ING to take EUR 0.9-1.1 billion 4Q charge on US Insurance Closed Block VA assumption review
(Thomson Reuters ONE) -
As reported in ING's third quarter results of 3 November 2011, ING has been
conducting a comprehensive assumptions review for the Insurance US Closed Block
Variable Annuity (VA) business.
The review shows current US policyholder behaviour for Closed Block VA policies
sold predominantly between 2003 and 2009 diverges from earlier assumptions made
by ING, particularly given the ongoing volatility and challenging market
circumstances.
The assumptions for the US Closed Block VA were updated for lapses, mortality,
annuitisation, and utilisation rates, with the most significant revision coming
from the adjustments of lapse assumptions. The revisions bring the assumptions
more in line with US policyholder experience and reflect to a much greater
degree the market volatility of recent years. In conjunction, ING Insurance US
is adjusting hedging to reflect the revised assumptions.
Based on preliminary and unaudited figures, the assumption changes will result
in an estimated earnings charge of between EUR 0.9 and 1.1 billion against
fourth-quarter results of the US Closed Block VA. The impact of the assumption
adjustments includes a charge to restore the reserve adequacy to the 50%
confidence level for the US Closed Block VA in line with ING's IFRS-based
accounting policy.
ING decided in early 2009 to terminate the sale of these VA policies. Since
then, ING has taken decisive action to reduce risk, leverage and expenses. These
actions include reducing deferred acquisition costs, strengthening reserves,
expanding the hedging programs and increasing transparency by reporting the US
Closed Block VA as a separate business alongside the ongoing ING Insurance US
businesses.
"Our new management team in the US Insurance business is taking decisive steps
to address legacy issues, improve results and prepare the business for its
standalone future," said Jan Hommen, CEO of ING Group. "The actions announced
today reflect necessary steps taken in the context of ongoing market turbulence
and the impact that has on US policyholder behaviour."
As a result of the developments announced today, the Insurance Group Directive
(IGD) ratio for ING Insurance is expected to decrease by an estimated 12
percentage-points, but will remain strong at approximately 230%. Likewise, the
estimated consolidated risk-based capital (RBC) ratio for the Insurance US
operating subsidiaries is expected to decline from 492% as of 30 September
2011, but to remain comfortably above our 425% target following these
assumptions changes. ING plans to provide a contingent funding facility of
approximately EUR 1.1 billion to its US insurance business to ensure ongoing
compliance with US regulatory requirements. ING Insurance US will continue to
work on improving its overall regulatory capital position through retained
earnings, further derisking and changes in asset allocation. Its core
retirement, insurance, and investment management businesses continue to perform
as planned.
Today's announcement about the US Closed Block VA business has no material
impact on the results of ING Bank or of ING Insurance EurAsia. ING continues to
prepare its Insurance/Investment Management (IM) businesses for a base case of
two IPOs, one for its US Insurance and IM activities and one for its European
and Asian Insurance and IM businesses.
ING has completed a separate annual review of the policyholder behaviour
assumptions for the VA Japan business, which has resulted in non-material
adjustments.
ING will report its fourth-quarter 2011 results on 9 February 2012.
Analyst conference call and webcast
ING will hold an analyst conference call on 7 December 2011 at 12:00 CET.
Members of the investment community can listen in to the conference call at
+31 20 794 8500 (NL), +44 207 190 1537 (UK) or +1 480 629 9676 (US) and via live
audio webcast at www.ing.com.
Press enquiries Investor enquiries
Victorina de Boer Matt Keppler
+31 20 541 5469 +31 20 541 6527
Victorina.de.Boer(at)ing.com Matt.Keppler(at)ing.com
ING PROFILE
ING is a global financial institution of Dutch origin, offering banking,
investments, life insurance and retirement services to meet the needs of a broad
customer base. Going forward, we will concentrate on our position as an
international retail, direct and commercial bank, while creating an optimal base
for an independent future for our insurance and investment management operations
IMPORTANT LEGAL INFORMATION
Certain of the statements contained herein are not historical facts, including,
without limitation, certain statements made of future expectations and other
forward-looking statements that are based on management's current views and
assumptions and involve known and unknown risks and uncertainties that could
cause actual results, performance or events to differ materially from those
expressed or implied in such statements. Actual results, performance or events
may differ materially from those in such statements due to, without limitation:
(1) changes in general economic conditions, in particular economic conditions in
ING's core markets, (2) changes in performance of financial markets, including
developing markets, (3) the implementation of ING's restructuring plan to
separate banking and insurance operations, (4) changes in the availability of,
and costs associated with, sources of liquidity such as interbank funding, as
well as conditions in the credit markets generally, including changes in
borrower and counterparty creditworthiness, (5) the frequency and severity of
insured loss events, (6) changes affecting mortality and morbidity levels and
trends, (7) changes affecting persistency levels, (8) changes affecting interest
rate levels, (9) changes affecting currency exchange rates, (10) changes in
customer and policyholder behaviour, (11) changes in general competitive
factors, (12) changes in laws and regulations, (13) changes in the policies of
governments and/or regulatory authorities, (14) conclusions with regard to
purchase accounting assumptions and methodologies, (15) changes in ownership
that could affect the future availability to us of net operating loss, net
capital and built-in loss carry forwards, and (16) ING's ability to achieve
projected operational synergies. ING assumes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information or
for any other reason. This document, and any other document or presentation to
which it refers, do not constitute an offer to sell, or a solicitation of an
offer to buy, any securities.
Pdf version of press release:
http://hugin.info/130668/R/1569597/487939.pdf
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: ING Group via Thomson Reuters ONE
[HUG#1569597]
Unternehmensinformation / Kurzprofil:
Datum: 07.12.2011 - 07:59 Uhr
Sprache: Deutsch
News-ID 94608
Anzahl Zeichen: 8026
contact information:
Town:
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Kategorie:
Business News
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