity, net of deferred taxes.

Valuation allowances are provided when it is considered more likely than
not that deferred tax assets will not be realized. No valuation allowance
has been established at this time as management believes the above
conditions presently do not exist.

53

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

NOTES TO FINANCIAL STATEMENTS (continued)
(DOLLAR AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED)

8. INCOME TAXES (continued)

The Company establishes reserves for probable proposed adjustments by
various taxing authorities. Management believes there are sufficient
reserves provided for, or adequate defenses against any such adjustments.
The Internal Revenue Service (the "Service") has completed examinations of
the federal income tax returns of the Company for all years through the
December 13, 2000 short period. The tax benefit associated with the
settlement of the most recent audit is included in the 2004 financial
statements. The Service has commenced its examination for the tax years
ended December 31, 2000 and 2001, and various state tax audits are in
progress.

9. BENEFIT PLANS

The Company utilizes the employees of ING North America Insurance
Corporation, Inc. and its affiliates, primarily ILIAC. Benefit charges to
the Company for the years ended December 31, 2004, 2003, and 2002 were not
significant. There were no pension benefit charges allocated to the Company
from the ING Americas Retirement Plan for 2004, 2003, or 2002. During 2004
and 2003, the Company was not allocated charges related to the Supplemental
ING Retirement Plan for Aetna Financial Services that covers certain
employees of ING Life Insurance Company of America and its affiliates.
During 2002, liabilities totaling $0.3 were allocated to the Company
related to the Supplemental Executive Retirement Plan ("SERP"). During
2004, 2003, or 2002, there were no matching contribution charges allocated
to the Company from the ING Americas Savings Plan and ESOP.

10. RELATED PARTY TRANSACTIONS

OPERATING AGREEMENTS

IICA has certain agreements whereby it incurs expenses with affiliated
entities. The agreements are as follows:

- Underwriting agreement with ING Financial Advisors, LLC ("ING FA"), for
the variable insurance products issued by IICA. ING FA is authorized to
enter into agreements with broker-dealers to distribute the IICA's
variable products and appoint representatives of the broker-dealers as
agents. For the years ended December 31, 2004, 2003 and 2002, expenses
were incurred in the amount of $34.6, $36.9, and $47.7, respectively.

- Investment advisory agreement with ING Investment Management, LLC
("IIM"), an affiliate, effective March 31, 2001 and amended January 1,
2003 and August 26, 2003, under which IIM provides asset management and
accounting services. Under the agreement, the Company records a fee based
on the value of the assets under management. The fee is payable
quarterly. For the years ended December 31, 2004, 2003, and 2002, the
Company incurred fees of $0.6, $0.6, $1.2, respectively, under this
agreement.

- Service agreement between the Company and its affiliates effective
January 2001, and amended effective January 1, 2002. For the year ended
December 31, 2004, net expenses related to the agreement were incurred in
the amount of $0.9. No significant expenses were incurred during the
years ended December 31, 2003 and 2002.

54

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

NOTES TO FINANCIAL STATEMENTS (continued)
(DOLLAR AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED)

10. RELATED PARTY TRANSACTIONS (continued)

- Expense sharing agreement with ING North America Insurance Corporation
for administrative, management, financial, and information technology
services, which was approved in 2001. For the years ended December 31,
2004 and 2003, expenses were incurred in the amounts of $.05 and $1.1,
respectively. No significant expenses were incurred during 2002.

Management and service contracts and all cost sharing arrangements with
other affiliated companies are allocated in accordance with the Company's
expense and cost allocation methods.

RECIPROCAL LOAN AGREEMENT

IICA maintains a reciprocal loan agreement with ING AIH, a Delaware
corporation and affiliate, to facilitate the handling of unusual and/or
unanticipated short-term cash requirements. Under this agreement, which
became effective in June 2001 and expires on April 1, 2011, IICA and ING
AIH can borrow up to 0.5% of IICA's statutory admitted assets as of the
prior December 31 from one another. Interest is charged at the rate of ING
AIH's cost of funds for the interest period plus 0.15%. Under this
agreement, IICA incurred an immaterial amount of interest expense for the
years ended December 31, 2004, 2003, and 2002, respectively. At December
31, 2004 and 2003, IICA did not have any outstanding borrowing from ING AIH
under this agreement.

CAPITAL TRANSACTIONS

The Company did not receive capital contributions from its parent in 2004,
2003, or 2002.

TAX SHARING AGREEMENTS

The Company files a consolidated federal income tax return with its parent,
ING Life Insurance and Annuity Company. The Company has a federal tax
allocation agreement with its parent, whereby the Company is charged for
taxes it would have incurred were it not a member of a consolidated group
and is credited for losses at the statutory federal tax rate.

The Company has entered into a state tax sharing agreement with ING AIH and
each of the specific subsidiaries that are parties to the agreement. The
state tax agreement applies to situations in which ING AIH and all or some
of the subsidiaries join in the filing of a state or local franchise,
income tax, or other tax return on a consolidated, combined, or unitary
basis.

11. FINANCING AGREEMENTS

The Company maintains a revolving loan agreement with SunTrust Bank ("the
Bank"). Under this agreement, which expires July 30, 2005, the Company can
borrow up to $30.0 from the Bank. Interest on any company borrowing accrues
at an annual rate equal to (1) the cost of funds for the Bank for the
period applicable for the advance plus .225% or (2) a rate quoted by the
Bank to the Company for the borrowing. Under this agreement, the Company
incurred minimal interest expense for the years ended December 31, 2004,
2003, and 2002, respectively. At December 31, 2004, the Company did not
have any balances payable to the Bank.

55

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

NOTES TO FINANCIAL STATEMENTS (continued)
(DOLLAR AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED)

11. FINANCING AGREEMENTS (continued)

The Company also maintains a revolving loan agreement with Bank of New York
("BONY"). Under this agreement, the Company can borrow up to $30.0 from
BONY. Interest on any company borrowing accrues at an annual rate equal
to (1) the cost of funds for BONY for the period applicable for the advance
plus .35% or (2) a rate quoted by BONY to the Company for the borrowing.
Under this agreement, the Company incurred minimal interest expense for the
years ended December 31, 2004, 2003, and 2002. At December 31, 2004 and
2003, the Company did not have any balances payable to BONY.

Also see Note 10 for reciprocal loan agreement with an affiliate.

12. COMMITMENTS AND CONTINGENT LIABILITIES

LEASES

The Company occupies space that is leased by ILIAC or other affiliates.
Expenses associated with these offices are allocated on a direct and
indirect basis to the Company. Under the lease agreements, the Company
incurred an immaterial amount of rent expense for the years ended December
31, 2004, 2003, and 2002, respectively.

COMMITMENTS

At December 31, 2004 and 2003, the Company had no commitments or contingent
liabilities.

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/arbitration, 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.

REGULATORY MATTERS

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.

FUND REGULATORY ISSUES

Since 2002, there has been increased governmental and regulatory activity
relating to mutual funds and variable insurance products. This activity has
primarily focused on inappropriate trading of fund shares,

56

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

NOTES TO FINANCIAL STATEMENTS (continued)
(DOLLAR AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED)

12. COMMITMENTS AND CONTINGENT LIABILITIES (continued)

revenue sharing and directed brokerage, compensation, sales practices and
suitability, arrangements with service providers, pricing, compliance and
controls, and adequacy of disclosure.

In addition to responding to governmental and regulatory requests on fund
regulatory issues, ING management, on its own initiative, conducted,
through special counsel and a national accounting firm, an extensive
internal review of mutual fund trading in ING insurance, retirement, and
mutual fund products. The goal of this review was to identify any instances
of inappropriate trading in those products by third parties or by ING
investment professionals and other ING personnel.

The internal review identified several isolated arrangements allowing third
parties to engage in frequent trading of mutual funds within the variable
insurance and mutual fund products of certain affiliates of the Company,
and identified other circumstances where frequent trading occurred despite
measures taken by ING intended to combat market timing. Each of the
arrangements has been terminated and disclosed to regulators, to the
independent trustees of ING Funds (U.S.) and in Company reports previously
filed with the Securities and Exchange Commission ("SEC") pursuant to the
Securities Exchange Act of 1934, as amended.

An affiliate of the Company, ING Funds Distributors, LLC ("IFD") has
received notice from the staff of the National Association of Securities
Dealers ("NASD") that the staff has made a preliminary determination to
recommend that disciplinary action be brought against IFD and one of its
registered persons for violations of the NASD Conduct Rules and federal
securities laws in connection with frequent trading arrangements.

Other regulators, including the SEC and the New York Attorney General, are
also likely to take some action with respect to certain ING affiliates
before concluding their investigation of ING relating to fund trading. The
potential outcome of such action is difficult to predict but could subject
certain affiliates to adverse consequences, including, but not limited to,
settlement payments, penalties, and other financial liability. It is not
currently anticipated, however, that the actual outcome of such action will
have a material adverse effect on ING or ING's U.S.-based operations,
including the Company.

ING has agreed to indemnify and hold harmless the ING Funds from all
damages resulting from wrongful conduct by ING or its employees or from
ING's internal investigation, any investigations conducted by any
governmental or self-regulatory agencies, litigation or other formal
proceedings, including any proceedings by the SEC. Management reported to
the ING Funds Board that ING management believes that the total amount
of any indemnification obligations will not be material to ING or ING's
U.S.-based operations, including the Company.

OTHER REGULATORY MATTERS

The New York Attorney General and other regulators are also conducting
broad inquiries and investigations involving the insurance industry. These
initiatives currently focus on, among other things, compensation and other
sales incentives, potential conflicts of interest, potential
anti-competitive activity, marketing practices, certain financial
reinsurance arrangements, and disclosure. It is likely that the scope of
these investigations will further broaden before the investigations are
concluded. U.S. affiliates of ING have

57

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

NOTES TO FINANCIAL STATEMENTS (continued)
(DOLLAR AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED)

12. COMMITMENTS AND CONTINGENT LIABILITIES (continued)

received formal and informal requests in connection with such
investigations, and are cooperating fully with each request for
information.

These initiatives may result in new legislation and regulation that could
significantly affect the financial services industry, including businesses
in which the Company is engaged.

In light of these and other developments, U.S. affiliates of ING, including
the Company, periodically review whether modifications to their business
practices are appropriate.

58

QUARTERLY DATA (UNAUDITED)

Restatement of Financial Information:

- During the quarterly period ended June 30, 2003, the Company
incorrectly recorded investment income and realized capital gains
related to Separate Accounts. The Company noted the effect during the
compilation of the December 31, 2003 financial statements and made the
appropriate changes to the quarterly periods ended June 30, 2003 and
September 30, 2003.
- In addition, during each of the quarters in 2003, the Company
classified GMDB excess reserves as a reduction to fee income, rather
than as interest credited and other benefits to contractowners. The
Company noted the effect during the compilation of the March 31, 2004
financial statements and made the appropriate changes to the periods
affected.

The following tables show the previously reported and reclassified amounts
for each of the periods affected.

* Reclassified

59

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

ITEM 9A. 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-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.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Omitted pursuant to General Instruction I(2) of Form 10-K, except with
respect to compliance with Sections 406 and 407 of the Sarbanes-Oxley
Act of 2002:

a) CODE OF ETHICS FOR FINANCIAL PROFESSIONALS

The Company has approved and adopted a Code of Ethics for
Financial Professionals, pursuant to the requirements of Section
406 of the Sarbanes-Oxley Act of 2002 (which was filed as Exhibit
14 to the Company's Form 10-K, as filed with the SEC on March 29,
2004 (File No. 033-81010)). Any waiver of the Code of Ethics will
be disclosed by the Company by way of a Form 8-K filing.

b) DESIGNATION OF BOARD FINANCIAL EXPERT

The Company has designated David A. Wheat, Director, Senior Vice
President and Chief Financial Officer of the Company, as its
Board Financial Expert, pursuant to the requirements of Section
407 of the Sarbanes-Oxley Act of 2002. Because the Company is a
wholly-owned subsidiary of ILIAC, it does not have any outside
directors sitting on its board.

ITEM 11. EXECUTIVE COMPENSATION

Omitted pursuant to General Instruction I(2) of Form 10-K.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Omitted pursuant to General Instruction I(2) of Form 10-K.

60

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Omitted pursuant to General Instruction I(2) of Form 10-K.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(Dollar amounts in millions, unless otherwise stated)

In 2004 and 2003, Ernst & Young LLP ("Ernst & Young") served as the
principal external auditing firm for ING including IICA. ING
subsidiaries, including IICA, are allocated Ernst & Young fees
attributable to services rendered by Ernst & Young to each subsidiary.
Ernst & Young fees allocated to the Company for the years ended
December 31, 2004 and 2003 are detailed below along with a description
of the services rendered by Ernst & Young to the Company:

* Less than $0.1

AUDIT FEES

Fees for audit services include fees associated with professional
services rendered by the auditors for the audit of the annual
financial statements of the Company and review of the Company's
interim financial statements.

AUDIT-RELATED FEES

There were minimal audit-related fees allocated to IICA in 2004 and
2003. This category typically includes assurance and related services
that are reasonably related to the performance of the audit or review
of the financial statements and are not reported under the audit fee
item above. These services typically consist primarily of IT audits,
work performed relating to comfort letters issued in connection with
prospectuses, audit of SEC product filings, advice on accounting
matters, and progress review on International Financial Reporting
Standards and Sarbanes-Oxley projects.

TAX FEES

There were minimal tax fees allocated to IICA in 2004 and no fees in
2003. This category typically includes tax compliance, tax advice and
tax planning professional services. These services typically consist
of: tax compliance including the review of original and amended tax
returns, assistance with questions regarding tax audits, and tax
planning and advisory services relating to common forms of domestic
taxation (i.e. income tax and capital tax).

61

ALL OTHER FEES

There were minimal fees allocated to IICA under the category "all
other fees" in 2004 and 2003. This category typically includes fees
paid for products and services other than the audit fees,
audit-related fees and tax fees described above, and consists
primarily of non-recurring support and advisory services.

PRE-APPROVAL POLICIES AND PROCEDURES

IICA has adopted the pre-approval policies and procedures of ING.
Audit, audit-related and non-audit services provided to the Company by
ING's independent auditors are pre-approved by ING's audit committee.
Pursuant to ING's pre-approval policies and procedures, the ING audit
committee is required to pre-approve all services provided by ING's
independent auditors to ING and its majority owned legal entities,
including the Company. The ING pre-approval policies and procedures
distinguish four types of services: (1) audit services, (2)
audit-related services, (3) non-audit services, and (4) prohibited
services (as described in the Sarbanes-Oxley Act).

The ING pre-approval procedures consist of a general pre-approval
procedure and a specific pre-approval procedure.

GENERAL PRE-APPROVAL PROCEDURE

ING's audit committee pre-approves audit, audit-related, and non-audit
services to be provided by ING's external audit firms on an annual
basis, provided that the amount for such pre-approved service may not
be exceeded. ING's audit committee receives an overview of all
services provided, including related fees and supported by
sufficiently detailed information. ING's audit committee evaluates
this overview retrospectively on a semi-annual basis.

SPECIFIC PRE-APPROVAL PROCEDURE

In addition to audit committee pre-approval, all audit-related and
non-audit engagements that are expected to generate fees in excess of
EUR 100,000 need specific approval of ING's Chief Financial Officer
("CFO"). These engagements are submitted in advance to the General
Manager of ING Corporate Audit Services, who will advise ING's CFO on
the compatibility of such services with the independence policy.
Further, in addition to audit committee pre-approval under the general
pre-approval procedures, the audit committee must approve on a
case-by-case basis:

(i) Each individual audit-related and non-audit engagement which is
expected to generate fees in excess of EUR 250,000;
(ii) All further audit-related and non-audit engagements over and
above the pre-approved amounts.

In 2004, 100% of each of the audit-related services, tax services and
all other services were pre-approved by ING's audit committee.

62

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this report:

1. Financial statements. See Item 8 on Page 28.

2. Financial statement schedules. See Index to Financial Statement
Schedules on Page 64.

EXHIBITS

3.(i) Articles of Incorporation, as restated January 1, 2002, incorporated
by reference to the Registrant's Form 10-K, as filed with the SEC on
March 28, 2002 (File No. 33-81010).

(ii) By-Laws, as amended and restated January 1, 2002, incorporated by
reference to the Registrant's Form 10-K, as filed with the SEC on
March 28, 2002 (File No. 33-81010).

4.(a) Instruments Defining the Rights of Security Holders, Including
Indentures (Annuity Contracts)

Incorporated herein by reference to Registration Statement on Form
N-4, File No. 33-80750, as amended and filed with the SEC on April
23, 1997.

Incorporated herein by reference to Registration Statement on Form
N-4, File No. 33-59749, as filed with the SEC on June 1, 1995.

Incorporated herein by reference to Post-Effective Amendment No. 4
to Registration Statement on Form N-4, File No. 33-59749, as filed
with the SEC on April 16, 1997.

Incorporated herein by reference to Post-Effective Amendment No. 6
to Registration Statement on Form N-4, File No. 33-59749, as filed
with the SEC on November 26, 1997.

Incorporated herein by reference to Post-Effective Amendment No. 8
to Registration Statement on Form N-4, File No. 33-59749, as filed
with the SEC on April 17, 1998.

Incorporated herein by reference to Registration Statement on Form
S-2, File No. 33-63657, as filed with the SEC on October 25, 1995.

Incorporated herein by reference to Pre-Effective Amendment No. 3
to the Registration Statement on Form S-2, File No. 33-63657, as
filed with the SEC on January 17, 1996.

Incorporated herein by reference to Post-Effective Amendment No. 3
to Registration Statement on Form S-2, File No. 33-63657, as filed
with the SEC on November 24, 1997.

10. MATERIAL CONTRACTS

(a) Distribution Agreement, dated as of December 13, 2000, between
Aetna Inc., renamed Lion Connecticut Holdings Inc. ("Lion") and
Aetna U.S. Healthcare Inc., renamed Aetna Inc.,

63

incorporated by reference to ING Life Insurance and Annuity
Company's ("ILIAC") Form 10-K filed with the SEC on March 30, 2001
(File No. 033-23376).

(b) Employee Benefits Agreement, dated as of December 13, 2000,
between Aetna Inc., renamed Lion, and Aetna U.S. Healthcare Inc.,
renamed Aetna Inc., incorporated by reference to ILIAC's Form 10-K
filed with the SEC on March 30, 2001 (File No. 033-23376).

(c) Tax Sharing Agreement, dated as of December 13, 2000, among Aetna
Inc., renamed Lion, Aetna U.S. Healthcare, renamed Aetna Inc., and
ING America Insurance Holdings, Inc., incorporated by reference to
ILIAC's Form 10-K filed with the SEC on March 30, 2001 (File No.
033-23376).

(d) Lease Agreement, dated as of December 13, 2000 between the Aetna
Life Insurance Company and ILIAC, incorporated by reference to
ILIAC's Form 10-K filed with the SEC on March 30, 2001 (File No.
033-23376).

(e) Real Estate Services Agreement, dated as of December 13, 2000,
between Aetna Inc. and ILIAC, incorporated by reference to ILIAC's
Form 10-K filed with the SEC on March 30, 2001 (File No.
033-23376).

(f) Tax Sharing Agreement between IICA and ILIAC, effective January 1,
2001, incorporated by reference to IICA's Form 10-K filed with the
SEC on March 29, 2004 (File No. 033-81010).

(g) Tax Sharing Agreement between IICA, ING America Insurance
Holdings, Inc. and affiliated companies, effective January 1,
2001, incorporated by reference to IICA's Form 10-K filed with the
SEC on March 29, 2004 (File No. 033-81010).

(h) Investment Advisory Agreement between IICA and ING Investment
Management LLC, effective March 31, 2001, incorporated by
reference to IICA's Form 10-K filed with the SEC on March 29, 2004
(File No. 033-81010).

(i) Services Agreement between IICA and the affiliated companies
listed on Exhibit B to the Agreement, dated January 1, 2001, as
amended effective January 1, 2002, incorporated by reference to
IICA's Form 10-K filed with the SEC on March 29, 2004 (File No.
033-81010).

(j) Service Agreement between IICA and ING North America Insurance
Corporation, effective January 1, 2001, incorporated by reference
to IICA's Form 10-K filed with the SEC on March 29, 2004 (File No.
033-81010).

(k) Investment Advisory Agreement between IICA and ING Investment
Management LLC, dated March 31, 2001, as amended effective January
1, 2003, incorporated by reference to IICA's Form 10-K filed with
the SEC on March 29, 2004 (File No. 033-81010).

(l) Amendment to Investment Advisory Agreement between IICA and ING
Investment Management LLC, effective August 26, 2003, incorporated
by reference to IICA's Form 10-K filed with the SEC on March 29,
2004 (File No. 033-81010).

(m) Principal Underwriting Agreement between Aetna Insurance Company
of America (now ING Insurance Company of America ("IICA" or
"Registrant")) and Aetna Investment Services, LLC

64

(now ING Financial Advisers, LLC) effective as of November 17,
2002, incorporated by reference to Post-Effective Amendment No. 2
to Registration Statement on Form N-4, filed with the Securities
and Exchange Commission ("SEC") on December 13, 2000 (File No.
333-87131).

14. ING Code of Ethics for Financial Professionals, incorporated by
reference to IICA's Form 10-K filed with the SEC on March 29, 2004
(File No. 033-81010).

31.1 Certificate of David A. Wheat pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.

31.2 Certificate of Brian D. Comer 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 Brian D. Comer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

65

INDEX TO FINANCIAL STATEMENT SCHEDULES

Schedules other than those listed above are omitted because they are not
required or not applicable.

66

Report of Independent Registered Public Accounting Firm

The Board of Directors
ING Insurance Company of America

We have audited the financial statements of ING Insurance Company of America as
of December 31, 2004 and 2003, and for each of the three years in the period
ended December 31, 2004, and have issued our report thereon dated March 31,
2005. Our audits also included the financial statement schedule listed in Item
15. This schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.

/s/ Ernst & Young LLP

Atlanta, Georgia
March 31, 2005

67

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

SCHEDULE I
Summary of Investments--Other than Investments in Affiliates
As of December 31, 2004
(In Millions)

* See Notes 3 and 4 of Notes to Financial Statements.

(1) The term "foreign" includes foreign governments, foreign political
subdivisions, foreign public utilities and all other bonds of foreign
issuers. Substantially all of the Company's foreign securities are
denominated in U.S. dollars.

68

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.

ING INSURANCE COMPANY OF AMERICA
(Registrant)

(Date) March 28, 2005 By /s/ David A. Wheat
-------------- -------------------
David A. Wheat
Director, Senior Vice President and
Chief Financial Officer
(Duly Authorized Officer and Principal Financial
Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on or before March 28, 2005.