pea30rc485b70600.htm - Generated by SEC Publisher for SEC Filing


As filed with the Securities and Exchange			Registration No. 333-70600
Commission on December 20, 2012			Registration No. 811-05626
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM N-4
POST-EFFECTIVE AMENDMENT NO. [ 30 ] REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 AMENDMENT NO. [ ]

(Check appropriate box or boxes)
SEPARATE ACCOUNT B
(Exact name of Registrant)
ING USA ANNUITY AND LIFE INSURANCE COMPANY
(Name of Depositor)
1475 Dunwoody Drive West Chester, Pennsylvania 19380-1478 (Address of Depositor’s Principal Executive Offices) (Zip Code) Depositor’s Telephone Number, including Area Code (610) 425-3400



J. Neil McMurdie, Senior Counsel ING One Orange Way, C2N Windsor, CT 06095-4774 (860) 580-2824			Nicholas Morinigo, Esq. ING Americas (U.S. Legal Services) 1475 Dunwoody Drive West Chester, PA 19308-1478 (610) 425-3447





			(Name and Address of Agent for Service)
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):
	X	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) of Rule 485
		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: Group and Individual Deferred Variable Annuity Contract

Report of Independent Registered Public Accounting Firm

The Board of Directors
ING USA Annuity and Life Insurance Company

We have audited the accompanying balance sheets of ING USA Annuity and Life Insurance Company as of December 31,
2011 and 2010, and the related statements of operations, comprehensive income, changes in shareholder's equity, and cash
flows for each of the three years in the period ended December 31, 2011. 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 include 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 financial position of ING
USA Annuity and Life Insurance Company at December 31, 2011 and 2010, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2011, in conformity with U.S. generally accepted accounting
principles.

As discussed in Note 1 to the financial statements, in 2009 the Company changed its method of accounting for the recognition
and presentation of other-than-temporary impairments. Also, as discussed in Note 1 to the financial statements, the Company
retrospectively changed its method of accounting for costs associated with acquiring or renewing insurance contracts.
Additionally, as discussed in Note 1 to the financial statements, the Company has elected to change its method of accounting
for guaranteed minimum withdrawal benefits with life payouts riders, and has also elected to change its method of recognizing
actuarial gains and losses related to its pension and post-retirement benefit plans.

/s/ Ernst & Young LLP

Atlanta, Georgia

December 18, 2012


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.)


Balance Sheets (In millions, except share data)
Balance Sheets (In millions, except share data)


	As of December 31,
	2011	2010
Assets
Investments:
Fixed maturities, available-for-sale, at fair value (amortized cost of $20,062.4 at
2011 and $20,237.9 at 2010)	$ 21,400.7	$ 20,968.2
Fixed maturities at fair value using the fair value option	335.0	237.7
Equity securities, available-for-sale, at fair value (cost of $26.7 at 2011 and $59.2
at 2010)	27.7	66.1
Short-term investments	2,397.0	939.2
Mortgage loans on real estate	3,137.3	2,967.9
Policy loans	112.0	122.1
Loan - Dutch State obligation	658.2	843.9
Limited partnerships/corporations	305.4	295.8
Derivatives	1,609.1	236.5
Other investments	82.2	82.1
Securities pledged (amortized cost of $965.0 at 2011and $886.6 at 2010)	1,012.8	889.4
Total investments	31,077.4	27,648.9
Cash and cash equivalents	121.2	71.5

Short-term investments under securities loan agreement, including collateral delivered	248.3	145.1
Accrued investment income	233.3	233.4
Receivable for securities sold	32.4	16.9
Premium receivable	28.2	38.0
Deposits and reinsurance recoverable	4,068.6	3,482.0
Deferred policy acquisition costs, Value of business acquired, and Sales
inducements to contract holders	4,396.5	3,495.4
Short-term loan to affiliate	535.9	593.6
Due from affiliates	363.5	90.5
Current income taxes recoverable from Parent	204.0	—
Deferred income taxes	38.6	29.7
Other assets	394.6	431.2
Assets held in separate accounts	39,356.9	44,413.3
Total assets	$ 81,099.4	$ 80,689.5


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




4


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.)


Balance Sheets (In millions, except share data)
Balance Sheets (In millions, except share data)

	As of December 31,
	2011	2010
Liabilities and Shareholder's Equity
Future policy benefits and claims reserves	$ 29,708.3	$ 27,354.8
Payable for securities purchased	0.4	3.1
Payables under securities loan agreement, including collateral held	1,069.4	203.0
Long-term debt	435.0	435.0
Due to affiliates	128.9	120.3
Funds held under reinsurance treaties with affiliates	5,456.4	3,498.2
Current income taxes payable to Parent	—	79.2
Other liabilities	808.0	738.8
Liabilities related to separate accounts	39,356.9	44,413.3
Total liabilities	76,963.3	76,845.7

Shareholder's equity:
Common stock (250,000 shares authorized, issued and outstanding; $10 per share
value)	2.5	2.5
Additional paid-in capital	5,971.6	5,921.7
Accumulated other comprehensive income (loss)	245.1	154.8
Retained earnings (deficit)	(2,083.1)	(2,235.2)
Total shareholder's equity	4,136.1	3,843.8
Total liabilities and shareholder's equity	$ 81,099.4	$ 80,689.5


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




5


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.)


Statements of Operations (In millions)
Statements of Operations (In millions)

	Years Ended December 31,
	2011	2010	2009
Revenues:
Net investment income	$ 1,409.3	$ 1,356.4	$ 1,412.4
Fee income	871.5	880.1	766.4
Premiums	456.2	280.6	786.1
Net realized capital gains (losses):
Total other-than-temporary impairments	(201.5)	(300.1)	(538.9)
Less: Portion of other-than-temporary impairments recognized
in Other comprehensive income (loss)	(21.1)	(105.7)	(49.3)
Net other-than-temporary impairments recognized in earnings	(180.4)	(194.4)	(489.6)
Other net realized capital gains (losses)	(776.6)	(723.2)	(878.9)
Total net realized capital gains (losses)	(957.0)	(917.6)	(1,368.5)
Other income	54.2	61.5	52.3
Total revenues	1,834.2	1,661.0	1,648.7
Benefits and expenses:
Interest credited and other benefits to contract owners	2,227.1	654.9	1,189.7
Operating expenses	447.3	453.5	458.3
Net amortization of deferred policy acquisition costs and value of
business acquired	(904.4)	418.3	(808.9)
Interest expense	31.7	32.1	32.9
Other expense	11.7	38.9	40.1
Total benefits and expenses	1,813.4	1,597.7	912.1
Income (loss) before income taxes	20.8	63.3	736.6
Income tax expense (benefit)	(131.3)	(42.1)	167.2
Net income (loss)	$ 152.1	$ 105.4	$ 569.4


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




6


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.)


Statements of Changes in Shareholder's Equity (In millions)


	Common Stock	Additional Paid- In Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings (Deficit)	Total Shareholder's Equity




Balance at January 1, 2009 - As previously
filed	$ 2.5	$ 4,335.4	$ (1,353.4) $	(2,217.8)	$ 766.7

Cumulative effect of changes in accounting:
Deferred policy acquisition cost			(158.4)	(345.0)	(503.4)
Fair value for Guaranteed Minimum
Withdrawal benefits for Life			492.8	(654.1)	(161.3)
Actuarial gains (losses) for pension and
post-retirement benefit plans			2.9	(2.9)	—
Balance at January 1, 2009 - As revised	2.5	4,335.4	(1,016.1)	(3,219.8)	102.0
Cumulative effect of change in accounting:
Other-than-temporary impairments	—	—	(309.8)	309.8	—
Comprehensive income (loss):
Net income (loss)	—	—	—	569.4	569.4
Other comprehensive income (loss), after
tax	—	—	801.8	—	801.8
Total comprehensive income (loss)					1,371.2
Capital contribution from Parent	—	835.0	—	—	835.0
Employee related benefits	—	2.3	—	—	2.3
Balance at December 31, 2009 - As revised	2.5	5,172.7	(524.1)	(2,340.6)	2,310.5
Comprehensive income (loss):
Net income (loss)	—	—	—	105.4	105.4
Other comprehensive income (loss), after
tax	—	—	678.9	—	678.9
Total comprehensive income (loss)					784.3
Contribution of capital	—	749.0	—	—	749.0
Balance at December 31, 2010 - As revised	2.5	5,921.7	154.8	(2,235.2)	3,843.8
Comprehensive income (loss):
Net income (loss)	—	—	—	152.1	152.1
Other comprehensive income (loss), after
tax	—	—	90.3	—	90.3
Total comprehensive income (loss)					242.4
Contribution of capital	—	44.0	—	—	44.0
Employee related benefits	—	5.9	—	—	5.9
Balance at December 31, 2011 - As revised	$ 2.5	$ 5,971.6	$ 245.1 $	(2,083.1)	$ 4,136.0


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



8


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.)

Statements of Cash Flows (In millions)
Statements of Cash Flows (In millions)
	Years Ended December 31,
	2011	2010	2009
Cash Flows from Operating Activities:
Net income	$ 152.1	$105.4	$569.4
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Capitalization of deferred policy acquisition costs and sales
inducements	(159.1)	(218.1)	(407.7)
Net amortization of deferred policy acquisition costs, value of
business acquired, and sales inducements	(1,366.2)	500.3	(429.6)
Net accretion/decretion of discount/premium	65.7	44.1	55.2
Future policy benefits, claims reserves, and interest credited	1,461.6	963.7	1,360.4
Provision for deferred income taxes	64.5	(665.0)	524.4
Net realized capital losses	957.0	917.6	1,368.5
Change in:
Accrued investment income	0.1	(46.1)	27.2
Reinsurance recoverable	(728.1)	(290.2)	(705.2)
Other receivables and asset accruals	44.5	15.9	318.4
Other reinsurance asset	(0.5)	17.7	(19.0)
Due to/from affiliates	(262.1)	721.3	(831.0)
Income tax recoverable	(283.2)	10.2	390.1
Other payables and accruals	1,909.7	205.7	1,109.5
Employee share-based payments	5.9	0.6	1.7
Other, net	(10.7)	(9.8)	(328.8)
Net cash provided by operating activities	1,851.2	2,273.3	3,003.5
Cash Flows from Investing Activities:
Proceeds from the sale, maturity, or redemption of:
Fixed maturities	5,400.7	8,028.5	6,830.0
Equity securities, available-for-sale	38.8	66.8	136.5
Mortgage loans on real estate	678.4	714.7	566.6
Limited partnership/corporations	38.9	23.0	92.6
Acquisition of:
Fixed maturities	(5,483.6)	(10,791.6)	(3,162.7)
Equity securities, available-for-sale	(5.7)	(58.4)	(10.2)
Mortgage loans on real estate	(853.6)	(278.6)	(81.1)
Limited partnerships/corporations	(39.4)	(57.1)	(32.9)
Derivatives, net	(511.9)	(740.1)	(2,285.4)
Short-term investments, net	(1,458.0)	1,104.7	(1,928.8)
Loan-Dutch State obligation, net	185.7	182.1	180.5
Policy loans, net	10.1	9.5	12.8
Collateral held, net	763.2	25.8	14.5
Other, net	(1.3)	2.0	0.9
Net cash provided by (used in) investing activities	(1,237.7)	(1,768.7)	333.3




9


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.)


Statements of Cash Flows (In millions)
Statements of Cash Flows (In millions)

	Years Ended December 31,
	2011	2010	2009
Cash Flows from Financing Activities:
Deposits received for investment contracts	$ 6,363.2	$ 3,549.4	$ 4,552.6
Maturities and withdrawals from investment contracts	(7,170.1)	(4,571.3)	(11,282.1)
Reinsurance recoverable on investment contracts	(81.4)	7.3	2,704.2
Notes to affiliates	280.5	103.5	(545.5)
Short-term repayments of repurchase agreements, net	—	(311.1)	(172.0)
Capital contribution from Parent	44.0	749.0	835.0
Net cash used in financing activities	(563.8)	(473.2)	(3,907.8)
Net increase (decrease) in cash and cash equivalents	49.7	31.4	(570.7)
Cash and cash equivalents, beginning of period	71.5	40.1	610.8
Cash and cash equivalents, end of period	$ 121.2	$ 71.5	$ 40.1
Supplemental cash flow information:
Income taxes (received) paid, net	$ 87.1	$ 614.0	$ (753.7)
Interest paid	$ 28.8	$ 29.1	$ 35.4
Non-cash transfers:
Securities received from affiliate under reinsurance agreement	$ —	$ —	$ 2,084.7
Loan-Dutch State obligation	$ —	$ —	$ 1,206.5


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




10


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)




1.	Business, Basis of Presentation and Significant Accounting Policies

*Business*

ING USA Annuity and Life Insurance Company (“ING USA” or the “Company,” as appropriate) is a stock life insurance company domiciled in the State of Iowa and provides financial products and services in the United States. ING USA is authorized to conduct its insurance business in all states, except New York, and the District of Columbia.



ING USA is a direct, wholly owned subsidiary of Lion Connecticut Holdings Inc. ("Lion" or "Parent"), which is a direct, wholly owned subsidiary of ING America Insurance Holdings, Inc. ("ING AIH"). ING AIH 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."




As part of a restructuring plan approved by the European Commission (“EC”), ING has agreed to separate its banking and insurance businesses by 2013. ING intends to achieve this separation by divestment of its insurance and investment management operations, including the Company. ING has announced that it will explore all options for implementing the separation including one or more initial public offerings, sales, or a combination thereof. On November 10, 2010, ING announced that, in connection with the restructuring plan, it will prepare for a base case of an initial public offering (“IPO”) of the Company and its U.S.-based insurance and investment management affiliates.






On September 30, 2010, ING USA purchased the remaining 30% interest in PFP Holdings LP (“PFP”), an affiliate, from ING Clarion, an affiliate, for $11.0. The Company previously held a 70% equity interest in PFP. Immediately upon acquisition, PFP was dissolved as ING USA owned 100% of the limited partnership. This acquisition is treated as a combination of entities under common control (i.e. the comparative financial statements were revised and presented as if the transaction had occurred on the opening balance sheet date).





The Company currently offers various insurance products, including immediate and deferred fixed annuities. The Company's fixed annuity products are distributed by national and regional brokerage and securities firms, independent broker-dealers, banks, life insurance companies with captive agency sales forces, independent insurance agents, independent marketing organizations, and affiliated broker-dealers. The Company's primary annuity customers are individual consumers. The Company ceased new sales of variable annuity products in March of 2010, as part of a global business strategy and risk reduction plan. Some new amounts will continue to be deposited on ING USA variable annuities as add-on premiums to existing contracts.







The Company also offers guaranteed investment contracts and funding agreements (collectively referred to as “GICs”), sold primarily to institutional investors and corporate benefit plans. These products are marketed by home office personnel or through specialty insurance brokers.



The Company has one operating segment.

*Basis of Presentation*

The accompanying financial statements of ING USA have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).


Certain reclassifications have been made to prior year financial information to conform to the current year classifications, including the presentation of changes in fair value of embedded derivatives within annuity products and the presentation of market value adjustment items in order to align with the presentation of the Consolidated Financial Statements of ING AIH. For the years ended December 31, 2011, 2010, and 2009, respectively, reclassifications decreased Fee income by $(207.9), $(211.2), and $(176.8), (decreased) increased Other net realized capital gains (losses) by $(1.7) billion, $(111.9), and $1.1 billion, increased Other income by $53.5, $61.5, and $51.4, and (decreased) increased Interest credited and other benefits to contact owners by $(1.9) billion, $(260.4), and $1.0 billion, in the Statements of Operations. Such reclassifications had no impact on Shareholder's equity or Net income (loss).










11

ING USA Annuity and Life Insurance Company
(A wholly owned subsidiary of Lion Connecticut Holdings Inc.)
Notes to Financial Statements
(Dollar amounts in millions, unless otherwise stated)

Accounting Changes

Future Policy Benefits and Contract Owner Accounts

As of January 1, 2012, the Company voluntarily changed to fair value accounting for the guaranteed minimum withdrawal
benefits with life payouts (“GMWBL”) riders as a retrospective change in accounting principle. Under fair value accounting,
GMWBLs are considered embedded derivatives, which are measured at estimated fair value separately from the host annuity
contract. Changes in estimated fair value are reported in Other net realized capital gains (losses) in the Statements of
Operations. Previously, GMWBLs were accounted for by estimating the value of expected benefits in excess of the projected
account balance and recognizing the excess ratably over the accumulation period based on total expected assessments. The new
accounting method is preferable, as it provides more useful financial reporting information to financial statement users and fair
value is more closely aligned with the underlying economics of the guarantee.

The cumulative effect of this change as of January 1, 2009, is an increase (decrease) to Accumulated other comprehensive
income and to Retained earnings of $492.8 and $(654.1), respectively, net of other related impacts of DAC, other intangible
assets, and taxes.

Deferred Acquisition Costs

In October 2010, the FASB issued ASU 2010-26, “Financial Services - Insurance (ASC Topic 944): Accounting for Costs
Associated with Acquiring or Renewing Insurance Contracts” (“ASU 2010-26”), which clarifies what costs relating to the
acquisition of new or renewal insurance contracts qualify for deferral. Costs that should be capitalized include (1) incremental
direct costs of successful contract acquisition and (2) certain costs related directly to successful acquisition activities
(underwriting, policy issuance and processing, medical and inspection, and sales force contract selling) performed by the
insurer for the contract. Advertising costs should be included in deferred acquisition costs only if the capitalization criteria in
the U.S. GAAP direct-response advertising guidance are met. All other acquisition-related costs should be charged to expense
as incurred.

The provisions of ASU 2010-26 were adopted retrospectively by the Company on January 1, 2012. As a result of implementing
ASU 2010-26, the Company recognized a cumulative effect of change in accounting principle of $345.0, net of income taxes of
$185.7, as a reduction to January 1, 2009 Retained earnings (deficit). In addition, the Company recognized a $158.4 decrease to
Accumulated other comprehensive income (“AOCI”).

Employee Benefit Plans

As of January 1, 2012, the Company voluntarily changed its method of recognizing actuarial gains and losses related to its
pension and post-retirement benefit plans. Previously, actuarial gains and losses were recognized in Accumulated other
comprehensive income and, to the extent outside a corridor, amortized into operating results over the average remaining service
period of active plan participants or the average remaining life expectancy of inactive plan participants, as applicable. The
Company has elected to immediately recognize actuarial gains and losses in the Statements of Operations in the year in which
the gains and losses occur. The new accounting method is preferable, as it eliminates the delay in recognition of actuarial gains
and losses. These gains and losses are generally only measured annually as of December 31 and, accordingly, will generally be
recorded during the fourth quarter.

The Company's change in accounting methodology has been applied retrospectively. The cumulative effect of this change as of
January 1, 2009, is a decrease to Retained earnings, with a corresponding increase to Accumulated other comprehensive
income, of $2.9, net of tax.


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)




The impacts of the accounting changes as of December 31, 2011 and 2010 to the Balance Sheets and for the years ended December 31, 2011, 2010, and 2009 to the Statements of Operations were as follows:


	2011
	As Previously Filed	Effect of GMWBL Change	Effect of Pension Change	Other Changes ⁽¹⁾	As Revised
	As Previously Filed	Effect of GMWBL Change	Effect of Pension Change	Other Changes ⁽¹⁾	As Revised
Balance Sheet:

Deferred policy acquisition costs, Value of
business acquired and Sales inducements to
contract owners	$ 3,974.9	$ 1,037.6	$ —	$ (616.0)	$ 4,396.5
Other assets	385.8	—	—	8.8	394.6
Future policy benefits and claims reserves	27,970.2	1,738.1	—	—	29,708.3
Deferred income taxes	418.9	(245.1)	—	(212.4)	(38.6)⁽²⁾
Accumulated other comprehensive income
(loss)	435.2	(288.9)	3.2	95.6	245.1
Retained earnings (deficit)	(1,423.3)	(166.4)	(3.2)	(490.2)	(2,083.1)

Statement of Operations:

Fee income	$ 1,079.4	$ —	$ —	$ (207.9)	$ 871.5
Other net realized capital gains (losses)	922.5	—	—	(1,699.1)	(776.6)
Other income	0.7	—	—	53.5	54.2
Interest credited and other benefits to contract
owners	3,044.9	1,035.8	—	(1,853.6)	2,227.1
Operating expenses	437.1	—	(0.9)	11.1	447.3
Net amortization of deferred policy acquisition
costs and value of business acquired	(236.5)	(804.1)	—	136.2	(904.4)
Other expense	11.4	—	—	0.3	11.7
Income tax expense (benefit)	1.1	(81.1)	0.3	(51.6)	(131.3)
Net income (loss)	398.0	(150.7)	0.6	(95.8)	152.1
⁽¹⁾See reclassification in Basis of Presentation and Accounting Changes above.
⁽²⁾Reflects a deferred tax asset.




13


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





	2010
	As Previously Filed	Effect of GMWBL Change	Effect of Pension Change	Other Changes⁽¹⁾	As Revised
	As Previously Filed	Effect of GMWBL Change	Effect of Pension Change	Other Changes⁽¹⁾	As Revised
Balance Sheet:

Deferred policy acquisition costs, Value of
business acquired and Sales inducements to
contract owners	$ 3,889.0	$ 158.8	$ —	$ (552.4)	$ 3,495.4
Other assets	422.3	—	—	8.9	431.2
Future policy benefits and claims reserves	27,137.3	217.5	—	—	27,354.8
Deferred income taxes	181.0	(20.5)	—	(190.2)	(29.7)⁽²⁾
Accumulated other comprehensive income
(loss)	132.3	(22.4)	3.8	41.1	154.8
Retained earnings (deficit)	(1,821.3)	(15.8)	(3.8)	(394.3)	(2,235.2)

Statement of Operations:

Fee income	$ 1,091.3	$ —	$ —	$ (211.2)	$ 880.1
Other net realized capital gains(losses)	(611.3)	—	—	(111.9)	(723.2)
Other income	—	—	—	61.5	61.5
Interest credited and other benefits to contract
owners	985.0	(69.7)	—	(260.4)	654.9
Operating expenses	428.4	—	(1.2)	26.3	453.5
Net amortization of deferred policy acquisition
costs and value of business acquired	411.6	73.2	—	(66.5)	418.3
Other expense	39.3	—	—	(0.4)	38.9
Income tax expense (benefit)	(55.1)	(1.2)	0.4	13.8	(42.1)
Net income (loss)	81.3	(2.3)	0.8	25.6	105.4
⁽¹⁾See reclassification in Basis of Presentation and Accounting Changes above.
⁽²⁾Reflects a deferred tax asset.




14


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





	2009
	As Previously Filed	Effect of GMWBL Change	Effect of Pension Change	Other Changes⁽¹⁾	As Revised
	As Previously Filed	Effect of GMWBL Change	Effect of Pension Change	Other Changes⁽¹⁾	As Revised
Statement of Operations:

Fee income	$ 943.2 $	—	$ —	$ (176.8)	$ 766.4
Other net realized capital gains (losses)	(2,007.5)	—	—	1,128.6	(878.9)
Other income	0.9	—	—	51.4	52.3
Interest credited and other benefits to
contract owners	682.4	(502.5)	—	1,009.8	1,189.7
Operating expenses	386.1	—	2.5	69.7	458.3
Net amortization of deferred policy
acquisition costs and value of business
acquired	(362.2)	(483.0)	—	36.3	(808.9)
Other expense	39.6	—	—	0.5	40.1
Income tax expense (benefit)	(136.5)	344.9	(0.9)	(40.3)	167.2
Net income (loss)	3.2	640.6	(1.6)	(72.8)	569.4
⁽¹⁾See reclassification in Basis of Presentation and Accounting Changes above.

Significant Accounting Policies

Estimates and Assumptions

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Those
estimates are inherently subject to change and actual results could differ from those estimates.

The Company has identified the following accounts and policies as significant in that they involve a higher degree of judgment,
are subject to a significant degree of variability, and contain accounting estimates:

Reserves for future policy benefits, valuation and amortization of deferred policy acquisition costs (“DAC”), value of business
acquired (“VOBA”), valuation of investments and derivatives, impairments, income taxes, and contingencies.

Fair Value Measurement

The Company measures the fair value of its financial assets and liabilities based on assumptions used by market participants in
pricing the asset or liability, which may include inherent risk, restrictions on the sale or use of an asset, or non-performance
risk, including the Company's own credit risk. The estimate of an exchange price is the price in an orderly transaction between
market participants to sell the asset or transfer the liability (“exit price”) in the principal market, or the most advantageous
market in the absence of a principal market, for that asset or liability. The Company utilizes a number of valuation sources to
determine the fair values of its financial assets and liabilities, including quoted market prices, third-party commercial pricing
services, third-party brokers, and industry-standard, vendor-provided software that models the value based on market
observable inputs, and other internal modeling techniques based on projected cash flows.


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





The Company categorizes 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 Balance Sheets are categorized as follows:






ª	Level 1 - Unadjusted quoted prices for identical assets or liabilities in an active market. The Company defines an active market as a market in which transactions take place with sufficient frequency and volume to provide pricing information on an ongoing basis.


ª	Level 2 - Quoted prices in markets that are not active or valuation techniques that require 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.
ª	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.



When available, the estimated fair value of securities is based on quoted prices in active markets that are readily and regularly obtainable. When quoted prices in active markets are not available, the determination of estimated fair value is based on market standard valuation methodologies, including discounted cash flow methodologies, matrix pricing, or other similar techniques. See the Financial Instruments note to these Financial Statements for additional information regarding the fair value of specific financial assets and liabilities.





Investments

The accounting policies for the Company's principal investments are as follows:

Fixed Maturities and Equity Securities: The Company's fixed maturities and equity securities are currently designated as available-for-sale, except those accounted for using the fair value option (“FVO”). Available-for-sale securities are reported at fair value and unrealized capital gains (losses) on these securities are recorded directly in Accumulated other comprehensive income (loss) (“AOCI”), and presented net of related changes in DAC, VOBA, and deferred income taxes.





Certain collateralized mortgage obligations (“CMOs”), primarily interest-only and principal-only strips, are accounted for as hybrid instruments and valued at fair value with changes in the fair value recorded in Other net realized capital gains (losses) in the Statements of Operations.



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. Investment gains and losses on sales of securities are generally determined on a first-in-first-out (“FIFO”) basis.



Interest income on fixed maturities is recorded when earned using an effective yield method, giving effect to amortization of premiums and accretion of discounts. Dividends on equity securities are recorded when declared. Such dividends and interest income are recorded in Net investment income on the Statements of Operations.



Included within fixed maturities are loan-backed securities, including residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”), and asset-backed securities (“ABS”). Amortization of the premium or discount from the purchase of these securities considers the estimated timing and amount of prepayments of the underlying loans. Actual prepayment experience is periodically reviewed and effective yields are recalculated when differences arise between the prepayments originally anticipated and the actual prepayments received and currently anticipated. Prepayment assumptions for single class and multi-class mortgage-backed securities (“MBS”) and ABS are estimated by management using







16

inputs obtained from third-party specialists, including broker-dealers, and based on management's knowledge of the current
market. For credit-sensitive MBS and ABS, and certain prepayment-sensitive securities, the effective yield is recalculated on a
prospective basis. For all other MBS and ABS, the effective yield is recalculated on a retrospective basis.

Short-term Investments: Short-term investments include investments with remaining maturities of one year or less, but greater
than three months, at the time of purchase. These investments are stated at fair value.

Assets Held in Separate Accounts: Assets held in separate accounts are reported at the fair values of the underlying investments
in the separate accounts. The underlying investments include mutual funds, short-term investments and cash.

Mortgage Loans on Real Estate: The Company's mortgage loans on real estate are all commercial mortgage loans, which are
reported at amortized cost, less impairment write-downs and allowance for losses. If the value of any mortgage loan is
determined to be impaired (i.e., when it is probable that 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 lower of either the present
value of expected cash flows from the loan, discounted at the loan's effective interest rate, or fair value of the collateral. For
those mortgages that are determined to require foreclosure, the carrying value is reduced to the fair value of the underlying
collateral, net of estimated costs to obtain and sell at the point of foreclosure. The carrying value of the impaired loans is
reduced by establishing a permanent write-down recorded in Net realized capital gains (losses) in the Statements of Operations.

All mortgage loans are evaluated by the Company's investment professionals, including an appraisal of loan-specific credit
quality, property characteristics, and market trends. Loan performance is monitored on a loan-specific basis. The Company's
review includes submitted appraisals, operating statements, rent revenues and annual inspection reports, among other items.
This review evaluates whether the properties are performing at a consistent and acceptable level to secure the debt.

All mortgages are evaluated for the purpose of quantifying the level of risk. Those loans with higher risk are placed on a watch
list and are closely monitored for collateral deficiency or other credit events that may lead to a potential loss of principal or
interest. The Company defines delinquent mortgage loans consistent with industry practice as 60 days past due.

As of December 31, 2011 and 2010, all mortgage loans are held-for-investment. The Company diversifies its mortgage loan
portfolio by geographic region and property type to reduce concentration risk. The Company manages risk when originating
mortgage loans by generally lending only up to 75% of the estimated fair value of the underlying real estate.

The Company records an allowance for probable incurred, but not specifically identified, losses.

Loan - Dutch State Obligation: The reported value of The State of the Netherlands (the “Dutch State”) loan obligation is based
on the outstanding loan balance plus any unamortized premium.

Policy Loans: The reported value of policy loans is equal to the carrying value of the loans. Interest income on such loans is
recorded as earned in Net investment income using the contractually agreed upon interest rate. Generally, interest is capitalized
on the policy's anniversary date. Valuation allowances are not established for policy loans, as these loans are collateralized by
the value of the associated insurance contracts. Any unpaid principal or interest on the loan is deducted from the account value
or the death benefit prior to settlement of the policy.

Limited Partnerships/Corporations: The Company uses the equity method of accounting for investments in limited partnership
interests, primarily private equities and hedge funds. Generally, the Company records its share of earnings using a lag
methodology, relying upon the most recent financial information available, where the contractual right exists to receive such
financial information on a timely basis. The Company's equity in earnings from limited partnership interests accounted for
under the equity method is recorded in Net investment income.

Other Investments: Other investments are comprised primarily of Federal Home Loan Bank (“FHLB”) stock, as well as other
miscellaneous investments. The Company is a member of the FHLB system and is required to own a certain amount of stock
based on the level of borrowings and other factors, and may invest in additional amounts. FHLB stock is carried at cost,
classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value. Cash
dividends are reported as income. The carrying value of the stock was $80.3 as of December 31, 2011 and 2010.


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





Securities Lending: The Company engages in securities lending whereby certain domestic 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 securities. Generally, the lending agent retains all of the cash collateral. Collateral retained by the agent is invested in liquid assets on behalf of the Company. 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.





As of December 31, 2011 and 2010, the fair value of loaned securities was $233.0 and $139.7, respectively, and is included in Securities pledged on the Balance Sheets. Collateral received is included in Short-term investments under securities loan agreement, including collateral delivered. As of December 31, 2011 and 2010, liabilities to return collateral of $248.3 and $145.1, respectively, are included in Payables under securities loan agreement, including collateral held, on the Balance Sheets.




Other-than-temporary Impairments
The Company periodically evaluates its available-for-sale general account investments to determine whether there has been an other-than-temporary decline in fair value below the amortized cost basis. Factors considered in this analysis include, but are not limited to, the length of time and the extent to which the fair value has been less than amortized cost, the issuer's financial condition and near-term prospects, future economic conditions and market forecasts, interest rate changes, and changes in ratings of the security. An extended and severe unrealized loss position on a fixed maturity may not have any impact on: (a) the ability of the issuer to service all scheduled interest and principal payments, and (b) the evaluation of recoverability of all contractual cash flows or the ability to recover an amount at least equal to its amortized cost based on the present value of the expected future cash flows to be collected. In contrast, for certain equity securities, the Company gives greater weight and consideration to a decline in market value and the likelihood such market value decline will recover.









Effective April 1, 2009, the Company prospectively adopted guidance on the recognition and presentation of OTTI losses (see the “Adoption of New Pronouncements” section below). When assessing the Company's intent to sell a security or if it is more likely than not the Company will be required to sell a security before recovery of its amortized cost basis, management evaluates facts and circumstances such as, but not limited to, decisions to rebalance the investment portfolio and sales of investments to meet cash flow or capital needs.





When the Company has determined it has the intent to sell or if it is more likely than not that the Company will be required to sell a security before recovery of its amortized cost basis and the fair value has declined below amortized cost (“intent impairment”), the individual security is written down from amortized cost to fair value, and a corresponding charge is recorded in Net realized capital gains (losses) in the Statements of Operations as an OTTI. If the Company does not intend to sell the security and it is not more likely than not the Company will be required to sell the security before recovery of its amortized cost basis, but the Company has determined that there has been an other-than-temporary decline in fair value below the amortized cost basis, the OTTI is bifurcated into the amount representing the present value of the decrease in cash flows expected to be collected (“credit impairment”) and the amount related to other factors (“noncredit impairment”). The credit impairment is recorded in Net realized capital gains (losses) in the Statements of Operations. The noncredit impairment is recorded in Other comprehensive income (loss) on the Balance Sheets.










Prior to April 1, 2009, the Company recognized in earnings an OTTI for a fixed maturity in an unrealized loss position, unless it could assert that it had both the intent and ability to hold the fixed maturity for a period of time sufficient to allow for a recovery of estimated fair value to the security's amortized cost. The entire difference between the fixed maturity's amortized cost basis and its estimated fair value was recognized in earnings if the security was determined to have an OTTI.





There was no change in guidance for equity securities which, when an OTTI has occurred, continue to be impaired for the entire difference between the equity security's cost and its estimated fair value.


The Company uses the following methodology and significant inputs to determine the amount of the OTTI credit loss:

ª	The Company calculates the recovery value by performing a discounted cash flow analysis based on the present value of future cash flows expected to be received. The discount rate is generally the effective interest rate of the fixed maturity prior to impairment.


ª	When determining collectability and the period over which the value is expected to recover, the Company applies the same considerations utilized in its overall impairment evaluation process, which incorporates information regarding



18


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





	the specific security, the industry and geographic area in which the issuer operates, and overall macroeconomic conditions. Projected future cash flows are estimated using assumptions derived from the Company's best estimates of likely scenario-based outcomes, after giving consideration to a variety of variables that include, but are not limited to: general payment terms of the security; the likelihood that the issuer can service the scheduled interest and principal payments; the quality and amount of any credit enhancements; the security's position within the capital structure of the issuer; possible corporate restructurings or asset sales by the issuer; and changes to the rating of the security or the issuer by rating agencies.






ª	Additional considerations are made when assessing the unique features that apply to certain structured securities such as RMBS, CMBS, and ABS. These additional factors for structured securities include, but are not limited to: the quality of underlying collateral; expected prepayment speeds; current and forecasted loss severity; and the payment priority within the tranche structure of the security.



ª	When determining the amount of the credit loss for U.S. and foreign corporate securities, foreign government securities and state and political subdivision securities, the Company considers the estimated fair value as the recovery value when available information does not indicate that another value is more appropriate. When information is identified that indicates a recovery value other than estimated fair value, the Company considers in the determination of recovery value the same considerations utilized in its overall impairment evaluation process, which incorporates available information and the Company's best estimate of scenarios-based outcomes regarding the specific security and issuer; possible corporate restructurings or asset sales by the issuer; the quality and amount of any credit enhancements; the security's position within the capital structure of the issuer; fundamentals of the industry and geographic area in which the security issuer operates, and the overall macroeconomic conditions.









In periods subsequent to the recognition of the credit related impairment components of OTTI on a fixed maturity through Net realized capital gains (losses) on the Statements of Operations, the Company accounts for the impaired security as if it had been purchased on the measurement date of the impairment. Accordingly, the discount (or reduced premium) based on the new cost basis is accreted into net investment income over the remaining term of the fixed maturity in a prospective manner based on the amount and timing of estimated future cash flows.





Derivatives

The Company's use of derivatives is limited mainly to economic hedging to reduce the Company's exposure to cash flow variability of assets and liabilities, interest rate risk, credit risk, exchange rate risk, and market risk. It is the Company's policy not to offset fair value amounts recognized for derivative instruments and fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral arising from derivative instruments recognized at fair value executed with the same counterparty under a master netting arrangement.





The Company enters into interest rate, equity market, credit default, and currency contracts, including swaps, futures, forwards, caps, floors, and options, to reduce and manage various 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 Derivatives assets or liabilities on the Balance Sheets at fair value. Changes in the fair value of such derivatives are recorded in Net realized capital gains (losses) in the Statements of Operations.







To qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge as either (i) a hedge of the exposure to changes in the estimated fair value of a recognized asset or liability (“fair value hedge”); or (ii) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”). In this documentation, the Company sets forth how the hedging instrument is expected to hedge the designated risks related to the hedged item and sets forth the method that will be used to retrospectively and prospectively assess the hedging instrument's effectiveness and the method which will be used to measure ineffectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and periodically throughout the life of the designated hedging relationship.













19


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





ª	Fair Value Hedge Relationship: For derivative instruments that are designated and qualify as a fair value hedge (e.g., hedging the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk), the gain or loss on the derivative instrument as well as the hedged item, to the extent of the risk being hedged, are recognized in Other net realized capital gains (losses).



ª	Cash Flow Hedge Relationship: For derivative instruments that are designated and qualify as a cash flow hedge (e.g., hedging the exposure to the variability in expected future cash flows that is attributable to interest rate risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of AOCI and reclassified into earnings in the same period or periods during which the hedged transaction impacts earnings in the same line item associated with the forecasted transaction. The ineffective portion of the derivative's change in value, if any, along with any of the derivative's change in value that is excluded from the assessment of hedge effectiveness, are recorded in Other net realized capital gains (losses).







When hedge accounting is discontinued because it is determined that the derivative is no longer expected to be highly effective in offsetting changes in the estimated fair value or cash flows of a hedged item, the derivative continues to be carried on the Balance Sheets at its estimated fair value, with subsequent changes in estimated fair value recognized immediately in Other net realized capital gains (losses). The carrying value of the hedged recognized asset or liability under a fair value hedge is no longer adjusted for changes in its estimated fair value due to the hedged risk, and the cumulative adjustment to its carrying value is amortized into income over the remaining life of the hedged item. Provided the hedged forecasted transaction is still probable of occurrence, the changes in estimated fair value of derivatives recorded in Other comprehensive income (loss) related to discontinued cash flow hedges are released into the Statements of Operations when the Company's earnings are affected by the variability in cash flows of the hedged item.









When hedge accounting is discontinued because it is no longer probable that the forecasted transactions will occur on the anticipated date or within two months of that date, the derivative continues to be carried in the Balance Sheets at its estimated fair value, with changes in estimated fair value recognized currently in Other net realized capital gains (losses). Derivative gains and losses recorded in Other comprehensive income (loss) pursuant to the discontinued cash flow hedge of a forecasted transaction that is no longer probable are recognized immediately in Other net realized capital gains (losses).





If the Company's current debt and claims paying ratings were downgraded in the future, the terms in the Company's derivative agreements may be triggered, which could negatively impact overall liquidity. For the majority of the Company's counterparties, there is a termination event should the Company's long-term debt ratings drop below BBB+/Baal.



The carrying amounts for these financial instruments, which can be assets or liabilities, reflect the fair value of the assets and liabilities.


The Company also has investments in certain fixed maturities, and has issued certain annuity products, that contain embedded derivatives whose fair value is at least partially determined by levels of or changes in domestic and/or foreign interest rates (short-term or long-term), exchange rates, prepayment rates, equity markets, or credit ratings/spreads. Embedded derivatives within fixed maturities are included with the host contract on the Balance Sheets, and changes in fair value are recorded in Other net realized capital gains (losses) in the Statements of Operations. Embedded derivatives within annuity products are included in Future policy benefits and claims reserves on the Balance Sheets, and changes in the fair value are recorded in Other net realized capital gains (losses) in the Statements of Operations.







In addition, the Company has entered into two coinsurance with funds withheld arrangements that contains an embedded derivative whose fair value is based on the change in the fair value of the underlying assets held in trust. The embedded derivative within the coinsurance funds withheld arrangement is included in Funds held under reinsurance treaties with affiliates on the Balance Sheets, and changes in the fair value are recorded in Interest credited and other benefits to contract owners in the Statements of Operations.





Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, amounts due from banks, and other highly liquid investments, such as money market instruments and debt instruments with maturities of three months or less at the time of purchase. Cash and cash equivalents are stated at fair value.





20

Deferred Policy Acquisition Costs and Value of Business Acquired and Sales Inducements

DAC represents policy acquisition costs that have been capitalized and are subject to amortization and interest. Capitalized
costs are incremental, direct costs of contract acquisition, as well as certain costs related directly to acquisition activities. Such
costs consist principally of certain commissions, underwriting, sales, and contract issuance and processing expenses directly
related to the successful acquisition of new and renewal business. Indirect or unsuccessful acquisition costs, maintenance,
product development and overhead expenses are charged to expense as incurred. VOBA represents the outstanding value of in
force business acquired and is subject to amortization and interest. The value is based on the present value of estimated net
cash flows embedded in the insurance contracts at the time of the acquisition and increased for subsequent deferrable expenses
on purchased policies.

Amortization Methodologies

The Company amortizes DAC and VOBA related to universal life contracts and fixed and variable deferred annuity contracts
over the estimated lives of the contracts in relation to the emergence of estimated gross profits. Assumptions as to mortality,
persistency, interest crediting rates, returns associated with separate account performance, impact of hedge performance,
expenses to administer the business, and certain economic variables, such as inflation, are based on the Company's experience
and overall capital markets. At each valuation date, actual historical gross profits are reflected and estimated gross profits, and
related assumptions, are evaluated for continued reasonableness. Adjustments to estimated gross profits require that
amortization rates be revised retroactively to the date of the contract issuance ("unlocking").

The Company also reviews the estimated gross profits for each block of business to determine the recoverability of DAC and
VOBA balances each period. DAC and VOBA are deemed to be recoverable if the estimated gross profits exceed these
balances.

Assumptions

Changes in assumptions can have a significant impact on DAC and VOBA balances and amortization rates. Amortization of
deferred sales inducements on these products are also impacted by changes in assumptions (see “Sales Inducements” below).

Several assumptions are considered significant in the estimation of future gross profits associated with variable products. One
significant assumption 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. The Company's practice
assumes that intermediate-term appreciation in equity markets reverts to the long-term appreciation in equity markets. The
Company monitors market events and only changes the assumption when sustained deviations are expected. This methodology
incorporates a 9% long-term equity return assumption, and a 14% cap. The reversion to the mean methodology was
implemented prospectively on January 1, 2011.

Prior to January 1, 2011, the Company utilized a static long-term equity return assumption for projecting account balance
growth in all future years. This return assumption was reviewed annually or more frequently, if deemed necessary. Actual
returns that were higher than long-term expectations produced higher contract owner account balances, which increased future
fee expectations and decreased future benefit payment expectations on minimum death and living benefit guarantees, resulting
in higher expected gross profits. The opposite result occurred when returns were lower than long-term expectations.

Other significant assumptions include estimated policyholder behavior assumptions, such as surrender, lapse, and annuitization
rates. Estimated gross profits of variable annuity contracts are sensitive to these assumptions.

Contract owners may periodically exchange one contract for another, or make modifications to an existing contract. These
transactions are identified as internal replacements. 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. 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 Statements of Operations.


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)




Sales inducements represent benefits paid to contract owners for a specified period that are incremental to the amounts the Company credits on similar contracts and are higher than the contract's expected ongoing crediting rates for periods after the inducement. The Company defers sales inducements and amortizes them over the life of the policy using the same methodology and assumptions used to amortize DAC. The amortization of sales inducements is included in Interest credited and other benefits to contract owners on the Statements of Operations. Each year, or more frequently if circumstances indicate a potentially significant recoverability issue exists, the Company reviews the deferred sales inducements to determine the recoverability of these balances. During the years ended December 31, 2011, 2010, and 2009, the Company capitalized $32.2, $46.9, and $65.7, respectively, of sales inducements. During the years ended December 31, 2011, 2010, and 2009, the Company amortized $461.8, $(82.0), and $(379.2), respectively, of sales inducements.









Future Policy Benefits and Contract Owner Accounts

Reserves
The Company establishes and carries actuarially-determined reserves that are calculated to meet its future obligations. The principal assumptions used to establish liabilities for future policy benefits are based on Company experience and periodically reviewed against industry standards. These assumptions include mortality, morbidity, policy lapse, renewal, retirement, investment returns, inflation, and expenses. Changes in, or deviations from, the assumptions used can significantly affect the Company's reserve levels and related future operations.






ª	Reserves for traditional life insurance contracts represent the present value of future benefits to be paid to or on behalf of contract owners and related expenses, less the present value of future net premiums. Assumptions as to interest rates, mortality, expenses, and persistency are based upon the Company's estimates of anticipated experience at the period the policy is sold, including a margin for adverse deviations. Interest rates used to calculate the present value of these reserves ranged up to 7.8%.




ª	Reserves for individual immediate annuities with life contingent payout benefits are equal to the present value of expected future payments. Assumptions as to interest rates, mortality, and expenses are based upon the Company's experience at the period the policy is sold, including a margin for adverse deviations. Such assumptions generally vary by annuity plan type, year of issue, and policy duration. Interest rates used to calculate the present value of future benefits ranged up to 8.0%.





Although assumptions are “locked-in” upon the issuance of traditional life insurance and immediate annuities with life contingent payout benefits, significant changes in experience or assumptions may require the Company to provide for expected future losses on a product by establishing premium deficiency reserves. Premium deficiency reserves are determined based on best estimate assumptions that exist at the time the premium deficiency reserve is established and do not include a margin for adverse deviations. Reserves are recorded in Future policy benefits on the Balance Sheets.





Contract Owner Accounts
Contract owner account balances relate to investment-type contracts, such as guaranteed investment contracts and funding agreements (collectively referred to as “GICs”), and universal life-type contracts and certain fixed-indexed annuity (“FIA”) contracts.



ª	Reserves for GICs are calculated using the amount deposited with the Company, less withdrawals, plus interest accrued to the ending valuation date. Interest on these contracts is accrued by a predetermined index, plus a spread or a fixed rate, established at the issue date of the contract.


ª	Account balances for universal life and universal life-type contracts, such as 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. Credited interest rates vary by product and ranged up to 7.8% for the years 2011, 2010, and 2009. Reserves for group immediate annuities without life contingent payouts are equal to the discounted value of the payment at the implied break-even rate.




ª	For FIAs, the aggregate initial liability is equal to the deposit received, plus a bonus, if applicable, and is split into a host component and an embedded derivative component. Thereafter, the host liability accumulates at a set interest rate, and the embedded derivative liability is recognized at fair value, with the change in fair value recorded in the Statements of Operations.





22

Additional Reserves

The Company calculates additional reserve liabilities for certain universal life products and certain variable annuity guaranteed
benefits. The additional reserve for such products recognizes the portion of contract assessments received in early years used to
compensate the Company for benefits provided in later years.

The Company calculates a benefit ratio for each block of business that meets the requirements for additional reserves and
calculates an additional reserve by accumulating amounts equal to the benefit ratio multiplied by the assessments for each
period, reduced by excess benefits during the period. The additional reserve is accumulated at interest rates consistent with the
DAC model for the period. The calculated reserve includes a provision for universal life contracts with patterns of cost of
insurance charges that produce expected gains from the insurance benefits function followed by losses from that function in
later years.

Guarantees

Reserves for guaranteed minimum death benefits (“GMDB”) and guaranteed minimum income benefits (“GMIB”) are
determined by estimating the value of expected benefits in excess of the projected account balance and recognizing the excess
ratably over the accumulation period based on total expected assessments. Expected experience is based on a range of
scenarios. Assumptions used, such as near-term and long-term equity market return, lapse rate, and mortality, are consistent
with assumptions used in estimating gross profits for purposes of amortizing DAC, and are, thus, subject to the same variability
and risk. The assumptions of investment performance and volatility are consistent with the historical experience of the
appropriate underlying equity index, such as the Standard & Poor's (”S&P”) 500 Index. In addition, the reserve for the GMIB
guarantee incorporates an assumption for the percentage of the potential annuitizations that may be elected by the contract
owner. In general, management assumes that GMIB annuitization rates will be higher for policies with more valuable (more “in
the money”) guarantees. The Company periodically evaluates estimates used and adjusts 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.

For contracts issued prior to January 1, 2000, most contracts with enhanced death benefit guarantees were reinsured to third-
party reinsurers to mitigate the risk produced by such guaranteed death benefits. For contracts issued after December 31, 1999,
the Company instituted a variable annuity guarantee hedging program in lieu of reinsurance. The variable annuity guarantee
hedging program is based on the Company entering into derivative positions to offset exposures to guaranteed minimum death
benefits due to adverse changes in the equity markets. A hedging program is also utilized to mitigate certain risks associated
with GMWBL and GMIB contracts.

Guaranteed minimum accumulation benefits (“GMABs”), guaranteed minimum withdrawal benefits without life contingencies
(“GMWBs”), guaranteed minimum withdrawal benefits with life contingent payouts (“GMWBL”), and FIAs are considered
embedded derivatives, which are measured at estimated fair value separately from the host annuity contract, with changes in
estimated fair value reported in Other net realized capital gains (losses) on the Statements of Operations.

At inception of the GMAB, GMWB, and GMWBL contracts, the Company projects a fee to be attributed to the embedded
derivative portion of the guarantee equal to the present value of projected future guaranteed benefits.

The estimated fair value of the GMAB, GMWB, and GMWBL contracts is determined based on the present value of projected
future guaranteed benefits minus the present value of projected attributed fees. A risk neutral valuation methodology is used
under which the cash flows from the guarantees are projected under multiple capital market scenarios using observable risk free
rates. The projection of future guaranteed benefits and future attributed fees require the use of assumptions for capital markets
(e.g., implied volatilities, correlation among indices, risk-free swap curve, etc.) and policyholder behavior (e.g., lapse, benefit
utilization, mortality, etc.). The projection also includes adjustments for the Company's credit risk, or risk of non-performance,
and risk margins for non-capital market, or policyholder behavior, assumptions. The Company's credit risk adjustment is based
on the credit default swap spreads of ING Verzekeringen N.V. (“ING V”), the indirect parent of ING AIH, and applied to the
risk-free swap curve in the Company's valuation models. Risk margins are established to capture uncertainties related to
policyholder behavior assumptions. The margin represents additional compensation a market participant would require to
assume these risks.


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





The estimated fair value of the FIA contracts is based on the present value of excess of the interest payments to the contract holders over the minimum guaranteed interest rate. Projected cashflows are based on best estimates of future excess interest payments over the anticipated life of the related contracts. These projections also include adjustments for the Company's credit risk, or risk of non-performance, and risk margins for non-capital market, or policyholder behavior, assumptions. The Company's credit risk adjustment is based on the credit default swaps of ING V and applied to the discount factors in its valuation models.






See the Additional Insurance Benefits and Minimum Guarantees note to these Financial Statements for more information.

Separate Accounts

Separate account assets and liabilities generally represent funds maintained to meet specific investment objectives of contract owners 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 contract owners. 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 contract owner 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.




The Company reports separately, as assets and liabilities, investments held in the separate accounts and liabilities of separate accounts if:


ª	Such separate accounts are legally recognized;
ª	Assets supporting the contract liabilities are legally insulated from the Company's general account liabilities;
ª	Investments are directed by the contract holder; and
ª	All investment performance, net of contract fees and assessments, is passed through to the contract holder.

The Company reports separate account assets and liabilities that meet the above criteria at fair value on the Balance Sheets based on the fair value of the underlying investments. Investment income and net realized and unrealized capital gains (losses) of the separate accounts, however, are not reflected in the Statements of Operations. The Statements of Cash Flows do not reflect investment activity of the separate accounts.




Repurchase Agreements

The Company engages in dollar repurchase agreements with mortgage-backed securities (“dollar rolls”) and repurchase agreements with other collateral types to increase its return on investments and improve liquidity. Such arrangements meet the requirements to be accounted for as financing arrangements. The Company enters into dollar roll transactions by selling existing mortgage-backed securities and concurrently entering into an agreement to repurchase similar securities within a short time frame at a lower price. Under repurchase agreements, the Company borrows cash from a counterparty at an agreed upon interest rate for an agreed upon time frame and pledges collateral in the form of securities. At the end of the agreement, the counterparty returns the collateral to the Company, and the Company, in turn, repays the loan amount along with the additional agreed upon interest. Company policy requires that at all times during the term of the dollar roll and repurchase agreements that cash or other collateral types obtained is sufficient to allow the Company to fund substantially all of the cost of purchasing replacement assets. Cash received is invested in short-term investments, with the offsetting obligation to repay the loan included as a liability on the Balance Sheets.











As of December 31, 2011 and 2010, the Company did not have any securities pledged in dollar rolls and repurchase agreement transactions. At December 31, 2011 and 2010, the Company did not have any repurchase obligation related to dollar rolls and repurchase agreements.



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 policy requires that, at all times during the term of the reverse repurchase agreements, cash or other collateral types provided is sufficient to allow the counterparty to fund




24


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





substantially all of the cost of purchasing replacement assets. As of December 31, 2011 and 2010, the Company did not have any securities pledged under 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. The Company believes the counterparties to the dollar rolls, repurchase, and reverse repurchase agreements are financially responsible and that the counterparty risk is minimal.




Recognition of Insurance Revenue and Related Benefits

Premiums related to traditional life and annuity policies with life contingencies are recognized as revenue when due from the contract owners. When premiums are due over a significantly shorter period than the period over which benefits are provided, any gross premium in excess of the net premium (i.e., the portion of the gross premium required to provide for all expected future benefits and expenses) is deferred and recognized into revenue in a constant relationship to insurance in force. Benefits are recorded as expense when incurred.





Amounts received as payment for investment-type and universal life-type contracts are reported as deposits to contract owner account balances. Revenues from these contracts consist primarily of fees assessed against the contract owner account balance for mortality, policy administration and surrender charges and are reported in fee income. In addition, the Company earns investment income from the investment of contract deposits in the Company's general account portfolio. Fees assessed that represent compensation to the Company for services to be provided in future periods and certain other fees are deferred and amortized into revenue over the life of the related contracts in proportion to estimated gross profits. Benefits and expenses for these products include claims in excess of related account balances, expenses of contract administration, and interest credited to contract owner account balances.








Premiums, benefits, and expenses are presented net of reinsurance ceded to other companies.

Income Taxes

The Company's deferred tax assets and liabilities resulting from temporary differences between financial reporting and tax bases of assets and liabilities are measured at the balance sheet date using enacted tax rates expected to apply to taxable income in the years the temporary differences are expected to reverse.



The results of the Company's operations are included in the consolidated tax return of ING AIH. Generally, the Company's financial statements recognize the current and deferred income tax consequences that result from the Company's activities during the current and preceding periods pursuant to the provisions of Accounting Standards Codification Topic 740, Income Taxes (ASC 740) as if the Company were a separate taxpayer rather than a member of ING AIH's consolidated income tax return group with the exception of any net operating loss carryforwards and capital loss carryforwards, which are recorded pursuant to the tax sharing agreement. The Company's tax sharing agreement with ING AIH states that for each taxable year during which the Company is included in a consolidated federal income tax return with ING AIH will pay to the Company an amount equal to the tax benefit of the Company's net operating loss carryforwards and capital loss carryforwards generated in such year, without regard to whether such net operating loss carryforwards and capital loss carryforwards are actually utilized in the reduction of the consolidated federal income tax liability for any consolidated taxable year.










The Company evaluates and tests the recoverability of its deferred tax assets. Deferred tax assets represent the tax benefit of future deductible temporary differences and tax credit carryforwards. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. Considerable judgment and the use of estimates are required in determining whether a valuation allowance is necessary, and if so, the amount of such valuation allowance. In evaluating the need for a valuation allowance, the Company considers many factors, including:






ª	The nature and character of the deferred tax assets and liabilities;
ª	Taxable income in prior carryback years;
ª	Projected future taxable income, exclusive of reversing temporary differences and carryforwards;
ª	Projected future reversals of existing temporary differences;


25


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





ª	The length of time carryforwards can be utilized; and
ª	Any prudent and feasible tax planning strategies the Company would employ to avoid a tax benefit from expiring unused.


Management uses certain assumptions and estimates in determining the income taxes payable or refundable to/from the Parent for the current year, the deferred income tax liabilities and assets for items recognized differently in its financial statements from amounts shown on its income tax returns, and the federal income tax expense. Determining these amounts requires analysis and interpretation of current tax laws and regulations, including the loss limitation rules associated with change in control. Management exercises considerable judgment in evaluating the amount and timing of recognition of the resulting income tax liabilities and assets. These judgments and estimates are reevaluated on a continual basis as regulatory and business factors change.







The Company determines whether a tax position is more likely than not to be sustained under examination by the appropriate taxing authority before any part of the benefit can be recognized in the financial statements. Tax positions that do not meet the more likely than not standard are not recognized. Tax positions that meet this standard are recognized in the Financial Statements. The Company measures the tax position as the largest amount that is greater than 50% likely of being realized upon ultimate resolution with the tax authority that has full knowledge of all relevant information.





Reinsurance

The Company utilizes reinsurance agreements in most aspects of its insurance business to reduce its exposure to large losses. Such reinsurance permits recovery of a portion of losses from reinsurers, although it does not discharge the primary liability of the Company as direct insurer of the risks reinsured.



Accounting for reinsurance requires extensive use of assumptions and estimates, particularly related to the future performance of the underlying business and the potential impact of counterparty credit risks. The Company periodically reviews actual and anticipated experience compared to the assumptions used to establish assets and liabilities relating to ceded and assumed reinsurance. The Company also evaluates the financial strength of potential reinsurers and continually monitors the financial condition of reinsurers. Only those reinsurance recoverable balances deemed probable of recovery are recognized as assets on the Company's Balance Sheets. The combined coinsurance and coinsurance funds withheld reinsurance agreement between the Company and Security Life of Denver International Limited (“SLDI”), an affiliate, contains an embedded derivative whose carrying value is estimated based upon the change in the fair value of the assets supporting the funds withheld payable under the agreement.









Participating Insurance

Participating business approximates 8.0% of the Company's ordinary life insurance in force and 28.0% of life insurance premium income. The amount of dividends to be paid is determined annually by the Board of Directors. Amounts allocable to participating contract owners are based on published dividend projections or expected dividend scales. Dividends to participating policyholders of $11.1, $12.1, and $12.4, were incurred during the years ended December 31, 2011, 2010, and 2009, respectively.





Contingencies

A loss contingency is an existing condition, situation, or set of circumstances involving uncertainty as to possible loss that will ultimately be resolved when one or more future events occur or fail to occur. Examples of loss contingencies include pending or threatened adverse litigation, threat of expropriation of assets, and actual or possible claims and assessments. Amounts related to loss contingencies are accrued if it is probable that a loss has been incurred and the amount can be reasonably estimated, based on the Company's best estimate of the ultimate outcome. If determined to meet the criteria for a reserve, the Company also evaluates whether there are external legal or other costs directly associated with the resolution of the matter and accrues such costs if estimable.










26


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





*Adoption of New Pronouncements*

Financial Instruments

A Creditor's Determination of Whether a Restructuring is a Troubled Debt Restructuring
In April 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-02, “Receivables (Accounting Standards Codification^TM(“ASC”) Topic 310): A Creditor's Determination of Whether a Restructuring is a Troubled Debt Restructuring” (“ASU 2011-02”), which clarifies the guidance on a creditor's evaluation of whether it has granted a concession and whether the debtor is experiencing financial difficulties, as follows:




ª	If a debtor does not have access to funds at a market rate for similar debt, the restructuring would be considered to be at a below-market rate;

ª	An increase in the contractual interest rate does not preclude the restructuring from being considered a concession, as the new rate could still be below the market interest rate;

ª	A restructuring that results in a delay in payment that is insignificant is not a concession;
ª	A creditor should evaluate whether it is probable that the debtor would be in payment default on any of its debt without the modification to determine if the debtor is experiencing financial difficulties; and

ª	A creditor is precluded from using the effective interest rate test.

Also, ASU 2011-02 requires disclosure of the information required in ASU 2010-20 about troubled debt restructuring, which was previously deferred by ASU 2011-01.


The provisions of ASU 2011-02 were adopted by the Company on July 1, 2011, and applied retrospectively to January 1, 2011. The Company determined, however, that there was no effect on the Company's financial condition, results of operations, or cash flows for the year ended December 31, 2011, as there were no troubled debt restructurings during that period.



Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses
In July 2010, the FASB issued ASU 2010-20, “Receivables (ASC Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses” (“ASU 2010-20”), which requires certain existing disclosures to be disaggregated by class of financing receivable, including the rollforward of the allowance for credit losses, with the ending balance further disaggregated on the basis of impairment method. For each disaggregated ending balance, an entity also is required to disclose the related recorded investment in financing receivables, the nonaccrual status of financing receivables, and impaired financing receivables.






ASU 2010-20 also requires new disclosures by class of financing receivable, including credit quality indicators, aging of past due amounts, the nature and extent of troubled debt restructurings and related defaults, and significant purchases and sales of financing receivables disaggregated by portfolio segment.



In January 2011, the FASB issued ASU 2011-01, which temporarily delayed the effective date of the disclosures about troubled debt restructurings in ASU 2010-20.


The provisions of ASU 2010-20 were adopted by the Company on December 31, 2010, and are included in the Financial Instruments note to these Financial Statements, except for the disclosures about troubled debt restructurings included in ASU 2011-02, which was adopted by the Company on July 1, 2011 (see above). The disclosures that include information for activity that occurs during a reporting period were adopted by the Company on January 1, 2011 and are included in the Financial Instruments note to these Financial Statements. As this pronouncement only pertains to additional disclosure, the adoption had no effect on the Company's financial condition, results of operations, or cash flows.






Scope Exception Related to Embedded Credit Derivatives
In March 2010, the FASB issued ASU 2010-11, “Derivatives and Hedging (ASC Topic 815): Scope Exception Related to Embedded Credit Derivatives” (“ASU 2010-11”), which clarifies that the only type of embedded credit derivatives that are exempt from bifurcation requirements are those that relate to the subordination of one financial instrument to another.




27


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





The provisions of ASU 2010-11 were adopted by the Company on July 1, 2010. 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.



Improvements to Financial Reporting by Enterprises Involved in Variable Interest Entities
In December 2009, the FASB issued ASU 2009-17, “Consolidations (ASC Topic 810): Improvements to Financial Reporting by Enterprises Involved in Variable Interest Entities,” (“ASU 2009-17”), which eliminates the exemption for qualifying special- purpose entities (“QSPEs”), as well as amends the consolidation guidance for variable interest entities (“VIEs”), as follows:



ª	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;


ª	Requires an ongoing reassessment of whether an entity is the primary beneficiary of a VIE; and
ª	Requires enhanced disclosures, including (i) presentation on the balance sheet of assets and liabilities of consolidated VIEs that meet the separate presentation criteria and disclosure of assets and liabilities recognized on the balance sheet and (ii) the maximum exposure to loss for those VIEs in which a reporting entity is determined not to be the primary beneficiary, but in which the reporting entity has a variable interest.




In addition, in February 2010, the FASB issued ASU 2010-10, “Consolidation (ASC Topic 810): Amendments for Certain Investment Funds” (ASU 2010-10), which defers to ASU 2009-17 for reporting entity's interests in certain investment funds that have attributes of investment companies, for which the reporting entity does not have an obligation to fund losses, and that are not structured as securitization entities.




The provisions of ASU 2009-17 and ASU 2010-10 were adopted on January 1, 2010. 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 consolidation conclusions were consistent with those under previous U.S. GAAP. The disclosure provisions required by ASU 2009-17 are presented in the Financial Instruments note to these Financial Statements.




Recognition and Presentation of Other-than-temporary Impairments
In April 2009, the FASB issued new guidance on recognition and presentation of OTTIs, included in ASC Topic 320, “Investments-Debt and Equity Securities”, which requires:


ª	Noncredit related impairments 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;


ª	Total OTTIs to be presented in the Statements of Operations with an offset recognized in AOCI for the noncredit related impairments;

ª	A cumulative effect adjustment as of the beginning of the period of adoption to reclassify the noncredit component of a previously recognized OTTI from Retained earnings (deficit) to AOCI; and

ª	Additional interim disclosures for debt and equity securities regarding types of securities held, unrealized losses, and OTTIs.


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 $309.8 after considering the effects of DAC and income taxes of $(141.3) and $48.6, respectively, as an increase to April 1, 2009 Retained earnings (deficit) with a corresponding decrease to AOCI, with no overall change to shareholder's equity. See the Investments note to these Financial Statements for further information on the Company's OTTIs, including additional required disclosures.





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:




ª	How and why derivative instruments are used;


28


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





ª	How derivative instruments and related hedged items are accounted for; and
ª	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 “Derivative Financial Instruments” section above and the Fair Value Measurements note to these Financial Statements. 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.




Accounting for Transfers of Financial Assets
In December 2009, the FASB issued ASU 2009-16 “Transfers and Servicing (ASC Topic 860): Accounting for Transfers of Financial Assets” (“ASU 2009-16”), which eliminates the QSPE concept and requires a transferor of financial assets to:


ª	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;

ª	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

ª	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 ASU 2009-16 were adopted on January 1, 2010. 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 Company did not have any QSPEs under previous U.S. GAAP, and the requirements for sale accounting treatment are consistent with those previously applied by the Company.




Business Combinations

Disclosure of Supplementary Pro Forma Information for Business Combinations
In December 2010, the FASB issued ASU 2010-29, “Business Combinations (ASC Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations” (“ASU 2010-29”), which clarifies that if an entity presents comparative financial statements, it should disclose revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period. Also, ASU 2010-29 expands the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the pro forma revenue and earnings.







The provisions of ASU 2010-29 were adopted by the Company on January 1, 2011 for business combinations occurring on or after that date. The Company determined, however, that there was no effect on the Company's financial condition, results of operations, cash flows, or disclosures for the year ended December 31, 2011, as there were no business combinations during the period.




Fair Value

Improving Disclosures about Fair Value Measurements
In January 2010, the FASB issued ASU 2010-06, “Fair Value Measurements and Disclosure (ASC Topic 820): Improving Disclosures about Fair Value Measurements,” (“ASU 2010-06”), which requires several new disclosures, as well as clarification to existing disclosures, as follows:



ª	Significant transfers in and out of Level 1 and Level 2 fair value measurements and the reason for the transfers;
ª	Purchases, sales, issuances, and settlement, in the Level 3 fair value measurements reconciliation on a gross basis;
ª	Fair value measurement disclosures for each class of assets and liabilities (i.e., disaggregated); and
ª	Valuation techniques and inputs for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3 fair value measurements.





29

The provisions of ASU 2010-06 were adopted by the Company on January 1, 2010, except for the disclosures related to the
Level 3 reconciliation, which were adopted by the Company on January 1, 2011. The disclosures required by ASU 2010-06 are
included in the Financial Instruments note to these Financial Statements. 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.

Measuring the Fair Value of Certain Alternative Investments

In September 2009, the FASB issued 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 were adopted by the Company on December 31, 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. The disclosure provisions required by ASU 2009-12 are
presented in the Investments note to these Financial Statements.

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 Fair
Value Measurements note to these Financial Statements. The adoption had no effect on the Company's financial condition,
results of operations, or cash flows, as the pronouncement only pertains to additional disclosure.

Other Pronouncements

Presentation of Comprehensive Income

In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (ASC Topic 220): Presentation of Comprehensive
Income” (“ASU 2011-05”), which states that an entity has the option to present total comprehensive income and the
components of net income and other comprehensive income either in a single, continuous statement of comprehensive income
or in two separate, consecutive statements.

In December 2011, the FASB issued ASU 2011-12, which defers the ASU 2011-05 requirements to present, on the face of the
financial statements, the effects of reclassification out of AOCI on the components of net income and other comprehensive
income.

The Company early adopted provisions of ASU 2011-05 and ASU 2010-12 as of December 31, 2011, and applied the
provisions retrospectively. The Statement of Comprehensive Income, with corresponding revisions to the Statements of
Changes in Shareholder's Equity, is included in the Financial Statements. In addition, the required disclosures are included in
the AOCI note to these Financial Statements.

Consolidation Analysis of Investments Held through Separate Accounts

In April 2010, the FASB issued ASU 2010-15, “Financial Services - Insurance (ASC Topic 944): How Investments Held
through Separate Accounts Affect an Insurer's Consolidation Analysis of Those Investments” (“ASU 2010-15”), which clarifies
that an insurance entity generally should not consider any separate account interests in an investment held for the benefit of
policyholders to be the insurer's interests, and should not combine those separate account interests with its general account
interest in the same investment when assessing the investment for consolidation.

The provisions of ASU 2010-15 were adopted by the Company on January 1, 2011; however, the Company determined that
there was no effect on its financial condition, results of operations, or cash flows upon adoption, as the guidance is consistent
with that previously applied by the Company.


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





Subsequent Events
In May 2009, the FASB issued new guidance on subsequent events, included in ASC Topic 855, “Subsequent Events,” which establishes:


ª	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;

ª	The circumstances under which an entity should recognize such events or transactions in its financial statements; and
ª	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. In addition, in February 2010, the FASB issued ASU 2010-09, “Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements”, which clarifies that a Securities and Exchange Commission (“SEC”) filer should evaluate subsequent events through the date the financial statements are issued and eliminates the requirement for an SEC filer to disclose that date, effective upon issuance. The Company determined 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.






*Future Adoption of Accounting Pronouncements*

Disclosures about Offsetting Assets & Liabilities
In December 2011, the FASB issued ASU 2011-11, “Balance Sheet (ASC Topic 210): Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”), which requires an entity to disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position, as well as instruments and transactions subject to an agreement similar to a master netting arrangement. In addition, the standard requires disclosure of collateral received and posted in connection with master netting agreements or similar arrangements.





The provisions of ASU 2011-11 are effective, retrospectively, for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual reporting periods. The Company is currently in the process of determining the disclosure impact of adoption of the provisions of ASU 2011-11.



Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (“IFRSs”)

In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (ASC Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”), which includes the following amendments:



ª	The concepts of highest and best use and valuation premise are relevant only when measuring the fair value of nonfinancial assets;

ª	The requirements for measuring the fair value of equity instruments are consistent with those for measuring liabilities;
ª	An entity is permitted to measure the fair value of financial instruments managed within a portfolio at the price that would be received to sell or transfer a net position for a particular risk; and

ª	The application of premiums and discounts in a fair value measurement is related to the unit of account for the asset or liability.


ASU 2011-04 also requires additional disclosures, including use of a nonfinancial asset in a way that differs from its highest and best use, categorization by level for items in which fair value is required to be disclosed, and further information regarding Level 3 fair value measurements.



The provisions of ASU 2011-04 are effective during interim or annual periods beginning after December 15, 2011, and should be applied prospectively. As the pronouncement only pertains to additional disclosures, the adoption had no effect on the Company's financial condition, results of operations or cash flows.




31

Reconsideration of Effective Control for Repurchase Agreements

In April 2011, the FASB issued ASU 2011-03, “Transfers and Servicing (ASC Topic 860): Reconsideration of Effective
Control for Repurchase Agreements” (“ASU 2011-03”), which removes from the assessment of effective control (1) the
criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed
terms, and (2) the collateral maintenance implementation guidance related to that criterion.

The provisions of ASU 2011-03 are effective for the first interim or annual period beginning on or after December 15, 2011,
and should be applied prospectively. The Company determined, however, that there was no effect on the Company's financial
condition, results of operations or cash flows, as the policy is consistent with that previously applied by the Company.


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





2.	Investments

*Fixed Maturities and Equity Securities*

Available-for-sale and fair value option fixed maturities and equity securities were as follows as of December 31, 2011.

		Amortized Cost	Gross Unrealized Capital Gains	Gross Unrealized Capital Losses	Embedded Derivatives⁽³⁾	Fair Value	OTTI⁽²⁾


Fixed maturities:
	U.S. Treasuries	$ 1,692.9	$ 92.9	$ —	$ —	$ 1,785.8	$ —
	U.S. government agencies and
	authorities	19.9	3.8	—	—	23.7	—
	State, municipalities, and political
	subdivisions	98.9	6.8	0.9	—	104.8	—
	U.S. corporate securities:
	Public utilities	1,916.4	188.4	9.7	—	2,095.1	—
	Other corporate securities	7,611.3	596.1	31.7	—	8,175.7	—
	Total U.S. corporate securities	9,527.7	784.5	41.4	—	10,270.8	—

	Foreign securities⁽¹⁾:
	Government	349.0	26.7	5.4	—	370.3	—
	Other	4,939.4	336.8	64.4	—	5,211.8	0.1
	Total foreign securities	5,288.4	363.5	69.8	—	5,582.1	0.1

	Residential mortgage-backed
	securities:
	Agency	1,354.6	186.9	2.4	46.4	1,585.5	0.3
	Non-Agency	735.4	58.3	88.5	15.1	720.3	75.7
	Total Residential mortgage-backed
	securities	2,090.0	245.2	90.9	61.5	2,305.8	76.0
	Commercial mortgage-backed
	securities	1,910.3	118.0	26.4	—	2,001.9	1.9
	Other asset-backed securities	734.3	15.4	69.6	(6.5)	673.6	—

	Total fixed maturities, including
	securities pledged	21,362.4	1,630.1	299.0	55.0	22,748.5	78.0
	Less: securities pledged	965.0	49.8	2.0	—	1,012.8	—
Total fixed maturities		20,397.4	1,580.3	297.0	55.0	21,735.7	78.0
Equity securities		26.7	1.8	0.8	—	27.7	—
Total investments		$ 20,424.1	$ 1,582.1	$ 297.8	$ 55.0	$ 21,763.4	$ 78.0
⁽¹⁾Primarily U.S. dollar denominated.
⁽²⁾Represents other-than-temporary impairments ("OTTI") reported as a component of Other comprehensive income.
⁽³⁾Embedded derivatives within fixed maturity securities are reported with the host investment. The changes in fair value of embedded derivatives are
reported in Other net realized capital gains (losses) in the Statements of Operations.


33


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)




Available-for-sale and fair value option fixed maturities and equity securities were as follows as of December 31, 2010.

	Amortized Cost	Gross Unrealized Capital Gains	Gross Unrealized Capital Losses	Derivatives Embedded⁽³⁾	Fair Value	OTTI⁽²⁾


Fixed maturities:
U.S. Treasuries	$ 1,595.7	$ 19.4	$ 2.4	$ —	$ 1,612.7	$ —
U.S. government agencies and
authorities	24.2	0.3	0.2	—	24.3	—
State, municipalities, and political
subdivisions	126.5	3.6	11.6	—	118.5	—
U.S. corporate securities:
Public utilities	1,609.6	83.9	19.8	—	1,673.7	—
Other corporate securities	7,433.9	367.2	62.1	—	7,739.0	0.3
Total U.S. corporate securities	9,043.5	451.1	81.9	—	9,412.7	0.3

Foreign securities⁽¹⁾:
Government	474.6	39.0	4.3	—	509.3	—
Other	4,742.9	216.7	70.0	—	4,889.6	0.1
Total foreign securities	5,217.5	255.7	74.3	—	5,398.9	0.1

Residential mortgage-backed
securities:
Agency	1,113.1	185.6	6.0	41.6	1,334.3	—
Non-Agency	915.6	55.2	92.5	13.7	892.0	67.2
Total Residential mortgage-backed
securities	2,028.7	240.8	98.5	55.3	2,226.3	67.2
Commercial mortgage-backed
securities	2,112.2	125.8	39.1	—	2,198.9	7.3
Other asset-backed securities	1,213.9	17.8	124.1	(4.6)	1,103.0	32.1

Total fixed maturities, including
securities pledged	21,362.2	1,114.5	432.1	50.7	22,095.3	107.0
Less: securities pledged	886.6	17.5	14.7	—	889.4	—
Total fixed maturities	20,475.6	1,097.0	417.4	50.7	21,205.9	107.0
Equity securities	59.2	6.9	—	—	66.1	—
Total investments	$ 20,534.8	$ 1,103.9	$ 417.4	$ 50.7	$ 21,272.0	$ 107.0
⁽¹⁾Primarily U.S. dollar denominated.
⁽²⁾Represents other-than-temporary impairments ("OTTI") reported as a component of Other comprehensive income.
⁽³⁾Embedded derivatives within fixed maturity securities are reported with the host investment. The changes in fair value of embedded derivatives are reported in Other net realized capital gains (losses) in the Statements of Operations.





34


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)




The fair value and amortized cost of total fixed maturities, including securities pledged, as of December 31, 2011, are shown below by contractual maturity. Actual maturities may differ from contractual maturities as securities may be restructured, called, or prepaid. Mortgage-backed securities and other ABS are shown separately because they are not due at a single maturity date.




	Amortized Cost	Fair Value
	Amortized Cost	Fair Value
Due to mature:
One year or less	$ 1,444.7	$ 1,472.2
After one year through five years	5,479.9	5,669.9
After five years through ten years	5,987.4	6,390.4
After ten years	3,715.8	4,234.7
Mortgage-backed securities	4,000.3	4,307.7
Other asset-backed securities	734.3	673.6
Fixed maturities, including securities pledged	$ 21,362.4	$ 22,748.5

The Company did not have any investments in a single issuer, other than obligations of the U.S. government and government
agencies and the Dutch State loan obligation, with a carrying value in excess of 10% of the Company's Shareholder's equity at
December 31, 2011 and 2010.

At December 31, 2011 and 2010, fixed maturities with fair values of $12.2 and $12.4, respectively, were on deposit as required
by regulatory authorities.

The Company invests in various categories of collateralized mortgage obligations (“CMOs”), including CMOs that are not
agency-backed, that are subject to different degrees of risk from changes in interest rates and 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, 2011 and 2010, approximately 28.3% and 22.3%, respectively, of the Company's CMO holdings were invested
in those types of CMOs such as interest-only or principal-only strips, which are subject to more prepayment and extension risk
than traditional CMOs.

Certain CMOs, primarily interest-only and principal-only strips are accounted for as hybrid instruments and valued at fair value
with changes in fair value reported in Other net realized gains (losses) in the Statements of Operations.

Transfer of Alt-A RMBS Participation Interest and Related Loan to Dutch State

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 covering 80% of ING's Alt-A RMBS. Refer to the
Related Party Transactions note to these Financial Statements for further details of these agreements.

Variable Interest Entities

The Company holds certain VIEs for investment purposes. VIEs may be in the form of private placement securities, structured
securities, securitization transactions, or limited partnerships. The Company has reviewed each of its holdings and determined
that consolidation of these investments in the Company's financial statements is not required, as the Company is not the
primary beneficiary, because the Company does not have both the power to direct the activities that most significantly impact
the entity's economic performance and the obligation or right to potentially significant losses or benefits, for any of its
investments in VIEs. The Company provided no non-contractual financial support and its carrying value represents the
Company's exposure to loss. The carrying value of collateralized loan obligations (“CLOs”) of $3.5 and $2.7 at December 31,
2011 and 2010, respectively, is included in Limited partnerships/corporations on the Balance Sheets. Income and losses
recognized on these investments are reported in Net investment income on the Statements of Operations.

Securitizations

The Company invests in various tranches of securitization entities, including RMBS, CMBS and ABS. Some RMBS
investments are in various senior level tranches of mortgage securitizations issued and guaranteed by Fannie Mae, Freddie
Mac, or a similar government-sponsored entity, typically referred to as “agency pass-through” investments. These
securitizations pool residential mortgages and pass through the principal and interest to investors based on the terms of each
tranche or portion of the total pool. Investments held by the Company in non-agency RMBS and CMBS also include interest-
only, principal-only, and inverse floating securities. Through its investments, the Company is not obligated to provide any
financial or other support to these entities.

Each of the RMBS, CMBS, and ABS entities described above are thinly capitalized by design, and considered VIEs under ASC
810-10-25 as amended by ASU 2009-17. As discussed above, the Company's involvement with these entities is limited to that
of a passive investor. The Company has no unilateral right to appoint or remove the servicer, special servicer, or investment
manager, which are generally viewed to have the power to direct the activities that most significantly impact the securitization
entities' economic performance, in any of these entities, nor does the Company function in any of these roles. The Company
through its investments or other arrangements does not have the obligation to absorb losses or the right to receive benefits from
the entity that could potentially be significant to the entity. Therefore, the Company is not the primary beneficiary and will not
consolidate any of the RMBS, CMBS, and ABS entities in which it holds investments. These investments are accounted for as
investments as described in the Business, Basis of Presentation and Significant Accounting Policies note to these Financial
Statements.

Fixed Maturity Securities Credit Quality - Ratings

The Securities Valuation Office ("SVO") of the National Association of Insurance Commissioners (“NAIC”) evaluates the
fixed maturity security investments of insurers for regulatory reporting and capital assessment purposes and assigns securities
to one of six credit quality categories called “NAIC designations.” An internally developed rating is used as permitted by the
NAIC, if no rating is available. The NAIC designations are generally similar to the credit quality designations of a Nationally
Recognized Statistical Rating Organization (“NRSRO”) for marketable fixed maturity securities, called “rating agency
designations,” except for certain structured securities as described below. NAIC designations of "1," highest quality, and "2,"
high quality, include fixed maturity securities generally considered investment grade (“IG”) by such rating organizations.
NAIC designations 3 through 6 include fixed maturity securities generally considered below investment grade (“BIG”) by such
rating organizations.

The NAIC adopted revised designation methodologies for non-agency RMBS, including RMBS backed by subprime mortgage
loans reported within ABS, that became effective December 31, 2009 and for CMBS that became effective December 31, 2010.
The NAIC's objective with the revised designation methodologies for these structured securities was to increase the accuracy in
assessing expected losses, and to use the improved assessment to determine a more appropriate capital requirement for such
structured securities. The revised methodologies reduce regulatory reliance on rating agencies and allow for greater regulatory
input into the assumptions used to estimate expected losses from such structured securities.

As a result of time lags between the funding of investments, the finalization of legal documents and the completion of the SVO
filing process, the fixed maturity portfolio generally includes securities that have not yet been rated by the SVO as of each
balance sheet date, such as private placements. Pending receipt of SVO ratings, the categorization of these securities by NAIC
designation is based on the expected ratings indicated by internal analysis.

Information about the Company's fixed maturity securities holdings, including securities pledged, by NAIC designations is set
forth in the following tables. Corresponding rating agency designation does not directly translate to NAIC designation, but
represents the Company's best estimate of comparable ratings from rating agencies, including Moody's, S&P, and Fitch. If no
rating is available from a rating agency, then an internally developed rating is used.


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





It is management's objective that the portfolio of fixed maturities be of high quality and be well diversified by market sector. The fixed maturities in the Company's portfolio are generally rated by external rating agencies and, if not externally rated, are rated by the Company on a basis believed to be similar to that used by the rating agencies. Ratings are derived from three NRSRO ratings and are applied as follows based on the number of agency rating received:




ª	when three ratings are received then the middle rating is applied;
ª	when two ratings are received then the lower rating is applied;
ª	when a single rating is received, the NRSRO rating is applied;
ª	and, when ratings are unavailable then an internal rating is applied.

*Unrealized Capital Losses*

Unrealized capital losses (including noncredit impairments) in fixed maturities, including securities pledged to creditors, for IG and BIG securities by duration, based on NAIC designations, were as follows at December 31, 2011 and 2010.


	2011				2010

		% of IG		% of IG		% of IG		% of IG
	IG	and BIG	BIG	and BIG	IG	and BIG	BIG	and BIG

Six months or less below amortized cost $ 40.0		13.4%	$ 10.9	3.6%	$ 124.6	28.8%	$ 12.4	2.9%
More than six months and twelve
months or less below amortized cost	38.3	12.8%	4.0	1.3%	2.2	0.5%	0.1	—%
More than twelve months below
amortized cost	136.5	45.7%	69.3	23.2%	167.5	38.8%	125.3	29.0%
Total unrealized capital loss	$ 214.8	71.9%	$ 84.2	28.1%	$ 294.3	68.1%	$ 137.8	31.9%

Unrealized capital losses (including noncredit impairments) in fixed maturities, including securities pledged to creditors, for securities rated BBB and above (Investment Grade (“IG”)) and securities rated BB and below (Below Investment Grade (“BIG”)) by duration, based on NRSRO ratings, were as follows at December 31, 2011 and 2010.


	2011				2010

		% of IG		% of IG		% of IG		% of IG
	IG	and BIG	BIG	and BIG	IG	and BIG	BIG	and BIG

Six months or less below amortized cost $ 40.3		13.5%	$ 10.6	3.5%	$ 125.0	29.0%	$ 12.0	2.8%
More than six months and twelve
months or less below amortized cost	26.9	9.0%	15.4	5.2%	2.2	0.5%	0.1	—%
More than twelve months below
amortized cost	69.8	23.3%	136.0	45.5%	97.8	22.6%	195.0	45.1%
Total unrealized capital loss	$ 137.0	45.8%	$ 162.0	54.2%	$ 225.0	52.1%	$ 207.1	47.9%




37


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)




Unrealized capital losses (including noncredit impairments), along with the fair value of fixed maturities, including securities pledged to creditors, by market sector and duration were as follows at December 31, 2011 and 2010.



	Six Months or Less Below Amortized Cost		More Than Six Months and Twelve Months or Less Below Amortized Cost		More Than Twelve Months Below Amortized Cost		Total


	Fair Value	Unrealized Capital Loss	Fair Value	Unrealized Capital Loss	Fair Value	Unrealized Capital Loss	Fair Value	Unrealized Capital Loss


2011
U.S. Treasuries	—	—	—	—	—	—	—	—
U.S. government agencies
and authorities	—	—	—	—	—	—	—	—
U.S. corporate, state, and
municipalities	798.9	17.6	97.6	4.1	208.0	20.6	1,104.5	42.3
Foreign	476.5	30.2	51.1	5.0	339.5	34.6	867.1	69.8
Residential mortgage-
backed	74.6	0.9	188.2	5.7	305.6	84.3	568.4	90.9
Commercial mortgage-
backed	155.1	1.9	234.7	17.9	35.7	6.6	425.5	26.4
Other asset-backed	42.6	0.3	26.5	9.6	142.1	59.7	211.2	69.6

Total	1,547.7	50.9	598.1	42.3	1,030.9	205.8	3,176.7	299.0

2010
U.S. Treasuries	677.8	2.4	—	—	—	—	677.8	2.4
U.S. government agencies
and authorities	18.1	0.2	—	—	—	—	18.1	0.2
U.S. corporate, state, and
municipalities	2,494.7	73.0	37.1	1.0	258.9	19.5	2,790.7	93.5
Foreign	1,277.5	52.8	35.8	1.1	195.4	20.4	1,508.7	74.3
Residential mortgage-
backed	472.6	7.2	1.0	0.1	336.5	91.2	810.1	98.5
Commercial mortgage-
backed	22.6	0.4	4.3	0.1	390.2	38.6	417.1	39.1
Other asset-backed	133.5	1.0	8.7	—	441.6	123.1	583.8	124.1

Total	5,096.8	137.0	86.9	2.3	1,622.6	292.8	6,806.3	432.1

Of the unrealized capital losses aged more than twelve months, the average market value of the related fixed maturities was 83.4% of the average book value as of December 31, 2011.





38


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)




Unrealized capital losses (including noncredit impairments) in fixed maturities, including securities pledged to creditors, for instances in which fair value declined below amortized cost by greater than or less than 20% for consecutive periods as indicated in the tables below, were as follows for December 31, 2011 and 2010.



	Amortized Cost			Unrealized Capital Loss				Number of Securities
	< 20%	> 20%		< 20%			> 20%	< 20%	> 20%
2011
Six months or less below amortized cost	$ 1,638.7	$ 178.0		$ 52.5		$ 52.5		271	49
More than six months and twelve months or
less below amortized cost	645.4		57.1		38.0		17.3	67	22
More than twelve months below amortized
cost	735.1		221.4		47.0		91.7	126	80
Total	$ 3,019.2	$ 456.5		$ 137.5		$ 161.5		464	151

2010
Six months or less below amortized cost	$ 5,650.7	$ 49.3		$ 172.3		$ 13.2		585	14
More than six months and twelve months or
less below amortized cost	289.5		18.9		15.9		4.8	46	3
More than twelve months below amortized
cost	688.7		541.3		40.6		185.3	95	137
Total	$ 6,628.9	$ 609.5		$ 228.8		$ 203.3		726	154

Unrealized capital losses (including noncredit impairments) in fixed maturities, including securities pledged to creditors, by market sector for instances in which fair value declined below amortized cost by greater than or less than 20% for consecutive periods as indicated in the tables below, were as follows for December 31, 2011 and 2010.




39


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





	Amortized Cost		Unrealized Capital Loss		Number of Securities
	Amortized Cost		Unrealized Capital Loss		Number of Securities
	< 20%	> 20%	< 20%	> 20%	< 20%	> 20%
2011
U.S. Treasuries	$ —	$ —	$ —	$ —	—	—
U.S. government agencies and authorities	—	—	—	—	—	—
U.S. corporate, state and municipalities	1,112.3	34.5	32.4	9.9	137	5
Foreign	850.6	86.3	41.7	28.1	131	12
Residential mortgage-backed	500.9	158.4	31.7	59.2	98	89
Commercial mortgage-backed	446.3	5.6	25.1	1.3	24	1
Other asset-backed	109.1	171.7	6.6	63.0	74	44
Total	$ 3,019.2	$ 456.5	$ 137.5	$ 161.5	464	151

2010
U.S. Treasuries	$ 680.2	$ —	$ 2.4	$ —	2	—
U.S. government agencies and authorities	18.3	—	0.2	—	2	—
U.S. corporate, state and municipalities	2,850.0	34.2	84.1	9.4	279	6
Foreign	1,563.7	19.3	69.2	5.1	142	7
Residential mortgage-backed	636.6	272.0	22.1	76.4	121	77
Commercial mortgage-backed	418.6	37.6	22.1	17.0	27	9
Other asset-backed	461.5	246.4	28.7	95.4	153	55
Total	$ 6,628.9	$ 609.5	$ 228.8	$ 203.3	726	154

At December 31, 2011, the Company held no fixed maturity with an unrealized capital loss in excess of $10.0. At December 31, 2010, the Company held 1 fixed maturity with an unrealized capital loss in excess of $10.0. The unrealized capital loss on this fixed maturity equaled $17.8, or 4.1% of the total unrealized losses, as of December 31, 2010.



All investments with fair values less than amortized cost are included in the Company's other-than-temporary impairment analysis, and impairments were recognized as disclosed in OTTI, which follows this section. After detailed impairment analysis was completed, management determined that the remaining investments in an unrealized loss position were not other-than- temporarily impaired, and therefore no further other-than-temporary impairment was necessary.







40


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)




*Other-Than-Temporary Impairments*

The following tables identify the Company's credit-related and intent-related impairments included in the Statements of Operations, excluding noncredit impairments included in AOCI, by type for the years ended December 31, 2011, 2010, and 2009.



	2011		2010		2009
	Impairment	No. of Securities	Impairment	No. of Securities	Impairment	No. of Securities
	Impairment	No. of Securities	Impairment	No. of Securities	Impairment	No. of Securities

U.S. Treasuries	$ —	—	$ —	—	$ 114.7	10
U.S. corporate	9.5	17	4.8	19	55.2	55
Foreign⁽¹⁾	27.2	52	30.7	23	31.1	45
Residential mortgage-backed	12.3	65	24.5	67	78.6	84
Commercial mortgage-backed	49.7	14	23.2	7	70.9	5
Other asset-backed	74.8	60	104.6	54	114.5	44

Equity	—	—	— *	1	3.3	5
Public utilities	—	—	0.3	5	—	—
Mortgage loans on real estate	6.9	5	6.3	5	20.9	8
Limited partnerships	—	—	—	—	0.4	1
Total	$ 180.4	213	$ 194.4	181	$ 489.6	257
^*Less than $0.1.
⁽¹⁾Primary U.S. dollar denominated.

The above tables include $27.6, $95.5, and $171.2, for the years ended December 31, 2011, 2010, and 2009, respectively, in other-than-temporary write-downs related to credit impairments, which are recognized in earnings. The remaining $152.8, $98.9, and $318.4, in write-downs for the years ended December 31, 2011, 2010, and 2009, respectively, are related to intent impairments. The following tables summarize these intent impairments, which are also recognized in earnings, by type for the years ended December 31, 2011, 2010, and 2009.





	2011		2010		2009
	Impairment	No. of Securities	Impairment	No. of Securities	Impairment	No. of Securities
	Impairment	No. of Securities	Impairment	No. of Securities	Impairment	No. of Securities

U.S. Treasuries	$ —	—	$ —	—	$ 114.7	10
U.S. Corporate	9.5	16	3.8	18	45.9	41
Foreign⁽¹⁾	24.1	48	12.8	18	25.6	41
Residential mortgage-backed	1.8	8	6.1	11	2.9	1
Commercial mortgage-backed	45.5	14	3.9	2	70.9	5
Other asset-backed	71.9	59	72.0	35	58.4	13
Public utilities	—	—	0.3	5	—	—
Total	$ 152.8	145	$ 98.9	89	$ 318.4	111
⁽¹⁾Primarily U.S. dollar denominated.



41


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)




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.



The fair value of fixed maturities with other-than-temporary impairments as of December 31, 2011, 2010, and 2009 was $2.1 billion, $2.3 billion, and $2.4 billion, respectively.


The following tables identify the amount of credit impairments on fixed maturities for the years ended December 31, 2011, 2010, and 2009, for which a portion of the OTTI was recognized in AOCI, and the corresponding changes in such amounts.


	2011	2010	2009
Balance at January 1	$ 118.2	$ 123.3	$ —
Implementation of OTTI guidance included in ASC Topic 320⁽¹⁾	—	—	92.7
Additional credit impairments:
On securities not previously impaired	5.0	20.0	21.7
On securities previously impaired	6.7	23.4	13.8
Reductions:
Intent Impairments	(3.4)	(7.1)	—
Securities sold, matured, prepaid or paid down	(62.4)	(41.4)	(4.9)
Balance at December 31	$ 64.1	$ 118.2	$ 123.3
⁽¹⁾Represents credit losses remaining in Retained earnings related to the adoption of new guidance on OTTI, included in ASC Topic 320, on April 1, 2009.

*Net Investment Income*

Sources of Net investment income were as follows for the years ended December 31, 2011, 2010, and 2009.

	2011	2010	2009
Fixed maturities	$ 1,242.5	$ 1,182.2	$ 1,240.9
Equity securities, available-for-sale	3.7	4.5	19.1
Mortgage loans on real estate	174.9	180.8	198.7
Real estate	—	(3.3)	—
Policy loans	6.6	7.2	7.6
Short-term investments and cash equivalents	2.0	4.1	5.6
Limited partnerships	17.1	20.0	(10.1)
Other	21.3	14.0	10.8
Gross investment income	1,468.1	1,409.5	1,472.6
Less: investment expenses	58.8	53.1	60.2
Net investment income	$ 1,409.3	$ 1,356.4	$ 1,412.4




42


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)




*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 credit-related and intent-related other-than-temporary impairment of investments and changes in fair value of fixed maturities accounted for using the fair value option and derivatives. The cost of the investments on disposal is generally determined based on first-in-first-out (“FIFO”) methodology. Net realized capital gains (losses) on investments were as follows for the years ended December 31, 2011, 2010, and 2009.





	2011	2010	2009
Fixed maturities, available-for-sale, including securities pledged	$ 33.7	$ 11.8	$ (298.0)
Fixed maturities at fair value using the fair value option	(34.4)	(14.6)	117.6
Equity securities, available-for-sale	(0.2)	1.9	6.4
Derivatives	744.4	(807.9)	(2,249.3)
Embedded Derivatives - fixed maturities	4.3	12.3	(57.8)
Embedded Derivatives - product guarantees	(1,699.1)	(111.9)	1,128.5
Other investments	(5.7)	(9.2)	(15.9)
Net realized capital gains (losses)	$ (957.0)	$ (917.6)	$ (1,368.5)
After-tax net realized capital losses	$ (513.1)	$ (660.6)	$ (854.0)

Proceeds from the sale of fixed maturities and equity securities and the related gross realized gains and losses were as follows for the periods ended December 31, 2011, 2010, and 2009.


	2011	2010	2009
Proceeds on sales	$ 3,821.9	$ 6,211.7	$ 5,202.4
Gross gains	238.0	243.1	173.3
Gross losses	33.7	37.4	98.3




43


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





3.	Financial Instruments

The following tables present the Company's hierarchy for its assets and liabilities measured at fair value on a recurring basis as of December 31, 2011 and 2010.


		2011
		Level 1	Level 2	Level 3⁽²⁾	Total
Assets:
	Fixed maturities including securities pledged:
	U.S. Treasuries	$ 1,778.0	$ 7.8 $	— $	1,785.8
	U.S government agencies and authorities	—	23.7	—	23.7
	U.S. corporate, state and municipalities	—	10,251.1	124.5	10,375.6
	Foreign	—	5,525.2	56.9	5,582.1
	Residential mortgage-backed securities	—	2,245.1	60.7	2,305.8
	Commercial mortgage-backed securities	—	2,001.9	—	2,001.9
	Other asset-backed securities	—	600.8	72.8	673.6
	Equity securities, available-for-sale	11.4	—	16.3	27.7
	Derivatives:
	Interest rate contracts	4.0	1,534.4	—	1,538.4
	Foreign exchange contracts	—	9.7	—	9.7
	Equity contracts	26.5	—	33.6	60.1
	Credit contracts	—	0.9	—	0.9
	Cash and cash equivalents, short-term
	investments, and short-term investments under
	securities loan agreement	2,760.7	5.8	—	2,766.5
	Assets held in separate accounts	39,356.9	—	—	39,356.9
Total		$ 43,937.5	$ 22,206.4 $	364.8 $	66,508.7
Liabilities:
	Investment contract guarantees:
	Fixed Indexed Annuities ("FIA")	$ —	$ — $	1,282.2 $	1,282.2
	GMAB/GMWB/GMWBL⁽¹⁾	—	—	2,229.9	2,229.9
	Embedded derivative on reinsurance	—	230.9	—	230.9
	Derivatives:
	Interest rate contracts	—	520.0	—	520.0
	Foreign exchange contracts	—	42.4	—	42.4
	Equity contracts	3.3	—	25.1	28.4
	Credit contracts	—	1.2	12.9	14.1
Total		$ 3.3	$ 794.5 $	3,550.1 $	4,347.9
⁽¹⁾Guaranteed minimum accumulation benefits ("GMAB"), Guaranteed minimum withdrawal benefits ("GMWB"), Guaranteed minimum withdrawal benefits with life payouts ("GMWBL").

⁽²⁾Level 3 net assets and liabilities accounted for (5.1)% 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 (14.0)%.




44


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





	2010
	Level 1	Level 2	Level 3⁽²⁾	Total
Assets:
Fixed maturities including securities pledged:
U.S. Treasuries	$ 1,552.3	$ 60.4	$ — $	1,612.7
U.S government agencies and authorities	—	24.3	—	24.3
U.S. corporate, state and municipalities	—	9,491.1	40.1	9,531.2
Foreign	—	5,389.1	9.8	5,398.9
Residential mortgage-backed securities	—	2,027.7	198.6	2,226.3
Commercial mortgage-backed securities	—	2,198.9	—	2,198.9
Other asset-backed securities	—	458.2	644.8	1,103.0
Equity securities, available-for-sale	52.6	—	13.5	66.1
Derivatives:
Interest rate contracts	2.6	105.9	12.0	120.5
Foreign exchange contracts	—	5.1	—	5.1
Equity contracts	12.4	—	95.3	107.7
Credit contracts	—	3.2	—	3.2
Embedded derivative on reinsurance	—	20.9	—	20.9
Cash and cash equivalents, short-term
investments, and short-term investments under
securities loan agreement	1,155.8	—	—	1,155.8
Assets held in separate accounts	44,413.3	—	—	44,413.3
Total	$ 47,189.0	$ 19,784.8	$ 1,014.1 $	67,987.9
Liabilities:
Investment contract guarantees:
Fixed Indexed Annuities ("FIA")	$ —	$ —	$ 1,165.5 $	1,165.5
GMAB/GMWB/GMWBL⁽¹⁾	—	—	490.2	490.2
Derivatives:
Interest rate contracts	—	413.3	0.3	413.6
Foreign exchange contracts	—	42.1	—	42.1
Equity contracts	0.8	—	16.0	16.8
Credit contracts	—	0.1	14.4	14.5
Total	$ 0.8	$ 455.5	$ 1,686.4 $	2,142.7
⁽¹⁾Guaranteed minimum accumulation benefits ("GMAB"), Guaranteed minimum withdrawal benefits ("GMWB"), Guaranteed minimum withdrawal benefits with life payouts ("GMWBL").

⁽²⁾Level 3 net assets and liabilities accounted for (1.0)% 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 (3.1)%.



*Transfers in and out of Level 1 and 2*

There were no transfers between Levels 1 and Level 2 for the year ended December 31, 2011.



45

During 2010, certain U.S. Treasury securities valued by commercial pricing services where prices are derived using market
observable inputs have been transferred from Level 1 to Level 2. These securities for the year ended December 31, 2010,
include U.S. Treasury strips of $79.4 in which prices are modeled incorporating 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. The Company's policy is to recognize transfers in and transfers out as of the beginning of the reporting
period.

Valuation of Financial Assets and Liabilities

As described below, certain assets and liabilities are measured at estimated fair value on the Company's Balance Sheets. In
addition, further disclosure of estimated fair values is included in this Financial Instruments note. The Company defines fair
value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
The exit price and the transaction (or entry) price will be the same at initial recognition in many circumstances. However, in
certain cases, the transaction price may not represent fair value. The fair value of a liability is based on the amount that would
be paid to transfer a liability to a third-party with an equal credit standing. Fair value is required to be a market-based
measurement which is determined based on a hypothetical transaction at the measurement date, from a market participant's
perspective. The Company considers three broad valuation techniques when a quoted price is unavailable: (i) the market
approach, (ii) the income approach and (iii) the cost approach. The Company determines the most appropriate valuation
technique to use, given the instrument being measured and the availability of sufficient inputs. The Company prioritizes the
inputs to fair valuation techniques and allows for the use of unobservable inputs to the extent that observable inputs are not
available.

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 Company reviews the assumptions and inputs used by third party commercial pricing services for each
reporting period in order to determine an appropriate fair value hierarchy level. The documentation and analysis obtained from
the third party commercial pricing services are reviewed by the Company, including in-depth validation procedures confirming
the observability of inputs. 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.

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 during 2011 and 2010,
except for the Company's use of commercial pricing services to value certain CMOs which commenced in the first quarter of
2010. Certain CMOs were previously valued using an average of broker quotes when more than one broker quote is provided.

The following valuation methods and assumptions were used by the Company in estimating the reported values for the
investments and derivatives described below:

Fixed maturities: The fair values for the actively traded marketable bonds are determined based upon the quoted market prices
and are classified as Level 1 assets. Assets in this category would primarily include certain U.S. Treasury securities. 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 and are
classified as Level 2 assets. This category includes U.S. and foreign corporate bonds, ABS, U.S. agency and government
guaranteed securities, CMBS, and RMBS, including certain CMO assets and subprime RMBS. During the first quarter of 2011,
the market for subprime RMBS had been determined to be active, and as such, these securities are now included in Level 2 of
the valuation hierarchy.

Generally, the Company does not obtain more than one vendor price from pricing services per instrument. The Company uses
a hierarchy process in which prices are obtained from a primary vendor, and, if that vendor is unable to provide the price, the
next vendor in the hierarchy is contacted until a price is obtained or it is determined that a price cannot be obtained from a
commercial pricing service. When a price cannot be obtained from a commercial pricing service, independent broker quotes
are solicited. Securities priced using independent broker quotes are classified as Level 3.

Broker quotes and prices obtained from pricing services are reviewed and validated monthly through an internal valuation
committee price variance review, comparisons to internal pricing models, back testing to recent trades, or monitoring of trading
volumes. At December 31, 2011, $157.1 and $17.7 billion of a total of $22.7 billion in fixed maturities, including securities
pledged, were valued using unadjusted broker quotes and unadjusted prices obtained from pricing services, respectively, and
verified through the review process. The remaining balance in fixed maturities consisted primarily of privately placed bonds
valued using a matrix-based pricing model.

All prices and broker quotes obtained go through the review process described above including valuations for which only one
broker quote is obtained. After review, for those instruments where the price is determined to be appropriate, the unadjusted
price provided is used for financial statement valuation. If it is determined that the price is questionable, another price may be
requested from a different vendor. For certain CMO assets, the average of several broker quotes may be used when multiple
quotes are available. The internal valuation committee then reviews all prices for the instrument again, along with information
from the review, to determine which price best represents “exit price” for the instrument.

Fair values of privately placed bonds are primarily 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 its 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. In addition, certain privately placed bonds are valued using
broker quotes and internal pricing models and are classified as Level 3 assets. The Company's internal pricing models utilize
the Company's best estimate of expected future cash flows discounted at a rate of return that a market participant would require.
The significant inputs to the models include, but are not limited to, current market inputs, such as credit loss assumptions,
assumed prepayment speeds and business performance.

Equity securities, available-for-sale: Fair values of publicly traded equity securities are based upon quoted market price and are
classified as Level 1 assets. Other equity securities, typically private equities or equity securities not traded on an exchange, are
valued by other sources such as analytics or brokers and are classified as Level 3 assets.

Cash and cash equivalents, Short-term investments, and Short-term investments under securities loan agreement: The fair
values for cash equivalents and certain short-term investments are determined based on quoted market prices. These assets are
classified as Level 1. Other short-term investments are valued and classified in the fair value hierarchy consistent with the
policies described herein, depending on investment type.

Derivatives: The carrying amounts for these financial instruments, which can be assets or liabilities, reflect the fair value of the
assets and liabilities. Derivatives are carried at fair value (on the Balance Sheets), which is determined using the Company's
derivative accounting system in conjunction with observable key financial data from third party sources, such as yield curves,
exchange rates, Standard & Poor's (“S&P”) 500 Index prices, and London Interbank Offered Rates (“LIBOR”), 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
transact only with investment grade counterparties with a credit rating of A- or better. The Company's own credit risk is also
considered and incorporated in the Company's valuation process. Valuations for the Company's futures contracts are based on
unadjusted quoted prices from an active exchange and, therefore, are classified as Level 1. The Company also has certain credit
default swaps and options that are priced using models that primarily use market observable inputs, but contain inputs that are
not observable to market participants, which have been classified as Level 3. However, all other derivative instruments are
valued based on market observable inputs and are classified as Level 2.

Embedded derivatives - Investment contract guarantees: The Company records guarantees, which can be either assets or
liabilities, for annuity contracts containing guaranteed riders for GMABs, GMWBs and GMBWLs in accordance with U.S.
GAAP for derivative instruments and hedging activities. The guarantee is treated as an embedded derivative and is required to
be reported separately from the host variable annuity contract. The fair value of the obligation is calculated based on actuarial
and capital market assumptions related to the projected cash flows, 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
market return scenarios and other market implied assumptions. These derivatives are classified as Level 3 liabilities in the fair
value hierarchy.

The Company also records for its FIA contracts an embedded derivative liability for interest payments to contract holders above
the minimum guaranteed interest rate, in accordance with U.S. GAAP for derivative instruments and hedging activities. The
guarantee is treated as an embedded derivative and is required to be reported separately from the host contract. The fair value of
the obligation is calculated based on actuarial and capital market assumptions related to the projected cash flows, including
benefits and related contract charges, over the anticipated life of the related contracts. The cash flow estimates are produced by
market implied assumptions. These derivatives are classified as Level 3 liabilities in the fair value hierarchy.

Nonperformance risk for investment contract guarantees contains adjustments to the fair values of these contract liabilities
related to the current credit standing of ING V and the Company based on credit default swaps with similar term to maturity
and priority of payment. The ING V credit default swap spread is applied to the discount factors for FIAs and the risk-free rates
for GMABs, GMWBs and GMWBLs in the Company's valuation models to incorporate credit risk into the fair values of these
investment contract guarantees.

Embedded derivative on reinsurance: The carrying value of the embedded derivative is estimated based upon the change in the
fair value of the assets supporting the funds withheld payable under the combined coinsurance and coinsurance funds withheld
reinsurance agreement between the Company and Security Life of Denver International Limited (“SLDI”). As the fair value of
the assets held in trust is based on a quoted market price (Level 1), the fair value of the embedded derivative is based on market
observable inputs and is classified as Level 2.

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. The underlying investments include mutual funds, short-term investments and cash, the
valuations of which are based upon a quoted market price and are included in Level 1.

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 ASC 820), including but not
limited to liquidity spreads for investments within markets deemed not currently active. 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 addition, the Company has determined, for certain financial instruments, an
active market is such a significant input to determine fair value that the presence of an inactive market may lead to
classification in Level 3. 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.


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





The following table summarizes the changes in fair value of the Company's Level 3 assets and liabilities for the year ended December 31, 2011.


	December 31, 2011
		Total realized/unrealized gains (losses included in


	Fair Value as of January 1	Net Income	OCI		Purchases	Issuances	Sales	Settlements	Transfer into Level 3⁽²⁾	Transfer out of Level 3⁽²⁾	Fair Value as of December 31	Change in unrealized gains (losses) included in earnings⁽³⁾



Fixed maturities, including
securities pledged:
U.S. corporate, state and
municipalities	$ 40.1	$ (0.3)	$ (2.7)		$ 12.6	$ —	$ —	$ (24.7)	$ 99.5	$ —	$ 124.5	$ (0.2)
Foreign	9.8	0.3		(0.1)	13.9	—	(12.5)	(7.7)	54.9	(1.7)	56.9	(0.5)
Residential mortgage-
backed securities	198.6	—		(0.6)	34.3	—	(0.1)	(11.3)	1.9	(162.1)	60.7	(1.0)
Other asset-backed
securities	644.8	(78.7)		64.3	—	—	(214.7)	(35.7)	—	(307.2)	72.8	(10.1)
Total fixed maturities,
including securities
pledged:	893.3	(78.7)		60.9	60.8	—	(227.3)	(79.4)	156.3	(471.0)	314.9	(11.8)
Equity securities, available
for sale	13.5	(0.1)		0.1	4.3	—	(0.2)	—	—	(1.3)	16.3	—
Derivatives, net	76.6	(38.6)		—	—	—	(42.4)	—	—	—	(4.4)	(50.0)
Investment contract
guarantees:
FIA	(1,165.5)	(111.7)		—	—	(128.3)	—	123.3	—	—	(1,282.2)	—

GMWB/GMAB/GMWBL	(490.2)	(1,587.4)		—	—	(154.5)	—	2.2	—	—	(2,229.9)	—
Total Investment contract		(1,699.
guarantees	$ (1,655.7)	$ 1)	⁽¹⁾$	—	$ —	$ (282.8)	$ —	$ 125.5	$ —	$ —	$ (3,512.1)	$ —
⁽¹⁾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. These amounts are included in Other net realized capital gains (losses) in the Statements of Operations.

⁽²⁾The Company's policy is to recognize transfers in and transfers out as of the beginning of the reporting period.
⁽³⁾For financial instruments still held as of December 31, amounts are included in Net investment income and Other net realized capital gains (losses) in the Statements of Operations.




49


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





The following table summarizes the changes in fair value of the Company’s Level 3 assets and liabilities for the year ended December 31, 2010.


	December 31, 2010

		Total realized/unrealized gains/losses included in:
	Fair Value as of January 1	Net Income	OCI	Purchases, issuances, and settlements	Transfers in to Level 3⁽²⁾	Transfers out of Level 3⁽²⁾	Fair Value as of December 31	Changes in unrealized gains (losses) included in earnings⁽³⁾



Fixed maturities, including securities pledged:
U.S. corporate, state and municipalities	$ —	$ —	$ (0.6)	$ (1.4)	$ 42.1 $	—	$ 40.1	$ —
Foreign	—	—	0.4	5.3	4.1	—	9.8	(0.2)
Residential mortgage-backed securities	1,088.2	(1.5)	(0.4)	(41.9)	13.2	(859.0)	198.6	(7.1)
Other asset-backed securities	423.9	(101.5)	212.7	(99.7)	209.4	—	644.8	(102.7)
Total fixed maturities, including securities pledged:	1,512.1	(103.0)	212.1	(137.7)	268.8	(859.0)	893.3	(110.0)
Equity securities, available for sale	4.5	(0.7)	0.1	9.6	—	—	13.5	—
Derivatives, net	111.9	(71.3)	—	36.0	—	—	76.6	27.9
Investment contract guarantees:
FIA	(927.2)	(230.0)	—	(8.3)	—	—	(1,165.5)	—
GMWB/GMAB/GMWBL	(470.5)	118.1	—	(137.8)	—	—	(490.2)	—
Total Investment contract guarantees	(1,397.7)	(111.9) ⁽¹⁾	—	(146.1)	—	—	(1,655.7)	—
⁽¹⁾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. These amounts are included in Other net realized capital gains (losses) in the Statements of Operations.

⁽²⁾The Company's policy is to recognize transfers in and transfers out as of the beginning of the reporting period.
⁽³⁾For financial instruments still held as of December 31, amounts are included in Net investment income and Other net realized capital gains (losses) in the Statements of Operations.




50

The transfers out of Level 3 during the year ended December 31, 2011 in Fixed maturities, including securities pledged, are
primarily due to the Company's determination that the market for subprime RMBS securities has become active. While the
valuation methodology has not changed, the Company has concluded that the frequency of transactions in the market for
subprime RMBS securities represent regularly occurring market transactions and therefore are now classified as Level 2. The
transfers out of Level 3 during the year ended December 31, 2010 in Fixed maturities, including securities pledged, are
primarily due to an increased utilization of vendor valuations of certain CMOs.

The remaining transfers in and out of Level 3 for fixed maturities during the year ended December 31, 2011 are due to the
variation in inputs relied upon for valuation each quarter. Securities that are primarily valued using independent broker quotes
when prices are not available from one of the commercial pricing services are reflected as transfers into Level 3, as these
securities are generally less liquid with very limited trading activity or where less transparency exists corroborating the inputs
to the valuation methodologies. When securities are valued using more widely available information, the securities are
transferred out of Level 3 and into Level 1 or 2, as appropriate.


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts 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, 2011 and 2010.


	2011		2010
	Carrying	Fair	Carrying	Fair
	Value	Value	Value	Value
Assets:
Fixed maturities, available-for-sale, including
securities pledged	$ 22,413.5 $	22,413.5 $	21,857.6 $	21,857.6
Fixed maturities at fair value using the fair
value option	335.0	335.0	237.7	237.7
Equity securities, available-for-sale	27.7	27.7	66.1	66.1
Mortgage loans on real estate	3,137.3	3,214.1	2,967.9	3,036.0
Loan - Dutch State obligation	658.2	660.6	843.9	795.7
Limited partnerships/corporations	305.4	305.4	295.8	297.9
Policy loans	112.0	112.0	122.1	122.1
Cash, cash equivalents, Short-term
investments, and Short-term investments under
securities loan agreement	2,766.5	2,766.5	1,155.8	1,155.8
Derivatives	1,609.1	1,609.1	236.5	236.5
Other investments	82.2	82.2	82.1	82.1
Deposits from affiliates	1,377.6	1,360.3	1,600.4	1,577.3
Embedded derivative on reinsurance	—	—	20.9	20.9
Assets held in separate accounts	39,356.9	39,356.9	44,413.3	44,413.3
Liabilities:
Investment contract liabilities:
Deferred annuities⁽¹⁾	22,453.2	22,749.4	21,232.8	20,685.6
Guaranteed investment contracts and funding
agreements	2,367.7	2,568.2	2,218.3	1,909.5
Supplementary contracts and immediate
annuities	816.1	884.6	803.3	716.8
Embedded derivative on reinsurance	230.9	230.9	—	—
Derivatives	604.9	604.9	487.0	487.0
Investment contract guarantees:
Fixed indexed annuities	1,282.2	1,282.2	1,165.5	1,165.5
GMAB/GMWB/GMWBL	2,229.9	2,229.9	490.2	490.2
Notes to affiliates	435.0	419.3	435.0	447.2
⁽¹⁾Certain amounts included in Deferred annuities are also reflected within the Investment contract guarantees section of the table above.

The following disclosures are made in accordance with the requirements of ASC Topic 825 which 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.







52

ASC Topic 825 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, which are not carried at fair value on the Balance Sheets, and therefore not categorized in the fair value
hierarchy:

Limited partnerships/corporations: The fair value for these investments, primarily private equity fund of funds and hedge
funds, is estimated based on the Net Asset Value (“NAV”) as provided by the investee.

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.

Loan - Dutch State obligation: The fair value of the Dutch State loan obligation is estimated utilizing discounted cash flows
from the Dutch Strip Yield Curve.

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.

Other investments: The fair value of other investments is estimated based on the Company's percentage of ownership of third
party appraised value for joint ventures and third party appraised value for real estate. FHLB stock is carried at cost, classified
as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value.

Deposits from affiliates: Fair value is estimated based on the fair value of the liabilities for the account values of the underlying
contracts, plus the fair value of the unamortized ceding allowance based on the present value of the projected release of the
ceding allowance, discounted at risk-free rates, plus a credit spread.

Investment contract liabilities (included in Future policy benefits and claims reserves):

With a fixed maturity: Fair value is estimated by discounting cash flows, including associated expenses for maintaining the
contracts, at rates, which are market risk-free rates augmented by credit spreads on current Company credit default swaps. The
augmentation is present to account for non-performance risk. A margin for non-financial risks associated with the contracts is
also included.

Without a fixed maturity: Fair value is estimated as the mean present value of stochastically modeled cash flows associated with
the contract liabilities relevant to both the contract holder and to the Company. Here, the stochastic valuation scenario set is
consistent with current market parameters, and discount is taken using stochastically evolving short risk-free rates in the
scenarios augmented by credit spreads on current Company debt. The augmentation in the discount is present
to account for non-performance risk. Margins for non-financial risks associated with the contract liabilities are also included.

Notes to affiliates: Estimated fair value of the Company's notes to affiliates is based upon discounted future cash flows using a
discount rate approximating the current market rate.

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.


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)




*Mortgage Loans on Real Estate*

The Company's mortgage loans on real estate are summarized as follows at December 31, 2011 and 2010.

	2011	2010
Total commercial mortgage loans	$ 3,138.8	$ 2,970.9
Collective valuation allowance	(1.5)	(3.0)
Total net commercial mortgage loans	$ 3,137.3	$ 2,967.9

As of December 31, 2011, all commercial mortgage loans are held-for-investment. The Company diversifies its commercial mortgage loan portfolio by geographic region and property type to reduce concentration risk. The Company manages risk when originating commercial mortgage loans by generally lending only up to 75% of the estimated fair value of the underlying real estate. Subsequently, the Company continuously evaluates all mortgage loans based on relevant current information including an appraisal of loan-specific credit quality, property characteristics and market trends. Loan performance is monitored on a loan-specific basis through the review of submitted appraisals, operating statements, rent revenues and annual inspection reports, among other items. This review ensures properties are performing at a consistent and acceptable level to secure the debt.








The Company has established a collective valuation allowance for probable incurred, but not specifically identified, losses related to factors inherent in the lending process. The collective valuation allowance is determined based on historical loss rates as adjusted by current economic information for all loans that are not determined to have an individually-assessed loss. The changes in the collective valuation allowance were as follows for the years ended December 31, 2011 and 2010.




	2011	2010
Collective valuation allowance for losses, beginning of year	$ 3.0	$ 4.1
Addition to / (release of) allowance for losses	(1.5)	(1.1)
Collective valuation allowance for losses, end of year	$ 1.5	$ 3.0

The commercial mortgage loan portfolio is the recorded investment, prior to collective valuation allowances, by the indicated
loan-to-value ratio and debt service coverage ratio, as reflected in the following tables at December 31, 2011 and 2010.

	2011⁽¹⁾	2010⁽¹⁾
Loan to Value Ratio:
0% - 50%	$ 920.9	$ 1,140.4
50% - 60%	833.9	707.7
60% - 70%	1,173.2	903.4
70% - 80%	191.3	197.6
80% - 90%	19.5	21.8
Total Commercial Mortgage Loans	$ 3,138.8	$ 2,970.9
⁽¹⁾Balances do not include allowance for mortgage loan credit losses.




54


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





	2011⁽¹⁾		2010⁽¹⁾
Debt Service Coverage Ratio:
Greater than 1.5x	$ 2,105.3		$ 2,038.3
1.25x - 1.5x	565.8		387.9
1.0x - 1.25x	355.5		255.2
Less than 1.0x	112.2		144.0
Mortgages secured by loans on land or construction loans	—		145.5
Total Commercial Mortgage Loans	$ 3,138.8		$ 2,970.9
⁽¹⁾Balances do not include allowance for mortgage loan credit losses.

The Company believes it has a high quality mortgage loan portfolio with substantially all of commercial mortgages classified as performing. The Company defines delinquent commercial mortgage loans consistent with industry practice as 60 days past due. As of December 31, 2011 and 2010, there were no commercial loans classified as delinquent. The Company's policy is to recognize interest income until a loan becomes 90 days delinquent or foreclosure proceedings are commenced, at which point interest accrual is discontinued. Interest accrual is not resumed until past due payments are brought current. At December 31, 2011 and 2010, there were no commercial mortgage loans on nonaccrual status.






All commercial mortgages are evaluated for the purpose of quantifying the level of risk. Those loans with higher risk are placed on a watch list and are closely monitored for collateral deficiency or other credit events that may lead to a potential loss of principal or interest. If the value of any mortgage loan is determined to be impaired (i.e., when it is probable that the Company will be unable to collect on all amounts due according to the contractual terms of the loan agreement), the carrying value of the mortgage loan is reduced to either the present value of expected cash flows from the loan, discounted at the loan's effective interest rate, or fair value of the collateral.







The carrying values and unpaid principal balances (prior to any charge-off) of impaired commercial mortgage loans were as follows for the years ended December 31, 2011 and 2010.


	2011		2010
Impaired loans without valuation allowances	$ —		$ 16.5
Unpaid principal balance of impaired loans	$ —		$ 18.7

The following is information regarding impaired loans, restructured loans, loans 90 days or more past due and loans in the process of foreclosure for the years ended December 31, 2011, 2010, and 2009.


	2011	2010	2009
Impaired loans, average investment during the period	$ 8.3	$ 28.0	$ 19.8
Interest income recognized on impaired loans, on an accrual basis	—	1.3	1.4
Interest income recognized on impaired loans, on a cash basis	—	1.4	1.2
Loans in foreclosure, at amortized cost	—	—	8.7

Troubled Debt Restructuring

The Company has high quality, well performing portfolios of commercial mortgage loans and private placements. Under certain circumstances, modifications to these contracts are granted. Each modification is evaluated as to whether a troubled debt restructuring has occurred. A modification is a troubled debt restructure when the borrower is in financial difficulty and the creditor makes concessions. Generally, the types of concessions may include: reduction of the face amount or maturity




55

amount of the debt as originally stated, reduction of the contractual interest rate, extension of the maturity date at an interest
rate lower than current market interest rates and/or reduction of accrued interest. The Company considers the amount, timing
and extent of the concession granted in determining any impairment or changes in the specific valuation allowance recorded in
connection with the troubled debt restructuring. A valuation allowance may have been recorded prior to the quarter when the
loan is modified in a troubled debt restructuring. Accordingly, the carrying value (net of the specific valuation allowance)
before and after modification through a troubled debt restructuring may not change significantly, or may increase if the
expected recovery is higher than the pre-modification recovery assessment. For the year ended December 31, 2011, the
Company had one private placement troubled debt restructuring with pre-modification and post-modification carrying value of
$9.8.

During the twelve months ended December 31, 2011, the Company had no loans modified in a troubled debt restructuring with
a subsequent payment default.

Derivative Financial Instruments

See the Business, Basis of Presentation and Significant Accounting Policies note to these Financial Statements for disclosure
regarding the Company's purpose for entering into derivatives and the policies on valuation and classification of derivatives.
The Company enters into the following derivatives:

Interest rate caps: Interest rate caps are used to manage the interest rate risk in the Company's fixed maturity portfolio. Interest
rate caps are purchased contracts that are used by the Company to hedge annuity products against rising interest rates.

Interest rate swaps: Interest rate swaps are used to manage the interest rate risk in the Company's fixed maturity 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.

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.

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 on 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 par minus recovery value of the swap
contract.

Total return swaps: Total return swaps are used to hedge against a decrease in variable annuity account values, which are
invested in certain funds. The difference between floating-rate interest amounts calculated by reference to an agreed upon
notional principal amount is exchanged with other parties at specified intervals.

Forwards: Certain forwards are acquired to hedge certain CMO assets held by the Company against movements in interest
rates, particularly mortgage rates. On the settlement date, the Company will either receive a payment (interest rate drops on
purchased forwards or interest rate rises on sold forwards) or will be required to make a payment (interest rate rises on
purchased forwards or interest rate drops on sold forwards). The Company also uses currency forward contracts to hedge
policyholder liabilities in variable annuity contracts which are linked to foreign indexes. The currency fluctuations 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.

Futures: Futures contracts are used to hedge against a decrease in certain equity indices. Such decreases 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. Futures contracts are also used to hedge against an increase in certain equity
indices. Such increases may result in increased payments to contract holders of fixed indexed annuity contracts, and the futures
income would serve to offset this increased expense.


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)




Options: Call options are used to hedge against an increase in the various equity indices. Such increase may result in increased payments to contract holders of fixed indexed annuity contracts, and the options offset this increased expense.


Embedded derivatives: The Company invests in certain fixed maturities and has issued certain annuity products, that contain embedded derivatives whose fair value is at least partially determined by levels of or changes in domestic and/or foreign interest rates (short-term or long-term), exchange rates, prepayment rates, equity markets, or credit ratings/spreads. Embedded derivatives within fixed maturities are included with the host contract on the Balance Sheets, and changes in fair value of the embedded derivatives are recorded in Other net realized capital gains (losses) in the Statements of Operations. Embedded derivatives within annuity products are included in Future policy benefits and claims reserves on the Balance Sheets, and changes in the fair value are recorded in Other net realized capital gains (losses) in the Statements of Operations.







In addition, the Company has entered into two coinsurance with funds withheld arrangements that contain embedded derivatives in which the fair value is based on the change in the fair value of the underlying assets held in trust. The embedded derivative within the coinsurance funds withheld arrangement is included in Funds held under reinsurance treaties with affiliates on the Balance Sheets, and changes in the fair value are recorded in Interest credited and other benefits to contract owners in the Statements of Operations.





The notional amounts and fair values of derivatives were as follows as of December 31, 2011 and 2010.


		2011			2010
	Notional Amount	Asset Fair Value	Liability Fair Value	Notional Amount	Asset Fair Value	Liability Fair Value
	Notional Amount	Asset Fair Value	Liability Fair Value	Notional Amount	Asset Fair Value	Liability Fair Value
Derivatives: Qualifying for hedge
accounting
Cash flow hedges:
Interest rate contracts	$ —	$ —	$ —	$ 6.5 $	0.5	$ —
Foreign exchange contracts	—	—	—	25.4	—	0.2
Fair value hedges:
Interest rate contracts	—	—	—	73.0	—	7.2
Derivatives: Non-Qualifying for hedge
accounting
Interest rate contracts	27,046.0	1,538.4	520.0	17,246.1	120.0	406.4
Foreign exchange contracts	1,297.8	9.7	42.4	908.4	5.1	41.9
Equity contracts	15,434.3	60.1	28.4	9,269.8	107.7	16.8
Credit contracts	143.4	0.9	14.1	333.8	3.2	14.5

Embedded derivatives:
Within fixed maturity investments	N/A	55.0	—	N/A	50.7	—
Within annuity products	N/A	—	3,512.1	N/A	—	1,655.7
Within reinsurance agreement	N/A	—	230.9	N/A	20.9	—
Total		$ 1,664.1	$ 4,347.9	$ 308.1		$ 2,142.7
N/A - Not applicable.

Net realized gains (losses) on derivatives were as follows for the years ended December 31, 2011, 2010, and 2009.




57


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)






	2011	2010	2009
Derivatives: Qualifying for hedge accounting⁽¹⁾
Cash flow hedges:
Interest rate contracts	$ — $	— $	—
Fair value hedges:
Interest rate contracts	—	(3.3)	(1.8)
Derivatives: Non-Qualifying for hedge accounting⁽¹⁾
Interest rate contracts	1,300.8	38.5	(126.0)
Foreign exchange contracts	(5.8)	9.3	(38.2)
Equity contracts	(548.2)	(853.4)	(2,070.4)
Credit contracts	(2.4)	1.0	(12.9)

Embedded derivatives:
Within fixed maturity investments	4.3	12.3	(57.8)
Within annuity products	(1,699.1)	(111.9)	1,128.5
Within reinsurance agreement	(251.8)	(17.8)	38.7
Total	$ (1,202.2) $	(925.3) $	(1,139.9)
⁽¹⁾Changes in value for effective fair value hedges are recorded in Other net realized capital gains (losses). Changes in fair value upon disposal for effective cash flow hedges are recorded in Other net realized capital gains (losses) in the Statements of Operations.


Credit Default Swaps

The Company has entered into various credit default swaps. When credit default swaps are sold, the Company assumes credit exposure to certain assets that it does not own. Credit default swaps may also be purchased to reduce credit exposure in the Company's portfolio. 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 has International Swaps and Derivatives Association, Inc. (“ISDA”) agreements with each counterparty with which it conducts business and tracks the collateral positions for each counterparty. To the extent cash collateral is received, it is included in Payables under securities loan agreement, including collateral held, on the Balance Sheets and is reinvested in short-term investments. Collateral held is used in accordance with the Credit Support Annex (“CSA”) to satisfy any obligations. Investment grade bonds owned by the Company are the source of noncash collateral posted, which is reported in Securities pledged on the Balance Sheets. 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 par minus recovery value of the swap contract. At December 31, 2011, the fair value of credit default swaps of $0.9 and $14.1 was included in Derivatives and Other liabilities, respectively, on the Balance Sheets. At December 31, 2010, the fair value of credit default swaps of $3.2 and $14.5 was included in Derivatives and Other liabilities, respectively, on the Balance Sheets. As of December 31, 2011 and 2010, the maximum potential future exposure to the Company on the sale of credit protection under credit default swaps was $108.8 and $308.1, respectively.




















58


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





4.	Deferred Policy Acquisition Costs and Value of Business Acquired

Beginning in the first quarter of 2011, the Company implemented a reversion to the mean technique of estimating its short-term equity market return assumptions. This change in estimate was applied prospectively in first quarter 2011. The reversion to the mean technique is a common industry practice in which DAC and VOBA unlocking for short-term equity returns only occurs if equity market performance falls outside established parameters.




Activity within DAC was as follows for the years ended December 31, 2011, 2010, and 2009.

		2011	2010	2009
Balance at January 1		$ 2,758.9	$ 3,322.4	$ 3,551.5
	Deferrals of commissions and expenses	126.8	171.1	335.2
	Amortization:
	Amortization	742.6	(570.8)	614.3
	Interest accrued at 2% to 7%	169.1	177.2	190.1
	Net amortization included in the
	Statements of Operations	911.7	(393.6)	804.4
	Change in unrealized capital gains/losses on available-for-sale
	securities	(470.9)	(341.0)	(1,368.7)
Balance at December 31		$ 3,326.5	$ 2,758.9	$ 3,322.4

Activity within VOBA was as follows for the years ended December 31, 2011, 2010, and 2009.

		2011	2010	2009
Balance at January 1		$ 66.5	$ 113.2	$ 163.4
	Amortization:
	Amortization	(11.0)	(28.6)	0.2
	Interest accrued at 2% to 7%	3.7	3.9	4.3
	Net amortization included in the
	Statements of Operations	(7.3)	(24.7)	4.5
	Change in unrealized capital gains/losses on available-for-sale
	securities	(13.1)	(22.0)	(54.7)
Balance at December 31		$ 46.1	$ 66.5	$ 113.2

The estimated amount of VOBA amortization expense, net of interest, is $13.2, $10.9, $10.4, $9.5 and $8.7, for the years 2012, 2013, 2014, 2015, and 2016, respectively. Actual amortization incurred during these years may vary as assumptions are modified to incorporate actual results.






59


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





6.	Capital Contributions, Dividends and Statutory Information

The Company's ability to pay dividends to its parent is subject to the prior approval of the State of Iowa Insurance Division (the “Division”) for payment of any dividend, which, when combined with other dividends paid within the preceding twelve months, exceeds the greater of (1) ten percent (10.0%) of the Company's earned statutory surplus at the prior year end or (2) the Company's prior year statutory net gain from operations. Iowa law also prohibits an Iowa insurer from declaring or paying a dividend except out of its earned surplus unless prior insurance regulatory approval is obtained.





During 2011, 2010, and 2009, the Company did not pay any dividends or return of capital distributions to its Parent.

During the year ended December 31, 2011 and 2010, the Company received $44.0 and $749.0, respectively, in capital contributions from its Parent. On February 24, 2009, $2.2 billion was contributed to the direct and indirect insurance company subsidiaries of ING AIH, of which $835.0 was contributed to the Company. The contribution was comprised of the proceeds from the investment by the Dutch State and the redistribution of currently existing capital within ING.




The Division recognizes as net income and capital and surplus those amounts determined in conformity with statutory accounting practices prescribed or permitted by the Division, which differ in certain respects from accounting principles generally accepted in the United States. Statutory net income (loss) was $386.0, $(384.4), and $(638.3), for the years ended December 31, 2011, 2010, and 2009, respectively. Statutory capital and surplus was $2.2 billion and $1.7 billion as of December 31, 2011 and 2010, respectively.





The December 2011 variable annuity assumption changes undertaken by the Company resulted in an increase in gross statutory reserves with respect to variable annuity guaranteed living benefits which are ceded to SLDI under an automatic reinsurance agreement between the Company and SLDI. SLDI's increased credit for reinsurance obligations with respect to the increase in ceded statutory reserves is supported in part by a $1.5 billion unconditional and irrevocable letter of credit issued by ING Bank N.V. on December 31, 2011, which matures on December 31, 2031. The letter of credit was issued pursuant to a Contingent Capital Letter of Credit Facility Agreement between ING Bank and SLDI and is not confirmed by a qualifying US financial institution recognized by the NAIC SVO (“unconfirmed”). The Division allowed the Company to accept the unconfirmed letter of credit and take reserve credit for the letter of credit with respect to the variable annuity guaranteed living benefits ceded under the reinsurance agreement between the Company and SLDI and it is not a permitted practice.









During the period from December 31, 2008 through July 1, 2010, due to the reduction in liquidity and the limited availability of Letter of Credit US confirming banks, the Division also allowed the Company to accept and take statutory reserve credit for unconfirmed letters of credit issued by ING Bank N.V. in amounts up to $320.0 with respect to the variable annuity guaranteed living benefits ceded under the reinsurance agreement between the Company and SLDI. Approval of the Company's reserve credit related to unconfirmed letters of credit was undertaken by the Division pursuant to authority granted under Iowa's credit for reinsurance regulation and was not a permitted practice.






Effective December 31, 2009, the Company adopted Actuarial Guideline 43 - Variable Annuity Commissioners Annuity Reserve Valuation Method (“AG43”) for its statutory basis of accounting. Where the application of AG43 produces higher reserves than the Company had otherwise established under previous standards, the Company may request permission from the Division to grade-in the impact of higher reserve over a three year period. During 2009, the Company elected this grade-in provision as allowed under AG43 and as approved by the Division. The impact of the grade-in for the year ended December 31, 2009 was an increase in reserves and a corresponding decrease in statutory surplus of $79.2. Since the AG43 reserves as of December 31, 2010 were lower than reserves established under previous standards, the Company did not elect the grade in provision. The full impact of adopting AG43 as of December 31, 2010 was an increase in reserves of $24.9.











61

Effective December 31, 2009, the Company adopted SSAP No. 10R, Income Taxes, for its statutory basis of accounting. This
statement requires the Company to calculate admitted deferred tax assets based upon what is expected to reverse within one
year with a cap on the admitted portion of the deferred tax asset of 10% of capital and surplus for its most recently filed
statement. If the Company's risk-based capital (“RBC”) levels, after reflecting the above limitation, exceeds 250% of the
authorized control level, the statement increases the limitation on admitted deferred tax assets from what is expected to reverse
in one year to what is expected to reverse over the next three years and increases the cap on the admitted portion of the deferred
tax asset from 10% of capital and surplus for its most recently filed statement to 15%. Other revisions in the statement include
requiring the Company to reduce the gross deferred tax asset by a statutory valuation allowance adjustment if, based on the
weight of available evidence, it is more likely than not (a likelihood of more than 50%) that some portion of or all of the gross
deferred tax assets will not be realized. To temper this positive RBC impact, and as a temporary measure at December 31,
2009 only, a 5% pre-tax RBC charge was required to be applied to the additional admitted deferred tax assets generated by
SSAP 10R. The adoption for 2009 had a December 31, 2009 sunset; however, during 2010, the 2009 adoption, including the
5% pre-tax RBC charge, was extended through December 31, 2011. The effects on the Company's statutory financial
statements of adopting this change in accounting principle were increases to total assets and capital and surplus of $86.5 and
$70.4 as of December 31, 2011 and 2010, respectively. This adoption had no impact on total liabilities or net income.


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





7. Additional Insurance Benefits and Minimum Guarantees

Under the requirements of ASC Topic 944, the Company calculates reserve liabilities for certain guaranteed benefits and for universal life products with certain patterns of cost of insurance charges and certain other fees.


The following assumptions and methodology were used to determine the guaranteed minimum death benefits (“GMDB”), guaranteed minimum income benefits (“GMIB”), guaranteed minimum withdrawal benefit with life payouts (“GMWBL”), guaranteed minimum accumulation benefits (“GMAB”) and guarantee minimum withdrawal benefits without lifetime guarantees (“GMWB”) additional reserves at December 31, 2011.





Area		2011 Assumptions/Basis for Assumptions
Data used		Based on 1,000 investment performance scenarios

Mean investment performance		GMDB: The mean investment performance varies by fund group. In general we group all separate account returns into 6 fund groups, and generate stochastic returns for each of these fund groups. The overall mean separate account return is 8.125%. The general account fixed portion is a small percentage of the overall total.




		GMIB: 8.125% based on a single fund group.

		GMAB / GMWB / GMWBL: Zero rate curve

Volatility		GMDB: 15.76%

		GMIB: 16.53%GMAB / GMWB / GMWBL: Implied volatilities through the 5-year tenor and
		then a blend of implied and historical thereafter.


Mortality		Depending on the type of benefit and gender, the Company uses Annuity 2011 Basic Table
		constructed by improving the Annuity 2000 basic table using Modified Projection Scale G
		with 11 years of improvement. Table multipliers were derived by comparing 2006 - 2010
		mortality experience to base table mortality. Multipliers grade to 100% on a straight line from
		age 80 to 100.

		A mortality margin was reflected in GMAB / GMWB / GMWBL fair value reserves.

Lapse rates		Vary by contract type, share class, time remaining in the surrender charge period and in-the-
		moneyness. A lapse margin was reflected in the GMAB / GMWB / GMWBL fair value
		reserves.

Discount rates		GMDB / GMIB: 5.5% based on management's best estimate of the long term credited rate of
		return.

		GMAB / GMWB / GMWBL: Zero rate curve plus adjustment for nonperformance risk;
		nonperformance risk varies between 0.95% and 1.65% based on term structure.

The Company completed its annual review of actuarial assumptions for its variable annuity block of business in the fourth quarter of 2011, and updated the assumptions used in determining the future policy benefit reserves for its variable annuity products. The assumptions for its variable annuity block were updated for lapses, mortality, annuitization and utilization rates, with the most significant revision coming from the adjustment of lapse assumptions. The assumption changes resulted in an increase in gross reserves as of December 31, 2011 of approximately $731.4, a portion of which is covered under various reinsurance agreements with SLDI or other third party reinsurers. As of December 31, 2011, the increase in reserves, net of reinsurance, was $411.4.







The calculation of the GMIB and GMWBL liabilities assumes dynamic surrenders and dynamic utilization of the guaranteed benefit reserves.



63


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)




The separate account liabilities subject to the requirements for additional reserve liabilities under ASC Topic 944 for minimum guaranteed benefits, and the additional liabilities recognized related to minimum guarantees, by type, as of December 31, 2011 and 2010, and the paid and incurred amounts by type for the years ended December 31, 2011 and 2010, were as follows:




	Guaranteed Minimum Death Benefit (GMDB)	Guaranteed Minimum Accumulation/ Withdrawal Benefit (GMAB/GMWB)	Guaranteed Minimum Income Benefit (GMIB)	Guaranteed Withdrawal For Life Benefit (GMWBL)






Separate account liability at December 31, 2011	$ 39,356.9	$ 1,105.9	$ —	$ —
Separate account liability at December 31, 2010	$ 44,413.3	$ 1,442.6	$ —	$ —

Additional liability balance:
Balance at January 1, 2010	$ 477.6	$ 73.9	$ —	$ 258.4
Incurred guaranteed benefits	21.4	13.8	—	(40.9)
Paid guaranteed benefits	(125.1)	(10.7)	—	—
Balance at December 31, 2010	$ 373.9	$ 77.0	$ —	$ 217.5
Incurred guaranteed benefits	246.7	40.1	—	1,520.6
Paid guaranteed benefits	(110.3)	(2.2)	—	—
Balance at December 31, 2011	$ 510.3	$ 114.9	$ —	$ 1,738.1

The net amount at risk, net of reinsurance, and the weighted average attained age of contract owners by type of minimum guaranteed benefit, were as follows as of December 31, 2011 and 2010.



	Guaranteed Minimum Death Benefit (GMDB)	Guaranteed Minimum Accumulation/ Withdrawal Benefit (GMAB/GMWB)	Guaranteed Minimum Income Benefit (GMIB)	Guaranteed Withdrawal For Life Benefit (GMWBL)





2011
Net amount at risk, net of reinsurance	$ 8,699.0	$ 63.2	$ —	$ —
Weighted average attained age	68.0	62.0	—	—
2010
Net amount at risk, net of reinsurance	$ 6,918.5	$ 52.4	$ —	$ —
Weighted average attained age	67.0	62.0	—	—

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, 2011 and 2010 was $39.4 billion and $44.4 billion, respectively.






64


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





8.	Income Taxes

Income tax expense (benefit) consisted of the following for the years ended December 31, 2011, 2010, and 2009.

		2011	2010	2009
Current tax expense (benefit):
	Federal	$ (195.8)	$ 622.9	$ (357.2)
	Total current tax expense (benefit)	(195.8)	622.9	(357.2)
Deferred tax expense (benefit):
	Federal	64.5	(665.0)	524.4
	Total deferred tax expense (benefit)	64.5	(665.0)	524.4
Total income tax expense (benefit)		$ (131.3)	$ (42.1)	$ 167.2

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, 2011, 2010, and 2009.


		2011	2010	2009
Income (loss) before income taxes		$ 20.8	$ 63.3	$ 736.6
Tax rate		35.0%	35.0%	35.0%
Income tax expense (benefit) at federal statutory rate		7.3	22.2	257.8
Tax effect of:
	Dividend received deduction	(30.3)	(75.9)	(53.7)
	Tax valuation allowance	(109.0)	64.0	(35.6)
	Audit settlement	3.3	(49.2)	0.1
	Tax credits	(2.0)	(3.5)	(1.0)
	Other	(0.6)	0.3	(0.4)
Income tax expense (benefit)		$ (131.3)	$ (42.1)	$ 167.2




65


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts 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, 2011 and 2010, are presented below.


	2011	2010
Deferred tax assets:
Future policy benefits	$ 1,003.3	$ 576.3
Goodwill	0.2	1.0
Investments	662.7	839.0
Employee compensation and benefits	50.7	43.2
Other	172.4	84.0
Total gross assets before valuation allowance	1,889.3	1,543.5
Less: valuation allowance	(12.1)	(199.6)
Assets, net of valuation allowance	1,877.2	1,343.9
Deferred tax liabilities:
Deferred policy acquisition costs	(1,500.6)	(1,099.4)
Unrealized gains	(275.2)	(133.4)
Value of business acquired	(29.2)	(31.3)
Other	(33.6)	(50.1)
Total gross liabilities	(1,838.6)	(1,314.2)
Net deferred income tax asset	$ 38.6	$ 29.7

Valuation allowances are provided when it is considered more likely than not that deferred tax assets will not be realized. At December 31, 2011, the Company did not have a tax valuation allowance related to realized and unrealized capital losses. At December 31, 2010, the Company had a tax valuation allowance of $187.5 related to realized and unrealized capital losses. As of December 31, 2011 and 2010, the Company had a full tax valuation allowance of $12.1 related to foreign tax credits, the benefit of which is uncertain. The change in net unrealized capital gains (losses) includes an increase (decrease) in the tax valuation allowance of $(79.0), $(173.0), and $(64.7), for the years ended December 31, 2011, 2010, and 2009, respectively.






*Tax Sharing Agreement*

The Company had a receivable from ING AIH of $204.0 at December 31, 2011 and a payable to ING AIH of $79.2 at December 31, 2010, for federal income taxes under the intercompany tax sharing agreement.


The results of the Company's operations are included in the consolidated tax return of ING AIH. Generally, the Company's financial statements recognize the current and deferred income tax consequences that result from the Company's activities during the current and preceding periods pursuant to the provisions of Income Taxes (ASC 740) as if the Company were a separate taxpayer rather than a member of ING AIH's consolidated income tax return group with the exception of any net operating loss carryforwards and capital loss carryforwards, which are recorded pursuant to the tax sharing agreement. The Company's tax sharing agreement with ING AIH states that for each taxable year during which the Company is included in a consolidated federal income tax return with ING AIH will pay to the Company an amount equal to the tax benefit of the Company's net operating loss carryforwards and capital loss carryforwards generated in such year, without regard to whether such net operating loss carryforwards and capital loss carryforwards are actually utilized in the reduction of the consolidated federal income tax liability for any consolidated taxable year.













66


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)




*Unrecognized Tax Benefits*

Reconciliations of the change in the unrecognized income tax benefits for the years ended December 31, 2011 and 2010 are as follows:


	2011	2010
Balance at beginning of period	$ 28.0	$ 60.3
Additions for tax positions related to prior years	6.1	28.0
Reductions for tax positions related to prior years	(6.1)	(60.2)
Reductions for settlements with taxing authorities	(25.3)	(0.1)
Balance at end of period	$ 2.7	$ 28.0

The Company had $2.7 of unrecognized tax benefits as of December 31, 2011 and 2010, 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 Balance Sheets and Statements of Operations, respectively. The Company had no accrued interest for the years ended December 31, 2011 and 2010. The decrease during the tax period ended December 31, 2011 is primarily related to the settlement of the 2009 federal audit.




*Tax Regulatory Matters*

In March 2011, the IRS completed its examination of the Company's returns through tax year 2009. In the provision for the year ended December 31, 2011, the Company reflected an increase in its tax expense based on the results of the IRS examination and monitoring the activities of the IRS with respect to certain issues with other taxpayers and the merits of the Company's position.




The Company is currently under audit by the IRS for tax years 2010 through 2012 and it is expected that the examination of tax year 2010 will be finalized within the next twelve months. The timing of the payment (if any) of the remaining allowance of $2.7 cannot be reliably estimated. The Company and the IRS have agreed to participate in the Compliance Assurance Program (“CAP”) for the tax years 2010 through 2012.







67


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)




9.	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. The Retirement Plan was amended and restated effective January 1, 2008. The Retirement Plan was also amended on July 1, 2008, related to the admission of 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 Retirement Plan, but has not yet received a favorable determination letter. Additionally, 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 Retirement Plan.








Beginning January 1, 2012, the Retirement Plan will use a cash balance pension formula instead of a final average pay (“FAP”) formula, allowing all eligible employees to participate in the Retirement Plan. Participants will earn an annual credit equal to 4% of eligible pay. Interest is credited monthly based on a 30-year U.S. Treasury securities bond rate published by the Internal Revenue Service in the preceding August of each year. The accrued vested cash balance benefit is portable; participants can take it when they leave the Company's employ. For participants in the Retirement Plan as of December 31, 2011, there will be a two-year transition period from the Retirement Plan's current FAP formula to the cash balance pension formula. Due to ASC Topic 715 requirements, the accounting impact of the change in the Retirement Plan was recognized upon Board approval November 10, 2011. This change had no material impact on the financial statements.








The Retirement Plan is a tax-qualified defined benefit plan, the benefits of which are guaranteed (within certain specified legal limits) by the Pension Benefit Guaranty Corporation (“PBGC”). As of January 1, 2002, each participant in the Retirement Plan (except for certain specified employees) earns a benefit under a FAP 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 $11.5, $11.0, and $15.7, for the years ended 2011, 2010, and 2009, respectively, and are included in Operating expenses in the 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) are eligible to participate, including the Company's employees other than Company agents. 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 January 1, 2008 and subsequently amended on July 1, 2008, with respect to the admission of employees from the acquisition of CitiStreet by Lion. The Savings Plan was amended effective January 1, 2011, to permit Roth 401(k) contributions to be made to the Plan. ING North America filed a request for a determination letter on the qualified status of the Plan and received a favorable determination letter dated May 19, 2009. 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 6.0% 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. The cost allocated to the Company for the Savings Plan were $3.3, $2.4, and $4.2, for the years ended December 31, 2011, 2010, and 2009, respectively, and are included in Operating expenses in the 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”). 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.







68


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)




Effective December 31, 2011, the Supplemental Executive Retirement Plan was amended to coordinate with the amendment of the Retirement Plan from its current final average pay formula to a cash balance formula.


The SERPs are non-qualified defined benefit pension plans, which means all the SERPs benefits are payable from the general assets of the Company. These non-qualified defined benefit pension plans are not guaranteed by the PBGC.


Obligations and Funded Status

The following table summarizes the benefit obligations, fair value of plan assets, and funded status, for the SERPs for the years ended December 31, 2011 and 2010.


	2011	2010
Change in Projected Benefit Obligation:
Projected benefit obligation, January 1	$ 25.5	$ 25.9
Interest cost	1.3	1.5
Benefits paid	(1.1)	(1.2)
Actuarial gain on obligation	(0.2)	(0.6)
Plan adjustments	(0.3)	—
Curtailment or settlement	—	(0.1)
Projected benefit obligation, December 31	$ 25.2	$ 25.5
Fair Value of Plan Assets:
Fair value of plan assets, December 31	$ —	$ —

Amounts recognized in the Balance Sheets consist of:

	2011	2010
Accrued benefit cost	$ (25.2)	$ (25.5)
Accumulated other comprehensive income	(0.3)	—
Net amount recognized	$ (25.5)	$ (25.5)

Assumptions

The weighted-average assumptions used in the measurement of the December 31, 2011 and 2010, benefit obligation for the SERPs were as follows:


	2011	2010
Discount rate at end of period	4.75%	5.50%
Rate of compensation increase	3.00%	3.00%

In determining the discount rate assumption, the Company utilizes current market information provided by its plan actuaries, 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 SERP. Based upon all available information, it was determined that 4.75% was the appropriate discount rate as of December 31, 2011, to calculate the Company's accrued benefit liability.







69


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





The weighted-average assumptions used in calculating the net pension cost were as follows:


	2011	2010	2009
Discount rate	5.50%	6.00%	6.00%
Rate of increase in compensation levels	3.00%	3.00%	1.50%

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 for the years ended December 31, 2011, 2010, and 2009, were as follows:


	2011	2010	2009
Interest cost	$ 1.3	$ 1.5	$ 1.3
Net actuarial loss recognized in the year	(0.2)	(0.8)	4.1
Net periodic benefit cost	$ 1.1	$ 0.7	$ 5.4

Cash Flows

In 2012, the employer is expected to contribute $1.5 to the SERPs. Future expected benefit payments related to the SERPs for the years ended December 31, 2012 through 2016, and thereafter through 2021, are estimated to be $1.5, $1.6, $1.6, $1.6, $1.6 and $8.3, respectively.



*Stock Option and Share Plans*

Through 2010, ING sponsored the ING Group Long-Term Equity Ownership Plan (“leo”), which provides employees of the Company who are selected by the ING Executive Board with 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.



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 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.














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 immediate vesting will








70

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.

Commencing in 2011, ING introduced a new long-term equity and deferred bonus plan, the Long-Term Sustainable
Performance Plan (“LSPP”). The terms applicable to an award under the LSPP will be set out in a grant agreement which is
signed by the participant when he or she accepts the award. The LSPP will provide employees of the Company who are
selected by the ING Executive Board with performance shares and will also require deferral of discretionary incentive bonus
awards in excess of EUR 100,000. The performance shares awarded under the LSPP will be a contingent grant of ING ADR
units and on settlement, the participant will have the right to either receive ING ADR units in kind or a cash amount equal to
the closing price per ING share on the Euronext Amsterdam Stock Market on the settlement date times the number of vested
ADR units, subject to achievement during the vesting period of performance targets based on return of equity and employee
engagement. The excess bonus amount will be held in deferred ING ADR units or in a deferred cash account, or some
combination thereof, depending on the total amount of the incentive bonus award, generally subject to vesting in three equal
tranches over the three year period commencing on the date of incentive bonus payment. Unlike the leo plan, no options on
ING shares in the form of ADRs will be granted under the LSPP. To vest in performance shares, deferred shares or deferred
cash, an employee must generally be actively employed on the settlement date, although immediate full and partial vesting in
the event of normal age or early retirement, death or disability, or termination due to redundancy or business divestiture will
occur, similar to the vesting treatment in the leo plan.

The Company was allocated from ING compensation expense for the leo options, leo performance shares and LSPP of $4.2,
$2.6, and $4.5, for the years ended December 31, 2011, 2010, and 2009, respectively, primarily related to leo.

For leo, the Company recognized minimal tax benefits in 2011, 2010, and 2009.

Other Benefit Plans

In addition to providing retirement plan benefits, the Company, in conjunction with ING North America, provides certain
supplemental retirement benefits to eligible employees and health care and life insurance benefits to retired employees and
other eligible dependents. The supplemental retirement plan includes a non-qualified defined benefit pension plan and a non-
qualified defined contribution plan, which means all benefits are payable from the general assets of the Company. The post-
retirement health care plan is contributory, with retiree contribution levels adjusted annually and the Company subsidizes a
portion of the monthly per-participant premium. Beginning August 1, 2009, the Company moved from self-insuring its
supplemental health care costs and began to use a private-fee-for-service Medicare Advantage program for post-Medicare
eligible retired participants. In addition, effective October 1, 2009, the Company no longer subsidizes medical premium costs
for early retirees. This change does not impact any participant currently retired and receiving coverage under the plan or any
employee who is eligible for coverage under the plan and whose employment ended before October 1, 2009. The Company
continues to offer access to medical coverage until retirees become eligible for Medicare. The life insurance plan provides a
flat amount of noncontributory coverage and optional contributory coverage. The ING Americas Deferred Compensation
Savings Plan is a deferred compensation plan that includes a 401(k) excess component. The benefits charges allocated to the
Company related to all of these plans for the years ended December 31, 2011, 2010, and 2009, were $3.4, $2.1, and $5.8,
respectively.


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





10.	Related Party Transactions

*Operating Agreements*

The Company has certain agreements whereby it generates revenues and incurs expenses with affiliated entities. The agreements are as follows:


ª	Underwriting and distribution agreement with Directed Services LLC (“DSL”) (successor by merger to Directed Services, Inc.), an affiliated broker-dealer, whereby DSL serves as the principal underwriter for variable insurance products issued by the Company. DSL is authorized to enter into agreements with broker-dealers to distribute the Company's variable products and appoint representatives of the broker-dealers as agents. For the years ended December 31, 2011, 2010, and 2009, commissions were incurred in the amounts of $201.1, $204.3, and $268.0, respectively.





ª	Asset management agreement with ING Investment Management LLC (“IIM”), an affiliate, in which IIM provides asset management, administration, and accounting services for ING USA's general account. The Company records a fee, which is paid quarterly, based on the value of the assets under management. For the years ended December 31, 2011, 2010, and 2009, expenses were incurred in the amounts of $56.2, $49.0, and $51.0, respectively.



ª	Intercompany agreement with DSL pursuant to which DSL agreed, effective January 1, 2010, to pay the Company, on a monthly basis, a portion of the revenues DSL earns as investment adviser to certain U.S. registered investment companies that are investment options under certain of the Company's variable insurance products. For the years ended December 31, 2011 and 2010, revenue under the DSL intercompany agreement was $143.4 and $146.9, respectively. Prior to January 1, 2010, the Company was a party to a service agreement with DSL pursuant to which the Company provided managerial and supervisory services to DSL and earned a fee. This service agreement was terminated as of January 1, 2010. For the year ended December 31, 2009, revenue for these services was $123.2.






ª	Intercompany agreement with IIM pursuant to which IIM agreed, effective January 1, 2010, to pay the Company, on a monthly basis, a portion of the revenues IIM earns as investment adviser to certain U.S. registered investment companies that are investment options under certain of the Company's variable insurance products. For the years ended December 31, 2011 and 2010, revenue under the IIM intercompany agreement was $35.3 and $32.0, respectively.




ª	Services agreements with ING North America, dated September 1, 2000 and January 1, 2001, respectively, for administrative, management, financial, information technology, and finance and treasury services. For the years ended December 31, 2011, 2010, and 2009, expenses were incurred in the amounts of $110.3, $91.6, and $77.1, respectively. Effective October 1, 2010, the services agreement with ING North America dated January 1, 2001, was amended in order for the Company to provide ING North America with use of the corporate office facility at 5780 Powers Ferry Road, N.W., Atlanta, GA (the “Atlanta Office”) in exchange for ING North America's payment of the Company's direct and indirect costs for the Atlanta Office.






ª	Services agreement between the Company and its U.S. insurance company affiliates dated January 1, 2001, amended effective January 1, 2002 and December 31, 2007, for administrative, management, professional, advisory, consulting, and other services. For the years ended December 31, 2011, 2010, and 2009, expenses related to the agreements were incurred in the amount of $14.0 $31.0, and $26.3, respectively.



ª	Administrative Services Agreement between the Company, ReliaStar Life Insurance Company of New York (“RLNY”), an affiliate, and other U.S. insurance company affiliates dated March 1, 2003, amended effective August 1, 2004, in which the Company and affiliates provide services to RLNY. For the years ended December 31, 2011, 2010, and 2009, revenue related to the agreement was $3.1, $2.1, and $3.1, respectively.



ª	ING Advisors Network, a group of broker-dealers formerly affiliated with the Company, distributed the Company's annuity products. For the years ended December 31, 2010, and 2009, ING Advisors Network sold new contracts of $117.5, and $442.2, respectively. Certain of these affiliated broker-dealers were sold to Lightyear Capital LLC effective February 1, 2010.



ª	Services agreement between the Company, Security Life of Denver Insurance Company (“SLD”), an affiliate, and IIM whereby IIM provides administrative, management, professional, advisory, consulting and other services to the Company and SLD with respect to its Financial Products unit. For the years ended December 31, 2011, 2010, and 2009, the Company incurred expenses of $3.6, $4.8, and $7.6, respectively.







72

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. Revenues and expenses recorded as a result of
transactions and agreements with affiliates may not be the same as those incurred if the Company was not a wholly owned
subsidiary of its Parent.

Reinsurance Agreements

Reinsurance Ceded

Waiver of Premium - Coinsurance Funds Withheld

Effective October 1, 2010, the Company entered into a coinsurance funds withheld agreement with its affiliate, Security Life of
Denver International Limited (“SLDI”). Under the terms of the agreement, the Company ceded to SLDI 100% of the group life
waiver of premium liability (except for groups covered under rate credit agreements) assumed from ReliaStar Life Insurance
Company (“RLI”), an affiliate, related to the Group Annual Term Coinsurance Funds Withheld agreement between the
Company and RLI described under “Reinsurance Assumed” below.

Upon inception of the agreement, the Company paid SLDI a premium of $245.6. At the same time, the Company established a
funds withheld liability for $188.5 to SLDI and SLDI purchased a $65.0 letter of credit to support the ceded Statutory reserves
of $245.6. In addition, the Company recognized a gain of $17.9 based on the difference between the premium paid and the
ceded U.S. GAAP reserves of $227.7, which offsets the $57.1 ceding allowance paid by SLDI. The ceding allowance will be
amortized over the life of the business.

As of December 31, 2011 and 2010, the value of the funds withheld liability under this agreement was $190.7 and $191.3,
which is included in Funds held under reinsurance treaties with affiliates on the Balance Sheets. In addition, as of December
31, 2011 and 2010, the Company had an embedded derivative under this agreement with a value of $(4.8) and $8.5,
respectively, which is recorded in Funds held under reinsurance treaties with affiliates on the Balance Sheets.

Group Term Life - Monthly Renewable Term

Effective June 30, 2009, the Company entered into a monthly renewable term (“MRT”) reinsurance agreement with Canada
Life Assurance Company (“Canada Life”), an unaffiliated Canadian insurance company. Under the terms of the agreement, the
Company ceded 90% of its net retained in-force block of group term life business and any new group term life business
assumed from RLI, an affiliate, to Canada Life. The coinsurance agreement is accounted for using the deposit method.
Effective October 1, 2010, the treaty was amended to discontinue ceding the group life waiver of premium business.

Guaranteed Living Benefit - Coinsurance and Coinsurance Funds Withheld

Effective June 30, 2008, the Company entered into an automatic reinsurance agreement with its affiliate, SLDI, covering 100%
of the benefits guaranteed under specific variable annuity guaranteed living benefit riders attached to certain variable annuity
contracts issued by the Company on or after January 1, 2000.

Also effective June 30, 2008, the Company entered into a services agreement with SLDI, under which the Company provides
certain actuarial risk modeling consulting services to SLDI with respect to hedge positions undertaken by SLDI in connection
with the reinsurance agreement. For the years ended December 31, 2011 and 2010, revenue related to the agreement was $12.4
and $11.9, respectively.

Effective July 1, 2009, the reinsurance agreement was amended and restated to change the reinsurance basis from coinsurance
to a combined coinsurance and coinsurance funds withheld basis. On July 31, 2009, SLDI transferred assets with a market
value of $3.2 billion to the Company, and the Company deposited those assets into a funds withheld trust account. As of
December 31, 2011, the assets on deposit in the trust account increased to $5.3 billion. The Company also established a
corresponding funds withheld liability to SLDI, which is included in Funds held under reinsurance treaties with affiliates on the
Balance Sheets. Funds held under reinsurance treaties with affiliates had a balance of $5.0 billion and $3.3 billion, at December
31, 2011 and 2010, respectively. In addition, as of December 31, 2011 and 2010, the Company had an embedded derivative

with a value of $235.7 and $(29.4), respectively, which is recorded in Funds held under reinsurance treaties with affiliates on
the Balance Sheets.

Effective October 1, 2011, the Company and SLDI entered into an amended and restated automatic reinsurance agreement in
order to provide more flexibility to the Company and SLDI with respect to the collateralization of the reserves related to the
variable annuity guaranteed living benefits reinsured under the agreement.

Also effective July 1, 2009, the Company and SLDI entered into an asset management services agreement, under which SLDI
serves as asset manager for the funds withheld account. SLDI has retained its affiliate, ING Investment Management LLC, as
subadviser for the funds withheld account.

At December 31, 2011 and 2010, the value of reserves ceded by the Company under this agreement was $1.9 billion and $1.0
billion, respectively. In addition, a deferred loss in the amount of $365.3 and $365.0 at December 31, 2011 and 2010,
respectively, is included in Other assets on the Balance Sheets and is amortized over the reinsurance period of benefit.

Multi-year Guaranteed Fixed Annuity - Coinsurance

Effective May 1, 2005, the Company entered into a coinsurance agreement with its affiliate, Security Life of Denver Insurance
Company (“SLD”). Under the terms of the agreement, SLD assumed and accepted the responsibility for paying, when due,
100% of the liabilities arising under the multi-year guaranteed fixed annuity contracts issued by the Company between
January 1, 2001 and December 31, 2003. In addition, the Company assigned to SLD all future premiums received by the
Company attributable to the ceded contracts.

Under the terms of the agreement, the Company ceded $2.5 billion in account balances and transferred a ceding commission
and $2.7 billion in assets to SLD, resulting in a realized capital gain of $47.9 to the Company, which reduced the ceding
commission.

The coinsurance agreement is accounted for using the deposit method. As such, $2.7 billion of Deposit receivable from
affiliate was established on the Balance Sheets. The receivable will be adjusted over the life of the agreement based on cash
settlements and the experience of the contracts, as well as for amortization of the ceding commission. The Company incurred
amortization expense of the negative ceding commission of $7.2, $21.4, and $17.9, for the years ended December 31, 2011,
2010, and 2009, respectively, which is recorded in Other expenses in the Statements of Operations.

Universal Life - Coinsurance

Effective January 1, 2000, the Company entered into a 100% coinsurance agreement with its affiliate, SLD, covering certain
universal life policies which had been issued and in force as of, as well as any such policies issued after, the effective date of
the agreement. As of December 31, 2011 and 2010, the value of reserves ceded by the Company under this agreement was
$18.7 and $18.1, respectively.

Guaranteed Investment Contract - Coinsurance

Effective August 20, 1999, the Company entered into a Facultative Coinsurance Agreement with its affiliate, SLD. Under the
terms of the agreement, the Company facultatively cedes to SLD, from time to time, certain GICs on a 100% coinsurance basis.
The Company utilizes this reinsurance facility primarily for diversification and asset-liability management purposes in
connection with this business, which is facilitated by the fact that SLD is also a major GIC issuer. Senior management of
the Company has established a current maximum of $4.0 billion for GIC reserves ceded under this agreement.

The value of GIC reserves ceded by the Company under this agreement was $121.4 and $40.0 at December 31, 2011 and 2010,
respectively.

Reinsurance Assumed

Level Premium Term Life Insurance - Stop-loss


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





Effective October 1, 2010, the Company entered into a stop-loss agreement with its affiliate, RLI under which the Company agreed to indemnify and reinsure RLI for the aggregate mortality risk under certain level premium term life insurance policies issued by RLI between January 1, 2009 and December 31, 2009 and certain level premium term life insurance policies assumed by RLI from ReliaStar Life Insurance Company of New York under an Automatic Coinsurance Agreement effective March 1, 2008. Under the terms of the agreement, the Company will make benefit payments to RLI equal to the amount of claims in excess of the attachment point (equal to a percentage of net reinsurance premium) up to the maximum fully covered benefit.






There was no initial consideration received by the Company from RLI under this agreement. The Company receives monthly premiums, net of benefit payments, based on premium rates set forth in the respective agreements. As such, there is no unearned reinsurance premium.



The stop-loss agreement is accounted for using the deposit method. A fee receivable from affiliate of $0.9 is included in Future policy benefits and claims reserves on the Balance Sheets. The fee is accrued for and subsequently settled in cash each quarterly accounting period.



Individual Life - Yearly Renewable Term

Effective December 1, 2008 and December 31, 2008, respectively, the Company entered into two yearly renewable term reinsurance agreements with its affiliate, RLI, for an indefinite duration. Under the terms of the agreements, the Company assumed 100% of RLI's mortality risk associated with the net amount at risk under specific life insurance policies, including:



ª	Individual life policies issued by RLI and previously assumed by RLI from ReliaStar Life Insurance Company of New York (“RLNY”), with policy dates prior to January 1, 2000, including certain term life, universal life, variable universal life, and whole life, insurance policies.


ª	In force individual life policies issued by RLI, where premiums are paid on the insured's behalf through payroll deduction and which were marketed by employee benefit brokers.


The Company received initial consideration of $3.9 from RLI. Thereafter, the Company receives monthly premiums, net of benefit payments, based on premium rates set forth in the respective agreements. As such, there is no unearned reinsurance premium.



As of December 31, 2011 and 2010, the value of the reserves assumed by the Company under these agreements was $9.4 and $9.6, respectively.


Group Annual Term - Coinsurance Funds Withheld

Effective December 31, 2008, the Company entered into a coinsurance funds withheld agreement with RLI for an indefinite duration. Under the terms of the agreement, the Company assumed 100% quota share of RLI's net retained liability under certain Employee Benefits Group Annual Term policies, including disability waiver of premium.



The initial premium of $219.9 was equal to the aggregate reserve assumed by the Company. Thereafter, premiums are equal to the total earned gross premiums collected by RLI from policyholders. RLI will retain all reinsurance premiums payable to the Company as funds withheld, as security for ceded liabilities and against which ceded losses will be offset. Monthly, the Company will receive or pay a net settlement. This agreement was amended and restated October 1, 2010 to better reflect the current investment environment and to modify the treatment of claims under certain policies under which claims are not paid in the form of a single lump sum; the underlying terms described above remained unchanged. (Please see also description of Waiver of Premium - Coinsurance Funds Withheld Agreement between the Company and SLDI under “Reinsurance Ceded” above).








As of December 31, 2011 and 2010, the value of the reserves assumed by the Company under this agreement was $453.1 and $465.5, respectively.





75


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





Group Life - Funds Withheld

Effective December 31, 2008, the Company entered into a funds withheld agreement with RLI pursuant to which the Company assumed 100% quota share of RLI's net retained liability under assumed group life reinsurance in-force. Effective January 1, 2010 and as a result of the sale of ING's U.S. Group Reinsurance business to Reinsurance Group of America, this agreement was terminated.




The initial premium of $60.0 for this agreement was equal to the net Statutory reserve assumed by the Company. Thereafter, premiums were equal to the total earned reinsurance premiums collected by RLI, less a ceding commission. RLI retained all reinsurance premiums payable to the Company as funds withheld, as security for ceded liabilities and against which ceded losses were offset. Net settlements were made on a monthly basis. In addition, the Company provided reserve credit (in the excess of the funds withheld balance) to RLI through either a cash deposit or letter of credit. As of December 31, 2011 and 2010, the Company did not have any reserves assumed under this agreement.






*Reciprocal Loan Agreement*

The Company 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 January 2004 and expires on January 14, 2014, either party can borrow from the other up to 3.0% of the Company's statutory net admitted assets, excluding Separate Accounts, as of the preceding December 31. Interest on any ING USA 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 borrowing 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, the Company did not incur interest expense for the year ended December 31, 2011 and 2010. The Company incurred interest expense of $0.4 for the year ended December 31, 2009. The Company earned interest income of $1.0, $1.2, and $1.7, for the years ended December 31, 2011, 2010, and 2009, respectively. Interest expense and income are included in Interest expense and Net investment income, respectively, on the Statements of Operations. At December 31, 2011 and 2010, the Company had an outstanding receivable of $535.9 and $593.6, respectively, with ING AIH under the reciprocal loan agreement.






*Total Return Swap*

During December 2010, the Company entered into a series of interest rate swaps with external counterparties. The Company also entered into a short-term mirror total return swap (“TRS”) transaction with ING V, its indirect parent company. The outstanding market value of the TRS was $11.6 at December 31, 2010. The TRS matured January 3, 2011.



*Long-term debt with Affiliates*

The Company issued a 30-year surplus note in the principal amount of $35.0 on December 8, 1999, to its affiliate, SLD, which matures on December 7, 2029. Interest is charged at an annual rate of 7.98%. Payment of the note and related accrued interest is subordinate to payments due to contract owners and claimant and beneficiary claims, as well as debts owed to all other classes of debtors, other than surplus note holders. Any payment of principal and/or interest made is subject to the prior approval of the Iowa Insurance Commissioner. Interest expense was $2.8 for each of the years ended December 31, 2011, 2010, and 2009, respectively.






On December 29, 2004, the Company issued surplus notes in the aggregate principal amount of $400.0 (the “Notes”), scheduled to mature on December 29, 2034, to its affiliates, ING Life Insurance and Annuity Company, RLI, and SLDI, in an offering that was exempt from the registration requirements of the Securities Act of 1933. The Notes bear 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 expense was $25.4 for each of the years ended December 31, 2011, 2010, and 2009, respectively.









76

Funding Agreement

On August 10, 2007, the Company issued an extendable funding agreement to its parent, Lion, upon receipt of a single deposit
in the amount of $500.0. To fund the purchase of the funding agreement, Lion issued a promissory note to its indirect parent
company, ING V, which has been guaranteed by Lion's immediate parent, ING AIH.

The funding agreement was scheduled to mature on August 10, 2012, however it was terminated on September 14, 2011, with
an early termination fee paid to the Company of $3.2.

Illiquid Assets Back-Up Facility

In the first quarter of 2009, ING reached an agreement, for itself and on behalf of certain ING affiliates including the Company,
with the Dutch State on the Illiquid Assets Back-Up Facility (the “Back-Up Facility”) covering 80% of ING's Alt-A RMBS.
Under the terms of the Back-Up Facility, a full credit risk transfer to the Dutch State was realized on 80% of ING's Alt-A
RMBS owned by ING Bank, FSB and ING affiliates within ING U.S. insurance with a book value of $36.0 billion, including
book value of $1.4 billion 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
participates in 80% of any results of the ING Alt-A RMBS portfolio. The risk transfer to the Dutch State took place at a
discount of approximately 10% of par value. In addition, under the Back-Up Facility, other fees were paid both by the
Company and the Dutch State. Each ING company participating in the ING-Dutch State Transaction, including the Company
remains the legal owner of 100% of its Alt-A RMBS portfolio and will remain exposed to 20% of any results on the portfolio.
The ING-Dutch State Transaction closed on March 31, 2009, with the affiliate participation conveyance and risk transfer to the
Dutch State described in the succeeding paragraph taking 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 entered into a participation agreement with its affiliates, ING Support Holding B.V. (“ING Support
Holding”) and ING pursuant to which the Company conveyed to ING Support Holding an 80% participation interest in its
Designated Securities Portfolio and will pay a periodic transaction fee, and received, 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 is obligated to pay certain periodic fees
and make certain periodic payments with respect to the Company's Designated Securities Portfolio, and ING Support Holding
is obligated to pay a periodic guarantee fee and make periodic payments to the Dutch State equal to the distributions made with
respect to the 80% participation interest in the Company's Designated Securities Portfolio. The Dutch-State payment obligation
to the Company under the Company Back-Up Facility is accounted for as a loan receivable for U.S. GAAP and is reported in
Loan-Dutch State obligation on the Balance Sheets.

Upon the closing of the transaction on March 31, 2009, the Company reduced the unrealized loss balance in Accumulated other
comprehensive loss included in Shareholder's equity by $411.3 and recognized a gain of $117.6, which was reported in Net
realized capital losses on the Statements of Operations.

In a second transaction, known as the Step 1 Cash Transfer, a portion of the Company's Alt-A RMBS which had a book value
of $18.9 was sold for cash to an affiliate, Lion II. Custom Investments LLC (“Lion II”). Immediately thereafter, Lion II sold to
ING Direct Bancorp the purchased securities (the “Step 2 Cash Transfer”). Contemporaneous with the Step 2 Cash Transfer,
ING Direct Bancorp included such purchased securities as part of its Alt-A RMBS portfolio sale to the Dutch State. The Step 1
Cash Transfer closed on March 31, 2009, and the Company recognized a gain of $7.9 contemporaneous with the closing of the
ING-Dutch State Transaction, which was reported in Net realized capital losses on the Statements of Operations.

As part of the final restructuring plan submitted to the EC in connection with its review of the Dutch state aid to ING, ING (the
“Restructuring Plan”), ING has agreed to make additional payments to the Dutch State corresponding to an adjustment of fees
for the Back-Up Facility. Under this new agreement, the terms of the ING-Dutch State Transaction which closed on March 31,
2009, including the transfer price of the Alt-A RMBS securities, remain unaltered and the additional payments are not borne by
the Company or any other ING U.S. subsidiaries.


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)




*Derivatives*

As of December 31, 2011 and 2010, the Company had call options with a notional amount of $382.2 and $382.6, respectively, and market value of $4.9 and $14.0, respectively, with ING Bank, an affiliate. Each of these contracts was entered into as a result of a competitive bid, which included unaffiliated counterparties.



11.	Reinsurance

At December 31, 2011, the Company had reinsurance treaties with 15 unaffiliated reinsurers covering a portion of the mortality risks and guaranteed death and living benefits under its annuity contracts. The Company, as cedant, also has reinsurance treaties with two affiliates, SLD and SLDI, related to GICs, fixed annuities, variable annuities, and universal life insurance policies. In addition, the Company assumed reinsurance risk under reinsurance treaties with its affiliate, RLI, related to certain life insurance policies and employee benefit group annual term policies. The Company remains liable to the extent its reinsurers do not meet their obligations under the reinsurance agreements.






Reinsurance ceded in force for life mortality risks were $147.7 billion and $170.4 billion at December 31, 2011 and 2010, respectively. At December 31, 2011 and 2010, net receivables were comprised of the following:


			2011	2010
Claims recoverable from reinsurers		$ 11.0		$ 14.4
Amounts due to reinsurers			(23.6)	(26.2)
Reinsurance reserves ceded			2,188.2	1,368.7
Deposits			1,377.6	1,600.4
Reinsurance receivable			498.1	508.6
Other			17.3	16.1
Total			$ 4,068.6	$ 3,482.0

Premiums and Interest credited and other benefits to contract owners were reduced by the following amounts for reinsurance ceded for the years ended December 31, 2011, 2010, and 2009.


		2011	2010	2009
Premiums:
Direct premiums		$ 16.9	$ 17.8	$ 20.0
Reinsurance assumed		478.4	522.8	768.6
Reinsurance ceded		(39.1)	(260.0)	(2.5)
Net premiums		$ 456.2	$ 280.6	$ 786.1

Also see Reinsurance Agreements in the Related Party Transactions note to these Financial Statements.




78


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





12.	Commitments and Contingent Liabilities

*Leases*

The Company leases its office space and certain equipment under operating leases, the longest term of which expires in 2017.

For the years ended December 31, 2011, 2010, and 2009, rent expense for leases was $7.7, $8.4, and $9.2, respectively. The future net minimum payments under noncancelable leases for the years ended December 31, 2011 through 2015 are estimated to be $7.0, $6.6, $6.7, $6.5, and $5.3, respectively, and $3.0, thereafter. The Company pays substantially all expenses associated with its leased and subleased office properties. Expenses not paid directly by the Company were paid for by an affiliate and allocated back to the Company.





*Commitments*

Through the normal course of investment operations, the Company commits to either purchase or sell securities, commercial mortgage loans, or money market instruments, at a specified future date and at a specified price or yield. The inability of counterparties to honor these commitments may result in either a higher or lower replacement cost. Also, there is likely to be a change in the value of the securities underlying the commitments.




As of December 31, 2011 and 2010, the Company had off-balance sheet commitments to purchase investments equal to their fair value of $255.3 and $529.2, respectively.


*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, 2011 and 2010, the Company held $821.2 and $57.9, respectively, of cash collateral, related to derivative contracts, which was included in Payables under securities loan agreement, including collateral held, on the Balance Sheets. In addition, as of December 31, 2011 and 2010, the Company delivered collateral of $779.8 and $749.7, respectively, in fixed maturities pledged under derivatives contracts, which was included in Securities pledged on the Balance Sheets.







*FHLB Funding Agreements*

The Company is a member of the Federal Home Loan Bank of Des Moines (“FHLB”) and is required to maintain a collateral deposit that backs funding agreements issued to the FHLB. At December 31, 2011 and 2010, the Company had $1,579.6 in non-putable funding agreements, including accrued interest, issued to the FHLB. These non-putable funding agreements are included in Future policy benefits and claims reserves, in the Balance Sheets. At December 31, 2011 and 2010, assets with a market value of $1,897.9 and $1,930.1, respectively, collateralized the funding agreements to the FHLB. Assets pledged to the FHLB are included in Fixed maturities, available-for-sale, in the 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.










79

Regulatory Matters

As with many financial services companies, the Company and its affiliates periodically receive informal and formal requests
for information from various state and federal governmental agencies and self-regulatory organizations in connection with
examinations, inquiries, investigations, and audits of the products and practices of the Company or the financial services
industry. Some of these investigations and inquiries could result in regulatory action against the Company. The potential
outcome of such action is difficult to predict but could subject the Company or its affiliates to adverse consequences, including,
but not limited to, settlement payments, penalties, fines, and other financial liability. The potential economic consequences
cannot be predicted, but management does not believe that the outcome of any such action will have a material adverse effect
on the Company's financial position or results of operations. It is the practice of the Company and its affiliates to cooperate
fully in these matters.


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)

13.	Accumulated Other Comprehensive Income (Loss)

Shareholder's equity included the following components of AOCI as of December 31, 2011, 2010, and 2009.

		2011	2010	2009
Fixed maturities, net of OTTI		$ 1,331.1	$ 682.4	$ (554.7)
Equity securities, available-for-sale		1.0	6.9	3.5
Derivatives		(1.1)	0.3	—
DAC/VOBA and sales inducements adjustment on available-for-sale
securities		(1,134.1)	(510.1)	(58.4)
Other investments		(35.7)	(35.7)	(25.0)
Unrealized capital gains (losses), before tax		161.2	143.8	(634.6)
Net deferred income tax asset (liability)		82.7	9.8	109.2
Unrealized capital gains (losses), after tax		243.9	153.6	(525.4)
Pension liability, net of tax		1.2	1.2	1.3
AOCI		$ 245.1	$ 154.8	$ (524.1)

Changes in AOCI, net of DAC, VOBA, and tax related to changes in unrealized capital gains (losses) on securities, including securities pledged, were as follows for the years ended December 31, 2011, 2010, and 2009.


		2011	2010	2009
Fixed maturities		$ 619.7	$ 1,244.0	$ 3,181.9
Equity securities, available-for-sale		(5.9)	3.4	7.2
Derivatives		(1.4)	0.3	—
DAC/VOBA and sales inducements adjustment on available-for-sale
securities		(624.0)	(451.7)	(1,956.0)
Other investments		—	(10.7)	0.9
Change in unrealized gains/losses on securities, before tax		(11.6)	785.3	1,234.0
Deferred income tax asset/liability		83.1	(101.8)	(368.1)
Change in unrealized gains/losses on securities, after tax		71.5	683.5	865.9

Change in OTTI, before tax		29.0	(6.9)	(100.1)
Deferred income tax asset/liability		(10.2)	2.4	35.0
Change in OTTI, after tax		18.8	(4.5)	(65.1)

Pension and other post-employment benefit liability, before tax		—	(0.2)	1.9
Deferred income tax asset/liability		—	0.1	(0.9)
Pension and other post-employment benefit liability, after tax		—	(0.1)	1.0

Net change in AOCI, after tax		$ 90.3	$ 678.9	$ 801.8




81


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)

Changes in unrealized capital gains/losses on securities, including securities pledged and noncredit impairments, as recognized in AOCI, reported net of DAC, VOBA, and income taxes, were as follows for the years ended December 31, 2011, 2010, and 2009.



	2011	2010	2009
Net unrealized capital holding gains/losses
arising during the year ⁽¹⁾	$ 34.0	$ 515.4	$ 556.1
Less: reclassification adjustment for gains (losses)
and other items included in Net income (loss)⁽²⁾	22.7	9.4	(180.0)
Change in deferred tax valuation allowance	79.0	173.0	64.7

Net change in unrealized capital gains/losses on
securities	$ 90.3	$ 679.0	$ 800.8
⁽¹⁾Pretax unrealized capital holding gain/losses arising during the year were $52.3, $792.9, and $856.9 for the years ended December 31, 2011,
2010, and 2009, respectively.
⁽²⁾Pretax reclassification adjustments for gains (losses) and other items included in Net income (loss) were $34.9, $14.5, and $(277.0), for the years
ended December 31, 2011, 2010, and 2009, respectively.

The reclassification adjustments for gains (losses) and other items included in Net income (loss) in the above table are generally determined by FIFO methodology.




82
82


SEPARATE ACCOUNT B PART C - OTHER INFORMATION
SEPARATE ACCOUNT B PART C - OTHER INFORMATION

Item 24. Financial Statements and Exhibits
Financial Statements:
(a)(1)	Incorporated by reference in Part A:
	Condensed Financial Information
(2)	Incorporated by reference in Part B:
	Financial Statements of Separate Account B:
	-	Report of Independent Registered Public Accounting Firm
	-	Statements of Assets and Liabilities as of December 31, 2011
	-	Statements of Operations for the year ended December 31, 2011
	-	Statements of Changes in Net Assets for the years ended December 31, 2011
		and 2010
	-	Notes to Financial Statements
(3)	Included in Part B:
Financial Statements of ING USA Annuity and Life Insurance Company:
	-	Report of Independent Registered Public Accounting Firm
	-	Statements of Operations for the years ended December 31, 2011, 2010 and
		2009
	-	Balance Sheets as of December 31, 2011 and 2010
	-	Statements of Changes in Shareholder’s Equity for the years ended
		December 31, 2011, 2010 and 2009
	-	Statements of Cash Flows for the years ended December 31, 2011, 2010 and
		2009
	-	Notes to Financial Statements


(b) Exhibits
(1)		Resolution of the Board of Directors of ING USA Annuity and Life Insurance
		Company authorizing the establishment of the Registrant • Incorporated by reference
		to the Initial Registration Statement on Form N-4 for Separate Account B filed with
		the Securities and Exchange Commission on October 1, 2001 (File Nos. 333-70600;
		811-5626).
(2)		Not applicable
(3.1)		Amendment to and Restatement of the Distribution Agreement between ING USA
		and Directed Services, Inc. effective January 1, 2004 • Incorporated herein by
		reference to Post-Effective Amendment No. 2 to a Registration Statement on Form N-
		4 for ING USA Annuity and Life Insurance Company Separate Account B filed with
		the Securities and Exchange Commission on April 9, 2004 (File Nos. 333-90516).
(3.2)		Master Selling Agreement • Incorporated by reference to Registration Statement on
		Form N-4 for Separate Account B filed with the Securities and Exchange Commission
		on May 12, 2006 (File Nos. 333-70600).


	(3.3)	Intercompany Agreement dated December 22, 2010 (effective January 1, 2010)
		between Directed Services LLC and ING USA Annuity and Life Insurance Company
		• Incorporated herein by reference to Post-Effective Amendment No. 55 to a
		Registration Statement on Form N-4 (File No 333-28679), as filed on April 6, 2011.
	(3.4)	Intercompany Agreement dated December 22, 2010 (effective January 1, 2010)
		between ING Investment Management LLC and ING USA Annuity and Life
		Insurance and Company • Incorporated herein by reference to Post-Effective
		Amendment No. 55 to a Registration Statement on Form N-4 (File No. 333-28679), as
		filed on April 6, 2011.
	(4.1)	Variable Annuity Group Master Contract (GA-MA-1102) • Incorporated by reference
		to Pre-Effective Amendment No. 1 to the Registration Statement on Form N-4 for
		Separate Account B filed with the Securities and Exchange Commission on December
		11, 2001 (File Nos. 333-70600).
	(4.2)	Variable Annuity Contract (GA-IA-1102) • Incorporated by reference to Pre-Effective
		Amendment No. 1 to the Registration Statement on Form N-4 for Separate Account B
		filed with the Securities and Exchange Commission on December 11, 2001 (File No.
		333-70600).
	(4.3)	Variable Annuity Certificate (GA-CA-1102) • Incorporated by reference to Pre-
		Effective Amendment No. 1 to the Registration Statement on Form N-4 for Separate
		Account B filed with the Securities and Exchange Commission on December 11, 2001
		(File No. 333-70600).
	(4.4)	GET Fund Rider (GA-RA-1085) • Incorporated by reference to Pre-Effective
		Amendment No. 1 to the Registration Statement on Form N-4 for Separate Account B
		filed with the Securities and Exchange Commission on December 11, 2001 (File No.
		333-70600).
	(4.5)	Section 72 Rider • Incorporated by reference to Pre-Effective Amendment No. 1 to
		the Registration Statement on Form N-4 for Separate Account B filed with the
		Securities and Exchange Commission on December 11, 2001 (File No. 333-70600).
	(4.6)	Waiver of Surrender Charge Rider • Incorporated by reference to Pre-Effective
		Amendment No. 1 to the Registration Statement on Form N-4 for Separate Account B
		filed with the Securities and Exchange Commission on December 11, 2001 (File No.
		333-70600).
	(4.7)	Simple Retirement Account Rider • Incorporated herein by reference to Post-Effective
		Amendment No. 34 to a Registration Statement on Form N-4 for Golden American
		Life Insurance Company Separate Account B filed with the Securities and Exchange
		Commission on April 15, 2003 (File No. 033-23351).
	(4.8)	403(b) Rider • Incorporated herein by reference to Post-Effective Amendment No. 34
		to a Registration Statement on Form N-4 for Golden American Life Insurance
		Company Separate Account B filed with the Securities and Exchange Commission on
		April 15, 2003 (File No. 033-23351).
	(4.9)	Individual Retirement Annuity Rider • Incorporated herein by reference to Post-
		Effective Amendment No. 34 to a Registration Statement on Form N-4 for Golden
		American Life Insurance Company Separate Account B filed with the Securities and
		Exchange Commission on April 15, 2003 (File No. 033-23351).


	(4.10)	ROTH Individual Retirement Annuity Rider • Incorporated herein by reference to
		Post-Effective Amendment No. 34 to a Registration Statement on Form N-4 for
		Golden American Life Insurance Company Separate Account B filed with the
		Securities and Exchange Commission on April 15, 2003 (File No. 033-23351).
	(4.11)	Death Benefit Option Package Endorsement (GA-RA-1117) • Incorporated herein by
		reference to Post-Effective Amendment No. 4 to a Registration Statement on Form N-
		4 for Golden American Life Insurance Company Separate Account B filed with the
		Securities and Exchange Commission on August 1, 2003 (File No. 333-70600).
	(4.12)	Company Address and Name Change Endorsement • Incorporated herein by reference
		to Post-Effective Amendment No. 25 to a Registration Statement on Form N-4 for
		ING USA Annuity and Life Insurance Company Separate Account B filed with the
		Securities and Exchange Commission on February 13, 2004 (File No. 333-28679).
	(4.13)	Minimum Guaranteed Withdrawal Benefit Rider with Reset Option (ING Life Pay)
		(IU-RA-3023) • Incorporated by reference to Post-Effective Amendment No. 15 to
		Registration Statement on Form N-4 for Separate Account B filed with the Securities
		and Exchange Commission on July 20, 2006 (File No. 333-70600).
	(4.14)	Sample Schedule Page Entries for Minimum Guaranteed Withdrawal Benefit Rider
		with Reset (Life Pay) (IU-RA-3023) • Incorporated by reference to Post-Effective
		Amendment No. 15 to Registration Statement on Form N-4 for Separate Account B
		filed with the Securities and Exchange Commission on July 20, 2006 (File No. 333-
		70600).
	(4.15)	Minimum Guaranteed Withdrawal Benefit Rider with Reset Option (ING Joint Life
		Pay) (IU-RA-3029) • Incorporated by reference to Post-Effective Amendment No. 15
		to Registration Statement on Form N-4 for Separate Account B filed with the
		Securities and Exchange Commission on July 20, 2006 (File No. 333-70600).
	(4.16)	Minimum Guaranteed Withdrawal Benefit Rider with Automatic Reset (ING Joint
		Life Pay) (IU-RA-3061) • Incorporated by reference to Post-Effective Amendment
		No. 20 to Registration Statement on Form N-4 for Separate Account B filed with the
		Securities and Exchange Commission on August 15, 2007 (File No. 333-70600).
	(4.17)	Minimum Guaranteed Withdrawal Benefit Rider with Automatic Reset (Life Pay)
		(IU-RA-3062) • Incorporated by reference to Post-Effective Amendment No. 20 to
		Registration Statement on Form N-4 for Separate Account B filed with the Securities
		and Exchange Commission on August 15, 2007 (File No. 333-70600).
	(4.18)	Surrender Charge Endorsement (IU-RA-3018) to Contract GA-IA-1102 and
		Certificate GA-CA-1102 and Master Contract GA-MA-1102 • Incorporated by
		reference to Post-Effective Amendment No. 25 to Registration Statement on Form N-
		4 for Separate Account B filed with the Securities and Exchange Commission on
		April 30, 2009 (File No. 333-70600).
	(4.19)	Minimum Guaranteed Income Benefit Rider (IU-RA-3030) • Incorporated by
		reference to Post-Effective Amendment No. 25 to Registration Statement on Form N-
		4 for Separate Account B filed with the Securities and Exchange Commission on
		April 30, 2009 (File No. 333-70600).


	(4.20)	Combination Minimum Guaranteed Withdrawal Benefit and Death Benefit Rider (IU-
		RA-3077) • Incorporated by reference to Post-Effective Amendment No. 25 to
		Registration Statement on Form N-4 for Separate Account B filed with the Securities
		and Exchange Commission on April 30, 2009 (File No. 333-70600).
	(4.21)	Combination Minimum Guaranteed Withdrawal Benefit and Death Benefit Rider (IU-
		RA-3078) • Incorporated by reference to Post-Effective Amendment No. 25 to
		Registration Statement on Form N-4 for Separate Account B filed with the Securities
		and Exchange Commission on April 30, 2009 (File No. 333-70600).
	(4.22)	Combination Minimum Guaranteed Withdrawal Benefit and Death Benefit Rider
		(Life Pay Plus) (IU-RA-4010(DE)(RC)) • Incorporated by reference to Post-Effective
		Amendment No. 25 to Registration Statement on Form N-4 for Separate Account B
		filed with the Securities and Exchange Commission on April 30, 2009 (File No. 333-
		70600).
	(4.23)	Combination Minimum Guaranteed Withdrawal Benefit and Death Benefit Rider
		(Life Pay Plus) (IU-RA-4011(DE)(RC)) • Incorporated by reference to Post-Effective
		Amendment No. 25 to Registration Statement on Form N-4 for Separate Account B
		filed with the Securities and Exchange Commission on April 30, 2009 (File No. 333-
		70600).
	(5.1)	Variable Annuity Application (GA-CDF-1105(08/06)) • Incorporated by reference to
		Post-Effective Amendment No. 16 to Registration Statement on Form N-4 for
		Separate Account B filed with the Securities and Exchange Commission on August 3,
		2006 (File No. 333-70600).
	(5.2)	Variable Annuity Application (GA-CDF-1105(08/07)) • Incorporated by reference to
		Post-Effective Amendment No. 20 to Registration Statement on Form N-4 for
		Separate Account B filed with the Securities and Exchange Commission on August
		15, 2007 (File No. 333-70600).
	(5.3)	Deferred Variable Annuity Application (GA-CDF-1105(12/08)) • Incorporated by
		reference to Post-Effective Amendment No. 25 to Registration Statement on Form N-
		4 for Separate Account B filed with the Securities and Exchange Commission on
		April 30, 2009 (File No. 333-70600).
	(6.1)	Restated Articles of Incorporation Providing for the Redomestication of Golden
		American Life Insurance Company dated July 2 and 3, 2003, effective January 1,
		2004 • Incorporated by reference to Company's 10-K, as filed with the SEC on
		March 29, 2004 (File No. 033-87270).
	(6.2)	Amendment to Articles of Incorporation Providing for the Name Change of Golden
		American Life Insurance Company dated November 20, 2003, effective January 1,
		2004 • Incorporated by reference to the Company's 10-K, as filed with the SEC on
		March 29, 2004 (File No. 033-87270).
	(6.3)	Amendment to Articles of Incorporation Providing for the Change in Purpose and
		Powers of ING USA Annuity and Life Insurance Company dated March 3 and 4,
		2004, effective March 11, 2004 • Incorporated by reference to the Company's 10-Q, as
		filed with the SEC on May 17, 2004 (File No. 033-87270).


	(6.4)	Amended and Restated By-Laws of ING USA Annuity and Life Insurance Company,
		effective January 1, 2005 • Incorporated by reference to Registrant’s Form 10-K as
		filed with the Securities and Exchange Commission on May 13, 2005 (File No. 33-
		87270).
	(6.5)	Resolution of the Board of Directors for Powers of Attorney, dated (04/23/99) •
		Incorporated by reference to Post-Effective Amendment No. 3 to a Registration
		Statement on Form N-4 for Golden American Life Insurance Separate Account B filed
		with the Securities and Exchange Commission on April 23, 1999 (File No. 333-
		28679).
	(7)	Not applicable
	(8.1)	Amended and Restated Participation Agreement as of June 26, 2009 by and among
		ING Life Insurance and Annuity Company, Fidelity Distributors Corporation,
		Variable Insurance Products Fund, Variable Insurance Products Fund II, Variable
		Insurance Products Fund III, Variable Insurance Products Fund IV and Variable
		Insurance Products Fund V and amended on June 26, 2009 • Incorporated by
		reference to Post-Effective Amendment No. 56 to Registration Statement on Form N-
		4 (File No. 333-01107), as filed on December 18, 2009.
	(8.2)	Letter Agreement dated May 16, 2007 between Reliastar Life Insurance Company of
		New York, Fidelity Distributors Corporation, Variable Insurance Products Fund,
		Variable Insurance Products Fund II and Variable Insurance Products Fund V •
		Incorporated by reference to Pre-Effective Amendment No. 2 to Registration
		Statement on Form N-4 (File No. 333-139695), as filed on September 5, 2007.
	(8.3)	Service Agreement effective as of June 1, 2002 by and between Fidelity Investments
		Institutional Operations Company, Inc. and ING Financial Advisers, LLC and
		amended on April 1, 2005 and April 1, 2006 • Incorporated by reference to Post-
		Effective Amendment No. 33 to Registration Statement on Form N-4 (File No. 033-
		75988), as filed on August 5, 2004, and by reference to Post-Effective Amendment
		No. 47 (File No. 033-75962), as filed on November 21, 2006.
	(8.4)	Service Contract effective as of June 1, 2002 and amended on June 20, 2003 by and
		between Directed Services, Inc., ING Financial Advisers, LLC, and Fidelity
		Distributors Corporation • Incorporated by reference to Post-Effective Amendment
		No. 33 to Registration Statement on Form N-4 (File No. 033-75988), as filed on
		August 5, 2004.
	(8.5)	Rule 22c-2 Agreement dated no later than April 16, 2007 and is effective as of
		October 16, 2007 between Fidelity Distributors Corporation, ING Life Insurance and
		Annuity Company, ING National Trust, ING USA Annuity and Life Insurance
		Company, ReliaStar Life Insurance Company, ReliaStar Life Insurance Company of
		New York, Security Life of Denver Insurance Company and Systematized Benefits
		Administrators Inc. • Incorporated by reference to Post-Effective Amendment No. 50
		to Registration Statement on Form N-4 (File No. 033-75962), as filed on June 15,
		2007.


	(8.6)	Amended and Restated Participation Agreement as of December 30, 2005 by and
		among Franklin Templeton Variable Insurance Products Trust, Franklin/Templeton
		Distributors, Inc., ING Life Insurance and Annuity Company, ING USA Annuity and
		Life Insurance Company, ReliaStar Life Insurance Company, ReliaStar Life Insurance
		Company of New York and Directed Services, Inc. and amended on June 5, 2007 •
		Incorporated by reference to Post-Effective Amendment No. 17 to Registration
		Statement on Form N-4 (File No. 333-85618), as filed on February 1, 2007, and by
		reference to Pre-Effective Amendment No. 1 (file No. 333-139695), as filed on July 6,
		2007.
	(8.7)	Amendment No. 2 dated November 17, 2011 to Amended and Restated Participation
		Agreement dated December 30, 2005 by and among Franklin Templeton Variable
		Insurance Products Trust, Franklin/Templeton Distributors, Inc., ING Life Insurance
		and Annuity Company, ING USA Annuity and Life Insurance Company, ReliaStar
		Life Insurance Company, ReliaStar Life Insurance Company of New York and
		Directed Services, Inc. and amended on June 5, 2007 • Incorporated by reference to
		Post-Effective Amendment No. 59 to Registration Statement on Form N-4 (File No.
		033-75962), as filed on April 3, 2012.
	(8.8)	Amended and Restated Administrative Services Agreement executed as of October 3,
		2005 between Franklin Templeton Services, LLC, ING Life Insurance and Annuity
		Company, ING Insurance Company of America, ING USA Annuity and Life
		Insurance Company and ReliaStar Life Insurance Company • Incorporated by
		reference to Post-Effective Amendment No. 32 to Registration Statement on Form N-
		4 (File No. 033-81216), as filed on April 11, 2006.
	(8.9)	Amendment No. 1 dated May 17, 2006 to Amended and Restated Administrative
		Services Agreement dated October 3, 2005 by and among Franklin Templeton
		Services, LLC, ING Life Insurance and Annuity Company, ING USA Annuity and
		Life Insurance Company, ReliaStar Life Insurance Company and ReliaStar Life
		Insurance Company of New York • Incorporated by reference to Post-Effective
		Amendment No. 59 to Registration Statement on Form N-4 (File No. 033-75962), as
		filed on April 3, 2012.
	(8.10)	Rule 22c-2 Shareholder Information Agreement (Franklin Templeton Variable
		Insurance Products Trust) entered into as of April 16, 2007 among
		Franklin/Templeton Distributors, Inc., ING Life Insurance and Annuity Company,
		ING USA Annuity and Life Insurance Company, ReliaStar Life Insurance Company
		and ReliaStar Life Insurance Company of New York • Incorporated by reference to
		Post-Effective Amendment No. 50 to Registration Statement on Form N-4 (File No.
		033-75962), as filed on June 15, 2007.
	(8.11)	Participation Agreement dated April 30, 2003 among ING Life Insurance and Annuity
		Company, The GCG Trust (renamed effective May 1, 2003, ING Investors Trust) and
		Directed Services, Inc. and amended on October 9, 2006 • Incorporated by reference
		to Post-Effective Amendment No. 54 to Registration Statement on Form N-1A (File
		No. 033-23512), as filed on August 1, 2003, and by reference to Post-Effective
		Amendment No. 47 (File No. 033-75962), as filed on November 21, 2006.


	(8.12)	Participation Agreement dated as of November 28, 2001 among Portfolio Partners,
		Inc. (renamed ING Partners, Inc. effective May 1, 2002), Aetna Life Insurance and
		Annuity Company (renamed ING Life Insurance and Annuity Company effective May
		1, 2002) and Aetna Investment Services, LLC and amended on March 5, 2002, May 1,
		2003, November 1, 2004, April 29, 2005, August 31, 2005, December 7, 2005 and
		April 28, 2006 • Incorporated by reference to Post-Effective Amendment No. 30 to
		Registration Statement on Form N-4 (File No. 033-75962), as filed on April 8, 2002,
		and by reference to Post-Effective Amendment No. 28 (File No. 033-75988), as filed
		on April 10, 2003, and by reference to Post-Effective Amendment No. 20 to
		Registration Statement on Form N-1A (File No. 333-32575), as filed on April 1, 2005,
		and by reference to Post-Effective Amendment No. 32 (File No. 033-81216), as filed
		on April 11, 2006, and by reference to Initial Registration (File No. 333-134760), as
		filed on June 6, 2006.
	(8.13)	Shareholder Servicing Agreement (Service Class Shares) dated as of November 27,
		2001 between Portfolio Partners, Inc. (renamed ING Partners, Inc. effective May 1,
		2002) and Aetna Life Insurance and Annuity Company (renamed ING Life Insurance
		and Annuity Company effective May 1, 2002) and amended on March 5, 2002, May
		1, 2003, November 1, 2004, April 29, 2005, December 7, 2005 and April 28, 2006 •
		Incorporated by reference to Post-Effective Amendment No. 30 to Registration
		Statement on Form N-4 (File No. 033-75962), as filed on April 8, 2002, and by
		reference to Post-Effective Amendment No. 30 (File No. 033-75962), as filed on April
		8, 2002, and by reference to Post-Effective Amendment No.28 (File No. 033-75988),
		as filed on April 10, 2003, and by reference to Post-Effective Amendment No. 32
		(File No. 033-81216), as filed on April 11, 2006, and by reference to Initial
		Registration Statement (File No. 333-134760), as filed on June 6, 2006.
	(8.14)	Fund Participation Agreement dated as of May 1, 1998 by and among Aetna Life
		Insurance and Annuity Company and Aetna Variable Fund, Aetna Variable Encore
		Fund, Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf of
		each of its series, Aetna Generation Portfolios, Inc. on behalf of each of its series,
		Aetna Variable Portfolios, Inc. on behalf of each of its series and Aeltus Investment
		Management, Inc. and amended on November 9, 1998, December 31, 1999, February
		11, 2000, May 1, 2000, February 27, 2001 and June 19, 2001 • Incorporated by
		reference to Registration Statement on Form N-4 (File No. 333-56297), as filed on
		June 8, 1998, and by reference to Post-Effective Amendment No. 2 (File No. 333-
		56297), as filed on December 14, 1998, and by reference to Post-Effective
		Amendment No. 19 (File No. 333-01107), as filed on February 16, 2000, and by
		reference to Post-Effective Amendment No. 20 (File No. 333-01107), as filed on April
		4. 2000, and by reference to Post-Effective Amendment No. 24 (File No. 333-01107),
		as filed on April 13, 2001, and by reference to Post-Effective Amendment No. 32
		(File No. 033-75988), as filed on April 13, 2004.


	(8.15)	Service Agreement effective as of May 1, 1998 between Aeltus Investment
		Management, Inc. and Aetna Life Insurance and Annuity Company in connection with
		the sale of shares of Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income
		Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf of each of its series,
		Aetna Generation Portfolios, Inc. on behalf of each of its series and Aetna Variable
		Portfolios, Inc. on behalf of each of its series and amended November 4, 1998,
		February 11, 2000, May 1, 2000 and June 26, 2001 • Incorporated by reference to
		Registration Statement on Form N-4 (File No. 333-56297), as filed on June 8, 1998,
		and by reference to Post-Effective Amendment No. 2 (File No. 333-56297), as filed
		on December 14, 1998, and by reference to Post-Effective Amendment No. 20 (File
		No. 333-01107), as filed on April 4, 2000, and by reference to Post-Effective
		Amendment No. 32 (File No. 033-75988), as filed on April 13, 2004.
	(8.16)	Fund Participation Agreement dated as of May 1, 2001 among Pilgrim Variable
		Products Trust (renamed ING Variable Products Trust), Aetna Life Insurance and
		Annuity Company (renamed ING Life Insurance and Annuity Company) and ING
		Pilgrim Securities, Inc. and amended on August 30, 2002 • Incorporated by reference
		to Post-Effective Amendment No. 26 to Registration Statement on Form N-4 (File No.
		333-01107), as filed on July 13, 2001, and by reference to Post-Effective Amendment
		No. 28 (File No. 033-75988), as filed on April 10, 2003.
	(8.17)	Administrative and Shareholder Services Agreement dated April 1, 2001 between
		ING Funds Services, LLC and ING Life Insurance and Annuity Company
		(Administrator for ING Variable Products Trust) • Incorporated by reference to Post-
		Effective Amendment No. 28 to Registration Statement on Form N-4 (File No. 033-
		75988), as filed on April 10, 2003.
	(8.18)	Rule 22c-2 Agreement dated no later than April 16, 2007 is effective October 16,
		2007 between ING Funds Services, LLC, ING Life Insurance and Annuity Company,
		ING National Trust, ING USA Annuity and Life Insurance Company, ReliaStar Life
		Insurance Company, ReliaStar Life Insurance Company of New York, Security Life
		of Denver Insurance Company and Systematized Benefits Administrators Inc. •
		Incorporated by reference to Post-Effective Amendment No. 50 to Registration
		Statement on Form N-4 (File No. 033-75962), as filed on June 15, 2007.
	(8.19)	Fund Participation Agreement dated March 11, 1997 between Aetna Life Insurance
		and Annuity Company, Oppenheimer Variable Annuity Account Funds and
		OppenheimerFunds, Inc. and amended on December 1, 1999, May 1, 2004 and
		August 15, 2007 • Incorporated by reference to Post-Effective Amendment No. 27 to
		Registration Statement on Form N-4 (File No. 033-34370), as filed on April 16, 1997,
		and by reference to Post-Effective Amendment No. 19 (File No. 333-01107), as filed
		on February 16, 2000, and by reference to Post-Effective Amendment No. 39 (File
		No. 033-75988), as filed on April 11, 2007, and by reference to Post-Effective
		Amendment No. 46 (File No. 333-01107), as filed on February 15, 2008.
	(8.20)	Service Agreement effective as of March 11, 1997 between OppenheimerFunds, Inc.
		and Aetna Life Insurance and Annuity Company • Incorporated by reference to Post-
		Effective Amendment No. 27 to Registration Statement on Form N-4 (File No. 033-
		34370), as filed on April 16, 1997.


	(8.21)	Rule 22c-2 Agreement dated no later than April 16, 2007 and is effective as of
		October 16, 2007 between Oppenheimer Funds Services, ING Life Insurance and
		Annuity Company, ING National Trust, ING USA Annuity and Life Insurance
		Company, ReliaStar Life Insurance Company, ReliaStar Life Insurance Company of
		New York, Security Life of Denver Insurance Company and Systematized Benefits
		Administrators Inc. • Incorporated by reference to Pre-Effective Amendment No. 50
		to Registration Statement on Form N-4 (File No. 033-75962), as filed on June 15,
		2007.
	(8.22)	Novation of and Amendment to Participation Agreement dated as of January 26, 2011
		and effective as of February 14, 2011 by and among Allianz Global Investors
		Distributors LLC, PIMCO Investments LLC, PIMCO Variable Insurance Trust, ING
		Life Insurance and Annuity Company, ING USA Annuity and Life Insurance
		Company, ReliaStar Life Insurance Company and ReliaStar Life Insurance Company
		of New York • Incorporated by reference to Post-Effective Amendment No. 15 to
		Registration Statement on Form N-4 (File No. 333-105479), as filed on April 25,
		2012.
	(8.23)	Participation Agreement dated as of May 1, 2004 among ING Life Insurance and
		Annuity Company, ReliaStar Life Insurance Company, PIMCO Variable Insurance
		Trust and PA Distributors LLC (renamed Allianz Global Investors Distributors LLC)
		and amended on August 15, 2007 • Incorporated by reference to Post-Effective
		Amendment No. 38 to Registration Statement on Form N-4 (File No. 333-01107), as
		filed on February 11, 2005, and by reference to Post-Effective Amendment No. 51
		(File No. 333-01107), as filed on May 23, 2008.
	(8.24)	Services Agreement dated as of May 1, 2004 between PIMCO Variable Insurance
		Trust (the “Trust”), ING Life Insurance and Annuity Company and ReliaStar Life
		Insurance Company (Administrative) and amended on August 15, 2007 • Incorporated
		by reference to Post-Effective Amendment No. 38 to Registration Statement on Form
		N-4 (File No. 333-01107), as filed on February 11, 2005, and by reference to Post-
		Effective Amendment No. 51 (File No. 333-01107), as filed on May 23, 2008.
	(8.25)	Services Agreement effective as of May 1, 2004 between Pacific Investment
		Management Company LLC (“PIMCO”), ING Life Insurance and Annuity Company
		and ReliaStar Life Insurance Company and amended on August 15, 2007 •
		Incorporated by reference to Post-Effective Amendment No. 38 to Registration
		Statement on Form N-4 (File No. 333-01107), as filed on February 11, 2005, and by
		reference to Post-Effective Amendment No. 51 (File No. 333-01107), as filed on May
		23, 2008.


	(8.26)	Rule 22c-2 Agreement dated no later than April 16, 2007, is effective as of the 16th
		day of October, 2007 between Allianz Global Investors Distributors LLC, ING Life
		Insurance and Annuity Company, ING National Trust, ING USA Annuity and Life
		Insurance Company, ReliaStar Life Insurance Company, ReliaStar Life Insurance
		Company of New York, Security Life of Denver Insurance Company and
		Systematized Benefits Administrators Inc. • Incorporated by reference to Pre-
		Effective Amendment No. 1 to Registration Statement on Form N-4 (File No. 333-
		139695), as filed on July 6, 2007.
	(8.27)	Participation Agreement made and entered into as of July 1, 2001 by and among
		Pioneer Variable Contracts Trust, Aetna Life Insurance and Annuity Company,
		Pioneer Investment Management, Inc. and Pioneer Funds Distributor, Inc. and
		amended on May 1, 2004 and August 15, 2007 • Incorporated by reference to Post-
		Effective Amendment No. 27 to Registration Statement on Form N-4 (File No. 333-
		01107), as filed on October 26, 2001, and by reference to Post-Effective Amendment
		No. 40 (File No. 033-75962), as filed on April 13, 2005, and by reference to Post-
		Effective Amendment No. 46 (File No. 333-01107), as filed on February 15, 2008.
	(8.28)	Rule 22c-2 Agreement dated March 1, 2007 and is effective as of October 16, 2007
		between Pioneer Investment Management Shareholder Services, Inc., ING Life
		Insurance and Annuity Company, ING National Trust, ING USA Annuity and Life
		Insurance Company, ReliaStar Life Insurance Company, ReliaStar Life Insurance
		Company of New York, Security Life of Denver Insurance Company and
		Systematized Benefits Administrators Inc. • Incorporated by reference to Post-
		Effective Amendment No. 50 to Registration Statement on Form N-4 (File No. 033-
		75962), as filed on June 15, 2007.
	(9)	Opinion and Consent of Counsel
	(10)	Consent of Independent Registered Public Accounting Firm
	(11)	Not applicable
	(12)	Not applicable
	(13)	Powers of Attorney • Incorporated by reference to Post-Effective Amendment No. 29
		to Registration Statement on Form N-4 (File No. 333-70600), as filed on April 13,
		2012.


Item 25. Directors and Officers of the Depositor*
Name	Principal Business Address	Positions and Offices with Depositor
Patrick G. Flynn	Amstelveenseweg 500	Director and Chairman
	1081 KL Amsterdam
	The Netherlands
Michael S. Smith	1475 Dunwoody Drive	Director and President
	West Chester, PA 19380
Mary (Maliz) E. Beams	One Orange Way	Director
	Windsor, CT 06095-4774
Donald W. Britton	20 Washington Avenue South	Director
	Minneapolis, Minnesota 55401
Alain M. Karaoglan	230 Park Avenue	Director
	New York, NY 10169
Rodney O. Martin	230 Park Avenue	Director
	New York, NY 10169
Ewout L. Steenbergen	230 Park Avenue	Director, Executive Vice President and
	New York, NY 10169	Chief Financial Officer
Boyd G. Combs	5780 Powers Ferry Road, N.W.	Senior Vice President, Tax
	Atlanta, GA 30327-4390
Mark B. Kaye	One Orange Way	Senior Vice President
	Windsor, CT 06095-4774
Patrick D. Lusk	1475 Dunwoody Drive	Senior Vice President and Appointed
	West Chester, PA 19380	Actuary
Gilbert E. Mathis	5780 Powers Ferry Road, N.W.	Senior Vice President
	Atlanta, GA 30327-4390
Daniel P. Mulheran, Sr.	20 Washington Avenue South	Senior Vice President
	Minneapolis, Minnesota 55401
David S. Pendergrass	5780 Powers Ferry Road, N.W.	Senior Vice President and Treasurer
	Atlanta, GA 30327-4390
Steven T. Pierson	5780 Powers Ferry Road, N.W.	Senior Vice President and Chief
	Atlanta, GA 30327-4390	Accounting Officer
Kristi L. Cooper	909 Locust Street	Vice President and Chief Compliance
	Des Moines, IA 50309	Officer
Megan A. Huddleston	One Orange Way	Secretary
	Windsor, CT 06095-4774
* These individuals may also be directors and/or officers of other affiliates of the Company.

Item 26. Persons Controlled by or Under Common Control with the Depositor or Registrant

Incorporated herein by reference to Item 26 in Post-Effective Amendment No. 3 to Registration
Statement on Form N-4 for Variable Annuity Account B of ING Life Insurance and Annuity
Company (File No. 333-167182), as filed with the Securities and Exchange Commission on
October 26, 2012.

Item 27. Number of Contract Owners

As of November 30, 2012, there were 274,374 qualified contract owners and 158,465 non-
qualified contract owners in ING USA’s Separate Account B.

Item 28. Indemnification

ING USA shall indemnify (including therein the prepayment of expenses) any person who is or
was a director, officer or employee, or who is or was serving at the request of ING USA as a
director, officer or employee of another corporation, partnership, joint venture, trust or other
enterprise for expenses (including attorney’s fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him with respect to any threatened, pending or
completed action, suit or proceedings against him by reason of the fact that he is or was such a
director, officer or employee to the extent and in the manner permitted by law.

ING USA may also, to the extent permitted by law, indemnify any other person who is or was
serving ING USA in any capacity. The Board of Directors shall have the power and authority to
determine who may be indemnified under this paragraph and to what extent (not to exceed the
extent provided in the above paragraph) any such person may be indemnified.

ING USA or its parents may purchase and maintain insurance on behalf of any such person or
persons to be indemnified under the provision in the above paragraphs, against any such liability
to the extent permitted by law.

A corporation may procure indemnification insurance on behalf of an individual who is or was a
director of the corporation. Consistent with the laws of the State of Connecticut, ING U.S., Inc.
maintains Professional Liability and fidelity bond insurance policies issued by an international
insurer. The policies cover ING U.S., Inc. and any company in which ING U.S., Inc. has a
controlling financial interest of 50% or more. These policies include either or both the principal
underwriter, the depositor and any/all assets under the care, custody and control of ING U.S.,
Inc. and/or its subsidiaries. The policies provide for the following types of coverage: errors and
omissions/professional liability, employment practices liability and fidelity/crime (a.k.a.
“Financial Institutional Bond”).

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended,
may be permitted to directors, officers and controlling persons of the Registrant, as provided
above or otherwise, the Registrant has been advised that in the opinion of the SEC such
indemnification by the Depositor is against public policy, as expressed in the Securities Act of
1933, and therefore may be unenforceable. In the event that a claim of such indemnification
(except insofar as it provides for the payment by the Depositor of expenses incurred or paid by a
director, officer or controlling person in the successful defense of any action, suit or proceeding)

is asserted against the Depositor by such director, officer or controlling person and the SEC is
still of the same opinion, the Depositor or Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by the Depositor is against public policy as expressed
by the Securities Act of 1933 and will be governed by the final adjudication of such issue.


Item 29. Principal Underwriter

(a)	In addition to the Registrant, Directed Services LLC serves as principal underwriter for
	all contracts issued by ING USA Annuity and Life Insurance Company through its
	Separate Accounts A, B and EQ and Alger Separate Account A and ReliaStar Life
	Insurance Company of New York through its Separate Account NY-B. Also, Directed
	Services LLC serves as investment advisor to ING Investors Trust and ING Partners,
	Inc.

(b)	The following information is furnished with respect to the officers and directors of
	Directed Services LLC, the Registrant’s Distributor.


Name	Principal Business Address	Positions and Offices with Underwriter

Chad Tope	909 Locust Street	President and Director
	Des Moines, IA 50309

Shaun P. Mathews	One Orange Way	Executive Vice President
	Windsor, Ct 06095-4774

Ronald R. Barhorst	One Orange Way	Director
	Windsor, CT 06095-4774

Kimberly Anderson	6450 Rockside Woods	Senior Vice President
	Boulevard South
	Independence, OH 44131

Michael J. Roland	7337 E. Doubletree Ranch Road	Senior Vice President and Investment
	Scottsdale, AZ 85258	Advisory Chief Compliance Officer

Stanley D. Vyner	230 Park Avenue	Senior Vice President
	New York, NY 10169

Richard E. Gelfand	1475 Dunwoody Drive	Chief Financial Officer
	West Chester, PA 19380-1478

Carol Stern	4550 North Park Avenue	Chief Compliance Officer
	Chevy Chase, MD 20815

Julius A. Drelick, III	7337 E. Doubletree Ranch Road	Vice President
	Scottsdale, AZ 85258

Heather Hackett	230 Park Avenue	Vice President
	New York, NY 10169


Name	Principal Business Address	Positions and Offices with Underwriter

Jody H. Hrazanek	230 Park Avenue	Vice President
	New York, NY 10169

Todd R. Modic	7337 E. Doubletree Ranch Road	Vice President
	Scottsdale, AZ 85258

David S. Pendergrass	5780 Powers Ferry Road, N.W.	Vice President and Treasurer
	Atlanta, GA 30327-4390

Jason Rausch	230 Park Avenue	Vice President
	New York, NY 10169

Stephen Sedmak	230 Park Avenue, 13^thFloor	Vice President
	New York, NY 10169

Spencer T. Shell	5780 Powers Ferry Road, N.W.	Vice President and Assistant Treasurer
	Atlanta, GA 30327-4390

May Tong	230 Park Avenue, 13^thFloor	Vice President
	New York, NY 10169

Paul L. Zemsky	230 Park Avenue	Vice President
	New York, NY 10169

Megan A. Huddleston	One Orange Way	Secretary
	Windsor, CT 06095-4774

Huey P. Falgout, Jr.	7337 E. Doubletree Ranch Road	Assistant Secretary
	Scottsdale, AZ 85258

Tina M. Nelson	20 Washington Avenue South	Assistant Secretary
	Minneapolis, MN 55401

Melissa A. O’Donnell	20 Washington Avenue South	Assistant Secretary
	Minneapolis, MN 55401

Jennifer M. Ogren	20 Washington Avenue South	Assistant Secretary
	Minneapolis, MN 55401

Randall K. Price	20 Washington Avenue South	Assistant Secretary
	Minneapolis, MN 55401

Susan M. Vega	20 Washington Avenue South	Assistant Secretary
	Minneapolis, MN 55401

(c)	Compensation to Principal Underwriter:


(1)	(2)	(3)	(4)	(5)

Name of Principal Underwriter	2011 Net Underwriting Discounts and Commissions	Compensation on Redemption	Brokerage Commissions	Compensation




Directed	$201,141,336	$0	$0	$0
Services LLC

Item 30. Location of Accounts and Records

All accounts, books and other documents required to be maintained by Section 31(a) of the 1940
Act and the rules under it relating to the securities described in and issued under this Registration
Statement are maintained by the Depositor and located at 909 Locust Street, Des Moines, Iowa
50309; 1475 Dunwoody Drive, West Chester, Pennsylvania 19380; 5780 Powers Ferry Road,
NW, Atlanta, Georgia 30327-4390 and at One Orange Way, Windsor, Connecticut 06156-4774.

Item 31. Management Services

None.

Item 32. Undertakings

Registrant hereby undertakes:


(a)	to file a post-effective amendment to this registration statement as frequently as it is necessary to ensure that the audited financial statements in the registration statement are never more than 16 months old for as long as payments under the variable annuity contracts may be accepted;




(b)	to include either (1) as part of any application to purchase a contract offered by the prospectus, a space that an applicant can check to request a Statement of Additional Information, or (2) a post card or similar written communication affixed to or included in the prospectus that the applicant can remove to send for a Statement of Additional Information;





(c)	to deliver any Statement of Additional Information and any financial statements required to be made available under this form N-4 promptly upon written or oral request; and



(d)	during the Guarantee Period, to mail notices to current shareholders promptly after the happening of significant events related to the guarantee issued by ING Life Insurance and Annuity Company (the “Guarantee”). These significant events include (i) the termination of the Guarantee; (ii) a default under the Guarantee that has a material adverse effect on a shareholder’s right to receive his or her guaranteed amount on the


	SIGNATURES

As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets the requirements of Securities Act Rule 485(b) for effectiveness of this Post-Effective Amendment to its Registration Statement on Form N-4 (File No. 333- 70600) and has duly caused this Post-Effective Amendment to be signed on its behalf in the Town of Windsor, State of Connecticut, on the 20^thday of December, 2012.





	SEPARATE ACCOUNT B
	(Registrant)

	By:	ING USA ANNUITY AND LIFE INSURANCE
		COMPANY
		(Depositor)

	By:	Michael S. Smith*
		Michael S. Smith
President
		(principal executive officer)

As required by the Securities Act of 1933, this Post-Effective Amendment No. 30 to the Registration Statement has been signed by the following persons in the capacities and on the date indicated



Signature	Title			Date

Michael S. Smith*	Director and President		)
Michael S. Smith			)
			)
Patrick G. Flynn*	Director and Chairman		)
Patrick G. Flynn			)
			)
Mary (Maliz) E. Beams*	Director and Senior Vice President		)	December
Mary (Maliz) E. Beams			)	20, 2012
			)
Donald W. Britton*	Director		)
Donald W. Britton			)
			)
Alain M. Karaoglan*	Director		)
Alain M. Karaoglan			)
			)
Rodney O. Martin*	Director		)
Rodney O. Martin			)
			)
Ewout Steenbergen*	Director, Executive Vice President and Chief Financial		)
Ewout Steenbergen	Officer		)


Supplement Dated December 20, 2012 To The Current Prospectus For:

ING Rollover Choice^SMVariable Annuity
Issued by ING USA Annuity and Life Insurance Company Through Its Separate Account B


This supplement updates the statement of additional information for your variable annuity contract. If you have any questions, please call our Customer Service Center at 1-800-366-0066.


Important Information Regarding the Company’s Financial Statements
The financial statements of ING USA Annuity and Life Insurance Company included in the Statement of Additional Information dated April 30, 2012 are deleted and replaced with the attached financial statements.






X.70600-12	1	December 2012


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.)

Index to Financial Statements
	Page
Report of Independent Registered Public Accounting Firm	3
Financial Statements:
Balance Sheets as of December 31, 2011 and 2010	4
Statements of Operations for the years ended
December 31, 2011, 2010, and 2009	6
Statements of Comprehensive Income for the years ended
December 31, 2011, 2010, and 2009	7
Statements of Changes in Shareholder's Equity for the years ended
December 31, 2011, 2010, and 2009	8
Statements of Cash Flows for the years ended
December 31, 2011, 2010, and 2009	9
Notes to Financial Statements	11



2


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.)


Statements of Comprehensive Income (In millions)
Statements of Comprehensive Income (In millions)


	Years Ended December 31,
	2011	2010	2009
Net income (loss)	$ 152.1	$ 105.4	$ 569.4
Other comprehensive income (loss), before tax:
Unrealized gains/losses on securities	(11.6)	785.3	1,234.0
Other-than-temporary impairments	29.0	(6.9)	(100.1)
Pension and other post-employment benefit liability	—	(0.2)	1.9
Other comprehensive income (loss), before tax	17.4	778.2	1,135.8
Income tax benefit (expense) related to items of other comprehensive
income (loss)	72.9	(99.3)	(334.0)
Other comprehensive income (loss), after tax	90.3	678.9	801.8

Comprehensive income (loss)	$ 242.4	$ 784.3	$ 1,371.2


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




7


ING USA Annuity and Life Insurance Company (A wholly owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Financial Statements (Dollar amounts in millions, unless otherwise stated)





5.	Sales Inducements

During the year ended December 31, 2011, the Company capitalized and amortized $32.2 and $461.8, respectively, of sales inducements. During the year ended December 31, 2010, the Company capitalized and amortized $46.9 and $(82.0), respectively, of sales inducements. The unamortized balance of capitalized sales inducements, net of unrealized capital gains (losses) on available-for-sale securities, was $1,023.8 and $669.9 as of December 31, 2011 and 2010, respectively.







60


	maturity date; (iii) the insolvency of ING Life Insurance and Annuity Company; or (iv) a reduction in the credit rating of ING Life Insurance and Annuity Company’s long- term debt as issued by Standard & Poor’s or Moody’s Investors Service, Inc. to BBB+ or lower or Baa1 or lower, respectively.




	During the Guarantee Period, the Registrant hereby undertakes to include in the prospectus which is a part of this registration statement on Form N-4, a space that an applicant can check to request the most recent annual and/or quarterly report of ING Life Insurance and Annuity Company.




The Company hereby represents:

1.	The account meets the definition of a “separate account” under federal securities laws.

2.	That the fees and charges deducted under the Contract described in the Prospectus, in
	the aggregate, are reasonable in relation to the services rendered, the expenses to be
	incurred and the risks assumed by the Company.


Steven T. Pierson*		Senior Vice President and Chief Accounting Officer	)
Steven T. Pierson			)

By:	/s/ Nicholas Morinigo
	Nicholas Morinigo
	*Attorney-in-Fact


	SEPARATE ACCOUNT B EXHIBIT INDEX
	SEPARATE ACCOUNT B EXHIBIT INDEX
Exhibit No.	Exhibit
24(b)(9)	Opinion and Consent of Counsel	_______
24(b)(10)	Consent of Independent Registered Public Accounting Firm	_______