N-4 1 growthplusn-4.txt REGISTRATION STATEMENT As filed with the Securities and Exchange Registration No. 333- Commission on January 3, 2006 Registration No. 811-8582 -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-4 -------------------------------------------------------------------------------- REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 and Amendment to REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 -------------------------------------------------------------------------------- Variable Annuity Account I (a Separate Account of ING Life Insurance and Annuity Company) -------------------------------------------------------------------------------- (Formerly Variable Annuity Account I (a Separate Account of ING Insurance Company of America)) -------------------------------------------------------------------------------- 151 Farmington Avenue, TS31, Hartford, Connecticut 06156 -------------------------------------------------------------------------------- Depositor's Telephone Number, including Area Code: (860) 723-2239 James A. Shuchart, Esq. ING 1475 Dunwoody Drive West Chester, PA 19380-1478 (610) 425-3563 (Name and Address of Agent for Service) -------------------------------------------------------------------------------- Approximate date of Proposed Public Offering: As soon as practicable after the effectiveness of this Registration Statement. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Title of Securities being Registered: Units of Interest in Individual and Group Deferred Variable Annuity Contracts (Growth Plus) PART A ING Life Insurance and Annuity Company and its Variable Annuity Account I Supplement dated January 3, 2006 This supplement amends certain information contained in the most recent variable annuity prospectus. Please read it carefully and keep it with your variable annuity prospectus for future reference. --------------------------------------------------------------- The "Industry Developments - Trading" sub-section of the prospectus is hereby deleted and replaced with the following: Trading - Industry Developments 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 SEC pursuant to the Securities Exchange Act of 1934, as amended. As previously reported, ING Funds Distributors, LLC ("IFD"), the distributor of certain ING Funds (U.S.) and an affiliate of the Company, received notice from the staff of the National Association of Securities Dealers ("NASD") that the staff made a preliminary determination to recommend disciplinary action against IFD and one of its registered persons for violations of the NASD Conduct Rules and federal securities laws in connection with certain frequent trading arrangements. In September of 2005 IFD settled an administrative proceeding with the NASD regarding these arrangements. Under the terms of the Letter of Acceptance, Waiver and Consent ("AWC") with the NASD, under which IFD neither admitted nor denied the allegations or findings, IFD consented to the following sanctions: (i) a censure; (ii) a fine of $1.5 million; (iii) restitution of approximately $1.44 million to certain ING Funds (U.S.) for losses attributable to excessive trading described in the AWC; and (iv) agreement to make certification to the NASD regarding the review and establishment of certain procedures. IFD's settlement of this administrative proceeding is not material to the Company. 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. ILIAC-138496 Page 1 of 2 01/03/06 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. ILIAC-138496 Page 2 of 2 01/03/06 -------------------------------------------------------------------------------- ING LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT I DEFERRED VARIABLE ANNUITY CONTRACT ING GROWTH PLUS -------------------------------------------------------------------------------- JANUARY 3, 2006 THE CONTRACTS. The contracts described in this prospectus are group or individual deferred variable annuity contracts ("Growth Plus") issued by ING Life Insurance and Annuity Company (the "Company," "we," "us," "our"). Prior to January 1, 2006, the Contract was issued by ING Insurance Company of America ("IICA"). On December 31, 2005, IICA merged with and into ING Life Insurance and Annuity Company, and ING Life Insurance and Annuity Company assumed responsibility for all of IICA's obligations under the Contract. See "Other Topics - The Company" for information about the merger of IICA with and into the Company. The Contract was available in connection with certain retirement plans that qualify for special federal income tax treatment ("qualified Contracts") as well as those that do not qualify for such treatment ("non-qualified Contracts"). We do not currently offer this Contract for sale to new purchasers. WHY READING THIS PROSPECTUS IS IMPORTANT. This prospectus contains facts about the contracts and their investment options that you should know before purchasing. This information will help you decide if the contracts are right for you. Please read this prospectus carefully and keep it for future reference. INVESTMENT OPTIONS. The contracts offer variable investment options and a guaranteed account option. When we establish your account you instruct us to direct account dollars to any of the available options. Some funds or the guaranteed account option may be unavailable through your contract or in your state. VARIABLE INVESTMENT OPTIONS. These options are called subaccounts. The subaccounts are within Variable Annuity Account I (the "separate account"), a separate account of the Company. Each subaccount invests in one of the mutual funds listed on the next 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 II -- 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 800-531-4547. 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 January 3, 2006, 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 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, http://www.sec.gov, or at the SEC Public Reference Room in Washington, D.C. You may call 1-202-551-5850 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, 100 F Street, NE, Room 1580, Washington, D.C. 20549. The SAI table of contents is listed in this prospectus. The SAI is incorporated into this prospectus by reference. 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 OPTION. o ILIAC Guaranteed Account (the Guaranteed Account) (formerly, IICA Guaranteed Account) Except as specifically mentioned, this prospectus describes only the investment options offered through the separate account. However, we describe the fixed interest option in an appendix to this prospectus. There is also a separate Guaranteed Account prospectus. AVAILABILITY OF OPTIONS. Some funds or the guaranteed account option may be unavailable through your contract or in your state. THESE CONTRACTS ARE NOT DEPOSITS WITH, OBLIGATIONS OF OR GUARANTEED BY ANY BANK, NOR ARE THEY INSURED BY THE FDIC. THE CONTRACTS ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT OF YOUR INVESTMENT. The investment portfolios available under your Contract are listed below: Federated American Leaders Fund II Federated Capital Income Fund II Federated Equity Income Fund II Federated Fund for U.S. Government Securities II Federated Growth Strategies Fund II Federated High Income Bond Fund II Federated International Equity Fund II Federated Prime Money Fund II -------------------------------------------------------------------------------- TABLE OF CONTENTS -------------------------------------------------------------------------------- PAGE CONTRACT OVERVIEW ...................................................... 1 Contract Design .................................................... 1 Contract Facts ..................................................... 1 CONTRACT PHASES: The Accumulation Phase, The Income Phase ............. 2 FEE TABLE .............................................................. 3 CONDENSED FINANCIAL INFORMATION ........................................ 6 INVESTMENT OPTIONS ..................................................... 6 TRANSFERS AMONG INVESTMENT OPTIONS ..................................... 8 PURCHASE AND RIGHTS .................................................... 11 RIGHT TO CANCEL ........................................................ 13 FEES ................................................................... 13 YOUR ACCOUNT VALUE ..................................................... 19 WITHDRAWALS ............................................................ 21 SYSTEMATIC DISTRIBUTION OPTIONS ........................................ 23 DEATH BENEFIT .......................................................... 23 THE INCOME PHASE........................................................ 27 TAXATION ............................................................... 31 OTHER TOPICS ........................................................... 40 The Company -- Variable Annuity Account I -- 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 -- DESCRIPTION OF UNDERLYING FUNDS ........................ II-1 APPENDIX III -- CONDENSED FINANCIAL INFORMATION ....................... III-1 -------------------------------------------------------------------------------- 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. CONTRACT FACTS: 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. Any death benefit during the income phase will depend upon the income phase payment option selected. See "Death Benefit" and "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. ILIAC Growth Plus - 137343 1 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. 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 401(a), 403(b) and 457 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." -------------------------------------------------------------------------------- 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 Guaranteed Account Option; or o Variable Investment Options. (The variable investment options are the subaccounts of Variable Annuity Account I. 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; ILIAC Growth Plus - 137343 2 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. MAXIMUM TRANSACTION FEES: EARLY WITHDRAWAL CHARGE (As a percentage of payments withdrawn.) ------------------------------------------------------------------------------ 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(1) ........................................... $30.00 TRANSFER CHARGE(2) .................................................. $10.00 ------------------------------------------------------------------------------ (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, but we reserve the right to charge $10.00 per transfer after the 12th . 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. * State premium taxes (which currently range from 0% to 4% of premium payments) may apply, but are not reflected in the fee tables or examples. See "Premium and Other Taxes." 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.) Mortality and Expense Risk Charge 1.25% Administrative Expense Charge 0.15% ----- Total Separate Account Expenses 1.40% ILIAC Growth Plus - 137343 3 AMOUNT DURING THE INCOME PHASE. (Daily deductions, equal to the following percentages on an annual basis, from amounts invested in the subaccounts.) Mortality and Expense Risk Charge 1.25% Administrative Expense Charge 0.00% - 0.25%(3) ---------------- Total Separate Account Expenses 1.25% - 1.50% (3) We currently do not deduct an administrative expense charge during the income phase; however, we reserve the right to deduct the daily charge of not more than 0.25% per year. See "The Income Phase -- Charges Deducted." 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. The minimum and maximum expenses listed below are based on expenses for the Trust or Fund's most recent fiscal year ends without taking into account any fee waiver or expense reimbursement arrangements that may apply. 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 MINIMUM MAXIMUM -------------------------------------------------------------------------------------------------------- (expenses that are deducted from Trust or Fund assets, including management fees, distribution and/or service (12b-1) fees(4), and 0.98% 1.87% other expenses): --------------------------------------------------------------------------------------------------------
(4) 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. EXAMPLE This example is 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, applicable to each type of contract, contract fees, separate account annual expenses, and Trust or Fund fees and expenses. The example assumes that you invest $10,000 in the Contract for the time periods indicated. The example also assumes 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: -------------------------------------------------------------------------------- 1) If you withdraw your entire account value at the end of the applicable time period: 1 year 3 years 5 years 10 years $1,036 $1,524 $2,036 $3,622 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 $336 $1,024 $1,736 $3,622 * This example does not apply during the income phase if you selected a nonlifetime income ILIAC Growth Plus - 137343 4 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. -------------------------------------------------------------------------------- CONDENSED FINANCIAL INFORMATION -------------------------------------------------------------------------------- UNDERSTANDING CONDENSED FINANCIAL INFORMATION. In Appendix III of this prospectus, we provide condensed financial information about the Variable Annuity Account I (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. -------------------------------------------------------------------------------- INVESTMENT OPTIONS -------------------------------------------------------------------------------- The contract offers variable investment options and a Guaranteed Account option. VARIABLE INVESTMENT OPTIONS. These options are called subaccounts. The subaccounts are within Variable Annuity Account I (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. o MUTUAL FUND (FUND) DESCRIPTIONS: We provide brief descriptions of the funds in Appendix II. 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. FIXED INTEREST OPTION. If available in your state, the Guaranteed Account option available to you is the ILIAC Guaranteed Account (the Guaranteed 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. For a description of this option, see Appendix I and the Guaranteed Account prospectus. 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 appendix and the Guaranteed Account prospectus ILIAC Growth Plus - 137343 5 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, will be considered an 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 calendar year. We reserve the right to charge $10 for each additional transfer. We currently do not impose this charge. During the income phase, if approved in your state, transfers are limited to four per year and allowed only if you select variable payments. Transfers from the Guaranteed Account are subject to certain restrictions and may be subject to a market value adjustment. Transfers must be made in accordance with the terms of your contract. 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 ILIAC Growth Plus - 137343 6 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 Federated Prime Money Fund II Portfolio, or other money market portfolio available under the Contract, 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. 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 rely on such instructions, you will bear the loss. ILIAC Growth Plus - 137343 7 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 or the Guaranteed 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 II for more information about dollar cost averaging from the Guaranteed Account. 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 calendar 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." Dollar Cost Averaging is not available if you have elected an Additional Withdrawal Option or the Account Rebalancing 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." Account Rebalancing is not available if you have elected the Dollar Cost Averaging Program. -------------------------------------------------------------------------------- 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. ILIAC Growth Plus - 137343 8 o Joint Contracts (spouses only). 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. FACTORS TO CONSIDER IN THE PURCHASE DECISION. You should discuss you 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; however, some states may require a lower maximum issue age. 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 sump; o Periodic payments; or o Transfer or rollover from a pre-existing retirement plan or account.* We reserve the right to reject any payments to a prospective or existing account without advance notice. * In some states an IRA contract can only accept a lump-sum, rollover payment. ILIAC Growth Plus - 137343 9 PURCHASE PAYMENT AMOUNTS. The minimum initial purchase payment amount is $1,500.00. Additional purchase payments must be at least $500, of if paid by automatic check plan, $50 per month (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. 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. 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. 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. -------------------------------------------------------------------------------- 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. We calculate the early withdrawal charge based on the number of years since the purchase payment was received. ILIAC Growth Plus - 137343 10 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 ------------------------------------------ ------------------------------------- YEARS FROM RECEIPT EARLY WITHDRAWAL OF PURCHASE PAYMENT 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% 4or 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% ------------------------------------------ ------------------------------------- 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). For example: If your initial purchase payment was made three years ago, we will deduct an early withdrawal charge equal to 6% of the portion of that purchase payment withdrawn. The next time you make a withdrawal we will assess the charge against the portion of the first purchase payment that you did not withdraw and/or your 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 calendar year, the amount withdrawn is 15% or less than: o Your account value as of the last valuation day of the preceding calendar year or the date of your first purchase payment, whichever is later (if approved in your state); or o Your account value on the next valuation day after we receive your withdrawal request. The free withdrawal applies only to the first partial or full withdrawal of the calendar year. If your withdrawal exceeds the free withdrawal amount, we will deduct the early withdrawal charge on the excess. The free withdrawal amount will be adjusted for amounts withdrawn under a systematic distribution option or taken as a required minimum distribution during the calendar 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 your 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; ILIAC Growth Plus - 137343 11 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 but, with respect to the Systematic Withdrawal Option (SWO, only to the extent that the amount taken is 15% or less (of your account value on the later of the date we established your account or the most recent anniversary of that date (see "Systematic Distribution Options"); 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 Estate Conservation Option (ECO) systematic distribution option); or o Paid upon termination of your account by us (see "Other Topics -- Involuntary Terminations"). NURSING HOME WAIVER. You may withdraw all or a portion of your account value without an early withdrawal charge if: o More than one year has elapsed since the account effective date; o The withdrawal is requested within three years of the annuitant's admission to a licensed nursing care facility (in New Hampshire non-licensed facilities are included); and o 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 on the date we established your account. It will also not apply if otherwise prohibited by state law. 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 related 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 calendar year. We reserve the right to charge $10 for each transfer in excess of 12 per year. 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. ILIAC Growth Plus - 137343 12 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 to1.25% of your account value invested in the subaccounts: During the income phase this charge, on an annual basis, is equal to 1.25% of amounts held 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 the Guaranteed Account 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 0.15% of your account value invested in the subaccounts. 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 Guaranteed Account option. This charge may be assessed during the accumulation phase or the income phase. If we are currently 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 that cannot be covered by the mortality and expense risk charge described above. This charge is not intended to exceed the average expected cost of administering the contract. We do not expect to make a profit from this charge. 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 ILIAC Growth Plus - 137343 13 least amount of revenue. All funds available through the contract are unaffiliated funds. 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. Federated Insurance Series, an unaffiliated fund family, is the only fund family which has funds currently offered through the Contract. 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. 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 I subaccount corresponding to that fund. ILIAC Growth Plus - 137343 14 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 and the administrative expense charge (if any). 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: 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, the administrative expense charge, if any, and any other fees deducted from investments in the separate account. See "Fees." The net investment rate may be either positive or negative. 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." ILIAC Growth Plus - 137343 15 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 or the Guaranteed Account (plus or minus any applicable market value adjustment) and minus any applicable early withdrawal charge and annual maintenance fee. (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 and any positive or negative market value adjustment for amounts withdrawn from the Guaranteed Account. See Appendix I and the Guaranteed Account prospectus for more information about withdrawals from the Guaranteed 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. -------------------------------------------------------------------------------- SYSTEMATIC DISTRIBUTION OPTIONS -------------------------------------------------------------------------------- Systematic distribution options may be exercised at any time during the accumulation 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. 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 a SWO. 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. ILIAC Growth Plus - 137343 16 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. 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 death benefit proceeds under the contract. CLAIM DATE: The valuation date next following 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. MARKET VALUE ADJUSTMENT: An adjustment that may be made to amounts withdrawn from the Guaranteed Account. The adjustment may be positive or negative. 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, when the contract holder is a non-natural person) dies. If there are joint contract holders, the death benefit is payable when either one dies. ILIAC Growth Plus - 137343 17 WHO RECEIVES DEATH BENEFIT PROCEEDS? 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 have 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 that beneficiary designation. If you die and no beneficiary exists, the death benefit will be paid in a lump sum to your estate. 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. Upon the death of the Contract Holder (or the Annuitant when the Contract Holder is a non-natural person), the death benefit proceeds will be the greatest of: (1) The account value as of the valuation date next following our receipt at our Home Office of proof of death and election of the payment type to be made; or (2) The account value on the most recent seventh year anniversary of the effective date plus any purchase payments made after such effective date anniversary less any withdrawals and any amounts annuitized; or (3) The amount of the death benefit determined as of the valuation date corresponding to the date of death as follows: (i) Until the first effective date anniversary, the death benefit is equal to the purchase payments made by the Contract Holder during that year, less any withdrawals and any amounts annuitized. (4) For each year thereafter, the death benefit during the year is equal to the death benefit at the beginning of the year (see (ii) below) plus all purchase payments made during the year less any withdrawals and any amounts annuitized that year. (ii) On the anniversary of the effective date each year, the death benefit is determined as follows: (a) The death benefit on the previous effective date anniversary increased by the death benefit factor of 4%; plus (b) Purchase payments made by the Contract Holder during the year since the last anniversary of the effective date increased by the death benefit factor of 4% for the portion of the year since the purchase payment was made; less (c) Any withdrawals or amounts applied to an Annuity Option during the year increased by the death benefit factor of 4% for the portion of the year since the withdrawal or election of an Annuity Option. Currently there is no limitation on the maximum death benefit payable; however, we reserve the right, in the future, to impose a limitation on the maximum allowable death benefit under sections (2) and (3) above. The death benefit calculation described in (2) and (3) applies until the Contract Holder attains age 85. Thereafter, the death benefit is only adjusted for purchase payments, withdrawals and annuitizations. If the Contract Holder attains age 85 prior to the seventh anniversary of the effective date, the death benefit will be the greater of (1) or (3) above. If the Contract Holder is a non-natural person, the Death Benefit calculation will be based on the age of the Annuitant. The excess, if any, of the guaranteed death benefit value over the account value is determined when we ILIAC Growth Plus - 137343 18 receive proof of death at our Home Office. Any excess amount is allocated to the Federated Prime Money Fund II Subaccount. The account value plus any excess amount deposited becomes the account value. In the case of a spousal beneficiary who continues the Account in his or her own name, the death benefit shall be equal to the adjusted account value less any applicable deferred sales charge on any purchase payment made after we receive proof of death. For amounts held in the Guaranteed Account, see Appendix I for a discussion of the calculation of death benefit proceeds. 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 where the contract holder is a trust or an employer, 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 Requirements;" 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 or ECO (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." 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 any market value adjustment. ILIAC Growth Plus - 137343 19 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). 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; 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. ILIAC Growth Plus - 137343 20 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 90th birthday; or (b) The tenth anniversary of the last purchase payment made to your account (fifth anniversary for contracts issued in Pennsylvania). 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 90th birthday or the tenth anniversary of your last purchase payment (the fifth anniversary for contracts issued in Pennsylvania) may have adverse tax consequences. You should consult with a qualified tax adviser if you are considering either of these courses of action. For qualified contracts only, income phase payments may not extend beyond: (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. 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. We may also deduct a daily administrative charge from amounts held in the subaccounts. See "Fees." ILIAC Growth Plus - 137343 21 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. 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. INCOME PHASE 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 Payments years 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 -------------------------------------------------------------------------------- ILIAC Growth Plus - 137343 22 -------------------------------------------------------------------------------- (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 thefirst 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 DEATH BENEFIT -- PAYMENT TO THE BENEFICIARY: Following (limited availability the annuitant's death, we will pay a lump-sum payment fixed payment only) equal to the amount originally applied to the income phase payment option -- (less any premium tax) and less the total amount of income payments paid. -------------------------------------------------------------------------------- Life Income-- Two LENGTH OF PAYMENTS: For as long as either annuitant Lives--Cash Refund lives. Option (limited CONTINUING PAYMENTS: 100% of the payment to continue availability -- fixed after the first death. payment only) 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 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. In certain cases a lump-sum payment may be Payments 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 payment 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). -------------------------------------------------------------------------------- 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; ILIAC Growth Plus - 137343 23 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. 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 I, 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 ILIAC Growth Plus - 137343 24 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. 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. ILIAC Growth Plus - 137343 25 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. 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. ILIAC Growth Plus - 137343 26 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. 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 ILIAC Growth Plus - 137343 27 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). 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 another traditional IRA or ILIAC Growth Plus - 137343 28 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 requirements 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: 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 one of 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 required 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. ILIAC Growth Plus - 137343 29 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. 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 ILIAC Growth Plus - 137343 30 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. 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. ILIAC Growth Plus - 137343 31 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%. 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 Prior to January 1, 2006, the contracts were issued by ING Insurance Company of America ("IICA"), a wholly owned subsidiary of ours. IICA was a life insurance company organized under the insurance laws of the State of Connecticut in 1990 and redomesticated under the insurance laws of the State of Florida on January 5, 2000. Prior to May 1, 2002, IICA was known as Aetna Insurance Company of America. Effective December 31, 2005, IICA merged with and into ILIAC, and ILIAC assumed responsibility for IICA's obligations under the contracts. ILIAC Growth Plus - 137343 32 ILIAC is 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, ILIAC's 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, ILIAC was known as Aetna Life Insurance and Annuity Company. We are engaged in the business of selling life insurance and annuities. Our principal executive offices are located at: 151 Farmington Avenue Hartford, Connecticut 06156 VARIABLE ANNUITY ACCOUNT I Variable Annuity Account I was established as a separate account in 1994. Prior to January 1, 2006, Variable Annuity Account I was known as Variable Annuity Account I (a Separate Account of ING Insurance Company of America). In connection with the merger of IICA with and into ILIAC, the separate account was transferred to ILIAC on December 31, 2005, and renamed Variable Annuity Account I (a Separate Account of ING Life Insurance and Annuity Company). Variable Annuity Account I is registered with the SEC as a unit investment trust under the Investment Company Act of 1940, as amended ("1940 Act"). Variable Annuity Account I is a separate investment account used for our variable annuity contracts. We own all the assets in Variable Annuity Account I but such assets are kept separate from our other accounts. Variable Annuity Account I is divided into subaccounts. Each subaccount invests exclusively in shares of one mutual fund investment portfolio of a Trust or Fund. Each investment portfolio has its own distinct investment objectives and policies. Income, gains and losses, realized or unrealized, of a portfolio are credited to or charged against the corresponding subaccount of Variable Annuity Account I without regard to any other income, gains or losses of the Company. Assets equal to the reserves and other contract liabilities with respect to each are not chargeable with liabilities arising out of any other business of the Company. They may, however, be subject to liabilities arising from subaccounts whose assets we attribute to other variable annuity contracts supported by Variable Annuity Account I. If the assets in Variable Annuity Account I exceed the required reserves and other liabilities, we may transfer the excess to our general account. We are obligated to pay all benefits and make all payments provided under the Contracts. NOTE: We currently offer other variable annuity contracts that invest in Variable Annuity Account I but are not discussed in this prospectus. Variable Annuity Account I may also invest in other investment portfolios which are not available under your Contract. Under certain circumstances, we may make certain changes to the subaccounts. For more information, see "The Annuity Contract -- Addition, Deletion or Substitution of Subaccounts and Other Changes." 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. ILIAC Growth Plus - 137343 33 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 6.5% of the first year of purchase 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 0.40% of assets attributable to purchase payments (which, when combined, could exceed 6.5% of purchase payments). Individual registered representatives may receive all or a portion of compensation paid to their distributor, depending upon the firm's practices. 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 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 ILIAC Growth Plus - 137343 34 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. 1. Lincoln Investment Planning Inc. 14.Proequities, Inc. 2. Symetra Investment Services, Inc. 15.Investment Professionals, Inc. 3. SunAmerica Securities, Inc. 16.Jefferson Pilot Securities Corporation 4. Securities America, Inc. 17.McGinn, Smith & Co., Inc. 5. ING Financial Partners, Inc. 18.Linsco/Private Ledger Corporation 6. Financial Network Investment Corporation 19.Queens Road Securities 7. Investacorp Inc. 20.A.G. Edwards & Sons 8. Huckin Financial Group 21.Horan Securities, Inc. 9. National Planning Corporation 22.Lincoln Financial Advisors Corporation 10.Walnut Street Securities, Inc. 23.Securities Service Network, Inc. 11.NIA Securities, L.L.C. 24.Woodbury Financial Services, Inc. 12.MML Investors Services, Inc. 25.M Holdings Securities, Inc. 13.Cadaret, Grant & Co., 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 ILIAC Growth Plus - 137343 35 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. 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. ILIAC Growth Plus - 137343 36 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. TRADING-INDUSTRY DEVELOPMENTS 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 ILIAC Growth Plus - 137343 37 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. LEGAL MATTERS AND PROCEEDINGS We are not aware of any pending legal proceedings which involve Variable Annuity Account I 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 ILIAC Growth Plus - 137343 38 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. ILIAC Growth Plus - 137343 39 -------------------------------------------------------------------------------- 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 I 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." ILIAC Growth Plus - 137343 SAI-1 -------------------------------------------------------------------------------- APPENDIX I -------------------------------------------------------------------------------- ILIAC GUARANTEED ACCOUNT THE ILIAC GUARANTEED ACCOUNT, (FORMERLY THE IICA 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. o When deciding to invest in the Guaranteed Account, contact your sales representative or the Company to learn: 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; 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. ILIAC Growth Plus - 137343 I-1 Rather, we consider these risks when determining the interest rate to be credited. 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. 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. 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. ILIAC Growth Plus - 137343 I-2 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. 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. ILIAC Growth Plus - 137343 I-3 -------------------------------------------------------------------------------- APPENDIX II -------------------------------------------------------------------------------- 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, 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. FUND NAME AND INVESTMENT ADVISER/SUBADVISER INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- FEDERATED INSURANCE SERIES 5800 Corporate Drive, Pittsburgh, PA 15237-7000 -------------------------------------------------------------------------------- FEDERATED AMERICAN LEADERS FUND II Seeks long-term capital growth. INVESTMENT ADVISER: Federated Equity Management Company of Pennsylvania -------------------------------------------------------------------------------- FEDERATED CAPITAL INCOME FUND II Seeks high current income and moderate capital appreciation. INVESTMENT ADVISER: Federated Equity Management Company of Pennsylvania -------------------------------------------------------------------------------- FEDERATED EQUITY INCOME FUND II Seeks to provide above average income and capital appreciation by investing primarily in income-producing equity securities. INVESTMENT ADVISER: Federated Equity Management Company of Pennsylvania -------------------------------------------------------------------------------- FEDERATED FUND FOR U.S. GOVERNMENT Seeks to provide current income SECURITIES II by investing primarily in a diversified portfolio of U.S. government securities. INVESTMENT ADVISER: Federated Equity Management Company of Pennsylvania -------------------------------------------------------------------------------- ILIAC Growth Plus - 137343 II-1 FUND NAME AND INVESTMENT ADVISER/SUBADVISER INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- FEDERATED GROWTH STRATEGIES FUND II Seeks capital appreciation. INVESTMENT ADVISER: Federated Equity Management Company of Pennsylvania -------------------------------------------------------------------------------- FEDERATED HIGH INCOME BOND FUND II Seeks high current income by investing primarily in a diversified portfolio of fixed-income securities. INVESTMENT ADVISER: Federated Equity Management Company of Pennsylvania -------------------------------------------------------------------------------- FEDERATED INTERNATIONAL EQUITY FUND II Seeks total return on assets. INVESTMENT ADVISER: Federated Equity Management Company of Pennsylvania -------------------------------------------------------------------------------- FEDERATED PRIME MONEY FUND FUND II Seeks to provide current income consistent with stability of principal and liquidity. INVESTMENT ADVISER: Federated Equity Management Company of Pennsylvania -------------------------------------------------------------------------------- ILIAC Growth Plus - 137343 II-2 APPENDIX III -------------------------------------------------------------------------------- CONDENSED FINANCIAL INFORMATION EXCEPT FOR SUBACCOUNTS WHICH DID NOT COMMENCE OPERATIONS AS OF SEPTEMBER 30, 2005, 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 I AVAILABLE UNDER THE CONTRACTS FOR THE INDICATED PERIODS. FOR THOSE SUBACCOUNTS THAT COMMENCED OPERATIONS DURING THE PERIOD ENDED SEPTEMBER 30, 2005 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 SEPTEMBER 30, 2005 THE "VALUE AT END OF PERIOD" SHOWN IS THE VALUE AT THE LAST DATE OF INVESTMENT. FOR CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.40% (SELECTED DATA FOR ACCUMULATION UNITS OUTSTANDING THROUGHOUT EACH PERIOD)
FOR THE NINE MONTHS ENDED 9/30/05 FOR THE YEAR ENDED DECEMBER 31, -------- -------------------------------------------------------------------------------------------- 2004 2003 2002 2001 2000 1999 1998 1997 1996 ---- ---- ---- ---- ---- ---- ---- ---- ---- FEDERATED AMERICAN LEADERS FUND II Value at beginning of period 22.19 20.50 16.28 20.70 21.92 21.71 20.64 17.80 13.64 11.38 Value at end of period 22.56 22.19 20.50 16.28 20.70 21.92 21.71 20.64 17.80 13.64 Number of accumulation units 311,207 3,129,674 3,991,308 4,800,123 5,676,770 5,948,616 6,747,543 7,163,133 6,408,594 4,250,206 outstanding at end ofperiod FEDERATED CAPITAL INCOME FUND II Value at beginning of period 12.84 11.85 9.96 13.28 15.61 17.39 17.34 15.43 12.36 11.24 Value at end of period 13.35 12.84 11.85 9.96 13.28 15.61 17.39 17.34 15.43 12.36 Number of accumulation units 354,150 527,903 712,249 870,450 2,193,415 1,219,460 1,413,709 1,523,424 1,367,3511,084,343 outstanding at end of period FEDERATED EQUITY INCOME FUND II Value at beginning of period 13.73 12.34 9.83 12.58 14.34 16.37 14.02 12.31 -0- -0- Value at end of period 13.68 13.73 12.34 9.83 12.58 14.34 16.37 14.02 12.31 -0- Number of accumulation units 807,869 1,117,884 1,398,342 1,534,337 1,809,194 1,963,033 1,955,219 2,019,440 -0- -0- outstanding at end ofperiod FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES II Value at beginning of period 15.41 15.09 14.95 13.90 13.17 12.04 12.28 11.57 10.81 10.52 Value at end of period 15.49 15.41 15.09 14.95 13.90 13.17 12.04 12.28 11.57 10.81 Number of accumulation units 186,798 239,095 334,763 509,898 745,166 306,831 488,754 531,319 487,807 220,805 outstanding at end of period FEDERATED GROWTH STRATEGIES FUND II Value at beginning of period 21.43 18.83 13.63 18.77 24.53 31.06 18.27 15.78 12.59 10.38 Value at end of period 23.37 21.43 18.83 13.63 18.77 24.53 31.06 18.27 15.78 12.59 Number of accumulation units 628,778 820,043 1,079,151 1,290,106 1,710,420 1,926,317 1,932,504 1,923,943 -0- 777,533 outstanding at end of period FEDERATED HIGH INCOME BOND FUND II Value at beginning of period 16.08 14.76 12.25 12.25 12.26 13.67 13.55 13.38 11.92 10.58 Value at end of period 16.10 16.08 14.76 12.25 12.25 12.26 13.67 13.55 13.38 11.92 Number of accumulation units 480,196 769,020 981,805 1,175,400 2,703,512 1,361,259 1,982,372 2,188,220 1,939,238 972,577 outstanding at end of period FEDERATED INTERNATIONAL EQUITY FUND II Value at beginning of period 15.83 14.07 10.82 14.21 20.42 26.77 14.68 11.86 10.92 10.23 Value at end of period 16.32 15.83 14.07 10.82 14.21 20.42 26.77 14.68 11.86 10.92 Number of accumulation units 482,563 642,534 833,231 1,067,518 1,435,800 1,698,894 1,773,642 1,881,029 1,695,5551,035,848 outstanding at end of period FEDERATED PRIME MONEY FUND II Value at beginning of period 12.24 12.31 12.40 12.41 12.13 11.61 11.25 10.88 10.51 10.18 Value at end of period 12.33 12.24 12.31 12.40 12.41 12.13 11.61 11.25 10.88 10.51 Number of accumulation units 101,056 175,919 305,993 461,986 417,159 342,869 447,801 414,693 345,598 327,448 outstanding at end of period
PART B -------------------------------------------------------------------------------- VARIABLE ANNUITY ACCOUNT I A SEPARATE ACCOUNT OF ING LIFE INSURANCE AND ANNUITY COMPANY -------------------------------------------------------------------------------- Statement of Additional Information dated January 3, 2006 ING GROWTH PLUS This Statement of Additional Information is not a prospectus and should be read in conjunction with the current prospectus for Variable Annuity Account I (the "separate account") dated January 3, 2006. 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 I 2 Offering and Purchase of Contracts 3 Income Phase Payments 3 Sales Material and Advertising 4 Independent Registered Public Accounting Firm 5 Financial Statements 5 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). Prior to January 1, 2006, the contracts described in the prospectus were issued by ING Insurance Company of America ("IICA"), a direct, wholly owned subsidiary of the Company. On December 31, 2005, IICA merged with and into the Company, and the Company assumed responsibility for IICA's obligations under the contracts. IICA was a life insurance company organized under the insurance laws of the State of Connecticut in 1990 and redomesticated under the insurance laws of the State of Florida on January 5, 2000. Prior to May 1, 2002, IICA was known as Aetna Insurance Company of America. As of December 31, 2004, the Company had $53 billion invested through their products, including $34 billion in their separate accounts (of which the Company, or its management affiliates ING Investment Management Co. and ING Investments, LLC manages or oversees the management of $19 billion). The Company is ranked among the top 5% of all life and health insurance companies rated by A.M. Best Company as of July 16, 2004. The Company is a direct, wholly owned subsidiary of Lion Connecticut Holdings Inc., and the Company is an indirect 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 I" below). Other than the mortality and expense risk charge and administrative expense charge 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 I Variable Annuity Account I is a separate account established by IICA for the purpose of funding variable annuity contracts issued by the Company. In connection with the merger of IICA with and into the Company, Variable Annuity Account I was transferred to the Company on December 31, 2005. The separate account retained its name, Variable Annuity Account I. 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. Purchase 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 or under all contracts. OFFERING AND PURCHASE OF CONTRACTS The Company's affiliate, ING Financial Advisers, LLC ("ING Financial"), serves as the principal underwriter for the contracts. 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' 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 $18,831, $1,250, and $2,742, respectively. These amounts reflect compensation paid to ING Financial Advisers, LLC attributable to regulatory and operating expenses associated with the distribution of all products issued by Variable Annuity Account I. 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 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 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 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 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 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 a 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 contracts 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. FINANCIAL STATEMENTS The statement of assets and liabilities of Variable Annuity Account I as of December 31, 2004, and the related statement of operations for the year ended December 31, 2004 and statement of changes in net assets for the years ended December 31, 2004 and 2003, appearing herein, have been audited by Ernst & Young, LLP, independent registered public accounting firm, as set forth in their report appearing herein. The statement of assets and liabilities of Variable Annuity Account I as of September 30, 2005, and the related statement of operations for the nine-months ended September 30, 2005 and statement of changes in net assets for the nine-months ended September 30, 2005, appearing herein, are unaudited. The consolidated balance sheet of the Company at 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, appearing herein, have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report appearing herein. The consolidated balance sheet of the Company as of September 30, 2005 and the related consolidated statements of operations, for the three and nine-month periods ended September 30, 2005 and 2004, and the related statements of changes in shareholder's equity, and cash flows for the nine-month periods ended September 30, 2005 and 2004, appearing herein, are unaudited. Our financial statements should be considered only as bearing on our ability to meet our obligations under the contracts. They should not be considered as bearing on the investment performance of the assets held in Variable Annuity Account I. 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 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF LION CONNECTICUT HOLDINGS INC.) FOR THE PERIOD ENDED SEPTEMBER 30, 2005 INDEX PAGE ---- FINANCIAL STATEMENTS (UNAUDITED) Condensed Consolidated Statements of Operations C-50 Condensed Consolidated Balance Sheets C-51 Condensed Consolidated Statements of Changes in Shareholder's Equity C-53 Condensed Consolidated Statements of Cash Flows C-54 Notes to Condensed Consolidated Financial Statements C-55 C-49 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A WHOLLY OWNED SUBSIDIARY OF LION CONNECTICUT HOLDINGS INC.) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In millions)
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, 2005 2004 2005 2004 ----------- ----------- ----------- ----------- REVENUES: Net investment income $ 244.6 $ 251.6 $ 769.1 $ 730.8 Fee income 123.5 110.6 358.8 340.6 Premiums 9.1 7.4 35.3 27.1 Net realized capital gains 24.2 3.7 26.1 19.6 Other income 2.5 1.5 5.2 2.3 ----------- ----------- ----------- ----------- Total revenue 403.9 374.8 1,194.5 1,120.4 ----------- ----------- ----------- ----------- BENEFITS AND EXPENSES: Interest credited and other benefits to contractowners 180.0 185.3 559.4 550.5 Operating expenses 118.8 93.5 327.4 280.3 Amortization of deferred policy acquisition costs and value of business acquired 29.6 34.6 122.9 108.8 Interest expense 0.5 0.1 0.9 0.4 ----------- ----------- ----------- ----------- Total benefits and expenses 328.9 313.5 1,010.6 940.0 ----------- ----------- ----------- ----------- Income before income taxes 75.0 61.3 183.9 180.4 Income tax (benefit) expense (46.0) (14.3) (14.3) 23.1 ----------- ----------- ----------- ----------- Net income $ 121.0 $ 75.6 $ 198.2 $ 157.3 =========== =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. C-50 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF LION CONNECTICUT HOLDINGS INC.) CONDENSED CONSOLIDATED BALANCE SHEETS (In millions, except share data)
AS OF AS OF SEPTEMBER 30, DECEMBER 31, 2005 2004 -------------- -------------- ASSETS (UNAUDITED) Investments: Fixed maturities, available-for-sale, at fair value (amortized cost of $16,418.7 at 2005 and $16,684.7 at 2004) $16,539.4 $17,151.3 Equity securities, available-for-sale, at fair value (cost of $160.7 at 2005 and $153.9 at 2004) 168.5 162.6 Mortgage loans on real estate 1,279.0 1,090.2 Policy loans 263.0 262.7 Other investments 118.1 57.0 Securities pledged (amortized cost of $1,645.0 at 2005 and $1,258.8 at 2004 ) 1,649.1 1,274.3 --------- --------- Total investments 20,017.1 19,998.1 Cash and cash equivalents 260.4 187.3 Short-term investments under securities loan agreement 774.1 219.5 Accrued investment income 210.8 181.7 Receivables for securities sold 150.2 0.2 Reinsurance recoverable 2,815.3 2,902.7 Deferred policy acquisition costs 488.4 414.5 Value of business acquired 1,310.2 1,365.2 Notes receivable from affiliate 175.0 175.0 Due from affiliates 24.3 25.9 Other assets 62.8 67.2 Assets held in separate accounts 35,143.5 33,310.5 --------- --------- Total assets $61,432.1 $58,847.8 ========= =========
The accompanying notes are an integral part of these consolidated financial statements. C-51 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF LION CONNECTICUT HOLDINGS INC.) CONDENSED CONSOLIDATED BALANCE SHEETS (In millions, except share data)
AS OF AS OF SEPTEMBER 30, DECEMBER 31, 2005 2004 -------------- -------------- LIABILITIES AND SHAREHOLDER'S EQUITY (UNAUDITED) Future policy benefits and claims reserves $21,045.8 $20,886.4 Payables for securities purchased 44.4 25.1 Payables under securities loan agreement 774.0 219.5 Borrowed money 894.4 1,057.4 Due to affiliates 106.8 49.4 Current income taxes 51.1 82.6 Deferred income taxes 193.2 209.3 Other liabilities 291.8 283.4 Liabilities related to separate accounts 35,143.5 33,310.5 --------- --------- Total liabilities 58,545.0 56,123.6 --------- --------- Shareholder's equity: Common stock (100,000 shares authorized; 55,000 shares issued and outstanding; $50 per share value) 2.8 2.8 Additional paid-in capital 4,578.8 4,576.5 Accumulated other comprehensive income 29.5 67.1 Retained earnings (deficit) (1,724.0) (1,922.2) --------- --------- Total shareholder's equity 2,887.1 2,724.2 --------- --------- Total liabilities and shareholder's equity $61,432.1 $58,847.8 ========= =========
The accompanying notes are an integral part of these consolidated financial statements. C-52 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF LION CONNECTICUT HOLDINGS INC.) CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY (Unaudited) (In millions)
ACCUMULATED ADDITIONAL OTHER RETAINED TOTAL COMMON PAID-IN COMPREHENSIVE EARNINGS SHAREHOLDER'S STOCK CAPITAL INCOME (DEFICIT) EQUITY -------- -------- -------- -------- -------- Balance at December 31, 2003 $ 2.8 $4,646.5 $ 116.0 $(2,119.4) $2,645.9 Comprehensive income: Net income -- -- -- 157.3 157.3 Other comprehensive loss, net of tax: Change in net unrealized gain (loss) on securities ($(60.9) pretax) -- -- (39.6) -- (39.6) -------- Total comprehensive income 117.7 -------- Other -- -- -- (2.1) (2.1) -------- -------- -------- --------- -------- Balance at September 30, 2004 $ 2.8 $4,646.5 $ 76.4 $(1,964.2) $2,761.5 ======== ======== ======== ========= ======== Balance at December 31, 2004 $ 2.8 $4,576.5 $ 67.1 $(1,922.2) $2,724.2 Comprehensive income: Net income -- -- -- 198.2 198.2 Other comprehensive loss, net of tax: Change in net unrealized gain (loss) on securities ($(48.8) pretax) -- -- (37.6) -- (37.6) -------- Total comprehensive income 160.6 -------- Employee share-based payments -- 2.3 -- -- 2.3 -------- -------- -------- --------- -------- Balance at September 30, 2005 $ 2.8 $4,578.8 $ 29.5 $(1,724.0) $2,887.1 ======== ======== ======== ========= ========
The accompanying notes are an integral part of these consolidated financial statements. C-53 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF LION CONNECTICUT HOLDINGS INC.) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In millions)
NINE MONTHS ENDED SEPTEMBER 30, 2005 2004 --------- --------- (RESTATED) Net cash provided by operating activities $ 829.3 $ 599.3 Cash Flows from Investing Activities: Proceeds from the sale, maturity, or redemption of: Fixed maturities, available-for-sale 15,263.6 21,496.7 Equity securities, available-for-sale 60.5 43.1 Mortgage loans on real estate 151.7 12.4 Acquisition of: Fixed maturities, available-for-sale (15,573.8) (21,177.9) Equity securities, available-for-sale (61.1) (41.6) Mortgage loans on real estate (340.5) (317.2) Policy loans (0.3) 5.9 Other investments (55.1) (290.6) Purchases of property and equipment, net (9.5) (4.9) --------- --------- Net cash used for investing activities (564.5) (274.1) --------- --------- Cash Flows from Financing Activities: Deposits received for investment contracts 1,587.6 1,620.1 Maturities and withdrawals from investment contracts (1,616.3) (1,347.0) Short-term loans (163.0) (486.8) --------- --------- Net cash used for financing activities (191.7) (213.7) --------- --------- Net increase in cash and cash equivalents 73.1 111.5 Cash and cash equivalents, beginning of period 187.3 57.8 --------- --------- Cash and cash equivalents, end of period $ 260.4 $ 169.3 ========= =========
C-54 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF LION CONNECTICUT HOLDINGS INC.) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollar amounts in millions, unless otherwise stated) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION ING Life Insurance and Annuity Company ("ILIAC") is a stock life insurance company domiciled in the state of Connecticut. ILIAC and its wholly-owned subsidiaries (collectively, the "Company") are providers of financial products and services in the United States. ILIAC is authorized to conduct its insurance business in the District of Columbia and all states. The condensed consolidated financial statements include ILIAC and its wholly-owned subsidiaries, ING Insurance Company of America ("IICA") and ING Financial Advisers, LLC ("IFA"). ILIAC is a direct, wholly-owned subsidiary of Lion Connecticut Holdings Inc. ("Lion" or "Parent"), which is an indirect, wholly-owned subsidiary of ING Groep N.V. ("ING"). ING is a global financial services holding company based in The Netherlands, with American Depository Shares listed on the New York Stock Exchange under the symbol "ING." On September 30, 2005, ILIAC entered into an agreement and plan of merger with IICA, whereby IICA will merge with and into ILIAC. The anticipated merger date is December 31, 2005. As of the merger date, IICA will cease to exist and ILIAC will be the surviving corporation. The merger is subject to certain regulatory approvals, including approval by the State of Florida Office of Insurance Regulation and the State of Connecticut Insurance Department. The merger is not expected to have any impact on ILIAC, as IICA, a wholly-owned subsidiary, is already included in the consolidated financial statements. The condensed consolidated financial statements and notes as of September 30, 2005 (unaudited) and December 31, 2004, and for the three and nine months ended September 30, 2005 and 2004 ("unaudited interim periods"), have been prepared in accordance with accounting principles generally accepted in the United States. The condensed consolidated financial statements reflect all adjustments (consisting only of normal, recurring accruals) which are, in the opinion of management, necessary for the fair presentation of the consolidated financial position, results of operations, and cash flows, for the unaudited interim periods. These condensed consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and related notes as presented in the Company's 2004 Annual Report on Form 10-K. The results of operations for the unaudited interim periods may not be considered indicative of results to be expected for the full year. C-55 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF LION CONNECTICUT HOLDINGS INC.) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollar amounts in millions, unless otherwise stated) 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. 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 year financial information to conform to the current year classifications (see Note 9). SIGNIFICANT ACCOUNTING POLICIES For a description of significant accounting policies, see Note 1 to the Consolidated Financial Statements included in the Company's 2004 Annual Report on Form 10-K. C-56 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF LION CONNECTICUT HOLDINGS INC.) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollar amounts in millions, unless otherwise stated) 2. NEW AND RECENTLY ADOPTED ACCOUNTING STANDARDS ACCOUNTING BY INSURANCE ENTERPRISES FOR DEFERRED ACQUISITION COSTS IN CONNECTION WITH MODIFICATIONS OR EXCHANGES OF INSURANCE CONTRACTS In September 2005, the American Institute of Certified Public Accountants ("AICPA") issued Statement of Position 05-1, "Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection With Modifications or Exchanges of Insurance Contracts" ("SOP 05-1"), which states that when an internal replacement transaction results in a substantially changed contract, the unamortized deferred acquisition costs, unearned revenue liabilities, and deferred sales inducement assets related to the replaced contract should not be deferred in connection with the new contract. Contract modifications that meet various conditions defined by SOP 05-1 and result in a new contract that is substantially unchanged from the replaced contract, however, should be accounted for as a continuation of the replaced contract. SOP 05-1 defines an internal replacement as a modification in product benefits, features, rights, or coverages, that occurs by the exchange of a contract for a new contract, or by amendment, endorsement, or rider, to a contract, or by the election of a feature or coverage within a contract. SOP 05-1 applies to internal replacements made primarily to contracts defined by Statement of Financial Accounting Standards ("FAS") No. 60, "Accounting and Reporting by Insurance Enterprises" ("FAS No. 60"), as short-duration and long-duration life insurance contracts, and by FAS No. 97, "Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments" ("FAS No. 97"), as investment contracts. SOP 05-1 is effective for internal replacements occurring in fiscal years beginning after December 15, 2006, with earlier adoption encouraged. The Company is in the process of determining the impact of adoption of SOP 05-1. INVESTOR'S ACCOUNTING FOR AN INVESTMENT IN A LIMITED PARTNERSHIP WHEN THE INVESTOR IS THE SOLE GENERAL PARTNER AND THE LIMITED PARTNERS HAVE CERTAIN RIGHTS In June 2005, the Emerging Issues Task Force ("EITF") reached a consensus on EITF Issue 04-5, "Investor's Accounting for an Investment in a Limited Partnership When the Investor is the Sole General Partner and the Limited Partners Have Certain Rights" ("EITF 04-5"), which states that the general partner in a limited partnership should presume that it controls and, thus, should consolidate the limited partnership, unless the limited partners have either (a) substantive ability to dissolve the limited partnership or otherwise remove the general partner without cause or (b) substantive participating rights. EITF 04-5 applies to limited partnerships that are not variable interest entities under FASB Interpretation No. 46(R): "Consolidation of Variable Interest Entities" ("FIN 46(R)"). EITF 04-5 is effective immediately for all new limited partnerships formed and for existing limited partnerships for which partnership agreements are modified after C-57 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF LION CONNECTICUT HOLDINGS INC.) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollar amounts in millions, unless otherwise stated) June 29, 2005, and is effective for all other limited partnerships at the commencement of the first reporting period beginning after December 15, 2005. EITF 04-5 had no impact on ILIAC as of September 30, 2005, as the Company's investments in limited partnerships are generally considered variable interest entities under FIN 46(R), and are accounted for using the cost or equity method of accounting since the Company is not the primary beneficiary. Investments in limited partnerships are included in Other investments on the Condensed Balance Sheets. SHARE-BASED PAYMENT In December 2004, the Financial Accounting Standards Board ("FASB") issued FAS No. 123 (revised 2004), "Share-Based Payment" ("FAS No. 123R"), which requires all share-based payments to employees be recognized in the financial statements based upon the fair value. FAS No. 123R is effective at the beginning of the first annual period beginning after June 15, 2005 for registrants. Earlier adoption is encouraged. FAS No. 123R provides two transition methods, modified-prospective and modified-retrospective. The Company early adopted the provisions of FAS No. 123R on January 1, 2005, using the modified-prospective method. Under the modified-prospective method, compensation cost recognized in the first nine months of 2005 includes: (a) compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2005, based on the grant date fair value estimated in accordance with the original provisions of FAS No. 123, "Accounting for Stock-Based Compensation" ("FAS No. 123"), and (b) compensation cost for all share-based payments granted subsequent to January 1, 2005, based on the grant-date fair value in accordance with the provisions of FAS No. 123R. Results for prior periods are not restated. Prior to January 1, 2005, the Company applied the intrinsic value-based provisions set forth in Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), and related Interpretations, as permitted by FAS No.123. No stock based employee compensation cost was recognized in the Statement of Operations during 2004, as all options granted during the year had an exercise price equal to the market value of the underlying common stock on the date of grant. All shares granted during 2005 and 2004 were those of ING, the Company's ultimate parent. As a result of adopting FAS No. 123R, the Company's net income for the three and nine months ended September 30, 2005, is $0.7 and $1.5 lower, respectively, than if it had continued to account for share-based payments under APB 25. C-58 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF LION CONNECTICUT HOLDINGS INC.) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollar amounts in millions, unless otherwise stated) 3. DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED Deferred policy acquisition costs ("DAC") represent policy acquisition costs that have been capitalized and are subject to amortization. Such costs consist principally of certain commissions, underwriting, contract issuance, and certain agency expenses, related to the production of new and renewal business. Value of business acquired ("VOBA") represents the outstanding value of in force business capitalized in purchase accounting when the Company was acquired and is subject to amortization. The value is based on the present value of estimated net cash flows embedded in the Company's contracts. 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 plus surrender charges. FAS No. 60 applies to traditional life insurance products, primarily traditional whole life and term life insurance contracts. Under FAS No. 60, DAC and VOBA are amortized over the premium payment period, in proportion to the premium revenue recognized. Activity for the nine months ended September 30, 2005 and 2004, within DAC, was as follows:
2005 2004 -------- -------- Balance at January 1 $ 414.5 $ 307.9 Deferrals of commissions and expenses 92.6 85.4 Amortization: Amortization (44.3) (32.6) Interest accrued at 5% to 7% 22.4 17.4 -------- -------- Net amortization included in the Statements of Operations (21.9) (15.2) Change in unrealized gains and losses on available-for-sale securities 3.2 1.7 Implementation of the SOP and TPA -- 0.2 -------- -------- Balance at September 30 $ 488.4 $ 380.0 ======== ========
C-59 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF LION CONNECTICUT HOLDINGS INC.) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollar amounts in millions, unless otherwise stated) Activity for the nine months ended September 30, 2005 and 2004, within VOBA, was as follows:
2005 2004 -------- -------- Balance at January 1 $1,365.2 $1,415.4 Deferrals of commissions and expenses 36.9 37.4 Amortization: Amortization (167.6) (163.2) Interest accrued at 5% to 7% 66.6 69.6 -------- -------- Net amortization included in the Statements of Operations (101.0) (93.6) Change in unrealized gains and losses on available-for-sale securities 9.1 5.3 -------- -------- Balance at September 30 $1,310.2 $1,364.5 ======== ========
4. INVESTMENTS IMPAIRMENTS The following table identifies the Company's other-than-temporary impairments, included in net realized capital gains (losses), by type for the three and nine months ended September 30, 2005 and 2004:
THREE MONTHS ENDED SEPTEMBER 30, 2005 2004 ------------------------ ------------------------ NO. OF NO. OF IMPAIRMENT SECURITIES IMPAIRMENT SECURITIES ---------- ---------- ---------- ---------- Residential mortgage-backed $ 3.3 11 $ 5.6 26 ---------- ---------- ---------- ---------- Total $ 3.3 11 $ 5.6 26 ========== ========== ========== ========== NINE MONTHS ENDED SEPTEMBER 30, 2005 2004 ------------------------ ------------------------ NO. OF NO. OF IMPAIRMENT SECURITIES IMPAIRMENT SECURITIES ---------- ---------- ---------- ---------- Residential mortgage-backed $37.1 78 $12.0 49 ---------- ---------- ---------- ---------- Total $37.1 78 $12.0 49 ========== ========== ========== ==========
The fair value of the fixed maturities which have had other-than-temporary impairments as of September 30, 2005 and 2004 is $174.3 and $134.7, respectively. C-60 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF LION CONNECTICUT HOLDINGS INC.) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollar amounts in millions, unless otherwise stated) 5. INCOME TAXES The Company's effective tax rates for the three months ended September 30, 2005 and 2004 were (61.3)% and (23.3)%, respectively. The effective tax rates for the nine months ended September 30, 2005 and 2004 were (7.8)% and 12.8%, respectively. The effective rate differs from the statutory rate primarily due to the following items:
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, 2005 2004 2005 2004 ------ ------ ------ ------ Statutory tax rate 35.0% 35.0% 35.0% 35.0% IRS audit settlement (77.6)% (53.8)% (31.7)% (18.3)% Dividends received deduction (18.6)% (4.8)% (11.2)% (4.1)% Other (0.1)% 0.3% 0.1% 0.2% ------ ------ ------ ------ Total effective tax rate (61.3)% (23.3)% (7.8)% 12.8% ====== ====== ====== ======
The Internal Revenue Service ("IRS") completed an examination of the Company's returns through tax year 2001. The provisions as of September 30, 2005 and 2004 reflect non-recurring, favorable adjustments resulting from a reduction in the tax liability that is no longer necessary based on the results of the current IRS examination, monitoring the activities of the IRS with respect to this issue with other taxpayers, and the merits of the Company's positions. The IRS has commenced examination of the Company's returns for tax years 2002 and 2003. 6. FINANCING AGREEMENTS ILIAC maintains a reciprocal loan agreement with ING America Insurance Holdings, Inc. ("ING AIH"), an affiliate, to facilitate the handling of unanticipated short-term cash requirements. Under this agreement, which became effective in June 2001 and expires on April 1, 2011, either party can borrow from the other up to 3% of ILIAC's statutory admitted assets as of the preceding December 31. 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 $0.3 for the three and nine months ended September 30, 2005, and earned interest income of $0.2 and $0.8 for the three and nine months ended September 30, 2005, respectively. ILIAC incurred minimal interest expense for the three months ended September 30, 2004, incurred interest expense of $0.1 for the nine months ended September 30, 2004, and earned interest income of $0.5 and $1.0 for the three and nine months ended September 30, 2004, respectively. At September 30, 2005 and December 31, 2004, ILIAC had $20.0 and $25.0 receivable from ING AIH under this agreement, respectively. C-61 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF LION CONNECTICUT HOLDINGS INC.) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollar amounts in millions, unless otherwise stated) Prior to September 30, 2005, the Company also maintained a $125.0 uncommitted revolving note facility with SunTrust Bank, Atlanta ("SunTrust"). At December 31, 2004, the Company had no amounts outstanding under the revolving note facility. Effective September 30, 2005, the Company no longer maintains the SunTrust note facility. 7. COMMITMENTS AND CONTINGENT LIABILITIES COMMITMENTS Through the normal course of investment operations, the Company commits to either purchase or sell securities, commercial mortgage loans, or money market instruments, at a specified future date and at a specified price or yield. The inability of counterparties to honor these commitments may result in either a higher or lower replacement cost. Also, there is likely to be a change in the value of the securities underlying the commitments. At September 30, 2005, the Company had off-balance sheet commitments to purchase investments equal to their fair value of $573.6, $416.0 of which was with related parties. At December 31, 2004, the Company had off-balance sheet commitments to purchase investments equal to their fair value of $778.2, $440.4 of which was with related parties. During the nine months ended September 30, 2005 $54.0 was funded to related parties under these commitments. LITIGATION The Company is a party to threatened or pending lawsuits/arbitrations arising from the normal conduct of business. Due to the climate in insurance and business litigation/arbitrations, suits against the Company sometimes include claims for substantial compensatory, consequential, or punitive damages, and other types of relief. Moreover, certain claims are asserted as class actions, purporting to represent a group of similarly situated individuals. While it is not possible to forecast the outcome of such lawsuits/arbitrations, in light of existing insurance, reinsurance and established reserves, it is the opinion of management that the disposition of such lawsuits/arbitrations will not have a materially adverse effect on the Company's operations or financial position. C-62 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF LION CONNECTICUT HOLDINGS INC.) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollar amounts in millions, unless otherwise stated) 8. ACCUMULATED OTHER COMPREHENSIVE INCOME Shareholder's equity included the following components of accumulated other comprehensive income (loss) as of September 30, 2005 and 2004:
2005 2004 ------- ------- Net unrealized capital gains (losses): Fixed maturities, available-for-sale $ 124.8 $ 543.8 Equity securities, available-for-sale 7.8 10.2 DAC/VOBA adjustment on available-for-sale securities 2.8 (12.6) Sales inducements amortization adjustment -- (0.1) Other investments (primarily limited partnerships) 7.3 1.0 Less: allocation to experience-rated contracts 66.5 424.4 ------- ------- Subtotal 76.2 117.9 Less: deferred income taxes 30.0 41.5 ------- ------- Net unrealized capital gains 46.2 76.4 Minimum pension liability (16.7) -- ------- ------- Accumulated other comprehensive income $ 29.5 $ 76.4 ======= =======
Net unrealized capital gains allocated to experience-rated contracts at September 30, 2005 and 2004, respectively, are reflected on the Condensed Consolidated Balance Sheets in Future policy benefits and claims reserves and are not included in Shareholder's equity. Changes in accumulated other comprehensive income, net of DAC/VOBA and tax, related to changes in net unrealized gains (losses) on securities, including securities pledged and excluding those related to experience-rated contractowners, were as follows:
NINE MONTHS ENDED SEPTEMBER 30, 2005 2004 ------- ------- Net unrealized holding gains arising during the period (1) $ 1.8 $ 3.1 Less: reclassification adjustment for realized gains and other items included in net income (2) 39.4 42.7 ------- ------- Net unrealized losses on securities $ (37.6) $ (39.6) ======= =======
(1) Pretax unrealized holding gains arising during the period were $2.4 and $4.7, for the nine months ended September 30, 2005 and 2004, respectively. (2) Pretax reclassification adjustments for realized gains and other items included in net income were $51.2 and $65.6, for the nine months ended September 30, 2005 and 2004, respectively. C-63 ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A WHOLLY-OWNED SUBSIDIARY OF LION CONNECTICUT HOLDINGS INC.) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollar amounts in millions, unless otherwise stated) 9. RECLASSIFICATIONS AND CHANGES TO PRIOR YEAR PRESENTATION During 2005, certain changes were made to the Condensed Statement of Cash Flows for the nine months ended September 30, 2004, to reflect the correct balances, primarily related to investment contracts and short-term loans. As a result of these adjustments, the Company has labeled the Condensed Statement of Cash Flows for the nine months ended September 30, 2004, as restated. The following summarizes the adjustments:
PREVIOUSLY NINE MONTHS ENDED SEPTEMBER 30, 2004 REPORTED ADJUSTMENT RESTATED -------- ---------- -------- Net cash provided by operating activities $430.5 $168.8 $599.3 Net cash used for investing activities (235.3) (38.8) (274.1) Net cash used for financing activities (83.7) (130.0) (213.7)
C-64 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 FINANCIAL STATEMENTS ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NINE MONTHS ENDED SEPTEMBER 30, 2005 This page intentionally left blank. ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I FINANCIAL STATEMENTS NINE MONTHS ENDED SEPTEMBER 30, 2005 CONTENTS Financial Statements Statements of Assets and Liabilities 1 Statements of Operations 14 Statements of Changes in Net Assets 29 Notes to Financial Statements 48 This page intentionally left blank. ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF ASSETS AND LIABILITIES SEPTEMBER 30, 2005 (Dollars in thousands, except for unit data)
AIM V.I. AIM V.I. AIM V.I. AMERICAN CAPITAL CORE AIM V.I. PREMIER CENTURY(R) VP APPRECIATION EQUITY GROWTH EQUITY BALANCED ------------ ------------ ------------ ------------ ------------- ASSETS Investments in mutual funds at fair value $ 10 $ 2,763 $ 1,767 $ 2,714 $ 129 ------------ ------------ ------------ ------------ ------------- Total assets 10 2,763 1,767 2,714 129 ------------ ------------ ------------ ------------ ------------- Net assets $ 10 $ 2,763 $ 1,767 $ 2,714 $ 129 ============ ============ ============ ============ ============= NET ASSETS Accumulation units $ 10 $ 2,763 $ 1,767 $ 2,714 $ 129 Contracts in payout (annuitization) period -- -- -- -- -- ------------ ------------ ------------ ------------ ------------- Total net assets $ 10 $ 2,763 $ 1,767 $ 2,714 $ 129 ============ ============ ============ ============ ============= Accumulation units outstanding: IICA I -- -- -- -- 7,592.459 ============ ============ ============ ============ ============= IICA II -- -- -- -- -- ============ ============ ============ ============ ============= IICA III 1,204.278 332,487.854 313,927.940 375,382.140 -- ============ ============ ============ ============ ============= Accumulation unit value: IICA I $ -- $ -- $ -- $ -- $ 17.04 ============ ============ ============ ============ ============= IICA II $ -- $ -- $ -- $ -- $ -- ============ ============ ============ ============ ============= IICA III $ 8.51 $ 8.31 $ 5.63 $ 7.23 $ -- ============ ============ ============ ============ ============= Total number of mutual fund shares 428 118,735 105,580 123,814 17,413 ============ ============ ============ ============ ============= Cost of mutual fund shares $ 9 $ 2,280 $ 1,594 $ 2,389 $ 110 ============ ============ ============ ============ =============
The accompanying notes are an integral part of these financial statements. 1 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF ASSETS AND LIABILITIES SEPTEMBER 30, 2005 (Dollars in thousands, except for unit data)
AMERICAN CALVERT FEDERATED FEDERATED FEDERATED CENTURY(R) VP SOCIAL AMERICAN CAPITAL EQUITY INTERNATIONAL BALANCED LEADERS INCOME INCOME --------------- ------------ -------------- ------------ ------------- ASSETS Investments in mutual funds at fair value $ 455 $ 287 $ 52,187 $ 4,750 $ 11,078 --------------- ------------ -------------- ------------ ------------- Total assets 455 287 52,187 4,750 11,078 --------------- ------------ -------------- ------------ ------------- Net assets $ 455 $ 287 $ 52,187 $ 4,750 $ 11,078 =============== ============ ============== ============ ============= NET ASSETS Accumulation units $ 455 $ 287 $ 52,141 $ 4,728 $ 11,052 Contracts in payout (annuitization) period -- -- 46 22 26 --------------- ------------ -------------- ------------ ------------- Total net assets $ 455 $ 287 $ 52,187 $ 4,750 $ 11,078 =============== ============ ============== ============ ============= Accumulation units outstanding: IICA I 26,725.339 16,815.903 2,311,207.240 354,149.565 807,868.946 =============== ============ ============== ============ ============= IICA II -- 6,336.629 -- -- -- =============== ============ ============== ============ ============= IICA III -- 30.340 -- -- -- =============== ============ ============== ============ ============= Accumulation unit value: IICA I $ 17.01 $ 12.40 $ 22.56 $ 13.35 $ 13.68 =============== ============ ============== ============ ============= IICA II $ -- $ 12.28 $ -- $ -- $ -- =============== ============ ============== ============ ============= IICA III $ -- $ 10.49 $ -- $ -- $ -- =============== ============ ============== ============ ============= Total number of mutual fund shares 58,357 147,378 2,494,622 537,327 837,336 =============== ============ ============== ============ ============= Cost of mutual fund shares $ 377 $ 269 $ 48,712 $ 5,205 $ 11,066 =============== ============ ============== ============ =============
The accompanying notes are an integral part of these financial statements. 2 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF ASSETS AND LIABILITIES SEPTEMBER 30, 2005 (Dollars in thousands, except for unit data)
FEDERATED FEDERATED FUND FOR US FEDERATED FEDERATED MID CAP FEDERATED GOVERNMENT HIGH INCOME INTERNATIONAL GROWTH PRIME SECURITIES BOND EQUITY STRATEGIES MONEY ------------ ------------ --------------- ------------ ------------- ASSETS Investments in mutual funds at fair value $ 2,894 $ 7,745 $ 7,888 $ 14,695 $ 1,246 ------------ ------------ --------------- ------------ ------------- Total assets 2,894 7,745 7,888 14,695 1,246 ------------ ------------ --------------- ------------ ------------- Net assets $ 2,894 $ 7,745 $ 7,888 $ 14,695 $ 1,246 ============ ============ =============== ============ ============= NET ASSETS Accumulation units $ 2,894 $ 7,731 $ 7,875 $ 14,695 $ 1,246 Contracts in payout (annuitization) period -- 14 13 -- -- ------------ ------------ --------------- ------------ ------------- Total net assets $ 2,894 $ 7,745 $ 7,888 $ 14,695 $ 1,246 ============ ============ =============== ============ ============= Accumulation units outstanding: IICA I 186,798.473 480,195.991 482,563.277 628,778.116 101,055.921 ============ ============ =============== ============ ============= IICA II -- -- -- -- -- ============ ============ =============== ============ ============= IICA III -- -- -- -- -- ============ ============ =============== ============ ============= Accumulation unit value: IICA I $ 15.49 $ 16.10 $ 16.32 $ 23.37 $ 12.33 ============ ============ =============== ============ ============= IICA II $ -- $ -- $ -- $ -- $ -- ============ ============ =============== ============ ============= IICA III $ -- $ -- $ -- $ -- $ -- ============ ============ =============== ============ ============= Total number of mutual fund shares 255,836 1,015,100 572,446 634,206 1,246,020 ============ ============ =============== ============ ============= Cost of mutual fund shares $ 2,994 $ 7,369 $ 10,341 $ 15,783 $ 1,246 ============ ============ =============== ============ =============
The accompanying notes are an integral part of these financial statements. 3 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF ASSETS AND LIABILITIES SEPTEMBER 30, 2005 (Dollars in thousands, except for unit data)
FIDELITY(R) FIDELITY(R) FIDELITY(R) FIDELITY(R) FIDELITY(R) VIP ASSET VIP VIP EQUITY- VIP VIP HIGH MANAGER(SM) CONTRAFUND(R) INCOME GROWTH INCOME ------------ --------------- -------------- -------------- ------------- ASSETS Investments in mutual funds at fair value $ 3,562 $ 27,110 $ 30,507 $ 26,982 $ 6,523 ------------ --------------- -------------- -------------- ------------- Total assets 3,562 27,110 30,507 26,982 6,523 ------------ --------------- -------------- -------------- ------------- Net assets $ 3,562 $ 27,110 $ 30,507 $ 26,982 $ 6,523 ============ =============== ============== ============== ============= NET ASSETS Accumulation units $ 3,562 $ 27,110 $ 30,507 $ 26,982 $ 6,474 Contracts in payout (annuitization) period -- -- -- -- 49 ------------ --------------- -------------- -------------- ------------- Total net assets $ 3,562 $ 27,110 $ 30,507 $ 26,982 $ 6,523 ============ =============== ============== ============== ============= Accumulation units outstanding: IICA I 156,874.191 877,306.858 1,271,073.853 635,655.681 453,146.054 ============ =============== ============== ============== ============= IICA II 75,313.180 210,713.340 339,709.174 172,964.063 98,201.419 ============ =============== ============== ============== ============= IICA III -- 3,967.703 2,722.714 1,889,889.297 -- ============ =============== ============== ============== ============= Accumulation unit value: IICA I $ 16.90 $ 26.58 $ 20.37 $ 16.51 $ 12.30 ============ =============== ============== ============== ============= IICA II $ 12.10 $ 17.75 $ 13.49 $ 12.06 $ 9.17 ============ =============== ============== ============== ============= IICA III $ -- $ 12.92 $ 12.12 $ 7.62 $ -- ============ =============== ============== ============== ============= Total number of mutual fund shares 242,840 907,608 1,233,122 826,641 992,877 ============ =============== ============== ============== ============= Cost of mutual fund shares $ 3,371 $ 19,346 $ 25,258 $ 23,240 $ 6,533 ============ =============== ============== ============== =============
The accompanying notes are an integral part of these financial statements. 4 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF ASSETS AND LIABILITIES SEPTEMBER 30, 2005 (Dollars in thousands, except for unit data)
FIDELITY(R) FIDELITY(R) VIP FIDELITY(R) ING VP VIP INVESTMENT VIP ING VP EMERGING INDEX 500 GRADE BOND OVERSEAS BALANCED MARKETS ------------ ------------- ------------- -------------- ------------- ASSETS Investments in mutual funds at fair value $ 18,999 $ 338 $ 3,324 $ 17,229 $ 191 ------------ ------------- ------------- -------------- ------------- Total assets 18,999 338 3,324 17,229 191 ------------ ------------- ------------- -------------- ------------- Net assets $ 18,999 $ 338 $ 3,324 $ 17,229 $ 191 ============ ============= ============= ============== ============= NET ASSETS Accumulation units $ 18,999 $ 338 $ 3,324 $ 17,174 $ 191 Contracts in payout (annuitization) period -- -- -- 55 -- ------------ ------------- ------------- -------------- ------------- Total net assets $ 18,999 $ 338 $ 3,324 $ 17,229 $ 191 ============ ============= ============= ============== ============= Accumulation units outstanding: IICA I 797,862.356 20,936.116 164,308.576 173,220.726 13,118.135 ============ ============= ============= ============== ============= IICA II 191,356.821 -- 49,751.097 60,140.774 -- ============ ============= ============= ============== ============= IICA III -- -- -- 1,134,792.900 -- ============ ============= ============= ============== ============= Accumulation unit value: IICA I $ 20.87 $ 16.14 $ 16.46 $ 19.54 $ 14.53 ============ ============= ============= ============== ============= IICA II $ 12.27 $ -- $ 12.46 $ 13.61 $ -- ============ ============= ============= ============== ============= IICA III $ -- $ -- $ -- $ 11.43 $ -- ============ ============= ============= ============== ============= Total number of mutual fund shares 136,676 26,628 175,431 1,268,668 19,004 ============ ============= ============= ============== ============= Cost of mutual fund shares $ 15,426 $ 338 $ 2,593 $ 15,269 $ 110 ============ ============= ============= ============== =============
The accompanying notes are an integral part of these financial statements. 5 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF ASSETS AND LIABILITIES SEPTEMBER 30, 2005 (Dollars in thousands, except for unit data)
ING VP ING VP ING VP ING ING FMR INTERMEDIATE MONEY NATURAL EVERGREEN EARNINGS BOND MARKET RESOURCES OMEGA GROWTH ------------- ------------ ------------ ------------ ------------- ASSETS Investments in mutual funds at fair value $ 8,155 $ 13,716 $ 405 $ 1,286 $ 1,184 ------------- ------------ ------------ ------------ ------------- Total assets 8,155 13,716 405 1,286 1,184 ------------- ------------ ------------ ------------ ------------- Net assets $ 8,155 $ 13,716 $ 405 $ 1,286 $ 1,184 ============= ============ ============ ============ ============= NET ASSETS Accumulation units $ 8,155 $ 13,713 $ 405 $ 1,286 $ 1,184 Contracts in payout (annuitization) period -- 3 -- -- -- ------------- ------------ ------------ ------------ ------------- Total net assets $ 8,155 $ 13,716 $ 405 $ 1,286 $ 1,184 ============= ============ ============ ============ ============= Accumulation units outstanding: IICA I 371,668.094 745,877.942 17,276.300 128,062.529 121,607.111 ============= ============ ============ ============ ============= IICA II 128,553.643 224,041.798 -- -- -- ============= ============ ============ ============ ============= IICA III 29,522.837 148,408.070 -- -- -- ============= ============ ============ ============ ============= Accumulation unit value: IICA I $ 15.91 $ 12.66 $ 23.43 $ 10.04 $ 9.74 ============= ============ ============ ============ ============= IICA II $ 14.27 $ 11.70 $ -- $ -- $ -- ============= ============ ============ ============ ============= IICA III $ 13.81 $ 11.11 $ -- $ -- $ -- ============= ============ ============ ============ ============= Total number of mutual fund shares 607,706 1,051,294 16,958 118,941 113,562 ============= ============ ============ ============ ============= Cost of mutual fund shares $ 8,272 $ 13,571 $ 238 $ 1,270 $ 1,174 ============= ============ ============ ============ =============
The accompanying notes are an integral part of these financial statements. 6 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF ASSETS AND LIABILITIES SEPTEMBER 30, 2005 (Dollars in thousands, except for unit data)
ING JPMORGAN ING MFS(R) ING ING VALUE TOTAL OPPENHEIMER ING PIMCO PIONEER OPPORTUNITIES RETURN MAIN STREET HIGH YIELD FUND -------------- -------------- ------------- ------------ ------------- ASSETS Investments in mutual funds at fair value $ 1,536 $ 13,943 $ 679 $ 1,727 $ 5 -------------- -------------- ------------- ------------ ------------- Total assets 1,536 13,943 679 1,727 5 -------------- -------------- ------------- ------------ ------------- Net assets $ 1,536 $ 13,943 $ 679 $ 1,727 $ 5 ============== ============== ============= ============ ============= NET ASSETS Accumulation units $ 1,536 $ 13,943 $ 679 $ 1,727 $ -- Contracts in payout (annuitization) period -- -- -- -- 5 -------------- -------------- ------------- ------------ ------------- Total net assets $ 1,536 $ 13,943 $ 679 $ 1,727 $ 5 ============== ============== ============= ============ ============= Accumulation units outstanding: IICA I 145,541.486 1,082,966.573 48,430.109 153,781.554 -- ============== ============== ============= ============ ============= IICA II 1,152.116 260,007.436 14,226.202 12,241.524 -- ============== ============== ============= ============ ============= IICA III -- -- -- -- -- ============== ============== ============= ============ ============= Accumulation unit value: IICA I $ 10.47 $ 10.38 $ 10.84 $ 10.40 $ -- ============== ============== ============= ============ ============= IICA II $ 10.47 $ 10.39 $ 10.85 $ 10.41 $ -- ============== ============== ============= ============ ============= IICA III $ -- $ -- $ -- $ -- $ -- ============== ============== ============= ============ ============= Total number of mutual fund shares 145,858 769,463 39,820 168,465 483 ============== ============== ============= ============ ============= Cost of mutual fund shares $ 1,529 $ 13,892 $ 671 $ 1,732 $ 5 ============== ============== ============= ============ =============
The accompanying notes are an integral part of these financial statements. 7 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF ASSETS AND LIABILITIES SEPTEMBER 30, 2005 (Dollars in thousands, except for unit data)
ING ING ING ING MFS ING OPPENHEIMER AMERICAN JPMORGAN CAPITAL OPPENHEIMER STRATEGIC CENTURY SELECT INTERNATIONAL OPPORTUNITIES GLOBAL INCOME --------------- -------------- -------------- -------------- ------------- ASSETS Investments in mutual funds at fair value $ 5,339 $ 1,668 $ 2,308 $ 40,137 $ 12,206 --------------- -------------- -------------- -------------- ------------- Total assets 5,339 1,668 2,308 40,137 12,206 --------------- -------------- -------------- -------------- ------------- Net assets $ 5,339 $ 1,668 $ 2,308 $ 40,137 $ 12,206 =============== ============== ============== ============== ============= NET ASSETS Accumulation units $ 5,271 $ 1,641 $ 2,279 $ 40,053 $ 12,112 Contracts in payout (annuitization) period 68 27 29 84 94 --------------- -------------- -------------- -------------- ------------- Total net assets $ 5,339 $ 1,668 $ 2,308 $ 40,137 $ 12,206 =============== ============== ============== ============== ============= Accumulation units outstanding: IICA I 433,150.389 93,187.205 133,764.174 1,917,274.854 685,379.543 =============== ============== ============== ============== ============= IICA II 73,647.521 32,420.259 54,701.465 310,702.442 205,601.427 =============== ============== ============== ============== ============= IICA III -- -- -- 1,277,996.530 309,321.287 =============== ============== ============== ============== ============= Accumulation unit value: IICA I $ 10.40 $ 13.22 $ 12.25 $ 11.54 $ 10.11 =============== ============== ============== ============== ============= IICA II $ 10.41 $ 12.61 $ 11.71 $ 11.55 $ 10.12 =============== ============== ============== ============== ============= IICA III $ -- $ -- $ -- $ 11.22 $ 10.03 =============== ============== ============== ============== ============= Total number of mutual fund shares 584,828 128,425 85,830 2,883,395 1,195,464 =============== ============== ============== ============== ============= Cost of mutual fund shares $ 5,065 $ 1,456 $ 1,955 $ 35,102 $ 12,003 =============== ============== ============== ============== =============
The accompanying notes are an integral part of these financial statements. 8 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF ASSETS AND LIABILITIES SEPTEMBER 30, 2005 (Dollars in thousands, except for unit data)
ING SALOMON ING ING ING ING BROTHERS T. ROWE PRICE T. ROWE PRICE UBS U.S. VAN KAMPEN AGGRESSIVE DIVERSIFIED GROWTH LARGE CAP EQUITY AND GROWTH MID CAP GROWTH EQUITY EQUITY INCOME ------------ --------------- ------------- ------------ ------------- ASSETS Investments in mutual funds at fair value $ 8,421 $ 5,650 $ 15,506 $ 6,296 $ 10,674 ------------ --------------- ------------- ------------ ------------- Total assets 8,421 5,650 15,506 6,296 10,674 ------------ --------------- ------------- ------------ ------------- Net assets $ 8,421 $ 5,650 $ 15,506 $ 6,296 $ 10,674 ============ =============== ============= ============ ============= NET ASSETS Accumulation units $ 8,416 $ 5,650 $ 15,387 $ 6,296 $ 10,674 Contracts in payout (annuitization) period 5 -- 119 -- -- ------------ --------------- ------------- ------------ ------------- Total net assets $ 8,421 $ 5,650 $ 15,506 $ 6,296 $ 10,674 ============ =============== ============= ============ ============= Accumulation units outstanding: IICA I 721,465.918 443,023.746 697,204.529 553,894.759 787,620.350 ============ =============== ============= ============ ============= IICA II 84,519.745 59,595.244 121,397.629 53,062.582 201,446.150 ============ =============== ============= ============ ============= IICA III 2,576.175 -- 5,633.502 -- 2.041 ============ =============== ============= ============ ============= Accumulation unit value: IICA I $ 10.55 $ 11.24 $ 19.59 $ 10.28 $ 10.79 ============ =============== ============= ============ ============= IICA II $ 9.32 $ 11.25 $ 13.76 $ 11.34 $ 10.80 ============ =============== ============= ============ ============= IICA III $ 6.63 $ -- $ 10.39 $ -- $ 10.61 ============ =============== ============= ============ ============= Total number of mutual fund shares 193,136 681,548 306,560 704,225 299,245 ============ =============== ============= ============ ============= Cost of mutual fund shares $ 5,680 $ 5,126 $ 13,301 $ 5,564 $ 9,993 ============ =============== ============= ============ =============
The accompanying notes are an integral part of these financial statements. 9 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF ASSETS AND LIABILITIES SEPTEMBER 30, 2005 (Dollars in thousands, except for unit data)
ING VP ING VP ING VP ING VP STRATEGIC STRATEGIC STRATEGIC ING VP GLOBAL ALLOCATION ALLOCATION ALLOCATION GROWTH AND SCIENCE AND BALANCED GROWTH INCOME INCOME TECHNOLOGY ------------ ------------ ------------ ------------ ------------- ASSETS Investments in mutual funds at fair value $ 1,980 $ 1,771 $ 1,446 $ 9,683 $ 2,127 ------------ ------------ ------------ ------------ ------------- Total assets 1,980 1,771 1,446 9,683 2,127 ------------ ------------ ------------ ------------ ------------- Net assets $ 1,980 $ 1,771 $ 1,446 $ 9,683 $ 2,127 ============ ============ ============ ============ ============= NET ASSETS Accumulation units $ 1,980 $ 1,771 $ 1,443 $ 9,627 $ 2,127 Contracts in payout (annuitization) period -- -- 3 56 -- ------------ ------------ ------------ ------------ ------------- Total net assets $ 1,980 $ 1,771 $ 1,446 $ 9,683 $ 2,127 ============ ============ ============ ============ ============= Accumulation units outstanding: IICA I 106,635.821 92,771.073 79,530.041 449,134.851 97,201.283 ============ ============ ============ ============ ============= IICA II 13,532.274 10,739.043 8,861.101 286,123.762 9,408.728 ============ ============ ============ ============ ============= IICA III -- -- -- 4,560.759 449,829.326 ============ ============ ============ ============ ============= Accumulation unit value: IICA I $ 17.04 $ 17.74 $ 16.73 $ 15.41 $ 3.75 ============ ============ ============ ============ ============= IICA II $ 12.05 $ 11.70 $ 12.69 $ 9.33 $ 3.78 ============ ============ ============ ============ ============= IICA III $ -- $ -- $ -- $ 7.87 $ 3.84 ============ ============ ============ ============ ============= Total number of mutual fund shares 138,762 115,854 109,407 476,522 525,288 ============ ============ ============ ============ ============= Cost of mutual fund shares $ 1,850 $ 1,564 $ 1,316 $ 7,382 $ 1,940 ============ ============ ============ ============ =============
The accompanying notes are an integral part of these financial statements. 10 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF ASSETS AND LIABILITIES SEPTEMBER 30, 2005 (Dollars in thousands, except for unit data)
ING VP ING VP ING VP ING VP ING VP INDEX PLUS INDEX PLUS INDEX PLUS INTERNATIONAL GROWTH LARGECAP MIDCAP SMALLCAP EQUITY ------------ -------------- ------------- ------------- ------------- ASSETS Investments in mutual funds at fair value $ 3,237 $ 19,757 $ 6,762 $ 3 $ 1,662 ------------ -------------- ------------- ------------- ------------- Total assets 3,237 19,757 6,762 3 1,662 ------------ -------------- ------------- ------------- ------------- Net assets $ 3,237 $ 19,757 $ 6,762 $ 3 $ 1,662 ============ ============== ============= ============= ============= NET ASSETS Accumulation units $ 3,152 $ 19,605 $ 6,762 $ 3 $ 1,348 Contracts in payout (annuitization) period 85 152 -- -- 314 ------------ -------------- ------------- ------------- ------------- Total net assets $ 3,237 $ 19,757 $ 6,762 $ 3 $ 1,662 ============ ============== ============= ============= ============= Accumulation units outstanding: IICA I 47,953.944 202,628.300 -- -- 86,137.657 ============ ============== ============= ============= ============= IICA II 23,352.966 89,418.293 -- -- 14,730.232 ============ ============== ============= ============= ============= IICA III 314,564.801 1,622,264.280 381,368.283 171.922 35,311.143 ============ ============== ============= ============= ============= Accumulation unit value: IICA I $ 14.45 $ 18.77 $ -- $ -- $ 10.27 ============ ============== ============= ============= ============= IICA II $ 10.61 $ 12.71 $ -- $ -- $ 10.39 ============ ============== ============= ============= ============= IICA III $ 7.03 $ 9.04 $ 17.73 $ 17.73 $ 8.80 ============ ============== ============= ============= ============= Total number of mutual fund shares 330,010 1,302,373 371,928 184 172,769 ============ ============== ============= ============= ============= Cost of mutual fund shares $ 2,810 $ 16,232 $ 6,679 $ 3 $ 1,468 ============ ============== ============= ============= =============
The accompanying notes are an integral part of these financial statements. 11 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF ASSETS AND LIABILITIES SEPTEMBER 30, 2005 (Dollars in thousands, except for unit data)
LORD ABBETT ING VP ING VP ING VP SERIES FUND MFS(R) INTERNATIONAL SMALL VALUE GROWTH AND STRATEGIC VALUE COMPANY OPPORTUNITY INCOME INCOME -------------- ------------ ------------ ------------ ------------- ASSETS Investments in mutual funds at fair value $ 524 $ 16,776 $ 2,441 $ 2,996 $ 919 -------------- ------------ ------------ ------------ ------------- Total assets 524 16,776 2,441 2,996 919 -------------- ------------ ------------ ------------ ------------- Net assets $ 524 $ 16,776 $ 2,441 $ 2,996 $ 919 ============== ============ ============ ============ ============= NET ASSETS Accumulation units $ 524 $ 16,683 $ 2,441 $ 2,996 $ 919 Contracts in payout (annuitization) period -- 93 -- -- -- -------------- ------------ ------------ ------------ ------------- Total net assets $ 524 $ 16,776 $ 2,441 $ 2,996 $ 919 ============== ============ ============ ============ ============= Accumulation units outstanding: IICA I -- 212,561.224 101,046.142 -- 51,585.561 ============== ============ ============ ============ ============= IICA II -- 87,310.033 41,041.655 -- 15,262.380 ============== ============ ============ ============ ============= IICA III 41,207.903 665,102.538 4,730.664 262,535.841 -- ============== ============ ============ ============ ============= Accumulation unit value: IICA I $ -- $ 23.41 $ 18.23 $ -- $ 13.82 ============== ============ ============ ============ ============= IICA II $ -- $ 16.92 $ 13.41 $ -- $ 13.51 ============== ============ ============ ============ ============= IICA III $ 12.71 $ 15.38 $ 10.19 $ 11.41 $ -- ============== ============ ============ ============ ============= Total number of mutual fund shares 42,001 790,960 182,002 109,326 86,872 ============== ============ ============ ============ ============= Cost of mutual fund shares $ 508 $ 13,783 $ 2,198 $ 2,889 $ 932 ============== ============ ============ ============ =============
The accompanying notes are an integral part of these financial statements. 12 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF ASSETS AND LIABILITIES SEPTEMBER 30, 2005 (Dollars in thousands, except for unit data)
OPPENHEIMER OPPENHEIMER OPPENHEIMER PIONEER AGGRESSIVE GLOBAL MAIN EQUITY INCOME GROWTH SECURITIES STREET VCT ------------ ------------ ------------ ------------- ASSETS Investments in mutual funds at fair value $ 4,057 $ -- $ 6,135 $ 1 ------------ ------------ ------------ ------------- Total assets 4,057 -- 6,135 1 ------------ ------------ ------------ ------------- Net assets $ 4,057 $ -- $ 6,135 $ 1 ============ ============ ============ ============= NET ASSETS Accumulation units $ 4,057 $ -- $ 6,065 $ 1 Contracts in payout (annuitization) period -- -- 70 -- ------------ ------------ ------------ ------------- Total net assets $ 4,057 $ -- $ 6,135 $ 1 ============ ============ ============ ============= Accumulation units outstanding: IICA I 184,454.792 311,492.930 -- ============ ============ ============ ============= IICA II 82,429.643 158,363.270 -- ============ ============ ============ ============= IICA III -- 7.804 -- 42.996 ============ ============ ============ ============= Accumulation unit value: IICA I $ 16.13 $ $ 13.97 $ -- ============ ============ ============ ============= IICA II $ 13.12 $ $ 10.82 $ -- ============ ============ ============ ============= IICA III $ -- $ 15.38 $ -- $ 11.69 ============ ============ ============ ============= Total number of mutual fund shares 85,567 4 287,908 24 ============ ============ ============ ============= Cost of mutual fund shares $ 3,378 $ -- $ 5,158 $ -- ============ ============ ============ =============
The accompanying notes are an integral part of these financial statements. 13 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 (Dollars in thousands)
AIM V.I. AIM V.I. AIM V.I. ALGER CAPITAL CORE AIM V.I. PREMIER AMERICAN APPRECIATION EQUITY GROWTH EQUITY BALANCED ------------ -------- -------- -------- -------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ -- $ -- $ -- $ -- $ 6 ------------ -------- -------- -------- -------- Total investment income -- -- -- -- 6 Expenses: Mortality and expense risk and other charges -- 20 12 20 4 ------------ -------- -------- -------- -------- Total expenses -- 20 12 20 4 ------------ -------- -------- -------- -------- Net investment income (loss) -- (20) (12) (20) 2 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments -- 5 (38) (17) 37 Capital gains distributions -- -- -- -- -- ------------ -------- -------- -------- -------- Total realized gain (loss) on investments and capital gains distributions -- 5 (38) (17) 37 Net unrealized appreciation (depreciation) of investments -- 70 106 94 (24) ------------ -------- -------- -------- -------- Net increase (decrease) in net assets resulting from operations $ -- $ 55 $ 56 $ 57 $ 15 ============ ======== ======== ======== ========
The accompanying notes are an integral part of these financial statements. 14 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 (Dollars in thousands)
ALGER ALGER AMERICAN AMERICAN AMERICAN AMERICAN CALVERT INCOME & LEVERAGED CENTURY(R) VP CENTURY(R) VP SOCIAL GROWTH ALLCAP BALANCED INTERNATIONAL BALANCED ------------ --------- ------------- ------------- -------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 14 $ -- $ 2 $ 6 $ -- ------------ --------- ------------- ------------- -------- Total investment income 14 -- 2 6 -- Expenses: Mortality and expense risk and other charges 13 14 1 5 4 ------------ --------- ------------- ------------- -------- Total expenses 13 14 1 5 4 ------------ --------- ------------- ------------- -------- Net investment income (loss) 1 (14) 1 1 (4) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 3 129 -- 6 36 Capital gains distributions -- -- -- -- -- ------------ --------- ------------- ------------- -------- Total realized gain (loss) on investments and capital gains distributions 3 129 -- 6 36 Net unrealized appreciation (depreciation) of investments (10) (39) 2 19 (21) ------------ --------- ------------- ------------- -------- Net increase (decrease) in net assets resulting from operations $ (6) $ 76 $ 3 $ 26 $ 11 ============ ========= ============= ============= ========
The accompanying notes are an integral part of these financial statements. 15 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 (Dollars in thousands)
FEDERATED FEDERATED FEDERATED FEDERATED FUND FOR US FEDERATED AMERICAN CAPITAL EQUITY GOVERNMENT HIGH INCOME LEADERS INCOME INCOME SECURITIES BOND ------------ --------- --------- ----------- ----------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 961 $ 323 $ 303 $ 137 $ 917 ------------ --------- --------- ----------- ----------- Total investment income 961 323 303 137 917 Expenses: Mortality and expense risk and other charges 642 64 139 35 113 ------------ --------- --------- ----------- ----------- Total expenses 642 64 139 35 113 ------------ --------- --------- ----------- ----------- Net investment income (loss) 319 259 164 102 804 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments (215) (1,508) (50) (8) (50) Capital gains distributions -- -- -- -- -- ------------ --------- --------- ----------- ----------- Total realized gain (loss) on investments and capital gains distributions (215) (1,508) (50) (8) (50) Net unrealized appreciation (depreciation) of investments 709 1,472 (202) (76) (759) ------------ --------- --------- ----------- ----------- Net increase (decrease) in net assets resulting from operations $ 813 $ 223 $ (88) $ 18 $ (5) ============ ========= ========= =========== ===========
The accompanying notes are an integral part of these financial statements. 16 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 (Dollars in thousands)
FEDERATED FEDERATED MID CAP FEDERATED FIDELITY(R) FIDELITY(R) INTERNATIONAL GROWTH PRIME VIP ASSET VIP EQUITY STRATEGIES MONEY MANAGER(SM) CONTRAFUND(R) ------------- ---------- --------- ----------- ------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ -- $ -- $ 27 $ 117 $ 83 ------------- ---------- --------- ----------- ------------- Total investment income -- -- 27 117 83 Expenses: Mortality and expense risk and other charges 95 164 17 42 280 ------------- ---------- --------- ----------- ------------- Total expenses 95 164 17 42 280 ------------- ---------- --------- ----------- ------------- Net investment income (loss) (95) (164) 10 75 (197) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments (1,804) 1,110 -- 78 1,348 Capital gains distributions -- -- -- 2 5 ------------- ---------- --------- ----------- ------------- Total realized gain (loss) on investments and capital gains distributions (1,804) 1,110 -- 80 1,353 Net unrealized appreciation (depreciation) of investments 2,093 289 -- (153) 1,735 ------------- ---------- --------- ----------- ------------- Net increase (decrease) in net assets resulting from operations $ 194 $ 1,235 $ 10 $ 2 $ 2,891 ============= ========== ========= =========== =============
The accompanying notes are an integral part of these financial statements. 17 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 (Dollars in thousands)
FIDELITY(R) FIDELITY(R) FIDELITY(R) FIDELITY(R) FIDELITY(R) VIP VIP EQUITY- VIP VIP HIGH VIP INVESTMENT INCOME GROWTH INCOME INDEX 500 GRADE BOND ------------ ----------- ----------- ----------- ----------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 578 $ 138 $ 653 $ 400 $ 13 ------------ ----------- ----------- ----------- ----------- Total investment income 578 138 653 400 13 Expenses: Mortality and expense risk and other charges 346 242 82 216 4 ------------ ----------- ----------- ----------- ----------- Total expenses 346 242 82 216 4 ------------ ----------- ----------- ----------- ----------- Net investment income (loss) 232 (104) 571 184 9 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 559 (180) 351 762 3 Capital gains distributions 1,270 -- -- -- 8 ------------ ----------- ----------- ----------- ----------- Total realized gain (loss) on investments and capital gains distributions 1,829 (180) 351 762 11 Net unrealized appreciation (depreciation) of investments (1,611) 633 (921) (673) (19) ------------ ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations $ 450 $ 349 $ 1 $ 273 $ 1 ============ =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 18 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 (Dollars in thousands)
FIDELITY(R) ING VP ING VP ING VP VIP ING VP EMERGING INTERMEDIATE MONEY OVERSEAS BALANCED MARKETS BOND MARKET ----------- -------- -------- ------------ -------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 22 $ 395 $ 1 $ 2 $ 178 ----------- -------- -------- ------------ -------- Total investment income 22 395 1 2 178 Expenses: Mortality and expense risk and other charges 33 135 2 84 148 ----------- -------- -------- ------------ -------- Total expenses 33 135 2 84 148 ----------- -------- -------- ------------ -------- Net investment income (loss) (11) 260 (1) (82) 30 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 183 149 3 (86) 70 Capital gains distributions 17 -- -- 27 -- ----------- -------- -------- ------------ -------- Total realized gain (loss) on investments and capital gains distributions 200 149 3 (59) 70 Net unrealized appreciation (depreciation) of investments 51 86 37 245 49 ----------- -------- -------- ------------ -------- Net increase (decrease) in net assets resulting from operations $ 240 $ 495 $ 39 $ 104 $ 149 =========== ======== ======== ============ ========
The accompanying notes are an integral part of these financial statements. 19 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 (Dollars in thousands)
ING ING VP ING ING FMR JPMORGAN ING MFS(R) NATURAL EVERGREEN EARNINGS VALUE TOTAL RESOURCES OMEGA GROWTH OPPORTUNITIES RETURN ---------- ---------- -------- ------------- ---------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ -- $ -- $ -- $ -- $ 8 ---------- ---------- -------- ------------- ---------- Total investment income -- -- -- -- 8 Expenses: Mortality and expense risk and other charges 4 -- -- 1 6 ---------- ---------- -------- ------------- ---------- Total expenses 4 -- -- 1 6 ---------- ---------- -------- ------------- ---------- Net investment income (loss) (4) -- -- (1) 2 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 30 -- -- 2 (1) Capital gains distributions 22 -- -- -- 11 ---------- ---------- -------- ------------- ---------- Total realized gain (loss) on investments and capital gains distributions 52 -- -- 2 10 Net unrealized appreciation (depreciation) of investments 81 16 10 7 51 ---------- ---------- -------- ------------- ---------- Net increase (decrease) in net assets resulting from operations $ 129 $ 16 $ 10 $ 8 $ 63 ========== ========== ======== ============= ==========
The accompanying notes are an integral part of these financial statements. 20 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 (Dollars in thousands)
ING ING ING AMERICAN ING OPPENHEIMER ING PIMCO PIONEER CENTURY JPMORGAN MAIN STREET HIGH YIELD FUND SELECT INTERNATIONAL ----------- ---------- -------- -------- ------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 3 $ 3 $ -- $ -- $ 17 ----------- ---------- -------- -------- ------------- Total investment income 3 3 -- -- 17 Expenses: Mortality and expense risk and other charges 2 1 -- 33 22 ----------- ---------- -------- -------- ------------- Total expenses 2 1 -- 33 22 ----------- ---------- -------- -------- ------------- Net investment income (loss) 1 2 -- (33) (5) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 3 -- -- 48 272 Capital gains distributions -- -- -- -- -- ----------- ---------- -------- -------- ------------- Total realized gain (loss) on investments and capital gains distributions 3 -- -- 48 272 Net unrealized appreciation (depreciation) of investments 8 (5) -- 274 (185) ----------- ---------- -------- -------- ------------- Net increase (decrease) in net assets resulting from operations $ 12 $ (3) $ -- $ 289 $ 82 =========== ========== ======== ======== =============
The accompanying notes are an integral part of these financial statements. 21 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 (Dollars in thousands)
ING ING SALOMON ING ING MFS(R) ING OPPENHEIMER BROTHERS T. ROWE PRICE CAPITAL OPPENHEIMER STRATEGIC AGGRESSIVE DIVERSIFIED OPPORTUNITIES GLOBAL INCOME GROWTH MID CAP GROWTH ------------- ----------- ----------- ----------- -------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 20 $ -- $ -- $ -- $ -- ------------- ----------- ----------- ----------- -------------- Total investment income 20 -- -- -- -- Expenses: Mortality and expense risk and other charges 27 214 70 89 33 ------------- ----------- ----------- ----------- -------------- Total expenses 27 214 70 89 33 ------------- ----------- ----------- ----------- -------------- Net investment income (loss) (7) (214) (70) (89) (33) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 132 158 27 245 58 Capital gains distributions -- 22 -- -- 101 ------------- ----------- ----------- ----------- -------------- Total realized gain (loss) on investments and capital gains distributions 132 180 27 245 159 Net unrealized appreciation (depreciation) of investments (174) 5,035 203 449 524 ------------- ----------- ----------- ----------- -------------- Net increase (decrease) in net assets resulting from operations $ (49) $ 5,001 $ 160 $ 605 $ 650 ============= =========== =========== =========== ==============
The accompanying notes are an integral part of these financial statements. 22 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 (Dollars in thousands)
ING ING ING ING VP ING VP T. ROWE PRICE UBS U.S. VAN KAMPEN STRATEGIC STRATEGIC GROWTH LARGE CAP EQUITY AND ALLOCATION ALLOCATION EQUITY EQUITY INCOME BALANCED GROWTH ------------- --------- ---------- ---------- ---------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 81 $ 56 $ 9 $ 28 $ 24 ------------- --------- ---------- ---------- ---------- Total investment income 81 56 9 28 24 Expenses: Mortality and expense risk and other charges 173 67 57 18 19 ------------- --------- ---------- ---------- ---------- Total expenses 173 67 57 18 19 ------------- --------- ---------- ---------- ---------- Net investment income (loss) (92) (11) (48) 10 5 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 355 113 49 70 113 Capital gains distributions -- -- 9 -- -- ------------- --------- ---------- ---------- ---------- Total realized gain (loss) on investments and capital gains distributions 355 113 58 70 113 Net unrealized appreciation (depreciation) of investments (181) 134 681 (14) (46) ------------- --------- ---------- ---------- ---------- Net increase (decrease) in net assets resulting from operations $ 82 $ 236 $ 691 $ 66 $ 72 ============= ========= ========== ========== ==========
The accompanying notes are an integral part of these financial statements. 23 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 (Dollars in thousands)
ING VP ING VP STRATEGIC ING VP GLOBAL ING VP ALLOCATION GROWTH AND SCIENCE AND ING VP INDEX PLUS INCOME INCOME TECHNOLOGY GROWTH LARGECAP ------------ ---------- ----------- -------- ---------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 34 $ -- $ -- $ 22 $ 239 ------------ ---------- ----------- -------- ---------- Total investment income 34 -- -- 22 239 Expenses: Mortality and expense risk and other charges 17 101 16 26 156 ------------ ---------- ----------- -------- ---------- Total expenses 17 101 16 26 156 ------------ ---------- ----------- -------- ---------- Net investment income (loss) 17 (101) (16) (4) 83 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 73 380 (1) 6 264 Capital gains distributions -- -- -- -- -- ------------ ---------- ----------- -------- ---------- Total realized gain (loss) on investments and capital gains distributions 73 380 (1) 6 264 Net unrealized appreciation (depreciation) of investments (50) 83 106 68 193 ------------ ---------- ----------- -------- ---------- Net increase (decrease) in net assets resulting from operations $ 40 $ 362 $ 89 $ 70 $ 540 ============ ========== =========== ======== ==========
The accompanying notes are an integral part of these financial statements. 24 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 (Dollars in thousands)
ING VP ING VP ING VP ING VP ING VP INDEX PLUS INDEX PLUS INTERNATIONAL INTERNATIONAL SMALL MIDCAP SMALLCAP EQUITY VALUE COMPANY ----------- ---------- ------------- ------------- -------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 28 $ -- $ 16 $ 9 $ 24 ----------- ---------- ------------- ------------- -------- Total investment income 28 -- 16 9 24 Expenses: Mortality and expense risk and other charges 30 -- 15 3 135 ----------- ---------- ------------- ------------- -------- Total expenses 30 -- 15 3 135 ----------- ---------- ------------- ------------- -------- Net investment income (loss) (2) -- 1 6 (111) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 16 -- 76 2 1,240 Capital gains distributions 423 -- -- 23 215 ----------- ---------- ------------- ------------- -------- Total realized gain (loss) on investments and capital gains distributions 439 -- 76 25 1,455 Net unrealized appreciation (depreciation) of investments 64 -- 73 1 (302) ----------- ---------- ------------- ------------- -------- Net increase (decrease) in net assets resulting from operations $ 501 $ -- $ 150 $ 32 $ 1,042 =========== ========== ============= ============= ========
The accompanying notes are an integral part of these financial statements. 25 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 (Dollars in thousands)
JANUS JANUS ASPEN JANUS JANUS ASPEN ING VP ASPEN SERIES ASPEN SERIES VALUE SERIES FLEXIBLE SERIES MIDCAP OPPORTUNITY BALANCED INCOME GROWTH GROWTH ------------ -------- ----------- -------- ----------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 57 $ -- $ -- $ -- $ -- ------------ -------- ----------- -------- ----------- Total investment income 57 -- -- -- -- Expenses: Mortality and expense risk and other charges 30 47 15 28 42 ------------ -------- ----------- -------- ----------- Total expenses 30 47 15 28 42 ------------ -------- ----------- -------- ----------- Net investment income (loss) 27 (47) (15) (28) (42) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 13 703 (91) 1,042 2,724 Capital gains distributions -- -- -- -- -- ------------ -------- ----------- -------- ----------- Total realized gain (loss) on investments and capital gains distributions 13 703 (91) 1,042 2,724 Net unrealized appreciation (depreciation) of investments 18 (983) 101 (1,443) (3,303) ------------ -------- ----------- -------- ----------- Net increase (decrease) in net assets resulting from operations $ 58 $ (327) $ (5) $ (429) $ (621) ============ ======== =========== ======== ===========
The accompanying notes are an integral part of these financial statements. 26 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 (Dollars in thousands)
JANUS ASPEN LORD ABBETT SERIES SERIES FUND MFS(R) MFS(R) OPPENHEIMER WORLDWIDE GROWTH AND STRATEGIC TOTAL AGGRESSIVE GROWTH INCOME INCOME RETURN GROWTH ----------- ----------- --------- -------- ----------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ -- $ -- $ 65 $ 310 $ -- ----------- ----------- --------- -------- ----------- Total investment income -- -- 65 310 -- Expenses: Mortality and expense risk and other charges 91 15 10 151 41 ----------- ----------- --------- -------- ----------- Total expenses 91 15 10 151 41 ----------- ----------- --------- -------- ----------- Net investment income (loss) (91) (15) 55 159 (41) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 2,148 23 3 1,541 221 Capital gains distributions -- -- 3 607 -- ----------- ----------- --------- -------- ----------- Total realized gain (loss) on investments and capital gains distributions 2,148 23 6 2,148 221 Net unrealized appreciation (depreciation) of investments (2,931) 54 (60) (2,233) 38 ----------- ----------- --------- -------- ----------- Net increase (decrease) in net assets resulting from operations $ (874) $ 62 $ 1 $ 74 $ 218 =========== =========== ========= ======== ===========
The accompanying notes are an integral part of these financial statements. 27 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 (Dollars in thousands)
OPPENHEIMER OPPENHEIMER OPPENHEIMER PIONEER GLOBAL MAIN STRATEGIC EQUITY INCOME SECURITIES STREET BOND VCT ------------ ------------ ------------ ------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 203 $ 106 $ 435 $ -- ------------ ------------ ------------ ------------- Total investment income 203 106 435 -- Expenses: Mortality and expense risk and other charges 65 74 36 -- ------------ ------------ ------------ ------------- Total expenses 65 74 36 -- ------------ ------------ ------------ ------------- Net investment income (loss) 138 32 399 -- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 3,633 624 371 -- Capital gains distributions -- -- -- -- ------------ ------------ ------------ ------------- Total realized gain (loss) on investments and capital gains distributions 3,633 624 371 -- Net unrealized appreciation (depreciation) of investments (4,717) (500) (889) 1 ------------ ------------ ------------ ------------- Net increase (decrease) in net assets resulting from operations $ (946) $ 156 $ (119) $ 1 ============ ============ ============ =============
The accompanying notes are an integral part of these financial statements. 28 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF CHANGES IN NET ASSETS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND THE YEAR ENDED DECEMBER 31, 2004 (Dollars in thousands)
AIM V.I. AIM V.I. AIM V.I. CAPITAL CORE AIM V.I. PREMIER APPRECIATION EQUITY GROWTH EQUITY ------------ -------- -------- -------- NET ASSETS AT JANUARY 1, 2004 $ 12 $ 2,525 $ 1,735 $ 2,269 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) -- 1 (17) (12) Net realized gain (loss) on investments and capital gains distributions -- (14) (173) (87) Net unrealized appreciation (depreciation) of investments -- 214 302 206 ------------ -------- -------- -------- Net increase (decrease) in net assets from operations -- 201 112 107 Changes from principal transactions: Total unit transactions (4) 87 (114) 215 ------------ -------- -------- -------- Increase (decrease) in net assets derived from principal transactions (4) 87 (114) 215 ------------ -------- -------- -------- Total increase (decrease) (4) 288 (2) 322 ------------ -------- -------- -------- NET ASSETS AT DECEMBER 31, 2004 8 2,813 1,733 2,591 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) -- (20) (12) (20) Net realized gain (loss) on investments and capital gains distributions -- 5 (38) (17) Net unrealized appreciation (depreciation) of investments -- 70 106 94 ------------ -------- -------- -------- Net increase (decrease) in net assets from operations -- 55 56 57 Changes from principal transactions: Total unit transactions 2 (105) (22) 66 ------------ -------- -------- -------- Increase (decrease) in net assets derived from principal transactions 2 (105) (22) 66 ------------ -------- -------- -------- Total increase (decrease) 2 (50) 34 123 ------------ -------- -------- -------- NET ASSETS AT SEPTEMBER 30, 2005 $ 10 $ 2,763 $ 1,767 $ 2,714 ============ ======== ======== ========
The accompanying notes are an integral part of these financial statements. 29 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF CHANGES IN NET ASSETS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND THE YEAR ENDED DECEMBER 31, 2004 (Dollars in thousands)
ALGER ALGER ALGER AMERICAN AMERICAN AMERICAN AMERICAN INCOME & LEVERAGED CENTURY(R) VP BALANCED GROWTH ALLCAP BALANCED ------------ -------- --------- ------------- NET ASSETS AT JANUARY 1, 2004 $ 630 $ 1,668 $ 1,660 $ 177 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 1 (13) (22) 1 Net realized gain (loss) on investments and capital gains distributions 8 (28) (13) 3 Net unrealized appreciation (depreciation) of investments 2 125 128 6 ------------ -------- --------- ------------- Net increase (decrease) in net assets from operations 11 84 93 10 Changes from principal transactions: Total unit transactions (262) (388) (297) (58) ------------ -------- --------- ------------- Increase (decrease) in net assets derived from principal transactions (262) (388) (297) (58) ------------ -------- --------- ------------- Total increase (decrease) (251) (304) (204) (48) ------------ -------- --------- ------------- NET ASSETS AT DECEMBER 31, 2004 379 1,364 1,456 129 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 2 1 (14) 1 Net realized gain (loss) on investments and capital gains distributions 37 3 129 -- Net unrealized appreciation (depreciation) of investments (24) (10) (39) 2 ------------ -------- --------- ------------- Net increase (decrease) in net assets from operations 15 (6) 76 3 Changes from principal transactions: Total unit transactions (394) (1,358) (1,532) (3) ------------ -------- --------- ------------- Increase (decrease) in net assets derived from principal transactions (394) (1,358) (1,532) (3) ------------ -------- --------- ------------- Total increase (decrease) (379) (1,364) (1,456) -- ------------ -------- --------- ------------- NET ASSETS AT SEPTEMBER 30, 2005 $ -- $ -- $ -- $ 129 ============ ======== ========= =============
The accompanying notes are an integral part of these financial statements. 30 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF CHANGES IN NET ASSETS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND THE YEAR ENDED DECEMBER 31, 2004 (Dollars in thousands)
AMERICAN CALVERT FEDERATED FEDERATED CENTURY(R) VP SOCIAL AMERICAN CAPITAL INTERNATIONAL BALANCED LEADERS INCOME ------------- -------- --------- --------- NET ASSETS AT JANUARY 1, 2004 $ 532 $ 424 $ 81,925 $ 8,126 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (4) 1 54 237 Net realized gain (loss) on investments and capital gains distributions 1 11 896 (1,519) Net unrealized appreciation (depreciation) of investments 61 17 4,550 1,832 ------------- -------- --------- --------- Net increase (decrease) in net assets from operations 58 29 5,500 550 Changes from principal transactions: Total unit transactions (108) (36) (17,909) (1,864) ------------- -------- --------- --------- Increase (decrease) in net assets derived from principal transactions (108) (36) (17,909) (1,864) ------------- -------- --------- --------- Total increase (decrease) (50) (7) (12,409) (1,314) ------------- -------- --------- --------- NET ASSETS AT DECEMBER 31, 2004 482 417 69,516 6,812 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 1 (4) 319 259 Net realized gain (loss) on investments and capital gains distributions 6 36 (215) (1,508) Net unrealized appreciation (depreciation) of investments 19 (21) 709 1,472 ------------- -------- --------- --------- Net increase (decrease) in net assets from operations 26 11 813 223 Changes from principal transactions: Total unit transactions (53) (141) (18,142) (2,285) ------------- -------- --------- --------- Increase (decrease) in net assets derived from principal transactions (53) (141) (18,142) (2,285) ------------- -------- --------- --------- Total increase (decrease) (27) (130) (17,329) (2,062) ------------- -------- --------- --------- NET ASSETS AT SEPTEMBER 30, 2005 $ 455 $ 287 $ 52,187 $ 4,750 ============= ======== ========= =========
The accompanying notes are an integral part of these financial statements. 31 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF CHANGES IN NET ASSETS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND THE YEAR ENDED DECEMBER 31, 2004 (Dollars in thousands)
FEDERATED FEDERATED FEDERATED FUND FOR US HIGH FEDERATED EQUITY GOVERNMENT INCOME INTERNATIONAL INCOME SECURITIES BOND EQUITY ------------ ----------- --------- ------------- NET ASSETS AT JANUARY 1, 2004 $ 17,322 $ 5,051 $ 14,508 $ 11,757 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 94 149 780 (150) Net realized gain (loss) on investments and capital gains distributions (297) 74 (535) (846) Net unrealized appreciation (depreciation) of investments 1,863 (132) 860 2,177 ------------ ----------- --------- ------------- Net increase (decrease) in net assets from operations 1,660 91 1,105 1,181 Changes from principal transactions: Total unit transactions (3,590) (1,457) (3,234) (2,746) ------------ ----------- --------- ------------- Increase (decrease) in net assets derived from principal transactions (3,590) (1,457) (3,234) (2,746) ------------ ----------- --------- ------------- Total increase (decrease) (1,930) (1,366) (2,129) (1,565) ------------ ----------- --------- ------------- NET ASSETS AT DECEMBER 31, 2004 15,392 3,685 12,379 10,192 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 164 102 804 (95) Net realized gain (loss) on investments and capital gains distributions (50) (8) (50) (1,804) Net unrealized appreciation (depreciation) of investments (202) (76) (759) 2,093 ------------ ----------- --------- ------------- Net increase (decrease) in net assets from operations (88) 18 (5) 194 Changes from principal transactions: Total unit transactions (4,226) (809) (4,629) (2,498) ------------ ----------- --------- ------------- Increase (decrease) in net assets derived from principal transactions (4,226) (809) (4,629) (2,498) ------------ ----------- --------- ------------- Total increase (decrease) (4,314) (791) (4,634) (2,304) ------------ ----------- --------- ------------- NET ASSETS AT SEPTEMBER 30, 2005 $ 11,078 $ 2,894 $ 7,745 $ 7,888 ============ =========== ========= =============
The accompanying notes are an integral part of these financial statements. 32 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF CHANGES IN NET ASSETS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND THE YEAR ENDED DECEMBER 31, 2004 (Dollars in thousands)
FEDERATED MID CAP FEDERATED FIDELITY(R) FIDELITY(R) GROWTH PRIME VIP ASSET VIP STRATEGIES MONEY MANAGER(SM) CONTRAFUND(R) ----------- --------- ----------- ------------- NET ASSETS AT JANUARY 1, 2004 $ 20,317 $ 3,768 $ 5,491 $ 26,252 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (260) (20) 92 (277) Net realized gain (loss) on investments and capital gains distributions 468 -- 86 960 Net unrealized appreciation (depreciation) of investments 2,058 -- (6) 2,785 ----------- --------- ----------- ------------- Net increase (decrease) in net assets from operations 2,266 (20) 172 3,468 Changes from principal transactions: Total unit transactions (5,011) (1,595) (1,033) (1,786) ----------- --------- ----------- ------------- Increase (decrease) in net assets derived from principal transactions (5,011) (1,595) (1,033) (1,786) ----------- --------- ----------- ------------- Total increase (decrease) (2,745) (1,615) (861) 1,682 ----------- --------- ----------- ------------- NET ASSETS AT DECEMBER 31, 2004 17,572 2,153 4,630 27,934 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (164) 10 75 (197) Net realized gain (loss) on investments and capital gains distributions 1,110 -- 80 1,353 Net unrealized appreciation (depreciation) of investments 289 -- (153) 1,735 ----------- --------- ----------- ------------- Net increase (decrease) in net assets from operations 1,235 10 2 2,891 Changes from principal transactions: Total unit transactions (4,112) (917) (1,070) (3,715) ----------- --------- ----------- ------------- Increase (decrease) in net assets derived from principal transactions (4,112) (917) (1,070) (3,715) ----------- --------- ----------- ------------- Total increase (decrease) (2,877) (907) (1,068) (824) ----------- --------- ----------- ------------- NET ASSETS AT SEPTEMBER 30, 2005 $ 14,695 $ 1,246 $ 3,562 $ 27,110 =========== ========= =========== =============
The accompanying notes are an integral part of these financial statements. 33 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF CHANGES IN NET ASSETS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND THE YEAR ENDED DECEMBER 31, 2004 (Dollars in thousands)
FIDELITY(R) FIDELITY(R) FIDELITY(R) FIDELITY(R) VIP EQUITY- VIP VIP VIP INCOME GROWTH HIGH INCOME INDEX 500 ------------ ----------- ----------- ----------- NET ASSETS AT JANUARY 1, 2004 $ 38,898 $ 29,686 $ 12,642 $ 25,584 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 91 (276) 824 4 Net realized gain (loss) on investments and capital gains distributions 491 (379) 665 7 Net unrealized appreciation (depreciation) of investments 2,853 1,151 (735) 1,953 ------------ ----------- ----------- ----------- Net increase (decrease) in net assets from operations 3,435 496 754 1,964 Changes from principal transactions: Total unit transactions (5,428) (1,074) (3,598) (4,073) ------------ ----------- ----------- ----------- Increase (decrease) in net assets derived from principal transactions (5,428) (1,074) (3,598) (4,073) ------------ ----------- ----------- ----------- Total increase (decrease) (1,993) (578) (2,844) (2,109) ------------ ----------- ----------- ----------- NET ASSETS AT DECEMBER 31, 2004 36,905 29,108 9,798 23,475 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 232 (104) 571 184 Net realized gain (loss) on investments and capital gains distributions 1,829 (180) 351 762 Net unrealized appreciation (depreciation) of investments (1,611) 633 (921) (673) ------------ ----------- ----------- ----------- Net increase (decrease) in net assets from operations 450 349 1 273 Changes from principal transactions: Total unit transactions (6,848) (2,475) (3,276) (4,749) ------------ ----------- ----------- ----------- Increase (decrease) in net assets derived from principal transactions (6,848) (2,475) (3,276) (4,749) ------------ ----------- ----------- ----------- Total increase (decrease) (6,398) (2,126) (3,275) (4,476) ------------ ----------- ----------- ----------- NET ASSETS AT SEPTEMBER 30, 2005 $ 30,507 $ 26,982 $ 6,523 $ 18,999 ============ =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 34 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF CHANGES IN NET ASSETS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND THE YEAR ENDED DECEMBER 31, 2004 (Dollars in thousands)
FIDELITY(R) VIP FIDELITY(R) ING VP INVESTMENT VIP ING VP EMERGING GRADE BOND OVERSEAS BALANCED MARKETS ----------- ----------- -------- -------- NET ASSETS AT JANUARY 1, 2004 $ 636 $ 3,114 $ 13,216 $ 190 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 18 (6) 120 (1) Net realized gain (loss) on investments and capital gains distributions 26 97 114 7 Net unrealized appreciation (depreciation) of investments (29) 236 902 19 ----------- ----------- -------- -------- Net increase (decrease) in net assets from operations 15 327 1,136 25 Changes from principal transactions: Total unit transactions (219) (96) 1,175 (56) ----------- ----------- -------- -------- Increase (decrease) in net assets derived from principal transactions (219) (96) 1,175 (56) ----------- ----------- -------- -------- Total increase (decrease) (204) 231 2,311 (31) ----------- ----------- -------- -------- NET ASSETS AT DECEMBER 31, 2004 432 3,345 15,527 159 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 9 (11) 260 (1) Net realized gain (loss) on investments and capital gains distributions 11 200 149 3 Net unrealized appreciation (depreciation) of investments (19) 51 86 37 ----------- ----------- -------- -------- Net increase (decrease) in net assets from operations 1 240 495 39 Changes from principal transactions: Total unit transactions (95) (261) 1,207 (7) ----------- ----------- -------- -------- Increase (decrease) in net assets derived from principal transactions (95) (261) 1,207 (7) ----------- ----------- -------- -------- Total increase (decrease) (94) (21) 1,702 32 ----------- ----------- -------- -------- NET ASSETS AT SEPTEMBER 30, 2005 $ 338 $ 3,324 $ 17,229 $ 191 =========== =========== ======== ========
The accompanying notes are an integral part of these financial statements. 35 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF CHANGES IN NET ASSETS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND THE YEAR ENDED DECEMBER 31, 2004 (Dollars in thousands)
ING VP ING VP ING VP ING INTERMEDIATE MONEY NATURAL EVERGREEN BOND MARKET RESOURCES OMEGA ------------ -------- --------- --------- NET ASSETS AT JANUARY 1, 2004 $ 11,032 $ 19,909 $ 423 $ -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 635 (59) (1) -- Net realized gain (loss) on investments and capital gains distributions 536 (36) 12 -- Net unrealized appreciation (depreciation) of investments (837) 38 26 -- ------------ -------- --------- --------- Net increase (decrease) in net assets from operations 334 (57) 37 -- Changes from principal transactions: Total unit transactions (2,693) (6,490) (78) -- ------------ -------- --------- --------- Increase (decrease) in net assets derived from principal transactions (2,693) (6,490) (78) -- ------------ -------- --------- --------- Total increase (decrease) (2,359) (6,547) (41) -- ------------ -------- --------- --------- NET ASSETS AT DECEMBER 31, 2004 8,673 13,362 382 -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (82) 30 (4) -- Net realized gain (loss) on investments and capital gains distributions (59) 70 52 -- Net unrealized appreciation (depreciation) of investments 245 49 81 16 ------------ -------- --------- --------- Net increase (decrease) in net assets from operations 104 149 129 16 Changes from principal transactions: Total unit transactions (622) 205 (106) 1,270 ------------ -------- --------- --------- Increase (decrease) in net assets derived from principal transactions (622) 205 (106) 1,270 ------------ -------- --------- --------- Total increase (decrease) (518) 354 23 1,286 ------------ -------- --------- --------- NET ASSETS AT SEPTEMBER 30, 2005 $ 8,155 $ 13,716 $ 405 $ 1,286 ============ ======== ========= =========
The accompanying notes are an integral part of these financial statements. 36 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF CHANGES IN NET ASSETS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND THE YEAR ENDED DECEMBER 31, 2004 (Dollars in thousands)
ING ING FMR JPMORGAN ING MFS(R) ING EARNINGS VALUE TOTAL OPPENHEIMER GROWTH OPPORTUNITIES RETURN MAIN STREET ---------- ------------- ---------- ----------- NET ASSETS AT JANUARY 1, 2004 $ -- $ -- $ -- $ -- 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 net assets derived from principal transactions -- -- -- -- ---------- ------------- ---------- ----------- Total increase (decrease) -- -- -- -- ---------- ------------- ---------- ----------- NET ASSETS AT DECEMBER 31, 2004 -- -- -- -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) -- (1) 2 1 Net realized gain (loss) on investments and capital gains distributions -- 2 10 3 Net unrealized appreciation (depreciation) of investments 10 7 51 8 ---------- ------------- ---------- ----------- Net increase (decrease) in net assets from operations 10 8 63 12 Changes from principal transactions: Total unit transactions 1,174 1,528 13,880 667 ---------- ------------- ---------- ----------- Increase (decrease) in net assets derived from principal transactions 1,174 1,528 13,880 667 ---------- ------------- ---------- ----------- Total increase (decrease) 1,184 1,536 13,943 679 ---------- ------------- ---------- ----------- NET ASSETS AT SEPTEMBER 30, 2005 $ 1,184 $ 1,536 $ 13,943 $ 679 ========== ============= ========== ===========
The accompanying notes are an integral part of these financial statements. 37 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF CHANGES IN NET ASSETS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND THE YEAR ENDED DECEMBER 31, 2004 (Dollars in thousands)
ING ING AMERICAN ING ING PIMCO PIONEER CENTURY JPMORGAN HIGH YIELD FUND SELECT INTERNATIONAL ------------ -------- -------- ------------- NET ASSETS AT JANUARY 1, 2004 $ -- $ -- $ -- $ 1,701 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) -- -- -- (5) Net realized gain (loss) on investments and capital gains distributions -- -- -- 149 Net unrealized appreciation (depreciation) of investments -- -- -- 211 ------------ -------- -------- ------------- Net increase (decrease) in net assets from operations -- -- -- 355 Changes from principal transactions: Total unit transactions -- -- -- 256 ------------ -------- -------- ------------- Increase (decrease) in net assets derived from principal transactions -- -- -- 256 ------------ -------- -------- ------------- Total increase (decrease) -- -- -- 611 ------------ -------- -------- ------------- NET ASSETS AT DECEMBER 31, 2004 -- -- -- 2,312 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 2 -- (33) (5) Net realized gain (loss) on investments and capital gains distributions -- -- 48 272 Net unrealized appreciation (depreciation) of investments (5) -- 274 (185) ------------ -------- -------- ------------- Net increase (decrease) in net assets from operations (3) -- 289 82 Changes from principal transactions: Total unit transactions 1,730 5 5,050 (726) ------------ -------- -------- ------------- Increase (decrease) in net assets derived from principal transactions 1,730 5 5,050 (726) ------------ -------- -------- ------------- Total increase (decrease) 1,727 5 5,339 (644) ------------ -------- -------- ------------- NET ASSETS AT SEPTEMBER 30, 2005 $ 1,727 $ 5 $ 5,339 $ 1,668 ============ ======== ======== =============
The accompanying notes are an integral part of these financial statements. 38 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF CHANGES IN NET ASSETS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND THE YEAR ENDED DECEMBER 31, 2004 (Dollars in thousands)
ING ING SALOMON ING MFS(R) ING OPPENHEIMER BROTHERS CAPITAL OPPENHEIMER STRATEGIC AGGRESSIVE OPPORTUNITIES GLOBAL INCOME GROWTH ------------- ----------- ----------- ----------- NET ASSETS AT JANUARY 1, 2004 $ 3,225 $ -- $ -- $ 11,703 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (28) -- -- (144) Net realized gain (loss) on investments and capital gains distributions 123 -- -- (21) Net unrealized appreciation (depreciation) of investments 219 -- -- 904 ------------- ----------- ----------- ----------- Net increase (decrease) in net assets from operations 314 -- -- 739 Changes from principal transactions: Total unit transactions (477) -- -- (3,073) ------------- ----------- ----------- ----------- Increase (decrease) in net assets derived from principal transactions (477) -- -- (3,073) ------------- ----------- ----------- ----------- Total increase (decrease) (163) -- -- (2,334) ------------- ----------- ----------- ----------- NET ASSETS AT DECEMBER 31, 2004 3,062 -- -- 9,369 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (7) (214) (70) (89) Net realized gain (loss) on investments and capital gains distributions 132 180 27 245 Net unrealized appreciation (depreciation) of investments (174) 5,035 203 449 ------------- ----------- ----------- ----------- Net increase (decrease) in net assets from operations (49) 5,001 160 605 Changes from principal transactions: Total unit transactions (705) 35,136 12,046 (1,553) ------------- ----------- ----------- ----------- Increase (decrease) in net assets derived from principal transactions (705) 35,136 12,046 (1,553) ------------- ----------- ----------- ----------- Total increase (decrease) (754) 40,137 12,206 (948) ------------- ----------- ----------- ----------- NET ASSETS AT SEPTEMBER 30, 2005 $ 2,308 $ 40,137 $ 12,206 $ 8,421 ============= =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 39 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF CHANGES IN NET ASSETS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND THE YEAR ENDED DECEMBER 31, 2004 (Dollars in thousands)
ING ING ING ING T. ROWE PRICE T. ROWE PRICE UBS U.S. VAN KAMPEN DIVERSIFIED GROWTH LARGE CAP EQUITY AND MID CAP GROWTH EQUITY EQUITY INCOME -------------- ------------- --------- ---------- NET ASSETS AT JANUARY 1, 2004 $ -- $ 19,372 $ 7,314 $ -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) -- (233) (44) -- Net realized gain (loss) on investments and capital gains distributions -- 156 (55) -- Net unrealized appreciation (depreciation) of investments -- 1,503 947 -- -------------- ------------- --------- ---------- Net increase (decrease) in net assets from operations -- 1,426 848 -- Changes from principal transactions: Total unit transactions -- (2,139) (1,169) -- -------------- ------------- --------- ---------- Increase (decrease) in net assets derived from principal transactions -- (2,139) (1,169) -- -------------- ------------- --------- ---------- Total increase (decrease) -- (713) (321) -- -------------- ------------- --------- ---------- NET ASSETS AT DECEMBER 31, 2004 -- 18,659 6,993 -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (33) (92) (11) (48) Net realized gain (loss) on investments and capital gains distributions 159 355 113 58 Net unrealized appreciation (depreciation) of investments 524 (181) 134 681 -------------- ------------- --------- ---------- Net increase (decrease) in net assets from operations 650 82 236 691 Changes from principal transactions: Total unit transactions 5,000 (3,235) (933) 9,983 -------------- ------------- --------- ---------- Increase (decrease) in net assets derived from principal transactions 5,000 (3,235) (933) 9,983 -------------- ------------- --------- ---------- Total increase (decrease) 5,650 (3,153) (697) 10,674 -------------- ------------- --------- ---------- NET ASSETS AT SEPTEMBER 30, 2005 $ 5,650 $ 15,506 $ 6,296 $ 10,674 ============== ============= ========= ==========
The accompanying notes are an integral part of these financial statements. 40 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF CHANGES IN NET ASSETS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND THE YEAR ENDED DECEMBER 31, 2004 (Dollars in thousands)
ING VP ING VP ING VP STRATEGIC STRATEGIC STRATEGIC ING VP ALLOCATION ALLOCATION ALLOCATION GROWTH AND BALANCED GROWTH INCOME INCOME ------------ ---------- ---------- ---------- NET ASSETS AT JANUARY 1, 2004 $ 1,035 $ 1,094 $ 1,648 $ 11,684 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (1) (7) 8 107 Net realized gain (loss) on investments and capital gains distributions 73 78 10 312 Net unrealized appreciation (depreciation) of investments 52 99 87 268 ------------ ---------- ---------- ---------- Net increase (decrease) in net assets from operations 124 170 105 687 Changes from principal transactions: Total unit transactions 351 529 (164) (1,816) ------------ ---------- ---------- ---------- Increase (decrease) in net assets derived from principal transactions 351 529 (164) (1,816) ------------ ---------- ---------- ---------- Total increase (decrease) 475 699 (59) (1,129) ------------ ---------- ---------- ---------- NET ASSETS AT DECEMBER 31, 2004 1,510 1,793 1,589 10,555 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 10 5 17 (101) Net realized gain (loss) on investments and capital gains distributions 70 113 73 380 Net unrealized appreciation (depreciation) of investments (14) (46) (50) 83 ------------ ---------- ---------- ---------- Net increase (decrease) in net assets from operations 66 72 40 362 Changes from principal transactions: Total unit transactions 404 (94) (183) (1,234) ------------ ---------- ---------- ---------- Increase (decrease) in net assets derived from principal transactions 404 (94) (183) (1,234) ------------ ---------- ---------- ---------- Total increase (decrease) 470 (22) (143) (872) ------------ ---------- ---------- ---------- NET ASSETS AT SEPTEMBER 30, 2005 $ 1,980 $ 1,771 $ 1,446 $ 9,683 ============ ========== ========== ==========
The accompanying notes are an integral part of these financial statements. 41 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF CHANGES IN NET ASSETS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND THE YEAR ENDED DECEMBER 31, 2004 (Dollars in thousands)
ING VP GLOBAL ING VP ING VP SCIENCE AND ING VP INDEX PLUS INDEX PLUS TECHNOLOGY GROWTH LARGECAP MIDCAP ------------ -------- ---------- ---------- NET ASSETS AT JANUARY 1, 2004 $ 2,897 $ 3,073 $ 16,152 $ 63 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (27) (31) (16) (1) Net realized gain (loss) on investments and capital gains distributions 320 (44) 39 2 Net unrealized appreciation (depreciation) of investments (357) 242 1,539 9 ------------ -------- ---------- ---------- Net increase (decrease) in net assets from operations (64) 167 1,562 10 Changes from principal transactions: Total unit transactions (682) (4) 751 12 ------------ -------- ---------- ---------- Increase (decrease) in net assets derived from principal transactions (682) (4) 751 12 ------------ -------- ---------- ---------- Total increase (decrease) (746) 163 2,313 22 ------------ -------- ---------- ---------- NET ASSETS AT DECEMBER 31, 2004 2,151 3,236 18,465 85 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (16) (4) 83 (2) Net realized gain (loss) on investments and capital gains distributions (1) 6 264 439 Net unrealized appreciation (depreciation) of investments 106 68 193 64 ------------ -------- ---------- ---------- Net increase (decrease) in net assets from operations 89 70 540 501 Changes from principal transactions: Total unit transactions (113) (69) 752 6,176 ------------ -------- ---------- ---------- Increase (decrease) in net assets derived from principal transactions (113) (69) 752 6,176 ------------ -------- ---------- ---------- Total increase (decrease) (24) 1 1,292 6,677 ------------ -------- ---------- ---------- NET ASSETS AT SEPTEMBER 30, 2005 $ 2,127 $ 3,237 $ 19,757 $ 6,762 ============ ======== ========== ==========
The accompanying notes are an integral part of these financial statements. 42 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF CHANGES IN NET ASSETS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND THE YEAR ENDED DECEMBER 31, 2004 (Dollars in thousands)
ING VP ING VP ING VP ING VP INDEX PLUS INTERNATIONAL INTERNATIONAL SMALL SMALLCAP EQUITY VALUE COMPANY ------------ ------------- ------------- -------- NET ASSETS AT JANUARY 1, 2004 $ 37 $ 492 $ -- $ 15,188 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) -- (2) -- (142) Net realized gain (loss) on investments and capital gains distributions 8 60 -- 819 Net unrealized appreciation (depreciation) of investments (5) 60 15 1,157 ------------ ------------- ------------- -------- Net increase (decrease) in net assets from operations 3 118 15 1,834 Changes from principal transactions: Total unit transactions (37) 530 119 (712) ------------ ------------- ------------- -------- Increase (decrease) in net assets derived from principal transactions (37) 530 119 (712) ------------ ------------- ------------- -------- Total increase (decrease) (34) 648 134 1,122 ------------ ------------- ------------- -------- NET ASSETS AT DECEMBER 31, 2004 3 1,140 134 16,310 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) -- 1 6 (111) Net realized gain (loss) on investments and capital gains distributions -- 76 25 1,455 Net unrealized appreciation (depreciation) of investments -- 73 1 (302) ------------ ------------- ------------- -------- Net increase (decrease) in net assets from operations -- 150 32 1,042 Changes from principal transactions: Total unit transactions -- 372 358 (576) ------------ ------------- ------------- -------- Increase (decrease) in net assets derived from principal transactions -- 372 358 (576) ------------ ------------- ------------- -------- Total increase (decrease) -- 522 390 466 ------------ ------------- ------------- -------- NET ASSETS AT SEPTEMBER 30, 2005 $ 3 $ 1,662 $ 524 $ 16,776 ============ ============= ============= ========
The accompanying notes are an integral part of these financial statements. 43 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF CHANGES IN NET ASSETS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND THE YEAR ENDED DECEMBER 31, 2004 (Dollars in thousands)
JANUS ASPEN ING VP JANUS ASPEN SERIES JANUS ASPEN VALUE SERIES FLEXIBLE SERIES OPPORTUNITY BALANCED INCOME GROWTH ------------ ----------- ----------- ----------- NET ASSETS AT JANUARY 1, 2004 $ 3,076 $ 14,592 $ 5,518 $ 9,545 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (16) 86 161 (100) Net realized gain (loss) on investments and capital gains distributions (59) 100 117 (82) Net unrealized appreciation (depreciation) of investments 343 608 (182) 324 ------------ ----------- ----------- ----------- Net increase (decrease) in net assets from operations 268 794 96 142 Changes from principal transactions: Total unit transactions (198) (4,176) (2,047) (2,785) ------------ ----------- ----------- ----------- Increase (decrease) in net assets derived from principal transactions (198) (4,176) (2,047) (2,785) ------------ ----------- ----------- ----------- Total increase (decrease) 70 (3,382) (1,951) (2,643) ------------ ----------- ----------- ----------- NET ASSETS AT DECEMBER 31, 2004 3,146 11,210 3,567 6,902 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 27 (47) (15) (28) Net realized gain (loss) on investments and capital gains distributions 13 703 (91) 1,042 Net unrealized appreciation (depreciation) of investments 18 (983) 101 (1,443) ------------ ----------- ----------- ----------- Net increase (decrease) in net assets from operations 58 (327) (5) (429) Changes from principal transactions: Total unit transactions (763) (10,883) (3,562) (6,473) ------------ ----------- ----------- ----------- Increase (decrease) in net assets derived from principal transactions (763) (10,883) (3,562) (6,473) ------------ ----------- ----------- ----------- Total increase (decrease) (705) (11,210) (3,567) (6,902) ------------ ----------- ----------- ----------- NET ASSETS AT SEPTEMBER 30, 2005 $ 2,441 $ -- $ -- $ -- ============ =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 44 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF CHANGES IN NET ASSETS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND THE YEAR ENDED DECEMBER 31, 2004 (Dollars in thousands)
JANUS ASPEN JANUS ASPEN LORD ABBETT SERIES SERIES SERIES FUND MFS(R) MIDCAP WORLDWIDE GROWTH AND STRATEGIC GROWTH GROWTH INCOME INCOME ------------ ----------- ----------- --------- NET ASSETS AT JANUARY 1, 2004 $ 10,449 $ 28,342 $ -- $ 1,384 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (128) (98) 5 43 Net realized gain (loss) on investments and capital gains distributions 882 (648) 7 25 Net unrealized appreciation (depreciation) of investments 1,128 1,394 53 (3) ------------ ----------- ----------- --------- Net increase (decrease) in net assets from operations 1,882 648 65 65 Changes from principal transactions: Total unit transactions (56) (7,100) 818 (396) ------------ ----------- ----------- --------- Increase (decrease) in net assets derived from principal transactions (56) (7,100) 818 (396) ------------ ----------- ----------- --------- Total increase (decrease) 1,826 (6,452) 883 (331) ------------ ----------- ----------- --------- NET ASSETS AT DECEMBER 31, 2004 12,275 21,890 883 1,053 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) (42) (91) (15) 55 Net realized gain (loss) on investments and capital gains distributions 2,724 2,148 23 6 Net unrealized appreciation (depreciation) of investments (3,303) (2,931) 54 (60) ------------ ----------- ----------- --------- Net increase (decrease) in net assets from operations (621) (874) 62 1 Changes from principal transactions: Total unit transactions (11,654) (21,016) 2,051 (135) ------------ ----------- ----------- --------- Increase (decrease) in net assets derived from principal transactions (11,654) (21,016) 2,051 (135) ------------ ----------- ----------- --------- Total increase (decrease) (12,275) (21,890) 2,113 (134) ------------ ----------- ----------- --------- NET ASSETS AT SEPTEMBER 30, 2005 $ -- $ -- $ 2,996 $ 919 ============ =========== =========== =========
The accompanying notes are an integral part of these financial statements. 45 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF CHANGES IN NET ASSETS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND THE YEAR ENDED DECEMBER 31, 2004 (Dollars in thousands)
MFS(R) OPPENHEIMER OPPENHEIMER OPPENHEIMER TOTAL AGGRESSIVE GLOBAL MAIN RETURN GROWTH SECURITIES STREET ------------ ----------- ----------- ----------- NET ASSETS AT JANUARY 1, 2004 $ 18,622 $ 4,366 $ 14,349 $ 7,918 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 47 (60) (3) (43) Net realized gain (loss) on investments and capital gains distributions 211 443 318 38 Net unrealized appreciation (depreciation) of investments 1,390 298 2,588 608 ------------ ----------- ----------- ----------- Net increase (decrease) in net assets from operations 1,648 681 2,903 603 Changes from principal transactions: Total unit transactions (2,768) (492) 2,602 (374) ------------ ----------- ----------- ----------- Increase (decrease) in net assets derived from principal transactions (2,768) (492) 2,602 (374) ------------ ----------- ----------- ----------- Total increase (decrease) (1,120) 189 5,505 229 ------------ ----------- ----------- ----------- NET ASSETS AT DECEMBER 31, 2004 17,502 4,555 19,854 8,147 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 159 (41) 138 32 Net realized gain (loss) on investments and capital gains distributions 2,148 221 3,633 624 Net unrealized appreciation (depreciation) of investments (2,233) 38 (4,717) (500) ------------ ----------- ----------- ----------- Net increase (decrease) in net assets from operations 74 218 (946) 156 Changes from principal transactions: Total unit transactions (17,576) (716) (18,908) (2,168) ------------ ----------- ----------- ----------- Increase (decrease) in net assets derived from principal transactions (17,576) (716) (18,908) (2,168) ------------ ----------- ----------- ----------- Total increase (decrease) (17,502) (498) (19,854) (2,012) ------------ ----------- ----------- ----------- NET ASSETS AT SEPTEMBER 30, 2005 $ -- $ 4,057 $ -- $ 6,135 ============ =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 46 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I STATEMENTS OF CHANGES IN NET ASSETS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND THE YEAR ENDED DECEMBER 31, 2004 (Dollars in thousands)
OPPENHEIMER PIONEER STRATEGIC EQUITY INCOME BOND VCT ----------- ------------- NET ASSETS AT JANUARY 1, 2004 $ 8,115 $ -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 306 -- Net realized gain (loss) on investments and capital gains distributions 236 -- Net unrealized appreciation (depreciation) of investments 76 -- ----------- ------------- Net increase (decrease) in net assets from operations 618 -- Changes from principal transactions: Total unit transactions 439 -- ----------- ------------- Increase (decrease) in net assets derived from principal transactions 439 -- ----------- ------------- Total increase (decrease) 1,057 -- ----------- ------------- NET ASSETS AT DECEMBER 31, 2004 9,172 -- INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income (loss) 399 -- Net realized gain (loss) on investments and capital gains distributions 371 -- Net unrealized appreciation (depreciation) of investments (889) 1 ----------- ------------- Net increase (decrease) in net assets from operations (119) 1 Changes from principal transactions: Total unit transactions (9,053) -- ----------- ------------- Increase (decrease) in net assets derived from principal transactions (9,053) -- ----------- ------------- Total increase (decrease) (9,172) 1 ----------- ------------- NET ASSETS AT SEPTEMBER 30, 2005 $ -- $ 1 =========== =============
The accompanying notes are an integral part of these financial statements. 47 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- 1. ORGANIZATION 2. ING Insurance Company of America Variable Annuity Account I (the "Account") was established by ING Insurance Company of America ("IICA" or the "Company") to support the operations of variable annuity contracts ("Contracts"). The Company is an indirect 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. IICA 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 IICA may conduct, but obligations of the Account, including the promise to make benefit payments, are obligations of IICA. The assets and liabilities of the Account are clearly identified and distinguished from the other assets and liabilities of IICA. Contracts are identified in the Statement of Assets and Liabilities by the qualifiers IICA I, IICA II, and IICA III. IICA I Contracts represent certain individual and group Contracts issued as non-qualified deferred annuity Contracts or Individual Retirement Annuity Contracts issued since June 28, 1995. IICA II Contracts represent certain individual and group Contracts issued as non-qualified deferred annuity Contracts or Individual Retirement Annuity Contracts issued since May 1, 1998. Contracts are no longer sold under qualifiers IICA I and IICA II. IICA III Contracts represent certain group Contracts issued as fund vehicles for Internal Revenue Code Section 403(b) and 401(e) plans issued since September 24, 2000. At September 30, 2005, the Account had 63 active investment divisions (the "Divisions"), 29 of which invest in independently managed mutual funds and 34 of which invest in mutual funds managed by an affiliate, 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 September 30, 2005 and related Trusts are as follows: AIM Variable Insurance Funds: AIM V.I. Capital Appreciation Fund - Series I Shares AIM V.I. Core Equity Fund - Series I Shares AIM V.I. Growth Fund - Series I Shares AIM V.I. Premier Equity Fund - Series I Shares American Century(R) Investments: American Century(R) VP Balanced Fund American Century(R) VP International Fund Calvert Social Balanced Portfolio Federated Insurance Series: Federated American Leaders Fund II Federated Capital Income Fund II Federated Equity Income Fund II Federated Fund for US Government Securities II Federated High Income Bond Fund II Federated International Equity Fund II Federated Mid Cap Growth Strategies Fund II Federated Prime Money Fund II 48 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- Fidelity(R) Investments Variable Insurance Products Funds: Fidelity(R) VIP Asset Manager(SM) Portfolio - Initial Class Fidelity(R) VIP Contrafund(R) Portfolio - Initial Class Fidelity(R) VIP Equity-Income Portfolio - Initial Class Fidelity(R) VIP Growth Portfolio - Initial Class Fidelity(R) VIP High Income Portfolio - Initial Class Fidelity(R) VIP Index 500 Portfolio - Initial Class Fidelity(R) VIP Investment Grade Bond Portfolio - Initial Class Fidelity(R) VIP Overseas Portfolio - Initial Class ING VP Balanced Portfolio, Inc. - Class I ING VP Emerging Markets Fund ING VP Intermediate Bond Portfolio - Class I ING VP Money Market Portfolio - Class I ING VP Natural Resources Trust ING Investors Trust: ING Evergreen Omega Portfolio - Institutional Class** ING FMR Earnings Growth Portfolio - Institutional Class** ING JPMorgan Value Opportunities Portfolio - Service Class** ING MFS(R) Total Return Portfolio - Institutional Class** ING Oppenheimer Main Street Portfolio - Service Class** ING PIMCO High Yield Portfolio - Service Class** ING Pioneer Fund Portfolio - Institutional Class** ING Partners, Inc.: ING American Century Select Portfolio - Initial Class** ING JPMorgan 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 T. Rowe Price Growth Equity Portfolio - Initial Class ING UBS U.S. Large Cap Equity Portfolio - Initial Class ING Strategic Allocation Portfolios, Inc.: ING VP Strategic Allocation Balanced Portfolio - Class I ING VP Strategic Allocation Growth Portfolio - Class I ING VP Strategic Allocation Income Portfolio - Class I ING Variable Funds: ING VP Growth and Income Portfolio - Class I 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 Index Plus MidCap Portfolio - Class I ING VP Index Plus SmallCap Portfolio - Class I ING VP International Equity Portfolio - Class I ING VP International Value Portfolio - Class I* ING VP Small Company Portfolio - Class I ING VP Value Opportunity Portfolio - Class I Lord Abbett Series Fund - Growth and Income Portfolio Class VC* MFS(R) Variable Insurance Trust: MFS(R) Strategic Income Series - Class I Oppenheimer Variable Account Funds: Oppenheimer Aggressive Growth Fund/VA(R) Oppenheimer Global Securities Fund/VA(R) Oppenheimer Main Street Fund/VA(R) Pioneer Equity Income VCT Portfolio - Class I * Division became available in 2004 ** Division became available in 2005 49 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- During 2005, the following funds were closed to contractowners: Alger American Balanced Portfolio - Class O Alger American Income and Growth Portfolio - Class O Alger American Leveraged AllCap Portfolio - Class O Janus Aspen Series Balanced Portfolio - Institutional Shares Janus Aspen Series Flexible Income Portfolio - Institutional Shares Janus Aspen Series Growth Portfolio - Institutional Shares Janus Aspen Series Mid Cap Growth Portfolio - Institutional Shares Janus Aspen Series Worldwide Growth Portfolio - Institutional Shares MFS(R) Total Return Series - Initial Class Oppenheimer Strategic Bond Fund/VA(R) The following divisions were offered during 2005, but had no investments as of September 30, 2005: EuroPacific Growth Fund(R) - Class R-4 Evergreen Special Values Fund - Class A FTVIP Franklin Small Cap Value Securities Fund - Class 2 Hibernia Mid Cap Equity Fund - Class A Shares ING Alliance Mid Cap Growth Portfolio - Service Class ING American Century Large Company Value Portfolio - Service Class ING American Century Select Portfolio - Service Class ING American Century Small Cap Value Portfolio - Service Class ING Baron Small Cap Growth Portfolio - Service Class ING Davis Venture Value Portfolio - Service Class ING Evergreen Health Sciences Portfolio - Class S ING FMR Diversified Mid Cap Portfolio - Service Class ING Fundamental Research Portfolio - Service Class ING GET Fund - Series J ING GET Fund - Series K ING Goldman Sachs(R) Capital Growth Portfolio - Service Class ING Index Plus Large Cap VP w/ Principal Protection - Class R ING JPMorgan Emerging Markets Equity Portfolio - Service Class ING JPMorgan Mid Cap Value Portfolio - Service Class ING JPMorgan Small Cap Equity Portfolio - Service Class ING Julius Baer Foreign Portfolio - Service Class ING Legg Mason Value Portfolio - Institutional Class ING Legg Mason Value Portfolio - Service Class ING Marsico Growth Portfolio - Service Class ING Marsico International Opportunities Portfolio - Service Class ING MFS(R) Utilities Portfolio - Service Class ING OpCap Balanced Value Portfolio - Service Class ING Oppenheimer Global Portfolio - Service Class ING Oppenheimer Main Street Portfolio(R) - Service Class ING PIMCO Total Return Portfolio - Service Class ING Real Estate Securities VP ING Solution 2015 Portfolio - Service Class ING Solution 2025 Portfolio - Service Class ING Solution 2035 Portfolio - Service Class ING Solution 2045 Portfolio - Service Class ING Solution Income Portfolio - Service Class ING Stock Index Portfolio - Institutional Class ING T. Rowe Price Capital Appreciation Portfolio - Service Class ING T. Rowe Price Diversified Mid Cap Growth Portfolio - Service Class ING Van Kampen Comstock Portfolio - Service Class ING Van Kampen Equity and Income Portfolio - Service Class ING Van Kampen Growth and Income Portfolio - Service Class ING VP Financial Services Portfolio - Class I ING VP Growth Opportunities Portfolio - Class I ING VP MagnaCap Portfolio - Class I ING VP Mid Cap Opportunities Portfolio - Class I ING VP Real Estate Portfolio - Class I ING VP SmallCap Opportunities Portfolio - Class I Lord Abbett Series Fund - Mid Cap Value Portfolio - Class VC New Perspective Fund(R) - Class R-4 Oppenheimer Developing Markets Fund - Class A Oppenheimer Main Street Small Cap Fund/VA(R) Pax World Balanced Fund 50 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- PIMCO VIT Real Return Portfolio - Admin Class Pioneer Fund VCT Portfolio - Class I Pioneer High Yield VCT Portfolio - Class I Pioneer Mid Cap Value VCT Portfolio - Class I Templeton Global Bond Fund - Class A The Growth Fund of America(R) - Class R-4 Wanger Select Wanger U.S. Smaller Companies Washington Mutual Investors Fund(SM) - Class R-4 The names of certain Divisions were changed during 2005. The following is a summary of current and former names for those Divisions: CURRENT NAME FORMER NAME ---------------------------------------- ---------------------------------- MFS(R) Strategic Income Series - Class I MFS(R) VIT Strategic Income Series 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 on the specific identification basis. The difference between cost and current market value of investments owned on the day of measurement 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 IICA, 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 IICA. 51 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- Variable 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 Contractowners' aggregate account values invested in the Account Divisions. Net assets allocated to Contracts in the payout period are computed according to the 1983a and 1983 Group Annuity Mortality tables using various assumed interest rates. The mortality risk is fully borne by IICA and may result in additional amounts being transferred into the Account by IICA to cover greater longevity of Contractowners than expected. Conversely, if amounts allocated exceed amounts required, transfers may be made to IICA. 3. CHARGES AND FEES Under the terms of the Contracts, certain charges are allocated to the Contracts to cover IICA's expenses in connection with the issuance and administration of the Contracts. Following is a summary of these charges: Mortality and Expense Risk Charges IICA 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 equal to an annual rate of up to 1.40% of the average daily net asset value of each Division of the Account. Administrative Charges A daily charge to cover administrative expenses of the Account is deducted at an annual rate of up to 0.15% of the assets attributable to the Contracts. Premium Taxes Various states and other governmental units levy a premium tax on annuity Contracts issued by insurance companies. If the owner of a Contract lives in a state which levies such a tax, IICA may deduct the amount of the tax from the purchase payments received or the value of the Contract at annuitization. Other Charges Deductions by the Account for other charges may be made in accordance with the terms of the Contracts and paid to IICA. 52 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- 4. RELATED PARTY TRANSACTIONS During the nine months ended September 30, 2005, management and service fees were paid indirectly to Directed Services, Inc., an affiliate of the Company, in its capacity as investment manager to the ING Investors Trust. The Trust's advisory agreement provided for a fee at annual rates ranging from 0.40% to 0.75% of the average net assets of each respective Series. In addition, management fees were paid indirectly to ING Investments, LLC, an affiliate of the Company, in its capacity as investment adviser to ING VP Intermediate Bond Portfolio, ING VP Balanced Portfolio, Inc., ING Money Market Portfolio, ING Variable Funds, ING Strategic Allocation Portfolios, Inc., ING VP Natural Resources Trust, ING Variable Portfolios, Inc., and ING VP Emerging Markets Fund, Inc. The annual fee rate ranged from 0.25% to 1.00% of the average net assets of each respective Fund. In addition, management fees were paid to ING Life Insurance and Annuity Company, an affiliate, in its capacity as investment adviser to ING Partners, Inc. The annual fee rate ranged from 0.50% to 0.80% of the average net assets of each respective Fund. 53 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- 5. PURCHASES AND SALES OF INVESTMENT SECURITIES The aggregate cost of purchases and proceeds from sales of investments follow:
NINE MONTHS ENDED YEAR ENDED SEPTEMBER 30, 2005 DECEMBER 31, 2004 ------------------- ------------------- PURCHASES SALES PURCHASES SALES --------- ------- --------- ------- (DOLLARS IN THOUSANDS) AIM Variable Insurance Funds: AIM V.I. Capital Appreciation $ 2 $ -- $ 3 $ 7 AIM V.I. Core Equity 241 366 424 336 AIM V.I. Growth 216 250 326 457 AIM V.I. Premier Equity 318 272 536 333 Alger American Funds: Alger American Balanced 6 398 56 317 Alger American Income & Growth 14 1,371 46 447 Alger American Leveraged AllCap 1 1,547 24 343 American Century(R) Investments: American Century(R) VP Balanced 2 4 4 61 American Century(R) VP International 6 58 3 115 Calvert Social Balanced 125 270 115 150 Federated Insurance Series: Federated American Leaders 1,087 18,910 1,575 19,430 Federated Capital Income 512 2,538 569 2,196 Federated Equity Income 502 4,564 1,005 4,501 Federated Fund for US Government Securities 240 947 434 1,717 Federated High Income Bond 935 4,760 1,286 3,740 Federated International Equity 105 2,698 175 3,071 Federated Mid Cap Growth Strategies 125 4,401 231 5,502 Federated Prime Money 903 1,810 1,716 3,331 Fidelity(R) Investments Variable Insurance Products Funds: Fidelity(R) VIP Asset Manager(SM) 314 1,307 1,672 2,613 Fidelity(R) VIP Contrafund(R) 1,720 5,627 4,938 7,001 Fidelity(R) VIP Equity-Income 2,580 7,926 3,970 9,163 Fidelity(R) VIP Growth 2,788 5,367 4,997 6,347 Fidelity(R) VIP High Income 1,024 3,729 2,823 5,597 Fidelity(R) VIP Index 500 1,056 5,621 3,540 7,609 Fidelity(R) VIP Investment Grade Bond 22 100 45 227 Fidelity(R) VIP Overseas 510 765 857 959 ING VP Balanced 2,918 1,451 3,493 2,198 ING VP Emerging Markets 1 9 2 59 ING VP Intermediate Bond 3,006 3,683 2,913 4,574 ING VP Money Market 12,044 11,809 17,388 23,937 ING VP Natural Resources 21 109 11 90
54 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
NINE MONTHS ENDED YEAR ENDED SEPTEMBER 30, 2005 DECEMBER 31, 2004 ------------------- ------------------- PURCHASES SALES PURCHASES SALES --------- ------- --------- ------- (DOLLARS IN THOUSANDS) ING Investors Trust: ING Evergreen Omega $ 1,270 $ -- $ -- $ -- ING FMR Earnings Growth 1,174 -- -- -- ING JPMorgan Value Opportunities 1,594 67 -- -- ING MFS(R) Total Return 13,960 67 -- -- ING Oppenheimer Main Street 763 95 -- -- ING PIMCO High Yield 1,816 84 -- -- ING Pioneer Fund 5 -- -- -- ING Partners, Inc.: ING American Century Select 5,931 914 -- -- ING JPMorgan International 524 1,255 1,400 1,149 ING MFS(R) Capital Opportunities 55 767 335 840 ING Oppenheimer Global 39,516 4,572 -- -- ING Oppenheimer Strategic Income 13,753 1,777 -- -- ING Salomon Brothers Aggressive Growth 137 1,779 134 3,351 ING T. Rowe Price Diversified Mid Cap Growth 5,956 888 -- -- ING T. Rowe Price Growth Equity 293 3,620 2,283 4,655 ING UBS U.S. Large Cap Equity 735 1,679 952 2,165 ING Van Kampen Equity and Income 11,336 1,392 -- -- ING Strategic Allocation Portfolios, Inc.: ING VP Strategic Allocation Balanced 880 466 879 529 ING VP Strategic Allocation Growth 333 422 1,004 482 ING VP Strategic Allocation Income 330 496 360 516 ING Variable Funds: ING VP Growth and Income 232 1,567 739 2,448 ING Variable Portfolios, Inc.: ING VP Global Science and Technology 347 476 933 1,642 ING VP Growth 451 524 669 704 ING VP Index Plus LargeCap 3,384 2,549 3,648 2,913 ING VP Index Plus MidCap 6,874 277 23 12 ING VP Index Plus SmallCap 2 2 2 39 ING VP International Equity 1,055 682 1,015 487 ING VP International Value 453 66 122 3 ING VP Small Company 3,318 3,790 4,074 4,928 ING VP Value Opportunity 647 1,383 991 1,205
55 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
NINE MONTHS ENDED YEAR ENDED SEPTEMBER 30, 2005 DECEMBER 31, 2004 ------------------- ------------------- PURCHASES SALES PURCHASES SALES --------- ------- --------- ------- (DOLLARS IN THOUSANDS) Janus Aspen Series: Janus Aspen Series Balanced $ 235 $11,165 $ 902 $ 4,992 Janus Aspen Series Flexible Income 249 3,826 1,100 2,954 Janus Aspen Series Growth 94 6,595 349 3,234 Janus Aspen Series MidCap Growth 538 12,234 2,874 3,058 Janus Aspen Series Worldwide Growth 40 21,147 737 7,935 Lord Abbett Series Fund Growth and Income 2,293 257 836 6 MFS(R) Variable Insurance Trust: MFS(R) Strategic Income 131 208 363 716 MFS(R) VIT Total Return 1,494 18,304 2,589 5,310 Oppenheimer Variable Account Funds: Oppenheimer Aggressive Growth 588 1,345 1,627 2,179 Oppenheimer Global Securities 1,335 20,105 5,512 2,913 Oppenheimer Main Street 337 2,473 1,774 2,191 Oppenheimer Strategic Bond 1,471 10,125 2,677 1,932 Pioneer Equity Income VCT -- -- -- --
56 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NOTES TO FINANCIAL STATEMENTS 6. CHANGES IN UNITS The net changes in units outstanding follow:
NINE MONTHS ENDED SEPTEMBER 30, 2005 YEAR ENDED DECEMBER 31, 2004 ------------------------------- -------------------------------- NET UNITS NET UNITS UNITS UNITS ISSUED UNITS UNITS ISSUED ISSUED REDEEMED (REDEEMED) ISSUED REDEEMED (REDEEMED) ------ -------- ---------- ------- -------- ---------- AIM Variable Insurance Funds: AIM V.I. Capital Appreciation 190 -- 190 1,405 (1,914) (509) AIM V.I. Core Equity 30,375 (43,213) (12,838) 57,371 (46,138) 11,233 AIM V.I. Growth 40,324 (44,907) (4,583) 72,588 (96,362) (23,774) AIM V.I. Premier Equity 46,234 (36,866) 9,368 86,215 (55,850) 30,365 Alger American Funds: Alger American Balanced -- (18,659) (18,659) 6,782 (20,114) (13,332) Alger American Income & Growth 16 (64,251) (64,235) 6,895 (26,200) (19,305) Alger American Leveraged AllCap 16 (71,129) (71,113) 1,245 (16,669) (15,424) American Century(R) Investments: American Century(R) VP Balanced -- (173) (173) 775 (4,563) (3,788) American Century(R) VP International -- (3,319) (3,319) 314 (7,878) (7,564) Calvert Social Balanced 10,424 (21,946) (11,522) 12,175 (15,171) (2,996) Federated Insurance Series: Federated American Leaders 6,229 (824,581) (818,352) 98,839 (960,481) (861,642) Federated Capital Income 15,143 (188,965) (173,822) 29,977 (184,158) (154,181) Federated Equity Income 15,609 (325,383) (309,774) 85,353 (365,805) (280,452) Federated Fund for US Government Securities 6,770 (59,118) (52,348) 16,747 (112,308) (95,561) Federated High Income Bond 1,395 (290,136) (288,741) 15,081 (228,089) (213,008) Federated International Equity 7,278 (167,095) (159,817) 22,242 (213,195) (190,953) Federated Mid Cap Growth Strategies 6,242 (197,425) (191,183) 28,979 (287,987) (259,008) Federated Prime Money 71,519 (146,399) (74,880) 166,857 (297,024) (130,167)
57 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
NINE MONTHS ENDED SEPTEMBER 30, 2005 YEAR ENDED DECEMBER 31, 2004 ------------------------------------ -------------------------------- NET UNITS NET UNITS UNITS UNITS ISSUED UNITS UNITS ISSUED ISSUED REDEEMED (REDEEMED) ISSUED REDEEMED (REDEEMED) --------- ---------- ---------- ------- -------- ---------- Fidelity(R) Investments Variable Insurance Products Funds: Fidelity(R) VIP Asset Manager(SM) 12,996 (84,150) (71,154) 185,607 (251,419) (65,812) Fidelity(R) VIP Contrafund(R) 86,745 (257,290) (170,545) 392,371 (479,064) (86,693) Fidelity(R) VIP Equity-Income 49,858 (429,152) (379,294) 427,635 (733,140) (305,505) Fidelity(R) VIP Growth 314,746 (434,299) (119,553) 650,583 (589,878) 60,705 Fidelity(R) VIP High Income 50,541 (354,965) (304,424) 268,274 (628,607) (360,333) Fidelity(R) VIP Index 500 -- (5,974) (5,974) 286,900 (511,054) (224,154) Fidelity(R) VIP Investment Grade Bond 43,249 (302,734) (259,485) 12 (13,907) (13,895) Fidelity(R) VIP Overseas 35,143 (54,756) (19,613) 86,230 (94,141) (7,911) ING VP Balanced 223,806 (95,095) 128,711 334,554 (187,081) 147,473 ING VP Emerging Markets -- (584) (584) 132 (6,078) (5,946) ING VP Intermediate Bond 200,770 (239,576) (38,806) 173,232 (347,230) (173,998) ING VP Money Market 1,022,807 (1,010,457) 12,350 146,842 (671,246) (524,404) ING VP Natural Resources -- (5,750) (5,750) -- (5,319) (5,319) ING Investors Trust: ING Evergreen Omega 128,110 (47) 128,063 -- -- -- ING FMR Earnings Growth 121,634 (27) 121,607 -- -- -- ING JPMorgan Value Opportunities 153,002 (6,308) 146,694 -- -- -- ING MFS(R) Total Return 1,349,104 (6,130) 1,342,974 -- -- -- ING Oppenheimer Main Street 71,256 (8,600) 62,656 -- -- -- ING PIMCO High Yield 174,161 (8,138) 166,023 -- -- -- ING Pioneer Fund 523 (523) -- -- -- --
58 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
NINE MONTHS ENDED SEPTEMBER 30, 2005 YEAR ENDED DECEMBER 31, 2004 ------------------------------------ ------------------------------------ NET UNITS NET UNITS UNITS UNITS ISSUED UNITS UNITS ISSUED ISSUED REDEEMED (REDEEMED) ISSUED REDEEMED (REDEEMED) --------- ---------- ---------- --------- ---------- ---------- ING Partners, Inc.: ING American Century Select 599,026 (92,228) 506,798 -- -- -- ING JPMorgan International 42,888 (101,191) (58,303) 155,499 (131,290) 24,209 ING MFS(R) Capital Opportunities 3,163 (61,681) (58,518) 34,026 (76,870) (42,844) ING Oppenheimer Global 3,938,742 (432,768) 3,505,974 -- -- -- ING Oppenheimer Strategic Income 1,389,969 (189,667) 1,200,302 -- -- -- ING Salomon Brothers Aggressive Growth 15,589 (177,698) (162,109) 57,147 (397,639) (340,492) ING T. Rowe Price Diversified Mid Cap Growth 582,980 (80,361) 502,619 -- -- -- ING T. Rowe Price Growth Equity 18,117 (191,579) (173,462) 228,102 (345,603) (117,501) ING UBS U.S. Large Cap Equity 75,322 (168,985) (93,663) 193,734 (321,127) (127,393) ING Van Kampen Equity and Income 1,120,255 (131,186) 989,069 -- -- -- ING Strategic Allocation Portfolios, Inc.: ING VP Strategic Allocation Balanced 56,001 (30,069) 25,932 82,657 (58,246) 24,411 ING VP Strategic Allocation Growth 21,869 (25,474) (3,605) 70,255 (37,187) 33,068 ING VP Strategic Allocation Income 19,504 (33,294) (13,790) 30,144 (37,114) (6,970) ING Variable Funds: ING VP Growth and Income 23,029 (119,695) (96,666) 58,784 (198,802) (140,018) ING Variable Portfolios, Inc.: ING VP Global Science and Technology 100,760 (136,975) (36,215) 287,533 (478,728) (191,195) ING VP Growth 51,225 (48,267) 2,958 91,985 (76,902) 15,083 ING VP Index Plus LargeCap 312,350 (199,699) 112,651 437,200 (273,928) 163,272 ING VP Index Plus MidCap 392,137 (15,911) 376,226 2,077 (1,333) 744 ING VP Index Plus SmallCap 73 (91) (18) 144 (2,642) (2,498) ING VP International Equity 109,701 (99,750) 9,951 135,640 (73,441) 62,199 ING VP International Value 35,530 (5,500) 30,030 2,305,440 (2,294,262) 11,178 ING VP Small Company 198,682 (181,311) 17,371 361,667 (354,531) 7,136 ING VP Value Opportunity 36,130 (83,823) (47,693) 71,666 (81,455) (9,789)
59 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
NINE MONTHS ENDED SEPTEMBER 30, 2005 YEAR ENDED DECEMBER 31, 2004 ------------------------------------ ------------------------------------ NET UNITS NET UNITS UNITS UNITS ISSUED UNITS UNITS ISSUED ISSUED REDEEMED (REDEEMED) ISSUED REDEEMED (REDEEMED) --------- ---------- ---------- --------- ---------- ---------- Janus Aspen Series: Janus Aspen Series Balanced 10,615 (527,643) (517,028) 62,717 (255,673) (192,956) Janus Aspen Series Flexible Income 14,851 (233,404) (218,553) 73,937 (197,408) (123,471) Janus Aspen Series Growth 7,848 (444,446) (436,598) 253,488 (437,751) (184,263) Janus Aspen Series MidCap Growth 59,503 (1,347,855) (1,288,352) 260,007 (221,173) 38,834 Janus Aspen Series Worldwide Growth 5,699 (1,353,423) (1,347,724) 116,727 (562,194) (445,467) Lord Abbett Series Fund Growth and Income 207,305 (22,208) 185,097 78,383 (945) 77,438 MFS(R) Variable Insurance Trust: MFS(R) Strategic Income 4,635 (14,562) (9,927) 29,319 (59,653) (30,334) MFS(R) VIT Total Return 33,742 (983,826) (950,084) 265,885 (418,239) (152,354) Oppenheimer Variable Account Funds: Oppenheimer Aggressive Growth 41,382 (91,771) (50,389) 197,283 (236,625) (39,342) Oppenheimer Global Securities 71,461 (1,215,119) (1,143,658) 414,599 (226,434) 188,165 Oppenheimer Main Street 25,310 (195,984) (170,674) 180,058 (211,139) (31,081) Oppenheimer Strategic Bond 70,638 (683,742) (613,104) 227,684 (189,922) 37,762 Pioneer Equity Income VCT 37 -- 37 6 -- 6
60 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- 7. 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 nine months ended September 30, 2005, and the years ended December 31, 2004, 2003 and 2002, along with units outstanding and unit values for the year ended December 31, 2001, follows:
UNIT FAIR NET INVESTMENT EXPENSE RATIO(B) TOTAL RETURN(C) UNITS VALUE (LOWEST ASSETS INCOME (LOWEST TO (LOWEST TO DIVISION (000'S) TO HIGHEST) (000'S) RATIO(A) HIGHEST) HIGHEST) --------------------------------- ------- ------------------ ------- ---------- -------------- ------------------ AIM V.I. Capital Appreciation 2005 1 $8.51 $10 --% 1.00% 4.80% 2004 1 $8.12 8 -- 1.00% 5.59% 2003 2 $7.69 12 -- 1.00% 28.17% 2002 1 $6.00 6 -- 1.00% -25.11% 2001 1 $8.01 4 12.41 1.00% to 1.25% -24.05% AIM V.I. Core Equity 2005 332 $8.31 2,763 -- 1.00% 2.21% 2004 345 $8.13 2,813 1.01 1.00% 7.82% 2003 334 $7.54 2,525 1.06 1.00% 23.20% 2002 265 $6.12 1,625 0.40 1.00% -16.42% 2001 174 $7.32 1,281 0.09 1.00% to 1.25% -23.61% AIM V.I. Growth 2005 314 $5.63 1,767 -- 1.00% 3.49% 2004 319 $5.44 1,733 -- 1.00% 7.30% 2003 342 $5.07 1,735 -- 1.00% 29.67% 2002 299 $3.91 1,170 -- 1.00% -31.66% 2001 256 $5.71 1,463 0.43 1.00% to 1.25% -34.56% AIM V.I. Premier Equity 2005 375 $7.23 2,714 -- 1.00% 2.12% 2004 366 $7.08 2,591 0.49 1.00% 4.73% 2003 336 $6.76 2,269 0.33 1.00% 23.81% 2002 252 $5.46 1,374 0.41 1.00% -30.95% 2001 159 $7.91 1,257 4.22 1.00% to 1.25% -13.44%
61 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
UNIT FAIR NET INVESTMENT EXPENSE RATIO(B) TOTAL RETURN(C) UNITS VALUE (LOWEST ASSETS INCOME (LOWEST TO (LOWEST TO DIVISION (000'S) TO HIGHEST) (000'S) RATIO(A) HIGHEST) HIGHEST) --------------------------------- ------- ------------------ ------- ---------- -------------- ------------------ American Century(R) VP Balanced 2005 8 $17.04 $129 1.55% 1.40% 2.84% 2004 7 $16.57 129 1.96 1.40% 8.23% 2003 12 $15.31 177 3.08 1.40% 17.86% 2002 21 $12.99 277 2.74 1.40% -10.82% 2001 23 $14.57 336 6.24 1.25% to 1.40% -4.89% American Century(R) VP International 2005 27 $17.01 455 1.28 1.40% 6.05% 2004 30 $16.04 482 0.59 0.00% 0.00% 2003 38 $14.15 532 0.79 1.40% 22.72% 2002 41 $11.53 477 0.84 1.40% -21.49% 2001 67 $14.69 979 10.52 1.25% to 1.40% -30.17% Calvert Social Balanced 2005 23 $10.49 to $12.40 287 -- 1.00% to 1.40% 2.73% to 3.15% 2004 35 $10.17 to $12.07 417 1.66 1.00% to 1.40% 16.81% to 7.17% 2003 38 $9.49 to $11.30 424 2.64 1.00% to 1.40% 17.59% to 18.18% 2002 19 $8.03 to $9.61 182 2.65 1.00% to 1.40% -13.38% to -12.46% 2001 20 $10.92 to $11.09 222 5.66 1.00% to 1.40% -8.25% to -8.10% Federated American Leaders 2005 2,311 $22.56 52,187 1.58 1.40% 1.67% 2004 3,130 $22.19 69,516 1.46 1.40% 8.24% 2003 3,991 $20.50 81,925 1.52 1.40% 25.92% 2002 4,801 $16.28 78,300 1.15 1.25% to 1.40% -21.33% 2001 5,677 $20.70 117,754 2.00 1.25% to 1.40% -5.56% Federated Capital Income 2005 354 $13.35 4,750 5.59 1.40% 3.97% 2004 528 $12.84 6,812 4.55 1.40% 8.35% 2003 682 $11.85 8,126 6.54 1.40% 18.98% 2002 870 $9.96 8,714 5.53 1.25% to 1.40% -25.01% 2001 1,123 $13.28 14,993 3.52 1.25% to 1.40% -14.94%
62 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
UNIT FAIR NET INVESTMENT EXPENSE RATIO(B) TOTAL RETURN(C) UNITS VALUE (LOWEST ASSETS INCOME (LOWEST TO (LOWEST TO DIVISION (000'S) TO HIGHEST) (000'S) RATIO(A) HIGHEST) HIGHEST) --------------------------------- ------- ------------------ ------- ---------- -------------- ------------------ Federated Equity Income 2005 808 $13.68 $11,078 2.29% 1.40% -0.36% 2004 1,117 $13.73 15,392 1.95 1.40% 11.26% 2003 1,398 $12.34 17,322 1.88 1.40% 25.53% 2002 1,535 $9.83 15,168 2.03 1.25% to 1.40% -21.85% 2001 1,809 $12.58 22,899 1.95 1.25% to 1.40% -12.24% Federated Fund for US Government Securities 2005 187 $15.49 2,894 4.16 1.40% 0.52% 2004 239 $15.41 3,685 4.81 1.40% 2.12% 2003 335 $15.09 5,051 4.20 1.40% 0.94% 2002 510 $14.95 7,622 3.39 1.40% 7.52% 2001 414 $13.90 5,750 5.53 1.25% to 1.40% 5.53% Federated High Income Bond 2005 480 $16.10 7,745 9.11 1.40% 0.12% 2004 769 $16.08 12,379 7.18 1.40% 8.94% 2003 982 $14.76 14,508 7.74 1.40% 20.49% 2002 1,175 $12.25 14,413 10.18 1.25% to 1.40% -0.03% 2001 1,465 $12.25 17,955 10.78 1.25% to 1.40% -0.05% Federated International Equity 2005 483 $16.32 7,888 -- 1.40% 3.10% 2004 642 $15.83 10,192 -- 1.40% 12.51% 2003 833 $14.07 11,757 -- 1.40% 30.04% 2002 1,068 $10.82 11,589 -- 1.25% to 1.40% -23.84% 2001 1,436 $14.21 20,460 13.04 1.25% to 1.40% -30.42% Federated Mid Cap Growth Strategies 2005 629 $23.37 14,695 -- 1.40% 9.05% 2004 820 $21.43 17,572 -- 1.40% 13.81% 2003 1,079 $18.83 20,317 -- 1.40% 38.15% 2002 1,290 $13.63 17,585 -- 1.40% -27.38% 2001 1,710 $18.77 32,104 1.60 1.25% to 1.40% -23.48%
63 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
UNIT FAIR NET INVESTMENT EXPENSE RATIO(B) TOTAL RETURN(C) UNITS VALUE (LOWEST ASSETS INCOME (LOWEST TO (LOWEST TO DIVISION (000'S) TO HIGHEST) (000'S) RATIO(A) HIGHEST) HIGHEST) --------------------------------- ------- ------------------ ------- ---------- -------------- ------------------ Federated Prime Money 2005 101 $12.33 $1,246 1.59% 1.40% 0.74% 2004 176 $12.24 2,153 0.78 1.40% -0.57% 2003 306 $12.31 3,768 0.72 1.40% -0.73% 2002 462 $12.40 5,731 1.41 1.40% -0.01% 2001 417 $12.41 5,175 3.90 1.25% to 1.40% 2.28% Fidelity(R) VIP Asset Manager(SM) 2005 232 $12.10 to $16.90 3,562 2.86 1.25% to 1.40% 0.42% to 0.50% 2004 303 $12.04 to $16.83 4,630 3.36 1.25% to 1.40% 4.02% to 4.15% 2003 369 $11.56 to $16.18 5,491 3.48 1.25% to 1.40% 16.32% to 16.53% 2002 391 $9.92 to $13.91 5,092 3.86 1.25% to 1.40% -10.01% to -9.87% 2001 428 $11.01 to $15.46 6,147 5.71 1.25% to 1.40% -5.44% to -5.30% Fidelity(R) VIP Contrafund(R) 2005 1,092 $12.92 to $26.58 27,110 0.30 1.00% to 1.40% 11.35% to 11.67% 2004 1,263 $11.57 to $23.87 27,934 0.34 1.00% to 1.40% 13.88% to 14.33% 2003 1,349 $10.12 to $20.96 26,252 0.44 1.00% to 1.40% 26.65% to 27.30% 2002 1,431 $7.95 to $16.55 22,088 0.88 1.00% to 1.40% -10.62% to -10.25% 2001 1,631 $8.86 to $18.52 28,132 3.67 1.00% to 1.40% -13.48% to -9.81% Fidelity(R) VIP Equity-Income 2005 1,614 $12.12 to $20.37 30,507 1.71 1.00% to 1.40% 1.70% to 2.02% 2004 1,993 $11.88 to $20.03 36,905 1.59 1.00% to 1.40% 9.93% to 10.41% 2003 2,298 $10.76 to $18.22 38,898 1.70 1.00% to 1.40% 28.49% to 29.02% 2002 2,485 $8.34 to $14.18 32,897 1.80 1.00% to 1.40% -18.11% to -17.77% 2001 2,801 $10.14 to $17.31 45,509 6.50 1.00% to 1.40% -6.30% to 2.48% Fidelity(R) VIP Growth 2005 2,699 $7.62 to $16.51 26,982 0.49 1.00% to 1.40% 1.41% to 1.74% 2004 2,818 $7.49 to $16.28 29,108 0.27 1.00% to 1.40% 1.94% to 2.32% 2003 2,757 $7.32 to $15.97 29,686 0.24 1.00% to 1.40% 31.01% to 31.65% 2002 2,474 $5.56 to $12.19 22,175 0.25 1.00% to 1.40% -31.09% to -30.80% 2001 2,207 $8.04 to $17.69 31,764 7.38 1.00% to 1.40% -18.81% to -18.48%
64 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
UNIT FAIR NET INVESTMENT EXPENSE RATIO(B) TOTAL RETURN(C) UNITS VALUE (LOWEST ASSETS INCOME (LOWEST TO (LOWEST TO DIVISION (000'S) TO HIGHEST) (000'S) RATIO(A) HIGHEST) HIGHEST) --------------------------------- ------- ------------------ ------- ---------- -------------- ------------------ Fidelity(R) VIP High Income 2005 551 $9.17 to $12.30 $6,523 8.00% 1.25% to 1.40% 0.41% to 0.44% 2004 856 $9.13 to $12,25 9,798 8.58 1.25% to 1.40% 8.02 to 8.18% 2003 1,216 $8.44 to $11.34 12,642 6.01 1.25% to 1.40% 25.44% to 25.78% 2002 790 $6.71 to $9.04 6,897 11.08 1.25% to 1.40% 2.00% to 2.15% 2001 945 $6.57 to $8.86 7,979 17.37 1.25% to 1.40% -12.98% to -12.85% Fidelity(R) VIP Index 500 2005 989 $12.27 to $20.87 18,999 1.88 1.25% to 1.40% 1.66% to 1.74% 2004 1,249 $12.06 to $20.53 23,475 1.39 1.25% to 1.40% 9.03% to 9.24% 2003 1,473 $11.04 to $18.83 25,584 1.36 1.25% to 1.40% 26.63% to 26.75% 2002 1,512 $8.71 to $14.87 20,521 1.36 1.25% to 1.40% -23.34% to -23.22% 2001 1,830 $11.34 to $19.40 32,591 1.19 1.25% to 1.40% -13.34% to -13.20% Fidelity(R) VIP Investment Grade Bond 2005 21 $16.14 338 3.38 1.40% 0.56% 2004 27 $16.05 432 4.87 1.40% 3.02% 2003 41 $15.58 636 3.93 1.40% 3.73% 2002 46 $15.02 686 4.49 1.40% 8.80% 2001 67 $13.81 919 5.53 1.25% to 1.40% 6.94% Fidelity(R) VIP Overseas 2005 214 $12.46 to $16.46 3,324 0.66 1.25% to 1.40% 8.36% to 8.44% 2004 234 $11.49 to $15.19 3,345 1.11 1.25% to 1.40% 12.02% to 12.21% 2003 242 $10.24 to $13.56 3,114 0.74 1.25% to 1.40% 41.40% to 41.63% 2002 251 $7.23 to $9.59 2,309 0.83 1.25% to 1.40% -21.40% to -21.28% 2001 244 $9.19 to $12.20 2,834 14.13 1.00% to 1.40% -22.28% to -22.16% ING VP Balanced 2005 1,368 $11.43 to $19.54 17,229 2.41 1.00% to 1.40% 2.68% to 3.07% 2004 1,239 $11.09 to $19.03 15,527 1.93 1.00% to 1.40% 7.88% to 8.30% 2003 1,092 $10.24 to $17.64 13,216 1.95 1.00% to 1.40% 17.21% to 17.70% 2002 919 $8.70 to $15.05 10,006 0.98 1.00% to 1.40% -11.56% to -11.20% 2001 737 $9.80 to $17.02 9,754 6.16 1.00% to 1.40% -5.56% to -5.17%
65 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
UNIT FAIR NET INVESTMENT EXPENSE RATIO(B) TOTAL RETURN(C) UNITS VALUE (LOWEST ASSETS INCOME (LOWEST TO (LOWEST TO DIVISION (000'S) TO HIGHEST) (000'S) RATIO(A) HIGHEST) HIGHEST) --------------------------------- ------- ------------------ ------- ---------- -------------- ------------------ ING VP Emerging Markets 2005 13 $14.53 $191 0.57% 1.40% 25.47% 2004 14 $11.58 159 0.57 1.40% 20.00% 2003 20 $9.65 190 -- 1.40% 45.11% 2002 25 $6.65 164 -- 1.40% -10.60% 2001 42 $7.43 313 21.63 1.25% to 1.40% -11.68% ING VP Intermediate Bond 2005 530 $13.81 to $15.91 8,155 0.02 1.00% to 1.40% 1.40% to 1.77% 2004 569 $13.57 to $15.69 8,673 7.86 1.00% to 1.40% 1,57% to 3.61% 2003 743 $13.57 to $15.17 11,032 1.87 1.25% to 1.40% 4.84% to 4.95% 2002 1,064 $12.93 to $14.47 15,106 3.62 1.25% to 1.40% 6.82% to 6.98% 2001 784 $12.09 to $13.55 10,374 6.63 1.00% to 1.40% 7.22% to 7.38% ING VP Money Market 2005 1,118 $11.11 to $12.66 13,716 1.31 1.00% to 1.40% 0.96% to 1.28% 2004 1,106 $10.97 to $12.54 13,362 1.11 1.00% to 1.40% -0.32% to 0.09% 2003 1,630 $10.96 to $12.58 19,909 2.08 1.00% to 1.40% -0.55% to - 0.09% 2002 2,909 $10.97 to $12.65 35,752 3.44 1.00% to 1.40% 0.20% to 0.61% 2001 2,991 $10.91 to $12.62 36,764 4.11 1.00% to 1.40% 1.41% to 2.63% ING VP Natural Resources 2005 17 $23.43 405 -- 1.40% 41.23% 2004 23 $16.59 382 0.99 1.40% 11.04% 2003 28 $14.94 423 -- 1.40% 28.68% 2002 33 $11.61 383 0.18 1.40% -3.47% 2001 42 $12.02 506 -- 1.25% to 1.40% -17.12% ING Evergreen Omega 2005 128 $10.04 1,286 (e) 1.40% (e) 2004 (e) (e) (e) (e) (e) (e) 2003 (e) (e) (e) (e) (e) (e) 2002 (e) (e) (e) (e) (e) (e) 2001 (e) (e) (e) (e) (e) (e)
66 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
UNIT FAIR NET INVESTMENT EXPENSE RATIO(B) TOTAL RETURN(C) UNITS VALUE (LOWEST ASSETS INCOME (LOWEST TO (LOWEST TO DIVISION (000'S) TO HIGHEST) (000'S) RATIO(A) HIGHEST) HIGHEST) --------------------------------- ------- ------------------ ------- ---------- -------------- ------------------ ING FMR Earnings Growth 2005 122 $9.74 $1,184 (e)% 1.40% (e) 2004 (e) (e) (e) (e) (e) (e) 2003 (e) (e) (e) (e) (e) (e) 2002 (e) (e) (e) (e) (e) (e) 2001 (e) (e) (e) (e) (e) (e) ING JPMorgan Value Opportunities 2005 147 $10.47 1,536 (e) 1.25% to 1.40% (e) 2004 (e) (e) (e) (e) (e) (e) 2003 (e) (e) (e) (e) (e) (e) 2002 (e) (e) (e) (e) (e) (e) 2001 (e) (e) (e) (e) (e) (e) ING MFS Total Return 2005 1,343 $10.38 to $10.39 13,943 (e) 1.25% to 1.40% (e) 2004 (e) (e) (e) (e) (e) (e) 2003 (e) (e) (e) (e) (e) (e) 2002 (e) (e) (e) (e) (e) (e) 2001 (e) (e) (e) (e) (e) (e) ING Oppenheimer Main Street 2005 63 $10.84 to $10.85 679 (e) 1.25% to 1.40% (e) 2004 (e) (e) (e) (e) (e) (e) 2003 (e) (e) (e) (e) (e) (e) 2002 (e) (e) (e) (e) (e) (e) 2001 (e) (e) (e) (e) (e) (e) ING PIMCO High Yield 2005 166 $10.40 to $10.41 1,727 (e) 1.25% to 1.40% (e) 2004 (e) (e) (e) (e) (e) (e) 2003 (e) (e) (e) (e) (e) (e) 2002 (e) (e) (e) (e) (e) (e) 2001 (e) (e) (e) (e) (e) (e)
67 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
UNIT FAIR NET INVESTMENT EXPENSE RATIO(B) TOTAL RETURN(C) UNITS VALUE (LOWEST ASSETS INCOME (LOWEST TO (LOWEST TO DIVISION (000'S) TO HIGHEST) (000'S) RATIO(A) HIGHEST) HIGHEST) --------------------------------- ------- ------------------ ------- ---------- -------------- ------------------ ING American Century Select 2005 507 $10.40 to $10.41 $5,339 (e)% 1.25% to 1.40% (e) 2004 (e) (e) (e) (e) (e) (e) 2003 (e) (e) (e) (e) (e) (e) 2002 (e) (e) (e) (e) (e) (e) 2001 (e) (e) (e) (e) (e) (e) ING JPMorgan International 2005 126 $12.61 to $13.22 1,668 0.85 1.25% to 1.40% 5.34% to 5.43% 2004 184 $11.96 to $12.55 2,312 1.25 1.25% to 1.40% 17.18% to 17.37% 2003 160 $10.19 to $10.71 1,701 1.01 1.25% to 1.40% 27.65% to 27.85% 2002 176 $7.97 to $8.39 1,470 0.62 1.25% to 1.40% -19.23% to -19.10% 2001 141 $9.86 to $10.38 1,456 24.41 1.00% to 1.40% -27.96% to -27.84% ING MFS Capital Opportunities 2005 188 $11.71 to $12.25 2,308 0.74 1.25% to 1.40% -1.26% to -1.37% 2004 247 $11.86 to $12 .42 3,062 0.41 1.25% to 1.40% 11.29% to 12.47% 2003 290 $10.64 to $11.16 3,225 0.19 1.25% to 1.40% 26.24% to 26.37% 2002 453 $8.42 to $8.84 3,984 -- 1.25% to 1.40% -31.14% to -31.04% 2001 456 $12.20 to $12.84 5,817 16.63 1.00% to 1.40% -25.82% to -25.70% ING Oppenheimer Global 2005 3,506 $11.22 to $11.55 40,137 (e) 1.00% to 1.40% (e) 2004 (e) (e) (e) (e) (e) (e) 2003 (e) (e) (e) (e) (e) (e) 2002 (e) (e) (e) (e) (e) (e) 2001 (e) (e) (e) (e) (e) (e) ING Oppenheimer Strategic Income 2005 1,200 $10.03 to $10.12 12,206 (e) 1.00% to 1.40% (e) 2004 (e) (e) (e) (e) (e) (e) 2003 (e) (e) (e) (e) (e) (e) 2002 (e) (e) (e) (e) (e) (e) 2001 (e) (e) (e) (e) (e) (e)
68 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
UNIT FAIR NET INVESTMENT EXPENSE RATIO(B) TOTAL RETURN(C) UNITS VALUE (LOWEST ASSETS INCOME (LOWEST TO (LOWEST TO DIVISION (000'S) TO HIGHEST) (000'S) RATIO(A) HIGHEST) HIGHEST) --------------------------------- ------- ------------------ ------- ---------- -------------- ------------------ ING Salomon Brothers Aggressive Growth 2005 809 $6.63 to $10.55 $8,421 --% 1.00% to 1.40% 7.98% to 8.33% 2004 971 $6.12 to $9.77 9,369 -- 1.00% to 1.40% 8.19 % to 8.70% 2003 1,311 $5.63 to $9.03 11,703 -- 1.00% to 1.40% 36.20% to 36.65% 2002 1,450 $4.12 to $6.63 9,494 -- 1.00% to 1.40% -36.21% to -35.95% 2001 1,978 $6.43 to $10.40 20,338 6.42 1.00% to 1.40% -26.26% to -25.96% ING T. Rowe Price Diversified Mid Cap Growth 2005 503 $11.24 to $11.25 5,650 (e) 1.25% to 1.40% (e) 2004 (e) (e) (e) (e) (e) (e) 2003 (e) (e) (e) (e) (e) (e) 2002 (e) (e) (e) (e) (e) (e) 2001 (e) (e) (e) (e) (e) (e) ING T. Rowe Price Growth Equity 2005 824 $10.39 to $19.59 15,506 0.47 1.00% to 1.40% 0.98% to 1.27% 2004 998 $10.26 to $19.40 18,659 0.15 1.00% to 1.40% 8.44% to 8.92% 2003 1,115 $9.42 to $17.89 19,372 0.15 1.00% to 1.40% 29.17% to 29.57% 2002 1,207 $7.27 to $13.85 16,326 0.18 1.00% to 1.40% -24.37% to -20.23% 2001 1,421 $12.80 to $18.32 25,447 15.48 1.00% to 1.40% -11.48% to -11.35% ING UBS US Large Cap Equity 2005 607 $10.28 to $11.34 6,296 0.84 1.25% to 1.40% 4.05% to 4.13% 2004 701 $9.88 to 10.89 6,993 0.71 1.25% to 1.40% 13.04% to 13.32% 2003 828 $8.74 to $9.61 7,314 0.56 1.25% to 1.40% 23.27% to 23.36% 2002 1,026 $7.09 to $7.79 7,353 0.19 1.25% to 1.40% -25.95% to -25.83% 2001 1,315 $9.57 to $10.50 12,718 20.94 1.00% to 1.40% -22.00% to -21.88% ING Van Kampen Equity and Income 2005 989 $10.61 to $10.80 10,674 (e) 1.00% to 1.40% (e) 2004 (e) (e) (e) (e) (e) (e) 2003 (e) (e) (e) (e) (e) (e) 2002 (e) (e) (e) (e) (e) (e) 2001 (e) (e) (e) (e) (e) (e)
69 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
UNIT FAIR NET INVESTMENT EXPENSE RATIO(B) TOTAL RETURN(C) UNITS VALUE (LOWEST ASSETS INCOME (LOWEST TO (LOWEST TO DIVISION (000'S) TO HIGHEST) (000'S) RATIO(A) HIGHEST) HIGHEST) --------------------------------- ------- ------------------ ------- ---------- -------------- ------------------ ING VP Strategic Allocation Balanced 2005 120 $12.05 to $17.04 $1,980 1.60% 1.25% to 1.40% 3.02% to 3.17% 2004 94 $11.68 to $16.54 1,510 1.49 1.25% to 1.40% 8.67% to 8.85% 2003 70 $10.73 to $15.22 1,035 1.13 1.25% to 1.40% 17.80% to 18.04% 2002 47 $9.09 to $12.92 554 2.39 1.25% to 1.40% -10.81% to -10.67% 2001 52 $10.18 to $14.48 675 2.79 1.00% ro 1.40% -8.30% to -8.16% ING VP Strategic Allocation Growth 2005 104 $11.70 to $17.74 1,771 1.35 1.25% to 1.40% 3.80% to 3.91% 2004 107 $11.26 to $17.09 1,793 0.83 1.25% to 1.40% 10.47% to 10.61% 2003 74 $10.18 to $15.47 1,094 1.11 1.25% to 1.40% 22.58% to 22.80% 2002 58 $8.29 to $12.62 710 2.15 1.25% to 1.40% -14.97% to -14.84% 2001 64 $9.73 to $14.84 914 1.58 1.00% to 1.40% -12.79% to -12.65% ING VP Strategic Allocation Income 2005 88 $12.69 to $16.73 1,446 2.24 1.25% to 1.40% 2.39% to 2.50% 2004 102 $12.38 to $16.34 1,589 1.85 1.25% to 1.40% 6.45% to 6.63% 2003 109 $11.61 to $15.35 1,648 2.37 1.25% to 1.40% 12.04% to 12.17% 2002 115 $10.35 to $13.70 1,561 2.72 1.25% to 1.40% -5.69% to -5.54% 2001 143 $10.95 to $14.52 2,048 3.63 1.00% to 1.40% -3.75% to -3.60% ING VP Growth and Income 2005 740 $7.87 to $15.41 9,683 -- 1.00% to 1.40% 3.91% to 4.24% 2004 836 $7.55 to $14.83 10,555 2.28 1.00% to 1.40% 6.84% to 7.24% 2003 977 $7.04 to $13.88 11,684 -- 1.00% to 1.40% 24.37% to 24.82% 2002 1,131 $5.64 to $11.16 10,865 0.83 1.00% to 1.40% -26.04% to -25.74% 2001 1,285 $7.59 to $15.10 17,195 0.62 1.00% to 1.40% -19.55% to -15.90% ING VP Global Science and Technology 2005 556 $3.75 to $3.84 2,127 -- 1.00% to 1.40% 4.75% to 5.21% 2004 593 $3.58 to $3.65 2,151 -- 1.00% to 1.40% -2.45% to -2.14% 2003 784 $3.67 to $3.73 2,897 -- 1.00% to 1.40% 43.36% to 44.02% 2002 293 $2.56 to $2.59 756 -- 1.00% to 1.40% -42.10% to -41.87% 2001 166 $4.42 to $4.45 735 -- 1.00% to 1.40% -24.04% to -23.75%
70 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
UNIT FAIR NET INVESTMENT EXPENSE RATIO(B) TOTAL RETURN(C) UNITS VALUE (LOWEST ASSETS INCOME (LOWEST TO (LOWEST TO DIVISION (000'S) TO HIGHEST) (000'S) RATIO(A) HIGHEST) HIGHEST) --------------------------------- ------- ------------------ ------- ---------- -------------- ------------------ ING VP Growth 2005 386 $7.03 to $14.45 $3,237 0.68% 1.00% to 1.40% 2.26% to 2.63% 2004 383 $6.85 to $14.13 3,236 0.13 1.00% to 1.40% 5.76% to 6.20% 2003 368 $6.45 to $13.36 3,073 -- 1.00% to 1.40% 28.46% to 29.00% 2002 351 $5.00 to $10.40 2,359 -- 1.00% to 1.40% -29.94% to -29.65% 2001 348 $7.11 to $14.84 3,638 10.59 1.00% to 1.40% -28.09% to -27.79% ING VP Index Plus LargeCap 2005 1,914 $9.04 to $18.77 19,757 1.25 1.00% to 1.40% 2.57% to 2.84% 2004 1,802 $8.79 to $18.30 18,465 1.00 1.00% to 1.40% 9.06% to 9.46% 2003 1,638 $8.03 to $16.78 16,152 1.05 1.00% to 1.40% 24.39% to 24.88% 2002 1,296 $6.43 to $13.49 10,983 0.23 1.00% to 1.40% -22.63% to -22.31% 2001 905 $8.25 to $17.44 11,476 4.80 1.00% to 1.40% -14.84% to -14.48% ING VP Index Plus MidCap 2005 381 $17.73 6,762 0.82 1.00% 7.32% 2004 5 $16.52 85 -- 1.00% 15.44% 2003 4 $14.31 63 -- 1.00% 31.04% 2002 4 $10.92 45 0.41 1.00% -12.97% 2001 3 $12.54 39 8.59 1.00% (a) ING VP Index Plus SmallCap 2005 -- $17.73 3 -- 1.00% 5.98% 2004 -- $16.73 3 -- 1.00% 20.79% 2003 3 $13.85 37 -- 1.00% 34.86% 2002 3 $10.27 28 0.14 1.00% -14.07% 2001 2 $11.95 32 10.40 1.00% (a) ING VP International Equity 2005 136 $8.80 to $10.39 1,662 1.14 1.00% to 1.40% 10.08% to 10.41% 2004 126 $7.97 to $9.43 1,140 1.10 1.00% to 1.40% 15.47% to 16.01% 2003 64 $6.87 to $8.15 492 1.03 1.00% to 1.40% 30.32% to 30.61% 2002 46 $5.26 to $6.25 281 0.22 1.00% to 1.40% -27.71% to -27.41% 2001 46 $7.24 to $8.63 383 0.09 1.00% to 1.40% -24.95% to -24.64%
71 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
UNIT FAIR NET INVESTMENT EXPENSE RATIO(B) TOTAL RETURN(C) UNITS VALUE (LOWEST ASSETS INCOME (LOWEST TO (LOWEST TO DIVISION (000'S) TO HIGHEST) (000'S) RATIO(A) HIGHEST) HIGHEST) --------------------------------- ------- ------------------ ------- ---------- -------------- ------------------ ING VP International Value 2005 41 $12.71 $524 2.74% 1.00% 6.18% 2004 11 $11.97 134 -- 1.00% 13.46% 2003 (c) (c) (c) (c) (c) (c) 2002 (c) (c) (c) (c) (c) (c) 2001 (c) (c) (c) (c) (c) (c) ING VP Small Company 2005 965 $15.38 to $23.41 16,776 0.15 1.00% to 1.40% 6.89% to 7.18% 2004 948 $14.35 to $21.90 16,310 0.27 1.00% to 1.40% 12.77% to 13.26% 2003 940 $12.67 to $19.42 15,188 0.25 1.00% to 1.40% 35.52% to 36.09% 2002 676 $9.31 to $14.33 8,445 0.64 1.00% to 1.40% -24.30% to -23.99% 2001 507 $12.25 to $18.93 9,047 3.07 1.00% to 1.40% 2.54% to 2.96% ING VP Value Opportunity 2005 147 $10.19 to $18.23 2,441 2.04 1.00% to 1.40% 2.59% to 2.83% 2004 195 $9.91 to $17.77 3,146 1.06 1.00% to 1.40% 8.55% to 9.14% 2003 204 $9.08 to $16.37 3,076 0.79 1.00% to 1.40% 22.90% to 23.37% 2002 264 $7.36 to $13.32 3,282 0.50 1.00% to 1.40% -27.00% to -26.70% 2001 390 $10.05 to $18.25 6,718 5.60 1.00% to 1.40% -10.89% to -8.87% Lord Abbett Series Fund Growth & Income 2005 263 $11.41 2,996 -- 1.00% 0.09% 2004 77 $11.40 883 1.59 1.00% 9.62% 2003 (b) (b) (b) (b) (b) (b) 2002 (b) (b) (b) (b) (b) (b) 2001 (b) (b) (b) (b) (b) (b) MFS(R) Strategic Income 2005 67 $13.51 to $13.82 919 6.59 1.25% to 1.40% 0.29% to 0.37% 2004 77 $13.46 to $13.78 1,053 4.84 1.25% to 1.40% 6.25% to 6.32% 2003 107 $12.66 to $12.97 1,384 7.39 1.25% to 1.40% 8.81% to 9.04% 2002 95 $11.61 to $11.92 1,134 2.57 1.25% to 1.40% 6.89% to 7.05% 2001 50 $10.85 to $11.15 559 3.16 1.25% to 1.40% 3.28% to 3.43%
72 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
UNIT FAIR NET INVESTMENT EXPENSE RATIO(B) TOTAL RETURN(C) UNITS VALUE (LOWEST ASSETS INCOME (LOWEST TO (LOWEST TO DIVISION (000'S) TO HIGHEST) (000'S) RATIO(A) HIGHEST) HIGHEST) --------------------------------- ------- ------------------ ------- ---------- -------------- ------------------ Oppenheimer Aggressive Growth 2005 267 $13.12 to $16.13 $4,057 --% 1.25% to 1.40% 6.68% to 6.84% 2004 317 $12.28 to $15.12 4,555 -- 1.25% to 1.40% 18.13% to 18.30% 2003 357 $10.38 to $12.80 4,366 -- 1.25% to 1.40% 23.79% to 24.01% 2002 302 $8.37 to $10.34 2,987 0.68 1.25% to 1.40% -28.80% to -28.69% 2001 400 $11.74 to $14.52 5,569 15.42 1.25% to 1.40% -32.24% to -32.14% Oppenheimer Global Securities 2005 -- $15.38 -- 2.04 1.00% 8.46% 2004 1,144 $14.18 to $23.19 19,854 1.13 1.00% to 1.40% 17.48% to 17.97% 2003 956 $12.02 to $19.74 14,349 0.59 1.00% to 1.40% 41.00% to 41.58% 2002 656 $8.49 to $14.00 7,124 0.52 1.00% to 1.40% -23.23% to -22.91% 2001 376 $11.01 to $18.23 5,455 8.61 1.00% to 1.40% -13.28% to -12.92% Oppenheimer Main Street 2005 470 $10.82 to $13.97 6,135 1.48 1.25% to 1.40% 2.49% to 2.75% 2004 641 $10.53 to $13.63 8,147 0.82 1.25% to 1.40% 7.92% to 8.00% 2003 672 $9.75 to $12.63 7,918 0.89 1.25% to 1.40% 25.05% to 25.16% 2002 665 $7.79 to $10.10 6,276 0.78 1.25% to 1.40% -19.94% to -19.81% 2001 788 $9.71 to $12.62 9,280 0.55 1.25% to 1.40% -11.43% to -11.29%
73 ING INSURANCE COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT I NOTES TO FINANCIAL STATEMENTS --------------------------------------------------------------------------------
UNIT FAIR NET INVESTMENT EXPENSE RATIO(B) TOTAL RETURN(C) UNITS VALUE (LOWEST ASSETS INCOME (LOWEST TO (LOWEST TO DIVISION (000'S) TO HIGHEST) (000'S) RATIO(A) HIGHEST) HIGHEST) --------------------------------- ------- ------------------ ------- ---------- -------------- ------------------ Pioneer Equity Income VCT 2005 -- $11.69 $1 --% 1.00% 4.19% 2004 -- $11.22 -- (d) 1.00% (d) 2003 -- -- -- (b) -- (b) 2002 (b) (b) (b) (b) (b) (b) 2001 (b) (b) (b) (b) (b) (b)
(a) As this investment Division was not available until 2001, this data is not meaningful and therefore is not presented. (b) As this investment Division was not available until 2003, this data is not meaningful and therefore is not presented. (c) As this investment Division was not available until 2004, this data is not meaningful and therefore is not presented. (d) As this investment Division was offered during 2003 but had no investments as of December 31, 2004, this data is not meaningful and therefore is not presented. (e) As this investment Division was not available until 2005, this data is not meaningful and therefore is 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 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. 74 VARIABLE ANNUITY ACCOUNT I PART C - OTHER INFORMATION Item 24. Financial Statements and Exhibits (a) Financial Statements: (1) Included in Part A: Updated Condensed Financial Information (2) Included in Part B: Financial Statements of Variable Annuity Account I (now known as Variable Annuity Account I of ING Life Insurance and Annuity Company): - Report of Independent Registered Public Accounting Firm - Statement of Assets and Liabilities as of December 31, 2004 - Statement 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 - Statements of Assets and Liabilities as of September 30, 2005 (Unaudited) - Statements of Operations for the nine months ended September 30, 2005 (Unaudited) - Statements of Changes in Net Assets for the nine months ended September 30, 2005 (Unaudited) and the year ended December 31, 2004 Consolidated 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 (Restated) and 2002 (Restated) - Notes to Consolidated Financial Statements - Condensed Consolidated Statements of Operations for the three and nine month periods ended September 30, 2005 (Unaudited) and 2004 (Unaudited) - Condensed Consolidated Balance Sheets as of September 30, 2005 (Unaudited) and December 31, 2004 - Condensed Consolidated Statements of Changes in Shareholder's Equity for the nine month periods ended September 30, 2005 (Unaudited) and 2004 (Unaudited) - Condensed Consolidated Statement of Cash Flows for the nine month periods ended September 30, 2005 (Unaudited) and 2004 (Unaudited/restated) - Notes to Condensed Consolidated Financial Statements (Unaudited) (b) Exhibits (1) Resolution establishing Variable Annuity Account I of ING Insurance Company of Americao Incorporated by reference to Registration Statement on Form N-4 (File No. 33-59749), as filed on June 1, 1995. (2) Not Applicable (3.1) Selling Agreement o Incorporated by reference to Registration Statement on Form N-4 (File No. 33-59749), as filed on June 1, 1995. (3.2) Principal Underwriting Agreement between Aetna Insurance Company of America (now ING Insurance Company of America) and Aetna Investment Services, LLC (now ING Financial Advisers, LLC) effective as of November 17, 2000 o Incorporated by reference to Post-Effective Amendment No. 2 to Registration Statement on Form N-4 (File No. 333-87131), as filed on December 13, 2000. (4.1) Variable Annuity Contract (G-CDA-GP2 (4/94)) o Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 17, 1998. (4.2) Variable Annuity Contract (I-CDA-GP2 (4/94)) o Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 17, 1998 (4.3) Certificate of Group Annuity Coverage (GP2CERT (4/94)) o Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 17, 1998 (4.4) Group Variable, Fixed, or Combination Annuity Contract (Nonparticipating) (G-GP2 (5/96)) o Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 17, 1998 (4.5) Individual Variable, Fixed or Combination Annuity Contract (Nonparticipating) (I-GP2 (5/96)) o Incorporated by reference to Post-Effective Amendment No. 8 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 23, 1997. (4.6) Variable Annuity Contract (G-GP2 (5/97)) o Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 17, 1998 (4.7) Certificate of Group Annuity Coverage (GP2CERT (5/97)) o Incorporated by reference to Post-Effective Amendment No. 8 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 23, 1997. (4.8) Endorsement (GP2QEND (4/94)) to Contract G-CDA-GP2 o Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 17, 1998 (4.9) Endorsement (GP2NHEND (4/94)) to Contract G-CDA-GP2 o Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 17, 1998 (4.10) Endorsement (GP2IRA (5/97)) to Contract G-GP2 (5/97) and Certificate GP2CERT (5/97) o Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 17, 1998 (4.11) Endorsement (GP2QP (5/97)) o Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 17, 1998 (4.12) Endorsement (GP2DC (5/97)) o Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 17, 1998 (4.13) Endorsement (G-GP2TDA (5/97)) o Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 17, 1998 (4.14) Endorsement (I-GP2QP (5/97)) o Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 17, 1998 (4.15) Endorsement (I-GP2IRA (5/97)) o Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 17, 1998 (4.16) Endorsement (I-GP2DC (5/97)) o Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 17, 1998 (4.17) Endorsement (I-GP2TDA (5/97)) o Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 17, 1998 (4.18) Endorsement (G-GP2QP (4/96)) o Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 17, 1998 (4.19) Endorsement (G-GP2IRA (5/96)) o Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 17, 1998 (4.20) Endorsement (G-G-2TDA (5/96)) o Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 17, 1998 (4.21) Endorsement (G-GP2DC (5/96)) o Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 17, 1998 (4.22) Endorsement (I-GP2QP (4/96)) o Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 17, 1998 (4.23) Endorsement (I-GP2IRA (5/96)) o Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 17, 1998 (4.24) Endorsement (I-GP2TDA (5/96)) o Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 17, 1998 (4.25) Endorsement (I-GP2DC (5/96)) o Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 17, 1998 (4.26) Endorsement (I-GP2END (8/95)) o Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 17, 1998 (4.27) Endorsement (GP2END (8/95)) o Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 17, 1998 (4.28) Endorsement (GP2CERTEND (8/95)) o Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 33-80750), as filed on April 17, 1998 (4.29) ILIAC Merger Endorsement o Incorporated by reference to Registration Statement on Form N-4 (File No. 333-130822), as filed on January 3, 2006. (5) Application for Aetna Growth Plus Group Variable, Fixed or Combination Annuity Contract (Nonparticipating) o Incorporated by reference to Post-Effective Amendment No. 3 to Registration Statement on Form N-4 (File No. 33-80750), as filed on August 15, 1995. (6.1) Restated Certificate of Incorporation (amended and restated as of January 1, 2002) of ING 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) Amended and Restated By-Laws of ING Life Insurance and Annuity Company, effective January 1, 2005 o Incorporated by reference to the ILIAC 10-Q as filed on May 12, 2005 (File No. 033-23376, Accession No. 0001047469-05-014783). (7) Not Applicable (8) Fund Participation Agreement between Insurance Management Series, Federated Advisors and Aetna Insurance Company of America o Incorporated by reference to Post-Effective Amendment No. 4 to Registration Statement on Form N-4 (File No. 33-59749), as filed on April 16, 1997. (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 Included on signature page (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 Principal Officers of the Depositor* Name and Principal Positions and Offices with Business Address Depositor ------------------------ --------------------------- Thomas J. McInerney(1) Director and Chairman Kathleen A. Murphy(2) Director Catherine H. Smith(2) Director Jacques de Vaucleroy(1) Director and Senior Vice President David A. Wheat(1) Director, Senior Vice President and Chief Financial Officer Brian D. Comer(2) President Steven Pierson(1) Chief Accounting Officer Sue A. Collins(2) Senior Vice President, Chief Actuary and Appointed Actuary Boyd G. Combs(1) Senior Vice President Shaun P. Mathews(2) Senior Vice President David Pendergrass(1) Senior Vice President and Treasurer Stephen J. Preston(3) Senior Vice President Harry N. Stout(3) Senior Vice President Carl P. Steinhilber(2) Vice President Therese M. Squillacote(2) Vice President and Compliance Officer Paula Cludray-Engelke(3) Secretary * 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 directors and these officers is 1475 Dunwoody Drive, West Chester, Pennsylvania 19380 4 The principal business address of these officers is 20 Washington Avenue South, 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 November 30, 2005, there were 10,364 individuals holding interests in variable annuity contracts funded through Variable Annuity Account I. 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 Accounts B, C and 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) Separate Account N of ReliaStar Life Insurance Company (RLIC) (a separate account of RLIC registered as a unit investment trust under the 1940 Act.), (ii) ReliaStar Select Variable Account of ReliaStar Life Insurance Company (a separate account of RLIC registered as a unit investment trusts under the 1940 Act), (iii) MFS ReliaStar Variable Account (a separate account of RLIC registered as a unit investment trusts under the 1940 Act), (iv) Northstar Variable Account (a separate account of RLIC registered as a unit investment trusts under the 1940 Act) (v) ReliaStar Life Insurance Company of New York Variable Annuity Funds A, B, C (a management investment company registered under the 1940 Act), (vi) 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), (vii) ReliaStar Life Insurance Company of New York Variable Annuity Funds M, P, and Q (a management investment company registered under the1940 Act), and (viii) 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. Comer(1) Director and Senior Vice President William L. Lowe(1) Director and Senior Vice President Kathleen A. Murphy(1) Senior Vice President Marie M. Augsberger(1) Senior Vice President Boyd G. Combs(2) Senior Vice President, Tax William Jasien(3) Senior Vice President Louis E. Bachetti Senior Vice President 581 Main Street, 4th Fl. Woodbridge, NJ 07095 Susan J. Stamm(1) Chief Financial Officer Mark Appel Vice President 200 North Sepulveda Boulevard El Segundo, California Pamela Mulvey Barcia(1) Vice President Robert H. Barley(1) Vice President David A. Brounley(1) Vice President Anthony V. Camp, Jr.(1) Vice President Mary Kathleen Carey-Reid(1) Vice President Nancy D. Clifford(1) Vice President James Drake Vice President 5 Penn Plaza, 11th Floor New York, New York William P. Elmslie Vice President New York, New York Joseph J. Elmy(2) Vice President, Tax Brian K. Haendiges(1) Vice President Bernard P. Heffernon Vice President 10740 Nall Ave., Ste. 120 Overland Park, KS 66211 David Kelsey(1) Vice President Christina Lareau(1) Vice President George D. Lessner Vice President Richardson, Texas Katherine E. Lewis Vice President 2675 N Mayfair Road, Ste. 501 Milwaukee, WI 53226 David J. Linney Vice President 2900 N. Loop W., Ste. 180 Houston, TX 77092 Frederick C. Litow(2) 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. Neeb(4) Vice President David Pendergrass(2) Vice President and Treasurer Ethel Pippin(1) Vice President Srinivas D. Reddy(1) Vice President Dawn M. Peck (2) Vice President, Assistant Treasurer and Assistant Secretary Deborah Rubin(3) Vice President Todd Smiser Vice President Lisle, Illinois Frank W. Snodgrass Vice President 150 4th Ave., N., Ste.410 Nashville, TN 37219 Terran Titus(1) Vice President Bess B. Twyman(1) Vice President S. Bradford Vaughan, Jr. Vice President 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. Wrinn(1) Vice President Therese M. Squillacote(1) Vice President and Chief Compliance Officer Paula Cludray-Engelke(5) Secretary Diana R. Cavender(5) Assistant Secretary Krystal L. Ols(5) Assistant Secretary Loralee A. Renelt(5) Assistant Secretary Edwina P.J. Steffer(5) Assistant Secretary John F. Todd(1) Assistant Secretary Glenn A. Black(2) Tax Officer Terry L. Owens(2) Tax Officer James H. Taylor(2) 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 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 Advisers, LLC $22,235.01
* 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 I during 2005. 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. The Company hereby represents that it is relying upon and will comply with the provisions of Paragraphs (1) through (4) of the SEC Staff's No-Action Letter dated November 28, 1988 with respect to language concerning withdrawal restrictions applicable to plans established pursuant to Section 403(b) of the Internal Revenue Code. See American Counsel of Life Insurance; SEC No-Action Letter, [1988 WL 235221, *13 (S.E.C.)]. 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 I of ING Life Insurance and Annuity Company has duly caused this Registration to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of West Chester, Commonwealth of Pennsylvania, on the 3rd day of January, 2006. VARIABLE ANNUITY ACCOUNT I OF ING LIFE INSURANCE AND ANNUITY COMPANY (Registrant) By: ING LIFE INSURANCE AND ANNUITY COMPANY (Depositor) /s/Brian D. Comer By: ______________________ Brian D. Comer President As required by the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. Each person whose signature appears below hereby constitutes and appoints J. Neil McMurdie, Julie E. Rockmore, Michael A Pignatella, James A. Shuchart and Kimberly J. Smith and each of them individually, such person's true and lawful attorneys and agents with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign for such person and in such person's name and capacity indicated below, any and all amendments to this Registration Statement, hereby ratifying and confirming such person's signature as it may be signed by said attorneys to any and all amendments (pre-effective and post-effective amendments). Signature Title Date /s/ Brian D. Comer ) ------------------- President ) Brian D. Comer (principal executive officer) ) ) /s/ Thomas J. McInerney ) ------------------- Director ) January Thomas J. McInerney ) 3, 2006 ) /s/ Kathleen A. Murphy ) ------------------- Director ) Kathleen A. Murphy ) ) /s/ Catherine H. Smith ) ------------------- Director ) Catherine H. Smith ) ) /s/ Jacques de Vaucleroy ) ------------------- Director ) Jacques de Vaucleroy ) ) /s/ David A. Wheat ) ------------------- Director and Chief Financial Officer ) David A. Wheat ) ) /s/ Steven T. Pierson ) ------------------- Chief Accounting Officer ) Steven T. Pierson ) VARIABLE ANNUITY ACCOUNT I EXHIBIT INDEX Exhibit No. Exhibit 99-B.9 Opinion and Consent of Counsel EX-99.B9 99-B.10 Consent of Independent Registered Public EX-99.B10 Accounting Firm