final.htm - Generated by SEC Publisher for SEC Filing

N-4/A 1 final.htm REGISTRATION STATEMENT final.htm - Generated by SEC Publisher for SEC Filing

As filed with the Securities and Exchange	Registration No. 333-162593
Commission on February 25, 2010	Registration No. 811-02512


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 1	[X]

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No.	[X]

(Check appropriate box or boxes.)

Variable Annuity Account B

(Exact Name of Registrant)

ING LIFE INSURANCE AND ANNUITY COMPANY

(Name of Depositor)

One Orange Way

Windsor, Connecticut 06095-4774

(860) 580-4646

(Address and Telephone Number of Depositor’s Principal Office)

John S. (Scott) Kreighbaum, Esq.

ING

1475 Dunwoody Drive

West Chester, PA 19380-1478

(610) 425-3404

(Name and Address of Agent for Service of Process)

Approximate Date of Proposed Public Offering:
As soon as practical after the effective date of the Registration Statement

It is proposed that this filing will become effective (check appropriate box):

	[ ]	immediately upon filing pursuant to paragraph (b) of Rule 485
	[ ]	on ____________, pursuant to paragraph (b) of Rule 485
	[ ]	60 days after filing pursuant to paragraph (a)(1)
	[ ]	on ____________, pursuant to paragraph (a)(1) of Rule 485.


If appropriate, check the following box:
[ ]	This post-effective amendment designates a new effective date for a previously filed post-
	effective amendment
Title of Securities Being Registered:
Modified Single Premium Deferred Variable Annuity Contract

PART A

PROSPECTUS

ING Select Opportunities

Modified Single Premium Deferred Variable Annuity Contract

Issued By ING Life Insurance and Annuity Company

Through Its Variable Annuity Account B

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This prospectus sets forth the information you ought to know before investing. You should keep the prospectus for future reference.

Additional information has been filed with the Securities and Exchange Commission (SEC) and is available upon written or oral

request without charge, including the Statement of Additional Information (SAI) dated February 25 , 2010.

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The SAI is incorporated by reference into the prospectus, and
its table of contents appears on page 57 .		*How to reach us…*
		Customer Service Center
The SEC maintains a web site (www.sec.gov) that contains the	Call:	(888) 854-5950
SAI, material incorporated by reference, and other information	Write:	P.O. Box 10450, Des Moines, Iowa
about us, which we file electronically. The reference number		50306-0450
assigned to this Contract is 333-162593.	Visit:	www.ingannuities.com

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The variable sub-accounts currently available under your Contract…

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ING BlackRock Inflation Protected Bond Portfolio	ING Russell^TMLarge Cap Value Index Portfolio
ING Dow Jones Euro STOXX 50® Index Portfolio	ING Russell^TMMid Cap Index Portfolio
ING International Index Portfolio	ING Russell^TMSmall Cap Index Portfolio
ING Money Market Portfolio	ING Stock Index Portfolio
ING Russell^TMLarge Cap Growth Index Portfolio	ING U.S. Bond Index Portfolio

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	The SEC has not approved or disapproved these securities or passed upon the adequacy of this
	prospectus. Any representation to the contrary is a criminal offense.

	NOT: FDIC/NCUA INSURED; A DEPOSIT OF A BANK; BANK GUARANTEED; OR INSURED
	BY ANY FEDERAL GOVERNMENT AGENCY. MAY LOSE VALUE.

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RIGHT TO EXAMINE AND RETURN THIS CONTRACT: You may return the

Contract within 10 days of its receipt (or longer as state law may require or when issued as a

replacement contract). If so returned, we will promptly pay you the

amount required

by the state in which the Contract was issued. Where applicable, this amount may be more or

less than the Premium paid, depending on the investment results of the variable sub-accounts.

See page 44 .

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	EXCHANGES: Your agent should only recommend an exchange (replacement) if it is in your
	best interest and only after evaluating your personal and financial situation and needs, tolerance
	for risk and the financial ability to pay for the Contract.

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February 25 , 2010

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We pay compensation to broker/dealers whose registered representatives sell the Contract. See page
46 .

2 February 25 , 2010

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Contents

Contents	3	Systematic Withdrawals	34
Glossary______________________________________ 4		Surrender Charges on Systematic Withdrawals	34
Synopsis – The Contract	7	Withdrawals from Individual Retirement Annuities____ 35
Synopsis – Fees and Expenses	₉	Variable Sub-account Transfers (Excessive Trading
Condensed Financial Information	₁₁	Policy)	35
Accumulation Value	11	Limits on Frequent or Disruptive Transfers	35
Financial Statements______________________________11		Excessive Trading Policy	36
ING Life Insurance and Annuity Company_______ 11		Limits Imposed by the Underlying Investment Portfolios 37
Organization and Operation	11	Agreements to Share Information with Fund Companies 37
Regulatory Matters	12	Dollar Cost Averaging	37
Product Regulation ___________________________________12		Elective Automatic Rebalancing	38
Variable Annuity Account B and its Variable Sub-		Death Benefit	38
accounts	13	Spousal Beneficiary Contract Continuation___________ 39
Organization and Operation	13	Payment of the Proceeds to a Spousal or Non-spousal
Variable Sub-accounts	13	Beneficiary	40

Fees Deducted by the Underlying Investment Portfolios_¹⁴		Annuity Death Benefit Plans Once and Annuity Annuity Payments Payments Have Begun	40 40
Variable Sub-account Classifications for MGWB and
Required Automatic Rebalancing	15	Annuity Commencement Date	40
Changes to a Variable Sub-account and/or Variable Annuity		The Annuity Plans	41
Account B	17	Annuity Payments	41
Fees and Expenses	17	Death of the Annuitant____________________________ 43
Surrender Charge	₁₇	Other Important Information	43
Premium Tax____________________________________ 19		Reports to Contract Owners	43
Annual Administrative Charge	19	Suspension of Payments	43
Excess Transfer Charge	20	Misstatement Made by Owner in Connection with Purchase
Redemption Fees	20	of this Contract	44
Mortality & Expense Risk Charge	20	Insurable Interest	44
MGWB Charge	20	Assignment	44
Consolidated Charge Deduction Option	21	Contract Changes	44
Underlying Investment Portfolio Expenses____________ 21		Right to Examine and Return this Contract	44
Types of Revenue Received from Affiliated Funds __________21		Non-Waiver_____________________________________ 46
The Annuity Contract	22	Special Arrangements	46
Owner	22	Selling the Contract	46
Joint Owner	22	Voting Rights	48
Annuitant and Contingent Annuitant	22	State Regulation	48

Change Beneficiary of Owner or Beneficiary	23 ²³	United Legal Proceedings________________________________ States Federal Income Tax Considerations _ 49 48
Contract Purchase Requirements	24	Introduction	49
Availability of the Contract	25	Types of Contracts: Non-Qualified and Qualified	49
Crediting of Premium Payments	25	Taxation of Non-Qualified Contracts	49
Administrative Procedures_________________________26		Premiums	49
Other Contracts	26	Taxation of Gains Prior to Distribution	49
		Taxation of Distributions	50
Minimum Guaranteed Withdrawal Benefit	26	Taxation of Qualified Contracts	53
Highlights_______________________________________ 26		General	53
MGWB Base	26	Tax Deferral	53
Withdrawals and Excess Withdrawals	26	Premiums	54
Ratchets	28	Distributions – General	54
Lifetime Withdrawal Phase	29	Withholding_________________________________________ 55
Maximum Annual Withdrawal	29	Assignment and Other Transfers	56
Required Minimum Distributions	30	Possible Changes in Taxation	56

Lifetime Automatic Periodic Benefit Status	³¹	Statement Taxation of of Company_____________________________ Additional Information	57 56
Death of Owner or Annuitant and Spousal Continuation of
the MGWB	32
Surrender and Withdrawals	32
Cash Surrender Value	33
Withdrawals	33
Regular Withdrawals	33

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Glossary
This glossary defines the special terms used throughout the prospectus. A special term used in only one section of the prospectus is
defined there. The page references are to sections of the prospectus where more information can be found.

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Accumulation Value – The sum of the Accumulation Values	Death Benefit – The amount payable to the Beneficiary upon
in each of the variable sub-accounts. Each variable sub-	death of any Owner (or, if the Owner is not a natural
account is valued at the close of each Business Day for	person, upon the death of the Annuitant) (1) prior to the
the preceding Valuation Period. See page 11 .	Annuity Commencement Date (see page 40 ) and
Additional Premium – Any payment, other than the Initial	before the Contract Enters Lifetime Automatic Periodic
Premium, made by you and accepted by us for this	Benefit Status (see page 31 ), or (2) while the
Contract. See page 24 .	Table 2 Annuity Plan for a non-qualified Contract or Roth
Annuitant – The individual designated by you and upon	IRA Contract is in effect (see page 41 ) and before
whose life Annuity Payments and Minimum	the Contract enters Lifetime Automatic Periodic Benefit
Guaranteed Withdrawal Benefits are based.	Status (see page 31 ).
See page 22 .	Endorsements – Attachments to this Contract that add to,
Annuity Commencement Date – The date on which Annuity	amend, change, modify or supersede the Contract’s terms
Payments commence. See page 40 .	or provisions.
Annuity Payments – Periodic payments made by us to you	Excess Transfer – Any transfer after 12 transfers have
or, subject to our consent in the event the payee is not a	occurred within any Contract Year.
natural person, to a payee designated by you. See page	Excess Transfer Charge – The charge we may access on
40 . For Contracts issued in Oregon, payments to a	each Excess Transfer. See page 20 .
non-natural person are not subject to our consent.	Excess Withdrawal – Any Withdrawal taken before the
Annuity Plan – An option elected by you, or the contractually	Annuitant reaches the Lifetime Withdrawal Eligibility
designated default option if none is elected, that	Age, other than a request for the payment of Investment
determines the frequency, duration and amount of the	Advisory Fees, or any Withdrawal in a Contract Year
Annuity Payments. See page 40 .	exceeding the then current Maximum Annual Withdrawal
Beneficiary – The individual or entity you select to receive	(MAW) (see page 29 ) on or after the Lifetime
the Death Benefit. See page 23 .	Withdrawal Phase has begun (see page 29 ). See
Business Day –Any day that the New York Stock Exchange	page 27 .
(NYSE) is open for trading, exclusive of federal holidays,	Extended Medical Care – Confinement in a Hospital or
or any day the Securities and Exchange Commission	Nursing Home prescribed by a Qualifying Medical
(SEC) requires that mutual funds, unit investment trusts	Professional. See page 18 .
or other investment portfolios be valued.	General Account – An account which contains all of our
Cash Surrender Value – The amount you receive upon	assets other than those held in Variable Annuity Account
Surrender of this Contract, which equals the	B.
Accumulation Value minus any applicable Surrender	Hospital or Nursing Home – A Hospital or a
Charges. See page 33 .	skilled care or intermediate care nursing, operating as
Code – The Internal Revenue Code of 1986, as amended.	such according to applicable law and at which medical
Company, we, us or our – ING Life Insurance and Annuity	treatment is available on a daily basis. A Hospital or
Company (ING Life), a stock company domiciled in	Nursing Home does not include a rest home or other
Connecticut. See page 11 .	facility whose primary purpose is to provide
Contingent Annuitant – The individual who is not an	accommodations, board or personal care services to
Annuitant and will become the Annuitant if the named	individuals who do not need medical or nursing care. See
Annuitant dies prior to the Annuity Commencement Date	page 18 .
and the Death Benefit is not otherwise payable. See page	Initial Premium – The payment made by you to us to put this
22 .	Contract into effect. See page 24 .
Contract – This Modified Single Premium Deferred Variable	Initial Standard Death Benefit Base – The Initial Premium.
Annuity Contract, together with any attached application,	See page 38 .
amendments or Endorsements, where applicable.	Insurable Interest – A lawful and substantial economic
Contract Anniversary – The same day and month each year	interest in the continued life of a person. An Insurable
as the Contract Date. If the Contract Date is February	Interest does not exist if the Owner’s sole economic
29^th, in non-leap years, the Contract Anniversary shall be	interest in the Annuitant arises as a result of the
March 1^st.	Annuitant’s death. See page 44 .
Contract Date – The date on which this Contract becomes	Investment Advisory Fees – Fees or charges paid to a
effective.	registered investment advisor for advice provided on the
Contract Year – The period beginning on a Contract	selection and ongoing allocation of Accumulation Value
Anniversary (or, in the first Contract Year only, beginning	among the funds underlying this Contract.
on the Contract Date) and ending on the day preceding the	Irrevocable Beneficiary – A Beneficiary whose rights and
next Contract Anniversary.	interests under this Contract cannot be changed without

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his, her or its consent. See page 23 .	Notice to Us by telephone or electronically.
Joint Owner – An individual who, along with another	Notice to You – Written notification mailed to your last
individual Owner, is entitled to exercise the rights	known address. A different means of notification may
incident to ownership. Both Joint Owners must agree to	also be used if you and we mutually agree. When action
any change or the exercise of any rights under the	is required by you, the time frame and manner for
Contract. The Joint Owner may not be an entity and may	response will be specified in the notice.
not be named if the Owner is an entity. See page	Owner – The individual (or entity) that is entitled to exercise
22 .	the rights incident to ownership. The terms “you” or
Lifetime Automatic Periodic Benefit Status – A period in	“your,” when used in this prospectus, refer to the Owner.
time during which we will pay you MGWB Periodic	See page 22 .
Payments. See page 31 .	Premium – Collectively, the Initial Premium and any
Lifetime Withdrawal Eligibility Age – The minimum age of	Additional Premium. See page 24 .
the Annuitant on or after which you may begin the	Proof of Death – The documentation we deem necessary to
Lifetime Withdrawal Phase. See page 29 .	establish death, including, but not limited to: (1) a
Lifetime Withdrawal Phase – The period under the	certified copy of a death certificate; (2) a certified copy of
Minimum Guaranteed Withdrawal Benefit during which	a statement of death from the attending physician; (3) a
the Maximum Annual Withdrawal is calculated and	finding of a court of competent jurisdiction as
available for Withdrawal (see pages 26 and	to the cause of death; or (4) any other proof we deem in
29 ). The Lifetime Withdrawal Phase begins on	our discretion to be satisfactory to us. See page
the date of the first Withdrawal, other than a Withdrawal	39 .
requested for the payment of Investment Advisory Fees,	Qualified Institutional Care – For Contracts issued in
on or after the date the Annuitant reaches the Lifetime	Washington, care provided in a hospital, skilled or
Withdrawal Eligibility Age. See page 29 .	intermediate nursing home, congregate care facility, adult
Maximum Annual Withdrawal or MAW – The maximum	family home, or other facility certified or licensed by the
amount available for Withdrawal from the Contract under	state primarily affording diagnostic, preventative,
the Minimum Guaranteed Withdrawal Benefit in any	therapeutic, rehabilitative, maintenance or person care
Contract Year without reducing the MGWB Base in	services. Such facility provides twenty-four hour nursing
future Contract Years. See pages 29 .	services on its premises or in facilities available to the
MGWB Base – The factor that is used only for the sole	institution on a formal prearranged basis. See page
purpose of calculating the MAW and the charge for the	19.
Minimum Guaranteed Withdrawal Benefit. The MGWB	Qualifying Medical Professional – A legally licensed
Base has no cash value. See page 26 .	practitioner of the healing arts who: (1) is acting within
MGWB Charge Rate – The percentage of the MGWB Base	the scope of his or her license; (2) is not a resident of your
as of the last Business Day immediately prior to the date	household or that of the Annuitant; and (3) is not related
the MGWB charge is deducted. See page 20 .	to you or the Annuitant by blood or marriage. See page
MGWB Periodic Payments – The payments that occur after	19 .
the Contract enters the Lifetime Automatic Periodic	Ratchet – The increase to the MGWB Base by an amount
Benefit Status. See page 31 .	equal to the difference between the MGWB Base and the
Minimum Guaranteed Withdrawal Benefit or MGWB –	Accumulation Value on the applicable Ratchet Date if the
The benefit available after the Annuitant reaches the	Accumulation Value is greater than the
Lifetime Withdrawal Eligibility Age that guarantees you	amount of the MGWB Base immediately prior to such
will have a pre-determined amount, the MAW, available	Ratchet Date. See page 28 .
for Withdrawals from the Contract each Contract Year,	Ratchet Date – The applicable date on which the Ratchet is to
even if the Accumulation Value is reduced to zero. See	occur. See page 28 .
page 26 .	Right to Examine and Return this Contract – The period of
Minimum Guaranteed Withdrawal Benefit Charge	time during which you have the right to return the
or MGWB Charge – The charge for the MGWB. See	Contract for any reason, or no reason at all, and receive
page 20 .	the Premium paid and not previously surrendered. See
Net Return Factor – The value that reflects: (1) the	page 44 .
investment experience of a mutual fund or investment	Specially Designated Variable Sub-account – A variable
portfolio in which a variable sub-account invests; and (2)	sub-account that is used as a “holding” account or for
the charges assessed against that variable sub-account	administrative purposes. The Specially Designated
during a Valuation Period. See page 11 .	Variable Sub-account is designated by us – currently,
Notice to Us – Notice made in a form that: (1) is approved by	ING Money Market.
or is acceptable to, us; (2) has the information and any	Standard Death Benefit Base – The sum of all Premiums
documentation we determine in our discretion to be	reduced pro rata by any Withdrawals. See page
necessary to take the action requested or exercise the right	38 .
specified; and (3) is received by us at our Customer	Surrender – A transaction in which the entire Cash Surrender
Service Center at the address specified on page 1. Under	Value is taken from the Contract. See page 33 .
certain circumstances, we may permit you to provide	Surrender Charge – A charge applied to certain Withdrawals

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and to a Surrender that will reduce the amount paid to	Valuation Period – The time from the close of regular trading
you. See page 17 .	on the NYSE on one Business Day to the close of regular
Surrender Charge Free Withdrawal – The amount that may	trading on the next succeeding Business Day.
be withdrawn each Contract Year without any applicable	Withdrawal – A transaction in which only a portion of the
Surrender Charges. See page 18 .	Cash Surrender Value is taken from the Contract.
Terminal Condition – An illness or injury that results in a life	Annuity Payments under the Table 2 Annuity Plan for
expectancy of 12 months or less, as measured from the	non-qualified Contracts are treated as Withdrawals. See
date of diagnosis by a Qualifying Medical Professional.	pages 33 and 41 .
See page 19 .

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Synopsis – The Contract
This synopsis reviews some important things that you should know about this annuity. We urge you to read the entire prospectus for
complete details. This Synopsis is designed only as a guide. Certain features and benefits may vary
depending on the state in which your Contract is issued. These state variations are identified later in the prospectus.

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You can use an annuity to save money for retirement and to	Regular Withdrawals: You can withdraw up to 10% of your
receive retirement income for life. It is not meant to be used to	Accumulation Value during the year, as measured from the
meet short-term financial goals.	date the contract became effective (Contract Year) without
	paying a Surrender Charge. The Surrender Charge is based
This annuity is a modified single premium deferred variable	on the amount of Premium withdrawn and the period of time
annuity. If you purchase the annuity with after-tax money, the	since that Premium was added. The Surrender Charge is a
first payment must be at least $10,000. We refer to this	percentage of the withdrawal. See page 17 for more
annuity as a non-qualified contract. If you purchase the	information.
annuity with pre-tax money, the first payment must be at least
$5,000. We refer to this annuity as a qualified contract.	Systematic withdrawals: You can get monthly, quarterly, or
Additional payments, known as Additional Premium, will only	annual payments from your annuity in set amounts without
be accepted during the first year, subject to our prior approval.	paying Surrender Charges. There are restrictions on taking
	systematic withdrawals. See page 34 for more
Premiums cannot total more than $1,000,000, unless you	information.
receive approval from us.
	Extended medical care and terminal condition waiver of
	surrender charge: If you are in a hospital or nursing facility or
THE ANNUITY CONTRACT	diagnosed with a terminal condition, you can take money from
	your annuity without paying a Surrender Charge under some
	conditions. See page 18 for more information.
How does this annuity work?
This annuity is a contract between you and us. You pay	What happens if I die?
premium into your contract, and we agree to make payments	This annuity has a death benefit that pays money to your
to you, starting in five years or at a later date in the future.	beneficiary if you die before we start to pay you income from
	your contract. The death benefit is equal to the greater of: (a)
An annuity consists of the accumulation phase and the income	your annuity’s value; and (b) the return of Premiums paid into
phase.	the contract, reduced pro rata for withdrawals. For
	more information about the death benefit, see page 38 .
During the accumulation phase, you make investment
decisions that can increase or decrease your annuity’s value,	What other benefits are included with the annuity?
which we refer to as the Accumulation Value, based upon	This annuity includes a minimum guaranteed withdrawal
your allocation to the various underlying investment options	benefit, or MGWB, which generally provides, subject to
we offer. You decide how your money is allocated.	certain restrictions and limitations, that we will guarantee a
	minimum level of annual withdrawals from the contract for
For a list of the investment options currently available to you,	the lifetime of the annuitant, even if these withdrawals deplete
see page 13 .	your annuity’s value to zero. It is important to note that
	excess withdrawals (as described more fully on page 27)
Since this annuity is tax-deferred, you do not pay taxes on the	will decrease the value of the MGWB and may, if applicable,
earnings until the money is paid to you.	result in the loss of the MGWB. This is more likely to occur if
	such withdrawals are made during periods of negative market
We begin to pay money to you during the income phase. We	activity. For more information about the MGWB, and how
use the value of your contract to determine the amount of	withdrawals can affect this benefit, see page 26 .
income you receive, which we refer to as an Annuity Payment.
Depending on the Annuity Plan you choose, you can receive	FEES AND EXPENSES
payouts for life or for a specific period of time. You select the
date the payouts start, which we refer to as the Annuity	What fees and/or expenses do you deduct from my
Commencement Date, and how often you receive them. See	annuity?
page 43 for more information about Annuity Payments	You will pay fees while you own the annuity. These fees will
and Annuity Plans available to you.	be deducted from the annuity. The amount of the fees
	depends on the value of the investments in your annuity and
What other options do I have for accessing money from	the types of investments you choose. There are three types of
my annuity?	fees: transactional, recurring and underlying investment
	portfolio fees. For specific information about these fees, see

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page 9 .

TAXES

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How will payouts and withdrawals from my annuity be

taxed?

This annuity is tax-deferred, which means you do not pay

taxes on the annuity’s earnings until the money is paid to you.

When you take payouts or make a withdrawal, you pay

ordinary income tax on the accumulated earnings. You also

defer paying taxes on earnings if you move money from one

underlying investment option to another. You may pay a

federal income tax penalty on earnings you withdraw before

age 59½. See page 49 for more information. Your

annuity may also be subject to a premium tax, which depends

on your state of residency. See page 19 for more

information.

You can exchange one tax-deferred annuity for another

without paying taxes on the accumulated earnings when you

make the exchange. Before making such exchange, you should

compare the benefits, features, and costs of the two annuities.

Does buying an annuity in a retirement plan provide extra

tax benefits?

No. Buying an annuity within an IRA or other tax-deferred

retirement plan doesn’t give you any extra tax benefits,

because amounts contributed to such plans are already tax-

deferred. Choose your annuity based on its other features and

benefits as well as its risks and costs, not its tax benefits.

OTHER INFORMATION

What else do I need to know?

We may change your contract from time to time to follow

federal or state laws and regulations. If we do, we will provide

Notice to You of such changes in writing.

Compensation: We pay the broker-dealer for selling the

annuity to you. Your broker-dealer also may have certain

revenue sharing arrangements or pay its personnel more for

selling this contract than for selling other annuity contracts.

See page 46 for more information.

Right to Examine the Contract: Many states have laws that

give you a set number of days to look at an annuity after you

buy it. If you decide during that time that you do not want it,

you can return the annuity. See page 44 for more

information.

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Synopsis – Fees and Expenses
The following tables describe the fees and expenses that you will pay when buying, owning, and Surrendering the Contract.

This table describes the transactional fees and expenses that you will pay at the time that you buy the Contract, Surrender the
Contract, or transfer Accumulation Value between variable sub-accounts. Premium taxes may also be deducted.

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Transactional Fees and Expenses

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Surrender Charge	6%
(as a percentage of Premium withdrawn, if applicable)¹
Excess Transfer Charge²	$25
Overnight Charge³	$20

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1. A Surrender Charge will apply to certain Surrenders or Withdrawals of Premium, based on the following schedules:

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Surrender Charge Schedule
Full Years Since Paid Premium	0	1	2	3	4	5+
Surrender Charge	6%	5%	4%	3%	2%	0%

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The charge is deducted proportionally from the Accumulation Value in the variable sub-accounts, or you may request the charge
be deducted from the Withdrawal of Premium. Each Premium is subject to its own Surrender Charge schedule lasting 5 full years
from the payment date.
2 Per transfer after 12 during a Contract Year (which we refer to as an Excess Transfer, currently nil.)
3. You may choose to have this charge deducted from the amount of a Surrender or Withdrawal you would like sent to you by
overnight delivery service.

This table describes the recurring fees and expenses that you will pay periodically during the time that you own the Contract, not
including variable sub-account fees and expenses.

Recurring Fees and Expenses

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Annual Administrative Charge	$40
Separate Account Annual Expenses (as a percentage of Accumulation Value)

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Mortality & Expense	Maximum	Current
Risk Charge⁴	1.50%	0.75%
Asset Based
Administrative Charge	None	None

Total Separate Account Annual Expenses	1.50%	0.75%

Minimum Guaranteed Withdrawal Benefit
Charge(as a percentage of the MGWB Base)⁵	1.90%	1.00%

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3. The annual administrative charge is waived if the Accumulation Value or Premiums paid is $100,000 or more when it is
deducted. This charge is deducted on your Contract Anniversary, the Annuity Commencement Date, or when you Surrender the
Contract.
4. This charge is deducted on Business Days as a percentage of and from the Accumulation Value in each variable sub-account.
5. This charge is for the MGWB, which is an included benefit of your annuity. The charge is deducted quarterly
from the Accumulation Value in each variable sub-account. The MGWB Base is equal to the
Initial Premium on the Contract Date, and is increased dollar-for-dollar for any Additional Premiums permitted during the first
Contract Year. The charge can increase upon: an increase to the MGWB Base, the Maximum Annual Withdrawal or MAW
percentage, and in the event of any Additional Premiums permitted, subject to the maximum charge. For more information, please
see pages 20 and 26 .

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This item shows the minimum and maximum total gross operating expenses charged by the variable sub-accounts that you may
pay periodically during the time that you own the Contract. More detail concerning each variable sub-account’s fees and expenses is
contained in the prospectus for the relevant underlying investment portfolio.

Total Annual Variable Sub-account Gross Operating Expenses

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Expenses that are deducted from underlying		0.51%	0.83%
investment portfolio assets, including management
fees, service and/or distribution (12b-1) fees, and
other expenses^6,7
Minimum	Maximum

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6.	We may receive compensation from the underlying investment portfolios or their affiliates based on an annual percentage of the average net assets held in that investment portfolio by us. The percentage paid may vary from one underlying investment portfolio to another. For certain underlying investment portfolios, some of this compensation may be paid out as 12b-1 fees or service fees that are deducted from investment portfolio assets. These fees are disclosed in the underlying investment portfolio prospectuses. We may also receive compensation from certain underlying investment portfolios or their affiliates for recordkeeping or other services.
	See page 46 .
7.	No underlying investment portfolio currently charges a redemption fee. See page 21 .

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This example is intended to help you compare the cost of investing in the Contract with the cost of investing in other variable
annuity contracts.

Example

Assumptions

a. You invest $10,000 in the Contract for the time periods indicated below.
b. The costs reflected include the maximum transactional and recurring fees and expenses noted above and the
maximum charge for the MGWB. Also included are the maximum gross operating expenses noted above of
any of the variable sub-accounts.
c. The example assumes that your investment has a 5% return each year.

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Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
If you Surrender or annuitize your Contract at the end of the applicable time period
1 year	3 years	5 years	10 years
$1,453	$1,263	$1,939	$3,985
If you do not Surrender your Contract
1 year	3 years	5 years	10 years
$853	$863	$1,739	$3,985

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Condensed Financial Information

Accumulation Value

We use accumulation units to calculate the Accumulation Value of a Contract. Each variable sub-account of Variable Annuity Account B has its own accumulation unit value. Their values may increase or decrease from day to day based on the investment performance of the applicable underlying investment portfolio. Shares in the underlying investment portfolios are valued at their net asset value.

On the Contract Date, the Accumulation Value in each variable sub-account equals the Initial Premium allocated to that variable sub-account, less a charge for premium tax, if applicable. We calculate the Accumulation Value at the close of each Business Day thereafter as follows:

Accumulation Value in the variable sub-account at the close of the preceding Business Day

è Multiplied by the variable sub-account’s Net Return Factor for the current Valuation Period (see below)

è Plus any Additional Premium accepted to the variable sub-accounts during the current Valuation Period

è Minus any premium taxes related to the Additional Premium, if applicable

è Plus or Minus any transfers to or from the variable sub-account during the current Valuation Period

è Minus any Withdrawals and any applicable Surrender Charges from the variable sub-account during the

current Valuation Period

è Minus any charges, other than daily charges (e.g., the charge for the MGWB, which is deducted on quarterly

Contract Anniversaries), or applicable taxes, including any premium taxes not previously deducted,

allocated to that variable sub-account

No accumulation unit value history is contained in this prospectus because the Contract has not previously been offered for sale.

The Net Return Factor is an index number that reflects certain charges under the Contract and the investment performance of the variable sub-account. The Net Return Factor is calculated for each variable sub-account as follows:

The net asset value of the portfolio in which the variable sub-account invests at the close of the current Business

è Plus the amount of any dividend or capital gains distribution declared for and reinvested in such portfolio

during the current Valuation Period

è Divided by the net asset value of the portfolio at the close of the preceding Business Day

è Minus the daily charges from the variable sub-account (e.g., the mortality & expense risk charge)

Calculations for the variable sub-accounts are made on a per unit basis.

Financial Statements

The financial statements of each of ING Life Insurance and Annuity Company and its Variable Annuity Account B can be found in the SAI. The financial statements of Variable Annuity Account B include information about all contracts offered through it. The financial statements of ING Life Insurance and Annuity Company should only be considered as bearing on the Company’s ability to meet its contractual obligations under the Contracts. ING Life Insurance and Annuity Company’s financial statements do not bear on the future investment experience of the assets held in Variable Annuity Account B.

ING Life Insurance and Annuity Company

Organization and Operation

ING Life Insurance and Annuity Company (the Company, we, us, our) issues the Contracts described in this prospectus and is responsible for providing each Contract’s insurance and annuity benefits. We are a direct, wholly owned subsidiary of Lion Connecticut Holdings Inc.

We are a stock life insurance company organized under the insurance laws of the State of Connecticut in 1976 and an indirect wholly owned subsidiary of ING Groep N.V. (“ING”), a global financial institution active in the fields of insurance, banking and asset management. Through a merger, our operations include the business of Aetna Variable Annuity Life Insurance Company (formerly known as Participating Annuity Life Insurance Company, an Arkansas life insurance company organized in 1954). Prior to January 1, 2002, the Company was known as Aetna Life Insurance and Annuity Company.

We are engaged in the business of issuing life insurance and annuities.

Our principal executive offices are located at:

One Orange Way
Windsor, Connecticut 06095-4774

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.

Insurance and Retirement Plan Products and Other Regulatory Matters. Federal and state regulators and self-regulatory agencies are conducting broad inquiries and investigations involving the insurance and retirement industries. These initiatives currently focus on, among other things, compensation, revenue sharing, and other sales incentives; potential conflicts of interest; sales and marketing practices (including sales to seniors); specific product types (including group annuities and indexed annuities); and disclosure. The Company and certain of its U.S. affiliates have received formal and informal requests in connection with such investigations, and have cooperated and are cooperating fully with each request for information. Some of these matters could result in regulatory action involving the Company.

These initiatives also 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.

Investment Product 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; directed brokerage; compensation; sales practices, suitability, and supervision; arrangements with service providers; pricing; compliance and controls; adequacy of disclosure; and document retention.

In addition to responding to governmental and regulatory requests on fund trading 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.

Action has been or may be taken by regulators with respect to certain ING affiliates before investigations relating to fund trading are completed. 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 any 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.

Product Regulation

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Our products are subject to a complex and extensive array of state and federal tax, securities and insurance laws, and regulations, which are administered and enforced by a number of governmental and self-regulatory authorities. Specifically, U.S. federal income tax law imposes requirements relating to non-qualified annuity product design, administration, and investments that are conditions for beneficial tax treatment of such products under the Internal Revenue Code. (See page 49 for further discussion of some of these requirements.) Failure to administer certain non-qualified contract features (for example, contractual annuity start dates in non-qualified annuities) could affect such beneficiary tax treatment. In addition, state and federal securities and insurance laws impose

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requirements relating to insurance and annuity product design, offering and distribution, and administration. Failure to meet any of these complex tax, securities, or insurance requirements could subject the Company to administrative penalties, unanticipated remediation, or other claims and costs.

Variable Annuity Account B and its Variable Sub-accounts

Organization and Operation

We established Variable Annuity Account B (the “separate account”) under Connecticut Law in 1976 as a continuation of the separate account established in 1974 under Arkansas law of Aetna Variable Annuity Life Insurance Company. The separate account was established as a segregated asset account to fund variable annuity contracts. The separate account is registered as a unit investment trust under the Investment Company Act of 1940. It also meets the definition of “separate account” under the federal securities laws.

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The separate account is divided into “sub-accounts.” Each sub-account invests directly in shares of a corresponding fund.

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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 ING Life Insurance and Annuity Company. All obligations arising under the Contracts are obligations of ING Life Insurance and Annuity Company.

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Please note that we currently offer other variable annuity contracts through Variable Annuity Account B having different variable sub-accounts that are not discussed in this prospectus. Under certain circumstances, we may make certain changes to the variable sub-accounts. For more information, see page 26 .

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Variable Sub-accounts

More information about the variable sub-accounts available under the Contract is contained in the below table.

You bear the entire investment risk for amounts you allocate to any underlying investment portfolio, and you may lose your principal. The investment results of the underlying investment portfolios are likely to differ significantly. There is no assurance that any of the funds will achieve their respective investment objectives. You should carefully consider the investment objectives, risks and charges and expenses of the underlying investment options before investing. More information is available in the prospectus for an underlying investment option. You may obtain a copy of the prospectus for an underlying investment portfolio by contacting our customer service center. Contact information for the customer service center appears on page 1.

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Please work with your investment professional to determine if the variable sub-accounts may be suited to your financial needs, investment time horizon and risk tolerance. You should periodically review these factors to determine if you need to change your investment strategy.

[

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Variable Sub-accounts Currently Available

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ING Blackrock Inflation Protected Bond Portfolio

Sub-advised by BlackRock Financial Management Inc.

Seeks to maximize real return, consistent with preservation of real capital and prudent investment management.

ING Dow Jones Euro STOXX 50® Index Portfolio

Sub-advised by ING Investment Management Co.

The Portfolio seeks investment results (before fees and expenses) that correspond to the total return of the Dow

Jones Euro STOXX (“DJES”) 50® Index

ING International Index Portfolio

Sub-advised by ING Investment Management Co.

The Portfolio seeks investment results (before fees and expenses) that correspond to the total return of a widely

accepted international index.

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ING Money Market Portfolio

Sub-advised by ING Investment Management Co.

The Portfolio seeks to provide high current return, consistent with preservation of capital

and liquidity, through investment in high-quality money market instruments while maintaining a stable share

price of $1.00.

ING Russell^TMLarge Cap Growth Index Portfolio

Sub-advised by ING Investment Management Co.

The Portfolio seeks investment results (before fees and expenses) that correspond to

the total return of the Russell Top 200® Growth Index (“Index”).

ING Russell^TMLarge Cap Value Index Portfolio

Sub-advised by ING Investment Management Co.

The Portfolio seeks investment results (before fees and expenses) that correspond to

the total return of the Russell Top 200® Value Index.

ING Russell^TMMid Cap Index Portfolio

Sub-advised by ING Investment Management Co.

The Portfolio seeks investment results (before fees and expenses) that correspond to the total return of the

Russell Midcap® Index.

ING Russell^TMSmall Cap Index Portfolio

Sub-advised by ING Investment Management Co.

The Portfolio seeks investment results before fees and expenses)that correspond to the total return of the Russell

2000® Index.

ING Stock Index Portfolio

Sub-advised by ING Investment Management Co.

Total Return.

ING U.S. Bond Index Portfolio

Sub-advised by Lehman Brothers Asset Management LLC

The Portfolio seeks investment results before fees and expenses) that correspond to the total return of the Barclays Capital

U.S. Aggregate Bond Index.

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Fees Deducted by the Underlying Investment Portfolios
The prospectuses for the underlying investment portfolios show the investment advisory fees, 12b-1 fees and other expenses including
service fees (if applicable) charged annually. Fees of an underlying investment portfolio are one factor that impacts the value of a
share. Please refer to the prospectuses for the underlying investment portfolios for more information and to learn more about
additional factors.

The Company may receive compensation from each of the underlying investment portfolios or their affiliates based on an annual
percentage of the average net assets held in that underlying investment portfolio by the Company. The percentage paid may vary from
one fund company to another. For certain underlying investment portfolios, some of this compensation may be paid out of 12b-1 fees
or service fees that are deducted from underlying investment portfolio assets. Any such fees deducted from underlying investment
portfolio assets are disclosed in the prospectuses for the underlying investment portfolio. The Company may also receive additional
compensation from certain underlying investment portfolios for administrative, recordkeeping or other services provided by the
Company to the underlying investment portfolios or their affiliates. These additional payments may also be used by the Company to
finance distribution.
See page 21 for more
information.

In the case of fund companies affiliated with the Company, where an affiliated investment adviser employs subadvisers to manage the
underlying investment portfolios, no direct payments are made to the Company or the affiliated investment adviser by the subadvisers.
Subadvisers may provide reimbursement for employees of the Company or its affiliates to attend business meetings or training
conferences. Investment management fees are apportioned between the affiliated investment adviser and subadviser. This
apportionment varies by subadviser, resulting in varying amounts of revenue retained by the affiliated investment adviser.
See page 21 for more information.

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Fees are deducted from the value of the underlying investment portfolio shares on a daily basis, which in turn affects the value of each
variable sub-account that purchases fund shares.

Variable Sub-account Classifications for MGWB and Required Automatic Rebalancing
In order to mitigate the insurance risk inherent in our guarantees under the Minimum Guaranteed Withdrawal Benefit, we have
classified the variable sub-accounts currently available under the Contract into three groups, each of which has a different weighting in
relation to the allocation of your Accumulation Value. Your application to purchase the Contract is not complete unless your Initial
Premium is allocated according to the allocation percentages of each group under required automatic rebalancing for the MGWB
. See page 25.

To issue the Contract, we require that the Initial Premium be allocated
according to the allocation percentages of each group, and you may allocate to one or more variable sub-accounts in
these groups (or
none in the case of Groups B or C) as follows:

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Group A	Group B	Group C
No less than 40%* (40-100%)		No more than 10% (0-10%)
	Balance of total Accumulation Value
Of total Accumulation Value		Of total Accumulation Value
* Currently waived to 30%	Currently 0-70% with Group A waiver
ê Currently available ê	ê Currently available ê	ê Currently available ê
ING BlackRock Inflation Protected Bond	ING Russell Large Cap Growth Index	ING Dow Jones Euro STOXX 50 Index
ING U.S. Bond Index	ING Stock Index	ING International Index
ING Money Market	ING Russell Large Cap Value Index
	ING Russell Mid Cap Index
	ING Russell Small Cap Index

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While the MGWB is in effect, your allocation of Accumulation Value will remain subject to the above allocation percentages
. Moreover, your Accumulation Value will be subject to periodic automatic rebalancing to ensure
that your current allocation between and among the variable sub-accounts in each group continues to conform to the
above allocation percentages. We will rebalance the proportion of your Accumulation Value in each group pro-rata between and
among the variable sub-accounts that comprise your current allocation. The above groups and allocation percentages are also
indicated in the Contract on the data table for the MGWB, which is part of the schedule pages appearing at the front of the Contract.
By purchasing the Contract, you are providing the Company with direction and authorization to periodically rebalance, on
your behalf, the proportion of your Accumulation Value allocated between and among the variable sub-accounts
in each group. You should not purchase the Contract if you do not want your Accumulation Value to be
subject to these variable sub-account classifications and the rebalancing requirement .

The dates on which your Accumulation Value will be subject to required automatic rebalancing:

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	Each quarterly Contract Anniversary;
	Receipt by us of any Additional Premiums, if permitted;
	Upon any transfer or reallocation among the variable sub-accounts; and
	Upon a Withdrawal for other than payment of the charge for the MGWB or Investment Advisory Fees.

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On any required automatic rebalancing date, if the Accumulation Value you have allocated to the variable sub-accounts in each
group does not meet the minimum or maximum allocation percentage, as applicable, we will automatically rebalance the
Accumulation Value, pro-rata between and among your variable sub-account allocations, to restore the proportion of your
Accumulation Value allocated to each group; according to the appropriate allocation percentages
, starting with Group C and as follows:

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	è Amounts rebalanced from Group C will be reallocated to Group B
	¡ The portion of your Accumulation Value allocated to one or more variable sub-accounts in Group C will be
	rebalanced pro-rata from Group C and reallocated pro-rata to the variable sub-accounts that comprise your
	current allocation to Group B, if any.
	¡Rebalancing will only occur from Group C to Group A if no Accumulation Value is allocated to Group B

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è Amounts rebalanced from Group B will be reallocated to Group A.

¡ The portion of your Accumulation Value allocated to one or more variable sub-accounts in Group B will be

rebalanced pro-rata from Group B and reallocated pro-rata to the variable sub-accounts that comprise your

current allocation to Group A.

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àExplanatory Example #1:
You purchase the Contract with $120,000 of Initial Premium , which, pursuant to your allocation
instructions, is allocated pro-rata among the variable sub-accounts in Group A. You then make a payment of
$480,000 in Additional Premium , which, pursuant to your allocation instructions at that time, is allocated
pro-rata among the variable sub-accounts in Group B, and which brings the total of your Accumulation Value to
$600,000. Because the percentage of this total Accumulation Value allocated to Group A, which is 20% (120,000/600,000 *
0.2), is less than the 30% required minimum allocation percentage, we will automatically rebalance $60,000 of the
Accumulation Value in Group B to Group A. This is done pro-rata among the variable sub-accounts that comprise your
current allocation of Accumulation Value, which, in this case, consists of all the variable sub-accounts available between
these two groups. After required automatic rebalancing, the Contract complies with the allocation percentages with 30% of
the total Accumulation Value in Group A ($180,000) and 70% in Group B ($420,000).

àExplanatory Example #2:
You purchase the Contract with $100,000 of Initial Premium. Pursuant to your allocation instructions:
$40,000, or 40%, is allocated pro-rata to the variable sub-accounts in Group A; $10,000, or 10%, is allocated pro-rata to the
variable sub-accounts in Group C; and the remaining $50,000, or 50%, is allocated pro-rata to the variable sub-accounts in
Group B. (Accordingly, your Accumulation Value is allocated to all the variable sub-accounts available under the Contract.)
Upon a subsequent Withdrawal of $20,000 from the variable sub-accounts in Group A, the Accumulation Value
allocated to Group C exceeds the 10% maximum allocation percentage. We will automatically rebalance $2,000 of the
Accumulation Value in Group C to Group B. Moreover, as a result of the Withdrawal, since the Accumulation Value
allocated to Group A is only 25% of the total Accumulation Value, we will next automatically rebalance $4,000 of the
Accumulation Value in Group B to Group A. Both transactions (rebalance Group C to Group B, and Group B to Group A)
are done pro-rata among the variable sub-accounts that comprise your current allocation of Accumulation Value within each
group. After required automatic rebalancing, the Contract complies with the allocation percentages with 30% of the total
Accumulation Value in Group A ($24,000), 60% of the total Accumulation Value in Group B ($48,000) and 10% of the total
Accumulation Value in Group C ($8,000).

Although the Group A minimum allocation percentage is currently waived to 30%, this waiver is not
contractual. The Contract will indicate that at least 40% of your total Accumulation Value must be allocated to Group A. We may
revoke this non-contractual waiver at any time in order to reduce the risk that, due to a decrease in the equity markets (especially a
prolonged and/or precipitous decline), the guarantees under the MGWB are not covered by your Accumulation Value, which would
thereby increase the possibility that we may be required to pay a benefit to you. Also, we may revoke this non-contractual waiver at
any time in order to reduce the risks associated with the costs we incur in hedging the guarantees under the MGWB.

In the event that we decide we want to revoke this non-contractual waiver, we will notify you before
implementing the change. We will send Notice to You at least 30 days prior to the date on which the change becomes effective.
The notice will describe the change and permit you the opportunity to provide alternative allocation instructions before the next
succeeding required automatic rebalancing date, or, if you are unwilling to accept the impending change
, you may cancel the MGWB. This notice will specify how to
cancel the MGWB. If you cancel the MGWB, any guaranteed payments under the MGWB will terminate, and all charges will cease,
effective on the next succeeding required automatic rebalancing date. Otherwise, on the next succeeding required automatic
rebalancing date, we will rebalance your Accumulation Value to conform to the 40% minimum allocation percentage of Group A.

We will not reclassify the variable sub-accounts available under the Contract.

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Required automatic rebalancing is separate from elective automatic rebalancing under the Contract. Please see page 38 for more information on elective automatic rebalancing.

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Changes to a Variable Sub-account and/or Variable Annuity Account B

We may make additional variable sub-accounts through Variable Annuity Account B available to you under the Contract. We may also eliminate, combine or substitute underlying investment portfolios, subject to the conditions set forth in your Contract, and subject to any required regulatory approvals, including SEC approval.

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If you elected the dollar cost averaging, systematic withdrawals or automatic rebalancing programs, as described below, or if you have other outstanding instructions and a variable sub-account is no longer available because it has been substituted or merged , we will execute your instructions using the substituted or merged variable sub-account, unless you instruct otherwise. The substituted or merged variable sub-account may have higher fees and charges than the variable sub-account it replaces. If a variable sub-account is no longer available for any other reason, we will allocate your Accumulation Value proportionally among the other variable sub-accounts available that, according to your outstanding instructions, comprise your current allocation.

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Subject to any required regulatory approvals, we reserve the right to transfer assets of Variable Annuity Account B or any variable sub-account that we determine to be associated with the class of contracts to which this Contract belongs to another separate account or variable sub-account. The portfolio in which the transferred assets invests may have higher fees and charges than the portfolio from which such assets were transferred.

We operate Variable Annuity Account B in accordance with the Investment Company Act of 1940. Subject to SEC approval, we reserve the right to make the following changes to this separate account:

Deregister the separate account;

Operate the separate account as a management company;

Restrict or eliminate any voting rights; or

Combine Variable Annuity Account B with another separate account.

We will provide you with written notice before we make any of these changes to the variable sub-accounts and/or Variable Annuity Account B.

Fees and Expenses

We deduct the following fees and expenses to compensate us for our costs, the services we provide, and the risks we assume under the Contracts. We incur costs for distributing and administering the Contracts, including compensation and expenses paid in connection with sales of the Contracts, for paying the benefits payable under the Contracts and for bearing various risks associated with the Contracts. Fees and expenses expressed as a percentage are rounded to the nearest hundredth of one percent. We expect to profit from the charges and may use the profits to finance the distribution of Contracts.

Surrender Charge

A Surrender Charge may apply to a Surrender or Withdrawal of Premium.

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The Contract has a Surrender Charge schedule. This charge is intended to cover the costs we incur in selling the Contracts. Each Premium is subject to its own Surrender Charge schedule lasting 5 complete years from the payment date. We consider Withdrawals to come from Premium in the same order as paid (first-in, first-out (FIFO)). Therefore, the rate of this charge depends on the number of complete years (12 month periods) that have elapsed since you paid the Premium and is deducted pro rata from the Accumulation Value in the variable sub-accounts, unless you request otherwise:

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Surrender Charge Schedule
Full Years since Premium Paid	0	1	2	3	4	5+
Surrender Charge	6%	5%	4%	3%	2%	0%

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If a variable sub-account is liquidated, Surrender Charges will be deducted pro rata across all remaining variable sub-accounts.

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Surrender Charges will be applied to the gross Withdrawal amount. You may instead request that any Surrender Charge be deducted from the amount of the Withdrawal of Premium.

No Surrender Charges will apply to:

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Payment of the Death Benefit (see page 38 )

Commencement of Annuity Payments after the fifth Contract Year (see page 40 )

¡ IMPORTANT NOTE: For Contracts issued in Florida, no Surrender Charges will apply to Annuity Payments

after the first Contract Year.

Withdrawals equal to the greater of the following, which we refer to as the Surrender Charge Free Withdrawal:

è 10% of the Accumulation Value at the time of the Withdrawal less any Withdrawals already taken during the

current Contract Year; and

èTheamount of the Maximum Annual Withdrawal (and any applicable Additional Withdrawal Amount) (see

page 29 ), less any Withdrawals already taken during the current Contract Year.

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A Surrender Charge Free Withdrawal will not be considered a Withdrawal of Premium for purposes of assessing Surrender Charges.

àExplanatory Example #2:

The Contract is purchased with $30,000 of Initial Premium. After three Contract Years, the Accumulation Value equals $32,400, of which $3,240 ($32,400 * .10) is available in that Contract Year to withdraw without incurring Surrender Charges. A Withdrawal of $9,720 exceeds the Surrender Charge Free Withdrawal by $6,480 ($9,720 - $3,240) and would be subject to a 3% Surrender Charge of $200 (($6,480/(1-.03) * .03). The Surrender Charge will be deducted from your Accumulation Value.

There is no Surrender Charge under the Contract on amounts transferred or rolled over from certain existing contracts issued by us or one of our affiliates (“internal transfer”), provided that there was no Surrender Charge applicable to the existing contract at the time of the internal transfer. This waiver does not apply to all existing contracts.

The Contract has a waiver of Surrender Charge for Extended Medical Care or a Terminal Condition. Extended Medical Care means confinement in a Hospital or Nursing Home prescribed by a Qualifying Medical Professional, as these terms are defined in the Contract. We will waive the Surrender Charge in most states in the event:

You begin receiving Extended Medical Care on or after the first Contract Anniversary for at least 45 days during a 60

day period with Notice to Us during the term of your care or within 90 days after the last day of your care; or

You are first diagnosed by a Qualifying Medical Professional, on or after the first Contract Anniversary, as having a

Terminal Condition.

For purposes of this Surrender Charge waiver:

A Hospital or Nursing Home is defined as a hospital or a skilled care or intermediate care nursing facility:

¡Operating as such according to applicable law; and

¡At which medical treatment is available on a daily basis.

è A Hospital or Nursing Home does not include a rest home or other facility whose primary purpose is to

provide accommodations, board or personal care services to individuals who do not need medical or

nursing care.

A Qualifying Medical Professional is defined as a legally licensed practitioner of the healing arts who:

¡Is acting within the scope of his or her license;

¡Is not a resident of your household or that of the Annuitant; and

¡Is not related to you or the Annuitant by blood or marriage.

To qualify for a waiver as a result of Extended Medical Care:

You (or any Annuitant, if the Owner is a non-natural person) begin receiving Extended Medical Care on or after

the first Contract Anniversary and receive such Extended Medical Care for at least 45 days during any continuous

60-day period; and

Your request for a Surrender or Withdrawal, together with satisfactory proof of such Extended Medical Care,

must be provided by Notice to Us during the term of such Extended Medical Care or within 90 days after the last

day that you received Extended Medical Care.

To qualify for a waiver as a result of a Terminal Condition:

You (or any Annuitant, if the Owner is a non-natural person) must first be diagnosed by a Qualifying Medical

Professional as having a Terminal Condition on or after the first Contract Anniversary; and

Your request for a Surrender or Withdrawal, together with satisfactory proof of such Terminal Condition, must be

provided by Notice to Us.

We require the proof of Extended Medical Care or a Terminal Condition to be in writing and, where applicable, attested to by a Qualifying Medical Professional. We reserve the right in the Contract to require a secondary medical opinion by a Qualifying Medical Professional of our choosing. We will pay for any such secondary medical opinion.

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¡ IMPORTANT NOTE: For Contracts issued in Massachusetts, no waiver of Surrender Charge for Extended Medical Care or a Terminal Condition is available. For Contracts issued in Texas, no waiver of Surrender Charge for a Terminal Condition is available. For Contracts issued in Washington, the waiver is available for Qualified Institutional Care or a Terminal Condition. Qualified Institutional Care means care provided in a hospital, skilled or intermediate nursing home, congregate care facility, adult family home, or other facility certified or licensed by the state primarily affording diagnostic, preventative, therapeutic, rehabilitative, maintenance or person care services. Such facility provides twenty-four hour nursing services on its premises or in facilities available to the institution on a formal prearranged basis.

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Premium Tax

In certain states, the Premium you pay for the Contract is subject to a premium tax. A premium tax is generally any tax or fee imposed or levied by any state government or political subdivision thereof on your Premium received by us. Currently, the premium tax ranges from zero to 3.5%, depending on your state of residence. We reserve the right in the Contract to recoup the amount of any premium tax from the Accumulation Value if and when:

The premium tax is incurred by us; or

The Accumulation Value is applied to an Annuity Plan on the Annuity Commencement Date.

Unless you direct otherwise, a charge for any premium taxes will be deducted proportionally from the Accumulation Value. We reserve the right in the Contract to change the amount we charge for the premium tax if you change your state of residence. We do not expect to incur any other tax liability attributable to the Contract. We also reserve the right to charge for any other taxes as a result of any changes in applicable law.

Annual Administrative Charge

The Contract has a $40 annual administrative charge. This charge covers a portion of our ongoing administrative expenses and is deducted from the Accumulation Value in the variable sub-accounts. We deduct this charge on:

Each Contract Anniversary prior to the Annuity Commencement Date;

Each Contract Anniversary on or following the Annuity Commencement Date under the Table 2 Annuity Plans;

The Annuity Commencement Date; or

The date you Surrender the Contract.

Each such charge will be deducted in the same proportion that the Accumulation Value in that variable sub-account bears to the total Accumulation Value in all variable sub-accounts to that date. This charge is waived if either the Accumulation Value or total Premium paid is $100,000 or more when the annual administrative charge becomes due. We may at any time reduce, but never increase these amounts for waiving this charge.

Excess Transfer Charge

The Contract has a $25 charge for each transfer exceeding 12 during a Contract Year (which we refer to as an Excess Transfer). Currently, we do not deduct this charge. If you make an Excess Transfer, you will be assessed an Excess Transfer Charge. The charge is deducted from the Accumulation Value in the variable sub-account from which the transfer is made. The charge will not apply to any transfers due to the election of dollar cost averaging or automatic rebalancing.

Redemption Fees

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If applicable, we may deduct the amount of any redemption fees imposed by the underlying investment portfolios as a result of Withdrawals, transfers or other fund transactions you initiate. For contracts issued in Connecticut, we will not deduct any redemption fees. For contracts issued in Texas or Oregon, the amount of redemption fees we may deduct will not exceed 5% of the Withdrawals, transfers or other fund transaction. Redemption fees, if any, are separate and distinct from any transaction charges or other charges deducted from your Accumulation Value. The prospectus for an underlying investment portfolio will have a more complete description of its fees and expenses.

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Mortality & Expense Risk Charge

The Contract has a mortality & expense risk charge, currently 0.75% annually (the maximum annual charge is 1.50%), that is deducted on Business Days as a percentage of the Accumulation Value in each variable sub-account. This charge compensates us for Death Benefit and age risks and the risk that expense charges will not cover actual expenses. If there are any profits from this charge, we may use them to finance the distribution of the Contracts.

MGWB Charge

The charge for the MGWB is currently 1.00% annually (which we refer to as the MGWB Charge Rate), calculated using the MGWB Base and deducted proportionally, in arrears, from the Accumulation Value in the variable sub-accounts on each quarterly Contract Anniversary. The maximum MGWB Charge Rate is 1.90% annually. The MGWB charge is equal to the MGWB Base on the previous Business Day multiplied by the MGWB Charge Rate. This charge compensates us for the risk that the assumptions used in designing the MGWB prove accurate.

We reserve the right in the Contract to increase the charge for the MGWB, subject to the maximum annual charge. The Charge for the MGWB may increase at our discretion upon any of the following:

An increase to the MGWB Base or the Maximum Annual Withdrawal, which may occur due to a Ratchet;

If and when any Additional Premiums are paid into the Contract; or

An increase in the MAW percentage

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The MAW percentage will automatically increase as the Annuitant ages, at which time we will have the right to increase the charge for the MGWB. For more information about the calculation of the MAW percentage, see page 29. We expect that when we increase the charge for the MGWB, we will increase it to an amount equal to the charge then in effect for new Contracts. In the event that we elect to increase the charge for the MGWB pertaining to your Contract, we will send Notice to You not less than 30 days in advance . You may decline the charge increase by providing Notice to Us. When you decline a charge increase, you will forfeit all future Ratchets. You will not be permitted to pay any Additional Premiums into the Contract, and you will not be eligible for any increase in the MAW percentage. Please note that by declining a charge increase, you will limit your ability to increase the amount guaranteed to be available for Withdrawals annually under the MGWB.

The charge for the MGWB will continue to be assessed until the Accumulation Value is reduced to zero, or until the MGWB is terminated. See page 32 . The MGWB charge will be prorated in the event that:

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The Contract (and therefore the MGWB) is terminated by Surrender. See page 32 .

The Accumulation Value is applied to an Annuity Plan described in Table 1. See page 41.

The MGWB is terminated upon an impermissible ownership change. See page 23.

We revoke the current, noncontractual waiver of the Group A minimum allocation percentage, and you decide to

cancel the MGWB. See page 16.

We reclassify a variable sub-account, and you decide to cancel the MGWB. See page 16.

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Also, the MGWB will terminate

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upon the death of the Owner or Annuitant (subject to the surviving spouse’s option to continue the Contract). See page 32. Upon Proof of Death (see page 39 ), any charges which are due but unpaid for any period the MGWB was active and in force prior to the date of death will be deducted, or any charges that have been deducted for any period of time after the date of death will be refunded.

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Prorated charges will be deducted on the next succeeding quarterly Contract Anniversary.

Consolidated Charge Deduction Option

You may elect the Consolidated Charge Deduction Option by providing Notice to Us, in which case all fees and expenses, except the daily mortality and expense risk charge, will be deducted from the Specially Designated Variable Sub-account –currently, the ING Money Market Portfolio. If you do not elect this option, or if the amount of the charges is greater than the Accumulation Value in the Specially Designated Variable Sub-account, we will deduct the fees and charges for the Contract proportionally from the variable sub-accounts to which your Accumulation Value is then allocated. You may cancel this option at any time by providing Notice to Us, and any change will take effect within 7 days of our receipt of your request.

Underlying Investment Portfolio Expenses

As shown in the prospectuses for the underlying investment portfolios as well as described in the “Fees Deducted by the Underlying Investment Portfolios” section of this prospectus, each underlying investment portfolio deducts management fees from the amounts allocated to it. In addition, each underlying investment portfolio deducts other expenses which may include service fees that may be 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 underlying investment portfolios may 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 these fees and expenses, review each prospectus for the underlying investment portfolio.

The Company or its U.S. affiliates receive substantial revenue from each of the underlying funds or their affiliates, although the amount and types of revenue vary with respect to each of the underlying investment portfolios offered through the Contract. This revenue is one of several factors we consider when determining the Contract fees and charges and whether to offer an underlying investment portfolio through our contracts. Fund revenue is important to the Company’s profitability, and it is generally more profitable for us to offer affiliated underlying investment portfolios than to offer unaffiliated underlying investment portfolios.

In terms of total dollar amounts received, the greatest amount of revenue generally comes from assets allocated to underlying investment portfolios managed by Directed Services LLC or other Company affiliates, which underlying investment portfolios may or may not also be subadvised by another Company affiliate. Assets allocated to underlying investment portfolios managed by a Company affiliate but subadvised by unaffiliated third parties generally generate the next greatest amount of revenue. Finally, assets allocated to unaffiliated underlying investment portfolios generate the least amount of revenue. The Company expects to make a profit from this revenue to the extent it exceeds the Company’s expenses, including the payment of sales compensation to our distributors. Only affiliated funds are available under the Contract.

Types of Revenue Received from Affiliated Funds

Affiliated funds are (a) funds managed by Directed Services LLC or other Company affiliates, which may or may not also be subadvised by another Company affiliate; and (b) funds managed by a Company affiliate but that are subadvised by unaffiliated third parties.

Revenues received by the Company from affiliated funds may include:

A share of the management fee deducted from fund assets; Service fees that are deducted from fund assets;

For certain share classes, the Company or its affiliates may also receive compensation paid out of 12b-1 fees that are deducted from fund assets; and Other revenues that may be based either on an annual percentage of average net assets held in the fund by the Company or a percentage of the fund’s management fees.

These revenues may be received as cash payments or according to a variety of financial accounting techniques that are used to allocate revenue and profits across the organization. In the case of affiliated funds subadvised by unaffiliated third parties, any sharing of the management fee between the Company and the affiliated investment adviser is based on the amount of such fee remaining after the subadvisory fee has been paid to the unaffiliated subadviser. Because subadvisory fees vary by subadviser, varying amounts of revenue are retained by the affiliated investment adviser and ultimately shared with the Company.

In addition to the types of revenue received from affiliated funds described above, affiliated funds and their investment advisers, subadvisers or affiliates may participate at their own expense in Company sales conferences or educational and training meetings. In

relation to such participation, a fund’s investment adviser, subadviser or affiliate may make fixed dollar payments to help offset the cost of the meetings or sponsor events associated with the meetings. In exchange for these expense offset or sponsorship arrangements, the investment adviser, subadviser or affiliate may receive certain benefits and access opportunities to Company sales representatives and wholesalers rather than monetary benefits. These benefits and opportunities include, but are not limited to, co-branded marketing materials, targeted marketing sales opportunities, training opportunities at meetings, training modules for sales personnel and opportunity to host due diligence meetings for representatives and wholesalers.

Certain funds may be structured as “fund of funds.” These funds may have higher fees and expenses than a fund that invests directly in debt and equity securities because they also incur the fees and expenses of the underlying funds in which they invest. These funds are affiliated funds, and the underlying funds in which they invest may be affiliated funds as well. The fund prospectuses disclose the aggregate annual operating expenses of each investment portfolio and its corresponding underlying fund or funds.

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Please note that certain management personnel and other employees of the Company or its affiliates may receive a portion of their total employment compensation based on the amount of net assets allocated to affiliated funds. For more information, please see page 46 .

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The Annuity Contract

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The Contract described in this prospectus is a modified single premium deferred variable annuity contract. The Contract provides a means for you to invest in one or more of the available variable sub-accounts and has a guaranteed minimum withdrawal benefit. The Contract is non-participating, which means that it will not pay dividends resulting from any surplus or earnings of the Company. Except for Contracts issued in Florida and South Carolina, the Contract consists of any attached application, amendment or Endorsements that are issued in consideration of the Initial Premium paid. For Contracts issued in Florida, the application is not considered part of the Contract. For Contracts issued in South Carolina, the application, as well as any amendments or Endorsements, are not considered part of the Contract. In any event, we urge you to read the Contract, which details your rights as the Owner.

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Owner

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The Owner is the individual (or entity) entitled to exercise the rights incident to ownership. The Owner may be an individual or a non-natural person (e.g., a corporation or trust). We require the Owner to have an Insurable Interest in the Annuitant. See page 44 . Two individuals may own the Contract, which we refer to as Joint Owners. Joint Owners must agree to any changes or exercise the rights under the Contract. The Death Benefit becomes payable (see page 38 ) if the Owner dies (or, in the case of multiple Owners, any Owner dies) before the Annuity Commencement Date (see page 43 ). If the Owner is a non-natural person, the Death Benefit becomes payable if any Annuitant dies prior to the Annuity Commencement Date. Under the Table 2 Annuity Plan for a non-qualified Contract or Roth IRA Contract, the Death Benefit is also payable after the Annuity Commencement Date (see page 43 ). We will pay the Death Benefit to the Beneficiary (see below).

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Joint Owner

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For Contracts purchased with after-tax money, which we refer to as non-qualified Contracts, Joint Owners may be named in a written request to us at any time before the Contract is in effect. A Joint Owner may not be an entity, however, and may not be named if the Owner is an entity. In the case of Joint Owners, all Owners must agree to any change or exercise of the rights under the Contract. Joint Owners must agree to any exercise of the rights under the Contract. All other rights of ownership must be exercised jointly by both Owners. Joint Owners own equal shares of any benefits accruing or payments made to them. In the case of Joint Owners, upon the death of a Joint Owner, any surviving Owner will take the place of, and will be deemed to be, the sole primary Beneficiary, and the Death Benefit is payable. See page 38 . This Beneficiary change will override any previous Beneficiary designation. All rights of a joint Owner terminate upon the death of that Owner, so long as the other joint Owner survives, and the deceased joint Owner’s entire interest in the Contract will pass to the surviving joint Owner. The Death Benefit is either payable to the surviving joint Owner, or in the case of a surviving joint Owner who is the spouse of the deceased joint Owner, will be payable if the surviving joint Owner dies prior to the Annuity Commencement Date. See page 43 .

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Annuitant and Contingent Annuitant

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The Annuitant is the individual upon whose life the Annuity Payments and the Minimum Guaranteed Withdrawal Benefits are based. The Annuitant must be a natural person, who is designated by you at the time the Contract is issued. If you do not designate the Annuitant, the Owner will be the Annuitant. In the case of Joint Owners, we will not issue a Contract if you have not designated the Annuitant. Each Owner must have an Insurable Interest in the life of the Annuitant. While the Minimum Guaranteed Withdrawal Benefit is in effect, the Annuitant must be the Owner, unless the Owner is not a natural person. If the Owner is a non-natural person, an Annuitant must be named. We require the Owner to have an Insurable Interest in the Annuitant. See page 44 .

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You may name a Contingent Annuitant. A Contingent Annuitant is the individual who will become the Annuitant if the named Annuitant dies prior to the Annuity Commencement Date.

Neither the Annuitant nor the contingent annuitant can be changed while he or she is still living. Permitted changes to the Annuitant:

If the Owner is an individual, and the Annuitant dies prior to the Annuity Commencement Date, the Contingent Annuitant, if any, will become the Annuitant, if two Owners do not exist.

Otherwise, the Owner will become the Annuitant if the Owner is a natural person. If two individual Owners exist, the youngest Owner will become the Annuitant.

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The Owner, or joint Owners, must name an individual as the Annuitant if the Owner is age 90 or older as of the date of the Annuitant’s death. We require the Owner to have an Insurable Interest in the Annuitant. See page 44 .

If the Owner is a non-natural person, and the Annuitant dies before the Annuity Commencement Date, we will pay the Death Benefit to the designated Beneficiary (see below). Under the Table 2 Annuity Plan for a non-qualified Contract or Roth IRA Contract, the Death Benefit is also payable after the Annuity Commencement Date (see page 43 ). There are different distribution requirements under the Code for paying the Death Benefit on a Contract that is owned by a non-natural person. You should consult your tax adviser for more information if the Owner is non-natural person.

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Beneficiary

The Beneficiary is the individual or entity designated by you to receive the Death Benefit. The Beneficiary may become the successor Owner if the Owner, who is a spouse, as defined under U.S. federal law, dies before the Annuity Commencement Date. You may designate one or more classes of Beneficiaries: primary Beneficiaries and contingent Beneficiaries. The Death Benefit will be paid to the primary Beneficiary. The Owner may designate a contingent Beneficiary, who will become the Beneficiary if all primary Beneficiaries die before any Owner (or the Annuitant if the Owner is a non-natural person). The Owner may designate one or more primary Beneficiaries and contingent Beneficiaries. The Owner may also designate any Beneficiary to be an Irrevocable Beneficiary. An Irrevocable Beneficiary is a Beneficiary whose rights and interest under the Contract cannot be changed without the consent of such Irrevocable Beneficiary.

Payment of the Death Benefit to the Beneficiary:

We pay the Death Benefit to the primary Beneficiary (unless there are joint Owners, in which case the Death Benefit is paid to the surviving Owner(s)).

If all primary Beneficiaries die before any Owner (or, if the Owner is not a natural person, the Annuitant), we pay the Death Benefit to any contingent Beneficiary, who shall take the place of, and be deemed to be, the primary Beneficiary.

If there is a sole natural Owner and no surviving Beneficiary (or no Beneficiary is designated), we pay the Death Benefit to the Owner’s estate.

If the Owner is not a natural person and all Beneficiaries die before the Annuitant (or no Beneficiary is designated), the Owner will be deemed to be the primary Beneficiary.

One or more individuals may be a Beneficiary or contingent Beneficiary.

In the case of more than one Beneficiary, we will assume any Death Benefit is to be paid in equal shares to all primary Beneficiaries, unless you provide Notice to Us directing otherwise.

We will deem a Beneficiary to have predeceased the Owner if:

The Beneficiary died at the same time as the Owner;

The Beneficiary died within 24 hours after the Owner’s death; or

There is insufficient evidence to determine that the Beneficiary and Owner died other than at the same time.

The Beneficiary may decide how to receive the Death Benefit, subject to the distribution requirements under Section 72(s) of the Code. You may restrict a Beneficiary’s right to elect an Annuity Plan or receive the Death Benefit in a single lump-sum payment.

Change of Owner or Beneficiary

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You may change the ownership of a non-qualified Contract before the Annuity Commencement Date. Any change, addition or deletion of an Owner is treated as a change of ownership. We require any new Owner to have an Insurable Interest in the Annuitant. See page 44 .

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The age of the new Owner (or, if the new Owner is a non-natural person, the Annuitant’s age), as of the date of the change, will be used in determining when a Death Benefit is payable. In the event that the new Owner (or, in the case of a change to a non-natural Owner, the Annuitant) is age 85 or older, the Death Benefit after the ownership change will be the Accumulation Value. Please note that once a Death Benefit has been changed due to a change in Owner, a subsequent change to a younger Owner will not restore the

Death Benefit.

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A change in ownership will cause the Minimum Guaranteed Withdrawal Benefit to terminate. We do not consider the following transactions to be a change of Owner and thus they are permitted under the Minimum Guaranteed Withdrawal Benefit:

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Continuation of the Contract by a Beneficiary who is the spouse (as defined under federal law) of the deceased

Owner;

From one custodian to another for the benefit of the same individual;

From a custodian for the benefit of an individual to the same individual;

From an individual to custodian for the benefit of the same individual;

Collateral assignments;

From one trust to another where the individual Owner and the grantor of both trusts are the same individual;

From one individual to a trust where the individual Owner and the grantor of the trust are the same individual;

From a trust to an individual where the individual Owner and grantor of the trust is the same individual;

Pursuant to a court order; and

From an Owner of a tax-qualified Contract that is a non-natural person to a beneficial owner or participant of that tax-

qualified Contract.

You have the right to change the Beneficiary unless you have designated such person as an Irrevocable Beneficiary at any time prior to the Annuity Commencement Date. Unless you specify otherwise, a change of Beneficiary cancels any existing Beneficiary designations in the same class (primary or contingent).

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Notice to Us is required for any changes pursuant to the Contract. Any such change will take effect as of the date Notice to Us is received and not affect any payment made or action taken by us before recording the change. A change of Owner likely has tax consequences. See page 49 .

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Contract Purchase Requirements

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We will issue a Contract so long as the Annuitant and the Owner (if natural person) are between the ages 50 and 80 at the time of application. An Insurable Interest must exist at the time we issue the Contract. In purchasing the Contract, you will represent and acknowledge that the Owner has an Insurable Interest in the Annuitant. We require the agent/registered representative to confirm on the application that the Owner has an Insurable Interest in the Annuitant. Insurable Interest means the Owner has a lawful and substantial economic interest in the continued life of a person. See page 44 .

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The minimum initial payment (which we refer to as the Initial Premium) for non-qualified (purchased with after-tax money) Contracts must be at least $10,000, and the Initial Premium for qualified (purchased with pre-tax money) Contracts must be at least $5,000. We currently accept Additional Premiums (any payment after the first payment) from the time your right to return the Contract expires up to 90 days after the first Contract Anniversary, but only when you notify us that Additional Premium will be coming before the end of the first Contract Year. Otherwise, we will only accept Additional Premiums through the end of the first Contract Year. Your ability to pay Additional Premiums is subject to our right in the Contract to not allow Additional Premiums. Each Additional Premium must be at least $500 for non-qualified Contracts and $50 for qualified Contracts.

We may refuse to accept certain forms of payment (e.g., traveler’s checks). We may also require information as to why a particular form of payment was used (e.g., third party checks), and the source of the funds, before we decide to accept it. We will not issue a Contract when you use an unacceptable form of payment. We will return to the source any payments we determine to be unacceptable.

If your Premium payment was transmitted by wire order from your agent/registered representative (broker-dealer), we will follow one of the following two procedures after we receive and accept the wire order and investment instructions. Which procedure depends on whether your state or agent/registered representative (broker-dealer) requires an application to issue the Contract.

If an application is required, we will issue the Contract along with a Contract acknowledgement and delivery

statement, but we reserve the right to void the Contract if we are not in receipt of a properly completed application

within 5 days of receiving the Initial Premium. We will refund the Accumulation Value plus any charges we

deducted, and the Contract will be voided. We will return the Initial Premium when required.

When an application is not required, we will issue the Contract along with a Contract acknowledgement and delivery

statement. We require you to execute and return the Contract acknowledgement and delivery statement. Until you do,

we will require a signature guarantee, or notarized signature, on certain transactions prior to processing.

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Except for Contracts issued in Florida or Connecticut, our prior approval is required for Premium that would cause the Accumulation Value of all annuities you maintain with us to exceed $1,000,000. For Contracts issued in Florida, we reserve the right not to accept Additional Premium which would bring the total sum of premiums or the value of the annuity under this Contract above $100,000, unless we approve such higher amount.

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Availability of the Contract

The Contract is designed for people seeking long-term tax-deferred accumulation of assets, generally for retirement or other long-term purposes. The tax-deferred feature is more attractive to people in high federal and state income tax brackets. You should not buy this Contract if:

You are looking for a short-term investment;

You cannot risk getting back an amount less than your initial investment; or

Your assets are in a plan that already provides for tax-deferral and you can identify no other benefits in purchasing

this Contract.

When considering an investment in the Contract, you should consult with your investment professional about your financial goals, investment time horizon and risk tolerance.

Replacing an existing insurance contract with this Contract may not be beneficial to you. Before purchasing the Contract, you should determine whether your existing contract will be subject to any fees or penalties upon termination of such contract. You should also compare the fees, charges, coverage provisions and limitations, if any, of your existing contract to this Contract.

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IRAs and other qualified plans already have the tax-deferral feature found in this Contract. For an additional cost, the Contract provides other features and benefits, which other plans may not provide. You should not purchase a qualified Contract unless you want these other features and benefits, taking into account their cost. See page 53 for more information. If this Contract is issued as an IRA, no contributions may be made for the taxable year in which you attain age 70½.

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Crediting of Premium Payments

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We will process your Initial Premium within 2 Business Days of receipt and allocate it according to the instructions you specify, in an amount equal to the Accumulation Value as next determined, so long as the application and all information necessary for processing the Contract are complete. The Contract will not be issued unless your Initial Premium is allocated in accordance with the allocation percentages of each group of variable sub-accounts under required automatic rebalancing for the MGWB. See page 15 .

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In the event that an application is incomplete for any reason, we are permitted to retain your Initial Premium for up to 5 Business Days while attempting to complete it. We will contact you for further instructions when a variable sub-account that you have selected is not available or, we believe, is requested in error. If the application cannot be completed during this time, we will inform you of the reasons for the delay. We will also return the Initial Premium promptly. Alternatively, you may direct us to hold the Initial Premium, which we will place in a non-interest bearing account until the application is completed. Once the application is completed, we will process your Initial Premium within 2 Business Days and allocate it according to your instructions.

In some states, we may be required to allocate your Initial Premium to a money market sub-account while you have the right to return the Contract for a refund of the Initial Premium. We refer to this sub-account in the Contract as the Specially Designated Variable Sub-account – currently, the ING Money Market Portfolio. After your right to return the Contract expires, we will convert your Accumulation Value in the Specially Designated Variable Sub-account to Accumulation Value of the variable sub-accounts you previously selected. The Accumulation Value will be allocated based on the Accumulation Value next computed for each variable sub-account.

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We will process Additional Premium payments on or after the Accumulation Value next determined after receipt when we receive complete instructions. On Additional Premium, we will ask about any missing information. Additional Premium will be allocated in the same proportion as the current Accumulation Value, unless you specify otherwise. If a variable sub-account is no longer available for the allocation of Additional Premium (or for transfers) because it has been substituted or merged into another variable sub-account, we will execute your instructions using the substituted or merged variable sub-account. If a variable sub-account is no longer available for any other reason (including due to a fund purchase restriction) or, we believe, is requested in error, we will allocate the Additional Premiums proportionally among the other variable sub-account(s) in your current allocation. If none of the variable sub-accounts in which you are currently invested are available for the allocation of Additional Premium, we will attempt to contact you or your designated representative and obtain alternate instructions. Otherwise, we will return the Additional Premium to you.

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Once we allocate your Initial Premium and any permitted Additional Premiums to the variable sub-accounts selected by you, we will convert them to accumulation units. We have established an account to hold assets funding the variable benefits for this and other

variable contracts, which we refer to as Variable Annuity Account B. We will divide the amount of the payment allocated to a particular variable sub-account by the value of an accumulation unit for the variable sub-account to determine the number of accumulation units of the variable sub-account to be held in Variable Annuity Account B with respect to your Contract. The net investment results of each variable sub-account vary with its investment performance.

Administrative Procedures

We may accept a request for Contract service in writing, by telephone, or other approved electronic means, subject to our administrative procedures, which vary depending on the type of service requested and may include proper completion of certain forms, providing appropriate identifying information, and/or other administrative requirements. We will process your request at the Accumulation Value as it is next determined only after you have met all administrative requirements. Please be advised that the risk of a fraudulent transaction is increased with telephonic or electronic instructions (for example, a facsimile Withdrawal request form), even if appropriate identifying information is provided.

Other Contracts

We and our affiliates offer various other products with different features and terms than the Contracts, which may offer some or all of the same variable sub-accounts. These products may have different benefits, fees and charges, and may or may not better match your needs. Please consult your agent/registered representative if you are interested in learning more information about these other products.

Minimum Guaranteed Withdrawal Benefit

Highlights

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This paragraph introduces the terminology (i.e., the defined terms) of the Minimum Guaranteed Withdrawal Benefit, or MGWB, and provides a general overview of how its components work together. Benefits and guarantees are subject to the terms, conditions and limitations of the MGWB provisions under the Contract. The MGWB is an included feature of your Contract and is not an optional rider. You should however, consider the risk that, depending on the market performance of your allocation of Accumulation Value to the variable sub-accounts and how long you live, the MGWB feature of your Contract may not provide a benefit to you. The MGWB is an obligation of the General Account of ING Life Insurance and Annuity Company. Payment of the benefit is dependent upon the claims paying ability of the Company. More detailed information follows below. The capitalized words that are underlined in this paragraph constitute terminology that is unique to the MGWB and also indicate the title of the subsections included below, in which these defined terms are defined. The MGWB guarantees an amount available for regular or systematic Withdrawals from the Contract each Contract Year once the Lifetime Withdrawal Phase begins (which is the date of your first Withdrawal on or after the Annuitant reaches the Lifetime Withdrawal Eligibility Age). We use the MGWB Base (which is set to the Initial Premium on the Contract Date and adjusted as described below) as part of the calculation of the pre-determined amount the MGWB guarantees to be available for regular or systematic Withdrawals from the Contract each Contract Year (which we refer to as the Maximum Annual Withdrawal). The rate at which we calculate the amount of the Maximum Annual Withdrawal is greater the longer you can wait to take a Withdrawal. The guarantee continues when the MGWB enters Lifetime Automatic Periodic Benefit Status (which begins when your Accumulation Value is reduced to zero by a Withdrawal less than or equal to the Maximum Annual Withdrawal), at which time we will make periodic payments to you in an aggregate annual amount equal to the Maximum Annual Withdrawal (since Accumulation Value would be zero) until the Annuitant’s death. The MGWB Base is eligible for Ratchets (which are recalculations of the MGWB Base as described below), and is subject to adjustment for any Excess Withdrawals. The MGWB has an allowance for Withdrawals from a Contract subject to the Required Minimum Distribution rules of the Code that would otherwise be Excess Withdrawals. The MGWB allows for spousal continuation, and for contracts issued in New Jersey, continuation by a civil union partner.

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MGWB Base

The MGWB Base is the factor we use for the sole purpose of calculating the Maximum Annual Withdrawal and the charges for the MGWB. On the Contract Date, the MGWB Base is set equal to the Initial Premium. The MGWB Base is increased, dollar for dollar, by any Additional Premiums that we may permit and accept. The MGWB Base may also be increased by Ratchets and may decrease due to any Withdrawals. The MGWB has no cash value.

Withdrawals and Excess Withdrawals

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Once the Lifetime Withdrawal Phase begins, on the date of your first Withdrawal after the Annuitant is age 65, Withdrawals within a Contract Year up to the Maximum Annual Withdrawal, including for payment of Investment Advisory Fees, will have no impact on the MGWB Base. These Withdrawals will not incur Surrender Charges. Additionally, we will waive the Surrender Charges on Withdrawals in a Contract Year that are less than or equal to the Surrender Charge Free Withdrawal. See page 18 .

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àExplanatory Example:

Under a Contract in the Lifetime Withdrawal Phase of the MGWB, the Accumulation Value is $90,000, the MGWB Base is $100,000, and the Maximum Annual Withdrawal is $5,500. While a Withdrawal of $5,500 would reduce the Accumulation Value to $84,500, it would not reduce the MGWB Base, as the Withdrawal did not exceed the Maximum Annual Withdrawal. See below for more information about the Maximum Annual Withdrawal.

An Excess Withdrawal is:

Any Withdrawal taken before the Annuitant reaches the Lifetime Withdrawal Eligibility Age, other than a request

for the payment of Investment Advisory Fees;

Any Withdrawal in a Contract Year exceeding the then current Maximum Annual Withdrawal (MAW) on or after

the Lifetime Withdrawal Phase has begun; or

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On the date that any Excess Withdrawal occurs, we will apply an immediate pro rata reduction to the MGWB Base. The proportion of any such reduction will equal:

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{B – (C – A)}

A is the amount of the Excess Withdrawal
B is the Accumulation Value immediately prior to the Withdrawal
C is the total amount of the current Withdrawal

IMPORTANT NOTE: An Excess Withdrawal will be deemed to be a full Surrender and the Cash Surrender Value will be paid if, at the time of the Withdrawal, no Premiums have been received for the prior 24 months and the remaining Cash Surrender Value as of the close of that Business Day is less than $2,500.

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An Excess Withdrawal will result in a pro rata reduction of the MGWB Base, meaning the MGWB Base will be reduced in the same proportion as the Accumulation Value is reduced by the portion of the Withdrawal that is considered an Excess Withdrawal, inclusive of Surrender Charges (rather than the total amount of the Withdrawal). An Excess Withdrawal may subject to Surrender Charges whether or not the Lifetime Withdrawal Phase has begun. Surrender Charges are considered part of the Withdrawal.

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àExplanatory Example:

Under a Contract before the Lifetime Withdrawal Phase of the MGWB begins, the Accumulation Value is $90,000, the MGWB Base is $100,000, and there is no Maximum Annual Withdrawal because the Annuitant not yet age 65. As a result, the entire amount of a $3,000 Withdrawal is considered an Excess Withdrawal. The MGWB Base will be reduced by 3.33% ($3,000/$90,000) to $96,667 ((1 - 3.33%) * $100,000). This example assumes no Surrender Charges.


Accumulation	Net	Surrender	Gross	Total Net	Total Gross	MGWB	Maximum
Value	Withdrawal	Charges	Withdrawal	Withdrawals	Withdrawals	Base	Annual
							Withdrawal
$90,000	($3,000)	0	($3,000)	($3,000)	($3,000)	$100,000	n/a
$87,000						$96,667

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Although a Withdrawal to pay Investment Advisory Fees before the Lifetime Withdrawal Phase begins is considered an Excess Withdrawal, the adjustment to the MGWB Base will be dollar for dollar (rather than pro rata).

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An Excess Withdrawal that occurs after the Lifetime Withdrawal Phase begins will also cause the Maximum Annual Withdrawal to be recalculated. The adjustment to the MGWB Base and Maximum Annual Withdrawal is based on the lesser of the amount by which the total gross Withdrawals in the Contract Year exceed the Maximum Annual Withdrawal and the amount of the current gross Withdrawal.

àExplanatory Example:

Under a Contract after the Lifetime Withdrawal Phase of the MGWB begins, the Accumulation Value is $53,000, the MGWB Base is $100,000, and the Maximum Annual Withdrawal is $5,000. The first two Withdrawals of $3,000 and $1,500 ($4,500 total) do not exceed the Maximum Annual Withdrawal and do not incur Surrender Charges. The next Withdrawal of $1,500 exceeds the Maximum Annual Withdrawal and will incur Surrender Charges. Although the current Withdrawal is $1,700 with surrender charge, the adjustment to the MGWB Base and the Maximum Annual Withdrawal is based on $1,200, which is the amount by which the total gross Withdrawals in the Contract Year exceed the Maximum Annual Withdrawal. The MGWB Base will be reduced by 2.5% ($1,200/$48,000) to $97,500 ((1 - 2.5%) * $100,000). The Maximum Annual Withdrawal is also reduced by 2.5% to $4,875 ((1 - 2.5%) * $5,000).


Accumulation	Net	Surrender	Gross	Total Net	Total Gross	MGWB	Maximum
Value	Withdrawal	Charges	Withdrawal	Withdrawals	Withdrawals	Base	Annual
							Withdrawal
$53,000	($3,000)		($3,000)	($3,000)	($3,000)	$100,000	$5,000
$50,000	($1,500)		($1,500)	($4,500)	($4,500)	$100,000	$5,000
$48,500	($1,500)	($200)	($1,700)	($6,000)	($6,200)	$100,000	$5,000
$46,800				($6,000)	($6,200)	$97,500	$4,875

Ratchets

The MGWB Base is recalculated on each Contract Anniversary (which we refer to as the Ratchet Date) to equal the greater of the current value of:

The MGWB Base; and
The Accumulation Value

We call each such recalculation a Ratchet. If the Accumulation Value on the applicable Ratchet Date is equal to or less than the MGWB Base on such Ratchet Date, no Ratchet occurs.

If a Ratchet is scheduled to occur on a non-Business Day, the determination of whether a Ratchet will occur will take place on the next Business Day, calculated using the Accumulation Value as of the end of that Business Day, prior to the processing of any transactions. To the extent an Additional Premium is accepted, on any date that such Additional Premium is paid on a Ratchet Date, that Additional Premium will be added to the MGWB Base before any otherwise applicable Ratchets are applied.

Lifetime Withdrawal Phase

The Lifetime Withdrawal Phase is the period during which the maximum amount available for Withdrawal in any Contract Year without reducing the MGWB Base in future Contract Years is calculated (which we refer to as the Maximum Annual Withdrawal). The Lifetime Withdrawal Phase begins on the date of your first Withdrawal, other than a Withdrawal requested for payment of Investment Advisory Fees, on and after the Annuitant is age 65 (which we refer to as the Lifetime Eligibility Age). On the date of your first Withdrawal after the Annuitant is age 65, the MGWB Base is recalculated to equal the greater of the current value of:

The MGWB Base; and

The Accumulation Value on the previous Business Day.

The Lifetime Withdrawal Phase will continue until the earliest of:

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The date Annuity Payments begin, except under the Table 2 Annuity Plan for a non-qualified Contract or Roth IRA

Contract (see page 41 );

The Accumulation Value is reduced to zero by an Excess Withdrawal;

The date the Contract enters Lifetime Automatic Periodic Benefit Status;

Surrender of the Contract; and

The first Owner’s death or, if the Owner is not a natural person, the Annuitant’s death, unless the Beneficiary is the

Owner’s spouse and elects to continue the Contract.

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Maximum Annual Withdrawal

The Maximum Annual Withdrawal is the maximum amount available for regular or systematic Withdrawals from the Contract under the MGWB in any Contract Year without reducing the MGWB Base in future Contract Years. The Maximum Annual Withdrawal equals the MGWB Base multiplied by the applicable MAW percentage, as set forth in the schedules below. The amount of the Maximum Annual Withdrawal is first calculated on the date the Lifetime Withdrawal Phase begins. We use the MAW percentages from one of the three schedules below to calculate the amount of the Maximum Annual Withdrawal. The MAW percentages are based on the age of the Annuitant as of the date the Maximum Annual Withdrawal is calculated. The schedules depend on the number of Contract Years completed prior to any Withdrawal, other than a Withdrawal to pay Investment Advisory Fees.

The rate at which we calculate the amount of the Maximum Annual Withdrawal is greater the longer you wait to take a Withdrawal:


Before 5^th		After 5^thbut before 10^th		After 10^th
Contract Anniversary		Contract Anniversary		Contract Anniversary
Annuitant’s Age	MAW%	Annuitant’s Age	MAW%	Annuitant’s Age	MAW%
65-69	3.0%	65-69	4.0%	65-69	5.0%
70-74	3.5%	70-74	4.5%	70-74	5.5%
75+	4.0%	75+	5.0%	75+	6.0%

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IMPORTANT NOTE: One of three schedules of the MAW percentages indicated will apply once the Lifetime Withdrawal Phase begins, and once determined, the schedule of MAW percentages will apply for the life of the Annuitant.

During the Lifetime Withdrawal Phase, you are eligible for a greater MAW percentage within the same schedule of MAW percentages as the Annuitant ages. The Maximum Annual Withdrawal will be automatically recalculated using the greater MAW percentage on the next Contract Anniversary. The MAW percentage is permanently fixed, however, once the MGWB enters Lifetime Automatic Periodic Benefit Status, which begins when your Accumulation Value is reduced to zero by a Withdrawal less than or equal to the Maximum Annual Withdrawal.

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The Maximum Annual Withdrawal is recalculated whenever the MGWB Base is recalculated, and the amount of the Maximum Annual Withdrawal will increase if the MGWB Base is increased through Ratchets. The amount of the Maximum Annual Withdrawal will not be reduced by any negative market performance attributable to your variable sub-account allocations.

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ONLY FOR TAX-QUALIFIED CONTRACTS

ALLOWANCE FOR REQUIRED MINIMUM DISTRIBUTIONS

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Required Minimum Distributions

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For purposes of the MGWB, we do not deem Withdrawals that exceed the Maximum Annual Withdrawal to be Excess Withdrawals, if such Withdrawals relate to a Contract subject to the Required Minimum Distribution rules of the Code. You will be entitled to receive the amount by which the Required Minimum Distribution applicable to this Contract for a calendar year exceeds the Maximum Annual Withdrawal without causing a pro rata adjustment to the MGWB Base and Maximum Annual Withdrawal. We refer to this amount as the Additional Withdrawal Amount.

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àExplanatory Example:

If your Required Minimum Distribution for the current calendar year applicable to the Contract is $6,000, and the Maximum Annual Withdrawal is $5,000, then you will be entitled to receive an Additional Withdrawal Amount of $1,000 ($6,000 -$5,000).

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The Additional Withdrawal Amount is available on a calendar year basis and recalculated every January to equal the portion of the Required Minimum Distribution for that calendar year that exceeds the Maximum Annual Withdrawal on the determination date. We waive surrender charges on Withdrawals in a Contract Year that are less than or equal to the Surrender Charge Free Withdrawal. See page 18 . Amounts Withdrawn for payment of Investment Advisory Fees will count toward the application of the Maximum Annual Withdrawal and the Additional Withdrawal Amount.

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If you are entitled to an Additional Withdrawal Amount, once you have taken the Maximum Annual Withdrawal for the then current Contract Year, the amount of any additional Withdrawals will reduce the Additional Withdrawal Amount for the current calendar year and, and if such additional Withdrawals do not exceed the Additional Withdrawal Amount, they will not constitute Excess Withdrawals.

àExplanatory Example:

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Assuming the Required Minimum Distribution for the current calendar year applicable to the Contract is $6,000, and the Maximum Annual Withdrawal is $5,000, the Additional Withdrawal Amount equals $1,000 ($6,000 - $5,000). The first two Withdrawals of $3,000 and $1,500 ($4,500 total) do not exceed the Maximum Annual Withdrawal. Although the next Withdrawal of $1,500 exceeds the Maximum Annual Withdrawal by $1,000, this amount is equal to the Additional Withdrawal Amount. Because the Additional Withdrawal Amount is not deemed to be an Excess Withdrawal, there would be no pro rata adjustment to the MGWB Base and Maximum Annual Withdrawal.

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Any unused amount of the Additional Withdrawal Amount from one calendar year may be carried over to the next calendar year and is available through the end of that latter year, at which time any amount remaining will expire. Once you have taken the Maximum Annual Withdrawal for the current Contract Year, the dollar amount of any additional Withdrawals will first count against and reduce any unused Additional Withdrawal Amount from the previous calendar year, followed by any Additional Withdrawal Amount for the current calendar year.

àExplanatory Example:

Assume the most recent Contract Anniversary was July 1, 2008 and the Maximum Annual Withdrawal is $5,000. Also assume the Required Minimum Distributions for 2009 and 2010 applicable to the Contract are $6,000 and $5,000, respectively. Between July 1, 2008 and December 2008, a Withdrawal is taken that exhausts the Maximum Annual Withdrawal. On January 1, 2009, the Additional Withdrawal Amount for the current calendar year equals $1,000 ($6,000 -$5,000). (Note: Although the Maximum Annual Withdrawal has been exhausted, it is still used to calculate the Additional Withdrawal Amount.) No additional Withdrawals occur in 2009. On January 1, 2010, the Additional Withdrawal Amount for the current calendar year equals zero ($5,000 - $5,000). However, the Additional Withdrawal Amount calculated for 2009 would still available for Withdrawal until December 31, 2010.

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Withdrawals that exceed the amount of the Maximum Annual Withdrawal and all available Additional Withdrawal Amounts will be deemed to be Excess Withdrawals that will cause a pro rata reduction of the MGWB Base, and therefore, a recalculation of the amount of the Maximum Annual Withdrawal.

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àExplanatory Example:

Under a Contract with an Accumulation Value of $53,000, the MGWB Base is $100,000, the Maximum Annual Withdrawal is $5,000 and the Required Minimum Distribution for the current calendar year applicable to the Contract is $6,000. The Additional Withdrawal amount equals $1,000 ($6,000 - $5,000). The first two Withdrawals of $3,000 and $1,500 ($4,500 total) do not exceed the Maximum Annual Withdrawal. The next Withdrawal of $3,500 exceeds the sum of the Maximum

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Annual Withdrawal and the Additional Withdrawal Amount. Although the current Withdrawal is $3,500, the adjustment to the MGWB Base and the Maximum Annual Withdrawal is based on $2,000, which is the amount by which the total Withdrawals in the Contract Year exceed the sum of the Maximum Annual Withdrawal and the Additional Withdrawal Amount. The MGWB Base will be reduced by 4.26% ($2,000/47,000) to $95,745 ((1 - 4.26%) * $100,000). The Maximum Annual Withdrawal is also reduced by 4.26% to $4,787 (1 - 4.26%) * $5,000). This example assumes no surrender charges.

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Accumulation		Total	MGWB	Maximum
Value	Withdrawal	Withdrawals	Base	Annual
				Withdrawal
$53,000	($3,000)	($3,000)	$100,000	$5,000
$50,000	($1,500)	($4,500)	$100,000	$5,000
$48,500	($3,500)	($8,000)	$100,000	$5,000
$45,000		($8,000)	$95,745	$4,787

The Additional Withdrawal Amount is not subject to any adjustment in the event that the Maximum Annual Withdrawal is recalculated during a Contract Year. There is also no adjustment to the Additional Withdrawal Amount upon spousal continuation of the MGWB.

Lifetime Automatic Periodic Benefit Status

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Lifetime Automatic Periodic Benefit Status only begins when your Accumulation Value is reduced to zero by a Withdrawal less than or equal to the Maximum Annual Withdrawal and not by an Excess Withdrawal (or Surrender of the Contract). An Excess Withdrawal that causes your Accumulation Value to be reduced to zero will terminate the MGWB. Moreover, any Excess Withdrawal will be deemed to be a full Surrender and the Cash Surrender Value will be paid if, at the time of the Withdrawal, no Premiums have been received for the prior 24 months and the remaining Cash Surrender Value as of the close of that Business Day is less than $2,500. See page 27 .

During Lifetime Automatic Periodic Benefit Status, you will no longer be entitled to make Withdrawals; instead, we will make periodic payments to you, which over the course of a Contract Year, will, in the aggregate, equal the Maximum Annual Withdrawal. We refer to these payments as MGWB Periodic Payments. MGWB Periodic Payments will begin on the first Contract Anniversary after the date the MGWB enters Lifetime Periodic Benefit Status and will continue to be paid annually for each Contract Year thereafter until the Annuitant dies and the Contract terminates. If, when Lifetime Automatic Periodic Benefit Status begins, your net Withdrawals are less than the Maximum Annual Withdrawal for that Contract Year, we will promptly pay you the difference.

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During Lifetime Automatic Periodic Benefit Status:

The dollar amount of the Maximum Annual Withdrawal will be the same for the remaining life of the Annuitant. The MAW percentage is permanently fixed, and you will no longer be eligible for a greater MAW percentage as the Annuitant ages.

No Additional Premiums are permitted.

The Contract will provide no further benefits other than as provided in connection with the Minimum Guaranteed Withdrawal Benefit.

Any Endorsements attached to the Contract will terminate unless specified otherwise

The Owner or, if applicable, the Owner’s estate is obligated to return any MGWB Periodic Payments made before we receive Notice to Us of the Annuitant’s death.

If you have previously elected to receive systematic Withdrawals pursuant to the terms of the Contract, which would entitle you to receive either a fixed dollar amount or an amount based upon a percentage of the Accumulation Value that is withdrawn from your Contract and paid to you on a monthly, quarterly or annual basis, the MGWB Periodic Payments once Lifetime Automatic Periodic Benefit Status begins will be made at the same frequency and on the same dates as previously set up, provided the payments were being made monthly or quarterly. If the payments were being made annually, then the MGWB Periodic Payments will be made on each Contract Anniversary. The sum of the MGWB Periodic Payments in each Contract Year will equal the amount of the Maximum Annual Withdrawal.

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In the event that the Accumulation Value is reduced to zero before the Lifetime Withdrawal Phase begins, MGWB Periodic Payments will be deferred until the Contract Anniversary on or after the Annuitant reaches age 65. A Death Benefit may still be payable while the MGWB is in deferred Lifetime Automatic Periodic Benefit Status. See page 38 .

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Death of Owner or Annuitant and Spousal Continuation of the MGWB

The MGWB terminates upon the death of the Owner, if such Owner is a natural person. In the case of joint Owners who are natural persons, the MGWB terminates upon the death of the first Owner and in the case of an Owner that is a non-natural person, the MGWB terminates upon the death of the Annuitant. When the MGWB is in Lifetime Automatic Periodic Benefit Status, it terminates on the date of the Annuitant’s death.

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The Contract permits a Beneficiary who is the spouse of the deceased Owner to elect to continue the Contract. The surviving spouse as Beneficiary (or deemed Beneficiary) has the option, but is not required to continue the Contract. Except as described in the Important Note below, the spouse’s right to continue the Contract is limited by our use of the definition of “spouse” under U.S. federal law, which refers only to a person of the opposite sex who is a husband or a wife. In electing to continue the Contract, the age of the surviving spouse will be used as the Owner’s age under the continued Contract. The surviving spouse will become the sole Owner and will also replace the deceased Owner as Annuitant, if applicable.

The MGWB is continued on the date that the Contract is continued. The MGWB Charge will restart at the next quarterly Contract Anniversary following spousal continuation of the Contract. The Lifetime Withdrawal Phase does not begin, or resume, until the date of the first Withdrawal after the surviving spouse as the Annuitant reaches age 65. The amount of the Maximum Annual Withdrawal will also be calculated, or recalculated, based on the age of the surviving spouse as the Annuitant. Any Withdrawal taken after spousal continuation of the Contract, but before the MGWB is continued will be considered an Excess Withdrawal. The MGWB Base remains eligible for Ratchets. Any available Additional Withdrawal Amounts will not be adjusted due to a spousal continuation.

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Treatment of the MGWB upon spousal continuation depends on whether or not the surviving spouse is the original Annuitant and the Lifetime Withdrawal Phase has begun:

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If the surviving spouse is NOT the a Joint Owner and the	If the surviving spouse IS a Joint Owner and the original
original Annuitant AND the Lifetime Withdrawal Phase has	Annuitant OR the Lifetime Withdrawal Phase has not yet begun:
already begun:
The MGWB Base equals the Accumulation Value, inclusive of	The MGWB Base equals the greater of the Accumulation Value,
the Death Benefit, as of the date of the spousal continuance.	inclusive of the Death Benefit; and the last calculated MGWB
	Base, reduced pro rata for any Withdrawals since the
	deceased Owner’s death.
Additional Premiums will only be allowed until the first Contract	Additional Premiums will only be allowed until the first Contract
Anniversary following the original Contract Date.	Anniversary following the original Contract Date.
The schedule of MAW percentages to calculate the amount of	The schedule of MAW percentages to calculate the amount of
the Maximum Annual Withdrawal is based on the current age of	the Maximum Annual Withdrawal is based on the current age of
the surviving spouse as Annuitant. The number of Contract	the surviving spouse as the original Annuitant. The number of
Years completed prior to any Withdrawal is measured from the	Contract Years completed prior to any Withdrawal is measured
date the surviving spouse continues the MGWB.	from the Contract Date.

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¡ IMPORTANT NOTE: For contracts issued in New Jersey only, a surviving civil union partner will have the same option to continue the Contract as a surviving spouse. All references in this section to a “surviving spouse” or “spousal continuation” shall apply equally to a civil union partner.

Other Events that Terminate the MGWB

In addition to the MGWB terminating upon the Owner or Annuitant’s death (subject to the surviving spouse’s option to continue the Contract) as described above, the MGWB terminates in the event that:

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The Contract (and therefore the MGWB) is terminated by Surrender. See page 32.

The Accumulation Value is applied to an Annuity Plan described in Table 1. See page 41.

The MGWB is terminated upon an impermissible ownership change. See page 23.

We revoke the current, noncontractual waiver of the Group A minimum allocation percentage, and you decide to

cancel the MGWB. See page 16.

We reclassify a variable sub-account, and you decide to cancel the MGWB. See page 16.

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If the MGWB is terminated, the charge for the MGWB will be prorated. Prorated charges will be deducted on the next succeeding Contract Anniversary. See page 20.

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Surrender and Withdrawals

Except under certain tax-qualified Contracts, you may withdraw all or part of your money at any time before the earlier of:

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The date on which Annuity Payments begin (which we refer to as the Annuity Commencement Date), except under

the Table 2 Annuity Plans (see page 41 ); and

IMPORTANT NOTE: You may take a Withdrawal after the Annuity Commencement Date under the Table 2

Annuity Plan for a non-qualified Contract or Roth IRA Contract; you may Surrender the Contract after the

Annuity Commencement Date under both Table 2 Annuity Plans.

The death of the Owner (or, if the Owner is not a natural person, the death of the Annuitant).

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A Surrender or Withdrawal before the Owner or Annuitant, as applicable, reaches age 59 ½ may be subject to a U.S. federal income tax penalty equal to 10% of such amount treated as income, for which you would be responsible. See page 49 for a general discussion of the U.S. federal income tax treatment of the Contract, which discussion is not intended to be tax advice. You should consult a tax adviser for advice about the effect of U.S. federal income tax laws, state laws or any other tax laws affecting the Contract, or any transaction involving the Contract.

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Cash Surrender Value

You may take the full cash value from the Contract (which we refer to as the Cash Surrender Value). We do not guarantee a minimum Cash Surrender Value. The Cash Surrender Value will fluctuate daily based on the investment results of the variable sub-accounts to which your Accumulation Value is allocated. At any time prior to the Annuity Commencement Date, the Cash Surrender Value equals:

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Accumulation Value

èMinus(if applicable)

¡Any applicable Surrender Charges

¡Any non-daily charges that have been incurred but not deducted (for example, the annual administrative

charge and the pro rata portion of any MGWB Charges)

¡Any Surrender Charges calculated at the time of Surrender

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To Surrender the Contract, you must provide Notice to Us of such Surrender. If we receive your Notice to Us before the close of business on any Business Day, we will determine the Cash Surrender Value as of the close of business on such Business Day; otherwise, we will determine the Cash Surrender Value as of the close of the next Business Day. We may require that the Contract be returned to us before we pay you the Cash Surrender Value. If you have lost the Contract, we may require that you complete and return to our Customer Service Center a lost contract form.

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We will generally pay the Cash Surrender Value within 7 days of receipt of Notice to Us of such Surrender. You may receive the Cash Surrender Value in a single lump sum payment or apply it to an Annuity Plan. See page 41 . Upon payment of the Cash Surrender Value, this Contract will terminate and cease to have any further value.

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Withdrawals

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You may take a portion of the Accumulation Value from the Contract (which we refer to as a Withdrawal). To make a Withdrawal, you must provide Notice to Us that specifies the variable sub-accounts from which to make the Withdrawal. Otherwise, we will make the Withdrawal on a pro rata basis from all of the variable sub-accounts in which you are invested. If we receive your Notice to Us before the close of business on any Business Day, we will determine the amount of the Accumulation Value of each variable sub-account at the close of business on such Business Day; otherwise, we will determine the amount of the Accumulation Value as of the close of the next Business Day. The Accumulation Value may be more or less than the Premium payments you have made. A Withdrawal may be subject to a surrender charge.

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We currently offer the following Withdrawal options:

Regular Withdrawals; and

Systematic Withdrawals.

Regular Withdrawals

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After your right to return the Contract has expired (see page 44 ), you may take one or more regular Withdrawals. Each such regular Withdrawal must be a minimum of the lesser of:

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$1,000; and

The Surrender Charge Free Withdrawal. See page 18 .

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You are permitted to make regular Withdrawals regardless of whether you have previously elected, or continue to elect, to make systematic Withdrawals. A Withdrawal will constitute an Excess Withdrawal (see page 27 ) and be deemed to be a full

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Surrender and the Cash Surrender Value will be paid if:

No Premiums have been received in the prior 24 months; and

The remaining Cash Surrender Value as of the close of the Business Day on which such Surrender is made is less than

$2,500.

Systematic Withdrawals

You may choose to receive automatic systematic Withdrawal payments from the Accumulation Value in the variable sub-accounts in which you are invested, provided you are not making IRA withdrawals (see “Withdrawals from Individual Retirement Annuities” below). You may take systematic Withdrawals monthly, quarterly or annually. Systematic Withdrawals will incur surrender charges, unless you limit the amount of your systematic Withdrawals to the maximum amount available for Withdrawal in a Contract Year without incurring surrender charges. There is no additional charge for electing the systematic Withdrawal option. Only one systematic Withdrawal option may be elected at a time. You may begin a systematic Withdrawal in a Contract Year in which a regular Withdrawal has been made.

If you are eligible for systematic Withdrawals, you must provide Notice to Us of the date on which you would like such systematic Withdrawals to start. This date must be at least 30 days after the Contract Date and no later than the 28^thday of the calendar month. For a day that is after the 28^thday of the calendar month, the payment will be made on the first Business Day of the next succeeding calendar month. Subject to these restrictions on timing, if you have not indicated a start date, your systematic Withdrawals will begin on the first Business Day following the Contract Date (or the monthly or quarterly anniversary thereof), and the systematic Withdrawals will be made at the frequency you have selected, which may be either monthly, quarterly or annually. If the day on which a systematic Withdrawal is scheduled is not a Business Day, the payment will be made on the next succeeding Business Day.

You may express the amount of your systematic Withdrawal as either:

A fixed dollar amount; or

An amount that is a percentage of the Accumulation Value.

The amount of each systematic Withdrawal must be a minimum of $100. If your systematic Withdrawal is a fixed dollar amount of less than $100 on any systematic Withdrawal date, we will automatically and immediately terminate your systematic Withdrawal election. Fixed dollar systematic Withdrawals that are intended to satisfy the requirements of Section 72(q) or 72(t) of the Code may exceed the maximum amount available for Withdrawal in a Contract Year without incurring surrender charges. However, such Withdrawals will incur surrender charges on any amount in excess of such applicable maximum amount.

Systematic withdrawals of an amount based on a percentage of the Accumulation Value are subject to the applicable maximum percentage of Accumulation Value as shown below, which is used to calculate the amount of Withdrawal on the date of each systematic Withdrawal:


Frequency of Systematic Withdrawals	Maximum Percentage of Accumulation Value
Monthly	0.83%
Quarterly	2.50%
Annually	10.00%

If your systematic Withdrawal of an amount that is a percentage of the Accumulation Value would be less than $100, we will automatically increase the amount to $100, provided it does not exceed the applicable maximum percentage of Accumulation Value and you have elected not to incur surrender charges. Otherwise, we will only pay the portion that would not incur surrender charges and then automatically and immediately terminate your systematic Withdrawal election.

You may change the fixed dollar amount, or percentage of Accumulation Value, of your systematic Withdrawal once each Contract Year, except in a Contract Year during which you have previously made a regular Withdrawal. You may cancel the systematic Withdrawal option at any time by providing Notice to Us at least 7 days before the date of the next scheduled systematic Withdrawal. For systematic Withdrawals based on a fixed dollar amount, we will not adjust the systematic Withdrawal payments to account for any Additional Premium received from you. For systematic Withdrawals based on a percentage of your Accumulation Value, however, we will automatically incorporate into the systematic Withdrawal calculation any Additional Premiums received from you.

Surrender Charges on Systematic Withdrawals

Systematic Withdrawals will incur surrender charges, unless you elect to limit the amount of your systematic Withdrawals to the maximum amount available for Withdrawal in a Contract Year without incurring surrender charges. In the event that a systematic Withdrawal incurs a surrender charge, we will apply the surrender charge to the Accumulation Value.

Withdrawals from Individual Retirement Annuities

If you have an IRA Contract (other than a Roth IRA Contract) and will be at least age 70½ during any calendar year, you may, pursuant to your IRA Contract, elect for such calendar year and successive calendar years to have distributions made to you to satisfy requirements imposed by U.S. federal income tax law. Such IRA Withdrawals provide payout of amounts required to be distributed by the Internal Revenue Service rules governing mandatory distributions under qualified plans.

If you elect to make IRA Withdrawals, we will send you a notice before such IRA Withdrawals commence, and you may elect to make IRA Withdrawals at that time, or at a later date. Any IRA Withdrawals will be made at the frequency you have selected (which may be monthly, quarterly or annually) and will commence on the start date you have selected, which must be no earlier than 30 days after the Contract Date and no later than the 28^thday of the calendar month. For a day that is after the 28^thday of any calendar month, the payment will be made on the first Business Day of the next succeeding month. Subject to these restrictions on timing, if you have not indicated a start date, your IRA Withdrawals will begin on the first Business Day following your Contract Date at the frequency you have selected.

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At your discretion, you may request that we calculate the amount you are required to withdraw from your Contract each year based on the information you give us and the various options under the IRA Contract that you have chosen. This amount will be a minimum of $100 per IRA Withdrawal. For information regarding the calculation and options that you have, please see the SAI, which you may request from us without charge by sending us the request form on page 57 of this prospectus. Alternatively, we will accept written instructions from you setting forth your calculation of the required amount to be withdrawn from your IRA Contract each year, also subject to the $100 minimum per IRA Withdrawal. If at any time the IRA Withdrawal amount is greater than the Accumulation Value, we will immediately terminate the IRA Contract and promptly send you an amount equal to the Cash Surrender Value.

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You may not elect to make IRA Withdrawals if you have already elected to make systematic Withdrawals. Additionally, since only one systematic Withdrawal option may be elected at a time, if you have elected to make such systematic Withdrawals, distributions thereunder must be sufficient to satisfy the mandatory distribution rules imposed by U.S. federal income tax law; otherwise, we may alter such distributions to comply with U.S. federal income tax law. You are permitted to change the frequency of your IRA Withdrawals once per Contract Year, and you may cancel IRA Withdrawals altogether at any time by providing Notice to Us at least 7 days before the next scheduled IRA Withdrawal date to ensure such scheduled IRA Withdrawals and successive IRA Withdrawals are not effected.

Variable Sub-account Transfers (Excessive Trading Policy)

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Between the time that your right to return the Contract has expired and the date on which Annuity Payments begin, you may transfer your Accumulation Value among the variable sub-accounts in which you are invested, subject to the variable sub-account classifications of, and automatic rebalancing required by, the MGWB until it is no longer in effect. See page 15 . We currently do not charge you for transfers made during a Contract Year, but reserve the right to charge for each transfer after the twelfth transfer in a Contract Year. We also reserve the right to limit the number of transfers you may make and may otherwise modify or terminate transfer privileges if required by our business judgment or in accordance with applicable law.

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The minimum amount that you may transfer is $100 (unless your entire Accumulation Value held in a variable sub-account is less than $100, in which case you may transfer the entire Accumulation Value in such variable sub-account regardless of the amount). You must provide Notice to Us to make a transfer. We will determine transfer values at the end of the Business Day on which you provide Notice to Us. Transferred amounts will be reduced by Excess Transfer Charges and redemption fees, if any, imposed by the investment portfolio in which a variable sub-account invests. The transfer will be made on the same day we receive the transfer request, unless such day is not a Business Day, or we receive the transfer request after the earlier of 4 p.m. Eastern Time and the close of regular trading on the New York Stock Exchange, in which case we will make the transfer on the next succeeding Business Day.

Variable Annuity Account B and the Company will not be liable for following instructions communicated by telephone or other approved electronic means that we reasonably believed to be genuine. We may require personal identifying information to process a request for transfer made by telephone, on the Internet or by other approved electronic means. Please be advised that the risk of a fraudulent transaction is increased with telephonic or electronic instructions, even if appropriate identifying information is provided.

Limits on Frequent or Disruptive Transfers

The Contract is not designed to serve as a vehicle for frequent transfers. Frequent transfer activity can disrupt management of a fund and raise its expenses through:

Increased trading and transaction costs;

Forced and unplanned investment portfolio turnover;

Lost opportunity costs; and

Large asset swings that decrease the fund’s ability to provide maximum investment return to all Contract Owners.

Consequently, we have adopted an Excessive Trading Policy (as described below) to prevent frequent or disruptive transfers that could otherwise adversely affect fund performance and investment returns. Accordingly, individuals and entities that use market-timing investment strategies or make frequent transfers should not purchase the Contract.

Excessive Trading Policy

We and the other members of the ING family of companies that provide multi-fund variable insurance and retirement products, have adopted a common Excessive Trading Policy to respond to the demands of the various fund families that make their funds available through our products to restrict excessive fund trading activity and to ensure compliance with Rule 22c-2 of the 1940 Act.

We actively monitor fund transfer and reallocation activity within our variable insurance products to identify violations of our Excessive Trading Policy. Our Excessive Trading Policy is violated if fund transfer and reallocation activity:

Meets or exceeds our current definition of Excessive Trading, as defined below; or

Is determined, in our sole discretion, to be disruptive or not in the best interests of other owners of our variable

insurance and retirement products.

We currently define Excessive Trading as:

More than one purchase and sale of the same fund (including money market funds) within a 60 calendar day period

(hereinafter, a purchase and sale of the same fund is referred to as a “round-trip”). This means two or more round-

trips involving the same fund within a 60 calendar day period would meet our definition of Excessive Trading; or

Six round-trips involving the same fund within a twelve month period.

The following transactions are excluded when determining whether one is engaging in Excessive Trading:

Purchases or sales of shares related to non-fund transfers (for example, new purchase payments, and Withdrawals);

Transfers associated with scheduled dollar cost averaging, scheduled rebalancing or scheduled asset allocation

programs;

Purchases and sales of fund shares in the amount of $5,000 or less;

Purchases and sales of funds that affirmatively permit short-term trading in their fund shares, and movement between

such funds and a money market fund; and

Transactions initiated by us, another member of the ING family of insurance companies or a fund.

If we determine that an individual or entity has made a purchase of a fund within 60 days of a prior round-trip involving the same fund, we will send them a letter (once per year) warning that another sale of that same fund within 60 days of the beginning of the prior round-trip will be deemed to be Excessive Trading and result in a six month suspension of their ability to initiate fund transfers or reallocations through the Internet, facsimile, Voice Response Unit (VRU), telephone calls to the ING Customer Service Center, or other electronic trading medium that we may make available from time to time (“Electronic Trading Privileges”). Likewise, if we determine that an individual or entity has made five round-trips involving the same fund within a rolling twelve month period, we will send them a letter warning that another purchase and sale of that same fund within twelve months of the initial purchase in the first round-trip in the prior twelve month period will be deemed to be Excessive Trading and result in a suspension of their Electronic Trading Privileges. According to the needs of the various business units, a copy of the warning letters may also be sent, as applicable, to the person(s) or entity authorized to initiate fund transfers or reallocations, the agent/registered representative or investment adviser for that individual or entity. A copy of the warning letters and details of the individual’s or entity’s trading activity may also be sent to the fund whose shares were involved in the trading activity.

If we determine that an individual or entity has violated our Excessive Trading Policy, we will send them a letter stating that their Electronic Trading Privileges have been suspended for a period of six months. Consequently, all fund transfers or reallocations, not just those which involve the fund whose shares were involved in the activity that violated our Excessive Trading Policy, will then have to be initiated by providing written instructions to us via regular U.S. mail. Suspension of Electronic Trading Privileges may also extend to products other than the product through which the Excessive Trading activity occurred. During the six month suspension period, electronic “inquiry only” privileges will be permitted where and when possible. A copy of the letter restricting future transfer and reallocation activity to regular U.S. mail and details of the individual’s or entity’s trading activity may also be sent, as applicable, to the person(s) or entity authorized to initiate fund transfers or reallocations, the agent/registered representative or investment adviser for that individual or entity and the fund whose shares were involved in the activity that violated our Excessive Trading Policy.

Following the six month suspension period during which no additional violations of our Excessive Trading Policy are identified, Electronic Trading Privileges may again be restored. We will continue to monitor the fund transfer and reallocation activity, and any

future violations of our Excessive Trading Policy will result in an indefinite suspension of Electronic Trading Privileges. A violation of our Excessive Trading Policy during the six month suspension period will also result in an indefinite suspension of Electronic Trading Privileges.

We reserve the right to suspend Electronic Trading Privileges with respect to any individual or entity, with or without prior notice, if we determine, in our sole discretion, that the individual’s or entity’s trading activity is disruptive or not in the best interests of other owners of our variable insurance products, regardless of whether the individual’s or entity’s trading activity falls within the definition of Excessive Trading set forth above.

Our failure to send or an individual’s or entity’s failure to receive any warning letter or other notice contemplated under our Excessive Trading Policy will not prevent us from suspending that individual’s or entity’s Electronic Trading Privileges or taking any other action provided for in our Excessive Trading Policy.

We do not allow exceptions to our Excessive Trading Policy. We reserve the right to modify our Excessive Trading Policy, or the policy as it relates 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 our policy, it will be applied uniformly to all Contract Owners or, as applicable, to all Contract Owners investing in the underlying fund.

Our Excessive Trading Policy may not be completely successful in preventing market timing or excessive trading activity. If it is not completely successful, fund performance and management may be adversely affected, as noted above.

Limits Imposed by the Underlying Investment Portfolios

Each underlying fund available through the variable insurance and retirement products offered by us and/or the other members of the ING family of insurance companies, either by prospectus or stated contract, has adopted or may adopt its own excessive/frequent trading policy, and orders for the purchase of fund shares are subject to acceptance or rejection by the underlying fund. We reserve the right, without prior notice, to implement fund purchase restrictions and/or limitations on an individual or entity that the fund has identified as violating its excessive/frequent trading policy and to reject any allocation or transfer request to a sub-account if the corresponding fund will not accept the allocation or transfer for any reason. All such restrictions and/or limitations (which may include, but are not limited to, suspension of Electronic Trading Privileges and/or blocking of future purchases of shares of a fund or shares of all funds within a fund family) will be done in accordance with the directions we receive from the fund.

Agreements to Share Information with Fund Companies

As required by Rule 22c-2 under the 1940 Act, we have entered into information sharing agreements with each of the fund companies whose funds are offered through the Contract. Trading information related to a Contract Owner is shared under these agreements, as necessary, so that fund companies are able to monitor fund share trading and our implementation of our Excessive Trading Policy. Under these agreements, the Company is required to share information regarding Contract Owner transactions, including, but not limited to, information regarding fund transfers initiated by you. In addition to information about Contract Owner transactions, this information may include personal Contract Owner information, including your name and social security number or other tax identification number.

As a result of this information sharing, a fund company may direct us to restrict a Contract Owner’s transactions if the fund determines that the Contract Owner has violated the fund’s excessive/frequent trading policy. This could include directing us to reject any allocations of Premium, or reallocations of Accumulation Value, to the fund or all funds within the fund family.

Dollar Cost Averaging

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Dollar cost averaging is available prior to the Annuity Commencement Date. Dollar cost averaging is also available after the Annuity Commencement Date under the Table 2 Annuity Plans. See page 41 . You are eligible to participate in dollar cost averaging, or DCA, through the ING Money Market Portfolio starting no earlier than 30 days after the Contract Date. This variable sub-account serves as the source account from which we will, on a monthly basis, automatically transfer a set dollar amount of money to the variable sub-accounts you specify. You may participate in dollar cost averaging by providing Notice to Us of your election to participate. There is no additional charge for dollar cost averaging. The duration is 3 months, or any longer duration you may specify, so long as you meet the minimum monthly transfer amount of $100. We will transfer all your money allocated to that source account into the variable sub-account(s) you specify in equal payments over the relevant duration. The last payment will include earnings accrued over the duration. DCA is not available with automatic rebalancing and may be subject to limited availability in connection with systematic Withdrawals.

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Because the number of units of a variable sub-account that are purchased depend on whether the value of the unit is low (resulting in more units purchased) or high (resulting in fewer units purchased), DCA, through a stream of equal payments over the relevant

duration is designed to lessen the impact of market fluctuation on your investment. Therefore, a lower than average value per unit may be achieved over the long term; however, we cannot guarantee this. When you elect to participate in DCA, you are continuously investing in securities whose price levels are changing. You should consider your ability to withstand periods of potentially significantly fluctuating price levels.

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Transfers under DCA will be subject to the variable sub-account classifications of, and automatic rebalancing required by, the MGWB until it is no longer in effect. See page 15 . If you do not specify to which variable sub-accounts to transfer the dollar amount of the source account, we will transfer the money to the variable sub-accounts in which you are currently invested on a proportional basis, subject to any fund purchase restrictions. The transfer date is the same day each month as your Contract Date. For a day that is after the 28^thday of any calendar month, the transfer will be made on the first Business Day of the next succeeding calendar month. If, on any transfer date, your Accumulation Value in a source account is equal to or less than the amount you have elected to transfer, the entire amount will be transferred and the program will end. You may terminate the DCA at any time by sending Notice to Us at least 7 days before the next scheduled transfer date.

Although transfers pursuant to DCA are excluded when determining whether trading activity is excessive under our Excessive Trading Policy, the variable sub-accounts available to you for this purpose will be subject to any purchase restrictions and/or limitations that an underlying investment portfolio has directed us to implement. See “Excessive Trading Policy” and “Limits Imposed by the Underlying Investment Portfolios” on pages 36 and 37 , respectively.

We may modify, suspend or terminate DCA. We will send Notice to You in advance. Such modification, suspension or termination, however, will apply prospectively only and will not affect any DCAs in effect at the time. DCA is not available for contracts issued in Oregon.

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Elective Automatic Rebalancing

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Elective automatic rebalancing is available prior to the Annuity Commencement Date. Elective automatic rebalancing is also available after the Annuity Commencement Date under the Table 2 Annuity Plans. See page 41 . You are eligible to elect to have your investments in the variable sub-accounts automatically rebalanced starting no earlier than 30 days after the Contract Date. You must have at least $10,000 of Accumulation Value. Elective automatic rebalancing is available at no additional charge. Elective automatic rebalancing is not available if you participate in Dollar Cost Averaging.

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If you elect to participate in automatic rebalancing, we will transfer your Contract’s Accumulation Value on a quarterly, semi-annual, or annual calendar basis among the variable sub-accounts to maintain the investment blend of your selected variable sub-accounts. Monthly automatic rebalancing is not permitted. The minimum size of any allocation must be expressed in full percentage points. If you have elected to make automatic systematic Withdrawals, you may choose automatic rebalancing only if such systematic Withdrawals are taken on a pro rata basis.

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To elect automatic rebalancing, you must provide Notice to Us of such election. We will begin the program on the last Business Day of the relevant quarterly, semi-annual or annual period in which we receive notice of your election. Elective automatic rebalancing will be subject to the variable sub-account classifications of, and automatic rebalancing required by, the MGWB until it is no longer in effect. See page 15 . You may cancel elective automatic rebalancing at any time. In addition, the program will automatically terminate if you choose to reallocate your Accumulation Value among the variable sub-accounts or if you pay any Additional Premiums or take a Withdrawal on other than a pro rata basis. Payments of Additional Premiums and Withdrawals, each made on a pro rata basis, will not cause elective automatic rebalancing program to terminate.

Although transfers pursuant to elective automatic rebalancing are excluded when determining whether trading activity is excessive under our Excessive Trading Policy, the variable sub-accounts available to you for this purpose will be subject to any purchase restrictions and/or limitations that an underlying investment portfolio has directed us to implement. See “Excessive Trading Policy” and “Limits Imposed by Underlying Investment Portfolios” on pages 36 and 37 , respectively.

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Death Benefit

The Contract provides for a Death Benefit equal to the greater of:

The total of all Premiums paid into the Contract, adjusted on a pro rata basis for Withdrawals; and The Accumulation Value.

We use the standard death benefit base to determine the value of all Premiums paid into the Contract, as adjusted ratably for Withdrawals. Withdrawals will not reduce the Death Benefit by the actual amount withdrawn. On the Contract Date, the standard death benefit base is equal to the Initial Premium (which we refer to as the Initial Standard Death Benefit Base). On any Business Day thereafter, the standard death benefit base is recalculated to equal:

The standard death benefit base from the prior Business Day

èPlus any Additional Premiums made during the current Business Day

èMinus the pro rata adjustment for any Withdrawal during the current Business Day, which equals:

¡The Accumulation Value withdrawn è Divided By

¡The Accumulation Value immediately prior to the Withdrawal è Multiplied By

¡The amount of the standard death benefit base immediately prior to the Withdrawal.

The Death Benefit is calculated as of the date of death of any Owner (or, if the Owner is not a natural person, upon any Annuitant’s death) and payable upon our receipt of:

Proof of Death; and
All required claim forms.

PROVIDED:

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The Accumulation Value of the Contract has not been applied to an Annuity Plan (see page 41 ); and

IMPORTANT NOTE: The Death Benefit is still payable after the Annuity Commencement Date under the

Table 2 Annuity Plan for a non-qualified Contract or Roth IRA Contract (see page 41 ).

Lifetime Automatic Periodic Benefit Status has not begun under the MGWB.

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Proof of Death is the documentation we deem necessary to establish death, including, but not limited to:

A certified copy of a death certificate;

A certified copy of a statement of death from the attending physician

A finding of a court of competent jurisdiction as to the cause of death; or

Any other proof we deem in our sole discretion to be satisfactory to us.

We will calculate the Death Benefit on the Business Day we receive Proof of Death and reallocate this amount to the Specially Designated Variable Sub-account – currently, the ING Money Market Portfolio.

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Once we have received satisfactory Proof of Death and all required documentation necessary to process a claim, we will generally pay the Death Benefit within 7 days of such date. See page 43 . We will pay the Death Benefit under a non-qualified Contract according to Section 72(s) of the Code. Only one Death Benefit is payable under the Contract. The Death Benefit will be paid to the named Beneficiary, unless the Contract has joint Owners , in which case any surviving Owner will take the place of, and be deemed to be, the Beneficiary entitled to collect the Death Benefit. The Owner may restrict how the Beneficiary is to receive the Death Benefit (e.g., by requiring a lump-sum payment, installment payments or that any amount be applied to an Annuity Plan). See page 41 .

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Spousal Beneficiary Contract Continuation

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Any surviving spouse of a deceased Owner who is a named Beneficiary (or deemed Beneficiary) has the option, but is not required, to continue the Contract under the same terms existing prior to such Owner’s death. Such election would be in lieu of payment of the Death Benefit. Except as described in the Important Note below, the surviving spouse’s right to continue the Contract is limited by our use of the term “spouse,” as it is defined under U.S. federal law, which refers only to a person of the opposite sex who is a husband or a wife. Also, the surviving spouse may not continue the Contract if he or she is age 85 or older on the date of the Owner’s death. If the surviving spouse elects to continue the Contract, the following will apply:

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The surviving spouse will replace the deceased Owner as the Contract Owner (and if the deceased Owner was the

Annuitant, the surviving spouse will replace the deceased Owner as the Annuitant);

The age of the surviving spouse will be used as the Owner’s age under the continued Contract;

All rights of the surviving spouse as the Beneficiary under the Contract in effect prior to such continuation election

will cease;

Any surrender charges on subsequent Withdrawals or Surrender will be waived.

Additional Premiums will not be accepted.

All rights and privileges granted by the Contract or allowed by us will belong to the surviving spouse as Owner of the

continued Contract.

Upon the death of the surviving spouse as the Owner of the Contract, the Death Benefit will be distributed to the Beneficiary or Beneficiaries described below, and the Contract will terminate.

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¡ IMPORTANT NOTE: For contracts issued in New Jersey only, a surviving civil union partner will have the same option to continue the Contract as a surviving spouse. All references in this section to a “surviving spouse” shall apply equally to a civil union partner. If the contract is continued by a civil union partner, the Death Benefit must be paid in accordance with Section 72(s) of the Code.

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Payment of the Proceeds to a Spousal or Non-spousal Beneficiary

Subject to any payment restrictions imposed by the Owner, the Beneficiary may decide to receive the Death Benefit:

In one lump sum or installments; or
By applying the Death Benefit to an Annuity Plan.

We will not accept any Additional Premiums following the date of the Owner’s death. The Beneficiary may receive the Death Benefit in one lump sum or installments, provided the Death Benefit is distributed to the Beneficiary within 5 years of the Owner’s death. The Beneficiary has until 1 year after the Owner’s death to decide to apply the Death Benefit to an Annuity Plan. If the Death Benefit is applied to an Annuity Plan, the Beneficiary will be deemed to be the Annuitant, and the Annuity Payments must:

Be distributed in substantially equal installments over the life of such Beneficiary or over a period not extending beyond the life expectancy of such Beneficiary; and Begin no later than 1 year after the Owner’s date of death.

If we do not receive a request to apply the Death Benefit to an Annuity Plan, we will make a single sum distribution to the Beneficiary. Unless you elect otherwise, the payment will be made into an interest bearing account, backed by our General Account, which can be accessed by the Beneficiary through a checkbook feature. The Beneficiary may access the Death Benefit proceeds at any time without penalty. For information on required distributions under U.S. federal income tax laws, see “Required Distributions upon Owner’s Death” below. Interest earned on amounts held in the interest bearing account may be less than interest paid on other settlement options, as we seek to make a profit on such interest bearing accounts.

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The Beneficiary may elect to receive the Death Benefit in payments over a period of time based on his or her life expectancy. These payments are sometimes referred to as stretch payments. Stretch payments for each calendar year will vary in amount because they are based on the Accumulation Value and the Beneficiary’s remaining life expectancy. The first stretch payment must be made by the first anniversary of the Owner’s date of death. Each succeeding stretch payment is required to be made by December 31^stof each calendar year. Stretch payments are subject to the same conditions and limitations as systematic Withdrawals. See page 34 . The rules for, and tax consequences of, stretch payments are complex and contain conditions and exceptions not covered in this prospectus. You should consult a tax adviser for advice about the effect of U.S. federal income tax laws, state laws or other tax laws affecting the Contract, or any transactions involving the Contract.

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Death Benefit Once Annuity Payments Have Begun

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There is no Death Benefit once the Owner decides to begin receiving Annuity Payments, except under the Table 2 Annuity Plan for a non-qualified Contract or Roth IRA (see below). In the event that the Owner dies (or, in the event that the Owner is not a natural person, the Annuitant dies) before all guaranteed Annuity Payments have been made pursuant to any applicable Annuity Plan, we will continue to make the Annuity Payments until all such guaranteed payments have been made. The Annuity Payments will be paid to the Beneficiary according to the Annuity Plan at least as frequently as before the death of the Owner or Annuitant, as applicable.

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Annuity Plans and Annuity Payments

Annuity Commencement Date

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The Contract provides for Annuity Payments, so long as the Annuitant is then living. You can apply the Accumulation Value to an Annuity Plan on any date following the fifth Contract Anniversary, which we refer to as the Annuity Commencement Date. For Contracts issued in Florida, the Annuity Commencement Date can be any date following the first Contract Anniversary. The Annuity Commencement Date can be no later than the Contract Anniversary on or next following the Annuitant’s 90^thbirthday, unless:

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We agree to a later date; or

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The Internal Revenue Service publishes a final regulation or a revenue ruling concluding that an annuity contract with a Maturity Date that is later than the Contract Anniversary following the oldest Annuitant’s 90^thbirthday will be treated as an annuity for U.S. federal tax purposes.

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Notice to Us is required at least 30 days in advance of the date you wish to begin receiving Annuity Payments. If you do not select an Annuity Commencement Date, it will be the Contract Anniversary on or next following the Annuitant’s 90^thbirthday (which we refer to as the maximum Annuity Commencement Date).

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The Annuity Plans

You may elect one of the Annuity Plans described in Table 1 or Table 2 below. In addition, you may elect another Annuity Plan we may be offering thirty days prior to the Annuity Commencement Date, the latest date by which you must provide your election. You may change Annuity Plans at any time before the Annuity Commencement Date by providing at least 30 days prior Notice to Us. The Annuity Plan may not be changed once Annuity Payments begin.

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TABLE 1:

On or Before the Maximum Annuity Commencement Date

Payments for a Period Certain

è Annuity Payments are made in equal installments for a fixed number of years. The number of years cannot be

less than 10 nor more than 30, unless otherwise required by applicable law.

Payments for Life with a Period Certain

è Annuity Payments are made for a fixed number of years and as long thereafter as the Annuitant is living. The

number of years cannot be less than 10 nor more than 30, unless otherwise required by applicable law.

Life Only Payments

è Annuity Payments are made for as long as the Annuitant is living.

Joint and Last Survivor Life Payments

è Annuity Payments are made for as long as either of two Annuitants is living.

TABLE 2:

ONLY on the Maximum Annuity Commencement Date

¡ IMPORTANT NOTE: This annuity payout option is designated as the default Annuity Plan under

your Contract, as applicable, if you do not elect an Annuity Plan.

Payments for Life with Surrender Right and Lump Sum Distribution at Death

è If your Contract is a non-qualified Contract or Roth IRA Contract, Annuity Payments are made for as long as

the Annuitant is living.

Automatic Required Minimum Distribution Option

è If your Contract is a Traditional IRA or SEP IRA Contract, periodic payments are made for as long

as the Annuitant is living.

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Annuity Plan Comparison Chart
					Payments for
Key:					Life with	Automatic
		Payments for		Joint and Last		Required
ü= permitted	Payments for a	Life with a	Life Only	Survivor Life	Surrender Right	Minimum
			Payments		and Lump Sum
û= not permitted	Period Certain	Period Certain		Payments		Distribution
					Distribution at	Option
					Death

Select another Annuity Plan after	û	û	û	û	û	ü
the Annuity Commencement Date

Monthly, quarterly, annual and	ü	ü	ü	ü	ü	ü
semi-annual Annuity Payments

Change the frequency of the	û	û	û	û	û	ü
Annuity Payments

Withdrawals after the Annuity	û	û	û	û	û	ü
Commencement Date

Surrender of the Contract after the	û	û	û	û	ü	ü
Annuity Commencement Date

Accumulation Value remains	û	û	û	û	ü	ü
allocated to variable sub-accounts

Annuity Payments

Annuity Payments are periodic payments made by us to you, or subject to our consent in the event the payee is not a natural person, to a payee designated by you. Annuity Payments will be made to the Owner, unless you provide Notice to Us directing otherwise. Any change in payee will take effect as of the date we receive Notice to Us.

For Table 1 Annuity Plans, we determine the amount of the Annuity Payments on the Annuity Commencement Date as follows:

Accumulation Value

è Minus any premium tax that may apply

è Multiplied by the applicable payment factor, which depends on:

¡The Annuity Plan;

¡The frequency of Annuity Payments;

¡The age of the Annuitant (and gender, where appropriate under applicable law); and

¡A net investment return of 1.0% is assumed (we may pay a higher rate at our discretion).

We use the Annuity 2000 Mortality Tables. Portions of the tables relevant to each Annuity Plan are set forth in the Contract for

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illustration purposes. For Contracts issued in Oregon, we will use the greater of these minimums or the current rates used at the time Annuity Payments begin. You can obtain information more specific to your Contract by contacting our Customer Service Center. Contact information for the Customer Service Center appears on page 1.

Under the Annuity Plan that provides for life only payments, if the Minimum Guaranteed Withdrawal Benefit is still in effect (see page 26 ) on the Annuity Commencement Date, we will pay the greater amount of:

The Annuity Payments (as determined per the above calculation); and The Maximum Annual Withdrawal (see page 29 ).

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For Table 2 Annuity Plans:

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If your Contract is a non-qualified Contract or Roth IRA Contract, we determine the amount of the Annuity Payments, on an annual basis on each Contract Anniversary beginning with the Contract Anniversary that is the maximum Annuity Commencement Date, as follows:

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Accumulation Value

	Divided by the life expectancy of the Annuitant, which depends on:
	¡	The age of the Annuitant, as determined pursuant to the Single Life Expectancy Table under Treasury Regulation Section 1.401(a)(9)-9.

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If your Contract is a Traditional IRA or SEP IRA Contract, we determine the amount of the periodic payments, on an annual basis beginning on the December 31 that precedes the maximum Annuity Commencement Date (and on each December 31 thereafter), as follows:

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Accumulation Value

	Plus the actuarial present value of the Minimum Guaranteed Withdrawal Benefit; and
	¡	This present value is determined pursuant to Treasury Regulation Section 1.401(a)(9)-6, Q&A 12.
	Divided by the distribution period, which depends on:
	¡	The age of the Annuitant, as determined pursuant to the Uniform Lifetime Table under Treasury Regulation Section 1.401(a)(9)-9.

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Under the Table 2 Annuity Plans, if the Minimum Guaranteed Withdrawal Benefit is still in effect (see page ) on the Annuity Commencement Date, we will pay the greater amount of:

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The Annuity Payments (as determined per the above calculation); and

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The Maximum Annual Withdrawal (see page 29 ), as determined beginning with the Contract Anniversary that is the maximum Annuity Commencement Date.

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If the Accumulation Value is less than $2,000 on the Annuity Commencement Date, we will pay such amount in a single lump-sum payment. We will make the Annuity Payments in monthly installments, unless you deliver Notice to Us directing us to pay at a different frequency. If any day that an Annuity Payment is thereafter scheduled to be paid is not a Business Day (e.g., a weekend, or the day does not exist in the given month), such Annuity Payment will be paid on the next Business Day. Each Annuity Payment must be at least $20.

We reserve the right in the Contract to make the Annuity Payments less frequently, as necessary, to make the Annuity Payments equal to at least $20. We may also change the $2,000 and $20 minimums, if allowed by law, based upon increases reflected in the Consumer Price Index for All Urban Consumers (CPI-U) since September 1, 2009. The MGWB terminates, once you begin to receive Annuity Payments under an Annuity Plan.

Upon application of the Accumulation Value to an Annuity Plan, unless you are eligible for and elect a Table 2 Annuity Plan for non-

qualified Contracts, this Contract will terminate and will cease to have any further value other than as provided under the Annuity Plan you elected.

Death of the Annuitant

In the event the Annuitant dies on or after the Annuity Commencement Date, but before all Annuity Payments have been made pursuant to the applicable Annuity Plan, we will continue the Annuity Payments until all guaranteed Annuity Payments have been made. The Annuity Payments will be paid at least as frequently (and at least as rapidly) as before the Annuitant’s death until the end of any guaranteed period certain. We may require satisfactory proof of death in regard to the Annuitant before continuing the Annuity Payments.

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Under the Table 2 Annuity Plan for a non-qualified Contract or Roth IRA Contract, so long as the MGWB is not in the Lifetime Automatic Periodic Benefit Status (see page 31 ), the Beneficiary will be entitled to the Death Benefit (see page 38 ) according to one of the following:

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In a lump sum on or before the end of the calendar year in which the Annuitant’s death occurs; or

Periodic payments, in the same frequency and at least as rapidly as under this Annuity Plan at the time of death, equal

to, on an annual basis as determined on the Contract Anniversary immediately preceding the Contract Year in which

the payments will be made, the Accumulation Value:

è Increased by the difference between the Accumulation Value and, if greater, the Standard Death Benefit Base

upon receipt of Proof of Death (see page 38 ); and

è Divided by the remaining life expectancy of the Annuitant at the time of death (or the life expectancy of the

Beneficiary at the time of the Annuitant’s death if shorter).

¡Life expectancy is determined pursuant to the Single Life Table under Treasury Regulation Section

1.401(a)(9)-9.

IMPORTANT NOTE: If the Accumulation Value has been reduced to zero upon receipt of Proof of Death, the

Death Benefit will equal the Standard Death Benefit Base, and this amount will be allocated to the Specially

Designated Variable Sub-account.

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On each Contract Anniversary following the first periodic payment of the Death Benefit (the amount of which is determined as per the above), we will recalculate the periodic payment using the remaining Accumulation Value and the life expectancy factor used in calculating the amount of the prior periodic payment reduced by one. At any time after election of this periodic payment option, the Beneficiary may allocate all or a portion of the Accumulation Value from the Specially Designated Variable Sub-account to the available variable sub-accounts.

Other Important Information

Reports to Contract Owners

We will confirm purchase, transfer and Withdrawal transactions usually within 5 Business Days of processing any such transaction. At least once a year, we will send you, without charge, a report showing the current Accumulation Value and Cash Surrender Value, as well as amounts deducted from, or added to, the Accumulation Value since the last report. This report will show your allocation of the Accumulation Value among the variable sub-accounts, as well as any other information that is required by law or regulation. We may also send you a quarterly statement showing these same values as of the end of the calendar quarter.

In addition, we will provide you with any other reports, notices or documents that we are required by applicable law to furnish to you. We will send these reports to you at your last known address within 60 days after the report date. Upon your request, we will provide additional reports, but we reserve the right in the Contract to access a reasonable charge for each such additional report.

Suspension of Payments

We reserve the right to suspend or postpone the date of any payment or determination of any value under the Contract, beyond the 7 permitted days by applicable law, on any Business Day when:

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The New York Stock Exchange is closed;

Trading on the New York Stock Exchange is restricted (except for contracts issued in Texas);

An emergency exists as determined by the SEC so that the sale of securities held in Variable Annuity Account B may

not reasonably occur or so that the Company may not reasonably determine the value of Variable Annuity Account

B’s net assets; or

The SEC so permits for the protection of security holders (except for contracts issued in Texas).

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During such times, we may delay:

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Determination and payment of the Cash Surrender Value (see page 33 ); Determination and payment of the Death Benefit (see page 38 ); Allocation changes to the Accumulation Value; or Application of the Accumulation Value under an Annuity Plan (see page 40 ).

For contracts issued in Idaho and Florida, deferred payments will include interest that is required by applicable law.

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Misstatement Made by Owner in Connection with Purchase of this Contract

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We may require proof of the age and sex of the person upon whose life certain benefit payments are determined (i.e., the Death Benefit or Annuity Payments). If the Owner misstates the age or sex of a person in connection with the purchase of the Contract, we reserve the right in the Contract to adjust (either upward or downward) these payments based on the correct age or sex. If an upward adjustment to your benefit payment is required, we will include an amount in your next benefit payment representing the past underpayments by us, with interest credited at a rate of 1.5% annually (where permitted). If a downward adjustment to your benefit payment is required, we will make a deduction from future benefit payments until the past overpayments by us, plus interest at 1.5% annually (where permitted), has been repaid in full by you.

We reserve the right in the Contract (where permitted) to void the Contract and return the Cash Surrender Value in the event of any material misrepresentation made by the Owner in connection with the purchase of the Contract.

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Insurable Interest

We require the Owner of the Contract to have an Insurable Interest in the Annuitant. Insurable Interest means the Owner has a lawful and substantial economic interest in the continued life of a person. An Insurable Interest does not exist if the Owner’s sole economic interest in the Annuitant arises as a result of the Annuitant’s death. A natural person is presumed to have an Insurable Interest in his or her own life and is generally considered to have an Insurable Interest in his or her spouse and family members. State statutory and case law have established guidelines for circumstances in which an Insurable Interest is generally considered to exist:

Relationships between parent and child, brother and sister, and grandparent and grandchild; and

Certain business relationships and financial dependency situations (e.g., uncle has Insurable Interest in nephew who runs the uncle’s business and makes money for the uncle).

The above list is not comprehensive, but instead contains some common examples to help illustrate what it means for the Owner to have an Insurable Interest in the Annuitant. You should consult your agent/registered representative for advice on whether the Owner of the Contract would have an Insurable Interest in the Annuitant to be designated.

An Insurable Interest must exist at the time we issue the Contract. In purchasing the Contract, you will represent and acknowledge that you, as the Owner, have an Insurable Interest in the Annuitant. We require the agent/registered representative to confirm on the application that the Owner has an Insurable Interest in the Annuitant. We also require that any new Owner after issuance of the Contract to have an Insurable Interest in the Annuitant. We will seek to void the Contract if we discover that it was applied for and issued (or ownership was transferred) based on misinformation, or information that was omitted, in order to evade state Insurable Interest and other laws enacted to prevent an Owner from using the Contract to profit from the death of a person in whom such Owner does not have an Insurable Interest.

Assignment

You may assign a non-qualified Contract as collateral security for a loan or other obligation. This kind of assignment is not a change of ownership. But you should understand that your rights, and those of any Beneficiary, are subject to the terms of the assignment. To make, modify or release an assignment, you must provide Notice to Us. Your instructions will take effect as of the date we receive Notice to Us of such assignment. We require written consent of an Irrevocable Beneficiary before your instructions will take effect. An assignment likely has U.S. federal tax consequences. You should consult a tax adviser for tax advice. We are not responsible for the validity, tax consequences or other effects of any assignment you choose to make.

Contract Changes

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We have the right to amend, make changes to or modify the Contract if required by law, including any amendment, change or modification necessary to continue to qualify such Contract as an annuity contract under applicable law. Any such amendment, change or modification must be in writing. An Endorsement added to comply with applicable law does not require your consent but is subject to regulatory approval. Any such amendments, changes or modifications will apply uniformly to all contracts affected.

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Right to Examine and Return this Contract

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For a prescribed period, you may return the Contract for any reason or no reason at all, which we refer to as the Right to Examine and Return this Contract. Subject to the state requirements specified in the table below, you may return the Contract within 10 days of your receipt of it, and you have up to 30 days if the Contract was issued as a replacement contract. Unless as otherwise noted below, if so returned, we will promptly pay you the Accumulation Value plus any charges we have deducted.

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Contract	Days for New Purchase	Days for Replacement Purchase
Issue State	and Amount Returned	and Amount Returned
	10 days or 30 days if you are age 65 or older on the	30 days
Arizona	date the application is signed	Accumulation Value plus any charges deducted
	Accumulation Value plus any charges deducted
	10 days
Connecticut		Same
	Accumulation Value plus any charges deducted

District of	10 days	Same
Columbia	Premium paid, less any Withdrawals
	14 days
Florida		Same
	Premium paid less any Withdrawals
	10 days
Georgia		Same
	Premium paid, less any Withdrawals

Hawaii	10 days	30 days
	Premium paid, less any Withdrawals	Accumulation Value plus any charges deducted
	20 days
Idaho		Same
	Premium paid, less any Withdrawals
	10 days	20 days
Indiana	Accumulation Value plus any charges deducted	Premium paid, less any Withdrawals

Kentucky	10 days	30 days
	Premium paid less any Withdrawals	Accumulation Value plus any charges deducted

Louisiana	10 days	30 days
	Premium paid less any Withdrawals	Accumulation Value plus any charges deducted
	10 days	30 days
Maryland	Premium paid less any Withdrawals	Accumulation Value plus any charges deducted

Massachusetts	10 days	20 days
	Accumulation Value plus any charges deducted	Premium paid, less any Withdrawals
	10 days
Michigan		Same
	Premium paid less any Withdrawals
	10 days	30 days
Minnesota	Accumulation Value plus any charges deducted	Premium paid, less any Withdrawals

Mississippi	10 days	30 days
	Premium paid less any Withdrawals	Accumulation Value plus any charges deducted

Missouri	10 days	20 days
	Premium paid less any Withdrawals	Premium paid less any Withdrawals
	10 days	30 days
New Hampshire	Premium paid less any Withdrawals	Premium paid, less any Withdrawals
	20 days
North Dakota		Same
	Accumulation Value plus any charges deducted

Nebraska	10 days	30 days
	Premium paid less any Withdrawals	Accumulation Value plus any charges deducted
	10 days	30 days
North Carolina	Premium paid less any Withdrawals	Accumulation Value plus any charges deducted

Oklahoma	10 days	20 days
	Premium paid less any Withdrawals	Premium paid less any Withdrawals

Rhode Island	20 days	30 days
	Premium paid, less any Withdrawals	Accumulation Value plus any charges deducted
	10 days	30 days
South Carolina	Premium paid, less any Withdrawals	Accumulation Value plus any charges deducted

Tennessee	10 days	20 days
	Accumulation Value plus any charges deducted	Premium paid less any Withdrawals
Virginia	10 days	Same

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	Accumulation Value plus any charges deducted

Washington	10 days	20 days
	Premium paid less any Withdrawals	Premium paid less any Withdrawals

West Virginia	10 days	30 days
	Premium paid less any Withdrawals	Accumulation Value, adjusted for any MVA

Wyoming	10 days	20 days
	Accumulation Value plus any charges deducted	Premium paid less any Withdrawals

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If you decide to return the Contract, you must deliver it to:

To us at our Customer Service Center (the address is specified on page 1); or To your agent/registered representative.

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We do not retain any investment gain associated with a Contract that is returned. If the state in which your Contract was issued requires us to pay the Accumulation Value (plus any charges deducted) in the event that your return it, this amount may be greater or less than the Premiums paid. For the states noted above in which we pay the amount of the Premiums paid if you return the Contract, your investment will not be subject to any market risk until the Right to Examine and Return this Contract expires. We may, in our discretion, require that, until your Right to Examine and Return this Contract expires, the Premium be allocated to the ING Money Market Portfolio. In the event that your right to return the Contract has expired and you decided to keep it, any Premium we required to be allocated to the ING Money Market Portfolio will be transferred to the variable sub-accounts chosen by you based on the Accumulation Value next computed.

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Non-Waiver

We may, in our discretion, elect not to exercise a right, privilege or option under the Contract. Such election will not constitute our waiver of the right to exercise such right, privilege or option at a later date, nor will it constitute a waiver of any provision of the Contract.

Special Arrangements

We may reduce or waive any Contract fees or charges for certain group or sponsored arrangements, under special programs, and for certain employees, agents, and related persons of our parent corporation and its affiliates. We reduce or waive these items based on expected economies, and the variations are based on differences in costs or services.

Selling the Contract

Our affiliate, Directed Services LLC, 1475 Dunwoody Drive, West Chester, Pennsylvania 19380 is the principal underwriter and distributor of the Contract, as well as of contracts issued by our affiliate, ING USA Annuity and Life Insurance Company. Directed Services LLC, a Delaware limited liability company, is registered with the SEC as a broker/dealer under the Securities Exchange Act of 1934, as amended, and is a member of the Financial Industry Regulatory Authority, Inc., or FINRA.

Directed Services LLC does not retain any commissions or compensation that we pay to it for Contract sales. Directed Services LLC enters into selling agreements with affiliated and unaffiliated broker/dealers to sell the Contracts through their registered representatives who are licensed to sell securities and variable insurance products, which representatives we refer to as selling firms. Selling firms are also registered with the SEC and are FINRA member firms.

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The following is a list of broker/dealers that are affiliated with the Company

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Bancnorth Investment Group, Inc.	ING Funds Distributor, LLC
Directed Services LLC	ING Investment Advisors, LLC
Financial Network Investment Corporation	ING Investment Management Services LLC
Guaranty Brokerage Services, Inc.	Multi-Financial Securities Corporation
ING America Equities, Inc.	PrimeVest Financial Services, Inc.
ING Financial Advisers, LLC	ShareBuilder Securities Corporation
ING Financial Markets LLC,	Systematized Benefits Administrators, Inc.
ING Financial Partners, Inc.

Directed Services LLC pays selling firms compensation for the promotion and sale of the Contracts. Registered representatives of the selling firms who solicit sales of the Contracts typically receive a portion of the compensation paid by Directed Services LLC to such selling firm in the form of commissions or other compensation, depending on the agreement between the selling firm and the

registered representative. This compensation, as well as other incentives or payments, is not paid directly by the Owners of the Contract or Variable Annuity Account B. We intend to recoup this compensation and other sales expenses paid to selling firms through fees and charges imposed under the Contracts.

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Directed Services LLC pays selling firms for Contract sales according to one or more schedules. This compensation is generally based on a percentage of Premium payments. Selling firms may receive commissions of up to 5% of Premium . In addition, selling firms may receive ongoing annual compensation of up to 0.75% of all, or a portion, of the values of Contracts sold through such selling firm . Individual representatives may receive all or a portion of the compensation paid to their selling firm, depending on such selling firm’s practices. Commissions and annual compensation, when combined with additional compensation or reimbursement of expenses (as more fully described below), could exceed 5% of Premium.

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Directed Services LLC has special compensation arrangements with certain selling firms based on such firms’ aggregate or anticipated sales of the Contracts or other specified criteria. These special compensation arrangements will not be offered to all selling firms, and the terms of such arrangements may differ among selling firms based on various factors. Any such compensation payable to a selling firm will not result in any additional direct charge to you by us.

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In addition to the direct cash compensation for sales of Contracts described above, Directed Services LLC may also pay selling firms additional compensation or reimbursement of expenses for their efforts in selling the Contracts to you and other customers. These amounts may include :

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Marketing/distribution allowances which may be based on the percentages of Premium received, the aggregate commissions paid and/or the aggregate assets held in relation to certain types of designated insurance products issued by the Company and/or its affiliates during the calendar year; Loans or advances of commissions in anticipation of future receipt of Premiums (i.e., a form of lending to agents/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 terms may be conditioned on fixed insurance product sales; Education and training allowances to facilitate our attendance at certain educational and training meetings to provide information and training about our products. We also hold training programs from time to time at our expense; Sponsorship payments or reimbursements for broker/dealers to use in sales contests and/or meetings for their agents/registered representatives who sell our products. We do not hold contests based solely on the sales of the Contract; Certain overrides and other benefits that may include cash compensation based on the amount of earned commissions, agent/representative recruiting or other activities that promote the sale of Contracts; and Additional cash or non-cash compensation and reimbursements permissible under existing law. This may include, but is not limited to, cash incentives, merchandise, trips, occasional entertainment, meals and tickets to sporting events, client appreciation events, business and educational enhancement items, payment for travel expenses (including meals and lodging) to pre-approved training and education seminars, and payment for advertising and sales campaigns.

We may pay commissions, 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 Contract.

The following is a list of the top 25 selling firms that, during 2008, received the most total dollars of compensation, in the aggregate, from us in connection with the sale of registered annuity contracts issued by us, ranked from greatest to least aggregate compensation:

1.	ING Financial Advisers, LLC
2.	SagePoint Financial, Inc.
3.	Symetra Investment Services, Inc.
4.	Huckin Financial Group, Inc.
5.	LPL Financial Corporation
6.	Walnut Street Securities, Inc.^®
7.	ING Financial Partners, Inc.
8.	NFP Securities, Inc.
9.	Valor Insurance Agency Inc.
10.	Lincoln Financial Securities Corporation
11.	Financial Network Investment Corporation
12.	NRP Financial, Inc.
13.	National Planning Corporation

14.	Multi-Financial Securities Corporation
15.	Mutual Service Corporation
16.	Waterstone Financial Group, Inc.
17.	Northwestern Mutual Investment Services, LLC
18.	Lincoln Investment Planning, Inc.
19.	Cadaret, Grant & Co., Inc.
20.	Securities America, Inc.
21.	Edward D. Jones & Co., L.P.
22.	American Portfolios Financial Services, Inc.
23.	Ameritas Investment Corp.
24.	First Heartland^®Capital, Inc.
25.	Lincoln Financial Advisors Corporation

Directed Services LLC may also compensate wholesalers/distributors, and their sales management personnel, for Contract sales within the wholesale/distribution channel. This compensation may be based on a percentage of Premiums and/or a percentage of Accumulation Value. Directed Services LLC may, at its discretion, pay additional cash compensation to wholesalers/distributors for sales by certain broker-dealers or “focus firms.”

This is a general discussion of the types and levels of compensation paid by us for sale of our variable annuity contracts. It is important for you to know that the payment of volume- or sales-based compensation to a selling firm or registered representative may provide such selling firm or registered representative a financial incentive to promote our products, such as the Contract, over those of another company, and may also provide a financial incentive to promote one of our contracts over another, such as the Contract.

Voting Rights

We will vote the shares of an underlying investment portfolio owned by Variable Annuity Account B according to your instructions. However, if the 1940 Act or any related regulations should change, or if interpretations of it or related regulations should change, and we decide that we are permitted to vote the shares of a trust in our own right, we may decide to do so without consulting you.

We determine the number of shares that you have in a variable sub-account by dividing the Contract’s Accumulation Value in that variable sub-account by the net asset value of one share of the underlying investment portfolio in which a variable sub-account invests. We count fractional votes. We will determine the number of shares you can instruct us to vote 180 days or less before a trust shareholder meeting. We will ask you for voting instructions by mail at least 10 days before the meeting. If we do not receive your instructions in time, we will vote the shares in the same proportion as the instructions received from all Contracts in that variable sub-account. We will also vote shares we hold in Variable Annuity Account B that are not attributable to Contract Owners in the same proportion. The effect of proportional voting is that a small number of Contract Owners may decide the outcome of a vote.

State Regulation

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We are regulated by the Insurance Department of the State of Connecticut. We are also subject to the insurance laws and regulations of all jurisdictions in which we do business. The Contract offered by this prospectus has been approved where required by such jurisdictions. We are required to submit annual statements of our operations, including financial statements, to the insurance departments of the various jurisdictions in which we do business to allow regulators to assess our solvency and compliance with state insurance laws and regulations.

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Legal Proceedings

We are not aware of any current or pending legal proceedings that involve Variable Annuity Account B as a party.

The Company is involved in threatened or pending lawsuits/arbitrations arising from the normal conduct of its 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.

Directed Services LLC, the principal underwriter and distributor of the Contract, is a party to threatened or pending lawsuits/arbitration that generally arise from the normal conduct of business. Some of these suits may seek class action status and sometimes include claims for substantial compensatory, consequential or punitive damages and other types of relief. Directed Services LLC is not involved in any legal proceeding which, in the opinion of management, is likely to have a material adverse effect on its ability to distribute the Contract.

United States Federal Income Tax Considerations

Introduction

The Contract is designed to be treated as an annuity for U.S. federal income tax purposes. The U.S. federal income tax treatment of the Contract is complex and sometimes uncertain. You should keep the following in mind when reading it:

Your tax position (or the tax position of the designated Beneficiary, as applicable) may influence the U.S. federal

taxation of amounts held, or paid out, under the Contract;

Tax laws change. It is possible that a change in the future could retroactively affect contracts issued in the past,

including your Contract;

This section addresses some, but not all, applicable U.S. federal income tax rules and does not discuss U.S. federal

estate and gift tax implications, state and local taxes, taxes of any foreign jurisdiction or any other tax provisions; and

No assurance can be given that the Internal Revenue Service, or IRS, would not assert, or that a court would not

sustain, a position contrary to any of those set forth below.

The information provided herein is not tax advice. For advice about the effect of U.S. federal income tax laws affecting the Contract, state tax laws or any other tax laws affecting the Contract or any transactions involving the Contract, you should consult a tax adviser.

Types of Contracts: Non-Qualified and Qualified

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Non-qualified annuity contracts are purchased with after-tax money to save money for retirement in exchange for the right to receive annuity payments for either a specified period of time or over the lifetime of an individual. Qualified annuity contracts are designed for use by individuals whose premium payments are comprised solely of proceeds from retirement plans, pre-tax contributions to Individual Retirement Annuities (“IRA”) or after-tax contributions to a Roth IRA that are intended to qualify for special favorable income tax treatment under Section 408 or 408A of the Code, respectively.

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Taxation of Non-Qualified Contracts

Premiums

You may not deduct the amount of premiums paid into a non-qualified annuity contract.

Taxation of Gains Prior to Distribution

Section 72 of the Code governs the general U.S. federal income taxation of annuity contracts. If the owner of a non-qualified annuity contract is a natural person (e.g., an individual), generally such owner will not be taxed on increases in the value of his or her non-qualified contract until a distribution occurs or until annuity payments begin. An agreement to assign or pledge any portion of the contract’s value generally will be treated as a distribution. To be eligible to defer U.S. federal income taxation on the increases in the value of the contract, each of the following requirements must be satisfied.

1.	Diversification. Section 817(h) of the Code requires that the investments of the funds that comprise a separate account in a variable annuity contract be “adequately diversified” in order for a non-qualified contract to qualify as an annuity contract under U.S. federal income tax law. Variable Annuity Account B, through its funds, intends to comply with the diversification requirements prescribed by Section 817(h) of the Code and Treasury regulation section 1.817-5, and any rulings made thereunder, which affect how the assets of the various funds in Variable Annuity Account B may be invested. If your Contract does not satisfy the applicable diversification requirements because Variable Annuity Account B’s funds fail to be, or remain, adequately diversified, we will take appropriate steps to bring your Contract into compliance with applicable law, regulations and rulings. We reserve the right to modify your Contract as necessary to satisfy such diversification requirements.
2.	Investor Control. Although earnings under non-qualified annuity contracts generally are not taxed until withdrawn, the IRS has stated in published rulings that a variable contract owner will be considered the owner of separate account assets if such contract owner possesses incidents of investment control over such 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 variable contract owners could direct their investments among sub- accounts without being treated as owners of the underlying assets of the separate account may adversely affect the tax treatment of existing contracts, such as the Contract. Therefore, the Company reserves the right to modify your Contract as necessary to prevent you from being considered the owner of a pro rata share of the assets of Variable Annuity Account B for U.S. federal income tax purposes.
3.	Required Distributions. To be treated as an annuity contract for U.S. federal income tax purposes, the Code requires any non-qualified contract to contain certain provisions specifying how the owner’s interest will be distributed in the

event of the owner’s death. As a result, your Contract contains certain provisions that are intended to comply with these Code requirements.

Different distribution requirements apply if the contract owner’s death occurs:

After he or she begins receiving annuity payments under the contract; or Before he or she begins receiving such distributions.

If the contract owner’s death occurs after he or she begins receiving annuity payments, distributions must be made at least as rapidly as under the method in effect at the time of such contract owner’s death.

If the contract owner’s death occurs before he or she begins receiving annuity payments, such contract owner’s entire balance must be distributed within five years after the date of his or her death. For example, if the contract owner died on September 1, 2009, his or her entire balance must be distributed by August 31, 2014. However, if distributions begin within one year of such contract owner’s death, then payments may be made over either of the following two timeframes:

Over the life of the designated beneficiary; or

Over a period not extending beyond the life expectancy of the designated beneficiary.

Under the terms of the Contract, if the designated Beneficiary is your spouse, your Contract may be continued after your death with the surviving spouse as the new Contract Owner.

There are currently no regulations interpreting these Code requirements; however, if such requirements are clarified by regulation or otherwise, we will review the distribution provisions in your Contract and, if necessary, modify them to assure that such provisions comply with the applicable requirements.

4.	Owners of Non-Qualified Contracts That Are Not Natural Persons. If the owner of a non-qualified annuity contract is not a natural person, such contract generally is not treated as an annuity for U.S. federal income tax purposes and any income on such contract during the applicable taxable year is taxable as ordinary income. The income on the contract during the applicable taxable year is equal to any increase in the contract’s value over the “investment in the contract” (generally, the premiums or other consideration paid for such contract less any nontaxable withdrawals) during such taxable year. There are certain exceptions to this rule, and a non-natural person considering an investment in the Contract should consult with its tax adviser prior to purchasing the Contract. If the Contract Owner is not a natural person and the primary Annuitant dies, the same rules apply on the death of the primary Annuitant as outlined above for the death of a Contract Owner.
	When the contract owner is a non-natural person, a change in the annuitant is treated as the death of such contract owner.
5.	Delayed Annuity Starting Date. If the date on which annuity payments begin under a non-qualified annuity contract occurs, or is scheduled to occur, at a time after the annuitant has, or will have, reached an advanced age (e.g., after age 95), it is possible that such contract will not be treated as an annuity for U.S. federal income tax purposes. In that event, the income and gains under such contract could be currently includible in the contract owner’s taxable income.

Taxation of Distributions

General. When a withdrawal from a non-qualified annuity contract occurs, the amount received will be treated as ordinary income, subject to U.S. federal income tax, up to an amount equal to the excess, if any, of the contract’s value immediately prior to the distribution (without regard to the amount of any surrender charge) over the contract owner’s investment in the contract at such time. Investment in the contract generally is equal to the amount of all premiums paid into the contract, plus amounts previously included in taxable income as a result of certain loans, assignments, pledges and gifts, less the aggregate amount of non-taxable distributions previously made under such contract.

In the case of a surrender of a non-qualified annuity contract, the amount received generally will be taxable only to the extent it exceeds the contract owner’s investment in such contract (i.e., the cost basis).

10% Penalty Tax. A distribution from a non-qualified annuity contract may be subject to a U.S. federal tax penalty equal to 10% of the amount treated as income. In general, however, there is no penalty on distributions from non-qualified contracts if such distributions are:

Made on or after the taxpayer reaches age 59½;

Made on or after the death of the contract owner (or the annuitant, if the contract owner is a non-natural person); Attributable to the taxpayer’s becoming “disabled,” as defined in the Code; made as part of a series of substantially equal periodic payments (which payments are made at least annually) over the life or the life expectancy of the taxpayer, or the joint lives or joint life expectancies of the taxpayer and his, her or its designated beneficiary; or Allocable to investment in the contract before August 14, 1982.

The 10% penalty does not apply to distributions from an “immediate annuity,” as defined in the Code. Other exceptions may be applicable under certain circumstances, and special rules may be applicable in connection with the exceptions listed above. You should consult a tax adviser with regard to whether any distributions from your Contract meet the exceptions from the 10% penalty tax as provided in the Code.

Tax-Free Exchanges. Section 1035 of the 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 adviser regarding the procedures for making a Section 1035 exchange.

If your Contract is acquired through a tax-free exchange of a life insurance, endowment or annuity contract that was purchased prior to August 14, 1982, then any distributions from your Contract, other than Annuity Payments, will be treated, for U.S. federal income tax purposes, as coming:

First, from any remaining “investment in the contract” made prior to August 14, 1982 and exchanged into your Contract; Second, from any “income on the contract” attributable to the investment made prior to August 14, 1982; Third, from any remaining “income on the contract”; and Fourth, 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 annuity contract will be tax-free. Pursuant to IRS guidance, receipt of withdrawals, surrenders or annuity payments (annuitizations) from either an original contract or a new contract during the 12-month period following the partial exchange may retroactively negate the tax-free treatment of the partial exchange. If this occurs, the partial surrender of the original contract will be treated as a withdrawal, taxable as ordinary income to the extent of gain in the original contract. Furthermore, if the partial exchange occurred prior to the contract owner reaching age 59½, the contract owner may be subject to an additional 10% tax penalty. A taxable event may be avoided if certain requirements identified as a qualifying event are satisfied. We are not responsible for the manner in which any other insurance companies administer, recognize or report, for U.S. federal income tax purposes, Section 1035 exchanges and partial exchanges and what the ultimate tax treatment may be by the IRS. You should consult with your tax adviser with respect to any proposed Section 1035 exchange or partial exchange prior to proceeding with any such transaction with respect to your Contract.

Tax Consequences of the MGWB. Except as otherwise noted below, when a Withdrawal from a non-qualified annuity contract occurs under a minimum guaranteed withdrawal provision of your Contract, the amount you receive will be treated as ordinary income subject to U.S. federal income tax up to an amount equal to the excess, if any, of the Contract’s value (unreduced by the amount of any deferred sales charge) immediately before the distribution over your 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 and gifts, less the aggregate amount of non-taxable distributions you previously made from your Contract. For non-qualified contracts, the income on the Contract for purposes of calculating the taxable amount of a distribution may be unclear. For example, the living benefits provided under the MGWB provisions of your contract could increase the applicable Contract value. As a result, you could have higher amounts of income than will be reported to you. In addition, payments under any guaranteed payment phase of the minimum guaranteed withdrawal provisions after your Contract’s value has been reduced to zero may be subject to the exclusion ratio rules under Section 72(b) of the Code for U.S. federal income tax purposes.

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Payments of the Maximum Annual Withdrawal under the Table 2 Annuity Plans (see page 41 ) are designed to be treated as Annuity Payments for withholding and tax reporting purposes. A portion of each such Annuity Payment is generally not taxed as ordinary income, and the remainder is taxed as ordinary income. The non-taxable portion of the 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. Any Withdrawals in addition to the Annuity Payments of the Maximum Annual Withdrawal, if permitted, constitute Excess Withdrawals, causing a pro rata reduction of the MGWB Base and Maximum Annual Withdrawal. This reduction will result in a proportional reduction in the non-taxable portion of your future Maximum Annual Withdrawal payments. Once your investment in the Contract

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has been fully recovered, the full amount of each of your future Maximum Annual Withdrawal payments would be subject to U.S. federal income tax as ordinary income.

The U.S. federal income tax treatment of partial annuitizations is unclear. We currently treat any partial annuitization, such as those associated with the minimum guaranteed income benefit, as Withdrawals rather than Annuity Payments. You should consult your tax adviser before electing a partial annuitization of your Contract.

Taxation of Annuity Payments. Although the U.S. federal income tax consequences may vary depending on the payment option elected under an annuity contract, a portion of each annuity payment generally is not taxed as ordinary income, while the remainder is taxed as ordinary income. The non-taxable portion of an annuity payment generally is determined in a manner that is designed to allow the contract owner to recover his, her or its investment in the annuity contract ratably on a tax-free basis over the expected stream of annuity payments when annuity payments begin. Once the investment in such contract has been fully recovered, the full amount of each subsequent annuity payment will be subject to tax as ordinary income.

The U.S. federal income tax treatment of partial annuitizations is unclear. We currently treat any partial annuitizations involving the Contract as Withdrawals rather than as Annuity Payments. You should consult your tax adviser before electing a partial annuitization with respect to your Contract.

Death Benefits. Amounts may be distributed from an annuity contract, such as the Contract, because of the contract owner’s 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, such amounts are taxed in the same manner as a surrender of the contract, or (ii) if distributed under a payment option, such amounts are taxed in the same way as annuity payments. As discussed above, the Code contain special rules that specify how the contract owner’s interest in a non-qualified contract will be distributed and taxed in the event of the contract owner’s death.

Assignments and Other Transfers. A transfer, pledge or assignment of ownership of a non-qualified annuity contract, the selection of certain annuity dates or the designation of an annuitant or payee other than a contract owner may result in certain tax consequences that are not discussed herein. The assignment, pledge or agreement to assign or pledge any portion of the contract value generally will be treated as a distribution. You should consult your tax adviser regarding the potential tax effects of any transfer, pledge, assignment, or designation or exchange of your Contract or any portion of your Contract value.

Immediate Annuities. Under Section 72 of the Code, an “immediate annuity” means an annuity (i) that is purchased with a single premium, (ii) with annuity payments starting within one year from the date of purchase, and (iii) that provides a series of substantially equal periodic payments made at least annually. Your Contract is not designed as an immediate annuity. If your Contract were treated as an immediate annuity, it could affect the U.S. federal income tax treatment of your Contract with respect to (a) the application of certain exceptions from the 10% early Withdrawal penalty, (b) ownership, if the Owner is not a natural person, and (c) certain exchanges.

Multiple Contracts. U.S. federal income tax laws require that all non-qualified annuity contracts that are issued by a company or its affiliates to the same contract owner during any calendar year be treated as one annuity contract for purposes of determining the amount includible in gross income under Section 72(e) of the Code. In addition, the Treasury Department has specific authority to issue regulations that prevent the avoidance of Section 72(e) of the Code through the serial purchase of annuity contracts or otherwise.

Withholding. We will withhold and remit to the IRS a part of the taxable portion of each distribution made under your Contract unless the intended recipient of the distribution notifies us at or before the time of such distribution that the recipient elects not to have any amounts withheld. Withholding is mandatory, however, if the intended recipient of such distribution 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 to have U.S. federal income tax withheld, you are still liable for payment of U.S. federal income tax on the taxable portion of the payment.

Certain states have indicated that state income tax withholding will also apply to payments from the Contracts made to their residents. Generally, an election out of federal withholding will also be considered an election out of state withholding. In some state, you may elect out of state withholding, even if federal withholding applies. If you need more information concerning a particular state or any required forms, please contact our customer service center. Contact information appears on page 1.

If you or your designated Beneficiary is a non-resident alien, withholding is governed by Section 1441 of the Code based on your or your designated Beneficiary’s citizenship, country of domicile and treaty status, and we may require additional documentation or information prior to processing any requested transaction.

Taxation of Qualified Contracts

General

The tax rules applicable to owners of qualified contracts vary according to the type of qualified contract and the specific terms and conditions of the qualified contract. Qualified annuity contracts are designed for use by individuals whose premium payments are comprised solely of proceeds from retirement plans, pre-tax contributions to IRA or after-tax contributions to a Roth IRA that are intended to qualify for special favorable income tax treatment under Sections 408 or 408A of the Code, respectively. The ultimate effect of U.S. federal income taxes on the amounts held under a qualified contract, or on annuity payments from a qualified contract, depends on the type of qualified contract and your tax position. Special favorable tax treatment may be available for certain types of contributions and distributions. In addition, certain requirements must be satisfied in purchasing a qualified contract with proceeds from a tax-qualified retirement plan in order to continue receiving favorable tax treatment.

Under U.S. federal income tax laws, earnings on amounts held in qualified annuity contracts used as an IRA or Roth IRA generally are not taxed until they are withdrawn. It is not necessary, however, to purchase a qualified contract to obtain the favorable tax treatment accorded to an IRA or Roth IRA under Sections 408 or 408A of the Code, respectively. A qualified contract, therefore, does not provide any tax benefits beyond the deferral already available to an IRA or Roth IRA under the Code. Qualified contracts do provide other features and benefits (such as guaranteed living benefits and/or Death Benefits or the option of lifetime income phase options at established rates) that may be valuable to you. You should discuss the alternatives available to you with your financial adviser, taking into account the additional fees and expenses you may incur in purchasing a qualified contract, such as the Contract.

Adverse tax consequences may result from: (i) contributions in excess of specified limits; (ii) distributions before age 59½ (subject to certain exceptions); (iii) distributions that do not conform to specified commencement and minimum distribution rules; and (iv) certain other specified circumstances. Some qualified contracts may be subject to additional distribution or other requirements that are not incorporated into your Contract. No attempt is made to provide more than general information about the use of this Contract as a qualified contract. Contract Owners, Annuitants and Beneficiaries are cautioned that the rights of any person to any benefits under qualified contracts may be subject to the terms and conditions of the retirement plans or programs themselves, regardless of the terms and conditions of the Contract. The Company is not bound by the terms and conditions of such plans to the extent such terms contradict any language of the Contract, unless we consent to be so bound.

Contract Owners and Beneficiaries generally are responsible for determining that contributions, distributions and other transactions with respect to the Contract comply with applicable law. Therefore, you should consult your legal and tax advisers regarding the suitability of the Contract for your particular situation.

Tax Deferral

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The following discussion assumes that a qualified contract is purchased with premium payments that are comprised solely of proceeds from retirement plans, pre-tax contributions to IRA or after-tax contributions to a Roth IRA that are intended to qualify for special favorable income tax treatment under Sections 408 or 408A of the Code, respectively.

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Individual Retirement Annuities. Section 408 of the Code permits eligible individuals to contribute to an individual retirement program known as an Individual Retirement Annuity. IRAs are subject to limits on (i) the amounts that can be contributed, (ii) the deductible amount of the contribution and (iii) the time when distributions can begin. Contributions to IRAs must be made in cash or as a rollover or a transfer from another eligible plan. Also, distributions from IRAs, individual retirement accounts and other types of retirement plans may be “rolled over” on a tax-deferred basis into an IRA. 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 an IRA, you may not make another tax-free rollover from the IRA within a one-year period. You should be aware that sales of the Contract for use with IRAs may be subject to special requirements imposed by the IRS.

The IRS has not reviewed the Contract described in this prospectus for qualification as an IRA and has not addressed, in a ruling of general applicability, whether the Contract’s Death Benefit provisions comply with IRS qualification requirements. You should consult with your tax adviser in connection with purchasing the Contract as an IRA.

Roth IRAs. Section 408A of the Code permits certain eligible individuals to contribute to a Roth IRA. Contributions to a Roth IRA are not deductible, are subject to certain limitations 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 a SIMPLE 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 within a one-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 such conversion was made.

Sales of a contract for use with a Roth IRA may be subject to special requirements imposed by the IRS. The IRS has not reviewed the Contract described in this prospectus for qualification as a Roth IRA and has not addressed, in a ruling of general applicability, whether the Contract’s Death Benefit provisions comply with IRS qualification requirements. You should consult with your tax adviser in connection with purchasing the Contract as a Roth IRA.

Premiums

In order to be excludable from gross income for U.S. federal income tax purposes, total annual premiums to certain qualified contracts are limited by the Code. You should consult with your tax adviser in connection with premiums to a qualified contract.

Distributions – General

Certain tax rules apply to distributions from the Contract. A distribution is any amount taken from your Contract including Withdrawals, Annuity Payments, rollovers, exchanges and Death Benefit proceeds. We report the taxable portion of all distributions to the IRS.

Individual Retirement Annuities. All distributions from an IRA are taxed when received unless either one of the following is true:

The distribution is rolled over to another IRA or to a plan eligible to receive rollovers as permitted under the Code; or

The IRA owner made after-tax contributions to the IRA (e.g., Roth). In this latter case, the distribution will be taxed

according to the rules detailed in the Code.

The Code imposes a 10% penalty tax on the taxable portion of any distribution from an IRA unless certain exceptions, including one or more of the following, have occurred:

The IRA owner has attained age 59½;

The IRA owner has become “disabled,” as defined in the Code;

The IRA owner has died and the distribution is to the beneficiary of such IRA;

The distribution amount is rolled over into another eligible retirement plan or to an IRA in accordance with the terms

of the Code;

The distribution is made due to an IRS levy upon the IRA owner’s plan;

The withdrawal amount is paid to an alternate payee under a Qualified Domestic Relations Order (“QDRO”); or

The distribution is a qualified reservist distribution as defined under the Pension Protection Act of 2006.

In addition, the 10% penalty tax does not apply to a distribution made from an IRA to pay for health insurance premiums for certain unemployed individuals, for a qualified first-time home purchase or for higher education expenses.

Roth IRAs. A qualified distribution from a Roth IRA is not taxed when it is received. A qualified distribution is a distribution that is both:

Made after the five-taxable year period beginning with the first taxable year for which a contribution was made to the

Roth IRA’s owner; and

(a) Made after the Roth IRA owner (i) attains age 59½, (ii) dies, or (iii) becomes “disabled,” as defined in the Code, or

(b) Is for a qualified first-time home purchase.

If a distribution is not qualified, generally it will be taxable to the extent of the accumulated earnings. A partial distribution will first be treated as a return of contributions that is not taxable and then as taxable accumulated earnings.

The Code imposes a 10% penalty tax on the taxable portion of any distribution from a Roth IRA that is not a qualified distribution unless certain exceptions have been met. In general, the exceptions from imposition of the 10% penalty on distribution from an IRA listed above also apply to a distribution from a Roth IRA. The 10% penalty tax is also waived on a distribution made from a Roth IRA to pay for health insurance premiums for certain unemployed individuals, for a qualified first-time home purchase or for higher education expenses.

Lifetime Required Minimum Distributions (IRAs only). To avoid certain tax penalties, you and any designated Beneficiary must also meet the minimum distribution requirements imposed by the Code. These rules may dictate the following:

The start date for distributions;

The time period in which all amounts in your account(s) must be distributed; and

Distribution amounts.

Start Date and Time Period. Generally, you must begin receiving distributions by April 1 of the calendar year following the calendar year in which you attain age 70½. We must pay out distributions from your Contract over a period not extending beyond one of the following time periods:

Over your life or the joint lives of you and your designated Beneficiary; or

Over a period not greater than your life expectancy or the joint life expectancies of you and your designated Beneficiary.

Distribution Amounts. The amount of each required distribution must be calculated in accordance with Section 401(a)(9) of the Code. The entire interest in the account includes the amount of any outstanding rollover, transfer, recharacterization, if applicable, and the actuarial present value of other benefits provided under the account, such as guaranteed death benefits.

50% Excise Tax. If you fail to receive the minimum required distribution for any tax year, a 50% excise tax may be imposed on the required amount that was not distributed.

Lifetime Required Minimum Distributions are not applicable to Roth IRAs during your lifetime. Further information regarding required minimum distributions may be found in your Contract.

Required Distributions upon Death (IRAs and Roth IRAs Only). Different distribution requirements apply to qualified contacts after your death, depending upon if you have been receiving required minimum distributions. Further information regarding required distributions upon death may be found in your Contract.

If your death occurs on or after you begin receiving minimum distributions under the Contract, distributions generally must be made at least as rapidly as under the method in effect at the time of your death. Section 401(a)(9) of the Code provides specific rules for calculating the required minimum distributions after your death.

If your death occurs before you begin receiving minimum distributions under your 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 died on September 1, 2006, your entire balance must be distributed to the designated Beneficiary by December 31, 2011. 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:

Over the life of the designated Beneficiary; or

Over a period not extending beyond the life expectancy of the designated Beneficiary.

Start Dates for Spousal Beneficiaries. If the designated Beneficiary is your spouse, distributions must begin on or before the later of the following:

December 31 of the calendar year following the calendar year of your death; or December 31 of the calendar year in which you would have attained age 70½.

No Designated Beneficiary. If there is no designated Beneficiary, the entire interest generally must be distributed by the end of the calendar containing the fifth anniversary of the your death.

Special Rule for IRA Spousal Beneficiaries (IRAs and Roth IRAs Only). In lieu of taking a distribution under these rules, if the sole designated Beneficiary is the Contract Owner’s surviving spouse, the spousal Beneficiary may elect to treat the Contract as his or her own IRA and defer taking a distribution until his or her own start date. The surviving spouse will be deemed to have made such an election if the surviving spouse makes a rollover to or from the Contract or fails to take a distribution within the required time period.

Withholding

Any taxable distributions under the Contract are generally subject to withholding. U.S. federal income tax liability rates vary according to the type of distribution and the recipient’s tax position.

IRAs and Roth IRAs. Generally, you or, if applicable, a designated Beneficiary may elect not to have tax withheld from distributions.

Non-resident Aliens. If you or your designated Beneficiary is a non-resident alien, then any withholding is governed by Section 1441 of the Code based on your or your designated Beneficiary’s citizenship, country of domicile and treaty status, and we may require additional documentation prior to processing any requested information.

Assignment and Other Transfers

IRAs and Roth IRAs. The Code does not allow a transfer or assignment of your rights under the IRA Contracts or Roth IRA Contracts except in limited circumstances. Adverse tax consequences may result if you assign or transfer your interest in the such a Contract to persons other than your spouse incident to a divorce. You should consult your tax adviser regarding the potential tax effects of such a transaction if you are contemplating such an assignment or transfer.

Possible Changes in Taxation

Although the likelihood of changes in tax legislation, regulation, rulings and other interpretations thereof is uncertain, there is always the possibility that the tax treatment of the Contract could change by such means. It is also possible that any such change could be retroactive (i.e., effective before the date of the change). You should consult a tax adviser with respect to legislative and regulatory developments and their potential effects on the Contract.

Taxation of Company

We are taxed as a life insurance company under the Code. Variable Annuity Account B 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 Variable Annuity Account B to increase reserves under the Contracts. Because of this, under existing U.S. 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 Variable Annuity Account B will be first used to reduce any income taxes imposed on such separate account before being used by the Company.

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In summary, we do not expect that we will incur any U.S. federal income tax liability attributable to Variable Annuity Account B and we do not intend to make any provision for such taxes. However, changes in U.S. federal tax laws and/or the interpretation thereof may result in our being taxed on income or gains attributable to Variable Annuity Account B. In this case, we may impose a charge against Variable Annuity Account B (with respect to some or all of the Contracts) to set aside provisions to pay any such taxes. We may deduct this amount from Variable Annuity Account B, including from your Accumulation Value invested in the variable sub-accounts.

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Statement of Additional Information
Table of Contents
Item	Page
General Information and History	2
Variable Annuity Account B	3
Offering and Purchase of Contracts	3
Accumulation Unit Value	3
Sales Material and Advertising	4
Independent Registered Public Accounting Firm	4
Consolidated Financial Statements of ING Life Insurance and Annuity Company	C-1
Unaudited Condensed Financial Statements of ING Life Insurance and Annuity Company
Financial Statements of the Separate Account (Variable Annuity Account B)	S-1
Unaudited Financial Statements of the Separate Account (Variable Annuity Account B)

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Please tear off, complete and return the form below to request, free of charge, a Statement of Additional Information for the Contract offered under this prospectus. Send the completed form to our Customer Service Center at the address specified on page 1.

PLEASE SEND ME A FREE COPY OF THE STATEMENT OF ADDITIONAL INFORMATION FOR VARIABLE ANNUITY ACCOUNT B.

Please Print or Type:

_________________________________________________
Name

_________________________________________________
Social Security Number

_________________________________________________
Street Address

_________________________________________________
City, State, Zip

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PART B

VARIABLE ANNUITY ACCOUNT B

ING LIFE INSURANCE AND ANNUITY COMPANY

ING SELECT OPPORTUNITIES

Statement of Additional Information

Dated

February 25, 2010

This Statement of Additional Information is not a prospectus and should be read in conjunction with the current
prospectus for Variable Annuity Account B (the “Separate Account”) dated February 25, 2010.

A free prospectus is available upon request from the local ING Life Insurance and Annuity Company office or by
writing to or calling:

ING

P.O. Box 10450

Des Moines, IA 50306-040

(888) 854-5950

Read the prospectus before you invest. Terms used in this Statement of Additional Information shall have the same
meaning as in the prospectus.


TABLE OF CONTENTS

	Page

General Information and History	2
Variable Annuity Account B	3
Offering and Purchase of Contracts	3
Accumulation Unit Value	3
Sales Material and Advertising	4
Independent Registered Public Accounting Firm	4
Consolidated Financial Statements of ING Life Insurance and Annuity Company	C-1
Unaudited Condensed Financial Statements of ING Life Insurance and Annuity Company
Financial Statements of the Separate Account (Variable Annuity Account B)	S-1
Unaudited Financial Statements of the Separate Account (Variable Annuity Account B)

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 January 1, 2002, the Company
was known as Aetna Life Insurance and Annuity Company. Through a merger, it succeeded to the business of Aetna
Variable Annuity Life Insurance Company (formerly Participating Annuity Life Insurance Company organized in
1954).

As of December 31, 2008, the Company had $50 billion invested through its products, including $37 billion in its
separate accounts (of which the Company’s investment management affiliates manage or oversee the management
of $22 billion). Based on assets, ING Life Insurance and Annuity Company is ranked among the top 2% of all life
and health insurance companies rated by A.M. Best Company as of July 15, 2008. The Company is an indirect
wholly owned subsidiary of ING Groep N.V., a global financial institution active in the fields of insurance, banking
and asset management and is a direct, wholly owned subsidiary of Lion Connecticut Holdings Inc. The Company is
engaged in the business of issuing life insurance policies and annuity contracts. Our Home Office is located at One
Orange Way, Windsor, Connecticut 06095-4774.

The Company serves as the depositor for the separate account.

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 and Expenses” in the prospectus).

The assets of the separate account are held by the Company. The separate account has no custodian. However, the
funds in whose shares the assets of the separate account are invested each have custodians, as discussed in their
respective prospectuses.

From this point forward, the term “contract(s)” refers only to those offered through the prospectus.

VARIABLE ANNUITY ACCOUNT B

Variable Annuity Account B is a separate account established by the Company for the purpose of funding variable
annuity contracts issued by the Company. The separate account is registered with the Securities and Exchange
Commission (“SEC”) as a unit investment trust under the Investment Company Act of 1940, as amended. Payments
to accounts under the contract may be allocated to one or more of the subaccounts. Each subaccount invests in the
shares of only one of the funds offered under the contracts. We may make additions to, deletions from or
substitutions of available investment options as permitted by law and subject to the conditions of the contract. The
availability of the funds is subject to applicable regulatory authorization. Not all funds are available in all
jurisdictions, under all contracts, or under all plans.

OFFERING AND PURCHASE OF CONTRACTS

The Company’s subsidiary, Directed Services, LLC serves as the principal underwriter for contracts. Directed
Services, LLC, a Delaware limited liability company, is registered as a broker-dealer with the SEC. Directed
Services, LLC is also a member of the Financial Industry Regulatory Authority, Inc., or FINRA . Directed Services,
LLC’s principal office is located at 1475 Dunwoody Drive, West Chester, PA, 19380-1478. Directed Services, LLC
offers the securities under the Contracts on a continuous basis. A description of the manner in which contracts are
purchased may be found in the prospectus under the sections entitled “The Annuity Contract” and “Contract
Purchase Requirements.”

Compensation paid to the principal underwriter, Directed Services, LLC, reflects compensation paid to Directed
Services, LLC attributable to regulatory and operating expenses associated with the distribution of all registered
variable annuity products issued by Variable Annuity Account B of ING Life Insurance and Annuity Company.

ACCUMULATION UNIT VALUE

The calculation of the Accumulation Unit Value (“AUV”) is discussed in the prospectus for the Contracts under
Condensed Financial Information. The following illustrations show a calculation of a new AUV and the purchase of
Units (using hypothetical examples). Note that the examples below do not reflect the mortality and expense risk
charge for this product and are for illustration purposes only. For AUV’s calculated for this Contract, please see the
Condensed Financial Information in the prospectus.

ILLUSTRATION OF CALCULATION OF AUV
EXAMPLE 1.
1. AUV, beginning of period	$10.00
2. Value of securities, beginning of period	$10.00
3. Change in value of securities	$0.10
4. Gross investment return (3) divided by (2)	0.01
5. Less daily mortality and expense charge	0.00004280
6. Less asset based administrative charge	0.00000411
7. Net investment return (4) minus (5) minus (6)	0.009953092
8. Net investment factor (1.000000) plus (7)	1.009953092
9. AUV, end of period (1) multiplied by (8)	$10.09953092

ILLUSTRATION OF PURCHASE OF UNITS (ASSUMING NO STATE PREMIUM TAX)

EXAMPLE 2.
1. Initial premium payment	$1,000
2. AUV on effective date of purchase (see Example 1)	$10.00
3. Number of units purchased (1) divided by (2)	100
4. AUV for valuation date following purchase (see Example 1)	$10.09953092
5. Contract Value in account for valuation date following purchase
(3) multiplied by (4)	$1,009.95

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, 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 funds in
terms of the asset classes they represent and use such categories in marketing material 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 or participants. 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, 55 Ivan Allen Jr. Boulevard, Suite 1000, 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
and the Company include the audit of the separate account’s financial statements and the consolidated financial
statements of the Company incorporated in reliance upon the reports of such firm given upon their authority as
experts in accounting and auditing.

Financial Statements of ING Life Insurance and Annuity Company

The audited financial statements of ING Life Insurance and Annuity Company are listed below and are included in

this Statement of Additional Information:

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, 2008, 2007 and 2006

Consolidated Balance Sheets as of December 31, 2008 and 2007

Consolidated Statements of Changes in Shareholder’s Equity for the years ended December 31, 2008, 2007

and 2006

Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006

Notes to Financial Statements

The unaudited financial statements of ING Life Insurance and Annuity Company are listed below and are included

in this Statement of Additional Information:

Unaudited Condensed Financial Statements of ING Life Insurance and Annuity Company

Unaudited Condensed Consolidated Statements of Operations for the three months ended September 30,

2009 and 2008, and the nine months ended September 30, 2009 and 2008

Condensed Consolidated Balance Sheets as of September 30, 2009 (unaudited) and as of December 31,

2008

Unaudited Condensed Consolidated Statements of Changes in Shareholder’s Equity for the nine months

ended September 30, 2009 and 2008

Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30,

2009 and 2008

Unaudited Notes to Condensed Consolidated Financial Statements

Financial Statements of Variable Annuity Account B

The audited financial statements of Variable Annuity Account B are listed below and are included in this Statement

of Additional Information

Financial Statements of Variable Annuity Account B

Report of Independent Registered Public Accounting Firm

Statements of Assets and Liabilities as of December 31, 2008

Statements of Operations for the year ended December 31, 2008

Statements of Changes in Net Assets for the years ended December 31, 2008 and 2007

Notes to Financial Statements

The unaudited financial statements of Variable Annuity Account B are listed below and are included in this

Statement of Additional Information

Unaudited Financial Statements of Variable Annuity Account B

Unaudited Statements of Assets and Liabilities as of September 30, 2009

Unaudited Statements of Operations for the nine months ended September 30, 2009

Unaudited Statements of Changes in Net Assets for the nine months ended September 30, 2009 and the

year ended December 31, 2008

Unaudited Notes to Financial Statements

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)


Index to Consolidated Financial Statements
	Page
Report of Independent Registered Public Accounting Firm	C-2

Consolidated Financial Statements:

Consolidated Statements of Operations for the years ended
December 31, 2008, 2007, and 2006	C-3

Consolidated Balance Sheets as of
December 31, 2008 and 2007	C-4

Consolidated Statements of Changes in Shareholder's Equity
For the years ended December 31, 2008, 2007, and 2006	C-6

Consolidated Statements of Cash Flows for the years ended
December 31, 2008, 2007, and 2006	C-7

Notes to Consolidated Financial Statements	C-9

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 and subsidiaries as of December 31, 2008 and 2007, 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, 2008. 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 audits 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 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 and subsidiaries
as of December 31, 2008 and 2007, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 2008, in conformity with U.S.
generally accepted accounting principles.

/s/ Ernst & Young LLP

Atlanta, Georgia
March 26, 2009

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,
	2008	2007	2006
Revenue:
Net investment income	$ 1,083.7	$ 1,054.7	$ 1,029.7
Fee income	612.9	769.9	714.8
Premiums	46.9	46.8	37.5
Broker-dealer commission revenue	622.5	568.4	429.2
Net realized capital (losses) gains	(653.1)	(27.6)	3.0
Other income	21.3	20.3	15.7
Total revenue	1,734.2	2,432.5	2,229.9
Benefits and expenses:
Interest credited and other benefits
to contractowners	1,432.4	802.8	783.7
Operating expenses	687.5	652.2	568.3
Broker-dealer commission expense	622.5	568.4	429.2
Net amortization of deferred policy acquisition
cost and value of business acquired	128.9	129.2	21.3
Interest expense	1.4	5.5	2.9
Total benefits and expenses	2,872.7	2,158.1	1,805.4
(Loss) income before income taxes	(1,138.5)	274.4	424.5
Income tax (benefit) expense	(108.3)	56.0	122.7
Net (loss) income	$ (1,030.2)	$ 218.4	$ 301.8

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)


	As of December 31,
	2008	2007

Assets
Investments:
Fixed maturities, available-for-sale, at fair value
(amortized cost of $14,632.6 at 2008 and $13,374.7 at 2007)	$ 13,252.2	$ 13,316.3
Equity securities, available-for-sale, at fair value
(cost of $247.7 at 2008 and $440.1 at 2007)	240.3	446.4
Short-term investments	41.9	167.9
Mortgage loans on real estate	2,107.8	2,089.4
Policy loans	267.8	273.4
Limited partnerships/corporations	513.9	636.1
Other investments	235.2	34.8
Securities pledged (amortized cost of $1,160.5 at 2008 and $940.2 at 2007)	1,225.4	934.1
Total investments	17,884.5	17,898.4
Cash and cash equivalents	203.5	252.3
Short-term investments under securities loan agreement,
including collateral delivered	483.9	202.7
Accrued investment income	205.8	168.3
Receivables for securities sold	5.5	5.6
Reinsurance recoverable	2,505.6	2,594.4
Deferred policy acquisition costs	865.5	728.6
Value of business acquired	1,832.5	1,253.2
Notes receivable from affiliate	175.0	175.0
Due from affiliates	13.8	10.6
Current income tax recoverable	38.6	-
Property and equipment	114.7	147.4
Other assets	233.3	112.1
Assets held in separate accounts	35,927.7	48,091.2
Total assets	$ 60,489.9	$ 71,639.8

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 Balance Sheets
(In millions, except share data)


	As of December 31,
	2008	2007

Liabilities and Shareholder's Equity
Future policy benefits and claims reserves	$ 20,782.1	$ 18,569.1
Payables for securities purchased	1.6	0.2
Payables under securities loan agreement, including collateral held	488.3	183.9
Notes payable	17.9	9.9
Borrowed money	615.3	738.4
Due to affiliates	116.7	130.7
Current income taxes	-	56.8
Deferred income taxes	101.1	275.9
Other liabilities	874.7	542.7
Liabilities related to separate accounts	35,927.7	48,091.2
Total liabilities	58,925.4	68,598.8

Shareholder's equity
Common stock (100,000 shares authorized; 55,000
issued and outstanding; $50 per share value)	2.8	2.8
Additional paid-in capital	4,161.3	4,159.3
Accumulated other comprehensive loss	(482.1)	(33.8)
Retained earnings (deficit)	(2,117.5)	(1,087.3)
Total shareholder's equity	1,564.5	3,041.0
Total liabilities and shareholder's equity	$ 60,489.9	$ 71,639.8

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 Changes in Shareholder’s Equity
(In millions)

			Accumulated
		Additional	Other	Retained	Total
	Common	Paid-In	Comprehensive	Earnings	Shareholder's
	Stock	Capital	Income (Loss)	(Deficit)	Equity
Balance at December 31, 2005	$ 2.8	$ 4,549.6	$ (5.3)	$ (1,576.4)	$ 2,970.7
Comprehensive income:
Net income	-	-	-	301.8	301.8
Other comprehensive loss, net of tax:
Change in net unrealized capital gains (losses)
on securities ($(23.4) pretax)	-	-	(10.7)	-	(10.7)
Pension liability and FAS No. 158
transition adjustment ($3.9 pretax)	-	-	2.5	-	2.5
Total comprehensive income					293.6
Cumulative effect of change in accounting
principle ($(0.8) pretax)			(0.5)	-	(0.5)
Dividends paid	-	(256.0)	-	-	(256.0)
Employee share-based payments	-	5.9	-	-	5.9
Balance at December 31, 2006	2.8	4,299.5	(14.0)	(1,274.6)	3,013.7
Cumulative effect of change in
accounting principle	-	-	-	(31.1)	(31.1)
Balance at January 1, 2007	2.8	4,299.5	(14.0)	(1,305.7)	2,982.6
Comprehensive income:
Net income	-	-	-	218.4	218.4
Other comprehensive loss, net of tax:
Change in net unrealized capital gains (losses)
on securities ($(27.7) pretax), including
tax valuation allowance of $(6.4)	-	-	(24.4)	-	(24.4)
Pension liability ($7.1 pretax)	-	-	4.6	-	4.6
Total comprehensive income					198.6
Dividends paid	-	(145.0)	-	-	(145.0)
Employee share-based payments	-	4.8	-	-	4.8
Balance at December 31, 2007	2.8	4,159.3	(33.8)	(1,087.3)	3,041.0
Comprehensive loss:
Net loss	-	-	-	(1,030.2)	(1,030.2)
Other comprehensive loss, net of tax:
Change in net unrealized capital gains (losses)
on securities ($(635.4) pretax), including
tax valuation allowance of $6.4	-	-	(435.3)	-	(435.3)
Pension liability ($18.7 pretax)	-	-	(13.0)	-	(13.0)
Total comprehensive loss					(1,478.5)
Dividends paid	-	-	-	-	-
Employee share-based payments	-	2.0	-	-	2.0
Balance at December 31, 2008	$ 2.8	$ 4,161.3	$ (482.1)	$ (2,117.5)	$ 1,564.5

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.)

Consolidated Statements of Cash Flows
(In millions)


		Year Ended December 31,
	2008	2007		2006
Cash Flows from Operating Activities:
Net (loss) income	$ (1,030.2)	$ 218.4	$ 301.8
Adjustments to reconcile net income to
net cash provided by operating activities:
Capitalization of deferred policy acquisition costs, value
of business acquired, and sales inducements	(205.1)	(193.4)		(191.0)
Net amortization of deferred policy acquisition costs,
value of business acquired, and sales inducements	128.3	133.9		25.9
Net accretion/decretion of discount/premium	87.1	72.7		83.8
Future policy benefits, claims reserves, and
interest credited	1,296.8	579.6		662.5
Provision for deferred income taxes	25.3	30.4		75.6
Net realized capital losses (gains)	653.1	27.6		(3.0)
Depreciation	56.7	18.2		12.6
Change in:
Accrued investment income	(37.5)	12.1		23.2
Reinsurance recoverable	88.8	121.0		81.3
Other receivable and assets accruals	(115.3)	(37.0)		(20.1)
Due to/from affiliates	(17.2)	46.4		20.4
Other payables and accruals	(120.3)	17.8		86.3
Other, net	(44.0)	(16.4)		5.9
Net cash provided by operating activities	766.5	1,031.3		1,165.2
Cash Flows from Investing Activities:
Proceeds from the sale, maturity, or redemption of:
Fixed maturities, available-for-sale	9,039.7	10,235.6		10,355.2
Equity securities, available-for-sale	135.0	113.8		91.7
Mortgage loans on real estate	146.5	205.4		197.0
Acquisition of:
Fixed maturities, available-for-sale	(11,593.4)	(8,425.5)		(8,802.1)
Equity securities, available-for-sale	(54.8)	(243.9)		(149.1)
Mortgage loans on real estate	(168.0)	(415.1)		(680.3)
Policy loans, net	5.6	(4.5)		(6.5)
Derivatives, net	52.6	32.2		1.4
Limited partnerships, net	81.5	(279.5)		(237.6)
Short-term investments, net	126.0	(163.3)		-
Purchases of property and equipment, net	(24.0)	(90.5)		(54.5)
Collateral received (paid)	23.2	(18.8)		-
Other investments	0.7	-		(4.0)
Net cash (used in) provided by investing activities	(2,229.4)	945.9		711.2

The accompanying notes are an integral part of these consolidated financial statements.

C-7

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,
	2008	2007		2006
Cash Flows from Financing Activities:
Deposits received for investment contracts	3,836.4	1,600.0		1,875.7
Maturities and withdrawals from investment contracts	(2,312.2)	(3,451.2)		(3,420.7)
Short-term loans to affiliates	13.0	45.0		86.0
Short-term repayments	(123.1)	(94.8)		(107.9)
Notes payable	-	9.9		-
Dividends to Parent	-	(145.0)		(256.0)
Net cash provided by (used in) financing activities	1,414.1	(2,036.1)		(1,822.9)
Net (decrease) increase in cash and cash equivalents	(48.8)	(58.9)		53.5
Cash and cash equivalents, beginning of year	252.3	311.2		257.7
Cash and cash equivalents, end of year	$ 203.5	$ 252.3	$ 311.2
Supplemental cash flow information:
Income taxes (received) paid, net	$ (44.1)	$ 45.1	$ 37.6
Interest paid	$ 23.6	$ 44.6	$ 40.8

The accompanying notes are an integral part of these consolidated financial statements.

C-8

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount 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 all states and in
	the District of Columbia.

	The consolidated financial statements include ILIAC and its wholly-owned subsidiaries,
	ING Financial Advisers, LLC (“IFA”) and Directed Services LLC (“DSL”). 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 December 1, 2006, Lion contributed to ILIAC, Directed Services, Inc. (“DSI”), a
	New York corporation registered as a broker-dealer under the Securities Exchange Act of
	1934 and as an investment advisor under the Investment Advisors Act of 1940, whose
	primary functions were the distribution of variable insurance products and investment
	advisory services for open-end mutual funds. Additionally, on December 12, 2006,
	ILIAC organized DSL as a wholly-owned Delaware limited liability company. On
	December 31, 2006, DSI merged with and into DSL and ceased to exist. Upon merger,
	the operations and broker-dealer and investment advisor registrations of DSI were
	consolidated into DSL, the surviving company. Effective January 1, 2007, ILIAC’s
	investment advisory agreement with certain variable funds offered in Company products
	was assigned to DSL.

	On May 11, 2006, ILIAC organized NWL as a wholly-owned subsidiary for the purpose
	of purchasing, constructing, developing, leasing, and managing a new corporate office
	facility to be located at One Orange Way, Windsor, Connecticut (the “Windsor
	Property”). Effective October 1, 2007, the principal executive office of ILIAC was
	changed to One Orange Way, Windsor, Connecticut.

	On October 31, 2007, ILIAC’s subsidiary, NWL merged with and into ILIAC. As of the
	merger date, NWL ceased to exist, and ILIAC became the surviving corporation. The
	merger did not have an impact on ILIAC’s consolidated results of operations and
	financial position, as NWL was a wholly-owned subsidiary and already included in the
	consolidated financial statements for all periods presented since its formation.

	*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 and related services. The Company’s products

C-9

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

are offered primarily to individuals, pension plans, small businesses, and employer-

sponsored groups in the health care, government, and education markets (collectively

“not-for-profit” organizations) and corporate markets. The Company’s products are

generally distributed through pension professionals, independent agents and brokers,

third party administrators, banks, dedicated career agents, and financial planners.

Products offered by the Company include deferred and immediate (payout annuities)

annuity contracts. Company 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

pension and retirement savings plan administrative services.

The Company has one operating segment.

Recently Adopted Accounting Standards

Fair Value Measurements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued

Statement of Financial Accounting Standards (“FAS”) No. 157, “Fair Value

Measurements” (“FAS 157”). FAS 157 provides guidance for using fair value to

measure assets and liabilities whenever other standards require (or permit) assets or

liabilities to be measured at fair value. FAS 157 does not expand the use of fair value to

any new circumstances.

Under FAS 157, the FASB clarifies the principle that fair value should be based on the

assumptions market participants would use when pricing the asset or liability. In support

of this principle, FAS 157 establishes a fair value hierarchy that prioritizes the

information used to develop such assumptions. The fair value hierarchy gives the highest

priority to quoted prices in active markets and the lowest priority to unobservable data.

FAS 157 also requires separate disclosure of fair value measurements by level within the

hierarchy and expanded disclosure of the effect on earnings for items measured using

unobservable data.

FAS 157 was adopted by the Company on January 1, 2008. As a result of implementing

FAS 157, the Company recognized $1.7, before tax, as an increase to Net income on the

date of adoption related to the fair value measurements of the reserves for product

guarantees. The impact of implementation was included in Interest credited and other

benefits to contractholders on the Consolidated Statements 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

(Dollar amount in millions, unless otherwise stated)


In October 2008, the FASB issued FASB Staff Position (“FSP”) FAS No. 157-3,
“Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not
Active” (“FSP FAS 157-3”), which provides clarifying guidance on the application of
FAS 157 to financial assets in a market that is not active and was effective upon issuance.
FSP FAS 157-3 had no effect on the Company’s financial condition, results of
operations, or cash flows upon adoption, as its guidance is consistent with that applied by
the Company upon adoption of FAS 157.

The Company recognized no other adjustments to its financial statements related to the
adoption of FAS 157, and new disclosures are included in the Financial Instruments
footnote.

The Fair Value Option for Financial Assets and Financial Liabilities

In February 2007, the FASB issued FAS No. 159, “The Fair Value Option for Financial
Assets and Financial Liabilities” (“FAS 159”), which allows a company to make an
irrevocable election, on specific election dates, to measure eligible items at fair value
with unrealized gains and losses recognized in earnings at each subsequent reporting
date. The election to measure an item at fair value may be determined on an instrument
by instrument basis, with certain exceptions. If the fair value option is elected, any
upfront costs and fees related to the item will be recognized in earnings as incurred.
Items eligible for the fair value option include:

§	Certain recognized financial assets and liabilities;
§	Rights and obligations under certain insurance contracts that are not financial
	instruments;
§	Host financial instruments resulting from the separation of an embedded
	nonfinancial derivative instrument from a nonfinancial hybrid instrument; and
§	Certain commitments.

FAS 159 was adopted by the Company on January 1, 2008. In implementing FAS 159,
the Company elected not to take the fair value option for any eligible assets or liabilities
in existence on January 1, 2008, or in existence at the date of these Consolidated
Financial Statements.

Offsetting of Amounts Related to Certain Contracts

On April 30, 2007, the FASB issued a FSP on FASB Interpretation (“FIN”) No. 39,
“Offsetting of Amounts Related to Certain Contracts” (“FSP FIN 39-1”), which permits a
reporting entity to offset fair value amounts recognized for the right to reclaim or the
obligation to return cash collateral against fair value amounts recognized for derivative
instruments under master netting arrangements. FSP FIN 39-1 had no effect on the
financial condition, results of operations, or cash flows upon adoption by the Company
on January 1, 2008, as it is the Company’s accounting policy not to offset such fair value
amounts.

C-11

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

Accounting for Uncertainty in Income Taxes

In June 2006, the FASB issued FIN No. 48, “Accounting for Uncertainty in Income

Taxes” (“FIN 48”), which creates a single model to address the accounting for the

uncertainty in income tax positions recognized in a company’s financial statements.

FIN 48 prescribes a recognition threshold and measurement criteria that must be satisfied

to recognize a financial statement benefit of tax positions taken, or expected to be taken,

on an income tax return. Additionally, FIN 48 provides guidance on derecognition,

classification, interest and penalties, accounting in interim periods, disclosure, and

transition.

FIN 48 was adopted by the Company on January 1, 2007. As a result of implementing

FIN 48, the Company recognized a cumulative effect of change in accounting principle of

$2.9 as a reduction to January 1, 2007 Retained earnings (deficit).

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 ("SOP") 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 coverage that occurs by the exchange of a contract for a new contract, 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 FAS No. 60, “Accounting and Reporting by Insurance Enterprises”

(“FAS 60”), as short-duration and long-duration 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 97”),

as investment contracts.

C-12

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)


SOP 05-1 was adopted by the Company on January 1, 2007, and is effective for internal
replacements occurring on or after that date. As a result of implementing SOP 05-1, the
Company recognized a cumulative effect of change in accounting principle of $43.4,
before tax, or $28.2, net of $15.2 of income taxes, as a reduction to January 1, 2007
Retained earnings (deficit). In addition, the Company revised its accounting policy on
the amortization of deferred policy acquisition costs ("DAC") and value of business
acquired ("VOBA") to include internal replacements.

Disclosures about Credit Derivatives and Certain Guarantees

In September 2008, the FASB issued FSP FAS No. 133-1 and FIN No. 45-4,
“Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB
Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective
Date of FASB Statement No. 161” (“FSP FAS 133-1 and FIN 45-4”), which does the
following:

§	Amends FAS No. 133, “Accounting for Derivative Instruments and Hedging
	Activities” (“FAS 133”), requiring additional disclosures by sellers of credit
	derivatives;
§	Amends FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure
	Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
	Others” (“FIN 45”), requiring additional disclosure about the current status of the
	payment/performance risk of a guarantee; and
§	Clarifies the effective date of FAS No. 161, “Disclosures about Derivative
	Instruments and Hedging Activities” (“FAS 161”).

FSP FAS 133-1 and FIN 45-4 was adopted by the Company on December 31, 2008. In
implementing FSP FAS 133-1 and FIN 45-4, the Company determined that its adoption
had no financial statement impact. New disclosures are included in the Financial
Instruments and Commitments and Contingent Liabilities footnotes.

The clarification in the FSP of the effective date of FAS 161 is consistent with the
guidance in FAS 161 and the Company’s disclosure provided herein.

Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and
Interests in Variable Interest Entities

In December, 2008, the FASB issued FSP FAS 140-4 and FIN 46(R)-8, “Disclosures by
Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable
Interest Entities” (“FSP FAS 140-4 and FIN 46(R)-8”), which requires additional
disclosures regarding a transferor’s continuing involvement with financial assets
transferred in a securitization or asset-backed financing arrangement and an enterprise’s
involvement with variable interest entities (“VIEs”) and qualifying special purpose
entities (“QSPEs”).

C-13

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)


FSP FAS 140-4 and FIN 46(R)-8 was adopted by the Company on December 31, 2008.
In implementing FSP FAS 140-4 and FIN 46(R)-8, the Company determined that its
adoption has no financial statement impact. The Company does not have any QSPEs or
continuing involvement with financial assets transferred in a securitization or asset-
backed financing arrangement.

Amendments to Impairment Guidance

In January 2009, the FASB issued FSP Emerging Issues Task Force (“EITF”) 99-20-1,
“Amendments to the Impairment Guidance of EITF Issue No. 99-20” (“FSP EITF 99-20-
1”), which amends EITF 99-20, “Recognition of Interest Income and Impairment on
Purchased Beneficial Interests and Beneficial Interests That Continue to Be Held by a
Transferor in Securitized Financial Assets” (“EITF 99-20”). FSP EITF 99-20-1 requires
that an other-than-temporary impairment on investments that meet the criteria of EITF
99-20 be recognized as a realized loss through earnings when it is probable there has
been an adverse change in the holder’s estimated cash flow, consistent with the
impairment model in FAS No. 115, “Accounting for Certain Investments in Debt and
Equity Securities.”

FSP EITF 99-20-1 was adopted by the Company on December 31, 2008, prospectively.
In implementing FSP EITF 99-20-1, the Company determined there was a minimal effect
on financial position, results of operations, and cash flows, as the structured securities
held by the Company were highly rated at issue.

*New Accounting Pronouncements*

Disclosures about Derivative Instruments and Hedging Activities

In March 2008, the FASB issued FAS 161, which requires enhanced disclosures about
objectives and strategies for using derivatives, fair value amounts of and gains and losses
on derivative instruments, and credit-risk-related contingent features in derivative
agreements, including:

§	How and why derivative instruments are used;
§	How derivative instruments and related hedged items are accounted for under
	FAS 133 and its related interpretations; and
§	How derivative instruments and related hedged items affect an entity’s financial
	statements.

The provisions of FAS 161 are effective for financial statements issued for fiscal years
and interim periods beginning after November 15, 2008, with early application
encouraged. The Company is currently in the process of determining the impact of
adoption of FAS 161 on its disclosures; however, as the pronouncement only pertains to
additional disclosures, the Company has determined that the adoption of FAS 161 will
have no financial statement impact. In addition, the Company’s derivatives are generally

C-14

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)


not accounted for using hedge accounting treatment under FAS 133, as the Company has
not historically sought hedge accounting treatment.

Business Combinations

In December 2007, the FASB issued FAS No. 141 (revised 2007), “Business
Combinations” (“FAS 141R”), which replaces FAS No. 141, “Business Combinations,”
as issued in 2001. FAS 141R requires most identifiable assets, liabilities, noncontrolling
interest, and goodwill acquired in a business combination to be recorded at full fair value
as of the acquisition date, even for acquisitions achieved in stages. In addition, the
statement requires:

§	Acquisition-related costs to be recognized separately and generally expensed;
§	Non-obligatory restructuring costs to be recognized separately when the liability is
	incurred;
§	Contractual contingencies acquired to be recorded at acquisition-date fair values;
§	A bargain purchase, which occurs when the fair value of net assets acquired
	exceeds the consideration transferred plus any non-controlling interest in the
	acquiree, to be recognized as a gain; and
§	The nature and financial effects of the business combination to be disclosed.

FAS 141R also amends or eliminates various other authoritative literature.

The provisions of FAS 141R are effective for fiscal years beginning on or after
December 15, 2008 for all business combinations occurring on or after that date. As
such, this standard will impact any Company acquisitions that occur on or after
January 1, 2009.

Equity Method Investment Accounting

In November 2008, the EITF reached consensus on EITF 08-6, “Equity Method
Investment Accounting Considerations” (“EITF 08-6”), which requires, among other
provisions, that:

§	Equity method investments be initially measured at cost;
§	Contingent consideration only be included in the initial measurement;
§	An investor recognize its share of any impairment charge recorded by the equity
	investee; and
§	An investor account for a share issuance by an equity investee as if the investor had
	sold a proportionate share of its investment;

The provisions of EITF 08-6 are effective in fiscal years beginning on or after December
15, 2008, and interim periods within those fiscal years. As such, this standard will
impact Company acquisitions or changes in ownership with regards to equity investments
that occur on or after January 1, 2009. The Company is currently in the process of
determining the impact of the other-than-temporary impairment provisions.

C-15

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

Use of Estimates

The preparation of financial statements in conformity with accounting principles

generally accepted in the United States (“US GAAP”) 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.

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 maturities and equity securities are currently designated as

available-for-sale. Available-for-sale securities are reported at fair value and unrealized

capital gains (losses) on these securities are recorded directly in Shareholder’s equity,

after adjustment, if any, for related changes in experience-rated contract allocations,

DAC, 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.

Management considers the length of time and the extent to which fair value has been less

than amortized cost, the issuer’s financial condition and near-term prospects, future

economic conditions and market forecasts, and the Company’s intent and ability to retain

the investment 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 the EITF

99-20. Under EITF 99-20, a further 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 adverse change in cash flow since

the last remeasurement date.

C-16

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

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 change in Net

realized capital gains (losses).

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

capital gains (losses) on the sale of and unrealized capital gains (losses) on investments

supporting these products are included in Future policy benefits and claims reserves on

the Consolidated Balance Sheets. Net realized capital gains (losses) on all other

investments were reflected in the Consolidated Statements of Operations. Unrealized

capital gains (losses) on all other investments were reflected in Accumulated other

comprehensive income (loss) in Shareholder’s equity, net of DAC and VOBA

adjustments for unrealized capital gains (losses), and related income taxes. During 2008,

due to the current economic environment, which resulted in significant realized and

unrealized losses associated with assets supporting experience-rated contracts, the

Company accelerated the amortization of realized losses and recorded such amounts in

Interest credited and other benefits to contractowners in the Consolidated Statements of

Operations and recorded unrealized losses in Accumulated other comprehensive income

(loss) in Shareholder’s equity rather than Future policy benefits and claims reserves.

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

The fair values for the actively traded marketable fixed maturities are determined based

upon the quoted market prices or dealer quotes. The fair values for marketable bonds

without an active market are obtained through several commercial pricing services, which

provide the estimated fair values. These services incorporate a variety of market

observable information in their valuation techniques, including benchmark yields, broker-

dealer quotes, credit quality, issuer spreads, bids, offers and other reference data.

Valuations obtained from third party commercial pricing services are non-binding and are

validated monthly through comparisons to internal pricing models, back testing to recent

trades, and monitoring of trading volumes.

C-17

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

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.

The fair values for certain collateralized mortgage obligations (“CMO-Bs”) are

determined by taking the average of broker quotes when more than one broker quote is

provided. A few of the CMO-Bs are priced by the originating broker due to the

complexity and unique characteristics of the asset.

The fair values for actively traded equity securities are based on quoted market prices.

Mortgage loans on real estate are reported at amortized cost, less impairment write-

downs. 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 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 write-down recorded in Net realized capital gains (losses).

The fair value of policy loans is equal to the carrying, or cash surrender, value of the

loans. Policy loans are fully collateralized by the account value of the associated

insurance contracts.

Short-term investments, consisting primarily of money market instruments and other

fixed maturity issues purchased with an original maturity of 91 days to one year, are

considered available-for-sale and are carried at fair value.

Derivative instruments are reported at fair value primarily using the Company’s

derivative accounting system. The system uses key financial data, such as yield curves,

exchange rates, Standard & Poor’s (“S&P”) 500 Index prices, and London Inter Bank

Offered Rates (“LIBOR”), which are obtained from third party sources and uploaded into

the system. For those derivatives that are unable to be valued by the accounting system,

the Company typically utilizes values established by third party brokers. Embedded

derivative instruments are reported at fair value based upon internally established

valuations that are consistent with external valuation models or market quotations.

C-18

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

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

carrying value of the securities pledged in dollar rolls and repurchase agreement

transactions is included in Securities pledged on the Consolidated Balance Sheets. The

repurchase obligation related to dollar rolls and repurchase agreements is included in

Borrowed money on the Consolidated Balance Sheets.

The Company also enters into reverse repurchase agreements. These transactions involve

a purchase of securities and an agreement to sell substantially the same securities as those

purchased. Company policies require a minimum of 102% of the fair value of securities

pledged under reverse repurchase agreements to be pledged as collateral. Reverse

repurchase agreements are included in Cash and cash equivalents on the Consolidated

Balance Sheets.

Securities Lending

The Company engages in securities lending whereby certain securities from its portfolio

are loaned to other institutions for short periods of time. Initial collateral, primarily cash,

is required at a rate of 102% of the market value of the loaned domestic securities. The

collateral is deposited by the borrower with a lending agent, and retained and invested by

the lending agent according to the Company’s guidelines to generate additional income.

The market value of the loaned securities is monitored on a daily basis with additional

collateral obtained or refunded as the market value of the loaned securities fluctuates.

Derivatives

The Company’s use of derivatives is limited mainly to hedging purposes to reduce the

Company’s exposure to cash flow variability of assets and liabilities, interest rate risk,

credit risk, and market risk. Generally, derivatives are not accounted for using hedge

accounting treatment under FAS 133, as the Company has not historically sought hedge

accounting treatment.

The Company enters into interest rate, equity market, credit default, and currency

contracts, including swaps, caps, floors, and options, to reduce and manage risks

associated with changes in value, yield, price, cash flow, or exchange rates of assets or

liabilities held or intended to be held, or to assume or reduce credit exposure associated

with a referenced asset, index, or pool. The Company also utilizes options and futures on

equity indices to reduce and manage risks associated with its annuity products. Open

derivative contracts are reported as either Other investments or Other liabilities, as

appropriate, on the Consolidated Balance Sheets. Changes in the fair value of such

C-19

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

derivatives are recorded in Net realized capital gains (losses) in the Consolidated

Statements of Operations.

The Company also has investments in certain fixed maturity instruments, and has issued

certain products with guarantees, that contain embedded derivatives 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.

Embedded derivatives within fixed maturity instruments are included in Fixed maturities,

available-for-sale, on the Consolidated Balance Sheets, and changes in fair value are

recorded in Net realized capital gains (losses) in the Consolidated Statements of

Operations.

Embedded derivatives within retail annuity products are included in Future policy

benefits and claims reserves on the Consolidated Balance Sheets, and changes in the fair

value are recorded in Interest credited and benefits to contractowners in the Consolidated

Statements of Operations.

Deferred Policy Acquisition Costs and Value of Business Acquired

General

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 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 97 applies to universal life and investment-type products, such as fixed and variable

deferred annuities. Under FAS 97, DAC and VOBA are amortized, with interest, over

the life of the related contracts in relation to the present value of estimated future gross

profits from investment, mortality, and expense margins, plus surrender charges.

Internal Replacements

Contractowners may periodically exchange one contract for another, or make

modifications to an existing contract. Beginning January 1, 2007, these transactions are

identified as internal replacements and are accounted for in accordance with SOP 05-1.

C-20

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

Internal replacements that are determined to result in substantially unchanged contracts

are accounted for as continuations of the replaced contracts. Any costs associated with

the issuance of the new contracts are considered maintenance costs and expensed as

incurred. Unamortized DAC and VOBA related to the replaced contracts continue to be

deferred and amortized in connection with the new contracts. For deferred annuities, the

estimated future gross profits of the new contracts are treated as revisions to the estimated

future gross profits of the replaced contracts in the determination of amortization.

Internal replacements that are determined to result in contracts that are substantially

changed are accounted for as extinguishments of the replaced contracts, and any

unamortized DAC and VOBA related to the replaced contracts are written off to Net

amortization of deferred policy acquisition costs and value of business acquired in the

Consolidated Statements of Operations.

Unlocking

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 quarterly and annual analyses of DAC

and VOBA. The DAC and VOBA balances are evaluated for recoverability.

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 future gross profits requires that the amortization rate be revised

(“unlocking”), retroactively to the date of the policy or contract issuance. The

cumulative unlocking adjustment is recognized as a component of current period

amortization. In general, sustained increases in investment, mortality, and expense

margins, and thus estimated future gross profits, lower the rate of amortization.

Sustained decreases in investment, mortality, and expense margins, and thus estimated

future gross profits, however, increase the rate of amortization.

C-21

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

Property and Equipment

Property and equipment are carried at cost, less accumulated depreciation. Expenditures

for replacements and major improvements are capitalized; maintenance and repair

expenditures are expensed as incurred.

At December 31, 2008 and 2007, total accumulated depreciation and amortization was

$103.0 and $120.7, respectively. Depreciation on property and equipment is provided on

a straight-line basis over the estimated useful lives of the assets with the exception of

land and artwork, which are not depreciated or amortized. The Company’s property and

equipment are depreciated using the following estimated useful lives.

	Estimated Useful Lives
Buildings	40 years
Furniture and fixtures	5 years
Leasehold improvements	10 years, or the life of the lease, whichever is shorter
Equipment	3 years
Software	3 years

*Reserves*

The Company records as liabilities reserves to meet the Company’s future obligations
under its variable annuity and fixed annuity products.

Future policy benefits and claims reserves include reserves for deferred annuities and
immediate annuities with and without life contingent payouts.

Reserves for individual and group deferred annuity investment contracts and individual
immediate annuities without life contingent payouts are equal to cumulative deposits, less
charges and withdrawals, plus credited interest thereon, net of adjustments for investment
experience that the Company is entitled to reflect in future credited interest. Credited
interest rates vary by product and ranged from 1.6% to 7.8% for the years 2008, 2007,
and 2006. Certain reserves may also include net unrealized gains and losses related to
investments and unamortized net realized gains and losses on investments for experience-
rated contracts.	Reserves on experienced-rated contracts reflect the rights of
contractowners, plan participants, and the Company. During 2008, given the current
economic environment, which resulted in significant net realized and unrealized losses,
the Company did not include net unrealized and unamortized realized losses associated
with experience-rated contracts in Future policy benefits and claims reserves. The net
unrealized losses are reflected in Accumulated other comprehensive (loss) income, and
the amortization of the unamortized realized losses have been recorded in Interest
credited and other benefits to contractholders. Reserves for group immediate annuities
without life contingent payouts are equal to the discount value of the payment at the
implied break-even rate.

C-22

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

Reserves for individual immediate annuities with life contingent payout 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 annuity

type plan, year of issue, and policy duration. For the years 2008, 2007, and 2006, reserve

interest rates ranged from 5.3% to 5.9%.

The Company records reserves for product guarantees, which can be either assets or

liabilities, for annuity contracts containing guaranteed credited rates. The guarantee is

treated as an embedded derivative or a stand-alone derivative (depending on the

underlying product) and is required to be reported at fair value. The fair value of the

obligation is calculated based on the income approach. The income associated with the

contracts is projected using relevant actuarial and capital market assumptions, including

benefits and related contract charges, over the anticipated life of the related contracts.

The cash flow estimates are produced by using stochastic techniques under a variety of

risk neutral scenarios and other best estimate assumptions. Explicit risk margins in the

actuarial assumptions underlying valuations are included, as well as an explicit

recognition of all nonperformance risks beginning January 1, 2008 with the adoption of

FAS 157. Nonperformance risk for product guarantees contains adjustments to the fair

values of these contract liabilities related to the current credit standing of ING and the

Company based on credit default swaps with similar term to maturity and priority of

payment. The ING credit default spread is applied to the discount factors for product

guarantees in the Company’s valuation model in order to incorporate credit risk into the

fair values of these product guarantees.

The Company has a significant concentration of reinsurance arising from the disposition

of its individual life insurance business. In 1998, the Company entered into an indemnity

reinsurance arrangement with certain subsidiaries of Lincoln National Corporation

(“Lincoln”). Effective March 1, 2007, the reinsurance agreements were assigned to a

single subsidiary of Lincoln, and that subsidiary established a trust to secure its

obligations to the Company under the reinsurance transaction. The Company includes an

amount in Reinsurance recoverable on the Consolidated Balance Sheets, which equals the

Company’s total individual life reserves. Individual life reserves are included in Future

policy benefits and claims reserves on 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.

Certain variable annuities offer guaranteed minimum death benefits (“GMDB”). The

GMDB is accrued in the event the contractowner account value at death is below the

guaranteed value and is included in reserves.

C-23

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

Revenue Recognition

For most annuity contracts, charges assessed against contractowner funds for the cost of

insurance, surrenders, expenses, and other fees are recorded as revenue as charges are

assessed. Other amounts received for these contracts are reflected as deposits and are not

recorded as premiums or revenue. 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 in both

Premiums and Interest credited and other benefits to contractowners in the Consolidated

Statements of Operations.

Premiums on the Consolidated Statements of Operations primarily represent amounts

received for immediate annuities with life contingent payouts.

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 guarantees. 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 variable 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 that are managed by the Company or its affiliates, or in 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 (losses) of the separate accounts, however, are not

reflected in the Consolidated Statements of Operations (with the exception of realized

and unrealized capital gains (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 for

separate presentation in the Consolidated Balance Sheets (primarily the guaranteed

interest option), and revenue and expenses related to such arrangements, are consolidated

in the financial statements with the general account. At December 31, 2008 and 2007,

unrealized capital losses of $53.2 and $11.0, respectively, after taxes, on assets

supporting a guaranteed interest option are reflected in Shareholder’s equity.

C-24

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

Reinsurance

The Company utilizes indemnity reinsurance agreements to reduce its exposure to losses

from GMDBs in its annuity insurance business. Reinsurance permits recovery of a

portion of losses from reinsurers, although it does not discharge the Company’s primary

liability as the direct insurer of the risks. The Company evaluates the financial strength

of potential reinsurers and continually monitors the financial strength and credit ratings of

its reinsurers. Only those reinsurance recoverable balances deemed probable of recovery

are reflected as assets on the Company’s Consolidated Balance Sheets.

Of the Reinsurance recoverable on the Consolidated Balance Sheets, $2.5 billion and

$2.6 billion at December 31, 2008 and 2007, respectively, is related to the reinsurance

recoverable from certain subsidiaries of Lincoln arising from the disposal of the

Company’s individual life insurance business in 1998 (see the Reinsurance footnote).

Effective March 1, 2007, the reinsurance agreements were assigned to a single subsidiary

of Lincoln, and that subsidiary established a trust to secure its obligations to the

Company under the reinsurance transaction.

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.

C-25

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)


2.	Investments

	*Fixed Maturities and Equity Securities*

	Fixed maturities and equity securities, available-for-sale, were as follows as of
	December 31, 2008.

		Gross	Gross
		Unrealized	Unrealized
	Amortized	Capital	Capital	Fair
	Cost	Gains	Losses	Value
Fixed maturities:
U.S. Treasuries	$ 1,391.4	$ 84.5	$ 0.9	$ 1,475.0
U.S. government agencies and authorities	797.1	77.2	1.2	873.1
State, municipalities, and political subdivisions	72.9	0.3	17.7	55.5

U.S. corporate securities:
Public utilities	1,112.4	4.4	117.6	999.2
Other corporate securities	3,986.2	85.6	436.6	3,635.2
Total U.S. corporate securities	5,098.6	90.0	554.2	4,634.4

Foreign securities⁽¹⁾:
Government	397.8	4.3	61.4	340.7
Other	2,188.5	27.0	274.0	1,941.5
Total foreign securities	2,586.3	31.3	335.4	2,282.2

Residential mortgage-backed securities	3,412.6	153.6	266.7	3,299.5
Commercial mortgage-backed securities	1,604.0	0.1	370.5	1,233.6
Other asset-backed securities	830.2	9.0	214.9	624.3

Total fixed maturities, including
securities pledged	15,793.1	446.0	1,761.5	14,477.6
Less: securities pledged	1,160.5	72.7	7.8	1,225.4
Total fixed maturities	14,632.6	373.3	1,753.7	13,252.2
Equity securities	247.7	1.0	8.4	240.3
Total investments, available-for-sale	$ 14,880.3	$ 374.3	$ 1,762.1	$ 13,492.5
⁽¹⁾Primarily U.S. dollar denominated.

C-26

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)


Fixed maturities and equity securities, available-for-sale, were as follows as of
December 31, 2007.

		Gross	Gross
		Unrealized	Unrealized
	Amortized	Capital	Capital	Fair
	Cost	Gains	Losses	Value
Fixed maturities:
U.S. Treasuries	$ 11.2	$ 0.7	$ -	$ 11.9
U.S. government agencies and authorities	0.6	-	-	0.6
State, municipalities, and political subdivisions	66.1	0.1	2.2	64.0

U.S. corporate securities:
Public utilities	1,049.1	10.8	15.6	1,044.3
Other corporate securities	3,855.1	46.1	65.2	3,836.0
Total U.S. corporate securities	4,904.2	56.9	80.8	4,880.3

Foreign securities⁽¹⁾:
Government	379.3	17.1	6.6	389.8
Other	1,955.8	29.9	40.3	1,945.4
Total foreign securities	2,335.1	47.0	46.9	2,335.2

Residential mortgage-backed securities	4,146.1	101.8	63.5	4,184.4
Commercial mortgage-backed securities	1,927.3	10.7	52.3	1,885.7
Other asset-backed securities	924.3	5.5	41.5	888.3

Total fixed maturities, including
securities pledged	14,314.9	222.7	287.2	14,250.4
Less: securities pledged	940.2	8.0	14.1	934.1
Total fixed maturities	13,374.7	214.7	273.1	13,316.3
Equity securities	440.1	13.8	7.5	446.4

Total investments, available-for-sale	$ 13,814.8	$ 228.5	$ 280.6	$ 13,762.7
⁽¹⁾Primarily U.S. dollar denominated.

At December 31, 2008 and 2007, net unrealized losses were $1,322.9 and $58.2,

respectively, on total fixed maturities, including securities pledged to creditors, and

equity securities. During 2008, as a result of the current economic environment, which

resulted in significant losses on investments supporting experience-rated contracts, the

Company reflected all unrealized losses in Shareholder’s equity rather than Future policy

benefits and claims reserves. At December 31, 2007, $16.4 of net unrealized capital

gains (losses) was related to experience-rated contracts and was not reflected in

Shareholder’s equity but in Future policy benefits and claim reserves.

C-27

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

The amortized cost and fair value of total fixed maturities as of December 31, 2008, are

shown below by contractual maturity. Actual maturities may differ from contractual

maturities as securities may be restructured, called, or prepaid.

	Amortized	Fair
	Cost	Value
Due to mature:
One year or less	$ 273.3	$ 271.5
After one year through five years	3,751.8	3,576.2
After five years through ten years	3,546.6	3,344.4
After ten years	2,374.6	2,128.1
Mortgage-backed securities	5,016.6	4,533.1
Other asset-backed securities	830.2	624.3
Less: securities pledged	1,160.5	1,225.4
Fixed maturities, excluding securities pledged	$ 14,632.6	$ 13,252.2

The Company did not have any investments in a single issuer, other than obligations of

the U.S. government and government agencies, with a carrying value in excess of 10% of

the Company’s Shareholder’s equity at December 31, 2008 or 2007.

At December 31, 2008 and 2007, fixed maturities with fair values of $14.2 and $13.9,

respectively, were on deposit as required by regulatory authorities.

The Company invests in various categories of collateralized mortgage obligations

(“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 prepayment of principal from the underlying mortgages,

either earlier or later than originally anticipated. At December 31, 2008 and 2007,

approximately 13.0% and 11.3%, respectively, of the Company’s CMO holdings were

invested in those types of CMOs which are subject to more prepayment and extension

risk than traditional CMOs, such as interest-only or principal-only strips.

Transfer of Alt-A RMBS Participation Interest

On January 26, 2009, ING announced it reached an agreement, for itself and on behalf of

certain ING affiliates including the Company, with the Dutch State on an Illiquid Assets

Back-up Facility (the “Back-up Facility”) covering 80% of ING’s Alt-A residential

mortgage-backed securities (“Alt-A RMBS”). Under the terms of the Back-up Facility, a

full credit risk transfer to the Dutch State will be realized on 80% of ING’s Alt-A RMBS

owned by ING Bank, FSB and ING affiliates within ING Insurance Americas with a

book value of $36.0 billion portfolio, including book value of $775.1 of the Alt-A RMBS

portfolio owned by the Company (with respect to the Company’s portfolio, the

“Designated Securities Portfolio”) (the “ING-Dutch State Transaction”). As a result of

the risk transfer, the Dutch State will participate in 80% of any results of the ING Alt-A

RMBS portfolio. The risk transfer to the Dutch State will take place at a discount of

approximately 10% of par value. In addition, under the Back-up Facility, other fees will

C-28

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

be paid both by the Company and the Dutch State. Each ING company participating in

the ING-Dutch State Transaction, including the Company will remain the legal owner of

100% of its Alt-A RMBS portfolio and will remain exposed to 20% of any results on the

portfolio. Subject to documentation and regulatory approvals, the ING-Dutch State

Transaction is expected to close by the end of March 2009, with the affiliate participation

conveyance and risk transfer to the Dutch State described in the succeeding paragraph to

take effect as of January 26, 2009.

In order to implement that portion of the ING-Dutch State Transaction related to the

Company’s Designated Securities Portfolio, the Company will enter into a participation

agreement with its affiliates, ING Support Holding B.V. (“ING Support Holding”) and

ING pursuant to which the Company will convey to ING Support Holding an 80%

participation interest in its Designated Securities Portfolio and pay a periodic transaction

fee, and will receive, as consideration for the participation, an assignment by ING

Support Holding of its right to receive payments from the Dutch State under the Illiquid

Assets Back-Up Facility related to the Company’s Designated Securities Portfolio

among, ING, ING Support Holding and the Dutch State (the “Company Back-Up

Facility”). Under the Company Back-Up Facility, the Dutch State will be obligated to

pay certain periodic fees and make certain periodic payments with respect to the

Company’s Designated Securities Portfolio, and ING Support Holding will be obligated

to pay a periodic guarantee fee and make periodic payments to the Dutch State equal to

the distributions it receives with respect to the 80% participation interest in the

Company’s Designated Securities Portfolio.

In a second transaction, known as the Step 1 Cash Transfer, a portion of the Company’s

Alt-A RMBS which has a book value of $4.2 will be sold for cash to an affiliate, Lion II

Custom Investments LLC (“Lion II”). Immediately thereafter, Lion II will sell to ING

Direct Bancorp the purchased securities (the “Step 2 Cash Transfer”). Contemporaneous

with the Step 2 Cash Transfer, ING Direct Bancorp will include such purchased securities

as part of its Alt-A RMBS portfolio sale to the Dutch State. Subject to documentation

and regulatory approval, the Step 1 Cash Transfer is expected to close by the end of

March 2009 contemporaneous with the closing of the ING-Dutch State Transaction.

Since the Company had the intent to sell a portion of its Alt-A RMBS through the 80%

participation interest in its Designated Securities Portfolio or as part of the Step 1 Cash

Transfer as of December 31, 2008, the Company recognized $253.2 in other-than-

temporary impairments with respect to the 80% participation interest in its Designated

Securities Portfolio that it expects to convey as part of the ING-Dutch State Transaction

and the Step 1 Cash Transfer. The Company expects to recognize a gain in the estimated

range of $220.0 to $240.0 upon the closing of the ING-Dutch State Transaction and the

Step 1 Cash Transfer.

C-29

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)


*Equity Securities*

Equity securities, available-for-sale, included investments with fair values of $141.0 and
$279.5 in ING proprietary funds as of December 31, 2008 and 2007, respectively.

*Repurchase Agreements*

The Company engages in dollar repurchase agreements (“dollar rolls”) and repurchase
agreements to increase its 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. At December 31, 2008 and 2007, the carrying value of the securities pledged in
dollar rolls and repurchase agreement transactions was $657.2 and $757.6, respectively.
The carrying value of the securities pledged in dollar rolls and repurchase agreement
transactions is included in Securities pledged on the Consolidated Balance Sheets. The
repurchase obligation related to dollar rolls and repurchase agreements totaled $613.9 and
$734.8 at December 31, 2008 and 2007, respectively. The repurchase obligation related
to dollar rolls and repurchase agreements is included in Borrowed money on the
Consolidated Balance Sheets.

The Company also engages in reverse repurchase agreements. At December 31, 2008
and 2007, the Company did not have any reverse repurchase agreements.

The primary risk associated with short-term collateralized borrowings is that the
counterparty will be unable to perform under the terms of the contract. The Company’s
exposure is limited to the excess of the net replacement cost of the securities over the
value of the short-term investments, an amount that was immaterial at December 31,
2008 and 2007. The Company believes the counterparties to the dollar rolls, repurchase,
and reverse repurchase agreements are financially responsible and that the counterparty
risk is minimal.

*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. At
December 31, 2008 and 2007, the fair value of loan securities was $474.8 and $176.5,
respectively.

C-30

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

Unrealized Capital Losses

Unrealized capital losses in fixed maturities at December 31, 2008 and 2007, were

primarily related to the effects of interest rate movement or spread widening on mortgage

and other asset-backed securities. Mortgage and other asset-backed securities include

U.S. government-backed securities, principal protected securities, and structured

securities, which did not have an adverse change in cash flows. The following table

summarizes the unrealized capital losses by duration and reason, along with the fair value

of fixed maturities, including securities pledged, in unrealized capital loss positions at

December 31, 2008 and 2007.

	Less than	More than	More than
	Six	Six Months	Twelve
	Months	and less than	Months	Total
	Below	Twelve Months	Below	Unrealized
	Amortized	Below Amortized	Amortized	Capital
2008	Cost	Cost	Costs	Loss
Interest rate or spread widening	$ 144.2	$ 381.7	$ 383.5	$ 909.4
Mortgage and other
asset-backed securities	65.3	188.5	598.3	852.1
Total unrealized capital losses	$ 209.5	$ 570.2	$ 981.8	$ 1,761.5
Fair value	$ 2,999.6	$ 3,446.7	$ 2,964.2	$ 9,410.5


	Less than	More than	More than
	Six	Six Months	Twelve
	Months	and less than	Months	Total
	Below	Twelve Months	Below	Unrealized
	Amortized	Below Amortized	Amortized	Capital
2007	Cost	Cost	Costs	Loss
Interest rate or spread widening	$ 18.8	$ 62.3	$ 48.8	$ 129.9
Mortgage and other
asset-backed securities	30.1	69.0	58.2	157.3
Total unrealized capital losses	$ 48.9	$ 131.3	$ 107.0	$ 287.2
Fair value	$ 2,256.2	$ 2,217.7	$ 3,612.1	$ 8,086.0

Of the unrealized capital losses aged more than twelve months, the average market value

of the related fixed maturities is 79.2% of the average book value. In addition, this

category includes 1,243 securities, which have an average quality rating of AA-. No

other-than-temporary impairment loss was considered necessary for these fixed

maturities as of December 31, 2008. The value of the Company’s fixed maturities

declined $534.2, before tax and DAC, from December 31, 2008 though February 28,

2009, due to further widening of credit spreads. This decline in fair value includes $81.7

related to the Company’s investments in commercial mortgage-backed securities.

C-31

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

Other-Than-Temporary Impairments

The following table identifies the Company’s other-than-temporary impairments by type

for the years ended December 31, 2008, 2007, and 2006.


	2008		2007		2006
		No. of		No. of		No. of
	Impairment	Securities	Impairment	Securities	Impairment	Securities
U.S. Treasuries	$ -	-	$ -	-	$ 6.4	4
U.S. corporate	283.2	233	36.3	113	24.4	67
Foreign	108.9	94	19.1	54	4.2	10
Residential mortgage-backed	349.3	194	7.1	30	16.6	76
Other asset-backed	245.6	64	10.5	21	7.0	1
Equity securities	55.1	17	-	-	0.1	3
Limited partnerships	6.6	6	3.0	1	-	-
Mortgage loans on real estate	3.8	1	-	-	-	-
Total	$ 1,052.5	609	$ 76.0	219	$ 58.7	161

The above schedule includes $235.8, $16.4, and $16.1 for the years ended December 31,

2008, 2007, and 2006, respectively, in other-than-temporary write-downs related to the

analysis of credit-risk and the possibility of significant prepayment risk. The remaining

$816.7, $59.6, and $42.6 in write-downs for the years ended December 31, 2008, 2007,

and 2006, respectively, are related to investments that the Company does not have the

intent to retain for a period of time sufficient to allow for recovery in fair value.

The following table summarizes these write-downs recognized by type for the years

ended December 31, 2008, 2007, and 2006.


	2008		2007		2006
		No. of		No. of		No. of
	Impairment	Securities	Impairment	Securities	Impairment	Securities
U.S. Treasuries	$ -	-	$ -	-	$ 6.4	4
U.S. corporate	204.5	180	31.6	102	24.4	67
Foreign	81.3	78	19.1	54	4.2	10
Residential mortgage-backed	291.8	128	2.6	2	0.6	1
Other asset-backed	239.1	43	6.3	16	7.0	1
Total	$ 816.7	429	$ 59.6	174	$ 42.6	83

The remaining fair value of the fixed maturities with other-than-temporary impairments

at December 31, 2008, 2007, and 2006 was $2,136.5, $1,210.8, and $704.4, respectively.

The Company may sell securities during the period in which fair value has declined

below amortized cost for fixed maturities or cost for equity securities. In certain

situations new factors, including changes in the business environment, can change the

Company’s previous intent to continue holding a security.

C-32

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

Net Investment Income

Sources of Net investment income were as follows for the years ended December 31,

2008, 2007, and 2006.

	2008	2007	2006
Fixed maturities, available-for-sale	$ 1,020.6	$ 895.5	$ 969.0
Equity securities, available-for-sale	(13.2)	38.5	10.5
Mortgage loans on real estate	116.0	118.5	93.6
Real estate	9.0	-	-
Policy loans	14.2	14.1	13.2
Short-term investments and cash equivalents	4.5	2.2	2.4
Other	12.7	88.3	44.5
Gross investment income	1,163.8	1,157.1	1,133.2
Less: investment expenses	80.1	102.4	103.5
Net investment income	$ 1,083.7	$ 1,054.7	$ 1,029.7

Net Realized Capital Gains (Losses)

Net realized capital gains (losses) are comprised of the difference between the amortized

cost of investments and proceeds from sale and redemption, as well as losses incurred

due to other-than-temporary impairment of investments and changes in fair value of

derivatives. The cost of the investments on disposal is determined based on specific

identification of securities. Net realized capital gains (losses) on investments were as

follows for the years ended December 31, 2008, 2007, and 2006.

	2008	2007	2006
Fixed maturities, available-for-sale	$ (990.8)	$ (50.3)	$ (67.0)
Equity securities, available-for-sale	(81.0)	6.4	9.3
Derivatives	(187.0)	(123.0)	(3.9)
Other	(18.7)	(2.6)	-
Less: allocation to experience-rated contracts	624.4	141.9	(64.6)
Net realized capital (loss) gains	$ (653.1)	$ (27.6)	$ 3.0
After-tax net realized capital (loss) gains	$ (424.5)	$ (17.9)	$ 2.0

The increase in Net realized capital losses for the year ended December 31, 2008, was

primarily due to higher credit and intent related impairments of fixed maturities driven by

the widening of credit spreads. In addition, the Company experienced losses on equity

securities mainly due to the poor market performance and losses on interest rate swaps

due to lower LIBOR rates in 2008.

Net realized capital gains (losses) allocated to experience-rated contracts are deducted

from Net realized capital gains (losses) and an offsetting amount was reflected in Future

policy benefits and claim reserves on the Consolidated Balance Sheets. During 2008, as

a result of the current economic environment, which resulted in significant realized losses

associated with experience-rated contracts, the Company accelerated amortization of

C-33

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

realized losses rather than reflect those losses in Future policy benefits and claims

reserves. During 2008, the Company fully amortized $624.4 of net unamortized realized

capital losses allocated to experience-rated contractowners, which are reflected in Interest

credited and other benefits to contractowners in the Consolidated Statements of

Operations. Net unamortized realized capital gains allocated to experienced-rated

contractowners were $53.8 and $164.5 at December 31, 2007 and 2006, respectively, and

were reflected in Future policy benefits and claims reserves.

Proceeds from the sale of fixed maturities and equity securities, available-for-sale, and

the related gross realized gains and losses, excluding those related to experience-related

contracts, as appropriate, were as follows for the years ended December 31, 2008, 2007,

and 2006.

	2008	2007	2006
Proceeds on sales	$ 12,649.0	$ 5,738.8	$ 6,481.2
Gross gains	120.0	66.4	109.0
Gross losses	(234.4)	(101.2)	110.9


3.	Financial Instruments

	*Fair Value Measurements*

	FAS 157 defines fair value, establishes a framework for measuring fair value, establishes
	a fair value hierarchy based on the quality of inputs used to measure fair value, and
	enhances disclosure requirements for fair value measurements.

	*Fair Value Hierarchy*

	The Company has categorized its financial instruments into a three level hierarchy based
	on the priority of the inputs to the valuation technique.

	The fair value hierarchy gives the highest priority to quoted prices in active markets for
	identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs
	(Level 3). If the inputs used to measure fair value fall within different levels of the
	hierarchy, the category level is based on the lowest priority level input that is significant
	to the fair value measurement of the instrument.

	Financial assets and liabilities recorded at fair value on the Consolidated Balance Sheets
	are categorized as follows:

	§	Level 1 - Unadjusted quoted prices for identical assets or liabilities in an active
		market.
	§	Level 2 - Quoted prices in markets that are not active or inputs that are observable
		either directly or indirectly for substantially the full term of the asset or liability.
		Level 2 inputs include the following:

C-34

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

	a)	Quoted prices for similar assets or liabilities in active markets;
	b)	Quoted prices for identical or similar assets or liabilities in non-active markets;
	c)	Inputs other than quoted market prices that are observable; and
	d)	Inputs that are derived principally from or corroborated by observable market
		data through correlation or other means.
§	Level 3 - Prices or valuation techniques that require inputs that are both unobservable
	and significant to the overall fair value measurement. These valuations, whether
	derived internally or obtained from a third party, use critical assumptions that are not
	widely available to estimate market participant expectations in valuing the asset or
	liability.


The following table presents the Company’s hierarchy for its assets and liabilities
measured at fair value on a recurring basis as of December 31, 2008.

	Level 1	Level 2		Level 3⁽¹⁾		Total
Assets:
Fixed maturities, available-for-sale, including
securities pledged	$ 1,481.7	$ 10,704.3	$ 2,291.6		$ 14,477.6
Equity securities, available-for-sale	240.3	-		-		240.3
Other investments (primarily derivatives)	-	235.2		-		235.2
Cash and cash equivalents, short-term
investments, and short-term investments
under securities loan agreement	729.3	-		-		729.3
Assets held in separate accounts	30,547.6	5,380.1		-		35,927.7
Total	$ 32,998.9	$ 16,319.6	$ 2,291.6		$ 51,610.1

Liabilities:
Product guarantees	$ -	$ -	$ 220.0		$ 220.0
Other liabilities (primarily derivatives)	-	470.5		73.6		544.1
Total	$ -	$ 470.5	$ 293.6		$ 764.1

⁽¹⁾Level 3 net assets and liabilities accounted for 3.9% of total net assets and liabilities measured at fair value on a recurring
basis. Excluding separate accounts assets for which the policyholder bears the risk, the Level 3 net assets and liabilities
in relation to total net assets and liabilities measured at fair value on a recurring basis totaled 13.4%.

Valuation of Financial Assets and Liabilities

The Company utilizes a number of valuation methodologies to determine the fair values
of its financial assets and liabilities in conformity with the concepts of “exit price” and
the fair value hierarchy as prescribed in FAS 157. Valuations are obtained from third
party commercial pricing services, brokers and industry-standard, vendor-provided
software that models the value based on market observable inputs. The valuations
obtained from the brokers are non-binding. The valuations are reviewed and validated
monthly through comparisons to internal pricing models, back testing to recent trades,
and monitoring of trading volumes.

C-35

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

All valuation methods and assumptions are validated at least quarterly to ensure the

accuracy and relevance of the fair values. There were no material changes to the

valuation methods or assumptions used to determine fair values.

The following valuation methods and assumptions were used by the Company in

estimating the fair value of the following financial instruments:

Fixed maturities, available-for-sale: The fair values for the actively traded marketable

bonds are determined based upon the quoted market prices or dealer quotes and are

classified as Level 1 assets. The fair values for marketable bonds without an active

market, excluding subprime and Alt-A mortgage-backed securities, are obtained through

several commercial pricing services, which provide the estimated fair values, and are

classified as Level 2 assets. These services incorporate a variety of market observable

information in their valuation techniques, including benchmark yields, broker-dealer

quotes, credit quality, issuer spreads, bids, offers and other reference data. Valuations

obtained from third party commercial pricing services are non-binding and are validated

monthly through comparisons to internal pricing models, back testing to recent trades,

and monitoring of trading volumes.

Fair values of privately placed bonds are determined using a matrix-based pricing model

and are classified as Level 2 assets. 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.

The fair values for certain collateralized mortgage obligations (“CMO-Bs”) are

determined by taking the average of broker quotes when more than one broker quote is

provided. A few of the CMO-Bs are priced by the originating broker due to the

complexity and unique characteristics of the asset. Due to the lack of corroborating

evidence to support a higher level, these bonds are classified as Level 3 assets.

Trading activity for the Company’s Residential Mortgage-backed Securities (“RMBS”),

particularly subprime and Alt-A mortgage-backed securities, has been declining during

2008 as a result of the dislocation of the credit markets. During 2008, the Company

continued to obtain pricing information from commercial pricing services and brokers.

However, the pricing for subprime and Alt-A mortgage-backed securities did not

represent regularly occurring market transactions since the trading activity declined

significantly in the second half of 2008. As a result, the Company concluded in the

second half of 2008 that the market for subprime and Alt-A mortgage-backed securities

was inactive. The Company did not change its valuation procedures, which are consistent

with those used for Level 2 marketable bonds without an active market, as a result of

determining that the market was inactive. However, the Company determined that the

C-36

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

classification within the valuation hierarchy should be transferred to Level 3 due to

market inactivity.

At December 31, 2008, the fixed maturities valued using unadjusted broker quotes totaled

$9,069.0.

Equity securities, available-for-sale: Fair values of these securities are based upon quoted

market price and are classified as Level 1 assets.

Cash and cash equivalents, Short-term investments, and Short-term investments under

securities loan agreement: The carrying amounts for cash reflect the assets’ fair values.

The fair values for cash equivalents and short-term investments are determined based on

quoted market prices. These assets are classified as Level 1.

Assets held in separate accounts: Assets held in separate accounts are reported at the

quoted fair values of the underlying investments in the separate accounts. Mutual funds,

short-term investments and cash are based upon a quoted market price and are included in

Level 1. Bond valuations are obtained from third party commercial pricing services and

brokers and are included in Level 2. The valuations obtained from brokers are non-

binding. Valuations are validated monthly through comparisons to internal pricing

models, back testing to recent trades, and monitoring of trading volumes.

Other financial instruments reported as assets and liabilities: The carrying amounts for

these financial instruments (primarily derivatives) reflect the fair value of the assets and

liabilities. Derivatives are carried at fair value (on the Consolidated Balance Sheets),

which is determined using the Company’s derivative accounting system in conjunction

with observable key financial data from third party sources or through values established

by third party brokers. Counterparty credit risk is considered and incorporated in the

Company’s valuation process through counterparty credit rating requirements and

monitoring of overall exposure. It is the Company’s policy to deal only with investment

grade counterparties with a credit rating of A- or better. These assets and liabilities are

classified as Level 2.

Product guarantees: The Company records reserves for product guarantees, which can be

either assets or liabilities, for annuity contracts containing guaranteed credited rates in

accordance with FAS 133. The guarantee is treated as an embedded derivative or a

stand-alone derivative (depending on the underlying product) and is required to be

reported at fair value. The fair value of the obligation is calculated based on the income

approach as described in FAS 157. The income associated with the contracts is projected

using relevant actuarial and capital market assumptions, including benefits and related

contract charges, over the anticipated life of the related contracts. The cash flow

estimates are produced by using stochastic techniques under a variety of risk neutral

scenarios and other best estimate assumptions. Explicit risk margins in the actuarial

assumptions underlying valuations are included, as well as an explicit recognition of all

nonperformance risks as required by FAS 157. Nonperformance risk for product

guarantees contains adjustments to the fair values of these contract liabilities related to

C-37

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

the current credit standing of ING and the Company based on credit default swaps with

similar term to maturity and priority of payment. The ING credit default spread is

applied to the discount factors for product guarantees in the Company’s valuation model

in order to incorporate credit risk into the fair values of these product guarantees. As of

December 31, 2008, the credit ratings of ING and the Company changed in relation to

prior periods, which resulted in substantial changes in the valuation of the reserves for

product guarantees.

The following disclosures are made in accordance with the requirements of FAS No. 107,

“Disclosures about Fair Value of Financial Instruments” (“FAS 107”). FAS 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 107 excludes certain financial instruments, including insurance contracts, and all

nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate

fair value amounts presented do not represent the underlying value of the Company.

The following valuation methods and assumptions were used by the Company in

estimating the fair value of the following financial instruments:

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.

Policy loans: The fair value of policy loans is equal to the carrying, or cash surrender,

value of the loans. Policy loans are fully collateralized by the account value of the

associated insurance contracts.

Investment contract liabilities (included in Future policy benefits and claim reserves):

With a fixed maturity: Fair value is estimated by discounting cash flows at interest

rates currently being offered by, or available to, the Company for similar contracts.

Without a fixed maturity: Fair value is estimated as the amount payable to the

contractowner upon demand. However, the Company has the right under such

contracts to delay payment of withdrawals, which may ultimately result in paying an

amount different than that determined to be payable on demand.

C-38

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

The carrying values and estimated fair values of certain of the Company’s financial

instruments were as follows at December 31, 2008 and 2007.


	2008		2007
	Carrying	Fair	Carrying	Fair
	Value	Value	Value	Value
Assets:
Fixed maturities, available-for-sale,
including securities pledged	$ 14,477.6	$ 14,477.6	$ 14,250.4	$ 14,250.4
Equity securities, available-for-sale	240.3	240.3	446.4	446.4
Mortgage loans on real estate	2,107.8	2,027.9	2,089.4	2,099.3
Policy loans	267.8	267.8	273.4	273.4
Cash, cash equivalents, short-term
investments, and short-term
investments under securities
loan agreement	729.3	729.3	622.9	622.9
Other investments	749.1	749.1	670.9	670.9
Assets held in separate accounts	35,927.7	35,927.7	48,091.2	48,091.2
Liabilities:
Investment contract liabilities:
With a fixed maturity	1,529.4	1,610.6	1,251.1	1,308.7
Without a fixed maturity	15,611.8	17,237.9	13,421.9	13,379.1
Derivatives	544.1	544.1	200.3	200.3

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 capital gains (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.

Level 3 Financial Instruments

The fair values of certain assets and liabilities are determined using prices or valuation

techniques that require inputs that are both unobservable and significant to the overall fair

value measurement (i.e., Level 3 as defined by FAS 157). These valuations, whether

derived internally or obtained from a third party, use critical assumptions that are not

widely available to estimate market participant expectations in valuing the asset or

liability. In light of the methodologies employed to obtain the fair value of financial

assets and liabilities classified as Level 3, additional information is presented below, with

particular attention addressed to the reserves for product guarantees due to the impact on

the Company’s results of operations.

C-39

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

The following table summarizes the change in fair value of the Company’s Level 3 assets

and liabilities for the year ended December 31, 2008.

	Fixed		Product
	Maturities	Derivatives	Guarantees
Balance at January 1, 2008	$ 1,737.6	$ -	$ (76.4)
Capital gains (losses):
Net realized capital gains (losses)	(72.6) ⁽¹⁾	(29.3)	(139.6) ⁽³⁾
Net unrealized capital (losses) gains⁽²⁾	71.8	-	-
Total net realized and unrealized capital losses	(0.8)	(29.3)	(139.6)

Purchases, sales, issuances, and settlements, net	(171.7)	21.5	(4.0)
Transfer in (out) of Level 3	726.5	(65.8)	-
Balance at December 31, 2008	$ 2,291.6	$ (73.6)	$ (220.0)

⁽¹⁾This amount is included in Net realized capital gains (losses) on the Consolidated Statements of Operations.

⁽²⁾The amounts in this line are included in Accumulated other comprehensive income (loss) on the Consolidated Balance Sheets.

⁽³⁾This amount is included in Interest credited and other benefits to contractowners on the Consolidated Statements of

Operations. All gains and losses on Level 3 liabilities are classified as realized gains (losses) for the purpose of this

disclosure because it is impracticable to track realized and unrealized gains (losses) separately on a contract-by-contract basis.

For the year ended December 31, 2008, the value of the liability increased due to

increased credit spreads, increased interest rate volatility and decreased interest rates. As

of December 31, 2008, the net realized gains attributable to credit risk were $107.9. The

unrealized capital losses on fixed maturities were driven by the widening of credit

spreads.

During 2008, the Company determined that the classification within the valuation

hierarchy related to the subprime and Alt-A mortgage-backed securities within the

RMBS portfolio should be changed due to market inactivity. This change is presented as

transfers into Level 3 in the table above and discussed in more detail in the previous

disclosure regarding RMBS.

C-40

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

*Derivative Financial Instruments*

	Notional Amount		Fair Value
	2008	2007	2008	2007
Interest Rate Swaps
Interest rate swaps are used to manage the interest
rate risk in the Company’s fixed maturities portfolio,
as 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.	7,207.2	7,680.0	$ (232.0)	$ (111.6)

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
U.S. dollar cash flows at regular interim periods,
typically quarterly or semi-annually.	199.5	224.5	(18.6)	(45.3)

Credit Default Swaps
Credit default swaps are used to reduce the credit loss
exposure with respect to certain assets that the
Company owns, or to assume credit exposure to
certain assets that the Company does not own.
Payments are made to or received from the
counterparty at specified intervals and amounts
for the purchase or sale of credit protection.
In the event of a default on the underlying credit
exposure, the Company will either receive
an additional payment (purchased credit
protection) or will be required to make an additional
payment (sold credit protection) equal to the notional
value of the swap contract.	341.1	335.9	(58.9)	(8.8)

Forwards
Forwards are acquired to hedge the Company's
inverse portfolio against movements in interest
rates, particularly mortgage rates. On the
settlement date, the Company will either receive
a payment (interest rate drops on owned forwards
or interest rate rises on purchased forwards) or
will be required to make a payment (interest rate
rises on owned forwards or interest rate drops
on purchased forwards).	263.0	-	3.3	-

C-41

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)


	Notional Amount		Fair Value
	2008	2007	2008	2007
Swaptions
Swaptions are used to manage interest rate risk in the
Company’s collateralized mortgage obligation portfolio.
Swaptions are contracts that give the Company the
option to enter into an interest rate swap at a specific
future date.	2,521.5	542.3	$ 5.1	$ 0.2

Futures
Futures contracts are used to hedge against a decrease
in certain equity indices. Such decrease may result
in a decrease in variable annuity account values,
which would increase the possibility of the Company
incurring an expense for guaranteed benefits in
excess of account values. A decrease in variable
annuity account values would also result in lower
fee income. A decrease in equity markets may also
negatively impact the Company's investment in
equity securities. The futures income would
serve to offset these effects. Futures contracts
are also used to hedge against an increase
in certain equity indices. Such increase may result
in increased payments to contract holders of fixed
indexed annuity contracts, and the futures income
would serve to offset this increased expense. The
underlying reserve liabilities are valued under
FAS 133 and FAS 157 (see discussion under
“Reserves” section) and the change in reserve
liability is recorded in Interest credited and other
benefits to contractowners. The gain or loss on
futures is recorded in Net realized capital gains
(losses).	580.6	-	(7.8)	-

Embedded Derivatives
The Company also has investments in certain fixed
maturity instruments, and has issued certain retail
annuity products, that contain embedded derivatives
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 rates, or
credit ratings/spreads.
Within securities	N/A*	N/A*	123.7	40.8
Within annuity products	N/A*	N/A*	180.0	78.1

* N/A - not applicable.

C-42

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

Credit Default Swaps

The Company has entered into various credit default swaps to assume credit exposure to

certain assets that the Company does not own. Credit default swaps involve a transfer of

credit risk from one party to another in exchange for periodic payments. These

instruments are typically written for a maturity period of five years and do not contain

recourse provisions, which would enable the seller to recover from third parties. The

Company’s collateral positions are tracked by the International Swaps and Derivatives

Associations, Inc. (“ISDA”). To the extent cash collateral was received, it was included

in the Collateral held, including payables under securities loan agreement on the Balance

Sheets and was reinvested in short-term investments. The source of non-cash collateral

posted was investment grade bonds of the entity. Collateral held is used in accordance

with the Credit Support Annex (“CSA”) to satisfy any obligations. In the event of a

default on the underlying credit exposure, the Company will either receive an additional

payment (purchased credit protection) or will be required to make an additional payment

(sold credit protection) equal to the notional value of the swap contract. At December 31,

2008, the fair value of credit default swaps of $16.1 and $75.0 was included in Other

investments and Other liabilities, respectively, on the Consolidated Balance Sheets. As

of December 2008, the maximum potential future exposure to the Company on the sale of

credit protection under credit default swaps was $161.0.

Embedded Derivative in Credit-Linked Note

The Company owns a 3-year credit-linked note arrangement, whereby the Company

agrees to reimburse the guaranteed party upon payment default of the referenced

obligation. Upon such default, the Company reimburses the guaranteed party for the loss

under the reference obligation, and the Company receives that reference obligation in

settlement. The Company can then seek recovery of any losses under the agreement by

sale or collection of the received reference obligation. As of December 31, 2008, the

maximum potential future exposure to the Company under the guarantee was $30.0.

Variable Interest Entities

The Company holds VIEs for investment purposes in the form of private placement

securities, structured securities, securitization transactions, and limited partnerships.

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. Rather, the VIEs

are accounted for using the cost or equity method of accounting. Investments in limited

partnerships are included in Limited partnerships/corporations on the Consolidated

Balance Sheets.

C-43

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

4.	Deferred Policy Acquisition Costs and Value of Business Acquired

	Activity within DAC was as follows for the years ended December 31, 2008, 2007, and
	2006.

Balance at January 1, 2006	$ 511.4
Deferrals of commissions and expenses	136.0
Amortization:
Amortization	(62.1)
Interest accrued at 6% to 7%	37.5
Net amortization included in the Consolidated Statements of Operations	(24.6)
Change in unrealized capital gains (losses) on available-for-sale securities	(0.2)
Balance at December 31, 2006	622.6
Deferrals of commissions and expenses	147.1
Amortization:
Amortization	(80.9)
Interest accrued at 5% to 7%	44.8
Net amortization included in the Consolidated Statements of Operations	(36.1)
Change in unrealized capital gains (losses) on available-for-sale securities	1.0
Implementation of SOP 05-1	(6.0)
Balance at December 31, 2007	728.6
Deferrals of commissions and expenses	168.7
Amortization:
Amortization	(112.5)
Interest accrued at 5% to 7%	50.6
Net amortization included in the Consolidated Statements of Operations	(61.9)
Change in unrealized capital gains (losses) on available-for-sale securities	30.1
Balance at December 31, 2008	$ 865.5

The estimated amount of DAC to be amortized, net of interest, is $50.8, $59.0, $61.7,

$59.6, and $58.5, for the years 2009, 2010, 2011, 2012 and 2013, respectively. Actual

amortization incurred during these years may vary as assumptions are modified to

incorporate actual results.

C-44

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

Activity within VOBA was as follows for the years ended December 31, 2008, 2007, and

2006.

Balance at January 1, 2006	$ 1,291.7
Deferrals of commissions and expenses	46.2
Amortization:
Amortization	(82.4)
Interest accrued at 5% to 7%	85.7
Net amortization included in the Consolidated Statements of Operations	3.3
Change in unrealized capital gains (losses) on available-for-sale securities	(1.0)
Balance at December 31, 2006	1,340.2
Deferrals of commissions and expenses	40.5
Amortization:
Amortization	(177.3)
Interest accrued at 5% to 7%	84.2
Net amortization included in the Consolidated Statements of Operations	(93.1)
Change in unrealized capital gains (losses) on available-for-sale securities	2.9
Implementation of SOP 05-1	(37.3)
Balance at December 31, 2007	1,253.2
Deferrals of commissions and expenses	33.3
Amortization:
Amortization	(144.2)
Interest accrued at 5% to 7%	77.2
Net amortization included in the Consolidated Statements of Operations	(67.0)
Change in unrealized capital gains (losses) on available-for-sale securities	613.0
Balance at December 31, 2008	$ 1,832.5

The estimated amount of VOBA to be amortized, net of interest, is $59.9, $69.9, $75.7,

$73.7, and $71.8, for the years 2009, 2010, 2011, 2012 and 2013, respectively. Actual

amortization incurred during these years may vary as assumptions are modified to

incorporate actual results.

Analysis of DAC and VOBA

The increase in Net amortization of DAC and VOBA for the year ended December 31,

2008, was primarily driven by unfavorable unlocking of $63.0 resulting from unfavorable

equity market performance and the revisions of certain assumptions used in the

estimation of gross profits. The increase in Net amortization of DAC and VOBA for the

year ended December 31, 2007, was primarily driven by unfavorable unlocking of $131.3

attributable to an increase in actual gross profits related to higher fee income and fixed

margins in 2007.

The decrease in Net amortization of DAC and VOBA in 2006 is primarily driven by

favorable unlocking of $83.3, resulting from the refinements of the Company’s estimates

of persistency, expenses and other assumptions. In addition, the decrease in amortization

reflects lower actual gross profits, primarily due to a legal settlement incurred in 2006.

C-45

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)


5.	Dividend Restrictions and Shareholder’s Equity

	ILIAC’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) ten percent (10%) of ILIAC’s statutory surplus at the prior year end or (2)
	ILIAC’s prior year statutory net gain from operations.

	During 2008, ILIAC did not pay any dividends to its Parent. During 2007 and 2006,
	ILIAC paid $145.0, and $256.0, respectively, in dividends on its common stock to its
	Parent.

	During 2006, Lion contributed to ILIAC, DSI, which had $50.5 in equity on the date of
	contribution and was accounted for in a manner similar to a pooling-of-interests. During
	2008, 2007, and 2006, ILIAC did not receive any cash capital contributions from its
	Parent.

	On November 12, 2008, ING issued to the Dutch State non-voting Tier 1 securities for a
	total consideration of Euro 10 billion. On February 24, 2009, $2.2 billion was
	contributed to direct and indirect insurance company subsidiaries of ING America
	Insurance Holdings, Inc. (“ING AIH”), of which $365.0 was contributed to the Company.
	The contribution was comprised of the proceeds from the investment by the Dutch
	government and the redistribution of currently existing capital within ING.

	The State of Connecticut Insurance Department (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
	(loss) income was $(428.4), $245.5, and $138.3, for the years ended December 31, 2008,
	2007, and 2006, respectively. Statutory capital and surplus was $1,524.6 and $1,388.0 as
	of December 31, 2008 and 2007, respectively. As specifically permitted by statutory
	accounting policies, statutory surplus as of December 31, 2008 included the impact of the
	$365.0 capital contribution received on February 24, 2009.

	During 2008, the Company received a permitted practice regarding deferred income
	taxes, which modified the accounting prescribed by the National Association of Insurance
	Commissioners by increasing the realization period for deferred tax assets from one year
	to three years and increasing the asset recognition limit from 10% to 15% of adjusted
	statutory capital and surplus. This permitted practice expires on December 15, 2009. This
	permitted practice increased admitted assets and statutory surplus by $58.4 for the year
	ended December 31, 2008. The benefits of this permitted practice may not be considered
	by the Company when determining surplus available for dividends.

C-46

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)


	The Department also has the ability to revise certain reserving requirements at its
	discretion. Due to the financial crisis and related federal government interest rate actions,
	the Department provided the Company and other domestic life insurers the opportunity to
	elect to use a formula for the discount rate for statutory reserve and reserve related
	calculations that resulted in the discount rate being floored at 3.25% for December 31,
	2008; the formula stipulated by the Department was such that the discount rate was to
	equal the greater of 3.25% or 105% of the otherwise applicable spot rate; this reserve
	relief reduces statutory reserves and increases surplus by approximately $700.0. This
	reserve relief is available for the period from December 31, 2008 through September 30,
	2009 and is not a permitted practice. The Company also discloses that, as in prior years,
	its asset adequacy analysis associated with these reserves is favorable.


6.	Additional Insurance Benefits and Minimum Guarantees

	The Company calculates an additional liability for certain GMDBs and other minimum
	guarantees in order to recognize the expected value of these 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, 2008, the separate account liability for guaranteed minimum benefits
	and the additional liability recognized related to minimum guarantees were $6.5 billion
	and $181.2, respectively. As of December 31, 2007, the separate account liability for
	guaranteed minimum benefits and the additional liability recognized related to minimum
	guarantees were $7.1 billion and $80.4, 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, 2008 and 2007, was $6.5 billion and $7.1 billion, respectively.


7.	Income Taxes

	Effective January 1, 2006, ILIAC files a consolidated federal income tax return with ING
	AIH and certain other subsidiaries of ING AIH that are eligible corporations qualified to
	file consolidated federal income tax returns as part of the ING AIH affiliated group.
	Effective January 1, 2006, ILIAC is party to a federal tax allocation agreement with ING
	AIH and its subsidiaries that are part of the group whereby ING AIH charges its
	subsidiaries for federal taxes each subsidiary would have incurred were it not a member
	of the consolidated group and credits each subsidiary for losses at the statutory federal tax
	rate.

C-47

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

	2008	2007	2006
Current tax expense (benefit):
Federal	$ (121.8)	$ 28.6	$ 23.3
State	(18.1)	(9.0)	20.0
Total current tax (benefit) expense	(139.9)	19.6	43.3
Deferred tax expense:
Federal	31.6	36.4	79.4
Total deferred tax expense	31.6	36.4	79.4
Total income tax (benefit) expense	$ (108.3)	$ 56.0	$ 122.7

Income taxes were different from the amount computed by applying the federal income

tax rate to income before income taxes for the following reasons for the years ended

December 31, 2008, 2007 and 2006:

	2008	2007	2006
(Loss) income before income taxes	$ (1,138.5)	$ 274.4	$ 424.5
Tax rate	35.0%	35.0%	35.0%
Income tax (benefit) expense at federal statutory rate	(398.5)	96.0	148.6
Tax effect of:
Dividend received deduction	(15.5)	(26.2)	(36.5)
IRS audit settlement	(10.1)	-	-
State audit settlement	(12.6)	(21.8)	-
State tax expense	1.3	-	13.0
Tax valuation allowance	333.0	-	-
Other	(5.9)	8.0	(2.4)
Income tax (benefit) expense	$ (108.3)	$ 56.0	$ 122.7

C-48

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

Temporary Differences

The tax effects of temporary differences that give rise to Deferred tax assets and Deferred

tax liabilities at December 31, 2008 and 2007, are presented below.

	2008	2007
Deferred tax assets:
Insurance reserves	$ 217.2	$ 216.6
Net unrealized capital loss	503.8	8.5
Unrealized losses allocable to experience-rated contracts	-	5.7
Investments	294.7	6.7
Postemployment benefits	67.4	65.5
Compensation	42.5	37.7
Other	3.9	32.9
Total gross assets before valuation allowance	1,129.5	373.6
Less: valuation allowance	(333.0)	(6.4)
Assets, net of valuation allowance	796.5	367.2
Deferred tax liabilities:
Value of business acquired	(653.3)	(438.5)
Deferred policy acquisition costs	(244.3)	(204.6)
Total gross liabilities	(897.6)	(643.1)
Net deferred income tax asset (liability)	$ (101.1)	$ (275.9)

Net unrealized capital gains and losses are presented as a component of other

comprehensive income (loss) in Shareholder’s equity, net of deferred taxes. Due to

changes in classification during 2008, the amount for the 2007 table above were

reclassified in order to allow for more effective comparison.

Valuation allowances are provided when it is considered unlikely that deferred tax assets

will be realized. As of December 31, 2008 and 2007, the Company had a tax valuation

allowance of $328.0 and $0, respectively, related to realized capital losses, which is

included in Net (loss) income. The valuation allowance includes $106.7 related to

impairments of securities designated in the ING-Dutch State Transaction, which has

established pending uncertainties regarding the closing of the transaction. As of

December 31, 2008 and 2007, the Company had a valuation allowance of $0 and $6.4,

respectively, related to unrealized capital losses on investments, which is included in

Accumulated Other Comprehensive Income (Loss). In 2008, the Company has also

established a $5.0 tax valuation allowance against foreign tax credits, the benefit of

which is uncertain.

Tax Sharing Agreement

ILIAC had a receivable of $38.6 and payable $56.8 to ING AIH at December 31, 2008

and 2007, respectively, for federal income taxes under the inter-company tax sharing

agreement.

See Related Party Transactions footnote for more information.

C-49

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

Unrecognized Tax Benefits

Reconciliations of the change in the unrecognized income tax benefits for the years ended

December 31, 2008 and 2007 are as follows:

	2008	2007
Balance at January 1	$ 47.4	$ 68.0
Additions for tax positions related to current year	2.4	2.9
Additions for tax positions related to prior years	2.2	-
Reductions for tax positions related to prior years	(20.7)	(23.5)
Reductions for settlements with taxing authorities	(9.2)	-
Balance at December 31	$ 22.1	$ 47.4

The Company had $23.1 and $42.6 of unrecognized tax benefits as of December 31, 2008

and 2007, respectively, that would affect the Company’s effective tax rate if recognized.

Interest and Penalties

The Company recognizes accrued interest and penalties related to unrecognized tax

benefits in Current income taxes and Income tax expense on the Consolidated Balance

Sheets and the Consolidated Statements of Operations, respectively. The Company had

accrued interest of $3.8 and $16.9 as of December 31, 2008 and 2007, respectively. The

decrease in accrued interest during the year ended December 31, 2008 primarily related

to the settlement of the 2002 and 2003 IRS audit and the 1995 through 2000 New York

state audit.

Tax Regulatory Matters

The Company is under audit by the IRS for tax years 2004 through 2008, and is subject to

state audit in New York for years 2001 through 2006. It is anticipated that the IRS audit

of tax years 2004 through 2008 will be finalized within the next twelve months. Upon

finalization of the IRS and New York examinations, it is reasonably possible that the

unrecognized tax benefits will decrease by up to $7.6. The timing of the payment of the

remaining allowance of $14.5 can not be reliably estimated.

On September 25, 2007, the IRS issued Revenue Ruling 2007-61, which announced its

intention to issue regulations with respect to certain computational aspects of the

dividend received deduction (“DRD”) on separate account assets held in connection with

variable annuity and life insurance contracts. Revenue Ruling 2007-61 suspended

Revenue Ruling 2007-54 issued in August 2007 that purported to change accepted

industry and IRS interpretations of the statutes governing these computational questions.

Any regulations that the IRS ultimately proposes for issuance in this area will be subject

to public notice and comment, at which time insurance companies and other members of

the public will have the opportunity to raise legal and practical questions about the

content, scope and application of such regulations. As a result, the ultimate timing,

substance, and effective date of any such regulations are unknown, but they could result

C-50

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)


	in the elimination of some or all of the separate account DRD tax benefit that the
	Company receives.

	Under prior law, life insurance companies were allowed to defer from taxation a portion
	of income. Deferred income of $17.2 was accumulated in the Policyholders Surplus
	Account and would only become taxable under certain conditions, which management
	believed to be remote. In 2004, Congress passed the American Jobs Creation Act of
	2004 allowing certain tax-free distributions from the Policyholders’ Surplus Account
	during 2005 and 2006. During 2006, the Company made a dividend distribution of
	$256.0, which eliminated the $17.2 balance in the Policyholders Surplus Account and,
	therefore, any potential tax on the accumulated balance.


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 affiliates (excluding certain
	employees) are eligible to participate, including the Company’s employees other than
	Company agents. However, effective January 1, 2009, the Retirement Plan was amended
	to provide that anyone hired or rehired by the Company on or after January 1, 2009,
	would not be eligible to participate in the Plan. The Retirement Plan was amended and
	restated effective July 1, 2008 related to the admission of the employees from the
	acquisition of CitiStreet LLC (“CitiStreet”) by Lion, and ING North America filed a
	request for a determination letter on the qualified status of the Plan. 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 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 $14.0, $17.2, and
	$23.8, for 2008, 2007, and 2006, respectively, and are included in Operating expenses in
	the Consolidated Statements of Operations.

	*Defined Contribution Plan*

	ING North America sponsors the ING Americas Savings Plan and ESOP (the “Savings
	Plan”). Substantially all employees of ING North America and its 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 salespeople 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 defined contribution retirement plan, which includes
	an employee stock ownership plan (“ESOP”) component. The Savings Plan was amended
	and restated effective July 1, 2008 related to the admission of the employees from the

C-51

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

acquisition of CitiStreet by Lion, and ING North America filed a request for a

determination letter on the qualified status of the Plan. 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. 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 to operations of the Company for the Savings Plan were

$10.3, $10.1, and $9.7, for the years ended December 31, 2008, 2007, and 2006,

respectively, and are included in Operating expenses in the Consolidated Statements of

Operations.

Non-Qualified Retirement Plans

Through December 31, 2001, the Company, in conjunction with ING North America,

offered certain eligible employees (other than Career Agents) a Supplemental Executive

Retirement Plan and an Excess Plan (collectively, the “SERPs”). Benefit accruals under

the SERPs ceased, effective as of December 31, 2001. Benefits under the SERPs are

determined based on an eligible employee’s years of service and average annual

compensation for the highest five years during the last ten years of employment.

The Company, in conjunction with ING North America, sponsors the Pension Plan for

Certain Producers of ING Life Insurance and Annuity Company (formerly the Pension

Plan for Certain Producers of Aetna Life Insurance and Annuity Company) (the “Agents

Non-Qualified Plan”). This plan covers certain full-time insurance salespeople who have

entered into a career agent agreement with the Company and certain other individuals

who meet the eligibility criteria specified in the plan (“Career Agents”). The Agents

Non-Qualified Plan was terminated effective January 1, 2002. In connection with the

termination, all benefit accruals ceased and all accrued benefits were frozen.

The SERPs and Agents Non-Qualified Plan, are non-qualified defined benefit pension

plans, which means all the SERPs benefits are payable from the general assets of the

Company and Agents Non-Qualified Plan benefits are payable from the general assets of

the Company and ING North America. These non-qualified defined benefit pension

plans are not guaranteed by the PBGC.

Obligations and Funded Status

The following tables summarize the benefit obligations, fair value of plan assets, and

funded status, for the SERPs and Agents Non-Qualified Plan, for the years ended

December 31, 2008 and 2007.

C-52

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

	2008	2007
Change in Projected Benefit Obligation:
Projected benefit obligation, January 1	$ 85.6	$ 97.7
Interest cost	5.2	5.4
Benefits paid	(11.6)	(9.3)
Post service cost-unrecognized	0.2	-
Actuarial gain (loss) on obligation	15.5	(8.2)
Projected benefit obligation, December 31	$ 94.9	$ 85.6

Fair Value of Plan Assets:
Fair value of plan assets, December 31	$ -	$ -

Amounts recognized in the Consolidated Balance Sheets consist of:

	2008	2007
Accrued benefit cost	$ (94.9)	$ (85.6)
Intangible assets	-	-
Accumulated other comprehensive income	20.0	4.9
Net amount recognized	$ (74.9)	$ (80.7)

At December 31, 2008 and 2007, the projected benefit obligation was $94.9 and $85.6,

respectively.

Assumptions

The weighted-average assumptions used in the measurement of the December 31, 2008

and 2007 benefit obligation for the SERPs and Agents Non-Qualified Plan, were as

follows:

	2008	2007
Discount rate at end of period	6.50%	6.50%
Rate of compensation increase	4.00%	4.20%

In determining the discount rate assumption, the Company utilizes current market

information provided by its plan actuaries (particularly the Citigroup Pension Discount

Curve Liability Index), including a discounted cash flow analysis of the Company’s

pension obligation and general movements in the current market environment. The

discount rate modeling process involves selecting a portfolio of high quality, noncallable

bonds that will match the cash flows of the Retirement Plan. Based upon all available

information, it was determined that 6.0% was the appropriate discount rate as of

December 31, 2008, to calculate the Company’s accrued benefit liability. Accordingly,

as prescribed by FAS No. 87, “Employers’ Accounting for Pensions”, the 6.5% discount

rate will also be used to determine the Company’s 2008 pension expense. December 31

is the measurement date for the SERP’s and Agents Non-Qualified Plan.

C-53

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

The weighted-average assumptions used in calculating the net pension cost were as

follows:

	2008	2007	2006
Discount rate	6.50%	5.90%	6.00%
Rate of increase in compensation levels	4.00%	4.20%	4.00%

The weighted average assumptions used in calculating the net pension cost for 2008

were, as indicated above, a 6.0% discount rate and a 4.0% rate of compensation increase.

Since the benefit plans of the Company are unfunded, an assumption for return on plan

assets is not required.

Net Periodic Benefit Costs

Net periodic benefit costs for the SERPs and Agents Non-Qualified Plan, for the years

ended December 31, 2008, 2007, and 2006, were as follows:

	2008		2007		2006
Interest cost	$ 5.2		$ 5.4		$ 5.5
Net actuarial loss recognized in the year		-		0.7		2.0
Unrecognized past service cost recognized in the year		-		-		0.2
The effect of any curtailment or settlement		0.5		0.4		0.4
Net periodic benefit cost	$ 5.7		$ 6.5		$ 8.1

Cash Flows

In 2009, the employer is expected to contribute $4.3 to the SERPs and Agents Non-

Qualified Plan. Future expected benefit payments related to the SERPs, and Agents Non-

Qualified Plan, for the years ended December 31, 2009 through 2013, and thereafter

through 2018, are estimated to be $4.3, $4.4, $5.0, $5.1, $5.1, and $26.4, respectively.

Other

On October 4, 2004, the President signed into law The Jobs Creation Act (“Jobs Act”).

The Jobs Act affects nonqualified deferred compensation plans, such as the Agents

Nonqualified Plan. ING North America has made changes to impacted nonqualified

deferred compensation plans, as necessary to comply with the requirements of the Jobs

Act.

Stock Option and Share Plans

ING sponsors the ING Group Long Term Equity Ownership Plan (“leo”), which provides

employees of the Company who are selected by the ING Board of Directors to be granted

options and/or performance shares. The terms applicable to an award under leo are set

out in an award agreement, which is signed by the participant when he or she accepts the

award.

C-54

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

Options granted under leo are nonqualified options on ING shares in the form of

American Depository Receipts (“ADRs”). Leo options have a ten (10) year term and vest

three years from the grant date. Options awarded under leo may vest earlier in the event

of the participant’s death, permanent disability or retirement. Retirement for purposes of

leo means a participant terminates service after attaining age 55 and completing 5 years

of service. Early vesting in all or a portion of a grant of options may also occur in the

event the participant is terminated due to redundancy or business divestiture. Unvested

options are generally subject to forfeiture when a participant voluntarily terminates

employment or is terminated for cause (as defined in leo). Upon vesting, participants

generally have up to seven years in which to exercise their vested options. A shorter

exercise period applies in the event of termination due to redundancy, business

divestiture, voluntary termination or termination for cause. An option gives the recipient

the right to purchase an ING share in the form of ADRs at a price equal to the fair market

value of one ING share on the date of grant. On exercise, participant’s have three options

(i) retain the shares and remit a check for applicable taxes due on exercise, (ii) request the

administrator to remit a cash payment for the value of the options being exercised, less

applicable taxes, or (iii) retain some of the shares and have the administrator liquidate

sufficient shares to satisfy the participant’s tax obligation. The share price is in Euros and

converted to U.S. dollars, as determined by ING.

Awards of performance shares may also be made under leo. Performance shares are a

contingent grant of ING stock, and, on vesting, the participant has the right to receive a

cash amount equal to the closing price per ING share on the Euronext Amsterdam Stock

Market on the vesting date times the number of vested Plan shares. Performance shares

generally vest three years from the date of grant, with the amount payable based on

ING’s share price on the vesting date. Payments made to participants on vesting are

based on the performance targets established in connection with leo and payments can

range from 0% to 200% of target. Performance is based on ING’s total shareholder

return relative to a peer group as determined at the end of the vesting period. To vest, a

participant must be actively employed on the vesting date, although vesting will continue

to occur in the event of the participant’s death, disability or retirement. If a participant is

terminated due to redundancy or business divestiture, vesting will occur but in only a

portion of the award. Unvested shares are generally subject to forfeiture when an

employee voluntarily terminates employment or is terminated for cause (as defined in

leo). Upon vesting, participants have three options (i) retain the shares and remit a check

for applicable taxes due on exercise, (ii) request the administrator to remit a cash

payment for the value of the shares, less applicable taxes, or (iii) retain some of the shares

and have the administrator liquidate sufficient shares to satisfy the participant’s tax

obligation. The amount is converted from Euros to U.S. dollars based on the daily

average exchange rate between the Euro and the U.S. dollar, as determined by ING.

The Company recognized compensation expense for the leo options and performance

shares of $4.1, $4.5, and $10.1, for the years ended December 31, 2008, 2007, and 2006

respectively.

C-55

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)


	For leo, the Company recognized tax benefits of $0.7, $3.2, and $0.1, in 2008, 2007, and
	2006, respectively.

	*Other Benefit Plans*

	In addition, the Company, in conjunction with ING North America, sponsors the
	following benefit plans:

	§	The ING 401(k) Plan for ILIAC Agents, which allows participants to defer a
		specified percentage of eligible compensation on a pre-tax basis. Effective
		January 1, 2006, the Company match equals 60% of a participant’s pre-tax deferral
contribution, with a maximum of 6% of the participant’s eligible pay.
	§	The Producers’ Incentive Savings Plan, which allows participants to defer up to a
		specified portion of their eligible compensation on a pre-tax basis. The Company
		matches such pre-tax contributions at specified amounts.
	§	The Producers’ Deferred Compensation Plan, which allows participants to defer up
to a specified portion of their eligible compensation on a pre-tax basis.
	§	Certain health care and life insurance benefits for retired employees and their
		eligible dependents. The post retirement health care plan is contributory, with
		retiree contribution levels adjusted annually. The life insurance plan provides a flat
amount of noncontributory coverage and optional contributory coverage.
	§	The ING Americas Supplemental Executive Retirement Plan, which is a non-
		qualified defined benefit restoration pension plan.
	§	The ING Americas Deferred Compensation Savings Plan, which is a deferred
		compensation plan that includes a 401(k) excess component.

	The benefit charges allocated to the Company related to these plans for the years ended
	December 31, 2008, 2007, and 2006, were $1.4, $0.4, and $1.4, respectively.


9.	Related Party Transactions

	*Operating Agreements*

	ILIAC has certain agreements whereby it generates revenues and expenses with affiliated
	entities, as follows:

	§	Investment Advisory agreement with ING Investment Management LLC (“IIM”),
		an affiliate, in which IIM provides asset management, administrative, and
		accounting services for ILIAC’s general account. ILIAC incurs a fee, which is paid
		quarterly, based on the value of the assets under management. For the years ended
		December 31, 2008, 2007, and 2006, expenses were incurred in the amounts of
		$58.4, $60.5, and $62.2, respectively.

C-56

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)


§	Services agreement with ING North America for administrative, management,
	financial, and information technology services, dated January 1, 2001 and amended
	effective January 1, 2002. For the years ended December 31, 2008, 2007, and
	2006, expenses were incurred in the amounts of $175.3, $167.9, and $175.3,
	respectively.
§	Services agreement between ILIAC and its U.S. insurance company affiliates dated
	January 1, 2001, and amended effective January 1, 2002 and December 31, 2007.
	For the years ended December 31, 2008, 2007, and 2006, net expenses related to the
	agreement were incurred in the amount of $19.6, $21.7, and $12.4, 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.

DSL has certain agreements whereby it generates revenues and expenses with affiliated
entities, as follows:

§	Underwriting and distribution agreements with ING USA Annuity and Life
	Insurance Company (“ING USA”) and ReliaStar Life Insurance Company of New
	York (“RLNY”), affiliated companies, whereby DSL serves as the principal
	underwriter for variable insurance products. In addition, DSL is authorized to enter
	into agreements with broker-dealers to distribute the variable insurance products
	and appoint representatives of the broker-dealers as agents. For the years ended
	December 31, 2008, 2007, and 2006, commissions were collected in the amount of
	$622.5, $568.4, and $429.2. Such commissions are, in turn, paid to broker-dealers.
§	Services agreements with ING USA and RLNY, whereby DSL receives managerial
	and supervisory services and incurs a fee that is calculated as a percentage of
	average assets of each company’s variable separate accounts deposited in ING
	Investors Trust. On August 9, 2007, DSL and ING USA entered into an
	amendment to the service agreement effective July 31, 2007 to modify the method
	for calculating the compensation owed to ING USA under the service agreement.
	As a result of this amendment, DSL pays ING USA the total net revenue associated
	with ING USA deposits into ING Investors Trust.	For the years ended
	December 31, 2008, 2007, and 2006, expenses were incurred under these services
	agreements in the amount of $156.2, $124.4, and $70.8, respectively.
§	Administrative and advisory services agreements with ING Investment LLC and
	IIM, affiliated companies, in which DSL receives certain services for a fee. The fee
	for these services is calculated as a percentage of average assets of ING Investors
	Trust. For the years ended December 31, 2008, 2007, and 2006, expenses were
	incurred in the amounts of $14.9, $13.1, and $8.8, respectively.

*Investment Advisory and Other Fees*

During 2006, ILIAC served as investment advisor to certain variable funds offered in
Company products (collectively, the “Company Funds”). The Company Funds paid
ILIAC, as investment advisor, daily fees that, on an annual basis, ranged, depending on

C-57

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)


the Fund, from 0.5% to 1.0% of their average daily net assets. Each of the Company
Funds managed by ILIAC were subadvised by investment advisors, in which case ILIAC
paid a subadvisory fee to the investment advisors, which included affiliates. Effective
January 1, 2007, ILIAC’s investment advisory agreement with the Company Funds was
assigned to DSL. 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 daily fees that, on an
annual basis are, depending on the product, up to 3.4% of their average daily net assets.
The total amount of compensation and fees received by the Company from the Company
Funds and separate accounts totaled $245.1, $312.7, and $289.9, (excludes fees paid to
ING Investment Management Co.) in 2008, 2007, and 2006, respectively.

DSL has been retained by ING Investors Trust (the “Trust”), an affiliate, pursuant to a
management agreement to provide advisory, management, administrative and other
services to the Trust. Under the management agreement, DSL provides or arranges for
the provision of all services necessary for the ordinary operations of the Trust.	DSL
earns a monthly fee based on a percentage of average daily net assets of the Trust.	DSL
has entered into an administrative services subcontract with ING Fund Services, LLC, an
affiliate, pursuant to which ING Fund Services, LLC, provides certain management,
administrative and other services to the Trust and is compensated a portion of the fees
received by DSL under the management agreement. For the years ended December 31,
2008, 2007, and 2006, revenue received by DSL under the management agreement
(exclusive of fees paid to affiliates) was $323.8, $343.8, and $233.9, respectively. At
December 31, 2008 and 2007, DSL had $18.6 and $26.7, respectively, receivable from
the Trust under the management agreement.

*Financing Agreements*

ILIAC maintains a reciprocal loan agreement with ING AIH, an affiliate, to facilitate the
handling of unanticipated short-term cash requirements that arise in the ordinary course
of business. 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 borrowing 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, $3.9, and $1.8, for the
years ended December 31, 2008, 2007, and 2006, respectively, and earned interest
income of $4.8, $1.7, and $3.3, for the years ended December 31, 2008, 2007, and 2006,
respectively. Interest expense and income are included in Interest expense and Net
investment income, respectively, on the Consolidated Statements of Operations. As of
December 31, 2008, ILIAC had $13.0 due to ING AIH under the reciprocal loan
agreement and no amounts due as of December 31, 2007. At December 31, 2008 and
2007, ILIAC had no amount due from ING AIH under the reciprocal loan agreement.

C-58

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

As of June 1, 2007, the State of Connecticut, acting by the Department of Economic and

Community Development (“DECD”), loaned ILIAC $9.9 (the “DECD Loan”) in

connection with the development of the Windsor Property. The loan has a term of twenty

years and bears an annual interest rate of 1.00%. As long as no defaults have occurred

under the loan, no payments of principal or interest are due for the initial ten years of the

loan. For the second ten years of the DECD Loan term, ILIAC is obligated to make

monthly payments of principal and interest.

The DECD Loan provides for loan forgiveness at varying amounts up to $5.0 if ILIAC

and its affiliates meet certain employment thresholds at the Windsor Property during the

term of the loan. ILIAC’s obligations under the DECD Loan are secured by an unlimited

recourse guaranty from its affiliate, ING North America Insurance Corporation.

On December 1, 2008, the DECD determined that the Company met the employment

thresholds for loan forgiveness and, accordingly, forgave $5.0 of the DECD Loan to the

Company in accordance with the terms of the DECD Loan.

At December 31, 2008 and 2007, the amount of the loan outstanding was $4.9 and $9.9,

which was reflected in Notes payable on the Consolidated Balance Sheets.

Note with Affiliate

On December 29, 2004, ING USA issued a surplus note in the principal amount of

$175.0 (the “Note”) scheduled to mature on December 29, 2034, to ILIAC, in an offering

that was exempt from the registration requirements of the Securities Act of 1933.

ILIAC’s $175.0 Note from ING USA bears interest at a rate of 6.26% per year. Any

payment of principal and/or interest is subject to the prior approval of the Iowa Insurance

Commissioner. Interest is scheduled to be paid semi-annually in arrears on June 29 and

December 29 of each year, commencing on June 29, 2005. Interest income for the years

ended December 31, 2008, 2007, and 2006 was $11.1.

Tax Sharing Agreements

Effective January 1, 2006, ILIAC is a party to a federal tax allocation agreement with

ING AIH and its subsidiaries that are part of the ING AIH consolidated group. Under the

federal tax allocation agreement, ING AIH charges its subsidiaries for federal taxes each

subsidiary would have incurred were it not a member of the consolidated group and

credits each subsidiary for losses at the statutory federal tax rate.

For the years ended December 31, 2006 and 2005, DSI, which merged with and into DSL

on December 31, 2006, was party to the ING AIH federal tax allocation agreement, as

described above. Income from DSL, a single member limited liability company, is taxed

at the member level (ILIAC).

C-59

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)


	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.


10.	Financing Agreements

	ILIAC maintains a $50.0 uncommitted, perpetual revolving note facility with the Bank of
	New York ("BONY"). Interest on any of ILIAC’s borrowing accrues at an annual rate
	equal to a rate quoted by BONY to ILIAC for the borrowing. Under this agreement,
	ILIAC incurred no interest expense for the year ended December 31, 2008, and minimal
	interest expense for the years ended December 31, 2007 and 2006. At December 31,
	2008 and 2007, ILIAC had no amounts outstanding under the revolving note facility.

	ILIAC also maintains a $100.0 uncommitted line-of-credit agreement with PNC Bank
	(“PNC”), effective December 19, 2005. Borrowings are guaranteed by ING AIH, with
	maximum aggregate borrowings outstanding at anytime to ING AIH and its affiliates of
	$100.0. Interest on any of ILIAC’s borrowing accrues at an annual rate equal to a rate
	quoted by PNC to ILIAC for the borrowing. Under this agreement, ILIAC incurred no
	interest expense for the year ended December 31, 2008, and minimal interest expense for
	the years ended December 31, 2007 and 2006. At December 31, 2008 and 2007, ILIAC
	had no amounts outstanding under the line-of-credit agreement. As of October 31, 2008,
	the Company had not formally renewed this line-of-credit, which subsequently expired
	on this date.

	ILIAC also maintains $100.0 uncommitted line-of-credit agreement with Svenska
	Handelsbanken AB (Publ.), effective June 2, 2006. Borrowings are guaranteed by ING
	AIH, with maximum aggregate borrowings outstanding at anytime to ING AIH and its
	affiliates of $100.0. Interest on any of the Company’s borrowing accrues at an annual
	rate equal to the rate quoted by Svenska to the Company for the borrowing. Under this
	agreement, the Company incurred no interest expense for the year ended December 31,
	2008, and minimal interest expense for the years ended December 31, 2007 and 2006. At
	December 31, 2007, ILIAC had no amounts outstanding under the line-of-credit
	agreement. Effective November 19, 2008, the Company discontinued this line-of-credit.

	Also see Financing Agreements in the Related Party Transactions footnote.


11.	Reinsurance

	At December 31, 2008, the Company had reinsurance treaties with 7 unaffiliated
	reinsurers covering a significant portion of the mortality risks and guaranteed death
	benefits under its variable contracts. At December 31, 2008, the Company did not have
	any outstanding cessions under any reinsurance treaties with affiliated reinsurers. The

C-60

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

Company remains liable to the extent its reinsurers do not meet their obligations under

the reinsurance agreements.

On, October 1, 1998, the Company disposed of its individual life insurance business

under an indemnity reinsurance arrangement with certain subsidiaries of Lincoln for $1.0

billion in cash. Under the agreement, Lincoln contractually assumed from the Company

certain policyholder liabilities and obligations, although the Company remains obligated

to contractowners. Effective March 1, 2007, the reinsurance agreements were assigned to

a single subsidiary of Lincoln, and that subsidiary established a trust to secure its

obligations to the Company under the reinsurance transaction.

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 $11.0 and $16.1 were

maintained for this contract as of December 31, 2008 and 2007, respectively.

Reinsurance ceded in force for life mortality risks were $19.6 billion and $20.9 billion at

December 31, 2008 and 2007, respectively. At December 31, 2008 and 2007, net

receivables were comprised of the following:

	2008	2007
Claims recoverable from reinsurers	$ 2,506.6	$ 2,595.2
Payable for reinsurance premiums	(0.9)	(0.9)
Reinsured amounts due to reinsurer	(0.4)	(5.9)
Reserve credits	-	0.1
Other	0.3	5.9
Total	$ 2,505.6	$ 2,594.4

Premiums and Interest credited and other benefits to contractowners were reduced by the

following amounts for reinsurance ceded for the years ended December 31, 2008, 2007,

and 2006.

	2008	2007	2006
Deposits ceded under reinsurance	$ 174.4	$ 188.5	$ 199.0
Premiums ceded under reinsurance	0.3	0.4	0.5
Reinsurance recoveries	309.0	419.7	359.0

12.	Commitments and Contingent Liabilities

	*Leases*

	Prior to December 31, 2008, the Company leased certain office space and certain
	equipment under various operating leases, the longest term of which expires in 2014.
	However, all operating leases were terminated or consolidated by ING AIH during the

C-61

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

fourth quarter of 2008, which resulted in the Company no longer being party to any

operating leases.

For the years ended December 31, 2008, 2007, and 2006, rent expense for leases was

$6.1, $17.7, and $17.8, respectively. 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. As of

December 31, 2008, the Company’s expenses will be paid for by an affiliate and

allocated back to the Company.

For more information on the lease terminations, see the Restructuring Charges footnote.

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, 2008, the Company had off-balance sheet commitments to purchase

investments equal to their fair value of $353.3, $253.7 of which was with related parties.

At December 31, 2007, the Company had off-balance sheet commitments to purchase

investments equal to their fair value of $357.8, $226.6 of which was with related parties.

During 2008 and 2007, $81.3 and $87.3, respectively, was funded to related parties under

off-balance sheet commitments.

Financial Guarantees

The Company owns a 3-year credit-linked note arrangement, whereby the Company will

reimburse the guaranteed party upon payment default of the referenced obligation. Upon

such default, the Company reimburses the guaranteed party for the loss under the

reference obligation, and the Company receives that reference obligation in settlement.

The Company can then seek recovery of any losses under the agreement by sale or

collection of the received reference obligation. As of December 31, 2008, the maximum

liability to the Company under the guarantee was $30.0.

Cash Collateral

Under the terms of the Company’s Over-The-Counter Derivative ISDA Agreements

(“ISDA Agreements”), the Company may receive from, or deliver to, counterparties,

collateral to assure that all terms of the ISDA Agreements will be met with regard to the

CSA. The terms of the CSA call for the Company to pay interest on any cash received

equal to the Federal Funds rate. As of December 31, 2008, the Company held $4.4 of

cash collateral, which was included in Collateral held, including payables under securities

loan agreement. As of December 31, 2007, the Company delivered $18.8 of cash

C-62

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)


collateral, which was included in Short-term investments under securities loan agreement,
including collateral delivered, on the Consolidated Balance Sheets.

*Litigation*

The Company is involved in 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.

*Other Regulatory Matters*

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.

Insurance and Retirement Plan Products and Other Regulatory Matters

Federal and state regulators, and self-regulatory agencies, are conducting broad inquiries
and investigations involving the insurance and retirement industries. These initiatives
currently focus on, among other things, compensation, revenue sharing, and other sales
incentives; potential conflicts of interest; sales and marketing practices (including sales to
seniors); specific product types (including group annuities and indexed annuities); and
disclosure. The Company and certain of its U.S. affiliates have received formal and
informal requests in connection with such investigations, and have cooperated and are
cooperating fully with each request for information. Some of these matters could result
in regulatory action involving the Company. These initiatives also 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-63

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

Investment Product 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; directed brokerage; compensation; sales practices,

suitability, and supervision; arrangements with service providers; pricing; compliance

and controls; adequacy of disclosure; and document retention.

In addition to responding to governmental and regulatory requests on fund trading 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.

Action has been or may be taken with respect to certain ING affiliates before

investigations relating to fund trading are completed. 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 any 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.

C-64

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)


13.	Restructuring Charges

	2008 CitiStreet Integration

	During the third quarter, integration initiatives related to the acquisition of CitiStreet by
	Lion, which provided significant operational and information technology efficiencies to
	ING’s U.S. retirement services businesses, including the Company, resulted in the
	recognition of integration and restructuring costs. In addition, the Company implemented
	an expense reduction program for the purpose of streamlining its overall operations. The
	restructuring charges related to these expense reduction and integration initiatives include
	severance and other employee benefits and lease abandonment costs, which are included
	in Operating Expenses on the Consolidated Statements of Operations.

	The following table illustrates the restructuring reserves and charges for the period ended
	December 31, 2008.

Restructuring reserve at inception	$ -
Restructuring charges:
Employee severance and termination benefits	11.2	(1)
Future rent on non-cancelable leases	1.5	(2)
Total restructuring charges	12.7
Other charges	-
Intercompany charges and payments	(2.5)	⁽³⁾
Payments applied against reserve	(1.9)	⁽⁴⁾
Restructuring reserve at December 31, 2008	$ 8.3

(1)	Amounts represent charges to the Company for all severed employees that support the Company, including those
	within affiliates.
(2)	Amounts represent intercompany expense allocations from ING AIH. The expenses were allocated to the Company
	based upon the department that used the space, and the cash settlement occurred in January 2009.
(3)	Amounts represent payments to ING affiliates for severance incurred by another ING entity for employees that supported
	the Company. Payments were made through ING's intercompany cash settlement process.
(4)	Amounts represent payments to employees of the Company, as well as reversals of severance reserves.

The Company estimates the completion of these integration and restructuring activities

by January 30, 2010.

2009 Expense and Staff Reductions

On January 12, 2009, ING announced expense and staff reductions across all U.S.

operations, which resulted in the elimination of 87 current and open positions in the

Company. Due to the staff reductions, curtailment of pension benefits shall occur during

the first quarter of 2009, which will result in the recognition of a loss related to

unrecognized prior service costs. The effect of the curtailment on the Company’s

earnings is anticipated to be less than $0.1. The Company anticipates that these

restructuring activities in regards to its operations will be complete by February 10, 2010

with total estimated costs of $5.8.

C-65

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

14.	Accumulated Other Comprehensive Income (Loss)

	Shareholder’s equity included the following components of Accumulated other
	comprehensive income (loss) as of December 31, 2008, 2007, and 2006.

	2008	2007	2006
Net unrealized capital gains (losses):
Fixed maturities, available-for-sale	$ (1,315.5)	$ (64.5)	$ (44.6)
Equity securities, available-for-sale	(7.4)	6.3	18.1
DAC/VOBA adjustment on
available-for-sale securities	650.9	7.8	3.9
Sales inducements adjustment on
available-for-sale securities	2.4	0.2	0.1
Premium deficiency reserve adjustment	-	-	(37.5)
Other investments	(0.3)	(0.7)	0.8
Less: allocation to experience-rated contracts	-	(16.4)	(52.4)
Unrealized capital gains (losses), before tax	(669.9)	(34.5)	(6.8)
Deferred income tax asset (liability)	205.8	12.1	2.4
Asset valuation allowance	-	(6.4)	-
Net unrealized capital gains (losses)	(464.1)	(28.8)	(4.4)
Pension liability, net of tax	(18.0)	(5.0)	(9.6)
Accumulated other comprehensive
(loss) income	$ (482.1)	$ (33.8)	$ (14.0)

During 2008, as a result of the current market conditions, the Company reflected net

unrealized capital losses allocated to experience-rated contracts in Shareholder’s equity

on the Consolidated Balance Sheets rather than Future policy benefits and claims

reserves. At December 31, 2008, there are no net unrealized losses allocated to

experience-rated contracts. Net unrealized capital gains (losses) allocated to experience-

rated contracts of $(16.4) at December 31, 2007, are reflected on the Consolidated

Balance Sheets in Future policy benefits and claims reserves and are not included in

Shareholder’s equity.

C-66

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

Changes in Accumulated other comprehensive income (loss), net of DAC, VOBA, and

tax (excluding the tax valuation allowance), related to changes in unrealized capital gains

(losses) on securities, including securities pledged and excluding those related to

experience-rated contracts, as appropriate, were as follows for the years ended

December 31, 2008, 2007, and 2006.

	2008	2007	2006
Fixed maturities, available-for-sale	$ (1,251.0)	$ (19.9)	$ (26.6)
Equity securities, available-for-sale	(13.7)	(11.8)	14.9
DAC/VOBA adjustment on
available-for-sale securities	643.1	3.9	(1.2)
Sales inducements adjustment on
available-for-sale securities	2.2	0.1	-
Premium deficiency reserve adjustment	-	37.5	(13.9)
Other investments	0.4	(1.5)	(0.4)
Less: allocation to experience-rated contracts	16.4	36.0	(3.8)
Unrealized capital gains (losses), before tax	(635.4)	(27.7)	(23.4)
Deferred income tax asset (liability)	193.7	9.7	12.7
Net change in unrealized capital gains (losses)	$ (441.7)	$ (18.0)	$ (10.7)

	2008	2007	2006
Net unrealized capital holding gains (losses) arising
during the year ⁽¹⁾	$ (1,192.0)	$ (66.9)	$ (43.6)
Less: reclassification adjustment for gains (losses)
and other items included in Net (loss) income⁽²⁾	(750.3)	(48.9)	(32.9)
Net change in unrealized capital gains (losses) on securities	$ (441.7)	$ (18.0)	$ (10.7)

(1)	Pretax unrealized holding gains (losses) arising during the year were $(1,714.8), $(102.9), and $(95.4), for the years ended
	December 31, 2008, 2007, and 2006, respectively.
(2)	Pretax reclassification adjustments for gains (losses) and other items included in Net (loss) income were and $(1,079.4), $(75.2),
	and $(72.0), for the years ended December 31, 2008, 2007, and 2006, respectively.

C-67

ING Life Insurance and Annuity Company and Subsidiaries

(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)

Notes to Consolidated Financial Statements

(Dollar amount in millions, unless otherwise stated)

15.	Changes to Prior Years Presentation

	Consolidated Statements of Operations Presentational Changes

	During 2008, certain changes were made to the Consolidated Statements of Operations
	for the year ended 2007 to more accurately reflect the correct balances, primarily related
	to surrenders on market value adjusted contracts. As the Company has determined these
	changes to be immaterial, the Consolidated Statements of Operations for the year ended
	December 31, 2007, has not been labeled as restated. The following table summarizes the
	adjustments:

	Previously
	Reported	Reclassification	Adjusted
2007
Fee income	$ 789.3	$ (19.4)	$ 769.9
Net realized capital gains (losses)	(8.2)	(19.4)	(27.6)
Other income	0.9	19.4	20.3
Total revenue	2,451.9	(19.4)	2,432.5
Interest credited and other benefits to contractowners	822.2	(19.4)	802.8
Total benefits and expenses	2,177.5	(19.4)	2,158.1

C-68

QUARTERLY DATA (UNAUDITED)

(Dollar amounts in millions, unless otherwise stated)


First
2008	(Restated)*	Second	Third	Fourth
Total revenue	$ 560.4	$ 538.4	$ 469.3	$ 166.1
Income (loss) before income taxes	(98.4)	25.1	(391.3)	(673.9)
Income tax expense (benefit)	(53.8)	1.9	(25.1)	(31.3)
Net income	$ (44.6)	$ 23.2	$ (366.2)	$ (642.6)

2007	First	Second	Third	Fourth
Total revenue	$ 579.1	$ 594.9	$ 601.4	$ 657.1
Income (loss) before income taxes	100.7	115.8	85.8	(27.9)
Income tax expense (benefit)	28.5	33.6	22.3	(28.4)
Net income	$ 72.2	$ 82.2	$ 63.5	$ 0.5

*The Company has restated its previously issued unaudited interim financial statements for the three months

ended March 31, 2008 due to an error in the calculation of the fair value of the reserves for product guarantees

for annuity contracts containing guaranteed credited rates. The effect of the restatement on these prior period

interim financial statements for the three months ended March 31, 2008 was to increase the net loss by $18.9.

C-69

ING Life Insurance and Annuity Company and Subsidiaries
(A wholly-owned subsidiary of Lion Connecticut Holdings Inc.)
For the period ended September 30, 2009

INDEX

Condensed Consolidated Financial Statements (Unadited):

Condensed Consolidated Statements of Operations

Condensed Consolidated Balance Sheets

Condensed Consolidated Statements of Changes in Shareholder's Equity

Condensed Consolidated Statements of Cash Flows

Notes to Condensed Consolidated Financial Statements

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		Nine Months Ended
	September 30,		September 30,
	2009	2008	2009	2008
Revenues:
Net investment income	$ 322.2	$ 263.9	$ 935.7	$ 800.3
Fee income	141.9	154.8	381.7	496.5
Premiums	9.6	16.3	23.2	31.4
Broker-dealer commission revenue	56.0	152.2	215.3	502.7
Net realized capital gains (losses):
Total other-than-temporary impairment
losses	(21.5)	(275.8)	(366.4)	(389.0)
Portion of other-than-temporary
impairment losses recognized in
Other comprehensive income (loss)	6.9	-	21.2	-
Net other-than-temporary impairments
recognized in earnings	(14.6)	(275.8)	(345.2)	(389.0)
Other net realized capital (losses) gains	(0.4)	151.1	145.9	111.4
Total net realized capital losses	(15.0)	(124.7)	(199.3)	(277.6)
Other income	3.8	6.8	11.9	14.8
Total revenue	518.5	469.3	1,368.5	1,568.1
Benefits and expenses:
Interest credited and other benefits
to contractowners	116.1	500.5	414.6	827.1
Operating expenses	147.3	209.3	432.7	544.2
Broker-dealer commission expense	56.0	152.2	215.3	502.7
Net amortization of deferred policy acquisition
costs and value of business acquired	(19.2)	(1.8)	42.2	157.5
Interest expense	0.9	0.4	2.6	1.2
Total benefits and expenses	301.1	860.6	1,107.4	2,032.7
Income (loss) before income taxes	217.4	(391.3)	261.1	(464.6)
Income tax expense (benefit)	72.8	(25.1)	(20.8)	(77.0)
Net income (loss)	$ 144.6	$ (366.2)	$ 281.9	$ (387.6)

The accompanying notes are an integral part of these consolidated financial statements.

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,
	2009	2008
	(Unaudited)
Assets
Investments:
Fixed maturities, available-for-sale, at fair value
(amortized cost of $14,259.3 at 2009 and $14,544.3 at 2008)	$ 14,356.8	$ 13,157.7
Equity securities, available-for-sale, at fair value
(cost of $189.1 at 2009 and $247.7 at 2008)	201.1	240.3
Short-term investments	908.1	41.9
Mortgage loans on real estate	1,993.5	2,107.8
Loan - Dutch State obligation	706.9	-
Policy loans	254.5	267.8
Limited partnerships/corporations	428.8	513.9
Derivatives	134.7	235.2
Securities pledged (amortized cost of $761.6 at 2009 and $1,248.8 at 2008)	759.7	1,319.9
Total investments	19,744.1	17,884.5
Cash and cash equivalents	265.6	203.5
Short-term investments under securities loan agreement,
including collateral delivered	639.5	483.9
Accrued investment income	211.5	205.8
Receivable for securities sold	21.4	5.5
Reinsurance recoverable	2,444.0	2,505.6
Deferred policy acquisition costs	887.3	865.5
Value of business acquired	1,032.9	1,832.5
Notes receivable from affiliate	175.0	175.0
Short-term loan to affiliate	257.2	-
Due from affiliates	27.0	13.8
Current income tax recoverable	-	38.6
Property and equipment	91.8	114.7
Other assets	100.1	233.3
Assets held in separate accounts	40,942.4	35,927.7
Total assets	$ 66,839.8	$ 60,489.9

The accompanying notes are an integral part of these consolidated financial statements.

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,
	2009	2008
	(Unaudited)
Liabilities and Shareholder's Equity
Future policy benefits and claims reserves	$ 21,134.3	$ 20,782.1
Payable for securities purchased	100.6	1.6
Payables under securities loan agreement, including collateral held	643.8	488.3
Notes payable	4.9	17.9
Borrowed money	0.1	615.3
Due to affiliates	142.2	116.7
Current income taxes	56.2	-
Deferred income taxes	223.2	101.1
Other liabilities	745.6	874.7
Liabilities related to separate accounts	40,942.4	35,927.7
Total liabilities	63,993.3	58,925.4

Shareholder's equity:
Common stock (100,000 shares authorized, 55,000
issued and outstanding; $50 per share value)	2.8	2.8
Additional paid-in capital	4,527.8	4,161.3
Accumulated other comprehensive income (loss)	(0.2)	(482.1)
Retained earnings (deficit)	(1,683.9)	(2,117.5)
Total shareholder's equity	2,846.5	1,564.5
Total liabilities and shareholder's equity	$ 66,839.8	$ 60,489.9

The accompanying notes are an integral part of these consolidated financial statements.


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 Sharholder's
	Stock	Capital		Income (Loss)	(Deficit)	Equity
Balance at December 31, 2007	$ 2.8	$ 4,159.3		$ (33.8)	$ (1,087.3)	$ 3,041.0
Comprehensive loss:
Net loss	-		-	-	(387.6)	(387.6)
Other comprehensive loss, net of tax:
Change in net unrealized capital gains (losses)
on securities ($(626.3) pretax), including
change in tax valuation allowance of $6.4	-		-	(400.7)	-	(400.7)
Pension liability ($(0.6) pretax)	-		-	(0.4)	-	(0.4)
Total comprehensive loss						(788.7)
Employee share-based payments	-		1.4	-	-	1.4
Balance at September 30, 2008	$ 2.8	$ 4,160.7		$ (434.9)	$ (1,474.9)	$ 2,253.7
Balance at December 31, 2008	2.8		4,161.3	(482.1)	(2,117.5)	1,564.5
Activity during three months ended March 31, 2009:
Total comprehensive income	-		-	30.2	40.3	70.5
Contribution of capital	-		365.0	-	-	365.0
Employee share-based payments	-		0.5	-	-	0.5
Balance at March 31, 2009	2.8		4,526.8	(451.9)	(2,077.2)	2,000.5
Cumulative effect of change in accounting principle,
net of DAC and tax	-		-	(151.7)	151.7	-
Balance at April 1, 2009	2.8		4,526.8	(603.6)	(1,925.5)	2,000.5
Comprehensive income:
Net income	-		-	-	241.6	241.6
Other comprehensive income, net of tax:
Change in net unrealized capital gains (losses)
on securities ($804.0 pretax), including
change in tax valuation allowance of $(72.8)	-		-	619.0	-	619.0
Portion of other-than-temporary impairment
losses recognized in other comprehensive
income (loss) ($(21.2) pretax), including
change in tax valuation allowance of $6.9	-		-	(21.2)	-	(21.2)
Change in other-than-temporary impairment
losses recognized in other comprehensive
income (loss) ($0.4 pretax), including
change in tax valuation allowance of $(0.1)	-		-	0.4	-	0.4
Pension liability ($8.0 pretax)	-		-	5.2	-	5.2
Total comprehensive income						845.0
Employee share-based payments	-		1.0	-	-	1.0
Balance at September 30, 2009	$ 2.8	$ 4,527.8		$ (0.2)	$ (1,683.9)	$ 2,846.5

The accompanying notes are an integral part of these consolidated financial statements.

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,
	2009	2008
Net cash provided by operating activities	$ 1,030.2	$ 638.4

Cash Flows from Investing Activities:
Proceeds from the sale, maturity, disposal or redemption of:
Fixed maturities, available-for-sale	4,939.8	4,576.8
Equity securities, available-for-sale	86.3	360.4
Mortgage loans on real estate	162.0	110.8
Limited partnerships/corporations	80.4	66.0
Derivatives	19.1	27.5
Acquisition of:
Fixed maturities, available-for-sale	(4,673.5)	(5,663.7)
Equity securities, available-for-sale	(24.9)	(315.5)
Mortgage loans on real estate	(56.1)	(115.5)
Limited partnerships/corporations	(28.9)	(141.0)
Derivatives	(155.3)	(15.8)
Policy loans, net	13.3	9.6
Short-term investments, net	(865.4)	110.8
Collateral delivered	(0.1)	(42.5)
Purchases of fixed assets, net	13.5	(23.2)
Other investments, net	-	0.1
Net cash used in investing activities	(489.8)	(1,055.2)

Cash Flows from Financing Activities:
Deposits received for investment contracts	1,620.1	2,785.2
Maturities and withdrawals from investment contracts	(1,578.0)	(1,656.6)
Short-term loans to affiliates	(270.2)	(481.4)
Short-term repayments of repurchase agreements, net	(615.2)	(83.2)
Contribution of capital	365.0	-
Net cash (used in) provided by financing activities	(478.3)	564.0
Net increase in cash and cash equivalents	62.1	147.2
Cash and cash equivalents, beginning of period	203.5	252.3
Cash and cash equivalents, end of period	$ 265.6	$ 399.5

The accompanying notes are an integral part of these consolidated financial statements.

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 all states and in
	the District of Columbia.

	The condensed consolidated financial statements for the nine months ended
	September 30, 2009, include ILIAC and its wholly-owned subsidiaries, ING Financial
	Advisers, LLC (“IFA”) and Directed Services LLC (“DSL”). 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.”

	The condensed consolidated financial statements and notes as of September 30, 2009, and
	for the three and nine months ended September 30, 2009 and 2008, have been prepared in
	accordance with accounting principles generally accepted in the United States ("US
	GAAP") and are unaudited.

	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 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 2008 Annual Report on Form 10-K. The results of
	operations for the interim periods may not be considered indicative of results to be
	expected for the full year.

	*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, and education markets (collectively “not-for-profit”
	organizations) and corporate markets. The Company’s products are generally distributed
	through pension professionals, independent agents and brokers, third party
	administrators, banks, dedicated career agents, and financial planners.


	*Use of Estimates*

	The preparation of financial statements in conformity with US GAAP 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.

	*Subsequent Events*

	The Company has evaluated subsequent events for recognition and disclosure through
	November 16, 2009, which is the date the condensed consolidated financial statements as
	of September 30, 2009 and for the three and nine months ended September 30, 2009 were
	issued. (See the Subsequent Events footnote.)

	*Significant Accounting Policies*

	For a description of significant accounting policies, see the Organization and Significant
	Accounting Policies footnote to the Consolidated Financial Statements included in the
	Company’s 2008 Annual Report on Form 10-K. There have been no material changes to
	the Company’s significant accounting policies since the filing of the Company’s 2008
	Annual Report on Form 10-K, except as noted in the Recently Adopted Accounting
	Standards footnote.

2. Recently Adopted Accounting Standards

FASB Accounting Standards Codification


	In June 2009, the Financial Accounting Standards Board (“FASB”) issued Statement of
	Financial Accounting Standards (“FAS”) No. 168, “The FASB Accounting Standards
	Codification^TMand the Hierarchy of Generally Accepted Accounting Principles - a
	replacement of FASB Statement No. 162,” which confirms that as of July 1, 2009, the
	“FASB Accounting Standards Codification^TM” (“the Codification” or “ASC”) is the single
	official source of authoritative, nongovernmental US GAAP. All existing accounting
	standard documents are superseded, and all other accounting literature not included in the
	Codification is considered nonauthoritative.


	The Company adopted the Codification as of July 1, 2009. There was no effect on the
	Company’s financial condition, results of operations, or cash flows. The Company has
	revised its disclosures to incorporate references to the Codification topics.

	Subsequent Events

	In May 2009, the FASB issued new guidance on subsequent events, included in ASC
	Topic 855, “Subsequent Events,” which establishes:

	§	The period after the balance sheet date during which an entity should evaluate
		events or transactions for potential recognition or disclosure in the financial
		statements;
	§	The circumstances under which an entity should recognize such events or
		transactions in its financial statements; and
	§	Disclosures regarding such events or transactions and the date through which an
		entity has evaluated subsequent events.

	These provisions, as included in ASC Topic 855, were adopted by the Company on
	June 30, 2009. The Company determined, however, that there was no effect on the
	Company’s financial condition, results of operations, or cash flows upon adoption, as the
	guidance is consistent with that previously applied by the Company under US GAAP.
	The disclosure provisions included in ASC Topic 855 are presented in the Organization
	and Significant Accounting Policies footnote.

	Determining Fair Value When the Volume and Level of Activity for the Asset or Liability
	Have Significantly Decreased and Identifying Transactions That Are Not Orderly

	In April 2009, the FASB issued new guidance on determining fair value when the volume
	and level of activity for the asset or liability have significantly decreased and identifying
	transactions that are not orderly, included in ASC Topic 820, “Fair Value Measurements
	and Disclosures,” which confirms that fair value is the price that would be received to sell
	an asset or paid to transfer a liability in an orderly transaction between market
	participants at the measurement date under current market conditions. In addition, this
	guidance, as included in ASC Topic 820:

	§	Clarifies factors for determining whether there has been a significant decrease in
		market activity for an asset or liability;
	§	Requires an entity to determine whether a transaction is not orderly based on the
		weight of the evidence; and
	§	Requires an entity to disclose in interim and annual periods the input and valuation
		technique used to measure fair value and any change in valuation technique.

	These provisions, as included in ASC Topic 820, were adopted by the Company on
	April 1, 2009. The Company determined, however, that there was no effect on the
	Company’s financial condition, results of operations, or cash flows upon adoption, as its
	guidance is consistent with that previously applied by the Company under US GAAP.

	Recognition and Presentation of Other-Than-Temporary Impairments

	In April 2009, the FASB issued new guidance on recognition and presentation of other-
	than-temporary impairments, included in ASC Topic 320, “Investments-Debt and Equity
	Securities,” which requires:

	§	Noncredit losses to be recognized in other comprehensive income (loss), if
		management asserts that it does not have the intent to sell the security and that it is
		more likely than not that the entity will not have to sell the security before recovery
		of the amortized cost basis;
	§	Total other-than-temporary impairments (“OTTI”) to be presented in the statement
		of earnings with an offset recognized in other comprehensive income (loss) for the
		noncredit related impairments;
	§	A cumulative effect adjustment as of the beginning of the period of adoption to
		reclassify the noncredit component of a previously recognized other-than-temporary
		impairment from retained earnings to accumulated other comprehensive income
		(loss); and
	§	Additional interim disclosures for debt and equity securities regarding types of
		securities held, unrealized losses, and other-than-temporary impairments.

	These provisions, as included in ASC Topic 320, were adopted by the Company on
	April 1, 2009. As a result of implementation, the Company recognized a cumulative
	effect of change in accounting principle of $151.7 after considering the effects of
	deferred policy acquisition costs (“DAC”) and income taxes of $(134.0) and $46.9,
	respectively, as an increase to April 1, 2009 Retained earnings (deficit) with a
	corresponding decrease to Accumulated other comprehensive income (loss).


	In addition, the Company recognized an increase in amortized cost for previously
	impaired securities due to the recognition of the cumulative effect of change in
	accounting principle as of April 1, 2009, as follows:

		Change in
		Amortized Cost
	Fixed maturities:
	U.S. corporate, state and municipalities	$ 47.0
	Foreign	45.0
	Residential mortgage-backed	14.3
	Commercial mortgage-backed	88.5
	Other asset-backed	44.0
	Total investments, available-for-sale	$ 238.8


	The disclosure provisions, as included in ASC Topic 320, are presented in the
	Investments footnote.

	Interim Disclosures about Fair Value of Financial Instruments

	In April 2009, the FASB issued new guidance on interim disclosures about fair value of
	financial instruments, included in ASC Topic 825, “Financial Instruments,” which
	requires that the fair value of financial instruments be disclosed in an entity’s interim
	financial statements, as well as in annual financial statements. The provisions included in
	ASC Topic 825 also require that fair value information be presented with the related
	carrying value and that the method and significant assumptions used to estimate fair
	value, as well as changes in method and significant assumptions, be disclosed.

	These provisions, as included in ASC Topic 825, were adopted by the Company on
	April 1, 2009 and are presented in the Financial Instruments footnote.	As the
	pronouncement only pertains to additional disclosure, the adoption had no effect on the
	Company’s financial condition, results of operations, or cash flows.

	Disclosures about Derivative Instruments and Hedging Activities

	In March 2008, the FASB issued new guidance on disclosures about derivative
	instruments and hedging activities, included in ASC Topic 815, “Derivatives and
	Hedging,” which requires enhanced disclosures about objectives and strategies for using
	derivatives, fair value amounts of and gains and losses on derivative instruments, and
	credit-risk-related contingent features in derivative agreements, including:

	§	How and why derivative instruments are used;
	§	How derivative instruments and related hedged items are accounted for under US
		GAAP for derivative and hedging activities; and

	§	How derivative instruments and related hedged items affect an entity’s financial
		statements.

	These provisions, as included in ASC Topic 815, were adopted by the Company on
	January 1, 2009 and are included in the Financial Instruments footnote. As the
	pronouncement only pertains to additional disclosure, the adoption had no effect on the
	Company’s financial condition, results of operations, or cash flows. In addition, the
	Company’s derivatives are generally not accounted for using hedge accounting treatment
	under ASC Topic 815, as the Company has not historically sought hedge accounting
	treatment.

	Business Combinations

	In December 2007, the FASB issued new guidance on business combinations, included in
	ASC Topic 805, “Business Combinations.” ASC Topic 805 requires most identifiable
	assets, liabilities, noncontrolling interest, and goodwill, acquired in a business
	combination to be recorded at full fair value as of the acquisition date, even for
	acquisitions achieved in stages. In addition, the guidance requires:

	§	Acquisition-related costs to be recognized separately and generally expensed;
	§	Non-obligatory restructuring costs to be recognized separately when the liability is
		incurred;
	§	Contractual contingencies acquired to be recorded at acquisition-date fair values;
	§	A bargain purchase, which occurs when the fair value of net assets acquired
		exceeds the consideration transferred plus any non-controlling interest in the
		acquiree, to be recognized as a gain; and
	§	The nature and financial effects of the business combination to be disclosed.

	These provisions, as included in ASC Topic 805, also amend or eliminate various other
	authoritative literature.

	In addition, in April 2009, the FASB issued new guidance on accounting for assets
	acquired and liabilities assumed in a business combination that arise from contingencies,
	which rescinds requirements to recognize contingent assets and liabilities acquired in a
	business combination at fair value on the acquisition date, and reinstates certain previous
	guidance to value many of those contingencies under ASC 450, “Contingencies.”

	These provisions, as included in ASC Topic 805, were adopted by the Company on
	January 1, 2009. The Company determined, however, that there was no impact as of
	September 30, 2009, as there have been no acquisitions for the three or nine month
	periods ended September 30, 2009.

Equity Method Investment Accounting

In November 2008, a consensus was reached on new guidance on equity method

investment accounting considerations, included in ASC Topic 323, “Investments-Equity

Method and Joint Ventures,” which requires, among other provisions, that:


§	Equity method investments be initially measured at cost;
§	Contingent consideration only be included in the initial measurement;
§	An investor recognize its share of any impairment charge recorded by the equity
	investee; and
§	An investor account for a share issuance by an equity investee as if the investor had
	sold a proportionate share of its investment.

These provisions, as included in ASC Topic 323, were adopted by the Company on

January 1, 2009. The Company determined, however, that there was no impact as of

September 30, 2009, as there have been no acquisitions or changes in ownership for the

three or nine month periods ended September 30, 2009.


3.	New Accounting Pronouncements

	Measuring the Fair Value of Certain Alternative Investments

	In September 2009, the FASB issued Accounting Standards Update (“ASU”) 2009-12,
	“Fair Value Measurements and Disclosures (ASC Topic 820): Investments in Certain
	Entities That Calculate Net Asset Value per Share (or Its Equivalent)” (“ASU 2009-12”),
	which allows the use of net asset value to estimate the fair value of certain alternative
	investments, such as interests in hedge funds, private equity funds, real estate funds,
	venture capital funds, offshore fund vehicles, and funds of funds. In addition, ASU 2009-
	12 requires disclosures about the attributes of such investments.

	The provisions of ASU 2009-12 are effective for the first reporting period beginning after
	December 15, 2009, and for subsequent interim and annual reporting periods. The
	Company is currently in the process of determining the impact of adoption of the
	provisions of ASU 2009-12.

	Measuring Liabilities at Fair Value

	In August 2009, the FASB issued ASU 2009-05, “Fair Value Measurements and
	Disclosures (ASC Topic 820): Measuring Liabilities at Fair Value” (“ASU 2009-05”),
	which clarifies that in circumstances where a quoted price in an active market for an
	identical liability is not available, one of the following techniques should be used to
	measure a liability’s fair value:


§	The quoted price of the identical liability when traded as an asset; or
§	Quoted prices for similar liabilities or similar liabilities traded as assets; or
§	Another valuation technique consistent with the principles of ASC Topic 820, such
	as the income approach or a market approach.

ASU 2009-05 also clarifies that restrictions preventing the transfer of a liability should

not be considered as an adjustment in the measurement of its fair value.

The provisions of ASU 2009-05 are effective as of the first reporting period beginning

after August 26, 2009, and for subsequent interim and annual reporting periods. The

Company does not anticipate an impact due to adoption of the provisions of ASU 2009-

05.

Consolidation of Variable Interest Entities

In June 2009, the FASB issued FAS 167, “Consolidation of Variable Interest Entities, an

amendment to FIN 46(R),” not yet codified in the FASB ASC, which eliminates the

exemption for qualifying special-purpose entities ("QSPEs"), as well as amends the

consolidation guidance for variable interest entities (“VIEs”), as follows:


§	Removes the quantitative-based assessment for consolidation of VIEs and, instead,
	requires a qualitative assessment of whether an entity has the power to direct the
	VIE’s activities, and whether the entity has the obligation to absorb losses or the
	right to receive benefits that could be significant to the VIE; and
§	Requires an ongoing reassessment of whether an entity is the primary beneficiary of
	a VIE.

The provisions of FAS 167 are effective as of the beginning of the first fiscal year that

begins after November 15, 2009, and for subsequent interim and annual reporting

periods. The Company is currently in the process of determining the impact of adoption

of the provisions of FAS 167.

Accounting for Transfers of Financial Assets

In June 2009, the FASB issued FAS 166, “Accounting for Transfers of Financial Assets -

an amendment of FASB Statement No. 140,” not yet codified in the FASB ASC, which

eliminates the QSPE concept and requires a transferor of financial assets to:


§	Consider the transferor’s continuing involvement in assets, limiting the
	circumstances in which a financial asset should be derecognized when the transferor
	has not transferred the entire asset to an entity that is not consolidated;


	§	Account for the transfer as a sale only if an entity transfers an entire financial asset
		and surrenders control, unless the transfer meets the conditions for a participating
		interest; and
	§	Recognize and initially measure at fair value all assets obtained and liabilities
		incurred as a result of a transfer of financial assets accounted for as a sale.

	The provisions of FAS 166 are effective as of the beginning of the first fiscal year that
	begins after November 15, 2009, and for subsequent interim and annual reporting
	periods. The Company is currently in the process of determining the impact of adoption
	of the provisions of FAS 166.


4.	Financial Instruments

	*Fair Value Measurements*

	ASC Topic 820, “Fair Value Measurements and Disclosures”, defines fair value,
	establishes a framework for measuring fair value, establishes a fair value hierarchy based
	on the quality of inputs used to measure fair value, and enhances disclosure requirements
	for fair value measurements.

	*Fair Value Hierarchy*

	The Company has categorized its financial instruments into a three level hierarchy based
	on the priority of the inputs to the valuation technique.

	The fair value hierarchy gives the highest priority to quoted prices in active markets for
	identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs
	(Level 3). If the inputs used to measure fair value fall within different levels of the
	hierarchy, the category level is based on the lowest priority level input that is significant
	to the fair value measurement of the instrument.

	Financial assets and liabilities recorded at fair value on the Condensed Consolidated
	Balance Sheets are categorized as follows:

	§	Level 1 - Unadjusted quoted prices for identical assets or liabilities in an active
		market.
	§	Level 2 - Quoted prices in markets that are not active or inputs that are observable
		either directly or indirectly for substantially the full term of the asset or liability.
		Level 2 inputs include the following:
		a)	Quoted prices for similar assets or liabilities in active markets;
		b)	Quoted prices for identical or similar assets or liabilities in non-active markets;
		c)	Inputs other than quoted market prices that are observable; and


	d)	Inputs that are derived principally from or corroborated by observable market
		data through correlation or other means.
§	Level 3 - Prices or valuation techniques that require inputs that are both unobservable
	and significant to the overall fair value measurement. These valuations, whether
	derived internally or obtained from a third party, use critical assumptions that are not
	widely available to estimate market participant expectations in valuing the asset or
	liability.

The following table presents the Company’s hierarchy for its assets and liabilities
measured at fair value on a recurring basis as of September 30, 2009 and December 31, 2008.


			2009
	Level 1	Level 2		Level 3⁽¹⁾	Total
Assets:
Fixed maturities, available-for-sale,
including securities pledged	$ 2,237.9	$ 11,070.9	$ 1,807.7		$ 15,116.5
Equity securities, available-for-sale	201.1	-		-	201.1
Other investments (primarily derivatives)	-	134.7		-	134.7
Cash and cash equivalents, short-term
investments, and short-term investments
under securities loan agreement	1,813.2	-		-	1,813.2
Assets held in separate accounts	34,961.5	5,980.9		-	40,942.4
Total	$ 39,213.7	$ 17,186.5	$ 1,807.7		$ 58,207.9

Liabilities:
Product guarantees	$ -	$ -	$ 83.0		$ 83.0
Other liabilities (primarily derivatives)	-	327.0		66.7	393.7
Total	$ -	$ 327.0	$ 149.7		$ 476.7

⁽¹⁾Level 3 net assets and liabilities accounted for 2.9% of total net assets and liabilities measured at fair value on a recurring

basis. Excluding separate accounts assets for which the policyholder bears the risk, the Level 3 net assets and liabilities

in relation to total net assets and liabilities measured at fair value on a recurring basis totaled 9.9%.


			2008
	Level 1	Level 2		Level 3⁽¹⁾	Total
Assets:
Fixed maturities, available-for-sale,
including securities pledged	$ 1,481.7	$ 10,704.3	$ 2,291.6		$ 14,477.6
Equity securities, available-for-sale	240.3	-		-	240.3
Other investments (primarily derivatives)	-	235.2		-	235.2
Cash and cash equivalents, short-term
investments, and short-term investments
under securities loan agreement	729.3	-		-	729.3
Assets held in separate accounts	30,547.6	5,380.1		-	35,927.7
Total	$ 32,998.9	$ 16,319.6	$ 2,291.6		$ 51,610.1

Liabilities:
Product guarantees	$ -	$ -	$ 220.0		$ 220.0
Other liabilities (primarily derivatives)	-	470.5		73.6	544.1
Total	$ -	$ 470.5	$ 293.6		$ 764.1

⁽¹⁾Level 3 net assets and liabilities accounted for 3.9% of total net assets and liabilities measured at fair value on a recurring

basis. Excluding separate accounts assets for which the policyholder bears the risk, the Level 3 net assets and liabilities

in relation to total net assets and liabilities measured at fair value on a recurring basis totaled 13.4%.

Valuation of Financial Assets and Liabilities

The Company utilizes a number of valuation methodologies to determine the fair values

of its financial assets and liabilities in conformity with the concepts of “exit price” and

the fair value hierarchy as prescribed in ASC Topic 820. Valuations are obtained from

third party commercial pricing services, brokers, and industry-standard, vendor-provided

software that models the value based on market observable inputs. The valuations

obtained from brokers and third party commercial pricing services are non-binding. The

valuations are reviewed and validated monthly through the internal valuation committee

price variance review, comparisons to internal pricing models, back testing to recent

trades, or monitoring of trading volumes.