485BPOS 1 iliacavan4.txt REGISTRATION STATEMENT As filed with the Securities and Exchange Registration No. 333-56297 Commission on April 20, 2005 Registration No. 811-2513 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-4 Post-Effective Amendment No. 31 To REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------------------------------------------------------------------------- and Amendment to REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Variable Annuity Account B of ING Life Insurance and Annuity Company ING Life Insurance and Annuity Company 151 Farmington Avenue, TS31, Hartford, Connecticut 06156 Depositor's Telephone Number, including Area Code: (860) 723-2239 -------------------------------------------------------------------------------- Linda E. Senker, Esq. James A. Shuchart, Esq. ING ING 1475 Dunwoody Drive 1475 Dunwood Drive West Chester, PA 19380-1478 West Chester, PA 19380-1478 (610) 425-4139 (610) 425-3563 (NAME AND ADDRESS OF AGENT FOR SERVICE) -------------------------------------------------------------------------------- It is proposed that this filing will become effective: ______ immediately upon filing pursuant to paragraph (b) of Rule 485 ___X___ on April 29, 2005 pursuant to paragraph (b) of Rule 485 PART A ING INSURANCE COMPANY OF AMERICA AND ITS VARIABLE ANNUITY ACCOUNT I AND ING LIFE INSURANCE AND ANNUITY COMPANY AND ITS VARIABLE ANNUITY ACCOUNT B PROSPECTUS SUPPLEMENT DATED APRIL 29, 2005 TO YOUR CURRENT VARIABLE ANNUITY PROSPECTUS This supplement amends certain information contained in the most recent variable annuity prospectus. Please read it carefully and keep it with your prospectus for future reference. THE "INDUSTRY DEVELOPMENTS - TRADING" SECTION OF THE PROSPECTUS IS HEREBY DELETED AND REPLACED WITH THE FOLLOWING: INDUSTRY DEVELOPMENTS - TRADING 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 ING, 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 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 Securities and Exchange Commission ("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. -------------------------------------------------------------------------------- ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B OF ING LIFE INSURANCE AND ANNUITY COMPANY DEFERRED VARIABLE ANNUITY CONTRACT ING VARIABLE ANNUITY -------------------------------------------------------------------------------- APRIL 29, 2005 THE CONTRACT. The contract described in this prospectus is a group or individual deferred variable annuity contract issued by ING Life Insurance and Annuity Company (the "Company," "we," "us," "our"). It is issued to you, the contract holder, as either a nonqualified deferred annuity, including contracts offered to a custodian for an Individual Retirement Account as described in Section 408(a) of the Internal Revenue Code of 1986, as amended ("Tax Code"); a qualified individual retirement annuity ("IRA"); a qualified Roth IRA; or as a qualified contract for use with certain employer sponsored retirement plans. The contract is not available as a SIMPLE IRA under Tax Code Section 408(p). WHY READING THIS PROSPECTUS IS IMPORTANT. This prospectus contains facts about the contract and its investment options that you should know before purchasing. This information will help you decide if the contract is right for you. Please read this prospectus carefully. PREMIUM BONUS OPTION. We will credit a premium bonus to your account for each purchase payment you make during the first account year if you elect the premium bonus option. There is an additional charge for this option during the first seven account years. Therefore, the fees you will pay if you elect the premium bonus option will be greater than the fees you will pay if you do not elect the premium bonus option. The premium bonus option may not be right for you if you expect to make additional purchase payments after the first account year or if you anticipate that you will need to make withdrawals during the first seven account years. In these circumstances the amount of the premium bonus option charge may be more than the amount of the premium bonus we credit to your account. See "Premium Bonus Option-Suitability." INVESTMENT OPTIONS. The contract offers variable investment options and fixed interest options. When we establish your account you instruct us to direct account dollars to any of the available options. VARIABLE INVESTMENT OPTIONS. These options are called subaccounts. The subaccounts are within Variable Annuity Account B (the separate account), a separate account of the Company. Each subaccount invests in one of the mutual funds listed on the previous page. Earnings on amounts invested in a subaccount will vary depending upon the performance of its underlying fund. You do not invest directly in or hold shares of the funds. THE FUNDS. Information about the funds in which the subaccounts invest is located in Appendix III -- Description of Underlying Funds and in each fund prospectus. A prospectus containing more information on each Underlying Fund may be obtained by calling our Customer Service Center at 800-366-0066. READ THIS PROSPECTUS IN CONJUNCTION WITH THE FUND PROSPECTUSES, AND RETAIN THE PROSPECTUSES FOR FUTURE REFERENCE. GETTING ADDITIONAL INFORMATION. You may obtain free of charge the April 29, 2005, Statement of Additional Information ("SAI") about the separate account by indicating your request on your application or calling us at 1-800-531-4547. You may also obtain free of charge, the most recent annual and/or quarterly report of ING USA Annuity and Life Insurance Company by calling us at 1-800-366-0066. You may also obtain an SAI for any of the funds by calling that number. The Securities and Exchange Commission ("SEC") also makes available to the public reports and information about the separate account and the funds. Certain reports and information, including this prospectus and SAI, are available on the EDGAR Database on the SEC web site, www.sec.gov, or at the SEC Public Reference Room in Washington, D.C. You may call 1-202-942-8090 or 1-800-SEC-0330 to get information about the operations of the Public Reference Room. You may obtain copies of reports and other information about the separate account and the funds, after paying a duplicating fee, by sending an e-mail request to publicinfo@sec.gov or by writing to the SEC Public Reference Room, Washington, D.C. 20549-0102. The SAI table of contents is listed in this prospectus. The SAI is incorporated into this prospectus by reference. ILIAC Variable Annuity - 134789 ADDITIONAL DISCLOSURE INFORMATION. Neither the SEC nor any state securities commission has approved or disapproved the securities offered through this prospectus or passed on the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. We do not intend for this prospectus to be an offer to sell or a solicitation of an offer to buy these securities in any state that does not permit their sale. We have not authorized anyone to provide you with information that is different than that contained in this prospectus. FIXED INTEREST OPTIONS. o ILIAC Guaranteed Account (the Guaranteed Account) o Fixed Account Except as specifically mentioned, this prospectus describes only the investment options offered through the separate account. However, we describe the fixed interest options in appendices to this prospectus. There is also a separate Guaranteed Account prospectus. AVAILABILITY OF OPTIONS. Some funds or fixed interest options may be unavailable through your contract or in your state. THE CONTRACT IS NOT A DEPOSIT WITH, OBLIGATION OF OR GUARANTEED OR ENDORSED BY ANY BANK, NOR IS IT INSURED BY THE FDIC. THE CONTRACT IS SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT OF YOUR INVESTMENT. -------------------------------------------------------------------------------- THE INVESTMENT PORTFOLIOS ARE LISTED ON THE NEXT PAGE. -------------------------------------------------------------------------------- ILIAC Variable Annuity - 134789 The investment portfolios available under your Contract are: ING INVESTORS TRUST ING American Funds Growth Portfolio ING American Funds Growth-Income Portfolio ING American Funds International Portfolio ING Evergreen Omega Portfolio (Class I) ING FMR(SM) Earnings Growth Portfolio (Class I) ING JPMorgan Small Cap Equity Portfolio (Class I) ING JPMorgan Value Opportunities Portfolio (Class I) ING Legg Mason Value Portfolio (Class I) ING Marsico International Opportunities Portfolio (Class S) ING Mercury Large Cap Growth Portfolio (Class S) ING MFS Total Return Portfolio (Class I) ING Oppenheimer Main Street Portfolio (Class I) ING Pioneer Fund Portfolio (Class I) ING UBS U.S. Allocation Portfolio (Class S) ING PARTNERS, INC. ING American Century Select Portfolio (Initial Class) ING JPMorgan Fleming International Portfolio (Initial Class) ING MFS Capital Opportunities Portfolio (Initial Class) ING Oppenheimer Global Portfolio (Initial Class) ING Oppenheimer Strategic Income Portfolio (Initial Class) ING Salomon Brothers Aggressive Growth Portfolio (Initial Class) ING T. Rowe Price Diversified Mid Cap Growth Portfolio (Initial Class) ING UBS U.S. Large Cap Equity Portfolio (Initial Class) ING Van Kampen Equity and Income Portfolio (Initial Class) ING VARIABLE FUNDS ING VP Growth and Income Portfolio (Class I) ING VARIABLE INSURANCE TRUST ING GET U.S. Core Portfolio ING VARIABLE PORTFOLIOS, INC. ING VP Global Science and Technology Portfolio (Class I) ING VP Growth Portfolio (Class I) ING VP Index Plus LargeCap Portfolio (Class I) ING VP International Equity Portfolio (Class I) ING VP Small Company Portfolio (Class I) ING VARIABLE PRODUCTS TRUST ING VP SmallCap Opportunities Portfolio (Class S) ING VP BALANCED PORTFOLIO (CLASS I) ING VP INTERMEDIATE BOND PORTFOLIO (CLASS I) ING VP MONEY MARKET PORTFOLIO (CLASS I) FIDELITY VARIABLE INSURANCE PRODUCTS PORTFOLIO Fidelity VIP Contrafund Portfolio (Class I) Fidelity VIP Equity-Income Portfolio (Class I) Fidelity VIP Growth Portfolio (Class I) Fidelity VIP High Income Portfolio (Class I) OPPENHEIMER VARIABLE ACCOUNT FUNDS Oppenheimer Aggressive Growth Fund ILIAC Variable Annuity - 134789 -------------------------------------------------------------------------------- TABLE OF CONTENTS -------------------------------------------------------------------------------- PAGE CONTRACT OVERVIEW ........................................................ 4 Contract Design ...................................................... 4 New York Contracts ................................................... 4 Contract Facts ....................................................... 4 CONTRACT PHASES: The Accumulation Phase, The Income Phase ................ 7 FEE TABLE ................................................................ 8 CONDENSED FINANCIAL INFORMATION .......................................... 12 PURCHASE AND RIGHTS ...................................................... 12 RIGHT TO CANCEL .......................................................... 14 PREMIUM BONUS OPTION ..................................................... 15 INVESTMENT OPTIONS ....................................................... 17 TRANSFERS AMONG INVESTMENT OPTIONS ....................................... 19 TRANSFERS BETWEEN OPTION PACKAGES ........................................ 22 FEES ..................................................................... 23 YOUR ACCOUNT VALUE ....................................................... 28 WITHDRAWALS .............................................................. 30 SYSTEMATIC DISTRIBUTION OPTIONS .......................................... 32 DEATH BENEFIT ............................................................ 33 THE INCOME PHASE ......................................................... 38 NEW YORK CONTRACTS ....................................................... 42 TAXATION ................................................................. 46 OTHER TOPICS ............................................................. 56 The Company -- Variable Annuity Account B -- Contract Distribution -- Payment of Commissions -- Payment Delay or Suspension -- Voting Rights -- Contract Modifications -- Transfer of Ownership: Assignment -- Involuntary Terminations -- Trading -- Industry Developments -- Legal Matters and Proceedings CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION ...................... SAI-1 APPENDIX I -- ILIAC GUARANTEED ACCOUNT ................................... I-1 APPENDIX II -- FIXED ACCOUNT ............................................. II-1 APPENDIX III -- DESCRIPTION OF UNDERLYING FUNDS .......................... III-1 APPENDIX IV -- PROJECTED SCHEDULE OF ING GET U.S. CORE PORTFOLIO OFFERINGS IV-1 APPENDIX V -- CONDENSED FINANCIAL INFORMATION ............................ V-1 i ILIAC Variable Annuity - 134789 -------------------------------------------------------------------------------- CONTRACT OVERVIEW -------------------------------------------------------------------------------- The following is intended as a summary. Please read each section of this prospectus for additional detail. QUESTIONS: CONTACTING THE COMPANY. To answer your questions, contact your sales representative or write or call our Customer Service Center at: ING P.O. Box 9271 Des Moines, IA 50306-9271 1-800-531-4547 SENDING FORMS AND WRITTEN REQUESTS IN GOOD ORDER. If you are writing to change your beneficiary, request a withdrawal or for any other purpose, contact us or your sales representative to learn what information is required for the request to be in "good order." We can only act upon requests that are received in good order. Generally, a request is considered to be in "good order" when it is signed, dated and made with such clarity and completeness that we are not required to exercise any discretion in carrying it out. SENDING ADDITIONAL PURCHASE PAYMENTS. Use the following addresses when sending additional purchase payments. If using the U.S. Postal Service: If using express mail: ING ING Attn: Customer Service Attn: Customer Service Center P.O. Box 9271 909 Locust Street Des Moines, IA 50306-9271 Des Moines, IA 50309-2899 Express mail packages should not be sent to the P.O. Box address. CONTRACT DESIGN: The contract described in this prospectus is a group or individual deferred variable annuity contract. It is intended to be a retirement savings vehicle that offers a variety of investment options to help meet long-term financial goals. The term "contract" in this prospectus refers to individual contracts and to certificates issued under group contracts. NEW YORK CONTRACTS: Some of the fees, features and benefits of the contract are different if it is issued in the State of New York. For details regarding the New York contracts, see the "Fee Table" and the "New York Contracts" sections of this prospectus. CONTRACT FACTS: OPTION PACKAGES. There are three option packages available under the contract. You select an option package at the time of application. Each option package is distinct. See "Purchase and Rights" for age maximums on the calculation of death benefits. The differences are summarized as follows: 1 ILIAC Variable Annuity - 134789
-------------------------------------------------------------------------------------------------------------------------------- OPTION PACKAGE I OPTION PACKAGE II OPTION PACKAGE III -------------------------------------------------------------------------------------------------------------------------------- Mortality and Expense Risk Charge(1): 0.80% 1.10% 1.25% -------------------------------------------------------------------------------------------------------------------------------- Death Benefit(2) on Death of The greater of: The greatest of: The greatest of: the Annuitant(3): 1) The sum of all purchase 1) The sum of all purchase 1) The sum of all purchase payments, adjusted for payments, adjusted for payments, adjusted for amounts withdrawn or amounts withdrawn or amounts withdrawn or applied to an income applied to an income applied to an income phase payment option as phase payment option as phase payment option as of the claim date; or of the claim date; or of the claim date; or 2) The account value on the 2) The account value on the 2) The account value on the claim date. claim date; or claim date; or 3) The "step-up value" on 3) The "step-up value" on the claim date. the claim date; or 4) The "roll-up value" on the claim date.(4) -------------------------------------------------------------------------------------------------------------------------------- Minimum Initial Purchase NON-QUALIFIED: QUALIFIED: NON-QUALIFIED: QUALIFIED: NON-QUALIFIED: QUALIFIED: Payment(5): $15,000 $1,500 $5,000 $1,500 $5,000 $1,500 -------------------------------------------------------------------------------------------------------------------------------- Free Withdrawals(6): 10% of your account value 10% of your account value 10% of your account value each account year, each account year, each account year, non-cumulative. non-cumulative. cumulative to a maximum 30%. -------------------------------------------------------------------------------------------------------------------------------- Nursing Home Waiver -- Waiver of Early Withdrawal Charge(7): Not Available Available Available --------------------------------------------------------------------------------------------------------------------------------
(1) See "Fee Table" and "Fees." (2) See "Death Benefit." If a death benefit is payable based on account value, step-up value or roll-up value, the death benefit will not include any premium bonus credited to the account after or within 12 months of the date of death. See "Premium Bonus Option--Forfeiture." (3) When a contract holder who is not the annuitant dies, the amount of the death benefit is not the same as shown above under each option package. See "Death Benefit." THEREFORE, CONTRACT HOLDERS WHO ARE NOT ALSO THE ANNUITANT SHOULD SERIOUSLY CONSIDER WHETHER OPTION PACKAGES II AND III ARE SUITABLE FOR THEIR CIRCUMSTANCES. (4) See the "New York Contracts" section of this prospectus for details regarding the death benefit under Option Package III for contracts issued in New York. (5) See "Purchase and Rights." (6) See "Fees." (7) See "Fees" and the "New York Contracts" sections of this prospectus for details regarding contracts issued in New York. PREMIUM BONUS OPTION. At the time of application you may elect the premium bonus option. Once elected it may not be revoked. If you elect this option we will credit your account with a 4% premium bonus for each purchase payment you make during the first account year. The premium bonus will be included in your account value and allocated among the investment options you have selected in the same proportion as the purchase payment. See "Premium Bonus Option." In exchange for the premium bonus, during the first seven account years you will pay an annual premium bonus option charge equal to 0.50% of your account value allocated to the subaccounts. This charge may also be deducted from amounts allocated to the fixed interest options, resulting in a 0.50% reduction in the interest which would have been credited to your account during the first seven account years if you had not elected the premium bonus option. See "Fee Table" and "Fees." In each of the following circumstances all or part of a premium bonus credited to your account will be forfeited: o If you exercise your free look privilege and cancel your contract. See "Premium Bonus Option--Forfeiture" and "Right to Cancel." o If a death benefit is payable based on account value, step-up value or roll-up value, but only the amount of any premium bonus credited to the account after or within 12 months of the date of death. See "Premium Bonus Option--Forfeiture" and "Death Benefit--Premium Bonus." 2 ILIAC Variable Annuity - 134789 o If all or part of a purchase payment for which a premium bonus was credited is withdrawn during the first seven account years. See "Premium Bonus Option--Forfeiture" and "Withdrawals." If you expect to make purchase payments to your contract after the first account year, the premium bonus option may not be right for you. Also, if you anticipate that you will need to make withdrawals from your account during the first seven account years, you may not want to elect the premium bonus option. See "Premium Bonus Option--Suitability." Your sales representative can help you decide if the premium bonus option is right for you. TRANSFERABILITY. You may transfer from one option package to another. o Transfers must occur on an account anniversary. o A written request for the transfer must be received by us within 60 days of an account anniversary. o Certain minimum account values must be met. See "Transfers Between Option Packages." FREE LOOK/RIGHT TO CANCEL. You may cancel your contract within ten days (some states require more than ten days) of receipt. See "Right to Cancel." DEATH BENEFIT. Your beneficiary may receive a financial benefit in the event of your death prior to the income phase. The amount of the death benefit will depend upon the option package selected. See "Death Benefit." Any death benefit during the income phase will depend upon the income phase payment option selected. See "The Income Phase." WITHDRAWALS. During the accumulation phase you may withdraw all or part of your account value. Certain fees, taxes and early withdrawal penalties may apply. In addition, the Tax Code restricts full and partial withdrawals in some circumstances. See "Withdrawals." Amounts withdrawn from the Guaranteed Account may be subject to a market value adjustment. See Appendix I. SYSTEMATIC DISTRIBUTION OPTIONS. These are made available for you to receive periodic withdrawals from your account, while retaining the account in the accumulation phase. See "Systematic Distribution Options." FEES AND EXPENSES. Certain fees and expenses are deducted from the value of your contract. The fees and expenses deducted may vary depending upon the option package you select. See "Fee Table" and "Fees." TAXATION. You will generally not pay taxes on any earnings from the annuity contract described in this prospectus until they are withdrawn. Tax-qualified retirement arrangements (e.g., IRAs or 403(b) plans) also defer payment of taxes on earnings until they are withdrawn. If you are considering funding a tax-qualified retirement arrangement with an annuity contract, you should know that the annuity contract does not provide any additional tax deferral of earnings beyond the tax deferral provided by the tax-qualified retirement arrangement. However, annuities do provide other features and benefits which may be valuable to you. You should discuss your decision with your financial representative. Taxes will generally be due when you receive a distribution. Tax penalties may apply in some circumstances. See "Taxation." USE OF AN ANNUITY CONTRACT IN AN IRA OR OTHER QUALIFIED PLAN. Under the federal tax laws, earnings on amounts held in annuity contracts are generally not taxed until they are withdrawn. However, in the case of an Individual Retirement Account or other qualified retirement account, an annuity contract is not necessary to obtain this favorable tax treatment. However, annuities do provide other features and benefits (such as the guaranteed death benefit or the option of lifetime income phase options at established rates) which may be valuable to you. You should discuss your alternatives with your sales representative taking into account the additional fees and expenses you may incur in an annuity. See "Purchase and Rights." 3 ILIAC Variable Annuity - 134789 -------------------------------------------------------------------------------- CONTRACT PHASES -------------------------------------------------------------------------------- I. THE ACCUMULATION PHASE (accumulating dollars under your contract) STEP 1: You provide us with your completed application and initial purchase payment. We establish an account for you and credit that account with your initial purchase payment. If you elected the premium bonus option we will also credit your account with a premium bonus. STEP 2: You direct us to invest your purchase payment and the premium bonus, if applicable, in one or more of the following investment options: o Fixed Interest Options; or o Variable Investment Options. (The variable investment options are the subaccounts of Variable Annuity Account B. Each one invests in a specific mutual fund.) STEP 3: Each subaccount you select purchases shares of its assigned fund. II. THE INCOME PHASE (receiving income phase payments from your contract) When you want to begin receiving payments from your contract you may select from the options available. The contract offers several income phase payment options (see "The Income Phase"). In general, you may: o Receive income phase payments for a specified period of time or for life; o Receive income phase payments monthly, quarterly, semi-annually or annually; o Select an income phase payment option that provides for payments to your beneficiary; or o Select income phase payments that are fixed or vary depending upon the performance of the variable investment options you select. -------------------------------------------------------------------------------- FEE TABLE -------------------------------------------------------------------------------- The following tables describe the fees and expenses that you will pay when buying, owning, and surrendering the contract. The first table describes the fees and expenses that you will pay at the time that you buy the contract, surrender the contract, or transfer contract value between investment options. State premium taxes may also be deducted. See "The Income Phase" for the different fees that may apply after you begin receiving payments under the contract. 4 ILIAC Variable Annuity - 134789 MAXIMUM TRANSACTION FEES: EARLY WITHDRAWAL CHARGE (As a percentage of payments withdrawn.) -------------------------------------------------------------------------- FOR CONTRACTS ISSUED OUTSIDE OF THE STATE OF NEW YORK -------------------------------------------------------------------------- ALL CONTRACTS (EXCEPT ROTH IRA CONTRACTS ISSUED BEFORE SEPTEMBER 20, 2000): -------------------------------------------------------------------------- Years from Receipt of Purchase Payment Early Withdrawal Charge Less than 2 7% 2 or more but less than 4 6% 4 or more but less than 5 5% 5 or more but less than 6 4% 6 or more but less than 7 3% 7 or more 0% -------------------------------------------------------------------------- ROTH IRA CONTRACTS ISSUED BEFORE SEPTEMBER 20, 2000 -------------------------------------------------------------------------- Completed Account Years Early Withdrawal Charge Less than 1 5% 1 or more but less than 2 4% 2 or more but less than 3 3% 3 or more but less than 4 2% 4 or more but less than 5 1% 5 or more 0% -------------------------------------------------------------------------- FOR CONTRACTS ISSUED IN THE STATE OF NEW YORK -------------------------------------------------------------------------- ALL CONTRACTS -------------------------------------------------------------------------- Years from Receipt of Purchase Payment Early Withdrawal Charge Less than 1 7% 1 or more but less than 2 6% 2 or more but less than 3 5% 3 or more but less than 4 4% 4 or more but less than 5 3% 5 or more but less than 6 2% 6 or more but less than 7 1% 7 or more 0% -------------------------------------------------------------------------- ANNUAL MAINTENANCE FEE .........................................$30.00(1) TRANSFER CHARGE ................................................$ 0.00(2) -------------------------------------------------------------------------- (1) The annual maintenance fee will be waived if your account value is $50,000 or greater on the date this fee is due. See "Fees--Annual Maintenance Fee." (2) We currently do not impose this charge. We reserve the right, however, during the accumulation phase to charge $10 for each transfer after the first 12 transfers in each account year. See "Transfers" for additional information. The next table describes the fees and expenses that you will pay periodically during the time that you own the contract, not including Trust or Fund fees and expenses. FEES DEDUCTED FROM INVESTMENTS IN THE SEPARATE ACCOUNT: AMOUNT DURING THE ACCUMULATION PHASE (Daily deductions, equal to the following percentages on an annual basis, from amounts invested in the subaccounts.) 5 ILIAC Variable Annuity - 134789 IF YOU DO NOT ELECT THE PREMIUM BONUS OPTION: ALL ACCOUNT YEARS ----------- OPTION PAGE I Mortality and Expense Risk Charge 0.80% Administrative Expense Charge 0.15% ---- Total Separate Account Expenses 0.95% OPTION PAGE II Mortality and Expense Risk Charge 1.10% Administrative Expense Charge 0.15% ---- Total Separate Account Expenses 1.25% OPTION PAGE III Mortality and Expense Risk Charge 1.25% Administrative Expense Charge 0.15% ---- Total Separate Account Expenses 1.40% IF YOU ELECT THE PREMIUM BONUS OPTION: ACCOUNT AFTER THE 7TH YEARS ACCOUNT 1-7 YEAR ------- ------------- OPTION PAGE I Mortality and Expense Risk Charge 0.80% 0.80% Administrative Expense Charge 0.15% 0.15% Premium Bonus Option Charge 0.50% 0.00% ---- ---- Total Separate Account Expenses 1.45% 0.95% OPTION PAGE II Mortality and Expense Risk Charge 1.10% 1.10% Administrative Expense Charge 0.15% 0.15% Premium Bonus Option Charge 0.50% 0.00% ---- ---- Total Separate Account Expenses 1.75% 1.25% OPTION PAGE III Mortality and Expense Risk Charge 1.25% 1.25% Administrative Expense Charge 0.15% 0.15% Premium Bonus Option Charge 0.50% 0.00% ---- ---- Total Separate Account Expenses 1.90% 1.40% IF YOU ELECT THE PREMIUM BONUS OPTION AND INVEST IN THE GET FUND*: ACCOUNT AFTER THE 7TH YEARS ACCOUNT 1-7 YEAR ------- ------------- OPTION PAGE I Mortality and Expense Risk Charge 0.80% 0.80% Administrative Expense Charge 0.15% 0.15% Premium Bonus Option Charge 0.50% 0.00% GET Fund Guarantee Charge 0.50% 0.00% ---- ---- Total Separate Account Expenses 1.95% 0.95% OPTION PAGE II Mortality and Expense Risk Charge 1.10% 1.10% Administrative Expense Charge 0.15% 0.15% Premium Bonus Option Charge 0.50% 0.00% GET Fund Guarantee Charge 0.50% 0.00% ---- ---- Total Separate Account Expenses 2.25% 1.25% 6 ILIAC Variable Annuity - 134789 OPTION PAGE III Mortality and Expense Risk Charge 1.25% 1.25% Administrative Expense Charge 0.15% 0.15% Premium Bonus Option Charge 0.50% 0.00% GET Fund Guarantee Charge 0.50% 0.00% ---- ---- Total Separate Account Expenses 2.40% 1.40% * The GET Fund guarantee charge applies during each guarantee period to amounts invested in the GET Fund investment option only. This fee table assumes a GET Fund guarantee period of seven years. See "Investment Options -- Variable Investment Options" for additional information. FEES DEDUCTED BY THE FUNDS: The next item shows the minimum and maximum total operating expenses charged by a Trust or Fund that you may pay periodically during the time that you own the Contract. More detail concerning each Trust or Fund's fees and expenses is contained in the prospectus for each Trust or Fund. -------------------------------------------------------------------------- TOTAL ANNUAL TRUST OR FUND OPERATING EXPENSES(1) MINIMUM MAXIMUM -------------------------------------------------------------------------- (expenses that are deducted from Trust or Fund assets, including management fees, distribution 0.34% 1.37% and/or service (12b-1) fees(2), and other expenses): -------------------------------------------------------------------------- (1) The minimum and maximum total operating expenses charged by a Trust or Fund including applicable expense reimbursement or fee waiver arrangements would also be 0.34% to 1.37%. The expense reimbursement or fee arrangement reflected is expected to continue through May 1, 2006. (2) The Company may receive compensation from each of the funds or the funds' affiliates based on an annual percentage of the average net assets held in that fund by the Company. The percentage paid may vary from one fund company to another. For certain funds, some of this compensation may be paid out of 12b-1 fees or service fees that are deducted from fund assets. Any such fees deducted from fund assets are disclosed in the fund prospectuses. The Company may also receive additional compensation from certain funds for administrative, recordkeeping or other services provided by the Company to the funds or the funds' affiliates. These additional payments are made by the funds or the funds' affiliates to the Company and do not increase, directly or indirectly, the fees and expenses shown above. See "Fees - Fund Expenses" for additional information. EXAMPLES: These examples are intended to help you compare the costs of investing in the Contract with the cost of investing in other variable annuity Contracts. These costs include contract owner transaction expenses, contract fees, separate account annual expenses, and Trust or Fund fees and expenses. The examples assume that you invest $10,000 in the Contract for the time periods indicated. The examples also assume that your investment has a 5% return each year and assumes the maximum fees and expenses of the Contracts and of any of the Trusts or Funds without taking into account any fee waiver or expense reimbursement arrangements that may apply. Although your actual costs may be higher or lower, based on these assumptions, your costs would be: FOR CONTRACTS ISSUED OUTSIDE THE STATE OF NEW YORK Assuming You Elect the Premium Bonus Option: -------------------------------------------------------------------- 1) If you withdraw your entire account value at the end of the applicable time period: -------------------------------------------------------------------- 1 year 3 years 5 years 10 years $1,034 $1,618 $2,226 $3,604 -------------------------------------------------------------------- 2) If you do not withdraw your entire account value or if you select an income phase payment option at the end of the applicable time period*: -------------------------------------------------------------------- 1 year 3 years 5 years 10 years $334 $1,018 $1,726 $3,604 -------------------------------------------------------------------- 7 ILIAC Variable Annuity - 134789 FOR CONTRACTS ISSUED IN THE STATE OF NEW YORK Assuming You Elect the Premium Bonus Option: -------------------------------------------------------------------- 1) If you withdraw your entire account value at the end of the applicable time period: -------------------------------------------------------------------- 1 year 3 years 5 years 10 years $1,034 $1,518 $2,026 $3,604 -------------------------------------------------------------------- 2) If you do not withdraw your entire account value or if you select an income phase payment option at the end of the applicable time period*: -------------------------------------------------------------------- 1 year 3 years 5 years 10 years $334 $1,018 $1,726 $3,604 -------------------------------------------------------------------- * This example does not apply during the income phase if you selected a nonlifetime income phase payment option with variable payments and take a lump-sum withdrawal after payments start. In this case the lump-sum payment is treated as a withdrawal during the accumulation phase and may be subject to an early withdrawal charge (refer to Example 1). -------------------------------------------------------------------------------- CONDENSED FINANCIAL INFORMATION -------------------------------------------------------------------------------- UNDERSTANDING CONDENSED FINANCIAL INFORMATION. In Appendix V of this prospectus we provide condensed financial information about the Variable Annuity Account B (the separate account) subaccounts you may invest in through the contract. The numbers show the year-end unit values of each subaccount from the time purchase payments were first received in the subaccounts under the contract. -------------------------------------------------------------------------------- PURCHASE AND RIGHTS -------------------------------------------------------------------------------- HOW TO PURCHASE: Please note that this contract is no longer available for purchase, although you may continue to make purchase payments under existing contracts. We and our affiliates offer various other products with different features and terms than these contracts that may offer some or all of the same funds. These products have different benefits, fees and charges, and may offer different share classes of the funds offered in this contract that are less expensive. These other products may or may not better match your needs. You should be aware that there are alternative options available, and, if you are interested in learning more about these other products, contact your registered representative. o Individual Contracts. In some states, where group contracts are not available, you may purchase the contract directly from us by completing an application and delivering it and your initial purchase payment to us. Upon our approval we will issue you a contract and set up an account for you under the contract. o Group Contracts. In most states we have distributors, usually broker-dealers or banks, who hold the contract as a group contract (see "Other Topics -- Contract Distribution"). You may purchase an interest (or, in other words, participate) in the group contract by contacting a distributor and completing an application and delivering it with your initial purchase payment to that distributor. Upon our approval, we will set up an account for you under the group contract and issue you a certificate showing your rights under the contract. o Joint Contracts (generally spouses). For a nonqualified contract, you may participate in a group contract as a joint contract holder. References to "contract holder" in this prospectus mean both contract holders under joint contracts. Tax law prohibits the purchase of qualified contracts by joint contract holders. 8 ILIAC Variable Annuity - 134789 FACTORS TO CONSIDER IN THE PURCHASE DECISION. You should discuss your decision to purchase a contract with your sales representative. You should understand the investment options it provides, its other features, the risks and potential benefits it includes, and the fees and expenses you will incur. You should take note of the following issues, among others: 1. Long-Term Investment - This contract is designed for people seeking long-term tax-deferred accumulation of assets, generally for retirement or other long-term purposes. Early withdrawals may cause you to incur surrender charges and/or tax penalties. The value of deferred taxation on earnings grows with the amount of time funds are left in the contract. You should not buy this contract if you are looking for a short-term investment or expect to need to make withdrawals before you are 59 1/2. 2. Investment Risk - The value of investment options available under this contract may fluctuate with the markets and interest rates. You should not buy this contract in order to invest in these options if you cannot risk getting back less money than you put in. 3. Features and Fees - The fees for this contract reflect costs associated with the features and benefits it provides. In some cases, you have the option to elect certain benefits that carry additional charges. As you consider this contract, you should determine the value that these various benefits and features have for you, taking into account the charges for those features. 4. Exchanges - If this contract will be a replacement for another annuity contract, you should compare the two contracts carefully. You should consider whether any additional benefits under this contract justify any increased charges that might apply. Also, be sure to talk to your sales representative or tax adviser to make sure that the exchange will be handled so that it is tax-free. MAXIMUM ISSUE AGE. The maximum issue age for you and the annuitant (if you are not the annuitant) on the date we establish your account is 90. Please note that there are age maximums on the calculation of the step-up value and roll-up value death benefits under Option Packages II and III. Therefore, if you are age 75 or older you may want to consider whether choosing one of these options is in your best interest. See "Death Benefit" for a description of the calculation of death benefits above certain ages. YOUR RIGHTS UNDER THE CONTRACT: o Individual Contracts. You have all contract rights. o Group Contracts. The holder of the group contract has title to the contract and, generally, only the right to accept or reject any modifications to the contract. You have all other rights to your account under the contract. o Joint Contracts. Joint contract holders have equal rights under the contract with respect to their account. All rights under the contract must be exercised by both joint contract holders with the exception of transfers among investment options. See the "Death Benefit" section for the rights of the surviving joint contract holder upon the death of a joint contract holder prior to the income phase start date. PURCHASE PAYMENT METHODS. The following purchase payment methods are allowed: o One lump sum; o Periodic payments; or o Transfer or rollover from a pre-existing retirement plan or account We reserve the right to reject any purchase payments to a prospective or existing account without advance notice. If you are considering making periodic payments beyond the first contract year, the premium bonus option may not be right for you. See "Premium Bonus Option--Suitability." PURCHASE PAYMENT AMOUNTS. The minimum initial purchase payment depends upon the option package you select when you purchase the contract and must be met without consideration of any premium bonus. 9 ILIAC Variable Annuity - 134789
-------------------------------------------------------------------------------------------------------------- OPTION PACKAGE I OPTION PACKAGE II OPTION PACKAGE III -------------------------------------------------------------------------------------------------------------- MINIMUM INITIAL PURCHASE PAYMENT Non-Qualified: Qualified:* Non-Qualified: Qualified:* Non-Qualified: Qualified:* $15,000 $1,500 $5,000 $1,500 $5,000 $1,500 --------------------------------------------------------------------------------------------------------------
* The Tax Code imposes a maximum limit on annual payments which may be excluded from your gross income. Additional purchase payments must be at least $50 (we may change this amount from time to time). A purchase payment of more than $1,000,000 will be allowed only with our consent. REDUCTION OF PURCHASE PAYMENT AMOUNTS. In certain circumstances we may reduce the minimum initial or additional purchase payment amount we will accept under a contract. Whether such a reduction is available will be based on consideration of each of the following factors: o The size and type of the prospective group, if any, to which the reduction would apply; o The method and frequency of purchase payments to be made under the contract; and o The amount of compensation to be paid to distributors and their registered representative on each purchase payment. Any reduction of the minimum initial or additional purchase payment amount will not be unfairly discriminatory against any person. We will make any such reduction according to our own rules in effect at the time the purchase payment is received. We reserve the right to change these rules from time to time. ACCEPTANCE OR REJECTION OF YOUR APPLICATION. We must accept or reject your application within two business days of receipt. If the application is incomplete, we may hold any forms and accompanying purchase payment(s) for five business days. We may hold purchase payments for longer periods, pending acceptance of the application, only with your permission. If the application is rejected, the application and any purchase payments will be returned to you. We may also refuse to accept certain forms of premium payments or loan repayments, if applicable, (traveler's checks, for example) or restrict the amount of certain forms of premium payments or loan repayments (money orders totaling more than $5,000, for example). In addition, we may require information as to why a particular form of payment was used (third party checks, for example) and the source of the funds of such payment in order to determine whether or not we will accept it. Use of an unacceptable form of payment may result in us returning your premium payment and not issuing the contract. ALLOCATING PURCHASE PAYMENTS TO THE INVESTMENT OPTIONS. We will allocate your purchase payments among the investment options you select. Allocations must be in whole percentages and there may be limits on the number of investment options you may select. When selecting investment options you may find it helpful to review the "Investment Options" section. -------------------------------------------------------------------------------- RIGHT TO CANCEL -------------------------------------------------------------------------------- WHEN AND HOW TO CANCEL. You may cancel your contract within ten days of receipt (some states require more than ten days) by returning it to our Customer Service Center along with a written notice of cancellation. 10 ILIAC Variable Annuity - 134789 REFUNDS. We will issue you a refund within seven days of our receipt of your contract and written notice of cancellation. Unless your state requires otherwise or unless you purchased an IRA, your refund will equal the purchase payments made plus any earnings or minus any losses attributable to those purchase payments allocated among the subaccounts. Any premium bonus credited to your account will be forfeited and your refund will reflect any earnings or losses attributable to the premium bonus. In other words, you will bear the entire investment risk for amounts allocated among the subaccounts during this period and the amount refunded could be less than the amount paid. If your state requires or if you purchased an IRA, we will refund all purchase payments made. If the purchase payments for your canceled contract came from a rollover from another contract issued by us or one of our affiliates where an early withdrawal charge was reduced or eliminated, the purchase payments will be restored to your prior contract. -------------------------------------------------------------------------------- PREMIUM BONUS OPTION -------------------------------------------------------------------------------- ELECTION. At the time of application you may elect the premium bonus option. Once elected it may not be revoked. The premium bonus option may not be available under all contracts. PREMIUM BONUS AMOUNT. If you elect this option we will credit your account with a 4% premium bonus for each purchase payment you make during the first account year. The premium bonus will be included in your account value and allocated among the investment options you have selected in the same proportion as the purchase payment. The amount of the premium bonus we credit to an account may be reduced if the premium bonus option charge is reduced or eliminated. PREMIUM BONUS OPTION CHARGE. In exchange for the premium bonus, during the first seven account years you will pay an annual premium bonus option charge equal to 0.50% of your account value allocated to the subaccounts. We may also deduct this charge from amounts allocated to the fixed interest options, resulting in an annual 0.50% reduction in the interest which would have been credited to your account during the first seven account years if you had not elected the premium bonus option. Under certain contracts, the premium bonus option charge may be reduced or eliminated. See "Fees--Reduction or Elimination of Certain Fees." After the seventh account year you will no longer pay the premium bonus option charge. We will administer the elimination of this charge by decreasing the number of accumulation units and increasing the accumulation unit values of the subaccounts in which you are then invested. The elimination of this charge and the adjustment of the number of accumulation units and accumulation unit values will not affect your account value. See "Your Account Value." FORFEITURE. In each of the following circumstances all or part of a premium bonus credited to your account will be forfeited: o If you exercise your free look privilege and cancel your contract. See "Right to Cancel." o If a death benefit is payable based on account value, step-up value or roll-up value, but only the amount of any premium bonus credited to the account after or within 12 months of the date of death. See "Death Benefit--Premium Bonus." o If all or part of a purchase payment for which a premium bonus was credited is withdrawn during the first seven account years. The amount of the premium bonus forfeited will be in the same percentage as the amount withdrawn subject to an early withdrawal charge is to the total purchase payments made during the first account year. See "Withdrawals." The following hypothetical example illustrates how the forfeiture of premium bonus is calculated when you withdraw all or part of a purchase payment for which a premium bonus was credited during the first seven account years. 11 ILIAC Variable Annuity - 134789
------------------------------------------------------------------------------------------------------------------------------ PURCHASE PREMIUM ACCOUNT WITHDRAWAL DATE PAYMENT BONUS VALUE AMOUNT EXPLANATION ------------------------------------------------------------------------------------------------------------------------------ May 2, 2004 $100,000 $4,000 $104,000 -- You make a $100,000 initial purchase payment and we credit your account with a 4% ($4,000) premium bonus. Your beginning account value equals $104,000. ------------------------------------------------------------------------------------------------------------------------------ May 2, 2007 -- -- $120,000 $30,000 Assume that your account value grows to $120,000 over the next three years and you request a $30,000 withdrawal. $18,000 of that $30,000 will be subject to an early withdrawal charge ($30,000 minus $12,000 (the 10% free withdrawal amount, see "Fees--Free Withdrawals")) and you would pay a $1,080 early withdrawal charge (6% of $18,000). Additionally, because $18,000 is 18% of the $100,000 purchase payment made in the first account year, 18% of your $4,000 premium bonus, or $720, would be forfeited.* ------------------------------------------------------------------------------------------------------------------------------
* This example assumes that either Option Package I or II has been in effect since you purchased the contract. If Option Package III has been in effect since inception, none of the withdrawal would be subject to an early withdrawal charge because the 30% cumulative free withdrawal amount ($36,000) would be greater than the amount of the withdrawal. See "Fees--Free Withdrawals." Therefore, the withdrawal would not result in forfeiture of any of the premium bonus. See the "New York Contracts" section of this prospectus for details about forfeiture of the premium bonus under contracts issued in New York. SUITABILITY. If you expect to make purchase payments to your account after the first account year, the premium bonus option may not be right for you. Your account will not be credited with a premium bonus for purchase payments made after the first account year yet we will assess the premium bonus option charge against your account value which is increased by these additional purchase payments. Consequently, the amount of the premium bonus option charge you would pay over time may be more than the amount of the premium bonus we credited to your account. Also, if you anticipate that you will need to make withdrawals from your account during the first seven account years, you may not want to elect the premium bonus option. When you make such a withdrawal you may forfeit part of your premium bonus, and the amount of the premium bonus option charge you have paid may be more than the amount of the premium bonus not forfeited. Likewise, if you make a withdrawal during the first seven account years and the market is down, the amount of the bonus forfeited may be greater than the then current market value of the premium bonus. Your sales representative can help you decide if the premium bonus option is right for you. -------------------------------------------------------------------------------- INVESTMENT OPTIONS -------------------------------------------------------------------------------- The contract offers variable investment options and fixed interest options. VARIABLE INVESTMENT OPTIONS. These options are called subaccounts. The subaccounts are within Variable Annuity Account B (the separate account), a separate account of the Company. Each subaccount invests in a specific mutual fund. You do not invest directly in or hold shares of the funds. 12 ILIAC Variable Annuity - 134789 MUTUAL FUND (FUND) DESCRIPTIONS. We provide brief descriptions of the funds in Appendix III. Investment results of the funds are likely to differ significantly and there is no assurance that any of the funds will achieve their respective investment objectives. Shares of the funds will rise and fall in value and you could lose money by investing in the funds. Shares of the funds are not bank deposits and are not guaranteed, endorsed or insured by any financial institution, the Federal Deposit Insurance Corporation or any other government agency. Unless otherwise noted, all funds are diversified as defined under the Investment Company Act of 1940. Refer to the fund prospectuses for additional information. Fund prospectuses may be obtained, free of charge, from our Customer Service Center at the address and phone number listed in "Contract Overview--Questions: Contacting the Company," by accessing the SEC's web site or by contacting the SEC Public Reference Room. ING GET U.S. CORE PORTFOLIO (FORMERLY KNOWN AS, AND REFERRED TO HEREIN AS, "GET FUND"). A GET Fund series may be available during the accumulation phase of the Contract. We make a guarantee, as described below, when you allocate money into a GET Fund series. Each GET Fund series has an offering period of three months which precedes the guarantee period. The GET Fund investment option may not be available under your Contract or in your state. Various series of the GET Fund may be offered from time to time, and additional charges will apply if you elect to invest in one of these series. Please see Appendix IV for a projected schedule of GET Fund Series Offerings. The Company makes a guarantee when you direct money into a GET Fund series. We guarantee that the value of an accumulation unit of the GET Fund subaccount for that series under the Contract on the maturity date will not be less than its value as determined after the close of business on the last day of the offering period for that GET Fund series. If the value on the maturity date is lower than it was on the last day of the offering period, we will add funds to the GET Fund subaccount for that series to make up the difference. This means that if you remain invested in the GET Fund series until the maturity date, at the maturity date, you will receive no less than the value of your separate account investment directed to the GET Fund series as of the last day of the offering period, less any maintenance fees or any amounts you transfer or withdraw from the GET Fund subaccount for that series. The value of dividends and distributions made by the GET Fund series throughout the guarantee period is taken into account in determining whether, for purposes of the guarantee, the value of your GET Fund investment on the maturity date is no less than its value as of the day of the offering period. The guarantee does not promise that you will earn the fund's minimum targeted return referred to in the investment objective. If you withdraw or transfer funds from a GET Fund series prior to the maturity date, we will process the transactions at the actual unit value next determined after we receive your request. The guarantee will not apply to these amounts or to amounts deducted as a maintenance fee, if applicable. The GET Fund subaccount is not available for the dollar cost averaging program or the account rebalancing program. Before the maturity date, we will send a notice to each contract owner who has allocated amounts to the GET Fund series. This notice will remind you that the maturity date is approaching and that you must choose other investment options for your GET Fund series amounts. If you do not make a choice on the maturity date, we will transfer your GET Fund series amounts to another available series of the GET Fund that is then accepting deposits. If no GET Fund series is then available, we will transfer your GET Fund series amounts to the fund or funds that we designate. Please see the ING GET U.S. Core Portfolio prospectus for a complete description of the GET Fund investment option, including charges and expenses. FIXED INTEREST OPTIONS. If available in your state, the ILIAC Guaranteed Account (the Guaranteed Account) or the Fixed Account. The Guaranteed Account offers certain guaranteed minimum interest rates for a stated period of time. Amounts must remain in the Guaranteed Account for specific periods to receive the quoted interest rates, or a market value adjustment will be applied. The market value adjustment may be positive or negative. The Fixed Account guarantees payment of the minimum interest rate specified in the contract. The Fixed Account is only available in certain states. For a description of these options, see Appendices I and II and the Guaranteed Account prospectus. 13 ILIAC Variable Annuity - 134789 SELECTING INVESTMENT OPTIONS: o CHOOSE OPTIONS APPROPRIATE FOR YOU. Your sales representative can help you evaluate which investment options may be appropriate for your financial goals. o UNDERSTAND THE RISKS ASSOCIATED WITH THE OPTIONS YOU CHOOSE. Some subaccounts invest in funds that are considered riskier than others. Funds with additional risks are expected to have values that rise and fall more rapidly and to a greater degree than other funds. For example, funds investing in foreign or international securities are subject to risks not associated with domestic investments, and their investment performance may vary accordingly. Also, funds using derivatives in their investment strategy may be subject to additional risks. o BE INFORMED. Read this prospectus, the fund prospectuses, the Guaranteed Account and Fixed Account appendices and the Guaranteed Account prospectus. LIMITS ON AVAILABILITY OF OPTIONS. Some funds or fixed interest options may be unavailable through your contract or in your state. We may add, withdraw or substitute funds, subject to the conditions in your contract and compliance with regulatory requirements. In the case of a substitution, the new fund may have different fees and charges than the fund it replaced. LIMITS ON HOW MANY INVESTMENT OPTIONS YOU MAY SELECT. Although there is currently no limit, we reserve the right to limit the number of investment options you may select at any one time or during the life of the contract. For purposes of determining any limit, each subaccount and each guaranteed term of the Guaranteed Account, or an investment in the Fixed Account in certain contracts, will be considered an investment option. ADDITIONAL RISKS OF INVESTING IN THE FUNDS (MIXED AND SHARED FUNDING). "Shared funding" occurs when shares of a fund, which the subaccounts buy for variable annuity contracts, are also bought by other insurance companies for their variable annuity contracts. "Mixed funding" occurs when shares of a fund, which the subaccounts buy for variable annuity contracts, are bought for variable life insurance contracts issued by us or other insurance companies. o Shared--bought by more than one company. o Mixed--bought for annuities and life insurance. It is possible that a conflict of interest may arise due to mixed and/or shared funding, which could adversely impact the value of a fund. For example, if a conflict of interest occurred and one of the subaccounts withdrew its investment in a fund, the fund may be forced to sell its securities at disadvantageous prices, causing its share value to decrease. Each fund's Board of Directors or Trustees will monitor events to identify any conflicts which may arise and to determine what action, if any, should be taken to address such conflicts. -------------------------------------------------------------------------------- TRANSFERS AMONG INVESTMENT OPTIONS -------------------------------------------------------------------------------- You may transfer amounts among the available subaccounts. During the accumulation phase we allow you 12 free transfers each account year. We reserve the right to charge $10 for each additional transfer. We currently do not impose this charge. During the income phase we allow you four free transfers each account year. We reserve the right to charge $10 for each additional transfer. We currently do not impose this charge. Transfers from the Guaranteed Account are subject to certain restrictions and may be subject to a market value adjustment. Transfers from the Fixed Account are subject to certain restrictions and transfers into the Fixed Account from any of the other investment options are not allowed. Transfers must be made in accordance with the terms of your contract. 14 ILIAC Variable Annuity - 134789 TRANSFER REQUESTS. Requests may be made in writing, by telephone or, where applicable, electronically. LIMITS IMPOSED BY THE UNDERLYING FUND. Orders for the purchase of fund shares may be subject to acceptance by the fund. We reserve the right to reject, without prior notice, any allocation of a purchase payment to a subaccount if the subaccount's investment in the corresponding fund is not accepted by the fund for any reason. LIMITS ON FREQUENT OR DISRUPTIVE TRANSFERS. The Contract is not designed to serve as a vehicle for frequent trading. Frequent trading can disrupt management of a fund and raise its expenses through: 1) increased trading and transaction costs; 2) forced and unplanned portfolio turnover; 3) lost opportunity costs; and 4) large asset swings that decrease the fund's ability to provide maximum investment return to all contract owners. This in turn can have an adverse effect on fund performance. Accordingly, individuals or organizations that use market-timing investment strategies and make frequent transfers should not purchase the Contract. We monitor transfer activity. With regard to frequent transfers, in the event that an individual's or organization's transfer activity: 1. exceeds our then-current monitoring standard for frequent trading; 2. is identified as problematic by an underlying fund even if the activity does not exceed our monitoring standard for frequent trading; or 3. if we determine in our sole discretion that such transfer activity may not be in the best interests of other contract owners, we will take the following actions to deter such activity. Upon the first violation, we will send a one time warning letter. A second violation will result in the suspension of trading privileges via facsimile, telephone, email and internet, and limit trading privileges to submission by regular U.S. mail for a period of six months. At the end of that period, trading privileges will be reinstated. If there is another violation after such rights are reinstated, we will suspend such privileges permanently. We will notify you in writing if we take any of these actions. With regard to transfers initiated by a market-timing organization or individual or other party authorized to give transfer instructions on behalf of multiple contract owners, we will also take the following actions, without prior notice: (1) not accepting transfer instructions from an agent acting on behalf of more than one contract owner; and (2) not accepting preauthorized transfer forms from market timers or other entities acting on behalf of more than one contract owner at a time. Our current definition of frequent trading is more than one purchase and sale of the same underlying fund within a 30-day period. We do not count transfers associated with scheduled dollar cost averaging or automatic rebalancing programs, transfers involving funds that affirmatively permit short-term trading in their fund shares, movement between such funds and the Money Market Portfolio, and transfers involving certain de minimis amounts when determining whether trading activity is excessive. We reserve the right to modify our general standard, or the standard as it may apply to a particular fund, at any time without prior notice, depending on, among other factors, the needs of the underlying fund(s), the best interests of contract owners and fund investors and/or state or federal regulatory requirements. If we modify such standard, it will be applied uniformly to all contract owners or, as applicable, to all contract owners investing in the underlying fund. In addition, if, due to the excessive dollar amounts of trades, even though not within our then current definition of frequent trading, an individual's or organization's transfer activity is determined, in our sole discretion, to be disruptive, we will take the same actions as are described above to limit frequent transfers. 15 ILIAC Variable Annuity - 134789 The Company does not allow waivers to the above policy. Our excessive trading policy may not be completely successful in preventing market timing or excessive trading activity. VALUE OF YOUR TRANSFERRED DOLLARS. The value of amounts transferred into or out of subaccounts will be based on the subaccount unit values next determined after we receive your transfer request in good order at our Customer Service Center or, if you are participating in the dollar cost averaging or account rebalancing programs, after your scheduled transfer or reallocation. TELEPHONE AND ELECTRONIC TRANSACTIONS: SECURITY MEASURES. To prevent fraudulent use of telephone and electronic transactions (including, but not limited to, internet transactions), we have established security procedures. These include recording calls on our toll-free telephone lines and requiring use of a personal identification number (PIN) to execute transactions. You are responsible for keeping your PIN and account information confidential. If we fail to follow reasonable security procedures, we may be liable for losses due to unauthorized or fraudulent telephone or other electronic transactions. We are not liable for losses resulting from telephone or electronic instructions we believe to be genuine. If a loss occurs when we rely on such instructions, you will bear the loss. THE DOLLAR COST AVERAGING PROGRAM. Dollar cost averaging is an investment strategy whereby you purchase fixed dollar amounts of an investment at regular intervals, regardless of price. Under this program a fixed dollar amount is automatically transferred from certain subaccounts, the Guaranteed Account or Fixed Account to any of the other subaccounts. A market value adjustment will not be applied to dollar cost averaging transfers from a guaranteed term of the Guaranteed Account during participation in the dollar cost averaging program. If such participation is discontinued, we will automatically transfer the remaining balance in that guaranteed term to another guaranteed term of the same duration, unless you initiate a transfer into another investment option. In either case a market value adjustment will apply. See Appendix I for more information about dollar cost averaging from the Guaranteed Account. If dollar cost averaging is stopped with respect to amounts invested in the Fixed Account, the remaining balance will be transferred to the money market subaccount. Dollar cost averaging neither ensures a profit nor guarantees against loss in a declining market. You should consider your financial ability to continue purchases through periods of low price levels. There is no additional charge for this program and transfers made under this program do not count as transfers when determining the number of free transfers that may be made each account year. For additional information about this program, contact your sales representative or call us at the number listed in "Contract Overview--Questions: Contacting the Company." In certain states purchase payments allocated to the Fixed Account may require participation in the dollar cost averaging program. THE ACCOUNT REBALANCING PROGRAM. Account rebalancing allows you to reallocate your account value to match the investment allocations you originally selected. Only account values invested in the subaccounts may be rebalanced. We automatically reallocate your account value annually (or more frequently as we allow). Account rebalancing neither ensures a profit nor guarantees against loss in a declining market. There is no additional charge for this program and transfers made under this program do not count as transfers when determining the number of free transfers that may be made each account year. You may participate in this program by completing the account rebalancing section of your application or by contacting us at the address and/or number listed in "Contract Overview--Questions: Contacting the Company." 16 ILIAC Variable Annuity - 134789 -------------------------------------------------------------------------------- TRANSFERS BETWEEN OPTION PACKAGES -------------------------------------------------------------------------------- You may transfer from one option package to another. o Transfers must occur on an account anniversary. o A written request for the transfer must be received by us within 60 days before an account anniversary. o The following minimum account values need to be met:
--------------------------------------------------------------------------------------------------------------------- TRANSFERS TO TRANSFERS TO OPTION PACKAGE I OPTION PACKAGES II OR III --------------------------------------------------------------------------------------------------------------------- MINIMUM ACCOUNT VALUE Non-Qualified: Qualified: Non-Qualified: Qualified: $15,000 $1,500 $5,000 $1,500 ---------------------------------------------------------------------------------------------------------------------
o You will receive a new contract schedule page upon transfer. o Only one option package may be in effect at any time
------------------------------------------------------------------------------------------------------------------------ TRANSFERS TO TRANSFERS TO TRANSFERS TO OPTION PACKAGE I OPTION PACKAGE II OPTION PACKAGE III ------------------------------------------------------------------------------------------------------------------------ DEATH BENEFIT(1): DEATH BENEFIT(1): DEATH BENEFIT(1): o The sum of all purchase o The sum of all purchase o The sum of all purchase payments made, adjusted for payments made, adjusted for payments made, adjusted for amounts withdrawn or applied to amounts withdrawn or applied to amounts withdrawn or applied an income phase payment option as an income phase payment option to an income phase payment of the claim date, will continue as of the claim date, will option as of the claim date, to be calculated from the account continue to be calculated from will continue to be calculated effective date. the account effective date. from the account effective o The "step-up value" under o If transferring from Option date. Option Packages II and III will Package I, the "step-up value" o If transferring from Option terminate on the new schedule will be calculated beginning on Package I, the "step-up value" effective date. the new schedule effective date. will be calculated beginning o The "roll-up value" under o If transferring from Option on the new schedule effective Option Package III will terminate Package III, the "step-up date. on the new schedule effective value" will continue to be o If transferring from Option date. calculated from the date Package II, the "step-up calculated under Option Package value" will continue to be III. calculated from the date o The "roll-up value" under calculated under Option Option Package III will Package II. terminate on the new schedule o The "roll-up value" will be effective date. calculated beginning on the new schedule effective date. ------------------------------------------------------------------------------------------------------------------------ NURSING HOME WAIVER(2): NURSING HOME WAIVER(2): NURSING HOME WAIVER(2): o The availability of the waiver o If transferring from Option o If transferring from Option of the early withdrawal charge Package I, the waiting period Package I, the waiting period under the Nursing Home Waiver under the Nursing Home Waiver under the Nursing Home Waiver will terminate on the new will begin to be measured from will begin to be measured from schedule effective date. the new schedule effective date. the new schedule effective o If transferring from Option date. Package III, the waiting period o If transferring from Option will have been satisfied on the Package II, the waiting period new schedule effective date. will have been satisfied on the new schedule effective date. ------------------------------------------------------------------------------------------------------------------------ FREE WITHDRAWALS(3): FREE WITHDRAWALS(3): FREE WITHDRAWALS(3): o If transferring from Option o If transferring from Option o The cumulative to 30% Package III, any available free Package III, any available free available free withdrawal withdrawal amount in excess of withdrawal amount in excess of amount will begin to be 10% will be lost as of the new 10% will be lost as of the new calculated as of the new schedule effective date. schedule effective date. schedule effective date. ------------------------------------------------------------------------------------------------------------------------
17 ILIAC Variable Annuity - 134789 (1) See "Death Benefit." (2) See "Fees--Nursing Home Waiver." (3) See "Fees--Free Withdrawals." -------------------------------------------------------------------------------- FEES -------------------------------------------------------------------------------- The following repeats and adds to information provided in the "Fees and Expenses" section. Please review both sections for information on fees. TRANSACTION FEES EARLY WITHDRAWAL CHARGE Withdrawals of all or a portion of your account value may be subject to a charge. In the case of a partial withdrawal where you request a specified dollar amount, the amount withdrawn from your account will be the amount you specified plus adjustment for any applicable early withdrawal charge. AMOUNT. A percentage of the purchase payments that you withdraw. The percentage will be determined by the early withdrawal charge schedule that applies to your account. EARLY WITHDRAWAL CHARGE SCHEDULES -------------------------------------------------------------------------- FOR CONTRACTS ISSUED OUTSIDE OF THE STATE OF NEW YORK -------------------------------------------------------------------------- ALL CONTRACTS (EXCEPT ROTH IRA CONTRACTS ISSUED BEFORE SEPTEMBER 20, 2000): -------------------------------------------------------------------------- Years from Receipt of Purchase Payment Early Withdrawal Charge Less than 2 7% 2 or more but less than 4 6% 4 or more but less than 5 5% 5 or more but less than 6 4% 6 or more but less than 7 3% 7 or more 0% -------------------------------------------------------------------------- ROTH IRA CONTRACTS ISSUED BEFORE SEPTEMBER 20, 2000: -------------------------------------------------------------------------- Completed Account Years Early Withdrawal Charge Less than 1 5% 1 or more but less than 2 4% 2 or more but less than 3 3% 3 or more but less than 4 2% 4 or more but less than 5 1% 5 or more 0% -------------------------------------------------------------------------- FOR CONTRACTS ISSUED IN THE STATE OF NEW YORK -------------------------------------------------------------------------- ALL CONTRACTS -------------------------------------------------------------------------- Years from Receipt of Purchase Payment Early Withdrawal Charge Less than 1 7% 1 or more but less than 2 6% 2 or more but less than 3 5% 3 or more but less than 4 4% 4 or more but less than 5 3% 5 or more but less than 6 2% 6 or more but less than 7 1% 7 or more 0% -------------------------------------------------------------------------- 18 ILIAC Variable Annuity - 134789 PURPOSE. This is a deferred sales charge. It reimburses us for some of the sales and administrative expenses associated with the contract. If our expenses are greater than the amount we collect for the early withdrawal charge, we may use any of our corporate assets, including potential profit that may arise from the mortality and expense risk charge, to make up any difference. FIRST IN, FIRST OUT. The early withdrawal charge is calculated separately for each purchase payment withdrawn. For purposes of calculating your early withdrawal charge, we consider that your first purchase payment to the account (first in) is the first you withdraw (first out). Examples: Where the early withdrawal charge is based on the number of years since the purchase payment was received, if your initial purchase payment was made three years ago, we will deduct an early withdrawal charge equal to 6% (4% for a Contract issued in NY) of the portion of that purchase payment withdrawn. For certain Roth IRA contracts where the early withdrawal charge is based on the number of completed account years, if your initial purchase payment was made three years ago, we will deduct an early withdrawal charge equal to 2% of the portion of that purchase payment withdrawn. In each case the next time you make a withdrawal we will assess the early withdrawal charge, if any, against the portion of the first purchase payment you did not withdraw and/or subsequent purchase payments to your account in the order they were received. Earnings may be withdrawn after all purchase payments have been withdrawn. There is no early withdrawal charge for withdrawal of earnings. FREE WITHDRAWALS. There is no early withdrawal charge if, during each account year, the amount withdrawn is 10% or less of your account value on the later of the date we established your account or the most recent anniversary of that date. Under Option Package III, any unused percentage of the 10% free withdrawal amount shall carry forward into successive account years, up to a maximum 30% of your account value. The free withdrawal amount will be adjusted for amounts withdrawn under a systematic distribution option or taken as a required minimum distribution during the account year. WAIVER. The early withdrawal charge is waived for purchase payments withdrawn if the withdrawal is: o Used to provide income phase payments to you; o Paid due to the annuitant's death during the accumulation phase in an amount up to the sum of purchase payments made, minus the total of all partial withdrawals, amounts applied to an income phase payment option and deductions made prior to the annuitant's death; o Paid upon a full withdrawal where your account value is $2,500 or less and no part of the account has been withdrawn during the prior 12 months; o Taken because of the election of a systematic distribution option (see "Systematic Distribution Options"); 19 ILIAC Variable Annuity - 134789 o Applied as a rollover to certain Roth IRAs issued by us or an affiliate; o If approved in your state, taken under a qualified contract, when the amount withdrawn is equal to the minimum distribution required by the Tax Code for your account calculated using a method permitted under the Tax Code and agreed to by us (including required minimum distributions using the ECO systematic distribution option (see "Systematic Distribution Options")); or o Paid upon termination of your account by us (see "Other Topics -- Involuntary Terminations"). NURSING HOME WAIVER. Under Option Packages II and III, you may withdraw all or a portion of your account value without an early withdrawal charge if: o More than one account year has elapsed since the schedule effective date; o The withdrawal is requested within three years of the annuitant's admission to a licensed nursing care facility (in Oregon there is no three year limitation period and in New Hampshire non-licensed facilities are included); and The annuitant has spent at least 45 consecutive days in such nursing care facility. We will not waive the early withdrawal charge if the annuitant was in a nursing care facility for at least one day during the two week period immediately preceding or following the schedule effective date. It will also not apply to contracts where prohibited by state law. See the "New York Contracts" section of this prospectus for contracts issued in New York. ANNUAL MAINTENANCE FEE MAXIMUM AMOUNT. $30.00 WHEN/HOW. Each year during the accumulation phase we deduct this fee from your account value. We deduct it on your account anniversary and at the time of full withdrawal. It is deducted proportionally from each investment option. PURPOSE. This fee reimburses us for our administrative expenses relating to the establishment and maintenance of your account. ELIMINATION. We will not deduct the annual maintenance fee if your account value is $50,000 or more on the date this fee is to be deducted. TRANSFER CHARGE AMOUNT. During the accumulation phase we currently allow you 12 free transfers each account year. We reserve the right to charge $10 for each additional transfer. We currently do not impose this charge. PURPOSE. This charge reimburses us for administrative expenses associated with transferring your dollars among investment options. REDEMPTION FEES. If applicable, we may deduct the amount of any redemption fees imposed by the underlying portfolios as a result of withdrawals, transfers or other fund transactions you initiate. Redemption fees, if any, are separate and distinct from any transaction charges or other charges deducted from your contract value. 20 ILIAC Variable Annuity - 134789 FEES DEDUCTED FROM INVESTMENTS IN THE SEPARATE ACCOUNT MORTALITY AND EXPENSE RISK CHARGE MAXIMUM AMOUNT. During the accumulation phase the amount of this charge, on an annual basis, is equal to the following percentages of your account value invested in the subaccounts: ------------------------------------------------------------ OPTION PACKAGE I OPTION PACKAGE II ------------------------------------------------------------ 0.80% 1.10% ------------------------------------------------------------ During the income phase this charge, on an annual basis, is equal to 1.25% of amounts invested in the subaccounts. See "The Income Phase - Charges Deducted." WHEN/HOW. We deduct this charge daily from the subaccounts corresponding to the funds you select. We do not deduct this charge from any fixed interest option. PURPOSE. This charge compensates us for the mortality and expense risks we assume under the contract. o The mortality risks are those risks associated with our promise to make lifetime income phase payments based on annuity rates specified in the contract. o The expense risk is the risk that the actual expenses we incur under the contract will exceed the maximum costs that we can charge. If the amount we deduct for this charge is not enough to cover our mortality costs and expenses under the contract, we will bear the loss. We may use any excess to recover distribution costs relating to the contract and as a source of profit. We expect to make a profit from this charge. ADMINISTRATIVE EXPENSE CHARGE MAXIMUM AMOUNT. During the accumulation phase the amount of this charge, on an annual basis, is equal to the following percentages of your account value invested in the subaccounts: ------------------------------------------------------------ OPTION PACKAGE I OPTION PACKAGE II OPTION PACKAGE III ------------------------------------------------------------ 0.15% 0.15% 0.15% ------------------------------------------------------------ There is currently no administrative expense charge during the income phase. We reserve the right, however, to charge an administrative expense charge of up to 0.25% during the income phase. WHEN/HOW. If imposed, we deduct this charge daily from the subaccounts corresponding to the funds you select. We do not deduct this charge from the fixed interest options. If we are imposing this charge when you enter the income phase, the charge will apply to you during the entire income phase. PURPOSE. This charge helps defray our administrative expenses. PREMIUM BONUS OPTION CHARGE MAXIMUM AMOUNT. 0.50%, but only if you elect the premium bonus option. WHEN/HOW. We deduct this charge daily from the subaccounts corresponding to the funds you select. We may also deduct this charge from amounts allocated to the fixed interest options. This charge is deducted for the first seven account years during the accumulation phase and, if applicable, the income phase. PURPOSE. This charge compensates us for the cost associated with crediting the premium bonus to your account on purchase payments made during the first account year. See "Premium Bonus Option - Premium Bonus Option Charge." ING GET U.S. CORE PORTFOLIO GUARANTEE CHARGE MAXIMUM AMOUNT. 0.50%, but only if you elect to invest in the GET Fund investment option. 21 ILIAC Variable Annuity - 134789 WHEN/HOW. We deduct this charge daily during the guarantee period from amounts allocated to the GET Fund investment option. PURPOSE. This charge compensates us for the cost of providing a guarantee of accumulation unit values of the GET Fund subaccount. See "Investment Options-Variable Investment Options." REDUCTION OR ELIMINATION OF CERTAIN FEES When sales of the contract are made to individuals or a group of individuals in a manner that results in savings of sales or administrative expenses, we may reduce or eliminate the early withdrawal charge, annual maintenance fee, mortality and expense risk charge, administrative expense charge or premium bonus option charge. Our decision to reduce or eliminate any of these fees will be based on one or more of the following: o The size and type of group to whom the contract is issued; o The amount of expected purchase payments; o A prior or existing relationship with the Company, such as being an employee or former employee of the Company or one of our affiliates, receiving distributions or making transfers from other contracts issued by us or one of our affiliates or transferring amounts held under qualified retirement plans sponsored by us or one of our affiliates; o The type and frequency of administrative and sales services provided; or o The level of annual maintenance fee and early withdrawal charges. In the case of an exchange of another contract issued by us or one of our affiliates where the early withdrawal charge has been waived, the early withdrawal charge for certain contracts offered by this prospectus may be determined based on the dates purchase payments were received in the prior contract. The reduction or elimination of any of these fees will not be unfairly discriminatory against any person and will be done according to our rules in effect at the time the contract is issued. We reserve the right to change these rules from time to time. The right to reduce or eliminate any of these fees may be subject to state approval. FUND EXPENSES Each fund deducts management fees from the amounts allocated to the funds. In addition, each fund deducts other expenses which may include service fees which are used to compensate service providers, including the Company and its affiliates, for administrative and contract owner services provided on behalf of the fund. Furthermore, certain funds deduct a distribution or 12b-1 fee, which is used to finance any activity that is primarily intended to result in the sale of fund shares. FOR A MORE COMPLETE DESCRIPTION OF THE FUNDS' FEES AND EXPENSES, REVIEW EACH FUND'S PROSPECTUS. The Company, or its U.S. affiliates, receives from each of the funds or the funds' affiliates varying levels and types of revenues with respect to each of the funds available through the Contract. In terms of total dollar amounts received, the greatest amount of revenue generally comes from assets allocated to funds managed by ING Investments, LLC or other Company affiliates, which funds may or may not also be sub-advised by another Company affiliate. Assets allocated to funds managed by a Company affiliate, Directed Services, Inc., for example, but which are sub-advised by unaffiliated third parties generally generate the next greatest amount of revenue. Finally, assets allocated to unaffiliated funds generally generate the least amount of revenue. 22 ILIAC Variable Annuity - 134789 TYPES OF REVENUE RECEIVED FROM AFFILIATED FUNDS Affiliated funds are (a) funds managed by ING Investments, LLC or other Company affiliates, which may or may not also be sub-advised by a Company affiliate; and (b) funds managed by a Company affiliate but which are sub-advised by unaffiliated third parties. Revenues received by the Company from affiliated funds include: o Service fees that are deducted from fund assets and included with the "Other Expenses" column of the Fund Expense Table contained in this prospectus. o For certain share classes, the Company may also receive compensation paid out of 12b-1 fees that are deducted from fund assets and disclosed in the "Distribution and/or Service (12b-1) Fees" column of the Fund Expense Table. o Additionally, the Company receives the other revenues from affiliated funds and/or their affiliates which may be based either on an annual percentage of average net assets held in the fund by the Company or a percentage of the management fees shown in the Fund Expense Table. These revenues may be received as cash payments or according to a variety of financial accounting techniques which are used to allocate revenue and profits across ING businesses. For funds sub-advised by unaffiliated third parties, once the sub-adviser has been paid, the adviser may share a portion of the remaining management fee with the Company. Because sub-advisory fees vary by sub-adviser, varying amounts of revenue are retained by the affiliated investment adviser and ultimately shared with the Company. TYPES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS Revenues received from each of the unaffiliated funds or their affiliates are based on an annual percentage of the average net assets held in that fund by the Company. Some unaffiliated funds or their affiliates pay us more than others and some of the amounts we receive may be significant. Revenues received by the Company from unaffiliated funds include: o For certain funds, compensation paid from 12b-1 fees or service fees that are deducted from fund assets. Any such fees deducted from fund assets are disclosed in the Fund Expense Table. o We may also receive additional payments for administrative, recordkeeping or other services which we provide to the funds or their affiliates or as an incentive for us to make the funds available through the Contract. These additional payments are not disclosed in the Fund Expense Table. These additional payments may be used by us to finance distribution of the Contract. The following table shows the unaffiliated fund families which have funds currently offered through the Contract, ranked according to total dollar amounts they paid to the Company or its affiliates in 2004: Fidelity Variable Insurance Products Portfolio Oppenheimer Variable Account Funds If the revenues received from affiliated funds were included in the table above, payments to the Company or its affiliates by ING Investments, LLC and other Company affiliates would be at the top of the list. Management personnel of the Company, and of its affiliated broker-dealers, may receive additional compensation if the overall amount of investments in funds advised by the Company or affiliates meets certain target levels or increases over time. Compensation for certain management personnel, including sales management personnel, may be enhanced if the overall amount of investments in the contracts and other products issued or advised by the Company or its affiliates increases over time. Certain sales management personnel may also receive compensation that is a specific percentage of the commissions paid to distributors or of purchase payments received under the contracts. 23 ILIAC Variable Annuity - 134789 Certain funds are designated as "Master-Feeder" Funds. Funds offered in a Master-Feeder structure (such as the American Funds) may have higher fees and expenses than a fund that invests directly in debt and equity securities. PREMIUM AND OTHER TAXES MAXIMUM AMOUNT. Some states and municipalities charge a premium tax on annuities. These taxes currently range from 0% to 4%, depending upon the jurisdiction. WHEN/HOW. We reserve the right to deduct a charge for premium taxes from your account value or from purchase payments to the account at any time, but not before there is a tax liability under state law. For example, we may deduct a charge for premium taxes at the time of a complete withdrawal or we may reflect the cost of premium taxes in our income phase payment rates when you commence income phase payments. We will not deduct a charge for any municipal premium tax of 1% or less, but we reserve the right to reflect such an expense in our annuity purchase rates. IN ADDITION, WE RESERVE THE RIGHT TO ASSESS A CHARGE FOR ANY FEDERAL TAXES DUE AGAINST THE SEPARATE ACCOUNT. SEE "TAXATION." -------------------------------------------------------------------------------- YOUR ACCOUNT VALUE -------------------------------------------------------------------------------- During the accumulation phase your account value at any given time equals: o The current dollar value of amounts invested in the subaccounts; plus o The current dollar values of amounts invested in the fixed interest options, including interest earnings to date. SUBACCOUNT ACCUMULATION UNITS. When you select a fund as an investment option, your account dollars invest in "accumulation units" of the Variable Annuity Account B subaccount corresponding to that fund. The subaccount invests directly in the fund shares. The value of your interests in a subaccount is expressed as the number of accumulation units you hold multiplied by an "accumulation unit value," as described below, for each unit. ACCUMULATION UNIT VALUE (AUV). The value of each accumulation unit in a subaccount is called the accumulation unit value or AUV. The AUV varies daily in relation to the underlying fund's investment performance. The value also reflects deductions for fund fees and expenses, the mortality and expense risk charge, the administrative expense charge, the premium bonus option charge (if any) and, for amounts allocated to the ING GET U.S. Core Portfolio subaccount only, the GET Fund guarantee charge. We discuss these deductions in more detail in "Fee Table" and "Fees." VALUATION. We determine the AUV every normal business day after the close of the New York Stock Exchange (normally at 4:00 p.m. Eastern Time). At that time we calculate the current AUV by multiplying the AUV last calculated by the "net investment factor" of the subaccount. The net investment factor measures the investment performance of the subaccount from one valuation to the next. Current AUV = Prior AUV x Net Investment Factor NET INVESTMENT FACTOR. The net investment factor for a subaccount between two consecutive valuations equals the sum of 1.0000 plus the net investment rate. NET INVESTMENT RATE. The net investment rate is computed according to a formula that is equivalent to the following: 24 ILIAC Variable Annuity - 134789 o The net assets of the fund held by the subaccount as of the current valuation; minus o The net assets of the fund held by the subaccount at the preceding valuation; plus or minus o Taxes or provisions for taxes, if any, due to subaccount operations (with any federal income tax liability offset by foreign tax credits to the extent allowed); divided by o The total value of the subaccount's units at the preceding valuation; minus o A daily deduction for the mortality and expense risk charge and the administrative expense charge, if any, and any other fees deducted from investments in the separate account, such as the premium bonus option charge and guarantee charges for the ING GET U.S. Core Portfolio. See "Fees." The net investment rate may be either positive or negative. HYPOTHETICAL ILLUSTRATION. As a hypothetical illustration assume that your initial purchase payment to a qualified contract is $5,000 and you direct us to invest $3,000 in Fund A and $2,000 in Fund B. Also assume that you did not elect the premium bonus option and on the day we receive the purchase payment the applicable AUVs after the next close of business of the New York Stock Exchange (normally at 4:00 p.m. Eastern Time) are $10 for Subaccount A and $20 for Subaccount B. Your account is credited with 300 accumulation units of Subaccount A and 100 accumulation units of Subaccount B. STEP 1: You make an initial purchase payment of $5000. STEP 2: A. You direct us to invest $3,000 in Fund A. The purchase payment purchases 300 accumulation units of Subaccount A ($3,000 divided by the current $10 AUV). B. You direct us to invest $2,000 in Fund B. The purchase payment purchases 100 accumulation units of Subaccount B ($2,000 divided by the current $20 AUV). STEP 3: The separate account purchases shares of the applicable funds at the then current market value (net asset value or NAV). ------------------------------------------ $5,000 Purchase Payment ------------------------------------------ STEP 1 | V ------------------------------------------ ING Life Insurance and Annuity Company ------------------------------------------ STEP 2 | V ------------------------------------------ Variable Annuity Account B ------------------------------------------ Subaccount A Subaccount B 300 accumulation 100 units accumulation Etc. units ------------------------------------------ | STEP 3 | V V ------ ------ Mutual Mutual Fund A Fund B ------ ------ 25 ILIAC Variable Annuity - 134789 Each fund's subsequent investment performance, expenses and charges, and the daily charges deducted from the subaccount, will cause the AUV to move up or down on a daily basis. PURCHASE PAYMENTS TO YOUR ACCOUNT. If all or a portion of your initial purchase payment is directed to the subaccounts, it will purchase subaccount accumulation units at the AUV next computed after our acceptance of your application as described in "Purchase and Rights." Subsequent purchase payments or transfers directed to the subaccounts will purchase subaccount accumulation units at the AUV next computed following our receipt of the purchase payment or transfer request in good order. The AUV will vary day to day. -------------------------------------------------------------------------------- WITHDRAWALS -------------------------------------------------------------------------------- You may withdraw all or a portion of your account value at any time during the accumulation phase. If you participate in the contract through a 403(b) plan, certain restrictions apply. See "Restrictions on Withdrawals from 403(b) Plan Accounts." STEPS FOR MAKING A WITHDRAWAL: o Select the withdrawal amount. (1) Full Withdrawal: You will receive, reduced by any required withholding tax, your account value allocated to the subaccounts, the Guaranteed Account (plus or minus any applicable market value adjustment) and the Fixed Account, minus any applicable early withdrawal charge, annual maintenance fee and forfeited premium bonus. (2) Partial Withdrawal (Percentage or Specified Dollar Amount): You will receive, reduced by any required withholding tax, the amount you specify, subject to the value available in your account. However, the amount actually withdrawn from your account will be adjusted by any applicable early withdrawal charge, any positive or negative market value adjustment for amounts withdrawn from the Guaranteed Account and any forfeited premium bonus. See Appendices I and II and the Guaranteed Account prospectus for more information about withdrawals from the Guaranteed Account and the Fixed Account. o Select investment options. If you do not specify this, we will withdraw dollars in the same proportion as the values you hold in the various investment options from each investment option in which you have an account value. o Properly complete a disbursement form and deliver it to our Customer Service Center. RESTRICTIONS ON WITHDRAWALS FROM 403(B) PLAN ACCOUNTS. Under Section 403(b) contracts the withdrawal of salary reduction contributions and earnings on such contributions is generally prohibited prior to the participant's death, disability, attainment of age 59 1/2, separation from service or financial hardship. See "Taxation." CALCULATION OF YOUR WITHDRAWAL. We determine your account value every normal business day after the close of the New York Stock Exchange (normally at 4:00 p.m. Eastern Time). We pay withdrawal amounts based on your account value as of the next valuation after we receive a request for withdrawal in good order at our Customer Service Center. DELIVERY OF PAYMENT. Payments for withdrawal requests will be made in accordance with SEC requirements. Normally, your withdrawal amount will be sent no later than seven calendar days following our receipt of your properly completed disbursement form in good order. 26 ILIAC Variable Annuity - 134789 REINSTATING A FULL WITHDRAWAL. Within 30 days after a full withdrawal, if allowed by law and the contract, you may elect to reinstate all or a portion of your withdrawal. We must receive any reinstated amounts within 60 days of the withdrawal. We reserve the right, however, to accept a reinstatement election received more than 30 days after the withdrawal and accept proceeds received more than 60 days after the withdrawal. We will credit your account for the amount reinstated based on the subaccount values next computed following our receipt of your request and the amount to be reinstated. We will credit the amount reinstated proportionally for annual maintenance fees and early withdrawal charges imposed at the time of withdrawal. We will deduct from the amount reinstated any annual maintenance fee which fell due after the withdrawal and before the reinstatement. We will reinstate in the same investment options and proportions in place at the time of withdrawal. If you withdraw amounts from a series of the ING GET U.S. Core Portfolio and then elect to reinstate them, we will reinstate them in an ING GET U.S. Core Portfolio series that is then accepting deposits, if one is available. If one is not available, we will reallocate your GET amounts among other investment options in which you invested, on a pro-rata basis. The reinstatement privilege may be used only once. Special rules apply to reinstatement of amounts withdrawn from the Guaranteed Account (see Appendix I and the Guaranteed Account prospectus). We will not credit your account for market value adjustments or any premium bonus forfeited that we deducted at the time of your withdrawal or refund any taxes that were withheld. Seek competent advice regarding the tax consequences associated with reinstatement. -------------------------------------------------------------------------------- SYSTEMATIC DISTRIBUTION OPTIONS -------------------------------------------------------------------------------- Systematic distribution options may be exercised at any time during the accumulation phase. FEATURES OF A SYSTEMATIC DISTRIBUTION OPTION. A systematic distribution option allows you to receive regular payments from your contract without moving into the income phase. By remaining in the accumulation phase, you retain certain rights and investment flexibility not available during the income phase. The following systematic distribution options may be available: o SWO--SYSTEMATIC WITHDRAWAL OPTION. SWO is a series of automatic partial withdrawals from your account based on a payment method you select. Consider this option if you would like a periodic income while retaining investment flexibility for amounts accumulated in the account. o ECO--ESTATE CONSERVATION OPTION. ECO offers the same investment flexibility as SWO, but is designed for those who want to receive only the minimum distribution that the Tax Code requires each year. Under ECO we calculate the minimum distribution amount required by law, generally at age 70 1/2, and pay you that amount once a year. ECO is not available under nonqualified contracts. An early withdrawal charge will not be deducted from and a market value adjustment will not be applied to any part of your account value paid under an ECO. o LEO--LIFE EXPECTANCY OPTION. LEO provides for annual payments for a number of years equal to your life expectancy or the life expectancy of you and a designated beneficiary. It is designed to meet the substantially equal periodic payment exception to the 10% premature distribution penalty under Tax Code section 72. See "Taxation." OTHER SYSTEMATIC DISTRIBUTION OPTIONS. We may add additional systematic distribution options from time to time. You may obtain additional information relating to any of the systematic distribution options from your sales representative or by calling us at the number listed in "Contract Overview--Questions: Contacting the Company." SYSTEMATIC DISTRIBUTION OPTION AVAILABILITY. Withdrawals under a systematic distribution option are limited to your free withdrawal amount. See "Fees - Early Withdrawal Charge - Free Withdrawals." If allowed by applicable law, we may discontinue the availability of one or more of the systematic distribution options for new elections at any time and/or to change the terms of future elections. 27 ILIAC Variable Annuity - 134789 ELIGIBILITY FOR A SYSTEMATIC DISTRIBUTION OPTION. To determine if you meet the age and account value criteria and to assess terms and conditions that may apply, contact your sales representative or the Company at the number listed in "Contract Overview--Questions: Contacting the Company." TERMINATING A SYSTEMATIC DISTRIBUTION OPTION. You may revoke a systematic distribution option at any time by submitting a written request to our Customer Service Center. ECO, once revoked, may not, unless allowed under the Tax Code, be elected again. CHARGES AND TAXATION. When you elect a systematic distribution option your account value remains in the accumulation phase and subject to the charges and deductions described in the "Fees" and "Fee Table" sections. Taking a withdrawal under a systematic distribution option, or later revoking the option, may have tax consequences. If you are concerned about tax implications, consult a qualified tax adviser before electing an option. -------------------------------------------------------------------------------- DEATH BENEFIT -------------------------------------------------------------------------------- This section provides information about the death benefit during the accumulation phase. For death benefit information applicable to the income phase, see "The Income Phase." TERMS TO UNDERSTAND ACCOUNT YEAR/ACCOUNT ANNIVERSARY: A period of 12 months measured from the date we established your account and each anniversary of this date. Account anniversaries are measured from this date. ANNUITANT(S): The person(s) on whose life(lives) or life expectancy(ies) the income phase payments are based. BENEFICIARY(IES): The person(s) or entity(ies) entitled to receive a death benefit under the contract. CLAIM DATE: The date proof of death and the beneficiary's right to receive the death benefit are received in good order at our Customer Service Center. Please contact our Customer Service Center to learn what information is required for a request for payment of the death benefit to be in good order. CONTRACT HOLDER (YOU/YOUR): The contract holder of an individually owned contract or the certificate holder of a group contract. The contract holder and annuitant may be the same person. SCHEDULE EFFECTIVE DATE: The date an option package and benefits become effective. The initial schedule effective date equals the date we established your account. Thereafter, this date can occur only on an account anniversary. DURING THE ACCUMULATION PHASE WHEN IS A DEATH BENEFIT PAYABLE? During the accumulation phase a death benefit is payable when the contract holder or the annuitant dies. If there are joint contract holders, the death benefit is payable when either one dies. WHO RECEIVES THE DEATH BENEFIT? If you would like certain individuals or entities to receive the death benefit when it becomes payable, you may name them as your beneficiaries. However, if you are a joint contract holder and you die, the beneficiary will automatically be the surviving joint contract holder. In this circumstance any other beneficiary you named will be treated as the primary or contingent beneficiary, as originally named, of the surviving joint contract holder. The surviving joint contract holder may change the beneficiary designation. If you die and no beneficiary exists, the death benefit will be paid in a lump sum to your estate. 28 ILIAC Variable Annuity - 134789 DESIGNATING YOUR BENEFICIARY. You may designate a beneficiary on your application or by contacting your sales representative or us as indicated in "Contract Overview--Questions: Contacting the Company." DEATH BENEFIT AMOUNT. The death benefit depends upon the option package in effect on the date the annuitant dies.
----------------------------------------------------------------------------------------------------------------- OPTION PACKAGE I OPTION PACKAGE II OPTION PACKAGE III ----------------------------------------------------------------------------------------------------------------- DEATH BENEFIT ON DEATH The greater of: The greatest of: The greatest of: OF THE ANNUITANT: (1) The sum of all (1) The sum of all (1) The sum of all purchase payments, purchase payments, purchase payments, adjusted for amounts adjusted for amounts adjusted for amounts withdrawn or applied withdrawn or applied withdrawn or applied to an income phase to an income phase to an income phase payment option as of payment option as of payment option as of the claim date; or the claim date; or the claim date; or (2) The account value* (2) The account value* (2) The account value* on the claim date. on the claim date; or on the claim date; or (4) The "step-up (3) The "step-up value"* (as described value"* (as below) on the claim described below) on date. the claim date; or (4) The "roll-up value"* (as described below) on the claim date.** -----------------------------------------------------------------------------------------------------------------
* For purposes of calculating the death benefit, the account value, step-up value and roll-up value will be reduced by the amount of any premium bonus credited to your account after or within 12 months of the date of death. See "Premium Bonus Option--Forfeiture." ** See the "New York Contracts" section of this prospectus for details about the Option Package III death benefit for contracts issued in New York. STEP-UP VALUE. On the schedule effective date, the step-up value is equal to the greater of: o The account value; or o The step-up value, if any, calculated on the account anniversary prior to the schedule effective date, adjusted for purchase payments made and amounts withdrawn or applied to an income phase payment option during the prior account year. Thereafter, once each year on the anniversary of the schedule effective date until the anniversary immediately preceding the annuitant's 85th birthday or death, whichever is earlier, the step-up value is equal to the greater of: o The step-up value most recently calculated, adjusted for purchase payments made and amounts withdrawn or applied to an income phase payment option during the prior account year; or o The account value on that anniversary of the schedule effective date. On each anniversary of the schedule effective date after the annuitant's 85th birthday, the step-up value shall be equal to the step-up value on the anniversary immediately preceding the annuitant's 85th birthday, adjusted for purchase payments made and amounts withdrawn or applied to an income phase payment option since that anniversary. On the claim date, the step-up value shall equal the step-up value on the anniversary of the schedule effective date immediately preceding the annuitant's death, adjusted for purchase payments made and amounts withdrawn or applied to an income phase payment option since that anniversary. For purposes of calculating the death benefit, the step-up value will be reduced by the amount of any premium bonus credited to your account after or within 12 months of the date of death. See "Premium Bonus Option--Forfeiture." ROLL-UP VALUE. On the schedule effective date, the roll-up value is equal to the account value. Thereafter, once each year on the anniversary of the schedule effective date until the anniversary immediately preceding the annuitant's 76th birthday or death, whichever is earlier, the roll-up value is equal to the roll-up value most recently calculated multiplied by a factor of 1.05, adjusted for purchase payments made and amounts withdrawn or applied to an income phase payment option during the prior account year. The roll-up value may not exceed 200% of the account value on the schedule effective date, adjusted for purchase payments made and amounts withdrawn or applied to an income phase payment option since that date. 29 ILIAC Variable Annuity - 134789 On each anniversary of the schedule effective date after the annuitant's 76th birthday, the roll-up value shall be equal to the roll-up value on the anniversary immediately preceding the annuitant's 76th birthday, adjusted for purchase payments made and amounts withdrawn or applied to an income phase payment option since that anniversary. On the claim date, the roll-up value shall equal the roll-up value on the anniversary of the schedule effective date immediately preceding the annuitant's death, adjusted for purchase payments made and amounts withdrawn or applied to an income phase payment option since that anniversary. For purposes of calculating the death benefit, the roll-up value will be reduced by the amount of any premium bonus credited to your account after or within 12 months of the date of death. See "Premium Bonus Option--Forfeiture." THE "ROLL-UP VALUE" IS NOT AVAILABLE ON CONTRACTS ISSUED IN THE STATE OF NEW YORK. SEE THE "NEW YORK CONTRACTS" SECTION OF THIS PROSPECTUS FOR DETAILS ABOUT THE OPTION PACKAGE III DEATH BENEFIT FOR CONTRACTS ISSUED IN NEW YORK. ADJUSTMENT. For purposes of determining the death benefit, the adjustment for purchase payments made will be dollar for dollar. The adjustment for amounts withdrawn or applied to an income phase payment option will be proportionate, reducing the sum of all purchase payments made, the step-up value and the roll-up value in the same proportion that the account value was reduced on the date of the withdrawal or application to an income phase payment option. DEATH BENEFIT GREATER THAN THE ACCOUNT VALUE. Notwithstanding which option package is selected, on the claim date, if the amount of the death benefit is greater than the account value, the amount by which the death benefit exceeds the account value will be deposited and allocated to the money market subaccount available under the contract, thereby increasing the account value available to the beneficiary to an amount equal to the death benefit. Prior to the election of a method of payment of the death benefit by the beneficiary, the account value will remain in the account and continue to be affected by the investment performance of the investment option(s) selected. The beneficiary has the right to allocate or transfer any amount to any available investment option (subject to a market value adjustment, as applicable). The amount paid to the beneficiary will equal the adjusted account value on the day the payment is processed. Unless your beneficiary elects otherwise, the distribution will be made into an interest bearing account, backed by our general account, that is accessed by the beneficiary through a checkbook feature. The beneficiary may access death benefit proceeds at any time without penalty. Interest earned on this account may be less than interest paid on other settlement options. DEATH BENEFIT AMOUNTS IN CERTAIN CASES IF A SPOUSAL BENEFICIARY CONTINUES THE ACCOUNT FOLLOWING THE DEATH OF THE CONTRACT HOLDER/ANNUITANT. If a spousal beneficiary continues the account at the death of a contract holder who was also the annuitant, the spousal beneficiary becomes the annuitant. The option package in effect at the death of the contract holder will also apply to the spousal beneficiary, unless later changed by the spousal beneficiary. The premium bonus option charge, if any, will continue, unless the premium bonus was forfeited when calculating the account value, step-up value and roll-up value on the death of the original contract holder/annuitant. The amount of the death benefit payable at the death of a spousal beneficiary who has continued the account shall be determined under the option package then in effect, except that: 30 ILIAC Variable Annuity - 134789 (1) In calculating the sum of all purchase payments, adjusted for amounts withdrawn or applied to an income phase payment option, the account value on the claim date following the original contract holder's/annuitant's death shall be treated as the spousal beneficiary's initial purchase payment; (2) In calculating the step-up value, the step-up value on the claim date following the original contract holder's/annuitant's death shall be treated as the spousal beneficiary's initial step-up value; and (3) In calculating the roll-up value, the roll-up value on the claim date following the original contract holder's/annuitant's death shall be treated as the initial roll-up value. IF THE CONTRACT HOLDER IS NOT THE ANNUITANT. Under nonqualified contracts only the death benefit described above under Option Packages I, II and III will not apply if a contract holder (including a spousal beneficiary who has continued the account) who is not also the annuitant dies. In these circumstances the amount paid will be equal to the account value on the date the payment is processed, plus or minus any market value adjustment. An early withdrawal charge may apply to any full or partial payment of this death benefit. BECAUSE THE DEATH BENEFIT IN THESE CIRCUMSTANCES EQUALS THE ACCOUNT VALUE, PLUS OR MINUS ANY MARKET VALUE ADJUSTMENT, A CONTRACT HOLDER WHO IS NOT ALSO THE ANNUITANT SHOULD SERIOUSLY CONSIDER WHETHER OPTION PACKAGES II AND III ARE SUITABLE FOR THEIR CIRCUMSTANCES. If the spousal beneficiary who is the annuitant continues the account at the death of the contract holder who was not the annuitant, the annuitant will not change. The option package in effect at the death of the contract holder will also apply to the spousal beneficiary, unless later changed by the spousal beneficiary, and the death benefit payable at the spousal beneficiary's death shall be determined under the option package then in effect. GUARANTEED ACCOUNT. For amounts held in the Guaranteed Account, see Appendix I for a discussion of the calculation of the death benefit. DEATH BENEFIT--METHODS OF PAYMENT FOR QUALIFIED CONTRACTS. Under a qualified contract if the annuitant dies the beneficiary may choose one of the following three methods of payment: o Apply some or all of the account value, plus or minus any market value adjustment, to any of the income phase payment options (subject to the Tax Code distribution rules (see "Taxation Required Minimum Distributions")); o Receive, at any time, a lump-sum payment equal to all or a portion of the account value, plus or minus any market value adjustment; or o Elect SWO, ECO or LEO (described in "Systematic Distribution Options"), provided the election would satisfy the Tax Code minimum distribution rules. PAYMENTS FROM A SYSTEMATIC DISTRIBUTION OPTION. If the annuitant was receiving payments under a systematic distribution option and died before the Tax Code's required beginning date for minimum distributions, payments under the systematic distribution option will stop. The beneficiary, or contract holder on behalf of the beneficiary, may elect a systematic distribution option provided the election is permitted under the Tax Code minimum distribution rules. If the annuitant dies after the required beginning date for minimum distributions, payments will continue as permitted under the Tax Code minimum distribution rules, unless the option is revoked. DISTRIBUTION REQUIREMENTS. Subject to Tax Code limitations, a beneficiary may be able to defer distribution of the death benefit. Death benefit payments must satisfy the distribution rules in Tax Code Section 401(a)(9). See "Taxation." 31 ILIAC Variable Annuity - 134789 FOR NONQUALIFIED CONTRACTS. (1) If you die and the beneficiary is your surviving spouse, or if you are a non-natural person and the annuitant dies and the beneficiary is the annuitant's surviving spouse, then the beneficiary becomes the successor contract holder. In this circumstance the Tax Code does not require distributions under the contract until the successor contract holder's death. As the successor contract holder, the beneficiary may exercise all rights under the account and has the following options: (a) Continue the contract in the accumulation phase; (b) Elect to apply some or all of the account value, plus or minus any market value adjustment, to any of the income phase payment options; or (c) Receive at any time a lump-sum payment equal to all or a portion of the account value, plus or minus any market value adjustment. If you die and are not the annuitant, an early withdrawal charge will apply if a lump sum is elected. (2) If you die and the beneficiary is not your surviving spouse, he or she may elect option 1(b) or option 1(c) above (subject to the Tax Code distribution rules). See "Taxation--Required Minimum Distributions." In this circumstance the Tax Code requires any portion of the account value, plus or minus any market value adjustment, not distributed in installments over the beneficiary's life or life expectancy, beginning within one year of your death, must be paid within five years of your death. See "Taxation." (3) If you are a natural person but not the annuitant and the annuitant dies, the beneficiary may elect option 1(b) or 1(c) above. If the beneficiary does not elect option 1(b) within 60 days from the date of death, the gain, if any, will be included in the beneficiary's income in the year the annuitant dies. PAYMENTS FROM A SYSTEMATIC DISTRIBUTION OPTION. If the contract holder or annuitant dies and payments were made under SWO, payments will stop. A beneficiary, however, may elect to continue SWO. TAXATION. In general, payments received by your beneficiary after your death are taxed to the beneficiary in the same manner as if you had received those payments. Additionally, your beneficiary may be subject to tax penalties if he or she does not begin receiving death benefit payments within the time-frame required by the Tax Code. See "Taxation." -------------------------------------------------------------------------------- THE INCOME PHASE -------------------------------------------------------------------------------- During the income phase you stop contributing dollars to your account and start receiving payments from your accumulated account value. INITIATING PAYMENTS. At least 30 days prior to the date you want to start receiving payments you must notify us in writing of all of the following: o Payment start date; 32 ILIAC Variable Annuity - 134789 o Income phase payment option (see the income phase payment options table in this section); o Payment frequency (i.e., monthly, quarterly, semi-annually or annually); o Choice of fixed, variable or a combination of both fixed and variable payments; and o Selection of an assumed net investment rate (only if variable payments are elected). Your account will continue in the accumulation phase until you properly initiate income phase payments. Once an income phase payment option is selected it may not be changed. WHAT AFFECTS PAYMENT AMOUNTS? Some of the factors that may affect the amount of your income phase payments include your age, gender, account value, the income phase payment option selected, the number of guaranteed payments (if any) selected and whether you select fixed, variable or a combination of both fixed and variable payments and, for variable payments, the assumed net investment rate selected. FIXED PAYMENTS. Amounts funding fixed income phase payments will be held in the Company's general account. The amount of fixed payments does not vary with investment performance over time. VARIABLE PAYMENTS. Amounts funding your variable income phase payments will be held in the subaccount(s) you select. Not all subaccounts available during the accumulation phase may be available during the income phase. Payment amounts will vary depending upon the performance of the subaccounts you select. For variable income phase payments, you must select an assumed net investment rate. ASSUMED NET INVESTMENT RATE. If you select variable income phase payments, you must also select an assumed net investment rate of either 5% or 3 1/2%. If you select a 5% rate, your first income phase payment will be higher, but subsequent payments will increase only if the investment performance of the subaccounts you selected is greater than 5% annually, after deduction of fees. Payment amounts will decline if the investment performance is less than 5%, after deduction of fees. If you select a 3 1/2% rate, your first income phase payment will be lower and subsequent payments will increase more rapidly or decline more slowly depending upon changes to the net investment rate of the subaccounts you selected. For more information about selecting an assumed net investment rate, call us for a copy of the SAI. See "Contract Overview--Questions: Contacting the Company." MINIMUM PAYMENT AMOUNTS. The income phase payment option you select must result in: o A first income phase payment of at least $50; and o Total yearly income phase payments of at least $250. If your account value is too low to meet these minimum payment amounts, you will receive one lump-sum payment. Unless prohibited by law, we reserve the right to increase the minimum payment amount based on increases reflected in the Consumer Price Index-Urban (CPI-U) since July 1, 1993. RESTRICTIONS ON START DATES AND THE DURATION OF PAYMENTS. Income phase payments may not begin during the first account year, or, unless we consent, later than the later of: (a) The first day of the month following the annuitant's 85th birthday; or (b) The tenth anniversary of the last purchase payment made to your account. Income phase payments will not begin until you have selected an income phase payment option. Failure to select an income phase payment option by the later of the annuitant's 85th birthday or the tenth anniversary of your last purchase payment may have adverse tax consequences. You should consult with a qualified tax adviser if you are considering delaying the selection of an income phase payment option before the later of these dates. For qualified contracts only, income phase payments may not extend beyond: 33 ILIAC Variable Annuity - 134789 (a) The life of the annuitant; (b) The joint lives of the annuitant and beneficiary; (c) A guaranteed period greater than the annuitant's life expectancy; or (d) A guaranteed period greater than the joint life expectancies of the annuitant and beneficiary. When income phase payments start the age of the annuitant plus the number of years for which payments are guaranteed may not exceed 95. If income phase payments start when the annuitant is at an advanced age, such as over 85, it is possible that the contract will not be considered an annuity for federal tax purposes. See "Taxation" for further discussion of rules relating to income phase payments. CHARGES DEDUCTED. o If variable income phase payments are selected, we make a daily deduction for mortality and expense risks from amounts held in the subaccounts. Therefore, if you choose variable income phase payments and a nonlifetime income phase payment option, we still make this deduction from the subaccounts you select, even though we no longer assume any mortality risks. The amount of this charge, on an annual basis, is equal to 1.25% of amounts invested in the subaccounts. See "Fees--Mortality and Expense Risk Charge." o There is currently no administrative expense charge during the income phase. We reserve the right, however, to charge an administrative expense charge of up to 0.25% during the income phase. If imposed, we deduct this charge daily from the subaccounts corresponding to the funds you select. If we are imposing this charge when you enter the income phase, the charge will apply to you during the entire income phase. See "Fees--Administrative Expense Charge." o If you elected the premium bonus option and variable income phase payments, we may also deduct the premium bonus option charge. We deduct this charge daily during the first seven account years from the subaccounts corresponding to the funds you select. If fixed income phase payments are selected, this charge may be reflected in the income phase payment rates. See "Fees--Premium Bonus Option Charge." DEATH BENEFIT DURING THE INCOME PHASE. The death benefits that may be available to a beneficiary are outlined in the income phase payment options table below. If a lump-sum payment is due as a death benefit, we will make payment within seven calendar days after we receive proof of death acceptable to us and the request for the payment in good order at our Customer Service Center. Unless your beneficiary elects otherwise, the distribution will be made into an interest bearing account, backed by our general account, that is accessed by the beneficiary through a checkbook feature. The beneficiary may access death benefit proceeds at any time without penalty. Interest earned on this account may be less than interest paid on other settlement options. If continuing income phase payments are elected, the beneficiary may not elect to receive a lump sum at a future date unless the income phase payment option specifically allows a withdrawal right. We will calculate the value of any death benefit at the next valuation after we receive proof of death and a request for payment. Such value will be reduced by any payments made after the date of death. BENEFICIARY RIGHTS. A beneficiary's right to elect an income phase payment option or receive a lump-sum payment may have been restricted by the contract holder. If so, such rights or options will not be available to the beneficiary. PARTIAL ENTRY INTO THE INCOME PHASE. You may elect an income phase payment option for a portion of your account dollars, while leaving the remaining portion invested in the accumulation phase. Whether the Tax Code considers such payments taxable as income phase payments or as withdrawals is currently unclear; therefore, you should consult with a qualified tax adviser before electing this option. The same or different income phase payment option may be selected for the portion left invested in the accumulation phase. 34 ILIAC Variable Annuity - 134789 TAXATION. To avoid certain tax penalties, you or your beneficiary must meet the distribution rules imposed by the Tax Code. Additionally, when selecting an income phase payment option, the Tax Code requires that your expected payments will not exceed certain durations. See "Taxation" for additional information. PAYMENT OPTIONS. The following table lists the income phase payment options and accompanying death benefits available during the income phase. We may offer additional income phase payment options under the contract from time to time. Once income phase payments begin the income phase payment option selected may not be changed. TERMS TO UNDERSTAND: ANNUITANT(S): The person(s) on whose life expectancy(ies) the income phase payments are based. BENEFICIARY(IES): The person(s) or entity(ies) entitled to receive a death benefit under the contract. -------------------------------------------------------------------------------- LIFETIME INCOME PHASE PAYMENT OPTIONS -------------------------------------------------------------------------------- Life Income LENGTH OF PAYMENTS: For as long as the annuitant lives. It is possible that only one payment will be made if the annuitant dies prior to the second payment's due date. DEATH BENEFIT--NONE: All payments end upon the annuitant's death. -------------------------------------------------------------------------------- Life Income-- LENGTH OF PAYMENTS: For as long as the annuitant lives, Guaranteed with payments guaranteed for your choice of 5 to 30 years Payments or as otherwise specified in the contract. DEATH BENEFIT--PAYMENT TO THE BENEFICIARY: If the annuitant dies before we have made all the guaranteed payments, we will continue to pay the beneficiary the remaining payments, unless the beneficiary elects to receive a lump-sum payment equal to the present value of the remaining guaranteed payments. -------------------------------------------------------------------------------- Life Income-- LENGTH OF PAYMENTS: For as long as either annuitant Two Lives lives. It is possible that only one payment will be made if both annuitants die before the second payment's due date. CONTINUING PAYMENTS: When you select this option you choose for: (a) 100%, 66 2/3 % or 50% of the payment to continue to the surviving annuitant after the first death; or (b) 100% of the payment to continue to the annuitant on the second annuitant's death, and 50% of the payment to continue to the second annuitant on the annuitant's death. DEATH BENEFIT--NONE: All payments end upon the death of both annuitants. -------------------------------------------------------------------------------- Life Income-- LENGTH OF PAYMENTS: For as long as either annuitant Two Lives-- lives, with payments guaranteed from 5 to 30 years or as Guaranteed otherwise specified in the contract. Payments CONTINUING PAYMENTS: 100% of the payment to continue to the surviving annuitant after the first death. DEATH BENEFIT--PAYMENT TO THE BENEFICIARY: If both annuitants die before we have made all the guaranteed payments, we will continue to pay the beneficiary the remaining payments, unless the beneficiary elects to receive a lump-sum payment equal to the present value of the remaining guaranteed payments. -------------------------------------------------------------------------------- Life Income-- Cash LENGTH OF PAYMENTS: For as long as the annuitant lives. Refund Option (limited DEATH BENEFIT--PAYMENT TO THE BENEFICIARY: Following the availability--fixed annuitant's death, we will pay a lump sum payment equal payments only) to the amount originally applied to the income phase payment option (less any applicable premium tax) and less the total amount of income payments paid. -------------------------------------------------------------------------------- 35 ILIAC Variable Annuity - 134789 -------------------------------------------------------------------------------- Life Income--Two LENGTH OF PAYMENTS: For as long as either annuitant Lives--Cash Refund lives. Option (limited availability--fixed CONTINUING PAYMENTS: 100% of the payment to continue payments only) after the first death. DEATH BENEFIT--PAYMENT TO THE BENEFICIARY: When both annuitants die we will pay a lump-sum payment equal to the amount applied to the income phase payment option (less any applicable premium tax) and less the total amount of income payments paid. -------------------------------------------------------------------------------- NONLIFETIME INCOME PHASE PAYMENT OPTION -------------------------------------------------------------------------------- Nonlifetime-- LENGTH OF PAYMENTS: You may select payments for 5 to 30 Guaranteed years (15 to 30 years if you elected the premium bonus Payments option). In certain cases a lump-sum payment may be requested at any time (see below). DEATH BENEFIT--PAYMENT TO THE BENEFICIARY: If the annuitant dies before we make all the guaranteed payments, we will continue to pay the beneficiary the remaining payments, unless the beneficiary elects to receive a lump-sum payment equal to the present value of the remaining guaranteed payments. We will not impose any early withdrawal charge. -------------------------------------------------------------------------------- LUMP-SUM PAYMENT: If the "Nonlifetime--Guaranteed Payments" option is elected with variable payments, you may request at any time that all or a portion of the present value of the remaining payments be paid in one lump sum. Any such lump-sum payments will be treated as a withdrawal during the accumulation phase and we will charge any applicable early withdrawal charge. See "Fees--Early Withdrawal Charge." Lump-sum payments will be sent within seven calendar days after we receive the request for payment in good order at the Customer Service Center. -------------------------------------------------------------------------------- CALCULATION OF LUMP-SUM PAYMENTS: If a lump-sum payment is available under the income phase payment options above, the rate used to calculate the present value of the remaining guaranteed payments is the same rate we used to calculate the income phase payments (i.e., the actual fixed rate used for fixed payments or the 3 1/2% or 5% assumed net investment rate used for variable payments). -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- NEW YORK CONTRACTS -------------------------------------------------------------------------------- Some of the fees, features and benefits of the contract are different if it is issued in the State of New York. This section identifies the different features and benefits and replaces the portions of this prospectus that contain the differences with information that relates specifically to New York contacts. This section should be read in conjunction with the rest of this prospectus. The fees that apply to New York contracts are described in the "Fee Table" and "Fees" sections of this prospectus. CONTRACT OVERVIEW - CONTRACT FACTS. The following information about New York contracts replaces the "Contract Facts" subsection in the "Contract Overview" section of this prospectus: OPTION PACKAGES. There are three option packages available under the contract. You select an option package at the time of application. Each option package is distinct. The differences are summarized as follows: 36 ILIAC Variable Annuity - 134789
--------------------------------------------------------------------------------------------------------------------------- OPTION PACKAGE I OPTION PACKAGE II OPTION PACKAGE III --------------------------------------------------------------------------------------------------------------------------- Mortality and Expense Risk Charge(1): 0.80% 1.10% 1.25% --------------------------------------------------------------------------------------------------------------------------- Death Benefit(2) on The greater of: The greatest of: The greatest of: Death of the (1) The sum of all (1) The sum of all (1) The sum of all Annuitant(3): purchase payments, purchase payments, purchase payments, adjusted for amounts adjusted for amounts adjusted for amounts withdrawn or applied withdrawn or applied withdrawn or applied to an income phase to an income phase to an income phase payment option as of payment option as of payment option as of the claim date; or the claim date; or the claim date; or (2) The account value (2) The account value (2) The account value on the claim date. on the claim date; or on the claim date; or (3) The "step-up (3) The "step-up value" value" on the claim on the claim date.(4) date. --------------------------------------------------------------------------------------------------------------------------- Minimum Initial Payment/ Non- Non- Non- Account Value(5): Qualified: Qualified: Qualified: Qualified: Qualified: Qualified: $15,000 $1,500 $5,000 $1,500 $5,000 $1,500 --------------------------------------------------------------------------------------------------------------------------- Free Withdrawals(6): 10% of your account 10% of your account 10% of your account value each account value each account value each account year, non-cumulative. year, non-cumulative. year, cumulative to a maximum 30%. --------------------------------------------------------------------------------------------------------------------------- Nursing Home Waiver --Waiver of Early Not Not Not Withdrawal Charge(7): Available Available Available ---------------------------------------------------------------------------------------------------------------------------
(1) See "Fee Table" and "Fees." (2) See "Death Benefit." If a death benefit is payable based on account value or step-up value, the death benefit will not include any premium bonus credited to the account after or within 12 months of the date of death. See "Premium Bonus Option--Forfeiture" in this section. (3) When a contract holder who is not the annuitant dies, the amount of the death benefit is not the same as shown above under each option package. See "Death Benefit." THEREFORE, CONTRACT HOLDERS WHO ARE NOT ALSO THE ANNUITANT SHOULD SERIOUSLY CONSIDER WHETHER OPTION PACKAGES II AND III ARE SUITABLE FOR THEIR CIRCUMSTANCES. (4) The death benefit is the same under Option Packages II and III for contracts issued in New York. THEREFORE, CONTRACT HOLDERS OF CONTRACTS ISSUED IN NEW YORK SHOULD SERIOUSLY CONSIDER WHETHER OPTION PACKAGE III IS SUITABLE FOR THEIR CIRCUMSTANCES. (5) See "Purchase and Rights." (6) See "Fees." (7) See "Fees." PREMIUM BONUS OPTION - FORFEITURE. The following information about New York contracts replaces the "Forfeiture" subsection in the "Premium Bonus Option" section of this prospectus: FORFEITURE. In each of the following circumstances all or part of a premium bonus credited to your account will be forfeited: o If you exercise your free look privilege and cancel your contract. See "Right to Cancel." o If a death benefit is payable based on account value or step-up value, but only the amount of any premium bonus credited to the account after or within 12 months of the date of death. See "Death Benefit--Premium Bonus." o If all or part of a purchase payment for which a premium bonus was credited is withdrawn during the first seven account years. The amount of the premium bonus forfeited will be calculated by: (1) Determining the amount of the premium bonus that is subject to forfeiture according to the following table: ------------------------------------------------------------------------- COMPLETED ACCOUNT YEARS AMOUNT OF PREMIUM AT THE TIME OF THE WITHDRAWAL BONUS SUBJECT TO FORFEITURE ------------------------------------------------------------------------- Less than 1 100% 1 or more but less than 2 100% 2 or more but less than 3 100% 3 or more but less than 4 100% 4 or more but less than 5 100% 5 or more but less than 6 75% 6 or more but less than 7 50% 7 or more 0% ------------------------------------------------------------------------- 37 ILIAC Variable Annuity - 134789 (2) And multiplying that amount by the same percentage as the amount withdrawn subject to the early withdrawal charge is to the total of all purchase payments made to the account during the first account year. The following hypothetical example illustrates how the forfeiture of premium bonus is calculated when you withdraw all or part of a purchase payment for which a premium bonus was credited during the first seven account years.
-------------------------------------------------------------------------------------------------------------------------------- PURCHASE PREMIUM ACCOUNT WITHDRAWAL DATE PAYMENT BONUS VALUE AMOUNT EXPLANATION -------------------------------------------------------------------------------------------------------------------------------- May 2, 2004 $100,000 $4,000 $104,000 -- You make a $100,000 initial purchase payment and we credit your account with a 4% ($4,000) premium bonus. Your beginning account value equals $104,000. -------------------------------------------------------------------------------------------------------------------------------- May 2, 2007 -- -- $120,000 $30,000 Assume that your account value grows to $120,000 over the next three years and you request a $30,000 withdrawal. $18,000 of that $30,000 will be subject to an early withdrawal charge ($30,000 minus $12,000 (the 10% free withdrawal amount, see "Fees--Free Withdrawals")) and you would pay a $720 early withdrawal charge (4% of $18,000). Additionally, 100% of the premium bonus is subject to forfeiture according to the table above, and because $18,000 is 18% of the $100,000 purchase payment made in the first account year, 18% of your $4,000 premium bonus, or $720, would be forfeited.* --------------------------------------------------------------------------------------------------------------------------------
* This example assumes that either Option Package I or II has been in effect since you purchased the contract. If Option Package III has been in effect since inception, none of the withdrawal would be subject to an early withdrawal charge because the 30% cumulative free withdrawal amount ($36,000) would be greater than the amount of the withdrawal. See "Fees--Free Withdrawals." Therefore, the withdrawal would not result in forfeiture of any of the premium bonus. DEATH BENEFIT - DEATH BENEFIT AMOUNT. The following information about New York contracts replaces the "Death Benefit" section of this prospectus: DEATH BENEFIT AMOUNT. The death benefit depends upon the option package in effect on the date the annuitant dies:
----------------------------------------------------------------------------------------------------------- OPTION PACKAGE I OPTION PACKAGE II OPTION PACKAGE III** ----------------------------------------------------------------------------------------------------------- DEATH BENEFIT ON The greater of: The greatest of: The greatest of: DEATH OF THE (1) The sum of all (1) The sum of all (1) The sum of all ANNUITANT: purchase payments, purchase payments, purchase payments, adjusted for adjusted for adjusted for amounts withdrawn amounts withdrawn amounts withdrawn or applied to an or applied to an or applied to an income phase income phase income phase payment option as payment option as payment option as of the claim date; of the claim date; of the claim date; or or or THE ACCOUNT VALUE* (2) The account (2) The account ON THE CLAIM DATE. value* on the claim value* on the date; or claim date; or THE "STEP-UP VALUE"* THE "STEP-UP VALUE"* (AS DESCRIBED BELOW) (AS DESCRIBED BELOW) ON THE CLAIM DATE. ON THE CLAIM DATE.** -----------------------------------------------------------------------------------------------------------
38 ILIAC Variable Annuity - 134789 * For purposes of calculating the death benefit, the account value and step-up value will be reduced by the amount of any premium bonus credited to your account after or within 12 months of the date of death. See "Premium Bonus Option--Forfeiture." ** FOR CONTRACTS ISSUED IN THE STATE OF NEW YORK, THE BENEFIT PAYABLE UPON THE DEATH OF THE ANNUITANT UNDER OPTION PACKAGE III IS THE SAME AS THAT DESCRIBED UNDER OPTION PACKAGE II. THEREFORE, CONTRACT HOLDERS OF CONTRACTS ISSUED IN NEW YORK SHOULD SERIOUSLY CONSIDER WHETHER OPTION PACKAGE III IS SUITABLE FOR THEIR CIRCUMSTANCES. STEP-UP VALUE. On the schedule effective date, the step-up value is equal to the greater of: o The account value; or o The step-up value, if any, calculated on the account anniversary prior to the schedule effective date, adjusted for purchase payments made and amounts withdrawn or applied to an income phase payment option during the prior account year. Thereafter, once each year on the anniversary of the schedule effective date until the anniversary immediately preceding the annuitant's 85th birthday or death, whichever is earlier, the step-up value is equal to the greater of: o The step-up value most recently calculated, adjusted for purchase payments made and amounts withdrawn or applied to an income phase payment option during the prior account year; or o The account value on that anniversary of the schedule effective date. On each anniversary of the schedule effective date after the annuitant's 85th birthday, the step-up value shall be equal to the step-up value on the anniversary immediately preceding the annuitant's 85th birthday, adjusted for purchase payments made and amounts withdrawn or applied to an income phase payment option since that anniversary. On the claim date, the step-up value shall equal the step-up value on the anniversary of the schedule effective date immediately preceding the annuitant's death, adjusted for purchase payments made and amounts withdrawn or applied to an income phase payment option since that anniversary. For purposes of calculating the death benefit, the step-up value will be reduced by the amount of any premium bonus credited to your account after or within 12 months of the date of death. See "Premium Bonus Option--Forfeiture" above. -------------------------------------------------------------------------------- TAXATION -------------------------------------------------------------------------------- INTRODUCTION This section discusses our understanding of current federal income tax laws affecting the contract. You should keep the following in mind when reading it: o Your tax position (or the tax position of the designated beneficiary, as applicable) determines federal taxation of amounts held or paid out under the contract; o Tax laws change. It is possible that a change in the future could affect contracts issued in the past; o This section addresses federal income tax rules and does not discuss federal estate and gift tax implications, state and local taxes, foreign taxes or any other tax provisions; and o We do not make any guarantee about the tax treatment of the contract or transactions involving the contract. 39 ILIAC Variable Annuity - 134789 We do not intend this information to be tax advice. For advice about the effect of federal income taxes or any other taxes on amounts held or paid out under the contract, consult a tax adviser. For more comprehensive information, contact the Internal Revenue Service (IRS). TYPES OF CONTRACTS: NON-QUALIFIED OR QUALIFIED The Contract may be purchased on a non-tax-qualified basis or purchased on a tax-qualified basis. Non-qualified contracts are purchased with after tax contributions and are not related to retirement plans that receive special income tax treatment under the Code. Qualified Contracts are designed for use by individuals whose premium payments are comprised solely of proceeds from and/or contributions under retirement plans that are intended to qualify as plans entitled to special income tax treatment under Sections 401(a), 403(a), 403(b), 408, 408A or 457 of the Code. The ultimate effect of federal income taxes on the amounts held under a Contract, or annuity payments, depends on the type of retirement plan, on the tax and employment status of the individual concerned, and on your tax status. In addition, certain requirements must be satisfied in purchasing a qualified Contract with proceeds from a tax-qualified plan in order to continue receiving favorable tax treatment. Some retirement plans are subject to additional distribution and other requirements that are not incorporated into our Contract. Because the Plan is not part of the Contract, we are not bound by any Plan's terms or conditions. Contract owners, participants and beneficiaries are responsible for determining that contributions, distributions and other transactions with respect to the Contract comply with applicable law. Therefore, you should seek competent legal and tax advice regarding the suitability of a Contract for your particular situation. The following discussion assumes that qualified Contracts are purchased with proceeds from and/or contributions under retirement plans that qualify for the intended special federal income tax treatment. TAXATION OF NON-QUALIFIED CONTRACTS TAXATION PRIOR TO DISTRIBUTION We believe that if you are a natural person you will generally not be taxed on increases in the value of a non-qualified Contract until a distribution or transfer occurs or until annuity payments begin. This assumes that the Contract will qualify as an annuity contract for federal income tax purposes. For these purposes, the agreement to assign or pledge any portion of the contract value generally will be treated as a distribution. In order to receive deferral of taxation, the following requirements must be satisfied: DIVERSIFICATION. Internal Revenue Code Section 817(h) requires investments of a variable account be adequately diversified in order for a contract to be treated as an annuity contract for federal income tax purposes. The Treasury has issued regulations which set the standards for measuring the adequacy of any diversification. To be adequately diversified, each variable investment option must meet certain tests. Each sub-account's corresponding fund has represented that it will meet the diversification standards that apply to your policy. We therefore believe that Variable Annuity Account B, through the subaccounts, will satisfy these diversification requirements. INVESTOR CONTROL. Although earnings under non-qualified contracts are generally not taxed until withdrawn, the Internal Revenue Service (IRS) has stated in published rulings that a variable contract owner will be considered the owner of separate account assets if the contract owner possesses incidents of investment control over the assets. In these circumstances, income and gains from the separate account assets would be currently includible in the variable contract owner's gross income. Future guidance regarding the extent to which owners could direct their investments among subaccounts without being treated as owners of the underlying assets of the separate account, may adversely affect the tax treatment of existing contracts. The Company therefore reserves the right to modify the contract as necessary to attempt to prevent the contract holder from being considered the federal tax owner of a pro rata share of the assets of the separate account. REQUIRED DISTRIBUTIONS. In order to be treated as an annuity contract for federal income tax purposes, the Code requires any non-qualified Contract to contain certain provisions specifying how your interest in the Contract will be distributed in the event of your death. The non-qualified Contracts contain provisions that are intended to comply with these Code requirements, although no regulations interpreting these requirements have yet been issued. We intend to review such distribution provisions and modify them if necessary to assure that they comply with the applicable requirements when such requirements are clarified by regulation or otherwise. See "Death Benefit Choices" for additional information on required distributions from non-qualified contracts. 40 ILIAC Variable Annuity - 134789 NON-NATURAL PERSONS. The owner of any annuity contract who is not a natural person generally must include in income any increase in the excess of the contract value over the "investment in the contract" (generally, the premiums or other consideration you paid for the contract less any nontaxable withdrawals) during the taxable year. There are some exceptions to this rule and a prospective contract owner that is not a natural person may wish to discuss these with a tax adviser. DELAYED ANNUITY STARTING DATE. If the Contract's annuity starting date occurs (or is scheduled to occur) at a time when the annuitant has reached an advanced age (e.g., age 85), it is possible that the Contract would not be treated as an annuity for federal income tax purposes. In that event, the income and gains under the Contract could be currently includible in your income. TAXATION OF DISTRIBUTIONS GENERAL. When a withdrawal from a non-qualified Contract occurs, the amount received will be treated as ordinary income subject to tax up to an amount equal to the excess (if any) of the contract value (unreduced by the amount of any surrender charge) immediately before the distribution over the contract owner's investment in the contract at that time. Investment in the contract is generally equal to the amount of all contributions to the contract, plus amounts previously included in your gross income as the result of certain loans, assignments or gifts, less the aggregate amount of non-taxable distributions previously made. The contract value that applies for this purpose is unclear in some respects. For example, the market value adjustment could increase the contract value that applies. Thus, the income on the Contracts could be higher than the amount of income that would be determined without regard to such benefits. As a result, you could have higher amounts of income than will be reported to you. In the case of a surrender under a non-qualified Contract, the amount received generally will be taxable only to the extent it exceeds the contract owner's cost basis in the contract. 10% PENALTY TAX. A distribution from a non-qualified Contract may be subject to a federal tax penalty equal to 10% of the amount treated as income. In general, however, there is no penalty on distributions: o made on or after the taxpayer reaches age 59 1/2; o made on or after the death of a contract owner; o attributable to the taxpayer's becoming disabled; or o made as part of a series of substantially equal periodic payments for the life (or life expectancy) of the taxpayer. Other exceptions may be applicable under certain circumstances and special rules may be applicable in connection with the exceptions enumerated above. A tax adviser should be consulted with regard to exceptions from the penalty tax. TAX-FREE EXCHANGES. Section 1035 of the Tax Code permits the exchange of a life insurance, endowment or annuity contract for an annuity contract on a tax-free basis. In such instance, the "investment in the contract" in the old contract will carry over to the new contract. You should consult with your tax advisor regarding procedures for making Section 1035 exchanges. 41 ILIAC Variable Annuity - 134789 If your Contract is purchased through a tax-free exchange of a life insurance, endowment or annuity contract that was purchased prior to August 14, 1982, then any distributions other than annuity payments will be treated, for tax purposes, as coming: o First, from any remaining "investment in the contract" made prior to August 14, 1982 and exchanged into the Contract; o Next, from any "income on the contract" attributable to the investment made prior to August 14, 1982; o Then, from any remaining "income on the contract;" and o Lastly, from any remaining "investment in the contract." The IRS has concluded that in certain instances, the partial exchange of a portion of one annuity contract for another contract will be tax-free. However, the IRS has reserved the right to treat transactions it considers abusive as ineligible for favorable partial 1035 tax-free exchange treatment. It is not certain whether the IRS would treat an immediate withdrawal or annuitization after a partial exchange as abusive. In addition, it is unclear how the IRS will treat a partial exchange from a life insurance, endowment, or annuity contract directly into an immediate annuity. Currently, we will accept a partial 1035 exchange from a non-qualified annuity into a deferred annuity or an immediate annuity as a tax-free transaction unless we believe that we would be expected to treat the transaction as abusive. We are not responsible for the manner in which any other insurance company, for tax reporting purposes, or the IRS, with respect to the ultimate tax treatment, recognizes or reports a partial exchange. We strongly advise you to discuss any proposed 1035 exchange with your tax advisor prior to proceeding with the transaction. TAXATION OF ANNUITY PAYMENTS. Although tax consequences may vary depending on the payment option elected under an annuity contract, a portion of each annuity payment is generally not taxed and the remainder is taxed as ordinary income. The non-taxable portion of an annuity payment is generally determined in a manner that is designed to allow you to recover your investment in the contract ratably on a tax-free basis over the expected stream of annuity payments, as determined when annuity payments start. Once your investment in the contract has been fully recovered, however, the full amount of each annuity payment is subject to tax as ordinary income. The tax treatment of partial annuitizations is unclear. We currently treat any partial annuitizations as withdrawals rather than as annuity payments. Please consult your tax adviser before electing a partial annuitization. DEATH BENEFITS. Amounts may be distributed from a Contract because of your death or the death of the annuitant. Generally, such amounts are includible in the income of the recipient as follows: (i) if distributed in a lump sum, they are taxed in the same manner as a surrender of the Contract, or (ii) if distributed under a payment option, they are taxed in the same way as annuity payments. Special rules may apply to amounts distributed after a Beneficiary has elected to maintain Contract value and receive payments. The Contract offers a death benefit (including the benefit provided by the earnings multiplier benefit rider) that may exceed the greater of the premium payments and the contract value. Certain charges are imposed with respect to the death benefit. It is possible that these charges (or some portion thereof) could be treated for federal tax purposes as a distribution from the Contract. ASSIGNMENTS AND OTHER TRANSFERS. A transfer, pledge or assignment of ownership of a Contract, or the designation of an annuitant or payee other than an owner, may result in certain tax consequences to you that are not discussed herein. A contract owner contemplating any such transfer, pledge, assignment, or designation or exchange, should consult a tax adviser as to the tax consequences. IMMEDIATE ANNUITIES. Under section 72 of the Tax Code, an immediate annuity means an annuity (1) which is purchased with a single premium, (2) with annuity payments starting within one year from the date of purchase, and (3) which provides a series of substantially equal periodic payments made annually or more frequently. Treatment as an immediate annuity will have significance with respect to exceptions from the 10% early withdrawal penalty, to contracts owned by non-natural persons, and for certain policy exchanges. 42 ILIAC Variable Annuity - 134789 MULTIPLE CONTRACTS. The tax law requires that all non-qualified deferred annuity contracts that are issued by a company or its affiliates to the same contract owner during any calendar year are treated as one non-qualified deferred annuity contract for purposes of determining the amount includible in such contract owner's income when a taxable distribution occurs. WITHHOLDING. We will withhold and remit to the U.S. government a part of the taxable portion of each distribution made under a Contract unless the distributee notifies us at or before the time of the distribution that he or she elects not to have any amounts withheld. Withholding will be mandatory, however, if the distributee fails to provide a valid taxpayer identification number or if we are notified by the IRS that the taxpayer identification number we have on file is incorrect. The withholding rates applicable to the taxable portion of periodic annuity payments are the same as the withholding rates generally applicable to payments of wages. In addition, a 10% withholding rate applies to the taxable portion of non-periodic payments. Regardless of whether you elect not to have federal income tax withheld, you are still liable for payment of federal income tax on the taxable portion of the payment. TAXATION OF QUALIFIED CONTRACTS GENERAL. The Contracts are designed for use with several types of qualified plans. The tax rules applicable to participants in these qualified plans vary according to the type of plan and the terms and conditions of the plan itself. Special favorable tax treatment may be available for certain types of contributions and distributions. Adverse tax consequences may result from: contributions in excess of specified limits; distributions before age 59 1/2 (subject to certain exceptions); distributions that do not conform to specified commencement and minimum distribution rules; and in other specified circumstances. Therefore, no attempt is made to provide more than general information about the use of the Contracts with the various types of qualified retirement plans. Contract owners, annuitants, and beneficiaries are cautioned that the rights of any person to any benefits under these qualified retirement plans may be subject to the terms and conditions of the plans themselves, regardless of the terms and conditions of the Contract, but we shall not be bound by the terms and conditions of such plans to the extent such terms contradict the Contract, unless the Company consents. You will not generally pay taxes on earnings from the annuity contract described in this prospectus until they are withdrawn. When an annuity contract is used to fund one of these tax qualified retirement arrangements, you should know that the annuity contract does not provide any additional tax deferral of earnings beyond the tax deferral provided by the tax-qualified retirement arrangement. Tax-qualified retirement arrangements under Tax Code sections 401(a), 401(k), 403(a), 403(b) or governmental 457 plans also generally defer payment of taxes on earnings until they are withdrawn (or in the case of a non-governmental 457 plan, paid or made available to you or a designated beneficiary). However, annuities do provide other features and benefits which may be valuable to you. You should discuss your alternatives with your local representative. DISTRIBUTIONS - GENERAL For qualified plans under Section 401(a) and 403(b), the Code requires that distributions generally must commence no later than the later of April 1 of the calendar year following the calendar year in which the plan participant for whose benefit the contract is purchased (i) reaches age 70 1/2 or (ii) retires, and must be made in a specified form or manner. If the plan participant is a "5 percent owner" (as defined in the Code), distributions generally must begin no later than April 1 of the calendar year following the calendar year in which the plan participant reaches age 70 1/2. For IRAs described in Section 408, distributions generally must commence no later than by April 1 of the calendar year following the calendar year in which the individual contract owner reaches age 70 1/2. Roth IRAs under Section 408A do not require distributions at any time before the contract owner's death. Please note that required minimum distributions under qualified Contracts may be subject to surrender charges and/or market value adjustment, in accordance with the terms of the Contract. This could affect the amount that must be taken from the Contract in order to satisfy required minimum distributions. DIRECT ROLLOVERS If the Contract is used in connection with a pension, profit-sharing, or annuity plan qualified under sections 401(a) or 403(a) of the Code, or is a tax-sheltered annuity under section 403(b) of the Code, or is used with an eligible deferred compensation plan that has a government sponsor and that is qualified under section 457(b), any "eligible rollover distribution" from the Contract will be subject to the direct rollover and mandatory withholding requirements. An eligible rollover distribution generally is any taxable distribution from a qualified pension plan under section 401(a) of the Code, qualified annuity plan under section 403(a) of the Code, section 403(b) annuity or custodial account, or an eligible section 457(b) deferred compensation plan that has a government sponsor, excluding certain amounts (such as minimum distributions required under section 401(a)(9) of the Code, distributions which are part of a "series of substantially equal periodic payments" made for life or a specified period of 10 years or more, or hardship distributions as defined in the tax law). 43 ILIAC Variable Annuity - 134789 Under these requirements, federal income tax equal to 20% of the eligible rollover distribution will be withheld from the amount of the distribution. Unlike withholding on certain other amounts distributed from the Contract, discussed below, you cannot elect out of withholding with respect to an eligible rollover distribution. However, this 20% withholding will not apply if, instead of receiving the eligible rollover distribution, you elect to have it directly transferred to certain qualified plans. Prior to receiving an eligible rollover distribution, you will receive a notice (from the plan administrator or us) explaining generally the direct rollover and mandatory withholding requirements and how to avoid the 20% withholding by electing a direct rollover. CORPORATE AND SELF-EMPLOYED PENSION AND PROFIT SHARING PLANS Section 401(a) of the Code permits corporate employers to establish various types of retirement plans for employees, and permits self-employed individuals to establish these plans for themselves and their employees. These retirement plans may permit the purchase of the Contracts to accumulate retirement savings under the plans. Adverse tax or other legal consequences to the plan, to the participant, or to both may result if this Contract is assigned or transferred to any individual as a means to provide benefit payments, unless the plan complies with all legal requirements applicable to such benefits before transfer of the Contract. Employers intending to use the Contract with such plans should seek competent advice. INDIVIDUAL RETIREMENT ANNUITIES - GENERAL Section 408 of the Code permits eligible individuals to contribute to an individual retirement program known as an "Individual Retirement Annuity" or "IRA." These IRAs are subject to limits on the amount that can be contributed, the deductible amount of the contribution, the persons who may be eligible, and the time when distributions commence. Also, distributions from certain other types of qualified retirement plans may be "rolled over" on a tax-deferred basis into an IRA. Also, amounts in another IRA or individual retirement account can be rolled over or transferred tax-free to an IRA. There are significant restrictions on rollover or transfer contributions from Savings Incentive Match Plans for Employees (SIMPLE), under which certain employers may provide contributions to IRAs on behalf of their employees, subject to special restrictions. Employers may establish Simplified Employee Pension (SEP) Plans to provide IRA contributions on behalf of their employees. If you make a tax-free rollover of a distribution from any of these IRAs, you may not make another tax-free rollover from the IRA within a 1-year period. Sales of the Contract for use with IRAs may be subject to special requirements of the IRS. INDIVIDUAL RETIREMENT ANNUITIES - DISTRIBUTIONS All distributions from a traditional IRA are taxed as received unless either one of the following is true: o The distribution is rolled over to a plan eligible to receive rollovers or to a nother traditional IRA or certain qualified plans in accordance with the Tax Code; or o You made after-tax contributions to the IRA. In this case, the distribution will be taxed according to rules detailed in the Tax Code. To avoid certain tax penalties, you and any designated beneficiary must also meet the required minimum distributions imposed by the Tax Code. The requirements do not apply to Roth IRA contracts while the owner is living. These rules may dictate the following: 44 ILIAC Variable Annuity - 134789 o Start date for distributions; o The time period in which all amounts in your account(s) must be distributed; and o Distribution amounts. Generally, you must begin receiving distributions from a traditional IRA by April 1 of the calendar year following the calendar year in which you attain age 70 1/2. We must pay out distributions from the contract over a period not extending beyond the following time periods: o Over your life or the joint lives of you and your designated beneficiary; or o Over a period not greater than your life expectancy or the joint life expectancies of you and your designated beneficiary. The amount of each periodic distribution must be calculated in accordance with IRS regulations. If you fail to receive the required minimum distribution for any tax year, a 50% excise tax may be imposed on the required amount that was not distributed. The following applies to the distribution of death proceeds under 408(b) and 408A (Roth IRA - See below) plans. Different distribution requirements apply after your death. If your death occurs on or after you begin receiving minimum distributions under the contract, distributions must be made at least as rapidly as under the method in effect at the time of your death. Code section 401(a)(9) provides specific rules for calculating the required minimum distributions at your death. The death benefit under the contract and also certain other contract benefits, such as living benefits, may affect the amount of the required minimum distribution that must be taken. If your death occurs before you begin receiving minimum distributions under the contract, your entire balance must be distributed by December 31 of the calendar year containing the fifth anniversary of the date of your death. For example, if you die on September 1, 2005, your entire balance must be distributed to the designated beneficiary by December 31, 2010. However, if distributions begin by December 31 of the calendar year following the calendar year of your death, and you have named a designated beneficiary, then payments may be made over either of the following time frames: o Over the life of the designated beneficiary; or o Over a period not extending beyond the life expectancy of the designated beneficiary. If the designated beneficiary is your spouse, distributions must begin on or before the later of the following: o December 31 of the calendar year following the calendar year of your death; or o December 31 of the calendar year in which you would have attained age 70 1/2. ROTH IRAS - GENERAL Section 408A of the Code permits certain eligible individuals to contribute to a Roth IRA. Contributions to a Roth IRA, which are subject to limits on the amount of the contributions and the persons who may be eligible to contribute, are not deductible, and must be made in cash or as a rollover or transfer from another Roth IRA or other IRA. Certain qualifying individuals may convert an IRA, SEP, or SIMPLE IRA, to a Roth IRA. Such rollovers and conversions are subject to tax, and other special rules may apply. If you make a tax-free rollover of a distribution from a Roth IRA to another Roth IRA, you may not make another tax-free rollover from the Roth IRA from which the rollover was made within a 1-year period. A 10% penalty may apply to amounts attributable to a conversion to a Roth IRA if the amounts are distributed during the five taxable years beginning with the year in which the conversion was made. 45 ILIAC Variable Annuity - 134789 ROTH IRAS - DISTRIBUTIONS A qualified distribution from a Roth IRA is not taxed when it is received. A qualified distribution is a distribution: o Made after the five-taxable year period beginning with the first taxable year for which a contribution was made to a Roth IRA of the owner; and o Made after you attain age 59 1/2, die, become disabled as defined in the Tax Code, or for a qualified first-time home purchase. If a distribution is not qualified, it will be taxable to the extent of the accumulated earnings. Under special ordering rules, a partial distribution will first be treated generally as a return of contributions which is not taxable and then as taxable accumulated earnings. TAX SHELTERED ANNUITIES - GENERAL The Contracts may be used by individuals whose premium payments are comprised solely of proceeds from and/or contributions under retirement plans that are intended to qualify as plans entitled to special income tax treatment under Code section 403(b) plans. Section 403(b) of the Code allows employees of certain Section 501(c)(3) organizations and public schools to exclude from their gross income the premium payments made, within certain limits, to a Contract that will provide an annuity for the employee's retirement. Special favorable tax treatment may be available for certain types of contributions and distributions. Adverse tax consequences may result from: contributions in excess of specified limits; distributions before age 59 1/2 (subject to certain exceptions); distributions that do not conform to specified commencement and minimum distribution rules; and other specified circumstances. 403(b) plans may be subject to additional distribution and other requirements that are not incorporated into our Contract. In addition, the Treasury proposed 403(b) regulations in November, 2004 which, if finalized, do not take effect until after 2005. These proposed regulations may not be relied upon until they become final. The proposed regulations include rules governing the ability of a 403(b) plan to be terminated which would entitle a participant to a distribution, a revocation of IRS Revenue Ruling 90-204 which would increase restrictions on a participant's right to transfer his or her 403(b) account, the imposition of withdrawal restrictions on non-salary reduction amounts, as well as other changes. As a result, no attempt is made to provide more than general information about the use of the Contracts with 403(b) plans. Contract owners, annuitants, and beneficiaries are cautioned that the rights of any person to any benefits under these 403(b) plans may be subject to the terms and conditions of the plans themselves, regardless of the terms and conditions of the Contract, but we are not bound by the terms and conditions of such plans to the extent such terms contradict the Contract. Contract owners, participants and beneficiaries are responsible for determining that contributions, distributions and other transactions with respect to the Contract comply with applicable law. You should seek competent legal and tax advice regarding the suitability of a Contract for your particular situation. The following discussion assumes that Contracts are purchased with proceeds from and/or contributions under 403(b) plans that qualify for the intended special federal income tax treatment. TAX SHELTERED ANNUITIES - LOANS Loans may be available if you purchased your contract in connection with a non-ERISA plan qualified under Section 403(b) of the Code ("TSA"). We do not currently permit loans under Section 403(b) Contracts that are subject to ERISA. If your Contract was issued in connection with a TSA and the terms of your plan permit, you may take a loan from us, using your surrender value as collateral for the loan. Loans are subject to the terms of the Contract, your 403(b) plan, the Code and other federal and state regulations. The amount and number of loans outstanding at any one time under your TSA are limited, whether under our contracts or those of other carriers. We may modify the terms of a loan to comply with changes in applicable law. Various mandatory repayment requirements apply to loans, and failure to repay generally would result in income to you and the potential application of tax penalties. We urge you to consult with a qualified tax advisor prior to effecting a loan transaction under your Contract. We may apply additional restrictions or limitations on loans, and you must make loan requests in accordance with our administrative practices and loan request procedures in effect at the time you submit your request. Read the terms of the loan agreement before submitting any request. 46 ILIAC Variable Annuity - 134789 Any outstanding loan balance impacts the following: o Withdrawals and Charges: We determine amounts available for maximum withdrawal amounts, free partial withdrawals, systematic withdrawals and waiver of administrative charges by reducing the otherwise applicable amounts by the amount of any outstanding loan balance. o Death Benefits, Annuitization and Surrenders: We deduct the outstanding loan balance from any amounts otherwise payable and in determining the amount available for annuitization. TAX SHELTERED ANNUITIES - DISTRIBUTIONS All distributions from Section 403(b) plans are taxed as received unless either of the following is true: o The distribution is rolled over to another plan eligible to receive rollovers or to a traditional individual retirement annuity/account (IRA) in accordance with the Tax Code; or o You made after-tax contributions to the plan. In this case, the amount will be taxed according to rules detailed in the Tax Code. Generally, you must begin receiving distributions by April 1 of the calendar year following the calendar year in which you attain age 70 1/2 or retire, whichever occurs later, unless you had amounts under the contract as of December 31, 1986. In this case, distribution of these amounts generally must begin by the end of the calendar year in which you attain age 75 or retire, if later. The death benefit under the contract and also certain other contract benefits, such as the living benefits, may affect the amount of the required minimum distribution that must be taken. If you take any distributions in excess of the required minimum amount, then special rules require that some or all of the December 31, 1986 balance be distributed earlier. TAX CONSEQUENCES OF ENHANCED DEATH BENEFIT The Contract offers a death benefit (including the benefit provided by the earnings multiplier benefit rider) that may exceed the greater of the premium payments and the contract value. It is possible that the IRS could characterize such a death benefit as an incidental death benefit. There are limitations on the amount of incidental benefits that may be provided under pension and profit sharing plans. In addition, the provision of such benefits may result in currently taxable income to participants. Also, as stated above, the presence of the death benefit, as well as certain other contract benefits, could affect the amount of required minimum distributions. OTHER TAX CONSEQUENCES As noted above, the foregoing comments about the federal tax consequences under the Contracts are not exhaustive, and special rules are provided with respect to other tax situations not discussed in this prospectus. Further, the federal income tax consequences discussed herein reflect our understanding of current law, and the law may change. Federal estate and state and local estate, inheritance and other tax consequences of ownership or receipt of distributions under a Contract depend on the individual circumstances of each contract owner or recipient of the distribution. A competent tax adviser should be consulted for further information. POSSIBLE CHANGES IN TAXATION Although the likelihood of legislative change is uncertain, there is always the possibility that the tax treatment of the Contracts could change by legislation or other means. It is also possible that any change could be retroactive (that is, effective before the date of the change). You should consult a tax adviser with respect to legislative developments and their effect on the Contract. FEDERAL INCOME TAX WITHHOLDING We will withhold and remit to the U.S. government a part of the taxable portion of each distribution made under a Contract unless the distributee notifies us at or before the time of the distribution that he or she elects not to have any amounts withheld. In certain circumstances, we may be required to withhold tax, as explained above. The withholding rates applicable to the taxable portion of periodic annuity payments (other than eligible rollover distributions) are the same as the withholding rates generally applicable to payments of wages. In addition, a 10% withholding rate applies to the taxable portion of non-periodic payments (including withdrawals prior to the annuity starting date) and conversions of, and rollovers from, non-Roth IRAs to Roth IRAs. Regardless of whether you elect not to have federal income tax withheld, you are still liable for payment of federal income tax on the taxable portion of the payment. As discussed above, the withholding rate applicable to eligible rollover distributions is 20%. 47 ILIAC Variable Annuity - 134789 ASSIGNMENTS Adverse tax consequences to the plan and/or to you may result if your beneficial interest in the contract is assigned or transferred to persons other than: a plan participant as a means to provide benefit payments; an alternate payee under a qualified domestic relations order in accordance with code section 414(p); or to the Company as collateral for a loan. TAXATION OF COMPANY We are taxed as a life insurance company under the Tax Code. The Separate Account is not a separate entity from us. Therefore, it is not taxed separately as a "regulated investment company," but is taxed as part of the Company. We automatically apply investment income and capital gains attributable to the separate account to increase reserves under the contracts. Because of this, under existing federal tax law we believe that any such income and gains will not be taxed to the extent that such income and gains are applied to increase reserves under the contracts. In addition, any foreign tax credits attributable to the separate account will be first used to reduce any income taxes imposed on the separate account before being used by the Company. In summary, we do not expect that we will incur any federal income tax liability attributable to the separate account and we do not intend to make any provision for such taxes. However, changes in federal tax laws and/or their interpretation may result in our being taxed on income or gains attributable to the separate account. In this case, we may impose a charge against the separate account (with respect to some or all of the contracts) to set aside provisions to pay such taxes. We may deduct this amount from the separate account, including from your account value invested in the subaccounts. -------------------------------------------------------------------------------- OTHER TOPICS -------------------------------------------------------------------------------- THE COMPANY We issue the contract described in this prospectus and are responsible for providing each contract's insurance and annuity benefits. We are a stock life insurance company organized under the insurance laws of the State of Connecticut in 1976 and an indirect wholly-owned subsidiary of ING Groep N.V., a global financial institution active in the fields of insurance, banking and asset management. Through a merger our operations include the business of Aetna Variable Annuity Life Insurance Company (formerly known as Participating Annuity Life Insurance Company, an Arkansas life insurance company organized in 1954). Prior to May 1, 2002, the Company was known as Aetna Life Insurance and Annuity Company. We are engaged in the business of issuing life insurance and annuities. Our principal executive offices are located at: 151 Farmington Avenue Hartford, Connecticut 06156 48 ILIAC Variable Annuity - 134789 VARIABLE ANNUITY ACCOUNT B We established Variable Annuity Account B (the separate account) in 1976 under Connecticut Law as a continuation of the separate account established in 1974 under Arkansas Law of Aetna Variable Annuity Life Insurance Company. The separate account was established as a segregated asset account to fund variable annuity contracts. The separate account is registered as a unit investment trust under the Investment Company Act of 1940 (the "40 Act"). It also meets the definition of "separate account" under the federal securities laws. The separate account is divided into subaccounts. The subaccounts invest directly in shares of a pre-assigned fund. Although we hold title to the assets of the separate account, such assets are not chargeable with the liabilities of any other business that we conduct. Income, gains or losses of the separate account are credited to or charged against the assets of the separate account without regard to other income, gains or losses of the Company. All obligations arising under the contract are obligations of the Company. CONTRACT DISTRIBUTION The Company's subsidiary, ING Financial Advisers, LLC, serves as the principal underwriter for the contracts. ING Financial Advisers, LLC, a Delaware limited liability Company, is registered as a broker-dealer with the SEC. ING Financial Advisers, LLC is also a member of the National Association of Securities Dealers, Inc. (NASD) and the Securities Investor Protection Corporation. ING Financial Advisers, LLC's principal office is located at 151 Farmington Avenue, Hartford, Connecticut 06156. The contracts are offered to the public by individuals who are registered representatives of ING Financial Advisers, LLC or of other broker-dealers which have entered into a selling arrangement with ING Financial Advisers, LLC. We refer to ING Financial Advisers, LLC and the other broker-dealers selling the contracts as "distributors." All registered representatives selling the contracts must also be licensed as insurance agents for the Company. Broker-dealers which have or may enter into selling agreements with ING Financial Advisers, LLC include the following broker-dealers which are affiliated with the Company: Bancnorth Investment Group, Inc. Baring Investment Services, Inc. Directed Services, Inc. Financial Network Investment Corporation Guaranty Brokerage Services, Inc. ING America Equities, Inc. ING DIRECT Securities, Inc. ING Financial Markets, LLC ING Financial Partners, Inc. ING Funds Distributor, LLC ING Investment Management Services, LLC Multi-Financial Securities Corporation PrimeVest Financial Services, Inc. Systematized Benefits Administrators, Inc. Registered representatives of distributors who solicit sales of the contracts typically receive a portion of the compensation paid to the distributor in the form of commissions or other compensation, depending upon the agreement between the distributor and the registered representative. This compensation, as well as other incentives or payments, is not paid directly by contract owners or the separate account. We intend to recoup this compensation and other sales expenses paid to distributors through fees and charges imposed under the contracts. COMMISSION PAYMENTS. Persons who offer and sell the contracts may be paid a commission. The maximum percentage amount that may be paid with respect to a given purchase payment is the first-year percentage which ranges from 0% to a maximum of 7% of the first year of payments to an account. Renewal commissions paid on payments made after the first year and asset-based service fees may also be paid. In addition, we may also pay ongoing annual compensation of up to 40% of the commissions paid during the year in connection with certain premium received during that year, if the registered representative attains a certain threshold of sales of Company contracts. Individual registered representatives may receive all or a portion of compensation paid to their distributor, depending upon the firm's practices. Commissions and annual payments, when combined, could exceed 7% of total premium payments. To the extent permitted by SEC and NASD rules and other applicable laws and regulations, we may also pay or allow other promotional incentives or payments in the form of cash payments or other compensation to distributors, which may require the registered representative to attain a certain threshold of sales of Company products. 49 ILIAC Variable Annuity - 134789 We may also enter into special compensation arrangements with certain distributors based on those firms' aggregate or anticipated sales of the contracts or other criteria. These special compensation arrangements will not be offered to all distributors, and the terms of such arrangements may differ among distributors based on various factors. Any such compensation payable to a distributor will not result in any additional direct charge to you by us. Some sales personnel may receive various types of non-cash compensation as special sales incentives, including trips, and we may also pay for some sales personnel to attend educational and/or business seminars. Any such compensation will be paid in accordance with SEC and NASD rules. Management personnel of the Company, and of its affiliated broker-dealers, may receive additional compensation if the overall amount of investments in funds advised by the Company or its affiliates meets certain target levels or increases over time. Compensation for certain management personnel, including sales management personnel, may be enhanced if the overall amount of investments in the contracts and other products issued or advised by the Company or its affiliates increases over time. Certain sales management personnel may also receive compensation that is a specific percentage of the commissions paid to distributors or of purchase payments received under the contracts. In addition to direct cash compensation for sales of contracts described above, distributors may also be paid additional compensation or reimbursement of expenses for their efforts in selling contracts to you and other customers. These amounts may include: o Wholesaling fees calculated as a percentage of the commissions paid to distributors or of purchase payments received under the contracts; o Marketing allowances; o Education and training allowances to facilitate our attendance at certain educational and training meetings to provide information and training about our products, including holding training programs at our expense; o Sponsorship payments to support attendance at meetings by registered representatives who sell our products; o Reimbursement for the cost of attendance by registered representatives at conventions that we sponsor; o Loans or advances of commissions in anticipation of future receipt of premiums (a form of lending to registered representatives). These loans may have advantageous terms, such as reduction or elimination of the interest charged on the loan and/or forgiveness of the principal amount of the loan, which may be conditioned on contract sales. We pay dealer concessions, wholesaling fees, overrides, bonuses, other allowances and benefits and the costs of all other incentives or training programs from our resources, which include the fees and charges imposed under the contracts. The following is a list of the top 25 selling firms that, during 2004, received the most compensation, in the aggregate, from us in connection with the sale of registered variable annuity contracts issued by the Company, ranked by total dollars received. 50 ILIAC Variable Annuity - 134789 -------------------------------------------------------------------------------- 1. Lincoln Investment Planning Inc. -------------------------------------------------------------------------------- 2. Symetra Investment Services, Inc. -------------------------------------------------------------------------------- 3. SunAmerica Securities, Inc. -------------------------------------------------------------------------------- 4. Securities America, Inc. -------------------------------------------------------------------------------- 5. ING Financial Partners, Inc. -------------------------------------------------------------------------------- 6. Financial Network Investment Corporation -------------------------------------------------------------------------------- 7. Investacorp Inc. -------------------------------------------------------------------------------- 8. Huckin Financial Group -------------------------------------------------------------------------------- 9. National Planning Corporation -------------------------------------------------------------------------------- 10. Walnut Street Securities, Inc. -------------------------------------------------------------------------------- 11. NIA Securities, L.L.C. -------------------------------------------------------------------------------- 12. MML Investors Services, Inc. -------------------------------------------------------------------------------- 13. Cadaret, Grant & Co., Inc. -------------------------------------------------------------------------------- 14. Proequities, Inc. -------------------------------------------------------------------------------- 15. Investment Professionals, Inc. -------------------------------------------------------------------------------- 16. Jefferson Pilot Securities Corporation -------------------------------------------------------------------------------- 17. McGinn, Smith & Co., Inc. -------------------------------------------------------------------------------- 18. Linsco/Private Ledger Corporation -------------------------------------------------------------------------------- 19. Queens Road Securities -------------------------------------------------------------------------------- 20. A.G. Edwards & Sons -------------------------------------------------------------------------------- 21. Horan Securities, Inc. -------------------------------------------------------------------------------- 22. Lincoln Financial Advisors Corporation -------------------------------------------------------------------------------- 23. Securities Service Network, Inc. -------------------------------------------------------------------------------- 24. Woodbury Financial Services, Inc. -------------------------------------------------------------------------------- 25. M Holdings Securities, Inc. -------------------------------------------------------------------------------- If the amounts paid to ING Financial Advisers, LLC, were included in the table above, the amounts paid to ING Financial Advisers, LLC would be at the top of the list. This is a general discussion of the types and levels of compensation paid by us for the sale of our variable annuity contracts. It is important for you to know that the payment of volume or sales-based compensation to a distributor or registered representative may provide that registered representative a financial incentive to promote our contracts over those of another Company, and may also provide a financial incentive to promote one of our contracts over another. The names of the distributor and the registered representative responsible for your account are stated in your enrollment materials. THIRD PARTY COMPENSATION ARRANGEMENTS. Occasionally: o Commissions and fees may be paid to distributors affiliated or associated with the contract holder, you and/or other contract participants; and/or o The Company may enter into agreements with entities associated with the contract holder, you and/or other participants. Through such agreements, we may pay the entities for certain services in connection with administering the contract. In both these circumstances there may be an understanding that the distributor or entities would endorse us as a provider of the contract. You will be notified if you are purchasing a contract that is subject to these arrangements. PAYMENT DELAY OR SUSPENSION We reserve the right to suspend or postpone the date of any payment of benefits or values under any one of the following circumstances: o On any valuation date when the New York Stock Exchange is closed (except customary weekend and holiday closings) or when trading on the New York Stock Exchange is restricted; o When an emergency exists as determined by the SEC so that disposal of the securities held in the subaccounts is not reasonably practicable or it is not reasonably practicable to fairly determine the value of the subaccount's assets; or o During any other periods the SEC may by order permit for the protection of investors. 51 ILIAC Variable Annuity - 134789 The conditions under which restricted trading or an emergency exists shall be determined by the rules and regulations of the SEC. VOTING RIGHTS Each of the subaccounts holds shares in a fund and each is entitled to vote at regular and special meetings of that fund. Under our current view of applicable law, we will vote the shares for each subaccount as instructed by persons having a voting interest in the subaccount. If you are a contract holder under a group contract, you have a fully vested interest in the contract and may instruct the group contract holder how to direct the Company to cast a certain number of votes. We will vote shares for which instructions have not been received in the same proportion as those for which we received instructions. Each person who has a voting interest in the separate account will receive periodic reports relating to the funds in which he or she has an interest, as well as any proxy materials and a form on which to give voting instructions. Voting instructions will be solicited by a written communication at least 14 days before the meeting. The number of votes (including fractional votes) you are entitled to direct will be determined as of the record date set by any fund you invest in through the subaccounts. o During the accumulation phase the number of votes is equal to the portion of your account value invested in the fund, divided by the net asset value of one share of that fund. o During the income phase the number of votes is equal to the portion of reserves set aside for the contract's share of the fund, divided by the net asset value of one share of that fund. CONTRACT MODIFICATIONS We may change the contract as required by federal or state law or as otherwise permitted in the contract. In addition, we may, upon 30 days' written notice to the group contract holder, make other changes to a group contract that would apply only to individuals who become participants under that contract after the effective date of such changes. If a group contract holder does not agree to a change, we reserve the right to refuse to establish new accounts under the contract. Certain changes will require the approval of appropriate state or federal regulatory authorities. TRANSFER OF OWNERSHIP: ASSIGNMENT We will accept assignments or transfers of ownership of a nonqualified contract or a qualified contract where such assignments or transfers are not prohibited, with proper notification. The date of any assignment or transfer of ownership will be the date we receive the notification at our Customer Service Center. An assignment or transfer of ownership may have tax consequences and you should consult with a tax adviser before assigning or transferring ownership of the contract. An assignment of a contract will only be binding on the Company if it is made in writing and sent to the Company at our Customer Service Center. We will use reasonable procedures to confirm that the assignment is authentic, including verification of signature. If we fail to follow our own procedures, we will be liable for any losses to you directly resulting from such failure. Otherwise, we are not responsible for the validity of any assignment. The rights of the contract holder and the interest of the annuitant and any beneficiary will be subject to the rights of any assignee we have on our records. INVOLUNTARY TERMINATIONS We reserve the right to terminate any account with a value of $2,500 or less immediately following a partial withdrawal. However, an IRA may only be closed out when payments to the contract have not been received for a 24-month period and the paid-up annuity benefit at maturity would be less than $20 per month. If such right is exercised, you will be given 90 days' advance written notice. No early withdrawal charge will be deducted for involuntary terminations. We do not intend to exercise this right in cases where the account value is reduced to $2,500 or less solely due to investment performance. 52 ILIAC Variable Annuity - 134789 TRADING-INDUSTRY DEVELOPMENTS As with many financial services companies, the Company and affiliates of the Company have received requests for information from various governmental and self-regulatory agencies in connection with investigations related to trading in investment company shares. In each case, full cooperation and responses are being provided. The Company is also reviewing its policies and procedures in this area. LEGAL MATTERS AND PROCEEDINGS We are not aware of any pending legal proceedings which involve Separate Account B as a party. We are, or may be in the future, a defendant in various legal proceedings in connection with the normal conduct of our insurance operations. Some of these cases may seek class action status and may include a demand for punitive damages as well as for compensatory damages. In the opinion of management, the ultimate resolution of any existing legal proceeding is not likely to have a material adverse effect on our ability to meet our obligations under the contract. ING Financial Advisers, LLC, the principal underwriter and distributor of the contract, (the "distributor"), is a party to threatened or pending lawsuits/arbitration that generally arise from the normal conduct of business. Suits against the distributor sometimes include claims for substantial compensatory, consequential or punitive damages and other types of relief. In a number of pending cases, claims have been made that a former registered representative of the distributor converted client funds to the representative's personal use. ING Financial Advisers, LLC is not involved in any legal proceeding which, in the opinion of management, is likely to have material adverse effect on its ability to distribute the contract. 53 ILIAC Variable Annuity - 134789 -------------------------------------------------------------------------------- CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION -------------------------------------------------------------------------------- The Statement of Additional Information (SAI) contains more specific information on the separate account and the contract, as well as the financial statements of the separate account and the Company. The following is a list of the contents of the SAI. General Information and History Variable Annuity Account B Offering and Purchase of Contracts Income Phase Payments Sales Material and Advertising Independent Registered Public Accounting Firm Financial Statements of the Separate Account Financial Statements of ING Life Insurance and Annuity Company and Subsidiaries You may request an SAI by calling the Company at the number listed in "Contract Overview -- Questions: Contacting the Company." SAI-1 ILIAC Variable Annuity - 134789 This page intentionally left blank. ILIAC Variable Annuity - 134789 -------------------------------------------------------------------------------- APPENDIX I -------------------------------------------------------------------------------- ILIAC GUARANTEED ACCOUNT THE ILIAC GUARANTEED ACCOUNT (THE GUARANTEED ACCOUNT) IS A FIXED INTEREST OPTION AVAILABLE DURING THE ACCUMULATION PHASE UNDER THE CONTRACT. THIS APPENDIX IS ONLY A SUMMARY OF CERTAIN FACTS ABOUT THE GUARANTEED ACCOUNT. PLEASE READ THE GUARANTEED ACCOUNT PROSPECTUS CAREFULLY BEFORE INVESTING IN THIS OPTION. IN GENERAL. Amounts invested in the Guaranteed Account earn specified interest rates if left in the Guaranteed Account for specified periods of time. If you withdraw or transfer those amounts before the specified periods elapse, we may apply a market value adjustment (described below) which may be positive or negative. When deciding to invest in the Guaranteed Account, contact your sales representative or the Company to learn: o The interest rate(s) we will apply to amounts invested in the Guaranteed Account. We change the rate(s) periodically. Be certain you know the rate we guarantee on the day your account dollars are invested in the Guaranteed Account. Guaranteed interest rates will never be less than an annual effective rate of 3%. o The period of time your account dollars need to remain in the Guaranteed Account in order to earn the rate(s). You are required to leave your account dollars in the Guaranteed Account for a specified period of time in order to earn the guaranteed interest rate(s). DEPOSIT PERIOD. During a deposit period, we offer a specific interest rate for dollars invested for a certain guaranteed term. For a specific interest rate and guaranteed term to apply, account dollars must be invested in the Guaranteed Account during the deposit period for which that rate and term are offered. INTEREST RATES. We guarantee different interest rates, depending upon when account dollars are invested in the Guaranteed Account. For guaranteed terms one year or longer, we may apply more than one specified interest rate. The interest rate we guarantee is an annual effective yield. That means the rate reflects a full year's interest. We credit interest daily at a rate that will provide the guaranteed annual effective yield over one year. Guaranteed interest rates will never be less than an annual effective rate of 3%. Among other factors, the safety of the interest rate guarantees depends upon the Company's claims-paying ability. GUARANTEED TERMS. The guaranteed term is the period of time account dollars must be left in the Guaranteed Account in order to earn the guaranteed interest rate. For guaranteed terms one year or longer, we may offer different rates for specified time periods within a guaranteed term. We offer different guaranteed terms at different times. We also may offer more than one guaranteed term of the same duration with different interest rates. Check with your sales representative or our Customer Service Center to learn what terms are being offered. The Company also reserves the right to limit the number of guaranteed terms or the availability of certain guaranteed terms. FEES AND OTHER DEDUCTIONS. If all or a portion of your account value in the Guaranteed Account is withdrawn or transferred, you may incur one or more of the following: o Market Value Adjustment (MVA)--as described in this appendix and in the Guaranteed Account prospectus; I-1 ILIAC Variable Annuity - 134789 o Tax penalties and/or tax withholding--see "Taxation;" o Early withdrawal charge--see "Fees;" or o Maintenance fee--see "Fees." We do not make deductions from amounts in the Guaranteed Account to cover mortality and expense risks. Rather, we consider these risks when determining the interest rate to be credited. Also, if you elected the premium bonus option, a charge may be deducted from amounts allocated to the Guaranteed Account, resulting in a 0.50% reduction in the interest which would have been credited to your account during the first seven account years if you had not elected the premium bonus option. See the "Premium Bonus Option - Forfeiture" and "Withdrawals" sections of the contract prospectus. MARKET VALUE ADJUSTMENT (MVA). If your account value is withdrawn or transferred from the Guaranteed Account before the guaranteed term is completed, an MVA may apply. The MVA reflects investment value changes caused by changes in interest rates occurring since the date of deposit. The MVA may be positive or negative. If interest rates at the time of withdrawal or transfer have increased since the date of deposit, the value of the investment decreases and the MVA will be negative. This could result in your receiving less than the amount you paid into the Guaranteed Account. If interest rates at the time of withdrawal or transfer have decreased since the date of deposit, the value of the investment increases and the MVA will be positive. MVA WAIVER. For withdrawals or transfers from a guaranteed term before the guaranteed term matures, the MVA may be waived for: o Transfers due to participation in the dollar cost averaging program; o Withdrawals taken due to your election of SWO or ECO (described in "Systematic Distribution Options"), if available; o Withdrawals for minimum distributions required by the Tax Code and for which the early withdrawal charge is waived; and o Withdrawals due to your exercise of the right to cancel your contract (described in "Right to Cancel"). DEATH BENEFIT. When a death benefit is paid under the contract within six months of the date of death, only a positive aggregate MVA amount, if any, is applied to the account value attributable to amounts withdrawn from the Guaranteed Account. This provision does not apply upon the death of a spousal beneficiary or joint contract holder who continued the account after the first death. If a death benefit is paid more than six months from the date of death, a positive or negative aggregate MVA amount, as applicable, will be applied, except under certain contracts issued in the State of New York. PARTIAL WITHDRAWALS. For partial withdrawals during the accumulation phase, amounts to be withdrawn from the Guaranteed Account will be withdrawn pro-rata from each group of deposits having the same length of time until the maturity date ("Guaranteed Term Group"). Within each Guaranteed Term Group, the amount will be withdrawn first from the oldest deposit period, then from the next oldest and so on until the amount requested is satisfied. GUARANTEED TERMS MATURITY. As a guaranteed term matures, assets accumulating under the Guaranteed Account may be (a) transferred to a new guaranteed term; (b) transferred to other available investment options; or (c) withdrawn. Amounts withdrawn may be subject to an early withdrawal charge, taxation and, if you are under age 59 1/2, tax penalties may apply. If no direction is received from you at our Customer Service Center by the maturity date of a guaranteed term, the amount from the maturing guaranteed term will be transferred to a new guaranteed term of a similar length. If the same guaranteed term is no longer available, the next shortest guaranteed term available in the current deposit period will be used. If no shorter guaranteed term is available, the next longer guaranteed term will be used. I-2 ILIAC Variable Annuity - 134789 If you do not provide instructions concerning the maturity value of a maturing guaranteed term, the maturity value transfer provision applies. This provision allows transfers or withdrawals without an MVA if the transfer or withdrawal occurs during the calendar month immediately following a guaranteed term maturity date. This waiver of the MVA only applies to the first transaction regardless of the amount involved in the transaction. Under the Guaranteed Account each guaranteed term is counted as one funding option. If a guaranteed term matures and is renewed for the same term, it will not count as an additional investment option for purposes of any limitation on the number of investment options. SUBSEQUENT PURCHASE PAYMENTS. Purchase payments received after your initial purchase payment to the Guaranteed Account will be allocated in the same proportions as the last allocation, unless you properly instruct us to do otherwise. If the same guaranteed term(s) is not available, the next shortest term will be used. If no shorter guaranteed term is available, the next longer guaranteed term will be used. DOLLAR COST AVERAGING. The Company may offer more than one guaranteed term of the same duration and credit one with a higher rate contingent upon use only with the dollar cost averaging program. If amounts are applied to a guaranteed term which is credited with a higher rate using dollar cost averaging and the dollar cost averaging is discontinued, the amounts will be transferred to another guaranteed term of the same duration and an MVA will apply. TRANSFER OF ACCOUNT DOLLARS. Generally, account dollars invested in the Guaranteed Account may be transferred among guaranteed terms offered through the Guaranteed Account and/or to other investment options offered through the contract. However, transfers may not be made during the deposit period in which your account dollars are invested in the Guaranteed Account or for 90 days after the close of that deposit period. We will apply an MVA to transfers made before the end of a guaranteed term. The 90-day wait does not apply to (1) amounts transferred on the maturity date or under the maturity value transfer provision; (2) amounts transferred from the Guaranteed Account before the maturity date due to the election of an income phase payment option; (3) amounts distributed under the ECO or SWO (see "Systematic Distribution Options"); and (4) amounts transferred from an available guaranteed term in connection with the dollar cost averaging program. Transfers after the 90-day period are permitted from guaranteed term(s) to other guaranteed term(s) available during a deposit period or to other available investment options. Transfers of the Guaranteed Account values on or within one calendar month of a term's maturity date are not counted as one of the 12 free transfers of accumulated values in the account. REINSTATING AMOUNTS WITHDRAWN FROM THE GUARANTEED ACCOUNT. If amounts are withdrawn and then reinstated in the Guaranteed Account, we apply the reinstated amount to the current deposit period. This means the guaranteed annual interest rate and guaranteed terms available on the date of reinstatement will apply. We reinstate amounts proportionately in the same way as they were allocated before withdrawal. We will not credit your account for market value adjustments or any premium bonus forfeited that we deducted at the time of withdrawal or refund any taxes that were withheld. THE INCOME PHASE. The Guaranteed Account cannot be used as an investment option during the income phase. However, you may notify us at least 30 days in advance to elect a fixed or variable payment option and to transfer your Guaranteed Account dollars to the general account or any of the subaccounts available during the income phase. Transfers made due to the election of a lifetime income phase payment option will be subject to only a positive aggregate MVA. I-3 ILIAC Variable Annuity - 134789 DISTRIBUTION. The Company's subsidiary, ING Financial Advisers, LLC ("ING Financial") serves as the principal underwriter of the contract. ING Financial, a Delaware limited liability company, is registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 as a broker-dealer and is a member of the National Association of Securities Dealers, Inc. and the Securities Investor Protection Corporation. From time to time ING Financial may offer customers of certain broker-dealers special guaranteed rates in connection with the Guaranteed Account offered through the contract and may negotiate different commissions for these broker-dealers. I-4 ILIAC Variable Annuity - 134789 -------------------------------------------------------------------------------- APPENDIX II -------------------------------------------------------------------------------- FIXED ACCOUNT GENERAL DISCLOSURE. o The Fixed Account is an investment option available during the accumulation phase under the contract. o Amounts allocated to the Fixed Account are held in the Company's general account which supports insurance and annuity obligations. o Interests in the Fixed Account have not been registered with the SEC in reliance on exemptions under the Securities Act of 1933, as amended. o Disclosure in this prospectus regarding the Fixed Account may be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of the statements. o Disclosure in this appendix regarding the Fixed Account has not been reviewed by the SEC. o Additional information about this option may be found in the contract. INTEREST RATES. o The Fixed Account guarantees that amounts allocated to this option will earn the minimum interest rate specified in the contract. We may credit a higher interest rate from time to time, but the rate we credit will never fall below the guaranteed minimum specified in the contract. Amounts applied to the Fixed Account will earn the interest rate in effect at the time money is applied. Amounts in the Fixed Account will reflect a compound interest rate as credited by us. The rate we quote is an annual effective yield. Among other factors, the safety of the interest rate guarantees depends upon the Company's claims-paying ability. o Our determination of credited interest rates reflects a number of factors, including mortality and expense risks, interest rate guarantees, the investment income earned on invested assets and the amortization of any capital gains and/or losses realized on the sale of invested assets. Under this option we assume the risk of investment gain or loss by guaranteeing the amounts you allocate to this option and promising a minimum interest rate and income phase payment. DOLLAR COST AVERAGING. Amounts you invest in the Fixed Account must be transferred into the other investment options available under the contract over a period not to exceed 12 months. If you discontinue dollar cost averaging, the remaining balance amounts in the Fixed Account will be transferred into the money market subaccount available under the contract, unless you direct us to transfer the balance into other available options. WITHDRAWALS. Under certain emergency conditions we may defer payment of any withdrawal for a period of up to six months or as provided by federal law. CHARGES. We do not make deductions from amounts in the Fixed Account to cover mortality and expense risks. We consider these risks when determining the credited rate. If you make a withdrawal from amounts in the Fixed Account, an early withdrawal charge may apply. See "Fees." TRANSFERS. During the accumulation phase you may transfer account dollars from the Fixed Account to any other available investment option. We may vary the dollar amount that you are allowed to transfer, but it will never be less than 10% of your account value held in the Fixed Account. By notifying the Customer Service Center at least 30 days before income phase payments begin, you may elect to have amounts transferred to one or more of the subaccounts available during the income phase to provide variable payments. II-1 ILIAC Variable Annuity - 134789 -------------------------------------------------------------------------------- APPENDIX III -------------------------------------------------------------------------------- DESCRIPTION OF UNDERLYING FUNDS During the accumulation phase, you may allocate your premium payments and contract value to any of the investment portfolios available under this Contract. They are listed in this appendix. You bear the entire investment risk for amounts you allocate to any investment portfolio, and you may lose your principal. The investment results of the mutual funds (funds) are likely to differ significantly and there is no assurance that any of the funds will achieve their respective investment objectives. You should consider the investment objectives, risks and charges and expenses of the funds carefully before investing. Please refer to the fund prospectuses for this and additional information. Shares of the funds will rise and fall in value and you could lose money by investing in the funds. Shares of the funds are not bank deposits and are not guaranteed, endorsed or insured by any financial institution, the Federal Deposit Insurance Corporation or any other government agency. Except as noted, all funds are diversified, as defined under the Investment Company Act of 1940. Fund prospectuses may be obtained free of charge, from our Customer Service Center at the address and telephone number listed in the prospectus, by accessing the SEC's web site or by contacting the SEC Public Reference Room. Certain funds offered under the contracts have investment objectives and policies similar to other funds managed by the fund's investment adviser. The investment results of a fund may be higher or lower than those of other funds managed by the same adviser. There is no assurance and no representation is made that the investment results of any fund will be comparable to those of another fund managed by the same investment adviser. Certain funds are designated as "Master-Feeder" Funds". Funds offered in a Master-Feeder structure (such as the American Funds) may have higher fees and expenses than a fund that invests directly in debt and equity securities.
----------------------------------------------------------------------------------------------------------------------------- LIST OF FUND NAME CHANGES ----------------------------------------------------------------------------------------------------------------------------- FORMER FUND NAME CURRENT FUND NAME ----------------------------------------------------------------------------------------------------------------------------- ING VP Bond Portfolio ING VP Intermediate Bond Portfolio -----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------- FUND NAME AND INVESTMENT ADVISER/SUBADVISER INVESTMENT OBJECTIVE ----------------------------------------------------------------------------------------------------------------------------- ING INVESTORS TRUST 7337 E. Doubletree Ranch Road, Scottsdale, AZ 85258 ----------------------------------------------------------------------------------------------------------------------------- ING AMERICAN FUNDS GROWTH PORTFOLIO Seeks to make your investment grow. The Portfolio operates as a "feeder fund" which invests all of its INVESTMENT ADVISER: ING Investments, LLC assets in the "master fund" which is Class 2 shares of INVESTMENT SUBADVISER: Capital Research and Management the Growth Fund, a series of American Funds Insurance Company Series(R), a registered open-end investment company. The master fund invests primarily in common stocks of companies that appear to offer superior opportunities for growth of capital. The Growth Fund is designed for investors seeking long-term capital appreciation through stocks. -----------------------------------------------------------------------------------------------------------------------------
III-1 ILIAC Variable Annuity - 134789
----------------------------------------------------------------------------------------------------------------------------- FUND NAME AND INVESTMENT ADVISER/SUBADVISER INVESTMENT OBJECTIVE ----------------------------------------------------------------------------------------------------------------------------- ING AMERICAN FUNDS GROWTH-INCOME PORTFOLIO Seeks to make your investment grow and provide you with income over time. The Portfolio operates as a "feeder INVESTMENT ADVISER: ING Investments, LLC fund" which invests all of its assets in the "master INVESTMENT SUBADVISER: Capital Research and Management fund" which is Class 2 shares of the Growth-Income Fund, Company a series of American Funds Insurance Series(R), a registered open-end investment company. The master fund invests primarily in common stocks or other securities which demonstrate the potential for appreciation and/or dividends. The Growth-Income Fund is designed for investors seeking both capital appreciation and income. ----------------------------------------------------------------------------------------------------------------------------- ING AMERICAN FUNDS INTERNATIONAL PORTFOLIO Seeks to make your investment grow over time. The Portfolio operates as a "feeder fund" which invests all INVESTMENT ADVISER: ING Investments, LLC of its assets in the "master fund" which is Class 2 INVESTMENT SUBADVISER: Capital Research and Management shares of the International Fund, a series of American Company Funds Insurance Series(R), a registered open-end investment company. The master fund invests primarily in common stocks of companies located outside the United States. The International Fund is designed for investors seeking capital appreciation through stocks. ----------------------------------------------------------------------------------------------------------------------------- ING EVERGREEN OMEGA PORTFOLIO (Class I) Seeks long-term capital growth. Invests primarily in common stocks and securities convertible into common INVESTMENT ADVISER: Directed Services, Inc. stocks of U.S. companies across all market INVESTMENT SUBADVISER: Evergreen Investment Management capitalizations. May invest up to 25% of its assets in Co., Inc. foreign securities. ----------------------------------------------------------------------------------------------------------------------------- ING FMR(SM) EARNINGS GROWTH PORTFOLIO (Class I) Seeks growth of capital over the long term. Normally invests primarily in common stocks. Invests the assets in INVESTMENT ADVISER: Directed Services, Inc. companies it believes have above-average growth INVESTMENT SUBADVISER: Fidelity Management & Research Co. potential. Growth may be measured by factors such as earnings or revenue. Companies with high growth potential tend to be companies with higher than average price/earnings (P/E) or price/book (P/B) ratios. ----------------------------------------------------------------------------------------------------------------------------- ING JPMORGAN SMALL CAP EQUITY PORTFOLIO Seeks capital growth over the long term. Under normal (Class I) market conditions, invests at least 80% of its total assets in equity securities of small-cap companies. May INVESTMENT ADVISER: Directed Services, Inc. invest up to 20% of its assets in foreign securities, INVESTMENT SUBADVISER: J.P. Morgan Investment Management convertible securities and high quality money market Inc. instruments and repurchase agreements. May invest in REITs and derivatives. ----------------------------------------------------------------------------------------------------------------------------- ING JPMORGAN VALUE OPPORTUNITIES PORTFOLIO Seeks to provide long-term capital appreciation. Under (Class I) normal market conditions, the Portfolio invests at least 80% of its assets in equity securities of mid and INVESTMENT ADVISER: Directed Services, Inc. large-capitalization companies at the time of purchase. INVESTMENT SUBADVISER: J.P. Morgan Investment Management Inc. ----------------------------------------------------------------------------------------------------------------------------- ING LEGG MASON VALUE PORTFOLIO (Class I) A non-diversified portfolio that seeks long-term growth of capital. Normally invests in equity securities, INVESTMENT ADVISER: Directed Services, Inc. including foreign securities, that offer the potential INVESTMENT SUBADVISER: Legg Mason Funds Management, Inc. for capital growth. May also invest in companies with market capitalizations greater than $5 billion, but may invest in companies of any size. May also invest up to 25% of its total assets in long-term debt securities. -----------------------------------------------------------------------------------------------------------------------------
III-2 ILIAC Variable Annuity - 134789
----------------------------------------------------------------------------------------------------------------------------- FUND NAME AND INVESTMENT ADVISER/SUBADVISER INVESTMENT OBJECTIVE ----------------------------------------------------------------------------------------------------------------------------- ING MARSICO INTERNATIONAL OPPORTUNITIES PORTFOLIO (Class S) Seeks long-term growth of capital. Invests primarily (no less than 65% of its total assets) in common stocks of INVESTMENT ADVISER: Directed Services, Inc. foreign companies that are selected for their long-term INVESTMENT SUBADVISER: Marsico Capital Management, LLC growth potential. May invest in companies of any size throughout the world. Normally invests in issuers from at least three different countries not including the United States and generally maintains a core position of between 35 and 50 common stocks. May invest in common stocks of companies operating in emerging markets. ----------------------------------------------------------------------------------------------------------------------------- ING MERCURY LARGE CAP GROWTH PORTFOLIO Seeks long-term growth of capital. Invests at least 80% (Class S) of its assets in equity securities of large capitalization companies located in the United States INVESTMENT ADVISER: Directed Services, Inc. believed to have good prospects for earnings growth. INVESTMENT SUBADVISER: Mercury Advisors These securities will be selected from companies that are included in the Russell 1000(R) Growth Index. May invest up to 10% of its total assets in securities issued by foreign companies. Normally will invest a portion of its assets in short-term debt securities. ----------------------------------------------------------------------------------------------------------------------------- ING MFS TOTAL RETURN PORTFOLIO (Class I) Seeks above-average income (compared to a portfolio entirely invested in equity securities) consistent with INVESTMENT ADVISER: Directed Services, Inc. the prudent employment of capital. Secondarily seeks INVESTMENT SUBADVISER: Massachusetts Financial Services reasonable opportunity for growth of capital and income. Company Invests in a combination of equity and fixed income securities. ----------------------------------------------------------------------------------------------------------------------------- ING OPPENHEIMER MAIN STREET PORTFOLIO (Class I) Seeks long-term growth of capital and future income. Normally invests mainly in common stocks of U.S. INVESTMENT ADVISER: Directed Services, Inc. companies of different capitalization ranges, presently INVESTMENT SUBADVISER: OppenheimerFunds, Inc. focusing on large-capitalization issuers. May also invest in debt securities, such as bonds and debentures, but does not currently emphasize these investments. ----------------------------------------------------------------------------------------------------------------------------- ING PIONEER FUND PORTFOLIO (Class I) Seeks reasonable income and capital growth. Invests in a broad list of carefully selected securities believed to INVESTMENT ADVISER: Directed Services, Inc. be reasonably priced, rather than in securities whose INVESTMENT SUBADVISER: Pioneer Investment Management, Inc. prices reflect a premium resulting from their current market popularity. Invests the major portion of its assets in equity securities, primarily of U.S. issuers. ----------------------------------------------------------------------------------------------------------------------------- ING UBS U.S. ALLOCATION PORTFOLIO (Class S) Seeks to maximize total return over the long term by allocating its assets among stocks, bonds, short-term INVESTMENT ADVISER: Directed Services, Inc. instruments and other investments. Allocates its assets INVESTMENT SUBADVISER: UBS Global Asset Management among the following classes, or types, of investments: (Americas) Inc. stocks, bonds, and short-term money market debt obligations. -----------------------------------------------------------------------------------------------------------------------------
III-3 ILIAC Variable Annuity - 134789
----------------------------------------------------------------------------------------------------------------------------- FUND NAME AND INVESTMENT ADVISER/SUBADVISER INVESTMENT OBJECTIVE ----------------------------------------------------------------------------------------------------------------------------- ING PARTNERS, INC. 151 Farmington Avenue, Hartford, CT 06156-8962 ----------------------------------------------------------------------------------------------------------------------------- ING AMERICAN CENTURY SELECT PORTFOLIO (Initial Class) Seeks long-term capital appreciation. Invests in securities of companies American Century believes will INVESTMENT ADVISER: ING Life Insurance and Annuity Co. increase in value over time, using a growth investment INVESTMENT SUBADVISER: American Century Investment strategy developed by American Century. Generally invests Management Inc. in larger companies, although may purchase securities of companies of any size. Can also invest in foreign companies. ----------------------------------------------------------------------------------------------------------------------------- ING JPMORGAN FLEMING INTERNATIONAL PORTFOLIO Seeks long-term growth of capital. Invests primarily (at (Initial Class) least 65% of total assets) in the equity securities of foreign companies that the subadviser believes have high INVESTMENT ADVISER: ING Life Insurance and Annuity Company growth potential. Will normally invest in securities of INVESTMENT SUBADVISER: J.P. Morgan Fleming Asset at least three different countries other than the U.S. Management (London) Ltd. and will invest in both developed and developing markets. ----------------------------------------------------------------------------------------------------------------------------- ING MFS CAPITAL OPPORTUNITIES PORTFOLIO Seeks capital appreciation. Invests primarily (at least (Initial Class) 65% of net assets) in common stocks and related securities, such as preferred stocks, convertible INVESTMENT ADVISER: ING Life Insurance and Annuity Company securities and depositary receipts focusing on companies INVESTMENT SUBADVISER: Massachusetts Financial Services that MFS believes have favorable growth prospects and Company attractive valuations based on current and expected earnings or cash flows. May invest in foreign securities (including emerging market securities). ----------------------------------------------------------------------------------------------------------------------------- ING OPPENHEIMER GLOBAL PORTFOLIO (Initial Class) Seeks capital appreciation. Invests mainly in common stocks of companies in the U.S. and foreign countries. INVESTMENT ADVISER: ING Life Insurance and Annuity Company Can invest without limit in foreign securities in any INVESTMENT SUBADVISER: OppenheimerFunds, Inc. country, including countries with emerging markets. Currently emphasizes investments in developed markets such as the United States, Western European countries and Japan. May invest in companies of any size, but currently focuses its investments in mid- and large-cap companies. Normally will invest in at least three countries (one of which may be the United States). ----------------------------------------------------------------------------------------------------------------------------- ING OPPENHEIMER STRATEGIC INCOME PORTFOLIO (Initial Class) Seeks capital appreciation. Invests mainly in common stocks of companies in the U.S. and foreign countries. Can invest without limit in foreign securities in any INVESTMENT ADVISER: ING Life Insurance and Annuity Company country, including countries with emerging markets. INVESTMENT SUBADVISER: OppenheimerFunds,Inc. Currently emphasizes investments in developed markets such as the United States, Western European countries and Japan. May invest in companies of any size, but currently focuses its investments in mid- and large-cap companies. Normally will invest in at least three countries (one of which may be the United States). ----------------------------------------------------------------------------------------------------------------------------- ING SALOMON BROTHERS AGGRESSIVE GROWTH PORTFOLIO (Initial I) Seeks long-term growth of capital. Invests primarily (at least 80% of net assets under normal circumstances) in INVESTMENT ADVISER: ING Life Insurance and Annuity common stocks and related securities, such as preferred Company stock, convertible securities and depositary receipts, of INVESTMENT SUBADVISER: Salomon Brothers Asset Management emerging growth companies. May invest in foreign Inc. securities (including emerging market securities). ----------------------------------------------------------------------------------------------------------------------------- ING T. ROWE PRICE DIVERSIFIED MID CAP GROWTH PORTFOLIO Seeks long-term capital growth, and secondarily, (Initial Class) increasing dividend income. Invests primarily (at least 80% of net assets under normal circumstances) in common INVESTMENT ADVISER: ING Life Insurance and Annuity stocks. Concentrates its investments in growth companies Company that have the ability to pay increasing dividends through INVESTMENT SUBADVISER: T. Rowe Price Associates, Inc. strong cash flows and whose rates of earnings growth are considered above average. May also purchase foreign stocks, hybrid securities, futures and options. Investments in foreign securities are limited to 30% of total assets. -----------------------------------------------------------------------------------------------------------------------------
III-4 ILIAC Variable Annuity - 134789
----------------------------------------------------------------------------------------------------------------------------- FUND NAME AND INVESTMENT ADVISER/SUBADVISER INVESTMENT OBJECTIVE ----------------------------------------------------------------------------------------------------------------------------- ING UBS U.S. LARGE CAP EQUITY PORTFOLIO Seeks long-term growth of capital and future income. (Initial Class) Under normal circumstances, invests at least 80% of net assets (plus borrowings for investment purposes, if any) INVESTMENT ADVISER: ING Life Insurance and Annuity Company in equity securities of U.S. large capitalization INVESTMENT SUBADVISER: UBS Global Asset Management companies. Investments in equity securities may include dividend-paying securities, common stock and preferred stock. ----------------------------------------------------------------------------------------------------------------------------- ING VAN KAMPEN EQUITY AND INCOME PORTFOLIO (Initial Class) Seeks total return, consisting of long-term capital appreciation and current income. Normally invests at INVESTMENT ADVISER: ING Life Insurance and Annuity Company least 80% of net assets (plus any borrowings for INVESTMENT SUBADVISER: Van Kampen investment purposes) in equity and income securities at the time of investment. Normally invests at least 65% of assets in income producing equity instruments (including common stocks, preferred stocks and convertible securities) and investment grade quality debt securities. May invest up to 25% of total assets in securities of foreign issuers. May purchase and sell certain derivative instruments, such as options, futures contracts, and options on futures contracts, for various portfolio management purposes, including to earn income, to facilitate portfolio management and to mitigate risks. -----------------------------------------------------------------------------------------------------------------------------
III-5 ILIAC Variable Annuity - 134789
----------------------------------------------------------------------------------------------------------------------------- FUND NAME AND INVESTMENT ADVISER/SUBADVISER INVESTMENT OBJECTIVE ----------------------------------------------------------------------------------------------------------------------------- ING VARIABLE INSURANCE TRUST 7337 E. Doubletree Ranch Road, Scottsdale, AZ 85258 ----------------------------------------------------------------------------------------------------------------------------- ING GET U.S. CORE PORTFOLIO Seeks to achieve maximum total return and minimal exposure of the Series' assets to a market value loss by INVESTMENT ADVISER: ING Investment Management Co. participating, to the extent possible, in favorable equity market performance during the guarantee period. The Series will not implement an "investment strategy" in any conventional sense. Rather, the Series' asset allocation strategy seeks to optimize the exposure of the Series to the Equity Component while protecting Series' assets. The Series invests at least 80% of its assets in equities and fixed-income securities issued by U.S. companies or the U.S. government or its agencies. Assets allocated to the Equity Component may be reduced or eliminated in order to conserve assets at a level equal to or above the present value of the Guarantee. During the Guarantee Period, the Series' assets will be allocated between the: EQUITY COMPONENT, consisting of common stocks included in the Standard & Poor's 500 Composite Stock Price Index ("S&P 500 Index"), futures contracts on the S&P 500 Index, and when the Equity Component's market value is $5 million or less, investments in exchange traded funds ("ETF"s) that can reasonably be expected to have at least a 95% correlation ratio with the S&P 500 Index, in S&P 500 Index futures, or in a combination of S&P 500 Index futures and ETFs, subject to any limitation on the Series' investments in such securities; and the FIXED COMPONENT, consisting primarily of short- to intermediate-duration U.S. government securities. ----------------------------------------------------------------------------------------------------------------------------- ING VARIABLE PORTFOLIOS, INC. 7337 E. Doubletree Ranch Road, Scottsdale, AZ 85258 ----------------------------------------------------------------------------------------------------------------------------- ING VP GLOBAL SCIENCE AND TECHNOLOGY PORTFOLIO (Class I) Seeks long-term capital appreciation. Normally invests at least 80% of net assets in equity securities issued by INVESTMENT ADVISER: ING Investments, LLC science and technology companies in all market INVESTMENT SUBADVISER: BlackRock Advisors, Inc. capitalization ranges. Will invest primarily in equity securities of U.S. and non-U.S. companies selected for their rapid and sustainable growth potential from the development, advancement and use of science and/or technology. May invest up to 25% of its net assets in stocks of issuers in emerging market countries. May also invest in preferred stock, initial public offerings, Rule 144A securities and derivative instruments including foreign currency contracts. May from time to time invest more than 25% of its assets in securities whose issuers are located in a single foreign country. ----------------------------------------------------------------------------------------------------------------------------- ING VP GROWTH PORTFOLIO (Class I) Seeks growth of capital through investment in a diversified portfolio consisting primarily of common INVESTMENT ADVISER: ING Investments, LLC stocks and securities convertible into common stocks INVESTMENT SUBADVISER: ING Investment Management, Co. believed to offer growth potential. Under normal market conditions, invests primarily in common stocks and securities convertible into common stock of large U.S. companies. May invest in derivatives and foreign securities. -----------------------------------------------------------------------------------------------------------------------------
III-6 ILIAC Variable Annuity - 134789
----------------------------------------------------------------------------------------------------------------------------- FUND NAME AND INVESTMENT ADVISER/SUBADVISER INVESTMENT OBJECTIVE ----------------------------------------------------------------------------------------------------------------------------- ING VP INDEX PLUS LARGECAP PORTFOLIO (Class S) Seeks to outperform the total return performance of the Standard & Poor's 500 Composite Stock Price Index (S&P INVESTMENT ADVISER: ING Investments, LLC 500 Index), while maintaining a market level of risk. INVESTMENT SUBADVISER: ING Investment Management Co., Invests at least 80% of assets in stocks included in the S&P 500 Index. The subadviser's objective is to overweight those stocks in the S&P 500 Index that it believes will outperform the index and underweight (or avoid altogether) those stocks it believes will underperform the index. May invest in derivatives. ----------------------------------------------------------------------------------------------------------------------------- ING VP INTERNATIONAL EQUITY PORTFOLIO (Class I) Seeks long-term capital growth primarily through investment in a diversified portfolio of common stocks INVESTMENT ADVISER: ING Investments, LLC principally traded in countries outside of the United INVESTMENT SUBADVISER: ING Investment Management, Co. States. The Portfolio will not target any given level of current income. Under normal market conditions, invests at least 80% of assets in equity securities. At least 65% of assets will normally be invested in securities principally traded in three or more countries outside of the U.S and countries with emerging securities markets. These securities may include common stocks as well as securities convertible into common stock. May employ hedging strategies to protect it from adverse effects on the U.S. dollar. May invest in derivatives. ----------------------------------------------------------------------------------------------------------------------------- ING VP SMALL COMPANY PORTFOLIO (Class I) Seeks growth of capital primarily through investment in a diversified portfolio of common stocks and securities of INVESTMENT ADVISER: ING Investments, LLC companies with smaller market capitalizations. Under INVESTMENT SUBADVISER: ING Investment Management, Co. normal market conditions, invests at least 80% off assets in common stocks of small-capitalization companies. May invest in foreign securities and derivatives. ----------------------------------------------------------------------------------------------------------------------------- ING VARIABLE PRODUCTS TRUST 7337 E. Doubletree Ranch Road, Scottsdale, AZ 85258 ----------------------------------------------------------------------------------------------------------------------------- ING VP SMALLCAP OPPORTUNITIES PORTFOLIO Seeks long-term capital appreciation. Normally invests at (Class S) least 80% of assets in the common stock of smaller, lesser-known U.S. companies that the sub-adviser believes INVESTMENT ADVISER: ING Investments, LLC have above average prospects for growth. For this INVESTMENT SUBADVISER: ING Investment Management Co. Portfolio, smaller companies are those with market capitalizations that fall within the range of companies in the Russell 2000 Growth Index. ----------------------------------------------------------------------------------------------------------------------------- ING VP BALANCED PORTFOLIO, INC. ----------------------------------------------------------------------------------------------------------------------------- Seeks to maximize investment return, consistent with ING VP BALANCED PORTFOLIO, INC. (Class I) reasonable safety of principal, by investing in a diversified portfolio of one or more of the following INVESTMENT ADVISER: ING Investments, LLC asset classes: stocks, bonds and cash equivalents, based INVESTMENT SUBADVISER: ING Investment Management, Co. on the judgment of the Portfolio's management, of which of those sectors or mix thereof offers the best investment prospects. Typically maintains approximately 60% of total assets in equities and approximately 40% of total assets in debt (including money market instruments). The Portfolio may invest a portion of its total assets in high-yield instruments. May also invest in convertible securities, foreign debt securities and derivatives. -----------------------------------------------------------------------------------------------------------------------------
III-7 ILIAC Variable Annuity - 134789
----------------------------------------------------------------------------------------------------------------------------- FUND NAME AND INVESTMENT ADVISER/SUBADVISER INVESTMENT OBJECTIVE ----------------------------------------------------------------------------------------------------------------------------- ING VP VARIABLE FUNDS ----------------------------------------------------------------------------------------------------------------------------- ING VP GROWTH AND INCOME PORTFOLIO (Class I) Seeks to maximize total return through investments in a diversified portfolio of common stocks and securities INVESTMENT ADVISER: ING Investments, LLC convertible into common stock. Under normal market INVESTMENT SUBADVISER: ING Investment Management, Co. conditions, invests at least 65% of total assets in common stocks that the subadviser believes have significant potential for capital appreciation or income growth or both. May invest up to 25% of its total assets in stocks of foreign issuers. May invest in derivatives. ----------------------------------------------------------------------------------------------------------------------------- ING VP INTERMEDIATE BOND PORTFOLIO ----------------------------------------------------------------------------------------------------------------------------- ING VP INTERMEDIATE BOND PORTFOLIO (CLASS I) Seeks to maximize total return consistent with reasonable (formerly ING VP Bond Portfolio) risk, through investment in a diversified portfolio consisting primarily of debt securities. It is INVESTMENT ADVISER: ING Investments, LLC anticipated that capital appreciation and investment INVESTMENT SUBADVISER: ING Investment Management Co., income will both be major factors in achieving total return. Under normal market conditions, the Portfolio invests at least 80% of its assets in a portfolio of bonds, including but not limited to corporate, government and mortgage bonds, which, at the time of investment, are rated investment grade or have an equivalent rating by a nationally recognized statistical rating organization, or of comparable quality if unrated. May also invest in: preferred stocks; high quality money market instruments; municipal bonds; debt securities of foreign issuers; mortgage- and asset-backed securities; and options and futures contracts involving securities, securities indices and interest rates. Although the portfolio may invest in high yield debt securities rated below investment grade, it seeks to maintain a minimum average portfolio quality of at least investment grade. ----------------------------------------------------------------------------------------------------------------------------- ING VP MONEY MARKET PORTFOLIO ----------------------------------------------------------------------------------------------------------------------------- ING VP MONEY MARKET PORTFOLIO (Class I) Seeks to provide high current return, consistent with preservation of capital and liquidity, through investment INVESTMENT ADVISER: ING Investments, LLC in high-quality money market instruments. Invests in a INVESTMENT SUBADVISER: ING Investment Management, Co. diversified portfolio of high-quality fixed income securities denominated in U.S. dollars, with short remaining maturities. May invest in certain obligations of foreign banks. THERE IS NO GUARANTEE THAT THE ING VP MONEY MARKET SUBACCOUNT WILL HAVE A POSITIVE OR LEVEL RETURN. ----------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VARIABLE INSURANCE PRODUCTS 82 Devonshire Street, Boston, MA 02109 ----------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP CONTRAFUND(R)PORTFOLIO (Class I) Seeks long-term capital appreciation. Normally invests primarily in common stocks of companies whose value the INVESTMENT ADVISER: Fidelity Management & Research Company Portfolio's investment adviser believes is not fully INVESTMENT SUBADVISER: Fidelity Management & Research recognized by the public. (U.K.) Inc.; Fidelity Management &Research (Far East) Inc.; Fidelity Investments Japan Limited; FMR Co., Inc. -----------------------------------------------------------------------------------------------------------------------------
III-8 ILIAC Variable Annuity - 134789
----------------------------------------------------------------------------------------------------------------------------- FUND NAME AND INVESTMENT ADVISER/SUBADVISER INVESTMENT OBJECTIVE ----------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP EQUITY-INCOME PORTFOLIO (Class I) Seeks reasonable income. Also considers the potential for capital appreciation. Seeks to achieve a yield which INVESTMENT ADVISER: Fidelity Management & Research Company exceeds the composite yield on the securities comprising INVESTMENT SUBADVISER: FMR Co., Inc. the Standard & Poor's 500(SM) Index. Normally invests at least 80% of total assets in income-producing equity securities (which tends to lead to investments in large cap "value" stocks). ----------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP GROWTH PORTFOLIO (Class I) Seeks to achieve capital appreciation. Normally invests primarily in common stocks of companies the investment INVESTMENT ADVISER: Fidelity Management & Research Company adviser believes have above-average growth potential INVESTMENT SUBADVISER: FMR Co., Inc. (often called "growth" stocks). ----------------------------------------------------------------------------------------------------------------------------- FIDELITY(R) VIP HIGH-INCOME PORTFOLIO (Class I) Seeks a high level of current income while also considering growth of capital. Normally invests INVESTMENT ADVISER: Fidelity Management & Research Company primarily in income-producing debt securities, preferred INVESTMENT SUBADVISER: Fidelity Management & Research stocks and convertible securities, with an emphasis on (U.K.) Inc.; Fidelity Management & Research (Far East) lower-quality debt securities. Inc.; Fidelity Investments Japan Limited; FMR Co., Inc. ----------------------------------------------------------------------------------------------------------------------------- OPPENHEIMER VARIABLE ACCOUNT FUNDS ----------------------------------------------------------------------------------------------------------------------------- OPPENHEIMER AGGRESSIVE GROWTH FUND/VA Seeks capital appreciation by investing in "growth type" companies. Invests mainly in equity securities, such as INVESTMENT ADVISER: OppenheimerFunds, Inc. common stocks and can invest in other equity securities, such as preferred stocks and securities convertible into common stocks. -----------------------------------------------------------------------------------------------------------------------------
III-9 ILIAC Variable Annuity - 134789 -------------------------------------------------------------------------------- APPENDIX IV -------------------------------------------------------------------------------- PROJECTED SCHEDULE OF ING GET U.S. CORE PORTFOLIO* OFFERINGS
------------------------------------------------------------------------------------ OFFERING DATES GUARANTEE DATES ------------------------------------------------------------------------------------ ING GET U.S. CORE PORTFOLIO - SERIES 8 03/09/05 - 06/07/05 06/08/05 - 06/07/12 ------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------ ING GET U.S. CORE PORTFOLIO - SERIES 9 06/08/05 - 09/06/05 09/07/05 - 09/06/12 ------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------ ING GET U.S. CORE PORTFOLIO - SERIES 10 09/07/05 - 12/05/05 12/06/05 - 12/05/12 ------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------ ING GET U.S. CORE PORTFOLIO - SERIES 11 12/06/05 - 03/01/06 03/02/06 - 02/28/03 ------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------ ING GET U.S. CORE PORTFOLIO - SERIES 12 03/02/06 - 05/31/06 06/01/06 - 05/30/13 ------------------------------------------------------------------------------------
* Formerly known as ING GET Fund. IV-1 ILIAC Variable Annuity - 134789 -------------------------------------------------------------------------------- APPENDIX V -------------------------------------------------------------------------------- CONDENSED FINANCIAL INFORMATION Except for subaccounts which did not commence operations as of December 31, 2004, the following tables give (1) the accumulation unit value (AUV) at the beginning of the period, (2) the AUV at the end of the period and (3) the total number of accumulation units outstanding at the end of the period for each subaccount of Variable Annuity Account B available under the contracts for the indicated periods. For those subaccounts that commenced operations during the period ended December 31, 2004 the "Value at beginning of period" shown is the value at first date of investment. For those subaccounts that ended operations during the period ended December 31, 2004 the "Value at end of period" shown is the value at the last date of investment. TABLE I FOR CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 0.95% (SELECTED DATA FOR ACCUMULATION UNITS OUTSTANDING THROUGHOUT EACH PERIOD)
2004 2003 2002 2001 ---- ---- ---- ---- AIM V.I. CAPITAL APPRECIATION FUND (Funds were first received in this option during October 1998) Value at beginning of period $9.46 $7.37 $9.841 $12.951 Value at end of period $9.99 $9.46 $7.37 $9.841 Number of accumulation units outstanding at end of period 360,589 445,452 501,618 613,912 AIM V.I. CORE EQUITY FUND (Funds were first received in this option during October 1998) Value at beginning of period $9.45 $7.67 $9.172 $12.001 Value at end of period $10.20 $9.45 $7.67 $9.172 Number of accumulation units outstanding at end of period 707,926 859,272 948,642 1,160,320 AIM V.I. GOVERNMENT SECURITIES FUND (Funds were first received in this option during September 2000) Value at beginning of period $12.37 $12.36 $11.383 $10.800 Value at end of period $12.57 $12.37 $12.36 $11.383 Number of accumulation units outstanding at end of period 351,285 346,392 590,034 178,808 AIM V.I. GROWTH FUND (Funds were first received in this option during October 1998) Value at beginning of period $6.62 $5.09 $7.446 $11.371 Value at end of period $7.09 $6.62 $5.09 $7.446 Number of accumulation units outstanding at end of period 596,277 686,221 753,288 964,134 AIM V.I. PREMIER EQUITY FUND (Funds were first received in this option during October 1998) Value at beginning of period $8.56 $6.91 $10.001 $11.548 Value at end of period $8.97 $8.56 $6.91 $10.001 Number of accumulation units outstanding at end of period 982,943 1,268,376 1,508,348 1,985,504 ALLIANCEBERNSTEIN GROWTH AND INCOME PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $10.20 $7.77 $10.068 $10.129 Value at end of period $11.26 $10.20 $7.77 $10.068 Number of accumulation units outstanding at end of period 1,340,371 1,037,180 826,949 713,345 2000 1999 1998 ---- ---- ---- AIM V.I. CAPITAL APPRECIATION FUND (Funds were first received in this option during October 1998) Value at beginning of period $14.675 $10.245 $7.522 Value at end of period $12.951 $14.675 $10.245 Number of accumulation units outstanding at end of period 552,619 190,831 10,913 AIM V.I. CORE EQUITY FUND (Funds were first received in this option during October 1998) Value at beginning of period $14.179 $10.663 $7.948 Value at end of period $12.001 $14.179 $10.663 Number of accumulation units outstanding at end of period 1,098,096 370,289 3,666 AIM V.I. GOVERNMENT SECURITIES FUND (Funds were first received in this option during September 2000) Value at beginning of period $10.488 Value at end of period $10.800 Number of accumulation units outstanding at end of period 8,235 AIM V.I. GROWTH FUND (Funds were first received in this option during October 1998) Value at beginning of period $14.438 $10.779 $7.856 Value at end of period $11.371 $14.438 $10.779 Number of accumulation units outstanding at end of period 935,078 300,327 11,163 AIM V.I. PREMIER EQUITY FUND (Funds were first received in this option during October 1998) Value at beginning of period $13.659 $10.616 $7.820 Value at end of period $11.548 $13.659 $10.616 Number of accumulation units outstanding at end of period 1,793,243 895,401 27,668 ALLIANCEBERNSTEIN GROWTH AND INCOME PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $9.778 Value at end of period $10.129 Number of accumulation units outstanding at end of period 29,928
V-1 ILIAC Variable Annuity - 134789
2004 2003 2002 2001 ---- ---- ---- ---- ALLIANCEBERNSTEIN LARGE CAP GROWTH PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $5.26 $4.29 $6.249 $7.620 Value at end of period $5.66 $5.26 $4.29 $6.249 Number of accumulation units outstanding at end of period 367,755 379,025 366,995 378,917 ALLIANCEBERNSTEIN VPSF SMALL CAP GROWTH (Funds were first received in this option during October 2000) Value at beginning of period $8.19 $5.55 $8.218 $9.511 Value at end of period $9.29 $8.19 $5.55 $8.218 Number of accumulation units outstanding at end of period 166,825 134,788 42,354 23,023 FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $11.91 $9.36 $10.424 $11.993 Value at end of period $13.62 $11.91 $9.36 $10.424 Number of accumulation units outstanding at end of period 3,122,247 2,257,322 2,018,022 2,109,547 FIDELITY(R) VIP EQUITY-INCOME PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $11.21 $8.68 $10.553 $11.210 Value at end of period $12.38 $11.21 $8.68 $10.553 Number of accumulation units outstanding at end of period 2,406,797 1,917,301 1,734,825 1,805,355 FIDELITY(R) VIP GROWTH PORTFOLIO (Funds were first received in this option during September 1999) Value at beginning of period $8.29 $6.30 $9.097 $11.154 Value at end of period $8.49 $8.29 $6.30 $9.097 Number of accumulation units outstanding at end of period 1,649,808 1,906,545 1,714,741 1,711,082 FIDELITY(R) VIP HIGH INCOME PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $8.31 $6.59 $6.436 $7.362 Value at end of period $9.02 $8.31 $6.59 $6.436 Number of accumulation units outstanding at end of period 988,970 1,157,540 893,040 941,816 ING AMERICAN FUNDS GROWTH PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period $10.02 Value at end of period $10.50 Number of accumulation units outstanding at end of period 64,970 ING AMERICAN FUNDS GROWTH-INCOME PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period $10.08 Value at end of period $10.37 Number of accumulation units outstanding at end of period 77,766 ING AMERICAN FUNDS INTERNATIONAL PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period $9.92 Value at end of period $10.61 Number of accumulation units outstanding at end of period 458,582 ING JPMORGAN FLEMING INTERNATIONAL PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $8.70 $6.79 $8.364 $11.557 Value at end of period $10.25 $8.70 $6.79 $8.364 Number of accumulation units outstanding at end of period 996,681 1,004,101 868,696 856,532 ING LEGG MASON VALUE PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period $10.24 Value at end of period $10.96 Number of accumulation units outstanding at end of period 43,882 2000 1999 1998 ---- ---- ---- ALLIANCEBERNSTEIN LARGE CAP GROWTH PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $9.283 Value at end of period $7.620 Number of accumulation units outstanding at end of period 83,126 ALLIANCEBERNSTEIN VPSF SMALL CAP GROWTH (Funds were first received in this option during October 2000) Value at beginning of period $10.602 Value at end of period $9.511 Number of accumulation units outstanding at end of period 1,070 FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $12.966 $10.535 $8.083 Value at end of period $11.993 $12.966 $10.535 Number of accumulation units outstanding at end of period 1,991,818 1,126,347 42,196 FIDELITY(R) VIP EQUITY-INCOME PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $10.438 $9.911 $8.459 Value at end of period $11.210 $10.438 $9.911 Number of accumulation units outstanding at end of period 1,176,439 735,175 48,260 FIDELITY(R) VIP GROWTH PORTFOLIO (Funds were first received in this option during September 1999) Value at beginning of period $12.649 $10.265 Value at end of period $11.154 $12.649 Number of accumulation units outstanding at end of period 1,214,067 84,394 FIDELITY(R) VIP HIGH INCOME PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $9.586 $8.949 $8.626 Value at end of period $7.362 $9.586 $8.949 Number of accumulation units outstanding at end of period 887,740 590,621 40,909 ING AMERICAN FUNDS GROWTH PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period ING AMERICAN FUNDS GROWTH-INCOME PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period ING AMERICAN FUNDS INTERNATIONAL PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period ING JPMORGAN FLEMING INTERNATIONAL PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $14.511 $9.248 $8.553 Value at end of period $11.557 $14.511 $9.248 Number of accumulation units outstanding at end of period 695,491 292,270 46,182 ING LEGG MASON VALUE PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period
V-2 ILIAC Variable Annuity - 134789
2004 2003 2002 2001 ---- ---- ---- ---- ING MFS CAPITAL OPPORTUNITIES PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $9.18 $7.23 $10.456 $14.030 Value at end of period $10.26 $9.18 $7.23 $10.456 Number of accumulation units outstanding at end of period 555,400 666,673 760,839 863,568 ING SALOMON BROTHERS AGGRESSIVE GROWTH PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $7.10 $5.19 $8.099 $10.933 Value at end of period $7.72 $7.10 $5.19 $8.099 Number of accumulation units outstanding at end of period 556,578 664,936 688,422 853,538 ING UBS U.S. LARGE CAP EQUITY PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $8.48 $6.85 $9.211 $11.755 Value at end of period $9.64 $8.48 $6.85 $9.211 Number of accumulation units outstanding at end of period 341,549 331,059 358,337 416,034 ING VP BALANCED PORTFOLIO, INC. (Funds were first received in this option during November 1998) Value at beginning of period $11.37 $9.66 $10.870 $11.457 Value at end of period $12.32 $11.37 $9.66 $10.870 Number of accumulation units outstanding at end of period 1,305,749 1,029,178 993,956 1,075,274 ING VP GLOBAL SCIENCE AND TECHNOLOGY PORTFOLIO (Funds were first received in this option during May 2000) Value at beginning of period $3.74 $2.59 $4.458 $5.842 Value at end of period $3.65 $3.74 $2.59 $4.458 Number of accumulation units outstanding at end of period 466,053 729,378 588,646 572,939 ING VP GROWTH AND INCOME PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $7.60 $6.09 $8.195 $10.140 Value at end of period $8.16 $7.60 $6.09 $8.195 Number of accumulation units outstanding at end of period 1,061,351 1,213,385 1,413,021 1,650,395 ING VP GROWTH PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $8.03 $6.22 $8.834 $12.229 Value at end of period $8.52 $8.03 $6.22 $8.834 Number of accumulation units outstanding at end of period 554,359 667,168 744,203 962,023 ING VP INDEX PLUS LARGECAP PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $9.84 $7.87 $10.129 $11.839 Value at end of period $10.77 $9.84 $7.87 $10.129 Number of accumulation units outstanding at end of period 2,759,569 3,215,532 3,628,671 4,201,884 ING VP INTERMEDIATE BOND PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $13.41 $12.73 $11.867 $11.018 Value at end of period $13.93 $13.41 $12.73 $11.867 Number of accumulation units outstanding at end of period 1,069,558 1,257,971 1,452,812 1,338,812 ING VP INTERNATIONAL EQUITY PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $7.75 $5.93 $8.160 $10.824 Value at end of period $9.00 $7.75 $5.93 $8.160 Number of accumulation units outstanding at end of period 355,722 314,549 273,415 304,009 2000 1999 1998 ---- ---- ---- ING MFS CAPITAL OPPORTUNITIES PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $15.023 $10.193 $9.507 Value at end of period $14.030 $15.023 $10.193 Number of accumulation units outstanding at end of period 643,763 207,410 10,086 ING SALOMON BROTHERS AGGRESSIVE GROWTH PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $15.499 $10.371 $7.999 Value at end of period $10.933 $15.499 $10.371 Number of accumulation units outstanding at end of period 844,849 360,244 11,391 ING UBS U.S. LARGE CAP EQUITY PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $12.424 $10.113 $8.805 Value at end of period $11.755 $12.424 $10.113 Number of accumulation units outstanding at end of period 383,389 208,889 4,604 ING VP BALANCED PORTFOLIO, INC. (Funds were first received in this option during November 1998) Value at beginning of period $11.632 $10.337 $9.555 Value at end of period $11.457 $11.632 $10.337 Number of accumulation units outstanding at end of period 788,863 417,961 5,235 ING VP GLOBAL SCIENCE AND TECHNOLOGY PORTFOLIO (Funds were first received in this option during May 2000) Value at beginning of period $9.999 Value at end of period $5.842 Number of accumulation units outstanding at end of period 367,378 ING VP GROWTH AND INCOME PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $11.498 $9.886 $7.862 Value at end of period $10.140 $11.498 $9.886 Number of accumulation units outstanding at end of period 1,630,201 1,093,630 125,488 ING VP GROWTH PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $14.022 $10.489 $8.387 Value at end of period $12.229 $14.022 $10.489 Number of accumulation units outstanding at end of period 1,034,464 453,570 8,460 ING VP INDEX PLUS LARGECAP PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $13.193 $10.716 $8.469 Value at end of period $11.839 $13.193 $10.716 Number of accumulation units outstanding at end of period 4,191,119 2,135,759 31,054 ING VP INTERMEDIATE BOND PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $10.145 $10.319 $10.157 Value at end of period $11.018 $10.145 $10.319 Number of accumulation units outstanding at end of period 722,145 708,744 16,582 ING VP INTERNATIONAL EQUITY PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $13.715 $9.149 $8.583 Value at end of period $10.824 $13.715 $9.149 Number of accumulation units outstanding at end of period 274,728 75,017 587
V-3 ILIAC Variable Annuity - 134789
2004 2003 2002 2001 ---- ---- ---- ---- ING VP MAGNACAP PORTFOLIO (Funds were first received in this option during May 2001) Value at beginning of period $9.22 $7.12 $9.335 $9.602 Value at end of period $9.95 $9.22 $7.12 $9.335 Number of accumulation units outstanding at end of period 60,269 54,558 35,551 28,149 ING VP MIDCAP OPPORTUNITIES PORTFOLIO (Funds were first received in this option during April 2001) Value at beginning of period $8.41 $6.21 $8.476 $10.181 Value at end of period $9.26 $8.41 $6.21 $8.476 Number of accumulation units outstanding at end of period 349,195 219,160 120,171 31,788 ING VP MONEY MARKET PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $11.58 $11.59 $11.515 $11.186 Value at end of period $11.60 $11.58 $11.59 $11.515 Number of accumulation units outstanding at end of period 2,815,301 1,967,775 3,154,101 3,693,592 ING VP SMALL COMPANY PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $13.67 $10.04 $13.205 $12.820 Value at end of period $15.49 $13.67 $10.04 $13.205 Number of accumulation units outstanding at end of period 1,151,775 1,313,138 1,077,683 886,919 ING VP SMALLCAP OPPORTUNITIES PORTFOLIO (Funds were first received in this option during April 2001) Value at beginning of period $6.49 $4.73 $8.497 $10.065 Value at end of period $7.07 $6.49 $4.73 $8.497 Number of accumulation units outstanding at end of period 228,383 175,467 117,669 73,607 JANUS ASPEN BALANCED PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $13.15 $11.64 $12.560 $13.308 Value at end of period $14.13 $13.15 $11.64 $12.560 Number of accumulation units outstanding at end of period 2,345,079 2,765,469 3,258,035 3,515,601 JANUS ASPEN LARGE CAP GROWTH PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $9.35 $7.16 $9.842 $13.203 Value at end of period $9.68 $9.35 $7.16 $9.842 Number of accumulation units outstanding at end of period 1,452,287 1,932,748 2,342,510 2,954,711 JANUS ASPEN MID CAP GROWTH PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $9.54 $7.13 $9.985 $16.650 Value at end of period $11.41 $9.54 $7.13 $9.985 Number of accumulation units outstanding at end of period 1,735,478 1,724,864 1,964,783 2,548,970 JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $9.07 $7.39 $10.010 $13.030 Value at end of period $9.41 $9.07 $7.39 $10.010 Number of accumulation units outstanding at end of period 2,517,662 3,033,409 3,739,037 4,534,179 JENNISON PORTFOLIO (Funds were first received in this option during June 2001) Value at beginning of period $7.79 $6.07 $8.903 $9.126 Value at end of period $8.43 $7.79 $6.07 $8.903 Number of accumulation units outstanding at end of period 31,154 23,315 17,204 16,482 MFS(R) TOTAL RETURN SERIES (Funds were first received in this option during November 1998) Value at beginning of period $12.82 $11.13 $11.850 $11.934 Value at end of period $14.14 $12.82 $11.13 $11.850 Number of accumulation units outstanding at end of period 2,060,200 1,339,016 1,138,016 1,083,172 2000 1999 1998 ---- ---- ---- ING VP MAGNACAP PORTFOLIO (Funds were first received in this option during May 2001) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period ING VP MIDCAP OPPORTUNITIES PORTFOLIO (Funds were first received in this option during April 2001) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period ING VP MONEY MARKET PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $10.615 $10.199 $10.122 Value at end of period $11.186 $10.615 $10.199 Number of accumulation units outstanding at end of period 2,214,734 2,174,383 103,626 ING VP SMALL COMPANY PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $12.128 $9.357 $8.799 Value at end of period $12.820 $12.128 $9.357 Number of accumulation units outstanding at end of period 578,289 163,679 13,538 ING VP SMALLCAP OPPORTUNITIES PORTFOLIO (Funds were first received in this option during April 2001) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period JANUS ASPEN BALANCED PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $13.742 $10.945 $9.175 Value at end of period $13.308 $13.742 $10.945 Number of accumulation units outstanding at end of period 3,217,068 1,721,022 114,603 JANUS ASPEN LARGE CAP GROWTH PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $15.599 $10.938 $7.907 Value at end of period $13.203 $15.599 $10.938 Number of accumulation units outstanding at end of period 3,180,106 1,611,327 138,459 JANUS ASPEN MID CAP GROWTH PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $24.654 $11.042 $7.183 Value at end of period $16.650 $24.654 $11.042 Number of accumulation units outstanding at end of period 2,655,062 1,018,787 18,318 JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $15.599 $9.576 $7.245 Value at end of period $13.030 $15.599 $9.576 Number of accumulation units outstanding at end of period 4,326,254 1,828,183 63,712 JENNISON PORTFOLIO (Funds were first received in this option during June 2001) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period MFS(R) TOTAL RETURN SERIES (Funds were first received in this option during November 1998) Value at beginning of period $10.385 $10.171 $9.712 Value at end of period $11.934 $10.385 $10.171 Number of accumulation units outstanding at end of period 485,471 321,447 11,625
V-4 ILIAC Variable Annuity - 134789
2004 2003 2002 2001 ---- ---- ---- ---- OPPENHEIMER AGGRESSIVE GROWTH FUND/VA (Funds were first received in this option during October 1998) Value at beginning of period $9.07 $7.29 $10.191 $14.970 Value at end of period $10.76 $9.07 $7.29 $10.191 Number of accumulation units outstanding at end of period 535,637 575,555 566,444 733,701 OPPENHEIMER MAIN STREET FUND(R)/VA (Funds were first received in this option during October 1998) Value at beginning of period $8.88 $7.08 $8.801 $9.891 Value at end of period $9.63 $8.88 $7.08 $8.801 Number of accumulation units outstanding at end of period 1,000,860 957,263 825,724 872,461 OPPENHEIMER STRATEGIC BOND FUND/VA (Funds were first received in this option during November 1998) Value at beginning of period $13.15 $11.24 $10.562 $10.171 Value at end of period $14.15 $13.15 $11.24 $10.562 Number of accumulation units outstanding at end of period 821,225 508,541 535,397 554,902 SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO (Funds were first received in this option during January 2002) Value at beginning of period $7.94 $5.76 $7.540 Value at end of period $9.13 $7.94 $5.76 Number of accumulation units outstanding at end of period 179,351 100,681 9,143 UBS U.S. ALLOCATION PORTFOLIO (Funds were first received in this option during May 1999) Value at beginning of period $8.61 $6.83 $8.944 $10.326 Value at end of period $9.41 $8.61 $6.83 $8.944 Number of accumulation units outstanding at end of period 105,312 184,873 198,038 229,676 2000 1999 1998 ---- ---- ---- OPPENHEIMER AGGRESSIVE GROWTH FUND/VA (Funds were first received in this option during October 1998) Value at beginning of period $17.027 $9.362 $7.289 Value at end of period $14.970 $17.027 $9.362 Number of accumulation units outstanding at end of period 614,552 102,852 730 OPPENHEIMER MAIN STREET FUND(R)/VA (Funds were first received in this option during October 1998) Value at beginning of period $10.946 $9.080 $6.913 Value at end of period $9.891 $10.946 $9.080 Number of accumulation units outstanding at end of period 768,952 341,458 27,241 OPPENHEIMER STRATEGIC BOND FUND/VA (Funds were first received in this option during November 1998) Value at beginning of period $10.005 $9.823 $9.550 Value at end of period $10.171 $10.005 $9.823 Number of accumulation units outstanding at end of period 410,623 247,095 21,480 SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO (Funds were first received in this option during January 2002) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period UBS U.S. ALLOCATION PORTFOLIO (Funds were first received in this option during May 1999) Value at beginning of period $10.651 $9.451 Value at end of period $10.326 $10.651 Number of accumulation units outstanding at end of period 187,906 101,508
TABLE II FOR CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.25% (SELECTED DATA FOR ACCUMULATION UNITS OUTSTANDING THROUGHOUT EACH PERIOD)
2004 2003 2002 2001 ---- ---- ---- ---- AIM V.I. CAPITAL APPRECIATION FUND (Funds were first received in this option during October 1998) Value at beginning of period $9.30 $7.27 $9.738 $12.855 Value at end of period $9.80 $9.30 $7.27 $9.738 Number of accumulation units outstanding at end of period 498,002 595,056 657,037 752,138 AIM V.I. CORE EQUITY FUND (Funds were first received in this option during October 1998) Value at beginning of period $9.30 $7.57 $9.076 $11.912 Value at end of period $10.00 $9.30 $7.57 $9.076 Number of accumulation units outstanding at end of period 1,122,563 1,330,081 1,538,823 1,890,198 AIM V.I. GOVERNMENT SECURITIES FUND (Funds were first received in this option during January 2001) Value at beginning of period $12.23 $12.26 $11.325 $10.843 Value at end of period $12.39 $12.23 $12.26 $11.325 Number of accumulation units outstanding at end of period 405,963 467,445 768,636 245,192 AIM V.I. GROWTH FUND (Funds were first received in this option during October 1998) Value at beginning of period $6.51 $5.02 $7.369 $11.288 Value at end of period $6.96 $6.51 $5.02 $7.369 Number of accumulation units outstanding at end of period 920,755 1,067,508 1,178,462 1,455,036 2000 1999 1998 ---- ---- ---- AIM V.I. CAPITAL APPRECIATION FUND (Funds were first received in this option during October 1998) Value at beginning of period $14.611 $10.231 $7.914 Value at end of period $12.855 $14.611 $10.231 Number of accumulation units outstanding at end of period 701,844 317,266 17,420 AIM V.I. CORE EQUITY FUND (Funds were first received in this option during October 1998) Value at beginning of period $14.117 $10.649 $8.179 Value at end of period $11.912 $14.117 $10.649 Number of accumulation units outstanding at end of period 1,809,797 938,411 9,968 AIM V.I. GOVERNMENT SECURITIES FUND (Funds were first received in this option during January 2001) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AIM V.I. GROWTH FUND (Funds were first received in this option during October 1998) Value at beginning of period $14.375 $10.764 $8.120 Value at end of period $11.288 $14.375 $10.764 Number of accumulation units outstanding at end of period 1,389,231 722,832 14,904
V-5 ILIAC Variable Annuity - 134789
2004 2003 2002 2001 ---- ---- ---- ---- AIM V.I. PREMIER EQUITY FUND (Funds were first received in this option during October 1998) Value at beginning of period $8.42 $6.82 $9.897 $11.463 Value at end of period $8.79 $8.42 $6.82 $9.897 Number of accumulation units outstanding at end of period 1,636,626 2,017,119 2,427,698 3,031,052 ALLIANCEBERNSTEIN GROWTH AND INCOME PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $10.09 $7.71 $10.017 $10.108 Value at end of period $11.10 $10.09 $7.71 $10.017 Number of accumulation units outstanding at end of period 1,421,683 1,055,320 882,219 929,829 ALLIANCEBERNSTEIN LARGE CAP GROWTH PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $5.20 $4.26 $6.217 $7.605 Value at end of period $5.58 $5.20 $4.26 $6.217 Number of accumulation units outstanding at end of period 336,525 323,966 306,904 313,435 ALLIANCEBERNSTEIN QUASAR PORTFOLIO (Funds were first received in this option during October 2000) Value at beginning of period $8.10 $5.51 $8.177 $9.491 Value at end of period $9.16 $8.10 $5.51 $8.177 Number of accumulation units outstanding at end of period 164,699 165,581 30,165 36,073 FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO (Funds were first received in this option during September 1998) Value at beginning of period $11.71 $9.23 $10.315 $11.904 Value at end of period $13.36 $11.71 $9.23 $10.315 Number of accumulation units outstanding at end of period 3,063,454 2,423,626 2,369,434 2,524,943 FIDELITY(R) VIP EQUITY-INCOME PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $11.02 $8.56 $10.443 $11.127 Value at end of period $12.14 $11.02 $8.56 $10.443 Number of accumulation units outstanding at end of period 2,738,588 2,405,810 2,273,947 2,332,214 FIDELITY(R) VIP GROWTH PORTFOLIO (Funds were first received in this option during September 1999) Value at beginning of period $8.17 $6.23 $9.027 $11.102 Value at end of period $8.34 $8.17 $6.23 $9.027 Number of accumulation units outstanding at end of period 1,506,470 1,615,540 1,513,916 1,544,437 FIDELITY(R) VIP HIGH INCOME PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $8.18 $6.51 $6.369 $7.307 Value at end of period $8.85 $8.18 $6.51 $6.369 Number of accumulation units outstanding at end of period 1,030,797 1,181,961 908,261 1,005,301 ING AMERICAN FUNDS GROWTH PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period $9.95 Value at end of period $10.50 Number of accumulation units outstanding at end of period 52,636 ING AMERICAN FUNDS GROWTH-INCOME PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period $10.01 Value at end of period $10.37 Number of accumulation units outstanding at end of period 73,449 ING AMERICAN FUNDS INTERNATIONAL PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period $9.92 Value at end of period $10.60 Number of accumulation units outstanding at end of period 128,126 2000 1999 1998 ---- ---- ---- AIM V.I. PREMIER EQUITY FUND (Funds were first received in this option during October 1998) Value at beginning of period $13.599 $10.601 $8.093 Value at end of period $11.463 $13.599 $10.601 Number of accumulation units outstanding at end of period 2,930,390 1,538,846 29,486 ALLIANCEBERNSTEIN GROWTH AND INCOME PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $9.765 Value at end of period $10.108 Number of accumulation units outstanding at end of period 16,099 ALLIANCEBERNSTEIN LARGE CAP GROWTH PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $9.083 Value at end of period $7.605 Number of accumulation units outstanding at end of period 76,848 ALLIANCEBERNSTEIN QUASAR PORTFOLIO (Funds were first received in this option during October 2000) Value at beginning of period $10.504 Value at end of period $9.491 Number of accumulation units outstanding at end of period 431 FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO (Funds were first received in this option during September 1998) Value at beginning of period $12.909 $10.521 $8.746 Value at end of period $11.904 $12.909 $10.521 Number of accumulation units outstanding at end of period 2,706,891 1,682,680 29,543 FIDELITY(R) VIP EQUITY-INCOME PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $10.392 $9.897 $8.314 Value at end of period $11.127 $10.392 $9.897 Number of accumulation units outstanding at end of period 2,028,220 1,507,320 59,609 FIDELITY(R) VIP GROWTH PORTFOLIO (Funds were first received in this option during September 1999) Value at beginning of period $12.628 $10.231 Value at end of period $11.102 $12.628 Number of accumulation units outstanding at end of period 1,209,832 124,948 FIDELITY(R) VIP HIGH INCOME PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $9.544 $8.936 $8.411 Value at end of period $7.307 $9.544 $8.936 Number of accumulation units outstanding at end of period 990,111 712,099 19,661 ING AMERICAN FUNDS GROWTH PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period ING AMERICAN FUNDS GROWTH-INCOME PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period ING AMERICAN FUNDS INTERNATIONAL PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period
V-6 ILIAC Variable Annuity - 134789
2004 2003 2002 2001 ---- ---- ---- ---- ING JPMORGAN FLEMING INTERNATIONAL PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $8.56 $6.70 $8.277 $11.472 Value at end of period $10.05 $8.56 $6.70 $8.277 Number of accumulation units outstanding at end of period 918,380 704,367 567,196 529,984 ING LEGG MASON VALUE PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period $10.31 Value at end of period $10.96 Number of accumulation units outstanding at end of period 32,623 ING MFS CAPITAL OPPORTUNITIES PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $9.02 $7.14 $10.347 $13.926 Value at end of period $10.06 $9.02 $7.14 $10.347 Number of accumulation units outstanding at end of period 654,366 726,481 775,399 911,394 ING SALOMON BROTHERS AGGRESSIVE GROWTH PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $6.99 $5.12 $8.015 $10.853 Value at end of period $7.57 $6.99 $5.12 $8.015 Number of accumulation units outstanding at end of period 656,230 747,149 836,353 1,011,359 ING UBS U.S. LARGE CAP EQUITY PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $8.34 $6.76 $9.115 $11.668 Value at end of period $9.45 $8.34 $6.76 $9.115 Number of accumulation units outstanding at end of period 503,215 549,257 619,494 766,265 ING VP BALANCED PORTFOLIO, INC. (Funds were first received in this option during September 1998) Value at beginning of period $11.18 $9.53 $10.757 $11.372 Value at end of period $12.08 $11.18 $9.53 $10.757 Number of accumulation units outstanding at end of period 964,065 742,506 701,902 759,422 ING VP GLOBAL SCIENCE AND TECHNOLOGY PORTFOLIO (Funds were first received in this option during May 2000) Value at beginning of period $3.69 $2.57 $4.435 $5.830 Value at end of period $3.60 $3.69 $2.57 $4.435 Number of accumulation units outstanding at end of period 439,023 508,346 381,818 433,715 ING VP GROWTH AND INCOME PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $7.48 $6.01 $8.110 $10.065 Value at end of period $8.00 $7.48 $6.01 $8.110 Number of accumulation units outstanding at end of period 1,142,343 1,277,114 1,439,279 1,759,669 ING VP GROWTH PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $7.90 $6.13 $8.742 $12.139 Value at end of period $8.36 $7.90 $6.13 $8.742 Number of accumulation units outstanding at end of period 539,251 596,441 640,934 822,257 ING VP INDEX PLUS LARGECAP PORTFOLIO (Funds were first received in this option during September 1998) Value at beginning of period $9.68 $7.77 $10.024 $11.752 Value at end of period $10.57 $9.68 $7.77 $10.024 Number of accumulation units outstanding at end of period 2,357,139 2,732,299 3,014,921 3,558,547 ING VP INTERMEDIATE BOND PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $13.19 $12.56 $11.743 $10.937 Value at end of period $13.66 $13.19 $12.56 $11.743 Number of accumulation units outstanding at end of period 1,246,912 1,229,859 1,436,808 1,394,133 2000 1999 1998 ---- ---- ---- ING JPMORGAN FLEMING INTERNATIONAL PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $14.448 $9.236 $8.395 Value at end of period $11.472 $14.448 $9.236 Number of accumulation units outstanding at end of period 453,858 180,822 25,860 ING LEGG MASON VALUE PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period ING MFS CAPITAL OPPORTUNITIES PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $14.957 $10.180 $9.302 Value at end of period $13.926 $14.957 $10.180 Number of accumulation units outstanding at end of period 845,124 361,089 9,561 ING SALOMON BROTHERS AGGRESSIVE GROWTH PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $15.431 $10.357 $6.702 Value at end of period $10.853 $15.431 $10.357 Number of accumulation units outstanding at end of period 1,063,458 421,059 13,509 ING UBS U.S. LARGE CAP EQUITY PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $12.370 $10.099 $9.089 Value at end of period $11.668 $12.370 $10.099 Number of accumulation units outstanding at end of period 740,495 434,221 36,363 ING VP BALANCED PORTFOLIO, INC. (Funds were first received in this option during September 1998) Value at beginning of period $11.581 $10.323 $9.276 Value at end of period $11.372 $11.581 $10.323 Number of accumulation units outstanding at end of period 741,768 403,187 17,681 ING VP GLOBAL SCIENCE AND TECHNOLOGY PORTFOLIO (Funds were first received in this option during May 2000) Value at beginning of period $9.999 Value at end of period $5.830 Number of accumulation units outstanding at end of period 223,693 ING VP GROWTH AND INCOME PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $11.447 $9.872 $7.672 Value at end of period $10.065 $11.447 $9.872 Number of accumulation units outstanding at end of period 1,840,246 1,317,642 55,707 ING VP GROWTH PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $13.961 $10.475 $8.359 Value at end of period $12.139 $13.961 $10.475 Number of accumulation units outstanding at end of period 901,462 536,727 8,297 ING VP INDEX PLUS LARGECAP PORTFOLIO (Funds were first received in this option during September 1998) Value at beginning of period $13.136 $10.702 $8.964 Value at end of period $11.752 $13.136 $10.702 Number of accumulation units outstanding at end of period 3,665,275 2,394,661 94,255 ING VP INTERMEDIATE BOND PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $10.101 $10.305 $10.119 Value at end of period $10.937 $10.101 $10.305 Number of accumulation units outstanding at end of period 1,025,035 806,343 30,949
V-7 ILIAC Variable Annuity - 134789
2004 2003 2002 2001 ---- ---- ---- ---- ING VP INTERNATIONAL EQUITY PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $7.62 $5.85 $8.075 $10.744 Value at end of period $8.82 $7.62 $5.85 $8.075 Number of accumulation units outstanding at end of period 309,684 206,797 174,150 191,553 ING VP MAGNACAP PORTFOLIO (Funds were first received in this option during May 2001) Value at beginning of period $9.14 $7.08 $9.316 $9.567 Value at end of period $9.84 $9.14 $7.08 $9.316 Number of accumulation units outstanding at end of period 58,843 27,368 18,913 6,683 ING VP MIDCAP OPPORTUNITIES PORTFOLIO (Funds were first received in this option during April 2001) Value at beginning of period $8.34 $6.18 $8.458 $10.125 Value at end of period $9.16 $8.34 $6.18 $8.458 Number of accumulation units outstanding at end of period 347,515 263,134 138,997 27,540 ING VP MONEY MARKET PORTFOLIO (Funds were first received in this option during September 1998) Value at beginning of period $11.39 $11.44 $11.396 $11.103 Value at end of period $11.37 $11.39 $11.44 $11.396 Number of accumulation units outstanding at end of period 3,781,977 1,880,007 2,724,201 2,794,371 ING VP SMALL COMPANY PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $13.45 $9.91 $13.068 $12.726 Value at end of period $15.19 $13.45 $9.91 $13.068 Number of accumulation units outstanding at end of period 743,438 709,514 617,861 558,858 ING VP SMALLCAP OPPORTUNITIES PORTFOLIO (Funds were first received in this option during April 2001) Value at beginning of period $6.44 $4.71 $8.479 $10.064 Value at end of period $6.99 $6.44 $4.71 $8.479 Number of accumulation units outstanding at end of period 249,195 233,330 101,824 37,135 JANUS ASPEN BALANCED PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $12.93 $11.48 $12.430 $13.210 Value at end of period $13.86 $12.93 $11.48 $12.430 Number of accumulation units outstanding at end of period 2,462,714 3,012,811 3,601,529 4,073,988 JANUS ASPEN LARGE CAP GROWTH PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $9.19 $7.07 $9.740 $13.106 Value at end of period $9.49 $9.19 $7.07 $9.740 Number of accumulation units outstanding at end of period 2,147,880 2,595,083 3,015,363 3,897,751 JANUS ASPEN MID CAP GROWTH PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $9.38 $7.03 $9.881 $16.527 Value at end of period $11.19 $9.38 $7.03 $9.881 Number of accumulation units outstanding at end of period 1,362,611 1,507,893 1,696,306 2,197,460 JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO (Funds were first received in this option during September 1998) Value at beginning of period $8.92 $7.29 $9.906 $12.934 Value at end of period $9.23 $8.92 $7.29 $9.906 Number of accumulation units outstanding at end of period 2,413,518 2,987,515 3,645,285 4,448,459 JENNISON PORTFOLIO (Funds were first received in this option during June 2001) Value at beginning of period $7.73 $6.04 $8.884 $9.208 Value at end of period $8.34 $7.73 $6.04 $8.884 Number of accumulation units outstanding at end of period 63,454 50,522 42,520 24,556 2000 1999 1998 ---- ---- ---- ING VP INTERNATIONAL EQUITY PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $13.655 $9.137 $8.497 Value at end of period $10.744 $13.655 $9.137 Number of accumulation units outstanding at end of period 211,631 79,291 4,529 ING VP MAGNACAP PORTFOLIO (Funds were first received in this option during May 2001) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period ING VP MIDCAP OPPORTUNITIES PORTFOLIO (Funds were first received in this option during April 2001) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period ING VP MONEY MARKET PORTFOLIO (Funds were first received in this option during September 1998) Value at beginning of period $10.569 $10.186 $10.086 Value at end of period $11.103 $10.569 $10.186 Number of accumulation units outstanding at end of period 1,993,511 1,313,322 44,014 ING VP SMALL COMPANY PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $12.074 $9.345 $7.219 Value at end of period $12.726 $12.074 $9.345 Number of accumulation units outstanding at end of period 419,834 114,138 7,787 ING VP SMALLCAP OPPORTUNITIES PORTFOLIO (Funds were first received in this option during April 2001) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period JANUS ASPEN BALANCED PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $13.681 $10.930 $8.301 Value at end of period $13.210 $13.681 $10.930 Number of accumulation units outstanding at end of period 3,812,377 2,130,090 27,397 JANUS ASPEN LARGE CAP GROWTH PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $15.531 $10.923 $7.596 Value at end of period $13.106 $15.531 $10.923 Number of accumulation units outstanding at end of period 4,430,382 2,407,010 35,759 JANUS ASPEN MID CAP GROWTH PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $24.546 $11.027 $6.858 Value at end of period $16.527 $24.546 $11.027 Number of accumulation units outstanding at end of period 2,338,682 994,780 21,356 JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO (Funds were first received in this option during September 1998) Value at beginning of period $15.531 $9.563 $8.027 Value at end of period $12.934 $15.531 $9.563 Number of accumulation units outstanding at end of period 4,782,841 2,118,680 39,602 JENNISON PORTFOLIO (Funds were first received in this option during June 2001) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period
V-8 ILIAC Variable Annuity - 134789
2004 2003 2002 2001 ---- ---- ---- ---- MFS(R) TOTAL RETURN SERIES (Funds were first received in this option during November 1998) Value at beginning of period $12.61 $10.98 $11.726 $11.846 Value at end of period $13.87 $12.61 $10.98 $11.726 Number of accumulation units outstanding at end of period 2,749,759 2,075,933 1,935,085 1,711,650 OPPENHEIMER AGGRESSIVE GROWTH FUND/VA (Funds were first received in this option during October 1998) Value at beginning of period $8.92 $7.19 $10.085 $14.860 Value at end of period $10.55 $8.92 $7.19 $10.085 Number of accumulation units outstanding at end of period 699,813 717,707 653,599 774,543 OPPENHEIMER MAIN STREET FUND(R)/VA (Funds were first received in this option during October 1998) Value at beginning of period $8.74 $6.98 $8.710 $9.818 Value at end of period $9.45 $8.74 $6.98 $8.710 Number of accumulation units outstanding at end of period 1,555,331 1,573,160 1,503,687 1,636,809 OPPENHEIMER STRATEGIC BOND FUND/VA (Funds were first received in this option during October 1998) Value at beginning of period $12.93 $11.09 $10.453 $10.096 Value at end of period $13.88 $12.93 $11.09 $10.453 Number of accumulation units outstanding at end of period 1,013,638 728,495 629,246 574,226 SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO (Funds were first received in this option during July 2001) Value at beginning of period $7.87 $5.73 $7.521 $9.347 Value at end of period $9.03 $7.87 $5.73 $7.521 Number of accumulation units outstanding at end of period 261,860 129,476 7,304 260 UBS U.S. ALLOCATION PORTFOLIO (Funds were first received in this option during May 1999) Value at beginning of period $8.49 $6.75 $8.871 $10.273 Value at end of period $9.25 $8.49 $6.75 $8.871 Number of accumulation units outstanding at end of period 613,898 921,723 964,640 1,022,443 2000 1999 1998 ---- ---- ---- MFS(R) TOTAL RETURN SERIES (Funds were first received in this option during November 1998) Value at beginning of period $10.339 $10.157 $9.772 Value at end of period $11.846 $10.339 $10.157 Number of accumulation units outstanding at end of period 1,107,686 675,246 12,838 OPPENHEIMER AGGRESSIVE GROWTH FUND/VA (Funds were first received in this option during October 1998) Value at beginning of period $16.952 $9.350 $6.300 Value at end of period $14.860 $16.952 $9.350 Number of accumulation units outstanding at end of period 677,022 139,615 12,609 OPPENHEIMER MAIN STREET FUND(R)/VA (Funds were first received in this option during October 1998) Value at beginning of period $10.898 $9.067 $6.647 Value at end of period $9.818 $10.898 $9.067 Number of accumulation units outstanding at end of period 1,516,368 737,210 41,656 OPPENHEIMER STRATEGIC BOND FUND/VA (Funds were first received in this option during October 1998) Value at beginning of period $9.961 $9.810 $9.566 Value at end of period $10.096 $9.961 $9.810 Number of accumulation units outstanding at end of period 497,551 321,797 13,169 SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO (Funds were first received in this option during July 2001) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period UBS U.S. ALLOCATION PORTFOLIO (Funds were first received in this option during May 1999) Value at beginning of period $10.629 $9.852 Value at end of period $10.273 $10.629 Number of accumulation units outstanding at end of period 917,170 541,487
TABLE III FOR CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.40% (SELECTED DATA FOR ACCUMULATION UNITS OUTSTANDING THROUGHOUT EACH PERIOD)
2004 2003 2002 2001 ---- ---- ---- ---- AIM V.I. CAPITAL APPRECIATION FUND (Funds were first received in this option during November 1998) Value at beginning of period $9.23 $7.23 $9.687 $12.808 Value at end of period $9.70 $9.23 $7.23 $9.687 Number of accumulation units outstanding at end of period 253,033 280,981 329,703 424,755 AIM V.I. CORE EQUITY FUND (Funds were first received in this option during October 1998) Value at beginning of period $9.22 $7.52 $9.029 $11.868 Value at end of period $9.91 $9.22 $7.52 $9.029 Number of accumulation units outstanding at end of period 405,693 474,287 507,917 607,793 AIM V.I. GOVERNMENT SECURITIES FUND (Funds were first received in this option during November 2000) Value at beginning of period $12.16 $12.21 $11.296 $10.767 Value at end of period $12.30 $12.16 $12.21 $11.296 Number of accumulation units outstanding at end of period 180,924 145,354 283,516 86,120 2000 1999 1998 ---- ---- ---- AIM V.I. CAPITAL APPRECIATION FUND (Funds were first received in this option during November 1998) Value at beginning of period $14.579 $10.224 $9.078 Value at end of period $12.808 $14.579 $10.224 Number of accumulation units outstanding at end of period 392,207 156,884 857 AIM V.I. CORE EQUITY FUND (Funds were first received in this option during October 1998) Value at beginning of period $14.086 $10.641 $8.830 Value at end of period $11.868 $14.086 $10.641 Number of accumulation units outstanding at end of period 628,311 259,387 7,172 AIM V.I. GOVERNMENT SECURITIES FUND (Funds were first received in this option during November 2000) Value at beginning of period $10.743 Value at end of period $10.767 Number of accumulation units outstanding at end of period 10,553
V-9 ILIAC Variable Annuity - 134789
2004 2003 2002 2001 ---- ---- ---- ---- AIM V.I. GROWTH FUND (Funds were first received in this option during December 1998) Value at beginning of period $6.46 $4.99 $7.330 $11.246 Value at end of period $6.89 $6.46 $4.99 $7.330 Number of accumulation units outstanding at end of period 294,937 341,365 372,278 500,453 AIM V.I. PREMIER EQUITY FUND (Funds were first received in this option during December 1998) Value at beginning of period $8.35 $6.77 $9.845 $11.420 Value at end of period $8.71 $8.35 $6.77 $9.845 Number of accumulation units outstanding at end of period 624,438 747,410 868,527 1,050,807 ALLIANCEBERNSTEIN GROWTH AND INCOME PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $10.03 $7.68 $9.991 $10.098 Value at end of period $11.03 $10.03 $7.68 $9.991 Number of accumulation units outstanding at end of period 524,886 396,340 356,243 341,168 ALLIANCEBERNSTEIN LARGE CAP GROWTH PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $5.17 $4.24 $6.201 $7.597 Value at end of period $5.54 $5.17 $4.24 $6.201 Number of accumulation units outstanding at end of period 127,190 126,509 138,235 85,676 ALLIANCEBERNSTEIN VPSF SMALL CAP GROWTH (Funds were first received in this option during October 2000) Value at beginning of period $8.06 $5.49 $8.156 $9.482 Value at end of period $9.10 $8.06 $5.49 $8.156 Number of accumulation units outstanding at end of period 42,040 41,352 10,982 8,785 FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $11.62 $9.17 $10.262 $11.860 Value at end of period $13.23 $11.62 $9.17 $10.262 Number of accumulation units outstanding at end of period 1,108,634 908,324 842,283 1,021,502 FIDELITY(R) VIP EQUITY-INCOME PORTFOLIO (Funds were first received in this option during December 1998) Value at beginning of period $10.93 $8.51 $10.388 $11.086 Value at end of period $12.02 $10.93 $8.51 $10.388 Number of accumulation units outstanding at end of period 988,726 767,724 665,354 681,661 FIDELITY(R) VIP GROWTH PORTFOLIO (Funds were first received in this option during October 1999) Value at beginning of period $8.12 $6.20 $8.993 $11.076 Value at end of period $8.27 $8.12 $6.20 $8.993 Number of accumulation units outstanding at end of period 449,122 592,005 531,768 556,572 FIDELITY(R) VIP HIGH INCOME PORTFOLIO (Funds were first received in this option during December 1998) Value at beginning of period $8.11 $6.46 $6.336 $7.280 Value at end of period $8.76 $8.11 $6.46 $6.336 Number of accumulation units outstanding at end of period 357,742 500,839 390,976 442,314 ING AMERICAN FUNDS GROWTH PORTFOLIO (Funds were first received in this option during December 2004) Value at beginning of period $10.38 Value at end of period $10.49 Number of accumulation units outstanding at end of period 4,609 2000 1999 1998 ---- ---- ---- AIM V.I. GROWTH FUND (Funds were first received in this option during December 1998) Value at beginning of period $14.343 $10.757 $9.702 Value at end of period $11.246 $14.343 $10.757 Number of accumulation units outstanding at end of period 539,472 228,578 1,498 AIM V.I. PREMIER EQUITY FUND (Funds were first received in this option during December 1998) Value at beginning of period $13.569 $10.594 $9.664 Value at end of period $11.420 $13.569 $10.594 Number of accumulation units outstanding at end of period 1,085,664 492,467 9,219 ALLIANCEBERNSTEIN GROWTH AND INCOME PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $9.310 Value at end of period $10.098 Number of accumulation units outstanding at end of period 4,460 ALLIANCEBERNSTEIN LARGE CAP GROWTH PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $7.918 Value at end of period $7.597 Number of accumulation units outstanding at end of period 23,775 ALLIANCEBERNSTEIN VPSF SMALL CAP GROWTH (Funds were first received in this option during October 2000) Value at beginning of period $8.851 Value at end of period $9.482 Number of accumulation units outstanding at end of period 296 FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $12.881 $10.514 $8.946 Value at end of period $11.860 $12.881 $10.514 Number of accumulation units outstanding at end of period 1,105,565 604,942 3,861 FIDELITY(R) VIP EQUITY-INCOME PORTFOLIO (Funds were first received in this option during December 1998) Value at beginning of period $10.369 $9.891 $9.412 Value at end of period $11.086 $10.369 $9.891 Number of accumulation units outstanding at end of period 597,258 471,012 9,907 FIDELITY(R) VIP GROWTH PORTFOLIO (Funds were first received in this option during October 1999) Value at beginning of period $12.618 $10.793 Value at end of period $11.076 $12.618 Number of accumulation units outstanding at end of period 444,916 35,352 FIDELITY(R) VIP HIGH INCOME PORTFOLIO (Funds were first received in this option during December 1998) Value at beginning of period $9.523 $8.930 $8.987 Value at end of period $7.280 $9.523 $8.930 Number of accumulation units outstanding at end of period 460,731 244,927 48,476 ING AMERICAN FUNDS GROWTH PORTFOLIO (Funds were first received in this option during December 2004) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period
V-10 ILIAC Variable Annuity - 134789
2004 2003 2002 2001 ---- ---- ---- ---- ING AMERICAN FUNDS GROWTH-INCOME PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period $10.15 Value at end of period $10.36 Number of accumulation units outstanding at end of period 34,306 ING AMERICAN FUNDS INTERNATIONAL PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period $10.00 Value at end of period $10.60 Number of accumulation units outstanding at end of period 149,631 ING JPMORGAN FLEMING INTERNATIONAL PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $8.49 $6.65 $8.234 $11.430 Value at end of period $9.95 $8.49 $6.65 $8.234 Number of accumulation units outstanding at end of period 322,703 435,174 399,228 415,390 ING LEGG MASON VALUE PORTFOLIO (Funds were first received in this option during December 2004) Value at beginning of period $10.69 Value at end of period $10.96 Number of accumulation units outstanding at end of period 2,326 ING MFS CAPITAL OPPORTUNITIES PORTFOLIO (Funds were first received in this option during December 1998) Value at beginning of period $8.95 $7.09 $10.293 $13.875 Value at end of period $9.96 $8.95 $7.09 $10.293 Number of accumulation units outstanding at end of period 166,306 183,337 201,250 268,472 ING SALOMON BROTHERS AGGRESSIVE GROWTH PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $6.93 $5.09 $7.973 $10.812 Value at end of period $7.50 $6.93 $5.09 $7.973 Number of accumulation units outstanding at end of period 233,080 248,251 250,908 336,248 ING UBS U.S. LARGE CAP EQUITY PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $8.27 $6.72 $9.068 $11.625 Value at end of period $9.36 $8.27 $6.72 $9.068 Number of accumulation units outstanding at end of period 182,701 159,053 179,084 239,620 ING VP BALANCED PORTFOLIO, INC. (Funds were first received in this option during November 1998) Value at beginning of period $11.09 $9.46 $10.701 $11.330 Value at end of period $11.97 $11.09 $9.46 $10.701 Number of accumulation units outstanding at end of period 429,399 361,022 324,406 390,130 ING VP GLOBAL SCIENCE AND TECHNOLOGY PORTFOLIO (Funds were first received in this option during May 2000) Value at beginning of period $3.67 $2.56 $4.424 $5.824 Value at end of period $3.58 $3.67 $2.56 $4.424 Number of accumulation units outstanding at end of period 62,319 98,525 55,830 79,126 ING VP GROWTH AND INCOME PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $7.42 $5.97 $8.067 $10.028 Value at end of period $7.93 $7.42 $5.97 $8.067 Number of accumulation units outstanding at end of period 388,591 456,278 490,461 598,188 ING VP GROWTH PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $7.83 $6.09 $8.697 $12.094 Value at end of period $8.28 $7.83 $6.09 $8.697 Number of accumulation units outstanding at end of period 111,972 117,746 122,600 179,315 2000 1999 1998 ---- ---- ---- ING AMERICAN FUNDS GROWTH-INCOME PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period ING AMERICAN FUNDS INTERNATIONAL PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period ING JPMORGAN FLEMING INTERNATIONAL PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $14.416 $9.229 $8.841 Value at end of period $11.430 $14.416 $9.229 Number of accumulation units outstanding at end of period 360,841 122,089 2,368 ING LEGG MASON VALUE PORTFOLIO (Funds were first received in this option during December 2004) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period ING MFS CAPITAL OPPORTUNITIES PORTFOLIO (Funds were first received in this option during December 1998) Value at beginning of period $14.924 $10.173 $9.421 Value at end of period $13.875 $14.924 $10.173 Number of accumulation units outstanding at end of period 258,457 99,417 161 ING SALOMON BROTHERS AGGRESSIVE GROWTH PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $15.397 $10.350 $8.599 Value at end of period $10.812 $15.397 $10.350 Number of accumulation units outstanding at end of period 337,201 173,671 12,479 ING UBS U.S. LARGE CAP EQUITY PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $12.343 $10.092 $8.886 Value at end of period $11.625 $12.343 $10.092 Number of accumulation units outstanding at end of period 281,914 145,910 6,259 ING VP BALANCED PORTFOLIO, INC. (Funds were first received in this option during November 1998) Value at beginning of period $11.555 $10.316 $9.581 Value at end of period $11.330 $11.555 $10.316 Number of accumulation units outstanding at end of period 383,215 237,246 9,447 ING VP GLOBAL SCIENCE AND TECHNOLOGY PORTFOLIO (Funds were first received in this option during May 2000) Value at beginning of period $8.693 Value at end of period $5.824 Number of accumulation units outstanding at end of period 74,724 ING VP GROWTH AND INCOME PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $11.422 $9.866 $8.961 Value at end of period $10.028 $11.422 $9.866 Number of accumulation units outstanding at end of period 609,964 407,605 47,020 ING VP GROWTH PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $13.930 $10.468 $8.899 Value at end of period $12.094 $13.930 $10.468 Number of accumulation units outstanding at end of period 205,559 114,036 2,298
V-11 ILIAC Variable Annuity - 134789
2004 2003 2002 2001 ---- ---- ---- ---- ING VP INDEX PLUS LARGECAP PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $9.60 $7.71 $9.971 $11.709 Value at end of period $10.46 $9.60 $7.71 $9.971 Number of accumulation units outstanding at end of period 1,023,641 1,074,895 1,263,503 1,515,400 ING VP INTERMEDIATE BOND PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $13.08 $12.48 $11.682 $10.896 Value at end of period $13.52 $13.08 $12.48 $11.682 Number of accumulation units outstanding at end of period 438,603 495,079 534,744 504,706 ING VP INTERNATIONAL EQUITY PORTFOLIO (Funds were first received in this option during December 1998) Value at beginning of period $7.56 $5.81 $8.033 $10.704 Value at end of period $8.74 $7.56 $5.81 $8.033 Number of accumulation units outstanding at end of period 128,680 75,410 61,383 79,279 ING VP MAGNACAP PORTFOLIO (Funds were first received in this option during May 2001) Value at beginning of period $9.10 $7.07 $9.306 $9.624 Value at end of period $9.78 $9.10 $7.07 $9.306 Number of accumulation units outstanding at end of period 12,048 5,557 1,232 701 ING VP MIDCAP OPPORTUNITIES PORTFOLIO (Funds were first received in this option during May 2001) Value at beginning of period $8.31 $6.17 $8.449 $9.402 Value at end of period $9.11 $8.31 $6.17 $8.449 Number of accumulation units outstanding at end of period 94,476 81,803 26,454 14,864 ING VP MONEY MARKET PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $11.30 $11.36 $11.336 $11.062 Value at end of period $11.26 $11.30 $11.36 $11.336 Number of accumulation units outstanding at end of period 1,683,216 809,314 1,186,508 1,293,086 ING VP SMALL COMPANY PORTFOLIO (Funds were first received in this option during December 1998) Value at beginning of period $13.34 $9.84 $13.000 $12.679 Value at end of period $15.04 $13.34 $9.84 $13.000 Number of accumulation units outstanding at end of period 229,226 271,334 200,548 165,137 ING VP SMALLCAP OPPORTUNITIES PORTFOLIO (Funds were first received in this option during April 2001) Value at beginning of period $6.41 $4.70 $8.470 $11.291 Value at end of period $6.95 $6.41 $4.70 $8.470 Number of accumulation units outstanding at end of period 78,291 98,422 56,606 14,405 JANUS ASPEN BALANCED PORTFOLIO (Funds were first received in this option during September 1998) Value at beginning of period $12.83 $11.41 $12.365 $13.161 Value at end of period $13.73 $12.83 $11.41 $12.365 Number of accumulation units outstanding at end of period 832,253 1,027,563 1,255,266 1,450,692 JANUS ASPEN LARGE CAP GROWTH PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $9.12 $7.02 $9.689 $13.057 Value at end of period $9.40 $9.12 $7.02 $9.689 Number of accumulation units outstanding at end of period 719,344 852,745 983,467 1,297,820 JANUS ASPEN MID CAP GROWTH PORTFOLIO (Funds were first received in this option during December 1998) Value at beginning of period $9.30 $6.98 $9.829 $16.466 Value at end of period $11.08 $9.30 $6.98 $9.829 Number of accumulation units outstanding at end of period 566,327 568,038 657,392 849,468 2000 1999 1998 ---- ---- ---- ING VP INDEX PLUS LARGECAP PORTFOLIO (Funds were first received in this option during October 1998) Value at beginning of period $13.107 $10.694 $9.134 Value at end of period $11.709 $13.107 $10.694 Number of accumulation units outstanding at end of period 1,645,365 926,393 4,957 ING VP INTERMEDIATE BOND PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $10.078 $10.298 $10.188 Value at end of period $10.896 $10.078 $10.298 Number of accumulation units outstanding at end of period 402,297 300,240 3,930 ING VP INTERNATIONAL EQUITY PORTFOLIO (Funds were first received in this option during December 1998) Value at beginning of period $13.625 $9.131 $8.663 Value at end of period $10.704 $13.625 $9.131 Number of accumulation units outstanding at end of period 82,568 28,091 718 ING VP MAGNACAP PORTFOLIO (Funds were first received in this option during May 2001) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period ING VP MIDCAP OPPORTUNITIES PORTFOLIO (Funds were first received in this option during May 2001) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period ING VP MONEY MARKET PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $10.546 $10.179 $10.120 Value at end of period $11.062 $10.546 $10.179 Number of accumulation units outstanding at end of period 818,340 707,569 47,079 ING VP SMALL COMPANY PORTFOLIO (Funds were first received in this option during December 1998) Value at beginning of period $12.048 $9.338 $8.739 Value at end of period $12.679 $12.048 $9.338 Number of accumulation units outstanding at end of period 119,263 39,754 396 ING VP SMALLCAP OPPORTUNITIES PORTFOLIO (Funds were first received in this option during April 2001) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period JANUS ASPEN BALANCED PORTFOLIO (Funds were first received in this option during September 1998) Value at beginning of period $13.651 $10.923 $9.275 Value at end of period $13.161 $13.651 $10.923 Number of accumulation units outstanding at end of period 1,480,174 778,170 9,108 JANUS ASPEN LARGE CAP GROWTH PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $15.497 $10.915 $9.157 Value at end of period $13.057 $15.497 $10.915 Number of accumulation units outstanding at end of period 1,465,080 647,596 6,648 JANUS ASPEN MID CAP GROWTH PORTFOLIO (Funds were first received in this option during December 1998) Value at beginning of period $24.492 $11.020 $9.497 Value at end of period $16.466 $24.492 $11.020 Number of accumulation units outstanding at end of period 933,621 368,330 944
V-12 ILIAC Variable Annuity - 134789
2004 2003 2002 2001 ---- ---- ---- ---- JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $8.85 $7.24 $9.854 $12.886 Value at end of period $9.14 $8.85 $7.24 $9.854 Number of accumulation units outstanding at end of period 713,488 875,429 1,076,133 1,330,767 JENNISON PORTFOLIO (Funds were first received in this option during June 2001) Value at beginning of period $7.70 $6.02 $8.875 $9.047 Value at end of period $8.29 $7.70 $6.02 $8.875 Number of accumulation units outstanding at end of period 42,622 19,308 4,457 7,748 MFS(R) TOTAL RETURN SERIES (Funds were first received in this option during November 1998) Value at beginning of period $12.51 $10.91 $11.665 $11.803 Value at end of period $13.73 $12.51 $10.91 $11.665 Number of accumulation units outstanding at end of period 788,222 575,689 561,729 515,486 OPPENHEIMER AGGRESSIVE GROWTH FUND/VA (Funds were first received in this option during December 1998) Value at beginning of period $8.84 $7.14 $10.032 $14.805 Value at end of period $10.45 $8.84 $7.14 $10.032 Number of accumulation units outstanding at end of period 180,375 201,788 205,718 257,900 OPPENHEIMER MAIN STREET FUND(R)/VA (Funds were first received in this option during November 1998) Value at beginning of period $8.67 $6.94 $8.664 $9.782 Value at end of period $9.35 $8.67 $6.94 $8.664 Number of accumulation units outstanding at end of period 584,609 492,452 475,185 542,225 OPPENHEIMER STRATEGIC BOND FUND/VA (Funds were first received in this option during December 1998) Value at beginning of period $12.82 $11.02 $10.398 $10.059 Value at end of period $13.74 $12.82 $11.02 $10.398 Number of accumulation units outstanding at end of period 381,381 224,446 209,695 190,058 SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO (Funds were first received in this option during January 2002) Value at beginning of period $7.84 $5.72 $7.280 Value at end of period $8.98 $7.84 $5.72 Number of accumulation units outstanding at end of period 48,006 31,363 7,013 UBS U.S. ALLOCATION PORTFOLIO (Funds were first received in this option during June 1999) Value at beginning of period $8.43 $6.71 $8.835 $10.247 Value at end of period $9.17 $8.43 $6.71 $8.835 Number of accumulation units outstanding at end of period 72,368 86,929 94,577 100,437 2000 1999 1998 ---- ---- ---- JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO (Funds were first received in this option during November 1998) Value at beginning of period $15.497 $9.557 $8.519 Value at end of period $12.886 $15.497 $9.557 Number of accumulation units outstanding at end of period 1,437,826 583,969 7,974 JENNISON PORTFOLIO (Funds were first received in this option during June 2001) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period MFS(R) TOTAL RETURN SERIES (Funds were first received in this option during November 1998) Value at beginning of period $10.317 $10.150 $9.737 Value at end of period $11.803 $10.317 $10.150 Number of accumulation units outstanding at end of period 359,846 307,463 27,534 OPPENHEIMER AGGRESSIVE GROWTH FUND/VA (Funds were first received in this option during December 1998) Value at beginning of period $16.915 $9.343 $8.309 Value at end of period $14.805 $16.915 $9.343 Number of accumulation units outstanding at end of period 262,829 58,765 407 OPPENHEIMER MAIN STREET FUND(R)/VA (Funds were first received in this option during November 1998) Value at beginning of period $10.874 $9.061 $8.449 Value at end of period $9.782 $10.874 $9.061 Number of accumulation units outstanding at end of period 527,870 255,253 1,468 OPPENHEIMER STRATEGIC BOND FUND/VA (Funds were first received in this option during December 1998) Value at beginning of period $9.939 $9.803 $9.768 Value at end of period $10.059 $9.939 $9.803 Number of accumulation units outstanding at end of period 151,921 118,824 10 SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO (Funds were first received in this option during January 2002) Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period UBS U.S. ALLOCATION PORTFOLIO (Funds were first received in this option during June 1999) Value at beginning of period $10.618 $9.567 Value at end of period $10.247 $10.618 Number of accumulation units outstanding at end of period 93,298 49,695
TABLE IV FOR CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.45% (SELECTED DATA FOR ACCUMULATION UNITS OUTSTANDING THROUGHOUT EACH PERIOD)
2004 2003 2002 2001 2000 ---- ---- ---- ---- ---- AIM V.I. CAPITAL APPRECIATION FUND (Funds were first received in this option during August 2000) Value at beginning of period $5.52 $4.33 $5.805 $7.678 $9.935 Value at end of period $5.80 $5.52 $4.33 $5.805 $7.678 Number of accumulation units outstanding at end of period 162,109 232,705 224,044 228,066 100,309
V-13 ILIAC Variable Annuity - 134789
2004 2003 2002 2001 2000 ---- ---- ---- ---- ---- AIM V.I. CORE EQUITY FUND (Funds were first received in this option during September 2000) Value at beginning of period $6.37 $5.20 $6.246 $8.214 $9.846 Value at end of period $6.84 $6.37 $5.20 $6.246 $8.214 Number of accumulation units outstanding at end of period 176,118 200,687 233,332 248,334 61,552 AIM V.I. GOVERNMENT SECURITIES FUND (Funds were first received in this option during October 2000) Value at beginning of period $11.72 $11.77 $10.897 $10.392 $10.090 Value at end of period $11.85 $11.72 $11.77 $10.897 $10.392 Number of accumulation units outstanding at end of period 100,760 93,136 175,025 184,082 918 AIM V.I. GROWTH FUND (Funds were first received in this option during August 2000) Value at beginning of period $4.36 $3.37 $4.958 $7.611 $9.945 Value at end of period $4.65 $4.36 $3.37 $4.958 $7.611 Number of accumulation units outstanding at end of period 214,258 166,356 164,058 256,729 121,073 AIM V.I. PREMIER EQUITY FUND (Funds were first received in this option during September 2000) Value at beginning of period $6.43 $5.21 $7.585 $8.804 $9.590 Value at end of period $6.70 $6.43 $5.21 $7.585 $8.804 Number of accumulation units outstanding at end of period 244,781 299,982 341,816 371,813 83,391 ALLIANCEBERNSTEIN GROWTH AND INCOME PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $10.30 $7.89 $10.272 $10.387 $9.984 Value at end of period $11.32 $10.30 $7.89 $10.272 $10.387 Number of accumulation units outstanding at end of period 457,454 451,492 380,963 433,113 20,209 ALLIANCEBERNSTEIN LARGE CAP GROWTH PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $5.57 $4.57 $6.688 $8.198 $9.505 Value at end of period $5.96 $5.57 $4.57 $6.688 $8.198 Number of accumulation units outstanding at end of period 158,402 190,489 201,715 174,117 38,184 ALLIANCEBERNSTEIN QUASAR PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $7.29 $4.97 $7.384 $8.589 $9.718 Value at end of period $8.23 $7.29 $4.97 $7.384 $8.589 Number of accumulation units outstanding at end of period 76,127 45,523 13,239 16,639 963 FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $9.23 $7.29 $8.163 $9.440 $10.000 Value at end of period $10.51 $9.23 $7.29 $8.163 $9.440 Number of accumulation units outstanding at end of period 569,499 396,289 267,452 229,470 56,160 FIDELITY(R) VIP EQUITY-INCOME PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $10.49 $8.17 $9.978 $10.654 $10.343 Value at end of period $11.53 $10.49 $8.17 $9.978 $10.654 Number of accumulation units outstanding at end of period 620,024 556,680 416,662 402,042 19,341 FIDELITY(R) VIP GROWTH PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $6.26 $4.78 $6.941 $8.554 $9.783 Value at end of period $6.38 $6.26 $4.78 $6.941 $8.554 Number of accumulation units outstanding at end of period 727,963 780,056 678,024 646,257 131,209 FIDELITY(R) VIP HIGH INCOME PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $9.42 $7.51 $7.367 $8.470 $9.860 Value at end of period $10.17 $9.42 $7.51 $7.367 $8.470 Number of accumulation units outstanding at end of period 197,485 182,940 102,212 110,266 13,910
V-14 ILIAC Variable Annuity - 134789
2004 2003 2002 2001 2000 ---- ---- ---- ---- ---- ING AMERICAN FUNDS GROWTH PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period $10.02 Value at end of period $10.49 Number of accumulation units outstanding at end of period 37,155 ING AMERICAN FUNDS INTERNATIONAL PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period $10.08 Value at end of period $10.36 Number of accumulation units outstanding at end of period 7,196 ING AMERICAN FUNDS GROWTH PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period $9.91 Value at end of period $10.60 Number of accumulation units outstanding at end of period 109,098 ING JPMORGAN FLEMING INTERNATIONAL PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $7.25 $5.68 $7.038 $9.775 $9.570 Value at end of period $8.49 $7.25 $5.68 $7.038 $9.775 Number of accumulation units outstanding at end of period 207,690 271,528 289,604 227,334 29,924 ING LEGG MASON VALUE PORTFOLIO (Funds were first received in this option during December 2004) Value at beginning of period $10.31 Value at end of period $10.96 Number of accumulation units outstanding at end of period 339 ING MFS CAPITAL OPPORTUNITIES PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $5.67 $4.49 $6.526 $8.801 $9.991 Value at end of period $6.31 $5.67 $4.49 $6.526 $8.801 Number of accumulation units outstanding at end of period 239,847 245,421 288,030 339,484 54,610 ING SALOMON BROTHERS AGGRESSIVE GROWTH PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $4.87 $3.58 $5.612 $7.612 $8.529 Value at end of period $5.27 $4.87 $3.58 $5.612 $7.612 Number of accumulation units outstanding at end of period 162,986 137,.013 108,235 140,983 24,330 ING UBS U.S. LARGE CAP EQUITY PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $6.20 $5.04 $6.803 $8.726 $9.951 Value at end of period $7.01 $6.20 $5.04 $6.803 $8.726 Number of accumulation units outstanding at end of period 138,044 130,099 151,906 165,808 31,491 ING VP BALANCED PORTFOLIO, INC. (Funds were first received in this option during September 2000) Value at beginning of period $9.32 $7.95 $8.998 $9.532 $9.867 Value at end of period $10.05 $9.32 $7.95 $8.998 $9.532 Number of accumulation units outstanding at end of period 312,115 302,567 241,435 255,686 50,040 ING VP GLOBAL SCIENCE AND TECHNOLOGY PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $3.83 $2.67 $4.622 $6.088 $9.288 Value at end of period $3.73 $3.83 $2.67 $4.622 $6.088 Number of accumulation units outstanding at end of period 139,144 174,872 125,467 115,833 27,854 ING VP GROWTH AND INCOME PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $6.63 $5.33 $7.215 $8.973 $9.481 Value at end of period $7.08 $6.63 $5.33 $7.215 $8.973 Number of accumulation units outstanding at end of period 224,659 206,944 217,039 229,035 37,513
V-15 ILIAC Variable Annuity - 134789
2004 2003 2002 2001 2000 ---- ---- ---- ---- ---- ING VP GROWTH PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $5.19 $4.04 $5.769 $8.027 $9.187 Value at end of period $5.48 $5.19 $4.04 $5.769 $8.027 Number of accumulation units outstanding at end of period 115,521 135,250 121,103 144,533 44,666 ING VP INDEX PLUS LARGECAP PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $7.37 $5.93 $7.662 $9.002 $9.846 Value at end of period $8.03 $7.37 $5.93 $7.662 $9.002 Number of accumulation units outstanding at end of period 691,021 713,781 675,425 649,181 90,026 ING VP INTERMEDIATE BOND PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $12.55 $11.98 $11.222 $10.472 $10.042 Value at end of period $12.97 $12.55 $11.98 $11.222 $10.472 Number of accumulation units outstanding at end of period 380,271 457,789 473,230 358,474 26,415 ING VP INTERNATIONAL EQUITY PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $6.17 $4.74 $6.557 $8.741 $9.183 Value at end of period $7.12 $6.17 $4.74 $6.557 $8.741 Number of accumulation units outstanding at end of period 184,925 137,644 71,158 77,492 27,898 ING VP MAGNACAP PORTFOLIO (Funds were first received in this option during April 2001) Value at beginning of period $9.09 $7.06 $9.303 $9.883 Value at end of period $9.76 $9.09 $7.06 $9.303 Number of accumulation units outstanding at end of period 12,903 6,959 7,235 7,867 ING VP MIDCAP OPPORTUNITIES PORTFOLIO (Funds were first received in this option during April 2001) Value at beginning of period $8.30 $6.16 $8.447 $10.001 Value at end of period $9.09 $8.30 $6.16 $8.447 Number of accumulation units outstanding at end of period 154,308 126,702 78,501 13,287 ING VP MONEY MARKET PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $10.35 $10.40 $10.389 $10.143 $10.044 Value at end of period $10.30 $10.35 $10.40 $10.389 $10.143 Number of accumulation units outstanding at end of period 447,163 545,754 727,899 825,726 101,038 ING VP SMALL COMPANY PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $9.70 $7.16 $9.463 $9.234 $8.762 Value at end of period $10.93 $9.70 $7.16 $9.463 $9.234 Number of accumulation units outstanding at end of period 387,298 436,486 339,072 272,628 19,542 ING VP SMALLCAP OPPORTUNITIES PORTFOLIO (Funds were first received in this option during April 2001) Value at beginning of period $6.40 $4.69 $8.467 $10.136 Value at end of period $6.94 $6.40 $4.69 $8.467 Number of accumulation units outstanding at end of period 90,621 101,400 49,257 18,432 JANUS ASPEN BALANCED PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $9.48 $8.44 $9.152 $9.746 $9.982 Value at end of period $10.14 $9.48 $8.44 $9.152 $9.746 Number of accumulation units outstanding at end of period 447,567 551,463 678,472 656,847 175,868
V-16 ILIAC Variable Annuity - 134789
2004 2003 2002 2001 2000 ---- ---- ---- ---- ---- JANUS ASPEN LARGE CAP GROWTH PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $5.79 $4.46 $6.162 $8.308 $10.000 Value at end of period $5.97 $5.79 $4.46 $6.162 $8.308 Number of accumulation units outstanding at end of period 240,635 290,986 327,790 388,433 139,032 JANUS ASPEN MID CAP GROWTH PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $3.93 $2.96 $4.161 $6.975 $10.000 Value at end of period $4.68 $3.93 $2.96 $4.161 $6.975 Number of accumulation units outstanding at end of period 676,302 541,527 555,398 600,078 131,436 JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $5.88 $4.81 $6.550 $8.570 $10.000 Value at end of period $6.07 $5.88 $4.81 $6.550 $8.570 Number of accumulation units outstanding at end of period 530,921 615,336 771,583 821,676 255,501 JENNISON PORTFOLIO (Funds were first received in this option during June 2001) Value at beginning of period $7.69 $6.02 $8.872 $8.978 Value at end of period $8.27 $7.69 $6.02 $8.872 Number of accumulation units outstanding at end of period 14,825 12,326 879 25,615 MFS(R) TOTAL RETURN SERIES (Funds were first received in this option during September 2000) Value at beginning of period $11.39 $9.94 $10.632 $10.763 $10.244 Value at end of period $12.50 $11.39 $9.94 $10.632 $10.763 Number of accumulation units outstanding at end of period 845,251 710,713 617,718 560,757 23,734 OPPENHEIMER AGGRESSIVE GROWTH FUND/VA (Funds were first received in this option during August 2000) Value at beginning of period $4.07 $3.29 $4.625 $6.828 $10.000 Value at end of period $4.81 $4.07 $3.29 $4.625 $6.828 Number of accumulation units outstanding at end of period 400,631 408,856 507,860 548,565 159,723 OPPENHEIMER MAIN STREET FUND(R)/VA (Funds were first received in this option during August 2000) Value at beginning of period $7.82 $6.26 $7.824 $8.838 $10.000 Value at end of period $8.43 $7.82 $6.26 $7.824 $8.838 Number of accumulation units outstanding at end of period 315,825 281,794 265,864 260,614 86,667 OPPENHEIMER STRATEGIC BOND FUND/VA (Funds were first received in this option during September 2000) Value at beginning of period $12.65 $10.87 $10.269 $9.939 $9.995 Value at end of period $13.55 $12.65 $10.87 $10.269 $9.939 Number of accumulation units outstanding at end of period 255,302 238,270 157,440 129,253 17,052 SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO (Funds were first received in this option during May 2000) Value at beginning of period $7.83 $5.71 $7.510 $8.170 Value at end of period $8.96 $7.83 $5.71 $7.510 Number of accumulation units outstanding at end of period 105,259 88,107 6,381 6,249 UBS U.S. ALLOCATION PORTFOLIO (Funds were first received in this option during October 2000) Value at beginning of period $7.86 $6.26 $8.244 $9.567 $9.565 Value at end of period $8.55 $7.86 $6.26 $8.244 $9.567 Number of accumulation units outstanding at end of period 107,028 88,298 81,758 149,872 200
V-17 ILIAC Variable Annuity - 134789 TABLE V FOR CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.75% (SELECTED DATA FOR ACCUMULATION UNITS OUTSTANDING THROUGHOUT EACH PERIOD)
2004 2003 2002 2001 2000 ---- ---- ---- ---- ---- AIM V.I. CAPITAL APPRECIATION FUND (Funds were first received in this option during August 2000) Value at beginning of period $5.47 $4.30 $5.782 $7.672 $10.077 Value at end of period $5.73 $5.47 $4.30 $5.782 $7.672 Number of accumulation units outstanding at end of period 181,280 229,855 235,585 261,736 88,286 AIM V.I. CORE EQUITY FUND (Funds were first received in this option during August 2000) Value at beginning of period $6.31 $5.16 $6.222 $8.207 $10.000 Value at end of period $6.75 $6.31 $5.16 $6.222 $8.207 Number of accumulation units outstanding at end of period 288,654 247,908 263,338 297,127 162,481 AIM V.I. GOVERNMENT SECURITIES FUND (Funds were first received in this option during November 2000) Value at beginning of period $11.61 $11.69 $10.855 $10.384 $10.222 Value at end of period $11.70 $11.61 $11.69 $10.855 $10.384 Number of accumulation units outstanding at end of period 90,863 121,747 259,823 72,882 5,029 AIM V.I. GROWTH FUND (Funds were first received in this option during August 2000) Value at beginning of period $4.32 $3.35 $4.929 $7.604 $10.000 Value at end of period $4.59 $4.32 $3.35 $4.929 $7.604 Number of accumulation units outstanding at end of period 234,519 310,878 361,314 122,963 98,934 AIM V.I. PREMIER EQUITY FUND (Funds were first received in this option during September 2000) Value at beginning of period $6.36 $5.18 $7.556 $8.796 $9.667 Value at end of period $6.61 $6.36 $5.18 $7.556 $8.796 Number of accumulation units outstanding at end of period 391,899 473,551 562,473 575,874 156,962 ALLIANCEBERNSTEIN GROWTH AND INCOME PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $10.20 $7.84 $10.232 $10.378 $10.240 Value at end of period $11.17 $10.20 $7.84 $10.232 $10.378 Number of accumulation units outstanding at end of period 411,646 346,882 324,306 301,192 15,500 ALLIANCEBERNSTEIN LARGE CAP GROWTH PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $5.52 $4.54 $6.662 $8.191 $9.170 Value at end of period $5.89 $5.52 $4.54 $6.662 $8.191 Number of accumulation units outstanding at end of period 259,232 280,459 235,804 298,931 113,044 ALLIANCEBERNSTEIN QUASAR PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $7.21 $4.93 $7.356 $8.582 $9.065 Value at end of period $8.12 $7.21 $4.93 $7.356 $8.582 Number of accumulation units outstanding at end of period 56,226 67,459 26,431 25,884 5,820 FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $9.14 $7.24 $8.131 $9.432 $10.000 Value at end of period $10.37 $9.14 $7.24 $8.131 $9.432 Number of accumulation units outstanding at end of period 660,042 470,820 281,389 255,868 58,407 FIDELITY(R) VIP EQUITY-INCOME PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $10.39 $8.11 $9.939 $10.645 $10.000 Value at end of period $11.38 $10.39 $8.11 $9.939 $10.645 Number of accumulation units outstanding at end of period 589,134 479,898 442,137 376,901 17,998
V-18 ILIAC Variable Annuity - 134789
2004 2003 2002 2001 2000 ---- ---- ---- ---- ---- FIDELITY(R) VIP GROWTH PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $6.20 $4.75 $6.914 $8.546 $9.790 Value at end of period $6.29 $6.20 $4.75 $6.914 $8.546 Number of accumulation units outstanding at end of period 524,074 533,582 529,194 547,139 121,084 FIDELITY(R) VIP HIGH INCOME PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $9.33 $7.46 $7.338 $8.463 $9.903 Value at end of period $10.04 $9.33 $7.46 $7.338 $8.463 Number of accumulation units outstanding at end of period 141,291 350,483 138,089 78,147 13,207 ING AMERICAN FUNDS GROWTH PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period $10.11 Value at end of period $10.49 Number of accumulation units outstanding at end of period 9,096 ING AMERICAN FUNDS GROWTH-INCOME PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period $10.15 Value at end of period $10.36 Number of accumulation units outstanding at end of period 11,564 ING AMERICAN FUNDS INTERNATIONAL PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period $10.12 Value at end of period $10.59 Number of accumulation units outstanding at end of period 7,742 ING JPMORGAN FLEMING INTERNATIONAL PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $7.18 $5.64 $7.011 $9.767 $10.111 Value at end of period $8.38 $7.18 $5.64 $7.011 $9.767 Number of accumulation units outstanding at end of period 169,467 107,187 90,377 74,030 19,915 ING LEGG MASON VALUE PORTFOLIO (Funds were first received in this option during December 2004) Value at beginning of period $10.69 Value at end of period $10.95 Number of accumulation units outstanding at end of period 583 ING MFS CAPITAL OPPORTUNITIES PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $5.61 $4.46 $6.500 $8.794 $9.984 Value at end of period $6.22 $5.61 $4.46 $6.500 $8.794 Number of accumulation units outstanding at end of period 155,776 166,817 196,376 287,459 59,096 ING SALOMON BROTHERS AGGRESSIVE GROWTH PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $4.82 $3.55 $5.590 $7.608 $9.683 Value at end of period $5.20 $4.82 $3.55 $5.590 $7.608 Number of accumulation units outstanding at end of period 137,503 157,743 162,543 184,512 23,377 ING UBS U.S. LARGE CAP EQUITY PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $6.14 $5.00 $6.777 $8.719 $9.996 Value at end of period $6.92 $6.14 $5.00 $6.777 $8.719 Number of accumulation units outstanding at end of period 120,594 120,065 121,588 131,798 26,544 ING VP BALANCED PORTFOLIO, INC. (Funds were first received in this option during August 2000) Value at beginning of period $9.22 $7.90 $8.963 $9.524 $10.000 Value at end of period $9.92 $9.22 $7.90 $8.963 $9.524 Number of accumulation units outstanding at end of period 200,405 141,763 128,993 156,083 56,480
V-19 ILIAC Variable Annuity - 134789
2004 2003 2002 2001 2000 ---- ---- ---- ---- ---- ING VP GLOBAL SCIENCE AND TECHNOLOGY PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $3.80 $2.66 $4.604 $6.083 $9.300 Value at end of period $3.68 $3.80 $2.66 $4.604 $6.083 Number of accumulation units outstanding at end of period 80,521 93,594 90,585 130,825 72,410 ING VP GROWTH AND INCOME PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $6.56 $5.30 $7.187 $8.965 $10.000 Value at end of period $6.99 $6.56 $5.30 $7.187 $8.965 Number of accumulation units outstanding at end of period 152,210 158,741 141,086 140,249 49,524 ING VP GROWTH PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $5.14 $4.01 $5.747 $8.021 $9.727 Value at end of period $5.41 $5.14 $4.01 $5.747 $8.021 Number of accumulation units outstanding at end of period 62,734 101,519 105,967 116,474 46,376 ING VP INDEX PLUS LARGECAP PORTFOLIO (Funds were first received in this option during December 2000) Value at beginning of period $7.29 $5.88 $7.633 $8.995 $10.000 Value at end of period $7.92 $7.29 $5.88 $7.633 $8.995 Number of accumulation units outstanding at end of period 473,790 512,899 539,612 651,208 214,203 ING VP INTERMEDIATE BOND PORTFOLIO (Funds were first received in this option during October 2000) Value at beginning of period $12.43 $11.90 $11.178 $10.463 $10.131 Value at end of period $12.80 $12.43 $11.90 $11.178 $10.463 Number of accumulation units outstanding at end of period 235,215 258,564 257,779 174,378 24,878 ING VP INTERNATIONAL EQUITY PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $6.10 $4.70 $6.531 $8.734 $10.038 Value at end of period $7.03 $6.10 $4.70 $6.531 $8.734 Number of accumulation units outstanding at end of period 78,254 53,643 50,412 66,652 20,253 ING VP MAGNACAP PORTFOLIO (Funds were first received in this option during November 2001) Value at beginning of period $9.02 $7.02 $9.284 $9.284 Value at end of period $9.65 $9.02 $7.02 $9.284 Number of accumulation units outstanding at end of period 17,502 3,527 2,778 2,777 ING VP MIDCAP OPPORTUNITIES PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $8.23 $6.13 $8.429 $9.630 Value at end of period $8.99 $8.23 $6.13 $8.429 Number of accumulation units outstanding at end of period 191,912 114,055 47,024 14,483 ING VP MONEY MARKET PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $10.24 $10.33 $10.348 $10.135 $10.015 Value at end of period $10.17 $10.24 $10.33 $10.348 $10.135 Number of accumulation units outstanding at end of period 426,126 559,971 832,127 716,591 68,061 ING VP SMALL COMPANY PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $9.60 $7.11 $9.426 $9.226 $10.169 Value at end of period $10.79 $9.60 $7.11 $9.426 $9.226 Number of accumulation units outstanding at end of period 236,666 237,295 170,804 175,854 22,000 ING VP SMALLCAP OPPORTUNITIES PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $6.35 $4.67 $8.450 $9.638 Value at end of period $6.86 $6.35 $4.67 $8.450 Number of accumulation units outstanding at end of period 79,772 82,631 39,805 4,949
V-20 ILIAC Variable Annuity - 134789
2004 2003 2002 2001 2000 ---- ---- ---- ---- ---- JANUS ASPEN BALANCED PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $9.39 $8.38 $9.116 $9.738 $10.000 Value at end of period $10.01 $9.39 $8.38 $9.116 $9.738 Number of accumulation units outstanding at end of period 321,078 373,097 472,318 483,591 180,750 JANUS ASPEN LARGE CAP GROWTH PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $5.74 $4.43 $6.138 $8.301 $10.000 Value at end of period $5.89 $5.74 $4.43 $6.138 $8.301 Number of accumulation units outstanding at end of period 254,254 344,774 353,242 478,007 198,258 JANUS ASPEN MID CAP GROWTH PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $3.90 $2.93 $4.145 $6.969 $10.000 Value at end of period $4.62 $3.90 $2.93 $4.145 $6.969 Number of accumulation units outstanding at end of period 290,051 293,508 385,034 470,611 127,628 JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $5.82 $4.78 $6.525 $8.563 $10.000 Value at end of period $5.99 $5.82 $4.78 $6.525 $8.563 Number of accumulation units outstanding at end of period 496,023 617,687 699,890 883,452 276,998 JENNISON PORTFOLIO (Funds were first received in this option during June 2001) Value at beginning of period $7.62 $5.99 $8.854 $9.109 Value at end of period $8.18 $7.62 $5.99 $8.854 Number of accumulation units outstanding at end of period 6,286 4,396 4,124 6,445 MFS(R) TOTAL RETURN SERIES (Funds were first received in this option during September 2000) Value at beginning of period $11.28 $9.87 $10.591 $10.754 $10.243 Value at end of period $12.33 $11.28 $9.87 $10.591 $10.754 Number of accumulation units outstanding at end of period 576,686 507,365 469,356 343,895 17,925 OPPENHEIMER AGGRESSIVE GROWTH FUND/VA (Funds were first received in this option during August 2000) Value at beginning of period $4.03 $3.27 $4.607 $6.823 $10.000 Value at end of period $4.75 $4.03 $3.27 $4.607 $6.823 Number of accumulation units outstanding at end of period 287,607 271,657 263,904 297,834 108,107 OPPENHEIMER MAIN STREET FUND(R)/VA (Funds were first received in this option during September 2000) Value at beginning of period $7.74 $6.22 $7.794 $8.831 $9.736 Value at end of period $8.33 $7.74 $6.22 $7.794 $8.831 Number of accumulation units outstanding at end of period 316,171 289,098 245,483 249,385 72,969 OPPENHEIMER STRATEGIC BOND FUND/VA (Funds were first received in this option during September 2000) Value at beginning of period $12.53 $10.80 $10.229 $9.931 $9.991 Value at end of period $13.38 $12.53 $10.80 $10.229 $9.931 Number of accumulation units outstanding at end of period 136,684 117,139 100,171 72,122 16,124 SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO (Funds were first received in this option during June 2001) Value at beginning of period $7.77 $5.68 $7.495 $8.295 Value at end of period $8.86 $7.77 $5.68 $7.495 Number of accumulation units outstanding at end of period 73,520 59,608 7,318 1,176 UBS U.S. ALLOCATION PORTFOLIO (Funds were first received in this option during October 2000) Value at beginning of period $7.78 $6.22 $8.212 $9.559 $9.954 Value at end of period $8.44 $7.78 $6.22 $8.212 $9.559 Number of accumulation units outstanding at end of period 63,102 79,267 74,439 66,813 8,215
V-21 ILIAC Variable Annuity - 134789 TABLE VI FOR CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.90% (SELECTED DATA FOR ACCUMULATION UNITS OUTSTANDING THROUGHOUT EACH PERIOD)
2004 2003 2002 2001 2000 ---- ---- ---- ---- ---- AIM V.I. CAPITAL APPRECIATION FUND (Funds were first received in this option during August 2000) Value at beginning of period $5.44 $4.28 $5.771 $7.669 $10.097 Value at end of period $5.69 $5.44 $4.28 $5.771 $7.669 Number of accumulation units outstanding at end of period 146,608 159,215 158,970 177,076 98,266 AIM V.I. CORE EQUITY FUND (Funds were first received in this option during September 2000) Value at beginning of period $6.28 $5.14 $6.210 $8.204 $9.845 Value at end of period $6.71 $6.28 $5.14 $6.210 $8.204 Number of accumulation units outstanding at end of period 86,754 99,620 105,523 135,664 69,883 AIM V.I. GOVERNMENT SECURITIES FUND (Funds were first received in this option during November 2000) Value at beginning of period $11.55 $11.65 $10.834 $10.379 $10.350 Value at end of period $11.62 $11.55 $11.65 $10.834 $10.379 Number of accumulation units outstanding at end of period 54,060 65,075 61,959 52,316 2,947 AIM V.I. GROWTH FUND (Funds were first received in this option during August 2000) Value at beginning of period $4.30 $3.34 $4.939 $7.601 $10.032 Value at end of period $4.56 $4.30 $3.34 $4.939 $7.601 Number of accumulation units outstanding at end of period 116,048 113,902 111,966 442,717 52,042 AIM V.I. PREMIER EQUITY FUND (Funds were first received in this option during August 2000) Value at beginning of period $6.33 $5.16 $7.541 $8.793 $10.009 Value at end of period $6.57 $6.33 $5.16 $7.541 $8.793 Number of accumulation units outstanding at end of period 111,241 126,619 143,877 168,627 28,615 ALLIANCEBERNSTEIN GROWTH AND INCOME PORTFOLIO (Funds were first received in this option during November 2000) Value at beginning of period $10.15 $7.81 $10.212 $10.374 $10.145 Value at end of period $11.10 $10.15 $7.81 $10.212 $10.374 Number of accumulation units outstanding at end of period 149,226 155,625 84,109 72,600 1,545 ALLIANCEBERNSTEIN LARGE CAP GROWTH PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $5.49 $4.52 $6.649 $8.188 $9.504 Value at end of period $5.85 $5.49 $4.52 $6.649 $8.188 Number of accumulation units outstanding at end of period 69,585 67,892 83,613 79,454 6,109 ALLIANCEBERNSTEIN QUASAR PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $7.18 $4.91 $7.341 $8.579 $9.714 Value at end of period $8.07 $7.18 $4.91 $7.341 $8.579 Number of accumulation units outstanding at end of period 76,399 44,822 5,281 5,613 835
V-22 ILIAC Variable Annuity - 134789
2004 2003 2002 2001 2000 ---- ---- ---- ---- ---- FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $9.10 $7.22 $8.115 $9.428 $9.607 Value at end of period $10.30 $9.10 $7.22 $8.115 $9.428 Number of accumulation units outstanding at end of period 141,674 99,481 79,561 68,936 10,423 FIDELITY(R) VIP EQUITY-INCOME PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $10.33 $8.08 $9.920 $10.640 $10.074 Value at end of period $11.31 $10.33 $8.08 $9.920 $10.640 Number of accumulation units outstanding at end of period 145,501 92,558 51,427 61,951 7,261 FIDELITY(R) VIP GROWTH PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $6.17 $4.73 $6.900 $8.543 $9.018 Value at end of period $6.25 $6.17 $4.73 $6.900 $8.543 Number of accumulation units outstanding at end of period 215,921 135,449 101,766 111,952 37,652 FIDELITY(R) VIP HIGH INCOME PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $9.28 $7.43 $7.324 $8.459 $9.371 Value at end of period $9.98 $9.28 $7.43 $7.324 $8.459 Number of accumulation units outstanding at end of period 67,947 52,953 55,375 45,717 12,250 ING AMERICAN FUNDS GROWTH PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period $10.08 Value at end of period $10.49 Number of accumulation units outstanding at end of period 496 ING AMERICAN FUNDS GROWTH-INCOME PORTFOLIO (Funds were first received in this option during December 2004) Value at beginning of period $10.18 Value at end of period $10.36 Number of accumulation units outstanding at end of period 3,297 ING AMERICAN FUNDS INTERNATIONAL PORTFOLIO (Funds were first received in this option during December 2004) Value at beginning of period $10.41 Value at end of period $10.59 Number of accumulation units outstanding at end of period 2,432 ING JPMORGAN FLEMING INTERNATIONAL PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $7.14 $5.62 $6.997 $9.763 $9.724 Value at end of period $8.33 $7.14 $5.62 $6.997 $9.763 Number of accumulation units outstanding at end of period 62,181 12,780 10,991 10,819 7,075 ING LEGG MASON VALUE PORTFOLIO (Funds were first received in this option during December 2004) Value at beginning of period $10.65 Value at end of period $10.95 Number of accumulation units outstanding at end of period 693 ING MFS CAPITAL OPPORTUNITIES PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $5.58 $4.44 $6.488 $8.790 $9.186 Value at end of period $6.18 $5.58 $4.44 $6.488 $8.790 Number of accumulation units outstanding at end of period 97,534 108,388 114,025 126,421 94,883
V-23 ILIAC Variable Annuity - 134789
2004 2003 2002 2001 2000 ---- ---- ---- ---- ---- ING SALOMON BROTHERS AGGRESSIVE GROWTH PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $4.80 $3.54 $5.579 $7.605 $8.273 Value at end of period $5.17 $4.80 $3.54 $5.579 $7.605 Number of accumulation units outstanding at end of period 96,803 97,562 58,907 74,707 22,160 ING UBS U.S. LARGE CAP EQUITY PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $6.11 $4.98 $6.763 $8.715 $9.414 Value at end of period $6.88 $6.11 $4.98 $6.763 $8.715 Number of accumulation units outstanding at end of period 37,968 35,349 38,140 51,496 2,326 ING VP BALANCED PORTFOLIO, INC. (Funds were first received in this option during September 2000) Value at beginning of period $9.18 $7.87 $8.945 $9.520 $9.924 Value at end of period $9.85 $9.18 $7.87 $8.945 $9.520 Number of accumulation units outstanding at end of period 71,463 80,704 77,192 74,575 29,543 ING VP GLOBAL SCIENCE AND TECHNOLOGY PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $3.78 $2.65 $4.595 $6.080 $8.131 Value at end of period $3.66 $3.78 $2.65 $4.595 $6.080 Number of accumulation units outstanding at end of period 29,626 22,775 22,240 31,073 27,016 ING VP GROWTH AND INCOME PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $6.53 $5.28 $7.173 $8.962 $9.312 Value at end of period $6.94 $6.53 $5.28 $7.173 $8.962 Number of accumulation units outstanding at end of period 86,309 80,267 77,343 70,511 6,539 ING VP GROWTH PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $5.11 $4.00 $5.736 $8.017 $9.280 Value at end of period $5.38 $5.11 $4.00 $5.736 $8.017 Number of accumulation units outstanding at end of period 12,606 13,017 12,355 15,657 5,769 ING VP INDEX PLUS LARGECAP PORTFOLIO (Funds were first received in this option during December 2000) Value at beginning of period $7.26 $5.86 $7.618 $8.991 $10.031 Value at end of period $7.87 $7.26 $5.86 $7.618 $8.991 Number of accumulation units outstanding at end of period 174,585 202,025 220,225 197,497 12,685 ING VP INTERMEDIATE BOND PORTFOLIO (Funds were first received in this option during November 2000) Value at beginning of period $12.36 $11.86 $11.157 $10.459 $10.323 Value at end of period $12.72 $12.36 $11.86 $11.157 $10.459 Number of accumulation units outstanding at end of period 65,243 66,982 72,408 134,013 2,717 ING VP INTERNATIONAL EQUITY PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $6.07 $4.69 $6.518 $8.730 $9.317 Value at end of period $6.98 $6.07 $4.69 $6.518 $8.730 Number of accumulation units outstanding at end of period 23,034 7,970 5,586 6,120 899 ING VP MAGNACAP PORTFOLIO (Funds were first received in this option during March 2002) Value at beginning of period $8.98 $7.01 $9.440 Value at end of period $9.60 $8.98 $7.01 Number of accumulation units outstanding at end of period 4,527 3,275 3,338
V-24 ILIAC Variable Annuity - 134789
2004 2003 2002 2001 2000 ---- ---- ---- ---- ---- ING VP MIDCAP OPPORTUNITIES PORTFOLIO (Funds were first received in this option during May 2001) Value at beginning of period $8.20 $6.11 $8.420 $9.481 Value at end of period $8.94 $8.20 $6.11 $8.420 Number of accumulation units outstanding at end of period 42,360 13,425 7,015 288 ING VP MONEY MARKET PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $10.19 $10.30 $10.328 $10.130 $10.014 Value at end of period $10.10 $10.19 $10.30 $10.328 $10.130 Number of accumulation units outstanding at end of period 234,870 226,002 207,160 290,006 92,189 ING VP SMALL COMPANY PORTFOLIO (Funds were first received in this option during October 2000) Value at beginning of period $9.56 $7.09 $9.408 $9.223 $9.222 Value at end of period $10.72 $9.56 $7.09 $9.408 $9.223 Number of accumulation units outstanding at end of period 60,875 42,546 36,062 31,930 3,438 ING VP SMALLCAP OPPORTUNITIES PORTFOLIO (Funds were first received in this option during April 2001) Value at beginning of period $6.32 $4.66 $8.441 $10.175 Value at end of period $6.82 $6.32 $4.66 $8.441 Number of accumulation units outstanding at end of period 38,830 13,008 11,288 2,354 JANUS ASPEN BALANCED PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $9.34 $8.35 $9.098 $9.734 $10.056 Value at end of period $9.95 $9.34 $8.35 $9.098 $9.734 Number of accumulation units outstanding at end of period 109,433 138,079 144,444 159,510 49,506 JANUS ASPEN LARGE CAP GROWTH PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $5.71 $4.42 $6.126 $8.298 $9.982 Value at end of period $5.85 $5.71 $4.42 $6.126 $8.298 Number of accumulation units outstanding at end of period 107,668 120,725 129,993 140,973 83,221 JANUS ASPEN MID CAP GROWTH PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $3.88 $2.92 $4.137 $6.966 $9.755 Value at end of period $4.59 $3.88 $2.92 $4.137 $6.966 Number of accumulation units outstanding at end of period 245,789 229,055 278,823 273,183 131,360 JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $5.79 $4.76 $6.512 $8.559 $9.853 Value at end of period $5.95 $5.79 $4.76 $6.512 $8.559 Number of accumulation units outstanding at end of period 171,279 186,074 194,741 210,061 113,875 JENNISON PORTFOLIO (Funds were first received in this option during September 2001) Value at beginning of period $7.59 $5.97 $8.844 $8.105 Value at end of period $8.14 $7.59 $5.97 $8.844 Number of accumulation units outstanding at end of period 1,253 1,356 1,485 629 MFS(R) TOTAL RETURN SERIES (Funds were first received in this option during August 2000) Value at beginning of period $11.22 $9.83 $10.570 $10.749 $10.077 Value at end of period $12.25 $11.22 $9.83 $10.570 $10.749 Number of accumulation units outstanding at end of period 143,628 156,338 143,894 152,627 15,277
V-25 ILIAC Variable Annuity - 134789
2004 2003 2002 2001 2000 ---- ---- ---- ---- ---- OPPENHEIMER AGGRESSIVE GROWTH FUND/VA (Funds were first received in this option during August 2000) Value at beginning of period $4.01 $3.26 $4.598 $6.820 $10.260 Value at end of period $4.71 $4.01 $3.26 $4.598 $6.820 Number of accumulation units outstanding at end of period 315,522 325,523 375,412 361,045 318,940 OPPENHEIMER MAIN STREET FUND(R)/VA (Funds were first received in this option during September 2000) Value at beginning of period $7.70 $6.20 $7.779 $8.827 $9.168 Value at end of period $8.27 $7.70 $6.20 $7.779 $8.827 Number of accumulation units outstanding at end of period 80,517 101,349 106,267 94,124 13,806 OPPENHEIMER STRATEGIC BOND FUND/VA (Funds were first received in this option during October 2000) Value at beginning of period $12.46 $10.76 $10.209 $9.927 $9.822 Value at end of period $13.29 $12.46 $10.76 $10.209 $9.927 Number of accumulation units outstanding at end of period 58,216 39,219 28,773 33,698 2,305 SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO (Funds were first received in this option during June 2001) Value at beginning of period $7.74 $5.67 $7.487 $7.170 Value at end of period $8.81 $7.74 $5.67 $7.487 Number of accumulation units outstanding at end of period 14,290 6,705 212 213 UBS U.S. ALLOCATION PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $7.74 $6.19 $8.196 $9.555 $9.803 Value at end of period $8.38 $7.74 $6.19 $8.196 $9.555 Number of accumulation units outstanding at end of period 15,589 31,946 40,586 65,708 11,556
TABLE VI FOR CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.90% (SELECTED DATA FOR ACCUMULATION UNITS OUTSTANDING THROUGHOUT EACH PERIOD)
2004 2003 2002 2001 2000 ---- ---- ---- ---- ---- AIM V.I. CAPITAL APPRECIATION FUND (Funds were first received in this option during August 2000) Value at beginning of period $5.44 $4.28 $5.771 $7.669 $10.097 Value at end of period $5.69 $5.44 $4.28 $5.771 $7.669 Number of accumulation units outstanding at end of period 146,608 159,215 158,970 177,076 98,266 AIM V.I. CORE EQUITY FUND (Funds were first received in this option during September 2000) Value at beginning of period $6.28 $5.14 $6.210 $8.204 $9.845 Value at end of period $6.71 $6.28 $5.14 $6.210 $8.204 Number of accumulation units outstanding at end of period 86,754 99,620 105,523 135,664 69,883 AIM V.I. GOVERNMENT SECURITIES FUND (Funds were first received in this option during November 2000) Value at beginning of period $11.55 $11.65 $10.834 $10.379 $10.350 Value at end of period $11.62 $11.55 $11.65 $10.834 $10.379 Number of accumulation units outstanding at end of period 54,060 65,075 61,959 52,316 2,947
V-26 ILIAC Variable Annuity - 134789
2004 2003 2002 2001 2000 ---- ---- ---- ---- ---- AIM V.I. GROWTH FUND (Funds were first received in this option during August 2000) Value at beginning of period $4.30 $3.34 $4.939 $7.601 $10.032 Value at end of period $4.56 $4.30 $3.34 $4.939 $7.601 Number of accumulation units outstanding at end of period 116,048 113,902 111,966 442,717 52,042 AIM V.I. PREMIER EQUITY FUND (Funds were first received in this option during August 2000) Value at beginning of period $6.33 $5.16 $7.541 $8.793 $10.009 Value at end of period $6.57 $6.33 $5.16 $7.541 $8.793 Number of accumulation units outstanding at end of period 111,241 126,619 143,877 168,627 28,615 ALLIANCEBERNSTEIN GROWTH AND INCOME PORTFOLIO (Funds were first received in this option during November 2000) Value at beginning of period $10.15 $7.81 $10.212 $10.374 $10.145 Value at end of period $11.10 $10.15 $7.81 $10.212 $10.374 Number of accumulation units outstanding at end of period 149,226 155,625 84,109 72,600 1,545 ALLIANCEBERNSTEIN LARGE CAP GROWTH PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $5.49 $4.52 $6.649 $8.188 $9.504 Value at end of period $5.85 $5.49 $4.52 $6.649 $8.188 Number of accumulation units outstanding at end of period 69,585 67,892 83,613 79,454 6,109 ALLIANCEBERNSTEIN QUASAR PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $7.18 $4.91 $7.341 $8.579 $9.714 Value at end of period $8.07 $7.18 $4.91 $7.341 $8.579 Number of accumulation units outstanding at end of period 76,399 44,822 5,281 5,613 835 FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $9.10 $7.22 $8.115 $9.428 $9.607 Value at end of period $10.30 $9.10 $7.22 $8.115 $9.428 Number of accumulation units outstanding at end of period 141,674 99,481 79,561 68,936 10,423 FIDELITY(R) VIP EQUITY-INCOME PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $10.33 $8.08 $9.920 $10.640 $10.074 Value at end of period $11.31 $10.33 $8.08 $9.920 $10.640 Number of accumulation units outstanding at end of period 145,501 92,558 51,427 61,951 7,261 FIDELITY(R) VIP GROWTH PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $6.17 $4.73 $6.900 $8.543 $9.018 Value at end of period $6.25 $6.17 $4.73 $6.900 $8.543 Number of accumulation units outstanding at end of period 215,921 135,449 101,766 111,952 37,652 FIDELITY(R) VIP HIGH INCOME PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $9.28 $7.43 $7.324 $8.459 $9.371 Value at end of period $9.98 $9.28 $7.43 $7.324 $8.459 Number of accumulation units outstanding at end of period 67,947 52,953 55,375 45,717 12,250 ING AMERICAN FUNDS GROWTH PORTFOLIO (Funds were first received in this option during November 2004) Value at beginning of period $10.08 Value at end of period $10.49 Number of accumulation units outstanding at end of period 496 ING AMERICAN FUNDS GROWTH-INCOME PORTFOLIO (Funds were first received in this option during December 2004) Value at beginning of period $10.18 Value at end of period $10.36 Number of accumulation units outstanding at end of period 3,297
V-27 ILIAC Variable Annuity - 134789
2004 2003 2002 2001 2000 ---- ---- ---- ---- ---- ING AMERICAN FUNDS INTERNATIONAL PORTFOLIO (Funds were first received in this option during December 2004) Value at beginning of period $10.41 Value at end of period $10.59 Number of accumulation units outstanding at end of period 2,432 ING JPMORGAN FLEMING INTERNATIONAL PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $7.14 $5.62 $6.997 $9.763 $9.724 Value at end of period $8.33 $7.14 $5.62 $6.997 $9.763 Number of accumulation units outstanding at end of period 62,181 12,780 10,991 10,819 7,075 ING LEGG MASON VALUE PORTFOLIO (Funds were first received in this option during December 2004) Value at beginning of period $10.65 Value at end of period $10.95 Number of accumulation units outstanding at end of period 693 ING MFS CAPITAL OPPORTUNITIES PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $5.58 $4.44 $6.488 $8.790 $9.186 Value at end of period $6.18 $5.58 $4.44 $6.488 $8.790 Number of accumulation units outstanding at end of period 97,534 108,388 114,025 126,421 94,883 ING SALOMON BROTHERS AGGRESSIVE GROWTH PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $4.80 $3.54 $5.579 $7.605 $8.273 Value at end of period $5.17 $4.80 $3.54 $5.579 $7.605 Number of accumulation units outstanding at end of period 96,803 97,562 58,907 74,707 22,160 ING UBS U.S. LARGE CAP EQUITY PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $6.11 $4.98 $6.763 $8.715 $9.414 Value at end of period $6.88 $6.11 $4.98 $6.763 $8.715 Number of accumulation units outstanding at end of period 37,968 35,349 38,140 51,496 2,326 ING VP BALANCED PORTFOLIO, INC. (Funds were first received in this option during September 2000) Value at beginning of period $9.18 $7.87 $8.945 $9.520 $9.924 Value at end of period $9.85 $9.18 $7.87 $8.945 $9.520 Number of accumulation units outstanding at end of period 71,463 80,704 77,192 74,575 29,543 ING VP GLOBAL SCIENCE AND TECHNOLOGY PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $3.78 $2.65 $4.595 $6.080 $8.131 Value at end of period $3.66 $3.78 $2.65 $4.595 $6.080 Number of accumulation units outstanding at end of period 29,626 22,775 22,240 31,073 27,016 ING VP GROWTH AND INCOME PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $6.53 $5.28 $7.173 $8.962 $9.312 Value at end of period $6.94 $6.53 $5.28 $7.173 $8.962 Number of accumulation units outstanding at end of period 86,309 80,267 77,343 70,511 6,539 ING VP GROWTH PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $5.11 $4.00 $5.736 $8.017 $9.280 Value at end of period $5.38 $5.11 $4.00 $5.736 $8.017 Number of accumulation units outstanding at end of period 12,606 13,017 12,355 15,657 5,769 ING VP INDEX PLUS LARGECAP PORTFOLIO (Funds were first received in this option during December 2000) Value at beginning of period $7.26 $5.86 $7.618 $8.991 $10.031 Value at end of period $7.87 $7.26 $5.86 $7.618 $8.991 Number of accumulation units outstanding at end of period 174,585 202,025 220,225 197,497 12,685
V-28 ILIAC Variable Annuity - 134789
2004 2003 2002 2001 2000 ---- ---- ---- ---- ---- ING VP INTERMEDIATE BOND PORTFOLIO (Funds were first received in this option during November 2000) Value at beginning of period $12.36 $11.86 $11.157 $10.459 $10.323 Value at end of period $12.72 $12.36 $11.86 $11.157 $10.459 Number of accumulation units outstanding at end of period 65,243 66,982 72,408 134,013 2,717 ING VP INTERNATIONAL EQUITY PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $6.07 $4.69 $6.518 $8.730 $9.317 Value at end of period $6.98 $6.07 $4.69 $6.518 $8.730 Number of accumulation units outstanding at end of period 23,034 7,970 5,586 6,120 899 ING VP MAGNACAP PORTFOLIO (Funds were first received in this option during March 2002) Value at beginning of period $8.98 $7.01 $9.440 Value at end of period $9.60 $8.98 $7.01 Number of accumulation units outstanding at end of period 4,527 3,275 3,338 ING VP MIDCAP OPPORTUNITIES PORTFOLIO (Funds were first received in this option during May 2001) Value at beginning of period $8.20 $6.11 $8.420 $9.481 Value at end of period $8.94 $8.20 $6.11 $8.420 Number of accumulation units outstanding at end of period 42,360 13,425 7,015 288 ING VP MONEY MARKET PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $10.19 $10.30 $10.328 $10.130 $10.014 Value at end of period $10.10 $10.19 $10.30 $10.328 $10.130 Number of accumulation units outstanding at end of period 234,870 226,002 207,160 290,006 92,189 ING VP SMALL COMPANY PORTFOLIO (Funds were first received in this option during October 2000) Value at beginning of period $9.56 $7.09 $9.408 $9.223 $9.222 Value at end of period $10.72 $9.56 $7.09 $9.408 $9.223 Number of accumulation units outstanding at end of period 60,875 42,546 36,062 31,930 3,438 ING VP SMALLCAP OPPORTUNITIES PORTFOLIO (Funds were first received in this option during April 2001) Value at beginning of period $6.32 $4.66 $8.441 $10.175 Value at end of period $6.82 $6.32 $4.66 $8.441 Number of accumulation units outstanding at end of period 38,830 13,008 11,288 2,354 JANUS ASPEN BALANCED PORTFOLIO (Funds were first received in this option during August 2000) Value at beginning of period $9.34 $8.35 $9.098 $9.734 $10.056 Value at end of period $9.95 $9.34 $8.35 $9.098 $9.734 Number of accumulation units outstanding at end of period 109,433 138,079 144,444 159,510 49,506 JANUS ASPEN LARGE CAP GROWTH PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $5.71 $4.42 $6.126 $8.298 $9.982 Value at end of period $5.85 $5.71 $4.42 $6.126 $8.298 Number of accumulation units outstanding at end of period 107,668 120,725 129,993 140,973 83,221 JANUS ASPEN MID CAP GROWTH PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $3.88 $2.92 $4.137 $6.966 $9.755 Value at end of period $4.59 $3.88 $2.92 $4.137 $6.966 Number of accumulation units outstanding at end of period 245,789 229,055 278,823 273,183 131,360 JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $5.79 $4.76 $6.512 $8.559 $9.853 Value at end of period $5.95 $5.79 $4.76 $6.512 $8.559 Number of accumulation units outstanding at end of period 171,279 186,074 194,741 210,061 113,875
V-29 ILIAC Variable Annuity - 134789
2004 2003 2002 2001 2000 ---- ---- ---- ---- ---- JENNISON PORTFOLIO (Funds were first received in this option during September 2001) Value at beginning of period $7.59 $5.97 $8.844 $8.105 Value at end of period $8.14 $7.59 $5.97 $8.844 Number of accumulation units outstanding at end of period 1,253 1,356 1,485 629 MFS(R) TOTAL RETURN SERIES (Funds were first received in this option during August 2000) Value at beginning of period $11.22 $9.83 $10.570 $10.749 $10.077 Value at end of period $12.25 $11.22 $9.83 $10.570 $10.749 Number of accumulation units outstanding at end of period 143,628 156,338 143,894 152,627 15,277 OPPENHEIMER AGGRESSIVE GROWTH FUND/VA (Funds were first received in this option during August 2000) Value at beginning of period $4.01 $3.26 $4.598 $6.820 $10.260 Value at end of period $4.71 $4.01 $3.26 $4.598 $6.820 Number of accumulation units outstanding at end of period 315,522 325,523 375,412 361,045 318,940 OPPENHEIMER MAIN STREET FUND(R)/VA (Funds were first received in this option during September 2000) Value at beginning of period $7.70 $6.20 $7.779 $8.827 $9.168 Value at end of period $8.27 $7.70 $6.20 $7.779 $8.827 Number of accumulation units outstanding at end of period 80,517 101,349 106,267 94,124 13,806 OPPENHEIMER STRATEGIC BOND FUND/VA (Funds were first received in this option during October 2000) Value at beginning of period $12.46 $10.76 $10.209 $9.927 $9.822 Value at end of period $13.29 $12.46 $10.76 $10.209 $9.927 Number of accumulation units outstanding at end of period 58,216 39,219 28,773 33,698 2,305 SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO (Funds were first received in this option during June 2001) Value at beginning of period $7.74 $5.67 $7.487 $7.170 Value at end of period $8.81 $7.74 $5.67 $7.487 Number of accumulation units outstanding at end of period 14,290 6,705 212 213 UBS U.S. ALLOCATION PORTFOLIO (Funds were first received in this option during September 2000) Value at beginning of period $7.74 $6.19 $8.196 $9.555 $9.803 Value at end of period $8.38 $7.74 $6.19 $8.196 $9.555 Number of accumulation units outstanding at end of period 15,589 31,946 40,586 65,708 11,556
V-30 ILIAC Variable Annuity - 134789 PART B -------------------------------------------------------------------------------- VARIABLE ANNUITY ACCOUNT B -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- OF -------------------------------------------------------------------------------- ING LIFE INSURANCE AND ANNUITY COMPANY STATEMENT OF ADDITIONAL INFORMATION DATED APRIL 29, 2005 ING VARIABLE ANNUITY This Statement of Additional Information is not a prospectus and should be read in conjunction with the current prospectus for Variable Annuity Account B (the "separate account") dated April 29, 2005. A free prospectus is available upon request from the local ING Life Insurance and Annuity Company office or by writing to or calling our Service Center at Customer Service Center P.O. Box 9271 Des Moines, IA 50306-9271 1-800-366-0066 Read the prospectus before you invest. Unless otherwise indicated, terms used in this Statement of Additional Information shall have the same meaning as in the prospectus. TABLE OF CONTENTS PAGE General Information and History............................................ 2 Variable Annuity Account B................................................. 2 Offering and Purchase of Contracts......................................... 2 Income Phase Payments...................................................... 3 Sales Material and Advertising............................................. 4 Independent Registered Public Accounting Firm.............................. 5 Consolidated Financial Statements of ING Life Insurance and Annuity Company C-1 Financial Statements of the Separate Account................................ S-1 GENERAL INFORMATION AND HISTORY ING Life Insurance and Annuity Company (the "Company," we, us, our) is a stock life insurance company which was organized under the insurance laws of the State of Connecticut in 1976. Prior to May 1, 2002, the Company was known as Aetna Life Insurance and Annuity Company. Through a merger, it succeeded to the business of Aetna Variable Annuity Life Insurance Company (formerly Participating Annuity Life Insurance Company organized in 1954). As of December 31, 2004, the Company and its subsidiary life company had $53 billion invested through their products, including $34 billion in their separate accounts (of which the Company, or its affiliate ING Investments, LLC manages or oversees the management of $19 billion). The Company is ranked based on assets among the top 5% of all life insurance companies rated by A.M. Best Company as of July 16, 2004. The Company is an indirect wholly owned subsidiary of ING Groep N.V., a global financial institution active in the fields of insurance, banking and asset management. The Company is engaged in the business of issuing life insurance policies and annuity contracts. Our Home Office is located at 151 Farmington Avenue, Hartford, Connecticut 06156. In addition to serving as the depositor for the separate account, the Company is a registered investment adviser under the Investment Advisers Act of 1940. We provide investment advice to several of the registered management investment companies offered as variable investment options under the contracts funded by the separate account (see "Variable Annuity Account B" below). Other than the mortality and expense risk charge and administrative expense charge, if any, described in the prospectus, all expenses incurred in the operations of the separate account are borne by the Company. However, the Company does receive compensation for certain administrative or distribution costs from the funds or affiliates of the funds used as funding options under the contract. (See "Fees" in the prospectus.) The assets of the separate account are held by the Company. The separate account has no custodian. However, the funds in whose shares the assets of the separate account are invested each have custodians, as discussed in their respective prospectuses. From this point forward, the term "contract(s)" refers only to those offered through the prospectus. VARIABLE ANNUITY ACCOUNT B Variable Annuity Account B is a separate account established by the Company for the purpose of funding variable annuity contracts issued by the Company. The separate account is registered with the Securities and Exchange Commission ("SEC") as a unit investment trust under the Investment Company Act of 1940, as amended. Payments to accounts under the contract may be allocated to one or more of the subaccounts. Each subaccount invests in the shares of only one of the funds listed below. We may make additions to, deletions from or substitutions of available investment options as permitted by law and subject to the conditions of the contract. The availability of the funds is subject to applicable regulatory authorization. Not all funds are available in all jurisdictions, under all contracts, or under all plans. OFFERING AND PURCHASE OF CONTRACTS The Company's affiliate, ING Financial Advisers, LLC ("ING Financial") (prior to May 1, 2002 known as Aetna Investment Services, LLC), serves as the principal underwriter for the contract. ING Financial, a Delaware limited liability company, is registered as a broker-dealer with the SEC. ING Financial is also a member of the National Association of Securities Dealers, Inc. and the Securities Investor Protection Corporation. ING Financial's principal office is located at 151 Farmington Avenue, Hartford, Connecticut 06156. The contracts are distributed through life insurance agents licensed to sell variable annuities who are registered representatives of ING Financial or of other registered broker-dealers who have entered into sales arrangements with ING Financial. The offering of the contracts is continuous. A description of the manner in which the contracts are purchased can be found in the prospectus under the sections entitled "Purchase and Rights" and "Your Account Value. Compensation paid to the principal underwriter, ING Financial Advisers, LLC, for the years ending December 31, 2004, 2003 and 2002 amounted to $2,068,285.47, $2,770,934, and $3,193,869, respectively. These amounts reflect compensation paid to ING Financial Advisers, LLC attributable to regulatory and operating expenses associated with the distribution of all registered variable annuity products issued by Variable Annuity Account B of ING Life Insurance and Annuity Company. INCOME PHASE PAYMENTS When you begin receiving payments under the contract during the income phase (see "The Income Phase" in the prospectus), the value of your account is determined using accumulation unit values as of the tenth valuation before the first income phase payment is due. Such value (less any applicable premium tax charge) is applied to provide income phase payments to you in accordance with the income phase payment option and investment options elected. The annuity option tables found in the contract show, for each option, the amount of the first income phase payment for each $1,000 of value applied. Thereafter, variable income phase payments fluctuate as the annuity unit value(s) fluctuates with the investment experience of the selected investment option(s). The first income phase payment and subsequent income phase payments also vary depending upon the assumed net investment rate selected (3.5% or 5% per annum). Selection of a 5% rate causes a higher first income phase payment, but income phase payments will increase thereafter only to the extent that the investment performance of the subaccounts you selected is greater than 5% annually, after deduction of fees. Income phase payments would decline if the performance was less than 5%. Use of the 3.5% assumed rate causes a lower first income phase payment, but subsequent income phase payments would increase more rapidly or decline more slowly as changes occur in the performance of the subaccounts selected. When the income phase begins, the annuitant is credited with a fixed number of annuity units (which does not change thereafter) in each of the designated investment options. This number is calculated by dividing (a) by (b), where (a) is the amount of the first income phase payment based on a particular investment option, and (b) is the then current annuity unit value for that investment option. As noted, annuity unit values fluctuate from one valuation to the next (see "Your Account Value" in the prospectus); such fluctuations reflect changes in the net investment factor for the appropriate subaccount(s) (with a ten valuation lag which gives the Company time to process income phase payments) and a mathematical adjustment which offsets the assumed net investment rate of 3.5% or 5% per annum. The operation of all these factors can be illustrated by the following hypothetical example. These procedures will be performed separately for the investment options selected during the income phase. EXAMPLE: Assume that, at the date income phase payments are to begin, there are 3,000 accumulation units credited under a particular contract and that the value of an accumulation unit for the tenth valuation prior to retirement was $13.650000. This produces a total value of $40,950. Assume also that no premium tax charge is payable and that the annuity table in the contract provides, for the income phase payment option elected, a first monthly variable income phase payment of $6.68 per $1000 of value applied; the annuitant's first monthly income phase payment would thus be $40.950 multiplied by $6.68, or $273.55. Assume then that the value of an annuity unit upon the valuation on which the first income phase payment was due was $13.400000. When this value is divided into the first monthly income phase payment, the number of annuity units is determined to be 20.414. The value of this number of annuity units will be paid in each subsequent month. If the net investment factor with respect to the appropriate subaccount is 1.0015000 as of the tenth valuation preceding the due date of the second monthly income phase payment, multiplying this factor by .9999058* (to take into account the assumed net investment rate of 3.5% per annum built into the number of annuity units determined above) produces a result of 1.0014057. This is then multiplied by the annuity unit value for the prior valuation (assume such value to be $13.504376) to produce an annuity unit value of $13.523359 for the valuation occurring when the second income phase payment is due. The second monthly income phase payment is then determined by multiplying the number of annuity units by the current annuity unit value, or 20.414 times $13.523359, which produces an income phase payment of $276.07. *If an assumed net investment rate of 5% is elected, the appropriate factor to take into account such assumed rate would be .9998663. SALES MATERIAL AND ADVERTISING We may include hypothetical illustrations in our sales literature that explain the mathematical principles of dollar cost averaging, compounded interest, tax deferred accumulation, and the mechanics of variable annuity contracts. We may also discuss the difference between variable annuity contracts and other types of savings or investment products such as personal savings accounts and certificates of deposit. We may distribute sales literature that compares the percentage change in accumulation unit values for any of the subaccounts to established market indices such as the Standard & Poor's 500 Stock Index and the Dow Jones Industrial Average or to the percentage change in values of other management investment companies that have investment objectives similar to the subaccount being compared. We may publish in advertisements and reports, the ratings and other information assigned to us by one or more independent rating organizations such as A.M. Best Company, Duff & Phelps, Standard & Poor's Corporation and Moody's Investors Service, Inc. The purpose of the ratings is to reflect our financial strength and/or claims-paying ability. We may also quote ranking services such as Morningstar's Variable Annuity/Life Performance Report and Lipper's Variable Insurance Products Performance Analysis Service (VIPPAS), which rank variable annuity or life subaccounts or their underlying funds by performance and/or investment objective. We may categorize the underlying funds in terms of the asset classes they represent and use such categories in marketing materials for the contracts. We may illustrate in advertisements the performance of the underlying funds, if accompanied by performance which also shows the performance of such funds reduced by applicable charges under the separate account. We may also show in advertisements the portfolio holdings of the underlying funds, updated at various intervals. From time to time, we will quote articles from newspapers and magazines or other publications or reports such as The Wall Street Journal, Money magazine, USA Today and The VARDS Report. We may provide in advertising, sales literature, periodic publications or other materials information on various topics of interest to current and prospective contract holders. These topics may include the relationship between sectors of the economy and the economy as a whole and its effect on various securities markets, investment strategies and techniques (such as value investing, market timing, dollar cost averaging, asset allocation, constant ratio transfer and account rebalancing), the advantages and disadvantages of investing in tax-deferred and taxable investments, customer profiles and hypothetical purchase and investment scenarios, financial management and tax and retirement planning, and investment alternatives to certificates of deposit and other financial instruments, including comparison between the contract and the characteristics of and market for such financial instruments. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP, 600 Peachtree Street, Suite 2800, Atlanta, GA 30308 is the independent registered public accounting firm for the separate account and for the Company. The services provided to the separate account include primarily the audit of the separate account's financial statements. ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF LION CONNECTICUT HOLDINGS INC.) INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE ---- Report of Independent Registered Public Accounting Firm C-2 Consolidated Financial Statements: Consolidated Statements of Operations for the years ended December 31, 2004, 2003 and 2002 C-3 Consolidated Balance Sheets as of December 31, 2004 and 2003 C-4 Consolidated Statements of Changes in Shareholder's Equity for the years ended December 31, 2004, 2003 and 2002 C-5 Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 (Restated) and 2002 (Restated) C-6 Notes to Consolidated Financial Statements C-7
C-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors ING Life Insurance and Annuity Company We have audited the accompanying consolidated balance sheets of ING Life Insurance and Annuity Company as of December 31, 2004 and 2003, and the related consolidated 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 were 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 consolidated financial position of ING Life Insurance and Annuity Company 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 the Note 14 to the financial statements, the Company restated certain amounts presented in the statements of cash flows related to its payables for securities purchased, short-term borrowings, and investment contracts for the years ended December 31, 2003 and 2002. /s/ Ernst & Young LLP Atlanta, Georgia March 31, 2005 C-2 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) CONSOLIDATED STATEMENTS OF OPERATIONS (In Millions)
YEAR ENDED DECEMBER 31, ------------------------------------------- 2004 2003 2002 ------------ ------------ ------------ Revenues: Net investment income $ 983.1 $ 919.1 $ 959.5 Fee income 455.7 395.8 423.9 Premiums 38.5 50.1 53.9 Net realized capital gains (losses) 25.2 64.5 (101.0) ------------ ------------ ------------ Total revenue 1,502.5 1,429.5 1,336.3 ------------ ------------ ------------ Benefits and expenses: Interest credited and other benefits to contractowners 739.4 723.4 707.3 Operating expenses 394.0 383.9 361.4 Amortization of deferred policy acquisition costs and value of business acquired 127.4 106.5 181.5 ------------ ------------ ------------ Total benefits and expenses 1,260.8 1,213.8 1,250.2 ------------ ------------ ------------ Income before income taxes and cumulative effect of change in accounting principle 241.7 215.7 86.1 Income tax expense 42.4 61.1 18.6 ------------ ------------ ------------ Income before cumulative effect of change in accounting principle 199.3 154.6 67.5 Cumulative effect of change in accounting principle, net of tax -- -- (2,412.1) ------------ ------------ ------------ Net income (loss) $ 199.3 $ 154.6 $ (2,344.6) ============ ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. C-3 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) CONSOLIDATED BALANCE SHEETS (In Millions, except share data)
DECEMBER 31, ---------------------------- 2004 2003 ------------ ------------ ASSETS: Investments: Fixed maturities, available-for-sale, at fair value (amortized cost of $16,684.7 at 2004 and $15,455.0 at 2003) $ 17,151.3 $ 16,049.7 Equity securities, available-for-sale, at fair value (cost of $153.9 at 2004 and $146.5 at 2003) 162.6 161.9 Mortgage loans on real estate 1,090.2 754.5 Policy loans 262.7 270.3 Other investments 57.0 53.6 Securities pledged (amortized cost of $1,258.8 at 2004 and $1,624.4 at 2003) 1,274.3 1,644.8 ------------ ------------ Total investments 19,998.1 18,934.8 Cash and cash equivalents 187.3 57.8 Short-term investments under securities loan agreement 219.5 123.9 Accrued investment income 181.7 169.6 Notes receivable from affiliate 175.0 -- Reinsurance recoverable 2,902.7 2,953.2 Deferred policy acquisition costs 414.5 307.9 Value of business acquired 1,365.2 1,415.4 Due from affiliates 25.9 41.5 Other assets 59.6 206.2 Assets held in separate accounts 33,310.5 33,014.7 ------------ ------------ Total assets $ 58,840.0 $ 57,225.0 ============ ============ LIABILITIES AND SHAREHOLDER'S EQUITY Future policy benefits and claims reserves $ 20,886.4 $ 19,276.6 Due to affiliates 49.4 92.4 Payables for securities purchased 25.1 5.4 Payables under securities loan agreement 219.5 123.9 Borrowed money 1,057.4 1,519.3 Current income taxes 82.6 85.6 Deferred income taxes 209.3 184.7 Other liabilities 275.6 276.5 Liabilities related to separate accounts 33,310.5 33,014.7 ------------ ------------ Total liabilities 56,115.8 54,579.1 ------------ ------------ Shareholder's equity: Common stock (100,000 shares authorized; 55,000 shares issued and outstanding, $50.0 per share value) 2.8 2.8 Additional paid-in capital 4,576.5 4,646.5 Accumulated other comprehensive income 67.1 116.0 Retained earnings (deficit) (1,922.2) (2,119.4) ------------ ------------ Total shareholder's equity 2,724.2 2,645.9 ------------ ------------ Total liabilities and shareholder's equity $ 58,840.0 $ 57,225.0 ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. C-4 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY (In Millions)
ACCUMULATED ADDITIONAL OTHER RETAINED TOTAL COMMON PAID-IN COMPREHENSIVE EARNINGS SHAREHOLDER'S STOCK CAPITAL INCOME (DEFICIT) EQUITY ------------ ------------ ------------- ------------ ------------- Balance at December 31, 2001 $ 2.8 $ 4,292.4 $ 55.8 $ 103.3 $ 4,454.3 Comprehensive loss: Net loss -- -- -- (2,344.6) (2,344.6) Other comprehensive income, net of tax: Net unrealized gain on securities ($94.9 pretax) -- -- 61.7 -- 61.7 ------------- Comprehensive loss (2,282.9) ------------- Distribution of IA Holdco -- (27.4) -- (32.7) (60.1) Capital contributions -- 164.3 -- -- 164.3 SERP -- transfer -- (15.1) -- -- (15.1) Other changes -- 2.3 -- -- 2.3 ------------ ------------ ------------- ------------ ------------- Balance at December 31, 2002 2.8 4,416.5 117.5 (2,274.0) 2,262.8 Comprehensive income: Net income -- -- -- 154.6 154.6 Other comprehensive loss, net of tax: Net unrealized loss on securities (($2.4) pretax) -- -- (1.5) -- (1.5) ------------- Comprehensive income 153.1 ------------- Capital contributions -- 230.0 -- -- 230.0 ------------ ------------ ------------- ------------ ------------- Balance at December 31, 2003 2.8 4,646.5 116.0 (2,119.4) 2,645.9 Comprehensive income: Net income -- -- -- 199.3 199.3 Other comprehensive loss, net of tax: Net unrealized loss on securities (($49.5) pretax) -- -- (32.2) -- (32.2) Minimum pension liability -- -- (16.7) -- (16.7) ------------- Comprehensive income 150.4 ------------- Dividends paid -- (70.0) -- -- (70.0) Other -- -- -- (2.1) (2.1) ------------ ------------ ------------- ------------ ------------- Balance at December 31, 2004 $ 2.8 $ 4,576.5 $ 67.1 $ (1,922.2) $ 2,724.2 ============ ============ ============= ============ =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. C-5 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) CONSOLIDATED STATEMENTS OF CASH FLOWS (In Millions)
YEAR ENDED DECEMBER 31, -------------------------------------------- 2004 2003 2002 ------------ ------------ ------------ (Restated) (Restated) Cash Flows from Operating Activities: Net income (loss) $ 199.3 $ 154.6 $ (2,344.6) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Capitalization of deferred policy acquisition costs (168.0) (159.7) (127.6) Amortization of deferred policy acquisition costs and value of business acquired 134.3 106.5 158.5 Net accretion/decretion of discount/premium 155.9 198.9 115.5 Future policy benefits, claims reserves, and interest credited 620.4 705.9 953.7 Impairment of goodwill -- -- 2,412.1 Provision for deferred income taxes 41.0 22.1 23.6 Net realized capital (gains) losses (25.1) (64.5) 101.0 Depreciation 12.4 23.3 20.9 Change in: Accrued investment income (2.3) 1.3 (10.0) Reinsurance recoverable 50.5 33.3 172.7 Accounts receivable and assets accruals 18.2 (25.2) (5.8) Due to/from affiliates (32.8) 47.4 8.1 Other payables and accruals 17.9 14.4 (82.8) ------------ ------------ ------------ Net cash provided by operating activities 1,021.7 1,058.3 1,395.3 ------------ ------------ ------------ Cash Flows from Investing Activities: Proceeds from the sale, maturity, or redemption of: Fixed maturities, available-for-sale 26,791.8 29,977.9 26,315.3 Equity securities, available-for-sale 85.7 130.2 57.2 Mortgage loans on real estate 71.0 16.3 2.0 Acquisition of: Fixed maturities, available-for-sale (26,809.0) (31,951.6) (28,272.8) Equity securities, available-for-sale (81.6) (34.8) (81.8) Mortgage loans on real estate (406.7) (194.2) (343.7) Increase in policy loans 7.6 26.0 32.7 Purchases/sales of property and equipment, net (11.7) (5.2) (5.8) Change in other investments (15.3) (8.1) (22.4) Loans to affiliates (175.0) -- -- ------------ ------------ ------------ Net cash used in investing activities (543.2) (2,043.5) (2,319.3) ------------ ------------ ------------ Cash Flows from Financing Activities: Deposits for investment contracts $ 2,089.9 $ 2,296.6 $ 1,349.1 Maturities and withdrawals from investment contracts (1,910.4) (1,745.5) (741.4) Short-term borrowings, net (458.5) 196.5 299.7 Dividends paid to Parent (70.0) -- -- Capital contributions -- 230.0 -- ------------ ------------ ------------ Net cash provided by (used in) financing activities (349.0) 977.6 907.4 ------------ ------------ ------------ Net increase (decrease) in cash and cash equivalents 129.5 (7.6) (16.6) Cash and cash equivalents, beginning of year 57.8 65.4 82.0 ------------ ------------ ------------ Cash and cash equivalents, end of year $ 187.3 $ 57.8 $ 65.4 ============ ============ ============ Supplemental cash flow information: Income taxes paid, net $ 3.2 $ 29.8 $ 6.7 ============ ============ ============ Interest paid $ 22.8 $ 32.6 $ 20.6 ============ ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. C-6 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in millions, unless otherwise stated) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION ING Life Insurance and Annuity Company ("ILIAC"), a stock life insurance company domiciled in the state of Connecticut, and its wholly-owned subsidiaries (collectively, the "Company") are providers of financial products and services in the United States. These consolidated financial statements include ILIAC and its wholly-owned subsidiaries, ING Insurance Company of America ("IICA"), ING Financial Advisers, LLC ("IFA") and, through February 28, 2002, ING Investment Adviser Holding, Inc. ("IA Holdco"). Until March 30, 2003, 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"), 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 offers qualified and nonqualified annuity contracts that include a variety of funding and payout options for individuals and employer-sponsored retirement plans qualified under Internal Revenue Code Sections 401, 403, 408 and 457, as well as nonqualified deferred compensation plans. The Company's products are offered primarily to individuals, pension plans, small businesses and employer-sponsored groups in the health care, government, education (collectively "not-for-profit" organizations), and corporate markets. The Company's products generally are distributed through pension professionals, independent agents and brokers, third party administrators, banks, dedicated career agents, and financial planners. Annuity contracts may be deferred or immediate (payout annuities). These products also include programs offered to qualified plans and nonqualified deferred compensation plans that package administrative and record-keeping services along with a variety of investment options, including affiliated and nonaffiliated mutual funds, and variable and fixed investment options. In addition, the Company offers wrapper agreements entered into with retirement plans which contain certain benefit responsive guarantees (i.e. liquidity guarantees of principal and previously accrued interest for benefits paid under the terms of the plan) with respect to portfolios of plan-owned assets not invested with the Company. The Company also offers investment advisory services and pension plan administrative services. 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 C-7 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued) 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 Consolidated 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 contractowners must be recognized on the Consolidated 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 ("DAC"). 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 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 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 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 which 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 ("EITF-03-1"), "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain C-8 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued) Investments," requiring that a three-step impairment model be applied to securities within its scope. The three-step model is 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. 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 No. 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. C-9 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued) 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 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 $8,489.3 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 $8,396.1 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 the recognition of an impairment loss of $2,412.1, net of taxes of $1,298.8, related to prior acquisitions, 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. This impairment charge is shown as a change in accounting principle on the December 31, 2002 Consolidated Statement of Operations. C-10 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued) NEW ACCOUNTING PRONOUNCEMENTS In December 2004, the FASB issued FAS No. 123 (revised 2004), "Share-Based Payment" ("FAS 123R"), which requires all share-based payments be recognized in the financial statements based upon the fair value. FAS 123R is effective at the beginning of the first interim or annual period beginning after June 15, 2005. Earlier adoption is encouraged. FAS 123R provides two transition methods, modified-prospective and modified-retrospective. The modified-prospective method recognizes the grant-date fair value of compensation for new and unvested awards beginning in the fiscal period in which the recognition provisions are first applied. Prior periods are not restated. The modified-retrospective method, entities are allowed to restate prior periods by recognizing the compensation cost in the amount previously reported in the pro forma footnote disclosures as required under FAS No. 123, "Accounting for Stock-Based Compensation." The Company intends to early adopt the provisions of FAS 123R on January 1, 2005 using the modified-prospective method. The adoption of FAS 123R is not expected to have a material impact on the Company's financial position, results of operations or cash flows. Prior to January 2005, the Company applied the intrinsic value-based provisions set forth in APB Opinion No. 25, "Accounting for Stock Issued to Employees". Under the intrinsic value method, compensation expense is determined on the measurement date, which is the first date on which both the number of shares the employee is entitled to receive and the exercise price are known. Compensation expense, if any, is measured based on the award's intrinsic value, which is the excess of the market price of the stock over the exercise price on the measurement date. 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. RECLASSIFICATIONS Certain reclassifications have been made to prior years financial information to conform to the current year presentation, including a reclassification in the amount of $9.2, net of tax, from retained earnings to accumulated other comprehensive income as of December 31, 2001 (see footnote 14). 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 C-11 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued) are included directly in shareholder's equity, after adjustment for related changes in deferred policy acquisition costs ("DAC"), 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 time and the extent to which fair value has been less than amortized cost; the financial condition and near-term prospects of the issuer; future economic conditions and market forecasts; and the Company's intent and ability to retain the investment in the issuer for a period of time sufficient to allow for recovery in fair value. If it is probable that all amounts due according to the contractual terms of a debt security will not be collected, an other-than-temporary impairment is considered to have occurred. 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 Issue No. EITF 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 is 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 guarantees. Unamortized realized gains and losses on the sale of and unrealized capital gains and losses on investments supporting these products are included in future policy benefits and claims reserves on the Consolidated Balance Sheets. Realized capital gains and losses on all other investments are reflected in the Consolidated 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 and equity securities (excluding private placements) are recorded on the trade date. Purchases and sales of private placements and mortgage loans 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 C-12 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued) cash flow characteristics of the security. The fair values for actively traded equity securities are based on quoted market prices. For equity securities not actively traded, estimated fair values are based upon values of issues of comparable yield and quality or conversion value where applicable. Mortgage loans on real estate are reported at amortized cost less impairment writedowns. If the value of any mortgage loan is determined to be impaired (i.e., when it is probable the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement), the carrying value of the mortgage loan is reduced to the present value of expected cash flows from the loan, discounted at the loan's effective interest rate, or to the loan's observable market price, or the fair value of the collateral. If the loan is in foreclosure, the carrying value is reduced to the fair value of the underlying collateral, net of estimated costs to obtain and sell. The carrying value of the impaired loans is reduced by establishing a permanent writedown charged to realized loss. Policy loans are carried at unpaid principal balances. 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. REPURCHASE AGREEMENTS The Company engages in dollar repurchase agreements ("dollar rolls") and repurchase agreements to increase the return on investments and improve liquidity. These transactions involve a sale of securities and an agreement to repurchase substantially the same securities as those sold. Company policies require a minimum of 95% of the fair value of securities pledged under dollar rolls and repurchase agreement transactions to be maintained as collateral. Cash collateral received is invested in fixed maturities and the offsetting collateral liability is included in borrowed money on the Consolidated Balance Sheets. DERIVATIVES The Company's use of derivatives is limited mainly to hedging purposes. However, these derivatives are not accounted for using hedge accounting treatment under FAS No. 133 and the Company does not seek hedge accounting treatment. The Company enters into interest rate, equity market, and currency contracts, including swaps, caps, and floors to reduce and manage risks associated with changes in value, yield, price or cash flow or exchange rates of assets or liabilities held or intended to be held. Changes in the fair value of open derivative contracts are recorded in net realized capital gains and losses. Derivatives are included in other investments on the Consolidated Balance Sheets. C-13 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued) The Company also has investments in certain fixed maturity instruments and has retail annuity products that contain embedded derivatives, including those whose market value is at least partially determined by, among other things, levels of or changes in domestic and/or foreign interest rates (short- or long-term), exchange rates, prepayment rates, equity markets, or credit ratings/spreads. Changes in the fair value of embedded derivatives are recorded in net realized capital gains (losses) in the Consolidated Statements of Operations. Embedded derivatives are included in fixed maturities. DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED 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 certain agency expenses, related to the production of new and renewal business. 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 DAC and VOBA varies by product type. FAS No. 60, "Accounting and Reporting by Insurance Enterprises," applies to traditional life insurance products, primarily whole life and term life insurance contracts. Under FAS No. 60, DAC and VOBA are amortized over the premium payment period, in proportion to the premium revenue recognized. FAS No. 97 applies to universal life and investment-type products, such as fixed and variable deferred annuities. Under FAS No. 97, DAC and VOBA are amortized, with interest, over the life of the related contracts (usually 25 years) in relation to the present value of estimated future gross profits from investment, mortality, and expense margins; asset-based fees, policy administration, and surrender charges; less policy maintenance fees and non-capitalized commissions, as well as realized gains and losses on investments. Changes in assumptions can have a significant impact on DAC and 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 DAC and VOBA balances, the Company performs a quarterly and annual analysis of DAC and VOBA for the annuity and life businesses, respectively. The DAC and VOBA balances are evaluated for recoverability and are reduced to the extent that estimated future gross profits are inadequate to recover the asset. C-14 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued) 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. 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 1.5% to 11.9% 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 contractholders, 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 9.5% for all years presented. Because the sale of the domestic individual life insurance business on October 1, 1998 was substantially in the form of an indemnity reinsurance agreement, the Company includes an amount in reinsurance recoverable on the Consolidated Balance Sheet, which approximates the Company's total individual life reserves. See Note 11 to the Consolidated Balance Sheets. Unpaid claims and claim expenses for all lines of insurance include benefits for reported losses and estimates of benefits for losses incurred but not reported. SALES INDUCEMENTS Sales inducements represent benefits paid to contractowners that are incremental to the amounts the Company credits on similar contracts and are higher than the contract's expected ongoing crediting rates for periods after the inducement. As of January 1, 2004, such amounts are reported separately and included in Other Assets on the Consolidated Balance Sheet in accordance with SOP 03-1. Prior to 2004, sales inducements were recorded as a component of DAC on the Consolidated Balance Sheet. Beginning in 2004, sales inducements are amortized as a component of interest credited and other benefits to contractowners using methodologies and assumptions consistent with those used for amortization of DAC. C-15 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued) 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 on the Consolidated Statements of Operations. Premiums on the Consolidated Statements of Operations primarily represent amounts received for immediate annuities with life contingencies. 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 certain 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 the Company or 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 Consolidated Balance Sheets. Deposits, investment income and net realized and unrealized capital gains and losses of the Separate Accounts are not reflected in the Consolidated Financial Statements (with the exception of realized and unrealized capital gains and losses on the assets supporting the guaranteed interest option). The Consolidated 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 Consolidated 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 of $7.3 and $55.7, respectively, on assets supporting a guaranteed interest option are reflected in shareholder's equity. 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 Consolidated Balance Sheets. Of the reinsurance recoverable on the Consolidated C-16 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued) Balance Sheets, $2.9 billion and $3.0 billion at December 31, 2004 and 2003, respectively, is related to the reinsurance recoverable from Lincoln National Corporation ("Lincoln") arising from the sale of the Company's domestic life insurance business in 1998 (See Note 11). 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. INVESTMENTS Fixed maturities and equity securities available-for-sale as of December 31, 2004, were as follows:
GROSS GROSS AMORTIZED UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE --------------------------------------------------------------------------------------------------------- Fixed maturities: U.S. government and government agencies and authorities $ 197.3 $ 0.9 $ 0.9 $ 197.3 States, municipalities and political subdivisions 32.1 0.2 0.9 31.4 U.S. corporate securities: Public utilities 1,207.6 50.0 5.0 1,252.6 Other corporate securities 5,846.5 275.0 25.4 6,096.1 --------------------------------------------------------------------------------------------------------- Total U.S. corporate securities 7,054.1 325.0 30.4 7,348.7 --------------------------------------------------------------------------------------------------------- Foreign securities: Government 660.2 33.9 3.1 691.0 Other 1,656.4 78.4 6.1 1,728.7 --------------------------------------------------------------------------------------------------------- Total foreign securities 2,316.6 112.3 9.2 2,419.7 --------------------------------------------------------------------------------------------------------- Residential mortgage-backed securities 5,497.6 65.6 58.2 5,505.0 Commercial mortgage-backed securities 1,491.2 73.2 4.4 1,560.0 Other asset-backed securities 1,354.6 22.6 13.7 1,363.5 --------------------------------------------------------------------------------------------------------- Total fixed maturities, including fixed maturities pledged 17,943.5 599.8 117.7 18,425.6 Less: fixed maturities pledged to creditors 1,258.8 18.0 2.5 1,274.3 --------------------------------------------------------------------------------------------------------- Fixed maturities 16,684.7 581.8 115.2 17,151.3 Equity securities 153.9 9.2 0.5 162.6 --------------------------------------------------------------------------------------------------------- Total investments available-for-sale $ 16,838.6 $ 591.0 $ 115.7 $ 17,313.9 =========================================================================================================
C-17 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 2. INVESTMENTS (continued) Fixed maturities and equity securities available-for-sale as of December 31, 2003, were as follows:
GROSS GROSS AMORTIZED UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE --------------------------------------------------------------------------------------------------------- Fixed maturities: U.S. government and government agencies and authorities $ 350.0 $ 1.7 $ 0.3 $ 351.4 States, municipalities and political subdivisions 2.1 0.1 -- 2.2 U.S. corporate securities: Public utilities 970.7 48.9 11.4 1,008.2 Other corporate securities 5,568.1 327.9 29.1 5,866.9 --------------------------------------------------------------------------------------------------------- Total U.S. corporate securities 6,538.8 376.8 40.5 6,875.1 --------------------------------------------------------------------------------------------------------- Foreign securities: Government 605.2 33.7 2.8 636.1 Other 1,364.7 74.5 11.0 1,428.2 --------------------------------------------------------------------------------------------------------- Total foreign securities 1,969.9 108.2 13.8 2,064.3 --------------------------------------------------------------------------------------------------------- Residential mortgage-backed securities 5,903.7 91.8 35.1 5,960.4 Commercial mortgage-backed securities 1,278.5 105.0 3.3 1,380.2 Other asset-backed securities 1,036.4 34.0 9.5 1,060.9 --------------------------------------------------------------------------------------------------------- Total fixed maturities, including fixed maturities pledged to creditors 17,079.4 717.6 102.5 17,694.5 Less: fixed maturities pledged to creditors 1,624.4 23.8 3.4 1,644.8 --------------------------------------------------------------------------------------------------------- Fixed maturities 15,455.0 693.8 99.1 16,049.7 Equity securities 146.5 15.5 0.1 161.9 --------------------------------------------------------------------------------------------------------- Total investments available-for-sale $ 15,601.5 $ 709.3 $ 99.2 $ 16,211.6 =========================================================================================================
At December 31, 2004 and 2003, net unrealized appreciation of $490.8 and $630.5, respectively, on total fixed maturities, including fixed maturities pledged to creditors, and equity securities, included $357.5 and $491.5, respectively, related to experience-rated contracts, which were not reflected in shareholder's equity but in future policy benefits and claim reserves. C-18 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 2. INVESTMENTS (continued) The aggregate unrealized losses and related fair values of investments with unrealized losses as of December 31, 2004, are shown below by duration:
UNREALIZED FAIR LOSS VALUE ----------------------------------------------------------------------------- Duration category: Less than six months below amortized cost $ 37.7 $ 3,319.0 More than six months and less than twelve months below cost 34.9 1,795.0 More than twelve months below amortized cost 45.6 960.5 ----------------------------------------------------------------------------- Total investments available-for-sale $ 118.2 $ 6,074.5 =============================================================================
Of the unrealized losses, less than 6 months in duration of $37.7, there were $9.5 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 $28.2, 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 $1,746.2. Of the unrealized losses, more than 6 months and less than 12 months in duration, of $34.9, there were $16.4 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 $18.5, 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 $829.2. An analysis of the unrealized losses, more than 12 months in duration, of $45.6 follows. There were $15.9 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 $29.7, 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 $505.6. 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.
AMORTIZED FAIR COST VALUE ----------------------------------------------------------------------------- Due to mature: One year or less $ 395.8 $ 400.0 After one year through five years 3,650.0 3,727.4 After five years through ten years 3,128.8 3,256.4 After ten years 2,425.5 2,613.3 Mortgage-backed securities 6,988.8 7,065.0 Other asset-backed securities 1,354.6 1,363.5 Less: fixed maturities pledged to creditors 1,258.8 1,274.3 ----------------------------------------------------------------------------- Fixed maturities $ 16,684.7 $ 17,151.3 =============================================================================
C-19 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 2. INVESTMENTS (continued) At December 31, 2004 and 2003, fixed maturities with carrying values of $10.9 and $11.2, respectively, 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. The Company has various categories of CMOs that are subject to different degrees of risk from changes in interest rates and, for CMOs that are not agency-backed, defaults. The principal risks inherent in holding CMOs are prepayment and extension risks related to dramatic decreases and increases in interest rates resulting in the repayment of principal from the underlying mortgages either earlier or later than originally anticipated. At December 31, 2004 and 2003, approximately 4.1% and 2.8%, respectively, of the Company's CMO holdings were invested in types of CMOs which are subject to more prepayment and extension risk than traditional CMOs (such as interest-only or principal-only strips). The Company enters into dollar repurchase agreements ("dollar rolls") and repurchase agreements to increase its return on investments and improve liquidity. At December 31, 2004 and 2003, the carrying value of the securities pledged in dollar rolls and repurchase agreements was $1,274.3 and $1,644.8, respectively. The carrying value of the securities pledged in dollar rolls and repurchase agreements is included in pledged securities on the Balance Sheets. The repurchase obligation related to dollar rolls and repurchase agreements totaled $1,057.4 and $1,519.3 at December 31, 2004 and 2003, respectively. The repurchase obligation related to dollar rolls and repurchase agreements is included in borrowed money on the Consolidated Balance Sheets. IMPAIRMENTS The following table identifies the Company's other-than-temporary impairments by type as of December 31:
2004 2003 2002 ----------------------- ----------------------- ----------------------- NO. OF NO. OF NO. OF IMPAIRMENT SECURITIES IMPAIRMENT SECURITIES IMPAIRMENT SECURITIES ------------------------------------------------------------------------------------------------------------ U.S. Corporate $ -- -- $ 6.2 4 $ 0.1 2 Residential mortgage-backed 13.5 53 88.2 83 40.0 33 Limited partnership -- -- 2.0 1 Equities -- -- -- 2 0.1 2 ------------------------------------------------------------------------------------------------------------ Total $ 13.5 53 $ 96.4 90 $ 40.2 37 ============================================================================================================
The remaining fair value of the fixed maturities with other-than-temporary impairments at December 31, 2004 and 2003 is $125.0 and $123.1, respectively. C-20 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 2. INVESTMENTS (continued) NET INVESTMENT INCOME Sources of net investment income were as follows:
YEAR ENDED YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, 2004 2003 2002 ----------------------------------------------------------------------------------- Fixed maturities $ 980.5 $ 946.2 $ 964.1 Preferred stock -- 9.9 3.9 Mortgage loans on real estate 56.0 42.7 23.3 Policy loans 8.1 9.0 8.7 Cash equivalents 2.4 1.7 1.7 Other (2.1) (1.0) 23.4 ----------------------------------------------------------------------------------- Gross investment income 1,044.9 1,008.5 1,025.1 Less: investment expenses 61.8 89.4 65.6 ----------------------------------------------------------------------------------- Net investment income $ 983.1 $ 919.1 $ 959.5 ===================================================================================
NET REALIZED CAPITAL GAINS AND LOSSES Net realized capital gains (losses) are comprised of the difference between the carrying value of investments and proceeds from sale, maturity, and redemption, as well as losses incurred due to impairment of investments. Net realized capital gains (losses) on investments were as follows:
YEAR ENDED YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, 2004 2003 2002 ----------------------------------------------------------------------------------------------------- Fixed maturities $ 24.7 $ 63.9 $ (97.5) Equity securities 0.5 0.6 (3.5) ----------------------------------------------------------------------------------------------------- Pretax net realized capital gains (losses) $ 25.2 $ 64.5 $ (101.0) ===================================================================================================== After-tax net realized capital gains (losses) $ 16.4 $ 41.9 $ (65.7) =====================================================================================================
Net realized capital gains allocated to experience-rated contracts of $42.0, $43.9, and $63.6 for the years ended December 31, 2004, 2003 and 2002, respectively, were deducted from net realized capital gains and an offsetting amount was reflected in future policy benefits and claim reserves on the Consolidated Balance Sheets. Net unamortized realized gains (losses) allocated to experienced-rated contractholders were $233.4, $213.7, and $199.3 at December 31, 2004, 2003 and 2002, respectively. C-21 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 2. INVESTMENTS (continued) Proceeds from the sale of fixed maturities and equity securities and the related gross gains and losses, excluding those related to experience-related contractholders, were as follows:
YEAR ENDED YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, 2004 2003 2002 ----------------------------------------------------------------------------------------------------- Proceeds on sales $ 10,236.3 $ 12,812.5 $ 13,265.2 Gross gains 146.9 291.9 276.7 Gross losses 70.9 228.0 374.2
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 contractholders) were as follows:
YEAR ENDED YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, 2004 2003 2002 ------------------------------------------------------------------------------------------------------- Fixed maturities $ 16.1 $ (54.3) $ 104.8 Equity securities (5.7) 17.9 (1.6) Sales inducements (0.1) -- -- Other (59.8) 34.0 (8.3) ------------------------------------------------------------------------------------------------------- Subtotal (49.5) (2.4) 94.9 Less: (Increase) decrease in deferred income taxes (17.3) (0.9) 33.2 ------------------------------------------------------------------------------------------------------- Net increase (decrease) in accumulated other comprehensive (loss) income $ (32.2) $ (1.5) $ 61.7 =======================================================================================================
3. 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 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. C-22 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 3. FINANCIAL INSTRUMENTS (continued) 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. EQUITY SECURITIES: Fair values of these securities are based upon quoted market price. MORTGAGE LOANS ON REAL ESTATE: The fair values for mortgage loans on real estate are estimated using discounted cash flow analyses and rates currently being offered in the marketplace for similar loans to borrowers with similar credit ratings. Loans with similar characteristics are aggregated for purposes of the calculations. CASH AND CASH EQUIVALENTS, SHORT-TERM INVESTMENTS AND POLICY LOANS: The carrying amounts for these assets approximate the assets' fair values. 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 contractowners 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 their fair value. C-23 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 3. 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:
2004 2003 --------------------------- --------------------------- CARRYING FAIR CARRYING FAIR VALUE VALUE VALUE VALUE ------------------------------------------------------------------------------------------------------ Assets: Fixed maturity securities, including securities pledged $ 18,425.6 $ 18,425.6 $ 17,694.5 $ 17,694.5 Equity securities 162.6 162.6 161.9 161.9 Mortgage loans on real estate 1,090.2 1,119.8 754.5 798.5 Policy loans 262.7 262.7 270.3 270.3 Cash and cash equivalents 187.3 187.3 57.8 57.8 Assets held in Separate Accounts 33,310.5 33,310.5 33,014.7 33,014.7 Liabilities: Investment contract liabilities: With a fixed maturity 2,106.0 2,028.2 2,282.9 2,259.4 Without a fixed maturity 13,884.9 13,845.6 12,936.9 12,892.0 Liabilities related to Separate Accounts 33,310.5 33,310.5 33,014.7 33,014.7
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. DERIVATIVE FINANCIAL INSTRUMENTS INTEREST RATE FLOORS Interest rate floors are used to manage the interest rate risk in the Company's bond portfolio. Interest rate floors are purchased contracts that provide the Company with an annuity in a declining interest rate environment. The Company had no open interest rate floors at December 31, 2004 or 2003. INTEREST RATE CAPS Interest rate caps are used to manage the interest rate risk in the Company's bond portfolio. Interest rate caps are purchased contracts that provide the Company with an annuity in an increasing interest rate environment. The notional amount, carrying value and estimated fair value of the Company's open interest rate caps as of December 31, 2004 were $527.8, $5.9, and $5.9, respectively. The notional amount, C-24 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 3. FINANCIAL INSTRUMENTS (continued) carrying value and estimated fair value of the Company's open interest rate caps as of December 31, 2003 were $739.6, $8.2, and $8.2, respectively. INTEREST RATE SWAPS Interest rate swaps are used to manage the interest rate risk in the Company's bond portfolio and well as the Company's liabilities. Interest rate swaps represent contracts that require the exchange of cash flows at regular interim periods, typically monthly or quarterly. The notional amount, carrying value and estimated fair value of the Company's open interest rate swaps as of December 31, 2004 were $1,766.0, $2.1, and $2.1, respectively. The notional amount, carrying value and estimated fair value of the Company's open interest rate swaps as of December 31, 2003 were $950.0, $(14.4), and $(14.4), respectively. FOREIGN EXCHANGE SWAPS Foreign exchange swaps are used to reduce the risk of a change in the value, yield, or cash flow with respect to invested assets. Foreign exchange swaps represent contracts that require the exchange of foreign currency cash flows for US dollar cash flows at regular interim periods, typically quarterly or semi-annually. The notional amount, carrying value, and estimated fair value of the Company's open foreign exchange rate swaps as of December 31, 2004 were $126.5, $(28.4), and $(28.4), respectively. The notional amount, carrying value and estimated fair value of the Company's open foreign exchange rate swaps as of December 31, 2003 were $78.1, $(12.8), and $(12.8), respectively. 4. DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED Activity for the year-ended December 31, 2004, 2003 and 2002 within VOBA was as follows: Balance at December 31, 2001 $ 1,601.8 Adjustment for unrealized gain (loss) (21.9) Additions 25.0 Interest accrued at 7% 86.8 Amortization (253.3) --------------------------------------------------------------------------- Balance at December 31, 2002 1,438.4 Adjustment for unrealized gain (loss) 6.2 Additions 59.1 Interest accrued at 7% 92.2 Amortization (180.5) --------------------------------------------------------------------------- Balance at December 31, 2003 1,415.4 Adjustment for unrealized gain (loss) 7.9 Additions 50.1 Interest accrued at 6% 92.3 Amortization (200.5) --------------------------------------------------------------------------- Balance at December 31, 2004 $ 1,365.2 ===========================================================================
C-25 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 4. DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED (continued) The estimated amount of VOBA to be amortized, net of interest, over the next five years is $112.2, $105.8, $97.4, $92.4, and $90.6 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 higher actual gross profits, a result of the margins earned on higher fixed and variable assets and fewer other-than-temporary impairments. Also, surrenders increased, which resulted in higher amortization for certain business. 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 during 2003. For the year ended December 31, 2003, the Company recorded a deceleration of DAC/VOBA amortization totaling $3.7 before tax, or $2.4, net of $1.3 of federal income tax expense. As part of the regular analysis of DAC/VOBA, at the end of third quarter 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 DAC/VOBA amortization totaling $45.6 before tax, or $29.7, net of $15.9 of federal income tax benefit. 5. DIVIDEND RESTRICTIONS AND SHAREHOLDER'S EQUITY The Company's ability to pay dividends to its parent is subject to the prior approval of insurance regulatory authorities of the State of Connecticut for payment of any dividend, which, when combined with other dividends paid within the preceding 12 months, exceeds the greater of (1) 10% of statutory surplus at prior year end or (2) ILIAC's prior year statutory net gain from operations. ILIAC paid a cash dividend of $70.0 to Lion in 2004 and did not pay cash dividends to Lion in 2003 or 2002. However, on February 28, 2002, ILIAC contributed 100% of the stock of IA Holdco to HOLDCO in the form of a $60.1 dividend distribution. ILIAC did not receive capital contributions from its parent in 2004 and received $230.0 and $164.3 in capital contributions during 2003 and 2002, respectively. The Insurance Department of the State of Connecticut (the "Department") recognizes 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 (loss) was $217.2, $67.5, and $148.8 for the years ended December 31, 2004, 2003, and 2002, respectively. Statutory capital and surplus was $1,344.5 and $1,230.7 as of December 31, 2004 and 2003, respectively. C-26 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 5. DIVIDEND RESTRICTIONS AND SHAREHOLDER'S EQUITY (continued) As of December 31, 2004, the Company did 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. 6. ADDITIONAL INSURANCE BENEFITS AND MINIMUM GUARANTEES Under SOP 03-1, the Company calculates an additional liability ("SOP reserves") for certain guaranteed minimum death benefits ("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 to adjust the additional liability balance, 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 guaranteed minimum benefits and the additional liability recognized related to minimum guarantees was $4,396.0 and $0.7, 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 $4,396.0. 7. INCOME TAXES ILIAC files a consolidated federal income tax return with its subsidiary, IICA. ILIAC has a federal tax allocation agreement with IICA whereby ILIAC charges its subsidiary for federal taxes it would have incurred were it not a member of the consolidated group and credits IICA for losses at the statutory federal tax rate. C-27 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 7. INCOME TAXES (continued) Income taxes (benefits) from continuing operations consist of the following:
YEAR ENDED YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, 2004 2003 2002 -------------------------------------------------------------------------------------------- Current tax (benefit) expense: Federal $ (3.8) $ 37.9 $ 40.4 State -- 1.1 1.8 -------------------------------------------------------------------------------------------- Total current tax (benefit) expense (3.8) 39.0 42.2 -------------------------------------------------------------------------------------------- Deferred tax expense (benefit): Federal 46.2 22.1 (23.6) -------------------------------------------------------------------------------------------- Total deferred tax expense (benefit) 46.2 22.1 (23.6) -------------------------------------------------------------------------------------------- Total income tax expense $ 42.4 $ 61.1 $ 18.6 ============================================================================================
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:
YEAR ENDED YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, 2004 2003 2002 -------------------------------------------------------------------------------------------- Income before income taxes and cumulative effect of change in accounting principle $ 241.7 $ 215.7 $ 86.1 Tax rate 35% 35% 35% -------------------------------------------------------------------------------------------- Income tax at federal statutory rate 84.6 75.5 30.1 Tax effect of: State income tax, net of federal benefit - 0.7 1.2 Dividends received deduction (9.6) (14.0) (5.3) IRS audit settlement (33.0) Transfer of mutual fund shares - - (6.7) Other, net 0.4 (1.1) (0.7) -------------------------------------------------------------------------------------------- Income tax expense $ 42.4 $ 61.1 $ 18.6 ============================================================================================
C-28 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 7. INCOME TAXES (continued) The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities at December 31, are presented below:
2004 2003 ------------------------------------------------------------------------------------------- Deferred tax assets: Insurance reserves $ 286.4 $ 263.7 Unrealized gains allocable to experience-rated contracts 125.1 172.0 Investments -- 69.7 Postemployment benefits 60.5 30.2 Compensation 35.5 56.0 Other, net 23.4 19.7 ------------------------------------------------------------------------------------------- Total gross assets 530.9 611.3 ------------------------------------------------------------------------------------------- Deferred tax liabilities: Value of business acquired 477.8 495.4 Net unrealized capital gains 161.3 236.4 Deferred policy acquisition costs 91.3 59.2 Other, net 9.8 5.0 ------------------------------------------------------------------------------------------- Total gross liabilities 740.2 796.0 ------------------------------------------------------------------------------------------- Net deferred tax liability $ 209.3 $ 184.7 ===========================================================================================
Net unrealized capital gains and losses are presented as a component of Other Comprehensive Income in shareholder's equity, net of deferred taxes. Under prior law, the Company was allowed to defer from taxation a portion of income. The deferred income was accumulated in the Policyholders' Surplus Account and only becomes taxable under certain conditions, which management believes to be remote. Furthermore, the American Jobs Creation Act of 2004 allows certain tax-free distributions from the Policyholders' Surplus Account during 2005 and 2006. Therefore, based on currently available information, no federal income taxes have been provided on the Policyholders' Surplus Account accumulated balance of $17.2 million. 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. 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. Additionally, various state tax audits are in process. C-29 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 8. BENEFIT PLANS DEFINED BENEFIT PLAN ING North America Insurance Corporation ("ING North America") sponsors the ING Americas Retirement Plan (the "Retirement Plan"), effective as of December 31, 2001. Substantially all employees of ING North America and its subsidiaries and affiliates (excluding certain employees) are eligible to participate, including the Company's employees other than Company agents. The Retirement Plan is a tax-qualified defined benefit plan, the benefits of which are guaranteed (within certain specified legal limits) by the Pension Benefit Guaranty Corporation ("PBGC"). As of January 1, 2002, each participant in the Retirement Plan (except for certain specified employees) earns a benefit under a final average compensation formula. Subsequent to December 31, 2001, ING North America is responsible for all Retirement Plan liabilities. The costs allocated to the Company for its employees' participation in the Retirement Plan were $19.0 for 2004, $15.1 for 2003, and $6.4 for 2002, respectively. DEFINED CONTRIBUTION PLAN ING North America sponsors the ING Savings Plan and ESOP (the "Savings Plan"). Substantially all employees of ING North America and its subsidiaries and affiliates (excluding certain employees, including but not limited to Career Agents) are eligible to participate, including the Company's employees other than Company agents. Career Agents are certain, full-time insurance salesmen who have entered into a career agent agreement with the Company and certain other individuals who meet specified eligibility criteria. The Savings Plan is a tax-qualified profit sharing and stock bonus plan, which includes an employee stock ownership plan ("ESOP") component. Savings Plan benefits are not guaranteed by the PBGC. The Savings Plan allows eligible participants to defer into the Savings Plan a specified percentage of eligible compensation on a pre-tax basis. ING North America matches such pre-tax contributions, up to a maximum of 6% of eligible compensation. All matching contributions are subject to a 4-year graded vesting schedule (although certain specified participants are subject to a 5-year graded vesting schedule). All contributions made to the Savings Plan are subject to certain limits imposed by applicable law. Pre-tax charges of operations of the Company for the Savings Plan were $8.0, $7.1 and $7.1 in 2004, 2003, and 2002, respectively. OTHER BENEFIT PLANS The Company also sponsors a tax-qualified profit sharing plan for Career Agents that is intended to satisfy the requirements of Code Section 401(K). In addition to providing retirement plan benefits, the Company, in conjunction with ING North America, provides certain supplemental retirement benefits to eligible employees; defined benefit pension plans for insurance salesmen who have entered into a career agent agreement and certain other individuals; and health care and life insurance benefits to retired employees and their eligible dependents. The supplemental retirement plan and defined benefit pension plan are non-qualified defined benefit pension plans, which means all benefits are payable from the general assets of the Company. The post-retirement health care plan is contributory, with retiree contribution levels adjusted annually. The defined benefit plan for salesmen was terminated effective January 1, 2002, and all benefit accruals ceased. The life insurance plan C-30 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 8. BENEFIT PLANS (continued) provides a flat amount of noncontributory coverage and optional contributory coverage. The benefit charges allocated to the Company related to all of these plans for the years ended December 31, 2004, 2003, and 2002, were not significant. 9. RELATED PARTY TRANSACTIONS OPERATING AGREEMENTS ILIAC has certain agreements whereby it incurs expenses with affiliated entities. The agreements are as follows: - Investment advisory agreement with ING Investment Management LLC ("IIM"), in which IIM provides asset management and accounting services. The Company records a fee, which is paid quarterly, based on the value of the assets under management. For the years ended December 31, 2004, 2003, and 2002, expenses were incurred in the amounts of $58.8, $53.8, and $46.5, respectively. - Services agreement between the Company and its affiliates effective January 2001, and amended effective January 1, 2002. For the years ended December 31, 2004, 2003, and 2002, net expenses related to the agreement where incurred in the amount of $8.6, $19.2, and $13.4, respectively. - Expense sharing agreement with ING North America Insurance Corporation, Inc., dated as of January 1, 2001, as amended effective January 1, 2002, for administrative, management, financial, and information technology services. For the years ended December 31, 2004, 2003, and 2002, expenses were incurred in the amounts of $132.9, $136.4, and $126.0, respectively. 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. INVESTMENT ADVISORY AND OTHER FEES ILIAC serves as investment advisor to certain variable funds used in Company products (collectively, the "Company Funds"). The Company Funds pay ILIAC, as investment advisor, a daily fee which, on an annual basis, ranged, depending on the Fund, from 0.5% to 1.0% of their average daily net assets. Each of the Company Funds managed by ILIAC are subadvised by investment advisors, in which case ILIAC pays a subadvisory fee to the investment advisors, which may include affiliates. ILIAC is also compensated by the Separate Accounts for bearing mortality and expense risks pertaining to variable life and annuity contracts. Under the insurance and annuity contracts, the Separate Accounts pay ILIAC a daily fee, which, on an annual basis is, depending on the product, up to 3.4% of their average daily net assets. The amount of compensation and fees received from affiliated mutual funds and separate accounts, amounted to $209.2, $201.4 (excludes fees paid to Aeltus Investment Management, Inc., now known as ING Investment Management LLP ("Aeltus")), and $391.8 (includes fees paid to Aeltus through February 28, 2002, when IA Holdco, Aeltus' parent, ceased to be a subsidiary of ILIAC) in 2004, 2003, and 2002, respectively. RECIPROCAL LOAN AGREEMENT ILIAC maintains a reciprocal loan agreement with ING AIH, an indirect wholly-owned subsidiary of ING and affiliate to ILIAC, to facilitate the handling of unusual and/or unanticipated short-term cash C-31 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 9. RELATED PARTY TRANSACTIONS (continued) requirements. Under this agreement, which became effective in June 2001 and expires on April 1, 2011, ILIAC and ING AIH can borrow up to 3% of ILIAC's statutory admitted assets as of the preceding December 31 from one another. Interest on any ILIAC borrowings is charged at the rate of ING AIH's cost of funds for the interest period plus 0.15%. Interest on any ING AIH borrowings is charged at a rate based on the prevailing interest rate of U.S. commercial paper available for purchase with a similar duration. Under this agreement, ILIAC incurred interest expense of $0.2, 0.1, and $0.1, for the years ended December 31, 2004, 2003, and 2002, respectively, and earned interest income of $1.3, $0.9, and $2.1 for the years ended December 31, 2004, 2003, and 2002, respectively. At December 31, 2004 and 2003, respectively, ILIAC had a $25.0 and $41.4 receivable from ING AIH under this agreement. NOTES FROM AFFILIATE On December 29, 2004, ING USA Annuity and Life Insurance Company ("ING USA") issued surplus notes in the aggregate principal amount of $400.0 (the "Notes") scheduled to mature on December 29, 2034, to its affiliates, ILIAC, ReliaStar Life Insurance Company ("ReliaStar Life"), and Security Life of Denver International Limited ("SLDI"), in an offering that was exempt from the registration requirements of the Securities Act of 1933. The Company's $175.0 Notes Receivable from ING USA bears interest at a rate of 6.257% per year. Any payment of principal and/or interest is subject to the prior approval of the Insurance Commissioner of the state of Iowa. Interest is scheduled to be paid semi-annually in arrears on June 29 and December 29 of each year, commencing on June 29, 2005. TAX SHARING AGREEMENTS ILIAC has a federal tax sharing agreement with IICA, whereby ILIAC charges its subsidiary for federal taxes it would have incurred were it not a member of the consolidated group and credits the member for losses at the statutory federal tax rate. ILIAC has also 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. CAPITAL TRANSACTIONS AND DIVIDENDS In 2004, ILIAC did not receive any capital contributions. In 2003, ILIAC received $230.0 in cash capital contributions from Lion. In addition, ILIAC received capital contributions in the form of investments in affiliated mutual funds of $164.3 from HOLDCO. ILIAC paid a cash dividend of $70.0 to Lion in 2004 and did not pay any cash dividends to Lion in 2003 or 2002. However, on February 28, 2002, ILIAC contributed 100% of the stock of IA Holdco to HOLDCO in the form of a $60.1 dividend distribution. C-32 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 10. FINANCING AGREEMENTS The Company maintains a revolving loan agreement with SunTrust Bank, Atlanta (the "Bank"). Under this agreement, which is due on demand, the Company can borrow up to $125.0 from the Bank. Interest on any 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 the agreement, the Company incurred minimal interest expense for the years ended December 31, 2004, 2003, and 2002, respectively. At December 31, 2004 and 2003, the Company did not have any balances payable to the Bank. The Company also maintains a perpetual revolving loan agreement with Bank of New York ("BONY"). Under this agreement, the Company can borrow up to $100.0 from BONY. Interest on any of the 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 Reciprocal Loan Agreement in Note 9. 11. REINSURANCE At December 31, 2004, the Company had reinsurance treaties with six unaffiliated reinsurers and one affiliated reinsurer covering a significant portion of the mortality risks and guaranteed death and living benefits under its variable contracts. The Company remains liable to the extent its reinsurers do not meet their obligations under the reinsurance agreements. On October 1, 1998, the Company sold its domestic individual life insurance business to Lincoln for $1.0 billion in cash. The transaction is generally in the form of an indemnity reinsurance arrangement, under which Lincoln contractually assumed from the Company certain policyholder liabilities and obligations, although the Company remains directly obligated to contractowners. Effective January 1, 1998, 90% of the mortality risk on substantially all individual universal life product business written from June 1, 1991 through October 31, 1997 was reinsured externally. Beginning November 1, 1997, 90% of new business written on these products was reinsured externally. Effective October 1, 1998 this agreement was assigned from the third party reinsurer to Lincoln. Effective December 31, 1988, the Company entered into a modified coinsurance reinsurance agreement ("MODCO") with Aetna Life Insurance Company ("Aetna Life"), (formerly an affiliate of the Company), in which substantially all of the nonparticipating individual life and annuity business written by Aetna Life prior to 1981 was assumed by the Company. Effective January 1, 1997, this agreement was amended to transition (based on underlying investment rollover in Aetna Life) from a modified coinsurance arrangement to a coinsurance agreement. As a result of this change, reserves were ceded to the Company from Aetna Life as investment rollover occurred. Effective October 1, 1998, this agreement was fully transitioned to a coinsurance arrangement and this business along with the Company's direct individual life insurance business, with the exception of certain supplemental contracts with reserves of $61.1 and $63.8 as of December 31, 2004 and 2003, respectively, was sold to Lincoln. C-33 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 11. REINSURANCE (continued) On December 16, 1988, the Company assumed $25.0 of premium revenue from Aetna Life, for the purchase and administration of a life contingent single premium variable payout annuity contract. In addition, the Company is also responsible for administering fixed annuity payments that are made to annuitants receiving variable payments. Reserves of $19.3 and $20.4 were maintained for this contract as of December 31, 2004 and 2003, respectively. The effect of reinsurance on premiums and recoveries for the years ended December 31, 2004, 2003 and 2002, were as follows:
YEAR ENDED YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, 2004 2003 2002 -------------------------------------------------------------------------------------------- Direct premiums $ 39.0 $ 51.1 $ 55.9 Reinsurance assumed -- 0.1 -- Reinsurance ceded (0.5) (1.1) (2.0) -------------------------------------------------------------------------------------------- Net premiums $ 38.5 $ 50.1 $ 53.9 ============================================================================================
12. COMMITMENTS AND CONTINGENT LIABILITIES LEASES The Company leases its office space and certain other equipment under operating leases that expire through 2009. For the years ended December 31, 2004, 2003, and 2002, rent expense for leases was $18.1, $20.8 and $18.1, respectively. The future net minimum payments under noncancelable leases for the years ended December 31, 2005 through 2009 are estimated to be $16.7, $15.4, $14.0, $1.3, and $0.5, respectively, and $0.1 thereafter. The Company pays substantially all expenses associated with its leased and subleased office properties. Expenses not paid directly by the Company are paid for by an affiliate and allocated back to the Company. COMMITMENTS Through the normal course of investment operations, the Company commits to either purchase or sell securities, commercial mortgage loans or money market instruments at a specified future date and at a specified price or yield. The inability of counterparties to honor these commitments may result in either a higher or lower replacement cost. Also, there is likely to be a change in the value of the securities underlying the commitments. At December 31, 2004, the Company had off-balance sheet commitments to purchase investments of $778.2 with an estimated fair value of $778.2. C-34 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 12. COMMITMENTS AND CONTINGENT LIABILITIES (continued) 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, 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. C-35 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 12. COMMITMENTS AND CONTINGENT LIABILITIES (continued) 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. C-36 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 13. OTHER COMPREHENSIVE INCOME The components of other comprehensive income for the years ended December 31, 2004 and 2003 were as follows:
AS OF AS OF DECEMBER 31, DECEMBER 31, 2004 2003 ------------------------------------------------------------------------------------------- Net unrealized capital gains (losses): Fixed maturities $ 124.6 $ 108.5 Equity securities 8.7 14.4 Sales inducements (0.1) - Other (8.2) 51.6 ------------------------------------------------------------------------------------------- Subtotal 125.0 174.5 Less: Deferred income taxes 41.2 58.5 ------------------------------------------------------------------------------------------- Net unrealized capital gains 83.8 116.0 Minimum pension liability (16.7) -- ------------------------------------------------------------------------------------------- Net accumulated other comprehensive income $ 67.1 $ 116.0 ===========================================================================================
Net unrealized capital gains allocated to experience-rated contracts of $357.5 and $491.5 at December 31, 2004 and 2003, respectively, are reflected on the Consolidated Balance Sheets in future policy benefits and claims reserves and are not included in shareholder's equity. Changes in accumulated other comprehensive income related to changes in net unrealized gains (losses) on securities, including securities pledged, excluding those related to experience-rated contractholders, were as follows:
YEAR ENDED YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, 2004 2003 2002 -------------------------------------------------------------------------------------------- Unrealized holding (losses) gains arising during the year (1) $ 18.6 $ (48.1) $ 127.4 Less: reclassification adjustment for gains (losses) and other items included in net income (2) 50.8 (46.6) 65.7 -------------------------------------------------------------------------------------------- Net unrealized (losses) gains on securities $ (32.2) $ (1.5) $ 61.7 ============================================================================================
(1) Pretax net unrealized holding gains (losses) were $28.6, $(74.0), and $196.0, 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 $78.1, $(71.6), and $101.1, for the years ended December 31, 2004, 2003, and 2002, respectively. C-37 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 14. 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 reinsurance ceded related to certain products, which were included as a reduction to premiums. - Certain changes were made to the classification of certain annuity and other products, which were included in premium income. - Certain changes were made to the classification of certain benefits to contractowners, which were included as a reduction to premiums. In addition, certain reclassifications have been made 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 to each financial statement line item:
PREVIOUSLY REVISED YEAR ENDED 12/31/2003 REPORTED 2003 ADJUSTMENT 2003 ------------- ---------- -------- Fee income $ 384.3 $ 11.5 $ 395.8 Premiums 95.8 (45.7) 50.1 Total revenue 1,463.7 (34.2) 1,429.5 Interest credited and other benefits to contractowners 757.6 (34.2) 723.4 Total expense 1,248.0 (34.2) 1,213.8
PREVIOUSLY REVISED YEAR ENDED 12/31/2002 REPORTED 2002 ADJUSTMENT 2002 ------------- ---------- -------- Fee income $ 418.2 $ 5.7 $ 423.9 Premiums 98.7 (44.8) 53.9 Total revenue 1,375.4 (39.1) 1,336.3 Interest credited and other benefits to contractowners 746.4 (39.1) 707.3 Total expense 1,289.3 (39.1) 1,250.2
C-38 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in millions, unless otherwise stated) 14. RECLASSIFICATIONS AND CHANGES TO PRIOR YEAR PRESENTATION (continued) Also, during 2004, certain changes were made to the 2003 and 2002 Statements of Cash Flows to restate the correct balances, primarily related to payables for securities purchased, short-term borrowings, and investment 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:
PREVIOUSLY REPORTED ADJUSTMENT RESTATED ------------- ---------- ---------- YEAR ENDED 12/31/2003 Net cash provided by (used for) operating activities $ 1,254.8 $ (196.5) $ 1,058.3 Net cash provided by (used for) financing activities 781.1 196.5 977.6 PREVIOUSLY REPORTED ADJUSTMENT RESTATED ------------- ---------- ---------- YEAR ENDED 12/31/2002 Net cash provided by (used for) operating activities $ 1,527.7 $ (132.4) $ 1,395.3 Net cash used for investing activities (2,152.0) (167.3) (2,319.3) Net cash provided by (used for) financing activities 607.7 299.7 907.4
C-39 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) 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 of this error 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. The following tables show the previously reported and restated for each of the periods affected in 2003.
AS RESTATED 2004 (IN MILLIONS) FIRST SECOND THIRD FOURTH ------------------------------------------------------------------------------------------------------------ Total revenue $384.5 $362.1 $376.7 $379.2 ------------------------------------------------------------------------------------------------------------ Income (loss) before income taxes 64.4 54.7 61.3 61.3 Income tax expense 20.4 17.0 (14.3) 19.3 ------------------------------------------------------------------------------------------------------------ Net income $ 44.0 $ 37.7 $ 75.6 $ 42.0 ============================================================================================================
AS REPORTED 2004 (IN MILLIONS) FIRST SECOND THIRD ----------------------------------------------------------------------------------------- Total revenue $387.3 $364.4 $379.0 ----------------------------------------------------------------------------------------- Income (loss) before income taxes 64.4 54.7 61.3 Income tax expense (benefit) 20.4 17.0 (14.3) ----------------------------------------------------------------------------------------- Net income $ 44.0 $ 37.7 $ 75.6 =========================================================================================
AS RESTATED 2003 (IN MILLIONS) FIRST SECOND* THIRD* FOURTH* ------------------------------------------------------------------------------------------------------------ Total revenue $351.6 $374.5 $353.9 $349.5 ------------------------------------------------------------------------------------------------------------ Income before income taxes 17.5 109.2 25.5 63.5 Income tax expense 5.1 35.4 0.6 20.0 ------------------------------------------------------------------------------------------------------------ Net income $ 12.4 $ 73.8 $ 24.9 $ 43.5 ============================================================================================================
AS REPORTED 2003 (IN MILLIONS) FIRST SECOND THIRD FOURTH ------------------------------------------------------------------------------------------------------------ Total revenue $359.2 $383.6 $362.4 $358.5 ------------------------------------------------------------------------------------------------------------ Income before income taxes 17.5 111.5 33.2 53.5 Income tax expense 5.1 36.2 3.3 16.5 ------------------------------------------------------------------------------------------------------------ Net income $ 12.4 $ 75.3 $ 29.9 $ 37.0 ============================================================================================================
* Restated C-40 FINANCIAL STATEMENTS ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B YEAR ENDED DECEMBER 31, 2004 WITH REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM S-1 This page intentionally left blank. ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2004 CONTENTS Report of Independent Registered Public Accounting Firm 1 Audited Financial Statements Statements of Assets and Liabilities 4 Statements of Operations 30 Statements of Changes in Net Assets 57 Notes to Financial Statements 90
This page intentionally left blank. Report of Independent Registered Public Accounting Firm The Board of Directors and Participants ING Life Insurance and Annuity Company We have audited the accompanying statements of assets and liabilities of ING Life Insurance and Annuity Company Variable Annuity Account B (the "Account") as of December 31, 2004, and the related statements of operations and changes in net assets for the periods disclosed in the financial statements. These financial statements are the responsibility of the Account's management. Our responsibility is to express an opinion on these financial statements based on our audits. The Account is comprised of the following Divisions: AIM Variable Insurance Funds: Fidelity(R) Variable Insurance Products Fund (continued): AIM V.I. Capital Appreciation Fund - Series I Shares Fidelity(R) VIP High Income Portfolio - Initial Class AIM V.I. Core Equity Fund - Series I Shares Fidelity(R) VIP ASSET MANAGER(SM) Portfolio - Initial AIM V.I. Government Securities Fund - Series I Shares Class AIM V.I. Growth Fund - Series I Shares Fidelity(R) VIP Investment Grade Bond Portfolio - AIM V.I. Premier Equity Fund - Series I Shares Initial Class Alger American Funds: Fidelity(R) VIP Index 500 Portfolio - Initial Class Alger American Balanced Portfolio Fidelity(R) VIP Overseas Portfolio - Initial Class Alger American Income & Growth Portfolio Franklin Templeton Variable Insurance Products Trust: Alger American Leveraged AllCap Portfolio Franklin Small Cap Value Securities Fund - Class 2 AllianceBernstein Variable Products Series Fund, Inc.: ING GET Fund: AllianceBernstein VPSF Growth and Income - Class A ING GET Fund - Series D AllianceBernstein VPSF Premier Growth - Class A ING GET Fund - Series E AllianceBernstein VPSF Small Cap Growth - Class A ING GET Fund - Series G American Century(R) Investments: ING GET Fund - Series H American Century(R) VP Balanced Fund ING GET Fund - Series I American Century(R) VP International Fund ING GET Fund - Series J Calvert Social Balanced Portfolio ING GET Fund - Series K Federated Insurance Series: ING GET Fund - Series L Federated American Leaders Fund II ING GET Fund - Series M Federated Capital Income Fund II ING GET Fund - Series N Federated Equity Income Fund II ING GET Fund - Series P Federated Fund for U.S. Government Securities II ING GET Fund - Series Q Federated High Income Bond Fund II ING GET Fund - Series R Federated International Equity Fund II ING GET Fund - Series S Federated Mid Cap Growth Strategies Fund II ING GET Fund - Series T Federated Prime Money Fund II ING GET Fund - Series U Fidelity(R) Variable Insurance Products Fund: ING GET Fund - Series V Fidelity(R) VIP Contrafund(R) Portfolio - Initial Class ING Investors Trust: Fidelity(R) VIP Equity-Income Portfolio - Initial Class ING American Funds Growth Portfolio Fidelity(R) VIP Growth Portfolio - Initial Class ING American Funds Growth-Income Portfolio ING American Funds International Portfolio
ING Julius Baer Foreign Portfolio - Service Class ING Variable Portfolios, Inc.: ING Legg Mason Value Portfolio - Institutional Class ING VP Global Science and Technology Portfolio - ING MFS Total Return Portfolio - Service Class Class I ING T. Rowe Price Equity Income Portfolio - Service ING VP Growth Portfolio - Class I Class ING VP Index Plus LargeCap Portfolio - Class I ING Partners, Inc.: ING VP Index Plus MidCap Portfolio - Class I ING Aeltus Enhanced Index Portfolio - Service Class ING VP Index Plus SmallCap Portfolio - Class I ING American Century Select Portfolio - Service Class ING VP International Equity Portfolio - Class I ING American Century Small Cap Value Portfolio - ING VP Small Company Portfolio - Class I Service Class ING VP Value Opportunity Portfolio - Class I ING Baron Small Cap Growth Portfolio - Service Class ING Variable Products Trust: ING Goldman Sachs(R) Capital Growth Portfolio - Service ING VP Growth Opportunities Portfolio - Class I Class ING VP Growth Opportunities Portfolio - Class S ING JPMorgan International Portfolio - Initial Class ING VP International Value Portfolio - Class I ING JPMorgan Mid Cap Value Portfolio - Service Class ING VP MagnaCap Portfolio - Class I ING MFS Capital Opportunities Portfolio - Initial Class ING VP MagnaCap Portfolio - Class S ING OpCap Balanced Value Portfolio - Service Class ING VP MidCap Opportunities Portfolio - Class I ING Oppenheimer Global Portfolio - Service Class ING VP MidCap Opportunities Portfolio - Class S ING PIMCO Total Return Portfolio - Service Class ING VP Real Estate Portfolio - Class I ING Salomon Brothers Aggressive Growth Portfolio - ING VP SmallCap Opportunities Portfolio - Class I Initial Class ING VP SmallCap Opportunities Portfolio - Class S ING Salomon Brothers Fundamental Value Portfolio - ING VP Balanced Portfolio, Inc. - Class I Service Class ING VP Emerging Markets Fund ING Salomon Brothers Investors Value Portfolio - ING VP Financial Services - Class I Service Class ING VP Intermediate Bond Portfolio - Class I ING T. Rowe Price Diversified Mid Cap Growth Portfolio ING VP Money Market Portfolio - Class I - Service Class ING VP Natural Resources Trust ING T. Rowe Price Growth Equity Portfolio - Initial Janus Aspen Series: Class Janus Aspen Balanced Portfolio - Inst Shares ING UBS U.S. Large Cap Equity Portfolio - Initial Class Janus Aspen Flexible Income Portfolio - Inst Shares ING Van Kampen Comstock Portfolio - Service Class Janus Aspen Growth Portfolio - Inst Shares ING Van Kampen Equity and Income Portfolio - Service Janus Aspen Mid Cap Growth Portfolio - Inst Shares Class Janus Aspen Worldwide Growth Portfolio - Inst Shares Lord Abbett Funds: ING Strategic Allocation Portfolios, Inc.: Lord Abbett Growth and Income Portfolio ING VP Strategic Allocation Balanced Portfolio - Class I Lord Abbett Mid-Cap Value Portfolio ING VP Strategic Allocation Growth Portfolio - Class I MFS(R) Funds: ING VP Strategic Allocation Income Portfolio - Class I MFS(R) VIT Strategic Income Series ING Variable Funds: MFS(R) VIT Total Return Series - Initial Class ING VP Growth and Income Portfolio - Class I Oppenheimer Variable Account Funds: ING Variable Insurance Trust: Oppenheimer Aggressive Growth Fund/VA ING GET U.S. Core Portfolio - Series 1 Oppenheimer Global Securities Fund/VA ING GET U.S. Core Portfolio - Series 2 Oppenheimer Main Street(R) Fund/VA ING GET U.S. Core Portfolio - Series 3 Oppenheimer Strategic Bond Fund/VA ING GET U.S. Core Portfolio - Series 4 PIMCO VIT Real Return Portfolio - Admin Class ING GET U.S. Core Portfolio - Series 5 Pioneer Variable Contracts Trust: ING GET U.S. Core Portfolio - Series 6 Pioneer Equity Income VCT Portfolio - Class I ING GET U.S. Core Portfolio - Series 7 Pioneer Fund VCT Portfolio - Class I Pioneer High Yield VCT Portfolio - Class I Pioneer Mid Cap Value VCT Portfolio - Class I
Prudential Series Fund, Inc.: UBS Series Trust: Jennison Portfolio - Class II Shares UBS U.S. Allocation Portfolio - Class I SP William Blair International Growth Portfolio - Class Wanger Advisors Trust: II Shares Wanger Select Wanger U.S. Smaller Companies
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 were not engaged to perform an audit of the Account'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 expressing an opinion on the effectiveness of the Account'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, as well as evaluating the overall financial statement presentation. Our procedures also included confirmation of securities owned as of December 31, 2004, by correspondence with the transfer agents. 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 each of the Divisions comprising the ING Life Insurance and Annuity Company Variable Annuity Account B at December 31, 2004, and the results of their operations and changes in their net assets for the periods disclosed in the financial statements, in conformity with U.S. generally accepted accounting principles. /s/ Ernst & Young LLP Atlanta, Georgia March 15, 2005 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
AIM V.I. AIM V.I. AIM V.I. CAPITAL AIM V.I. GOVERNMENT AIM V.I. PREMIER APPRECIATION CORE EQUITY SECURITIES GROWTH EQUITY --------------- --------------- --------------- --------------- --------------- ASSETS Investments in mutual funds at fair value $ 15,172 $ 31,830 $ 14,556 $ 16,959 $ 36,351 --------------- --------------- --------------- --------------- --------------- Total assets 15,172 31,830 14,556 16,959 36,351 --------------- --------------- --------------- --------------- --------------- Net assets $ 15,172 $ 31,830 $ 14,556 $ 16,959 $ 36,351 =============== =============== =============== =============== =============== NET ASSETS Accumulation units $ 14,226 $ 27,228 $ 14,556 $ 15,788 $ 34,142 Contracts in payout (annuitization) period 946 4,602 - 1,171 2,209 --------------- --------------- --------------- --------------- --------------- Total net assets $ 15,172 $ 31,830 $ 14,556 $ 16,959 $ 36,351 =============== =============== =============== =============== =============== Total number of shares 668,651 1,408,409 1,205,980 1,056,645 1,706,639 =============== =============== =============== =============== =============== Cost of shares $ 13,665 $ 28,329 $ 14,944 $ 15,807 $ 36,615 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 4 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ALGER ALGER ALLIANCE ALLIANCE ALGER AMERICAN AMERICAN BERNSTEIN BERNSTEIN AMERICAN INCOME & LEVERAGED VPSF GROWTH VPSF PREMIER BALANCED GROWTH ALLCAP AND INCOME GROWTH --------------- --------------- --------------- --------------- --------------- ASSETS Investments in mutual funds at fair value $ 1,926 $ 5,250 $ 5,104 $ 48,096 $ 7,542 --------------- --------------- --------------- --------------- --------------- Total assets 1,926 5,250 5,104 48,096 7,542 --------------- --------------- --------------- --------------- --------------- Net assets $ 1,926 $ 5,250 $ 5,104 $ 48,096 $ 7,542 =============== =============== =============== =============== =============== NET ASSETS Accumulation units $ 1,926 $ 5,250 $ 5,104 $ 48,096 $ 7,542 Contracts in payout (annuitization) period - - - - - --------------- --------------- --------------- --------------- --------------- Total net assets $ 1,926 $ 5,250 $ 5,104 $ 48,096 $ 7,542 =============== =============== =============== =============== =============== Total number of shares 142,166 522,416 167,956 1,997,327 321,756 =============== =============== =============== =============== =============== Cost of shares $ 1,803 $ 5,190 $ 4,973 $ 42,812 $ 6,888 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 5 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ALLIANCE BERNSTEIN AMERICAN AMERICAN CALVERT FEDERATED VPSF SMALL CENTURY(R) VP CENTURY(R) VP SOCIAL AMERICAN CAP GROWTH BALANCED INTERNATIONAL BALANCED LEADERS --------------- --------------- --------------- --------------- --------------- ASSETS Investments in mutual funds at fair value $ 5,141 $ 1,096 $ 1,196 $ 2,229 $ 42,192 --------------- --------------- --------------- --------------- --------------- Total assets 5,141 1,096 1,196 2,229 42,192 --------------- --------------- --------------- --------------- --------------- Net assets $ 5,141 $ 1,096 $ 1,196 $ 2,229 $ 42,192 =============== =============== =============== =============== =============== NET ASSETS Accumulation units $ 5,141 $ 1,096 $ 1,196 $ 2,229 $ 42,103 Contracts in payout (annuitization) period - - - - 89 --------------- --------------- --------------- --------------- --------------- Total net assets $ 5,141 $ 1,096 $ 1,196 $ 2,229 $ 42,192 =============== =============== =============== =============== =============== Total number of shares 441,255 150,541 162,767 1,190,608 2,041,206 =============== =============== =============== =============== =============== Cost of shares $ 4,463 $ 956 $ 1,050 $ 2,018 $ 39,597 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 6 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
FEDERATED FEDERATED FEDERATED FEDERATED FUND FOR U.S. HIGH FEDERATED CAPITAL EQUITY GOVERNMENT INCOME INTERNATIONAL INCOME INCOME SECURITIES BOND EQUITY --------------- --------------- --------------- --------------- --------------- ASSETS Investments in mutual funds at fair value $ 5,170 $ 9,093 $ 6,444 $ 11,845 $ 5,865 --------------- --------------- --------------- --------------- --------------- Total assets 5,170 9,093 6,444 11,845 5,865 --------------- --------------- --------------- --------------- --------------- Net assets $ 5,170 $ 9,093 $ 6,444 $ 11,845 $ 5,865 =============== =============== =============== =============== =============== NET ASSETS Accumulation units $ 5,156 $ 8,977 $ 6,442 $ 11,789 $ 5,830 Contracts in payout (annuitization) period 14 116 2 56 35 --------------- --------------- --------------- --------------- --------------- Total net assets $ 5,170 $ 9,093 $ 6,444 $ 11,845 $ 5,865 =============== =============== =============== =============== =============== Total number of shares 582,819 677,542 555,555 1,444,529 443,619 =============== =============== =============== =============== =============== Cost of shares $ 5,855 $ 9,403 $ 6,361 $ 10,497 $ 8,876 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 7 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
FEDERATED MID CAP FEDERATED FIDELITY(R) GROWTH PRIME FIDELITY(R) VIP VIP EQUITY- FIDELITY(R) STRATEGIES MONEY CONTRAFUND(R) INCOME VIP GROWTH --------------- --------------- --------------- --------------- --------------- ASSETS Investments in mutual funds at fair value $ 10,473 $ 3,326 $ 243,399 $ 218,459 $ 109,798 --------------- --------------- --------------- --------------- --------------- Total assets 10,473 3,326 243,399 218,459 109,798 --------------- --------------- --------------- --------------- --------------- Net assets $ 10,473 $ 3,326 $ 243,399 $ 218,459 $ 109,798 =============== =============== =============== =============== =============== NET ASSETS Accumulation units $ 10,473 $ 3,326 $ 243,399 $ 218,459 $ 109,798 Contracts in payout (annuitization) period - - - - - --------------- --------------- --------------- --------------- --------------- Total net assets $ 10,473 $ 3,326 $ 243,399 $ 218,459 $ 109,798 =============== =============== =============== =============== =============== Total number of shares 498,220 3,325,705 9,143,477 8,610,906 3,430,109 =============== =============== =============== =============== =============== Cost of shares $ 13,804 $ 3,326 $ 192,805 $ 183,717 $ 107,533 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 8 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
FIDELITY(R) FIDELITY(R) VIP FIDELITY(R) VIP VIP ASSET INVESTMENT FIDELITY(R) VIP FIDELITY(R) VIP HIGH INCOME MANAGER(SM) GRADE BOND INDEX 500 OVERSEAS --------------- --------------- --------------- --------------- --------------- ASSETS Investments in mutual funds at fair value $ 47,964 $ 11,587 $ 1,958 $ 70,298 $ 15,669 --------------- --------------- --------------- --------------- --------------- Total assets 47,964 11,587 1,958 70,298 15,669 --------------- --------------- --------------- --------------- --------------- Net assets $ 47,964 $ 11,587 $ 1,958 $ 70,298 $ 15,669 =============== =============== =============== =============== =============== NET ASSETS Accumulation units $ 45,288 $ 11,587 $ 1,958 $ 70,298 $ 15,669 Contracts in payout (annuitization) period 2,676 - - - - --------------- --------------- --------------- --------------- --------------- Total net assets $ 47,964 $ 11,587 $ 1,958 $ 70,298 $ 15,669 =============== =============== =============== =============== =============== Total number of shares 6,851,930 780,282 147,791 510,332 894,346 =============== =============== =============== =============== =============== Cost of shares $ 43,141 $ 10,638 $ 1,876 $ 62,020 $ 13,748 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 9 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
FRANKLIN SMALL ING GET ING GET ING GET ING GET CAP VALUE FUND - FUND - FUND - FUND - SECURITIES SERIES H SERIES I SERIES J SERIES K --------------- --------------- --------------- --------------- --------------- ASSETS Investments in mutual funds at fair value $ 4,384 $ 85,522 $ 60,675 $ 47,133 $ 55,421 --------------- --------------- --------------- --------------- --------------- Total assets 4,384 85,522 60,675 47,133 55,421 --------------- --------------- --------------- --------------- --------------- Net assets $ 4,384 $ 85,522 $ 60,675 $ 47,133 $ 55,421 =============== =============== =============== =============== =============== NET ASSETS Accumulation units $ 4,384 $ 85,522 $ 60,675 $ 47,133 $ 55,421 Contracts in payout (annuitization) period - - - - - --------------- --------------- --------------- --------------- --------------- Total net assets $ 4,384 $ 85,522 $ 60,675 $ 47,133 $ 55,421 =============== =============== =============== =============== =============== Total number of shares 280,146 8,798,593 6,216,670 4,894,430 5,615,069 =============== =============== =============== =============== =============== Cost of shares $ 4,063 $ 88,312 $ 62,102 $ 48,360 $ 56,226 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 10 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING GET ING GET ING GET ING GET ING GET FUND - FUND - FUND - FUND - FUND - SERIES L SERIES M SERIES N SERIES P SERIES Q --------------- --------------- --------------- --------------- --------------- ASSETS Investments in mutual funds at fair value $ 51,909 $ 76,815 $ 63,310 $ 47,889 $ 37,872 --------------- --------------- --------------- --------------- --------------- Total assets 51,909 76,815 63,310 47,889 37,872 --------------- --------------- --------------- --------------- --------------- Net assets $ 51,909 $ 76,815 $ 63,310 $ 47,889 $ 37,872 =============== =============== =============== =============== =============== NET ASSETS Accumulation units $ 51,909 $ 76,815 $ 63,310 $ 47,889 $ 37,872 Contracts in payout (annuitization) period - - - - - --------------- --------------- --------------- --------------- --------------- Total net assets $ 51,909 $ 76,815 $ 63,310 $ 47,889 $ 37,872 =============== =============== =============== =============== =============== Total number of shares 5,329,505 7,830,255 6,274,491 4,755,572 3,652,026 =============== =============== =============== =============== =============== Cost of shares $ 52,526 $ 76,934 $ 63,922 $ 47,501 $ 36,522 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 11 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING GET ING GET ING GET ING GET ING GET FUND - FUND - FUND - FUND - FUND - SERIES R SERIES S SERIES T SERIES U SERIES V --------------- --------------- --------------- --------------- --------------- ASSETS Investments in mutual funds at fair value $ 33,352 $ 36,434 $ 28,261 $ 27,273 $ 55,481 --------------- --------------- --------------- --------------- --------------- Total assets 33,352 36,434 28,261 27,273 55,481 --------------- --------------- --------------- --------------- --------------- Net assets $ 33,352 $ 36,434 $ 28,261 $ 27,273 $ 55,481 =============== =============== =============== =============== =============== NET ASSETS Accumulation units $ 33,352 $ 36,434 $ 28,261 $ 27,273 $ 55,481 Contracts in payout (annuitization) period - - - - - --------------- --------------- --------------- --------------- --------------- Total net assets $ 33,352 $ 36,434 $ 28,261 $ 27,273 $ 55,481 =============== =============== =============== =============== =============== Total number of shares 3,131,678 3,479,826 2,696,685 2,617,329 5,553,615 =============== =============== =============== =============== =============== Cost of shares $ 31,419 $ 34,933 $ 27,064 $ 26,231 $ 55,596 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 12 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING AMERICAN ING AMERICAN FUNDS ING AMERICAN ING ING FUNDS GROWTH- FUNDS JULIUS BAER LEGG MASON GROWTH INCOME INTERNATIONAL FOREIGN VALUE --------------- --------------- --------------- --------------- --------------- ASSETS Investments in mutual funds at fair value $ 1,774 $ 2,347 $ 9,074 $ 242 $ 882 --------------- --------------- --------------- --------------- --------------- Total assets 1,774 2,347 9,074 242 882 --------------- --------------- --------------- --------------- --------------- Net assets $ 1,774 $ 2,347 $ 9,074 $ 242 $ 882 =============== =============== =============== =============== =============== NET ASSETS Accumulation units $ 1,774 $ 2,152 $ 9,074 $ 242 $ 882 Contracts in payout (annuitization) period - 195 - - - --------------- --------------- --------------- --------------- --------------- Total net assets $ 1,774 $ 2,347 $ 9,074 $ 242 $ 882 =============== =============== =============== =============== =============== Total number of shares 34,858 63,558 566,061 19,773 87,905 =============== =============== =============== =============== =============== Cost of shares $ 1,726 $ 2,320 $ 8,910 $ 228 $ 858 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 13 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING AMERICAN ING MFS ING T. ROWE ING AELTUS ING AMERICAN CENTURY TOTAL PRICE EQUITY ENHANCED CENTURY SMALL CAP RETURN INCOME INDEX SELECT VALUE --------------- --------------- --------------- --------------- --------------- ASSETS Investments in mutual funds at fair value $ 1,922 $ 2,335 $ 79 $ 488 $ 1,034 --------------- --------------- --------------- --------------- --------------- Total assets 1,922 2,335 79 488 1,034 --------------- --------------- --------------- --------------- --------------- Net assets $ 1,922 $ 2,335 $ 79 $ 488 $ 1,034 =============== =============== =============== =============== =============== NET ASSETS Accumulation units $ 1,922 $ 2,335 $ 79 $ 488 $ 1,034 Contracts in payout (annuitization) period - - - - - --------------- --------------- --------------- --------------- --------------- Total net assets $ 1,922 $ 2,335 $ 79 $ 488 $ 1,034 =============== =============== =============== =============== =============== Total number of shares 102,319 169,911 9,032 52,694 84,631 =============== =============== =============== =============== =============== Cost of shares $ 1,829 $ 2,076 $ 74 $ 446 $ 925 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 14 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING ING GOLDMAN ING BARON SACHS(R) ING JPMORGAN ING MFS SMALL CAP CAPITAL JPMORGAN MID CAP CAPITAL GROWTH GROWTH INTERNATIONAL VALUE OPPORTUNITIES --------------- --------------- --------------- --------------- --------------- ASSETS Investments in mutual funds at fair value $ 2,941 $ 315 $ 44,030 $ 2,215 $ 38,224 --------------- --------------- --------------- --------------- --------------- Total assets 2,941 315 44,030 2,215 38,224 --------------- --------------- --------------- --------------- --------------- Net assets $ 2,941 $ 315 $ 44,030 $ 2,215 $ 38,224 =============== =============== =============== =============== =============== NET ASSETS Accumulation units $ 2,941 $ 315 $ 41,341 $ 2,215 $ 35,211 Contracts in payout (annuitization) period - - 2,689 - 3,013 --------------- --------------- --------------- --------------- --------------- Total net assets $ 2,941 $ 315 $ 44,030 $ 2,215 $ 38,224 =============== =============== =============== =============== =============== Total number of shares 196,591 27,968 3,579,704 159,478 1,405,283 =============== =============== =============== =============== =============== Cost of shares $ 2,538 $ 281 $ 37,399 $ 1,980 $ 30,520 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 15 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING ING ING SALOMON ING SALOMON OPCAP ING PIMCO BROTHERS BROTHERS BALANCED OPPENHEIMER TOTAL AGGRESSIVE FUNDAMENTAL VALUE GLOBAL RETURN GROWTH VALUE --------------- --------------- --------------- --------------- --------------- ASSETS Investments in mutual funds at fair value $ 2,126 $ 22 $ 3,885 $ 53,255 $ 1,483 --------------- --------------- --------------- --------------- --------------- Total assets 2,126 22 3,885 53,255 1,483 --------------- --------------- --------------- --------------- --------------- Net assets $ 2,126 $ 22 $ 3,885 $ 53,255 $ 1,483 =============== =============== =============== =============== =============== NET ASSETS Accumulation units $ 2,126 $ 22 $ 3,885 $ 51,733 $ 1,483 Contracts in payout (annuitization) period - - - 1,522 - --------------- --------------- --------------- --------------- --------------- Total net assets $ 2,126 $ 22 $ 3,885 $ 53,255 $ 1,483 =============== =============== =============== =============== =============== Total number of shares 158,321 1,780 354,449 1,333,037 82,459 =============== =============== =============== =============== =============== Cost of shares $ 1,946 $ 22 $ 3,835 $ 45,634 $ 1,371 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 16 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING T. ROWE ING SALOMON PRICE BROTHERS DIVERSIFIED ING T. ROWE ING UBS U.S. ING VAN INVESTORS MID CAP PRICE GROWTH LARGE CAP KAMPEN VALUE GROWTH EQUITY EQUITY COMSTOCK --------------- --------------- --------------- --------------- --------------- ASSETS Investments in mutual funds at fair value $ 387 $ 612 $ 73,921 $ 43,678 $ 3,726 --------------- --------------- --------------- --------------- --------------- Total assets 387 612 73,921 43,678 3,726 --------------- --------------- --------------- --------------- --------------- Net assets $ 387 $ 612 $ 73,921 $ 43,678 $ 3,726 =============== =============== =============== =============== =============== NET ASSETS Accumulation units $ 387 $ 612 $ 67,195 $ 43,678 $ 3,726 Contracts in payout (annuitization) period - - 6,726 - - --------------- --------------- --------------- --------------- --------------- Total net assets $ 387 $ 612 $ 73,921 $ 43,678 $ 3,726 =============== =============== =============== =============== =============== Total number of shares 27,294 76,638 1,484,062 5,090,630 303,194 =============== =============== =============== =============== =============== Cost of shares $ 366 $ 575 $ 63,844 $ 40,443 $ 3,374 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 17 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING ING VP ING VP ING VP VAN KAMPEN STRATEGIC STRATEGIC STRATEGIC ING VP EQUITY AND ALLOCATION ALLOCATION ALLOCATION GROWTH AND INCOME BALANCED GROWTH INCOME INCOME --------------- --------------- --------------- --------------- --------------- ASSETS Investments in mutual funds at fair value $ 137 $ 20,822 $ 15,631 $ 18,730 $ 423,357 --------------- --------------- --------------- --------------- --------------- Total assets 137 20,822 15,631 18,730 423,357 --------------- --------------- --------------- --------------- --------------- Net assets $ 137 $ 20,822 $ 15,631 $ 18,730 $ 423,357 =============== =============== =============== =============== =============== NET ASSETS Accumulation units $ 137 $ 17,934 $ 13,548 $ 15,154 $ 326,371 Contracts in payout (annuitization) period - 2,888 2,083 3,576 96,986 --------------- --------------- --------------- --------------- --------------- Total net assets $ 137 $ 20,822 $ 15,631 $ 18,730 $ 423,357 =============== =============== =============== =============== =============== Total number of shares 4,092 1,496,922 1,059,037 1,436,355 21,878,936 =============== =============== =============== =============== =============== Cost of shares $ 126 $ 18,835 $ 13,589 $ 17,369 $ 461,670 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 18 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING GET ING GET ING GET ING GET ING GET U.S. CORE - U.S. CORE - U.S. CORE - U.S. CORE - U.S. CORE - SERIES 1 SERIES 2 SERIES 3 SERIES 4 SERIES 5 --------------- --------------- --------------- --------------- --------------- ASSETS Investments in mutual funds at fair value $ 23,042 $ 19,803 $ 54,614 $ 8,173 $ 4,428 --------------- --------------- --------------- --------------- --------------- Total assets 23,042 19,803 54,614 8,173 4,428 --------------- --------------- --------------- --------------- --------------- Net assets $ 23,042 $ 19,803 $ 54,614 $ 8,173 $ 4,428 =============== =============== =============== =============== =============== NET ASSETS Accumulation units $ 23,042 $ 19,803 $ 54,614 $ 8,173 $ 4,428 Contracts in payout (annuitization) period - - - - - --------------- --------------- --------------- --------------- --------------- Total net assets $ 23,042 $ 19,803 $ 54,614 $ 8,173 $ 4,428 =============== =============== =============== =============== =============== Total number of shares 2,169,690 1,896,842 5,391,315 776,932 418,892 =============== =============== =============== =============== =============== Cost of shares $ 21,716 $ 18,979 $ 53,920 $ 7,775 $ 4,199 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 19 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING VP ING GET ING GET GLOBAL ING VP U.S. CORE - U.S. CORE - SCIENCE AND ING VP INDEX PLUS SERIES 6 SERIES 7 TECHNOLOGY GROWTH LARGECAP --------------- --------------- --------------- --------------- --------------- ASSETS Investments in mutual funds at fair value $ 88,090 $ 57,015 $ 10,373 $ 28,081 $ 182,362 --------------- --------------- --------------- --------------- --------------- Total assets 88,090 57,015 10,373 28,081 182,362 --------------- --------------- --------------- --------------- --------------- Net assets $ 88,090 $ 57,015 $ 10,373 $ 28,081 $ 182,362 =============== =============== =============== =============== =============== NET ASSETS Accumulation units $ 88,090 $ 57,015 $ 10,373 $ 25,389 $ 138,246 Contracts in payout (annuitization) period - - - 2,692 44,116 --------------- --------------- --------------- --------------- --------------- Total net assets $ 88,090 $ 57,015 $ 10,373 $ 28,081 $ 182,362 =============== =============== =============== =============== =============== Total number of shares 8,704,574 5,696,396 2,715,342 2,937,296 12,305,141 =============== =============== =============== =============== =============== Cost of shares $ 87,055 $ 56,970 $ 10,338 $ 25,718 $ 158,591 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 20 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING VP ING VP ING VP ING VP ING VP INDEX PLUS INDEX PLUS INTERNATIONAL SMALL VALUE MIDCAP SMALLCAP EQUITY COMPANY OPPORTUNITY --------------- --------------- --------------- --------------- --------------- ASSETS Investments in mutual funds at fair value $ 18,233 $ 8,963 $ 13,340 $ 82,870 $ 16,285 --------------- --------------- --------------- --------------- --------------- Total assets 18,233 8,963 13,340 82,870 16,285 --------------- --------------- --------------- --------------- --------------- Net assets $ 18,233 $ 8,963 $ 13,340 $ 82,870 $ 16,285 =============== =============== =============== =============== =============== NET ASSETS Accumulation units $ 18,233 $ 8,963 $ 11,657 $ 74,744 $ 16,285 Contracts in payout (annuitization) period - - 1,683 8,126 - --------------- --------------- --------------- --------------- --------------- Total net assets $ 18,233 $ 8,963 $ 13,340 $ 82,870 $ 16,285 =============== =============== =============== =============== =============== Total number of shares 1,004,006 546,874 1,526,296 4,155,956 1,234,626 =============== =============== =============== =============== =============== Cost of shares $ 13,694 $ 6,876 $ 11,261 $ 64,523 $ 15,461 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 21 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING VP ING VP ING VP ING VP ING VP MIDCAP MIDCAP INTERNATIONAL MAGNACAP MAGNACAP OPPORTUNITIES OPPORTUNITIES VALUE - CLASS I - CLASS S - CLASS I - CLASS S --------------- --------------- --------------- --------------- --------------- ASSETS Investments in mutual funds at fair value $ 2,980 $ 125 $ 1,635 $ 340 $ 10,784 --------------- --------------- --------------- --------------- --------------- Total assets 2,980 125 1,635 340 10,784 --------------- --------------- --------------- --------------- --------------- Net assets $ 2,980 $ 125 $ 1,635 $ 340 $ 10,784 =============== =============== =============== =============== =============== NET ASSETS Accumulation units $ 2,980 $ 125 $ 1,635 $ 340 $ 10,784 Contracts in payout (annuitization) period - - - - - --------------- --------------- --------------- --------------- --------------- Total net assets $ 2,980 $ 125 $ 1,635 $ 340 $ 10,784 =============== =============== =============== =============== =============== Total number of shares 233,504 13,199 171,365 49,615 1,588,235 =============== =============== =============== =============== =============== Cost of shares $ 2,491 $ 111 $ 1,431 $ 300 $ 9,263 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 22 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING VP ING VP SMALLCAP SMALLCAP ING VP ING VP OPPORTUNITIES OPPORTUNITIES ING VP EMERGING REAL ESTATE - CLASS I - CLASS S BALANCED MARKETS --------------- --------------- --------------- --------------- --------------- ASSETS Investments in mutual funds at fair value $ 1,193 $ 970 $ 5,342 $ 189,559 $ 770 --------------- --------------- --------------- --------------- --------------- Total assets 1,193 970 5,342 189,559 770 --------------- --------------- --------------- --------------- --------------- Net assets $ 1,193 $ 970 $ 5,342 $ 189,559 $ 770 =============== =============== =============== =============== =============== NET ASSETS Accumulation units $ 1,193 $ 970 $ 5,342 $ 144,379 $ 770 Contracts in payout (annuitization) period - - - 45,180 - --------------- --------------- --------------- --------------- --------------- Total net assets $ 1,193 $ 970 $ 5,342 $ 189,559 $ 770 =============== =============== =============== =============== =============== Total number of shares 87,573 59,645 330,956 14,146,212 96,925 =============== =============== =============== =============== =============== Cost of shares $ 1,095 $ 931 $ 4,682 $ 173,163 $ 558 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 23 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING VP ING VP ING VP JANUS ASPEN INTERMEDIATE MONEY NATURAL JANUS ASPEN FLEXIBLE BOND MARKET RESOURCES BALANCED INCOME --------------- --------------- --------------- --------------- --------------- ASSETS Investments in mutual funds at fair value $ 137,880 $ 192,781 $ 1,861 $ 156,790 $ 15,748 --------------- --------------- --------------- --------------- --------------- Total assets 137,880 192,781 1,861 156,790 15,748 --------------- --------------- --------------- --------------- --------------- Net assets $ 137,880 $ 192,781 $ 1,861 $ 156,790 $ 15,748 =============== =============== =============== =============== =============== NET ASSETS Accumulation units $ 125,417 $ 187,699 $ 1,861 $ 156,790 $ 15,748 Contracts in payout (annuitization) period 12,463 5,082 - - - --------------- --------------- --------------- --------------- --------------- Total net assets $ 137,880 $ 192,781 $ 1,861 $ 156,790 $ 15,748 =============== =============== =============== =============== =============== Total number of shares 10,493,163 14,900,388 105,429 6,428,456 1,297,160 =============== =============== =============== =============== =============== Cost of shares $ 140,963 $ 192,039 $ 1,487 $ 145,813 $ 16,069 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 24 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
JANUS ASPEN JANUS ASPEN LORD ABBETT LORD ABBETT JANUS ASPEN MID CAP WORLDWIDE GROWTH AND MID-CAP GROWTH GROWTH GROWTH INCOME VALUE --------------- --------------- --------------- --------------- --------------- ASSETS Investments in mutual funds at fair value $ 84,481 $ 94,264 $ 154,245 $ 6,773 $ 3,732 --------------- --------------- --------------- --------------- --------------- Total assets 84,481 94,264 154,245 6,773 3,732 --------------- --------------- --------------- --------------- --------------- Net assets $ 84,481 $ 94,264 $ 154,245 $ 6,773 $ 3,732 =============== =============== =============== =============== =============== NET ASSETS Accumulation units $ 78,822 $ 94,264 $ 148,522 $ 6,773 $ 3,732 Contracts in payout (annuitization) period 5,659 - 5,723 - - --------------- --------------- --------------- --------------- --------------- Total net assets $ 84,481 $ 94,264 $ 154,245 $ 6,773 $ 3,732 =============== =============== =============== =============== =============== Total number of shares 4,209,326 3,648,004 5,759,719 249,179 179,520 =============== =============== =============== =============== =============== Cost of shares $ 80,578 $ 65,778 $ 148,011 $ 6,206 $ 3,179 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 25 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
MFS(R) MFS(R) OPPENHEIMER OPPENHEIMER OPPENHEIMER VIT STRATEGIC VIT TOTAL AGGRESSIVE GLOBAL MAIN INCOME RETURN GROWTH SECURITIES STREET(R) --------------- --------------- --------------- --------------- --------------- ASSETS Investments in mutual funds at fair value $ 2,503 $ 142,497 $ 32,874 $ 43,720 $ 68,396 --------------- --------------- --------------- --------------- --------------- Total assets 2,503 142,497 32,874 43,720 68,396 --------------- --------------- --------------- --------------- --------------- Net assets $ 2,503 $ 142,497 $ 32,874 $ 43,720 $ 68,396 =============== =============== =============== =============== =============== NET ASSETS Accumulation units $ 2,503 $ 142,497 $ 30,981 $ 43,720 $ 60,919 Contracts in payout (annuitization) period - - 1,893 - 7,477 --------------- --------------- --------------- --------------- --------------- Total net assets $ 2,503 $ 142,497 $ 32,874 $ 43,720 $ 68,396 =============== =============== =============== =============== =============== Total number of shares 222,477 6,649,417 747,640 1,481,540 3,281,957 =============== =============== =============== =============== =============== Cost of shares $ 2,356 $ 127,339 $ 27,019 $ 34,455 $ 60,795 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 26 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
PIONEER OPPENHEIMER PIMCO VIT EQUITY PIONEER PIONEER STRATEGIC REAL INCOME FUND HIGH YIELD BOND RETURN VCT VCT VCT --------------- --------------- --------------- --------------- --------------- ASSETS Investments in mutual funds at fair value $ 58,634 $ 522 $ 1,581 $ 52 $ 216 --------------- --------------- --------------- --------------- --------------- Total assets 58,634 522 1,581 52 216 --------------- --------------- --------------- --------------- --------------- Net assets $ 58,634 $ 522 $ 1,581 $ 52 $ 216 =============== =============== =============== =============== =============== NET ASSETS Accumulation units $ 56,174 $ 522 $ 1,581 $ 52 $ 216 Contracts in payout (annuitization) period 2,460 - - - - --------------- --------------- --------------- --------------- --------------- Total net assets $ 58,634 $ 522 $ 1,581 $ 52 $ 216 =============== =============== =============== =============== =============== Total number of shares 11,254,177 40,409 76,829 2,548 18,493 =============== =============== =============== =============== =============== Cost of shares $ 53,032 $ 525 $ 1,443 $ 50 $ 214 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 27 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
SP WILLIAM PIONEER MID BLAIR UBS CAP VALUE INTERNATIONAL U. S. WANGER VCT JENNISON GROWTH ALLOCATION SELECT --------------- --------------- --------------- --------------- --------------- ASSETS Investments in mutual funds at fair value $ 3,193 $ 1,329 $ 6,154 $ 8,911 $ 249 --------------- --------------- --------------- --------------- --------------- Total assets 3,193 1,329 6,154 8,911 249 --------------- --------------- --------------- --------------- --------------- Net assets $ 3,193 $ 1,329 $ 6,154 $ 8,911 $ 249 =============== =============== =============== =============== =============== NET ASSETS Accumulation units $ 3,193 $ 1,329 $ 6,154 $ 8,911 $ 249 Contracts in payout (annuitization) period - - - - - --------------- --------------- --------------- --------------- --------------- Total net assets $ 3,193 $ 1,329 $ 6,154 $ 8,911 $ 249 =============== =============== =============== =============== =============== Total number of shares 129,415 73,978 908,946 662,070 11,273 =============== =============== =============== =============== =============== Cost of shares $ 2,795 $ 1,170 $ 5,331 $ 8,042 $ 238 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 28 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
WANGER U.S. SMALLER COMPANIES --------------- ASSETS Investments in mutual funds at fair value $ 97 --------------- Total assets 97 --------------- Net assets $ 97 =============== NET ASSETS Accumulation units $ 97 Contracts in payout (annuitization) period - --------------- Total net assets $ 97 =============== Total number of shares 3,108 =============== Cost of shares $ 84 ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 29 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
AIM V.I. AIM V.I. AIM V.I. CAPITAL AIM V.I. GOVERNMENT AIM V.I. PREMIER APPRECIATION CORE EQUITY SECURITIES GROWTH EQUITY ------------- ------------- ------------- ------------- ------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ - $ 303 $ 548 $ - $ 166 ------------- ------------- ------------- ------------- ------------- Total investment income - 303 548 - 166 Expenses: Mortality and expense risk and other charges 205 418 177 221 487 ------------- ------------- ------------- ------------- ------------- Total expenses 205 418 177 221 487 ------------- ------------- ------------- ------------- ------------- Net investment income (loss) (205) (115) 371 (221) (321) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments (18) 424 (58) (115) (740) Capital gains distributions - - - - - ------------- ------------- ------------- ------------- ------------- Total realized gain (loss) on investments and capital gains distributions (18) 424 (58) (115) (740) Net unrealized appreciation (depreciation) of investments 946 1,983 (147) 1,403 2,521 ------------- ------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $ 723 $ 2,292 $ 166 $ 1,067 $ 1,460 ============= ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 30 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ALGER ALGER ALLIANCE ALLIANCE ALGER AMERICAN AMERICAN BERNSTEIN BERNSTEIN AMERICAN INCOME & LEVERAGED VPSF GROWTH VPSF PREMIER BALANCED GROWTH ALLCAP AND INCOME GROWTH ------------- ------------- ------------- ------------- ------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 32 $ 32 $ - $ 366 $ - ------------- ------------- ------------- ------------- ------------- Total investment income 32 32 - 366 - Expenses: Mortality and expense risk and other charges 30 81 79 523 95 ------------- ------------- ------------- ------------- ------------- Total expenses 30 81 79 523 95 ------------- ------------- ------------- ------------- ------------- Net investment income (loss) 2 (49) (79) (157) (95) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 1 (120) (103) (43) (118) Capital gains distributions - - - - - ------------- ------------- ------------- ------------- ------------- Total realized gain (loss) on investments and capital gains distributions 1 (120) (103) (43) (118) Net unrealized appreciation (depreciation) of investments 40 477 484 4,351 714 ------------- ------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $ 43 $ 308 $ 302 $ 4,151 $ 501 ============= ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 31 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ALLIANCE BERNSTEIN AMERICAN AMERICAN CALVERT FEDERATED VPSF SMALL CENTURY(R) VP CENTURY(R) VP SOCIAL AMERICAN CAP GROWTH BALANCED INTERNATIONAL BALANCED LEADERS ------------- -------------- ------------- ------------- ------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ - $ 23 $ 7 $ 37 $ 685 ------------- ------------- ------------- ------------- ------------- Total investment income - 23 7 37 685 Expenses: Mortality and expense risk and other charges 58 19 18 27 647 ------------- ------------- ------------- ------------- ------------- Total expenses 58 19 18 27 647 ------------- ------------- ------------- ------------- ------------- Net investment income (loss) (58) 4 (11) 10 38 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 442 39 6 14 (902) Capital gains distributions - - - - - ------------- ------------- ------------- ------------- ------------- Total realized gain (loss) on investments and capital gains distributions 442 39 6 14 (902) Net unrealized appreciation (depreciation) of investments 77 55 152 121 4,253 ------------- ------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $ 461 $ 98 $ 147 $ 145 $ 3,389 ============= ============= ============= ============== =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 32 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
FEDERATED FEDERATED FEDERATED FEDERATED FUND FOR U.S. HIGH FEDERATED CAPITAL EQUITY GOVERNMENT INCOME INTERNATIONAL INCOME INCOME SECURITIES BOND EQUITY ------------- ------------- ------------- ------------- ------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 267 $ 206 $ 409 $ 1,080 $ - ------------- ------------- ------------- ------------- ------------- Total investment income 267 206 409 1,080 - Expenses: Mortality and expense risk and other charges 80 140 115 190 86 ------------- ------------- ------------- ------------- ------------- Total expenses 80 140 115 190 86 ------------- ------------- ------------- ------------- ------------- Net investment income (loss) 187 66 294 890 (86) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments (1,281) (211) 109 (586) (791) Capital gains distributions - - 48 - - ------------- ------------- ------------- ------------- ------------- Total realized gain (loss) on investments and capital gains distributions (1,281) (211) 157 (586) (791) Net unrealized appreciation (depreciation) of investments 1,520 1,125 (285) 797 1,543 ------------- ------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $ 426 $ 980 $ 166 $ 1,101 $ 666 ============= ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 33 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
FEDERATED MID CAP FEDERATED FIDELITY(R) GROWTH PRIME FIDELITY(R) VIP VIP EQUITY- FIDELITY(R) STRATEGIES MONEY CONTRAFUND(R) INCOME VIP GROWTH ------------- ------------- --------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ - $ 32 $ 662 $ 3,069 $ 330 ------------- ------------- -------------- -------------- -------------- Total investment income - 32 662 3,069 330 Expenses: Mortality and expense risk and other charges 153 57 2,560 2,550 1,514 ------------- ------------- -------------- -------------- -------------- Total expenses 153 57 2,560 2,550 1,514 ------------- ------------- -------------- -------------- -------------- Net investment income (loss) (153) (25) (1,898) 519 (1,184) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments (425) - 1,634 713 (1,400) Capital gains distributions - - - 733 - ------------- ------------- -------------- -------------- -------------- Total realized gain (loss) on investments and capital gains distributions (425) - 1,634 1,446 (1,400) Net unrealized appreciation (depreciation) of investments 1,905 - 28,725 17,751 4,239 ------------- ------------- -------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations $ 1,327 $ (25) $ 28,461 $ 19,716 $ 1,655 ============= ============= ============== ============== ==============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 34 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
FIDELITY(R) FIDELITY(R) VIP FIDELITY(R) VIP VIP ASSET INVESTMENT FIDELITY(R) VIP FIDELITY(R) VIP HIGH INCOME MANAGER(SM) GRADE BOND INDEX 500 OVERSEAS --------------- --------------- --------------- --------------- --------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 4,591 $ 321 $ 92 $ 966 $ 174 --------------- --------------- --------------- --------------- --------------- Total investment income 4,591 321 92 966 174 Expenses: Mortality and expense risk and other charges 653 163 30 980 174 --------------- --------------- --------------- --------------- --------------- Total expenses 653 163 30 980 174 --------------- --------------- --------------- --------------- --------------- Net investment income (loss) 3,938 158 62 (14) - REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 3,046 66 15 52 620 Capital gains distributions - - 66 - - --------------- --------------- --------------- --------------- --------------- Total realized gain (loss) on investments and capital gains distributions 3,046 66 81 52 620 Net unrealized appreciation (depreciation) of investments (3,248) 221 (81) 5,896 885 --------------- --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from operations $ 3,736 $ 445 $ 62 $ 5,934 $ 1,505 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 35 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
FRANKLIN SMALL ING GET ING GET ING GET ING GET CAP VALUE FUND - FUND - FUND - FUND - SECURITIES SERIES D SERIES E SERIES G SERIES H --------------- --------------- --------------- --------------- --------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 1 $ 3,232 $ 15,508 $ 10,204 $ 4,356 --------------- --------------- --------------- --------------- --------------- Total investment income 1 3,232 15,508 10,204 4,356 Expenses: Mortality and expense risk and other charges 14 104 2,542 2,018 1,587 --------------- --------------- --------------- --------------- --------------- Total expenses 14 104 2,542 2,018 1,587 --------------- --------------- --------------- --------------- --------------- Net investment income (loss) (13) 3,128 12,966 8,186 2,769 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 247 (8,794) (19,910) (11,127) (389) Capital gains distributions - - - - - --------------- --------------- --------------- --------------- --------------- Total realized gain (loss) on investments and capital gains distributions 247 (8,794) (19,910) (11,127) (389) Net unrealized appreciation (depreciation) of investments 194 5,596 4,843 2,313 (2,504) --------------- --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from operations $ 428 $ (70) $ (2,101) $ (628) $ (124) =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 36 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING GET ING GET ING GET ING GET ING GET FUND - FUND - FUND - FUND - FUND - SERIES I SERIES J SERIES K SERIES L SERIES M --------------- --------------- --------------- --------------- --------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 2,785 $ 2,341 $ 2,268 $ 2,369 $ 3,723 --------------- --------------- --------------- --------------- --------------- Total investment income 2,785 2,341 2,268 2,369 3,723 Expenses: Mortality and expense risk and other charges 1,145 903 1,219 1,143 1,685 --------------- --------------- --------------- --------------- --------------- Total expenses 1,145 903 1,219 1,143 1,685 --------------- --------------- --------------- --------------- --------------- Net investment income (loss) 1,640 1,438 1,049 1,226 2,038 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments (160) (104) 18 277 406 Capital gains distributions - - - - - --------------- --------------- --------------- --------------- --------------- Total realized gain (loss) on investments and capital gains distributions (160) (104) 18 277 406 Net unrealized appreciation (depreciation) of investments (1,883) (1,698) (1,900) (2,269) (3,412) --------------- --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from operations $ (403) $ (364) $ (833) $ (766) $ (968) =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 37 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING GET ING GET ING GET ING GET ING GET FUND - FUND - FUND - FUND - FUND - SERIES N SERIES P SERIES Q SERIES R SERIES S --------------- --------------- --------------- --------------- --------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 2,398 $ 1,925 $ 1,466 $ 1,150 $ 1,067 --------------- --------------- --------------- --------------- --------------- Total investment income 2,398 1,925 1,466 1,150 1,067 Expenses: Mortality and expense risk and other charges 1,378 1,053 813 699 777 --------------- --------------- --------------- --------------- --------------- Total expenses 1,378 1,053 813 699 777 --------------- --------------- --------------- --------------- --------------- Net investment income (loss) 1,020 872 653 451 290 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments (57) 261 361 323 457 Capital gains distributions - - - - 615 --------------- --------------- --------------- --------------- --------------- Total realized gain (loss) on investments and capital gains distributions (57) 261 361 323 1,072 Net unrealized appreciation (depreciation) of investments (1,190) (1,415) (1,058) (525) (1,093) --------------- --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from operations $ (227) $ (282) $ (44) $ 249 $ 269 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 38 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING AMERICAN ING GET ING GET ING GET ING AMERICAN FUNDS FUND - FUND - FUND - FUNDS GROWTH- SERIES T SERIES U SERIES V GROWTH INCOME --------------- --------------- --------------- --------------- --------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 844 $ 547 $ 649 $ - $ 2 --------------- --------------- --------------- --------------- --------------- Total investment income 844 547 649 - 2 Expenses: Mortality and expense risk and other charges 600 561 1,256 1 2 --------------- --------------- --------------- --------------- --------------- Total expenses 600 561 1,256 1 2 --------------- --------------- --------------- --------------- --------------- Net investment income (loss) 244 (14) (607) (1) - REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 250 213 (96) - - Capital gains distributions 498 1,191 - - - --------------- --------------- --------------- --------------- --------------- Total realized gain (loss) on investments and capital gains distributions 748 1,404 (96) - - Net unrealized appreciation (depreciation) of investments (824) (1,012) 971 48 27 --------------- --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from operations $ 168 $ 378 $ 268 $ 47 $ 27 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 39 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING AMERICAN ING ING ING MFS ING T. ROWE FUNDS JULIUS BAER LEGG MASON TOTAL PRICE EQUITY INTERNATIONAL FOREIGN VALUE RETURN INCOME --------------- --------------- --------------- --------------- --------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 1 $ - $ 2 $ 32 $ 19 --------------- --------------- --------------- --------------- --------------- Total investment income 1 - 2 32 19 Expenses: Mortality and expense risk and other charges 3 - - 10 13 --------------- --------------- --------------- --------------- --------------- Total expenses 3 - - 10 13 --------------- --------------- --------------- --------------- --------------- Net investment income (loss) (2) - 2 22 6 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments - 2 - 19 32 Capital gains distributions - 1 - - 11 --------------- --------------- --------------- --------------- --------------- Total realized gain (loss) on investments and capital gains distributions - 3 - 19 43 Net unrealized appreciation (depreciation) of investments 164 14 24 81 180 --------------- --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from operations $ 162 $ 17 $ 26 $ 122 $ 229 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 40 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING AMERICAN ING ING GOLDMAN ING AELTUS ING AMERICAN CENTURY BARON SACHS(R) ENHANCED CENTURY SMALL CAP SMALL CAP CAPITAL INDEX SELECT VALUE GROWTH GROWTH --------------- --------------- --------------- --------------- --------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ - $ - $ - $ - $ - --------------- --------------- --------------- --------------- --------------- Total investment income - - - - - Expenses: Mortality and expense risk and other charges 1 4 7 18 1 --------------- --------------- --------------- --------------- --------------- Total expenses 1 4 7 18 1 --------------- --------------- --------------- --------------- --------------- Net investment income (loss) (1) (4) (7) (18) (1) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments - 4 64 263 1 Capital gains distributions - - 63 - - --------------- --------------- --------------- --------------- --------------- Total realized gain (loss) on investments and capital gains distributions - 4 127 263 1 Net unrealized appreciation (depreciation) of investments 5 9 28 244 31 --------------- --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from operations $ 4 $ 9 $ 148 $ 489 $ 31 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 41 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING ING ING JPMORGAN ING MFS OPCAP ING JPMORGAN MID CAP CAPITAL BALANCED OPPENHEIMER INTERNATIONAL VALUE OPPORTUNITIES VALUE GLOBAL --------------- --------------- --------------- --------------- --------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 449 $ 3 $ 164 $ 17 $ - --------------- --------------- --------------- --------------- --------------- Total investment income 449 3 164 17 - Expenses: Mortality and expense risk and other charges 465 10 462 17 - --------------- --------------- --------------- --------------- --------------- Total expenses 465 10 462 17 - --------------- --------------- --------------- --------------- --------------- Net investment income (loss) (16) (7) (298) - - REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 3,477 37 (497) 56 4 Capital gains distributions - 64 - - - --------------- --------------- --------------- --------------- --------------- Total realized gain (loss) on investments and capital gains distributions 3,477 101 (497) 56 4 Net unrealized appreciation (depreciation) of investments 3,386 158 4,806 100 - --------------- --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from operations $ 6,847 $ 252 $ 4,011 $ 156 $ 4 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 42 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING T. ROWE ING ING SALOMON ING SALOMON ING SALOMON PRICE PIMCO BROTHERS BROTHERS BROTHERS DIVERSIFIED TOTAL AGGRESSIVE FUNDAMENTAL INVESTORS MID CAP RETURN GROWTH VALUE VALUE GROWTH --------------- --------------- --------------- --------------- --------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ - $ - $ - $ 3 $ - --------------- --------------- --------------- --------------- --------------- Total investment income - - - 3 - Expenses: Mortality and expense risk and other charges 29 725 13 4 8 --------------- --------------- --------------- --------------- --------------- Total expenses 29 725 13 4 8 --------------- --------------- --------------- --------------- --------------- Net investment income (loss) (29) (725) (13) (1) (8) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 9 (84) 80 22 61 Capital gains distributions 34 - - - - --------------- --------------- --------------- --------------- --------------- Total realized gain (loss) on investments and capital gains distributions 43 (84) 80 22 61 Net unrealized appreciation (depreciation) of investments 89 4,983 27 3 (11) --------------- --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from operations $ 103 $ 4,174 $ 94 $ 24 $ 42 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 43 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING ING VP ING T. ROWE ING UBS U.S. ING VAN VAN KAMPEN STRATEGIC PRICE GROWTH LARGE CAP KAMPEN EQUITY AND ALLOCATION EQUITY EQUITY COMSTOCK INCOME BALANCED --------------- --------------- --------------- --------------- --------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 113 $ 332 $ - $ - $ 246 --------------- --------------- --------------- --------------- --------------- Total investment income 113 332 - - 246 Expenses: Mortality and expense risk and other charges 949 546 15 1 253 --------------- --------------- --------------- --------------- --------------- Total expenses 949 546 15 1 253 --------------- --------------- --------------- --------------- --------------- Net investment income (loss) (836) (214) (15) (1) (7) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 541 (196) 63 2 112 Capital gains distributions - - 8 - - --------------- --------------- --------------- --------------- --------------- Total realized gain (loss) on investments and capital gains distributions 541 (196) 71 2 112 Net unrealized appreciation (depreciation) of investments 6,147 5,688 260 8 1,528 --------------- --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from operations $ 5,852 $ 5,278 $ 316 $ 9 $ 1,633 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 44 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING VP ING VP STRATEGIC STRATEGIC ING VP ING GET ING GET ALLOCATION ALLOCATION GROWTH AND U.S. CORE - U.S. CORE - GROWTH INCOME INCOME SERIES 1 SERIES 2 --------------- --------------- --------------- --------------- --------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 158 $ 348 $ 10,145 $ 166 $ 23 --------------- --------------- --------------- --------------- --------------- Total investment income 158 348 10,145 166 23 Expenses: Mortality and expense risk and other charges 184 246 4,736 464 420 --------------- --------------- --------------- --------------- --------------- Total expenses 184 246 4,736 464 420 --------------- --------------- --------------- --------------- --------------- Net investment income (loss) (26) 102 5,409 (298) (397) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 98 51 (37,452) 173 138 Capital gains distributions - - - 26 - --------------- --------------- --------------- --------------- --------------- Total realized gain (loss) on investments and capital gains distributions 98 51 (37,452) 199 138 Net unrealized appreciation (depreciation) of investments 1,429 1,020 60,752 465 642 --------------- --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from operations $ 1,501 $ 1,173 $ 28,709 $ 366 $ 383 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 45 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING GET ING GET ING GET ING GET ING GET U.S. CORE - U.S. CORE - U.S. CORE - U.S. CORE - U.S. CORE - SERIES 3 SERIES 4 SERIES 5 SERIES 6 SERIES 7 --------------- --------------- --------------- --------------- -------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 1 $ - $ - $ - $ - --------------- --------------- --------------- --------------- --------------- Total investment income 1 - - - - Expenses: Mortality and expense risk and other charges 907 91 33 360 35 --------------- --------------- --------------- --------------- --------------- Total expenses 907 91 33 360 35 --------------- --------------- --------------- --------------- --------------- Net investment income (loss) (906) (91) (33) (360) (35) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments (108) 12 36 39 3 Capital gains distributions - - - - - --------------- --------------- --------------- --------------- --------------- Total realized gain (loss) on investments and capital gains distributions (108) 12 36 39 3 Net unrealized appreciation (depreciation) of investments 694 398 229 1,035 45 --------------- --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from operations $ (320) $ 319 $ 232 $ 714 $ 13 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 46 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING VP GLOBAL ING VP ING VP ING VP SCIENCE AND ING VP INDEX PLUS INDEX PLUS INDEX PLUS TECHNOLOGY GROWTH LARGECAP MIDCAP SMALLCAP --------------- --------------- --------------- --------------- --------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ - $ 37 $ 1,857 $ 66 $ 11 --------------- --------------- --------------- --------------- --------------- Total investment income - 37 1,857 66 11 Expenses: Mortality and expense risk and other charges 134 337 2,240 136 61 --------------- --------------- --------------- --------------- --------------- Total expenses 134 337 2,240 136 61 --------------- --------------- --------------- --------------- --------------- Net investment income (loss) (134) (300) (383) (70) (50) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 1,339 (336) 380 515 599 Capital gains distributions - - - - 38 --------------- --------------- --------------- --------------- --------------- Total realized gain (loss) on investments and capital gains distributions 1,339 (336) 380 515 637 Net unrealized appreciation (depreciation) of investments (1,927) 2,144 15,721 1,945 912 --------------- --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from operations $ (722) $ 1,508 $ 15,718 $ 2,390 $ 1,499 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 47 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING VP ING VP ING VP ING VP ING VP GROWTH GROWTH INTERNATIONAL SMALL VALUE OPPORTUNITIES OPPORTUNITIES EQUITY COMPANY OPPORTUNITY - CLASS I - CLASS S --------------- --------------- --------------- --------------- --------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 128 $ 228 $ 143 $ - $ - --------------- --------------- --------------- --------------- --------------- Total investment income 128 228 143 - - Expenses: Mortality and expense risk and other charges 133 984 205 - 3 --------------- --------------- --------------- --------------- --------------- Total expenses 133 984 205 - 3 --------------- --------------- --------------- --------------- --------------- Net investment income (loss) (5) (756) (62) - (3) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 514 3,278 (370) 7 117 Capital gains distributions - - - - - --------------- --------------- --------------- --------------- --------------- Total realized gain (loss) on investments and capital gains distributions 514 3,278 (370) 7 117 Net unrealized appreciation (depreciation) of investments 1,167 7,164 1,835 (4) (79) --------------- --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from operations $ 1,676 $ 9,686 $ 1,403 $ 3 $ 35 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 48 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING VP ING VP ING VP ING VP ING VP MIDCAP MIDCAP INTERNATIONAL MAGNACAP MAGNACAP OPPORTUNITIES OPPORTUNITIES VALUE - CLASS I - CLASS S - CLASS I - CLASS S --------------- --------------- --------------- --------------- --------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 27 $ 2 $ 19 $ - $ - --------------- --------------- --------------- --------------- --------------- Total investment income 27 2 19 - - Expenses: Mortality and expense risk and other charges 18 1 16 5 119 --------------- --------------- --------------- --------------- --------------- Total expenses 18 1 16 5 119 --------------- --------------- --------------- --------------- --------------- Net investment income (loss) 9 1 3 (5) (119) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 96 - 13 150 348 Capital gains distributions - - - - - --------------- --------------- --------------- --------------- --------------- Total realized gain (loss) on investments and capital gains distributions 96 - 13 150 348 Net unrealized appreciation (depreciation) of investments 272 7 98 (84) 564 --------------- --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from operations $ 377 $ 8 $ 114 $ 61 $ 793 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 49 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING VP ING VP SMALLCAP SMALLCAP ING VP ING VP OPPORTUNITIES OPPORTUNITIES ING VP EMERGING REAL ESTATE - CLASS I - CLASS S BALANCED MARKETS --------------- --------------- --------------- --------------- --------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 13 $ - $ - $ 3,621 $ 6 --------------- --------------- --------------- --------------- --------------- Total investment income 13 - - 3,621 6 Expenses: Mortality and expense risk and other charges 2 3 62 2,155 11 --------------- --------------- --------------- --------------- --------------- Total expenses 2 3 62 2,155 11 --------------- --------------- --------------- --------------- --------------- Net investment income (loss) 11 (3) (62) 1,466 (5) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments - 22 411 (3,158) 29 Capital gains distributions 13 - - - - --------------- --------------- --------------- --------------- --------------- Total realized gain (loss) on investments and capital gains distributions 13 22 411 (3,158) 29 Net unrealized appreciation (depreciation) of investments 98 50 33 15,759 109 --------------- --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from operations $ 122 $ 69 $ 382 $ 14,067 $ 133 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 50 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
ING VP ING VP ING VP ING VP INTERMEDIATE MONEY NATURAL JANUS ASPEN FINANCIAL BOND MARKET RESOURCES BALANCED --------------- --------------- --------------- --------------- --------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ - $ 11,204 $ 2,075 $ 17 $ 3,577 --------------- --------------- --------------- --------------- --------------- Total investment income - 11,204 2,075 17 3,577 Expenses: Mortality and expense risk and other charges - 1,673 2,185 20 2,080 --------------- --------------- --------------- --------------- --------------- Total expenses - 1,673 2,185 20 2,080 --------------- --------------- --------------- --------------- --------------- Net investment income (loss) - 9,531 (110) (3) 1,497 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments (3) 1,747 (354) 53 764 Capital gains distributions - 5,664 - - - --------------- --------------- --------------- --------------- --------------- Total realized gain (loss) on investments and capital gains distributions (3) 7,411 (354) 53 764 Net unrealized appreciation (depreciation) of investments - (12,159) 154 122 8,691 --------------- --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from operations $ (3) $ 4,783 $ (310) $ 172 $ 10,952 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 51 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
JANUS ASPEN JANUS ASPEN JANUS ASPEN LORD ABBETT FLEXIBLE JANUS ASPEN MID CAP WORLDWIDE GROWTH AND INCOME GROWTH GROWTH GROWTH INCOME --------------- --------------- --------------- --------------- --------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 980 $ 124 $ - $ 1,617 $ 53 --------------- --------------- --------------- --------------- --------------- Total investment income 980 124 - 1,617 53 Expenses: Mortality and expense risk and other charges 234 1,137 1,031 2,094 47 --------------- --------------- --------------- --------------- --------------- Total expenses 234 1,137 1,031 2,094 47 --------------- --------------- --------------- --------------- --------------- Net investment income (loss) 746 (1,013) (1,031) (477) 6 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 415 (821) 2,091 (4,417) 276 Capital gains distributions 143 - - - 54 --------------- --------------- --------------- --------------- --------------- Total realized gain (loss) on investments and capital gains distributions 558 (821) 2,091 (4,417) 330 Net unrealized appreciation (depreciation) of investments (857) 3,988 14,067 9,492 222 --------------- --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from operations $ 447 $ 2,154 $ 15,127 $ 4,598 $ 558 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 52 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
LORD ABBETT MFS(R) MFS(R) OPPENHEIMER OPPENHEIMER MID-CAP VIT STRATEGIC VIT TOTAL AGGRESSIVE GLOBAL VALUE INCOME RETURN GROWTH SECURITIES --------------- --------------- --------------- --------------- --------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 10 $ 127 $ 1,923 $ - $ 428 --------------- --------------- --------------- --------------- --------------- Total investment income 10 127 1,923 - 428 Expenses: Mortality and expense risk and other charges 18 34 1,561 391 430 --------------- --------------- --------------- --------------- --------------- Total expenses 18 34 1,561 391 430 --------------- --------------- --------------- --------------- --------------- Net investment income (loss) (8) 93 362 (391) (2) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 135 63 258 134 771 Capital gains distributions 50 - - - - --------------- --------------- --------------- --------------- --------------- Total realized gain (loss) on investments and capital gains distributions 185 63 258 134 771 Net unrealized appreciation (depreciation) of investments 356 (10) 11,330 5,377 5,617 --------------- --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from operations $ 533 $ 146 $ 11,950 $ 5,120 $ 6,386 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 53 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
PIONEER OPPENHEIMER OPPENHEIMER PIMCO VIT EQUITY PIONEER MAIN STRATEGIC REAL INCOME FUND STREET(R) BOND RETURN VCT VCT --------------- --------------- --------------- --------------- --------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 565 $ 2,331 $ 1 $ 19 $ - --------------- --------------- --------------- --------------- --------------- Total investment income 565 2,331 1 19 - Expenses: Mortality and expense risk and other charges 884 602 1 6 - --------------- --------------- --------------- --------------- --------------- Total expenses 884 602 1 6 - --------------- --------------- --------------- --------------- --------------- Net investment income (loss) (319) 1,729 - 13 - REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 79 826 - 25 - Capital gains distributions - - 10 - - --------------- --------------- --------------- --------------- --------------- Total realized gain (loss) on investments and capital gains distributions 79 826 10 25 - Net unrealized appreciation (depreciation) of investments 5,227 895 (3) 95 2 --------------- --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from operations $ 4,987 $ 3,450 $ 7 $ 133 $ 2 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 54 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
SP WILLIAM PIONEER PIONEER MID BLAIR UBS HIGH YIELD CAP VALUE INTERNATIONAL U. S. VCT VCT JENNISON GROWTH ALLOCATION --------------- --------------- --------------- --------------- --------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 1 $ 6 $ 1 $ - $ 79 --------------- --------------- --------------- --------------- --------------- Total investment income 1 6 1 - 79 Expenses: Mortality and expense risk and other charges - 16 13 54 133 --------------- --------------- --------------- --------------- --------------- Total expenses - 16 13 54 133 --------------- --------------- --------------- --------------- --------------- Net investment income (loss) 1 (10) (12) (54) (54) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments - 67 70 211 73 Capital gains distributions - 15 - - - --------------- --------------- --------------- --------------- --------------- Total realized gain (loss) on investments and capital gains distributions - 82 70 211 73 Net unrealized appreciation (depreciation) of investments 2 342 32 540 787 --------------- --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from operations $ 3 $ 414 $ 90 $ 697 $ 806 =============== =============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 55 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (DOLLARS IN THOUSANDS)
WANGER U.S. WANGER SMALLER SELECT COMPANIES --------------- --------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ - $ - --------------- --------------- Total investment income - - Expenses: Mortality and expense risk and other charges - - --------------- --------------- Total expenses - - --------------- --------------- Net investment income (loss) - - REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments - - Capital gains distributions - - --------------- --------------- Total realized gain (loss) on investments and capital gains distributions - - Net unrealized appreciation (depreciation) of investments 11 13 --------------- --------------- Net increase (decrease) in net assets resulting from operations $ 11 $ 13 =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 56 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
AIM V.I. AIM V.I. CAPITAL AIM V.I. GOVERNMENT AIM V.I. APPRECIATION CORE EQUITY SECURITIES GROWTH ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ 14,832 $ 29,940 $ 25,997 $ 14,946 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (198) (72) 83 (197) Net realized gain (loss) on investments and capital gains distributions (625) (546) 609 (678) Net unrealized appreciation (depreciation) of investments 4,685 7,126 (826) 4,981 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 3,862 6,508 (134) 4,106 Changes from principal transactions: Total unit transactions (1,194) (1,540) (10,837) (985) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (1,194) (1,540) (10,837) (985) ------------- ------------- ------------- ------------- Total increase (decrease) 2,668 4,968 (10,971) 3,121 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 17,500 34,908 15,026 18,067 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (205) (115) 371 (221) Net realized gain (loss) on investments and capital gains distributions (18) 424 (58) (115) Net unrealized appreciation (depreciation) of investments 946 1,983 (147) 1,403 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 723 2,292 166 1,067 Changes from principal transactions: Total unit transactions (3,051) (5,370) (636) (2,175) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (3,051) (5,370) (636) (2,175) ------------- ------------- ------------- ------------- Total increase (decrease) (2,328) (3,078) (470) (1,108) ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 15,172 $ 31,830 $ 14,556 $ 16,959 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 57 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
ALGER ALGER AIM V.I. ALGER AMERICAN AMERICAN PREMIER AMERICAN INCOME & LEVERAGED EQUITY BALANCED GROWTH ALLCAP ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ 41,327 $ 2,576 $ 6,167 $ 5,724 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (395) 19 (68) (86) Net realized gain (loss) on investments and capital gains distributions (2,160) (34) (339) (265) Net unrealized appreciation (depreciation) of investments 11,202 413 1,960 2,058 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 8,647 398 1,553 1,707 Changes from principal transactions: Total unit transactions (7,144) (607) (1,250) (988) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (7,144) (607) (1,250) (988) ------------- ------------- ------------- ------------- Total increase (decrease) 1,503 (209) 303 719 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 42,830 2,367 6,470 6,443 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (321) 2 (49) (79) Net realized gain (loss) on investments and capital gains distributions (740) 1 (120) (103) Net unrealized appreciation (depreciation) of investments 2,521 40 477 484 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 1,460 43 308 302 Changes from principal transactions: Total unit transactions (7,939) (484) (1,528) (1,641) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (7,939) (484) (1,528) (1,641) ------------- ------------- ------------- ------------- Total increase (decrease) (6,479) (441) (1,220) (1,339) ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 36,351 $ 1,926 $ 5,250 $ 5,104 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 58 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
ALLIANCE ALLIANCE ALLIANCE BERNSTEIN BERNSTEIN BERNSTEIN AMERICAN VPSF GROWTH VPSF PREMIER VPSF SMALL CENTURY(R) VP AND INCOME GROWTH CAP GROWTH BALANCED ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ 22,169 $ 5,838 $ 684 $ 1,483 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (75) (86) (23) 19 Net realized gain (loss) on investments and capital gains distributions (917) (358) (125) (7) Net unrealized appreciation (depreciation) of investments 8,091 1,693 864 227 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 7,099 1,249 716 239 Changes from principal transactions: Total unit transactions 5,703 227 2,518 (302) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions 5,703 227 2,518 (302) ------------- ------------- ------------- ------------- Total increase (decrease) 12,802 1,476 3,234 (63) ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 34,971 7,314 3,918 1,420 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (157) (95) (58) 4 Net realized gain (loss) on investments and capital gains distributions (43) (118) 442 39 Net unrealized appreciation (depreciation) of investments 4,351 714 77 55 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 4,151 501 461 98 Changes from principal transactions: Total unit transactions 8,974 (273) 762 (422) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions 8,974 (273) 762 (422) ------------- ------------- ------------- ------------- Total increase (decrease) 13,125 228 1,223 (324) ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 48,096 $ 7,542 $ 5,141 $ 1,096 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 59 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
AMERICAN CALVERT FEDERATED FEDERATED CENTURY(R) VP SOCIAL AMERICAN CAPITAL INTERNATIONAL BALANCED LEADERS INCOME ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ 1,539 $ 1,775 $ 50,539 $ 7,021 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (8) 16 94 350 Net realized gain (loss) on investments and capital gains distributions (99) (37) (2,953) (1,548) Net unrealized appreciation (depreciation) of investments 372 343 13,953 2,295 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 265 322 11,094 1,097 Changes from principal transactions: Total unit transactions (458) 131 (9,916) (1,658) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (458) 131 (9,916) (1,658) ------------- ------------- ------------- ------------- Total increase (decrease) (193) 453 1,178 (561) ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 1,346 2,228 51,717 6,460 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (11) 10 38 187 Net realized gain (loss) on investments and capital gains distributions 6 14 (902) (1,281) Net unrealized appreciation (depreciation) of investments 152 121 4,253 1,520 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 147 145 3,389 426 Changes from principal transactions: Total unit transactions (297) (144) (12,914) (1,716) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (297) (144) (12,914) (1,716) ------------- ------------- ------------- ------------- Total increase (decrease) (150) 1 (9,525) (1,290) ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 1,196 $ 2,229 $ 42,192 $ 5,170 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 60 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
FEDERATED FEDERATED FEDERATED FUND FOR U.S. HIGH FEDERATED EQUITY GOVERNMENT INCOME INTERNATIONAL INCOME SECURITIES BOND EQUITY ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ 10,264 $ 12,674 $ 16,683 $ 6,024 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 58 275 1,017 (83) Net realized gain (loss) on investments and capital gains distributions (540) 427 (971) (781) Net unrealized appreciation (depreciation) of investments 2,785 (608) 3,008 2,426 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 2,303 94 3,054 1,562 Changes from principal transactions: Total unit transactions (1,562) (2,935) (3,963) (1,021) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (1,562) (2,935) (3,963) (1,021) ------------- ------------- ------------- ------------- Total increase (decrease) 741 (2,841) (909) 541 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 11,005 9,833 15,774 6,565 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 66 294 890 (86) Net realized gain (loss) on investments and capital gains distributions (211) 157 (586) (791) Net unrealized appreciation (depreciation) of investments 1,125 (285) 797 1,543 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 980 166 1,101 666 Changes from principal transactions: Total unit transactions (2,892) (3,555) (5,030) (1,366) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (2,892) (3,555) (5,030) (1,366) ------------- ------------- ------------- ------------- Total increase (decrease) (1,912) (3,389) (3,929) (700) ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 9,093 $ 6,444 $ 11,845 $ 5,865 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 61 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
FEDERATED MID CAP FEDERATED FIDELITY(R) GROWTH PRIME FIDELITY(R) VIP VIP EQUITY- STRATEGIES MONEY CONTRAFUND(R) INCOME ------------- ------------- --------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ 10,415 $ 7,387 $ 145,571 $ 146,420 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (148) (44) (1,258) 753 Net realized gain (loss) on investments and capital gains distributions (421) - (2,724) (6,755) Net unrealized appreciation (depreciation) of investments 3,953 - 42,317 47,447 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 3,384 (44) 38,335 41,445 Changes from principal transactions: Total unit transactions (1,986) (2,413) 4,149 4,284 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (1,986) (2,413) 4,149 4,284 ------------- ------------- ------------- ------------- Total increase (decrease) 1,398 (2,457) 42,484 45,729 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 11,813 4,930 188,055 192,149 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (153) (25) (1,898) 519 Net realized gain (loss) on investments and capital gains distributions (425) - 1,634 1,446 Net unrealized appreciation (depreciation) of investments 1,905 - 28,725 17,751 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 1,327 (25) 28,461 19,716 Changes from principal transactions: Total unit transactions (2,667) (1,579) 26,883 6,594 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (2,667) (1,579) 26,883 6,594 ------------- ------------- ------------- ------------- Total increase (decrease) (1,340) (1,604) 55,344 26,310 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 10,473 $ 3,326 $ 243,399 $ 218,459 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 62 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
FIDELITY(R) FIDELITY(R) VIP FIDELITY(R) FIDELITY(R) VIP VIP ASSET INVESTMENT VIP GROWTH HIGH INCOME MANAGER(SM) GRADE BOND ------------- --------------- ------------- --------------- NET ASSETS AT JANUARY 1, 2003 $ 98,180 $ 36,456 $ 11,086 $ 2,890 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (1,061) 2,326 250 76 Net realized gain (loss) on investments and capital gains distributions (3,844) 1,393 (99) 89 Net unrealized appreciation (depreciation) of investments 34,021 6,885 1,563 (69) ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 29,116 10,604 1,714 96 Changes from principal transactions: Total unit transactions (1,432) 9,910 (766) (742) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (1,432) 9,910 (766) (742) ------------- ------------- ------------- ------------- Total increase (decrease) 27,684 20,514 948 (646) ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 125,864 56,970 12,034 2,244 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (1,184) 3,938 158 62 Net realized gain (loss) on investments and capital gains distributions (1,400) 3,046 66 81 Net unrealized appreciation (depreciation) of investments 4,239 (3,248) 221 (81) ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 1,655 3,736 445 62 Changes from principal transactions: Total unit transactions (17,721) (12,742) (892) (348) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (17,721) (12,742) (892) (348) ------------- ------------- ------------- ------------- Total increase (decrease) (16,066) (9,006) (447) (286) ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 109,798 $ 47,964 $ 11,587 $ 1,958 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 63 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
FRANKLIN SMALL ING GET FIDELITY(R) VIP FIDELITY(R) VIP CAP VALUE FUND - INDEX 500 OVERSEAS SECURITIES SERIES D --------------- --------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ 64,190 $ 6,617 $ 365 $ 103,698 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 79 (39) (3) 2,488 Net realized gain (loss) on investments and capital gains distributions (2,618) 1,142 18 (1,414) Net unrealized appreciation (depreciation) of investments 18,365 2,299 125 (988) ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 15,826 3,402 140 86 Changes from principal transactions: Total unit transactions (5,750) 3,885 157 (17,353) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (5,750) 3,885 157 (17,353) ------------- ------------- ------------- ------------- Total increase (decrease) 10,076 7,287 297 (17,267) ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 74,266 13,904 662 86,431 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (14) - (13) 3,128 Net realized gain (loss) on investments and capital gains distributions 52 620 247 (8,794) Net unrealized appreciation (depreciation) of investments 5,896 885 194 5,596 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 5,934 1,505 428 (70) Changes from principal transactions: Total unit transactions (9,902) 260 3,294 (86,361) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (9,902) 260 3,294 (86,361) ------------- ------------- ------------- ------------- Total increase (decrease) (3,968) 1,765 3,722 (86,431) ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 70,298 $ 15,669 $ 4,384 $ - ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 64 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
ING GET ING GET ING GET ING GET FUND - FUND - FUND - FUND - SERIES E SERIES G SERIES H SERIES I ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ 276,397 $ 163,877 $ 121,603 $ 84,079 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 6,394 3,488 2,709 1,369 Net realized gain (loss) on investments and capital gains distributions (903) (335) (63) 100 Net unrealized appreciation (depreciation) of investments (2,753) (2,355) (1,049) (373) ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 2,738 798 1,597 1,096 Changes from principal transactions: Total unit transactions (40,249) (26,394) (18,191) (10,425) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (40,249) (26,394) (18,191) (10,425) ------------- ------------- ------------- ------------- Total increase (decrease) (37,511) (25,596) (16,594) (9,329) ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 238,886 138,281 105,009 74,750 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 12,966 8,186 2,769 1,640 Net realized gain (loss) on investments and capital gains distributions (19,910) (11,127) (389) (160) Net unrealized appreciation (depreciation) of investments 4,843 2,313 (2,504) (1,883) ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations (2,101) (628) (124) (403) Changes from principal transactions: Total unit transactions (236,785) (137,653) (19,363) (13,672) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (236,785) (137,653) (19,363) (13,672) ------------- ------------- ------------- ------------- Total increase (decrease) (238,886) (138,281) (19,487) (14,075) ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ - $ - $ 85,522 $ 60,675 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 65 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
ING GET ING GET ING GET ING GET FUND - FUND - FUND - FUND - SERIES J SERIES K SERIES L SERIES M ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ 71,844 $ 81,260 $ 75,255 $ 115,381 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 1,253 947 1,076 1,606 Net realized gain (loss) on investments and capital gains distributions 148 303 343 1,021 Net unrealized appreciation (depreciation) of investments (799) (922) (356) (674) ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 602 328 1,063 1,953 Changes from principal transactions: Total unit transactions (12,356) (11,083) (9,450) (22,616) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (12,356) (11,083) (9,450) (22,616) ------------- ------------- ------------- ------------- Total increase (decrease) (11,754) (10,755) (8,387) (20,663) ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 60,090 70,505 66,868 94,718 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 1,438 1,049 1,226 2,038 Net realized gain (loss) on investments and capital gains distributions (104) 18 277 406 Net unrealized appreciation (depreciation) of investments (1,698) (1,900) (2,269) (3,412) ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations (364) (833) (766) (968) Changes from principal transactions: Total unit transactions (12,593) (14,251) (14,193) (16,935) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (12,593) (14,251) (14,193) (16,935) ------------- ------------- ------------- ------------- Total increase (decrease) (12,957) (15,084) (14,959) (17,903) ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 47,133 $ 55,421 $ 51,909 $ 76,815 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 66 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
ING GET ING GET ING GET ING GET FUND - FUND - FUND - FUND - SERIES N SERIES P SERIES Q SERIES R ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ 90,143 $ 76,334 $ 54,826 $ 43,556 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 537 346 (991) (791) Net realized gain (loss) on investments and capital gains distributions 65 663 462 290 Net unrealized appreciation (depreciation) of investments 1,328 303 2,082 2,111 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 1,930 1,312 1,553 1,610 Changes from principal transactions: Total unit transactions (15,288) (19,643) (12,043) (6,991) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (15,288) (19,643) (12,043) (6,991) ------------- ------------- ------------- ------------- Total increase (decrease) (13,358) (18,331) (10,490) (5,381) ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 76,785 58,003 44,336 38,175 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 1,020 872 653 451 Net realized gain (loss) on investments and capital gains distributions (57) 261 361 323 Net unrealized appreciation (depreciation) of investments (1,190) (1,415) (1,058) (525) ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations (227) (282) (44) 249 Changes from principal transactions: Total unit transactions (13,248) (9,832) (6,420) (5,072) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (13,248) (9,832) (6,420) (5,072) ------------- ------------- ------------- ------------- Total increase (decrease) (13,475) (10,114) (6,464) (4,823) ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 63,310 $ 47,889 $ 37,872 $ 33,352 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 67 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
ING GET ING GET ING GET ING GET FUND - FUND - FUND - FUND - SERIES S SERIES T SERIES U SERIES V ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ 53,553 $ 39,378 $ 503 $ - INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (909) (654) (568) (915) Net realized gain (loss) on investments and capital gains distributions 493 412 768 (307) Net unrealized appreciation (depreciation) of investments 2,330 1,635 2,053 (1,086) ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 1,914 1,393 2,253 (2,308) Changes from principal transactions: Total unit transactions (11,327) (8,751) 27,322 76,985 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (11,327) (8,751) 27,322 76,985 ------------- ------------- ------------- ------------- Total increase (decrease) (9,413) (7,358) 29,575 74,677 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 44,140 32,020 30,078 74,677 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 290 244 (14) (607) Net realized gain (loss) on investments and capital gains distributions 1,072 748 1,404 (96) Net unrealized appreciation (depreciation) of investments (1,093) (824) (1,012) 971 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 269 168 378 268 Changes from principal transactions: Total unit transactions (7,975) (3,927) (3,183) (19,464) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (7,975) (3,927) (3,183) (19,464) ------------- ------------- ------------- ------------- Total increase (decrease) (7,706) (3,759) (2,805) (19,196) ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 36,434 $ 28,261 $ 27,273 $ 55,481 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 68 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
ING AMERICAN ING AMERICAN FUNDS ING AMERICAN ING FUNDS GROWTH- FUNDS JULIUS BAER GROWTH INCOME INTERNATIONAL FOREIGN ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ - $ - $ - $ - INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) - - - - Net realized gain (loss) on investments and capital gains distributions - - - - Net unrealized appreciation (depreciation) of investments - - - - ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations - - - - Changes from principal transactions: Total unit transactions - - - - ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions - - - - ------------- ------------- ------------- ------------- Total increase (decrease) - - - - ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 - - - - INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (1) - (2) - Net realized gain (loss) on investments and capital gains distributions - - - 3 Net unrealized appreciation (depreciation) of investments 48 27 164 14 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 47 27 162 17 Changes from principal transactions: Total unit transactions 1,727 2,320 8,912 225 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions 1,727 2,320 8,912 225 ------------- ------------- ------------- ------------- Total increase (decrease) 1,774 2,347 9,074 242 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 1,774 $ 2,347 $ 9,074 $ 242 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 69 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
ING ING MFS ING T. ROWE ING AELTUS LEGG MASON TOTAL PRICE EQUITY ENHANCED VALUE RETURN INCOME INDEX ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ - $ - $ - $ - INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) - 2 - - Net realized gain (loss) on investments and capital gains distributions - 2 7 1 Net unrealized appreciation (depreciation) of investments - 12 79 - ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations - 16 86 1 Changes from principal transactions: Total unit transactions - 385 618 5 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions - 385 618 5 ------------- ------------- ------------- ------------- Total increase (decrease) - 401 704 6 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 - 401 704 6 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 2 22 6 (1) Net realized gain (loss) on investments and capital gains distributions - 19 43 - Net unrealized appreciation (depreciation) of investments 24 81 180 5 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 26 122 229 4 Changes from principal transactions: Total unit transactions 856 1,399 1,402 69 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions 856 1,399 1,402 69 ------------- ------------- ------------- ------------- Total increase (decrease) 882 1,521 1,631 73 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 882 $ 1,922 $ 2,335 $ 79 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 70 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
ING AMERICAN ING ING GOLDMAN ING AMERICAN CENTURY BARON SACHS(R) CENTURY SMALL CAP SMALL CAP CAPITAL SELECT VALUE GROWTH GROWTH ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ 9 $ 173 $ 193 $ 18 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (1) (2) (6) - Net realized gain (loss) on investments and capital gains distributions 9 54 37 - Net unrealized appreciation (depreciation) of investments 34 74 159 4 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 42 126 190 4 Changes from principal transactions: Total unit transactions 329 262 998 3 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions 329 262 998 3 ------------- ------------- ------------- ------------- Total increase (decrease) 371 388 1,188 7 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 380 561 1,381 25 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (4) (7) (18) (1) Net realized gain (loss) on investments and capital gains distributions 4 127 263 1 Net unrealized appreciation (depreciation) of investments 9 28 244 31 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 9 148 489 31 Changes from principal transactions: Total unit transactions 99 325 1,071 259 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions 99 325 1,071 259 ------------- ------------- ------------- ------------- Total increase (decrease) 108 473 1,560 290 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 488 $ 1,034 $ 2,941 $ 315 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 71 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
ING ING ING JPMORGAN ING MFS OPCAP JPMORGAN MID CAP CAPITAL BALANCED INTERNATIONAL VALUE OPPORTUNITIES VALUE ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ 24,044 $ 87 $ 35,741 $ 15 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (3) (2) (375) 7 Net realized gain (loss) on investments and capital gains distributions 4,418 25 (7,641) 8 Net unrealized appreciation (depreciation) of investments 3,476 79 16,575 80 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 7,891 102 8,559 95 Changes from principal transactions: Total unit transactions 2,084 489 (5,013) 1,140 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions 2,084 489 (5,013) 1,140 ------------- ------------- ------------- ------------- Total increase (decrease) 9,975 591 3,546 1,235 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 34,019 678 39,287 1,250 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (16) (7) (298) - Net realized gain (loss) on investments and capital gains distributions 3,477 101 (497) 56 Net unrealized appreciation (depreciation) of investments 3,386 158 4,806 100 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 6,847 252 4,011 156 Changes from principal transactions: Total unit transactions 3,164 1,285 (5,074) 720 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions 3,164 1,285 (5,074) 720 ------------- ------------- ------------- ------------- Total increase (decrease) 10,011 1,537 (1,063) 876 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 44,030 $ 2,215 $ 38,224 $ 2,126 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 72 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
ING ING SALOMON ING SALOMON ING PIMCO BROTHERS BROTHERS OPPENHEIMER TOTAL AGGRESSIVE FUNDAMENTAL GLOBAL RETURN GROWTH VALUE ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ 1 $ 1,275 $ 47,008 $ 5 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) - 50 (674) - Net realized gain (loss) on investments and capital gains distributions 3 68 (3,532) 103 Net unrealized appreciation (depreciation) of investments - (57) 20,204 85 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 3 61 15,998 188 Changes from principal transactions: Total unit transactions 1 1,277 (4,367) 1,022 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions 1 1,277 (4,367) 1,022 ------------- ------------- ------------- ------------- Total increase (decrease) 4 1,338 11,631 1,210 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 5 2,613 58,639 1,215 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) - (29) (725) (13) Net realized gain (loss) on investments and capital gains distributions 4 43 (84) 80 Net unrealized appreciation (depreciation) of investments - 89 4,983 27 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 4 103 4,174 94 Changes from principal transactions: Total unit transactions 13 1,169 (9,558) 174 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions 13 1,169 (9,558) 174 ------------- ------------- ------------- ------------- Total increase (decrease) 17 1,272 (5,384) 268 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 22 $ 3,885 $ 53,255 $ 1,483 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 73 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
ING T. ROWE ING SALOMON PRICE BROTHERS DIVERSIFIED ING T. ROWE ING UBS U.S. INVESTORS MID CAP PRICE GROWTH LARGE CAP VALUE GROWTH EQUITY EQUITY ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ 14 $ 179 $ 58,443 $ 40,669 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) - (4) (747) (289) Net realized gain (loss) on investments and capital gains distributions 3 71 (2,008) (1,984) Net unrealized appreciation (depreciation) of investments 20 59 19,241 10,721 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 23 126 16,486 8,448 Changes from principal transactions: Total unit transactions 142 712 (42) (6,177) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions 142 712 (42) (6,177) ------------- ------------- ------------- ------------- Total increase (decrease) 165 838 16,444 2,271 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 179 1,017 74,887 42,940 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (1) (8) (836) (214) Net realized gain (loss) on investments and capital gains distributions 22 61 541 (196) Net unrealized appreciation (depreciation) of investments 3 (11) 6,147 5,688 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 24 42 5,852 5,278 Changes from principal transactions: Total unit transactions 184 (447) (6,818) (4,540) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions 184 (447) (6,818) (4,540) ------------- ------------- ------------- ------------- Total increase (decrease) 208 (405) (966) 738 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 387 $ 612 $ 73,921 $ 43,678 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 74 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
ING ING VP ING VP ING VAN VAN KAMPEN STRATEGIC STRATEGIC KAMPEN EQUITY AND ALLOCATION ALLOCATION COMSTOCK INCOME BALANCED GROWTH ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ 319 $ - $ 14,344 $ 11,257 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) - - 33 (41) Net realized gain (loss) on investments and capital gains distributions 45 1 (421) (254) Net unrealized appreciation (depreciation) of investments 103 3 2,802 2,920 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 148 4 2,414 2,625 Changes from principal transactions: Total unit transactions 432 49 179 926 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions 432 49 179 926 ------------- ------------- ------------- ------------- Total increase (decrease) 580 53 2,593 3,551 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 899 53 16,937 14,808 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (15) (1) (7) (26) Net realized gain (loss) on investments and capital gains distributions 71 2 112 98 Net unrealized appreciation (depreciation) of investments 260 8 1,528 1,429 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 316 9 1,633 1,501 Changes from principal transactions: Total unit transactions 2,511 75 2,252 (678) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions 2,511 75 2,252 (678) ------------- ------------- ------------- ------------- Total increase (decrease) 2,827 84 3,885 823 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 3,726 $ 137 $ 20,822 $ 15,631 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 75 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
ING VP STRATEGIC ING VP ING GET ING GET ALLOCATION GROWTH AND U.S. CORE - U.S. CORE - INCOME INCOME SERIES 1 SERIES 2 ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ 20,088 $ 415,966 $ - $ - INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 201 (4,562) (162) (36) Net realized gain (loss) on investments and capital gains distributions (299) (65,679) 16 - Net unrealized appreciation (depreciation) of investments 2,310 163,033 861 182 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 2,212 92,792 715 146 Changes from principal transactions: Total unit transactions (2,878) (53,397) 25,230 24,355 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (2,878) (53,397) 25,230 24,355 ------------- ------------- ------------- ------------- Total increase (decrease) (666) 39,395 25,945 24,501 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 19,422 455,361 25,945 24,501 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 102 5,409 (298) (397) Net realized gain (loss) on investments and capital gains distributions 51 (37,452) 199 138 Net unrealized appreciation (depreciation) of investments 1,020 60,752 465 642 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 1,173 28,709 366 383 Changes from principal transactions: Total unit transactions (1,865) (60,713) (3,269) (5,081) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (1,865) (60,713) (3,269) (5,081) ------------- ------------- ------------- ------------- Total increase (decrease) (692) (32,004) (2,903) (4,698) ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 18,730 $ 423,357 $ 23,042 $ 19,803 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 76 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
ING GET ING GET ING GET ING GET U.S. CORE - U.S. CORE - U.S. CORE - U.S. CORE - SERIES 3 SERIES 4 SERIES 5 SERIES 6 ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ - $ - $ - $ - INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (1) - - - Net realized gain (loss) on investments and capital gains distributions - - - - Net unrealized appreciation (depreciation) of investments - - - - ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations (1) - - - Changes from principal transactions: Total unit transactions 1,966 - - - ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions 1,966 - - - ------------- ------------- ------------- ------------- Total increase (decrease) 1,965 - - - ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 1,965 - - - INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (906) (91) (33) (360) Net realized gain (loss) on investments and capital gains distributions (108) 12 36 39 Net unrealized appreciation (depreciation) of investments 694 398 229 1,035 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations (320) 319 232 714 Changes from principal transactions: Total unit transactions 52,969 7,854 4,196 87,376 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions 52,969 7,854 4,196 87,376 ------------- ------------- ------------- ------------- Total increase (decrease) 52,649 8,173 4,428 88,090 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 54,614 $ 8,173 $ 4,428 $ 88,090 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 77 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
ING VP ING GET GLOBAL ING VP U.S. CORE - SCIENCE AND ING VP INDEX PLUS SERIES 7 TECHNOLOGY GROWTH LARGECAP ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ - $ 6,564 $ 28,286 $ 154,417 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) - (105) (341) (240) Net realized gain (loss) on investments and capital gains distributions - (728) (1,434) (6,964) Net unrealized appreciation (depreciation) of investments - 3,935 9,318 43,359 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations - 3,102 7,543 36,155 Changes from principal transactions: Total unit transactions - 3,706 (3,738) (3,646) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions - 3,706 (3,738) (3,646) ------------- ------------- ------------- ------------- Total increase (decrease) - 6,808 3,805 32,509 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 - 13,372 32,091 186,926 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (35) (134) (300) (383) Net realized gain (loss) on investments and capital gains distributions 3 1,339 (336) 380 Net unrealized appreciation (depreciation) of investments 45 (1,927) 2,144 15,721 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 13 (722) 1,508 15,718 Changes from principal transactions: Total unit transactions 57,002 (2,277) (5,518) (20,282) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions 57,002 (2,277) (5,518) (20,282) ------------- ------------- ------------- ------------- Total increase (decrease) 57,015 (2,999) (4,010) (4,564) ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 57,015 $ 10,373 $ 28,081 $ 182,362 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 78 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
ING VP ING VP ING VP ING VP INDEX PLUS INDEX PLUS INTERNATIONAL SMALL MIDCAP SMALLCAP EQUITY COMPANY ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ 11,779 $ 4,275 $ 5,228 $ 52,158 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (47) (31) (9) (591) Net realized gain (loss) on investments and capital gains distributions (736) (377) 842 (4,193) Net unrealized appreciation (depreciation) of investments 4,296 1,857 966 23,973 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 3,513 1,449 1,799 19,189 Changes from principal transactions: Total unit transactions (260) 988 1,897 9,111 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (260) 988 1,897 9,111 ------------- ------------- ------------- ------------- Total increase (decrease) 3,253 2,437 3,696 28,300 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 15,032 6,712 8,924 80,458 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (70) (50) (5) (756) Net realized gain (loss) on investments and capital gains distributions 515 637 514 3,278 Net unrealized appreciation (depreciation) of investments 1,945 912 1,167 7,164 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 2,390 1,499 1,676 9,686 Changes from principal transactions: Total unit transactions 811 752 2,740 (7,274) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions 811 752 2,740 (7,274) ------------- ------------- ------------- ------------- Total increase (decrease) 3,201 2,251 4,416 2,412 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 18,233 $ 8,963 $ 13,340 $ 82,870 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 79 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
ING VP ING VP ING VP GROWTH GROWTH ING VP VALUE OPPORTUNITIES OPPORTUNITIES INTERNATIONAL OPPORTUNITY - CLASS I - CLASS S VALUE ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ 17,001 $ 384 $ 125 $ 404 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (77) (2) (4) 5 Net realized gain (loss) on investments and capital gains distributions (911) (1) 4 12 Net unrealized appreciation (depreciation) of investments 4,627 23 109 247 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 3,639 20 109 264 Changes from principal transactions: Total unit transactions (1,995) (355) 619 531 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (1,995) (355) 619 531 ------------- ------------- ------------- ------------- Total increase (decrease) 1,644 (335) 728 795 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 18,645 49 853 1,199 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (62) - (3) 9 Net realized gain (loss) on investments and capital gains distributions (370) 7 117 96 Net unrealized appreciation (depreciation) of investments 1,835 (4) (79) 272 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 1,403 3 35 377 Changes from principal transactions: Total unit transactions (3,763) (52) (888) 1,404 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (3,763) (52) (888) 1,404 ------------- ------------- ------------- ------------- Total increase (decrease) (2,360) (49) (853) 1,781 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 16,285 $ - $ - $ 2,980 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 80 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
ING VP ING VP ING VP ING VP MIDCAP MIDCAP MAGNACAP MAGNACAP OPPORTUNITIES OPPORTUNITIES - CLASS I - CLASS S - CLASS I - CLASS S ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ 27 $ 490 $ 76 $ 2,583 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) - (2) (7) (52) Net realized gain (loss) on investments and capital gains distributions (4) (52) 182 (176) Net unrealized appreciation (depreciation) of investments 12 221 125 1,406 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 8 167 300 1,178 Changes from principal transactions: Total unit transactions 7 271 529 3,057 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions 7 271 529 3,057 ------------- ------------- ------------- ------------- Total increase (decrease) 15 438 829 4,235 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 42 928 905 6,818 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 1 3 (5) (119) Net realized gain (loss) on investments and capital gains distributions - 13 150 348 Net unrealized appreciation (depreciation) of investments 7 98 (84) 564 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 8 114 61 793 Changes from principal transactions: Total unit transactions 75 593 (626) 3,173 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions 75 593 (626) 3,173 ------------- ------------- ------------- ------------- Total increase (decrease) 83 707 (565) 3,966 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 125 $ 1,635 $ 340 $ 10,784 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 81 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
ING VP ING VP SMALLCAP SMALLCAP ING VP OPPORTUNITIES OPPORTUNITIES ING VP REAL ESTATE - CLASS I - CLASS S BALANCED ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ - $ 58 $ 1,772 $ 148,868 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) - (2) (33) 1,276 Net realized gain (loss) on investments and capital gains distributions - 39 (426) (6,377) Net unrealized appreciation (depreciation) of investments - (7) 1,223 30,184 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations - 30 764 25,083 Changes from principal transactions: Total unit transactions - 1,304 1,992 (1,133) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions - 1,304 1,992 (1,133) ------------- ------------- ------------- ------------- Total increase (decrease) - 1,334 2,756 23,950 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 - 1,392 4,528 172,818 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 11 (3) (62) 1,466 Net realized gain (loss) on investments and capital gains distributions 13 22 411 (3,158) Net unrealized appreciation (depreciation) of investments 98 50 33 15,759 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 122 69 382 14,067 Changes from principal transactions: Total unit transactions 1,071 (491) 432 2,674 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions 1,071 (491) 432 2,674 ------------- ------------- ------------- ------------- Total increase (decrease) 1,193 (422) 814 16,741 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 1,193 $ 970 $ 5,342 $ 189,559 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 82 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
ING VP ING VP ING VP EMERGING ING VP INTERMEDIATE MONEY MARKETS FINANCIAL BOND MARKET ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ 649 $ - $ 164,563 $ 262,556 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (10) - 820 1,300 Net realized gain (loss) on investments and capital gains distributions (21) - 1,734 (1,414) Net unrealized appreciation (depreciation) of investments 287 - 5,194 (660) ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 256 - 7,748 (774) Changes from principal transactions: Total unit transactions (96) - (28,876) (87,888) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (96) - (28,876) (87,888) ------------- ------------- ------------- ------------- Total increase (decrease) 160 - (21,128) (88,662) ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 809 - 143,435 173,894 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (5) - 9,531 (110) Net realized gain (loss) on investments and capital gains distributions 29 (3) 7,411 (354) Net unrealized appreciation (depreciation) of investments 109 - (12,159) 154 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 133 (3) 4,783 (310) Changes from principal transactions: Total unit transactions (172) 3 (10,338) 19,197 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (172) 3 (10,338) 19,197 ------------- ------------- ------------- ------------- Total increase (decrease) (39) - (5,555) 18,887 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 770 $ - $ 137,880 $ 192,781 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 83 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
ING VP JANUS ASPEN NATURAL JANUS ASPEN FLEXIBLE JANUS ASPEN RESOURCES BALANCED INCOME GROWTH ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ 1,567 $ 197,825 $ 28,392 $ 98,503 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (19) 1,782 840 (1,140) Net realized gain (loss) on investments and capital gains distributions (20) (2,339) 734 (4,646) Net unrealized appreciation (depreciation) of investments 435 23,364 (248) 32,018 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 396 22,807 1,326 26,232 Changes from principal transactions: Total unit transactions (231) (34,101) (7,560) (19,409) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (231) (34,101) (7,560) (19,409) ------------- ------------- ------------- ------------- Total increase (decrease) 165 (11,294) (6,234) 6,823 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 1,732 186,531 22,158 105,326 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (3) 1,497 746 (1,013) Net realized gain (loss) on investments and capital gains distributions 53 764 558 (821) Net unrealized appreciation (depreciation) of investments 122 8,691 (857) 3,988 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 172 10,952 447 2,154 Changes from principal transactions: Total unit transactions (43) (40,693) (6,857) (22,999) ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (43) (40,693) (6,857) (22,999) ------------- ------------- ------------- ------------- Total increase (decrease) 129 (29,741) (6,410) (20,845) ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 1,861 $ 156,790 $ 15,748 $ 84,481 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 84 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
JANUS ASPEN JANUS ASPEN LORD ABBETT LORD ABBETT MID CAP WORLDWIDE GROWTH AND MID-CAP GROWTH GROWTH INCOME VALUE ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ 77,233 $ 198,280 $ 422 $ 474 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (963) (283) 6 (1) Net realized gain (loss) on investments and capital gains distributions (5,140) (13,982) 7 - Net unrealized appreciation (depreciation) of investments 29,450 51,811 364 222 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 23,347 37,546 377 221 Changes from principal transactions: Total unit transactions (11,863) (44,903) 2,311 522 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (11,863) (44,903) 2,311 522 ------------- ------------- ------------- ------------- Total increase (decrease) 11,484 (7,357) 2,688 743 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 88,717 190,923 3,110 1,217 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (1,031) (477) 6 (8) Net realized gain (loss) on investments and capital gains distributions 2,091 (4,417) 330 185 Net unrealized appreciation (depreciation) of investments 14,067 9,492 222 356 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 15,127 4,598 558 533 Changes from principal transactions: Total unit transactions (9,580) (41,276) 3,105 1,982 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (9,580) (41,276) 3,105 1,982 ------------- ------------- ------------- ------------- Total increase (decrease) 5,547 (36,678) 3,663 2,515 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 94,264 $ 154,245 $ 6,773 $ 3,732 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 85 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
MFS(R) MFS(R) VIT OPPENHEIMER OPPENHEIMER VIT STRATEGIC VIT TOTAL AGGRESSIVE GLOBAL INCOME RETURN GROWTH SECURITIES ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ 2,720 $ 91,725 $ 23,930 $ 15,177 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 117 374 (335) (100) Net realized gain (loss) on investments and capital gains distributions 67 (807) (1,055) (902) Net unrealized appreciation (depreciation) of investments 55 14,113 6,608 7,819 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 239 13,680 5,218 6,817 Changes from principal transactions: Total unit transactions (435) 5,000 (33) 7,545 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (435) 5,000 (33) 7,545 ------------- ------------- ------------- ------------- Total increase (decrease) (196) 18,680 5,185 14,362 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 2,524 110,405 29,115 29,539 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 93 362 (391) (2) Net realized gain (loss) on investments and capital gains distributions 63 258 134 771 Net unrealized appreciation (depreciation) of investments (10) 11,330 5,377 5,617 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 146 11,950 5,120 6,386 Changes from principal transactions: Total unit transactions (167) 20,142 (1,361) 7,795 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (167) 20,142 (1,361) 7,795 ------------- ------------- ------------- ------------- Total increase (decrease) (21) 32,092 3,759 14,181 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 2,503 $ 142,497 $ 32,874 $ 43,720 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 86 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
PIONEER OPPENHEIMER OPPENHEIMER EQUITY MAIN STRATEGIC PIMCO VIT INCOME STREET(R) BOND REAL RETURN VCT ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ 48,801 $ 32,735 $ - $ 153 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (224) 1,817 - 3 Net realized gain (loss) on investments and capital gains distributions (1,676) 661 - (8) Net unrealized appreciation (depreciation) of investments 14,143 3,307 - 49 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 12,243 5,785 - 44 Changes from principal transactions: Total unit transactions 4,077 3,980 - 56 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions 4,077 3,980 - 56 ------------- ------------- ------------- ------------- Total increase (decrease) 16,320 9,765 - 100 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 65,121 42,500 - 253 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (319) 1,729 - 13 Net realized gain (loss) on investments and capital gains distributions 79 826 10 25 Net unrealized appreciation (depreciation) of investments 5,227 895 (3) 95 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 4,987 3,450 7 133 Changes from principal transactions: Total unit transactions (1,712) 12,684 515 1,195 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions (1,712) 12,684 515 1,195 ------------- ------------- ------------- ------------- Total increase (decrease) 3,275 16,134 522 1,328 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 68,396 $ 58,634 $ 522 $ 1,581 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 87 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
PIONEER PIONEER PIONEER MID CAP FUND HIGH YIELD VALUE VCT VCT VCT JENNISON ------------- ------------- ------------- -------------- NET ASSETS AT JANUARY 1, 2003 $ 1 $ - $ 30 $ 427 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) - - (1) (8) Net realized gain (loss) on investments and capital gains distributions - - 22 5 Net unrealized appreciation (depreciation) of investments - - 56 156 ------------- ------------- ------------- Net increase (decrease) in net assets from operations - - 77 153 Changes from principal transactions: Total unit transactions 3 - 632 279 ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions 3 - 632 279 ------------- ------------- ------------- Total increase (decrease) 3 - 709 432 ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 4 - 739 859 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) - 1 (10) (12) Net realized gain (loss) on investments and capital gains distributions - - 82 70 Net unrealized appreciation (depreciation) of investments 2 2 342 32 ------------- ------------- ------------- Net increase (decrease) in net assets from operations 2 3 414 90 Changes from principal transactions: Total unit transactions 46 213 2,040 380 ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions 46 213 2,040 380 ------------- ------------- ------------- Total increase (decrease) 48 216 2,454 470 ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 52 $ 216 $ 3,193 $ 1,329 ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 88 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 (DOLLARS IN THOUSANDS)
SP WILLIAM BLAIR UBS WANGER U.S. INTERNATIONAL U.S. WANGER SMALL GROWTH ALLOCATION SELECT COMPANIES ------------- ------------- ------------- ------------- NET ASSETS AT JANUARY 1, 2003 $ 214 $ 9,725 $ - $ - INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (12) (46) - - Net realized gain (loss) on investments and capital gains distributions 89 (189) - - Net unrealized appreciation (depreciation) of investments 289 2,649 - - ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 366 2,414 - - Changes from principal transactions: Total unit transactions 2,689 (431) - - ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions 2,689 (431) - - ------------- ------------- ------------- ------------- Total increase (decrease) 3,055 1,983 - - ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2003 3,269 11,708 - - INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (54) (54) - - Net realized gain (loss) on investments and capital gains distributions 211 73 - - Net unrealized appreciation (depreciation) of investments 540 787 11 13 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 697 806 11 13 Changes from principal transactions: Total unit transactions 2,188 (3,603) 238 84 ------------- ------------- ------------- ------------- Increase (decrease) in assets derived from principal transactions 2,188 (3,603) 238 84 ------------- ------------- ------------- ------------- Total increase (decrease) 2,885 (2,797) 249 97 ------------- ------------- ------------- ------------- NET ASSETS AT DECEMBER 31, 2004 $ 6,154 $ 8,911 $ 249 $ 97 ============= ============= ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 89 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- 1. ORGANIZATION ING Life Insurance and Annuity Company Variable Annuity Account B (the "Account") was established by ING Life Insurance and Annuity Company ("ILIAC" or the "Company") to support the operations of variable annuity contracts ("Contracts"). The Company is an indirect wholly owned subsidiary of ING America Insurance Holdings, Inc. ("ING AIH"), an insurance holding company domiciled in the State of Delaware. ING AIH is a wholly owned subsidiary of ING Groep, N.V., a global financial services holding company based in The Netherlands. The Account is registered as a unit investment trust with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended. The account is sold exclusively for use with variable annuity Contracts that may be entitled to tax-deferred treatment under specific sections of the Internal Revenue Code of 1986, as amended. ILIAC provides for variable accumulation and benefits under the Contracts by crediting annuity considerations to one or more divisions within the Account or the fixed separate account, which is not part of the Account, as directed by the Contractowners. The portion of the Account's assets applicable to Contracts will not be charged with liabilities arising out of any other business ILIAC may conduct, but obligations of the Account, including the promise to make benefit payments, are obligations of ILIAC. The assets and liabilities of the Account are clearly identified and distinguished from the other assets and liabilities of ILIAC. At December 31, 2004, the Account had 126 investment divisions (the "Divisions"), 54 of which invest in independently managed mutual funds and 72 of which invest in mutual funds managed by affiliates, either ING Investments, LLC or ING Life Insurance and Annuity Company. The assets in each Division are invested in shares of a designated fund ("Fund") of various investment trusts (the "Trusts"). Investment Divisions at December 31, 2004 and related Trusts are as follows: AIM Variable Insurance Funds: American Century(R) Investments: AIM V.I. Capital Appreciation Fund - Series I American Century(R) VP Balanced Fund Shares American Century(R) VP International Fund AIM V.I. Core Equity Fund - Series I Shares Calvert Social Balanced Portfolio AIM V.I. Government Securities Fund - Series I Federated Insurance Series: Shares AIM V.I. Growth Fund - Series I Shares Federated American Leaders Fund II AIM V.I. Premier Equity Fund - Series I Federated Capital Income Fund II Shares Alger American Funds: Federated Equity Income Fund II Alger American Balanced Portfolio Federated Fund for U.S. Government Securities II Alger American Income & Growth Portfolio Federated High Income Bond Fund II Alger American Leveraged AllCap Portfolio Federated International Equity Fund II AllianceBernstein Variable Products Series Fund, Inc.: Federated Mid Cap Growth Strategies Fund II AllianceBernstein VPSF Growth and Income - Class A Federated Prime Money Fund II AllianceBernstein VPSF Premier Growth - Class A Fidelity(R) Variable Insurance Products Fund: AllianceBernstein VPSF Small Cap Growth - Class A Fidelity(R) VIP Contrafund(R) Portfolio - Initial Class Fidelity(R) VIP Equity-Income Portfolio - Initial Class
90 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- Fidelity(R) Variable Insurance Products Fund ING Partners, Inc. (continued): (continued): ING JPMorgan International Portfolio - Initial Fidelity(R) VIP Growth Portfolio - Initial Class Class Fidelity(R) VIP High Income Portfolio - Initial Class ING JPMorgan Mid Cap Value Portfolio - Service Fidelity(R) VIP ASSET MANAGER(SM) Portfolio - Initial Class Class ING MFS Capital Opportunities Portfolio - Initial Fidelity(R) VIP Investment Grade Bond Portfolio - Class Initial Class ING OpCap Balanced Value Portfolio - Service Fidelity(R) VIP Index 500 Portfolio - Initial Class Class Fidelity(R) VIP Overseas Portfolio - Initial Class ING Oppenheimer Global Portfolio - Service Class Franklin Templeton Variable Insurance Products Trust: ING PIMCO Total Return Portfolio - Service Class Franklin Small Cap Value Securities Fund - Class 2 ING Salomon Brothers Aggressive Growth Portfolio ING GET Fund: - Initial Class ING GET Fund - Series H ING Salomon Brothers Fundamental Value Portfolio ING GET Fund - Series I - Service Class ING GET Fund - Series J ING Salomon Brothers Investors Value Portfolio - ING GET Fund - Series K Service Class ING GET Fund - Series L ING T. Rowe Price Diversified Mid Cap Growth ING GET Fund - Series M Portfolio - Service Class ING GET Fund - Series N ING T. Rowe Price Growth Equity Portfolio - ING GET Fund - Series P Initial Class ING GET Fund - Series Q ING UBS U.S. Large Cap Equity Portfolio - ING GET Fund - Series R Initial Class ING GET Fund - Series S ING Van Kampen Comstock Portfolio - Service Class ING GET Fund - Series T ING Van Kampen Equity and Income Portfolio - ING GET Fund - Series U Service Class ING GET Fund - Series V* ING Strategic Allocation Portfolios, Inc.: ING Investors Trust: ING VP Strategic Allocation Balanced Portfolio - ING American Funds Growth Portfolio** Class I ING American Funds Growth-Income Portfolio** ING VP Strategic Allocation Growth Portfolio - ING American Funds International Portfolio** Class I ING Julius Baer Foreign Portfolio - Service Class** ING VP Strategic Allocation Income Portfolio - ING Legg Mason Value Portfolio - Institutional Class I Class** ING Variable Funds: ING MFS Total Return Portfolio - Service Class* ING VP Growth and Income Portfolio - Class I ING T. Rowe Price Equity Income Portfolio - ING Variable Insurance Trust: Service Class* ING GET U.S. Core Portfolio - Series 1* ING Partners, Inc.: ING GET U.S. Core Portfolio - Series 2* ING Aeltus Enhanced Index Portfolio - Service Class ING GET U.S. Core Portfolio - Series 3* ING American Century Select Portfolio - Service ING GET U.S. Core Portfolio - Series 4** Class ING GET U.S. Core Portfolio - Series 5** ING American Century Small Cap Value Portfolio - ING GET U.S. Core Portfolio - Series 6** Service Class ING GET U.S. Core Portfolio - Series 7** ING Baron Small Cap Growth Portfolio - Service ING Variable Portfolios, Inc.: Class ING VP Global Science and Technology Portfolio - ING Goldman Sachs(R) Capital Growth Portfolio - Class I Service Class ING VP Growth Portfolio - Class I ING VP Index Plus LargeCap Portfolio - Class I ING VP Index Plus MidCap Portfolio - Class I
91 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- ING Variable Portfolios, Inc. (continued): Lord Abbett Funds: ING VP Index Plus SmallCap Portfolio - Class I Lord Abbett Growth and Income Portfolio ING VP International Equity Portfolio - Class I Lord Abbett Mid-Cap Value Portfolio ING VP Small Company Portfolio - Class I MFS(R) Funds: ING VP Value Opportunity Portfolio - Class I MFS(R) VIT Strategic Income Series ING Variable Products Trust: MFS(R) VIT Total Return Series - Initial Class ING VP International Value Portfolio - Class I Oppenheimer Variable Account Funds: ING VP MagnaCap Portfolio - Class I Oppenheimer Aggressive Growth Fund/VA ING VP MagnaCap Portfolio - Class S Oppenheimer Global Securities Fund/VA ING VP MidCap Opportunities Portfolio - Class I Oppenheimer Main Street(R) Fund/VA ING VP MidCap Opportunities Portfolio - Class S Oppenheimer Strategic Bond Fund/VA ING VP Real Estate Portfolio - Class I** PIMCO VIT Real Return Portfolio - Admin Class** ING VP SmallCap Opportunities Portfolio - Class I Pioneer Variable Contracts Trust: ING VP SmallCap Opportunities Portfolio - Class S Pioneer Equity Income VCT Portfolio - Class I ING VP Balanced Portfolio, Inc. - Class I Pioneer Fund VCT Portfolio - Class I ING VP Emerging Markets Fund Pioneer High Yield VCT Portfolio - Class I** ING VP Intermediate Bond Portfolio - Class I Pioneer Mid Cap Value VCT Portfolio - Class I ING VP Money Market Portfolio - Class I Prudential Series Fund, Inc.: ING VP Natural Resources Trust Jennison Portfolio - Class II Shares Janus Aspen Series: SP William Blair International Growth Portfolio Janus Aspen Balanced Portfolio - Inst Shares - Class II Shares Janus Aspen Flexible Income Portfolio - Inst Shares UBS Series Trust: Janus Aspen Growth Portfolio - Inst Shares UBS U.S. Allocation Portfolio - Class I Janus Aspen Mid Cap Growth Portfolio - Inst Shares Wanger Advisors Trust: Janus Aspen Worldwide Growth Portfolio - Inst Wanger Select** Shares Wanger U.S. Smaller Companies**
* Investment Division added in 2003 ** Investment Division added in 2004 The names of certain Divisions were changed during 2004. The following is a summary of current and former names for those Divisions:
CURRENT NAME FORMER NAME -------------------------------------------------------- --------------------------------------------------------- AllianceBernstein Variable Products Series Fund, Inc.: AllianceBernstein Variable Products Series Fund, Inc.: AllianceBernstein VPSF Small Cap Growth - Class A Alliance Bernstein VPSF Quasar - Class A Federated Insurance Series: Federated Insurance Series: Federated Mid Cap Growth Strategies Fund II Federated Growth Strategies Fund II ING Partners, Inc.: ING Partners, Inc.: ING Aeltus Enhanced Index Portfolio - Service Class ING DSI Enhanced Index Portfolio - Service Class ING American Century Select Portfolio - Service Class ING Alger Growth Portfolio - Service Class ING JPMorgan International Portfolio - Initial Class ING JPMorgan Fleming International Portfolio - Initial Class ING Oppenheimer Global Portfolio - Service Class ING MFS Global Growth Portfolio - Service Class ING T. Rowe Price Diversified Mid Cap Growth ING Alger Aggressive Growth Portfolio - Service Class
92 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
CURRENT NAME FORMER NAME -------------------------------------------------------- --------------------------------------------------------- Portfolio - Service Class ING UBS U.S. Large Cap Equity Portfolio - Initial ING MFS Research Equity Portfolio - Initial Class Class ING Van Kampen Equity and Income Portfolio - ING UBS Tactical Asset Allocation Portfolio - Service Class Service Class ING Strategic Allocation Portfolios, Inc.: ING Generations Portfolio, Inc.: ING VP Strategic Allocation Balanced Portfolio - ING VP Strategic Allocation Balanced Portfolio - Class I Class R ING VP Strategic Allocation Growth Portfolio - Class I ING VP Strategic Allocation Growth Portfolio - Class R ING VP Strategic Allocation Income Portfolio - Class I ING VP Strategic Allocation Income Portfolio - Class R ING Variable Funds: ING Variable Funds: ING VP Growth and Income Portfolio - Class I ING VP Growth and Income Portfolio - Class R ING Variable Portfolios, Inc.: ING Variable Portfolios, Inc.: ING VP Global Science and Technology Portfolio - ING VP Technology Portfolio - Class R Class I ING VP Growth Portfolio - Class I ING VP Growth Portfolio - Class R ING VP Index Plus LargeCap Portfolio - Class I ING VP Index Plus LargeCap Portfolio - Class R ING VP Index Plus MidCap Portfolio - Class I ING VP Index Plus MidCap Portfolio - Class R ING VP Index Plus SmallCap Portfolio - Class I ING VP Index Plus SmallCap Portfolio - Class R ING VP International Equity Portfolio - Class I ING VP International Equity Portfolio - Class R ING VP Small Company Portfolio - Class I ING VP Small Company Portfolio - Class R ING VP Value Opportunity Portfolio - Class I ING VP Value Opportunity Portfolio - Class R ING Variable Products Trust: ING Variable Products Trust: ING VP Growth Opportunities Portfolio - Class I ING VP Growth Opportunities Portfolio - Class R ING VP International Value Portfolio - Class I ING VP International Value Portfolio - Class R ING VP MagnaCap Portfolio - Class I ING VP MagnaCap Portfolio - Class R ING VP MidCap Opportunities Portfolio - Class I ING VP MidCap Opportunities Portfolio - Class R ING VP SmallCap Opportunities Portfolio - Class I ING VP SmallCap Opportunities Portfolio - Class R ING VP Balanced Portfolio, Inc. - Class I ING VP Balanced Portfolio, Inc. - Class R ING VP Intermediate Bond Portfolio - Class I ING VP Bond Portfolio - Class R ING VP Money Market Portfolio - Class I ING VP Money Market Portfolio - Class R MFS(R) Funds: MFS(R) Funds: MFS(R) VIT Strategic Income Series MFS(R) Global Governments Series MFS(R) VIT Total Return Series - Initial Class MFS(R) Total Return Series - Initial Class Prudential Series Fund, Inc.: Prudential Series Fund, Inc.: SP William Blair International Growth Portfolio - SP Jennison International Growth Portfolio - Class II Shares Class II Shares UBS Series Trust: UBS Series Trust: UBS U.S.Allocation Portfolio - Class I UBS Tactical Allocation Portfolio - Class I
During 2004, the following Divisions were closed to Contractowners: ING GET Fund - Series D ING GET Fund - Series E ING GET Fund - Series G ING VP Growth Opportunities Portfolio - Class I ING VP Growth Opportunities Portfolio - Class S ING VP Financial Services - Class I 93 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of the significant accounting policies of the Account: USE OF ESTIMATES The preparation of the financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. INVESTMENTS Investments are made in shares of a Fund and are recorded at fair value, determined by the net asset value per share of the respective Fund. Investment transactions in each Fund are recorded on the trade date. Distributions of net investment income and capital gains from each Fund are recognized on the ex-distribution date. Realized gains and losses on redemptions of the shares of the Fund are determined by specific identification. The difference between cost and current market value is recorded as unrealized appreciation or depreciation of investments. FEDERAL INCOME TAXES Operations of the Account form a part of, and are taxed with, the total operations of ILIAC, which is taxed as a life insurance company under the Internal Revenue Code. Earnings and realized capital gains of the Account attributable to the Contractowners are excluded in the determination of the federal income tax liability of ILIAC. ANNUITY RESERVES Prior to the annuity date, the Contracts are redeemable for the net cash surrender value of the Contracts. The annuity reserves are recorded in the financial statements at the aggregate account values of the Contractholders invested in the Account Divisions. Annuity reserves held in the Account for currently payable contracts are computed according to the Progressive Annuity, a49, 1971 Individual Annuity Mortality, 1971 Group Annuity Mortality, 1983a, and 1983 Group Annuity Mortality tables using various assumed interest rates not to exceed seven percent. Mortality experience is monitored by the Company. Charges to annuity reserves for mortality experience are reimbursed to the Company if the reserves required are less than originally estimated. If additional reserves are required, the Company reimburses the Account. Conversely, if amounts allocated exceed amounts required, transfers may be made to ILIAC. 94 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- 3. CHARGES AND FEES Under the terms of the Contracts, certain charges are allocated to the Contracts to cover ILIAC's expenses in connection with the issuance and administration of the Contracts. Following is a summary of these charges: MORTALITY AND EXPENSE RISK CHARGES ILIAC assumes mortality and expense risks related to the operations of the Account and, in accordance with the terms of the Contracts, deducts a daily charge from the assets of the Account. Daily charges are deducted at annual rates of up to 1.90% of the average daily net asset value of each Division of the Account to cover these risks, as specified in the Contract. ADMINISTRATIVE CHARGES A daily charge at an annual rate of up to 0.50% of the assets attributable to the Contracts is deducted, as specified in the Contract. CONTRACT MAINTENANCE CHARGES An annual contract or certificate maintenance fee of up to$20 may be deducted from the accumulation value of Contracts to cover ongoing administrative expenses, as specified in the Contract. CONTINGENT DEFERRED SALES CHARGES For certain Contracts, a contingent deferred sales charge is imposed as a percentage that ranges up to 7% of each premium payment if the Contract is surrendered or an excess partial withdrawal is taken, as specified in the Contract. PREMIUM TAXES For certain Contracts, premium taxes are deducted, where applicable, from the accumulation value of each Contract. The amount and timing of the deduction depends on the Contractowner's state of residence and currently ranges up to 4.0% of premiums. 95 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- 4. RELATED PARTY TRANSACTIONS During the year ended December 31, 2004, management fees were paid indirectly to ING Investments, LLC, an affiliate of the Company, in its capacity as investment adviser to the ING GET Fund, ING Balanced Portfolio, Inc., ING VP Emerging Markets Fund, ING VP Financial Services - Class I, ING VP Natural Resources Trust, ING VP Money Market Portfolio, ING Strategic Allocation Portfolios, Inc., ING Variable Funds, ING Variable Insurance Trust, ING VP Intermediate Bond Portfolio, ING Variable Portfolios, Inc., and ING Variable Products Trust. The annual fee rate ranged from 0.25% to 1.00% of the average net assets of each respective Fund or Fund of the Trust. In addition, management fees were paid to ILIAC, an affiliate, in its capacity as investment adviser to ING Partners, Inc. The annual fee rate ranged from 0.50% to 1.00% of the average net assets of each respective Fund of the Trust. Management fees were also paid indirectly to Directed Services, Inc., an affiliate of the Company, in its capacity as investment manager to ING Investors Trust. The Fund's advisory agreement provided for a fee at an annual rate ranging from 0.63% to 0.94% of the average net assets of each respective Portfolio excluding ING American Funds Growth Portfolio, ING American Funds Growth-Income Portfolio, and ING American Funds International Portfolio. 96 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- 5. PURCHASES AND SALES OF INVESTMENT SECURITIES The aggregate cost of purchases and proceeds from sales of investments follows:
YEAR ENDED DECEMBER 31 2004 2003 ------------------------- ------------------------- PURCHASES SALES PURCHASES SALES ----------- ----------- ----------- ----------- (DOLLARS IN THOUSANDS) AIM Variable Insurance Funds: AIM V.I. Capital Appreciation $ 739 $ 3,995 $ 1,737 $ 3,129 AIM V.I. Core Equity 2,792 8,277 3,305 4,917 AIM V.I. Government Securities 4,900 5,165 6,524 17,272 AIM V.I. Growth 1,088 3,484 1,907 3,089 AIM V.I. Premier Equity 465 8,725 1,284 8,823 Alger American Funds: Alger American Balanced 171 653 132 720 Alger American Income & Growth 125 1,702 168 1,486 Alger American Leveraged AllCap 43 1,763 1 1,075 AllianceBernstein Variable Products Series Fund, Inc.: AllianceBernstein VPSF Growth and Income 11,559 2,742 9,057 3,429 AllianceBernstein VPSF Premier Growth 1,267 1,635 1,645 1,504 AllianceBernstein VPSF Small Cap Growth 2,580 1,876 3,231 736 American Century(R) Investments: American Century(R) VP Balanced 64 482 40 323 American Century(R) VP International 11 319 19 485 Calvert Social Balanced 314 448 559 412 Federated Insurance Series: Federated American Leaders 1,373 14,249 1,301 11,123 Federated Capital Income 495 2,024 534 1,842 Federated Equity Income 428 3,254 627 2,131 Federated Fund for U.S. Government Securities 1,218 4,431 1,190 3,794 Federated High Income Bond 2,542 6,682 1,589 4,535 Federated International Equity 106 1,558 361 1,465 Federated Mid Cap Growth Strategies 79 2,899 475 2,609 Federated Prime Money 1,716 3,320 2,583 5,040 Fidelity(R) Variable Insurance Products Fund: Fidelity(R) VIP Contrafund(R) 37,679 12,694 26,291 23,400 Fidelity(R) VIP Equity-Income 30,257 22,411 41,183 36,146 Fidelity(R) VIP Growth 6,891 25,796 10,899 13,392 Fidelity(R) VIP High Income 13,312 22,116 30,754 18,518 Fidelity(R) VIP ASSET MANAGER(SM) 1,351 2,085 1,642 2,158 Fidelity(R) VIP Investment Grade Bond 213 433 220 846 Fidelity(R) VIP Index 500 3,354 13,270 7,977 13,648 Fidelity(R) VIP Overseas 7,834 7,574 36,192 32,346
97 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 2004 2003 ------------------------- ------------------------- PURCHASES SALES PURCHASES SALES ----------- ----------- ----------- ----------- (DOLLARS IN THOUSANDS) Franklin Templeton Variable Insurance Products Trust: Franklin Small Cap Value Securities $ 4,385 $ 1,104 $ 433 $ 279 ING GET Fund: ING GET Fund - Series D 3,233 86,466 4,052 18,917 ING GET Fund - Series E 15,758 239,577 10,996 44,851 ING GET Fund - Series G 10,351 139,818 6,153 29,059 ING GET Fund - Series H 4,438 21,032 4,789 20,271 ING GET Fund - Series I 2,796 14,828 3,353 12,409 ING GET Fund - Series J 2,510 13,665 2,456 13,559 ING GET Fund - Series K 2,415 15,617 2,775 12,911 ING GET Fund - Series L 2,474 15,441 3,093 11,467 ING GET Fund - Series M 3,742 18,639 4,217 25,227 ING GET Fund - Series N 3,220 15,448 2,265 17,016 ING GET Fund - Series P 1,932 10,892 1,839 21,136 ING GET Fund - Series Q 1,843 7,610 691 13,725 ING GET Fund - Series R 1,197 5,818 124 7,906 ING GET Fund - Series S 2,061 9,131 82 12,318 ING GET Fund - Series T 1,457 4,642 259 9,664 ING GET Fund - Series U 1,864 3,870 42,784 16,030 ING GET Fund - Series V 842 20,913 84,529 8,459 ING Investors Trust: ING American Funds Growth 1,728 2 - - ING American Funds Growth - Income 2,320 - - - ING American Funds International 8,911 1 - - ING Julius Baer Foreign 245 19 - - ING Legg Mason Value 858 - - - ING MFS Total Return 1,733 312 443 56 ING T. Rowe Price Equity Income 1,601 182 702 83 ING Partners, Inc.: ING Aeltus Enhanced Index 109 41 48 43 ING American Century Select 154 59 1,205 877 ING American Century Small Cap Value 604 223 490 216 ING Baron Small Cap Growth 2,155 1,102 1,230 238 ING Goldman Sachs(R) Capital Growth 261 3 11 8 ING JPMorgan International 23,692 20,544 163,765 161,684 ING JPMorgan Mid Cap Value 1,484 142 605 113 ING MFS Capital Opportunities 2,142 7,514 21,700 27,088 ING OpCap Balanced Value 1,170 450 1,204 57 ING Oppenheimer Global 229 216 25 24 ING PIMCO Total Return 1,760 586 2,644 1,301
98 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 2004 2003 ------------------------- ------------------------- PURCHASES SALES PURCHASES SALES ----------- ----------- ----------- ----------- (DOLLARS IN THOUSANDS) ING Partners, Inc. (continued): ING Salomon Brothers Aggressive Growth $ 4,089 $ 14,372 $ 10,004 $ 15,045 ING Salomon Brothers Fundamental Value 882 721 22,906 21,884 ING Salomon Brothers Investors Value 392 209 171 29 ING T. Rowe Diversified Mid Cap Growth 669 1,124 3,224 2,516 ING T. Rowe Price Growth Equity 6,117 13,771 12,358 13,147 ING UBS U.S. Large Cap Equity 3,764 8,518 1,157 7,623 ING Van Kampen Comstock 2,765 261 707 262 ING Van Kampen Equity and Income 103 29 82 33 ING Strategic Allocation Portfolios, Inc.: ING VP Strategic Allocation Balanced 6,007 3,762 2,839 2,627 ING VP Strategic Allocation Growth 1,927 2,631 2,913 2,028 ING VP Strategic Allocation Income 2,593 4,356 2,116 4,793 ING Variable Funds: ING VP Growth and Income 20,166 75,470 13,533 71,492 ING Variable Insurance Trust: ING GET U.S. Core - Series 1 193 3,734 26,984 1,916 ING GET U.S. Core - Series 2 47 5,525 24,434 115 ING GET U.S. Core - Series 3 62,647 10,584 1,965 - ING GET U.S. Core - Series 4 8,661 898 - - ING GET U.S. Core - Series 5 5,152 989 - - ING GET U.S. Core - Series 6 113,987 26,971 - - ING GET U.S. Core - Series 7 65,706 8,739 - - ING Variable Portfolios, Inc.: ING VP Global Science and Technology 8,353 10,764 10,849 7,248 ING VP Growth 1,349 7,167 2,962 7,041 ING VP Index Plus LargeCap 16,413 37,078 33,821 37,707 ING VP Index Plus MidCap 3,742 3,001 8,395 8,702 ING VP Index Plus SmallCap 3,206 2,466 3,097 2,140 ING VP International Equity 5,894 3,159 17,944 16,056 ING VP Small Company 17,304 25,334 39,143 30,623 ING VP Value Opportunity 1,693 5,518 1,688 3,760 ING Variable Products Trust: ING VP Growth Opportunities - Class I 5 57 205 562 ING VP Growth Opportunities - Class S 121 1,012 795 180 ING VP International Value 1,762 349 824 288 ING VP MagnaCap - Class I 77 1 26 19 ING VP MagnaCap - Class S 886 290 446 177 ING VP MidCap Opportunities - Class I 600 1,231 3,751 3,229 ING VP MidCap Opportunities - Class S 5,053 1,999 3,992 987 ING VP Real Estate 1,097 2
99 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 2004 2003 ------------------------- ------------------------- PURCHASES SALES PURCHASES SALES ----------- ----------- ----------- ----------- (DOLLARS IN THOUSANDS) ING Variable Products Trust (continued): ING VP SmallCap Opportunities - Class I $ 1,213 $ 1,707 $ 6,129 $ 4,827 ING VP SmallCap Opportunities - Class S 2,152 1,782 3,215 1,256 ING VP Balanced 23,869 19,729 19,176 19,033 ING VP Emerging Markets 6 183 10 116 ING VP Financial Services 203 200 - - ING VP Intermediate Bond 43,023 38,166 18,786 46,842 ING VP Money Market 175,942 156,855 260,698 347,286 ING VP Natural Resources 329 375 30 280 Janus Aspen Series: Janus Aspen Balanced 5,060 44,256 8,930 41,249 Janus Aspen Flexible Income 2,566 8,534 4,792 11,512 Janus Aspen Growth 1,915 25,927 2,952 23,501 Janus Aspen Mid Cap Growth 7,790 18,401 24,529 37,355 Janus Aspen Worldwide Growth 9,256 51,009 11,748 56,934 Lord Abbett Series Fund, Inc.: Lord Abbett Growth and Income 5,029 1,864 2,511 194 Lord Abbett Mid-Cap Value 2,528 504 787 254 MFS(R) Funds: MFS(R) VIT Strategic Income Series 648 722 1,124 1,442 MFS(R) VIT Total Return 28,482 7,978 13,814 8,440 Oppenheimer Variable Account Funds: Oppenheimer Aggressive Growth 3,840 5,592 5,069 5,437 Oppenheimer Global Securities 14,799 7,006 13,931 6,486 Oppenheimer Main Street(R) 9,493 11,524 13,702 9,849 Oppenheimer Strategic Bond 22,123 7,710 15,898 10,101 PIMCO VIT Real Return 530 5 - - Pioneer Variable Contracts Trust: Pioneer Equity Income VCT 1,340 132 116 57 Pioneer Fund VCT 46 - 4 1 Pioneer High Yield VCT 214 - - - Pioneer Mid Cap Value VCT 2,475 430 764 133 Prudential Series Fund, Inc.: Jennison 710 342 646 375 SP William Blair International Growth 3,656 1,522 4,361 1,684 UBS Series Trust: UBS U.S. Allocation 771 4,428 565 1,042 Wanger Advisors Trust: Wanger Select 238 - - - Wanger U.S. Smaller Companies 95 11 - -
100 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- 6. CHANGES IN UNITS The changes in units outstanding were as follows:
YEAR ENDED DECEMBER 31 2004 2003 ---------------------------------------- ------------ NET INCREASE UNITS UNITS NET INCREASE (DECREASE) ISSUED REDEEMED (DECREASE) ------------ ----------- ----------- ------------ (DOLLARS IN THOUSANDS) AIM Variable Insurance Funds: AIM V.I. Capital Appreciation (366,144) 182,630 (548,774) (215,223) AIM V.I. Core Equity (457,609) 457,989 (915,598) (376,156) AIM V.I. Government Securities (55,294) 583,926 (639,220) (899,844) AIM V.I. Growth (321,157) 403,166 (724,323) (285,985) AIM V.I. Premier Equity (955,218) 211,103 (1,166,321) (951,357) Alger American Funds: Alger American Balanced (19,851) 8,456 (28,307) (26,135) Alger American Income & Growth (69,100) 6,643 (75,743) (64,405) Alger American Leveraged AllCap (71,405) 6,763 (78,168) (49,907) AllianceBernstein Variable Products Series Fund, Inc.: AllianceBernstein VPSF Growth and Income 862,429 1,694,790 (832,361) 588,049 AllianceBernstein VPSF Premier Growth (49,650) 334,436 (384,086) 35,073 AllianceBernstein VPSF Small Cap Growth 82,791 406,019 (323,228) 371,072 American Century(R) Investments: American Century(R) VP Balanced (22,414) 3,505 (25,919) (17,978) American Century(R) VP International (20,134) 2,103 (22,237) (37,686) Calvert Social Balanced (12,086) 28,706 (40,792) 11,388 Federated Insurance Series: Federated American Leaders (546,038) 62,399 (608,437) (508,356) Federated Capital Income (132,268) 19,043 (151,311) (147,192) Federated Equity Income (230,475) 30,814 (261,289) (150,869) Federated Fund for U.S. Government Securities (227,703) 52,307 (280,010) (191,021) Federated High Income Bond (303,501) 101,932 (405,433) (266,792) Federated International Equity (94,803) 11,513 (106,316) (88,913) Federated Mid Cap Growth Strategies (138,677) 8,898 (147,575) (136,784) Federated Prime Money (125,732) 157,788 (283,520) (190,956) Fidelity(R) Variable Insurance Products Fund: Fidelity(R) VIP Contrafund(R) 2,210,505 4,742,147 (2,531,642) 571,228 Fidelity(R) VIP Equity-Income 950,623 4,239,290 (3,288,667) 522,988 Fidelity(R) VIP Growth (1,205,246) 1,796,952 (3,002,198) 215,167 Fidelity(R) VIP High Income (1,242,376) 1,847,199 (3,089,575) 1,123,161 Fidelity(R) VIP ASSET MANAGER(SM) (49,981) 82,616 (132,597) (46,959) Fidelity(R) VIP Investment Grade Bond (21,328) 4,381 (25,709) (46,941) Fidelity(R) VIP Index 500 (492,178) 364,877 (857,055) (363,659) Fidelity(R) VIP Overseas 6,966 922,163 (915,197) 324,783
101 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 2004 2003 ---------------------------------------- ------------ NET INCREASE UNITS UNITS NET INCREASE (DECREASE) ISSUED REDEEMED (DECREASE) ------------ ----------- ----------- ------------ Franklin Templeton Variable Insurance Products Trust: Franklin Small Cap Value Securities 239,477 333,627 (94,150) 15,203 ING GET Fund: ING GET Fund - Series D (8,494,083) 2,780,551 (11,274,634) (1,707,796) ING GET Fund - Series E (23,038,215) 959,375 (23,997,590) (3,914,768) ING GET Fund - Series G (13,524,039) 255,391 (13,779,430) (2,581,173) ING GET Fund - Series H (1,865,169) 228,480 (2,093,649) (1,762,825) ING GET Fund - Series I (1,335,909) 68,488 (1,404,397) (1,017,746) ING GET Fund - Series J (1,242,981) 88,834 (1,331,815) (1,217,984) ING GET Fund - Series K (1,415,104) 89,698 (1,504,802) (1,092,454) ING GET Fund - Series L (1,398,676) 54,643 (1,453,319) (936,734) ING GET Fund - Series M (1,673,473) 88,235 (1,761,708) (2,237,666) ING GET Fund - Series N (1,293,371) 183,830 (1,477,201) (1,500,256) ING GET Fund - Series P (971,579) 53,040 (1,024,619) (1,948,391) ING GET Fund - Series Q (619,713) 82,106 (701,819) (1,178,495) ING GET Fund - Series R (482,312) 83,612 (565,924) (678,100) ING GET Fund - Series S (763,314) 99,098 (862,412) (1,098,481) ING GET Fund - Series T (375,102) 15,504 (390,606) (845,512) ING GET Fund - Series U (301,079) 51,919 (352,998) 2,803,440 ING GET Fund - Series V (1,990,407) 273,020 (2,263,427) 7,680,444 ING Investors Trust: ING American Funds Growth 168,962 169,772 (810) - ING American Funds Growth - Income 207,578 226,597 (19,019) - ING American Funds International 855,611 860,280 (4,669) - ING Julius Baer Foreign 20,616 37,805 (17,189) - ING Legg Mason Value 80,447 80,758 (311) - ING MFS Total Return 118,817 175,632 (56,815) 35,396 ING T. Rowe Price Equity Income 110,340 124,617 (14,277) 57,696 ING Partners, Inc.: ING Aeltus Enhanced Index 6,455 10,370 (3,915) 621 ING American Century Select 9,355 26,697 (17,342) 37,994 ING American Century Small Cap Value 27,573 49,433 (21,860) 29,741 ING Baron Small Cap Growth 81,254 182,296 (101,042) 97,665 ING Goldman Sachs(R) Capital Growth 26,880 27,139 (259) 243 ING JPMorgan International 271,411 2,912,742 (2,641,331) 286,684 ING JPMorgan Mid Cap Value 98,855 113,896 (15,041) 45,969 ING MFS Capital Opportunities (439,084) 392,044 (831,128) (475,678) ING OpCap Balanced Value 64,341 129,425 (65,084) 114,002 ING Oppenheimer Global 1,359 28,178 (26,819) 276
102 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 2004 2003 ---------------------------------------- ------------ NET INCREASE UNITS UNITS NET INCREASE (DECREASE) ISSUED REDEEMED (DECREASE) ------------ ----------- ----------- ------------ ING Partners, Inc. (continued): ING PIMCO Total Return 102,913 188,796 (85,883) 117,809 ING Salomon Brothers Aggressive Growth (839,004) 810,897 (1,649,901) (471,812) ING Salomon Brothers Fundamental Value 15,465 96,573 (81,108) 112,732 ING Salomon Brothers Investors Value 17,323 48,671 (31,348) 15,639 ING T. Rowe Price Diversified Mid Cap Growth (42,524) 79,333 (121,857) 71,512 ING T. Rowe Price Growth Equity (321,793) 597,538 (919,331) (82,398) ING UBS U.S. Large Cap Equity (357,731) 626,743 (984,474) (638,397) ING Van Kampen Comstock 215,202 249,901 (34,699) 44,597 ING Van Kampen Equity and Income 7,059 9,990 (2,931) 5,211 ING Strategic Allocation Portfolios, Inc.: ING VP Strategic Allocation Balanced 117,296 435,875 (318,579) (29,336) ING VP Strategic Allocation Growth (42,713) 150,253 (192,966) (21,901) ING VP Strategic Allocation Income (105,446) 185,392 (290,838) (205,539) ING Variable Funds: ING VP Growth and Income (2,751,465) 1,415,804 (4,167,269) (3,322,672) ING Variable Insurance Trust: ING GET U.S. Core - Series 1 (316,504) 6,866 (323,370) 2,530,968 ING GET U.S. Core - Series 2 (502,841) 28,230 (531,071) 2,441,629 ING GET U.S. Core - Series 3 5,294,482 6,814,902 (1,520,420) 196,496 ING GET U.S. Core - Series 4 787,589 880,917 (93,328) - ING GET U.S. Core - Series 5 422,459 692,012 (269,553) - ING GET U.S. Core - Series 6 8,739,581 12,119,228 (3,379,647) - ING GET U.S. Core - Series 7 5,701,523 6,713,701 (1,012,178) - ING Variable Portfolios, Inc.: ING VP Global Science and Technology (737,935) 2,784,969 (3,522,904) 1,059,264 ING VP Growth (493,643) 315,802 (809,445) (329,681) ING VP Index Plus LargeCap (1,338,813) 2,319,971 (3,658,784) (1,018,952) ING VP Index Plus MidCap 43,455 362,950 (319,495) (23,571) ING VP Index Plus SmallCap 54,413 306,461 (252,048) 74,019 ING VP International Equity 360,107 937,259 (577,152) 156,583 ING VP Small Company (444,278) 2,017,604 (2,461,882) 612,976 ING VP Value Opportunity (221,653) 160,482 (382,135) (141,302) ING Variable Products Trust: ING VP Growth Opportunities - Class I (5,668) 3,482 (9,150) (58,161) ING VP Growth Opportunities - Class S (120,422) 19,426 (139,848) 97,238 ING VP International Value 132,178 222,297 (90,119) 65,868 ING VP MagnaCap - Class I 8,256 15,372 (7,116) 857 ING VP MagnaCap - Class S 64,848 103,553 (38,705) 32,197
103 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 2004 2003 ---------------------------------------- ------------ NET INCREASE UNITS UNITS NET INCREASE (DECREASE) ISSUED REDEEMED (DECREASE) ------------ ----------- ----------- ------------ ING Variable Products Trust (continued): ING VP MidCap Opportunities - Class I (63,756) 73,952 (137,708) 85,049 ING VP MidCap Opportunities - Class S 361,490 777,947 (416,457) 400,115 ING VP Real Estate 85,669 85,715 (46) - ING VP SmallCap Opportunities - Class I (73,351) 180,160 (253,511) 190,033 ING VP SmallCap Opportunities - Class S 60,834 447,989 (387,155) 327,810 ING VP Balanced 556,640 2,075,495 (1,518,855) (83,996) ING VP Emerging Markets (18,279) 2,209 (20,488) (14,583) ING VP Financial Services 20,398 (20,398) ING VP Intermediate Bond (578,190) 2,522,350 (3,100,540) (1,696,435) ING VP Money Market 2,217,160 23,677,963 (21,460,803) (6,789,055) ING VP Natural Resources (5,042) 21,362 (26,404) (19,060) Janus Aspen Series: Janus Aspen Balanced (2,307,049) 838,257 (3,145,306) (2,223,852) Janus Aspen Flexible Income (350,272) 169,983 (520,255) (394,174) Janus Aspen Growth (1,826,595) 627,645 (2,454,240) (1,648,598) Janus Aspen Mid Cap Growth (517,754) 1,553,013 (2,070,767) (1,191,018) Janus Aspen Worldwide Growth (2,802,085) 1,689,399 (4,491,484) (3,435,063) Lord Abbett Series Funds, Inc.: Lord Abbett Growth and Income 287,774 574,778 (287,004) 249,236 Lord Abbett Mid-Cap Value 175,099 254,855 (79,756) 62,337 MFS(R) Funds: MFS(R) VIT Strategic Income Series (12,985) 50,404 (63,389) (33,561) MFS(R) VIT Total Return 1,611,865 3,528,710 (1,916,845) 441,718 Oppenheimer Variable Account Funds: Oppenheimer Aggressive Growth (156,488) 830,981 (987,469) (134,199) Oppenheimer Global Securities 438,925 1,117,531 (678,606) 459,397 Oppenheimer Main Street(R) (105,681) 1,775,963 (1,881,644) 182,239 Oppenheimer Strategic Bond 911,025 2,163,745 (1,252,720) 289,876 PIMCO VIT Real Return 48,252 48,771 (519) - Pioneer Variable Contracts Trust: Pioneer Equity Income VCT 113,990 144,167 (30,177) 6,570 Pioneer Fund VCT 4,646 4,646 - 276 Pioneer High Yield VCT 20,207 20,203 4 - Pioneer Mid Cap Value VCT 158,287 240,872 (82,585) 58,218 Prudential Series Fund, Inc.: Jennison 48,371 95,947 (47,576) 40,553 SP William Blair International Growth 266,346 529,564 (263,218) 378,568 UBS Series Trust: UBS U.S. Allocation (415,740) 106,543 (522,283) (61,001) Wanger Advisors Trust Wanger Select 21,769 21,777 (8) - Wanger U.S. Smaller Companies 8,395 9,709 (1,314) -
104 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- 7. UNIT SUMMARY A summary of units outstanding at December 31, 2004 follows:
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- AIM V.I. CAPITAL APPRECIATION Currently payable annuity contracts: $ 946,010 Contracts in accumulation period: Non-Qualified V 4,777.356 $ 9.22 44,047 Non-Qualified V (0.75) 44,456.366 9.49 421,891 Non-Qualified XII 998.426 9.46 9,445 Non-Qualified XIII 360,588.990 9.99 3,602,284 Non-Qualified XIV 498,002.286 9.80 4,880,422 Non-Qualified XV 253,032.623 9.70 2,454,416 Non-Qualified XVI 162,108.604 5.80 940,230 Non-Qualified XVIII 146,608.432 5.69 834,202 Non-Qualified XIX 181,279.629 5.73 1,038,732 --------------- -------------- 1,651,852.712 $ 15,171,679 =============== ============== AIM V.I. CORE EQUITY Currently payable annuity contracts: $ 4,601,788 Contracts in accumulation period: Non-Qualified V 47,386.185 $ 8.31 393,779 Non-Qualified V (0.75) 70,643.921 8.55 604,006 Non-Qualified IX 854.295 8.19 6,997 Non-Qualified XII 1,350.732 8.52 11,508 Non-Qualified XIII 707,925.921 10.20 7,220,844 Non-Qualified XIV 1,122,563.215 10.00 11,225,632 Non-Qualified XV 405,693.092 9.91 4,020,419 Non-Qualified XVI 176,118.093 6.84 1,204,648 Non-Qualified XVIII 86,754.287 6.71 582,121 Non-Qualified XIX 288,654.300 6.75 1,948,417 Non-Qualified XX 772.921 12.80 9,893 --------------- -------------- 2,908,716.962 $ 31,830,052 =============== ============== AIM V.I. GOVERNMENT SECURITIES Contracts in accumulation period: Non-Qualified XIII 351,284.673 $ 12.57 $ 4,415,648 Non-Qualified XIV 405,962.802 12.39 5,029,879 Non-Qualified XV 180,923.683 12.30 2,225,361 Non-Qualified XVI 100,760.406 11.85 1,194,011 Non-Qualified XVIII 54,060.080 11.62 628,178 Non-Qualified XIX 90,863.230 11.70 1,063,100 --------------- -------------- 1,183,854.875 $ 14,556,177 =============== ==============
105 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- AIM V.I. GROWTH Currently payable annuity contracts: $ 1,170,999 Contracts in accumulation period: Non-Qualified V 9,140.493 $ 5.84 53,380 Non-Qualified V (0.75) 69,428.787 6.01 417,267 Non-Qualified IX 3,976.850 5.76 22,907 Non-Qualified XII 1,882.751 5.99 11,278 Non-Qualified XIII 596,276.594 7.09 4,227,601 Non-Qualified XIV 920,754.794 6.96 6,408,453 Non-Qualified XV 294,937.245 6.89 2,032,118 Non-Qualified XVI 214,257.930 4.65 996,299 Non-Qualified XVIII 116,047.854 4.56 529,178 Non-Qualified XIX 234,518.791 4.59 1,076,441 Non-Qualified XX 1,026.458 12.89 13,231 --------------- -------------- 2,462,248.548 $ 16,959,152 =============== ============== AIM V.I. PREMIER EQUITY Currently payable annuity contracts: $ 2,209,312 Contracts in accumulation period: Non-Qualified V 4,628.049 $ 7.44 34,433 Non-Qualified V (0.75) 64,429.342 7.66 493,529 Non-Qualified XII 1,438.345 7.64 10,989 Non-Qualified XIII 982,943.022 8.97 8,816,999 Non-Qualified XIV 1,636,625.875 8.79 14,385,941 Non-Qualified XV 624,438.286 8.71 5,438,857 Non-Qualified XVI 244,781.303 6.70 1,640,035 Non-Qualified XVIII 111,241.309 6.57 730,855 Non-Qualified XIX 391,898.746 6.61 2,590,451 --------------- -------------- 4,062,424.277 $ 36,351,401 =============== ============== ALGER AMERICAN BALANCED Contracts in accumulation period: Non-Qualified VII 74,405.311 $ 25.89 $ 1,926,353 --------------- -------------- 74,405.311 $ 1,926,353 =============== ============== ALGER AMERICAN INCOME & GROWTH Contracts in accumulation period: Non-Qualified VII 222,752.570 $ 23.57 $ 5,250,278 --------------- -------------- 222,752.570 $ 5,250,278 =============== ==============
106 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- ALGER AMERICAN LEVERAGED ALLCAP Contracts in accumulation period: Non-Qualified VII 205,959.632 $ 24.78 $ 5,103,680 Non-Qualified VIII 28.180 18.30 516 --------------- -------------- 205,987.812 $ 5,104,196 =============== ============== ALLIANCEBERNSTEIN VPSF GROWTH AND INCOME Contracts in accumulation period: Non-Qualified XIII 1,340,371.004 $ 11.26 $ 15,092,578 Non-Qualified XIV 1,421,682.947 11.10 15,780,681 Non-Qualified XV 524,886.213 11.03 5,789,495 Non-Qualified XVI 457,453.969 11.32 5,178,379 Non-Qualified XVIII 149,226.329 11.10 1,656,412 Non-Qualified XIX 411,646.408 11.17 4,598,090 --------------- -------------- 4,305,266.870 $ 48,095,635 =============== ============== ALLIANCEBERNSTEIN VPSF PREMIER GROWTH Contracts in accumulation period: Non-Qualified XIII 367,754.946 $ 5.66 $ 2,081,493 Non-Qualified XIV 336,525.293 5.58 1,877,811 Non-Qualified XV 127,190.393 5.54 704,635 Non-Qualified XVI 158,402.222 5.96 944,077 Non-Qualified XVIII 69,584.558 5.85 407,070 Non-Qualified XIX 259,232.332 5.89 1,526,878 --------------- -------------- 1,318,689.744 $ 7,541,964 =============== ============== ALLIANCEBERNSTEIN VPSF SMALL CAP GROWTH Contracts in accumulation period: Non-Qualified XIII 166,824.831 $ 9.29 $ 1,549,803 Non-Qualified XIV 164,698.544 9.16 1,508,639 Non-Qualified XV 42,039.517 9.10 382,560 Non-Qualified XVI 76,127.075 8.23 626,526 Non-Qualified XVIII 76,398.805 8.07 616,538 Non-Qualified XIX 56,226.418 8.12 456,559 --------------- -------------- 582,315.190 $ 5,140,625 --------------- -------------- AMERICAN CENTURY(R) VP BALANCED Contracts in accumulation period: Non-Qualified VII 55,659.781 $ 19.69 $ 1,095,941 --------------- -------------- 55,659.781 $ 1,095,941 =============== ==============
107 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- AMERICAN CENTURY(R) VP INTERNATIONAL Contracts in accumulation period: Non-Qualified VII 73,094.538 $ 16.33 $ 1,193,634 Non-Qualified VIII 181.390 14.91 2,705 --------------- -------------- 73,275.928 $ 1,196,339 --------------- -------------- CALVERT SOCIAL BALANCED Contracts in accumulation period: Non-Qualified V 7,769.057 $ 21.74 $ 168,899 Non-Qualified V (0.75) 13,374.618 22.73 304,005 Non-Qualified VII 73,314.482 12.07 884,906 Non-Qualified VIII 71,381.996 12.20 870,860 Non-Qualified XX 11.985 12.39 148 --------------- -------------- 165,852.137 $ 2,228,818 =============== ============== FEDERATED AMERICAN LEADERS Currently payable annuity contracts: $ 88,992 Contracts in accumulation period: Non-Qualified VII 1,663,262.001 $ 25.29 42,063,896 Non-Qualified VIII 2,122.775 18.30 38,847 --------------- -------------- 1,665,384.776 $ 42,191,735 --------------- -------------- FEDERATED CAPITAL INCOME Currently payable annuity contracts: $ 13,894 Contracts in accumulation period: Non-Qualified VII 373,009.228 $ 13.82 5,154,988 Non-Qualified VIII 62.461 11.56 722 --------------- -------------- 373,071.689 $ 5,169,604 =============== ============== FEDERATED EQUITY INCOME Currently payable annuity contracts: $ 115,922 Contracts in accumulation period: Non-Qualified VII 653,801.141 $ 13.73 8,976,690 --------------- -------------- 653,801.141 $ 9,092,612 =============== ============== FEDERATED FUND FOR U.S. GOV'T SECURITIES Currently payable annuity contracts: $ 2,348 Contracts in accumulation period: Non-Qualified VII 406,954.815 $ 15.83 6,442,095 --------------- -------------- 406,954.815 $ 6,444,443 =============== ==============
108 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- FEDERATED HIGH INCOME BOND Currently payable annuity contracts: $ 56,298 Contracts in accumulation period: Non-Qualified VII 665,992.911 $ 17.70 11,788,075 Non-Qualified VIII 50.338 15.13 762 --------------- -------------- 666,043.249 $ 11,845,135 =============== ============== FEDERATED INTERNATIONAL EQUITY Currently payable annuity contracts: $ 35,154 Contracts in accumulation period: Non-Qualified VII 367,215.587 $ 15.87 5,827,711 Non-Qualified VIII 121.712 14.71 1,790 --------------- -------------- 367,337.299 $ 5,864,655 =============== ============== FEDERATED MID CAP GROWTH STRATEGIES Contracts in accumulation period: Non-Qualified VII 488,688.448 $ 21.43 $ 10,472,593 --------------- -------------- 488,688.448 $ 10,472,593 =============== ============== FEDERATED PRIME MONEY Contracts in accumulation period: Non-Qualified VII 265,843.750 $ 12.51 $ 3,325,705 --------------- -------------- 265,843.750 $ 3,325,705 =============== ============== FIDELITY(R) VIP CONTRAFUND(R) Contracts in accumulation period: Non-Qualified V 578,222.035 $ 25.07 $ 14,496,026 Non-Qualified V (0.75) 940,536.451 26.20 24,642,055 Non-Qualified VII 2,745,175.804 27.52 75,547,238 Non-Qualified VIII 609,404.785 22.21 13,534,880 Non-Qualified IX 27,014.237 24.59 664,280 Non-Qualified X 25,162.384 25.07 630,821 Non-Qualified XII 64,656.396 14.60 943,983 Non-Qualified XIII 3,122,247.199 13.62 42,525,007 Non-Qualified XIV 3,063,453.759 13.36 40,927,742 Non-Qualified XV 1,108,634.390 13.23 14,667,233 Non-Qualified XVI 569,499.362 10.51 5,985,438 Non-Qualified XVIII 141,674.363 10.30 1,459,246 Non-Qualified XIX 660,042.384 10.37 6,844,640 Non-Qualified XX 37,912.019 14.00 530,768 --------------- -------------- 13,693,635.568 $ 243,399,357 =============== ==============
109 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- FIDELITY(R) VIP EQUITY-INCOME Contracts in accumulation period: Non-Qualified V 517,939.664 $ 21.35 $ 11,058,012 Non-Qualified V (0.75) 899,688.238 22.32 20,081,041 Non-Qualified VII 3,222,464.292 25.37 81,753,919 Non-Qualified VIII 751,001.056 18.33 13,765,849 Non-Qualified IX 16,492.720 20.94 345,358 Non-Qualified X 34,514.892 21.35 736,893 Non-Qualified XII 11,078.188 12.73 141,025 Non-Qualified XIII 2,406,797.137 12.38 29,796,149 Non-Qualified XIV 2,738,587.558 12.14 33,246,453 Non-Qualified XV 988,726.273 12.02 11,884,490 Non-Qualified XVI 620,023.952 11.53 7,148,876 Non-Qualified XVIII 145,500.704 11.31 1,645,613 Non-Qualified XIX 589,133.970 11.38 6,704,345 Non-Qualified XX 11,243.700 13.40 150,666 --------------- -------------- 12,953,192.346 $ 218,458,689 =============== ============== FIDELITY(R) VIP GROWTH Contracts in accumulation period: Non-Qualified V 376,032.222 $ 17.19 $ 6,463,994 Non-Qualified V (0.75) 609,242.033 17.96 10,941,987 Non-Qualified VII 1,927,086.897 23.41 45,113,104 Non-Qualified VIII 451,192.827 15.62 7,047,632 Non-Qualified IX 11,460.252 16.86 193,220 Non-Qualified X 13,505.482 17.19 232,159 Non-Qualified XII 16,516.633 10.83 178,875 Non-Qualified XIII 1,649,808.401 8.49 14,006,873 Non-Qualified XIV 1,506,469.612 8.34 12,563,957 Non-Qualified XV 449,121.990 8.27 3,714,239 Non-Qualified XVI 727,963.192 6.38 4,644,405 Non-Qualified XVIII 215,921.472 6.25 1,349,509 Non-Qualified XIX 524,073.822 6.29 3,296,424 Non-Qualified XX 4,116.402 12.49 51,414 --------------- -------------- 8,482,511.237 $ 109,797,792 =============== ==============
110 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- FIDELITY(R) VIP HIGH INCOME Currently payable annuity contracts: $ 2,676,125 Contracts in accumulation period: Non-Qualified VII 1,196,221.904 $ 12.92 15,455,187 Non-Qualified VIII 389,583.384 11.68 4,550,334 Non-Qualified XIII 988,970.086 9.02 8,920,510 Non-Qualified XIV 1,030,797.434 8.85 9,122,557 Non-Qualified XV 357,741.753 8.76 3,133,818 Non-Qualified XVI 197,484.522 10.17 2,008,418 Non-Qualified XVIII 67,947.438 9.98 678,115 Non-Qualified XIX 141,290.907 10.04 1,418,561 --------------- -------------- 4,370,037.430 $ 47,963,625 =============== ============== FIDELITY(R) VIP ASSET MANAGER Contracts in accumulation period: Non-Qualified VII 501,150.460 $ 19.00 $ 9,521,859 Non-Qualified VIII 129,569.099 15.94 2,065,331 --------------- -------------- 630,719.559 $ 11,587,190 =============== ============== FIDELITY(R) VIP INVESTMENT GRADE BOND Contracts in accumulation period: Non-Qualified VII 118,046.684 $ 16.55 $ 1,953,673 Non-Qualified VIII 280.757 16.25 4,562 --------------- -------------- 118,327.440 $ 1,958,235 =============== ============== FIDELITY(R) VIP INDEX 500 Contracts in accumulation period: Non-Qualified VII 2,661,119.324 $ 22.16 $ 58,970,404 Non-Qualified VIII 608,369.163 18.62 11,327,834 --------------- -------------- 3,269,488.487 $ 70,298,238 =============== ============== FIDELITY(R) VIP OVERSEAS Contracts in accumulation period: Non-Qualified V 132,647.290 $ 15.11 $ 2,004,301 Non-Qualified V (0.75) 334,500.483 15.79 5,281,763 Non-Qualified VII 442,931.136 16.51 7,312,793 Non-Qualified VIII 65,358.143 14.11 922,203 Non-Qualified IX 1,597.560 14.82 23,676 Non-Qualified X 2,466.855 15.11 37,274 Non-Qualified XII 161.441 10.99 1,774 Non-Qualified XX 6,279.490 13.56 85,150 --------------- -------------- 985,942.399 $ 15,668,934 =============== ==============
111 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- FRANKLIN SMALL CAP VALUE SECURITIES Contracts in accumulation period: Non-Qualified V 54,597.128 $ 14.71 $ 803,124 Non-Qualified V (0.75) 233,334.061 14.96 3,490,678 Non-Qualified IX 2,286.911 14.58 33,343 Non-Qualified XII 95.187 14.94 1,422 Non-Qualified XX 3,782.881 14.73 55,722 --------------- -------------- 294,096.169 $ 4,384,289 =============== ============== ING GET FUND - SERIES H Contracts in accumulation period: Non-Qualified V 67,541.300 $ 10.49 $ 708,508 Non-Qualified V (0.75) 45,587.065 10.75 490,061 Non-Qualified VII 913,267.127 10.27 9,379,253 Non-Qualified VIII 76,443.081 10.35 791,186 Non-Qualified IX 356.553 10.35 3,690 Non-Qualified XIII 2,696,120.752 10.51 28,336,229 Non-Qualified XIV 2,953,513.815 10.35 30,568,868 Non-Qualified XV 1,484,375.059 10.27 15,244,532 --------------- -------------- 8,237,204.751 $ 85,522,327 =============== ============== ING GET FUND - SERIES I Contracts in accumulation period: Non-Qualified VII 185,605.239 $ 10.14 $ 1,882,037 Non-Qualified VIII 13,210.136 10.22 135,008 Non-Qualified XIII 1,961,474.309 10.37 20,340,489 Non-Qualified XIV 2,236,446.267 10.22 22,856,481 Non-Qualified XV 1,524,722.682 10.14 15,460,688 --------------- -------------- 5,921,458.633 $ 60,674,703 =============== ============== ING GET FUND - SERIES J Contracts in accumulation period: Non-Qualified VII 110,507.746 $ 10.04 $ 1,109,498 Non-Qualified VIII 31,335.696 10.11 316,804 Non-Qualified XIII 1,369,142.531 10.25 14,033,711 Non-Qualified XIV 1,953,020.598 10.11 19,745,038 Non-Qualified XV 1,188,078.672 10.04 11,928,310 --------------- -------------- 4,652,085.243 $ 47,133,361 =============== ==============
112 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- ING GET FUND - SERIES K Contracts in accumulation period: Non-Qualified VII 36,609.989 $ 10.04 $ 367,564 Non-Qualified VIII 4,910.792 10.11 49,648 Non-Qualified XIII 1,035,095.577 10.24 10,599,379 Non-Qualified XIV 1,166,323.491 10.11 11,791,530 Non-Qualified XV 653,734.960 10.04 6,563,499 Non-Qualified XVI 996,110.292 9.99 9,951,142 Non-Qualified XVIII 700,222.473 9.80 6,862,180 Non-Qualified XIX 936,693.016 9.86 9,235,793 --------------- -------------- 5,529,700.591 $ 55,420,735 =============== ============== ING GET FUND - SERIES L Contracts in accumulation period: Non-Qualified VII 50,540.968 $ 10.01 $ 505,915 Non-Qualified VIII 28,127.612 10.07 283,245 Non-Qualified XIII 779,802.309 10.20 7,953,984 Non-Qualified XIV 659,969.200 10.07 6,645,890 Non-Qualified XV 526,247.352 10.01 5,267,736 Non-Qualified XVI 1,378,623.332 9.99 13,772,447 Non-Qualified XVIII 709,612.393 9.80 6,954,201 Non-Qualified XIX 1,066,459.640 9.87 10,525,957 --------------- -------------- 5,199,382.806 $ 51,909,375 =============== ============== ING GET FUND - SERIES M Contracts in accumulation period: Non-Qualified VII 139,615.734 $ 10.07 $ 1,405,930 Non-Qualified VIII 2,054.045 10.13 20,807 Non-Qualified XIII 1,153,320.460 10.25 11,821,535 Non-Qualified XIV 1,065,649.839 10.13 10,795,033 Non-Qualified XV 542,666.259 10.07 5,464,649 Non-Qualified XVI 2,067,494.771 10.05 20,778,322 Non-Qualified XVIII 1,176,204.849 9.88 11,620,904 Non-Qualified XIX 1,499,760.470 9.94 14,907,619 --------------- -------------- 7,646,766.426 $ 76,814,799 =============== ==============
113 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- ING GET FUND - SERIES N Contracts in accumulation period: Non-Qualified VII 194,406.537 $ 10.25 $ 1,992,667 Non-Qualified VIII 2,232.224 10.31 23,014 Non-Qualified XIII 852,806.374 10.42 8,886,242 Non-Qualified XIV 618,108.096 10.31 6,372,694 Non-Qualified XV 359,984.576 10.25 3,689,842 Non-Qualified XVI 2,139,941.936 10.24 21,913,005 Non-Qualified XVIII 619,359.210 10.07 6,236,947 Non-Qualified XIX 1,401,303.250 10.13 14,195,202 --------------- -------------- 6,188,142.201 $ 63,309,613 =============== ============== ING GET FUND - SERIES P Contracts in accumulation period: Non-Qualified VII 326,411.699 $ 10.10 $ 3,296,758 Non-Qualified VIII 40,193.485 10.15 407,964 Non-Qualified XIII 629,846.899 10.25 6,455,931 Non-Qualified XIV 403,353.697 10.15 4,094,040 Non-Qualified XV 258,151.521 10.10 2,607,330 Non-Qualified XVI 1,177,856.676 10.08 11,872,795 Non-Qualified XVIII 899,493.062 9.93 8,931,966 Non-Qualified XIX 1,024,231.132 9.98 10,221,827 --------------- -------------- 4,759,538.172 $ 47,888,611 =============== ============== ING GET FUND - SERIES Q Contracts in accumulation period: Non-Qualified VII 100,162.724 $ 10.37 $ 1,038,687 Non-Qualified VIII 22,844.644 10.41 237,813 Non-Qualified XIII 590,828.312 10.51 6,209,606 Non-Qualified XIV 401,231.112 10.41 4,176,816 Non-Qualified XV 81,930.596 10.37 849,620 Non-Qualified XVI 1,081,275.847 10.35 11,191,205 Non-Qualified XVIII 405,653.589 10.21 4,141,723 Non-Qualified XIX 978,150.211 10.25 10,026,040 --------------- -------------- 3,662,077.034 $ 37,871,510 =============== ==============
114 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- ING GET FUND - SERIES R Contracts in accumulation period: Non-Qualified VII 86,125.429 $ 10.60 $ 912,930 Non-Qualified VIII 25,963.079 10.64 276,247 Non-Qualified XIII 634,318.832 10.73 6,806,241 Non-Qualified XIV 289,900.343 10.64 3,084,540 Non-Qualified XV 90,067.592 10.60 954,716 Non-Qualified XVI 894,325.843 10.58 9,461,967 Non-Qualified XVIII 264,174.321 10.45 2,760,622 Non-Qualified XIX 867,026.244 10.49 9,095,105 --------------- -------------- 3,151,901.683 $ 33,352,368 =============== ============== ING GET FUND - SERIES S Contracts in accumulation period: Non-Qualified V 15,786.917 $ 10.61 $ 167,499 Non-Qualified V (0.75) 163,909.487 10.75 1,762,027 Non-Qualified VII 281,354.347 10.51 2,957,034 Non-Qualified VIII 53,942.447 10.55 569,093 Non-Qualified XIII 396,493.363 10.63 4,214,724 Non-Qualified XIV 331,915.997 10.55 3,501,714 Non-Qualified XV 107,787.124 10.51 1,132,843 Non-Qualified XVI 770,727.012 10.49 8,084,926 Non-Qualified XVIII 390,126.681 10.37 4,045,614 Non-Qualified XIX 960,451.830 10.41 9,998,304 --------------- -------------- 3,472,495.203 $ 36,433,778 =============== ============== ING GET FUND - SERIES T Contracts in accumulation period: Non-Qualified VII 200,303.981 $ 10.54 $ 2,111,204 Non-Qualified VIII 28,186.128 10.57 297,927 Non-Qualified XIII 339,609.024 10.65 3,616,836 Non-Qualified XIV 200,908.415 10.57 2,123,602 Non-Qualified XV 91,165.697 10.54 960,886 Non-Qualified XVI 804,753.084 10.53 8,474,050 Non-Qualified XVIII 209,779.754 10.42 2,185,905 Non-Qualified XIX 812,521.709 10.45 8,490,852 --------------- -------------- 2,687,227.792 $ 28,261,262 =============== ==============
115 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- ING GET FUND - SERIES U Contracts in accumulation period: Non-Qualified VII 65,819.111 $ 10.70 $ 704,264 Non-Qualified VIII 9,935.670 10.73 106,610 Non-Qualified XIII 401,464.245 10.80 4,335,814 Non-Qualified XIV 182,988.822 10.73 1,963,470 Non-Qualified XV 61,556.532 10.70 658,655 Non-Qualified XVI 922,251.061 10.69 9,858,864 Non-Qualified XVIII 156,377.383 10.59 1,656,036 Non-Qualified XIX 752,245.927 10.62 7,988,852 --------------- -------------- 2,552,638.750 $ 27,272,565 =============== ============== ING GET FUND - SERIES V Contracts in accumulation period: Non-Qualified VII 131,235.353 $ 9.77 $ 1,282,169 Non-Qualified VIII 108,342.823 9.80 1,061,760 Non-Qualified XIII 481,710.875 9.85 4,744,852 Non-Qualified XIV 314,845.045 9.80 3,085,481 Non-Qualified XV 115,521.829 9.77 1,128,648 Non-Qualified XVI 2,389,684.474 9.76 23,323,320 Non-Qualified XVIII 315,441.889 9.68 3,053,477 Non-Qualified XIX 1,833,255.185 9.71 17,800,908 --------------- -------------- 5,690,037.473 $ 55,480,615 =============== ============== ING AMERICAN FUNDS GROWTH Contracts in accumulation period: Non-Qualified XIII 64,969.632 $ 10.50 $ 682,181 Non-Qualified XIV 52,636.321 10.50 552,681 Non-Qualified XV 4,609.087 10.49 48,349 Non-Qualified XVI 37,154.887 10.49 389,755 Non-Qualified XVIII 495.785 10.49 5,201 Non-Qualified XIX 9,096.432 10.49 95,422 --------------- -------------- 168,962.144 $ 1,773,589 =============== ============== ING AMERICAN FUNDS GROWTH-INCOME Currently payable annuity contracts: $ 195,193 Contracts in accumulation period: Non-Qualified XIII 77,766.002 $ 10.37 806,433 Non-Qualified XIV 73,449.107 10.37 761,667 Non-Qualified XIX 11,563.638 10.36 119,799 Non-Qualified XV 34,305.837 10.36 355,408 Non-Qualified XVI 7,195.969 10.36 74,550 Non-Qualified XVIII 3,297.439 10.36 34,161 --------------- -------------- 207,577.992 $ 2,347,211 =============== ==============
116 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- ING AMERICAN FUNDS INTERNATIONAL Contracts in accumulation period: Non-Qualified XIII 458,581.695 $ 10.61 $ 4,865,552 Non-Qualified XIV 128,125.693 10.60 1,358,132 Non-Qualified XV 149,631.219 10.60 1,586,091 Non-Qualified XVI 109,098.312 10.60 1,156,442 Non-Qualified XVIII 2,432.049 10.59 25,755 Non-Qualified XIX 7,741.755 10.59 81,985 --------------- -------------- 855,610.723 $ 9,073,957 =============== ============== ING JULIUS BAER FOREIGN Contracts in accumulation period: Non-Qualified V (0.75) 20,616.122 $ 11.72 $ 241,621 --------------- -------------- 20,616.122 $ 241,621 =============== ============== ING LEGG MASON VALUE Contracts in accumulation period: Non-Qualified XIII 43,882.190 $ 10.96 $ 480,949 Non-Qualified XIV 32,623.387 10.96 357,552 Non-Qualified XV 2,325.615 10.96 25,489 Non-Qualified XVI 339.198 10.96 3,718 Non-Qualified XVIII 693.225 10.95 7,591 Non-Qualified XIX 583.397 10.95 6,388 --------------- -------------- 80,447.012 $ 881,687 =============== ============== ING MFS TOTAL RETURN Contracts in accumulation period: Non-Qualified V 46,457.410 $ 12.39 $ 575,607 Non-Qualified V (0.75) 91,791.125 12.49 1,146,471 Non-Qualified X 1,213.034 12.39 15,029 Non-Qualified XII 1,011.752 12.48 12,627 Non-Qualified XX 11,809.597 12.45 147,029 Non-Qualified IX 1,929.185 12.85 24,790 --------------- -------------- 154,212.102 $ 1,921,553 =============== ============== ING T. ROWE PRICE EQUITY INCOME Contracts in accumulation period: Non-Qualified V 55,087.140 $ 13.81 $ 760,753 Non-Qualified V (0.75) 110,301.927 13.93 1,536,506 Non-Qualified IX 779.150 14.63 11,399 Non-Qualified XX 1,867.106 13.88 25,915 --------------- -------------- 168,035.323 $ 2,334,573 =============== ==============
117 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- ING AELTUS ENHANCED INDEX Contracts in accumulation period: Non-Qualified V 1,165.666 $ 10.98 $ 12,799 Non-Qualified V (0.75) 5,910.203 11.13 65,781 --------------- -------------- 7,075.868 $ 78,580 =============== ============== ING AMERICAN CENTURY SELECT Contracts in accumulation period: Non-Qualified V 6,768.077 $ 9.93 $ 67,207 Non-Qualified V (0.75) 40,149.843 10.06 403,907 Non-Qualified XII 1,727.587 10.05 17,362 --------------- -------------- 48,645.507 $ 488,476 =============== ============== ING AMERICAN CENTURY SMALL CAP VALUE Contracts in accumulation period: Non-Qualified V 15,263.666 $ 12.96 $ 197,817 Non-Qualified V (0.75) 48,611.446 13.13 638,268 Non-Qualified IX 77.695 12.87 1,000 Non-Qualified XII 336.239 13.12 4,411 Non-Qualified XX 12,845.926 15.00 192,689 --------------- -------------- 77,134.971 $ 1,034,185 =============== ============== ING BARON SMALL CAP GROWTH Contracts in accumulation period: Non-Qualified V 63,157.998 $ 14.47 $ 913,896 Non-Qualified V (0.75) 123,221.405 14.66 1,806,426 Non-Qualified IX 1,709.159 14.37 24,561 Non-Qualified XII 502.935 14.64 7,363 Non-Qualified XX 11,637.454 16.22 188,760 --------------- -------------- 200,228.950 $ 2,941,006 =============== ============== ING GOLDMAN SACHS(R) CAPITAL GROWTH Contracts in accumulation period: Non-Qualified V 3,290.441 $ 10.55 $ 34,714 Non-Qualified V (0.75) 24,427.421 10.69 261,129 Non-Qualified XII 873.236 10.67 9,317 Non-Qualified XX 774.193 12.61 9,763 --------------- -------------- 29,365.291 $ 314,923 =============== ==============
118 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- ING JPMORGAN INTERNATIONAL Currently payable annuity contracts: $ 2,689,027 Contracts in accumulation period: Non-Qualified V 209,092.011 $ 22.92 4,792,389 Non-Qualified V (0.75) 243,086.212 23.96 5,824,346 Non-Qualified VII 248,566.444 12.55 3,119,509 Non-Qualified VIII 85,528.471 12.69 1,085,356 Non-Qualified IX 4,981.858 22.48 111,992 Non-Qualified X 3,217.308 22.92 73,741 Non-Qualified XII 3,896.660 11.06 43,097 Non-Qualified XIII 996,680.848 10.25 10,215,979 Non-Qualified XIV 918,379.584 10.05 9,229,715 Non-Qualified XV 322,703.366 9.95 3,210,898 Non-Qualified XVI 207,690.373 8.49 1,763,291 Non-Qualified XVIII 62,180.952 8.33 517,967 Non-Qualified XIX 160,467.191 8.38 1,344,715 Non-Qualified XX 628.700 13.27 8,343 --------------- -------------- 3,467,099.976 $ 44,030,365 =============== ============== ING JPMORGAN MID CAP VALUE Contracts in accumulation period: Non-Qualified V 29,365.209 $ 14.02 $ 411,700 Non-Qualified V (0.75) 106,478.599 14.21 1,513,061 Non-Qualified IX 1,516.658 13.93 21,127 Non-Qualified XX 16,913.274 15.92 269,259 --------------- -------------- 154,273.739 $ 2,215,147 =============== ============== ING MFS CAPITAL OPPORTUNITIES Currently payable annuity contracts: $ 3,012,586 Contracts in accumulation period: Non-Qualified V 177,277.282 $ 26.41 4,681,893 Non-Qualified V (0.75) 134,825.156 27.61 3,722,523 Non-Qualified VII 591,044.239 12.42 7,340,769 Non-Qualified VIII 170,464.753 12.56 2,141,037 Non-Qualified IX 6,217.577 25.90 161,035 Non-Qualified X 5,194.496 26.41 137,187 Non-Qualified XIII 555,400.451 10.26 5,698,409 Non-Qualified XIV 654,366.321 10.06 6,582,925 Non-Qualified XV 166,305.777 9.96 1,656,406 Non-Qualified XVI 239,846.526 6.31 1,513,432 Non-Qualified XVIII 97,533.866 6.18 602,759 Non-Qualified XIX 155,775.960 6.22 968,926 Non-Qualified XX 287.279 13.26 3,809 --------------- -------------- 2,954,539.683 $ 38,223,696 =============== ==============
119 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- ING OPCAP BALANCED VALUE Contracts in accumulation period: Non-Qualified V 79,196.261 $ 11.70 $ 926,596 Non-Qualified V (0.75) 90,164.841 11.85 1,068,453 Non-Qualified IX 6,822.380 11.13 75,933 Non-Qualified XX 3,984.796 13.87 55,269 --------------- -------------- 180,168.278 $ 2,126,251 =============== ============== ING OPPENHEIMER GLOBAL Contracts in accumulation period: Non-Qualified V 588.125 $ 12.30 $ 7,234 Non-Qualified V (0.75) 1,215.370 12.47 15,156 --------------- -------------- 1,803.495 $ 22,390 =============== ============== ING PIMCO TOTAL RETURN Contracts in accumulation period: Non-Qualified V 63,478.176 $ 11.35 $ 720,477 Non-Qualified V (0.75) 237,732.193 11.50 2,733,920 Non-Qualified IX 25,605.361 11.27 288,572 Non-Qualified XX 12,682.799 11.18 141,794 --------------- -------------- 339,498.529 $ 3,884,763 =============== ============== ING SALOMON BROTHERS AGGRESSIVE GROWTH Currently payable annuity contracts: $ 1,521,742 Contracts in accumulation period: Non-Qualified V 327,368.492 $ 14.25 4,665,001 Non-Qualified V (0.75) 258,443.178 14.90 3,850,803 Non-Qualified VII 1,960,116.407 13.62 26,696,785 Non-Qualified VIII 318,928.925 9.33 2,975,607 Non-Qualified IX 12,319.500 13.98 172,227 Non-Qualified X 16,173.306 14.25 230,470 Non-Qualified XII 4,262.639 8.14 34,698 Non-Qualified XIII 556,577.509 7.72 4,296,778 Non-Qualified XIV 656,230.280 7.57 4,967,663 Non-Qualified XV 233,079.861 7.50 1,748,099 Non-Qualified XVI 162,985.635 5.27 858,934 Non-Qualified XVIII 96,803.142 5.17 500,472 Non-Qualified XIX 137,503.346 5.20 715,017 Non-Qualified XX 1,505.178 13.63 20,516 --------------- -------------- 4,742,297.398 $ 53,254,812 =============== ==============
120 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- ING SALOMON BROTHERS FUNDAMENTAL VALUE Contracts in accumulation period: Non-Qualified V 37,944.636 $ 11.40 $ 432,569 Non-Qualified V (0.75) 86,617.340 11.55 1,000,430 Non-Qualified IX 3,163.554 11.05 34,957 Non-Qualified XX 1,125.966 13.75 15,482 --------------- -------------- 128,851.496 $ 1,483,438 =============== ============== ING SALOMON BROTHERS INVESTORS VALUE Contracts in accumulation period: Non-Qualified V 20,196.772 $ 11.02 $ 222,568 Non-Qualified V (0.75) 14,067.335 11.17 157,132 Non-Qualified XX 532.809 13.23 7,049 --------------- -------------- 34,796.915 $ 386,749 =============== ============== ING T. ROWE PRICE DIVERSIFIED MID CAP GROWTH Contracts in accumulation period: Non-Qualified V 15,530.124 $ 11.20 $ 173,937 Non-Qualified V (0.75) 32,163.821 11.35 365,059 Non-Qualified IX 1,574.963 10.90 17,167 Non-Qualified XII 315.152 11.33 3,571 Non-Qualified XX 3,746.698 14.04 52,604 --------------- -------------- 53,330.758 $ 612,338 =============== ============== ING T. ROWE PRICE GROWTH EQUITY Currently payable annuity contracts: $ 6,726,345 Contracts in accumulation period: Non-Qualified V 217,537.390 $ 20.42 4,442,114 Non-Qualified V (0.75) 413,855.475 21.35 8,835,814 Non-Qualified VII 1,898,218.540 25.72 48,822,181 Non-Qualified VIII 244,111.377 18.76 4,579,529 Non-Qualified IX 11,357.968 20.03 227,500 Non-Qualified X 10,065.144 20.42 205,530 Non-Qualified XII 1,744.951 12.62 22,021 Non-Qualified XX 4,347.277 13.82 60,079 --------------- -------------- 2,801,238.122 $ 73,921,113 =============== ==============
121 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- ING UBS U.S. LARGE CAP EQUITY Contracts in accumulation period: Non-Qualified V 261,133.863 $ 14.50 $ 3,786,441 Non-Qualified V (0.75) 202,035.759 15.16 3,062,862 Non-Qualified VI 18,709.954 12.29 229,945 Non-Qualified VII 1,400,306.790 14.22 19,912,363 Non-Qualified VIII 273,287.807 9.86 2,694,618 Non-Qualified IX 6,637.062 14.22 94,379 Non-Qualified X 136,060.306 14.50 1,972,874 Non-Qualified XI 8,356.733 12.29 102,704 Non-Qualified XIII 341,549.440 9.64 3,292,537 Non-Qualified XIV 503,214.629 9.45 4,755,378 Non-Qualified XV 182,701.292 9.36 1,710,084 Non-Qualified XVI 138,043.732 7.01 967,687 Non-Qualified XVIII 37,967.721 6.88 261,218 Non-Qualified XIX 120,594.309 6.92 834,513 --------------- -------------- 3,630,599.396 $ 43,677,603 =============== ============== ING VAN KAMPEN COMSTOCK Contracts in accumulation period: Non-Qualified V 50,627.599 $ 12.26 $ 620,694 Non-Qualified V (0.75) 228,373.167 12.43 2,838,678 Non-Qualified IX 571.570 12.18 6,962 Non-Qualified XII 2,753.062 12.41 34,166 Non-Qualified XX 15,764.911 14.32 225,754 --------------- -------------- 298,090.309 $ 3,726,254 =============== ============== ING VAN KAMPEN EQUITY AND INCOME Contracts in accumulation period: Non-Qualified V 3,087.856 $ 10.98 $ 33,905 Non-Qualified V (0.75) 9,072.582 11.13 100,978 Non-Qualified IX 162.188 10.36 1,680 --------------- -------------- 12,322.626 $ 136,563 =============== ============== ING VP STRATEGIC ALLOCATION BALANCED Currently payable annuity contracts: $ 2,888,023 Contracts in accumulation period: Non-Qualified V 63,295.330 $ 17.17 1,086,781 Non-Qualified V (0.75) 101,617.519 17.95 1,824,034 Non-Qualified VII 755,251.393 16.92 12,778,854 Non-Qualified VIII 139,920.313 15.45 2,161,769 Non-Qualified IX 474.508 16.84 7,991 Non-Qualified X 4,238.994 17.63 74,733 --------------- -------------- 1,064,798.058 $ 20,822,185 =============== ==============
122 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- ING VP STRATEGIC ALLOCATION GROWTH Currently payable annuity contracts: $ 2,083,387 Contracts in accumulation period: Non-Qualified V 69,723.542 $ 17.75 1,237,593 Non-Qualified V (0.75) 167,874.904 18.56 3,115,758 Non-Qualified VII 441,999.428 17.49 7,730,570 Non-Qualified VIII 76,407.357 15.68 1,198,067 Non-Qualified IX 2,864.545 17.41 49,872 Non-Qualified X 11,856.558 18.23 216,145 --------------- -------------- 770,726.333 $ 15,631,392 =============== ============== ING VP STRATEGIC ALLOCATION INCOME Currently payable annuity contracts: $ 3,576,463 Contracts in accumulation period: Non-Qualified V 49,393.099 $ 16.78 828,816 Non-Qualified V (0.75) 39,677.304 17.54 695,940 Non-Qualified VII 584,968.242 16.54 9,675,375 Non-Qualified VIII 226,963.262 15.55 3,529,279 Non-Qualified IX 847.971 16.46 13,958 Non-Qualified X 23,795.635 17.24 410,237 --------------- -------------- 925,645.513 $ 18,730,068 =============== ============== ING VP GROWTH AND INCOME Currently payable annuity contracts: $ 96,985,864 Contracts in accumulation period: Non-Qualified 1964 958.678 $ 216.86 207,899 Non-Qualified V 3,268,534.038 20.20 66,024,388 Non-Qualified V (0.75) 5,523,034.839 21.12 116,646,496 Non-Qualified VI 955,485.793 18.99 18,144,675 Non-Qualified VII 3,054,426.694 19.96 60,966,357 Non-Qualified VIII 672,513.018 13.46 9,052,025 Non-Qualified IX 48,536.358 19.82 961,991 Non-Qualified X 1,401,295.006 20.59 28,852,664 Non-Qualified XI 23,823.864 19.35 460,992 Non-Qualified XII 36,332.653 8.50 308,828 Non-Qualified XIII 1,061,351.422 8.16 8,660,628 Non-Qualified XIV 1,142,343.424 8.00 9,138,747 Non-Qualified XV 388,591.091 7.93 3,081,527 Non-Qualified XVI 224,659.164 7.08 1,590,587 Non-Qualified XVIII 86,309.022 6.94 598,985 Non-Qualified XIX 152,210.147 6.99 1,063,949 Non-Qualified XX 49,972.311 12.22 610,662 --------------- -------------- 18,090,377.521 $ 423,357,264 =============== ==============
123 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- ING GET U.S. CORE - SERIES 1 Contracts in accumulation period: Non-Qualified VII 67,853.261 $ 10.41 $ 706,352 Non-Qualified VIII 25,406.738 10.43 264,992 Non-Qualified XIII 539,936.925 10.48 5,658,539 Non-Qualified XIV 212,597.585 10.43 2,217,393 Non-Qualified XV 14,354.551 10.41 149,431 Non-Qualified XVI 628,884.672 10.40 6,540,401 Non-Qualified XVIII 106,535.292 10.32 1,099,444 Non-Qualified XIX 618,894.358 10.35 6,405,557 --------------- -------------- 2,214,463.383 $ 23,042,109 =============== ============== ING GET U.S. CORE - SERIES 2 Contracts in accumulation period: Non-Qualified VII 121,675.337 $ 10.21 $ 1,242,305 Non-Qualified VIII 40,825.189 10.23 417,642 Non-Qualified XIII 442,613.409 10.27 4,545,640 Non-Qualified XIV 354,366.915 10.23 3,625,174 Non-Qualified XV 79,260.253 10.21 809,247 Non-Qualified XVI 501,366.663 10.20 5,113,940 Non-Qualified XVIII 75,607.469 10.14 766,660 Non-Qualified XIX 323,073.279 10.16 3,282,425 --------------- -------------- 1,938,788.514 $ 19,803,033 =============== ============== ING GET U.S. CORE - SERIES 3 Contracts in accumulation period: Non-Qualified VII 1,371,223.983 $ 9.94 $ 13,629,966 Non-Qualified VIII 685,663.474 9.96 6,829,208 Non-Qualified XIII 1,017,358.830 9.99 10,163,415 Non-Qualified XIV 659,441.327 9.96 6,568,036 Non-Qualified XV 288,867.649 9.94 2,871,344 Non-Qualified XVI 530,341.249 9.93 5,266,289 Non-Qualified XVIII 124,668.947 9.89 1,232,976 Non-Qualified XIX 813,413.002 9.90 8,052,789 --------------- -------------- 5,490,978.460 $ 54,614,023 =============== ==============
124 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- ING GET U.S. CORE - SERIES 4 Contracts in accumulation period: Non-Qualified VII 55,350.795 $ 10.37 $ 573,988 Non-Qualified VIII 11,072.267 10.39 115,041 Non-Qualified XIII 200,119.233 10.41 2,083,241 Non-Qualified XIV 145,744.408 10.39 1,514,284 Non-Qualified XV 47,789.603 10.37 495,578 Non-Qualified XVI 162,517.855 10.37 1,685,310 Non-Qualified XVIII 15,848.954 10.33 163,720 Non-Qualified XIX 149,145.760 10.34 1,542,167 --------------- -------------- 787,588.874 $ 8,173,329 =============== ============== ING GET U.S. CORE - SERIES 5 Contracts in accumulation period: Non-Qualified VII 26,471.768 $ 10.47 $ 277,159 Non-Qualified VIII 21,298.617 10.48 223,210 Non-Qualified XIII 167,666.632 10.50 1,760,500 Non-Qualified XIV 32,995.601 10.48 345,794 Non-Qualified XV 34,183.739 10.47 357,904 Non-Qualified XVI 94,001.789 10.47 984,199 Non-Qualified XVIII 10,903.412 10.44 113,832 Non-Qualified XIX 34,937.327 10.45 365,095 --------------- -------------- 422,458.885 $ 4,427,693 =============== ============== ING GET U.S. CORE - SERIES 6 Contracts in accumulation period: Non-Qualified VII 1,006,500.128 $ 10.07 $ 10,135,456 Non-Qualified VIII 136,215.985 10.08 1,373,057 Non-Qualified XIII 2,749,880.961 10.09 27,746,299 Non-Qualified XIV 2,752,856.551 10.08 27,748,794 Non-Qualified XV 1,821,453.506 10.07 18,342,037 Non-Qualified XVI 154,287.101 10.07 1,553,671 Non-Qualified XVIII 7,176.233 10.06 72,193 Non-Qualified XIX 111,210.513 10.06 1,118,778 --------------- -------------- 8,739,580.979 $ 88,090,285 =============== ==============
125 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- ING GET U.S. CORE - SERIES 7 Contracts in accumulation period: Non-Qualified VII 887,189.220 $ 10.00 $ 8,871,892 Non-Qualified VIII 90,036.970 10.00 900,370 Non-Qualified XIII 1,474,440.651 10.00 14,744,407 Non-Qualified XIV 1,993,287.507 10.00 19,932,875 Non-Qualified XV 1,243,708.522 10.00 12,437,085 Non-Qualified XVI 8,296.068 10.00 82,961 Non-Qualified XVIII 4,563.610 10.00 45,636 --------------- -------------- 5,701,522.548 $ 57,015,226 =============== ============== ING VP GLOBAL SCIENCE AND TECHNOLOGY Contracts in accumulation period: Non-Qualified V 238,094.069 $ 3.60 $ 857,139 Non-Qualified V (0.75) 572,201.585 3.69 2,111,424 Non-Qualified VII 707,920.613 3.58 2,534,356 Non-Qualified VIII 79,278.288 3.60 285,402 Non-Qualified IX 24,497.489 3.56 87,211 Non-Qualified X 14,401.611 3.65 52,566 Non-Qualified XII 3,645.165 3.68 13,414 Non-Qualified XIII 466,052.674 3.65 1,701,092 Non-Qualified XIV 439,023.168 3.60 1,580,483 Non-Qualified XV 62,318.927 3.58 223,102 Non-Qualified XVI 139,144.166 3.73 519,008 Non-Qualified XVIII 29,625.846 3.66 108,431 Non-Qualified XIX 80,521.064 3.68 296,318 Non-Qualified XX 222.556 11.96 2,662 --------------- -------------- 2,856,947.221 $ 10,372,608 =============== ============== ING VP GROWTH Currently payable annuity contracts: $ 2,692,068 Contracts in accumulation period: Non-Qualified V 48,730.321 $ 14.30 696,844 Non-Qualified V (0.75) 351,384.521 14.86 5,221,574 Non-Qualified VII 399,687.310 14.13 5,647,582 Non-Qualified VIII 181,830.624 14.29 2,598,360 Non-Qualified IX 1,392.490 14.03 19,537 Non-Qualified XII 329.799 9.25 3,051 Non-Qualified XIII 554,358.579 8.52 4,723,135 Non-Qualified XIV 539,251.173 8.36 4,508,140 Non-Qualified XV 111,972.355 8.28 927,131 Non-Qualified XVI 115,521.339 5.48 633,057 Non-Qualified XVIII 12,606.150 5.38 67,821 Non-Qualified XIX 62,734.392 5.41 339,393 Non-Qualified XX 227.784 12.62 2,875 --------------- -------------- 2,380,026.839 $ 28,080,568 =============== ==============
126 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- ING VP INDEX PLUS LARGECAP Currently payable annuity contracts: $ 44,116,055 Contracts in accumulation period: Non-Qualified V 306,915.964 $ 18.54 5,690,222 Non-Qualified V (0.75) 1,062,734.535 19.33 20,542,659 Non-Qualified VII 1,398,953.392 18.30 25,600,847 Non-Qualified VIII 539,378.244 18.21 9,822,078 Non-Qualified IX 18,218.003 18.19 331,385 Non-Qualified XII 19,914.467 11.25 224,038 Non-Qualified XIII 2,759,569.441 10.77 29,720,563 Non-Qualified XIV 2,357,139.132 10.57 24,914,961 Non-Qualified XV 1,023,640.904 10.46 10,707,284 Non-Qualified XVI 691,020.652 8.03 5,548,896 Non-Qualified XVIII 174,584.744 7.87 1,373,982 Non-Qualified XIX 473,789.616 7.92 3,752,414 Non-Qualified XX 1,294.203 12.99 16,812 --------------- -------------- 10,827,153.298 $ 182,362,196 =============== ============== ING VP INDEX PLUS MIDCAP Contracts in accumulation period: Non-Qualified V 133,131.477 $ 18.79 $ 2,501,540 Non-Qualified V (0.75) 762,456.234 19.43 14,814,525 Non-Qualified IX 12,293.442 18.48 227,183 Non-Qualified XII 27,766.332 20.23 561,713 Non-Qualified XX 8,759.085 14.59 127,795 --------------- -------------- 944,406.571 $ 18,232,756 =============== ============== ING VP INDEX PLUS SMALLCAP Contracts in accumulation period: Non-Qualified V 93,290.456 $ 14.70 $ 1,371,370 Non-Qualified V (0.75) 472,530.398 15.2 7,182,462 Non-Qualified IX 9,103.073 14.45 131,539 Non-Qualified XII 14,220.587 16.34 232,364 Non-Qualified XX 2,974.116 15.31 45,534 --------------- -------------- 592,118.629 $ 8,963,269 =============== ==============
127 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- ING VP INTERNATIONAL EQUITY Currently payable annuity contracts: $ 1,683,470 Contracts in accumulation period: Non-Qualified V 5,471.836 $ 9.43 51,599 Non-Qualified V (0.75) 56,078.938 9.75 546,770 Non-Qualified VII 163,801.293 9.33 1,528,266 Non-Qualified VIII 47,160.238 9.43 444,721 Non-Qualified XIII 355,722.316 9.00 3,201,501 Non-Qualified XIV 309,683.989 8.82 2,731,413 Non-Qualified XV 128,679.636 8.74 1,124,660 Non-Qualified XVI 184,925.296 7.12 1,316,668 Non-Qualified XVIII 23,033.780 6.98 160,776 Non-Qualified XIX 78,253.994 7.03 550,126 --------------- -------------- 1,352,811.317 $ 13,339,970 =============== ============== ING VP SMALL COMPANY Currently payable annuity contracts: $ 8,125,753 Contracts in accumulation period: Non-Qualified V 52,193.997 $ 22.17 1,157,141 Non-Qualified V (0.75) 306,182.287 23.05 7,057,502 Non-Qualified VII 912,240.803 21.90 19,978,074 Non-Qualified VIII 272,889.538 22.16 6,047,232 Non-Qualified IX 4,684.470 21.75 101,887 Non-Qualified XII 23,142.633 15.90 367,968 Non-Qualified XIII 1,151,774.779 15.49 17,840,991 Non-Qualified XIV 743,437.677 15.19 11,292,818 Non-Qualified XV 229,225.655 15.04 3,447,554 Non-Qualified XVI 387,298.226 10.93 4,233,170 Non-Qualified XVIII 60,874.696 10.72 652,577 Non-Qualified XIX 236,666.145 10.79 2,553,628 Non-Qualified XX 954.607 14.10 13,460 --------------- -------------- 4,381,565.513 $ 82,869,755 =============== ============== ING VP VALUE OPPORTUNITY Contracts in accumulation period: Non-Qualified V 41,857.754 $ 18.00 $ 753,440 Non-Qualified V (0.75) 193,402.832 18.71 3,618,567 Non-Qualified VII 533,299.566 17.77 9,476,733 Non-Qualified VIII 121,623.422 17.99 2,188,005 Non-Qualified IX 1,276.388 17.65 22,528 Non-Qualified XII 16,995.065 12.65 214,988 Non-Qualified XX 854.765 12.23 10,454 --------------- -------------- 909,309.791 $ 16,284,715 =============== ==============
128 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- ING VP INTERNATIONAL VALUE Contracts in accumulation period: Non-Qualified V 49,802.193 $ 11.87 $ 591,152 Non-Qualified V (0.75) 168,355.691 12.07 2,032,053 Non-Qualified IX 6,238.164 11.76 73,361 Non-Qualified XII 18,767.857 12.05 226,153 Non-Qualified XX 4,296.240 13.22 56,796 --------------- -------------- 247,460.144 $ 2,979,515 =============== ============== ING VP MAGNACAP - CLASS I Contracts in accumulation period: Non-Qualified V 2,634.377 $ 9.52 $ 25,079 Non-Qualified V (0.75) 10,391.646 9.64 100,175 --------------- -------------- 13,026.023 $ 125,254 =============== ============== ING VP MAGNACAP - CLASS S Contracts in accumulation period: Non-Qualified XIII 60,268.762 $ 9.95 $ 599,674 Non-Qualified XIV 58,843.233 9.84 579,017 Non-Qualified XV 12,048.359 9.78 117,833 Non-Qualified XVI 12,903.304 9.76 125,936 Non-Qualified XVIII 4,527.444 9.60 43,463 Non-Qualified XIX 17,501.983 9.65 168,894 --------------- -------------- 166,093.085 $ 1,634,817 =============== ============== ING VP MIDCAP OPPORTUNITIES - CLASS I Contracts in accumulation period: Non-Qualified V 4,829.301 $ 10.28 $ 49,645 Non-Qualified V (0.75) 22,194.413 10.46 232,154 Non-Qualified XII 3,912.247 10.44 40,844 Non-Qualified XX 1,280.133 13.84 17,717 --------------- -------------- 32,216.095 $ 340,360 =============== ============== ING VP MIDCAP OPPORTUNITIES - CLASS S Contracts in accumulation period: Non-Qualified XIII 349,195.276 $ 9.26 $ 3,233,548 Non-Qualified XIV 347,514.608 9.16 3,183,234 Non-Qualified XV 94,476.123 9.11 860,677 Non-Qualified XVI 154,308.181 9.09 1,402,661 Non-Qualified XVIII 42,360.448 8.94 378,702 Non-Qualified XIX 191,912.015 8.99 1,725,289 --------------- -------------- 1,179,766.650 $ 10,784,111 =============== ==============
129 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- ING VP REAL ESTATE Contracts in accumulation period: Non-Qualified V 12,589.389 $ 13.88 $ 174,741 Non-Qualified V (0.75) 58,651.330 13.93 817,013 Non-Qualified XII 14,428.668 13.93 200,991 --------------- -------------- 85,669.387 $ 1,192,745 =============== ============== ING VP SMALLCAP OPPORTUNITIES - CLASS I Contracts in accumulation period: Non-Qualified V 5,867.007 $ 7.42 $ 43,533 Non-Qualified V (0.75) 122,292.668 7.55 923,310 Non-Qualified XX 233.976 12.78 2,990 --------------- -------------- 128,393.652 $ 969,833 =============== ============== ING VP SMALLCAP OPPORTUNITIES - CLASS S Contracts in accumulation period: Non-Qualified XIII 228,383.394 $ 7.07 $ 1,614,671 Non-Qualified XIV 249,195.161 6.99 1,741,874 Non-Qualified XIX 79,772.011 6.86 547,236 Non-Qualified XV 78,291.385 6.95 544,125 Non-Qualified XVI 90,620.915 6.94 628,909 Non-Qualified XVIII 38,830.004 6.82 264,821 --------------- -------------- 765,092.870 $ 5,341,636 =============== ============== ING VP BALANCED Currently payable annuity contracts: $ 45,180,069 Contracts in accumulation period: Non-Qualified V 1,342,969.084 $ 25.68 34,487,446 Non-Qualified V (0.75) 929,064.374 26.84 24,936,088 Non-Qualified VI 41,006.995 21.68 889,032 Non-Qualified VII 1,301,153.739 24.95 32,463,786 Non-Qualified VIII 379,563.335 17.81 6,760,023 Non-Qualified IX 10,164.223 25.19 256,037 Non-Qualified X 217,194.289 26.17 5,683,975 Non-Qualified XI 2,019.340 22.09 44,607 Non-Qualified XII 12,328.826 12.71 156,699 Non-Qualified XIII 1,305,748.947 12.32 16,086,827 Non-Qualified XIV 964,065.113 12.08 11,645,907 Non-Qualified XV 429,399.131 11.97 5,139,908 Non-Qualified XVI 312,115.322 10.05 3,136,759 Non-Qualified XVIII 71,463.408 9.85 703,915 Non-Qualified XIX 200,404.859 9.92 1,988,016 Non-Qualified XX 12.098 12.51 151 --------------- -------------- 7,518,673.083 $ 189,559,245 =============== ==============
130 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- ING VP EMERGING MARKETS Contracts in accumulation period: Non-Qualified VII 69,835.325 $ 11.02 $ 769,585 --------------- -------------- 69,835.325 $ 769,585 =============== ============== ING VP INTERMEDIATE BOND Currently payable annuity contracts: $ 12,463,268 Contracts in accumulation period: Non-Qualified V 1,012,406.746 $ 18.92 19,154,736 Non-Qualified V (0.75) 1,071,475.144 19.78 21,193,778 Non-Qualified VI 27,972.524 17.36 485,603 Non-Qualified VII 1,440,152.769 18.38 26,470,008 Non-Qualified VIII 421,916.782 15.79 6,662,066 Non-Qualified IX 8,892.198 18.56 165,039 Non-Qualified X 237,188.220 19.14 4,539,783 Non-Qualified XI 1,200.432 17.55 21,068 Non-Qualified XII 1,181.572 14.14 16,707 Non-Qualified XIII 1,069,558.214 13.93 14,898,946 Non-Qualified XIV 1,246,911.896 13.66 17,032,816 Non-Qualified XV 438,603.327 13.52 5,929,917 Non-Qualified XVI 380,270.840 12.97 4,932,113 Non-Qualified XVIII 65,243.314 12.72 829,895 Non-Qualified XIX 235,214.819 12.80 3,010,750 Non-Qualified XX 6,478.684 11.37 73,663 --------------- -------------- 7,664,667.482 $ 137,880,156 =============== ============== ING VP MONEY MARKET Currently payable annuity contracts: $ 5,081,623 Contracts in accumulation period: Non-Qualified V 546,291.829 $ 13.88 7,582,531 Non-Qualified V (0.75) 1,029,618.505 14.51 14,939,765 Non-Qualified VI 11,852.443 13.60 161,193 Non-Qualified VII 3,544,102.686 13.63 48,306,120 Non-Qualified VIII 657,977.858 12.44 8,185,245 Non-Qualified IX 1,714.625 13.61 23,336 Non-Qualified X 182,060.409 13.88 2,526,998 Non-Qualified XII 4,344.698 11.75 51,050 Non-Qualified XIII 2,815,300.710 11.60 32,657,488 Non-Qualified XIV 3,781,977.346 11.37 43,001,082 Non-Qualified XV 1,683,216.447 11.26 18,953,017 Non-Qualified XVI 447,162.532 10.30 4,605,774 Non-Qualified XVIII 234,869.855 10.10 2,372,186 Non-Qualified XIX 426,126.420 10.17 4,333,706 --------------- -------------- 15,366,616.362 $ 192,781,114 =============== ==============
131 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- ING VP NATURAL RESOURCES Contracts in accumulation period: Non-Qualified V 33,814.847 $ 16.73 $ 565,722 Non-Qualified V (0.75) 30,688.249 17.48 536,431 Non-Qualified VII 45,273.969 16.42 743,399 Non-Qualified IX 31.296 16.41 514 Non-Qualified X 881.859 16.73 14,754 --------------- -------------- 110,690.221 $ 1,860,820 =============== ============== JANUS ASPEN BALANCED Contracts in accumulation period: Non-Qualified V 303,557.215 $ 25.22 $ 7,655,713 Non-Qualified V (0.75) 376,517.988 26.36 9,925,014 Non-Qualified VII 1,451,761.281 27.77 40,315,411 Non-Qualified VIII 483,378.788 22.28 10,769,679 Non-Qualified IX 3,111.139 24.74 76,970 Non-Qualified X 12,240.485 25.22 308,705 Non-Qualified XII 4,924.728 15.01 73,920 Non-Qualified XIII 2,345,079.071 14.13 33,135,967 Non-Qualified XIV 2,462,713.831 13.86 34,133,214 Non-Qualified XV 832,253.390 13.73 11,426,839 Non-Qualified XVI 447,567.108 10.14 4,538,330 Non-Qualified XVIII 109,433.382 9.95 1,088,862 Non-Qualified XX 10,602.388 12.02 127,441 Non-Qualified XIX 321,077.514 10.01 3,213,986 --------------- -------------- 9,164,218.308 $ 156,790,051 =============== ============== JANUS ASPEN FLEXIBLE INCOME Contracts in accumulation period: Non-Qualified V 81,302.241 $ 20.45 $ 1,662,631 Non-Qualified V (0.75) 122,926.910 21.38 2,628,177 Non-Qualified VII 455,683.539 20.12 9,168,353 Non-Qualified VIII 125,500.266 16.97 2,129,740 Non-Qualified IX 1,624.092 20.06 32,579 Non-Qualified X 5,477.176 20.45 112,008 Non-Qualified XII 95.320 13.98 1,333 Non-Qualified XX 1,108.570 11.46 12,704 --------------- -------------- 793,718.112 $ 15,747,525 =============== ==============
132 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- JANUS ASPEN GROWTH Currently payable annuity contracts: $ 5,658,526 Contracts in accumulation period: Non-Qualified V 246,837.155 $ 17.95 4,430,727 Non-Qualified V (0.75) 269,491.218 18.76 5,055,655 Non-Qualified VII 992,984.736 21.12 20,971,838 Non-Qualified VIII 204,808.959 15.17 3,106,952 Non-Qualified IX 5,215.269 17.61 91,841 Non-Qualified X 17,334.475 17.95 311,154 Non-Qualified XII 4,686.574 10.20 47,803 Non-Qualified XIII 1,452,287.020 9.68 14,058,138 Non-Qualified XIV 2,147,879.640 9.49 20,383,378 Non-Qualified XV 719,343.866 9.40 6,761,832 Non-Qualified XVI 240,635.371 5.97 1,436,593 Non-Qualified XVIII 107,667.659 5.85 629,856 Non-Qualified XX 3,133.792 12.47 39,078 Non-Qualified XIX 254,253.944 5.89 1,497,556 --------------- -------------- 6,666,559.679 $ 84,480,927 =============== ============== JANUS ASPEN MID CAP GROWTH Contracts in accumulation period: Non-Qualified V 438,673.952 $ 20.74 $ 9,098,098 Non-Qualified V (0.75) 508,474.084 21.68 11,023,718 Non-Qualified VII 1,096,702.771 20.52 22,504,341 Non-Qualified VIII 269,336.595 14.37 3,870,367 Non-Qualified IX 18,452.132 20.34 375,316 Non-Qualified X 17,565.138 20.74 364,301 Non-Qualified XII 2,107.192 12.16 25,623 Non-Qualified XIII 1,735,478.017 11.41 19,801,804 Non-Qualified XIV 1,362,611.170 11.19 15,247,619 Non-Qualified XV 566,326.585 11.08 6,274,899 Non-Qualified XVI 676,302.394 4.68 3,165,095 Non-Qualified XVIII 245,789.412 4.59 1,128,173 Non-Qualified XX 2,944.777 15.29 45,026 Non-Qualified XIX 290,051.459 4.62 1,340,038 --------------- -------------- 7,230,815.679 $ 94,264,418 =============== ==============
133 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- JANUS ASPEN WORLDWIDE GROWTH Currently payable annuity contracts: $ 5,722,940 Contracts in accumulation period: Non-Qualified V 343,860.428 $ 20.59 7,080,086 Non-Qualified V (0.75) 636,923.946 21.52 13,706,603 Non-Qualified VII 2,546,336.205 23.00 58,565,733 Non-Qualified VIII 511,984.097 16.76 8,580,853 Non-Qualified IX 17,076.083 20.20 344,937 Non-Qualified X 17,546.416 20.59 361,281 Non-Qualified XII 14,506.278 10.10 146,513 Non-Qualified XIII 2,517,662.085 9.41 23,691,200 Non-Qualified XIV 2,413,517.634 9.23 22,276,768 Non-Qualified XV 713,488.202 9.14 6,521,282 Non-Qualified XVI 530,921.410 6.07 3,222,693 Non-Qualified XVIII 171,278.711 5.95 1,019,108 Non-Qualified XIX 496,022.579 5.99 2,971,175 Non-Qualified XX 2,953.931 11.54 34,088 --------------- -------------- 10,934,078.005 $ 154,245,260 =============== ============== LORD ABBETT GROWTH AND INCOME Contracts in accumulation period: Non-Qualified V 147,017.583 $ 11.31 $ 1,662,769 Non-Qualified V (0.75) 431,107.585 11.50 4,957,737 Non-Qualified IX 6,483.392 11.21 72,679 Non-Qualified XII 808.845 11.48 9,286 Non-Qualified XX 5,129.807 13.69 70,227 --------------- -------------- 590,547.211 $ 6,772,698 =============== ============== LORD ABBETT MID-CAP VALUE Contracts in accumulation period: Non-Qualified V 56,029.603 $ 12.56 $ 703,732 Non-Qualified V (0.75) 226,937.205 12.78 2,900,257 Non-Qualified IX 2,673.368 12.45 33,283 Non-Qualified XII 1,002.084 12.76 12,787 Non-Qualified XX 5,484.847 14.98 82,163 --------------- -------------- 292,127.107 $ 3,732,222 =============== ============== MFS(R) VIT STRATEGIC INCOME Contracts in accumulation period: Non-Qualified VII 156,244.603 $ 13.78 $ 2,153,051 Non-Qualified VIII 25,058.591 13.96 349,818 --------------- -------------- 181,303.194 $ 2,502,869 =============== ==============
134 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- MFS(R) VIT TOTAL RETURN Contracts in accumulation period: Non-Qualified VII 1,808,989.599 $ 19.52 $ 35,311,477 Non-Qualified VIII 488,231.994 19.78 9,657,229 Non-Qualified XIII 2,060,200.461 14.14 29,131,235 Non-Qualified XIV 2,749,759.330 13.87 38,139,162 Non-Qualified XV 788,222.026 13.73 10,822,288 Non-Qualified XVI 845,250.848 12.50 10,565,636 Non-Qualified XVIII 143,628.216 12.25 1,759,446 Non-Qualified XIX 576,686.392 12.33 7,110,543 --------------- -------------- 9,460,968.866 $ 142,497,016 =============== ============== OPPENHEIMER AGGRESSIVE GROWTH Currently payable annuity contracts: $ 1,893,483 Contracts in accumulation period: Non-Qualified VII 532,594.088 $ 15.12 8,052,823 Non-Qualified VIII 203,858.861 15.29 3,117,002 Non-Qualified XIII 535,637.326 10.76 5,763,458 Non-Qualified XIV 699,812.911 10.55 7,383,026 Non-Qualified XV 180,374.612 10.45 1,884,915 Non-Qualified XVI 400,630.820 4.81 1,927,034 Non-Qualified XVIII 315,521.710 4.71 1,486,107 Non-Qualified XIX 287,607.459 4.75 1,366,135 --------------- -------------- 3,156,037.787 $ 32,873,983 =============== ============== OPPENHEIMER GLOBAL SECURITIES Contracts in accumulation period: Non-Qualified V 172,903.559 $ 18.07 $ 3,124,367 Non-Qualified V (0.75) 695,649.807 18.68 12,994,738 Non-Qualified VII 937,941.585 23.19 21,750,865 Non-Qualified VIII 203,637.044 23.47 4,779,361 Non-Qualified IX 19,356.940 17.77 343,973 Non-Qualified XII 20,498.568 18.73 383,938 Non-Qualified XX 22,821.577 15.03 343,008 --------------- -------------- 2,072,809.080 $ 43,720,250 =============== ==============
135 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- OPPENHEIMER MAIN STREET(R) Currently payable annuity contracts: $ 7,476,625 Contracts in accumulation period: Non-Qualified VII 1,348,464.491 $ 13.63 18,379,571 Non-Qualified VIII 490,727.201 13.79 6,767,128 Non-Qualified XIII 1,000,860.074 9.63 9,638,283 Non-Qualified XIV 1,555,331.181 9.45 14,697,880 Non-Qualified XV 584,608.723 9.35 5,466,092 Non-Qualified XVI 316,825.028 8.43 2,670,835 Non-Qualified XVIII 80,516.748 8.27 665,874 Non-Qualified XIX 316,171.377 8.33 2,633,708 --------------- -------------- 5,693,504.823 $ 68,395,996 =============== ============== OPPENHEIMER STRATEGIC BOND Currently payable annuity contracts: $ 2,460,441 Contracts in accumulation period: Non-Qualified V 82,690.603 $ 14.00 1,157,668 Non-Qualified V (0.75) 201,561.708 14.48 2,918,614 Non-Qualified VII 803,237.777 15.31 12,297,570 Non-Qualified VIII 166,334.302 15.49 2,576,518 Non-Qualified IX 1,194.439 13.77 16,447 Non-Qualified XIII 821,225.322 14.15 11,620,338 Non-Qualified XIV 1,013,637.885 13.88 14,069,294 Non-Qualified XV 381,380.848 13.74 5,240,173 Non-Qualified XVI 255,301.822 13.55 3,459,340 Non-Qualified XVIII 58,215.833 13.29 773,688 Non-Qualified XX 16,350.973 13.17 215,342 Non-Qualified XIX 136,683.746 13.38 1,828,829 --------------- -------------- 3,937,815.261 $ 58,634,262 =============== ============== PIMCO VIT REAL RETURN Contracts in accumulation period: Non-Qualified V (0.75) 48,251.584 $ 10.82 $ 522,082 --------------- -------------- 48,251.584 $ 522,082 =============== ==============
136 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- PIONEER EQUITY INCOME VCT Contracts in accumulation period: Non-Qualified V 40,647.955 $ 11.12 $ 452,005 Non-Qualified V (0.75) 84,426.843 11.31 954,868 Non-Qualified IX 3,372.388 11.02 37,164 Non-Qualified XII 6,299.000 11.29 71,116 Non-Qualified XX 4,954.310 13.32 65,991 --------------- -------------- 139,700.496 $ 1,581,144 =============== ============== PIONEER FUND VCT Contracts in accumulation period: Non-Qualified V 60.856 $ 10.12 $ 616 Non-Qualified V (0.75) 5,033.296 10.29 51,793 --------------- -------------- 5,094.152 $ 52,409 =============== ============== PIONEER HIGH YIELD VCT Contracts in accumulation period: Non-Qualified V (0.75) 20,206.918 $ 10.68 $ 215,810 --------------- -------------- 20,206.918 $ 215,810 =============== ============== PIONEER MID CAP VALUE VCT Contracts in accumulation period: Non-Qualified V 33,380.458 $ 14.30 $ 477,341 Non-Qualified V (0.75) 173,075.973 14.55 2,518,255 Non-Qualified IX 2,457.910 14.18 34,853 Non-Qualified XII 9,989.956 14.53 145,154 Non-Qualified XX 1,071.113 15.93 17,063 --------------- -------------- 219,975.409 $ 3,192,666 =============== ============== JENNISON Contracts in accumulation period: Non-Qualified XIII 31,153.813 $ 8.43 $ 262,627 Non-Qualified XIV 63,454.234 8.34 529,208 Non-Qualified XIX 6,285.956 8.18 51,419 Non-Qualified XV 42,622.109 8.29 353,337 Non-Qualified XVI 14,825.289 8.27 122,605 Non-Qualified XVIII 1,252.663 8.14 10,197 --------------- -------------- 159,594.065 $ 1,329,393 =============== ==============
137 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
DIVISION/CONTRACT UNITS UNIT VALUE EXTENDED VALUE ---------------------------------------- --------------- ---------- -------------- SP WILLIAM BLAIR INTERNATIONAL GROWTH Contracts in accumulation period: Non-Qualified XIII 179,351.021 $ 9.13 $ 1,637,475 Non-Qualified XIV 261,860.021 9.03 2,364,596 Non-Qualified XIX 73,520.261 8.86 651,390 Non-Qualified XV 48,005.834 8.98 431,092 Non-Qualified XVI 105,258.550 8.96 943,117 Non-Qualified XVIII 14,290.240 8.81 125,897 --------------- -------------- 682,285.927 $ 6,153,567 =============== ============== UBS U.S. ALLOCATION Contracts in accumulation period: Non-Qualified XIII 105,312.240 $ 9.41 $ 990,988 Non-Qualified XIV 613,897.727 9.25 5,678,554 Non-Qualified XV 72,367.544 9.17 663,610 Non-Qualified XVI 107,027.964 8.55 915,089 Non-Qualified XVIII 15,588.862 8.38 130,635 Non-Qualified XIX 63,102.438 8.44 532,585 --------------- -------------- 977,296.775 $ 8,911,461 =============== ============== WANGER SELECT Contracts in accumulation period: Non-Qualified V (0.75) 21,768.701 $ 11.45 $ 249,252 --------------- -------------- 21,768.701 $ 249,252 =============== ============== WANGER U.S. SMALLER COMPANIES Contracts in accumulation period: Non-Qualified V (0.75) 8,396.540 $ 11.61 $ 97,484 --------------- -------------- 8,396.540 $ 97,484 =============== ==============
138 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- NON-QUALIFIED 1964 Individual Contracts issued from December 1, 1964 to March 14, 1967. NON-QUALIFIED V Certain AetnaPlus Contracts issued in connection with deferred compensation plans issued since August 28, 1992, and certain individual non-qualified Contracts. NON-QUALIFIED V (0.75) Subset of Non-Qualified V Contracts having a mortality and expense charge of 0.75% NON-QUALIFIED VI Certain existing Contracts that were converted to ACES, an administrative system (previously valued under Non-Qualified I). NON-QUALIFIED VII Certain individual and group Contracts issued as non-qualified deferred annuity contracts or Individual retirement annuity Contracts issued since May 4, 1994. NON-QUALIFIED VIII Certain individual retirement annuity Contracts issued since May 1, 1998. NON-QUALIFIED IX Group Aetna Plus Contracts assessing an administrative expense charge effective April 7, 1997 issued in connection with deferred compensation plans. NON-QUALIFIED X Group AetnaPlus contracts containing contractual limits on fees, issued in connection with deferred compensation plans and as individual non-qualified Contracts, resulting in reduced daily charges for certain funding options effective May 29, 1997. NON-QUALIFIED XI Certain Contracts, previously valued under Non-Qualified VI, containing contractual limits on fees, resulting in reduced daily charges for certain funding options effective May 29, 1997. 139 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- NON-QUALIFIED XII Certain individual retirement annuity contracts issued since March 1999. NON-QUALIFIED XIII Certain individual retirement annuity Contracts issued since October 1, 1998. NON-QUALIFIED XIV Certain individual retirement annuity Contracts issued since September 1, 1998. NON-QUALIFIED XV Certain individual retirement annuity Contracts issued since September 1, 1998. NON-QUALIFIED XVI Certain individual retirement annuity Contracts issued since August 2000. NON-QUALIFIED XVII Group AetnaPlus contracts issued in connection with deferred compensation plans having Contract modifications effective September 1, 1999. NON-QUALIFIED XVIII Certain individual retirement annuity Contracts issued since September 2000. NON-QUALIFIED XIX Certain individual retirement annuity Contracts issued since August 2000. NON-QUALIFIED XX Certain deferred compensation Contracts issued since December 2002. 140 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- 8. FINANCIAL HIGHLIGHTS A summary of unit values and units outstanding for variable annuity Contracts, expense ratios, excluding expenses of underlying Funds, investment income ratios, and total return for the years ended December 31, 2004, 2003, 2002 and 2001, along with units outstanding and unit values for the year ended December 31, 2000, follows:
INVESTMENT UNITS UNIT FAIR VALUE NET ASSETS INCOME EXPENSE RATIO(B) TOTAL RETURN(C) DIVISION (000'S) (LOWEST TO HIGHEST) (000'S) RATIO(A) (LOWEST TO HIGHEST) (LOWEST TO HIGHEST) -------------------------------- ------- ------------------- ---------- ---------- ------------------- ------------------- AIM V.I. Capital Appreciation 2004 1,652 $5.69 to $9.99 $ 15,172 -% 0.75% to 1.90% 4.60% to 5.80% 2003 2,018 $5.44 to $9.46 17,500 - 0.75% to 1.90% 27.10% to 28.59% 2002 2,233 $4.28 to $7.37 14,832 - 0.45% to 1.90% -25.80% to -0.04% 2001 2,600 $5.77 to $9.84 23,509 7.71 0.45% to 2.25% -24.75% to -23.82% 2000 2,085 $7.67 to $12.95 25,987 (a) (a) (a) AIM V.I. Core Equity 2004 2,909 $6.71 to $12.80 31,830 0.91 0.75% to 2.25% 6.85% to 8.23% 2003 3,366 $6.28 to $11.86 34,908 0.97 0.75% to 2.25% 22.18% to 23.44% 2002 3,742 $5.14 to $7.67 29,940 0.30 0.75% to 2.25% -17.19% to -16.21% 2001 4,491 $6.21 to $9.17 42,858 0.05 0.45% to 2.25% -24.31% to -16.23% 2000 4,034 $8.20 to $12.00 49,823 (a) (a) (a) AIM V.I. Government Securities 2004 1,184 $11.62 to $12.57 14,556 3.70 0.95% to 1.90% 0.61% to 1.62% 2003 1,239 $11.55 to $12.37 15,026 1.78 0.95% to 1.90% -0.86% to 0.08% 2002 2,139 $11.65 to $12.36 25,997 2.67 0.95% to 1.90% 0.07% to 8.01% 2001 819 $10.83 to $11.38 9,149 5.55 0.50% to 1.90% 4.38% to 5.40% 2000 28 $10.38 to $10.80 295 (a) (a) (a) AIM V.I. Growth 2004 2,462 $4.56 to $12.89 16,959 - 0.75% to 1.90% 6.05% to 7.35% 2003 2,783 $4.30 to $6.62 18,067 - 0.75% to 1.90% 28.74% to 30.23% 2002 3,069 $3.34 to $5.09 14,946 - 0.75% to 1.90% -32.29% to -31.49% 2001 3,912 $4.93 to $7.44 27,757 0.20 0.45% to 2.25% -35.18% to -34.38% 2000 3,321 $7.60 to $11.37 37,257 (a) (a) (a)
141 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
INVESTMENT UNITS UNIT FAIR VALUE NET ASSETS INCOME EXPENSE RATIO(B) TOTAL RETURN(C) DIVISION (000'S) (LOWEST TO HIGHEST) (000'S) RATIO(A) (LOWEST TO HIGHEST) (LOWEST TO HIGHEST) -------------------------------- ------- ------------------- ---------- ---------- ------------------- ------------------- AIM V.I. Premier Equity 2004 4,062 $6.57 to $8.97 $ 36,351 0.42% 0.75% to 1.90% 3.79% to 5.08% 2003 5,018 $6.33 to $8.56 42,830 0.28 0.75% to 1.90% 22.67% to 24.23% 2002 5,969 $5.16 to $6.91 41,327 0.29 0.45% to 1.90% -31.59% to -30.57% 2001 7,410 $7.54 to $10.00 74,008 2.16 0.45% to 2.25% -14.24% to -9.62% 2000 6,222 $8.79 to $11.55 73,350 (a) (a) (a) Alger American Balanced 2004 74 $25.89 1,926 1.49 1.40% 3.11% 2003 94 $25.11 2,367 2.17 1.40% 17.34% 2002 120 $21.40 2,576 1.69 1.40% -13.52% 2001 152 $24.74 3,765 3.07 0.85% to 1.40% -3.31% 2000 191 $25.59 4,888 (a) (a) (a) Alger American Income & Growth 2004 223 $23.57 5,250 0.55 1.40% 6.31% 2003 292 $22.17 6,470 0.32 1.40% 28.08% 2002 356 $17.31 6,167 0.64 1.40% -32.07% 2001 443 $25.49 11,279 6.98 0.85% to 1.40% -15.53% 2000 550 $30.17 16,586 (a) (a) (a) Alger American Leveraged AllCap 2004 206 $18.30 to $24.78 5,104 - 1.25% to 1.40% 6.67% to 6.83% 2003 277 $17.13 to $23.23 6,443 - 1.25% to 1.40% 32.82% to 33.10% 2002 327 $12.87 to $17.49 5,724 0.01 1.25% to 1.40% -34.84% to -34.74% 2001 388 $19.73 to $26.84 10,424 3.28 0.85% to 1.40% -17.11% to -16.99% 2000 481 $23.77 to $32.38 15,563 (a) (a) (a) AllianceBernstein VPSF Growth and Income 2004 4,305 $11.03 to $11.32 48,096 0.88 0.95% to 1.90% 9.36% to 10.39% 2003 3,443 $10.03 to $10.30 34,971 0.90 0.95% to 1.90% 29.96% to 31.27% 2002 2,855 $7.68 to $7.89 22,169 0.80 0.95% to 1.90% -23.53% to -22.79% 2001 2,791 $9.99 to $10.27 28,177 4.75 0.50% to 1.90% -1.56% to -0.60% 2000 88 $10.10 to $10.39 898 (a) (a) (a)
142 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
INVESTMENT UNITS UNIT FAIR VALUE NET ASSETS INCOME EXPENSE RATIO(B) TOTAL RETURN(C) DIVISION (000'S) (LOWEST TO HIGHEST) (000'S) RATIO(A) (LOWEST TO HIGHEST) (LOWEST TO HIGHEST) -------------------------------- ------- ------------------- ---------- ---------- ------------------- ------------------- AllianceBernstein VPSF Premier Growth 2004 1,319 $5.54 to $5.96 $ 7,542 -% 0.95% to 1.90% 6.56% to 7.60% 2003 1,368 $5.17 to $5.57 7,314 - 0.95% to 1.90% 21.46% to 22.61% 2002 1,333 $4.24 to $4.57 5,838 - 0.95% to 1.90% -31.96% to -31.30% 2001 1,331 $6.20 to $6.69 8,532 6.31 0.50% to 1.90% -18.80% to -17.99% 2000 341 $7.60 to $8.20 2,687 (a) (a) (a) AllianceBernstein VPSF Small Cap Growth 2004 582 $8.07 to $9.29 5,141 - 0.95% to 1.90% 12.40% to 13.43% 2003 500 $7.18 to $8.19 3,918 - 0.95% to 1.90% 46.23% to 47.57% 2002 128 $4.91 to $5.55 684 - 0.95% to 1.90% -33.07% to -32.42% 2001 116 $7.34 to $8.22 91 3.62 0.50% to 1.90% -14.43% to -13.59% 2000 9 $8.58 to $9.51 82 (a) (a) (a) American Century(R) VP Balanced 2004 56 $19.69 1,096 1.83 1.40% 8.25% 2003 78 $18.19 1,420 2.75 1.40% 17.81% 2002 96 $15.44 1,483 2.84 1.40% -10.82% 2001 118 $17.32 2,043 6.22 0.85% to 1.40% -4.90% 2000 147 $18.21 2,684 (a) (a) (a) American Century(R) VP International 2004 73 $14.91 to $16.33 1,196 0.55 1.25% to 1.40% 13.32% to 13.56% 2003 93 $13.13 to $14.41 1,346 0.75 1.25% to 1.40% 22.74% to 22.94% 2002 131 $10.68 to $11.74 1,539 0.83 1.25% to 1.40% -21.49% to -21.37% 2001 185 $13.59 to $14.95 2,759 10.20 0.85% to 1.40% -30.17% to -30.06% 2000 229 $19.43 to $21.41 4,905 (a) (a) (a) Calvert Social Balanced 2004 166 $12.07 to $22.73 2,229 1.66 0.75% to 1.40% 6.81% to 7.47% 2003 178 $11.30 to $21.15 2,228 1.98 0.75% to 1.40% 17.59% to 18.42% 2002 167 $9.61 to $17.86 1,775 2.79 0.75% to 1.40% -13.38% to -12.81% 2001 158 $11.09 to $20.48 1,959 4.91 0.45% to 1.50% -8.25% to -7.64% 2000 175 $12.09 to $22.18 2,514 (a) (a) (a)
143 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
INVESTMENT UNITS UNIT FAIR VALUE NET ASSETS INCOME EXPENSE RATIO(B) TOTAL RETURN(C) DIVISION (000'S) (LOWEST TO HIGHEST) (000'S) RATIO(A) (LOWEST TO HIGHEST) (LOWEST TO HIGHEST) -------------------------------- ------- ------------------- ---------- ---------- ------------------- ------------------- Federated American Leaders 2004 1,665 $18.30 to $25.29 $ 42,192 1.46% 1.25% to 1.40% 8.22% to 8.41% 2003 2,211 $16.88 to $23.37 51,717 1.51 1.25% to 1.40% 25.92% to 26.06% 2002 2,720 $13.39 to $18.56 50,539 1.17 1.25% to 1.40% -21.33% to -21.21% 2001 3,522 $16.99 to $23.59 83,193 2.06 0.85% to 1.40% -5.56% to -5.42% 2000 4,105 $17.97 to $24.98 102,586 (a) (a) (a) Federated Capital Income 2004 373 $11.56 to $13.82 5,170 4.59 1.25% to 1.40% 8.39% to 8.54% 2003 505 $10.65 to $12.75 6,460 6.55 1.25% to 1.40% 18.94% to 19.13% 2002 653 $8.94 to $10.72 7,021 5.71 1.25% to 1.40% -25.01% to -24.90% 2001 923 $11.90 to $14.29 13,230 3.57 0.85% to 1.40% -14.94% to -14.81% 2000 1,149 $13.97 to $16.80 19,351 (a) (a) (a) Federated Equity Income 2004 654 $13.73 9,093 2.05 1.25% to 1.40% 11.26% 2003 884 $12.34 11,005 1.89 1.25% to 1.40% 25.53% 2002 1,035 $ 9.83 10,264 2.11 1.25% to 1.40% -21.85% 2001 1,384 $12.58 17,476 1.97 0.75% to 1.40% -12.24% 2000 1,690 $14.33 24,264 (a) (a) (a) Federated Fund for U.S. Government Securities 2004 407 $15.83 6,444 5.03 1.25% to 1.40% 2.19% 2003 635 $15.49 9,833 3.85 1.25% to 1.40% 0.91% 2002 826 $15.35 12,674 3.65 1.40% 0.0752 2001 820 $14.28 11,702 3.90 0.85% to 1.40% 5.53% 2000 823 $13.53 11,133 (a) (a) (a) Federated High Income Bond 2004 666 $15.13 to $17.70 11,845 7.82 1.25% to 1.40% 8.92% to 9.08% 2003 970 $13.87 to $16.25 15,774 7.68 1.25% to 1.40% 20.55% to 20.71% 2002 1,236 $11.49 to $13.48 16,683 10.52 1.25% to 1.40% -0.03% to 0.12% 2001 1,548 $11.48 to $13.49 20,899 11.00 0.85% to 1.40% -0.04% to 0.10% 2000 1,959 $11.46 to $13.49 26,446 (a) (a) (a)
144 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
INVESTMENT UNITS UNIT FAIR VALUE NET ASSETS INCOME EXPENSE RATIO(B) TOTAL RETURN(C) DIVISION (000'S) (LOWEST TO HIGHEST) (000'S) RATIO(A) (LOWEST TO HIGHEST) (LOWEST TO HIGHEST) -------------------------------- ------- ------------------- ---------- ---------- ------------------- ------------------- Federated International Equity 2004 367 $14.71 to $15.87 $ 5,865 -% 1.25% to 1.40% 12.47% to 12.63% 2003 462 $13.06 to $14.11 6,565 - 1.25% to 1.40% 30.05% to 30.21% 2002 551 $10.03 to $10.85 6,024 - 1.25% to 1.40% -23.84% to -23.73% 2001 767 $13.15 to $14.25 10,976 12.94 0.85% to 1.40% -30.42% to -30.31% 2000 978 $18.87 to $20.48 20,057 (a) (a) (a) Federated Mid Cap Growth Strategies 2004 489 $21.43 10,473 - 1.40% 13.81% 2003 627 $18.83 11,813 - 1.40% 38.15% 2002 764 $13.63 10,415 - 1.40% -27.38% 2001 1,117 $18.77 20,974 1.68 0.85% to 1.40% -23.48% 2000 1,378 $24.53 33,809 (a) (a) (a) Federated Prime Money 2004 266 $12.51 3,326 0.78 1.40% -0.64% 2003 392 $12.59 4,930 0.71 1.40% -0.71% 2002 583 $12.68 7,387 1.37 1.40% 0% 2001 695 $12.68 8,812 3.44 0.85% to 1.40% 2.28% 2000 702 $12.40 8,703 (a) (a) (a) Fidelity(R) VIP Contrafund(R) 2004 13,694 $10.30 to $27.52 243,399 0.31 0.75% to 1.90% 13.19% to 14.61% 2003 11,483 $9.10 to $24.17 188,055 0.43 0.75% to 1.90% -29.37% to 27.50% 2002 10,912 $7.22 to $19.81 145,571 0.86 0.45% to 1.90% -11.07% to 78.65% 2001 11,618 $8.12 to $21.96 173,999 3.56 0.45% to 1.90% -13.93% to -3.25% 2000 12,102 $9.43 to $24.67 216,963 (a) (a) (a) Fidelity(R) VIP Equity-Income 2004 12,953 $11.31 to $25.37 218,459 1.49 0.75% to 1.90% 9.49% to 10.71% 2003 12,003 $10.33 to $23.07 192,149 1.64 0.75% to 1.90% 27.85% to 29.33% 2002 11,480 $8.08 to $17.95 146,420 1.78 0.75% to 1.90% -18.53% to -17.57% 2001 12,170 $9.92 to $21.92 193,019 6.26 0.45% to 1.90% -6.77% to -5.67% 2000 10,395 $10.64 to $23.40 188,025 (a) (a) (a)
145 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
INVESTMENT UNITS UNIT FAIR VALUE NET ASSETS INCOME EXPENSE RATIO(B) TOTAL RETURN(C) DIVISION (000'S) (LOWEST TO HIGHEST) (000'S) RATIO(A) (LOWEST TO HIGHEST) (LOWEST TO HIGHEST) -------------------------------- ------- ------------------- ---------- ---------- ------------------- ------------------- Fidelity(R) VIP Growth 2004 8,483 $6.25 to $23.41 $ 109,798 0.28% 0.75% to 1.90% 1.30% to 2.57% 2003 9,688 $6.17 to $22.97 125,864 0.26 0.75% to 1.90% 30.44% to 31.85% 2002 9,473 $4.73 to $17.54 98,180 0.26 0.45% to 1.90% -31.44% to -30.42% 2001 10,633 $6.90 to 25.45 167,319 7.26 0.45% to 1.90% -19.23% to -18.23% 2000 9,467 $8.54 to $31.34 209,610 (a) (a) (a) Fidelity(R) VIP High Income 2004 4,370 $8.76 to $12.92 47,964 8.75 0.80% to 2.25% 7.54% to 8.54% 2003 5,612 $8.11 to $11.96 56,970 6.32 0.95% to 2.25% 24.90% to 26.10% 2002 4,489 $6.46 to $9.53 36,456 10.78 0.95% to 2.25% 1.48% to 2.46% 2001 4,973 $6.34 to $9.34 39,385 13.71 0.50% to 2.25% -13.42% to -12.58% 2000 4,980 $7.28 to $10.74 45,512 (a) (a) (a) Fidelity(R) VIP ASSET MANAGER(SM) 2004 631 $15.94 to $19.00 11,587 2.72 1.25% to 1.40% 4.00% to 4.18% 2003 681 $15.30 to $18.27 12,034 3.51 1.25% to 1.40% 16.30% to 16.53% 2002 728 $13.13 to $15.71 11,086 4.06 1.25% to 1.40% -10.01% to -9.87% 2001 831 $14.57 to $17.45 14,094 6.08 0.85% to 1.40% -5.44% to -5.30% 2000 993 $15.39 to $18.46 17,821 (a) (a) (a) Fidelity(R) VIP Investment Grade Bond 2004 118 $16.25 to $16.55 1,958 4.38 1.25% to 1.40% 2.99% to 3.11% 2003 140 $15.76 to $16.07 2,244 4.39 1.25% to 1.40% 3.74% to 3.89% 2002 187 $15.17 to $15.49 2,890 4.05 1.25% to 1.40% 8.80% to 8.96% 2001 217 $13.92 to $14.24 3,084 5.86 0.85% to 1.40% 6.94% to 7.10% 2000 278 $13.00 to $13.32 3,700 (a) (a) (a) Fidelity(R) VIP Index 500 2004 3,269 $18.62 to $22.16 70,298 1.34 1.25% to 1.40% 9.11% to 9.21% 2003 3,762 $17.05 to $20.31 74,266 1.44 1.25% to 1.40% 26.62% to 26.86% 2002 4,125 $13.44 to $16.04 64,190 1.38 1.25% to 1.40% -23.34% to -23.22% 2001 4,961 $17.51 to $20.93 100,783 1.20 0.85% to 1.40% -13.34% to -13.21% 2000 5,672 $20.17 to $24.15 133,049 (a) (a) (a)
146 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
INVESTMENT UNITS UNIT FAIR VALUE NET ASSETS INCOME EXPENSE RATIO(B) TOTAL RETURN(C) DIVISION (000'S) (LOWEST TO HIGHEST) (000'S) RATIO(A) (LOWEST TO HIGHEST) (LOWEST TO HIGHEST) -------------------------------- ------- ------------------- ---------- ---------- ------------------- ------------------- Fidelity(R) VIP Overseas 2004 986 $10.99 to $16.51 $ 15,669 1.18% 0.75% to 1.50% 11.93% to 12.79% 2003 979 $9.75 to $14.74 13,904 0.58 0.75% to 1.50% 41.30% to 42.34% 2002 654 $6.85 to $10.42 6,617 0.85 0.75% to 1.50% -21.47% to -20.88% 2001 770 $8.67 to $13.26 9,914 13.97 0.45% to 1.50% -22.35% to -21.76% 2000 872 $11.08 to $17.06 14,451 (a) (a) (a) Franklin Small Cap Value Securities 2004 294 $14.58 to $14.96 4,384 0.04 0.75% to 1.50% 22.18% to 22.82% 2003 55 $12.02 to $12.18 66 0.19 0.75% to 1.25% 30.59% to 31.11% 2002 39 $9.22 to $9.29 365 (c) 0.75% to 1.25% -21.04% to -19.73% 2001 (c) (c) (c) (c) (c) (c) 2000 (c) (c) (c) (c) (c) (c) ING GET Fund - Series H 2004 8,237 $10.27 to $10.75 85,522 4.57 1.00% to 1.90% -0.29% to 0.56% 2003 10,102 $10.30 to $10.69 105,009 4.11 1.00% to 1.90% 1.18% to 2.20% 2002 11,865 $10.18 to $10.46 121,603 3.59 1.00% to 1.90% 2.78% to 3.72% 2001 13,233 $9.91 to $10.01 131,686 0.47 1.00% to 2.40% -1.24% to -0.33% 2000 14,101 $10.03 to $10.12 141,764 (a) (a) (a) ING GET Fund - Series I 2004 5,921 $10.14 to $10.37 60,675 4.11 1.45% to 1.90% -0.78% to -0.29% 2003 7,257 $10.22 to $10.40 74,750 3.44 1.45% to 1.90% 1.19% to 1.66% 2002 8,275 $10.10 to $10.23 84,079 3.54 1.45% to 1.90% 3.35% to 3.82% 2001 8,909 $9.78 to $9.86 87,402 0.25 1.35% to 2.40% -0.76% to -0.30% 2000 9,419 $9.85 to $9.89 92,929 (a) (a) (a) ING GET Fund - Series J 2004 4,652 $10.04 to $10.25 47,133 4.37 1.45% to 1.90% -0.79% to -0.39% 2003 5,895 $10.12 to $10.29 60,090 3.65 1.45% to 1.90% 0.70% to 1.18% 2002 7,113 $10.05 to $10.17 71,844 3.49 1.45% to 1.90% 4.05% to 4.53% 2001 7,719 $9.66 to $9.73 74,801 0.18 1.35% to 2.40% -0.63% to -0.16% 2000 8,207 $9.72 to $9.75 79,872 (a) (a) (a)
147 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
INVESTMENT UNITS UNIT FAIR VALUE NET ASSETS INCOME EXPENSE RATIO(B) TOTAL RETURN(C) DIVISION (000'S) (LOWEST TO HIGHEST) (000'S) RATIO(A) (LOWEST TO HIGHEST) (LOWEST TO HIGHEST) -------------------------------- ------- ------------------- ---------- ---------- ------------------- ------------------- ING GET Fund - Series K 2004 5,530 $9.80 to $10.24 $ 55,421 3.60% 1.45% to 2.40% -1.80% to -0.87% 2003 6,945 $9.98 to $10.33 70,505 3.20 1.45% to 2.40% -0.10% to 0.88% 2002 8,037 $9.99 to $10.24 81,260 2.68 1.45% to 2.40% 3.20% to 4.20% 2001 9,082 $9.68 to $9.82 88,558 - 1.35% to 2.40% -3.19% to -2.24% 2000 9,357 $10.00 to $10.05 93,790 (a) (a) (a) ING GET Fund - Series L 2004 5,199 $9.80 to $10.20 51,909 3.99 1.45% to 2.40% -1.90% to -0.87% 2003 6,598 $9.99 to $10.29 66,868 3.48 1.45% to 2.40% 1.01% to 1.98% 2002 7,535 $9.89 to $10.09 75,255 0.05 1.45% to 2.40% 0.22% to 1.20% 2001 8,101 $9.87 to $9.97 80,345 4.63 1.35% to 2.40% -1.53% to -0.46% 2000 58 $10.01 to $10.02 585 (a) (a) (a) ING GET Fund - Series M 2004 7,647 $9.88 to $10.25 76,815 4.34 1.45% to 2.40% -1.59% to -0.68% 2003 9,320 $10.04 to $10.32 94,718 3.54 1.45% to 2.40% 1.31% to 2.38% 2002 11,558 $9.91 to $10.08 115,381 0.03 1.45% to 2.40% 1.12% to 2.10% 2001 12,531 $9.80 to $9.87 123,165 (b) 1.45% to 2.40% (b) 2000 (b) (b) (b) (b) (b) (b) ING GET Fund - Series N 2004 6,188 $10.07 to $10.42 63,310 3.42 1.45% to 2.40% -0.79% to 0.19% 2003 7,482 $10.15 to $10.40 76,785 2.65 1.45% to 2.40% 1.81% to 2.77% 2002 8,982 $9.97 to $10.12 90,143 0.02 1.45% to 2.40% -2.77% to -1.82% 2001 10,181 $10.25 to $10.31 104,606 (b) (b) (b) 2000 (b) (b) (b) (b) (b) (b) ING GET Fund - Series P 2004 4,760 $9.93 to $10.25 47,889 3.64 1.45% to 2.40% -1.00% to 0.00% 2003 5,731 $10.03 to $10.25 58,003 2.56 1.45% to 2.40% 1.42% to 2.40% 2002 7,680 $9.89 to $10.01 76,334 0.04 1.45% to 2.40% -1.16% to -0.20% 2001 8,288 $10.00 to $10.03 83,012 (b) (b) (b) 2000 (b) (b) (b) (b) (b) (b)
148 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
INVESTMENT UNITS UNIT FAIR VALUE NET ASSETS INCOME EXPENSE RATIO(B) TOTAL RETURN(C) DIVISION (000'S) (LOWEST TO HIGHEST) (000'S) RATIO(A) (LOWEST TO HIGHEST) (LOWEST TO HIGHEST) -------------------------------- ------- ------------------- ---------- ---------- ------------------- ------------------- ING GET Fund - Series Q 2004 3,662 $10.21 to $10.51 $ 37,872 3.57% 1.45% to 2.40% -0.49% to 0.38% 2003 4,282 $10.26 to $10.47 44,336 - 1.45% to 2.40% 2.60% to 3.66% 2002 5,460 $10.00 to $10.10 54,826 3.81 1.45% to 2.40% 0.00% to 0.97% 2001 162 $10.00 1,620 (b) (b) (b) 2000 (b) (b) (b) (b) (b) (b) ING GET Fund - Series R 2004 3,152 $10.45 to $10.73 33,352 3.22 1.45% to 2.40% 0.29% to 1.23% 2003 3,634 $10.42 to $10.60 38,175 0.01 1.45% to 2.40% 3.58% to 4.54% 2002 4,312 $10.06 to $10.14 43,556 (c) 1.45% to 2.40% 0.65% to 1.42% 2001 (c) (c) (c) (c) (c) (c) 2000 (c) (c) (c) (c) (c) (c) ING GET Fund - Series S 2004 3,472 $10.37 to $10.75 36,434 2.65 1.00% to 2.40% 0.19% to 1.70% 2003 4,236 $10.35 to $10.57 44,140 0.10 1.00% to 2.40% 3.40% to 4.86% 2002 5,334 $10.01 to $10.08 53,553 (c) 1.00% to 2.40% 0.14% to 0.87% 2001 (c) (c) (c) (c) (c) (c) 2000 (c) (c) (c) (c) (c) (c) ING GET Fund - Series T 2004 2,687 $10.42 to $10.65 28,261 2.80 1.45% to 2.40% 0.19% to 1.14% 2003 3,062 $10.40 to $10.53 32,020 0.14 1.45% to 2.40% 3.38% to 4.36% 2002 3,908 $10.06 to $10.09 39,378 (c) 1.45% to 2.40% 0.88% to 0.93% 2001 (c) (c) (c) (c) (c) (c) 2000 (c) (c) (c) (c) (c) (c) ING GET Fund - Series U 2004 2,553 $10.59 to $10.80 27,273 1.91 1.45% to 2.40% 0.95% to 1.89% 2003 2,854 $10.49 to $10.60 30,078 - 1.45% to 2.40% 5.21% to 6.00% 2002 50 $9.99 to $10.00 503 (c) 0.95% to 1.75% -0.05% to 0.00% 2001 (c) (c) (c) (c) (c) (c) 2000 (c) (c) (c) (c) (c) (c)
149 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
INVESTMENT UNITS UNIT FAIR VALUE NET ASSETS INCOME EXPENSE RATIO(B) TOTAL RETURN(C) DIVISION (000'S) (LOWEST TO HIGHEST) (000'S) RATIO(A) (LOWEST TO HIGHEST) (LOWEST TO HIGHEST) -------------------------------- ------- ------------------- ---------- ---------- ------------------- ------------------- ING GET Fund - Series V 2004 5,690 $9.68 to $9.85 $ 55,481 1.00% 1.45% to 2.40% -0.10% to 0.82% 2003 7,680 $9.69 to $9.77 74,677 (d) 1.45% to 2.40% (d) 2002 (d) (d) (d) (d) (d) (d) 2001 (d) (d) (d) (d) (d) (d) 2000 (d) (d) (d) (d) (d) (d) ING American Funds Growth 2004 169 $10.49 to $10.50 1,774 (e) 0.95% to 1.90% (e) 2003 (e) (e) (e) (e) (e) (e) 2002 (e) (e) (e) (e) (e) (e) 2001 (e) (e) (e) (e) (e) (e) 2000 (e) (e) (e) (e) (e) (e) ING American Funds Growth-Income 2004 208 $10.36 to $10.37 2,347 (e) 0.95% to 1.90% (e) 2003 (e) (e) (e) (e) (e) (e) 2002 (e) (e) (e) (e) (e) (e) 2001 (e) (e) (e) (e) (e) (e) 2000 (e) (e) (e) (e) (e) (e) ING American Funds International 2004 856 $10.59 to $10.61 9,074 (e) 0.95% to 1.90% (e) 2003 (e) (e) (e) (e) (e) (e) 2002 (e) (e) (e) (e) (e) (e) 2001 (e) (e) (e) (e) (e) (e) 2000 (e) (e) (e) (e) (e) (e) ING Julius Baer Foreign 2004 21 $11.72 242 (e) 0.75% (e) 2003 (e) (e) (e) (e) (e) (e) 2002 (e) (e) (e) (e) (e) (e) 2001 (e) (e) (e) (e) (e) (e) 2000 (e) (e) (e) (e) (e) (e)
150 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
INVESTMENT UNITS UNIT FAIR VALUE NET ASSETS INCOME EXPENSE RATIO(B) TOTAL RETURN(C) DIVISION (000'S) (LOWEST TO HIGHEST) (000'S) RATIO(A) (LOWEST TO HIGHEST) (LOWEST TO HIGHEST) -------------------------------- ------- ------------------- ---------- ---------- ------------------- ------------------- ING Legg Mason Value 2004 80 $10.95 to $10.96 $ 882 (e)% 0.95% to 1.90% (e) 2003 (e) (e) (e) (e) (e) (e) 2002 (e) (e) (e) (e) (e) (e) 2001 (e) (e) (e) (e) (e) (e) 2000 (e) (e) (e) (e) (e) (e) ING MFS Total Return 2004 154 $12.39 to $12.85 1,922 2.76 0.75% to 1.50% 9.74% to 10.24% 2003 35 $11.29 to $11.33 401 (d) 0.75% to 1.25% (d) 2002 (d) (d) (d) (d) (d) (d) 2001 (d) (d) (d) (d) (d) (d) 2000 (d) (d) (d) (d) (d) (d) ING T. Rowe Price Equity Income 2004 168 $13.81 to $14.63 2,335 1.25 0.75% to 1.50% 13.48% to 13.99% 2003 58 $12.17 to $12.22 704 (d) 0.75% to 1.25% (d) 2002 (d) (d) (d) (d) (d) (d) 2001 (d) (d) (d) (d) (d) (d) 2000 (d) (d) (d) (d) (d) (d) ING Aeltus Enhanced Index 2004 7 $10.98 to $11.13 79 - 0.75% to 1.25% 9.12% 2003 1 $10.20 6 - 0.75% (d) 2002 (d) (d) (d) (d) (d) (d) 2001 (d) (d) (d) (d) (d) (d) 2000 (d) (d) (d) (d) (d) (d) ING American Century Select 2004 49 $9.93 to $10.06 488 - 0.75% to 1.25% 3.44% to 3.93% 2003 39 $9.60 to $9.68 380 - 0.75% to 1.25% 32.60% to 33.33% 2002 1 $7.24 to $7.26 9 (c) 0.75% to 1.25% -23.21% to -6.63% 2001 (c) (c) (c) (c) (c) (c) 2000 (c) (c) (c) (c) (c) (c)
151 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
INVESTMENT UNITS UNIT FAIR VALUE NET ASSETS INCOME EXPENSE RATIO(B) TOTAL RETURN(C) DIVISION (000'S) (LOWEST TO HIGHEST) (000'S) RATIO(A) (LOWEST TO HIGHEST) (LOWEST TO HIGHEST) -------------------------------- ------- ------------------- ---------- ---------- ------------------- ------------------- ING American Century Small Cap Value 2004 77 $12.87 to $15.00 $ 1,034 -% 0.75% to 1.50% 19.89% to 20.35% 2003 50 $10.81 to $12.48 56 0.16 0.75% to 1.25% 16.24% to 34.53% 2002 20 $8.11 to $9.30 173 (c) 0.75% to 1.25% -19.84% to -1.82% 2001 (c) (c) (c) (c) (c) (c) 2000 (c) (c) (c) (c) (c) (c) ING Baron Small Cap Growth 2004 200 $14.37 to $16.22 2,941 - 0.75% to 1.50% 26.05% to 27.04% 2003 119 $11.40 to $12.79 1,381 - 0.75% to 1.50% 18.29% to 32.34% 2002 21 $8.72 to $9.68 193 (c) 0.75% to 1.25% -12.61% to -1.83% 2001 (c) (c) (c) (c) (c) (c) 2000 (c) (c) (c) (c) (c) (c) ING Goldman Sachs(R) Capital Growth 2004 29 $10.55 to $12.61 315 - 0.75% to 1.25% 7.43% to 7.98% 2003 2 $9.82 to $11.70 25 - 0.75% to 1.25% 0.2268 2002 2 $8.07 18 (c) 0.75% to 0.80% -3.04% to -0.05% 2001 (c) (c) (c) (c) (c) (c) 2000 (c) (c) (c) (c) (c) (c) ING JPMorgan International 2004 3,467 $8.33 to $23.96 44,030 1.15 0.75% to 1.90% 16.67% to 18.03% 2003 3,196 $7.14 to $20.30 34,019 1.05 0.75% to 1.90% 27.05% to 28.48% 2002 2,909 $5.62 to $15.80 24,044 0.62 0.75% to 1.90% -19.64% to -18.69% 2001 2,892 $7.00 to $19.44 30,449 25.04 0.45% to 2.25% -28.33% to -27.48% 2000 2,451 $9.76 to $26.80 38,280 (a) (a) (a) ING JPMorgan Mid Cap Value 2004 154 $13.93 to $15.92 2,215 0.21 0.75% to 1.50% 18.76% to 19.71% 2003 55 $11.73 to $13.32 678 0.48 0.75% to 1.50% 28.46% to 29.02% 2002 9 $9.17 to $9.20 87 (c) 0.75% to 1.25% -8.51% to 0.47% 2001 (c) (c) (c) (c) (c) (c) 2000 (c) (c) (c) (c) (c) (c)
152 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
INVESTMENT UNITS UNIT FAIR VALUE NET ASSETS INCOME EXPENSE RATIO(B) TOTAL RETURN(C) DIVISION (000'S) (LOWEST TO HIGHEST) (000'S) RATIO(A) (LOWEST TO HIGHEST) (LOWEST TO HIGHEST) -------------------------------- ------- ------------------- ---------- ---------- ------------------- ------------------- ING MFS Capital Opportunities 2004 2,955 $6.18 to $27.61 $ 38,224 0.42% 0.75% to 1.90% 10.75% to 12.05% 2003 3,394 $5.58 to $24.64 39,287 0.20 0.75% to 1.90% 25.68% to 27.14% 2002 3,869 $4.44 to $20.94 35,741 - 0.45% to 1.90% -31.49% to -30.48% 2001 4,710 $6.49 to $30.11 62,832 19.25 0.45% to 2.25% -26.19% to -25.29% 2000 4,048 $8.79 to $40.30 78,233 (a) (a) (a) ING OpCap Balanced Value 2004 180 $11.13 to $13.87 2,126 1.01 0.75% to 1.50% 8.69% to 9.42% 2003 116 $10.24 to $12.69 1,250 1.66 0.75% to 1.50% 28.66% 2002 2 $8.34 to $8.37 15 (c) 0.80% to 1.25% -0.14% to 5.35% 2001 (c) (c) (c) (c) (c) (c) 2000 (c) (c) (c) (c) (c) (c) ING Oppenheimer Global 2004 2 $12.30 to $12.47 22 - 0.75% to 1.25% 13.57% to 14.19% 2003 - $10.83 to $10.92 5 - 0.75% to 1.25% 30.17% to 30.78% 2002 - $8.32 to $8.35 1 (c) 0.75% to 1.25% -10.41% to -0.17% 2001 (c) (c) (c) (c) (c) (c) 2000 (c) (c) (c) (c) (c) (c) ING PIMCO Total Return 2004 339 $11.18 to $11.50 3,885 - 0.75% to 1.50% 2.73% to 3.60% 2003 237 $10.82 to $11.10 2,613 3.68 0.75% to 1.50% 0.93% to 3.26% 2002 119 $10.70 to $10.75 1,275 (c) 0.75% to 1.50% 3.07% to 7.55% 2001 (c) (c) (c) (c) (c) (c) 2000 (c) (c) (c) (c) (c) (c) ING Salomon Brothers Aggressive Growth 2004 4,742 $5.17 to $14.90 53,255 - 0.75% to 1.90% 7.71% to 8.92% 2003 5,581 $4.80 to $13.68 58,639 - 0.75% to 1.90% 35.59% to 37.25% 2002 6,053 $3.54 to $9.97 47,008 - 0.45% to 1.90% -36.54% to -35.60% 2001 7,478 $5.58 to $15.53 91,535 6.31 0.45% to 2.25% -26.64% to -25.74% 2000 8,010 $7.60 to $20.93 136,685 (a) (a) (a)
153 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
INVESTMENT UNITS UNIT FAIR VALUE NET ASSETS INCOME EXPENSE RATIO(B) TOTAL RETURN(C) DIVISION (000'S) (LOWEST TO HIGHEST) (000'S) RATIO(A) (LOWEST TO HIGHEST) (LOWEST TO HIGHEST) -------------------------------- ------- ------------------- ---------- ---------- ------------------- ------------------- ING Salomon Brothers Fundamental Value 2004 129 $11.05 to $13.75 $ 1,483 -% 0.75% to 1.50% 6.87% to 7.64% 2003 113 $10.34 to $12.80 1,215 0.75 0.75% to 1.50% 0.3953 2002 1 7.69 5 (c) 0.75% 0.67% 2001 (c) (c) (c) (c) (c) (c) 2000 (c) (c) (c) (c) (c) (c) ING Salomon Brothers Investors Value 2004 35 $11.02 to $13.23 38 1.06 0.75% to 1.25% 8.68% to 9.19% 2003 17 $10.14 to $12.14 17 0.65 0.75% to 1.25% 29.67% 2002 2 7.82 14 (c) 1.25% -21.97% 2001 (c) (c) (c) (c) (c) (c) 2000 (c) (c) (c) (c) (c) (c) ING T. Rowe Price Diversified Mid Cap Growth 2004 53 $10.90 to $14.04 612 - 0.75% to 1.50% 6.86% to 7.79% 2003 96 $10.20 to $13.05 1,017 - 0.75% to 1.50% 42.82% to 43.46% 2002 24 $7.31 to $7.34 179 (c) 0.75% to 1.25% -8.53% to -0.37% 2001 (c) (c) (c) (c) (c) (c) 2000 (c) (c) (c) (c) (c) (c) ING T. Rowe Price Growth Equity 2004 2,801 $12.62 to $25.72 73,921 0.15 0.75% to 1.50% 8.39% to 9.21% 2003 3,123 $11.57 to $23.71 74,887 0.15 0.75% to 1.50% 28.96% to 30.00% 2002 3,205 $8.90 to $18.37 58,443 0.19 0.45% to 1.50% -24.44% to -23.64% 2001 3,768 $ 11.70 to $24.29 89,395 15.41 0.45% to 2.25% -11.56% to -10.85% 2000 4,250 $13.14 to $27.44 113,230 (a) (a) (a) ING UBS U.S. Large Cap Equity 2004 3,631 $6.88 to $15.16 43,678 0.77 0.75% to 1.90% 12.60% to 13.90% 2003 3,988 $6.11 to $13.31 42,940 0.57 0.75% to 1.90% 22.69% to 24.04% 2002 4,627 $4.98 to $10.73 40,669 0.20 0.75% to 1.90% -26.32% to -25.45% 2001 5,830 $6.77 to $14.39 69,394 20.49 0.45% to 1.90% -22.40% to -21.48% 2000 6,216 $8.71 to $18.33 97,910 (a) (a) (a)
154 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
INVESTMENT UNITS UNIT FAIR VALUE NET ASSETS INCOME EXPENSE RATIO(B) TOTAL RETURN(C) DIVISION (000'S) (LOWEST TO HIGHEST) (000'S) RATIO(A) (LOWEST TO HIGHEST) (LOWEST TO HIGHEST) ------------------------------- ------- ------------------- ---------- ---------- ------------------- ------------------- ING Van Kampen Comstock 2004 298 $12.18 to $14.32 $ 3,726 -% 0.75% to 1.50% 15.23% to 15.84% 2003 83 $10.64 to $12.38 899 0.77 0.75% to 1.25% 28.04% to 28.69% 2002 38 $8.31 to $8.34 319 (c) 0.75% to 1.25% -18.72% to -2.95% 2001 (c) (c) (c) (c) (c) (c) 2000 (c) (c) (c) (c) (c) (c) ING Van Kampen Equity and Income 2004 12 $10.36 to $11.13 137 - 0.75% to 1.50% 8.94% to 9.76% 2003 5 $9.51 to $10.14 53 0.01 0.75% to 1.50% 25.47% 2002 - 8.01 428 (c) 1.25% 0.33% 2001 (c) (c) (c) (c) (c) (c) 2000 (c) (c) (c) (c) (c) (c) ING VP Strategic Allocation Balanced 2004 1,065 $15.45 to $17.95 20,822 1.30 0.75% to 2.25% 8.74% to 9.38% 2003 948 $14.19 to $16.41 16,937 1.41 0.75% to 2.25% 17.79% to 18.57% 2002 977 $12.03 to $13.84 14,344 2.50 0.45% to 1.40% -10.81% to -9.94% 2001 1,082 $13.47 to $15.41 17,390 2.50 0.45% to 2.25% -8.30% to -7.65% 2000 1,232 $14.66 to $16.69 21,090 (a) (a) (a) ING VP Strategic Allocation Growth 2004 771 $15.68 to $18.56 15,631 1.04 0.75% to 2.25% 10.33% to 11.20% 2003 813 $14.18 to $16.69 14,808 0.87 0.75% to 2.25% 22.52% to 23.45% 2002 835 $11.55 to $13.52 11,257 1.75 0.75% to 2.25% -15.04% to -14.40% 2001 898 $13.56 to $15.80 13,876 1.59 0.45% to 2.25% -12.87% to -12.21% 2000 1,013 $15.52 to $18.00 17,520 (a) (a) (a) ING VP Strategic Allocation Income 2004 926 $15.55 to $17.54 18,730 1.82 0.75% to 1.50% 6.50% to 7.15% 2003 1,031 $14.58 to $16.37 19,422 2.31 0.75% to 1.40% 12.05% to 12.82% 2002 1,237 $12.99 to $14.51 20,088 3.32 0.75% to 1.40% -5.69% to -0.78% 2001 1,380 $10.79 to $15.29 23,347 4.36 0.45% to 2.25% -3.75% to -3.11% 2000 1,518 $11.13 to $15.77 26,191 (a) (a) (a)
155 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
INVESTMENT UNITS UNIT FAIR VALUE NET ASSETS INCOME EXPENSE RATIO(B) TOTAL RETURN(C) DIVISION (000'S) (LOWEST TO HIGHEST) (000'S) RATIO(A) (LOWEST TO HIGHEST) (LOWEST TO HIGHEST) ------------------------------- ------- ------------------- ---------- ---------- ------------------- ------------------- ING VP Growth and Income 2004 18,090 $6.94 to $216.86 $ 423,357 2.31% 0.75% to 2.25% 6.28% to 7.59% 2003 20,842 $6.53 to $202.58 455,361 - 0.75% to 2.25% -24.93% to 25.16% 2002 24,165 $5.28 to $162.71 415,966 0.84 0.45% to 1.90% -26.42% to 60.86% 2001 29,079 $7.17 to $219.66 663,646 0.60 0.45% to 2.25% -19.96% to -18.98% 2000 32,914 $8.96 to $272.61 928,210 (a) (a) (a) ING GET U.S. Core - Series 1 2004 2,214 $10.32 to $10.48 23,042 0.68 1.45% to 2.40% 0.98% to 1.95% 2003 2,531 $10.22 to $10.28 25,945 (d) 1.45% to 2.40% (d) 2002 (d) (d) (d) (d) (d) (d) 2001 (d) (d) (d) (d) (d) (d) 2000 (d) (d) (d) (d) (d) (d) ING GET U.S. Core - Series 2 2004 1,939 $10.14 to $10.27 19,803 0.10 1.45% to 2.40% 1.20% to 2.19% 2003 2,442 $10.02 to $10.05 24,501 (d) 1.45% to 2.40% (d) 2002 (d) (d) (d) (d) (d) (d) 2001 (d) (d) (d) (d) (d) (d) 2000 (d) (d) (d) (d) (d) (d) ING GET U.S. Core - Series 3 2004 5,491 $9.89 to $9.99 54,614 0.00 1.45% to 2.40% -1.00% to -0.10% 2003 196 $10.00 1,965 (d) 0.95% to 1.75% (d) 2002 (d) (d) (d) (d) (d) (d) 2001 (d) (d) (d) (d) (d) (d) 2000 (d) (d) (d) (d) (d) (d) ING GET U.S. Core - Series 4 2004 788 $10.33 to $10.41 8,173 (e) 1.45% to 2.40% (e) 2003 (e) (e) (e) (e) (e) (e) 2002 (e) (e) (e) (e) (e) (e) 2001 (e) (e) (e) (e) (e) (e) 2000 (e) (e) (e) (e) (e) (e)
156 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
INVESTMENT UNITS UNIT FAIR VALUE NET ASSETS INCOME EXPENSE RATIO(B) TOTAL RETURN(C) DIVISION (000'S) (LOWEST TO HIGHEST) (000'S) RATIO(A) (LOWEST TO HIGHEST) (LOWEST TO HIGHEST) ------------------------------ ------- ------------------- ---------- ---------- ------------------- ------------------- ING GET U.S. Core - Series 5 2004 422 $10.44 to $10.50 $ 4,428 (e)% 1.45% to 2.40% (e) 2003 (e) (e) (e) (e) (e) (e) 2002 (e) (e) (e) (e) (e) (e) 2001 (e) (e) (e) (e) (e) (e) 2000 (e) (e) (e) (e) (e) (e) ING GET U.S. Core - Series 6 2004 8,740 $10.06 to $10.09 88,090 (e) 1.45% to 2.40% (e) 2003 (e) (e) (e) (e) (e) (e) 2002 (e) (e) (e) (e) (e) (e) 2001 (e) (e) (e) (e) (e) (e) 2000 (e) (e) (e) (e) (e) (e) ING GET U.S. Core - Series 7 2004 5,702 $10.00 57,015 (e) 0.95% to 1.90% (e) 2003 (e) (e) (e) (e) (e) (e) 2002 (e) (e) (e) (e) (e) (e) 2001 (e) (e) (e) (e) (e) (e) 2000 (e) (e) (e) (e) (e) (e) ING VP Global Science and Technology 2004 2,857 $3.56 to $11.96 10,373 - 0.75% to 1.90% -3.17% to -1.86% 2003 3,595 $3.66 to $12.23 13,372 - 0.75% to 1.90% 42.64% to 44.62% 2002 2,536 $2.55 to $2.67 6,564 - 0.75% to 1.90% -42.40% to -41.72% 2001 2,631 $4.42 to $4.62 11,745 - 0.45% to 1.90% -24.42 to -23.54% 2000 1,680 $5.82 to $6.09 9,833 (a) (a) (a) ING VP Growth 2004 2,380 $5.38 to $14.86 28,081 0.12 0.75% to 1.90% 5.25% to 6.37% 2003 2,874 $5.11 to $13.97 32,091 - 0.75% to 1.90% 27.75% to 29.46% 2002 3,203 $4.00 to $10.80 28,286 - 0.75% to 1.90% -30.30% to -29.47% 2001 4,148 $5.73 to $15.31 52,088 12.13 0.45% to 2.25% -28.45% to -27.61% 2000 4,705 $8.02 to $21.15 85,002 (a) (a) (a)
157 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------
INVESTMENT UNITS UNIT FAIR VALUE NET ASSETS INCOME EXPENSE RATIO(B) TOTAL RETURN(C) DIVISION (000'S) (LOWEST TO HIGHEST) (000'S) RATIO(A) (LOWEST TO HIGHEST) (LOWEST TO HIGHEST) ------------------------------- ------- ------------------- ---------- ---------- ------------------- ------------------- ING VP Index Plus LargeCap 2004 10,827 $7.87 to $19.33 $ 182,362 1.01% 0.75% to 2.25% 8.40% to 9.77% 2003 12,166 $7.26 to $17.61 186,926 1.03 0.75% to 2.25% 23.89% to 25.16% 2002 13,185 $5.86 to $14.07 154,417 0.24 0.45% to 2.25% -23.02% to -21.88 2001 15,160 $7.62 to $18.06 224,762 4.07 0.45% to 2.25% -15.27% to -5.62% 2000 14,826 $8.99 to $21.06 261,795 (a) (a) (a) ING VP Index Plus MidCap 2004 944 $14.59 to $20.23 18,233 0.40 0.75% to 1.50% 14.85% to 15.72% 2003 901 $12.63 to $17.49 15,032 0.44 0.75% to 1.50% 30.49% to 31.40% 2002 925 $12.33 to $13.31 11,779 0.50 0.45% to 1.50% -13.40% to -12.49% 2001 631 $14.24 to $15.26 9,214 6.54 0.45% to 1.50% -2.80% to 12.09% 2000 452 $14.50 to $15.59 6,733 (a) (a) (a) ING VP Index Plus SmallCap 2004 592 $14.45 to $16.34 8,963 0.14 0.75% to 1.50% 20.22% to 21.21% 2003 538 $12.02 to $13.49 6,712 0.16 0.75% to 1.50% 34.15% to 35.13% 2002 464 $8.96 to $9.99 4,275 0.19 0.75% to 1.50% -14.50% to -13.86% 2001 225 $10.48 to $11.60 2,411 3.71 0.45% to 1.50% 0.87% to 1.64% 2000 104 $10.39 to $11.42 1,098 (a) (a) (a) ING VP International Equity 2004 1,353 $6.98 to $9.75 13,340 1.15 0.75% to 1.90% 14.99% to 16.21% 2003 993 $6.07 to $8.39 8,924 0.89 0.75% to 1.90% 29.42% to 31.09% 2002 836 $4.69 to $6.40 5,228 0.22 0.75% to 1.90% -28.07% to -27.23% 2001 954 $6.51 to $8.79 7,991 0.12 0.45% to 2.25% -25.34% to -24.45% 2000 863 $8.73 to $11.64 9,708 (a) (a) (a) ING VP Small Company 2004 4,382 $10.72 to $23.05 82,870 0.28 0.75% to 1.90% 12.13% to 13.55% 2003 4,826 $9.56 to $20.30 80,458 0.24 0.75% to 1.90% 34.84% to 36.42% 2002 4,213 $7.09 to $14.88 52,158 0.52 0.45% to 1.90% -24.69% to -23.57% 2001 3,814 $9.41 to $19.53 62,576 3.89 0.45% to 2.25% 0.50% to 3.22% 2000 2,815 $9.22 to $18.92 47,270 (a) (a) (a)
158 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
INVESTMENT UNITS UNIT FAIR VALUE NET ASSETS INCOME EXPENSE RATIO(B) TOTAL RETURN(C) DIVISION (000'S) (LOWEST TO HIGHEST) (000'S) RATIO(A) (LOWEST TO HIGHEST) (LOWEST TO HIGHEST) ------------------------------- ------- ------------------- ---------- ---------- ------------------- ------------------- ING VP Value Opportunity 2004 909 $12.23 to $18.71 $ 16,285 0.82% 0.75% to 1.50% 8.48% to 9.35% 2003 1,131 $11.21 to $17.11 18,645 0.76 0.75% to 1.50% 22.79% to 23.63% 2002 1,272 $9.36 to $13.84 17,001 0.44 0.45% to 1.50% -27.07% to -26.30% 2001 1,441 $12.75 to $18.83 26,362 5.21 0.45% to 1.50% -10.97% to 0.58% 2000 963 $14.22 to $20.99 19,710 (a) (a) (a) ING VP International Value 2004 247 $11.76 to $13.22 2,980 1.29 0.75% to 1.50% 15.63% to 16.51% 2003 115 $10.17 to $11.37 1,199 1.60 0.75% to 1.50% 15.86% to 29.02% 2002 49 $7.95 to $8.83 404 (c) 0.75% to 1.50% -19.18% to -1.19% 2001 (c) (c) (c) (c) (c) (c) 2000 (c) (c) (c) (c) (c) (c) ING VP MagnaCap - Class I 2004 13 $9.52 to $9.64 125 2.40 0.75% to 1.25% 7.81% to 8.19% 2003 5 $8.83 to $8.91 42 1.03 0.75% to 1.25% 30.07% 2002 4 $6.85 27 (c) 0.75% -21.38% 2001 (c) (c) (c) (c) (c) (c) 2000 (c) (c) (c) (c) (c) (c) ING VP MagnaCap - Class S 2004 166 $9.60 to $9.95 1,635 1.48 0.95% to 1.90% 6.90% to 7.92% 2003 101 $8.98 to $9.22 928 0.71 0.95% to 1.90% 28.10% to 29.49% 2002 69 $7.01 to $7.12 490 0.95 0.95% to 1.90% -25.77% to -23.73% 2001 46 $9.28 to $9.34 431 (b) 0.95% to 1.90% -5.87% to 0.00% 2000 (b) (b) (b) (b) (b) (b) ING VP MidCap Opportunities - Class I 2004 32 $10.28 to $13.84 340 - 0.75% to 1.25% 10.18% to 10.69% 2003 96 $9.33 to $9.45 905 - 0.75% to 1.25% 34.83% to 35.58% 2002 11 $6.89 to $6.97 76 (c) 0.75% to 1.50% -20.85% to -9.47% 2001 (c) (c) (c) (c) (c) (c) 2000 (c) (c) (c) (c) (c) (c)
159 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
INVESTMENT UNITS UNIT FAIR VALUE NET ASSETS INCOME EXPENSE RATIO(B) TOTAL RETURN(C) DIVISION (000'S) (LOWEST TO HIGHEST) (000'S) RATIO(A) (LOWEST TO HIGHEST) (LOWEST TO HIGHEST) ------------------------------- ------- ------------------- ---------- ---------- ------------------- ------------------- ING VP MidCap Opportunities - Class S 2004 1,180 $8.94 to $9.26 $ 10,784 -% 0.95% to 1.90% 9.02% to 10.11% 2003 818 $8.20 to $8.41 6,818 - 0.95% to 1.90% 34.21% to 35.43% 2002 418 $6.11 to $6.21 2,583 - 0.95% to 1.90% -27.40% to -26.70% 2001 102 $8.42 to $8.48 865 (b) 0.95% to 1.90% -16.75% to -10.14% 2000 (b) (b) (b) (b) (b) (b) ING VP Real Estate 2004 86 $13.88 to $13.93 1,193 (e) 0.75% to 1.25% (e) 2003 (e) (e) (e) (e) (e) (e) 2002 (e) (e) (e) (e) (e) (e) 2001 (e) (e) (e) (e) (e) (e) 2000 (e) (e) (e) (e) (e) (e) ING VP SmallCap Opportunities - Class I 2004 128 $7.42 to $12.78 970 - 0.75% to 1.25% 8.80% to 9.42% 2003 202 $6.78 to $11.71 1,392 - 0.75% to 1.50% 36.95% to 37.45% 2002 12 $4.98 to $5.02 58 (c) 0.75% to 1.25% -33.20% to -9.70% 2001 (c) (c) (c) (c) (c) (c) 2000 (c) (c) (c) (c) (c) (c) ING VP SmallCap Opportunities - Class S 2004 765 $6.82 to $7.07 5,342 - 0.95% to 1.90% 7.91% to 8.94% 2003 704 $6.32 to $6.49 4,528 - 0.95% to 1.90% 35.62% to 37.21% 2002 376 $4.66 to $4.73 1,772 - 0.95% to 1.90% -44.82% to -44.28% 2001 151 $8.44 to $8.50 1,280 (b) 0.95% to 1.90% -24.98% to -12.33% 2000 (b) (b) (b) (b) (b) (b) ING VP Balanced 2004 7,519 $9.85 to $26.84 189,559 2.00 0.75% to 2.25% 7.30% to 8.58% 2003 6,962 $9.18 to $24.72 172,818 1.94 0.75% to 2.25% 16.65% to 18.00% 2002 7,046 $7.87 to $26.80 148,868 1.07 0.45% to 2.25% -12.01% to -10.71% 2001 8,277 $8.94 to $30.01 189,948 5.84 0.45% to 2.25% -6.04% to 0.46% 2000 8,309 $9.52 to $24.76 199,768 (a) (a) (a)
160 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
INVESTMENT UNITS UNIT FAIR VALUE NET ASSETS INCOME EXPENSE RATIO(B) TOTAL RETURN(C) DIVISION (000'S) (LOWEST TO HIGHEST) (000'S) RATIO(A) (LOWEST TO HIGHEST) (LOWEST TO HIGHEST) ------------------------------- ------- ------------------- ---------- ---------- ------------------- ------------------- ING VP Emerging Markets 2004 70 $11.02 $ 770 0.76% 1.40% 20.04% 2003 88 $9.18 809 - 1.40% 45.25% 2002 103 $6.32 649 - 1.40% -10.60% 2001 129 $7.08 912 19.78 0.85% to 1.40% -11.68% 2000 157 $8.01 1,255 (a) (a) (a) ING VP Intermediate Bond 2004 7,665 $11.37 to $19.78 137,880 7.97 0.75% to 2.25% 2.91% to 4.11% 2003 8,243 $10.94 to $19.00 143,435 1.80 0.75% to 2.25% 4.22% to 5.51% 2002 9,939 $11.86 to $18.01 164,563 3.25 0.75% to 2.25% 6.28% to 7.53% 2001 9,525 $11.16 to $16.75 144,459 6.51 0.45% to 2.25% 6.67% to 7.93% 2000 6,869 $10.46 to $15.52 99,490 (a) (a) (a) ING VP Money Market 2004 15,367 $10.10 to $14.51 192,781 1.13 0.75% to 2.25% -0.88% to 0.35% 2003 13,149 $10.02 to $14.46 173,894 1.89 0.75% to 2.25% -1.07% to 0.14% 2002 19,939 $10.30 to $14.44 262,556 3.85 0.75% to 2.25% -0.31% to 0.86% 2001 22,423 $10.33 to $48.45 293,027 4.69 0.45% to 2.25% 1.33% to 3.16% 2000 16,310 $10.13 to $13.88 211,809 (a) (a) (a) ING VP Natural Resources 2004 111 $16.41 to $17.48 1,861 0.95 0.75% to 1.50% 11.03% to 11.76% 2003 116 $14.78 to $15.64 1,732 - 0.75% to 1.50% 28.52% to 29.58% 2002 135 $11.48 to $12.07 1,567 0.19 0.75% to 1.50% -3.56% to -2.83% 2001 166 $11.90 to $12.42 2,003 - 0.45% to 1.50% -17.19% to -16.57% 2000 193 $14.35 to $14.87 2,801 (a) (a) (a) Janus Aspen Balanced 2004 9,164 $9.95 to $27.77 156,790 2.08 0.75% to 1.90% 6.53% to 7.72% 2003 11,471 $9.34 to $25.95 186,531 2.17 0.75% to 1.90% -46.48% to 13.18% 2002 13,695 $8.35 to $23.08 197,825 2.41 0.45% to 1.90% -8.22% to 109.99% 2001 15,239 $9.10 to $25.02 240,241 2.63 0.45% to 1.90% -6.53% to -5.42% 2000 13,985 $9.73 to $26.63 244,144 (a) (a) (a)
161 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
INVESTMENT UNITS UNIT FAIR VALUE NET ASSETS INCOME EXPENSE RATIO(B) TOTAL RETURN(C) DIVISION (000'S) (LOWEST TO HIGHEST) (000'S) RATIO(A) (LOWEST TO HIGHEST) (LOWEST TO HIGHEST) ------------------------------- ------- ------------------- ---------- ---------- ------------------- ------------------- Janus Aspen Flexible Income 2004 794 $11.46 to $21.38 $ 15,748 5.17% 0.75% to 1.50% 2.40% to 3.19% 2003 1,144 $11.13 to $20.72 22,158 4.66 0.75% to 1.50% 4.82% to 5.61% 2002 1,538 $12.85 to $19.62 28,392 4.45 0.45% to 1.50% 8.83% to 9.98% 2001 1,415 $11.72 to $17.89 23,940 5.95 0.45% to 1.50% -0.78% to 6.93% 2000 1,182 $10.97 to $16.73 18,730 (a) (a) (a) Janus Aspen Growth 2004 6,667 $5.85 to $21.12 84,481 0.13 0.75% to 1.90% 2.45% to 3.70% 2003 8,493 $5.71 to $20.49 105,326 0.08 0.75% to 1.90% 29.19% to 30.80% 2002 10,142 $4.42 to $15.78 98,503 - 0.45% to 1.90% -27.91% to -26.84% 2001 13,150 $6.13 to $21.78 176,779 0.26 0.45% to 2.25% -26.17% to -25.27% 2000 14,324 $8.30 to $29.34 267,653 (a) (a) (a) Janus Aspen Mid Cap Growth 2004 7,231 $4.59 to $21.68 94,264 - 0.75% to 1.90% 18.30% to 19.85% 2003 7,749 $3.88 to $18.09 88,717 - 0.75% to 1.90% 32.77% to 34.10% 2002 8,940 $2.92 to $15.64 77,233 - 0.45% to 1.90% -29.31% to -28.26% 2001 11,480 $4.14 to $21.80 141,806 - 0.45% to 1.90% -40.61% to -39.88% 2000 12,172 $6.97 to $36.27 274,462 (a) (a) (a) Janus Aspen Worldwide Growth 2004 10,934 $5.95 to $23.00 154,245 0.94 0.75% to 1.90% 2.76% to 3.96% 2003 13,736 $5.79 to $22.26 190,923 1.05 0.75% to 1.90% 21.64% to 23.07% 2002 17,171 $4.76 to $18.46 198,280 0.84 0.45% to 1.90% -26.92% to -25.84% 2001 20,979 $6.51 to $24.89 331,396 0.44 0.45% to 2.25% -23.92% to -22.98% 2000 21,842 $8.56 to $32.41 483,863 (a) (a) (a) Lord Abbett Growth and Income 2004 591 $11.21 to $13.69 6,773 1.07 0.75% to 1.50% 10.99% to 11.78% 2003 303 $10.10 to $12.27 3,110 1.02 0.75% to 1.50% 29.43% to 30.09% 2002 54 $7.85 to $7.91 422 (c) 0.75% to 1.25% -17.45% to -15.55% 2001 (c) (c) (c) (c) (c) (c) 2000 (c) (c) (c) (c) (c) (c)
162 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
INVESTMENT UNITS UNIT FAIR VALUE NET ASSETS INCOME EXPENSE RATIO(B) TOTAL RETURN(C) DIVISION (000'S) (LOWEST TO HIGHEST) (000'S) RATIO(A) (LOWEST TO HIGHEST) (LOWEST TO HIGHEST) ------------------------------- ------- ------------------- ---------- ---------- ------------------- ------------------- Lord Abbett Mid-Cap Value 2004 292 $12.45 to $14.98 $ 3,732 0.40% 0.75% to 1.50% 22.18% to 23.12% 2003 117 $10.19 to $12.20 1,217 0.66 0.75% to 1.50% 3.85% to 23.87% 2002 55 $8.38 to $9.87 474 (c) 0.75% to 1.25% -13.36% to 1.56% 2001 (c) (c) (c) (c) (c) (c) 2000 (c) (c) (c) (c) (c) (c) MFS(R) VIT Strategic Income 2004 181 $13.78 to $13.96 2,503 5.05 1.25% to 1.40% 6.25% to 6.32% 2003 194 $12.97 to $13.13 2,524 5.90 1.25% to 1.40% 8.81% to 9.05% 2002 228 $11.92 to $12.04 2,720 2.91 1.25% to 1.40% 6.89% to 7.05% 2001 156 $11.15 to $11.25 1,742 3.89 0.85% to 1.40% 3.28% to 3.44% 2000 142 $10.80 to $10.87 1,537 (a) (a) (a) MFS(R) VIT Total Return 2004 9,461 $12.25 to $19.78 142,497 1.52 0.95% to 1.90% 9.18% to 10.30% 2003 7,849 $11.22 to $18.00 110,405 1.64 0.95% to 1.90% 14.14% to 15.18% 2002 7,407 $9.83 to $15.67 91,725 1.74 0.95% to 1.90% -6.97% to -6.07% 2001 7,002 $10.57 to $16.73 93,910 5.19 0.50% to 1.90% -1.67% to -0.70% 2000 4,368 $10.75 to $16.90 63,398 (a) (a) (a) Oppenheimer Aggressive Growth 2004 3,156 $4.71 to $15.29 32,874 - 0.95% to 1.90% 17.46% to 18.63% 2003 3,313 $4.01 to $12.93 29,115 - 0.95% to 1.90% 23.01% to 24.42% 2002 3,447 $3.26 to $10.43 23,930 0.67 0.95% to 1.90% -29.17% to -28.48% 2001 4,063 $4.60 to $14.62 40,449 15.39 0.50% to 2.25% -32.58% to -31.92% 2000 3,454 $6.82 to $21.54 57,052 (a) (a) (a) Oppenheimer Global Securities 2004 2,073 $15.03 to $23.47 43,720 1.17 0.75% to 1.50% 17.37% to 18.23% 2003 1,634 $12.73 to $19.94 29,539 0.55 0.75% to 1.50% 40.97% to 41.96% 2002 1,174 $10.74 to $14.12 15,177 0.57 0.75% to 1.50% -23.30% to -22.72% 2001 977 $14.01 to $18.36 16,403 12.79 0.75% to 1.50% -13.36% to -12.70% 2000 881 $16.17 to $21.14 17,260 (a) (a) (a)
163 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
INVESTMENT UNITS UNIT FAIR VALUE NET ASSETS INCOME EXPENSE RATIO(B) TOTAL RETURN(C) DIVISION (000'S) (LOWEST TO HIGHEST) (000'S) RATIO(A) (LOWEST TO HIGHEST) (LOWEST TO HIGHEST) ------------------------------- ------- ------------------- ---------- ---------- ------------------- ------------------- Oppenheimer Main Street(R) 2004 5,694 $8.27 to $13.79 $ 68,396 0.85% 0.80% to 2.25% 7.40% to 8.45% 2003 5,799 $7.70 to $12.76 65,121 0.86 0.95% to 2.25% 24.19% to 25.42% 2002 5,617 $6.20 to $10.19 48,801 0.77 0.95% to 2.25% -20.34% to -19.57% 2001 6,141 $7.78 to $12.71 65,709 0.53 0.50% to 2.25% -11.87% to -11.02% 2000 5,613 $8.83 to $14.33 67,652 (a) (a) (a) Oppenheimer Strategic Bond 2004 3,938 $13.17 to $15.49 58,634 4.61 0.75% to 2.25% 6.66% to 7.90% 2003 3,027 $12.23 to $14.43 42,500 6.13 0.75% to 2.25% 15.80% to 17.10% 2002 2,737 $10.76 to $12.38 32,735 7.25 0.75% to 2.25% 5.40% to 6.64% 2001 2,585 $10.21 to $11.67 28,892 6.16 0.50% to 2.25% 2.84% to 4.06% 2000 2,144 $9.93 to $11.27 23,335 (a) (a) (a) PIMCO VIT Real Return 2004 48 $10.82 522 (e) 0.75% (e) 2003 (e) (e) (e) (e) (e) (e) 2002 (e) (e) (e) (e) (e) (e) 2001 (e) (e) (e) (e) (e) (e) 2000 (e) (e) (e) (e) (e) (e) Pioneer Equity Income VCT 2004 140 $11.02 to $13.32 1,581 2.07 0.75% to 1.50% 14.67% to 15.53% 2003 26 $9.61 to $11.55 253 2.46 0.75% to 1.50% 21.03% to 21.61% 2002 19 $7.99 to $8.05 153 (c) 0.75% to 1.25% -17.35% to -16.32% 2001 (c) (c) (c) (c) (c) (c) 2000 (c) (c) (c) (c) (c) (c) Pioneer Fund VCT 2004 5 $10.12 to $10.29 52 - 0.75% to 1.25% 9.88% to 10.41% 2003 - $9.21 to $9.32 4 0.58 0.75% to 1.25% 22.79% 2002 - $7.59 1 (c) 0.75% 0.06% 2001 (c) (c) (c) (c) (c) (c) 2000 (c) (c) (c) (c) (c) (c)
164 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
INVESTMENT UNITS UNIT FAIR VALUE NET ASSETS INCOME EXPENSE RATIO(B) TOTAL RETURN(C) DIVISION (000'S) (LOWEST TO HIGHEST) (000'S) RATIO(A) (LOWEST TO HIGHEST) (LOWEST TO HIGHEST) ------------------------------- ------- ------------------- ---------- ---------- ------------------- ------------------- Pioneer High Yield VCT 2004 20 $10.68 $ 216 (e)% 0.75% (e) 2003 (e) (e) (e) (e) (e) (e) 2002 (e) (e) (e) (e) (e) (e) 2001 (e) (e) (e) (e) (e) (e) 2000 (e) (e) (e) (e) (e) (e) Pioneer Mid Cap Value VCT 2004 220 $14.18 to $15.93 3,193 0.31 0.75% to 1.50% 20.27% to 21.25% 2003 62 $11.79 to $13.17 739 0.14 0.75% to 1.50% 35.85% to 36.36% 2002 3 $8.73 to $8.80 30 (c) 0.75% to 1.25% -17.31% to -16.24% 2001 (c) (c) (c) (c) (c) (c) 2000 (c) (c) (c) (c) (c) (c) Jennison 2004 160 $8.14 to $8.43 1,329 0.09 0.95% to 1.90% 7.25% to 8.22% 2003 111 $7.59 to $7.79 859 - 0.95% to 1.90% 27.14% to 28.34% 2002 71 $5.97 to $6.07 427 - 0.95% to 1.90% -32.48% to -31.82% 2001 81 $8.84 to $8.90 724 - 0.95% to 1.90% -3.52% to 9.12% 2000 (b) (b) (b) (b) (b) (b) SP William Blair International Growth 2004 682 $8.81 to $9.13 6,154 - 0.95% to 1.90% 13.82% to 14.99% 2003 416 $7.74 to $7.94 3,269 - 0.95% to 1.90% 36.51% to 37.85% 2002 37 $5.67 to $5.76 214 - 0.95% to 1.90% -24.30% to -21.53% 2001 8 $ 7.49 to $7.52 59 - 0.95% to 1.90% -19.54% to 4.42% 2000 (b) (b) (b) (b) (b) (b) UBS U.S. Allocation 2004 977 $8.38 to $9.41 8,911 0.77 0.95% to 1.90% 8.27% to 9.29% 2003 1,393 $7.74 to $8.61 11,708 0.80 0.95% to 1.90% 25.04% to 26.06% 2002 1,454 $6.19 to $6.83 9,725 0.55 0.95% to 1.90% -24.42% to -23.69% 2001 1,635 $8.20 to $8.94 14,334 7.95 0.50% to 1.90% -14.22% to -13.38% 2000 1,218 $9.56 to $10.33 12,509 (a) (a) (a)
165 ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
INVESTMENT UNITS UNIT FAIR VALUE NET ASSETS INCOME EXPENSE RATIO(B) TOTAL RETURN(C) DIVISION (000'S) (LOWEST TO HIGHEST) (000'S) RATIO(A) (LOWEST TO HIGHEST) (LOWEST TO HIGHEST) ------------------------------- ------- ------------------- ---------- ---------- ------------------- ------------------- Wanger Select 2004 22 $11.45 $ 249 (e)% 0.75% (e) 2003 (e) (e) (e) (e) (e) (e) 2002 (e) (e) (e) (e) (e) (e) 2001 (e) (e) (e) (e) (e) (e) 2000 (e) (e) (e) (e) (e) (e) Wanger U.S. Smaller Companies 2004 8 $11.61 97 (e) 0.75% (e) 2003 (e) (e) (e) (e) (e) (e) 2002 (e) (e) (e) (e) (e) (e) 2001 (e) (e) (e) (e) (e) (e) 2000 (e) (e) (e) (e) (e) (e)
(a) Not provided for 2000. (b) As investment Division was not available until 2001, this data is not meaningful and is therefore not presented. (c) As investment Division was not available until 2002, this data is not meaningful and is therefore not presented. (d) As investment Division was not available until 2003, this data is not meaningful and is therefore not presented. (e) As investment Division was not available until 2004, this data is not meaningful and is therefore not presented. (A) The Investment Income Ratio represents dividends received by the Division, excluding capital gains distributions, divided by the average net assets. The recognition of investment income is determined by the timing of the declaration of dividends by the underlying fund in which the Division invests. (B) The Expense Ratio considers only the expenses borne directly by the Account and is equal to the mortality and expense risk charge, as defined in Note 3. Certain items in this table are presented as a range of minimum and maximum values; however, such information is calculated independently for each column in the table. (C) Total Return is calculated as the change in unit value for each Contract presented in the Statements of Assets and Liabilities. Certain items in this table are presented as a range of minimum and maximum values; however, such information is calculated independently for each column in the table. 166 VARIABLE ANNUITY ACCOUNT B PART C - OTHER INFORMATION ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements: (1) Included in Part A: Condensed Financial Information (2) Included in Part B: Consolidated Financial Statements of Variable Annuity Account B: - Report of Independent Registered Public Accounting Firm - Statements of Assets and Liabilities as of December 31, 2004 - Statements of Operations for the year ended December 31, 2004 - Statements of Changes in Net Assets for the years ended December 31, 2004 and 2003 - Notes to Financial Statements Financial Statements of ING Life Insurance and Annuity Company: - Report of Independent Registered Public Accounting Firm - Consolidated Statements of Operations for the years ended December 31, 2004, 2003 and 2002 - Consolidated Balance Sheets as of December 31, 2004 and 2003 - Consolidated Statements of Changes in Shareholder's Equity for the years ended December 31, 2004, 2003 and 2002 - Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002 - Notes to Consolidated Financial Statements (b) Exhibits (1) Resolution establishing Variable Annuity Account B o Incorporated by reference to Post-Effective Amendment No. 6 to Registration Statement on Form N-4 (File No. 33-75986), as filed on April 22, 1996. (2) Not applicable (3.1) Broker-Dealer Agreement o Incorporated by reference to Registration Statement on Form N-4 (File No. 333-56297), as filed on June 8, 1998. (3.2) Alternative Form of Wholesaling Agreement and Related Selling Agreement o Incorporated by reference to Post-Effective Amendment No. 5 to Registration Statement on Form N-4 (File No. 33-75986), as filed on April 12, 1996. (3.3) Broker-Dealer Agreement dated June 7, 2000 between Aetna Life Insurance and Annuity Company and Aetna Investment Services, Inc. (AISI) and Letter of Assignment to AISI o Incorporated by reference to Pre-Effective Amendment No. 1 to Registration Statement on Form N-4 (File No. 333-49176), as filed on November 30, 2000. (3.4) Underwriting Agreement dated November 17, 2000 between Aetna Life Insurance and Annuity Company and Aetna Investment Services, LLC o Incorporated by reference to Pre-Effective Amendment No. 1 to Registration Statement on Form N-4 (File No. 333-49176), as filed on November 30, 2000. (4.1) Variable Annuity Contract (GM-VA-98) o Incorporated by reference to Registration Statement on Form N-4 (File No. 333-56297), as filed on June 8, 1998. (4.2) Variable Annuity Contract Certificate (GMC-VA-98) o Incorporated by reference to Registration Statement on Form N-4 (File No. 333-56297), as filed on June 8, 1998. (4.3) Variable Annuity Contract (GM-VA-98(NY)) o Incorporated by reference to Post-Effective Amendment No. 18 to Registration Statement on Form N-4 (File No. 333-56297), as filed on August 30, 2000. (4.4) Variable Annuity Contract Certificate (GMC-VA-98(NY)) o Incorporated by reference to Post-Effective Amendment No. 18 to Registration Statement on Form N-4 (File No. 333-56297), as filed on August 30, 2000. (4.5) Endorsement (EVAGET98) to Variable Annuity Contract GM-VA-98 and Variable Annuity Contract Certificate GMC-VA-98 o Incorporated by reference to Post-Effective Amendment No. 1 to Registration Statement on Form N-4 (File No. 333-56297), as filed on September 14, 1998. (4.6) Endorsement (EGET-99) to Variable Annuity Contract GM-VA-98 and Variable Annuity Contract Certificate GMC-VA-98 o Incorporated by reference to Post-Effective Amendment No. 13 to Registration Statement on Form N-4 (File No. 333-01107), as filed on April 7, 1999. (4.7) Endorsement (EVA-PB-00) to Variable Annuity Contract GM-VA-98 and Variable Annuity Contract Certificate GMC-VA-98 o Incorporated by reference to Post-Effective Amendment No. 15 to Registration Statement on Form N-4 (File No. 333-56297), as filed on May 8, 2000. (4.8) Endorsement (EVA-PB-00 (NY)) to Variable Annuity Contract GM-VA-98(NY) and Variable Annuity Contract Certificate GMC-VA-98(NY) o Incorporated by reference to Post-Effective Amendment No. 21 to Registration Statement on Form N-4 (File No. 333-56297), as filed on December 13, 2000. (4.9) Endorsements ENMCHG (05/02) and ENMCHGI (05/02) for name change o Incorporated by reference to Post-Effective Amendment No. 30 to Registration Statement on Form N-4 (File No. 33-75962), as filed on April 8, 2002. (5) Variable Annuity Contract Application (9.5.89-6(9/98)) o Incorporated by reference to Pre-Effective Amendment No. 1 to Registration Statement on Form N-4 (File No. 333-56297), as filed on August 4, 1998. (6.1) Restated Certificate of Incorporation (amended and restated as of January 1, 2002) of ING Life Insurance and Annuity Company (formerly Aetna Life Insurance and Annuity Company) o Incorporated by reference to ING Life Insurance and Annuity Company annual report on Form 10-K (File No. 33-23376), as filed on March 28, 2002. (6.2) By-Laws restated as of January 1, 2002 of ING Life Insurance and Annuity Company (formerly Aetna Life Insurance and Annuity Company) o Incorporated by reference to ING Life Insurance and Annuity Company annual report on Form 10-K (File No. 33-23376), as filed on March 28, 2002. (7) Not applicable (8.1) Fund Participation Agreement dated June 30, 1998 by and among AIM Variable Insurance Funds, Inc., A I M Distributors, Inc. and Aetna Life Insurance and Annuity Company o Incorporated by reference to Pre-Effective Amendment No. 1 to Registration Statement on Form N-4 (File No. 333-56297), as filed on August 4, 1998. (8.2) Amendment No. 1 dated October 1, 2000 to Participation Agreement dated June 30, 1998 by and among AIM Variable Insurance Funds (formerly AIM Variable Insurance Funds, Inc.), A I M Distributors, Inc. and Aetna Life Insurance and Annuity Company o Incorporated by reference to Post-Effective Amendment No. 24 to Registration Statement on Form N-4 (File No. 333-01107), as filed on April 13, 2001. (8.3) First Amendment dated November 17, 2000 to Participation Agreement dated June 30, 1998 by and among AIM Variable Insurance Funds (formerly AIM Variable Insurance Funds, Inc.), A I M Distributors, Inc. and Aetna Life Insurance and Annuity Company o Incorporated by reference to Post-Effective Amendment No. 24 to Registration Statement on Form N-4 (File No. 333-01107), as filed on April 13, 2001. (8.4) Amendment dated July 12, 2002 to Participation Agreement dated as of June 30, 1998, as amended on October 1, 2000 and November 17, 2000 by and among AIM Variable Insurance Funds, A I M Distributors, Inc., Aetna Life Insurance Company and Annuity Company and Aetna Investment Services, LLC o Incorporated by reference to Post-Effective Amendment No. 32 to Registration Statement on Form N-4 (File No. 33-75988), as filed on April 13, 2004. (8.5) Service Agreement effective June 30, 1998 between Aetna Life Insurance and Annuity Company and AIM Advisors, Inc. o Incorporated by reference to Pre-Effective Amendment No. 1 to Registration Statement on Form N-4 (File No. 333-56297), as filed on August 4, 1998. (8.6) First Amendment dated October 1, 2000 to the Service Agreement dated June 30, 1998 between Aetna Life Insurance and Annuity Company and AIM Advisors, Inc. o Incorporated by reference to Pre-Effective Amendment No. 1 to Registration Statement on Form N-4 (File No. 333-49176), as filed on November 30, 2000. (8.7) Fund Participation Agreement dated March 1, 2000 between Aetna Life Insurance and Annuity Company and Alliance Capital o Incorporated by reference to Post-Effective Amendment No. 3 to Registration Statement on Form N-4 (File No. 333-87305), as filed on April 26, 2000. (8.8) Service Agreement dated March 1, 2000 between Aetna Life Insurance and Annuity Company and Alliance Capital o Incorporated by reference to Post-Effective Amendment No. 3 to Registration Statement on Form N-4 (File No. 333-87305), as filed on April 26, 2000. (8.9) Fund Participation Agreement dated as of May 1, 1998 by and among Aetna Life Insurance and Annuity Company and Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf of each of its series, Aetna Generation Portfolios, Inc. on behalf of each of its series, Aetna Variable Portfolios, Inc. on behalf of each of its series, and Aeltus Investment Management, Inc. o Incorporated by reference to Registration Statement on Form N-4 (File No. 333-56297), as filed on June 8, 1998. (8.10) Amendment dated November 9, 1998 to Fund Participation Agreement dated as of May 1, 1998 by and among Aetna Life Insurance and Annuity Company and Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf of each of its series, Aetna Generation Portfolios, Inc. on behalf of each of its series, Aetna Variable Portfolios, Inc. on behalf of each of its series, and Aeltus Investment Management, Inc. o Incorporated by reference to Post-Effective Amendment No. 2 to Registration Statement on Form N-4 (File No. 333-56297), as filed on December 14, 1998. (8.11) Second Amendment dated December 31, 1999 to Fund Participation Agreement dated as of May 1, 1998 and amended on November 9, 1998 by and among Aetna Life Insurance and Annuity Company and Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf of each of its series, Aetna Generation Portfolios, Inc. on behalf of each of its series, Aetna Variable Portfolios, Inc. on behalf of each of its series, and Aeltus Investment Management, Inc. o Incorporated by reference to Post-Effective Amendment No. 19 to Registration Statement on Form N-4 (File No. 333-01107), as filed on February 16, 2000. (8.12) Third Amendment dated February 11, 2000 to Fund Participation Agreement dated as of May 1, 1998 and amended on November 9, 1998 and December 31, 1999 by and among Aetna Life Insurance and Annuity Company and Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf of each of its series, Aetna Generation Portfolios, Inc. on behalf of each of its series, Aetna Variable Portfolios, Inc. on behalf of each of its series, and Aeltus Investment Management, Inc. o Incorporated by reference to Post-Effective Amendment No. 20 to Registration Statement on Form N-4 (File No. 333-01107), as filed on April 4, 2000. (8.13) Fourth Amendment dated May 1, 2000 to Fund Participation Agreement dated as of May 1, 1998 and amended on November 9, 1998, December 31, 1999 and February 11, 2000 by and among Aetna Life Insurance and Annuity Company and Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf of each of its series, Aetna Generation Portfolios, Inc. on behalf of each of its series, Aetna Variable Portfolios, Inc. on behalf of each of its series, and Aeltus Investment Management, Inc. o Incorporated by reference to Post-Effective Amendment No. 20 to Registration Statement on Form N-4 (File No. 333-01107), as filed on April 4, 2000. (8.14) Fifth Amendment dated February 27, 2001 to Fund Participation Agreement dated as of May 1, 1998 and amended on November 9, 1998, December 31, 1999, February 11, 2000 and May 1, 2000 by and among Aetna Life Insurance and Annuity Company and Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf of each of its series, Aetna Generation Portfolios, Inc. on behalf of each of its series, Aetna Generation Portfolios, Inc. on behalf of each of its series, Aetna Variable Portfolios, Inc. on behalf of each of its series, and Aeltus Investment Management, Inc. o Incorporated by reference to Post-Effective Amendment No. 24 to Registration Statement on Form N-4 (File No. 333-01107), as filed on April 13, 2001. (8.15) Sixth Amendment dated as of June 19, 2001 to Fund Participation Agreement dated as of May 1, 1998 and amended on November 9, 1998, December 31, 1999, February 11, 2000, May 1, 2000 and February 27, 2001 among Aetna Life Insurance and Annuity Company, Aeltus Investment Management, Inc. and Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund, on behalf of each of its series, Aetna Generations Portfolios, Inc., on behalf of each of its series, and Aetna Variable Portfolios, Inc., on behalf of each of its series o Incorporated by reference to Post-Effective Amendment No. 32 to Registration Statement on Form N-4 (File No. 33-75988), as filed on April 13, 2004. (8.16) Service Agreement dated as of May 1, 1998 between Aeltus Investment Management, Inc. and Aetna Life Insurance and Annuity Company in connection with the sale of shares of Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf of each of its series, Aetna Generation Portfolios, Inc. on behalf of each of its series, and Aetna Variable Portfolios, Inc. on behalf of each of its series o Incorporated by reference to Registration Statement on Form N-4 (File No. 333-56297), as filed on June 8, 1998. (8.17) Amendment dated November 4, 1998 to Service Agreement dated as of May 1, 1998 between Aeltus Investment Management, Inc. and Aetna Life Insurance and Annuity Company in connection with the sale of shares of Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf of each of its series, Aetna Generation Portfolios, Inc. on behalf of each of its series and Aetna Variable Portfolios, Inc. on behalf of each of its series o Incorporated by reference to Post-Effective Amendment No. 2 to Registration Statement on Form N-4 (File No. 333-56297), as filed on December 14, 1998. (8.18) Second Amendment dated February 11, 2000 to Service Agreement dated as of May 1, 1998 and amended on November 4, 1998 between Aeltus Investment Management, Inc. and Aetna Life Insurance and Annuity Company in connection with the sale of shares of Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf of each of its series, Aetna Generation Portfolios, Inc. on behalf of each of its series and Aetna Variable Portfolios, Inc. on behalf of each of its series o Incorporated by reference to Post-Effective Amendment No. 20 to Registration Statement on Form N-4 (File No. 333-01107), as filed on April 4, 2000. (8.19) Third Amendment dated May 1, 2000 to Service Agreement dated as of May 1, 1998 and amended on November 4, 1998 and February 11, 2000 between Aeltus Investment Management, Inc. and Aetna Life Insurance and Annuity Company in connection with the sale of shares of Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf of each of its series, Aetna Generation Portfolios, Inc. on behalf of each of its series and Aetna Variable Portfolios, Inc. on behalf of each of its series o Incorporated by reference to Post-Effective Amendment No. 20 to Registration Statement on Form N-4 (File No. 333-01107), as filed on April 4, 2000. (8.20) Fourth Amendment dated as of June 26, 2001 to Service Agreement with Investment Advisor effective as of May 1, 1998, as amended on November 4, 1998, February 11, 2000 and May 1, 2000 between Aeltus Investment Management, Inc. and Aetna Life Insurance and Annuity Company o Incorporated by reference to Post-Effective Amendment No. 32 to Registration Statement on Form N-4 (File No. 33-75988), as filed on April 13, 2004. (8.21) Fund Participation Agreement dated May 1, 1999 between Aetna Life Insurance and Annuity Company, Brinson Series Trust (formerly Mitchell Hutchins Series Trust), and Brinson Advisors, Inc. (formerly Mitchell Hutchins Asset Management, Inc.) o Incorporated by reference to Post-Effective Amendment No. 8 to Registration Statement on Form N-4 (File No. 333-56297), as filed on June 25, 1999. (8.22) Service Agreement dated May 1, 1999 between Brinson Advisors, Inc. (formerly Mitchell Hutchins Asset Management, Inc.) and Aetna Life Insurance and Annuity Company o Incorporated by reference to Post-Effective Amendment No. 8 to Registration Statement on Form N-4 (File No. 333-56297), as filed on June 25, 1999. (8.23) Fund Participation Agreement dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996 and March 1, 1996 between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund and Fidelity Distributors Corporation o Incorporated by reference to Post-Effective Amendment No. 12 to Registration Statement on Form N-4 (File No. 33-75964), as filed on February 11, 1997. (8.24) Fifth Amendment dated as of May 1, 1997 to the Fund Participation Agreement dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996 and March 1, 1996 between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund and Fidelity Distributors Corporation o Incorporated by reference to Post-Effective Amendment No. 30 to Registration Statement on Form N-4 (File No. 33-34370), as filed on September 29, 1997. (8.25) Sixth Amendment dated November 6, 1997 to the Fund Participation Agreement dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996, March 1, 1996 and May 1, 1997 between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund and Fidelity Distributors Corporation o Incorporated by reference to Post-Effective Amendment No. 16 to Registration Statement on Form N-4 (File No. 33-75964), as filed on February 9, 1998. (8.26) Seventh Amendment dated as of May 1, 1998 to the Fund Participation Agreement dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996, March 1, 1996, May 1, 1997 and November 6, 1997 between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund and Fidelity Distributors Corporation o Incorporated by reference to Registration Statement on Form N-4 (File No. 333-56297), as filed on June 8, 1998. (8.27) Eighth Amendment dated December 1, 1999 to Fund Participation Agreement dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996, March 1, 1996, May 1, 1997, November 6, 1997 and May 1, 1998 between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund and Fidelity Distributors Corporation o Incorporated by reference to Post-Effective Amendment No. 19 to Registration Statement on Form N-4 (File No. 333-01107), as filed on February 16, 2000. (8.28) Fund Participation Agreement dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996 and March 1, 1996 between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund II and Fidelity Distributors Corporation o Incorporated by reference to Post-Effective Amendment No. 12 to Registration Statement on Form N-4 (File No. 33-75964), as filed on February 11, 1997. (8.29) Fifth Amendment dated as of May 1, 1997 to the Fund Participation Agreement dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996 and March 1, 1996 between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund II and Fidelity Distributors Corporation o Incorporated by reference to Post-Effective Amendment No. 30 to Registration Statement on Form N-4 (File No. 33-34370), as filed on September 29, 1997. (8.30) Sixth Amendment dated as of January 20, 1998 to the Fund Participation Agreement dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996, March 1, 1996 and May 1, 1997 between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund II and Fidelity Distributors Corporation o Incorporated by Reference to Post-Effective Amendment No. 7 to Registration Statement on Form S-6 (File No. 33-75248), as filed on February 24, 1998. (8.31) Seventh Amendment dated as of May 1, 1998 to the Fund Participation Agreement dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996, March 1, 1996, May 1, 1997 and January 20, 1998 between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund II and Fidelity Distributors Corporation o Incorporated by reference to Registration Statement on Form N-4 (File No. 333-56297), as filed on June 8, 1998. (8.32) Eighth Amendment dated December 1, 1999 to Fund Participation Agreement dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996, March 1, 1996, May 1, 1997, January 20, 1998 and May 1, 1998 between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund II and Fidelity Distributors Corporation o Incorporated by reference to Post-Effective Amendment No. 19 to Registration Statement on Form N-4 (File No. 333-01107), as filed on February 16, 2000. (8.33) Service Agreement effective as of June 1, 2002 by and between Fidelity Investments Institutional Operations Company, Inc. and ING Financial Advisers, LLC o Incorporated by reference to Post-Effective Amendment No. 33 to Registration Statement on Form N-4 (File No. 33-75988), as filed on August 5, 2004. (8.34) Service Contract effective as of June 1, 2002 by and between Directed Services, Inc., ING Financial Advisers, LLC, and Fidelity Distributors Corporation o Incorporated by reference to Post-Effective Amendment No. 33 to Registration Statement on Form N-4 (File No. 33-75988), as filed on August 5, 2004. (8.35) Participation Agreement dated April 30, 2003 among ING Life Insurance and Annuity Company, The GCG Trust (renaming effective May 1, 2003) ING Investors Trust and Directed Services, Inc. o Incorporated by reference to Post-Effective Amendment No. 54 to Registration Statement on Form N-4 (File No. 33-23512), as filed on August 1, 2003. (8.36) Fund Participation Agreement dated April 30, 1996, and amended on September 3, 1996, March 14, 1997 and November 28, 1997 among MFS Variable Insurance Trust, Aetna Life Insurance and Annuity Company and Massachusetts Financial Services Company o Incorporated by reference to Registration Statement on Form N-4 (File No. 333-56297), as filed on June 8, 1998. (8.37) Fourth Amendment dated May 1, 1998 to the Fund Participation Agreement dated April 30, 1996, and amended on September 3, 1996, March 14, 1997 and November 28, 1997 by and among MFS Variable Insurance Trust, Aetna Life Insurance and Annuity Company and Massachusetts Financial Services Company o Incorporated by reference to Pre-Effective Amendment No. 1 to Registration Statement on Form N-4 (File No. 333-56297), as filed on August 4, 1998. (8.38) Fifth Amendment dated May 1, 1998 to Fund Participation Agreement dated April 30, 1996, and amended on September 3, 1996, March 14, 1997 and November 28, 1997 by and among MFS Variable Insurance Trust, Aetna Life Insurance and Annuity Company and Massachusetts Financial Services Company o Incorporated by reference to Post-Effective Amendment No. 4 to Registration Statement on Form N-4 (File No. 333-56297), as filed on February 16, 1999. (8.39) Fifth Amendment dated July 1, 1999 to Fund Participation Agreement dated April 30, 1996, and amended on September 3, 1996, March 14, 1997, November 28, 1997 and May 1, 1998 by and among MFS Variable Insurance Trust, Aetna Life Insurance and Annuity Company and Massachusetts Financial Services Company o Incorporated by reference to Post-Effective Amendment No. 11 to Registration Statement on Form N-4 (File No. 333-56297), as filed on November 23, 1999. (8.40) Sixth Amendment dated November 17, 2000 to the Fund Participation Agreement dated April 30, 1996, as amended on September 3, 1996, March 14, 1997, November 28, 1997, May 1, 1998 and July 1, 1999 between Aetna Life Insurance and Annuity Company, MFS Variable Insurance Trust and Massachusetts Financial Services Company o Incorporated by reference to Pre-Effective Amendment No. 1 to Registration Statement on Form N-4 (File No. 333-49176), as filed on November 30, 2000. (8.41) Fund Participation Agreement dated March 11, 1997 between Aetna Life Insurance and Annuity Company and Oppenheimer Variable Annuity Account Funds and Oppenheimer Funds, Inc. o Incorporated by reference to Post-Effective Amendment No. 27 to Registration Statement on Form N-4 (File No. 33-34370), as filed on April 16, 1997. (8.42) First Amendment dated December 1, 1999 to Fund Participation Agreement dated March 11, 1997between Aetna Life Insurance and Annuity Company and Oppenheimer Variable Annuity Account Funds and Oppenheimer Funds, Inc. o Incorporated by reference to Post-Effective Amendment No. 19 to Registration Statement on Form N-4 (File No. 333-01107), as filed on February 16, 2000. (8.43) Service Agreement effective as of March 11, 1997 between Oppenheimer Funds, Inc. and Aetna Life Insurance and Annuity Company o Incorporated by reference to Post-Effective Amendment No. 27 to Registration Statement on Form N-4 (File No. 33-34370), as filed on April 16, 1997. (8.44) Fund Participation Agreement dated as of May 1, 2001 among Pilgrim Variable Products Trust, Aetna Life Insurance and Annuity Company and ING Pilgrim Securities, Inc. o Incorporated by reference to Post-Effective Amendment No. 26 to Registration Statement on Form N-4 (File No. 333-01107), as filed on July 13, 2001. (8.45) Amendment dated August 30, 2002 between ING Life Insurance and Annuity Company, ING Variable Products Trust (formerly known as Pilgrim Variable Products Trust) and ING Funds Distributor to Fund Participation Agreement dated May 1, 2001 o Incorporated by reference to Post-Effective Amendment No. 28 to Registration Statement on Form N-4 (File No. 33-75988), as filed on April 10, 2003. (8.46) Administrative and Shareholder Services Agreement dated April 1, 2001 between ING Funds Services, LLC and ING Life Insurance and Annuity Company (Administrator for ING Variable Products Trust) o Incorporated by reference to Post-Effective Amendment No. 28 to Registration Statement on Form N-4 (File No. 33-75988), as filed on April 10, 2003. (8.47) Participation Agreement dated as of November 28, 2001 among Portfolio Partners, Inc., Aetna Life Insurance and Annuity Company and Aetna Investment Services, LLC o Incorporated by reference to Post-Effective Amendment No. 30 to Registration Statement on Form N-4 (File No. 33-75962), as filed on April 8, 2002. (8.48) Amendment dated March 5, 2002 between Portfolio Partners, Inc. (to be renamed ING Partners, Inc. effective May 1, 2002), Aetna Life Insurance and Annuity Company (to be renamed ING Life Insurance and Annuity Company effective May 1, 2002) and Aetna Investment Services LLC (to be renamed ING Financial Advisers, LLC) to Participation Agreement dated November 28, 2001 o Incorporated by reference to Post-Effective Amendment No. 30 to Registration Statement on Form N-4 (File No. 33-75962), as filed on April 8, 2002. (8.49) Amendment dated May 1, 2003 between ING Partners, INC., ING Life Insurance and Annuity Company and ING Financial Advisers, LLC to the Participation Agreement dated as of November 28, 2001 and subsequently amended on March 5, 2002 o Incorporated by reference to Post-Effective Amendment No. 28 to Registration Statement on Form N-4 (File No. 33-75988), as filed on April 10, 2003. (8.50) Amendment dated November 1, 2004 to the Participation Agreement between ING Partners, INC., ING Life Insurance and Annuity Company and ING Financial Advisers, LLC dated as of November 28, 2001 and subsequently amended on March 5, 2002 and May 1, 2003 o Incorporated by reference to Post-Effective Amendment No. 39 to Registration Statement on Form N-4 (File No. 33-75962), as filed on December 17, 2004. (8.51) Form of Amendment dated __________, 200_ to the Participation Agreement between ING Partners, Inc., ING Life Insurance and Annuity Company and ING Financial Advisers, LLC dated as of November 28, 2001 and subsequently amended on March 5, 2002, May 1, 2003 and November 1, 2004. (8.52) Shareholder Servicing Agreement (Service Class Shares) dated as of November 27, 2001 between Portfolio Partners, Inc. and Aetna Life Insurance and Annuity Company o Incorporated by reference to Post-Effective Amendment No. 30 to Registration Statement on Form N-4 (File No. 33-75962), as filed on April 8, 2002. (8.53) Amendment dated March 5, 2002 between Portfolio Partners, Inc. (to be renamed ING Partners, Inc. effective May 1, 2002) and Aetna Life Insurance and Annuity Company (to be renamed ING Life Insurance and Annuity Company effective May 1, 2002) to the Shareholder Servicing Agreement dated November 27, 2001 o Incorporated by reference to Post-Effective Amendment No. 30 to Registration Statement on Form N-4 (File No. 33-75962), as filed on April 8, 2002. (8.54) Amendment dated May 1, 2003 by and between ING Partners, Inc. and ING Life Insurance and Annuity Company to the Shareholder Servicing Agreement (Service Class Shares) dated November 27, 2001, as amended on March 5, 2002 o Incorporated by reference to Post-Effective Amendment No. 28 to Registration Statement on Form N-4 (File No. 33-75988), as filed on April 10, 2003. (8.55) Amendment dated November 1, 2004 to the Shareholder Servicing Agreement (Service Class Shares) by and between ING Partners, Inc. and ING Life Insurance and Annuity Company dated November 27, 2001, as amended on March 5, 2002 and May 1, 2003 o Incorporated by reference to Post-Effective Amendment No. 39 to Registration Statement on Form N-4 (File No. 33-75962), as filed on December 17, 2004. (8.56) Form of Amendment dated _______, 200_ to the Shareholder Servicing Agreement (Service Class Shares) by and between ING Partners, Inc. and ING Life Insurance and Annuity Company dated November 27, 2001, and amended on March 5, 2002, May 1, 2003 and November 1, 2004. (9) Opinion and Consent of Counsel (10) Consent of Independent Registered Public Accounting Firm (11) Not applicable (12) Not applicable (13.1) Powers of Attorney o Incorporated herein by reference to Registration Statement on Form S-2 for ING Insurance Company of America Guaranteed Account as filed with the Securities and Exchange Commission on April 7, 2005 (File Nos. 333-49581). (13.2) Authorization for Signatures o Incorporated by reference to Post-Effective Amendment No. 5 to Registration Statement on Form N-4 (File No. 33-75986), as filed on April 12, 1996. ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR* -------------------------------------------------- Name and Principal Positions and Offices with BUSINESS ADDRESS DEPOSITOR Thomas J. McInerney1 Director and Chairman Kathleen A. Murphy2 Director Catherine H. Smith2 Director Jacques de Vaucleroy1 Director and Senior Vice President David A. Wheat1 Director, Senior Vice President and Chief Financial Officer Brian D. Comer2 President Susan Collins2 Senior Vice President Shaun P. Mathews2 Senior Vice President Stephen J. Preston3 Senior Vice President Boyd G. Combs1 Senior Vice President, Tax James G. Auger2 Vice President Marie M. Augsberger2 Vice President Pamela M. Barcia2 Vice President Ronald R. Barhorst Vice President 4225 Executive Square La Jolla, California 92037 Linda Beblo3 Vice President Jeoffrey A. Block4 Vice President Kevin P. Brown2 Vice President Anthony V. Camp2 Vice President Mary Kathleen Carey-Reid2 Vice President Kevin L. Christensen4 Vice President Andrew D. Chua5 Vice President Elizabeth A. Clifford3 Vice President Patricia M. Corbett4 Vice President Karen Czizik5 Vice President Terrence O. Davis1 Vice President Robert B. DiMartino2 Vice President Shari A. Enger3 Vice President Julie A. Foster4 Vice President Brian K. Haendiges2 Vice President Steven J. Haun4 Vice President James Hennessy6 Vice President Ronald C. Hull2 Vice President William S. Jasien Vice President 12701 Fair Lakes Circle Suite 470 Fairfax, Virginia 22033 David A. Kelsey2 Vice President Mary A. Langevin2 Vice President Roger E. Lavallee2 Vice President Frederick C. Litow1 Vice President William L. Lowe1 Vice President Thomas A. Lutter3 Vice President Gregory J. Miller2 Vice President Todd E. Nevenhoven4 Vice President Peg O. Norris3 Vice President Ethel Pippin2 Vice President Robert A. Richard2 Vice President Michael Roland6 Vice President Eric J. Steelman3 Vice President Carl P. Steinhilber2 Vice President Laurie M. Tillinghast2 Vice President Stanley Vyner7 Vice President Barry G. Ward1 Vice President Christopher R. Welp4 Vice President Mary Broesch3 Vice President and Actuary Bruce T. Campbell2 Vice President and Actuary Richard Lau3 Vice President and Actuary Alice Su3 Vice President and Actuary Lawrence D. Taylor5 Vice President and Actuary Terry J. Boucher2 Vice President and Appointed Actuary Roger W. Fisher1 Vice President and Chief Accounting Officer John R. Dobo5 Vice President and Chief Actuary, ING Institutional Markets Therese M. Squillacote2 Vice President and Compliance Officer David S. Pendergrass1 Vice President and Treasurer Dawn M. Peck1 Vice President, Assistant Treasurer and Assistant Secretary Ira Braunstein1 Vice President, Investments Robert P. Browne1 Vice President, Investments Daniel J. Foley1 Vice President, Investments Christopher P. Lyons1 Vice President, Investments Gregory G. McGreevey1 Vice President, Investments Maurice M. Moore1 Vice President, Investments Joseph J. Elmy2 Vice President, Tax Paula Cludray-Engelke8 Secretary James M. Desrocher Illustration Actuary Lincoln National Life Insurance Company 350 Church Street, MPR1 Hartford, CT 06103-1106 Jane A. Boyle2 Assistant Secretary Diana R. Cavender8 Assistant Secretary Linda H. Freitag1 Assistant Secretary Daniel F. Hinkel1 Assistant Secretary William Hope1 Assistant Secretary Joseph D. Horan1 Assistant Secretary David Lee Jacobson3 Assistant Secretary Rita J. Kummer1 Assistant Secretary James M. May, III1 Assistant Secretary Donna M. O'Brien2 Assistant Secretary Krystal L. Ols8 Assistant Secretary Loralee A. Renelt8 Assistant Secretary Carol Semplice2 Assistant Secretary Linda E. Senker3 Assistant Secretary Patricia M. Smith2 Assistant Secretary Edwina P. J. Steffer8 Assistant Secretary John F. Todd2 Assistant Secretary Diane Yell9 Assistant Secretary Glenn A. Black1 Tax Officer Terry L. Owens1 Tax Officer James Taylor1 Tax Officer * These individuals may also be directors and/or officers of other affiliates of the Company. 1 The principal business address of these directors and these officers is 5780 Powers Ferry Road, N.W., Atlanta, Georgia 30327. 2 The principal business address of this director and these officers is 151 Farmington Avenue, Hartford, Connecticut 06156. 3 The principal business address of these officers is 1475 Dunwoody Drive, West Chester, Pennsylvania 19380. 4 The principal business address of these officers is 909 Locust Street, Des Moines, Iowa 50309. 5 The principal business address of these officers is 1290 Broadway, Denver, Colorado 80203 6 The principal business address of this officer is 7337 E Doubletree Ranch Road, Scottsdale, Arizona 85258. 7 The principal business address of this officer is 520 Madison Avenue, 10th Floor, New York, New York 10022. 8 The principal business address of these officers is 20 Washington Avenue South, Minneapolis, Minnesota 55401. 9 The principal business address of this officer is 100 Washington Square, Minneapolis, Minnesota 55401. ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR REGISTRANT -------------------------------------------------------------------------------- Incorporated herein by reference to Item 28 in Post-Effective Amendment No. 9 to Registration Statement on Form N-6 for ReliaStar Life Insurance Company of New York Variable Life Separate Account I (File No. 333-47527), as filed on April 7, 2005. ITEM 27. NUMBER OF CONTRACT OWNERS As of February 28, 2005, there were 106,691 individuals holding interests in variable annuity contracts funded through Variable Annuity Account B. ITEM 28. INDEMNIFICATION Section 33-779 of the Connecticut General Statutes ("CGS") provides that a corporation may provide indemnification of or advance expenses to a director, officer, employee or agent only as permitted by Sections 33-770 to 33-778, inclusive, of the CGS. Reference is hereby made to Section 33-771(e) of the CGS regarding indemnification of directors and Section 33-776(d) of CGS regarding indemnification of officers, employees and agents of Connecticut corporations. These statutes provide in general that Connecticut corporations incorporated prior to January 1, 1997 shall, except to the extent that their certificate of incorporation expressly provides otherwise, indemnify their directors, officers, employees and agents against "liability" (defined as the obligation to pay a judgment, settlement, penalty, fine, including an excise tax assessed with respect to an employee benefit plan, or reasonable expenses incurred with respect to a proceeding) when (1) a determination is made pursuant to Section 33-775 that the party seeking indemnification has met the standard of conduct set forth in Section 33-771 or (2) a court has determined that indemnification is appropriate pursuant to Section 33-774. Under Section 33-775, the determination of and the authorization for indemnification are made (a) by the disinterested directors, as defined in Section 33-770(3); (b) by special counsel; (c) by the shareholders; or (d) in the case of indemnification of an officer, agent or employee of the corporation, by the general counsel of the corporation or such other officer(s) as the board of directors may specify. Also, Section 33-772 with Section 33-776 provide that a corporation shall indemnify an individual who was wholly successful on the merits or otherwise against reasonable expenses incurred by him in connection with a proceeding to which he was a party because he is or was a director, officer, employee, or agent of the corporation. Pursuant to Section 33-771(d), in the case of a proceeding by or in the right of the corporation or with respect to conduct for which the director, officer, agent or employee was adjudged liable on the basis that he received a financial benefit to which he was not entitled, indemnification is limited to reasonable expenses incurred in connection with the proceeding against the corporation to which the individual was named a party. The statute does specifically authorize a corporation to procure indemnification insurance on behalf of an individual who was a director, officer, employee or agent of the corporation. Consistent with the statute, ING Groep N.V. maintains an umbrella insurance policy with an international insurer to cover errors and omissions, directors and officers, employment practices, fiduciary and fidelity. The policy covers ING Groep N.V. and any company in which ING Groep N.V. has controlling interest of 50% or more. This would encompass the principal underwriter as well as the depositor. Section 20 of the ING Financial Advisers, LLC Limited Liability Company Agreement provides that ING Financial Advisers, LLC will indemnify certain persons against any loss, damage, claim or expenses (including legal fees) incurred by such person if he is made a party or is threatened to be made a party to a suit or proceeding because he was a member, officer, director, employee or agent of ING Financial Advisers, LLC, as long as he acted in good faith on behalf of ING Financial Advisers, LLC and in a manner reasonably believed to be within the scope of his authority. An additional condition requires that no person shall be entitled to indemnity if his loss, damage, claim or expense was incurred by reason of his gross negligence or willful misconduct. This indemnity provision is authorized by and is consistent with Title 8, Section 145 of the General Corporation Law of the State of Delaware. ITEM 29. PRINCIPAL UNDERWRITER (a) In addition to serving as the principal underwriter for the Registrant, ING Financial Advisers, LLC also acts as the principal underwriter for ING Partners, Inc. (a management investment company registered under the Investment Company Act of 1940 (1940 Act)). Additionally, ING Financial Advisers, LLC acts as the principal underwriter for Variable Life Account B of ING Life Insurance and Annuity Company (ILIAC), Variable Life Account C of ILIAC, Variable Annuity Account B of ILIAC and Variable Annuity Account G of ILIAC (separate accounts of ILIAC registered as unit investment trusts under the 1940 Act). ING Financial Advisers, LLC is also the principal underwriter for (i) Variable Annuity Account I of ING Insurance Company of America (IICA) (a separate account of IICA registered as a unit investment trust under the 1940 Act), (ii) Separate Account N of ReliaStar Life Insurance Company (RLIC) (a separate account of RLIC registered as a unit investment trust under the 1940 Act.), (iii) ReliaStar Select Variable Account of ReliaStar Life Insurance Company (a separate account of RLIC registered as a unit investment trusts under the 1940 Act), (iv) MFS ReliaStar Variable Account (a separate account of RLIC registered as a unit investment trusts under the 1940 Act), (v) Northstar Variable Account (a separate account of RLIC registered as a unit investment trusts under the 1940 Act) (vi) ReliaStar Life Insurance Company of New York Variable Annuity Funds A, B, C (a management investment company registered under the 1940 Act), (vii) ReliaStar Life Insurance Company of New York Variable Annuity Funds D, E, F, G, H, I (a management investment company registered under the 1940 Act), (viii) ReliaStar Life Insurance Company of New York Variable Annuity Funds M, P, and Q (a management investment company registered under the1940 Act), and (ix) ReliaStar Life Insurance Company of New York Variable Annuity Funds M P (a management investment company registered under the1940 Act). (b) The following are the directors and officers of the Principal Underwriter: Name and Principal Positions and Offices with BUSINESS ADDRESS PRINCIPAL UNDERWRITER Ronald R. Barhorst Director and President 4225 Executive Square La Jolla, California 92037 Brian D. Comer1 Director and Senior Vice President William L. Lowe1 Director and Senior Vice President Shaun P. Mathews1 Senior Vice President Boyd G. Combs2 Senior Vice President, Tax William Jasien3 Senior Vice President Louis E. Bachetti Senior Vice President 581 Main Street, 4th Fl. Woodbridge, NJ 07095 Susan J. Stamm1 Chief Financial Officer Mark Appel Vice President 200 North Sepulveda Boulevard El Segundo, California Pamela Mulvey Barcia1 Vice President Robert H. Barley1 Vice President David A. Brounley1 Vice President Anthony V. Camp, Jr.1 Vice President Mary Kathleen Carey-Reid1 Vice President James Drake Vice President 5 Penn Plaza, 11th Floor New York, New York Joseph J. Elmy2 Vice President, Tax William Elmslie Vice President 5 Penn Plaza, 11th Floor New York, New York Brian K. Haendiges1 Vice President Bernard P. Heffernon Vice President 10740 Nall Ave., Ste. 120 Overland Park, KS 66211 David Kelsey1 Vice President Mary A. Langevin1 Vice President Christina Lareau1 Vice President George D. Lessner Richardson, Texas Vice President Katherine E. Lewis Vice President 2675 N Mayfair Road, Ste. 501 Milwaukee, WI 53226 Susan J. K. Lewis Vice President 16530 Ventura Blvd., Ste. 600 Encino, CA 91436 David J. Linney Vice President 2900 N. Loop W., Ste. 180 Houston, TX 77092 Frederick C. Litow2 Vice President Mark R. Luckinbill Vice President 2841 Plaza Place, Ste. 210 Raleigh, NC 27612 Richard T. Mason Vice President 440 S. Warren St., Ste. 702 Syracuse, NY 13202 Scott T. Neeb4 Vice President David Pendergrass2 Vice President and Treasurer Ethel Pippin1 Vice President Dawn M. Peck2 Vice President, Assistant Treasurer and Assistant Secretary Deborah Rubin3 Vice President Todd Smiser Lisle, Illinois Vice President Frank W. Snodgrass Vice President 150 4th Ave., N., Ste. 410 Nashville, TN 37219 Terran Titus1 Vice President Bess B. Twyman1 Vice President S. Bradford Vaughan, Jr. 601 Union St., Ste. 810 Seattle, WA 98101 O. V. Williams Vice President 444 Seabreeze Blvd. Daytona Beach, FL 32114 Forrest R. Wilson Vice President 2202 N. Westshore Blvd. Tampa, Florida 33607 Judeen T. Wrinn1 Vice President Therese M. Squillacote1 Vice President and Chief Compliance Officer Paula Cludray-Engelke5 Secretary Diana R. Cavender5 Assistant Secretary Krystal L. Ols5 Assistant Secretary Loralee A. Renelt5 Assistant Secretary Edwina P. J. Steffer5 Assistant Secretary John F. Todd1 Assistant Secretary Glenn A. Black2 Tax Officer Terry L. Owens2 Tax Officer James Taylor2 Tax Officer 1 The principal business address of this director and these officers is 151 Farmington Avenue, Hartford, Connecticut 06156. 2 The principal business address of these officers is 5780 Powers Ferry Road, N.W., Atlanta, Georgia 30327. 3 The principal business address of these officers is 12701 Fair Lakes Circle, Suite 470, Fairfax, Virginia 22033. 4 The principal business address of this director and these officers is 6140 Stonehedge Mall Rd., Ste. 375, Pleasanton, California 94588. 5 The principal business address of these officers is 20 Washington Avenue South, Minneapolis, Minnesota 55401. (c) Compensation to Principal Underwriter during last fiscal year:
(1) (2) (3) (4) (5) Name of Net Underwriting Compensation Principal Discounts and on Redemption Brokerage UNDERWRITER COMMISSIONS OR ANNUITIZATION COMMISSIONS COMPENSATION* ----------- ----------- ---------------- ----------- ------------- ING Financial $2,068,285.47 Advisers, LLC
* Reflects compensation paid to ING Financial Advisers, LLC attributable to regulatory and operating expenses associated with the distribution of all registered variable annuity products issued by Variable Annuity Account B of ING Life Insurance and Annuity Company during 2004. ITEM 30. LOCATION OF ACCOUNTS AND RECORDS All accounts, books and other documents required to be maintained by Section 31(a) of the 1940 Act and the rules under it relating to the securities described in and issued under this Registration Statement are maintained by ING Life Insurance and Annuity Company at 151 Farmington Avenue, Hartford, Connecticut 06156 and at ING Americas at 5780 Powers Ferry Road, Atlanta, Georgia 30327-4390. ITEM 31. MANAGEMENT SERVICES Not applicable ITEM 32. UNDERTAKINGS Registrant hereby undertakes: (a) to file a post-effective amendment to this registration statement on Form N-4 as frequently as is necessary to ensure that the audited financial statements in the registration statement are never more than sixteen months old for as long as payments under the variable annuity contracts may be accepted; (b) to include as part of any application to purchase a contract offered by a prospectus which is part of this registration statement on Form N-4, a space that an applicant can check to request a Statement of Additional Information; and (c) to deliver any Statement of Additional Information and any financial statements required to be made available under this Form N-4 promptly upon written or oral request. (d) during the Guarantee Period, to mail notices to current shareholders promptly after the happening of significant events related to the guarantee issued by ING Life Insurance and Annuity Company (the "Guarantee"). These significant events include (i) the termination of the Guarantee; (ii) a default under the Guarantee that has a material adverse effect on a shareholder's right to receive his or her guaranteed amount on the maturity date; (iii) the insolvency of ING Life Insurance and Annuity Company; or (iv) a reduction in the credit rating of ING Life Insurance and Annuity Company's long-term debt as issued by Standard & Poor's or Moody's Investor Service, Inc. to BBB+ or lower or Baal or lower, respectively. During the Guarantee Period, the Registrant hereby undertakes to include in the prospectus which is a part of this registration statement on Form N-4, a space that an applicant can check to request the most recent annual and/or quarterly report of ING Life Insurance and Annuity Company. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. ING Life Insurance and Annuity Company represents that the fees and charges deducted under the contracts covered by this registration statement, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the insurance company. SIGNATURES As required by the Securities Act of 1933, and the Investment Company Act of 1940, the Registrant, Variable Annuity Account B of ING Life Insurance and Annuity Company certifies that it meets the requirements of Securities Act Rule 485(b) for effectiveness of this Post-Effective Amendment No. 31 to its Registration Statement on Form N-4 (File No. 333-56297) and has duly caused this Post-Effective Amendment No. 31to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of West Chester, Commonwealth of Pennsylvania, on the 20th day of April, 2005. VARIABLE ANNUITY ACCOUNT B OF ING LIFE INSURANCE AND ANNUITY COMPANY (REGISTRANT) By: ING LIFE INSURANCE AND ANNUITY COMPANY (DEPOSITOR) By: BRIAN D. COMER* -------------- Brian D. Comer President By: /s/ LINDA E. SENKER --------------------- Linda E. Senker Counsel of Registrant As required by the Securities Act of 1933, this Post-Effective Amendment No. 31 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date BRIAN D. COMER* President ) -------------- ) Brian D. Comer (principal executive officer) ) ) THOMAS J. MCINERNEY* Director ) April ------------------- ) Thomas J. McInerney ) 20, 2005 ) KATHLEEN A. MURPHY* Director ) ------------------ ) Kathleen A. Murphy ) ) CATHERINE H. SMITH* Director ) ------------------ ) Catherine H. Smith ) ) JACQUES DE VAUCLEROY* Director ) -------------------- ) Jacques de Vaucleroy ) ) DAVID A. WHEAT* Director and Chief Financial Officer ) ----------------- ) David A. Wheat ) ) ROGER FISHER* Chief Accounting Officer ) ------------ ) Roger Fisher ) By: /s/ LINDA E. SENKER --------------------- Linda E. Sekner Counsel of Registrant * Executed by Linda E. Senker on behalf of those indicated pursuant to Power of Attorney. VARIABLE ANNUITY ACCOUNT B EXHIBIT INDEX EXHIBIT NO. EXHIBIT 99-B.8.51 Form of Amendment dated __________, 200_ to the EX-99.B8.51 Participation Agreement between ING Partners, Inc., ING Life Insurance and Annuity Company and ING Financial Advisers, LLC dated as of November 28, 2001 and subsequently amended on March 5, 2002, May 1, 2003 and November 1, 2004 99-B.8.56 Form of Amendment dated _________, 200_ to the EX-99.B8.56 Shareholder Servicing Agreement (Service Class Shares) by and between ING Partners, Inc. and ING Life Insurance and Annuity Company dated November 27, 2001, and amended on March 5, 2002, May 1, 2003 and November 1, 2004 99-B.9 Opinion and Consent of Counsel EX-99.B9 99-B.10 Consent of Independent Registered Public Accounting EX-99.B10A Firm