485BPOS 1 n4access.txt REGISTRATION STATEMENT As filed with the Securities and Exchange Commission on April 15, 2004 Registration Nos. 333-28769; 811-05626 -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Pre-Effective Amendment No. ___ [ ] Post-Effective Amendment No. 26 [X] and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Amendment No. [X] (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 Linda E. Senker, Esq. Kimberly J. Smith, Esq. ING ING 1475 Dunwoody Drive 1475 Dunwoody Drive West Chester, PA 19380-1478 West Chester, PA 19380-1478 (610) 425-4139 (610) 425-3427 (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): [ ] immediately upon filing pursuant to paragraph (b) of Rule 485 [X] on May 1, 2004 pursuant to paragraph (b) of Rule 485 [ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485 [ ] on (date) 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: Deferred Combination Variable and Fixed Annuity Contracts -------------------------------------------------------------------------------- PART A ING [Logo] ING USA ANNUITY AND LIFE INSURANCE COMPANY SEPARATE ACCOUNT B OF ING USA ANNUITY AND LIFE INSURANCE COMPANY PROSPECTUS SUPPLEMENT DATED MAY 1, 2004 TO THE PROSPECTUS DATED MAY 1, 2004 FOR DEFERRED COMBINATION VARIABLE AND FIXED ANNUITY CONTRACTS ("ING GOLDENSELECT ACCESS PROSPECTUS") ISSUED BY ING USA ANNUITY AND LIFE INSURANCE COMPANY FOR USE ONLY IN THE STATE OF WASHINGTON The information in this supplement updates and amends certain information contained in the above listed prospectuses. You should read and keep this supplement along with the prospectus. For Contracts issued in the State of Washington, the following provisions apply: 1. The Fixed Account is not available in the state of Washington. 2. The following amendments are made to the section entitled, "Minimum Guaranteed Income Benefit Rider (MGIB)": a. The Fixed Interest Division is designated as an Excluded Fund. b. The section entitled, "Determining the MGIB Charge Base" is amended as follows: The MGIB Charge Base is a percentage of the greatest sum of the MGIB Charge Base for Covered Funds and the MGIB Charge Base for Special Funds, on any date since the date on which the last charge was deducted, or the rider date for the first deduction. c. The quarterly charge for the MGIB rider is deducted only from the contract value of the subaccounts in which you are invested. No deduction will be made from the Fixed Interest Division. 3. The death benefits for Contracts issued for delivery in the State of Washington are described in the appendix to the prospectus entitled, "Death Benefits for Yr-2001 and May-2001 Contract Owners" with the following amendments: a. Contracts issued for delivery in the State of Washington will have a "5.5% Enhanced Death Benefit" and a "Max 5.5 Enhanced Death Benefit." The "7% Solution Enhanced Death Benefit" and the "Max 7 Enhanced Death Benefit" referred to in the prospectus are not available and not offered in the State of Washington. All references to the "7% Solution Enhanced Death Benefit" and the "Max 7 Enhanced Death Benefit" as described in the prospectus should be changed to the "5.5% Solution Enhanced Death Benefit" and a "Max 5.5 Enhanced Death Benefit." Access--WA--131812 05/1/2004 b. For purposes of calculating the 5.5% Solution Enhanced Death Benefit, the following apply: i. The death benefit accrues to age 80, but the cap is not applicable; ii. Withdrawals of up to 5.5% per year of cumulative premiums are referred to as special withdrawals. Special withdrawals reduce the 5.5% Solution Minimum Guaranteed Death Benefit ("MGDB") by the amount of contract value withdrawn. For any withdrawal in excess of the amount available as a special withdrawal, a pro rata adjustment is made to the 5.5% MGDB. c. The "floor" described in the appendix to the prospectus applies only to the calculation of the 5.5% Solution Enhanced Death Benefit and the Max 5.5% Enhanced Death Benefit. The floor does not apply to the Annual Ratchet Enhanced Death Benefit. d. The Special Funds listed in the prospectus apply to the calculation of the 5.5% Solution Enhanced Death Benefit and the Max 5.5% Enhanced Death Benefit. No Special Funds apply to the calculation of the Standard Death Benefit or the Annual Ratchet Enhanced Death Benefit. 4. The charges, fees and expenses for Contracts with the 5.5% Solution Enhanced Death Benefit and Max 5.5% Enhanced Death Benefit are as described in the prospectus with the exception of the mortality and expense risk charges. The mortality and expense risk charges and asset based administrative charges are as follows: -------------------------------------------------------------------------------- 5.5% SOLUTION MAX 5.5 -------------------------------------------------------------------------------- Mortality & Expense Risk Charge 1.80% 1.95% Asset-Based Administrative Charge 0.15% 0.15% Total 1.95% 2.10% -------------------------------------------------------------------------------- The mortality and expense risk charge is deducted each business day at the rate of 0.004976% (5.5% Solution), or 0.005395% (Max 5.5) for each day since the previous business day. The Asset-Based Administrative Charge is deducted each business day at the rate of 0.000411%. ING [Logo] ING USA ANNUITY AND LIFE INSURANCE COMPANY ING USA Annuity and Life Insurance Company is a stock company domiciled in Iowa. Access--WA--131812 2 05/1/2004 -------------------------------------------------------------------------------- ING USA ANNUITY AND LIFE INSURANCE COMPANY SEPARATE ACCOUNT B OF ING USA ANNUITY AND LIFE INSURANCE COMPANY DEFERRED COMBINATION VARIABLE AND FIXED ANNUITY PROSPECTUS ING GOLDENSELECT ACCESS(R) -------------------------------------------------------------------------------- MAY 1, 2004 This prospectus describes ING GoldenSelect Access, a group and individual deferred variable annuity contract (the "Contract") offered by ING USA Annuity and Life Insurance Company ("ING USA," the "Company," "we," "us" or "our") (formerly Golden American Life Insurance Company). The Contract is available in connection with certain retirement plans that qualify for special federal income tax treatment ("qualified Contracts") as well as those that do not qualify for such treatment ("non-qualified Contracts"). The Contract provides a means for you to invest your premium payments in one or more mutual fund investment portfolios. You may also allocate premium payments to our Fixed Account with guaranteed interest periods. Your contract value will vary daily to reflect the investment performance of the investment portfolio(s) you select and any interest credited to your allocations in the Fixed Account. For Contracts sold in some states, not all Fixed Interest Allocations or subaccounts are available. The investment portfolios available under your Contract and the portfolio managers are listed on the next page. You have a right to return a Contract within 10 days after you receive it for a refund of the adjusted contract value (which may be more or less than the premium payments you paid), or if required by your state, the original amount of your premium payment. Longer free look periods apply in some states and in certain situations. REPLACING AN EXISTING ANNUITY WITH THE CONTRACT MAY NOT BE BENEFICIAL TO YOU. YOUR EXISTING ANNUITY MAY BE SUBJECT TO FEES OR PENALTIES ON SURRENDER, AND THE CONTRACT MAY HAVE NEW CHARGES. This prospectus provides information that you should know before investing and should be kept for future reference. A Statement of Additional Information ("SAI"), dated May 1, 2004, has been filed with the Securities and Exchange Commission ("SEC"). It is available without charge upon request. To obtain a copy of this document, write to our Customer Service Center at P.O. Box 9271, Des Moines, Iowa 50306-9271 or call (800) 366-0066, or access the SEC's website (http://www.sec.gov). The table of contents of the SAI is on the last page of this prospectus and the SAI is made part of this prospectus by reference. THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. AN INVESTMENT IN ANY SUBACCOUNT THROUGH A TRUST OR FUND IS NOT A BANK DEPOSIT AND IS NOT INSURED OR GUARANTEED BY ANY BANK OR BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. THE INVESTMENT PORTFOLIOS ARE LISTED ON THE NEXT PAGE. -------------------------------------------------------------------------------- Access - 131789 The investment portfolios available under your Contract are:
ING INVESTORS TRUST ING PARTNERS, INC. ING AIM Mid Cap Growth Portfolio (Class S) ING JP Morgan Fleming International Portfolio ING Alliance Mid Cap Growth Portfolio (Class S) (Service Class) ING American Funds Growth Portfolio ING Salomon Brothers Aggressive Growth Portfolio ING American Funds Growth-Income Portfolio (Service Class) ING American Funds International Portfolio ING Capital Guardian Large Cap Value Portfolio ING VARIABLE INSURANCE TRUST (Class S) ING VP Worldwide Growth Portfolio ING Capital Guardian Managed Global Portfolio (Class S) ING VARIABLE PORTFOLIOS, INC. ING Capital Guardian Small Cap Portfolio (Class S) ING VP Index Plus LargeCap Portfolio (Class S) ING Developing World Portfolio (Class S) ING VP Index Plus MidCap Portfolio (Class S) ING Eagle Asset Capital Appreciation Portfolio ING VP Index Plus SmallCap Portfolio (Class S) (Class S) ING Evergreen Health Sciences Portfolio (Class S) ING VARIABLE PRODUCTS TRUST ING Evergreen Omega Portfolio (Class S) ING VP Financial Services Portfolio (Class S) ING FMR(SM) Diversified Mid Cap Portfolio (Class S) ING VP MagnaCap Portfolio (Class S) ING Goldman Sachs Internet Tollkeeper(SM) Portfolio ING VP MidCap Opportunities Portfolio (Class S) (Class S) ING VP SmallCap Opportunities Portfolio (Class S) ING Hard Assets Portfolio (Class S) ING International Portfolio (Class S) ING VP BOND PORTFOLIO (CLASS S) ING Janus Special Equity Portfolio (Class S) ING Jennison Equity Opportunities Portfolio (Class S) AIM VARIABLE INSURANCE FUNDS ING JPMorgan Small Cap Equity Portfolio (Class S) AIM V.I. Dent Demographic Trends Fund (Series II) ING Julius Baer Foreign Portfolio (Class S) ING Legg Mason Value Portfolio (Class S) FIDELITY VARIABLE INSURANCE PRODUCTS PORTFOLIO ING LifeStyle Aggressive Growth Portfolio Fidelity VIP Equity-Income Portfolio (Service Class 2) ING LifeStyle Growth Portfolio Fidelity VIP Growth Portfolio (Service Class 2) ING LifeStyle Moderate Growth Portfolio ING LifeStyle Moderate Portfolio INVESCO VARIABLE INVESTMENT FUNDS, INC. ING Liquid Assets Portfolio (Class S) INVESCO VIF - Leisure Fund (Series I) ING Marsico Growth Portfolio (Class S) INVESCO VIF - Utilities Fund (Series I) ING Mercury Focus Value Portfolio (Class S) ING Mercury Fundamental Growth Portfolio (Class S) LIBERTY VARIABLE INSURANCE TRUST ING MFS Mid Cap Growth Portfolio (Class S) Colonial Small Cap Value Fund ING MFS Research Portfolio (Class S) ING MFS Total Return Portfolio (Class S) PIONEER VARIABLE CONTRACTS TRUST ING PIMCO Core Bond Portfolio (Class S) Pioneer Fund VCT Portfolio (Class II) ING PIMCO High Yield Portfolio (Class A) Pioneer Mid Cap Value VCT Portfolio (Class II) ING Salomon Brothers All Cap Portfolio (Class S) ING Salomon Brothers Investors Portfolio (Class S) PROFUNDS VP ING T. Rowe Price Capital Appreciation Portfolio ProFund VP Bull (Class S) ProFund VP Europe 30 ING T. Rowe Price Equity Income Portfolio (Class S) ProFund VP Rising Rates Opportunity ING UBS U.S. Balanced Portfolio (Class S) ProFund VP Small-Cap ING Van Kampen Equity Growth Portfolio (Class S) ING Van Kampen Global Franchise Portfolio (Class S) PRUDENTIAL SERIES FUND, INC. ING Van Kampen Growth and Income Portfolio Jennison Portfolio (Class II) (Class S) SP William Blair International Growth Portfolio ING Van Kampen Real Estate Portfolio (Class S) (Class II)
Access - 131789 -------------------------------------------------------------------------------- TABLE OF CONTENTS --------------------------------------------------------------------------------
PAGE PAGE Index of Special Terms.............................. ii Death Benefit During the Accumulation Phase....... 35 Fees and Expenses................................... 1 Standard Death Benefit........................ 35 Condensed Financial Information..................... 4 Enhanced Death Benefit Options................ 36 Accumulation Unit................................. 4 Earnings Multiplier Benefit Rider............. 38 The Net Investment Factor..................... 4 Death Benefit During the Income Phase............. 38 Performance Information........................... 4 Continuation After Death-- Spouse................. 39 Financial Statements.............................. 5 Continuation After Death-- Not a Spouse........... 39 ING USA Annuity and Life Insurance Company.......... 6 Required Distributions Upon Contract ING USA Separate Account B.......................... 6 Owner's Death................................. 39 The Trusts and Funds................................ 7 The Annuity Options................................. 40 Restricted Funds.................................... 8 Other Contract Provisions........................... 43 Covered Funds, Special Funds and Excluded Other Information................................... 45 Funds ........................................... 9 Federal Tax Considerations.......................... 46 Charges and Fees.................................... 9 Statement of Additional Information Charge Deduction Subaccount....................... 9 Table of Contents................................. 54 Charges Deducted from the Contract Value.......... 9 Appendix A No Surrender Charge........................... 9 Condensed Financial Information................... A1 Premium Taxes................................. 9 Appendix B Administrative Charge......................... 10 The Investment Portfolios......................... B1 Transfer Charge............................... 10 Appendix C Charges Deducted from the Subaccounts............. 10 Fixed Account I................................... C1 Mortality and Expense Risk Charge............. 10 Appendix D Asset-Based Administrative Charge............. 10 Fixed Interest Division........................... D1 Earnings Multiplier Benefit Charge............ 10 Appendix E Optional Rider Charges........................ 11 Withdrawal Adjustment for 7% Solution Trust and Fund Expenses........................... 11 Death Benefit Examples for Contract The Annuity Contract................................ 12 Categories Other Than May-2002, Yr-2003 or Contract Date and Contract Year .................. 12 Yr-2004........................................... E1 Contract Owner.................................... 12 Appendix F Annuity Start Date................................ 14 Special Funds and Excluded Funds Examples......... F1 Annuitant......................................... 14 Appendix G Beneficiary....................................... 14 MGWB Excess Withdrawal Amount Examples............ G1 Purchase and Availability of the Contract......... 15 Appendix H Crediting of Premium Payments..................... 16 Death Benefits for Pre-2000 and Yr-2000 Administrative Procedures......................... 17 Contract Owners............................... H1 Contract Value.................................... 17 Appendix I Cash Surrender Value.............................. 18 Death Benefits for Yr-2001 and May-2001 Addition, Deletion or Substitution of Contract Owners............................... I1 Subaccounts and Other Changes................. 18 Appendix J The Fixed Account................................. 19 Death Benefits for May-2002 and Yr-2003 Optional Riders................................... 19 Contract Owners............................... J1 Rider Date.................................... 19 Appendix K No Cancellation............................... 19 Optional Rider Benefits for Pre-2000 and Termination................................... 19 Yr-2000 Contract Owners....................... K1 Minimum Guaranteed Income Appendix L Benefit Rider.............................. 22 Optional Rider Benefits for Yr-2001 and Minimum Guaranteed Withdrawal May-2001 Contract Owners...................... L1 Benefit Rider.............................. 26 Appendix M Other Contracts................................... 28 Optional Rider Benefit Charges and Withdrawals......................................... 29 Optional Rider Benefits for May-2002 Transfers Among Your Investments.................... 32 Contract Owners............................... M1 Death Benefit Choices............................... 35 Appendix N Optional Rider Benefit Charges and Optional Rider Benefits for May-2002 and Yr-2003 Contract Owners................... N1
Access - 131789 iii -------------------------------------------------------------------------------- INDEX OF SPECIAL TERMS -------------------------------------------------------------------------------- The following special terms are used throughout this prospectus. Refer to the page(s) listed for an explanation of each term: SPECIAL TERM PAGE ------------------------------------------------------------------ Accumulation Unit 4 Annuitant 14 Annuity Start Date 14 Cash Surrender Value 18 Claim Date 35 Contract Date 12 Contract Owner 12 Contract Value 17 Contract Year 12 Covered Fund 9 Earnings Multiplier Benefit 38 Excluded Fund 10 Max 7 Enhanced Death Benefit 38 Net Investment Factor 4 Net Rate of Return 4 Quarterly Ratchet Enhanced Death Benefit 37 Restricted Fund 8 Rider Date 19 7% Solution Death Benefit Element 36 Special Fund 9 Standard Death Benefit 35 The following terms as used in this prospectus have the same or substituted meanings as the corresponding terms currently used in the Contract: TERM USED IN THIS PROSPECTUS CORRESPONDING TERM USED IN THE CONTRACT ---------------------------------------------------------------------------- Accumulation Unit Value Index of Investment Experience Annuity Start Date Annuity Commencement Date Contract Owner Owner or Certificate Owner Contract Value Accumulation Value Transfer Charge Excess Allocation Charge Fixed Interest Allocation Fixed Allocation Free Look Period Right to Examine Period Guaranteed Interest Period Guarantee Period Subaccount(s) Division(s) Net Investment Factor Experience Factor Regular Withdrawals Conventional Partial Withdrawals Withdrawals Partial Withdrawals Access - 131789 iv -------------------------------------------------------------------------------- FEES AND EXPENSES -------------------------------------------------------------------------------- The following tables describe the fees and expenses that you will pay when buying, owning, and surrendering the contract. The first table describes the fees and expenses that you will pay at the time that you buy the contract, surrender the contract, or transfer contract value between investment options. State premium taxes may also be deducted. CONTRACT OWNER TRANSACTION EXPENSES(1) Surrender Charge...................................... None Transfer Charge 2..................................... $25 per transfer, if you make more than 12 transfers in a contract year 1 If you invested in a Fixed Interest Allocation, a Market Value Adjustment may apply to certain transactions. This may increase or decrease your contract value and/or your transfer or surrender amount. 2 We currently do not impose this charge, but may do so in the future. The next table describes the fees and expenses that you will pay periodically during the time that you own the contract, not including Trust or Fund fees and expenses. ANNUAL CONTRACT ADMINISTRATIVE CHARGE(3)..................... $40 (We waive this charge if the total of your premium payments is $100,000 or more or if your contract value at the end of a contract year is $100,000 or more.) 3 We deduct this charge on each contract anniversary and on surrender. SEPARATE ACCOUNT ANNUAL CHARGES(4) ---------------------------------------------------------------------- STANDARD EHNANCED DEATH BENEFITS DEATH QUARTERLY BENIFIT RATCHET MAX 7 ---------------------------------------------------------------------- Mortality & Expense Risk Charge 1.65% 1.90% 2.10% Asset-Based Administrative Charge 0.15% 0.15% 0.15% ----- ----- ----- Total 1.80% 2.05% 2.25% ---------------------------------------------------------------------- 4 As a percentage of average daily assets in each subaccount. The Separate Account Annual Charges are deducted daily. 5 Please see the applicable appendix for the mortality and expense risk charge applicable to Pre-2000, Yr-2000 and Yr-2001 contract owners. EARNINGS MULTIPLIER BENEFIT RIDER CHARGE(6) ------------------------------------------------------------ As an Annual Charge As a Quarterly Charge ------------------------------------------------------------ 0.30% of contract value 0.075% of contract value ------------------------------------------------------------ 6 We deduct the rider charge from the subaccounts in which you are invested on each quarterly contract anniversary and pro-rata on termination of the Contract; if the value in the subaccounts is insufficient, the rider charge will be deducted from the Fixed Interest Allocation(s) nearest maturity, and the amount deducted may be subject to a Market Value Adjustment. Access - 131789 1 OPTIONAL RIDER CHARGES(7) MINIMUM GUARANTEED INCOME BENEFIT RIDER:
--------------------------------------------------------------------------------- MGIB Rate As an Annual Charge As a Quarterly Charge --------------------------------------------------------------------------------- 7% 0.75% of the MGIB Charge Base(8) 0.1875% of the MGIB Charge Base(8) ---------------------------------------------------------------------------------
MINIMUM GUARANTEED WITHDRAWAL BENEFIT RIDER: ------------------------------------------------------------ As an Annual Charge As a Quarterly Charge ------------------------------------------------------------ 0.35% of contract value 0.0875% of contract value ------------------------------------------------------------ 7 We deduct optional rider charges from the subaccounts in which you are invested on each quarterly contract anniversary and pro-rata on termination of the Contract; if the value in the subaccounts is insufficient, the optional rider charges will be deducted from the Fixed Interest Allocation(s) nearest maturity, and the amount deducted may be subject to a Market Value Adjustment. 8 The MGIB Charge Base generally depends on the amount of premiums you pay during the first five contract years after you purchase the rider, when you pay the premiums, less a pro-rata deduction for any withdrawal made while the MGIB rider is in effect and accumulated at the MGIB Rate. The MGIB Charge Base is tracked separately for Covered, Special and Excluded Funds, based on initial allocation of eligible premium (or contract value), subsequent allocation of eligible premium, withdrawals and transfers. Withdrawals and transfers between Covered, Special and Excluded Funds may reduce the applicable MGIB Charge Base by more than the amount withdrawn or transferred. TRUST OR FUND EXPENSES The next item shows the minimum and maximum total operating expenses charged by the Trust or Fund that you may pay periodically during the time that you own the Contract. More detail concerning each Trust or Fund's fees and expenses is contained in the prospectus for each Trust or Fund. ----------------------------------------------------------------------------- TOTAL ANNUAL TRUST OR FUND OPERATING EXPENSES(9) MINIMUM MAXIMUM ----------------------------------------------------------------------------- (expenses that are deducted from Trust or Fund assets, including management fees, distribution 0.53% 1.91% and/or service (12b-1) fees10, and other expenses): ----------------------------------------------------------------------------- 9 The minimum and maximum total operating expenses charged by a Trust or a Fund including applicable expense reimbursement or fee waiver arrangements would also be 0.53% to 1.91%. The expense reimbursement or fee arrangement reflected is expected to continue through December 31, 2004. 10 The Company may receive compensation from each of the funds or the funds' affiliates based on an annual percentage of the average net assets held in that fund by the Company. The percentage paid may vary from one fund company to another. For certain funds, some of this compensation may be paid out of 12b-1 fees or service fees that are deducted from fund assets. Any such fees deducted from fund assets are disclosed in the Fund or Trust prospectuses. The Company may also receive additional compensation from certain funds for administrative, recordkeeping or other services provided by the Company to the funds or the funds' affiliates. These additional payments are made by the funds or the funds' affiliates to the Company and do not increase, directly or indirectly, the fees and expenses shown above. The following table shows the annual operating expenses separately for each Trust or Fund. FUND EXPENSE TABLE(1) The column labeled "Total Fund Annual Expenses Without Waivers or Reductions" shows the total annual operating expenses charged by a Trust or Fund, absent expense reimbursement or fee waiver arrangements. The column labeled "Net Fund Annual Expenses After Waivers or Reductions" shows such total annual operating expenses after applicable expense reimbursement or fee waiver arrangements where the Trust or Access - 131789 2 Fund has committed to continue such reimbursement or waiver through December 31, 2004. Expenses shown are actual expenses for the year ended 12/31/03 unless otherwise noted.
NET FUND TOTAL FUND ANNUAL DISTRIBUTION ANNUAL TOTAL EXPENSES AND/OR EXPENSES WAIVERS AFTER INVESTMENT SERVICE WITHOUT WAIVERS OR WAIVERS OR ADVISORY (12B-1) OTHER EXPENSES OR REDUCTIONS REDUCTIONS REDUCTIONS ---------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Dent Demographic Trends Fund (Series II) (7) 0.85% 0.25% 0.45% 1.55% 0.10% 1.45% Colonial Small Cap Value Fund 0.80% 0.25% 0.41% 1.46% 0.36% 1.10% Fidelity(R)VIP Equity-Income Portfolio (Service Class 2) 0.48% 0.25% 0.09% 0.82% 0.00% 0.82% Fidelity(R)VIP Growth Portfolio (Service Class 2) 0.58% 0.25% 0.09% 0.92% 0.00% 0.92% ING AIM Mid-Cap Growth Portfolio (Class S) (2)(3)(6) 0.68% 0.25% 0.01% 0.94% 0.00% 0.94% ING Alliance Mid-Cap Growth Portfolio (Class S) (2)(3)(6) 0.78% 0.25% 0.01% 1.04% 0.00% 1.04% ING American Funds Growth Portfolio (8)(9)(10)(11) 0.37% 0.75% 0.05% 1.17% 0.00% 1.17% ING American Funds Growth-Income Portfolio (8)(9)(10)(11) 0.33% 0.75% 0.04% 1.12% 0.00% 1.12% ING American Funds International Portfolio (8)(9)(10)(11) 0.57% 0.75% 0.09% 1.41% 0.00% 1.41% ING Capital Guardian Large Cap Value Portfolio (Class S) (2)(3)(6) 0.74% 0.25% 0.01% 1.00% 0.00% 1.00% ING Capital Guardian Managed Global Portfolio (Class S) (2)(3)(6) 1.00% 0.25% 0.01% 1.26% 0.00% 1.26% ING Capital Guardian Small Cap Portfolio (Class S) (2)(3)(6) 0.68% 0.25% 0.01% 0.94% 0.00% 0.94% ING Developing World Portfolio (Class S) (2)(3) 1.25% 0.25% 0.02% 1.52% 0.00% 1.52% ING Eagle Asset Capital Appreciation Portfolio (Class S) (2)(3) 0.68% 0.25% 0.01% 0.94% 0.00% 0.94% ING Evergreen Health Sciences Portfolio (Class S) (2)(3)(4) 0.75% 0.25% 0.01% 1.01% 0.00% 1.01% ING Evergreen Omega Portfolio (Class S) (2)(3)(4) 0.60% 0.25% 0.01% 0.86% 0.00% 0.86% ING FMR(SM) Diversified Mid-Cap Portfolio (Class S) (2)(3) 0.75% 0.25% 0.00% 1.00% 0.00% 1.00% ING Goldman Sachs Internet TollkeeperSM Portfolio (Class S) (2)(3) 1.35% 0.25% 0.01% 1.61% 0.00% 1.61% ING Hard Assets Portfolio (Class S) (2)(3) 0.68% 0.25% 0.01% 0.94% 0.00% 0.94% ING International Portfolio (Class S) (2)(3) 1.00% 0.25% 0.01% 1.26% 0.00% 1.26% ING Janus Special Equity Portfolio (Class S) (2)(3)(6) 0.81% 0.25% 0.01% 1.07% 0.00% 1.07% ING Jennison Equity Opportunities Portfolio (Class S) (2)(3)(6) 0.68% 0.25% 0.01% 0.94% 0.00% 0.94% ING JPMorgan Fleming International Portfolio (Service Class) (20) 0.80% 0.25% 0.20% 1.25% 0.00% 1.25% ING JPMorgan Small Cap Equity Portfolio (Class S) (2)(3)(6) 0.90% 0.25% 0.00% 1.15% 0.00% 1.15% ING Julius Baer Foreign Portfolio (Class S) (2)(3) 1.00% 0.25% 0.00% 1.25% 0.00% 1.25% ING Legg Mason Value Portfolio (Class S) (2)(3)(6) 0.81% 0.25% 0.00% 1.06% 0.00% 1.06% ING Lifestyles Aggressive Growth Portfolio (4)(12)(13) 1.23% 0.00% 0.05% 1.28% 0.05% 1.23% ING Lifestyles Growth Portfolio (4)(12)(13) 1.18% 0.00% 0.05% 1.23% 0.05% 1.18% ING Lifestyles Moderate Growth Portfolio (4)(12)(13) 1.13% 0.00% 0.05% 1.18% 0.05% 1.13% ING Lifestyles Moderate Portfolio (4)(12)(13) 1.05% 0.00% 0.05% 1.10% 0.05% 1.05% ING Liquid Assets Portfolio (Class S) (2)(3) 0.27% 0.25% 0.01% 0.53% 0.00% 0.53% ING Marsico Growth Portfolio (Class S) (2)(3)(6) 0.79% 0.25% 0.00% 1.04% 0.00% 1.04% ING Mercury Focus Value Portfolio (Class S) (2)(3) 0.80% 0.25% 0.00% 1.05% 0.00% 1.05% ING Mercury Fundamental Growth Portfolio (Class S) (2)(3) 0.80% 0.25% 0.00% 1.05% 0.00% 1.05% ING MFS Mid-Cap Growth Portfolio (Class S) (2)(3)(5)(6) 0.64% 0.25% 0.01% 0.90% 0.00% 0.90% ING MFS Research Portfolio (Class S) (2)(3)(5)(6) 0.64% 0.25% 0.01% 0.90% 0.00% 0.90% ING MFS Total Return Portfolio (Class S) (2)(3)(5)(6) 0.64% 0.25% 0.01% 0.90% 0.00% 0.90% ING PIMCO Core Bond Portfolio (Class S) (2)(3) 0.61% 0.25% 0.01% 0.87% 0.00% 0.87% ING PIMCO High Yield Portfolio (Class A) (2)(3)(4) 0.49% 0.25% 0.01% 0.75% 0.00% 0.75% ING Salomon Brothers Aggressive Growth Portfolio (Service Class) (20) 0.70% 0.25% 0.13% 1.08% 0.00% 1.08% ING Salomon Brothers All Cap Portfolio (Class S) (2)(3)(6) 0.75% 0.25% 0.00% 1.00% 0.00% 1.00% ING Salomon Brothers Investors Portfolio (Class S) (2)(3) 0.75% 0.25% 0.00% 1.00% 0.00% 1.00% ING T. Rowe Price Capital Appreciation Portfolio (Class S) (2)(3)(6) 0.68% 0.25% 0.01% 0.94% 0.00% 0.94% ING T. Rowe Price Equity Income Portfolio (Class S) (2)(3)(6) 0.68% 0.25% 0.01% 0.94% 0.00% 0.94% ING UBS U.S. Balanced Portfolio (Class S) (2)(3) 0.75% 0.25% 0.01% 1.01% 0.00% 1.01%
Access - 131789 3
NET FUND TOTAL FUND ANNUAL DISTRIBUTION ANNUAL TOTAL EXPENSES AND/OR EXPENSES WAIVERS AFTER INVESTMENT SERVICE WITHOUT WAIVERS OR WAIVERS OR ADVISORY (12B-1) OTHER EXPENSES OR REDUCTIONS REDUCTIONS REDUCTIONS ---------------------------------------------------------------------------------------------------------------------------------- ING Van Kampen Equity Growth Portfolio (Class S) (2)(3) 0.65% 0.25% 0.01% 0.92% 0.00% 0.92% ING Van Kampen Global Franchise Portfolio (Class S) (2)(3) 1.00% 0.25% 0.00% 1.25% 0.00% 1.25% ING Van Kampen Growth and Income Portfolio (Class S) (2)(3)(6) 0.68% 0.25% 0.01% 0.94% 0.00% 0.94% ING Van Kampen Real Estate Portfolio (Class S) (2)(3) 0.68% 0.25% 0.00% 0.93% 0.00% 0.93% ING VP Bond Portfolio (Class S) (14) 0.40% 0.25% 0.10% 0.75% 0.00% 0.75% ING VP Financial Services Portfolio (Class S) (16)(17)(18) 0.75% 0.25% 0.15% 1.15% 0.10% 1.05% ING VP Index Plus LargeCap Portfolio (ClassS) (14)(15) 0.35% 0.25% 0.08% 0.68% 0.00% 0.68% ING VP Index Plus MidCap Portfolio (Class S) (14)(15) 0.40% 0.25% 0.10% 0.75% 0.00% 0.75% ING VP Index Plus SmallCap Portfolio (Class S) (14)(15) 0.40% 0.25% 0.15% 0.80% 0.00% 0.80% ING VP MagnaCap Portfolio (Class S) (16)(17)(18)(19) 0.75% 0.25% 0.40% 1.40% 0.29% 1.11% ING VP MidCap Opportunities Portfolio (Class S)(16)(17)(18) 0.75% 0.25% 0.45% 1.45% 0.35% 1.10% ING VP SmallCap Opportunities Portfolio (Class S) (16)(17)(18) 0.75% 0.25% 0.32% 1.32% 0.22% 1.10% ING VP Worldwide Growth Portfolio (25)(26) 1.00% 0.25% 0.50% 1.75% 0.52% 1.23% INVESCO VIF-- Leisure Fund (Series I) (21)(22)(23) 0.75% 0.00% 1.09% 1.84% 0.54% 1.30% INVESCO VIF-- Utilities Fund (Series I) (21)(22)(24) 0.60% 0.00% 0.55% 1.15% 0.00% 1.15% Jennison Portfolio (Class II) 0.60% 0.25% 0.19% 1.04% 0.00% 1.04% Pioneer Fund VCT Portfolio (Class II) 0.65% 0.25% 0.10% 1.00% 0.00% 1.00% Pioneer Mid Cap Value VCT Portfolio (Class II) 0.65% 0.25% 0.10% 1.00% 0.00% 1.00% ProFund VP Bull 0.75% 0.25% 0.87% 1.87% 0.00% 1.87% ProFund VP Europe 30 0.75% 0.25% 0.91% 1.91% 0.00% 1.91% ProFund Rising Rates Opportunity 0.75% 0.25% 0.91% 1.91% 0.00% 1.91% ProFund VP Small-Cap 0.75% 0.25% 0.73% 1.73% 0.00% 1.73% SP William Blair International Growth Portfolio (Class II) 0.85% 0.25% 0.44% 1.54% 0.00% 1.54%
Footnotes to the "Fund Expense Table" (1) The Company may receive compensation from each of the funds or the funds' affiliates based on an annual percentage of the average net assets held in that fund by the Company. The percentage paid may vary from one fund company to another. For certain funds, some of this compensation may be paid out of 12b-1 fees or service fees that are deducted from fund assets. Any such fees deducted from fund assets are disclosed in this Fund Expense Table and the fund prospectuses. The Company may also receive additional compensation from certain funds for administrative, recordkeeping or other services provided by the Company to the funds or the funds' affiliates. These additional payments are made by the funds or the funds' affiliates to the Company and do not increase, directly or indirectly, the fees and expenses shown above. See "Fees - Fund Expenses" for additional information. (2) The table above shows the estimated operating expenses for Class S Shares of each Portfolio as a ratio of expenses to average daily net assets. These estimates, unless otherwise noted, are based on each Portfolio's actual operating expenses for its most recently completed fiscal year, as adjusted for contractual changes, if any. Distribution and/or Service (12b-1) Fees" includes a Shareholder Service Fee of 0.25%. (3) Through a "bundled fee" arrangement, Directed Services, Inc. (DSI), the Trust's manager, is paid a single fee for advisory, administrative, custodial, transfer agency, auditing and legal services necessary for the ordinary operation of the Portfolio. The Portfolios would bear any extraordinary expenses. (4) Because the Portfolio is new, expenses, shown above, are estimated. (5) DSI has voluntarily agreed to waive a portion of its management fee for certain Portfolios. Including these waivers, the " Net Fund Annual Expenses After Waivers or Reductions" for the year ended December 31, 2003, would have been 0.89% for ING MFS Mid Cap Growth and ING MFS Research Portfolios and 0.90% for ING MFS Total Return Portfolio. This arrangement may be discontinued by DSI at any time. (6) A portion of the brokerage commissions that the Portfolios pay is used to reduce each Portfolio's expenses. Including these reductions and the MFS voluntary management fee waiver the " Net Fund Annual Expenses After Waivers or Reductions" for the year ended December 31, 2003 would have been 0.86% for ING AIM Mid Cap Growth, 0.99% for ING Alliance Mid Cap Growth, 0.99% for ING Capital Guardian Large Cap Value, 1.25% for ING Capital Guardian Managed Global, 0.93% for ING Capital Guardian Small Cap, 1.04% for ING Janus Special Equity, 0.89% for ING Jennison Equity Opportunities, 1.14% for ING JPMorgan Small Cap Equity, 1.05% for ING Legg Mason Value, 1.02% for ING Marsico Growth, 0.86% for ING MFS Mid Cap Growth, 0.84% for ING MFS Research, 0.89% for ING MFS Total Return, 0.98% for ING Salomon Brothers All Cap, 0.93% for ING T. Rowe Price Capital Appreciation and ING T. Rowe Price Equity Income and 0.90% for ING Van Kampen Growth and Income Portfolios. This arrangement may be discontinued at any time. Access - 131789 4 (7) The Fund's advisor and/or distributor have contractually agreed to waive advisory fees or reimburse expenses of Series II shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) to 1.45% for AIM V.I. Dent Demographic Trends Fund. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the 1.45% cap for AIM V.I. Dent Demographic Trends Fund: (i) interest; (ii) taxes; (iii) extraordinary items (these are expenses that are not anticipated to arise from the Fund's day-to-day operations), as defined in the Financial Accounting Standard's Board's Generally Accepted Accounting Principles or as approved by the Fund's board of trustees; (iv) expenses related to a merger or reorganization, as approved by the Fund's board of trustees; and (v) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the only expense offset arrangements from which the Fund benefits are in the form of credits that the Fund receives from banks where the Fund or its transfer agent has deposit accounts in which it holds uninvested cash. Those credits are used to pay certain expenses incurred by the Fund. These expense limitation agreements are in effect through December 31, 2005 for AIM V.I. Dent Demographic Trends Fund. (8) This table reflects the aggregate annual operating expenses of each Portfolio and its corresponding Master Fund. (9) Pursuant to its investment management agreement with the Trust, ING Investments, LLC may charge an annual advisory fee at asset levels that are the same as the current asset levels of the Master Funds equal to 0.37% for ING American Funds Growth Portfolio, 0.33% for ING American Funds Growth-Income Portfolio and 0.57% for ING American Funds International Portfolio of the average daily net assets if the respective Portfolio does not invest substantially all of its assets in another investment company. If a Portfolio invests substantially all of its assets in another investment company, ING Investments, LLC does not charge an advisory fee. Each Portfolio anticipates investing substantially all of its assets in another investment company. (10) Shares of each ING American Funds Portfolio are subject to a Rule 12b-1 fee at an annual rate of 0.50% of average daily net assets payable to Directed Services, Inc. (DSI). In addition, Class 2 Shares of each of the ING American Funds Growth Portfolio, the ING American Funds Growth-Income Portfolio and the ING American Funds International Portfolio pay 0.25% of average net assets annually pursuant to a Plan of Distribution or 12b-1 plan. Shareholders of the Class 2 Shares of the Master Funds pay only their proportionate share of 12b-1 plan expenses. (11) "Other Expenses" are estimated because the Portfolios did not have a full year of operations as of December 31, 2003. (12) The table reflects the aggregate annual operating expense for these Portfolios. The expenses are derived by using a weighted average of the fees imposed by each of the portfolios underlying the Portfolios and adding to that average fee, an investment advisory fee of 0.14% and other expenses of 0.05% for each Portfolio. Because the annual net operating expenses of each underlying portfolio will vary from year to year, the expenses paid by a Portfolio may vary from year to year. For more information regarding the expenses of the underlying portfolios, please see the Fund's prospectus. (13) ING Investments, LLC, the investment adviser to each Portfolio, has entered into written expense limitation agreements with each Portfolio under which it will limit expenses of each Portfolio, excluding interest, taxes, brokerage and extraordinary expenses, subject to possible recoupment by ING within three years. The amount of each Portfolio's expenses waived, reimbursed or recouped during the last fiscal year by ING is shown under the heading "Total Waivers or Reductions." For each Portfolio, the expense limits will continue through at least May 3, 2005. For further information regarding the expense limitation agreements, see the Fund's prospectus. (14) The table above shows the estimated operating expenses for Class S shares of each Portfolio as a ratio of expenses to average daily net assets. These estimates, unless otherwise noted, are based on each Portfolio's actual operating expenses, annualized, for the Portfolio's most recently completed fiscal year and fee waivers to which the Portfolio's investment adviser has agreed for each Portfolio. (15) ING Investments, LLC, the investment adviser to each Portfolio, entered into written expense limitation agreements with each Portfolio under which it will limit expenses of the Portfolios, excluding interest, brokerage and extraordinary expenses, subject to possible recoupment by the adviser within three years. The amount of each Portfolio's expenses waived, reimbursed or recouped during the last fiscal year by the adviser is shown under "Total Waivers or Reductions" in the table above. The expense limit for each Portfolio is shown as "Net Fund Annual Expenses After Waivers or Reductions" in the table above. For each Portfolio, the expense limits will continue through at least December 31, 2004. For further information regarding the expense limitation agreements, see the Fund's prospectus. (16) The above table shows the estimated operating expenses for Class S shares of each Portfolio as a ratio of expenses to average daily net assets. With the exception of the ING VP Financial Services Portfolio these estimates are based on each Portfolio's actual operating expenses for its most recently completed fiscal year, as adjusted for contractual changes, if any, and fee waivers to which the Portfolio's investment adviser has agreed for each Portfolio. For the ING VP Financial Services Portfolio, which had not commenced operations prior to December 31, 2003, the Portfolio's fiscal year end, expenses are based on estimated amounts for the current year. (17) ING Funds Services, LLC receives an annual administration fee equal to 0.10% of average daily net assets which is included in "Other Expenses" in the above table. For the ING VP Financial Services Portfolio, which had not commenced operations prior to December 31, 2003, the Portfolio's fiscal year end. "Other Expenses" are based on estimated amounts for the current fiscal year. For all other Portfolios estimated "Other Expenses" are based on each Portfolio's actual "Other Expenses" for its most recently completed fiscal year. Access - 131789 5 (18) ING Investments, LLC, the investment adviser to each Portfolio, has entered into a written expense limitation agreement with each Portfolio under which it will limit expenses of the Portfolio, excluding interest, taxes, brokerage and extraordinary expenses, subject to possible recoupment by the adviser within three years. The amount of each Portfolio's expenses waived, reimbursed or recouped during the last fiscal year by the adviser is shown under "Total Waivers or Reductions" in the above table. For each Portfolio except ING VP MidCap Opportunities Portfolio, the expense limits will continue through at least December 31, 2004. For ING VP MidCap Opportunities Portfolio, the expense limits will continue through at least December 31, 2005. For further information regarding the expense limitation agreements, see the Fund's prospectus. (19) "Other Expenses", "Total Fund Annual Expenses" and "Net Fund Annual Expenses After Waivers or Reductions" in the above table exclude a one-time merger fee of 0.06% incurred in connection with the merger of another investment company into ING VP MagnaCap Portfolio. (20) "Other Expenses" shown in the above table include a Shareholder Services fee of 0.25%. (21) The Fund has adopted a new form of administrative services and transfer agency agreements which will be effective May 1, 2004. As a result, "Other Expenses" have been restated to reflect the changes in fees under the new agreements. (22) The Fund's advisor is entitled to receive reimbursement from the Fund for fees and expenses paid for by the Fund's advisor pursuant to expense limitation commitments between the Fund's advisor and the Fund if such reimbursement does not cause the Fund to exceed its then-current expense limitations and the reimbursement is made within three years after the Fund's advisor incurred the expense. (23) The Fund's advisor has contractually agreed to waive advisory fees or reimburse expenses of Series I shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) to 1.30%. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the 1.30% cap: (i) interest; (ii) taxes; (iii) extraordinary items (these are expenses that are not anticipated to arise from the Fund's day-to-day operations), as defined in the Financial Accounting Standard's Board's Generally Accepted Accounting Principles or as approved by the Fund's board of trustees; (iv) expenses related to a merger or reorganization, as approved by the Fund's board of trustees; and (v) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the only expense offset arrangements from which the Fund benefits are in the form of credits that the Fund receives from banks where the Fund or its transfer agent has deposit accounts in which it holds uninvested cash. Those credits are used to pay certain expenses incurred by the Fund. This expense limitation agreement is in effect through December 31, 2005. (24) As a result of a reorganization of another fund into the Fund, which occurred on April 30, 2004, the "Total Fund Annual Expenses Without Waivers or Reductions" have been restated to reflect current expenses. (25) The above table shows the estimated operating expenses of each Portfolio as a ratio of expenses to average daily net assets. These estimates are based on each Portfolio's actual operating expenses for its most recently completed fiscal year, as adjusted for contractual changes, if any, and fee waivers to which the Portfolio's investment adviser has agreed for each Portfolio. ING Funds Services, LLC receives an annual administration fee equal to 0.10% of average daily net assets which is included in Other Expenses in the above table. Estimated Other Expenses are based on each Portfolio's actual Other Expenses for its most recently completed fiscal year. (26) ING Investments, LLC, the investment adviser to each Portfolio, has entered into a written expense limitation agreement with each Portfolio under which it will limit expenses of the Portfolio, excluding interest, taxes, brokerage and extraordinary expenses, subject to possible recoupment by the adviser within three years. The amount of each Portfolio's expenses waived, reimbursed or recouped during the last fiscal year by the adviser is shown under Fees and Expenses Waived or Reimbursed in the above table. For each Portfolio the expense limits will continue through at least December 31, 2004. For further information regarding the expense limitation agreements, see the Fund's prospectus. Premium taxes (which currently range from 0% to 3.5% of premium payments) may apply, but are not reflected in the above table or in the example below. EXAMPLE: This Example is intended to help you compare the cost of investing in the Contract with the cost of investing in other variable annuity contracts. These costs include contract owner transaction expenses, contract fees, separate account annual expenses, and Trust or Fund fees and expenses. The Example assumes that you invest $10,000 in the Contract for the time periods indicated. The Example also assumes that your investment has a 5% return each year and assumes the maximum fees and expenses of any of the Trusts or Funds. Specifically, the Example assumes election of the Max 7 Enhanced Death Benefit and election of the earnings multiplier benefit rider with a charge of 0.30% of Access - 131789 6 the contract value annually. The Example reflects the deduction of a mortality and expense risk charge, an asset-based administrative charge, and the annual contract administrative charge as an annual charge of 0.03% of assets. The Example also assumes you elected an optional benefit rider with the highest cost, an assumed charge of 1.14% annually, where the rider base is equal to the initial premium and increases by 7% annually, and the rider charge is assessed each quarter on a base equal to the hypothetical $10,000 premium increasing at 7% per year. The assumed annual rider charge of 1.14% results from the assumption of a 7% annual increase in the rider base but only a 5% earnings increase in the contract value before expenses. Thus, 1.14% represents an annual charge over the 10-year period which is equivalent to a charge of 0.1875% of rider base per quarter over the same period. Although your actual costs may be higher or lower, based on these assumptions, your costs would be: ---------------------------------------------------------------- If you surrender or annuitize your contract at the end of the applicable time period: 1 year 3 years 5 years 10 years $567 $1,688 $2,795 $5,495 ---------------------------------------------------------------- Compensation is paid for the sale of the Contracts. For information about this compensation, see "Selling the Contract." -------------------------------------------------------------------------------- CONDENSED FINANCIAL INFORMATION -------------------------------------------------------------------------------- ACCUMULATION UNIT We use accumulation units to calculate the value of a Contract. Each subaccount of Separate Account B has its own accumulation unit value. The accumulation units are valued each business day that the New York Stock Exchange is open for trading. Their values may increase or decrease from day to day according to a Net Investment Factor, which is primarily based on the investment performance of the applicable investment portfolio. Shares in the investment portfolios are valued at their net asset value. Tables containing (i) the accumulation unit value history of each subaccount of ING USA Separate Account B offered in this prospectus and (ii) the total investment value history of each such subaccount are presented in Appendix A -- Condensed Financial Information. The numbers show the year-end unit values of each subaccount from the time purchase payments were first received in the subaccounts under the Contract. THE NET INVESTMENT FACTOR The Net Investment Factor is an index number which reflects certain charges under the Contract and the investment performance of the subaccount. The Net Investment Factor is calculated for each subaccount as follows: 1) We take the net asset value of the subaccount at the end of each business day. 2) We add to (1) the amount of any dividend or capital gains distribution declared for the subaccount and reinvested in such subaccount. We subtract from that amount a charge for our taxes, if any. 3) We divide (2) by the net asset value of the subaccount at the end of the preceding business day. 4) We then subtract the applicable daily mortality and expense risk charge and the daily asset-based administrative charge from the subaccount. Calculations for the subaccounts are made on a per share basis. Access - 131789 7 The Net Rate of Return equals the Net Investment Factor minus one. PERFORMANCE INFORMATION From time to time, we may advertise or include in reports to contract owner's performance information for the subaccounts of Separate Account B, including the average annual total return performance, yields and other nonstandard measures of performance. Such performance data will be computed, or accompanied by performance data computed, in accordance with standards defined by the SEC. Except for the Liquid Assets subaccount, quotations of yield for the subaccounts will be based on all investment income per unit (contract value divided by the accumulation unit) earned during a given 30-day period, less expenses accrued during such period. Information on standard total average annual return performance will include average annual rates of total return for 1-, 5- and 10-year periods, or lesser periods depending on how long Separate Account B has been investing in the portfolio. We may show other total returns for periods of less than one year. We will base total return figures on the actual historic performance of the subaccounts of Separate Account B, assuming an investment at the beginning of the period when the separate account first invested in the portfolios, and withdrawal of the investment at the end of the period, adjusted to reflect the deduction of all applicable portfolio and current contract charges. We may also show rates of total return on amounts invested at the beginning of the period with no withdrawal at the end of the period. Total return figures which assume no withdrawals at the end of the period will reflect all recurring charges. In addition, we may present historic performance data for the investment portfolios since their inception reduced by some or all of the fees and charges under the Contract. Such adjusted historic performance includes data that precedes the inception dates of the subaccounts of Separate Account B. This data is designed to show the performance that would have resulted if the Contract had been in existence before the separate account began investing in the portfolios. Current yield for the Liquid Assets subaccount is based on income received by a hypothetical investment over a given 7-day period, less expenses accrued, and then "annualized" (i.e., assuming that the 7-day yield would be received for 52 weeks). We calculate "effective yield" for the Liquid Assets subaccount in a manner similar to that used to calculate yield, but when annualized, the income earned by the investment is assumed to be reinvested. The "effective yield" will thus be slightly higher than the "yield" because of the compounding effect of earnings. We calculate quotations of yield for the remaining subaccounts on all investment income per accumulation unit earned during a given 30-day period, after subtracting fees and expenses accrued during the period, assuming the selection of the Max 7 Enhanced Death Benefit and the MGIB optional benefit rider. YOU SHOULD BE AWARE THAT THERE IS NO GUARANTEE THAT THE LIQUID ASSETS SUBACCOUNT WILL HAVE A POSITIVE OR LEVEL RETURN. We may compare performance information for a subaccount to: (i) the Standard & Poor's 500 Stock Index, Dow Jones Industrial Average, Donoghue Money Market Institutional Averages, or any other applicable market indices, (ii) other variable annuity separate accounts or other investment products tracked by Lipper Analytical Services (a widely used independent research firm which ranks mutual funds and other investment companies), or any other rating service, and (iii) the Consumer Price Index (measure for inflation) to determine the real rate of return of an investment in the Contract. Our reports and promotional literature may also contain other information including the ranking of any subaccount based on rankings of variable annuity separate accounts or other investment products tracked by Lipper Analytical Services or by similar rating services. Performance information reflects only the performance of a hypothetical contract and should be considered in light of other factors, including the investment objective of the investment portfolio and market conditions. Please keep in mind that past performance is not a guarantee of future results. FINANCIAL STATEMENTS The statement of assets and liabilities of Separate Account B as of December 31, 2003, and the related statement of operations for the year then ended, and the statements of changes in net assets for each of the two years in the period then ended are included in the Statement of Additional Information. The consolidated financial statements and schedules of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company) as of December 31, 2003 and 2002 and for each of the three years in the period ended December 31, 2003 are included in the Statement of Additional Information. Access - 131789 8 -------------------------------------------------------------------------------- ING USA ANNUITY AND LIFE INSURANCE COMPANY -------------------------------------------------------------------------------- ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company) ("ING USA") is an Iowa stock life insurance company, which was originally incorporated in Minnesota on January 2, 1973. ING USA is a wholly owned subsidiary of Lion Connecticut Holdings Inc. ("Lion Connecticut"), which in turn is a wholly owned subsidiary of ING Groep N.V. ("ING"), a global financial services holding company based in The Netherlands. ING USA is authorized to sell insurance and annuities in all states, except New York and the District of Columbia. ING USA's consolidated financial statements appear in the Statement of Additional Information. Lion Connecticut is the holding company for Directed Services, Inc., the investment manager of the ING Investors Trust and the distributor of the Contracts, and other interests. ING also owns ING Investments, LLC and ING Investment Management, LLC, portfolio managers of the ING Investors Trust, and the investment managers of the ING Variable Insurance Trust and ING Variable Products Trust and ING Variable Product Portfolios, respectively. ING also owns Baring International Investment Limited, another portfolio manager of the ING Investors Trust. Our principal office is located at 1475 Dunwoody Drive, West Chester, Pennsylvania 19380. -------------------------------------------------------------------------------- ING USA SEPARATE ACCOUNT B -------------------------------------------------------------------------------- ING USA Separate Account B (formerly Golden American Separate Account B) ("Separate Account B") was established as a separate account of the Company on July 14, 1988. It is registered with the SEC as a unit investment trust under the Investment Company Act of 1940, as amended (the "1940 Act"). Separate Account B is a separate investment account used for our variable annuity contracts. We own all the assets in Separate Account B but such assets are kept separate from our other accounts. Separate Account B is divided into subaccounts. Each subaccount invests exclusively in shares of one investment portfolio of a Trust or Fund. Each investment portfolio has its own distinct investment objectives and policies. Income, gains and losses, realized or unrealized, of a portfolio are credited to or charged against the corresponding subaccount of Separate Account B without regard to any other income, gains or losses of the Company. Assets equal to the reserves and other contract liabilities with respect to each are not chargeable with liabilities arising out of any other business of the Company. They may, however, be subject to liabilities arising from subaccounts whose assets we attribute to other variable annuity contracts supported by Separate Account B. If the assets in Separate Account B exceed the required reserves and other liabilities, we may transfer the excess to our general account. We are obligated to pay all benefits and make all payments provided under the Contracts. Note: We currently offer other variable annuity contracts that invest in Separate Account B, but are not discussed in this prospectus. Separate Account B may also invest in other investment portfolios which are not available under your Contract. Under certain circumstances, we may make certain changes to the subaccounts. For more information, see "The Annuity Contract -- Addition, Deletion, or Substitution of Subaccounts and Other Changes." -------------------------------------------------------------------------------- THE TRUSTS AND FUNDS -------------------------------------------------------------------------------- YOU WILL FIND INFORMATION ABOUT THE TRUSTS AND FUNDS CURRENTLY AVAILABLE UNDER YOUR CONTRACT IN APPENDIX B -- THE INVESTMENT PORTFOLIOS. A PROSPECTUS CONTAINING MORE COMPLETE INFORMATION ON EACH TRUST OR FUND MAY BE OBTAINED BY CALLING OUR CUSTOMER SERVICE CENTER AT 800-366-0066. YOU SHOULD READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. Access - 131789 9 Certain funds are designated as "Master-Feeder" or "LifeStyle Funds". Funds offered in a Master-Feeder structure (such as the American Funds) or fund of funds structure (such as the LifeStyle Funds) may have higher fees and expenses than a fund that invests directly in debt and equity securities. See "Trust and Fund Expenses". Also, you should discuss with your registered representative whether the LifeStyle Funds are appropriate for you, particularly if you are a conservative investor. If, due to differences in tax treatment or other considerations, the interests of contract owners of various contracts participating in the Trusts or Funds conflict, we, the Boards of Trustees or Directors of the Trusts or Funds, and any other insurance companies participating in the Trusts or Funds will monitor events to identify and resolve any material conflicts that may arise. -------------------------------------------------------------------------------- RESTRICTED FUNDS -------------------------------------------------------------------------------- We may, with 30 days notice to you, designate any investment option as a Restricted Fund and limit the amount you may allocate or transfer to a Restricted Fund. We may also change the limitations on existing contracts with respect to new premiums added to investment portfolios and with respect to new transfers to investment portfolios. We may establish any limitations, at our discretion, as a percentage of premium or contract value, or as a specified dollar amount, and change the limitation at any time. Currently, we have not designated any investment option as a Restricted Fund. If we designate an investment option as a Restricted Fund or set applicable limitations, such change will apply only to transactions made after the designation. We limit your investment in the Restricted Funds on an aggregate basis for all Restricted Funds and for each individual Restricted Fund. Currently, we limit an investment in Restricted Funds to the following limitations: no more than $999,999,999, and no more than 30 percent of contract value. We may change these limits, in our discretion, for new contracts, premiums, transfers or withdrawals. We monitor the aggregate and individual limits on investments in Restricted Funds for each transaction (e.g. premium payments, reallocations, withdrawals, dollar cost averaging). If the contract value in the Restricted Funds has increased beyond the applicable limit due to market growth, we will not require the reallocation or withdrawal of contract value from the Restricted Funds. However, if the contract value in the Restricted Funds exceeds the aggregate limit, if you take a withdrawal, it must come from either the Restricted Funds or pro-rata from all investment options in which contract value is allocated, so that the percentage of contract value in the Restricted Funds following the withdrawal is less than or equal to the percentage of contract value in the Restricted Funds prior to the withdrawal. We will not permit a transfer to the Restricted Funds if it would increase the contract value in the Restricted Fund or in all Restricted Funds to more than the applicable limits set forth above. We will not limit transfers from Restricted Funds. If the multiple reallocations lower the percentage of total contract value in Restricted Funds, we will permit the reallocation even if the percentage of contract value in a Restricted Fund is greater than its limit. Please see "Withdrawals" and "Transfers Among Your Investments" in this prospectus for more information on the effect of Restricted Funds. -------------------------------------------------------------------------------- COVERED FUNDS, SPECIAL FUNDS AND EXCLUDED FUNDS -------------------------------------------------------------------------------- For purposes of determining death benefits and benefits under the optional benefit riders (but not the earnings multiplier benefit rider), we assign the investment options to one of three categories of funds. The categories are: 1) Covered Funds; 2) Special Funds; and 3) Excluded Funds. Access - 131789 10 Allocations to Covered Funds participate fully in all guaranteed benefits. Allocations to Special Funds could affect the death benefit and/or optional benefit rider guarantee that may otherwise be provided. Allocations to Excluded Funds do not participate in any guaranteed benefits, due to their potential for volatility. No investment options are currently designated as Excluded Funds. Designation of investment options under these categories may vary by benefit. For example, we may designate an investment option a Special Fund for purposes of calculating a benefit under an optional benefit rider, but not a death benefit, or for calculating one death benefit and not another. We may, with 30 days notice to you, designate any investment option as a Special or Excluded Fund with respect to new premiums added to such investment option and also with respect to new transfers to such investment option. Please see Appendix F for examples. -------------------------------------------------------------------------------- CHARGES AND FEES -------------------------------------------------------------------------------- We deduct the Contract charges described below to compensate us for our costs and expenses, services provided and risks assumed under the Contracts. We incur certain costs and expenses for distributing and administering the Contracts, including compensation and expenses paid in connection with sales of the Contracts, for paying the benefits payable under the Contracts and for bearing various risks associated with the Contracts. The amount of a Contract charge will not always correspond to the actual costs associated with the charge. If there are any profits from fees and charges deducted under the Contract, including the mortality and expense risk charge and rider and benefit charges, we may use such profits to finance the distribution of Contracts. CHARGE DEDUCTION SUBACCOUNT You may elect to have all charges against your contract value deducted directly from a single subaccount designated by the Company. Currently we use the Liquid Assets subaccount for this purpose. If you do not elect this option, or if the amount of the charges is greater than the amount in the designated subaccount, we will deduct the charges as discussed below. You may cancel this option at any time by sending satisfactory notice to our Customer Service Center. CHARGES DEDUCTED FROM THE CONTRACT VALUE We deduct the following charges from your contract value: NO SURRENDER CHARGE. We do not deduct any surrender charges for withdrawals. PREMIUM TAXES. We may charge for state and local premium taxes depending on your state of residence. These taxes can range from 0% to 3.5% of the premium payment. We have the right to change this amount to conform with changes in the law or if you change your state of residence. We deduct the premium tax from your contract value (or from the MGIB Base, if exercised) on the annuity start date. However, some jurisdictions impose a premium tax at the time initial and additional premiums are paid, regardless of when the annuity payments begin. In those states we may defer collection of the premium taxes from your contract value and deduct it when you surrender the Contract or on the annuity start date. ADMINISTRATIVE CHARGE. We deduct an annual administrative charge on each Contract anniversary. If you surrender your Contract prior to a Contract anniversary, we deduct an administrative charge when we determine the cash surrender value payable to you. The charge is $40 per Contract. We waive this charge if your contract value is $100,000 or more at the end of a contract year or the total of your premium payments is $100,000 or more, or under other conditions established by ING USA. We deduct the charge proportionately from all subaccounts in which you are invested. If there is no contract value in those subaccounts, we will deduct the charge from your Fixed Interest Allocations starting with the guaranteed interest periods nearest their maturity dates until the charge has been paid. TRANSFER CHARGE. We currently do not deduct any charges for transfers made during a contract year. We have the right, however, to assess up to $25 for each transfer after the twelfth transfer in a contract year. The charge will not apply to any transfers due to the election of dollar cost averaging or automatic rebalancing. Access - 131789 11 CHARGES DEDUCTED FROM THE SUBACCOUNTS MORTALITY AND EXPENSE RISK CHARGE. The amount of the mortality and expense risk charge depends on the death benefit you have elected and on the category of contract owner to which you belong. We deduct the charge each business day based on the assets you have in each subaccount. If there are any profits from the mortality and expense risk charge, we may use such profits to finance the distribution of contracts. ------------------------------------------------------------- QUARTERLY RATCHET MAX 7 STANDARD ENHANCED ENHANCED DEATH BENEFIT DEATH BENEFIT DEATH BENEFIT ------------------------------------------------------------- Annual Annual Annual Charge Charge Charge Expressed Expressed Expressed Annual as Daily Annual as Daily Annual as Daily Charge Rate Charge Rate Charge Rate 1.65% 0.004558% 1.90% 0.005255% 2.10% 0.005815% ------------------------------------------------------------- A description of the mortality and expense risk charges for contract owners other than Yr-2004 contract owners is included in the appendices. See "The Annuity Contract -- Contract Owner Categories." PLEASE RETAIN THIS PROSPECTUS AND THE APPENDIX THAT IS APPLICABLE TO YOU SO YOU WILL HAVE IT FOR FUTURE REFERENCE. ASSET-BASED ADMINISTRATIVE CHARGE. The amount of the asset-based administrative charge, on an annual basis, is equal to 0.15% of the assets you have in each subaccount. We deduct the charge from your assets in each subaccount on each business day at the rate of 0.000411% for each day since the previous business day. EARNINGS MULTIPLIER BENEFIT CHARGE. Subject to state availability, you may purchase the earnings multiplier benefit rider for a non-qualified Contract either at issue or on the next contract anniversary following the introduction of the benefit in your state, if later. So long as the rider is in effect, we will deduct a separate quarterly charge for the rider through a pro-rata reduction of the contract value of the subaccounts in which you are invested. If there is insufficient contract value in the subaccounts, we will deduct the charges from your Fixed Interest Allocations starting with the allocation nearest its maturity date. If that is insufficient, we will deduct the charge from the allocation next nearest its maturity date, and so on. We deduct the rider charge on each quarterly contract anniversary in arrears, meaning we deduct the first charge on the first quarterly anniversary following the rider date. If you surrender or annuitize your Contract, we will deduct a pro-rata portion of the charge for the current quarter based on the current contract value immediately prior to the surrender or annuitization. The quarterly charge for the earnings multiplier benefit rider is 0.075% (0.30% annually). For a description of the rider, see "Earnings Multiplier Benefit Rider." OPTIONAL RIDER CHARGES. In addition to the earnings multiplier benefit rider, subject to state availability, you may purchase one of two optional benefit riders that you may elect at issue. So long as the rider is in effect, we will deduct a separate quarterly charge for each optional benefit rider through a pro-rata reduction of the contract value of the subaccounts in which you are invested. If there is insufficient contract value in the subaccount, we will deduct the charges from your Fixed Interest Allocations nearest their maturity date. We deduct each rider charge on each quarterly contract anniversary in arrears, meaning we deduct the first charge on the first quarterly anniversary following the rider date. For a description of the riders and the defined terms used in connection with the riders, see "The Annuity Contract -- Optional Riders." MINIMUM GUARANTEED INCOME BENEFIT (MGIB). The charge for the MGIB rider is as follows:
--------------------------------------------------------------------------------- MGIB Rate As an Annual Charge As a Quarterly Charge --------------------------------------------------------------------------------- 7% 0.75% of the MGIB Charge Base 0.1875% of the MGIB Charge Base ---------------------------------------------------------------------------------
Access - 131789 12 MINIMUM GUARANTEED WITHDRAWAL BENEFIT (MGWB). The annual charge for the MGWB rider is 0.35% (0.0875% quarterly) of the contract value. The charge is deducted from the contract value on each quarterly contract anniversary date, in arrears. We will deduct charges only during the period before your Contract's Automatic Periodic Benefit Status. If you surrender or annuitize your Contract, we will deduct a pro-rata portion of the charge for the current quarter based on the current quarterly charge rate immediately prior to the surrender or annuitization. Please see the appendix that is applicable to you for the optional rider charges under your Contract. TRUST AND FUND EXPENSES Each portfolio deducts portfolio management fees and charges from the amounts you have invested in the portfolios. In addition, certain portfolios deduct a service fee, which is used to compensate service providers for administrative and contract holder services provided on behalf of the portfolios, and certain portfolios deduct a distribution or 12b-1 fee, which is used to finance any activity that is primarily intended to result in the sale of shares of the applicable portfolio. In addition to the fees and charges shown in the Fee Table, the Company may, from time to time, receive other compensation from the funds or the funds' affiliates. For example, investment advisers to the funds may make cash payments or provide expense reimbursements to the Company as an incentive for the Company to include the funds among the investment options available under your Contract and to provide certain services to contract owners that relate to the investment options. In particular, we may receive compensation from the investment advisers, administrators or distributors of the portfolios in connection with administrative, distribution, or other services and cost savings experienced by the investment advisers, administrators or distributors. It is anticipated that such compensation will be based on assets of the particular portfolios attributable to the Contract. Some advisers, administrators or distributors may pay us more than others. During 2003, the Company received compensation from certain funds and funds' affiliates. Certain funds are designated as "Master-Feeder" or "LifeStyle Funds". Funds offered in a Master-Feeder structure (such as the American Funds) or fund of funds structure (such as the LifeStyle Funds) may have higher fees and expenses than a fund that invests directly in debt and equity securities. The Fund Expense Table included in "Fees and Expenses" reflects the aggregate annual operating expenses of each portfolio and its corresponding underlying fund or funds. These funds are identified in the Fund Expense Table. See "Fees and Expenses - Trust or Fund Expenses." -------------------------------------------------------------------------------- THE ANNUITY CONTRACT -------------------------------------------------------------------------------- The Contract described in this prospectus is a deferred combination variable and fixed annuity contract. The Contract provides a means for you to invest in one or more of the available mutual fund portfolios of the Trusts and Funds through Separate Account B. It also provides a means for you to invest in a Fixed Interest Allocation through the Fixed Account. See Appendix C and the Fixed Account I prospectus for more information on the Fixed Account. CONTRACT DATE AND CONTRACT YEAR The date the Contract became effective is the contract date. Each 12-month period following the contract date is a contract year. CONTRACT OWNER You are the contract owner. You have the rights and options described in the Contract. One or more persons may own the Contract. If there are multiple owners named, the age of the oldest owner will determine the applicable death benefit if such death benefit is available for multiple owners. Access - 131789 13 The death benefit becomes payable when you die. In the case of a sole contract owner who dies before the annuity start date, we will pay the beneficiary the death benefit then due. The sole contract owner's estate will be the beneficiary if no beneficiary has been designated or the beneficiary has predeceased the contract owner. In the case of a joint owner of the Contract dying before the annuity start date, we will designate the surviving contract owner as the beneficiary. This will override any previous beneficiary designation. If the contract owner is a trust and a beneficial owner of the trust has been designated, the beneficial owner will be treated as the contract owner for determining the death benefit. If a beneficial owner is changed or added after the contract date, we will treat this as a change of contract owner for determining the death benefit (likely a taxable event). If no beneficial owner of the trust has been designated, the availability of Enhanced Death Benefits will be based on the age of the annuitant at the time you purchase the Contract. CONTRACT OWNER CATEGORIES. There are seven categories of contract owners covered by this prospectus. For ease of reference, they are called Pre-2000, Yr-2000, Yr-2001, May-2001, May-2002, Yr-2003 and Yr-2004 contract owners. If you are a contract owner, the category of your Contract is indicated on your quarterly statements. If you are unsure which category applies to you, please call our Customer Service Center. The telephone number is (800) 366-0066. The following is a general description of the categories: --------------------------------------------------------------------------- PRE-2000: a) all contracts purchased prior to February 1, 2000; b) contracts purchased on or after February 1, 2000 which offer three death benefit options (as available in the state of issue at the time of purchase). --------------------------------------------------------------------------- YR-2000: Contracts purchased on or after February 1, 2000 which offer four death benefit options, including the Max 7 Enhanced Death Benefit and the Annual Ratchet Enhanced Death Benefit to age 80 (as available in the state of issue at the time of purchase). --------------------------------------------------------------------------- YR-2001: Contracts purchased on or after January 2, 2001 which offer four death benefit options, including the Annual Ratchet Enhanced Death Benefit to age 90, and under which the determination of benefits when there are allocations to Special Funds is based on the better of the original Yr-2001 benefit calculation and the Special Funds "floor" (as available in the state of issue at the time of purchase). --------------------------------------------------------------------------- MAY-2001: Contracts purchased on or after May 1, 2001, which offer four death benefit options, including the Annual Ratchet Enhanced Death Benefit to age 90, offer an earnings multiplier benefit option, and under which the determination of benefits when there are allocations to Special Funds is based on the better of the original May-2001 benefit calculation and the Special Funds "floor" (as available in the state of issue at the time of purchase). --------------------------------------------------------------------------- MAY-2002: Contracts purchased on or after May 1, 2002, which offer four death benefit options, including the Annual Ratchet Enhanced Death Benefit to age 90, offer an earnings multiplier benefit option, and under which the determination of benefits when there are allocations to Special Funds is the same as the Special Funds "floor," but all withdrawals are pro-rata (as available in the state of issue at the time of purchase). --------------------------------------------------------------------------- YR-2003: Contracts purchased on or after February 4, 2003 which have the same death benefits and living benefits as May-2002 Contracts, but have a different calculation of the Minimum Guaranteed Income Benefit and higher charges for all three living benefit optional riders (as available in the state of issue at the time of purchase). --------------------------------------------------------------------------- YR-2004: Contracts purchased on or after March 15, 2004 which offer the Quarterly Ratchet Death Benefit, do not offer the 7% Solution Death Benefit, do not offer the Minimum Guaranteed Accumulation Benefit and offer a Minimum Guaranteed Withdrawal Benefit with reset and step-up benefit options (as available in the state of issue at the time of purchase). --------------------------------------------------------------------------- Access - 131789 14 A description of benefits and charges for Pre-2000, Yr-2000, Yr-2001, May-2001, May-2002 and Yr-2003 contract owners is included in the appendices to this prospectus, to the extent they differ from those described in this prospectus for Yr-2004 contract owners. PLEASE RETAIN THIS PROSPECTUS AND THE APPENDIX THAT IS APPLICABLE TO YOU SO YOU WILL HAVE IT FOR FUTURE REFERENCE. JOINT OWNER. For non-qualified Contracts only, joint owners may be named in a written request before the Contract is in effect. Joint owners may independently exercise transfers and other transactions allowed under the Contract. All other rights of ownership must be exercised by both owners. Joint owners own equal shares of any benefits accruing or payments made to them. All rights of a joint owner end at death of that owner if the other joint owner survives. The entire interest of the deceased joint owner in the Contract will pass to the surviving joint owner and the death benefit will be payable. Joint owners may only select the Standard Death Benefit option. The earnings multiplier benefit rider is not available when there are joint owners. Any addition or deletion of a joint owner is treated as a change of owner which may affect the amount of the death benefit. See "Change of Contract Owner or Beneficiary" below. If you have elected an Enhanced Death Benefit, and you add a joint owner after issue, the Enhanced Death Benefit from the date of change will end. If the older joint owner is attained age 85 or under, the Standard Death Benefit will apply. If the older joint owner is attained age 86 or over on the date of the ownership change, the death benefit will be the cash surrender value. The mortality and expense risk charge going forward will reflect the change in death benefit. If you elected the earnings multiplier benefit rider, it will terminate if you add a joint owner after issue. Note that returning a Contract to single owner status will not restore any Enhanced Death Benefit or the earnings multiplier benefit. Unless otherwise specified, the term "age" when used for joint owners shall mean the age of the oldest owner. ANNUITY START DATE The annuity start date is the date you start receiving annuity payments under your Contract. The Contract, like all deferred variable annuity contracts, has two phases: the accumulation phase and the income phase. The accumulation phase is the period between the contract date and the annuity start date. The income phase begins when you start receiving regular annuity payments from your Contract on the annuity start date. ANNUITANT The annuitant is the person designated by you to be the measuring life in determining annuity payments. You are the annuitant unless you name another annuitant in the application. The annuitant's age determines when the income phase must begin and the amount of the annuity payments to be paid. The contract owner will receive the annuity benefits of the Contract if the annuitant is living on the annuity start date. You may not change the annuitant after the Contract is in effect. If the contract owner is an individual, and the annuitant dies before the annuity start date and you have named a contingent annuitant, the contingent annuitant becomes the annuitant. If the annuitant dies before the annuity start date and there is no contingent annuitant, the contract owner will become the annuitant. The contract owner may designate a new annuitant within 60 days of the death of the annuitant. If the annuitant was the sole contract owner and there is no beneficiary designation, the annuitant's estate will be the beneficiary. If the contract owner is not an individual, and the annuitant dies before the annuity start date, we will pay the designated beneficiary the death benefit then due. If a beneficiary has not been designated, or if there is no designated beneficiary living, the contract owner will be the beneficiary. Regardless of whether a death benefit is payable, if the annuitant dies and any contract owner is not an individual, distribution rules under federal tax law will apply. You should consult your tax adviser for more information if you are not an individual. BENEFICIARY The beneficiary is named by you in a written request. The beneficiary is the person who receives any death benefit proceeds. We pay death benefits to the primary beneficiary (unless there are joint owners, in which case death proceeds are payable to the surviving owner(s)). Access - 131789 15 If the beneficiary dies before the annuitant or the contract owner, we pay the death benefit proceeds to the contingent beneficiary, if any. If there is no surviving beneficiary, we pay the death benefit proceeds to the contract owner's estate. One or more persons may be a beneficiary or contingent beneficiary. In the case of more than one beneficiary, we will assume any death benefit proceeds are to be paid in equal shares to the surviving beneficiaries, unless you indicate otherwise in writing. CHANGE OF CONTRACT OWNER OR BENEFICIARY. During the annuitant's lifetime, you may transfer ownership of a non-qualified Contract. A change in ownership may affect the amount of the death benefit, the guaranteed minimum death benefit and/or the death benefit option applied to the contract, the amount of the earnings multiplier benefit, if applicable, and the continuation of any other optional rider that you have elected. The new owner's age, as of the date of the change, will be used as the basis for determining the applicable benefits and charges. The new owner's death will determine when a death benefit is payable. If you have elected the Standard Death Benefit option, the minimum guaranteed death benefit will continue if the new owner is age 85 or under on the date of the ownership change. For the Enhanced Death Benefit options, if the new owner is age 79 or under on the date that ownership changes, the minimum guaranteed death benefit will continue. If the new owner is age 80 to 85, the Enhanced Death Benefit will end, and the death benefit will become the Standard Death Benefit. For all death benefit options, 1) if the new owner's attained age is 86 or over on the date of the ownership change, or 2) if the new owner is not an individual (other than a trust for the benefit of the owner or annuitant), the death benefit will be the cash surrender value. The mortality and expense risk charge going forward will reflect the change in death benefit. Please note that once a death benefit has been changed due to a change in owner, a subsequent change to a younger owner will not restore any Enhanced Death Benefits. If you have elected the earnings multiplier benefit rider, and the new owner is under age 76, the rider will continue. The benefit will be adjusted to reflect the attained age of the new owner as the issue age. We will use the Maximum Base and Benefit Base percentages in effect on the original rider date to calculate the benefit. If the new owner is age 76 or over, the rider will terminate. If you have not elected the earnings multiplier benefit rider, the new owner may not add the rider upon the change of ownership. If you have elected another optional rider, the rider will terminate upon a change of ownership. A change of owner likely has tax consequences. See "Federal Tax Considerations" in this prospectus. You have the right to change beneficiaries during the annuitant's lifetime unless you have designated an irrevocable beneficiary. If you have designated an irrevocable beneficiary, you and the irrevocable beneficiary may have to act together to exercise some of the rights and options under the Contract. You may also restrict a beneficiary's right to elect an annuity option or receive a lump sum payment. If so, such rights or options will not be available to the beneficiary. All requests for changes must be in writing and submitted to our Customer Service Center. The change will be effective as of the day we receive the request. The change will not affect any payment made or action taken by us before recording the change. PURCHASE AND AVAILABILITY OF THE CONTRACT We will issue a Contract only if both the annuitant and the contract owner are age 90 or younger. The initial premium payment must be $10,000 or more ($1,500 for qualified Contracts). You may make additional payments of $500 or more ($50 for qualified Contracts) at any time after the free look period before you turn age 85. Under certain circumstances, we may waive the minimum premium payment requirement. We may also change the minimum initial or additional premium requirements for certain group or sponsored arrangements. An initial or additional premium payment that would cause the contract value of all annuities that you maintain with us to exceed $1,000,000 requires our prior approval. The Contract may not be available to all ages through all broker dealers. The Contract is designed for people seeking long-term tax-deferred accumulation of assets, generally for retirement or other long-term purposes. The tax-deferred feature is more attractive to people in high federal and state tax brackets. YOU SHOULD NOT BUY THIS CONTRACT: (I) IF YOU ARE LOOKING FOR A SHORT-TERM Access - 131789 16 INVESTMENT; (II) IF YOU CANNOT RISK GETTING BACK LESS MONEY THAN YOU PUT IN; OR (III) IF YOUR ASSETS ARE IN A PLAN WHICH PROVIDES FOR TAX-DEFERRAL AND YOU SEE NO OTHER REASON TO PURCHASE THIS CONTRACT. IRAs and other qualified plans already have the tax-deferral feature found in this Contract. For an additional cost, the Contract provides other features and benefits including death benefits and the ability to receive a lifetime income. You should not purchase a qualified Contract unless you want these other features and benefits, taking into account their cost. See "Fees and Expenses" in this prospectus. IF YOU ARE CONSIDERING AN ENHANCED DEATH BENEFIT OPTION AND/OR THE EARNINGS MULTIPLIER BENEFIT RIDER AND YOUR CONTRACT WILL BE AN IRA, SEE "TAXATION OF QUALIFIED CONTRACTS -- INDIVIDUAL RETIREMENT ANNUITIES" AND "TAX CONSEQUENCES OF ENHANCED DEATH BENEFIT" IN THIS PROSPECTUS. We and our affiliates offer other variable products that may offer some of the same investment portfolios. These products have different benefits and charges, and may or may not better match your needs. If you are interested in learning more about these other products, contact our Customer Service Center or your registered representative. CREDITING OF PREMIUM PAYMENTS We will process your initial premium within 2 business days after receipt, if the application and all information necessary for processing the Contract are complete. We will process subsequent premium payments within 1 business day if we receive all information necessary. In certain states we also accept initial and additional premium payments by wire order. Wire transmittals must be accompanied by sufficient electronically transmitted data. We may retain your initial premium payment for up to 5 business days while attempting to complete an incomplete application. If the application cannot be completed within this period, we will inform you of the reasons for the delay. We will also return the premium payment immediately unless you direct us to hold the premium payment until the application is completed. If you choose to have us hold the premium payment, it will be held in a non-interest bearing account. We will allocate your initial payment according to the instructions you specified. If a subaccount is not available or requested in error, we will make inquiry about a replacement subaccount. If we are unable to reach you or your representative, we will consider the application incomplete. For initial premium payments designated for a subaccount of Separate Account B, we will credit the payment at the accumulation unit value next determined after we receive your premium payment and the completed application. Once the completed application is received, we will allocate the payment to the subaccounts of Separate Account B specified by you within 2 business days. We will ask about any missing information related to subsequent payments. We will allocate the subsequent payment(s) pro-rata according to the current variable subaccount allocation unless you specify otherwise. Any fixed allocation(s) will not be considered in the pro-rata calculations. If a subaccount is no longer available or requested in error, we will allocate the subsequent payment(s) proportionally among the other subaccount(s) in your current allocation or your allocation instructions. For any subsequent premium payments, we will credit the payment designated for a subaccount of Separate Account B at the accumulation unit value next determined after receipt of your premium payment and instructions. Once we allocate your premium payment to the subaccounts selected by you, we convert the premium payment into accumulation units. We divide the amount of the premium payment allocated to a particular subaccount by the value of an accumulation unit for the subaccount to determine the number of accumulation units of the subaccount to be held in Separate Account B with respect to your Contract. The net investment results of each subaccount vary with its investment performance. If your premium payment was transmitted by wire order from your broker/dealer, we will follow one of the following two procedures after we receive and accept the wire order and investment instructions. The procedure we follow depends on state availability and the procedures of your broker/dealer. 1) If either your state or broker/dealer do not permit us to issue a Contract without an application, we reserve the right to rescind the Contract if we do not receive and accept a properly completed application or enrollment form within 5 days of the premium payment. If we do not receive the application or form within 5 days of the premium payment, we will refund the contract value plus any charges we deducted, and the Contract will be voided. Some states require that we return the premium paid. Access - 131789 17 2) If your state and broker/dealer allow us to issue a Contract without an application, we will issue and mail the Contract to you or your representative, together with a Contract Acknowledgement and Delivery Statement for your execution. Until our Customer Service Center receives the executed Contract Acknowledgement and Delivery Statement, neither you nor the broker/dealer may execute any financial transactions on your Contract unless they are requested in writing by you. We may require additional information before complying with your request (e.g., signature guarantee). In some states, we may require that an initial premium designated for a subaccount of Separate Account B or the Fixed Account be allocated to a subaccount specially designated by the Company (currently, the Liquid Assets subaccount) during the free look period. After the free look period, we will convert your contract value (your initial premium plus any earnings less any expenses) into accumulation units of the subaccounts you previously selected. The accumulation units will be allocated based on the accumulation unit value next computed for each subaccount. Initial premiums designated for Fixed Interest Allocations will be allocated to a Fixed Interest Allocation with the guaranteed interest period you have chosen; however, in the future we may allocate the premiums to the specially designated subaccount during the free look period. We may also refuse to accept certain forms of premium payments or loan repayments, if applicable, (traveler's checks, for example) or restrict the amount of certain forms of premium payments or loan repayments (money orders totaling more than $500, for example). In addition, we may require information as to why a particular form of payment was used (third party checks, for example) and the source of the funds of such payment in order to determine whether or not we will accept it. Use of an unacceptable form of payment may result in us returning your premium payment and not issuing the contract. ADMINISTRATIVE PROCEDURES We may accept a request for Contract service in writing, by telephone, or other approved electronic means, subject to our administrative procedures, which vary depending on the type of service requested and may include proper completion of certain forms, providing appropriate identifying information, and/or other administrative requirements. We will process your request at the contract value next determined only after you have met all administrative requirements. CONTRACT VALUE We determine your contract value on a daily basis beginning on the contract date. Your contract value is the sum of (i) the contract value in the Fixed Interest Allocations, and (ii) the contract value in each subaccount in which you are invested. CONTRACT VALUE IN FIXED INTEREST ALLOCATIONS. The contract value in your Fixed Interest Allocation is the sum of premium payments allocated to the Fixed Interest Allocation under the Contract, plus contract value transferred to the Fixed Interest Allocation, plus credited interest, minus any transfers and withdrawals from the Fixed Interest Allocation (including any Market Value Adjustment applied to such withdrawal), contract fees (including, in some cases, fees for optional benefit riders) and premium taxes. CONTRACT VALUE IN THE SUBACCOUNTS. On the contract date, the contract value in the subaccount in which you are invested is equal to the initial premium paid and designated to be allocated to the subaccount. On the contract date, we allocate your contract value to each subaccount and/or a Fixed Interest Allocation specified by you, unless the Contract is issued in a state that requires the return of premium payments during the free look period, in which case, the portion of your initial premium not allocated to a Fixed Interest Allocation may be allocated to a subaccount specially designated by the Company during the free look period for this purpose (currently, the Liquid Assets subaccount). On each business day after the contract date, we calculate the amount of contract value in each subaccount as follows: 1) We take the contract value in the subaccount at the end of the preceding business day. 2) We multiply (1) by the subaccount's Net Rate of Return since the preceding business day. 3) We add (1) and (2). 4) We add to (3) any additional premium payments, and then add or subtract any transfers to or from that subaccount. Access - 131789 19 5) We subtract from (4) any withdrawals and any related charges, and then subtract any contract fees (including any rider charges) and premium taxes. CASH SURRENDER VALUE The cash surrender value is the amount you receive when you surrender the Contract. The cash surrender value will fluctuate daily based on the investment results of the subaccounts in which you are invested and interest credited to Fixed Interest Allocations and any Market Value Adjustment. See Appendix C and the Fixed Account I prospectus for a description of the calculation of the surrender value under any Fixed Interest Allocation. We do not guarantee any minimum cash surrender value. On any date during the accumulation phase, we calculate the cash surrender value as follows: we start with your contract value, adjust for any Market Value Adjustment, and then we deduct any charge for premium taxes, the annual contract administrative fee (unless waived), any optional benefit rider charge, and any other charges incurred but not yet deducted. SURRENDERING TO RECEIVE THE CASH SURRENDER VALUE You may surrender the Contract at any time while the annuitant is living and before the annuity start date. A surrender is effective on the date we receive your written request and the Contract at our Customer Service Center. After we receive all paperwork required for us to process your surrender, we will determine and pay the cash surrender value at the price next determined. Once paid, all benefits under the Contract will terminate. For administrative purposes, we will transfer your money to a specially designated subaccount (currently the Liquid Assets subaccount) prior to processing the surrender. This transfer will have no effect on your cash surrender value. You may receive the cash surrender value in a single sum payment or apply it under one or more annuity options. We will usually pay the cash surrender value within 7 days. Consult your tax adviser regarding the tax consequences associated with surrendering your Contract. A surrender made before you reach age 59 1/2 may result in a 10% tax penalty. See "Federal Tax Considerations" for more details. ADDITION, DELETION OR SUBSTITUTION OF SUBACCOUNTS AND OTHER CHANGES We may make additional subaccounts available to you under the Contract. These subaccounts will invest in investment portfolios we find suitable for your Contract. We may also withdraw or substitute investment portfolios, subject to the conditions in your Contract and compliance with regulatory requirements. We may amend the Contract to conform to applicable laws or governmental regulations. If we feel that investment in any of the investment portfolios has become inappropriate to the purposes of the Contract, we may, with approval of the SEC (and any other regulatory agency, if required) substitute another portfolio for existing and future investments. If you elected the dollar cost averaging, systematic withdrawals or automatic rebalancing programs, or if you have other outstanding instructions and we substitute or otherwise eliminate a portfolio subject to those instructions, we will execute your instructions using the substituted or proposed replacement portfolio, unless you request otherwise. The substitute or proposed replacement portfolio may have higher fees and charges than any portfolio it replaces. We will provide you with written notice before we make these changes. We reserve the right to: (i) deregister Separate Account B under the 1940 Act; (ii) operate Separate Account B as a management company under the 1940 Act if it is operating as a unit investment trust; (iii) operate Separate Account B as a unit investment trust under the 1940 Act if it is operating as a managed separate account; (iv) restrict or eliminate any voting rights as to Separate Account B; and (v) combine Separate Account B with other accounts. We will provide you with written notice before we make any of these changes. THE FIXED ACCOUNT The Fixed Account is a segregated asset account which contains the assets that support a contract owner's Fixed Interest Allocations. See Appendix C and the Fixed Account I prospectus for more information. Access - 131789 19 OPTIONAL RIDERS Subject to state availability, you may elect one of the two optional benefit riders discussed below. YOU MAY ADD ONLY ONE OF THESE TWO RIDERS TO YOUR CONTRACT. EACH RIDER HAS A SEPARATE CHARGE. Once elected, the riders generally may not be cancelled. You may not remove the rider and charges will be assessed regardless of the performance of your Contract. Please see "Charges and Fees -- Optional Rider Charges" for information on rider charges. The following describes the optional riders for Contracts in the Yr-2004 category. A description of the optional rider benefits for all other contract owners is included in the appendices to this prospectus, to the extent they differ from those described in the prospectus for Yr-2004 Contract owners. Please retain this prospectus and the appendix that is applicable to you so you will have it for future reference. THE OPTIONAL RIDERS MAY NOT BE AVAILABLE FOR ALL INVESTORS. YOU SHOULD ANALYZE EACH RIDER THOROUGHLY AND UNDERSTAND IT COMPLETELY BEFORE YOU SELECT ONE. THE OPTIONAL RIDERS DO NOT GUARANTEE ANY RETURN OF PRINCIPAL OR PREMIUM PAYMENTS AND DO NOT GUARANTEE PERFORMANCE OF ANY SPECIFIC INVESTMENT PORTFOLIO UNDER THE CONTRACT. YOU SHOULD CONSULT A QUALIFIED FINANCIAL ADVISER IN EVALUATING THE RIDERS. THE OPTIONAL RIDERS MAY NOT BE APPROVED IN ALL STATES. CHECK WITH OUR CUSTOMER SERVICE CENTER FOR AVAILABILITY IN YOUR STATE. THE TELEPHONE NUMBER IS (800) 366-0066. RIDER DATE. The rider date is the date an optional benefit rider becomes effective. The rider date is also the contract date if you purchase the rider when the Contract is issued. NO CANCELLATION. Once you purchase a rider, you may not cancel it unless you cancel the Contract during the Contract's free look period, surrender, annuitize or otherwise terminate the Contract. These events automatically cancel any rider. Once the Contract continues beyond the free look period, you may not cancel the rider. The Company may, at its discretion, cancel and/or replace a rider at your request in order to renew or reset a rider. TERMINATION. The optional riders are "living benefits," which means the guaranteed benefits offered by the riders are intended to be available to you while you are living and while your Contract is in the accumulation phase. The optional riders automatically terminate if you: o annuitize, surrender or otherwise terminate your Contract during the accumulation phase; or o die during the accumulation phase (first owner to die if there are multiple contract owners, or at death of annuitant if contract owner is not a natural person), unless your spouse beneficiary elects to continue the Contract. The optional riders will also terminate if there is a change in contract ownership (other than a spousal beneficiary continuation on your death). Other circumstances which may cause a particular optional rider to terminate automatically are discussed below with each rider. MINIMUM GUARANTEED INCOME BENEFIT RIDER (MGIB). The MGIB rider is an optional benefit which guarantees a minimum amount of annuity income will be available to you if you annuitize on the MGIB Date, regardless of fluctuating market conditions. The amount of the Minimum Guaranteed Income Benefit will depend on the amount of premiums you pay during the five contract years after you purchase the rider, the amount of contract value you allocate or transfer to Special Funds or Excluded Funds, the MGIB Rate, the adjustment for Special Fund or Excluded Fund transfers, and any withdrawals you take while the rider is in effect. Thus, investing in Special Funds or Excluded Funds may limit the MGIB. The following investment options are designated as Special Funds for purposes of calculating the MGIB: the ING Liquid Assets Portfolio, the ING VP Bond Portfolio, the ING PIMCO Core Bond Portfolio, the ProFunds VP Rising Rates Opportunity Portfolio, the Fixed Account, the Fixed Interest Division and the TSA Special Fixed Account. For Contracts issued prior to May 1, 2003, the ING VP Bond Portfolio and the ING PIMCO Core Bond Portfolio are not designated as Special Funds. For Contracts issued prior to September 2, 2003, the ProFunds VP Rising Rates Opportunity Portfolio is not designated as a Special Fund. Access - 131789 20 No investment options are currently designated as Excluded Funds. The MGIB Rate is currently 7%. We may, at our discretion, discontinue offering this rate. The MGIB Rate is an annual effective rate. For a discussion of the charges we deduct under the MGIB rider, see "Charges and Fees -- Optional Rider Charges." Ordinarily, the amount of income that will be available to you on the annuity start date is based on your contract value, the annuity option you selected and the guaranteed or the income factors in effect on the date you annuitize. If you purchase the MGIB rider, the amount of income that will be available to you upon annuitization on the MGIB Date is the greatest of: 1) your annuity income based on your contract value adjusted for any Market Value Adjustment (see Appendix C and the Fixed Account I prospectus) on the MGIB Date applied to the guaranteed income factors specified in your Contract for the annuity option you selected; 2) your annuity income based on your contract value adjusted for any Market Value Adjustment (see Appendix C and the Fixed Account I prospectus) on the MGIB Date applied to the then-current income factors in effect for the annuity option you selected; or 3) the MGIB annuity income based on your MGIB Base on the MGIB Date applied to the MGIB income factors specified in your rider for the MGIB annuity option you selected. Prior to applying the MGIB income factors, we will adjust the MGIB Base for any premium tax recovery and Market Value Adjustment (see Appendix C and the Fixed Account I prospectus) that would otherwise apply at annuitization. The guaranteed factors contained in the MGIB rider generally provide lower payout per $1,000 of value applied than the guaranteed factors found in your Contract. The MGIB Benefit Base is only a calculation used to determine the MGIB annuity income. The MGIB Benefit Base does not represent a contract value, nor does it guarantee performance of the subaccounts in which you are invested. It is also not used in determining the amount of your cash surrender value and death benefits. Any reset of contract value under provisions of the Contract or other riders will not increase the MGIB Benefit Base or Maximum MGIB Base. The MGIB Benefit Base is tracked separately for Covered, Special and Excluded Funds, based on initial allocation of eligible premium (or contract value), and subsequently allocated eligible premiums, withdrawals and transfers. Contract value is used as the initial value if the rider is added after the contract date. Prior to your latest annuity start date, you may choose to exercise your right to receive payments under the MGIB rider. Payments under the rider begin on the MGIB Date. We require a 10-year waiting period before you can annuitize the MGIB rider benefit. The MGIB must be exercised in the 30-day period prior to the end of the waiting period or any subsequent contract anniversary. At your request, the Company may in its discretion extend the latest contract annuity start date without extending the MGIB Date. DETERMINING THE MGIB CHARGE BASE: The MGIB Charge Base is the greater of the MGIB Rollup Base and the MGIB Ratchet Base. (i) The MGIB Rollup Base is equal to the lesser of the Maximum MGIB Base and the sum of (a), (b) and (c) where: (a) is the MGIB Rollup Base for Covered Funds; (b) is the MGIB Rollup Base for Special Funds; (c) is the MGIB Rollup Base for Excluded Funds; and (ii) The MGIB Ratchet Base is equal to the sum of (a) and (b) where: (a) is the MGIB Ratchet Base for Covered and Special Funds; and (b) is the MGIB Ratchet Base for Excluded Funds. Access - 131789 21 DETERMINING THE MGIB ANNUITY INCOME. On the MGIB Date, we calculate your MGIB annuity income as follows: 1) WE FIRST DETERMINE YOUR MGIB BENEFIT BASE: The MGIB Benefit Base is equal to the greater of the MGIB Rollup Benefit Base and the MGIB Ratchet Benefit Base. (i) The MGIB Rollup Benefit Base is equal to the lesser of the Maximum MGIB Base and the sum of (a), (b) and (c) where: (a) is the MGIB Rollup Base for Covered Funds; (b) is the MGIB Rollup Base for Special Funds; (c) is the contract value allocated to Excluded Funds; and (ii) The MGIB Ratchet Benefit Base is equal to the sum of (a) and (b) where: (a) is the MGIB Ratchet Base for Covered and Special Funds; and (b) is the contract value allocated to Excluded Funds. The Maximum MGIB Base is 300% of eligible premiums adjusted pro-rata for withdrawals. The Maximum MGIB Base is not allocated by Fund category. A) CALCULATION OF MGIB ROLLUP BENEFIT BASE THE MGIB ROLLUP BASE ALLOCATED TO COVERED FUNDS equals the eligible premiums allocated to Covered Funds, adjusted for subsequent withdrawals and transfers taken or made while the MGIB rider is in effect, accumulated at the MGIB Rollup Rate to the earlier of the oldest owner reaching age 80 and the MGIB Rollup Benefit Base reaching the Maximum MGIB Base, and at 0% thereafter. THE MGIB ROLLUP BASE ALLOCATED TO SPECIAL FUNDS equals the eligible premiums allocated to Special Funds, adjusted for subsequent withdrawals and transfers taken or made while the MGIB rider is in effect. THERE IS NO ACCUMULATION OF MGIB ROLLUP BASE ALLOCATED TO SPECIAL FUNDS. THE MGIB ROLLUP BASE ALLOCATED TO EXCLUDED FUNDS equals the eligible premiums allocated to Excluded Funds, adjusted for subsequent withdrawals and transfers taken or made while the MGIB rider is in effect, accumulated at the MGIB Rate to the earlier of the oldest owner reaching age 80 and the MGIB Rollup Benefit Base reaching the Maximum MGIB Base, and at 0% thereafter. THE MGIB ROLLUP BASE ALLOCATED TO EXCLUDED FUNDS IS USED ONLY FOR TRANSFER ADJUSTMENTS AND RIDER CHARGES. IT IS NOT USED TO DETERMINE BENEFITS. Eligible premiums are those added more than 5 years before the earliest MGIB Benefit Date. Premiums paid after that are excluded from the MGIB Rollup Base. The MGIB Rollup Rate is currently 7%. We may, at our discretion, discontinue offering this rate. The MGIB Rollup Rate is an annual effective rate. Withdrawals reduce the MGIB Rollup Base on a pro-rata basis. The percentage reduction in the MGIB Rollup Base for each Fund category (i.e. Covered, Special or Excluded) equals the percentage reduction in contract value in that Fund category resulting from the withdrawal. For example, the value of the MGIB Rollup Base in Covered Funds after a withdrawal from one or more Covered Funds equals the value of the MGIB Rollup Base in Covered Funds before the withdrawal times the contract value in Covered Funds after the withdrawal divided by the contract value in Covered Funds before the withdrawal. Net transfers from Covered Funds will reduce the MGIB Rollup Base allocated to Covered Funds on a pro-rata basis. The resulting increase in the MGIB Rollup Base allocated to Special or Excluded Funds, as applicable, will equal the reduction in the MGIB Rollup Base allocated to Covered Funds. Access - 131789 22 Net transfers from Special Funds will reduce the MGIB Rollup Base allocated to Special Funds on a pro-rata basis. The resulting increase in the MGIB Rollup Base allocated to Covered or Excluded Funds, as applicable, will equal the reduction in the MGIB Rollup Base allocated to Special Funds. Net transfers from Excluded Funds will reduce the MGIB Rollup Base allocated to Excluded Funds on a pro-rata basis. The resulting increase in the MGIB Rollup Base allocated to Covered or Special Funds, as applicable, will equal the lesser of the net contract value transferred and the change in the MGIB Rollup Base allocated to Excluded Funds. B) CALCULATION OF MGIB RATCHET BENEFIT BASE The MGIB RATCHET BASE FOR COVERED FUNDS AND SPECIAL FUNDS equals: o on the rider date, eligible premiums, or the contract value, if applicable, allocated to Covered Funds and Special Funds; o on each "quarterly anniversary date" prior to attainment of age 90, the MGIB Ratchet Base for Covered Funds and Special Funds is set equal to the greater of : 1) the current contract value allocated to Covered Funds and Special Funds (after any deductions occurring on that date); and 2) the MGIB Ratchet Base for Covered Funds and Special Funds from the most recent prior quarterly anniversary date, adjusted for any new eligible premiums and withdrawals attributable to Covered Funds or Special Funds, and transfers. o at other times, the MGIB Ratchet Base for Covered Funds and Special Funds is the MGIB Ratchet Base from the prior quarterly anniversary date, adjusted for subsequent eligible premiums and withdrawals attributable to Covered Funds or Special Funds, and transfers. The MGIB RATCHET BASE FOR EXCLUDED FUNDS is calculated the same as for Covered Funds and Special Funds, but for premiums, allocations, withdrawals or transfers attributable to Excluded Funds. Effect of Transfers on MGIB Ratchet Base: Net transfers from Covered or Special Funds to Excluded Funds will reduce the MGIB Ratchet Base allocated to Covered and Special Funds on a pro-rata basis. The resulting increase in the MGIB Ratchet Base allocated to Excluded Funds will equal the reduction in the MGIB Ratchet Base allocated to Covered and Special Funds. Net transfers from Excluded Funds to Covered or Special Funds will reduce the MGIB Ratchet Base allocated to Excluded Funds on a pro-rata basis. The resulting increase in the MGIB Ratchet Base allocated to Covered and Special Funds will equal the lesser of the net contract value transferred and the change in the MGIB Ratchet Base allocated to Excluded Funds. A "quarterly anniversary date" is the date three months from the contract date that falls on the same date in the month as the contract date. For example, if the contract date is February 12, the quarterly anniversary date is May 12. If there is no corresponding date in the month, the quarterly anniversary date will be the last date of such month. If the quarterly anniversary date falls on a weekend or holiday, we will use the value as of the subsequent business day. 2) THEN WE DETERMINE THE MGIB ANNUITY INCOME BY MULTIPLYING YOUR MGIB BENEFIT BASE (ADJUSTED FOR ANY MARKET VALUE ADJUSTMENT, SURRENDER CHARGE AND PREMIUM TAXES) BY THE INCOME FACTOR, AND THEN DIVIDE BY $1,000. MGIB INCOME OPTIONS The following are the MGIB Income Options available under the MGIB Rider: a) Income for Life (Single Life or Joint with 100% Survivor) and 10-20 year certain; Access - 131789 23 b) Income for a 20-30 year period certain; c) Any other income plan offered by the Company in conjunction with the MGIB rider on the MGIB Benefit Date. You may elect to have payments under MGIB Income Options (a) and (b) increase annually at 1%, 2% or 3%. Once during the life of the Contract, you have the option to elect to apply up to 50% of the MGIB Benefit Base to one of the MGIB Income Options available under the Rider. This option may only be exercised on a contract anniversary at or after the end of the waiting period. The portion of the MGIB Benefit Base so applied will be used to determine the MGIB income, as is otherwise described in the prospectus. The Contract Value will be reduced on a pro-rata basis. Any subsequent exercise of your right to receive payments under the MGIB rider must be for 100% of the remaining value. The amount applied to the partial annuitization will be treated as a withdrawal for purposes of adjusting contract and rider values. PLEASE NOTE THAT IF YOU ELECT PARTIAL ANNUITIZATION, INCOME PAYMENTS RECEIVED WILL BE TAXED AS WITHDRAWALS. PLEASE CONSULT YOUR TAX ADVISER BEFORE MAKING THIS ELECTION, AS THE TAXATION OF PARTIAL ANNUITIZATION IS UNCERTAIN. PURCHASE. To purchase the MGIB rider, you must be age 79 or younger on the rider date and the ten-year waiting period must end at or prior to the latest annuity start date. The MGIB rider must be purchased (i) on the contract date, or (ii) within thirty days after the contract date. For contracts issued more than 30 days before the date this rider first became available in your state, the Company may in its discretion allow purchase of this rider during the 30-day period preceding the first contract anniversary after the date of this prospectus, or the date of state approval, whichever is later. There is a ten-year waiting period before you can annuitize under the MGIB rider. This could reduce the MGIB. THE MGIB DATE. If you purchased the MGIB rider on the contract date or added the MGIB rider within 30 days following the contract date, the MGIB Date is the contract anniversary on or after the tenth contract anniversary when you decide to exercise your right to annuitize under the MGIB rider. If you added the MGIB rider at any other time, your MGIB Date is the contract anniversary at least 10 years after the rider date when you decide to exercise your right to annuitize under the MGIB rider. NO CHANGE OF ANNUITANT. Once you purchase the MGIB rider, the annuitant may not be changed except for the following exception. If an annuitant who is not a contract owner dies prior to annuitization, a new annuitant may be named in accordance with the provisions of your Contract. The MGIB Base is unaffected and continues to accumulate. NOTIFICATION. On or about 30 days prior to the MGIB Date, we will provide you with notification which will include an estimate of the amount of MGIB annuity benefit available if you choose to exercise it. We will determine the actual amount of the MGIB annuity benefit as of the MGIB Date. THE MGIB RIDER DOES NOT RESTRICT OR LIMIT YOUR RIGHT TO ANNUITIZE THE CONTRACT AT ANY TIME PERMITTED UNDER THE CONTRACT. THE MGIB RIDER DOES NOT RESTRICT YOUR RIGHT TO ANNUITIZE THE CONTRACT USING CONTRACT VALUES THAT MAY BE HIGHER THAN THE MGIB ANNUITY BENEFIT. THE BENEFITS ASSOCIATED WITH THE MGIB RIDER ARE AVAILABLE ONLY IF YOU ANNUITIZE YOUR CONTRACT UNDER THE RIDER AND IN ACCORDANCE WITH THE PROVISIONS SET FORTH ABOVE. ANNUITIZING USING THE MGIB MAY RESULT IN A MORE FAVORABLE STREAM OF INCOME PAYMENTS, AND DIFFERENT TAX CONSEQUENCES, UNDER YOUR CONTRACT. BECAUSE THE MGIB RIDER IS BASED ON CONSERVATIVE ACTUARIAL FACTORS, THE LEVEL OF LIFETIME INCOME THAT IT GUARANTEES MAY BE LESS THAN THE LEVEL THAT MIGHT BE PROVIDED BY THE APPLICATION OF YOUR CONTRACT VALUE TO THE CONTRACT'S APPLICABLE ANNUITY FACTORS. YOU SHOULD CONSIDER ALL OF YOUR OPTIONS AT THE TIME YOU BEGIN THE INCOME PHASE OF YOUR CONTRACT. MINIMUM GUARANTEED WITHDRAWAL BENEFIT RIDER (MGWB). The MGWB rider, marketed under the name, ING PrincipalGuard Withdrawal Benefit, is an optional benefit which guarantees that if your contract value is reduced to zero, you will receive periodic payments. The amount of the periodic payments is based on the amount in the MGWB Withdrawal Account. Access - 131789 24 The guarantee provides that, subject to the conditions described below, the amount you will receive in periodic payments is equal to your Eligible Payment Amount adjusted for any prior withdrawals. Your Eligible Payment Amount depends on when you purchase the MGWB rider and equals: 1) if you purchased the MGWB rider on the contract date: your premium payments received during the first two contract years 2) if you purchased the MGWB rider after the contract date: your contract value on the Rider Date, including any premiums received that day, and any subsequent premium payments received during the two-year period commencing on the Rider Date. To maintain the guarantee, withdrawals in any contract year may not exceed 7% of your Eligible Payment Amount adjusted, as defined below. If your contract value is reduced to zero, your periodic payments will be 7% of your Eligible Payment Amount every year. Payments continue until your MGWB Withdrawal Account is reduced to zero. The MGWB Withdrawal Account is equal to the Eligible Payment Amount adjusted for any withdrawals and transfers between Covered and Excluded Funds. The MGWB Withdrawal Account is tracked separately for Covered and Excluded Funds. The MGWB Withdrawal Account equals the sum of (a) the MGWB Withdrawal Account allocated to Covered Funds, and (b) the lesser of (i) the MGWB Withdrawal Account allocated to Excluded Funds and (ii) the contract value in Excluded Funds. Thus, investing in the Excluded Funds may limit the MGWB Withdrawal Account. No investment options are currently designated as Excluded Funds for the Minimum Guaranteed Withdrawal Benefit. The Maximum Annual Withdrawal Amount (or "MAW") is equal to 7% of the Eligible Payment Amount. Withdrawals from Covered Funds of up to the MAW will reduce the value of your MGWB Withdrawal Account by the dollar amount of the withdrawal. Any withdrawals from Covered Funds greater than the MAW will cause a reduction in the MGWB Withdrawal Account allocated to Covered Funds by the proportion that the excess withdrawal bears to the remaining contract value in Covered Funds after the withdrawal of the MAW. All withdrawals from Excluded Funds will reduce the value of the MGWB Withdrawal Account allocated to Excluded Funds on a pro-rata basis. If a single withdrawal involves both Covered and Excluded Funds and exceeds 7%, the withdrawal will be treated as taken first from Covered Funds. Any withdrawals greater than the MAW will also cause a reduction in the Eligible Payment Amount by the proportion that the excess portion of the withdrawal bears to the contract value remaining after withdrawal of the MAW at the time of the withdrawal. Once your contract value is zero, any periodic payments paid under the MGWB rider also reduce the MGWB Withdrawal Account by the dollar amount of the payments. If a withdrawal reduces the MGWB Withdrawal Account to zero, the MGWB rider terminates and no further benefits are payable under the rider. Net transfers from Covered Funds to Excluded Funds will reduce the MGWB Withdrawal Account allocated to Covered Funds on a pro-rata basis. The resulting increase in the MGWB Withdrawal Account allocated to Excluded Funds equals the reduction in the MGWB Withdrawal Account for Covered Funds. Net transfers from Excluded Funds to Covered Funds will reduce the MGWB Withdrawal Account allocated to Excluded Funds on a pro-rata basis. The resulting increase in the MGWB Withdrawal Account allocated to Covered Funds will equal the lesser of the reduction in the MGWB Withdrawal Account for Excluded Funds and the net contract value transferred. YOU SHOULD NOT MAKE ANY WITHDRAWALS IF YOU WISH TO RETAIN THE OPTION TO ELECT THE STEP-UP BENEFIT (SEE BELOW). The MGWB Withdrawal Account is only a calculation which represents the remaining amount available for periodic payments. It does not represent a contract value, nor does it guarantee performance of the subaccounts in which you are invested. It will not affect your annuitization, surrender and death benefits. GUARANTEED WITHDRAWAL STATUS. You may continue to make withdrawals in any amount permitted under your Contract so long as your contract value is greater than zero. See "Withdrawals." However, making any withdrawals in any year greater than the MAW will reduce the Eligible Payment Amount and payments under the MGWB rider by the proportion that the withdrawal bears to the contract value at the time of the withdrawal. The MGWB rider will remain in force and you may continue to make withdrawals each year so long as: Access - 131789 25 1) your contract value is greater than zero; 2) your MGWB Withdrawal Account is greater than zero; 3) you have not reached your latest allowable annuity start date; 4) you have not elected to annuitize your Contract; and 5) you have not died (unless your spouse has elected to continue the Contract), changed the ownership of the Contract or surrendered the Contract. The standard Contract provision limiting withdrawals to no more than 90% of the cash surrender value is not applicable under the MGWB rider. AUTOMATIC PERIODIC BENEFIT STATUS. Under the MGWB rider, in the event your contract value is reduced to zero, your Contract is given Automatic Periodic Benefit Status, if: 1) your MGWB Withdrawal Account is greater than zero; 2) you have not reached your latest allowable annuity start date; 3) you have not elected to annuitize your Contract; and 4) you have not died, changed the ownership of the Contract or surrendered the Contract. Once your Contract is given Automatic Periodic Benefit Status, we will pay you the annual MGWB periodic payments, beginning on the next contract anniversary until the earliest of (i) your Contract's latest annuity start date, (ii) the death of the owner; or (iii) your MGWB Withdrawal Account is exhausted. These payments are equal to the lesser of the remaining MGWB Withdrawal Account or the MAW. We will reduce the MGWB Withdrawal Account by the amount of each payment. Once your Contract is given Automatic Periodic Benefit Status, we will not accept any additional premium payments in your Contract, and the Contract will not provide any benefits except those provided by the MGWB rider. Any other rider terminates. Your Contract will remain in Automatic Periodic Benefit Status until the earliest of (i) payment of all MGWB periodic payments, (ii) payment of the Commuted Value (defined below) or (iii) the owner's death. On the Contract's latest annuity start date, in lieu of making the remaining MGWB periodic payments, we will pay you the Commuted Value of your MGWB periodic payments remaining. We may, at our option, extend your annuity start date in order to continue the MGWB periodic payments. The Commuted Value is the present value of any then-remaining MGWB periodic payments at the current interest rate plus 0.50%. The current interest rate will be determined by the average of the Ask Yields for U.S. Treasury STRIPS as quoted by a national quoting service for period(s) applicable to the remaining payments. Once we pay you the last MGWB periodic payment or the Commuted Value, your Contract and the MGWB rider terminate. RESET OPTION. Beginning on the fifth contract anniversary following the Rider Date, if the contract value is greater than the MGWB Withdrawal Account, you may choose to reset the MGWB Rider. The effect will be to terminate the existing MGWB Rider and add a new MGWB Rider ("New Rider"). The MGWB Withdrawal Account under the New Rider will equal the contract value on the date the New Rider is effective. The charge for the MGWB under the New Rider and any right to reset again will be based on the terms of the New Rider when it is issued. We reserve the right to limit the reset election to contract anniversaries only. If you elect the reset option, the step-up benefit is not available. STEP-UP BENEFIT. If the Rider Date is the same as the Contract Date, beginning on the fifth contract anniversary following the Rider Date, if you have not made any previous withdrawals, you may elect to increase the MGWB Withdrawal Account, the adjusted Eligible Payment Amount and the MAW by a factor of 20%. This option is available whether or not the contract value is greater than the MGWB Withdrawal Account. If you elect the Step-Up Benefit: 1) we reserve the right to increase the charge for the MGWB Rider up to a maximum annual charge of 1.00%; 2) you must wait at least five years from the Step-Up date to elect the Reset Option. Access - 131789 26 The Step-Up Benefit may be elected only one time under the MGWB Rider. We reserve the right to limit the election of the Step-Up Benefit to contract anniversaries only. Please note that if you have a third party investment advisor who charges a separate advisory fee, and you have chosen to use withdrawals from your Contract to pay this fee, these will be treated as any other withdrawals, and the Step-Up Benefit will not be available. DEATH OF OWNER BEFORE AUTOMATIC PERIODIC BENEFIT STATUS. The MGWB rider terminates on the first owner's date of death (death of annuitant, if there is a non-natural owner), but the death benefit is payable. However, if the beneficiary is the owner's spouse, the spouse elects to continue the Contract, and the contract value steps up to the minimum guaranteed death benefit, the MGWB Withdrawal Account and MAW are also reset. The MGWB charge will continue at the existing rate. Reset upon spousal continuation does not affect any then existing reset option. DURING AUTOMATIC PERIODIC BENEFIT STATUS. The death benefit payable during Automatic Periodic Benefit Status is your MGWB Withdrawal Account which equals the sum of the remaining MGWB periodic payments. PURCHASE. To purchase the MGWB rider, you must be age 80 or younger on the Rider Date. The MGWB rider must be purchased (i) on the contract date, or (ii) within 30 days after the contract date. If the rider is not yet available in your state, the Company may in its discretion allow purchase of this rider during the 30-day period preceding the first contract anniversary after the date of this prospectus, or the date of state approval, whichever is later. For a discussion of the charges we deduct under the MGWB rider, see "Charges and Fees -- Optional Rider Charges." Each payment you receive under the MGWB rider will be taxed as a withdrawal and may be subject to a penalty tax. See "Withdrawals" and "Federal Tax Considerations" for more information. OTHER CONTRACTS We offer other variable annuity contracts that also invest in the same portfolios of the Trusts or Funds. These contracts have different charges that could affect their performance, and may offer different benefits more suitable to your needs. To obtain more information about these other contracts, contact our Customer Service Center or your registered representative. -------------------------------------------------------------------------------- WITHDRAWALS -------------------------------------------------------------------------------- Except under certain qualified contracts, you may withdraw all or part of your money any time during the accumulation phase and before the death of the contract owner. If you request a withdrawal for more than 90% of the cash surrender value, and the remaining cash surrender value after the withdrawal is less than $2,500, we will treat it as a request to surrender the Contract. You need to submit to us a written request specifying the Fixed Interest Allocations or subaccounts from which to withdraw amounts, otherwise we will make the withdrawal on a pro-rata basis from all of the subaccounts in which you are invested. If there is not enough contract value in the subaccounts, we will deduct the balance of the withdrawal from your Fixed Interest Allocations starting with the guaranteed interest periods nearest their maturity dates until we have honored your request. We will apply a Market Value Adjustment to any withdrawal from your Fixed Interest Allocation taken more than 30 days before its maturity date. Definitive guidance on the proper federal tax treatment of the Market Value Adjustment has not been issued. You may want to discuss the potential tax consequences of a Market Value Adjustment with your tax adviser. We will determine the contract value as of the close of business on the day we receive your withdrawal request at our Customer Service Center. The contract value may be more or less than the premium payments made. If the aggregate percentage cap on allocations to the Restricted Funds has been exceeded, any subsequent withdrawals must be taken so that the percentage of contract value in the Restricted Funds following the withdrawal would not be greater than the percentage of contract value in the Restricted Funds prior to the Access - 131789 27 withdrawal. If a requested withdrawal would cause the percentage cap to be exceeded, the amount of the withdrawal in excess of the cap would be taken pro-rata from all variable subaccounts. For administrative purposes, we will transfer your money to a specially designated subaccount (currently, the Liquid Assets subaccount) prior to processing the withdrawal. This transfer will not affect the withdrawal amount you receive. Please be aware that the benefit we pay under certain optional benefit riders will be reduced by any withdrawals you take while the optional benefit rider is in effect. See "Optional Riders." We offer the following three withdrawal options: REGULAR WITHDRAWALS After the free look period, you may make regular withdrawals. Each withdrawal must be a minimum of $100. We will apply a Market Value Adjustment to any regular withdrawal you take from a Fixed Interest Allocation more than 30 days before its maturity date. See Appendix C and the Fixed Account I prospectus for more information on the application of the Market Value Adjustment. SYSTEMATIC WITHDRAWALS You may choose to receive automatic systematic withdrawal payments (i) from the contract value in the subaccounts in which you are invested, or (ii) from the interest earned in your Fixed Interest Allocations. You may not elect the systematic withdrawal option if you are taking IRA withdrawals. Systematic withdrawals may be taken monthly, quarterly or annually. If you have contract value allocated to one or more Restricted Funds, and you elect to receive systematic withdrawals from the subaccounts in which you are invested, the systematic withdrawals must be taken pro-rata from all subaccounts in which contract value is invested. If you do not have contract value allocated to a Restricted Fund and choose systematic withdrawals on a non pro-rata basis, we will monitor the withdrawals annually. If you subsequently allocate contract value to one or more Restricted Funds, we will require you to take your systematic withdrawals on a pro-rata basis from all subaccounts in which contract value is invested. You decide when you would like systematic payments to start as long as it is at least 28 days after your contract date. You also select the date on which the systematic withdrawals will be made, but this date cannot be later than the 28th day of the month. If you have elected to receive systematic withdrawals but have not chosen a date, we will make the withdrawals on the same calendar day of each month as your contract date. If your contract date is after the 28th day of the month, your systematic withdrawal will be made on the 28th day of each month. Each systematic withdrawal amount must be a minimum of $100. The amount of your systematic withdrawal can either be (i) a fixed dollar amount or (ii) an amount based on a percentage of your contract value. Both forms of systematic withdrawals are subject to the following maximum, which is calculated on each withdrawal date: --------------------------------------------- MAXIMUM PERCENTAGE FREQUENCY OF CONTRACT VALUE --------------------------------------------- Monthly 1.25% Quarterly 3.75% Annually 15.00% --------------------------------------------- If your systematic withdrawal is a fixed dollar amount and the amount to be withdrawn would exceed the applicable maximum percentage of your contract value on any withdrawal date, we will automatically reduce the amount withdrawn so that it equals such percentage. Thus, your fixed dollar systematic withdrawals will never exceed the maximum percentage. If you want fixed dollar systematic withdrawals to exceed the maximum percentage, consider the Fixed Dollar Systematic Withdrawal Feature discussed below which you may add to your regular fixed dollar systematic withdrawal program. Access - 131789 28 If your systematic withdrawal is based on a percentage of your contract value and the amount to be withdrawn based on that percentage would be less than $100, we will automatically increase the amount to $100 as long as it does not exceed the maximum percentage. If the systematic withdrawal would exceed the maximum percentage, we will send the amount, and then automatically cancel your systematic withdrawal option. We limit systematic withdrawals from Fixed Interest Allocations to interest earnings during the prior month, quarter, or year, depending on the frequency you chose. Systematic withdrawals are not subject to a Market Value Adjustment, unless you have added the Fixed Dollar Systematic Withdrawal Feature discussed below and the payments exceed interest earnings. Systematic withdrawals from Fixed Interest Allocations under the Fixed Dollar Systematic Withdrawal Feature are available only in connection with Section 72(q) and 72(t) distributions. A Fixed Interest Allocation may not participate in both the systematic withdrawal option and the dollar cost averaging program at the same time. You may change the amount or percentage of your systematic withdrawal once each contract year or cancel this option at any time by sending satisfactory notice to our Customer Service Center at least 7 days before the next scheduled withdrawal date. If you submit a subsequent premium payment after you have applied for systematic withdrawals, we will not adjust future withdrawals under the systematic withdrawal program unless you specifically request that we do so. The systematic withdrawal option may commence in a contract year where a regular withdrawal has been taken but you may not change the amount or percentage of your withdrawals in any contract year during which you have previously taken a regular withdrawal. Subject to availability, a spousal or non-spousal beneficiary may elect to receive death benefits as payments over the beneficiary's lifetime ("stretch"). Stretch payments will be subject to the same limitations as systematic withdrawals, and non-qualified stretch payments will be reported on the same basis as other systematic withdrawals. FIXED DOLLAR SYSTEMATIC WITHDRAWAL FEATURE. You may add the Fixed Dollar Systematic Withdrawal Feature to your regular fixed dollar systematic withdrawal program. This feature allows you to receive a systematic withdrawal in a fixed dollar amount regardless of any Market Value Adjustments. Systematic withdrawals from Fixed Interest Allocations under the Fixed Dollar Systematic Withdrawal Feature are available only in connection with Section 72(q) and 72(t) distributions. You choose the amount of the fixed systematic withdrawals, which may total up to a maximum of 15% of your contract value as determined on the day we receive your election of this feature. We will not recalculate the maximum limit when you make additional premium payments, unless you instruct us to do so. We will assess a Market Value Adjustment on the withdrawal date if the withdrawal from a Fixed Interest Allocation exceeds your interest earnings on the withdrawal date. We will apply any Market Value Adjustment directly to your contract value (rather than to the withdrawal) so that the amount of each systematic withdrawal remains fixed. Flat dollar systematic withdrawals which are intended to satisfy the requirements of Section 72(q) or 72(t) of the Internal Revenue Code (the "Code") may exceed the maximum. Such withdrawals are subject to Market Value Adjustments when they exceed the applicable maximum percentage. IRA WITHDRAWALS If you have a non-Roth IRA Contract and will be at least age 70 1/2 during the current calendar year, you may elect to have distributions made to you to satisfy requirements imposed by federal tax law. IRA withdrawals provide payout of amounts required to be distributed by the Internal Revenue Service ("IRS") rules governing mandatory distributions under qualified plans. We will send you a notice before your distributions commence. You may elect to take IRA withdrawals at that time, or at a later date. You may not elect IRA withdrawals and participate in systematic withdrawals at the same time. If you do not elect to take IRA withdrawals, and distributions are required by federal tax law, distributions adequate to satisfy the requirements imposed by federal tax law may be made. Thus, if you are participating in systematic withdrawals, distributions under that option must be adequate to satisfy the mandatory distribution rules imposed by federal tax law. You may choose to receive IRA withdrawals on a monthly, quarterly or annual basis. You may elect payments to start as early as 28 days after the contract date. You select the day of the month when the withdrawals will be made, but it cannot be later than the 28th day of the month. If no date is selected, we will make the withdrawals on the same calendar day of the month as the contract date. If your contract date is after the 28th day of the month, your IRA withdrawal will be made on the 28th day of each month. Access - 131789 29 You may request us to calculate the amount you are required to withdraw from your Contract each year based on the information you give us and various choices you make. For information regarding the calculation and choices you have, see the SAI. Or, we will accept your written instructions regarding the calculated amount required to be withdrawn from your Contract each year. The minimum dollar amount you can withdraw is $100. When we determine the required IRA withdrawal amount for a taxable year based on the frequency you select, if that amount is less than $100, we will pay $100. At any time where the IRA withdrawal amount is greater than the contract value, we will cancel the Contract and send you the amount of the cash surrender value. You may change the payment frequency of your IRA withdrawals once each contract year or cancel this option at any time by sending satisfactory notice to our Customer Service Center at least 7 days before the next scheduled withdrawal date. An IRA withdrawal from a Fixed Interest Allocation in excess of the amount allowed under systematic withdrawals will be subject to a Market Value Adjustment. CONSULT YOUR TAX ADVISER REGARDING THE TAX CONSEQUENCES ASSOCIATED WITH TAKING WITHDRAWALS. You are responsible for determining that withdrawals comply with applicable law. A withdrawal made before the taxpayer reaches age 59 1/2 may result in a 10% penalty tax. See "Federal Tax Considerations" for more details. -------------------------------------------------------------------------------- TRANSFERS AMONG YOUR INVESTMENTS -------------------------------------------------------------------------------- Between the end of the free look period and the annuity start date, you may transfer your contract value among the subaccounts in which you are invested and your Fixed Interest Allocations. We currently do not charge you for transfers made during a contract year, but reserve the right to charge for each transfer after the twelfth transfer in a contract year. WE ALSO RESERVE THE RIGHT TO LIMIT THE NUMBER OF TRANSFERS YOU MAY MAKE AND MAY OTHERWISE MODIFY OR TERMINATE TRANSFER PRIVILEGES IF REQUIRED BY OUR BUSINESS JUDGMENT OR IN ACCORDANCE WITH APPLICABLE LAW. We will apply a Market Value Adjustment to transfers from a Fixed Interest Allocation taken more than 30 days before its maturity date, unless the transfer is made under the dollar cost averaging program. Keep in mind that transfers between Covered Funds, Special Funds and Excluded Funds may negatively impact your death benefit or rider benefits. If you allocate contract value to an investment option that has been designated as a Restricted Fund, your ability to transfer contract value to the Restricted Fund may be limited. A transfer to the Restricted Funds will not be permitted to the extent that it would increase the contract value in the Restricted Fund to more than the applicable limits following the transfer. We do not limit transfers from Restricted Funds. If the result of multiple reallocations is to lower the percentage of total contract value in the Restricted Fund, the reallocation will be permitted even if the percentage of contract value in the Restricted Fund is greater than the limit. Please be aware that the benefit we pay under an optional benefit rider may be affected by certain transfers you make while the rider is in effect. Transfers, including those involving Special Funds, may also affect your optional rider base. See "The Annuity Contract -- Optional Riders." The minimum amount that you may transfer is $100 or, if less, your entire contract value held in a subaccount or a Fixed Interest Allocation. To make a transfer, you must notify our Customer Service Center and all other administrative requirements must be met. We will determine transfer values at the end of the business day on which we receive the transfer request at our Customer Service Center. If we receive your transfer request after 4 p.m. eastern time or the close of regular trading of the New York Stock Exchange, we will make the transfer on the next business day. Separate Account B and the Company will not be liable for following instructions communicated by telephone or other approved electronic means that we reasonably believe to be genuine. We may require personal identifying information to process a request for transfer made over the telephone, over the internet or other approved electronic means. LIMITS IMPOSED BY UNDERLYING FUNDS. Orders for the purchase of fund shares may be subject to acceptance or rejection by the underlying fund. We reserve the right to reject, without prior notice, any Access - 131789 30 allocation of a premium payment to a subaccount if the subaccount's investment in its corresponding fund is not accepted by the fund for any reason. LIMITS ON FREQUENT OR DISRUPTIVE TRANSFERS. The Contract is not designed to serve as a vehicle for frequent trading. Frequent trading can disrupt management of a fund and raise its expenses through: 1) increased trading and transaction costs; 2) forced and unplanned portfolio turnover; 3) lost opportunity costs; and 4) large asset swings that decrease the fund's ability to provide maximum investment return to all contract owners. This in turn can have an adverse effect on fund performance. Accordingly, individuals or organizations that use market-timing investment strategies and make frequent transfers should not purchase the Contract. We reserve the right to restrict, in our sole discretion and without prior notice, transfers initiated by a market-timing organization or individual or other party authorized to give transfer instructions on behalf of multiple contract owners. Such restrictions could include: (1) not accepting transfer instructions from an agent acting on behalf of more than one contract owner; and (2) not accepting preauthorized transfer forms from market timers or other entities acting on behalf of more than one contract owner at a time. We monitor transfer activity. With regard to frequent transfers, in the event that an individual's or organization's transfer activity: 1. exceeds our then-current monitoring standard for frequent trading; 2. is identified as problematic by an underlying fund even if the activity does not exceed our monitoring standard for frequent trading; or 3. if we determine in our sole discretion that such transfer activity may not be in the best interests of other contract owners, we reserve the right to take any necessary action to deter such activity. Such actions may include, but are not limited to, the suspension of trading privileges via facsimile, telephone, email and internet, and the limiting of trading privileges to submission by regular U.S. mail. We will notify you in writing if we take any of these actions. Our current definition of frequent trading is more than one purchase and sale of the same underlying fund within a 30-day period. We do not count transfers associated with scheduled dollar cost averaging or automatic rebalancing programs, transfers involving funds that affirmatively permit short-term trading in their fund shares, such as the ProFund portfolios, movement between such funds and the Liquid Assets Portfolio, and transfers involving certain de minimis amounts when determining whether trading activity is excessive. We reserve the right to modify our general standard, or the standard as it may apply to a particular fund, at any time without prior notice, depending on, among other factors, the needs of the underlying fund(s), the best interests of contract owners and fund investors, and/or state or federal regulatory requirements. In addition, if, due to the excessive dollar amounts of trades, even though not within our then current definition of frequent trading, an individual's or organization's transfer activity is determined, in our sole discretion, to be disruptive, we may take the same actions as are described above to limit frequent transfers. The Company does not allow waivers to the above policy. Our excessive trading policy may not be completely successful in preventing market timing or excessive trading activity. We currently require that orders received via facsimile to effect transactions in subaccounts that invest in ProFund portfolios be received at our Customer Service Center no later than 3 p.m. eastern time. DOLLAR COST AVERAGING You may elect to participate in our dollar cost averaging program if you have at least $1,200 of contract value in (i) the Liquid Assets subaccount, or (ii) a Fixed Interest Allocation with either a 6-month or a 1-year guaranteed interest period. These subaccounts or Fixed Interest Allocations serve as the source accounts from which we will, on a monthly basis, automatically transfer a set dollar amount of money to other subaccounts selected by you. We also may offer DCA Fixed Interest Allocations, which are 6-month and 1-year Fixed Interest Allocations available exclusively for use with the dollar cost averaging program. The DCA Fixed Interest Allocations require a minimum premium payment of $1,200 directed into a DCA Fixed Interest Access - 131789 31 Allocation. A Fixed Interest Allocation or DCA Fixed Interest Allocation may not participate in the dollar cost averaging program and in systematic withdrawals at the same time. The dollar cost averaging program is designed to lessen the impact of market fluctuation on your investment. Since we transfer the same dollar amount to other subaccounts each month, more units of a subaccount are purchased if the value of its unit is low and fewer units are purchased if the value of its unit is high. Therefore, a lower than average value per unit may be achieved over the long term. However, we cannot guarantee this. When you elect the dollar cost averaging program, you are continuously investing in securities regardless of fluctuating price levels. You should consider your tolerance for investing through periods of fluctuating price levels. Unless you have a DCA Fixed Interest Allocation, you elect the dollar amount you want transferred under this program. Each monthly transfer must be at least $100. If your source account is the Liquid Assets subaccount or a 1-year Fixed Interest Allocation, the maximum amount that can be transferred each month is your contract value in such source account divided by 12. If your source account is a 6-month Fixed Interest Allocation, the maximum amount that can be transferred each month is your contract value in such source account divided by 6. You may change the transfer amount once each contract year. If you have a DCA Fixed Interest Allocation, there is no minimum or maximum transfer amount. We will transfer all your money allocated to that source account into the subaccount(s) in equal payments over the selected 6-month or 1-year period. The last payment will include earnings accrued over the course of the selected period. If you make an additional premium payment into a Fixed Interest Allocation subject to dollar cost averaging, the amount of your transfers under the dollar cost averaging program remains the same, unless you instruct us to increase the transfer amount. Transfers from a Fixed Interest Allocation or a DCA Fixed Interest Allocation under the dollar cost averaging program are not subject to a Market Value Adjustment. However, if you terminate the dollar cost averaging program for a DCA Fixed Interest Allocation and there is money remaining in the DCA Fixed Interest Allocation, we will transfer the remaining money to the Liquid Assets subaccount. Such transfer will trigger a Market Value Adjustment if the transfer is made more than 30 days before the maturity date of the DCA Fixed Interest Allocation. If you do not specify to which subaccounts you want to transfer the dollar amount of the source account, we will transfer the money to the subaccounts in which you are invested on a proportional basis. The transfer date is the same day each month as your contract date. If, on any transfer date, your contract value in a source account is equal or less than the amount you have elected to have transferred, the entire amount will be transferred and the program will end. You may terminate the dollar cost averaging program at any time by sending satisfactory notice to our Customer Service Center at least 7 days before the next transfer date. You are permitted to transfer contract value to a Restricted Fund, subject to the limitations described above in this section and in "Appendix B -- The Investment Portfolios." Compliance with the individual and aggregate Restricted Fund limits will be reviewed when the dollar cost averaging program is established. Transfers under the dollar cost averaging program must be within those limits. We will not review again your dollar cost averaging election for compliance with the individual and aggregate limits for investment in the Restricted Funds except in the case of the transactions described below. o Amount added to source account: If you add amounts to the source account which would increase the amount to be transferred under the dollar cost averaging program, we will review the amounts to be transferred to ensure that the individual and aggregate limits are not being exceeded. If such limits would be exceeded, we will require that the dollar cost averaging transfer amounts be changed to ensure that the transfers are within the limits based on the then-current allocation of contract value to the Restricted Fund(s) and the then-current value of the amount designated to be transferred to that Restricted Fund(s). o Additional premium paid: Up to the individual Restricted Fund percentage limit may be allocated to a Restricted Fund. If you request more than the individual limit be allocated to a Restricted Fund, we will look at the aggregate limit, subtract the current allocation to Restricted Funds, and subtract the current value of amounts to be transferred under the dollar cost averaging program to Restricted Funds. The excess, if any, is the maximum that may be allocated pro-rata to the Restricted Funds. Access - 131789 32 o Reallocation request is made while the dollar cost averaging program is active: If the reallocation would increase the amount allocated to Restricted Funds, the maximum that may be so allocated is the individual Restricted Fund percentage limit, less the current allocation to Restricted Funds and less the current value of any remaining amounts to be transferred under the dollar cost averaging program to the Restricted Funds. We may offer additional subaccounts or withdraw any subaccount or Fixed Interest Allocation to or from the dollar cost averaging program, stop offering DCA Fixed Interest Allocations or otherwise modify, suspend or terminate this program. Such change will not affect any dollar cost averaging programs in operation at the time. AUTOMATIC REBALANCING If you have at least $10,000 of contract value invested in the subaccounts of Separate Account B, you may elect to have your investments in the subaccounts automatically rebalanced. Automatic rebalancing is not available if you participate in dollar cost averaging. Automatic rebalancing will not take place during the free look period. Transfers made pursuant to automatic rebalancing do not count toward the 12-transfer limit on free transfers. You are permitted to reallocate between Restricted and non-Restricted Funds, subject to the limitations described above, in this section and in appendix B -- The Investment Portfolios. If the reallocation would increase the amount allocated to the Restricted Funds, the maximum that may be so allocated is the individual Restricted Fund percentage limit, less the current allocation to all Restricted Funds. We will transfer funds under your Contract on a quarterly, semi-annual, or annual calendar basis among the subaccounts to maintain the investment blend of your selected subaccounts. The minimum size of any allocation must be in full percentage points. Rebalancing does not affect any amounts that you have allocated to the Fixed Account. The program may be used in conjunction with the systematic withdrawal option only if withdrawals are taken pro-rata. To participate in automatic rebalancing, send satisfactory notice to our Customer Service Center. We will begin the program on the last business day of the period in which we receive the notice. You may cancel the program at any time. The program will automatically terminate if you choose to reallocate your contract value among the subaccounts or if you make an additional premium payment or partial withdrawal on other than a pro-rata basis. Additional premium payments and partial withdrawals made on a pro-rata basis will not cause the automatic rebalancing program to terminate. -------------------------------------------------------------------------------- DEATH BENEFIT CHOICES -------------------------------------------------------------------------------- DEATH BENEFIT DURING THE ACCUMULATION PHASE During the accumulation phase, a death benefit (and earnings multiplier benefit, if elected) is payable when either the contract owner, or the first of joint owners or the annuitant (when a contract owner is not an individual) dies. Assuming you are the contract owner, your beneficiary will receive a death benefit unless the beneficiary is your surviving spouse and elects to continue the Contract. We calculate the death benefit value as of the close of the business day on which we receive written notice and due proof of death, as well as any required paperwork, at our Customer Service Center ("claim date"). If your beneficiary wants to receive the death benefit on a date later than this, it may affect the amount of the benefit payable in the future. The proceeds may be received in a single sum, applied to any of the annuity options, or, if available, paid over the beneficiary's lifetime. (See "Systematic Withdrawals" above). A beneficiary's right to elect an annuity option or receive a lump-sum payment may have been restricted by the contract owner. If so, such rights or options will not be available to the beneficiary. If we do not receive a request to apply the death benefit proceeds to an annuity option, we will make a single sum distribution. Unless you elect otherwise, the distribution will be made into an interest bearing account, backed by our general account that is accessed by the beneficiary through a checkbook feature. The beneficiary may access death benefit proceeds at any time without penalty. We will generally distribute death benefit proceeds within 7 days after our Customer Service Center has received sufficient information to make Access - 131789 33 the payment. For information on required distributions under federal income tax laws, you should see "Required Distributions upon Contract Owner's Death." Interest earned on this account may be less than interest paid on other settlement options. THE FOLLOWING DESCRIBES THE DEATH BENEFIT OPTIONS FOR CONTRACT OWNERS IN THE YR-2004 CATEGORY. FOR A DESCRIPTION OF THE DEATH BENEFITS APPLICABLE UNDER YOUR CONTRACT IF YOU ARE IN A DIFFERENT CATEGORY, PLEASE SEE THE APPLICABLE APPENDIX. PLEASE RETAIN THIS PROSPECTUS AND THE APPENDIX THAT IS APPLICABLE TO YOU SO YOU WILL HAVE IT FOR FUTURE REFERENCE. IF YOU ARE UNSURE OF WHICH CATEGORY APPLIES TO YOU, PLEASE CALL OUR CUSTOMER SERVICE CENTER. You may choose one of the following Death Benefits: (i) the Standard Death Benefit, (ii) the Quarterly Ratchet Enhanced Death Benefit or (iii) the Max 7 Enhanced Death Benefit. The Quarterly Ratchet Enhanced Death Benefit and the Max 7 Enhanced Death Benefit are available only if the contract owner or the annuitant (if the contract owner is not an individual) is not more than 79 years old at the time of purchase. The Enhanced Death Benefits are available only at the time you purchase your Contract. The Enhanced Death Benefits are not available where a Contract is owned by joint owners. If you do not choose a death benefit, your death benefit will be the Standard Death Benefit. ONCE YOU CHOOSE A DEATH BENEFIT, YOU CANNOT CHANGE IT. We may stop or suspend offering any of the Enhanced Death Benefit options to new Contracts. A change in ownership of the Contract may affect the amount of the death benefit and the Enhanced Death Benefit. The MGWB rider may also affect the death benefit. The death benefit may be subject to certain mandatory distribution rules required by federal tax law. We use the Base Death Benefit to help determine the minimum death benefit payable under each of the death benefit options described below. You do not elect the Base Death Benefit. The Base Death Benefit is equal to the greater of: 1) the contract value; or 2) the cash surrender value. The STANDARD DEATH BENEFIT equals the GREATER of: 1) the Base Death Benefit; and 2) the Standard Minimum Guaranteed Death Benefit ("Standard MGDB") for amounts allocated to Covered Funds plus the contract value allocated to Excluded Funds. The Standard MGDB allocated to Covered Funds equals premiums allocated to Covered Funds less pro-rata adjustments for any withdrawals and transfers. The Standard MGDB allocated to Excluded Funds equals premiums allocated to Excluded Funds less pro-rata adjustments for any withdrawals and transfers. This calculation is not used for benefit purposes, but only to determine the impact of transfers to and from Excluded Funds. Withdrawals reduce the Standard MGDB on a pro-rata basis. The percentage reduction in the Standard MGDB for each Fund category (i.e. Covered or Excluded) equals the percentage reduction in contract value in that Fund category resulting from the withdrawal. The pro-rata adjustment is based on the change in contract value resulting from the withdrawal, not the amount requested. Transfers among Fund categories do not reduce the overall Standard MGDB. o Net transfers from Covered Funds to Excluded Funds will reduce the Standard MGDB in the Covered Funds on a pro-rata basis. The increase in the Standard MGDB allocated to Excluded Funds will equal the decrease in the Standard MGDB in Covered Funds. o Net transfers from Excluded Funds to Covered Funds will reduce the Standard MGDB in Excluded Funds on a pro-rata basis. The increase in the Standard MGDB allocated to Covered Funds will Access - 131789 34 equal the lesser of the net contract value transferred and the decrease in the Standard MGDB in Excluded Funds. ENHANCED DEATH BENEFIT OPTIONS. Under the Enhanced Death Benefit options, if you die before the annuity start date, your beneficiary will receive the greater of the Standard Death Benefit or the Enhanced Death Benefit option elected. We may, with 30 days notice to you, designate any investment portfolio as a Special Fund or Excluded Fund on existing contracts with respect to new premiums added to such investment portfolio and also with respect to new transfers to such investment portfolio. Selecting a Special Fund or Excluded Fund may limit or reduce the Enhanced Death Benefit. For the period during which a portion of the contract value is allocated to a Special Fund or Excluded Fund, we may, at our discretion, reduce the mortality and expense risk charge attributable to that portion of the contract value. The reduced mortality and expense risk charge will be applicable only during that period. The QUARTERLY RATCHET ENHANCED DEATH BENEFIT equals the greater of: 1) the Standard Death Benefit; and 2) the Quarterly Ratchet Minimum Guaranteed Death Benefit ("Quarterly Ratchet MGDB") allocated to Covered Funds plus the contract value allocated to Excluded Funds. No funds are currently designated as Excluded Funds for purposes of the Quarterly Ratchet MGDB. The Quarterly Ratchet MGDB allocated to Covered Funds on the contract date equals the premium allocated to Covered Funds. On each quarterly anniversary (three months from the contract date and each three month anniversary of that date) that occurs on or prior to attainment of age 90, the Quarterly Ratchet MGDB in Covered Funds will be set to the greater of: 1) the current contract value in Covered Funds (after deductions occurring as of that date); or 2) the Quarterly Ratchet MGDB in Covered Funds from the prior quarterly anniversary (after deductions occurring on that date), adjusted for new premiums and partial withdrawals attributable to Covered Funds, and transfers. Other than on quarterly anniversaries, the Quarterly Ratchet MGDB in the Covered Funds is equal to the Quarterly Ratchet MGDB in the Covered Funds from the last quarterly anniversary, adjusted for new premiums and partial withdrawals attributable to Covered Funds, and transfers. The Quarterly Ratchet MGDB allocated to Excluded Funds on the contract date equals the premium allocated to Excluded Funds. The calculation is not used for benefit purposes, but only to determine the impact of transfers to and from Excluded Funds. On each quarterly anniversary that occurs on or prior to attainment of age 90, the Quarterly Ratchet MGDB in Excluded Funds will be set to the greater of: 1) the current contract value in Excluded Funds (after deductions occurring as of that date); or 2) the Quarterly Ratchet MGDB in the Excluded Funds from the prior quarterly anniversary (after deductions occurring on that date), adjusted for new premiums and partial withdrawals attributable to Excluded Funds, and transfers. Other than on quarterly anniversaries, the Quarterly Ratchet MGDB in the Excluded Funds is equal to the Quarterly Ratchet MGDB in the Excluded Funds from the last Quarterly anniversary, adjusted for new premiums and partial withdrawals attributable to Excluded Funds, and transfers. Withdrawals reduce the Quarterly Ratchet MGDB on a pro-rata basis. The pro-rata adjustment is based on the change in contract value resulting from the withdrawal, not the amount requested. Net transfers from Covered Funds to Special or Excluded Funds will reduce the Quarterly Ratchet MGDB in Covered Funds on a pro-rata basis. The increase in the Quarterly Ratchet MGDB allocated to Special or Excluded Funds, as applicable, will equal the decrease in the Quarterly Ratchet MGDB in Covered Funds. Net transfers from Excluded Funds to Covered Funds will reduce the Quarterly Ratchet MGDB in Excluded Funds on a pro-rata basis. The increase in the Quarterly Ratchet MGDB allocated to Covered Funds will Access - 131789 35 equal the lesser of the net contract value transferred and the reduction in the Quarterly Ratchet MGDB in Excluded Funds The MAX 7 ENHANCED DEATH BENEFIT equals the greater of the Quarterly Ratchet Enhanced Death Benefit and the 7% Solution Death Benefit Element. Each element of the Max 7 Enhanced Death Benefit is determined independently of the other at all times. The 7% SOLUTION DEATH BENEFIT ELEMENT is the greater of: 1) the Standard Death Benefit; and 2) the lesser of: a) 3 times all premium payments, adjusted for withdrawals (the "cap"); and b) the SUM OF the 7% Solution Minimum Guaranteed Death Benefit Element ("7% MGDB") allocated to Covered Funds, the 7% MGDB allocated to Special Funds, and the contract value allocated to Excluded Funds. For purposes of calculating the 7% Solution Death Benefit Element, the following investment options are designated as Special Funds: the ING Liquid Assets Portfolio, the ING VP Bond Portfolio, the ING PIMCO Core Bond Portfolio, the ProFunds VP Rising Rates Opportunity Portfolio, the Fixed Account, the Fixed Interest Division, and the TSA Special Fixed Account. For Contracts issued prior to May 1, 2003, the ING VP Bond Portfolio and the ING PIMCO Core Bond Portfolio are not designated as Special Funds. For Contracts issued prior to September 2, 2003, the ProFunds VP Rising Rates Opportunity Portfolio is not designated as a Special Fund. No investment options are currently designated as Excluded Funds. The 7% MGDB allocated to Covered Funds equals premiums allocated to Covered Funds, adjusted for withdrawals and transfers, accumulated at 7% until age 80 or the 7% MGDB reaches the cap. There is no accumulation once the cap is reached. Payment of additional premiums may cause the accumulation to resume, but there is no catch-up for any period where accumulation was suspended. The 7% MGDB allocated to Special Funds equals premiums allocated to Special Funds, adjusted for withdrawals and transfers. There is no accumulation of Minimum Guaranteed Death Benefit allocated to Special Funds. The 7% MGDB allocated to Excluded Funds is determined in the same way as the 7% MGDB for Covered Funds, but the calculation is not used for benefit purposes, but only to determine the impact of transfers to and from Excluded Funds. Withdrawals reduce the 7% MGDB on a pro-rata basis. The percentage reduction in the 7% MGDB for each Fund category (i.e. Covered, Special or Excluded) equals the percentage reduction in contract value in that Fund category resulting from the withdrawal. The percentage reduction in the cap equals the percentage reduction in total contract value resulting from the withdrawal. The pro-rata adjustment is based on the change in contract value resulting from the withdrawal, not the amount requested. Transfers among Fund categories do not reduce the overall 7% MGDB, but do affect the amount of the 7% MGDB in a particular Fund category. Net transfers from among the Funds will reduce the 7% MGDB in the Funds on a pro-rata basis. Note: In all cases described above, the amount of the death benefit could be reduced by premium taxes owed and withdrawals not previously deducted. The enhanced death benefits may not be available in all states. EARNINGS MULTIPLIER BENEFIT RIDER. The earnings multiplier benefit rider is an optional rider that provides a separate death benefit in addition to the death benefit provided under the death benefit options described above. The rider is subject to state availability and is available only for issue ages 75 or under. You may add it at issue of the Contract or, if not yet available in your state, on the next contract anniversary following Access - 131789 36 introduction of the rider in your state. The date on which the rider is added is referred to as the "rider effective date." If the rider is added at issue, the rider provides a benefit equal to a percentage of the gain under the Contract, up to a gain equal to 150% of premiums adjusted for withdrawals ("Maximum Base"). Currently, if added at issue, the earnings multiplier benefit is equal to 55% (30% for issue ages 70 and above) of the lesser of: i) the Maximum Base; and ii) the contract value on the claim date minus premiums adjusted for withdrawals. If added after issue, the earnings multiplier benefit is equal to 55% (30% for issue ages 70 and above) of the lesser of: i) 150% of the contract value on the rider effective date, plus subsequent premiums adjusted for subsequent withdrawals; and ii) the contract value on the claim date minus the contract value on the rider effective date, minus subsequent premiums adjusted for subsequent withdrawals. The adjustment to the benefit for withdrawals is pro-rata, meaning that the benefit will be reduced by the proportion that the withdrawal bears to the contract value at the time of the withdrawal. There is an extra charge for the earnings multiplier benefit rider and once selected, it may not be revoked. The rider does not provide a benefit if there is no gain under the Contract. As such, the Company would continue to assess a charge for the rider, even though no benefit would be payable at death under the rider if there are no gains under the Contract. Please see "Charges and Fees -- Earnings Multiplier Benefit Charge" for a description of the charge. The rider is available for both non-qualified and qualified contracts. Please see the discussions of possible tax consequences in "Federal Tax Considerations," "Individual Retirement Annuities," "Taxation of Qualified Contracts," and "Tax Consequences of Enhanced Death Benefit," in this prospectus. DEATH BENEFIT DURING THE INCOME PHASE If any contract owner or the annuitant dies after the annuity start date, we will pay the beneficiary any certain benefit remaining under the annuity in effect at the time. CONTINUATION AFTER DEATH -- SPOUSE If at the contract owner's death, the surviving spouse of the deceased contract owner is the beneficiary and such surviving spouse elects to continue the contract as his or her own, the following will apply: If the guaranteed death benefit as of the date we receive due proof of death, minus the contract value on that date is greater than zero, we will add such difference to the contract value. We will allocate such addition to the variable subaccounts in proportion to the contract value in the subaccounts, unless you direct otherwise. If there is no contract value in any subaccount, we will allocate the addition to the Liquid Assets subaccount, or its successor. Such addition to contract value will not affect the guaranteed death benefit or any living benefit rider values. Any addition to contract value is available only to the spouse of the owner as of the date of death of the owner if such spouse under the provisions of the contract elects to continue the contract as his or her own. The death benefits under each of the available options will continue, based on the surviving spouse's age on the date that ownership changes. If you elected the earnings multiplier benefit rider, and the benefit would otherwise be payable, we will add the benefit to the contract value and allocate the benefit among the variable subaccounts in proportion to the contract value in the subaccounts, unless you direct otherwise. If there is no contract value in any subaccount, we will allocate the benefit to the Liquid Assets subaccount, or its successor. The earnings multiplier benefit rider will continue, if the surviving spouse is eligible based on his or her attained age. If the surviving spouse is older than the maximum rider issue age, the rider will terminate. The Maximum Base and the percentages will be reset based on the adjusted contract value. The calculation of the benefit going forward will be: (i) based on the attained age of the spouse at the time of the ownership change using current values as of that date; (ii) computed as if the rider were added to the Contract after issue and after the increase; and (iii) based on the Maximum Base and percentages in effect on the original rider date. However, we may permit the surviving spouse to elect to use the then-current Maximum Base and percentages in the benefit calculation. Access - 131789 37 CONTINUATION AFTER DEATH -- NOT A SPOUSE If the beneficiary or surviving joint owner is not the spouse of the owner, the contract may continue in force subject to the required distribution rules of the Code. See next section, "Required Distributions Upon Contract Owner's Death." If the guaranteed death benefit as of the date we receive due proof of death, minus the contract value also on that date, is greater than zero, we will add such difference to the contract value. Such addition will be allocated to the variable subaccounts in proportion to the contract value in the subaccounts, unless we are directed otherwise. If there is no contract value in any subaccount, the addition will be allocated to the Liquid Assets subaccount, or its successor. The death benefit will then terminate. At subsequent surrender, any surrender charge applicable to premiums paid prior to the date we receive due proof of death of the contract owner will be waived. No additional premium payments may be made. If you elected the earnings multiplier benefit rider, and the benefit would otherwise be payable, we will add the benefit to the contract value and allocate the benefit among the variable subaccounts in proportion to the contract value in the subaccounts, unless you direct otherwise. If there is no contract value in any subaccount, we will allocate the benefit to the Liquid Assets subaccount, or its successor. The earnings multiplier benefit rider then terminates, whether or not a benefit was payable under the terms of the rider. REQUIRED DISTRIBUTIONS UPON CONTRACT OWNER'S DEATH We will not allow any payment of benefits provided under a non-qualified Contract which does not satisfy the requirements of Section 72(s) of the Code. If any contract owner of a non-qualified contract dies before the annuity start date, we will distribute the death benefit payable to the beneficiary as follows: (a) the death benefit must be completely distributed within 5 years of the contract owner's date of death; or (b) the beneficiary may elect, within the 1-year period after the contract owner's date of death, to receive the death benefit in the form of an annuity from us, provided that (i) such annuity is distributed in substantially equal installments over the life of such beneficiary or over a period not extending beyond the life expectancy of such beneficiary; and (ii) such distributions begin not later than 1 year after the contract owner's date of death. Notwithstanding (a) and (b) above, if the sole contract owner's beneficiary is the deceased owner's surviving spouse, then such spouse may elect to continue the Contract under the same terms as before the contract owner's death. Upon receipt of such election from the spouse at our Customer Service Center: (i) all rights of the spouse as contract owner's beneficiary under the Contract in effect prior to such election will cease; (ii) the spouse will become the owner of the Contract and will also be treated as the contingent annuitant, if none has been named and only if the deceased owner was the annuitant; and (iii) all rights and privileges granted by the Contract or allowed by us will belong to the spouse as contract owner of the Contract. We deem the spouse to have made this election if such spouse makes a premium payment to the Contract or fails to make a timely election as described in this paragraph. If the owner's beneficiary is not a spouse, the distribution provisions described in subparagraphs (a) and (b) above, will apply even if the annuitant and/or contingent annuitant are alive at the time of the contract owner's death. Subject to availability, and our then current rules, a spousal or non-spousal beneficiary may elect to receive death benefits as payments over the life expectancy of the beneficiary ("stretch"). "Stretch" payments will be subject to the same limitations as systematic withdrawals, and non-qualified "stretch" payments will be reported on the same basis as other systematic withdrawals. If we do not receive an election from an owner's beneficiary who is not a spouse within the 1-year period after the contract owner's date of death, then we will pay the death benefit to the owner's beneficiary in a cash payment within five years from the date of death. We will determine the death benefit as of the date we receive proof of death. Such cash payment will be in full settlement of all our liability under the Contract. If a contract owner dies after the annuity start date, all of the contract owner's rights granted under the Contract or allowed by us will pass to the contract owner's beneficiary. Access - 131789 38 If a contract has joint owners we will consider the date of death of the first joint owner as the death of the contract owner, and the surviving joint owner will become the beneficiary of the Contract. If any contract owner is not an individual, the death of an annuitant shall be treated as the death of a contract owner. EFFECT OF MGWB ON DEATH BENEFIT If you die before Automatic Periodic Benefit Status under the MGWB rider, the death benefit is payable, but the rider terminates. However, if the beneficiary is the owner's spouse, and the spouse elects to continue the Contract, the death benefit is not payable until the spouse's death. Please see "Minimum Guaranteed Withdrawal Benefit Rider-Death of Owner" for a description of the impact of the owner's death on the MGWB Rider. If you die during Automatic Periodic Benefit Status, the death benefit payable is your MGWB Withdrawal Account, which equals the sum of the remaining MGWB periodic payments. Please see "Minimum Guaranteed Withdrawal Benefit Rider". -------------------------------------------------------------------------------- THE ANNUITY OPTIONS -------------------------------------------------------------------------------- ANNUITIZATION OF YOUR CONTRACT If the annuitant and contract owner are living on the annuity start date, we will begin making payments to the contract owner under an income plan. We will make these payments under the annuity option you chose. You may change an annuity option by making a written request to us at least 30 days before the annuity start date. The amount of the payments will be determined by applying your contract value, adjusted for any applicable Market Value Adjustment, on the annuity start date in accordance with the annuity option you chose. The MGIB annuity benefit may be available if you have purchased the MGIB rider, provided the waiting period and other specified conditions have been met. You may also elect an annuity option on surrender of the Contract for its cash surrender value or you may choose one or more annuity options for the payment of death benefit proceeds while it is in effect and before the annuity start date. If, at the time of the contract owner's death or the annuitant's death (if the contract owner is not an individual), no option has been chosen for paying death benefit proceeds, the beneficiary may choose an annuity option within 60 days. In all events, payments of death benefit proceeds must comply with the distribution requirements of applicable federal tax law. The minimum monthly annuity income payment that we will make is $20. We may require that a single sum payment be made if the contract value is less than $2,000 or if the calculated monthly annuity income payment is less than $20. For each annuity option we will issue a separate written agreement putting the annuity option into effect. Before we pay any annuity benefits, we require the return of your Contract. If your Contract has been lost, we will require that you complete and return the applicable lost Contract form. Various factors will affect the level of annuity benefits, such as the annuity option chosen, the applicable payment rate used and the investment performance of the portfolios and interest credited to the Fixed Interest Allocations. Our current annuity options provide only for fixed payments. Fixed annuity payments are regular payments, the amount of which is fixed and guaranteed by us. Some fixed annuity options provide fixed payments either for a specified period of time or for the life of the annuitant. The amount of life income payments will depend on the form and duration of payments you chose, the age of the annuitant or beneficiary (and gender, where appropriate under applicable law), the total contract value applied to periodic income payments, and the applicable payment rate. Our approval is needed for any option where: 1) The person named to receive payment is other than the contract owner or beneficiary; 2) The person named is not a natural person, such as a corporation; or 3) Any income payment would be less than the minimum annuity income payment allowed. Access - 131789 39 SELECTING THE ANNUITY START DATE You select the annuity start date, which is the date on which the annuity payments commence. The annuity start date must be at least 5 years from the contract date but before the month immediately following the annuitant's 90th birthday, or 10 years from the contract date, if later. If you do not select an annuity start date, it will automatically begin in the month following the annuitant's 90th birthday, or 10 years from the contract date, if later. If the annuity start date occurs when the annuitant is at an advanced age, such as over age 85, it is possible that the Contract will not be considered an annuity for federal tax purposes. For more information, see "Federal Tax Considerations" and the SAI. For a Contract purchased in connection with a qualified plan, other than a Roth IRA, distributions must commence not later than April 1st of the calendar year following the calendar year in which you reach age 70 1/2 or, in some cases, retire. Distributions may be made through annuitization or withdrawals. You should consult a tax adviser for tax advice before investing. FREQUENCY OF ANNUITY PAYMENTS You choose the frequency of the annuity payments. They may be monthly, quarterly, semi-annually or annually. If we do not receive written notice from you, we will make the payments monthly. There may be certain restrictions on minimum payments that we will allow. BENEFICIARY RIGHTS A beneficiary's right to elect an annuity option or receive a lump sum may have been restricted by the contract owner. If so, such options will not be available to the beneficiary. THE ANNUITY OPTIONS We offer the 4 annuity options shown below. Payments under Options 1, 2 and 3 are fixed. Payments under Option 4 may be fixed or variable, although only fixed payments are currently available. For a fixed annuity option, the contract value in the subaccounts is transferred to the Company's general account. OPTION 1. INCOME FOR A FIXED PERIOD. Under this option, we make monthly payments in equal installments for a fixed number of years based on the contract value on the annuity start date. We guarantee that each monthly payment will be at least the amount stated in your Contract. If you prefer, you may request that payments be made in annual, semi-annual or quarterly installments. We will provide you with illustrations if you ask for them. If the cash surrender value or contract value is applied under this option, a 10% penalty tax may apply to the taxable portion of each income payment until the contract owner reaches age 59 1/2. OPTION 2. INCOME FOR LIFE WITH A PERIOD CERTAIN. Under this option, we make payments for the life of the annuitant in equal monthly installments and guarantee the income for at least a period certain, such as 10 or 20 years. Other periods certain may be available to you on request. You may choose a refund period instead. Under this arrangement, income is guaranteed until payments equal the amount of your Contract. If the person named lives beyond the guaranteed period, we will continue payments until his or her death. We guarantee that each payment will be at least the amount specified in the Contract corresponding to the person's age on his or her last birthday before the annuity start date. Amounts for ages not shown in the Contract are available if you ask for them. OPTION 3. JOINT LIFE INCOME. This option is available when there are 2 persons named to determine annuity payments. At least one of the persons named must be either the contract owner or beneficiary of the Contract. We guarantee monthly payments will be made as long as at least one of the named persons is living. There is no minimum number of payments. Monthly payment amounts are available if you ask for them. OPTION 4. ANNUITY PLAN. Under this option, your contract value can be applied to any other annuitization plan that we choose to offer on the annuity start date. Annuity payments under Option 4 may be fixed or variable. If variable and subject to the 1940 Act, it will comply with the requirements of such Act. PAYMENT WHEN NAMED PERSON DIES When the person named to receive payment dies, we will pay any amounts still due as provided in the annuity agreement between you and ING USA. The amounts we will pay are determined as follows: Access - 131789 40 1) For Option 1, or any remaining guaranteed payments under Option 2, we will continue payments. Under Options 1 and 2, the discounted values of the remaining guaranteed payments may be paid in a single sum. This means we deduct the amount of the interest each remaining guaranteed payment would have earned had it not been paid out early. We will base the discount interest rate on the interest rate used to calculate the payments for Options 1 and 2. 2) For Option 3, no amounts are payable after both named persons have died. 3) For Option 4, the annuity option agreement will state the amount we will pay, if any. -------------------------------------------------------------------------------- OTHER CONTRACT PROVISIONS -------------------------------------------------------------------------------- REPORTS TO CONTRACT OWNERS We will send you a quarterly report within 31 days after the end of each calendar quarter. The report will show the contract value, cash surrender value, and the death benefit as of the end of the calendar quarter. The report will also show the allocation of your contract value and reflects the amounts deducted from or added to the contract value since the last report. You have 30 days to notify our Customer Service Center of any errors or discrepancies contained in the report and in any confirmation notice. We will also send you copies of any shareholder reports of the investment portfolios in which Separate Account B invests, as well as any other reports, notices or documents we are required by law to furnish to you. SUSPENSION OF PAYMENTS The Company reserves the right to suspend or postpone the date of any payment or determination of values on any business day (i) when the New York Stock Exchange is closed; (ii) when trading on the New York Stock Exchange is restricted; (iii) when an emergency exists as determined by the SEC so that the sale of securities held in Separate Account B may not reasonably occur or so that the Company may not reasonably determine the value of Separate Account B's net assets; or (iv) during any other period when the SEC so permits for the protection of security holders. We have the right to delay payment of amounts from a Fixed Interest Allocation for up to 6 months. IN CASE OF ERRORS IN YOUR APPLICATION If an age or gender given in the application or enrollment form is misstated, the amounts payable or benefits provided by the Contract shall be those that the premium payment would have bought had the age or gender not been misstated. ASSIGNING THE CONTRACT AS COLLATERAL You may assign a non-qualified Contract as collateral security for a loan but you should understand that your rights and any beneficiary's rights may be subject to the terms of the assignment. An assignment likely has federal tax consequences. You should consult a tax adviser for tax advice. You must give us satisfactory written notice at our Customer Service Center in order to make or release an assignment. We are not responsible for the validity of any assignment. CONTRACT CHANGES - APPLICABLE TAX LAW We have the right to make changes in the Contract to continue to qualify the Contract as an annuity under applicable federal tax law. We will give you advance notice of such changes. FREE LOOK You may cancel your Contract within your 10-day free look period. We deem the free look period to expire 15 days after we mail the Contract to you. Some states may require a longer free look period. To cancel, you need to send your Contract to our Customer Service Center or to the agent from whom you purchased it. We will refund the contract value. For purposes of the refund during the free look period, (i) we adjust your contract value for any market value adjustment (if you have invested in the Fixed Account), and (ii) then we include a refund of any charges deducted from your contract value. Because of the market risks associated Access - 131789 41 with investing in the portfolios and the potential positive or negative effect of the market value adjustment, the contract value returned may be greater or less than the premium payment you paid. Some states require us to return to you the amount of the paid premium (rather than the contract value) in which case you will not be subject to investment risk during the free look period. In these states, your premiums designated for investment in the subaccounts may be allocated during the free look period to a subaccount specially designated by the Company for this purpose (currently, the Liquid Assets subaccount). We may, in our discretion, require that premiums designated for investment in the subaccounts from all other states as well as premiums designated for a Fixed Interest Allocation be allocated to the specially designated subaccount during the free look period. Your Contract is void as of the day we receive your Contract and cancellation request in good order. We determine your contract value at the close of business on the day we void your Contract. If you keep your Contract after the free look period and the investment is allocated to a subaccount specially designated by the Company, we will put your money in the subaccount(s) chosen by you, based on the accumulation unit value next computed for each subaccount, and/or in the Fixed Interest Allocation chosen by you. SPECIAL ARRANGEMENTS We may reduce or waive any Contract, rider, or benefit fees or charges for certain group or sponsored arrangements, under special programs, and for certain employees, agents, and related persons of our parent corporation and its affiliates. We reduce or waive these items based on expected economies, and the variations are based on differences in costs or services. SELLING THE CONTRACT Our affiliate Directed Services, Inc. ("DSI"), 1475 Dunwoody Dr., West Chester, PA 19380 is the principal underwriter and distributor of the Contract as well as for other ING USA contracts. DSI, a New York corporation, is registered with the SEC as a broker/dealer under the Securities Exchange Act of 1934, and is a member of the National Association of Securities Dealers, Inc. ("NASD"). DSI does not retain any commissions or compensation paid to it by ING USA for Contract sales. DSI enters into selling agreements with affiliated and unaffiliated broker/dealers to sell the Contracts through their registered representatives who are licensed to sell securities and variable insurance products ("selling firms"). Selling firms are also registered with the SEC and are NASD member firms. DSI pays selling firms compensation for the promotion and sale of the Contracts. Registered representatives of the selling firms who solicit sales of the Contracts typically receive a portion of the compensation paid by DSI to the selling firm in the form of commissions or other compensation, depending on the agreement between the selling firm and the registered representative. This compensation, as well as other incentives or payments, is not paid directly by contract owners or the Separate Account. We intend to recoup this compensation and other sales expenses paid to selling firms through fees and charges imposed under the Contracts. DSI pays selling firms for Contract sales according to one or more schedules. This compensation is generally based on a percentage of premium payments. Selling firms may receive commissions of up to 3.0% of premium payments. In addition, selling firms may receive ongoing annual compensation of up to 1.40% of all, or a portion, of values of Contracts sold through the firm. Individual representatives may receive all or a portion of compensation paid to their selling firm, depending on the firm's practices. Commissions and annual compensation, when combined, could exceed 3.0% of total premium payments. To the extent permitted by SEC and NASD rules and other applicable laws and regulations, DSI may pay or allow other promotional incentives or payments in the form of cash or other compensation to selling firms. DSI may also pay selling firms additional compensation or reimbursement for their efforts in selling Contracts to you and other customers, including for, among other things, training of sales personnel, marketing or other sales-related services they provide to us or our affiliates. This compensation or reimbursement is not reflected in the fees and expenses listed in the fee table section of this prospectus. In addition, DSI may enter into special compensation arrangements with certain selling firms based on those firms' aggregate or anticipated sales of the Contracts or other criteria. These special compensation arrangements will not be offered to all selling firms, and the terms of such arrangements may differ among selling firms based on various factors. Any such compensation payable to a selling firm will not result in any additional direct charge to you by us. Access - 131789 42 Affiliated selling firms may include Baring Investment Services, Inc., Compulife Investor Services, Inc., Financial Network Investment Corporation, Granite Investment Services, Inc., Guaranty Brokerage Services, Inc., ING America Equities, Inc., ING Barings Corp., ING Direct Funds Limited, ING DIRECT Securities, Inc., ING Financial Advisers LLC, ING Financial Partners, Inc., ING Funds Distributor, LLC, ING Furman Selz Financial Services LLCING TT&S (U.S.) Securities, Inc., Multi-Financial Securities Corporation, PrimeVest Financial Services, Inc. and Systematized Benefits Administrators, Inc. DSI may also compensate wholesalers/distributors, and their sales management personnel, for Contract sales within the wholesale/distribution channel. This compensation may be based on a percentage of premium payments and/or a percentage of Contract values. We do not pay any additional compensation on the sale or exercise of any of the Contract's optional benefit riders offered in this prospectus. -------------------------------------------------------------------------------- OTHER INFORMATION -------------------------------------------------------------------------------- VOTING RIGHTS We will vote the shares of a Trust owned by Separate Account B according to your instructions. However, if the 1940 Act or any related regulations should change, or if interpretations of it or related regulations should change, and we decide that we are permitted to vote the shares of a Trust in our own right, we may decide to do so. We determine the number of shares that you have in a subaccount by dividing the Contract's contract value in that subaccount by the net asset value of one share of the portfolio in which a subaccount invests. We count fractional votes. We will determine the number of shares you can instruct us to vote 180 days or less before a Trust shareholder meeting. We will ask you for voting instructions by mail at least 10 days before the meeting. If we do not receive your instructions in time, we will vote the shares in the same proportion as the instructions received from all contracts in that subaccount. We will also vote shares we hold in Separate Account B which are not attributable to contract owners in the same proportion. STATE REGULATION We are regulated by the Insurance Department of the State of Iowa. We are also subject to the insurance laws and regulations of all jurisdictions where we do business. The Contract offered by this prospectus has been approved where required by those jurisdictions. We are required to submit annual statements of our operations, including financial statements, to the Insurance Departments of the various jurisdictions in which we do business to determine solvency and compliance with state insurance laws and regulations. LEGAL PROCEEDINGS We are not aware of any pending legal proceedings which involve Separate Account B as a party. We are, or may be in the future, a defendant in various legal proceedings in connection with the normal conduct of our insurance operations. Some of these cases may seek class action status and may include a demand for punitive damages as well as for compensatory damages. In the opinion of management, the ultimate resolution of any existing legal proceeding is not likely to have a material adverse effect on our ability to meet our obligations under the contract. Directed Services, Inc., the principal underwriter and distributor of the contract, is not involved in any legal proceeding which, in the opinion of management, is likely to have a material adverse effect on its ability to distribute the contract. INDUSTRY DEVELOPMENTS - TRADING As with many financial services companies, the Company and affiliates of the Company have received requests for information from various governmental and self-regulatory agencies in connection with investigations related to trading in investment company shares. In each case, full cooperation and responses are being provided. The Company is also reviewing its policies and procedures in this area. Access - 131789 43 EXPERTS The audited consolidated financial statements and schedules of the Company as of December 31, 2003 and 2002 and for each of the three years in the period ended December 31, 2003, along with the statement of assets and liabilities of Separate Account B as of December 31, 2003 and the related statement of operations for the year then ended, and the statements of changes in net assets for each of the two years in the period then ended, appearing in the SAI and Registration Statement have been audited by Ernst & Young LLP, independent auditors, as set forth in their reports thereon appearing in the SAI and in the Registration Statement, and are included in reliance on such reports given on the authority of such firm as experts in accounting and auditing. -------------------------------------------------------------------------------- FEDERAL TAX CONSIDERATIONS -------------------------------------------------------------------------------- INTRODUCTION This section discusses our understanding of current federal income tax laws affecting the contract. You should keep the following in mind when reading it: o Your tax position (or the tax position of the designated beneficiary, as applicable) determines federal taxation of amounts held or paid out under the contract; o Tax laws change. It is possible that a change in the future could affect contracts issued in the past; o This section addresses federal income tax rules and does not discuss federal estate and gift tax implications, state and local taxes, foreign taxes or any other tax provisions; and o We do not make any guarantee about the tax treatment of the contract or transactions involving the contract. We do not intend this information to be tax advice. For advice about the effect of federal income taxes or any other taxes on amounts held or paid out under the contract, consult a tax adviser. For more comprehensive information, contact the Internal Revenue Service (IRS). TYPES OF CONTRACTS: NON-QUALIFIED OR QUALIFIED The Contract may be purchased on a non-tax-qualified basis or purchased on a tax-qualified basis. Non-qualified contracts are purchased with after tax contributions and are not related to retirement plans that receive special income tax treatment under the Code. Qualified Contracts are designed for use by individuals whose premium payments are comprised solely of proceeds from and/or contributions under retirement plans that are intended to qualify as plans entitled to special income tax treatment under Sections 401(a), 403(a), 403(b), 408, 408A or 457 of the Code. The ultimate effect of federal income taxes on the amounts held under a Contract, or annuity payments, depends on the type of retirement plan, on the tax and employment status of the individual concerned, and on your tax status. In addition, certain requirements must be satisfied in purchasing a qualified Contract with proceeds from a tax-qualified plan in order to continue receiving favorable tax treatment. Some retirement plans are subject to additional distribution and other requirements that are not incorporated into our Contract. Because the Plan is not part of the Contract, we are not bound by any Plan's terms or conditions. Contract owners, participants and beneficiaries are responsible for determining that contributions, distributions and other transactions with respect to the Contract comply with applicable law. Therefore, you should seek competent legal and tax advice regarding the suitability of a Contract for your particular situation. The following discussion assumes that qualified Contracts are purchased with proceeds from and/or contributions under retirement plans that qualify for the intended special federal income tax treatment. Access - 131789 44 TAXATION OF NON-QUALIFIED CONTRACTS TAXATION PRIOR TO DISTRIBUTION We believe that if you are a natural person you will generally not be taxed on increases in the value of a non-qualified Contract until a distribution occurs or until annuity payments begin. This assumes that the Contract will qualify as an annuity contract for federal income tax purposes. For these purposes, the agreement to assign or pledge any portion of the contract value generally will be treated as a distribution. In order to receive deferral of taxation, the following requirements must be satisfied: DIVERSIFICATION. Internal Revenue Code Section 817(h) requires investments of a variable account be adequately diversified in order for a contract to be treated as annuity contract for federal income tax purposes. The Treasury has issued regulations which set the standards for measuring the adequacy of any diversification. To be adequately diversified, each variable investment option must meet certain tests. Each sub-account's corresponding fund has represented that it will meet the diversification standards that apply to your policy. It is intended that Separate Account B, through the subaccounts, will satisfy these diversification requirements. INVESTOR CONTROL. Although earnings under non-qualified contracts are generally not taxed until withdrawn, the Internal Revenue Service (IRS) has stated in published rulings that a variable contract owner will be considered the owner of separate account assets if the contract owner possesses incidents of investment control over the assets. In these circumstances, income and gains from the separate account assets would be currently includible in the variable contract owner's gross income. The Treasury announced that it will issue guidance regarding the extent to which owners could direct their investments among subaccounts without being treated as owners of the underlying assets of the separate account. It is possible that the Treasury's position, when announced, may adversely affect the tax treatment of existing contracts. The Company therefore reserves the right to modify the contract as necessary to attempt to prevent the contract holder from being considered the federal tax owner of a pro rata share of the assets of the separate account. REQUIRED DISTRIBUTIONS. In order to be treated as an annuity contract for federal income tax purposes, the Code requires any non-qualified Contract to contain certain provisions specifying how your interest in the Contract will be distributed in the event of your death. The non-qualified Contracts contain provisions that are intended to comply with these Code requirements, although no regulations interpreting these requirements have yet been issued. We intend to review such distribution provisions and modify them if necessary to assure that they comply with the applicable requirements when such requirements are clarified by regulation or otherwise. See "Death Benefit Choices" for additional information on required distributions from non-qualified contracts. NON-NATURAL PERSONS. The owner of any annuity contract who is not a natural person generally must include in income any increase in the excess of the contract value over the "investment in the contract" (generally, the premiums or other consideration you paid for the contract less any nontaxable withdrawals) during the taxable year. There are some exceptions to this rule and a prospective contract owner that is not a natural person may wish to discuss these with a tax adviser. DELAYED ANNUITY STARTING DATE. If the Contract's annuity starting date occurs (or is scheduled to occur) at a time when the annuitant has reached an advanced age (e.g., age 85), it is possible that the Contract would not be treated as an annuity for federal income tax purposes. In that event, the income and gains under the Contract could be currently includible in your income. TAXATION OF DISTRIBUTIONS GENERAL. When a withdrawal from a non-qualified Contract occurs (including amounts paid to you under the MGWB rider), the amount received will be treated as ordinary income subject to tax up to an amount equal to the excess (if any) of the contract value (unreduced by the amount of any surrender charge) immediately before the distribution over the contract owner's investment in the contract at that time. Investment in the contract is generally equal to the amount of all contributions to the contract, less the aggregate amount of non-taxable distributions previously made. The contract value that applies for this purpose is unclear in some respects. For example, the living benefits provided under the Contract, i.e., the, MGWB and MGIB, as well as the market value adjustment could increase the contract value that applies. Thus, the income on the Contracts could be higher than the amount of income that would be determined Access - 131789 45 without regard to such benefits. As a result, you could have higher amounts of income than will be reported to you. In the case of a surrender under a non-qualified Contract, the amount received generally will be taxable only to the extent it exceeds the contract owner's investment in the contract. 10% PENALTY TAX. A distribution from a non-qualified Contract may be subject to a federal tax penalty equal to 10% of the amount treated as income. In general, however, there is no penalty on distributions: o made on or after the taxpayer reaches age 59 1/2; o made on or after the death of a contract owner; o attributable to the taxpayer's becoming disabled; or o made as part of a series of substantially equal periodic payments for the life (or life expectancy) of the taxpayer. Other exceptions may be applicable under certain circumstances and special rules may be applicable in connection with the exceptions enumerated above. A tax adviser should be consulted with regard to exceptions from the penalty tax. TAX-FREE EXCHANGES. Section 1035 of the Tax Code permits the exchange of a life insurance, endowment or annuity contract for an annuity contract on a tax-free basis. In such instance, the "investment in the contract" in the old contract will carry over to the new contract. You should consult with your tax advisor regarding procedures for making Section 1035 exchanges. If your Contract is purchased through a tax-free exchange of a life insurance, endowment or annuity contract that was purchased prior to August 14, 1982, then any distributions other than annuity payments will be treated, for tax purposes, as coming: o First, from any remaining "investment in the contract" made prior to August 14, 1982 and exchanged into the Contract; o Next, from any "income on the contract" attributable to the investment made prior to August 14, 1982; o Then, from any remaining "income on the contract"; and o Lastly, from any remaining "investment in the contract". The IRS has concluded that in certain instances, the partial exchange of a portion of one annuity contract for another contract will be tax-free. However, the IRS has reserved the right to treat transactions it considers abusive as ineligible for favorable partial 1035 tax-free exchange treatment. The IRS has not provided any additional guidance on what it considers abusive. It is not certain whether the IRS would treat an immediate withdrawal or annuitization after a partial exchange as abusive. In addition, it is unclear how the IRS will treat a partial exchange from a life insurance, endowment, or annuity contract directly into an immediate annuity. Currently, we will accept a partial 1035 exchange from a non-qualified annuity into a deferred annuity or an immediate annuity as a tax-free transaction unless we believe that we would be expected to treat the transaction as abusive. We are not responsible for the manner in which any other insurance company, for tax reporting purposes, or the IRS, with respect to the ultimate tax treatment, recognizes or reports a partial exchange. We strongly advise you to discuss any proposed 1035 exchange with your tax advisor prior to proceeding with the transaction. TAXATION OF ANNUITY PAYMENTS. Although tax consequences may vary depending on the payment option elected under an annuity contract, a portion of each annuity payment is generally not taxed Access - 131789 46 and the remainder is taxed as ordinary income. The non-taxable portion of an annuity payment is generally determined in a manner that is designed to allow you to recover your investment in the contract ratably on a tax-free basis over the expected stream of annuity payments, as determined when annuity payments start. Once your investment in the contract has been fully recovered, however, the full amount of each annuity payment is subject to tax as ordinary income. The tax treatment of partial annuitizations is unclear. We currently treat any partial annuitizations, [such as those associated with the MGIB benefit,] as withdrawals rather than as annuity payments. Please consult your tax adviser before electing a partial annuitization. DEATH BENEFITS. Amounts may be distributed from a Contract because of your death or the death of the annuitant. Generally, such amounts are includible in the income of recipient as follows: (i) if distributed in a lump sum, they are taxed in the same manner as a surrender of the Contract, or (ii) if distributed under a payment option, they are taxed in the same way as annuity payments. Special rules may apply to amounts distributed after a Beneficiary has elected to maintain Contract value and receive payments. The Contract offers a death benefit (including the benefit provided by the earnings multiplier benefit rider) that may exceed the greater of the premium payments and the contract value. Certain charges are imposed with respect to the death benefit. It is possible that these charges (or some portion thereof) could be treated for federal tax purposes as a distribution from the Contract. ASSIGNMENTS AND OTHER TRANSFERS. A transfer, pledge or assignment of ownership of a Contract, or the designation of an annuitant or payee other than an owner, may result in certain tax consequences to you that are not discussed herein. A contract owner contemplating any such transfer, pledge, assignment, or designation or exchange, should consult a tax adviser as to the tax consequences. IMMEDIATE ANNUITIES. Under section 72 of the Tax Code, an immediate annuity means an annuity (1) which is purchased with a single premium, (2) with annuity payments starting within one year from the date of purchase, and (3) which provides a series of substantially equal periodic payments made annually or more frequently. Treatment as an immediate annuity will have significance with respect to exceptions from the 10% early withdrawal penalty, to contracts owned by non-natural persons, and for certain policy exchanges. MULTIPLE CONTRACTS. The tax law requires that all non-qualified deferred annuity contracts that are issued by a company or its affiliates to the same contract owner during any calendar year are treated as one non-qualified deferred annuity contract for purposes of determining the amount includible in such contract owner's income when a taxable distribution occurs. WITHHOLDING. We will withhold and remit to the U.S. government a part of the taxable portion of each distribution made under a Contract unless the distributee notifies us at or before the time of the distribution that he or she elects not to have any amounts withheld. The withholding rates applicable to the taxable portion of periodic annuity payments are the same as the withholding rates generally applicable to payments of wages. In addition, a 10% withholding rate applies to the taxable portion of non-periodic payments. Regardless of whether you elect not to have federal income tax withheld, you are still liable for payment of federal income tax on the taxable portion of the payment. TAXATION OF QUALIFIED CONTRACTS GENERAL The Contracts are designed for use with several types of qualified plans. The tax rules applicable to participants in these qualified plans vary according to the type of plan and the terms and conditions of the plan itself. Special favorable tax treatment may be available for certain types of contributions and distributions. Adverse tax consequences may result from: contributions in excess of specified limits; distributions before age 59 1/2 (subject to certain exceptions); distributions that do not conform to specified commencement and minimum distribution rules; and in other specified circumstances. Therefore, no attempt is made to provide more than general information about the use of the Contracts with the various types of qualified retirement plans. Contract owners, annuitants, and beneficiaries are cautioned that the rights of any person to any benefits under these qualified retirement plans may be subject to the terms and conditions of the plans themselves, regardless of the terms and conditions of the Contract, but we shall not be bound by the terms and conditions of such plans to the extent such terms contradict the Contract, unless the Company consents. Access - 131789 47 You will not generally pay taxes on earnings from the annuity contract described in this prospectus until they are withdrawn. When an annuity contract is used to fund one of these tax qualified retirement arrangements, you should know that the annuity contract does not provide any additional tax deferral of earnings beyond the tax deferral provided by the tax-qualified retirement arrangement. Tax-qualified retirement arrangements under Tax Code sections 401(a), 401(k), 403(a), 403(b) or governmental 457 plans also generally defer payment of taxes on earnings until they are withdrawn (or in the case of a non-governmental 457 plan, paid or made available to you or a designated beneficiary). However, annuities do provide other features and benefits which may be valuable to you. You should discuss your alternatives with your local representative. DISTRIBUTIONS - GENERAL For qualified plans under Section 401(a) and 403(b), the Code requires that distributions generally must commence no later than the later of April 1 of the calendar year following the calendar year in which the plan participant for whose benefit the contract is purchased (i) reaches age 70 1/2 or (ii) retires, and must be made in a specified form or manner. If the plan participant is a "5 percent owner" (as defined in the Code), distributions generally must begin no later than April 1 of the calendar year following the calendar year in which the plan participant reaches age 70 1/2. For IRAs described in Section 408, distributions generally must commence no later than by April 1 of the calendar year following the calendar year in which the individual contract owner reaches age 70 1/2. Roth IRAs under Section 408A do not require distributions at any time before the contract owner's death. Please note that required minimum distributions under qualified Contracts may be subject to surrender charge and/or market value adjustment, in accordance with the terms of the Contract. This could affect the amount that must be taken from the Contract in order to satisfy required minimum distributions. DIRECT ROLLOVERS If the Contract is used in connection with a pension, profit-sharing, or annuity plan qualified under sections 401(a) or 403(a) of the Code, or is a tax-sheltered annuity under section 403(b) of the Code, or is used with an eligible deferred compensation plan that has a government sponsor and that is qualified under section 457(b), any "eligible rollover distribution" from the Contract will be subject to direct rollover and mandatory withholding requirements. An eligible rollover distribution generally is any taxable distribution from a qualified pension plan under section 401(a) of the Code, qualified annuity plan under section 403(a) of the Code, section 403(b) annuity or custodial account, or an eligible section 457(b) deferred compensation plan that has a government sponsor, excluding certain amounts (such as minimum distributions required under section 401(a)(9) of the Code, distributions which are part of a "series of substantially equal periodic payments" made for life or a specified period of 10 years or more, or hardship distributions as defined in the tax law). Under these requirements, federal income tax equal to 20% of the eligible rollover distribution will be withheld from the amount of the distribution. Unlike withholding on certain other amounts distributed from the Contract, discussed below, you cannot elect out of withholding with respect to an eligible rollover distribution. However, this 20% withholding will not apply if, instead of receiving the eligible rollover distribution, you elect to have it directly transferred to certain qualified plans. Prior to receiving an eligible rollover distribution, you will receive a notice (from the plan administrator or us) explaining generally the direct rollover and mandatory withholding requirements and how to avoid the 20% withholding by electing a direct rollover. CORPORATE AND SELF-EMPLOYED PENSION AND PROFIT SHARING PLANS Section 401(a) of the Code permits corporate employers to establish various types of retirement plans for employees, and permits self-employed individuals to establish these plans for themselves and their employees. These retirement plans may permit the purchase of the Contracts to accumulate retirement savings under the plans. Adverse tax or other legal consequences to the plan, to the participant, or to both may result if this Contract is assigned or transferred to any individual as a means to provide benefit payments, unless the plan complies with all legal requirements applicable to such benefits before transfer of the Contract. Employers intending to use the Contract with such plans should seek competent advice. INDIVIDUAL RETIREMENT ANNUITIES - GENERAL Section 408 of the Code permits eligible individuals to contribute to an individual retirement program known as an "Individual Retirement Annuity" or "IRA." These IRAs are subject to limits on the amount that can be contributed, the deductible amount of the contribution, the persons who may be eligible, and the time when Access - 131789 48 distributions commence. Also, distributions from certain other types of qualified retirement plans may be "rolled over" on a tax-deferred basis into an IRA. Also, amounts in another IRA or individual retirement account can be rolled over or transferred tax-free to an IRA. There are significant restrictions on rollover or transfer contributions from Savings Incentive Match Plans for Employees (SIMPLE), under which certain employers may provide contributions to IRAs on behalf of their employees, subject to special restrictions. Employers may establish Simplified Employee Pension (SEP) Plans to provide IRA contributions on behalf of their employees. If you make a tax-free rollover of a distribution from any of these IRAs, you may not make another tax-free rollover from the IRA within a 1-year period. Sales of the Contract for use with IRAs may be subject to special requirements of the IRS. INDIVIDUAL RETIREMENT ANNUITIES - DISTRIBUTIONS All distributions from a traditional IRA are taxed as received unless either one of the following is true: o The distribution is rolled over to a plan eligible to receive rollovers or to another traditional IRA or certain qualified plans in accordance with the Tax Code; or o You made after-tax contributions to the IRA. In this case, the distribution will be taxed according to rules detailed in the Tax Code. To avoid certain tax penalties, you and any designated beneficiary must also meet the minimum distribution requirements imposed by the Tax Code. The requirements do not apply to Roth IRA contracts while the owner is living. These rules may dictate one or more of the following: o Start date for distributions; o The time period in which all amounts in your account(s) must be distributed; or o Distribution amounts. Generally, you must begin receiving distributions from a traditional IRA by April 1 of the calendar year following the calendar year in which you attain age 70 1/2. We must pay out distributions from the contract over one of the following time periods: o Over your life or the joint lives of you and your designated beneficiary; or o Over a period not greater than your life expectancy or the joint life expectancies of you and your designated beneficiary. The amount of each periodic distribution must be calculated in accordance with IRS regulations. If you fail to receive the minimum required distribution for any tax year, a 50% excise tax is imposed on the required amount that was not distributed. The following applies to the distribution of death proceeds under 408(b) and 408A (Roth IRA - See below) plans. Different distribution requirements apply after your death. If your death occurs after you begin receiving minimum distributions under the contract, distributions must be made at least as rapidly as under the method in effect at the time of your death. Code section 401(a)(9) provides specific rules for calculating the required minimum distributions at your death. The death benefit under the contract and also certain other contract benefits, such as living benefits, may affect the amount of the required minimum distribution that must be taken. If your death occurs before you begin receiving minimum distributions under the contract, your entire balance must be distributed by December 31 of the calendar year containing the fifth anniversary of the date of your death. For example, if you die on September 1, 2004, your entire balance must be distributed to the designated beneficiary by December 31, 2009. However, if the distributions begin by December 31 of the Access - 131789 49 calendar year following the calendar year of your death, and you have named a designated beneficiary, then payments may be made over either of the following time frames: o Over the life of the designated beneficiary; or o Over a period not extending beyond the life expectancy of the designated beneficiary. If the designated beneficiary is your spouse, distributions must begin on or before the later of the following: o December 31 of the calendar year following the calendar year of your death; or o December 31 of the calendar year in which you would have attained age 70 1/2. ROTH IRAs - GENERAL Section 408A of the Code permits certain eligible individuals to contribute to a Roth IRA. Contributions to a Roth IRA, which are subject to limits on the amount of the contributions and the persons who may be eligible to contribute, are not deductible, and must be made in cash or as a rollover or transfer from another Roth IRA or other IRA. Certain qualifying individuals may convert an IRA, SEP, or SIMPLE IRA, to a Roth IRA. Such rollovers and conversions are subject to tax, and other special rules may apply. If you make a tax-free rollover of a distribution from a Roth IRA to another Roth IRA, you may not make another tax-free rollover from the Roth IRA from which the rollover was made within a 1-year period. A 10% penalty may apply to amounts attributable to a conversion to a Roth IRA if the amounts are distributed during the five taxable years beginning with the year in which the conversion was made. ROTH IRAs - DISTRIBUTIONS A qualified distribution from a Roth IRA is not taxed when it is received. A qualified distribution is a distribution: o Made after the five-taxable year period beginning with the first taxable year for which a contribution was made to a Roth IRA of the owner; and o Made after you attain age 59 1/2, die, become disabled as defined in the Tax Code, or for a qualified first-time home purchase. If a distribution is not qualified, it will be taxable to the extent of the accumulated earnings. Under special ordering rules, a partial distribution will first be treated generally as a return of contributions which is not taxable and then as taxable accumulated earnings. TAX SHELTERED ANNUITIES - GENERAL Section 403(b) of the Code allows employees of certain Section 501(c)(3) organizations and public schools to exclude from their gross income the premium payments made, within certain limits, on a Contract that will provide an annuity for the employee's retirement. These premium payments may be subject to FICA (Social Security) tax. Distributions of (1) salary reduction contributions made in years beginning after December 31, 1988; (2) earnings on those contributions; and (3) earnings on amounts held as of the last year beginning before January 1, 1989, are not allowed prior to age 59 1/2, severance from employment, death or disability. Distributions allocable to salary reduction contributions, but not earnings on such contributions, may also be distributed upon hardship. Certain penalties may apply. TAX SHELTERED ANNUITIES - LOANS Loans may be available if you purchased your contract in connection with a non-ERISA plan qualified under Section 403(b) of the Code ("TSA"). We do not currently permit loans under Section 403(b) Contracts that are subject to ERISA. If your contract was issued in connection with a TSA and the terms of your plan permit, you may take a loan from us, using your surrender value as collateral for the loan. Loans are subject to the terms of the Contract, your 403(b) plan, the Code and other federal and state regulations. The amount and number of loans outstanding at any one time under your TSA are limited, whether under our contracts or those of other carriers. We may modify the terms of a loan to comply with changes in applicable law. Access - 131789 50 Various mandatory repayment requirements apply to loans, and failure to repay generally would result in income to you and the potential application of tax penalties. We urge you to consult with a qualified tax advisor prior to effecting a loan transaction under your Contract. We may apply additional restrictions or limitations on loans, and you must make loan requests in accordance with our administrative practices and loan request procedures in effect at the time you submit your request. Read the terms of the loan agreement before submitting any request. Any outstanding loan balance impacts the following: o Withdrawals and Charges: We determine amounts available for maximum withdrawal amounts, free partial withdrawals, systematic withdrawals and waiver of administrative charges by reducing the otherwise applicable amounts by the amount of any outstanding loan balance. o Death Benefits, Annuitization and Surrenders: We deduct the outstanding loan balance from any amounts otherwise payable and in determining the amount available for annuitization. [o Riders: - Minimum Guaranteed Income Benefit ("MGIB") Rider. If you exercise the MGIB rider, we reduce the MGIB Base by an amount equal to the ratio of the outstanding loan balance to the contract value multiplied by the MGIB Base. - Minimum Guaranteed Withdrawal Benefit ("MGWB") Rider. The portion of the contract value used to pay off the outstanding loan balance will reduce the MGWB Withdrawal Account. We do not recommend the MGWB rider if loans are contemplated. TAX SHELTERED ANNUITIES - DISTRIBUTIONS All distributions from Section 403(b) plans are taxed as received unless either of the following is true: o The distribution is rolled over to another plan eligible to receive rollovers or to a traditional individual retirement annuity/account (IRA) in accordance with the Tax Code; or o You made after-tax contributions to the plan. In this case, the amount will be taxed according to rules detailed in the Tax Code. Generally, you must begin receiving distributions by April 1 of the calendar year following the calendar year in which you attain age 70 1/2 or retire, whichever occurs later, unless you had amounts under the contract as of December 31, 1986. In this case, distribution of these amounts generally must begin by the end of the calendar year in which you attain age 75 or retire, if later. The death benefit under the contract and also certain other contract benefits, such as the living benefits, may affect the amount of the required minimum distribution that must be taken. If you take any distributions in excess of the required minimum amount, then special rules require that some or all of the December 31, 1986 balance be distributed earlier. TAX CONSEQUENCES OF ENHANCED DEATH BENEFIT The Contract offers a death benefit (including the benefit provided by the earnings multiplier benefit rider) that may exceed the greater of the premium payments and the contract value. It is possible that the IRS could characterize such a death benefit as an incidental death benefit. There are limitations on the amount of incidental benefits that may be provided under pension and profit sharing plans. In addition, the provision of such benefits may result in currently taxable income to participants. Also, as stated above, the presence of the death benefit, as well as certain other contract benefits, could affect the amount of required minimum distributions. OTHER TAX CONSEQUENCES As noted above, the foregoing comments about the federal tax consequences under the Contracts are not exhaustive, and special rules are provided with respect to other tax situations not discussed in this prospectus. Access - 131789 51 Further, the federal income tax consequences discussed herein reflect our understanding of current law, and the law may change. Federal estate and state and local estate, inheritance and other tax consequences of ownership or receipt of distributions under a Contract depend on the individual circumstances of each contract owner or recipient of the distribution. A competent tax adviser should be consulted for further information. POSSIBLE CHANGES IN TAXATION Although the likelihood of legislative change is uncertain, there is always the possibility that the tax treatment of the Contracts could change by legislation or other means. It is also possible that any change could be retroactive (that is, effective before the date of the change). You should consult a tax adviser with respect to legislative developments and their effect on the Contract. FEDERAL INCOME TAX WITHHOLDING We will withhold and remit to the U.S. government a part of the taxable portion of each distribution made under a Contract unless the distributee notifies us at or before the time of the distribution that he or she elects not to have any amounts withheld. In certain circumstances, we may be required to withhold tax, as explained above. The withholding rates applicable to the taxable portion of periodic annuity payments (other than eligible rollover distributions) are the same as the withholding rates generally applicable to payments of wages. In addition, a 10% withholding rate applies to the taxable portion of non-periodic payments (including withdrawals prior to the annuity starting date) and conversions of, and rollovers from, non-Roth IRAs to Roth IRAs. Regardless of whether you elect not to have federal income tax withheld, you are still liable for payment of federal income tax on the taxable portion of the payment. As discussed above, the withholding rate applicable to eligible rollover distributions is 20%. ASSIGNMENTS Adverse tax consequences to the plan and/or to you may result if your beneficial interest in the contract is assigned or transferred to persons other than: a plan participant as a means to provide benefit payments; an alternate payee under a qualified domestic relations order in accordance with code section 414(p); or to the Company as collateral for a loan. TAXATION OF COMPANY We are taxed as a life insurance company under the Tax Code. The Separate Account is not a separate entity from us. Therefore, it is not taxed separately as a "regulated investment company," but is taxed as part of the Company. We automatically apply investment income and capital gains attributable to the separate account to increase reserves under the contracts. Because of this, under existing federal tax law we believe that any such income and gains will not be taxed to the extent that such income and gains are applied to increase reserves under the contracts. In addition, any foreign tax credits attributable to the separate account will be first used to reduce any income taxes imposed on the separate account before being used by the Company. In summary, we do not expect that we will incur any federal income tax liability attributable to the separate account and we do not intend to make any provision for such taxes. However, changes in federal tax laws and/or their interpretation may result in our being taxed on income or gains attributable to the separate account. In this case, we may impose a charge against the separate account (with respect to some or all of the contracts) to set aside provisions to pay such taxes. We may deduct this amount from the separate account, including from your account value invested in the subaccounts. -------------------------------------------------------------------------------- STATEMENT OF ADDITIONAL INFORMATION -------------------------------------------------------------------------------- TABLE OF CONTENTS Item Introduction Description of ING USA Annuity and Life Insurance Company Safekeeping of Assets The Administrator Independent Auditors Distribution of Contracts Performance Information IRA Partial Withdrawal Option Other Information Financial Statements of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company) Financial Statements of ING USA Annuity and Life Insurance Company Separate Account B (formerly Golden American Separate Account B) PLEASE TEAR OFF, COMPLETE AND RETURN THE FORM BELOW TO ORDER A FREE STATEMENT OF ADDITIONAL INFORMATION FOR THE CONTRACTS OFFERED UNDER THE PROSPECTUS. SEND THE FORM TO OUR CUSTOMER SERVICE CENTER AT THE ADDRESS SHOWN ON THE PROSPECTUS COVER. ................................................................................ PLEASE SEND ME A FREE COPY OF THE STATEMENT OF ADDITIONAL INFORMATION FOR SEPARATE ACCOUNT B. Please Print or Type: -------------------------------------------------- NAME -------------------------------------------------- SOCIAL SECURITY NUMBER -------------------------------------------------- STREET ADDRESS -------------------------------------------------- CITY, STATE, ZIP 05/01/2004 ................................................................................ Access - 131789 52 -------------------------------------------------------------------------------- APPENDIX A -------------------------------------------------------------------------------- CONDENSED FINANCIAL INFORMATION Except for subaccounts which did not commence operations as of December 31, 2003, the following tables give (1) the accumulation unit value ("AUV") at the beginning of the period, (2) the AUV at the end of the period and (3) the total number of accumulation units outstanding at the end of the period for each subaccount of ING USA Separate Account B (formerly Golden American Separate Account B) available under the Contract for the indicated periods.
2003 2002 2001 2000 1999 --------------------------------------------------------------------------- SEPARATE ACCOUNT ANNUAL CHARGES OF 1.40% AIM VI DENT DEMOGRAPHIC TRENDS AUV at Beginning of Period $7.34 $10.99 $10.00 (11) AUV at End of Period $9.94 $7.34 $10.99 Number of Accumulation Units Outstanding at End of Period 756,657 218,094 16,786 COLONIAL SMALL CAP VALUE AUV at Beginning of Period $10.00 (16) AUV at End of Period $13.85 Number of Accumulation Units Outstanding at End of Period 368,372 FIDELITY(R) VIP EQUITY--INCOME AUV at Beginning of Period $7.83 $9.59 $10.00 (12) AUV at End of Period $10.04 $7.83 $9.59 Number of Accumulation Units Outstanding at End of Period 2,275,054 478,395 FIDELITY(R) VIP GROWTH AUV at Beginning of Period $6.37 $9.27 $10.00 (12) AUV at End of Period $8.33 $6.37 $9.27 Number of Accumulation Units Outstanding at End of Period 3,326,845 523,176 ING AIM MID CAP GROWTH AUV at Beginning of Period $9.91 $14.71 $18.92 $21.92 $14.23 AUV at End of Period $14.08 $9.91 $14.71 $18.92 $21.92 Number of Accumulation Units Outstanding at End of Period 2,884,535 2,906,118 3,787,157 4,824,609 2,450,796 ING ALLIANCE MID CAP GROWTH AUV at Beginning of Period $10.10 $14.64 $17.21 $21.06 $17.01 AUV at End of Period $16.63 $10.10 $14.64 $17.21 $21.06 Number of Accumulation Units Outstanding at End of Period 5,531,902 5,368,761 6,450,280 6,881,891 5,870,533 ING AMERICAN FUNDS GROWTH AUV at Beginning of Period $10.00 (14) AUV at End of Period $10.77 Number of Accumulation Units Outstanding at End of Period 1,647,654 ING AMERICAN FUNDS GROWTH-INCOME AUV at Beginning of Period $10.00 (14) AUV at End of Period $10.99 Number of Accumulation Units Outstanding at End of Period 1,032,491 ING AMERICAN FUNDS INTERNATIONAL AUV at Beginning of Period $10.00 (14) AUV at End of Period $11.62 Number of Accumulation Units Outstanding at End of Period 589,077 ING CAPITAL GUARDIAN LARGE CAP VALUE AUV at Beginning of Period $7.53 $10.02 $10.55 $10.00 (7) AUV at End of Period $10.15 $7.53 $10.02 $10.55 Number of Accumulation Units Outstanding at End of Period 6,231,900 4,513,819 3,900,663 2,138,069 1998 1997 1996 1995 -------------------------------------------------------------- SEPARATE ACCOUNT ANNUAL CHARGES OF 1.40% AIM VI DENT DEMOGRAPHIC TRENDS AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period COLONIAL SMALL CAP VALUE AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period FIDELITY(R) VIP EQUITY--INCOME AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period FIDELITY(R) VIP GROWTH AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING AIM MID CAP GROWTH AUV at Beginning of Period $14.31 $11.78 $10.01 $10.00 (1) AUV at End of Period $14.23 $14.31 $11.78 $10.01 Number of Accumulation Units Outstanding at End of Period 1,105,850 554,068 231,567 47,478 ING ALLIANCE MID CAP GROWTH AUV at Beginning of Period $15.41 $12.49 $10.00 (3) AUV at End of Period $17.01 $15.41 $12.49 Number of Accumulation Units Outstanding at End of Period 3,297,314 438,636 38,037 ING AMERICAN FUNDS GROWTH AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING AMERICAN FUNDS GROWTH-INCOME AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING AMERICAN FUNDS INTERNATIONAL AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING CAPITAL GUARDIAN LARGE CAP VALUE AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period
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2003 2002 2001 2000 1999 ------------------------------------------------------------------------------ ING CAPITAL GUARDIAN MANAGED GLOBAL AUV at Beginning of Period $13.80 $17.54 $20.19 $23.97 $14.88 AUV at End of Period $18.55 $13.80 $17.54 $20.19 $23.97 Number of Accumulation Units Outstanding at End of Period 2,320,224 1,965,666 1,757,559 1,348,844 676,402 ING CAPITAL GUARDIAN SMALL CAP AUV at Beginning of Period $13.14 $17.87 $18.40 $22.82 $15.37 AUV at End of Period $18.19 $13.14 $17.87 $18.40 $22.82 Number of Accumulation Units Outstanding at End of Period 5,701,159 5,592,680 7,129,680 6,884,892 5,053,919 ING DEVELOPING WORLD AUV at Beginning of Period $6.23 $7.08 $7.58 $11.61 $7.28 AUV at End of Period $9.01 $6.23 $7.08 $7.58 $11.61 Number of Accumulation Units Outstanding at End of Period 2,328,297 1,925,891 2,270,962 2,014,772 2,133,907 ING EAGLE ASSET VALUE EQUITY AUV at Beginning of Period $15.00 $18.34 $19.46 $18.14 $18.31 AUV at End of Period $18.52 $15.00 $18.34 $19.46 $18.14 Number of Accumulation Units Outstanding at End of Period 2,181,501 2,314,070 2,404,425 2,586,368 1,825,971 ING FMR(SM) DIVERSIFIED MID--CAP AUV at Beginning of Period $7.23 $9.09 $9.88 $10.00 (9) AUV at End of Period $9.52 $7.23 $9.09 $9.88 Number of Accumulation Units Outstanding at End of Period 2,137,834 1,436,694 685,331 290,230 ING GOLDMAN SACHS INTERNET TOLLKEEPER AUV at Beginning of Period $4.65 $7.62 $10.00 (10) AUV at End of Period $6.46 $4.65 $7.62 Number of Accumulation Units Outstanding at End of Period 976,839 387,486 47,818 ING HARD ASSETS AUV at Beginning of Period $14.05 $14.14 $16.32 $17.37 $14.28 AUV at End of Period $21.09 $14.05 $14.14 $16.32 $17.37 Number of Accumulation Units Outstanding at End of Period 742,286 575,255 295,871 309,819 355,052 ING INTERNATIONAL EQUITY AUV at Beginning of Period $7.16 $8.66 $11.37 $15.57 $10.29 AUV at End of Period $9.12 $7.16 $8.66 $11.37 $15.57 Number of Accumulation Units Outstanding at End of Period 3,949,927 4,449,069 5,060,321 5,535,477 4,666,041 ING JANUS GROWTH AND INCOME AUV at Beginning of Period $7.05 $8.87 $9.94 $10.00 (9) AUV at End of Period $8.52 $7.05 $8.87 $9.94 Number of Accumulation Units Outstanding at End of Period 2,887,495 1,676,923 1,073,857 274,785 ING JANUS SPECIAL EQUITY AUV at Beginning of Period $6.08 $8.32 $8.89 $10.00 (9) AUV at End of Period $9.01 $6.08 $8.32 $8.89 Number of Accumulation Units Outstanding at End of Period 856,121 464,522 368,091 121,670 ING JENNISON EQUITY OPPORTUNITIES AUV at Beginning of Period $15.06 $21.60 $25.17 $30.11 $24.50 AUV at End of Period $19.47 $15.06 $21.60 $25.17 $30.11 Number of Accumulation Units Outstanding at End of Period 2,581,561 2,929,610 3,606,212 3,626,696 2,412,721 ING JP MORGAN FLEMING INTERNATIONAL AUV at Beginning of Period $10.00 (14) AUV at End of Period $11.87 Number of Accumulation Units Outstanding at End of Period 75,922 ING JP MORGAN FLEMING SMALLCAP AUV at Beginning of Period $7.85 $10.00 (12) AUV at End of Period $10.38 $7.85 Number of Accumulation Units Outstanding at End of Period 824,986 169,670 ING JULIUS BAER FOREIGN AUV at Beginning of Period $8.22 $10.00 (12) AUV at End of Period $10.64 $8.22 Number of Accumulation Units Outstanding at End of Period 506,335 72,898 1998 1997 1996 1995 -------------------------------------------------------------- ING CAPITAL GUARDIAN MANAGED GLOBAL AUV at Beginning of Period $11.67 $10.55 $9.53 $9.28 (1) AUV at End of Period $14.88 $11.67 $10.55 $9.53 Number of Accumulation Units Outstanding at End of Period 610,300 443,665 231,774 ING CAPITAL GUARDIAN SMALL CAP AUV at Beginning of Period $12.88 $11.84 $10.00 $10.00 (2) AUV at End of Period $15.37 $12.88 $11.84 $10.00 Number of Accumulation Units Outstanding at End of Period 2,476,498 559,014 227,347 -- ING DEVELOPING WORLD AUV at Beginning of Period $10.00 (6) AUV at End of Period $7.28 Number of Accumulation Units Outstanding at End of Period 417,221 ING EAGLE ASSET VALUE EQUITY AUV at Beginning of Period $18.28 $14.57 $13.36 $12.41 (1) AUV at End of Period $18.31 $18.28 $14.57 $13.36 Number of Accumulation Units Outstanding at End of Period 1,415,540 469,649 249,994 23,394 ING FMR(SM) DIVERSIFIED MID--CAP AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING GOLDMAN SACHS INTERNET TOLLKEEPER AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING HARD ASSETS AUV at Beginning of Period $20.57 $19.65 $14.96 $14.71 (1) AUV at End of Period $14.28 $20.57 $19.65 $14.96 Number of Accumulation Units Outstanding at End of Period 258,034 90,379 43,232 2,847 ING INTERNATIONAL EQUITY AUV at Beginning of Period $9.90 $10.28 (5) AUV at End of Period $10.29 $9.90 Number of Accumulation Units Outstanding at End of Period 2,422,075 90,783 ING JANUS GROWTH AND INCOME AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING JANUS SPECIAL EQUITY AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING JENNISON EQUITY OPPORTUNITIES AUV at Beginning of Period $22.05 $17.34 $14.63 $14.23 (1) AUV at End of Period $24.50 $22.05 $17.34 $14.63 Number of Accumulation Units Outstanding at End of Period 1,342,756 312,229 174,592 16,369 ING JP MORGAN FLEMING INTERNATIONAL AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING JP MORGAN FLEMING SMALLCAP AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING JULIUS BAER FOREIGN AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period
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2003 2002 2001 2000 1999 ------------------------------------------------------------------------------ ING LIMITED MATURITY BOND AUV at Beginning of Period $20.16 $19.06 $17.76 $16.72 $16.77 AUV at End of Period $20.44 $20.16 $19.06 $17.76 $16.72 Number of Accumulation Units Outstanding at End of Period 5,262,645 6,261,694 4,325,602 3,621,501 2,938,050 ING LIQUID ASSETS AUV at Beginning of Period $15.84 $15.84 $15.47 $14.79 $14.33 AUV at End of Period $15.74 $15.84 $15.84 $15.47 $14.79 Number of Accumulation Units Outstanding at End of Period 7,879,356 12,089,799 14,053,316 14,214,982 13,701,796 ING MARSICO GROWTH AUV at Beginning of Period $10.52 $15.14 $22.02 $28.62 $16.29 AUV at End of Period $13.76 $10.52 $15.14 $22.02 $28.62 Number of Accumulation Units Outstanding at End of Period 11,921,200 12,372,395 16,739,731 18,211,995 14,289,972 ING MERCURY FOCUS VALUE AUV at Beginning of Period $8.37 $10.00 (12) AUV at End of Period $10.83 $8.37 Number of Accumulation Units Outstanding at End of Period 289,419 93,268 ING MERCURY FUNDAMENTAL GROWTH AUV at Beginning of Period $7.97 $10.00 (12) AUV at End of Period $9.98 $7.97 Number of Accumulation Units Outstanding at End of Period 158,396 44,773 ING MFS MID CAP GROWTH AUV at Beginning of Period $16.05 $31.80 $42.23 $39.59 $22.43 AUV at End of Period $22.02 $16.05 $31.80 $42.23 $39.59 Number of Accumulation Units Outstanding at End of Period 5,278,479 5,485,147 6,612,249 7,313,425 4,873,150 ING MFS RESEARCH AUV at Beginning of Period $15.14 $20.44 $26.39 $28.04 $22.89 AUV at End of Period $18.60 $15.14 $20.44 $26.39 $28.04 Number of Accumulation Units Outstanding at End of Period 5,432,937 5,913,309 7,316,946 8,149,686 6,431,949 ING MFS TOTAL RETURN AUV at Beginning of Period $19.23 $20.56 $20.75 $18.06 $17.72 AUV at End of Period $22.14 $19.23 $20.56 $20.75 $18.06 Number of Accumulation Units Outstanding at End of Period 9,215,693 9,138,045 9,253,396 9,222,565 8,274,090 ING PIMCO CORE BOND AUV at Beginning of Period $12.71 $11.86 $11.74 $11.79 $13.09 AUV at End of Period $13.12 $12.71 $11.86 $11.74 $11.79 Number of Accumulation Units Outstanding at End of Period 5,369,915 4,410,375 1,669,195 1,224,547 753,003 ING SALOMON BROTHERS AGGRESSIVE GROWTH AUV at Beginning of Period $10.00 (14) AUV at End of Period $10.82 Number of Accumulation Units Outstanding at End of Period 100,971 ING SALOMON BROTHERS ALL CAP AUV at Beginning of Period $8.55 $11.65 $11.59 $10.00 (7) AUV at End of Period $11.71 $8.55 $11.65 $11.59 Number of Accumulation Units Outstanding at End of Period 4,510,818 3,519,149 4,280,223 2,182,516 ING SALOMON BROTHERS INVESTORS AUV at Beginning of Period $8.07 $10.63 $11.26 $10.00 (7) AUV at End of Period $10.45 $8.07 $10.63 $11.26 Number of Accumulation Units Outstanding at End of Period 1,526,538 1,177,892 952,473 539,461 ING T. ROWE PRICE CAPITAL APPRECIATION AUV at Beginning of Period $27.96 $28.22 $26.04 $21.65 $20.53 AUV at End of Period $34.52 $27.96 $28.22 $26.04 $21.65 Number of Accumulation Units Outstanding at End of Period 6,071,997 5,326,018 4,592,780 3,264,322 2,546,589 1998 1997 1996 1995 -------------------------------------------------------------- ING LIMITED MATURITY BOND AUV at Beginning of Period $15.91 $15.13 $14.71 $14.35 (1) AUV at End of Period $16.77 $15.91 $15.13 $14.71 Number of Accumulation Units Outstanding at End of Period 1,557,946 133,461 46,293 11,834 ING LIQUID ASSETS AUV at Beginning of Period $13.83 $13.35 $12.89 $12.76 (1) AUV at End of Period $14.33 $13.83 $13.35 $12.89 Number of Accumulation Units Outstanding at End of Period 3,587,644 353,076 84,960 62,084 ING MARSICO GROWTH AUV at Beginning of Period $13.03 $11.42 $10.00 (4) AUV at End of Period $16.29 $13.03 $11.42 Number of Accumulation Units Outstanding at End of Period 3,293,705 343,006 ING MERCURY FOCUS VALUE AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING MERCURY FUNDAMENTAL GROWTH AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING MFS MID CAP GROWTH AUV at Beginning of Period $18.52 $15.70 $13.21 $12.95 (3) AUV at End of Period $22.43 $18.52 $15.70 $13.21 Number of Accumulation Units Outstanding at End of Period 1,905,009 177,125 28,223 ING MFS RESEARCH AUV at Beginning of Period $18.87 $15.93 $13.10 $12.25 (4) AUV at End of Period $22.89 $18.87 $15.93 $13.10 Number of Accumulation Units Outstanding at End of Period 3,902,975 268,126 ING MFS TOTAL RETURN AUV at Beginning of Period $16.10 $13.51 $12.05 $11.41 (4) AUV at End of Period $17.72 $16.10 $13.51 $12.05 Number of Accumulation Units Outstanding at End of Period 3,982,961 286,032 ING PIMCO CORE BOND AUV at Beginning of Period $11.87 $11.96 $11.55 $11.20 (6) AUV at End of Period $13.09 $11.87 $11.96 $11.55 Number of Accumulation Units Outstanding at End of Period 396,067 10,655 ING SALOMON BROTHERS AGGRESSIVE GROWTH AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING SALOMON BROTHERS ALL CAP AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING SALOMON BROTHERS INVESTORS AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING T. ROWE PRICE CAPITAL APPRECIATION AUV at Beginning of Period $19.66 $17.29 $15.07 $14.62 (1) AUV at End of Period $20.53 $19.66 $17.29 $15.07 Number of Accumulation Units Outstanding at End of Period 1,628,158 414,805 173,475 13,988
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2003 2002 2001 2000 1999 ------------------------------------------------------------------------------ ING T. ROWE PRICE EQUITY INCOME AUV at Beginning of Period $20.45 $23.90 $23.91 $21.47 $21.94 AUV at End of Period $25.24 $20.45 $23.90 $23.91 $21.47 Number of Accumulation Units Outstanding at End of Period 3,283,741 2,796,772 3,366,042 2,309,478 2,014,454 ING UBS U.S. BALANCED AUV at Beginning of Period $7.26 (16) AUV at End of Period $8.45 Number of Accumulation Units Outstanding at End of Period 870,957 ING VAN KAMPEN EQUITY GROWTH AUV at Beginning of Period $7.82 $10.00 (12) AUV at End of Period $9.54 $7.82 Number of Accumulation Units Outstanding at End of Period 349,933 124,181 ING VAN KAMPEN GLOBAL FRANCHISE AUV at Beginning of Period $8.85 $10.00 (12) AUV at End of Period $11.01 $8.85 Number of Accumulation Units Outstanding at End of Period 758,774 220,958 ING VAN KAMPEN GROWTH & INCOME AUV at Beginning of Period $18.19 $21.65 $24.94 $25.83 $22.61 AUV at End of Period $22.94 $18.19 $21.65 $24.94 $25.83 Number of Accumulation Units Outstanding at End of Period 5,707,684 6,183,621 7,290,571 8,035,274 7,496,161 ING VAN KAMPEN REAL ESTATE AUV at Beginning of Period $28.06 $28.40 $26.64 $20.62 $21.74 AUV at End of Period $38.11 $28.06 $28.40 $26.64 $20.62 Number of Accumulation Units Outstanding at End of Period 1,388,196 1,167,176 887,731 1,006,919 534,577 ING VP BOND PORTFOLIO AUV at Beginning of Period $10.64 $10.00 (12) AUV at End of Period $11.13 $10.64 Number of Accumulation Units Outstanding at End of Period 1,026,869 719,279 ING VP GROWTH OPPORTUNITIES AUV at Beginning of Period $5.26 $7.79 $10.00 (10) AUV at End of Period $6.87 $5.26 $7.79 Number of Accumulation Units Outstanding at End of Period 351,904 143,307 82,839 ING VP INDEX PLUS LARGE CAP AUV at Beginning of Period $10.00 (13) AUV at End of Period $8.98 Number of Accumulation Units Outstanding at End of Period 494,773 ING VP MAGNACAP AUV at Beginning of Period $7.10 $9.35 $10.00 (10) AUV at End of Period $9.15 $7.10 $9.35 Number of Accumulation Units Outstanding at End of Period 337,837 211,733 38,846 ING VP SMALLCAP OPPORTUNITIES AUV at Beginning of Period $4.62 $8.33 $10.00 (10) AUV at End of Period $6.31 $4.62 $8.33 Number of Accumulation Units Outstanding at End of Period 1,851,941 774,557 180,638 ING VP WORLDWIDE GROWTH AUV at Beginning of Period $5.21 $7.02 $8.75 $10.00 (8) AUV at End of Period $6.63 $5.21 $7.02 $8.75 Number of Accumulation Units Outstanding at End of Period 797,575 467,247 306,137 110,552 INVESCO VIF HEALTH SCIENCES AUV at Beginning of Period $7.65 $10.27 $10.00 (11) AUV at End of Period $9.64 $7.65 $10.27 Number of Accumulation Units Outstanding at End of Period 1,026,392 351,424 20,414 INVESCO VIF LEISURE FUND AUV at Beginning of Period $8.44 $10.00 (12) AUV at End of Period $10.71 $8.44 Number of Accumulation Units Outstanding at End of Period 355,401 69,607 1998 1997 1996 1995 -------------------------------------------------------------- ING T. ROWE PRICE EQUITY INCOME AUV at Beginning of Period $20.55 $17.75 $16.55 $15.94 (1) AUV at End of Period $21.94 $20.55 $17.75 $16.55 Number of Accumulation Units Outstanding at End of Period 800,490 255,396 150,732 21,073 ING UBS U.S. BALANCED AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING VAN KAMPEN EQUITY GROWTH AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING VAN KAMPEN GLOBAL FRANCHISE AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING VAN KAMPEN GROWTH & INCOME AUV at Beginning of Period $20.09 $15.69 $13.19 $12.12 (1) AUV at End of Period $22.61 $20.09 $15.69 $13.19 Number of Accumulation Units Outstanding at End of Period 4,591,471 853,473 355,191 36,100 ING VAN KAMPEN REAL ESTATE AUV at Beginning of Period $25.48 $21.04 $15.78 $14.91 (1) AUV at End of Period $21.74 $25.48 $21.04 $15.78 Number of Accumulation Units Outstanding at End of Period 436,867 135,993 42,710 2,910 ING VP BOND PORTFOLIO AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING VP GROWTH OPPORTUNITIES AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING VP INDEX PLUS LARGE CAP AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING VP MAGNACAP AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING VP SMALLCAP OPPORTUNITIES AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING VP WORLDWIDE GROWTH AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period INVESCO VIF HEALTH SCIENCES AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period INVESCO VIF LEISURE FUND AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period
Access - 131789 A4
2003 2002 2001 2000 1999 ------------------------------------------------------------------------------ INVESCO VIF--FINANCIAL SERVICES AUV at Beginning of Period $7.86 $9.37 $10.00 (11) AUV at End of Period $10.04 $7.86 $9.37 Number of Accumulation Units Outstanding at End of Period 803,207 584,089 28,966 INVESCO VIF--UTILITIES AUV at Beginning of Period $6.37 $8.11 $10.00 (11) AUV at End of Period $7.38 $6.37 $8.11 Number of Accumulation Units Outstanding at End of Period 310,305 127,145 5,341 JENNISON PORTFOLIO AUV at Beginning of Period $4.27 $6.30 $7.85 $10.00 (11) AUV at End of Period $5.46 $4.27 $6.30 $7.85 Number of Accumulation Units Outstanding at End of Period 1,124,696 1,009,408 1,264,693 194,916 PIMCO HIGH YIELD PORTFOLIO AUV at Beginning of Period $9.84 $10.10 $10.01 $10.24 $10.08 AUV at End of Period $11.92 $9.84 $10.10 $10.01 $10.24 Number of Accumulation Units Outstanding at End of Period 8,588,671 6,193,058 5,836,177 5,140,416 5,053,972 PIMCO STOCKSPLUS GROWTH & INCOME AUV at Beginning of Period $8.05 $10.23 $11.72 $13.13 $11.11 AUV at End of Period $10.35 $8.05 $10.23 $11.72 $13.13 Number of Accumulation Units Outstanding at End of Period 3,653,649 4,911,149 5,825,877 6,006,923 4,797,771 PIONEER FUND VCT AUV at Beginning of Period $7.47 $9.39 $10.00 (11) AUV at End of Period $9.09 $7.47 $9.39 Number of Accumulation Units Outstanding at End of Period 928,547 291,461 27,047 PIONEER MID CAP VALUE AUV at Beginning of Period $9.36 $10.72 $10.00 (11) AUV at End of Period $12.66 $9.36 $10.72 Number of Accumulation Units Outstanding at End of Period 2,142,901 983,243 170,276 PROFUND VP BULL AUV at Beginning of Period $6.67 $8.90 $10.00 (10) AUV at End of Period $8.26 $6.67 $8.90 Number of Accumulation Units Outstanding at End of Period 1,824,762 1,231,933 805,047 PROFUND VP EUROPE 30 AUV at Beginning of Period $6.05 $8.27 $10.00 (10) AUV at End of Period $8.28 $6.05 $8.27 Number of Accumulation Units Outstanding at End of Period 648,934 257,910 8,429 PROFUND VP RISING RATES OPPORTUNITY AUV at Beginning of Period $10.00 (15) AUV at End of Period $9.37 Number of Accumulation Units Outstanding at End of Period 98,866 PROFUND VP SMALL CAP AUV at Beginning of Period $7.21 $9.43 $10.00 (10) AUV at End of Period $10.15 $7.21 $9.43 Number of Accumulation Units Outstanding at End of Period 2,307,338 1,755,936 1,134,989 SP JENNISON INTERNATIONAL GROWTH AUV at Beginning of Period $4.12 $5.41 $8.56 $10.00 (9) AUV at End of Period $5.65 $4.12 $5.41 $8.56 Number of Accumulation Units Outstanding at End of Period 1,723,767 535,933 294,591 65,551 1998 1997 1996 1995 -------------------------------------------------------------- INVESCO VIF--FINANCIAL SERVICES AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period INVESCO VIF--UTILITIES AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period JENNISON PORTFOLIO AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period PIMCO HIGH YIELD PORTFOLIO AUV at Beginning of Period $10.00 (6) AUV at End of Period $10.08 Number of Accumulation Units Outstanding at End of Period 1,630,971 PIMCO STOCKSPLUS GROWTH & INCOME AUV at Beginning of Period $10.00 (6) AUV at End of Period $11.11 Number of Accumulation Units Outstanding at End of Period 1,527,698 PIONEER FUND VCT AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period PIONEER MID CAP VALUE AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period PROFUND VP BULL AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period PROFUND VP EUROPE 30 AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period PROFUND VP RISING RATES OPPORTUNITY AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period PROFUND VP SMALL CAP AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period SP JENNISON INTERNATIONAL GROWTH AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period
FOOTNOTES (1) Fund First Available during October 1995 (13) Fund First Available during August 2003 (2) Fund First Available during January 1996 (14) Fund First Available during September 2003 (3) Fund First Available during September 1996 (15) Fund First Available during October 2003 (4) Fund First Available during February 1997 (16) Fund First Available during November 2003 (5) Fund First Available during October 1997 (6) Fund First Available during May 1998 (7) Fund First Available during February 2000 (8) Fund First Available during May 2000 (9) Fund First Available during October 2000 (10) Fund First Available during May 2001 (11) Fund First Available during November 2001 (12) Fund First Available during May 2002
Access - 131789 A5
2003 2002 2001 2000 -------------------------------------------------------------------- SEPARATE ACCOUNT ANNUAL CHARGES OF 1.45% AIM VI DENT DEMOGRAPHIC TRENDS AUV at Beginning of Period $7.34 $10.99 $10.00 (5) AUV at End of Period $9.93 $7.34 $10.99 Number of Accumulation Units Outstanding at End of Period 1,009,538 226,139 23,503 COLONIAL SMALL CAP VALUE AUV at Beginning of Period $10.00 (14) AUV at End of Period $13.85 Number of Accumulation Units Outstanding at End of Period 504,034 FIDELITY(R) VIP EQUITY--INCOME AUV at Beginning of Period $7.83 $9.59 $10.00 (7) AUV at End of Period $10.03 $7.83 $9.59 Number of Accumulation Units Outstanding at End of Period 2,445,416 321,872 FIDELITY(R) VIP GROWTH AUV at Beginning of Period $6.37 $9.27 $10.00 (7) AUV at End of Period $8.32 $6.37 $9.27 Number of Accumulation Units Outstanding at End of Period 3,789,443 534,403 ING AIM MID CAP GROWTH AUV at Beginning of Period $9.86 $14.64 $18.85 $21.70 (1) AUV at End of Period $14.01 $9.86 $14.64 $18.85 Number of Accumulation Units Outstanding at End of Period 2,190,339 1,870,965 2,160,544 1,797,957 ING ALLIANCE MID CAP GROWTH AUV at Beginning of Period $10.06 $14.59 $17.17 $20.13 (1) AUV at End of Period $16.56 $10.06 $14.59 $17.17 Number of Accumulation Units Outstanding at End of Period 2,956,816 1,918,853 1,780,512 1,239,023 ING AMERICAN FUNDS GROWTH AUV at Beginning of Period $10.00 (12) AUV at End of Period $10.77 Number of Accumulation Units Outstanding at End of Period 1,864,132 ING AMERICAN FUNDS GROWTH-INCOME AUV at Beginning of Period $10.00 (12) AUV at End of Period $10.99 Number of Accumulation Units Outstanding at End of Period 1,348,350 ING AMERICAN FUNDS INTERNATIONAL AUV at Beginning of Period $10.00 (12) AUV at End of Period $11.62 Number of Accumulation Units Outstanding at End of Period 641,852 ING CAPITAL GUARDIAN LARGE CAP VALUE AUV at Beginning of Period $7.52 $10.01 $10.54 $10.00 (1) AUV at End of Period $10.13 $7.52 $10.01 $10.54 Number of Accumulation Units Outstanding at End of Period 9,374,553 6,465,467 4,561,875 1,537,946
Access - 131789 A6
2003 2002 2001 2000 -------------------------------------------------------------------- ING CAPITAL GUARDIAN MANAGED GLOBAL AUV at Beginning of Period $13.71 $17.43 $20.08 $22.29 (1) AUV at End of Period $18.42 $13.71 $17.43 $20.08 Number of Accumulation Units Outstanding at End of Period 2,876,283 2,246,287 1,775,926 965,140 ING CAPITAL GUARDIAN SMALL CAP AUV at Beginning of Period $13.09 $17.82 $18.35 $23.69 (1) AUV at End of Period $18.11 $13.09 $17.82 $18.35 Number of Accumulation Units Outstanding at End of Period 3,883,332 2,987,431 2,714,045 1,586,595 ING DEVELOPING WORLD AUV at Beginning of Period $6.22 $7.07 $7.57 $11.66 (1) AUV at End of Period $8.99 $6.22 $7.07 $7.57 Number of Accumulation Units Outstanding at End of Period 1,925,674 1,365,017 1,495,431 760,058 ING EAGLE ASSET VALUE EQUITY AUV at Beginning of Period $14.92 $18.25 $19.38 $17.48 (1) AUV at End of Period $18.41 $14.92 $18.25 $19.38 Number of Accumulation Units Outstanding at End of Period 1,303,905 1,201,589 833,753 472,034 ING FMR(SM) DIVERSIFIED MID--CAP AUV at Beginning of Period $7.22 $9.09 $9.88 $10.00 (3) AUV at End of Period $9.50 $7.22 $9.09 $9.88 Number of Accumulation Units Outstanding at End of Period 2,850,229 1,947,601 959,092 131,431 ING GET FUND -- SERIES V AUV at Beginning of Period $10.00 (11) AUV at End of Period $9.73 Number of Accumulation Units Outstanding at End of Period 9,202,842 ING GET U.S. CORE PORTFOLIO - SERIES 1 AUV at Beginning of Period $10.00 (11) AUV at End of Period $10.25 Number of Accumulation Units Outstanding at End of Period 6,174,490 ING GOLDMAN SACHS INTERNET TOLLKEEPER AUV at Beginning of Period $4.64 $7.61 $10.00 (4) AUV at End of Period $6.45 $4.64 $7.61 Number of Accumulation Units Outstanding at End of Period 1,534,119 519,244 89,535 ING HARD ASSETS AUV at Beginning of Period $13.94 $14.03 $16.20 $16.12 (1) AUV at End of Period $20.91 $13.94 $14.03 $16.20 Number of Accumulation Units Outstanding at End of Period 826,628 436,185 144,214 57,353 ING INTERNATIONAL EQUITY AUV at Beginning of Period $7.19 $8.70 $11.43 $15.02 (6) AUV at End of Period $9.15 $7.19 $8.70 $11.43 Number of Accumulation Units Outstanding at End of Period 2,278,889 1,834,152 1,624,384 1,257,278 ING JANUS GROWTH AND INCOME AUV at Beginning of Period $7.04 $8.87 $9.94 $10.00 (3) AUV at End of Period $8.50 $7.04 $8.87 $9.94 Number of Accumulation Units Outstanding at End of Period 4,499,898 2,831,574 1,698,201 170,460 ING JANUS SPECIAL EQUITY AUV at Beginning of Period $6.07 $8.32 $8.89 $10.00 (3) AUV at End of Period $9.00 $6.07 $8.32 $8.89 Number of Accumulation Units Outstanding at End of Period 934,004 610,059 538,057 76,347
Access - 131789 A7
2003 2002 2001 2000 -------------------------------------------------------------------- ING JENNISON EQUITY OPPORTUNITIES AUV at Beginning of Period $14.96 $21.46 $25.03 $29.44 (1) AUV at End of Period $19.33 $14.96 $21.46 $25.03 Number of Accumulation Units Outstanding at End of Period 1,900,374 1,951,375 1,862,499 1,210,622 ING JP MORGAN FLEMING INTERNATIONAL AUV at Beginning of Period $10.00 (12) AUV at End of Period $11.87 Number of Accumulation Units Outstanding at End of Period 77,955 ING JP MORGAN FLEMING SMALLCAP AUV at Beginning of Period $7.84 $10.00 (7) AUV at End of Period $10.37 $7.84 Number of Accumulation Units Outstanding at End of Period 1,251,726 209,858 ING JULIUS BAER FOREIGN AUV at Beginning of Period $8.22 $10.00 (7) AUV at End of Period $10.63 $8.22 Number of Accumulation Units Outstanding at End of Period 502,551 106,211 ING LIMITED MATURITY BOND AUV at Beginning of Period $19.95 $18.88 $17.60 $16.56 (1) AUV at End of Period $20.22 $19.95 $18.88 $17.60 Number of Accumulation Units Outstanding at End of Period 4,019,585 3,840,533 2,416,706 849,473 ING LIQUID ASSETS AUV at Beginning of Period $15.66 $15.67 $15.31 $14.70 (1) AUV at End of Period $15.55 $15.66 $15.67 $15.31 Number of Accumulation Units Outstanding at End of Period 9,522,307 10,877,063 12,017,917 7,270,477 ING MARSICO GROWTH AUV at Beginning of Period $10.48 $15.10 $21.96 $29.12 (1) AUV at End of Period $13.71 $10.48 $15.10 $21.96 Number of Accumulation Units Outstanding at End of Period 6,824,703 5,599,657 6,476,226 4,730,311 ING MERCURY FOCUS VALUE AUV at Beginning of Period $8.37 $10.00 (7) AUV at End of Period $10.82 $8.37 Number of Accumulation Units Outstanding at End of Period 392,802 91,571 ING MERCURY FUNDAMENTAL GROWTH AUV at Beginning of Period $7.97 $10.00 (7) AUV at End of Period $9.97 $7.97 Number of Accumulation Units Outstanding at End of Period 237,787 27,664 ING MFS MID CAP GROWTH AUV at Beginning of Period $16.01 $31.73 $42.16 $38.56 (1) AUV at End of Period $21.95 $16.01 $31.73 $42.16 Number of Accumulation Units Outstanding at End of Period 3,776,334 3,084,372 3,144,090 1,992,588 ING MFS RESEARCH AUV at Beginning of Period $15.07 $20.35 $26.30 $26.94 (1) AUV at End of Period $18.50 $15.07 $20.35 $26.30 Number of Accumulation Units Outstanding at End of Period 2,836,831 2,475,752 2,427,133 1,500,906 ING MFS TOTAL RETURN AUV at Beginning of Period $19.15 $20.47 $20.68 $17.46 (1) AUV at End of Period $22.03 $19.15 $20.47 $20.68 Number of Accumulation Units Outstanding at End of Period 6,645,212 4,962,123 3,612,214 1,350,560
Access - 131789 A8
2003 2002 2001 2000 -------------------------------------------------------------------- ING PIMCO CORE BOND AUV at Beginning of Period $12.65 $11.81 $11.70 $11.44 (1) AUV at End of Period $13.06 $12.65 $11.81 $11.70 Number of Accumulation Units Outstanding at End of Period 6,415,052 4,516,490 1,400,922 381,139 ING SALOMON BROTHERS AGGRESSIVE GROWTH AUV at Beginning of Period $10.00 (12) (1) AUV at End of Period $10.81 Number of Accumulation Units Outstanding at End of Period 192,028 ING SALOMON BROTHERS ALL CAP AUV at Beginning of Period $8.54 $11.64 $11.59 $10.00 (1) AUV at End of Period $11.68 $8.54 $11.64 $11.59 Number of Accumulation Units Outstanding at End of Period 5,835,012 4,205,151 3,977,598 1,200,520 ING SALOMON BROTHERS INVESTORS AUV at Beginning of Period $8.06 $10.62 $11.26 $10.00 (1) AUV at End of Period $10.42 $8.06 $10.62 $11.26 Number of Accumulation Units Outstanding at End of Period 2,060,651 1,674,081 1,224,296 313,828 ING T. ROWE PRICE CAPITAL APPRECIATION AUV at Beginning of Period $27.72 $27.99 $25.84 $20.89 (1) AUV at End of Period $34.21 $27.72 $27.99 $25.84 Number of Accumulation Units Outstanding at End of Period 5,743,181 4,380,117 2,279,908 507,008 ING T. ROWE PRICE EQUITY INCOME AUV at Beginning of Period $20.28 $23.71 $23.74 $20.18 (1) AUV at End of Period $25.02 $20.28 $23.71 $23.74 Number of Accumulation Units Outstanding at End of Period 3,297,900 2,137,260 1,599,946 470,889 ING UBS U.S. BALANCED AUV at Beginning of Period $7.25 (14) AUV at End of Period $8.44 Number of Accumulation Units Outstanding at End of Period 1,411,580 ING VAN KAMPEN EQUITY GROWTH AUV at Beginning of Period $7.82 $10.00 (7) AUV at End of Period $9.53 $7.82 Number of Accumulation Units Outstanding at End of Period 566,448 115,969 ING VAN KAMPEN GLOBAL FRANCHISE AUV at Beginning of Period $8.84 $10.00 (7) AUV at End of Period $11.00 $8.84 Number of Accumulation Units Outstanding at End of Period 885,643 255,324 ING VAN KAMPEN GROWTH & INCOME AUV at Beginning of Period $18.08 $21.53 $24.81 $25.53 (1) AUV at End of Period $22.79 $18.08 $21.53 $24.81 Number of Accumulation Units Outstanding at End of Period 2,615,475 1,951,607 1,737,220 1,073,372 ING VAN KAMPEN REAL ESTATE AUV at Beginning of Period $27.82 $28.18 $26.44 $20.64 (1) AUV at End of Period $37.77 $27.82 $28.18 $26.44 Number of Accumulation Units Outstanding at End of Period 1,439,332 947,487 414,152 211,380 ING VP BOND PORTFOLIO AUV at Beginning of Period $10.64 $10.00 (7) AUV at End of Period $11.12 $10.64 Number of Accumulation Units Outstanding at End of Period 897,496 665,314 ING VP GROWTH OPPORTUNITIES AUV at Beginning of Period $5.26 $7.79 $10.00 (4) AUV at End of Period $6.86 $5.26 $7.79 Number of Accumulation Units Outstanding at End of Period 696,848 297,926 83,427
Access - 131789 A9
2003 2002 2001 2000 -------------------------------------------------------------------- ING VP INDEX PLUS LARGE CAP AUV at Beginning of Period $10.00 (11) AUV at End of Period $8.97 Number of Accumulation Units Outstanding at End of Period 1,239,109 ING VP INDEX PLUS MID CAP AUV at Beginning of Period $10.00 (14) AUV at End of Period $11.13 Number of Accumulation Units Outstanding at End of Period 317,218 ING VP INDEX PLUS SMALL CAP AUV at Beginning of Period $10.00 (14) AUV at End of Period $11.53 Number of Accumulation Units Outstanding at End of Period 255,326 ING VP MAGNACAP AUV at Beginning of Period $7.10 $9.35 $10.00 (4) AUV at End of Period $9.14 $7.10 $9.35 Number of Accumulation Units Outstanding at End of Period 647,836 307,643 91,138 ING VP SMALLCAP OPPORTUNITIES AUV at Beginning of Period $4.62 $8.33 $10.00 (4) AUV at End of Period $6.30 $4.62 $8.33 Number of Accumulation Units Outstanding at End of Period 2,408,687 1,042,746 268,186 ING VP WORLDWIDE GROWTH AUV at Beginning of Period $5.20 $7.02 $8.75 $10.00 (2) AUV at End of Period $6.62 $5.20 $7.02 $8.75 Number of Accumulation Units Outstanding at End of Period 1,303,851 859,281 479,640 169,871 INVESCO VIF HEALTH SCIENCES AUV at Beginning of Period $7.65 $10.27 $10.00 (5) AUV at End of Period $9.63 $7.65 $10.27 Number of Accumulation Units Outstanding at End of Period 1,881,172 481,393 38,465 INVESCO VIF LEISURE FUND AUV at Beginning of Period $8.44 $10.00 (7) AUV at End of Period $10.70 $8.44 Number of Accumulation Units Outstanding at End of Period 567,796 132,019 INVESCO VIF--FINANCIAL SERVICES AUV at Beginning of Period $7.85 $9.36 $10.00 (5) AUV at End of Period $10.03 $7.85 $9.36 Number of Accumulation Units Outstanding at End of Period 1,345,964 491,869 37,443 INVESCO VIF--UTILITIES AUV at Beginning of Period $6.37 $8.11 $10.00 (5) AUV at End of Period $7.37 $6.37 $8.11 Number of Accumulation Units Outstanding at End of Period 588,433 152,798 8,161 JENNISON PORTFOLIO AUV at Beginning of Period $4.27 $6.29 $7.84 $10.00 (2) AUV at End of Period $5.45 $4.27 $6.29 $7.84 Number of Accumulation Units Outstanding at End of Period 1,748,111 1,366,874 1,272,891 242,694
Access - 131789 A10
2003 2002 2001 2000 -------------------------------------------------------------------- LIBERTY ASSET ALLOCATION AUV at Beginning of Period $10.00 (10) AUV at End of Period $11.99 Number of Accumulation Units Outstanding at End of Period 24,316 LIBERTY EQUITY AUV at Beginning of Period $6.56 $9.20 $11.41 $11.52 AUV at End of Period $8.02 $6.56 $9.20 $11.41 Number of Accumulation Units Outstanding at End of Period 44,064 41,998 48,568 46,533 LIBERTY FEDERAL SECURITIES AUV at Beginning of Period $10.00 (10) AUV at End of Period $10.09 Number of Accumulation Units Outstanding at End of Period 3,090 LIBERTY SMALL CO. GROWTH AUV at Beginning of Period $10.00 (10) AUV at End of Period $14.98 Number of Accumulation Units Outstanding at End of Period 1,018 PIMCO HIGH YIELD PORTFOLIO AUV at Beginning of Period $9.82 $10.08 $10.00 $10.16 (1) AUV at End of Period $11.89 $9.82 $10.08 $10.00 Number of Accumulation Units Outstanding at End of Period 7,368,292 3,925,320 2,641,283 908,512 PIMCO STOCKSPLUS GROWTH & INCOME AUV at Beginning of Period $8.03 $10.21 $11.70 $12.52 (1) AUV at End of Period $10.32 $8.03 $10.21 $11.70 Number of Accumulation Units Outstanding at End of Period 1,818,112 2,241,996 2,222,192 1,178,840 PIONEER FUND VCT AUV at Beginning of Period $7.47 $9.38 $10.00 (5) AUV at End of Period $9.08 $7.47 $9.38 Number of Accumulation Units Outstanding at End of Period 884,740 295,688 5,663 PIONEER MID CAP VALUE AUV at Beginning of Period $9.36 $10.71 $10.00 (5) AUV at End of Period $12.64 $9.36 $10.71 Number of Accumulation Units Outstanding at End of Period 2,350,778 728,410 98,183 PROFUND VP BULL AUV at Beginning of Period $6.66 $8.89 $10.00 (4) AUV at End of Period $8.25 $6.66 $8.89 Number of Accumulation Units Outstanding at End of Period 3,673,934 1,271,888 267,236 PROFUND VP EUROPE 30 AUV at Beginning of Period $6.05 $8.26 $10.00 (4) AUV at End of Period $8.27 $6.05 $8.26 Number of Accumulation Units Outstanding at End of Period 786,491 1,365,500 568,994 PROFUND VP RISING RATES OPPORTUNITY AUV at Beginning of Period $10.00 (13) AUV at End of Period $9.36 Number of Accumulation Units Outstanding at End of Period 214,510 PROFUND VP SMALL CAP AUV at Beginning of Period $7.21 $9.43 $10.00 (4) AUV at End of Period $10.14 $7.21 $9.43 Number of Accumulation Units Outstanding at End of Period 3,015,456 1,133,339 403,215
Access - 131789 A11
2003 2002 2001 2000 -------------------------------------------------------------------- SP JENNISON INTERNATIONAL GROWTH AUV at Beginning of Period $4.11 $5.41 $8.56 $10.00 (3) AUV at End of Period $5.64 $4.11 $5.41 $8.56 Number of Accumulation Units Outstanding at End of Period 2,035,467 519,700 385,101 44,024
FOOTNOTES (1) Fund First Available during October 1993 (10) Fund First Available during April 2003 (2) Fund First Available during January 1995 (11) Fund First Available during June 2003 (3) Fund First Available during October 1995 (12) Fund First Available during September 2003 (4) Fund First Available during January 1996 (13) Fund First Available during October 2003 (5) Fund First Available during September 1996 (14) Fund First Available during November 2003 (6) Fund First Available during February 1997 (7) Fund First Available during May 1998 (8) Fund First Available during October 2000 (9) Fund First Available during May 2001
2003 2002 2001 2000 1999 ------------------------------------------------------------------------------ SEPARATE ACCOUNT ANNUAL CHARGES OF 1.55% AIM VI DENT DEMOGRAPHIC TRENDS AUV at Beginning of Period $7.33 $10.99 $10.00 (11) AUV at End of Period $9.91 $7.33 $10.99 Number of Accumulation Units Outstanding at End of Period 178,911 43,074 77,645 COLONIAL SMALL CAP VALUE AUV at Beginning of Period $10.00 (18) AUV at End of Period $13.84 Number of Accumulation Units Outstanding at End of Period 82,669 FIDELITY(R) VIP EQUITY--INCOME AUV at Beginning of Period $7.82 $9.58 $10.00 (12) AUV at End of Period $10.01 $7.82 $9.58 Number of Accumulation Units Outstanding at End of Period 591,447 185,665 FIDELITY(R) VIP GROWTH AUV at Beginning of Period $6.36 $9.27 $10.00 (12) AUV at End of Period $8.30 $6.36 $9.27 Number of Accumulation Units Outstanding at End of Period 502,112 219,815 ING AIM MID CAP GROWTH AUV at Beginning of Period $9.80 $14.57 $18.78 $21.78 $14.16 AUV at End of Period $13.91 $9.80 $14.57 $18.78 $21.78 Number of Accumulation Units Outstanding at End of Period 1,824,861 1,999,022 2,640,192 3,565,531 2,655,079 ING ALLIANCE MID CAP GROWTH AUV at Beginning of Period $9.99 $14.51 $17.09 $20.94 $16.94 AUV at End of Period $16.43 $9.99 $14.51 $17.09 $20.94 Number of Accumulation Units Outstanding at End of Period 4,192,754 4,478,808 5,716,524 6,622,519 6,210,698 ING AMERICAN FUNDS GROWTH AUV at Beginning of Period $10.00 (16) AUV at End of Period $10.77 Number of Accumulation Units Outstanding at End of Period 388,436 ING AMERICAN FUNDS GROWTH-INCOME AUV at Beginning of Period $10.00 (16) AUV at End of Period $10.98 Number of Accumulation Units Outstanding at End of Period 397,600 ING AMERICAN FUNDS INTERNATIONAL AUV at Beginning of Period $10.00 (16) AUV at End of Period $11.61 Number of Accumulation Units Outstanding at End of Period 137,440 1998 1997 1996 1995 -------------------------------------------------------------- SEPARATE ACCOUNT ANNUAL CHARGES OF 1.55% AIM VI DENT DEMOGRAPHIC TRENDS AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period COLONIAL SMALL CAP VALUE AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period FIDELITY(R) VIP EQUITY--INCOME AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period FIDELITY(R) VIP GROWTH AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING AIM MID CAP GROWTH AUV at Beginning of Period $14.26 $11.76 $10.01 $10.00 (1) AUV at End of Period $14.16 $14.26 $11.76 $10.01 Number of Accumulation Units Outstanding at End of Period 1,731,615 1,361,070 968,694 152,633 ING ALLIANCE MID CAP GROWTH AUV at Beginning of Period $15.36 $12.47 $10.00 (3) AUV at End of Period $16.94 $15.36 $12.47 Number of Accumulation Units Outstanding at End of Period 3,474,460 1,288,333 173,758 ING AMERICAN FUNDS GROWTH AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING AMERICAN FUNDS GROWTH-INCOME AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING AMERICAN FUNDS INTERNATIONAL AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period
Access - 131789 A12
2003 2002 2001 2000 1999 ------------------------------------------------------------------------------ ING CAPITAL GUARDIAN LARGE CAP VALUE AUV at Beginning of Period $7.50 $9.99 $10.53 $10.00 (7) AUV at End of Period $10.09 $7.50 $9.99 $10.53 Number of Accumulation Units Outstanding at End of Period 2,408,098 2,128,387 1,783,085 770,213 ING CAPITAL GUARDIAN MANAGED GLOBAL AUV at Beginning of Period $13.59 $17.30 $19.94 $23.71 $14.75 AUV at End of Period $18.24 $13.59 $17.30 $19.94 $23.71 Number of Accumulation Units Outstanding at End of Period 2,499,768 2,796,359 3,208,566 3,496,637 3,306,922 ING CAPITAL GUARDIAN SMALL CAP AUV at Beginning of Period $13.00 $17.71 $18.26 $22.68 $15.30 AUV at End of Period $17.97 $13.00 $17.71 $18.26 $22.68 Number of Accumulation Units Outstanding at End of Period 3,768,841 4,048,976 4,908,965 5,436,275 4,514,345 ING DEVELOPING WORLD AUV at Beginning of Period $6.19 $7.04 $7.55 $11.58 $7.27 AUV at End of Period $8.93 $6.19 $7.04 $7.55 $11.58 Number of Accumulation Units Outstanding at End of Period 1,347,745 1,372,716 1,610,890 991,863 926,115 ING EAGLE ASSET VALUE EQUITY AUV at Beginning of Period $14.82 $18.15 $19.29 $18.01 $18.20 AUV at End of Period $18.27 $14.82 $18.15 $19.29 $18.01 Number of Accumulation Units Outstanding at End of Period 1,905,659 2,133,007 2,428,124 2,589,777 2,709,066 ING FMR(SM) DIVERSIFIED MID--CAP AUV at Beginning of Period $7.21 $9.08 $9.87 $10.00 (9) AUV at End of Period $9.47 $7.21 $9.08 $9.87 Number of Accumulation Units Outstanding at End of Period 492,657 504,098 261,790 185,852 ING GOLDMAN SACHS INTERNET TOLLKEEPER AUV at Beginning of Period $4.64 $7.61 $10.00 (10) AUV at End of Period $6.44 $4.64 $7.61 Number of Accumulation Units Outstanding at End of Period 228,338 109,776 36,477 ING HARD ASSETS AUV at Beginning of Period $13.76 $13.87 $16.03 $17.09 $14.07 AUV at End of Period $20.62 $13.76 $13.87 $16.03 $17.09 Number of Accumulation Units Outstanding at End of Period 549,898 561,650 458,820 598,435 696,930 ING INTERNATIONAL EQUITY AUV at Beginning of Period $7.14 $8.65 $11.37 $15.59 $10.32 AUV at End of Period $9.08 $7.14 $8.65 $11.37 $15.59 Number of Accumulation Units Outstanding at End of Period 1,583,400 1,745,092 2,043,470 2,474,741 1,959,321 ING JANUS GROWTH AND INCOME AUV at Beginning of Period $7.03 $8.86 $9.94 $10.00 (9) AUV at End of Period $8.48 $7.03 $8.86 $9.94 Number of Accumulation Units Outstanding at End of Period 754,836 719,851 470,484 88,531 ING JANUS SPECIAL EQUITY AUV at Beginning of Period $6.06 $8.31 $8.89 $10.00 (9) AUV at End of Period $8.97 $6.06 $8.31 $8.89 Number of Accumulation Units Outstanding at End of Period 240,606 162,394 158,129 85,716 ING JENNISON EQUITY OPPORTUNITIES AUV at Beginning of Period $14.82 $21.28 $24.85 $29.77 $24.26 AUV at End of Period $19.13 $14.82 $21.28 $24.85 $29.77 Number of Accumulation Units Outstanding at End of Period 2,572,697 2,915,036 3,688,603 4,174,489 3,839,680 ING JP MORGAN FLEMING INTERNATIONAL AUV at Beginning of Period $10.00 (16) AUV at End of Period $11.87 Number of Accumulation Units Outstanding at End of Period 11,753 1998 1997 1996 1995 -------------------------------------------------------------- ING CAPITAL GUARDIAN LARGE CAP VALUE AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING CAPITAL GUARDIAN MANAGED GLOBAL AUV at Beginning of Period $11.58 $10.49 $9.49 $9.24 (1) AUV at End of Period $14.75 $11.58 $10.49 $9.49 Number of Accumulation Units Outstanding at End of Period 3,354,682 2,721,529 1,375,023 ING CAPITAL GUARDIAN SMALL CAP AUV at Beginning of Period $12.84 $11.82 $10.00 $10.00 (2) AUV at End of Period $15.30 $12.84 $11.82 $10.00 Number of Accumulation Units Outstanding at End of Period 3,086,639 2,049,765 1,316,663 -- ING DEVELOPING WORLD AUV at Beginning of Period $10.00 (6) AUV at End of Period $7.27 Number of Accumulation Units Outstanding at End of Period 82,414 ING EAGLE ASSET VALUE EQUITY AUV at Beginning of Period $18.20 $14.53 $13.34 $12.40 (1) AUV at End of Period $18.20 $18.20 $14.53 $13.34 Number of Accumulation Units Outstanding at End of Period 2,736,311 1,793,172 1,052,064 179,453 ING FMR(SM) DIVERSIFIED MID--CAP AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING GOLDMAN SACHS INTERNET TOLLKEEPER AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING HARD ASSETS AUV at Beginning of Period $20.29 $19.42 $14.80 $14.57 (1) AUV at End of Period $14.07 $20.29 $19.42 $14.80 Number of Accumulation Units Outstanding at End of Period 609,087 637,191 341,711 26,605 ING INTERNATIONAL EQUITY AUV at Beginning of Period $9.95 $10.34 $10.00 (5) AUV at End of Period $10.32 $9.95 $10.34 Number of Accumulation Units Outstanding at End of Period 680,861 36,098 ING JANUS GROWTH AND INCOME AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING JANUS SPECIAL EQUITY AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING JENNISON EQUITY OPPORTUNITIES AUV at Beginning of Period $21.87 $17.22 $14.55 $14.16 (1) AUV at End of Period $24.26 $21.87 $17.22 $14.55 Number of Accumulation Units Outstanding at End of Period 2,787,732 1,772,316 1,106,359 326,610 ING JP MORGAN FLEMING INTERNATIONAL AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period
Access - 131789 A13
2003 2002 2001 2000 1999 ------------------------------------------------------------------------------ ING JP MORGAN FLEMING SMALLCAP AUV at Beginning of Period $7.84 $10.00 (12) AUV at End of Period $10.36 $7.84 Number of Accumulation Units Outstanding at End of Period 99,605 31,084 ING JULIUS BAER FOREIGN AUV at Beginning of Period $8.22 $10.00 (12) AUV at End of Period $10.61 $8.22 Number of Accumulation Units Outstanding at End of Period 33,208 ING LIMITED MATURITY BOND AUV at Beginning of Period $19.73 $18.69 $17.45 $16.45 $16.52 AUV at End of Period $19.98 $19.73 $18.69 $17.45 $16.45 Number of Accumulation Units Outstanding at End of Period 2,413,916 3,063,485 2,547,141 1,769,356 1,835,681 ING LIQUID ASSETS AUV at Beginning of Period $15.51 $15.54 $15.19 $14.55 $14.11 AUV at End of Period $15.39 $15.51 $15.54 $15.19 $14.55 Number of Accumulation Units Outstanding at End of Period 3,967,468 5,577,966 7,210,822 5,535,947 7,668,618 ING MARSICO GROWTH AUV at Beginning of Period $10.41 $15.01 $21.86 $28.46 $16.22 AUV at End of Period $13.60 $10.41 $15.01 $21.86 $28.46 Number of Accumulation Units Outstanding at End of Period 7,363,429 8,151,064 11,192,041 13,563,138 11,168,535 ING MERCURY FOCUS VALUE AUV at Beginning of Period $8.36 $10.00 (12) AUV at End of Period $10.80 $8.36 Number of Accumulation Units Outstanding at End of Period 78,050 69,302 ING MERCURY FUNDAMENTAL GROWTH AUV at Beginning of Period $7.97 $10.00 (12) AUV at End of Period $9.96 $7.97 Number of Accumulation Units Outstanding at End of Period 30,926 18,057 ING MFS MID CAP GROWTH AUV at Beginning of Period $15.88 $31.50 $41.89 $39.34 $22.31 AUV at End of Period $21.75 $15.88 $31.50 $41.89 $39.34 Number of Accumulation Units Outstanding at End of Period 3,416,000 3,781,798 4,965,396 5,926,553 3,717,261 ING MFS RESEARCH AUV at Beginning of Period $14.95 $20.21 $26.13 $27.80 $22.73 AUV at End of Period $18.33 $14.95 $20.21 $26.13 $27.80 Number of Accumulation Units Outstanding at End of Period 4,358,136 4,975,285 6,799,019 7,760,199 7,240,462 ING MFS TOTAL RETURN AUV at Beginning of Period $18.99 $20.33 $20.55 $17.91 $17.60 AUV at End of Period $21.83 $18.99 $20.33 $20.55 $17.91 Number of Accumulation Units Outstanding at End of Period 5,459,084 5,740,870 6,331,856 6,431,976 6,739,205 ING PIMCO CORE BOND AUV at Beginning of Period $12.55 $11.73 $11.63 $11.70 $13.00 AUV at End of Period $12.94 $12.55 $11.73 $11.63 $11.70 Number of Accumulation Units Outstanding at End of Period 1,936,849 2,142,595 813,599 490,810 382,608 ING SALOMON BROTHERS AGGRESSIVE GROWTH AUV at Beginning of Period $10.00 (16) AUV at End of Period $10.81 Number of Accumulation Units Outstanding at End of Period 16,860 ING SALOMON BROTHERS ALL CAP AUV at Beginning of Period $8.51 $11.62 $11.58 $10.00 (7) AUV at End of Period $11.64 $8.51 $11.62 $11.58 Number of Accumulation Units Outstanding at End of Period 1,646,965 1,646,987 2,043,716 1,155,496 ING SALOMON BROTHERS INVESTORS AUV at Beginning of Period $8.04 $10.60 $11.25 $10.00 (7) AUV at End of Period $10.38 $8.04 $10.60 $11.25 Number of Accumulation Units Outstanding at End of Period 565,048 590,391 533,884 198,869 1998 1997 1996 1995 -------------------------------------------------------------- ING JP MORGAN FLEMING SMALLCAP AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING JULIUS BAER FOREIGN AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING LIMITED MATURITY BOND AUV at Beginning of Period $15.70 $14.95 $14.56 $14.20 (1) AUV at End of Period $16.52 $15.70 $14.95 $14.56 Number of Accumulation Units Outstanding at End of Period 1,121,401 462,583 349,417 136,553 ING LIQUID ASSETS AUV at Beginning of Period $13.65 $13.19 $12.76 $12.63 (1) AUV at End of Period $14.11 $13.65 $13.19 $12.76 Number of Accumulation Units Outstanding at End of Period 2,964,038 1,132,057 383,231 93,239 ING MARSICO GROWTH AUV at Beginning of Period $12.99 $11.40 $10.00 (4) AUV at End of Period $16.22 $12.99 $11.40 Number of Accumulation Units Outstanding at End of Period 2,452,150 763,169 ING MERCURY FOCUS VALUE AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING MERCURY FUNDAMENTAL GROWTH AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING MFS MID CAP GROWTH AUV at Beginning of Period $18.45 $15.66 $13.19 $12.93 (3) AUV at End of Period $22.31 $18.45 $15.66 $13.19 Number of Accumulation Units Outstanding at End of Period 1,527,665 518,640 56,163 ING MFS RESEARCH AUV at Beginning of Period $18.77 $15.87 $13.07 $12.23 (4) AUV at End of Period $22.73 $18.77 $15.87 $13.07 Number of Accumulation Units Outstanding at End of Period 3,875,695 816,216 ING MFS TOTAL RETURN AUV at Beginning of Period $16.02 $13.46 $12.03 $11.39 (4) AUV at End of Period $17.60 $16.02 $13.46 $12.03 Number of Accumulation Units Outstanding at End of Period 3,973,034 746,754 ING PIMCO CORE BOND AUV at Beginning of Period $11.81 $11.91 $11.53 $11.18 (6) AUV at End of Period $13.00 $11.81 $11.91 $11.53 Number of Accumulation Units Outstanding at End of Period 119,924 310 ING SALOMON BROTHERS AGGRESSIVE GROWTH AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING SALOMON BROTHERS ALL CAP AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING SALOMON BROTHERS INVESTORS AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period
Access - 131789 A14
2003 2002 2001 2000 1999 ------------------------------------------------------------------------------ ING T. ROWE PRICE CAPITAL APPRECIATION AUV at Beginning of Period $27.37 $27.67 $25.57 $21.29 $20.23 AUV at End of Period $33.75 $27.37 $27.67 $25.57 $21.29 Number of Accumulation Units Outstanding at End of Period 3,717,807 4,093,955 3,679,280 3,165,782 3,304,307 ING T. ROWE PRICE EQUITY INCOME AUV at Beginning of Period $20.03 $23.43 $23.49 $21.12 $21.61 AUV at End of Period $24.68 $20.03 $23.43 $23.49 $21.12 Number of Accumulation Units Outstanding at End of Period 2,135,369 2,226,228 2,377,259 2,237,388 2,523,887 ING UBS U.S. BALANCED AUV at Beginning of Period $7.24 (18) AUV at End of Period $8.41 Number of Accumulation Units Outstanding at End of Period 284,098 ING VAN KAMPEN EQUITY GROWTH AUV at Beginning of Period $7.81 $10.00 (12) AUV at End of Period $9.51 $7.81 Number of Accumulation Units Outstanding at End of Period 122,975 36,457 ING VAN KAMPEN GLOBAL FRANCHISE AUV at Beginning of Period $8.84 $10.00 (12) AUV at End of Period $10.98 $8.84 Number of Accumulation Units Outstanding at End of Period 189,266 135,600 ING VAN KAMPEN GROWTH & INCOME AUV at Beginning of Period $17.94 $21.38 $24.67 $25.59 $22.43 AUV at End of Period $22.59 $17.94 $21.38 $24.67 $25.59 Number of Accumulation Units Outstanding at End of Period 6,186,431 6,933,409 8,520,621 9,797,232 10,160,317 ING VAN KAMPEN REAL ESTATE AUV at Beginning of Period $27.47 $27.85 $26.16 $20.28 $21.42 AUV at End of Period $37.25 $27.47 $27.85 $26.16 $20.28 Number of Accumulation Units Outstanding at End of Period 740,624 784,788 715,123 738,551 742,364 ING VP BOND PORTFOLIO AUV at Beginning of Period $10.63 $10.00 (12) AUV at End of Period $11.10 $10.63 Number of Accumulation Units Outstanding at End of Period 314,718 290,354 ING VP GROWTH OPPORTUNITIES AUV at Beginning of Period $5.25 $7.78 $10.00 (10) AUV at End of Period $6.84 $5.25 $7.78 Number of Accumulation Units Outstanding at End of Period 119,046 134,512 19,161 ING VP INDEX PLUS LARGE CAP AUV at Beginning of Period $10.00 (15) AUV at End of Period $8.94 Number of Accumulation Units Outstanding at End of Period 65,973 ING VP MAGNACAP AUV at Beginning of Period $7.08 $9.34 $10.00 (10) AUV at End of Period $9.11 $7.08 $9.34 Number of Accumulation Units Outstanding at End of Period 47,646 20,062 7,517 ING VP SMALLCAP OPPORTUNITIES AUV at Beginning of Period $4.61 $8.32 $10.00 (10) AUV at End of Period $6.28 $4.61 $8.32 Number of Accumulation Units Outstanding at End of Period 269,277 139,362 61,322 ING VP WORLDWIDE GROWTH AUV at Beginning of Period $5.19 $7.01 $8.75 $10.00 (8) AUV at End of Period $6.59 $5.19 $7.01 $8.75 Number of Accumulation Units Outstanding at End of Period 116,479 142,058 112,981 21,575 INVESCO VIF HEALTH SCIENCES AUV at Beginning of Period $7.63 $10.26 $10.00 (11) AUV at End of Period $9.60 $7.63 $10.26 Number of Accumulation Units Outstanding at End of Period 180,195 166,543 110,902 1998 1997 1996 1995 -------------------------------------------------------------- ING T. ROWE PRICE CAPITAL APPRECIATION AUV at Beginning of Period $19.40 $17.08 $14.91 $14.47 (1) AUV at End of Period $20.23 $19.40 $17.08 $14.91 Number of Accumulation Units Outstanding at End of Period 2,780,652 1,766,390 952,517 184,364 ING T. ROWE PRICE EQUITY INCOME AUV at Beginning of Period $20.28 $17.54 $16.38 $15.78 (1) AUV at End of Period $21.61 $20.28 $17.54 $16.38 Number of Accumulation Units Outstanding at End of Period 1,980,778 1,485,966 1,117,238 370,515 ING UBS U.S. BALANCED AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING VAN KAMPEN EQUITY GROWTH AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING VAN KAMPEN GLOBAL FRANCHISE AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING VAN KAMPEN GROWTH & INCOME AUV at Beginning of Period $19.96 $15.62 $13.15 $12.09 (1) AUV at End of Period $22.43 $19.96 $15.62 $13.15 Number of Accumulation Units Outstanding at End of Period 7,386,288 3,706,709 1,663,079 300,820 ING VAN KAMPEN REAL ESTATE AUV at Beginning of Period $25.14 $20.79 $15.61 $14.76 (1) AUV at End of Period $21.42 $25.14 $20.79 $15.61 Number of Accumulation Units Outstanding at End of Period 914,501 897,320 384,928 61,143 ING VP BOND PORTFOLIO AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING VP GROWTH OPPORTUNITIES AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING VP INDEX PLUS LARGE CAP AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING VP MAGNACAP AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING VP SMALLCAP OPPORTUNITIES AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING VP WORLDWIDE GROWTH AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period INVESCO VIF HEALTH SCIENCES AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period
Access - 131789 A15
2003 2002 2001 2000 1999 ------------------------------------------------------------------------------ INVESCO VIF LEISURE FUND AUV at Beginning of Period $8.43 $10.00 (12) AUV at End of Period $10.68 $8.43 Number of Accumulation Units Outstanding at End of Period 57,779 28,020 INVESCO VIF--FINANCIAL SERVICES AUV at Beginning of Period $7.84 $9.36 $10.00 (11) AUV at End of Period $10.00 $7.84 $9.36 Number of Accumulation Units Outstanding at End of Period 160,101 117,511 23,862 INVESCO VIF--UTILITIES AUV at Beginning of Period $6.36 $8.10 $10.00 (11) AUV at End of Period $7.35 $6.36 $8.10 Number of Accumulation Units Outstanding at End of Period 91,472 86,524 18,795 JENNISON PORTFOLIO AUV at Beginning of Period $4.26 $6.28 $7.84 $10.00 (11) AUV at End of Period $5.43 $4.26 $6.28 $7.84 Number of Accumulation Units Outstanding at End of Period 309,725 322,010 417,346 64,129 PIMCO HIGH YIELD PORTFOLIO AUV at Beginning of Period $9.77 $10.04 $9.97 $10.21 $10.07 AUV at End of Period $11.82 $9.77 $10.04 $9.97 $10.21 Number of Accumulation Units Outstanding at End of Period 3,503,280 3,053,446 3,198,237 3,158,188 3,194,935 PIMCO STOCKSPLUS GROWTH & INCOME AUV at Beginning of Period $7.99 $10.18 $11.67 $13.10 $11.10 AUV at End of Period $10.26 $7.99 $10.18 $11.67 $13.10 Number of Accumulation Units Outstanding at End of Period 2,681,601 3,392,261 4,054,658 4,659,705 4,371,570 PIONEER FUND VCT AUV at Beginning of Period $7.46 $9.38 $10.00 (11) AUV at End of Period $9.06 $7.46 $9.38 Number of Accumulation Units Outstanding at End of Period 258,851 144,234 14,633 PIONEER MID CAP VALUE AUV at Beginning of Period $9.35 $10.71 $10.00 (11) AUV at End of Period $12.61 $9.35 $10.71 Number of Accumulation Units Outstanding at End of Period 597,101 509,210 27,109 PROFUND VP BULL AUV at Beginning of Period $6.65 $8.89 $10.00 (10) AUV at End of Period $8.22 $6.65 $8.89 Number of Accumulation Units Outstanding at End of Period 354,864 194,394 256,467 PROFUND VP EUROPE 30 AUV at Beginning of Period $6.04 $8.26 $10.00 (10) AUV at End of Period $8.24 $6.04 $8.26 Number of Accumulation Units Outstanding at End of Period 147,115 156,756 5,726 PROFUND VP RISING RATES OPPORTUNITY AUV at Beginning of Period $10.00 (17) AUV at End of Period $9.36 Number of Accumulation Units Outstanding at End of Period 137,981 PROFUND VP SMALL CAP AUV at Beginning of Period $7.19 $9.42 $10.00 (10) AUV at End of Period $10.11 $7.19 $9.42 Number of Accumulation Units Outstanding at End of Period 424,034 269,440 67,787 SP JENNISON INTERNATIONAL GROWTH AUV at Beginning of Period $4.10 $5.40 $8.56 $10.00 (9) AUV at End of Period $5.62 $4.10 $5.40 $8.56 Number of Accumulation Units Outstanding at End of Period 188,212 120,333 101,972 64,843 1998 1997 1996 1995 -------------------------------------------------------------- INVESCO VIF LEISURE FUND AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period INVESCO VIF--FINANCIAL SERVICES AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period INVESCO VIF--UTILITIES AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period JENNISON PORTFOLIO AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period PIMCO HIGH YIELD PORTFOLIO AUV at Beginning of Period $10.00 (6) AUV at End of Period $10.07 Number of Accumulation Units Outstanding at End of Period 1,066,219 PIMCO STOCKSPLUS GROWTH & INCOME AUV at Beginning of Period $10.00 (6) AUV at End of Period $11.10 Number of Accumulation Units Outstanding at End of Period 942,738 PIONEER FUND VCT AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period PIONEER MID CAP VALUE AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period PROFUND VP BULL AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period PROFUND VP EUROPE 30 AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period PROFUND VP RISING RATES OPPORTUNITY AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period PROFUND VP SMALL CAP AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period SP JENNISON INTERNATIONAL GROWTH AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period
FOOTNOTES (1) Fund First Available during October 1995 (11) Fund First Available during November 2001 (2) Fund First Available during January 1996 (12) Fund First Available during May 2002 Access - 131789 A16 (3) Fund First Available during September 1996 (13) Fund First Available during September 2002 (4) Fund First Available during February 1997 (14) Fund First Available during December 2002 (5) Fund First Available during October 1997 (15) Fund First Available during August 2003 (6) Fund First Available during May 1998 (16) Funds First Available during September 2003 (7) Fund First Available during February 2000 (17) Funds First Available during October 2003 (8) Fund First Available during May 2000 (18) Funds First Available during November 2003 (9) Fund First Available during October 2000 (10) Fund First Available during May 2001
2003 2002 2001 2000 ---------------------------------------------------------------------- SEPARATE ACCOUNT ANNUAL CHARGES OF 1.60% AIM VI DENT DEMOGRAPHIC TRENDS AUV at Beginning of Period $7.32 $10.99 $10.00 (5) AUV at End of Period $9.90 $7.32 $10.99 Number of Accumulation Units Outstanding at End of Period 74,556 25,793 1,821 COLONIAL SMALL CAP VALUE AUV at Beginning of Period $10.00 (15) AUV at End of Period $13.83 Number of Accumulation Units Outstanding at End of Period 21,739 FIDELITY(R) VIP EQUITY--INCOME AUV at Beginning of Period $7.81 $9.58 $10.00 (7) AUV at End of Period $9.99 $7.81 $9.58 Number of Accumulation Units Outstanding at End of Period 175,077 70,102 -- FIDELITY(R) VIP GROWTH AUV at Beginning of Period $6.35 $9.26 $10.00 (7) AUV at End of Period $8.29 $6.35 $9.26 Number of Accumulation Units Outstanding at End of Period 161,545 69,148 -- ING AIM MID CAP GROWTH AUV at Beginning of Period $9.75 $14.50 $18.70 $21.56 (1) AUV at End of Period $13.83 $9.75 $14.50 $18.70 Number of Accumulation Units Outstanding at End of Period 680,329 748,019 1,052,847 1,149,145 ING ALLIANCE MID CAP GROWTH AUV at Beginning of Period $9.96 $14.47 $17.04 $20.01 (1) AUV at End of Period $16.37 $9.96 $14.47 $17.04 Number of Accumulation Units Outstanding at End of Period 691,122 749,731 826,424 740,611 ING AMERICAN FUNDS GROWTH AUV at Beginning of Period $10.00 (13) AUV at End of Period $10.76 Number of Accumulation Units Outstanding at End of Period 141,174 ING AMERICAN FUNDS GROWTH-INCOME AUV at Beginning of Period $10.00 (13) AUV at End of Period $10.98 Number of Accumulation Units Outstanding at End of Period 179,926 ING AMERICAN FUNDS INTERNATIONAL AUV at Beginning of Period $10.00 (13) AUV at End of Period $11.61 Number of Accumulation Units Outstanding at End of Period 74,169 Access - 131789 A17 2003 2002 2001 2000 ---------------------------------------------------------------------- ING CAPITAL GUARDIAN LARGE CAP VALUE AUV at Beginning of Period $7.48 $9.98 $10.53 $10.00 (1) AUV at End of Period $10.07 $7.48 $9.98 $10.53 Number of Accumulation Units Outstanding at End of Period 1,352,701 1,328,529 1,370,681 942,003 ING CAPITAL GUARDIAN MANAGED GLOBAL AUV at Beginning of Period $13.50 $17.19 $19.83 $22.04 (1) AUV at End of Period $18.11 $13.50 $17.19 $19.83 Number of Accumulation Units Outstanding at End of Period 583,925 629,168 726,954 648,150 ING CAPITAL GUARDIAN SMALL CAP AUV at Beginning of Period $12.95 $17.66 $18.21 $23.54 (1) AUV at End of Period $17.89 $12.95 $17.66 $18.21 Number of Accumulation Units Outstanding at End of Period 933,034 1,000,667 1,205,577 1,058,396 ING DEVELOPING WORLD AUV at Beginning of Period $6.17 $7.02 $7.54 $11.63 (1) AUV at End of Period $8.91 $6.17 $7.02 $7.54 Number of Accumulation Units Outstanding at End of Period 459,146 474,427 673,091 609,636 ING EAGLE ASSET VALUE EQUITY AUV at Beginning of Period $14.74 $18.06 $19.20 $17.35 (1) AUV at End of Period $18.16 $14.74 $18.06 $19.20 Number of Accumulation Units Outstanding at End of Period 266,586 259,140 252,946 143,195 ING FMR(SM) DIVERSIFIED MID--CAP AUV at Beginning of Period $7.20 $9.07 $9.87 $10.00 (3) AUV at End of Period $9.45 $7.20 $9.07 $9.87 Number of Accumulation Units Outstanding at End of Period 241,130 239,616 264,852 80,992 ING GET FUND -- SERIES T AUV at Beginning of Period $10.07 $10.00 (8) AUV at End of Period $10.44 $10.07 Number of Accumulation Units Outstanding at End of Period 1,117,865 1,558,992 ING GET FUND -- SERIES U AUV at Beginning of Period $10.00 $10.00 (9) AUV at End of Period $10.53 Number of Accumulation Units Outstanding at End of Period 1,896,117 -- ING GET FUND -- SERIES V AUV at Beginning of Period $10.00 (11) AUV at End of Period $9.72 Number of Accumulation Units Outstanding at End of Period 2,946,385 ING GET U.S. CORE PORTFOLIO - SERIES 1 AUV at Beginning of Period $10.00 (11) AUV at End of Period $10.24 Number of Accumulation Units Outstanding at End of Period 2,023,884 ING GET U.S. CORE PORTFOLIO - SERIES 2 AUV at Beginning of Period $10.00 (13) AUV at End of Period $10.03 Number of Accumulation Units Outstanding at End of Period 1,906,764 ING GET U.S. CORE PORTFOLIO - SERIES 3 AUV at Beginning of Period $10.00 (16) AUV at End of Period $10.00 Number of Accumulation Units Outstanding at End of Period 99,989 Access - 131789 A18 2003 2002 2001 2000 ---------------------------------------------------------------------- ING GOLDMAN SACHS INTERNET TOLLKEEPER AUV at Beginning of Period $4.63 $7.61 $10.00 (4) AUV at End of Period $6.43 $4.63 $7.61 Number of Accumulation Units Outstanding at End of Period 96,372 18,672 12,070 ING HARD ASSETS AUV at Beginning of Period $13.64 $13.76 $15.91 $15.85 (1) AUV at End of Period $20.44 $13.64 $13.76 $15.91 Number of Accumulation Units Outstanding at End of Period 101,132 62,771 22,850 17,608 ING INTERNATIONAL EQUITY AUV at Beginning of Period $7.11 $8.62 $11.34 $14.93 (6) AUV at End of Period $9.04 $7.11 $8.62 $11.34 Number of Accumulation Units Outstanding at End of Period 588,683 700,470 812,676 804,897 ING JANUS GROWTH AND INCOME AUV at Beginning of Period $7.02 $8.85 $9.94 $10.00 (3) AUV at End of Period $8.46 $7.02 $8.85 $9.94 Number of Accumulation Units Outstanding at End of Period 328,257 315,170 295,864 128,409 ING JANUS SPECIAL EQUITY AUV at Beginning of Period $6.05 $8.30 $8.88 $10.00 (3) AUV at End of Period $8.95 $6.05 $8.30 $8.88 Number of Accumulation Units Outstanding at End of Period 169,752 123,276 132,268 66,473 ING JENNISON EQUITY OPPORTUNITIES AUV at Beginning of Period $14.72 $21.15 $24.70 $29.09 (1) AUV at End of Period $18.99 $14.72 $21.15 $24.70 Number of Accumulation Units Outstanding at End of Period 633,989 692,997 938,385 847,242 ING JP MORGAN FLEMING INTERNATIONAL AUV at Beginning of Period $10.00 (13) AUV at End of Period $11.87 Number of Accumulation Units Outstanding at End of Period 7,837 ING JP MORGAN FLEMING SMALLCAP AUV at Beginning of Period $7.83 $10.00 (7) AUV at End of Period $10.35 $7.83 Number of Accumulation Units Outstanding at End of Period 72,864 14,675 ING JULIUS BAER FOREIGN AUV at Beginning of Period $8.21 $10.00 (7) AUV at End of Period $10.60 $8.21 Number of Accumulation Units Outstanding at End of Period 26,857 4,278 ING LIMITED MATURITY BOND AUV at Beginning of Period $19.53 $18.51 $17.29 $16.28 (1) AUV at End of Period $19.77 $19.53 $18.51 $17.29 Number of Accumulation Units Outstanding at End of Period 614,146 629,611 497,060 321,370 ING LIQUID ASSETS AUV at Beginning of Period $15.33 $15.36 $15.03 $14.45 (1) AUV at End of Period $15.20 $15.33 $15.36 $15.03 Number of Accumulation Units Outstanding at End of Period 1,702,971 2,297,033 2,858,557 2,183,030 ING MARSICO GROWTH AUV at Beginning of Period $10.37 $14.97 $21.80 $28.95 (1) AUV at End of Period $13.55 $10.37 $14.97 $21.80 Number of Accumulation Units Outstanding at End of Period 2,163,884 2,302,847 3,005,289 3,020,949 Access - 131789 A19 2003 2002 2001 2000 ---------------------------------------------------------------------- ING MERCURY FOCUS VALUE AUV at Beginning of Period $8.36 $10.00 (7) AUV at End of Period $10.79 $8.36 Number of Accumulation Units Outstanding at End of Period 24,096 22,198 ING MERCURY FUNDAMENTAL GROWTH AUV at Beginning of Period $7.96 $10.00 (7) AUV at End of Period $9.95 $7.96 Number of Accumulation Units Outstanding at End of Period 4,515 755 ING MFS MID CAP GROWTH AUV at Beginning of Period $15.81 $31.38 $41.76 $38.25 (1) AUV at End of Period $21.64 $15.81 $31.38 $41.76 Number of Accumulation Units Outstanding at End of Period 975,307 1,067,108 1,323,824 1,290,685 ING MFS RESEARCH AUV at Beginning of Period $14.88 $20.13 $26.05 $26.72 (1) AUV at End of Period $18.24 $14.88 $20.13 $26.05 Number of Accumulation Units Outstanding at End of Period 726,673 838,520 1,029,431 973,963 ING MFS TOTAL RETURN AUV at Beginning of Period $18.91 $20.25 $20.48 $17.32 (1) AUV at End of Period $21.73 $18.91 $20.25 $20.48 Number of Accumulation Units Outstanding at End of Period 932,450 859,682 856,471 597,315 ING PIMCO CORE BOND AUV at Beginning of Period $12.49 $11.68 $11.59 $11.35 (1) AUV at End of Period $12.88 $12.49 $11.68 $11.59 Number of Accumulation Units Outstanding at End of Period 642,677 689,475 227,627 150,099 ING SALOMON BROTHERS AGGRESSIVE GROWTH AUV at Beginning of Period $10.00 (13) AUV at End of Period $10.81 Number of Accumulation Units Outstanding at End of Period 10,182 ING SALOMON BROTHERS ALL CAP AUV at Beginning of Period $8.50 $11.60 $11.57 $10.00 (1) AUV at End of Period $11.61 $8.50 $11.60 $11.57 Number of Accumulation Units Outstanding at End of Period 920,674 957,912 1,200,300 819,316 ING SALOMON BROTHERS INVESTORS AUV at Beginning of Period $8.02 $10.59 $11.24 $10.00 (1) AUV at End of Period $10.36 $8.02 $10.59 $11.24 Number of Accumulation Units Outstanding at End of Period 292,659 330,088 353,861 202,765 ING T. ROWE PRICE CAPITAL APPRECIATION AUV at Beginning of Period $27.14 $27.45 $25.38 $20.54 (1) AUV at End of Period $33.45 $27.14 $27.45 $25.38 Number of Accumulation Units Outstanding at End of Period 662,358 639,977 495,196 185,069 ING T. ROWE PRICE EQUITY INCOME AUV at Beginning of Period $19.86 $23.25 $23.31 $19.85 (1) AUV at End of Period $24.46 $19.86 $23.25 $23.31 Number of Accumulation Units Outstanding at End of Period 372,504 375,191 398,072 225,138 ING UBS U.S. BALANCED AUV at Beginning of Period $7.23 (15) AUV at End of Period $8.40 Number of Accumulation Units Outstanding at End of Period 190,069 Access - 131789 A20 2003 2002 2001 2000 ---------------------------------------------------------------------- ING VAN KAMPEN EQUITY GROWTH AUV at Beginning of Period $7.81 $10.00 (7) AUV at End of Period $9.50 $7.81 Number of Accumulation Units Outstanding at End of Period 47,311 16,318 ING VAN KAMPEN GLOBAL FRANCHISE AUV at Beginning of Period $8.83 $10.00 (7) AUV at End of Period $10.97 $8.83 Number of Accumulation Units Outstanding at End of Period 55,092 27,705 ING VAN KAMPEN GROWTH & INCOME AUV at Beginning of Period $17.83 $21.26 $24.54 $25.28 (1) AUV at End of Period $22.44 $17.83 $21.26 $24.54 Number of Accumulation Units Outstanding at End of Period 456,690 478,280 529,164 440,779 ING VAN KAMPEN REAL ESTATE AUV at Beginning of Period $27.24 $27.63 $25.97 $20.30 (1) AUV at End of Period $36.92 $27.24 $27.63 $25.97 Number of Accumulation Units Outstanding at End of Period 168,123 149,145 107,794 86,644 ING VP BOND PORTFOLIO AUV at Beginning of Period $10.63 $10.00 (7) AUV at End of Period $11.09 $10.63 Number of Accumulation Units Outstanding at End of Period 76,855 48,128 ING VP GROWTH OPPORTUNITIES AUV at Beginning of Period $5.24 $7.78 $10.00 (4) AUV at End of Period $6.83 $5.24 $7.78 Number of Accumulation Units Outstanding at End of Period 53,290 30,250 17,747 ING VP INDEX PLUS LARGE CAP AUV at Beginning of Period $7.21 (12) AUV at End of Period $8.93 Number of Accumulation Units Outstanding at End of Period 68,649 ING VP INDEX PLUS MID CAP AUV at Beginning of Period $8.53 (15) AUV at End of Period $11.09 Number of Accumulation Units Outstanding at End of Period 139,798 ING VP INDEX PLUS SMALL CAP AUV at Beginning of Period $8.59 (15) AUV at End of Period $11.48 Number of Accumulation Units Outstanding at End of Period 139,269 ING VP MAGNACAP AUV at Beginning of Period $7.08 $9.34 $10.00 (4) AUV at End of Period $9.10 $7.08 $9.34 Number of Accumulation Units Outstanding at End of Period 56,265 17,210 4,692 ING VP SMALLCAP OPPORTUNITIES AUV at Beginning of Period $4.61 $8.32 $10.00 (4) AUV at End of Period $6.27 $4.61 $8.32 Number of Accumulation Units Outstanding at End of Period 106,296 48,063 59,196 ING VP WORLDWIDE GROWTH AUV at Beginning of Period $5.18 $7.00 $8.74 $10.00 (2) AUV at End of Period $6.58 $5.18 $7.00 $8.74 Number of Accumulation Units Outstanding at End of Period 123,771 116,508 135,472 85,307 Access - 131789 A21 2003 2002 2001 2000 ---------------------------------------------------------------------- INVESCO VIF HEALTH SCIENCES AUV at Beginning of Period $7.63 $10.26 $10.00 (5) AUV at End of Period $9.59 $7.63 $10.26 Number of Accumulation Units Outstanding at End of Period 105,120 35,810 3,133 INVESCO VIF LEISURE FUND AUV at Beginning of Period $8.43 $10.00 (7) AUV at End of Period $10.67 $8.43 Number of Accumulation Units Outstanding at End of Period 57,182 1,464 INVESCO VIF--FINANCIAL SERVICES AUV at Beginning of Period $7.83 $9.36 $10.00 (5) AUV at End of Period $9.99 $7.83 $9.36 Number of Accumulation Units Outstanding at End of Period 45,810 44,676 8,703 INVESCO VIF--UTILITIES AUV at Beginning of Period $6.35 $8.10 $10.00 (5) AUV at End of Period $7.34 $6.35 $8.10 Number of Accumulation Units Outstanding at End of Period 99,200 18,052 960 JENNISON PORTFOLIO AUV at Beginning of Period $4.25 $6.27 $7.84 $10.00 (2) AUV at End of Period $5.42 $4.25 $6.27 $7.84 Number of Accumulation Units Outstanding at End of Period 204,235 222,330 244,934 92,165 LIBERTY ASSET ALLOCATION AUV at Beginning of Period $10.00 (10) AUV at End of Period $11.97 Number of Accumulation Units Outstanding at End of Period 6,287 LIBERTY EQUITY AUV at Beginning of Period $6.53 $9.17 $11.38 $11.52 AUV at End of Period $7.97 $6.53 $9.17 $11.38 Number of Accumulation Units Outstanding at End of Period 3,460 2,533 3,013 3,426 LIBERTY FEDERAL SECURITIES AUV at Beginning of Period $10.00 (10) AUV at End of Period $10.08 Number of Accumulation Units Outstanding at End of Period 1,206 LIBERTY SMALL COMPANY GROWTH AUV at Beginning of Period $10.00 (10) AUV at End of Period $14.96 Number of Accumulation Units Outstanding at End of Period 413 PIMCO HIGH YIELD PORTFOLIO AUV at Beginning of Period $9.75 $10.03 $9.96 $10.13 (1) AUV at End of Period $11.78 $9.75 $10.03 $9.96 Number of Accumulation Units Outstanding at End of Period 796,025 657,118 673,993 498,509 PIMCO STOCKSPLUS GROWTH & INCOME AUV at Beginning of Period $7.97 $10.16 $11.66 $12.49 (1) AUV at End of Period $10.23 $7.97 $10.16 $11.66 Number of Accumulation Units Outstanding at End of Period 390,278 562,721 614,802 624,891 PIONEER FUND VCT AUV at Beginning of Period $7.45 $9.38 $10.00 (5) AUV at End of Period $9.05 $7.45 $9.38 Number of Accumulation Units Outstanding at End of Period 73,198 62,576 4,756 Access - 131789 A22 2003 2002 2001 2000 ---------------------------------------------------------------------- PIONEER MID CAP VALUE AUV at Beginning of Period $9.34 $10.71 $10.00 (5) AUV at End of Period $12.60 $9.34 $10.71 Number of Accumulation Units Outstanding at End of Period 146,268 113,225 4,960 PROFUND VP BULL AUV at Beginning of Period $6.64 $8.88 $10.00 (4) AUV at End of Period $8.21 $6.64 $8.88 Number of Accumulation Units Outstanding at End of Period 123,574 117,319 117,895 PROFUND VP EUROPE 30 AUV at Beginning of Period $6.03 $8.26 $10.00 (4) AUV at End of Period $8.23 $6.03 $8.26 Number of Accumulation Units Outstanding at End of Period 71,708 42,457 4,340 PROFUND VP RISING RATES OPPORTUNITY AUV at Beginning of Period $10.00 (14) AUV at End of Period $9.36 Number of Accumulation Units Outstanding at End of Period 6,865 PROFUND VP SMALL CAP AUV at Beginning of Period $7.19 $9.42 $10.00 (4) AUV at End of Period $10.10 $7.19 $9.42 Number of Accumulation Units Outstanding at End of Period 251,400 72,217 43,781 SP JENNISON INTERNATIONAL GROWTH AUV at Beginning of Period $4.10 $5.40 $8.56 $10.00 (3) AUV at End of Period $5.61 $4.10 $5.40 $8.56 Number of Accumulation Units Outstanding at End of Period 110,259 46,748 42,844 58,710
FOOTNOTES (1) Fund First Available during October 1993 (10) Fund First Available during April 2003 (2) Fund First Available during January 1995 (11) Fund First Available during June 2003 (3) Fund First Available during October 1995 (12) Fund First Available during August 2003 (4) Fund First Available during January 1996 (13) Fund First Available during September 2003 (5) Fund First Available during September 1996 (14) Fund First Available during October 2003 (6) Fund First Available during February 1997 (15) Fund First Available during November 2003 (7) Fund First Available during May 1998 (16) Fund First Available during December 2003 (8) Fund First Available during October 2000 (9) Fund First Available during May 2001
2003 2002 2001 2000 1999 ------------------------------------------------------------------------------ SEPARATE ACCOUNT ANNUAL CHARGES OF 1.70% AIM VI DENT DEMOGRAPHIC TRENDS AUV at Beginning of Period $7.32 $10.99 $10.00 (8) AUV at End of Period $9.87 $7.32 $10.99 Number of Accumulation Units Outstanding at End of Period 496,353 94,533 51,753 COLONIAL SMALL CAP VALUE AUV at Beginning of Period $10.00 (16) AUV at End of Period $13.82 Number of Accumulation Units Outstanding at End of Period 203,540 FIDELITY(R) VIP EQUITY--INCOME AUV at Beginning of Period $7.80 $9.58 (9) AUV at End of Period $9.97 $7.80 Number of Accumulation Units Outstanding at End of Period 881,408 338,456 1998 1997 -------------------------------------- SEPARATE ACCOUNT ANNUAL CHARGES OF 1.70% AIM VI DENT DEMOGRAPHIC TRENDS AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period COLONIAL SMALL CAP VALUE AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period FIDELITY(R) VIP EQUITY--INCOME AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period
Access - 131789 A23
2003 2002 2001 2000 1999 --------------------------------------------------------------------------------- FIDELITY(R) VIP GROWTH AUV at Beginning of Period $6.34 $9.26 (9) AUV at End of Period $8.27 $6.34 Number of Accumulation Units Outstanding at End of Period 1,487,203 256,321 ING AIM MID CAP GROWTH AUV at Beginning of Period $9.68 $14.41 $18.60 $21.61 $14.07 AUV at End of Period $13.72 $9.68 $14.41 $18.60 $21.61 Number of Accumulation Units Outstanding at End of Period 2,492,964 2,578,304 3,613,809 4,283,690 3,050,566 ING ALLIANCE MID CAP GROWTH AUV at Beginning of Period $9.89 $14.38 $16.96 $20.82 $16.87 AUV at End of Period $16.24 $9.89 $14.38 $16.96 $20.82 Number of Accumulation Units Outstanding at End of Period 5,800,164 6,139,683 7,379,706 8,274,067 7,450,250 ING AMERICAN FUNDS GROWTH AUV at Beginning of Period $10.00 (14) AUV at End of Period $10.76 Number of Accumulation Units Outstanding at End of Period 964,596 ING AMERICAN FUNDS GROWTH-INCOME AUV at Beginning of Period $10.00 (14) AUV at End of Period $10.98 Number of Accumulation Units Outstanding at End of Period 801,373 ING AMERICAN FUNDS INTERNATIONAL AUV at Beginning of Period $10.00 (14) AUV at End of Period $11.61 Number of Accumulation Units Outstanding at End of Period 252,100 ING CAPITAL GUARDIAN LARGE CAP VALUE AUV at Beginning of Period $7.46 $9.96 $10.52 $10.00 (4) AUV at End of Period $10.03 $7.46 $9.96 $10.52 Number of Accumulation Units Outstanding at End of Period 5,242,836 4,117,977 3,260,905 961,611 ING CAPITAL GUARDIAN MANAGED GLOBAL AUV at Beginning of Period $13.36 $17.03 $19.67 $23.42 $14.59 AUV at End of Period $17.91 $13.36 $17.03 $19.67 $23.42 Number of Accumulation Units Outstanding at End of Period 1,425,812 1,143,491 922,271 565,653 139,357 ING CAPITAL GUARDIAN SMALL CAP AUV at Beginning of Period $12.86 $17.55 $18.12 $22.55 $15.23 AUV at End of Period $17.75 $12.86 $17.55 $18.12 $22.55 Number of Accumulation Units Outstanding at End of Period 4,195,336 4,163,678 4,881,594 4,812,017 3,698,983 ING DEVELOPING WORLD AUV at Beginning of Period $6.14 $7.00 $7.51 $11.54 $7.26 AUV at End of Period $8.85 $6.14 $7.00 $7.51 $11.54 Number of Accumulation Units Outstanding at End of Period 1,492,155 1,283,289 1,380,292 1,788,602 1,344,877 ING EAGLE ASSET VALUE EQUITY AUV at Beginning of Period $14.61 $17.92 $19.08 $17.84 $18.06 AUV at End of Period $17.99 $14.61 $17.92 $19.08 $17.84 Number of Accumulation Units Outstanding at End of Period 1,958,387 2,165,514 2,414,646 2,230,349 1,956,244 1998 1997 -------------------------------------- FIDELITY(R) VIP GROWTH AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING AIM MID CAP GROWTH AUV at Beginning of Period $14.20 $14.04 (1) AUV at End of Period $14.07 $14.20 Number of Accumulation Units Outstanding at End of Period 827,478 49,579 ING ALLIANCE MID CAP GROWTH AUV at Beginning of Period $15.32 $15.92 (1) AUV at End of Period $16.87 $15.32 Number of Accumulation Units Outstanding at End of Period 2,741,016 253,937 ING AMERICAN FUNDS GROWTH AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING AMERICAN FUNDS GROWTH-INCOME AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING AMERICAN FUNDS INTERNATIONAL AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING CAPITAL GUARDIAN LARGE CAP VALUE AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING CAPITAL GUARDIAN MANAGED GLOBAL AUV at Beginning of Period $11.47 $12.34 (1) AUV at End of Period $14.59 $11.47 Number of Accumulation Units Outstanding at End of Period 67,979 3,479 ING CAPITAL GUARDIAN SMALL CAP AUV at Beginning of Period $12.81 $13.78 (1) AUV at End of Period $15.23 $12.81 Number of Accumulation Units Outstanding at End of Period 1,326,706 106,014 ING DEVELOPING WORLD AUV at Beginning of Period $10.00 (2) AUV at End of Period $7.26 Number of Accumulation Units Outstanding at End of Period 111,872 ING EAGLE ASSET VALUE EQUITY AUV at Beginning of Period $18.09 $18.67 (1) AUV at End of Period $18.06 $18.09 Number of Accumulation Units Outstanding at End of Period 1,201,314 118,902
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2003 2002 2001 2000 1999 ------------------------------------------------------------------------------ ING FMR(SM) DIVERSIFIED MID--CAP AUV at Beginning of Period $7.18 $9.06 $9.87 $10.00 (6) AUV at End of Period $9.42 $7.18 $9.06 $9.87 Number of Accumulation Units Outstanding at End of Period 1,406,797 1,210,499 722,319 285,263 ING GOLDMAN SACHS INTERNET TOLLKEEPER AUV at Beginning of Period $4.63 $7.60 $10.00 (7) AUV at End of Period $6.41 $4.63 $7.60 Number of Accumulation Units Outstanding at End of Period 559,222 151,985 87,897 ING HARD ASSETS AUV at Beginning of Period $13.45 $13.58 $15.72 $16.78 $13.84 AUV at End of Period $20.13 $13.45 $13.58 $15.72 $16.78 Number of Accumulation Units Outstanding at End of Period 1,031,494 968,858 474,626 861,668 565,254 ING INTERNATIONAL EQUITY AUV at Beginning of Period $7.07 $8.57 $11.29 $15.50 $10.27 AUV at End of Period $8.97 $7.07 $8.57 $11.29 $15.50 Number of Accumulation Units Outstanding at End of Period 3,838,886 4,107,916 4,631,066 5,326,265 4,663,701 ING JANUS GROWTH AND INCOME AUV at Beginning of Period $7.00 $8.84 $9.94 $10.00 (6) AUV at End of Period $8.43 $7.00 $8.84 $9.94 Number of Accumulation Units Outstanding at End of Period 2,181,919 1,909,357 1,431,165 283,250 ING JANUS SPECIAL EQUITY AUV at Beginning of Period $6.04 $8.29 $8.88 $10.00 (6) AUV at End of Period $8.92 $6.04 $8.29 $8.88 Number of Accumulation Units Outstanding at End of Period 553,068 327,690 389,304 131,190 ING JENNISON EQUITY OPPORTUNITIES AUV at Beginning of Period $14.56 $20.94 $24.48 $29.38 $23.98 AUV at End of Period $18.77 $14.56 $20.94 $24.48 $29.38 Number of Accumulation Units Outstanding at End of Period 3,080,079 3,453,225 4,160,509 4,496,266 3,574,165 ING JP MORGAN FLEMING INTERNATIONAL AUV at Beginning of Period $10.00 (14) AUV at End of Period $11.86 Number of Accumulation Units Outstanding at End of Period 32,414 ING JP MORGAN FLEMING SMALLCAP AUV at Beginning of Period $7.83 $10.00 (9) AUV at End of Period $10.33 $7.83 Number of Accumulation Units Outstanding at End of Period 498,967 166,809 ING JULIUS BAER FOREIGN AUV at Beginning of Period $8.21 $10.00 (9) AUV at End of Period $10.59 $8.21 Number of Accumulation Units Outstanding at End of Period 189,658 52,606 ING LIMITED MATURITY BOND AUV at Beginning of Period $19.29 $18.30 $17.11 $16.15 $16.25 AUV at End of Period $19.50 $19.29 $18.30 $17.11 $16.15 Number of Accumulation Units Outstanding at End of Period 3,602,661 4,436,723 3,653,891 2,442,971 2,267,799 ING LIQUID ASSETS AUV at Beginning of Period $15.17 $15.21 $14.90 $14.29 $13.88 AUV at End of Period $15.02 $15.17 $15.21 $14.90 $14.29 Number of Accumulation Units Outstanding at End of Period 6,180,281 8,964,021 10,759,451 7,933,970 11,002,422 ING MARSICO GROWTH AUV at Beginning of Period $10.30 $14.88 $21.70 $28.29 $16.16 AUV at End of Period $13.44 $10.30 $14.88 $21.70 $28.29 Number of Accumulation Units Outstanding at End of Period 10,340,319 11,094,010 15,394,399 18,166,964 15,200,893 1998 1997 -------------------------------------- ING FMR(SM) DIVERSIFIED MID--CAP AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING GOLDMAN SACHS INTERNET TOLLKEEPER AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING HARD ASSETS AUV at Beginning of Period $19.99 $23.34 (1) AUV at End of Period $13.84 $19.99 Number of Accumulation Units Outstanding at End of Period 210,821 13,179 ING INTERNATIONAL EQUITY AUV at Beginning of Period $9.92 $11.60 (1) AUV at End of Period $10.27 $9.92 Number of Accumulation Units Outstanding at End of Period 1,736,713 72,955 ING JANUS GROWTH AND INCOME AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING JANUS SPECIAL EQUITY AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING JENNISON EQUITY OPPORTUNITIES AUV at Beginning of Period $21.65 $21.57 (1) AUV at End of Period $23.98 $21.65 Number of Accumulation Units Outstanding at End of Period 1,023,965 69,625 ING JP MORGAN FLEMING INTERNATIONAL AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING JP MORGAN FLEMING SMALLCAP AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING JULIUS BAER FOREIGN AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING LIMITED MATURITY BOND AUV at Beginning of Period $15.47 $15.29 (1) AUV at End of Period $16.25 $15.47 Number of Accumulation Units Outstanding at End of Period 937,378 19,171 ING LIQUID ASSETS AUV at Beginning of Period $13.44 $13.33 (1) AUV at End of Period $13.88 $13.44 Number of Accumulation Units Outstanding at End of Period 3,069,965 370,411 ING MARSICO GROWTH AUV at Beginning of Period $12.96 $15.10 (1) AUV at End of Period $16.16 $12.96 Number of Accumulation Units Outstanding at End of Period 2,354,359 238,200
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2003 2002 2001 2000 1999 ------------------------------------------------------------------------------ ING MERCURY FOCUS VALUE AUV at Beginning of Period $8.35 $10.00 (9) AUV at End of Period $10.78 $8.35 Number of Accumulation Units Outstanding at End of Period 178,759 94,260 ING MERCURY FUNDAMENTAL GROWTH AUV at Beginning of Period $7.96 $10.00 (9) AUV at End of Period $9.93 $7.96 Number of Accumulation Units Outstanding at End of Period 113,463 44,257 ING MFS MID CAP GROWTH AUV at Beginning of Period $15.68 $31.15 $41.50 $39.02 $22.17 AUV at End of Period $21.44 $15.68 $31.15 $41.50 $39.02 Number of Accumulation Units Outstanding at End of Period 4,377,954 4,651,810 5,852,720 6,423,422 4,433,020 ING MFS RESEARCH AUV at Beginning of Period $14.76 $19.98 $25.89 $27.58 $22.59 AUV at End of Period $18.07 $14.76 $19.98 $25.89 $27.58 Number of Accumulation Units Outstanding at End of Period 5,236,618 6,172,512 7,706,339 8,763,560 8,143,208 ING MFS TOTAL RETURN AUV at Beginning of Period $18.75 $20.10 $20.35 $17.77 $17.49 AUV at End of Period $21.52 $18.75 $20.10 $20.35 $17.77 Number of Accumulation Units Outstanding at End of Period 8,577,564 8,722,390 9,559,263 9,095,577 9,101,946 ING PIMCO CORE BOND AUV at Beginning of Period $12.39 $11.60 $11.52 $11.60 $12.92 AUV at End of Period $12.76 $12.39 $11.60 $11.52 $11.60 Number of Accumulation Units Outstanding at End of Period 4,594,825 4,423,426 1,576,247 774,738 619,047 ING SALOMON BROTHERS AGGRESSIVE GROWTH AUV at Beginning of Period $10.00 (14) AUV at End of Period $10.80 Number of Accumulation Units Outstanding at End of Period 96,653 ING SALOMON BROTHERS ALL CAP AUV at Beginning of Period $8.47 $11.58 $11.56 $10.00 (4) AUV at End of Period $11.57 $8.47 $11.58 $11.56 Number of Accumulation Units Outstanding at End of Period 3,873,359 3,652,428 3,995,359 1,620,720 ING SALOMON BROTHERS INVESTORS AUV at Beginning of Period $8.00 $10.57 $11.23 $10.00 (4) AUV at End of Period $10.32 $8.00 $10.57 $11.23 Number of Accumulation Units Outstanding at End of Period 1,438,354 1,371,277 1,410,056 234,838 ING T. ROWE PRICE CAPITAL APPRECIATION AUV at Beginning of Period $26.76 $27.09 $25.07 $20.91 $19.90 AUV at End of Period $32.94 $26.76 $27.09 $25.07 $20.91 Number of Accumulation Units Outstanding at End of Period 5,299,315 5,386,259 4,693,130 3,237,449 3,118,319 ING T. ROWE PRICE EQUITY INCOME AUV at Beginning of Period $19.58 $22.94 $23.03 $20.74 $21.26 AUV at End of Period $24.09 $19.58 $22.94 $23.03 $20.74 Number of Accumulation Units Outstanding at End of Period 3,460,523 3,360,157 3,203,914 2,552,793 2,294,951 ING UBS U.S. BALANCED AUV at Beginning of Period $7.21 (16) AUV at End of Period $8.37 Number of Accumulation Units Outstanding at End of Period 699,233 1998 1997 -------------------------------------- ING MERCURY FOCUS VALUE AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING MERCURY FUNDAMENTAL GROWTH AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING MFS MID CAP GROWTH AUV at Beginning of Period $18.36 $18.79 (1) AUV at End of Period $22.17 $18.36 Number of Accumulation Units Outstanding at End of Period 1,235,725 48,347 ING MFS RESEARCH AUV at Beginning of Period $18.67 $19.15 (1) AUV at End of Period $22.59 $18.67 Number of Accumulation Units Outstanding at End of Period 3,674,201 162,677 ING MFS TOTAL RETURN AUV at Beginning of Period $15.94 $15.68 (1) AUV at End of Period $17.49 $15.94 Number of Accumulation Units Outstanding at End of Period 3,874,736 152,264 ING PIMCO CORE BOND AUV at Beginning of Period $11.75 $11.87 (1) AUV at End of Period $12.92 $11.75 Number of Accumulation Units Outstanding at End of Period 194,008 6,455 ING SALOMON BROTHERS AGGRESSIVE GROWTH AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING SALOMON BROTHERS ALL CAP AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING SALOMON BROTHERS INVESTORS AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING T. ROWE PRICE CAPITAL APPRECIATION AUV at Beginning of Period $19.11 $18.96 (1) AUV at End of Period $19.90 $19.11 Number of Accumulation Units Outstanding at End of Period 1,727,706 108,930 ING T. ROWE PRICE EQUITY INCOME AUV at Beginning of Period $19.97 $19.99 (1) AUV at End of Period $21.26 $19.97 Number of Accumulation Units Outstanding at End of Period 744,367 35,954 ING UBS U.S. BALANCED AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period
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2003 2002 2001 2000 1999 ------------------------------------------------------------------------------ ING VAN KAMPEN EQUITY GROWTH AUV at Beginning of Period $7.81 $10.00 (9) AUV at End of Period $9.49 $7.81 Number of Accumulation Units Outstanding at End of Period 279,599 62,876 ING VAN KAMPEN GLOBAL FRANCHISE AUV at Beginning of Period $8.83 $10.00 (9) AUV at End of Period $10.96 $8.83 Number of Accumulation Units Outstanding at End of Period 396,477 222,557 ING VAN KAMPEN GROWTH & INCOME AUV at Beginning of Period $17.67 $21.08 $24.36 $25.31 $22.22 AUV at End of Period $22.21 $17.67 $21.08 $24.36 $25.31 Number of Accumulation Units Outstanding at End of Period 6,539,928 7,350,028 8,865,678 9,922,551 9,473,482 ING VAN KAMPEN REAL ESTATE AUV at Beginning of Period $26.86 $27.27 $25.65 $19.92 $21.07 AUV at End of Period $36.36 $26.86 $27.27 $25.65 $19.92 Number of Accumulation Units Outstanding at End of Period 1,057,432 977,818 801,893 826,871 554,454 ING VP BOND PORTFOLIO AUV at Beginning of Period $10.62 $10.00 (9) AUV at End of Period $11.07 $10.62 Number of Accumulation Units Outstanding at End of Period 587,973 707,083 ING VP GROWTH OPPORTUNITIES AUV at Beginning of Period $5.23 $7.78 $10.00 (7) AUV at End of Period $6.82 $5.23 $7.78 Number of Accumulation Units Outstanding at End of Period 283,853 151,543 51,380 ING VP INDEX PLUS LARGE CAP AUV at Beginning of Period $10.00 (13) AUV at End of Period $8.91 Number of Accumulation Units Outstanding at End of Period 295,431 ING VP MAGNACAP AUV at Beginning of Period $7.07 $9.33 $10.00 (7) AUV at End of Period $9.08 $7.07 $9.33 Number of Accumulation Units Outstanding at End of Period 202,659 125,575 76,114 ING VP SMALLCAP OPPORTUNITIES AUV at Beginning of Period $4.60 $8.31 $10.00 (7) AUV at End of Period $6.25 $4.60 $8.31 Number of Accumulation Units Outstanding at End of Period 948,468 483,572 188,338 ING VP WORLDWIDE GROWTH AUV at Beginning of Period $5.16 $6.99 $8.74 $10.00 (5) AUV at End of Period $6.56 $5.16 $6.99 $8.74 Number of Accumulation Units Outstanding at End of Period 450,252 361,647 247,751 28,853 INVESCO VIF HEALTH SCIENCES AUV at Beginning of Period $7.62 $10.26 $10.00 (8) AUV at End of Period $9.57 $7.62 $10.26 Number of Accumulation Units Outstanding at End of Period 703,869 493,958 367,187 INVESCO VIF LEISURE FUND AUV at Beginning of Period $8.42 $10.00 (9) AUV at End of Period $10.65 $8.42 Number of Accumulation Units Outstanding at End of Period 155,027 30,007 1998 1997 -------------------------------------- ING VAN KAMPEN EQUITY GROWTH AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING VAN KAMPEN GLOBAL FRANCHISE AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING VAN KAMPEN GROWTH & INCOME AUV at Beginning of Period $19.81 $19.05 (1) AUV at End of Period $22.22 $19.81 Number of Accumulation Units Outstanding at End of Period 4,305,084 179,402 ING VAN KAMPEN REAL ESTATE AUV at Beginning of Period $24.76 $24.56 (1) AUV at End of Period $21.07 $24.76 Number of Accumulation Units Outstanding at End of Period 426,516 45,472 ING VP BOND PORTFOLIO AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING VP GROWTH OPPORTUNITIES AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING VP INDEX PLUS LARGE CAP AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING VP MAGNACAP AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING VP SMALLCAP OPPORTUNITIES AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period ING VP WORLDWIDE GROWTH AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period INVESCO VIF HEALTH SCIENCES AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period INVESCO VIF LEISURE FUND AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period
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2003 2002 2001 2000 1999 ------------------------------------------------------------------------------ INVESCO VIF--FINANCIAL SERVICES AUV at Beginning of Period $7.82 $9.35 $10.00 (8) AUV at End of Period $9.97 $7.82 $9.35 Number of Accumulation Units Outstanding at End of Period 377,242 182,156 45,911 INVESCO VIF--UTILITIES AUV at Beginning of Period $6.34 $8.10 $10.00 (8) AUV at End of Period $7.32 $6.34 $8.10 Number of Accumulation Units Outstanding at End of Period 376,280 103,374 6,689 JENNISON PORTFOLIO AUV at Beginning of Period $4.24 $6.26 $7.83 $10.00 (5) AUV at End of Period $5.40 $4.24 $6.26 $7.83 Number of Accumulation Units Outstanding at End of Period 902,884 840,344 1,001,520 75,572 LIBERTY ASSET ALLOCATION AUV at Beginning of Period $10.00 (12) AUV at End of Period $11.96 Number of Accumulation Units Outstanding at End of Period 2,420 LIBERTY EQUITY AUV at Beginning of Period $6.50 $9.14 $11.37 $11.78 AUV at End of Period $7.94 $6.50 $9.14 $11.37 $11.78 Number of Accumulation Units Outstanding at End of Period 4,086 2,843 5,671 6,673 4,420 LIBERTY FEDERAL SECURITIES AUV at Beginning of Period $10.00 (12) AUV at End of Period $10.07 Number of Accumulation Units Outstanding at End of Period 294 PIMCO HIGH YIELD PORTFOLIO AUV at Beginning of Period $9.70 $9.99 $9.93 $10.19 $10.06 AUV at End of Period $11.72 $9.70 $9.99 $9.93 $10.19 Number of Accumulation Units Outstanding at End of Period 6,864,118 5,428,136 5,191,930 4,861,886 5,486,600 PIMCO STOCKSPLUS GROWTH & INCOME AUV at Beginning of Period $7.94 $10.12 $11.62 $13.06 $11.09 AUV at End of Period $10.17 $7.94 $10.12 $11.62 $13.06 Number of Accumulation Units Outstanding at End of Period 4,207,501 5,327,508 6,170,622 6,920,736 7,321,127 PIONEER FUND VCT II AUV at Beginning of Period $7.44 $9.37 $10.00 (8) AUV at End of Period $9.03 $7.44 $9.37 Number of Accumulation Units Outstanding at End of Period 545,156 297,005 27,155 PIONEER MID CAP VALUE II AUV at Beginning of Period $9.33 $10.71 $10.00 (8) AUV at End of Period $12.57 $9.33 $10.71 Number of Accumulation Units Outstanding at End of Period 1,411,357 796,391 55,679 PROFUND VP BULL AUV at Beginning of Period $6.63 $8.88 $10.00 (7) AUV at End of Period $8.19 $6.63 $8.88 Number of Accumulation Units Outstanding at End of Period 548,338 342,070 353,534 PROFUND VP EUROPE 30 AUV at Beginning of Period $6.02 $8.25 $10.00 (7) AUV at End of Period $8.21 $6.02 $8.25 Number of Accumulation Units Outstanding at End of Period 538,227 181,953 13,357 1998 1997 -------------------------------------- INVESCO VIF--FINANCIAL SERVICES AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period INVESCO VIF--UTILITIES AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period JENNISON PORTFOLIO AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period LIBERTY ASSET ALLOCATION AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period LIBERTY EQUITY AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period LIBERTY FEDERAL SECURITIES AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period PIMCO HIGH YIELD PORTFOLIO AUV at Beginning of Period $10.00 (3) AUV at End of Period $10.06 Number of Accumulation Units Outstanding at End of Period 1,558,466 PIMCO STOCKSPLUS GROWTH & INCOME AUV at Beginning of Period $10.00 (3) AUV at End of Period $11.09 Number of Accumulation Units Outstanding at End of Period 1,911,521 PIONEER FUND VCT II AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period PIONEER MID CAP VALUE II AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period PROFUND VP BULL AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period PROFUND VP EUROPE 30 AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period
Access - 131789 A28
2003 2002 2001 2000 1999 ------------------------------------------------------------------------------ PROFUND VP RISING RATES OPPORTUNITY AUV at Beginning of Period $10.00 (15) AUV at End of Period $9.36 Number of Accumulation Units Outstanding at End of Period 404,098 PROFUND VP SMALL CAP AUV at Beginning of Period $7.17 $9.41 $10.00 (7) AUV at End of Period $10.07 $7.17 $9.41 Number of Accumulation Units Outstanding at End of Period 1,076,231 499,606 128,298 SP JENNISON INT. GROWTH AUV at Beginning of Period $4.09 $5.39 $8.56 $10.00 (6) AUV at End of Period $5.59 $4.09 $5.39 $8.56 Number of Accumulation Units Outstanding at End of Period 926,785 393,653 214,255 15,695 1998 1997 -------------------------------------- PROFUND VP RISING RATES OPPORTUNITY AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period PROFUND VP SMALL CAP AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period SP JENNISON INT. GROWTH AUV at Beginning of Period AUV at End of Period Number of Accumulation Units Outstanding at End of Period
FOOTNOTES (1) Fund First Available during October 1997 (12) Funds First Available during April 2003 (2) Fund First Available during February 1998 (13) Funds First Available during August 2003 (3) Fund First Available during May 1998 (14) Funds First Available during September 2003 (4) Fund First Available during February 2000 (15) Funds First Available during October 2003 (5) Fund First Available during May 2000 (16) Funds First Available during November 2003 (6) Fund First Available during October 2000 (7) Fund First Available during May 2001 (8) Fund First Available during November 2001 (9) Fund First Available during May 2002 (10) Fund First Available during September 2002 (11) Fund First Available during December 2002
2003 2002 2001 2000 ---------------------------------------------------------------------- SEPARATE ACCOUNT ANNUAL CHARGES OF 1.75 % AIM VI DENT DEMOGRAPHIC TRENDS AUV at Beginning of Period $7.31 $10.99 $10.00 (5) AUV at End of Period $9.86 $7.31 $10.99 Number of Accumulation Units Outstanding at End of Period 336,417 76,299 4,183 COLONIAL SMALL CAP VALUE AUV at Beginning of Period $10.00 (14) AUV at End of Period $13.82 Number of Accumulation Units Outstanding at End of Period 159,277 FIDELITY(R) VIP EQUITY--INCOME AUV at Beginning of Period $7.79 $9.57 $10.00 (7) AUV at End of Period $9.96 $7.79 $9.57 Number of Accumulation Units Outstanding at End of Period 987,940 139,297 FIDELITY(R) VIP GROWTH AUV at Beginning of Period $6.34 $9.26 $10.00 (7) AUV at End of Period $8.26 $6.34 $9.26 Number of Accumulation Units Outstanding at End of Period 1,008,677 138,235 ING AIM MID CAP GROWTH AUV at Beginning of Period $9.64 $14.37 $18.55 $21.42 (1) AUV at End of Period $13.66 $9.64 $14.37 $18.55 Number of Accumulation Units Outstanding at End of Period 542,810 398,841 327,852 149,363 Access - 131789 A29 2003 2002 2001 2000 ---------------------------------------------------------------------- ING ALLIANCE MID CAP GROWTH AUV at Beginning of Period $9.86 $14.34 $16.92 $19.90 (1) AUV at End of Period $16.18 $9.86 $14.34 $16.92 Number of Accumulation Units Outstanding at End of Period 888,765 616,586 395,575 116,196 ING AMERICAN FUNDS GROWTH AUV at Beginning of Period $10.00 (12) AUV at End of Period $10.76 Number of Accumulation Units Outstanding at End of Period 726,382 ING AMERICAN FUNDS GROWTH-INCOME AUV at Beginning of Period $10.00 (12) AUV at End of Period $10.98 Number of Accumulation Units Outstanding at End of Period 542,973 ING AMERICAN FUNDS INTERNATIONAL AUV at Beginning of Period $10.00 (12) AUV at End of Period $11.60 Number of Accumulation Units Outstanding at End of Period 208,539 ING CAPITAL GUARDIAN LARGE CAP VALUE AUV at Beginning of Period $7.45 $9.95 $10.51 $10.00 (1) AUV at End of Period $10.01 $7.45 $9.95 $10.51 Number of Accumulation Units Outstanding at End of Period 3,953,848 2,719,021 1,513,414 177,361 ING CAPITAL GUARDIAN MANAGED GLOBAL AUV at Beginning of Period $13.29 $16.95 $19.59 $21.80 (1) AUV at End of Period $17.80 $13.29 $16.95 $19.59 Number of Accumulation Units Outstanding at End of Period 805,342 592,153 361,440 138,197 ING CAPITAL GUARDIAN SMALL CAP AUV at Beginning of Period $12.82 $17.49 $18.07 $23.40 (1) AUV at End of Period $17.68 $12.82 $17.49 $18.07 Number of Accumulation Units Outstanding at End of Period 1,161,533 857,078 525,394 140,651 ING DEVELOPING WORLD AUV at Beginning of Period $6.13 $6.98 $7.50 $11.60 (1) AUV at End of Period $8.83 $6.13 $6.98 $7.50 Number of Accumulation Units Outstanding at End of Period 410,102 256,922 138,408 35,033 ING EAGLE ASSET VALUE EQUITY AUV at Beginning of Period $14.56 $17.87 $19.03 $17.21 (1) AUV at End of Period $17.92 $14.56 $17.87 $19.03 Number of Accumulation Units Outstanding at End of Period 406,394 307,027 174,298 10,293 ING FMR(SM) DIVERSIFIED MID--CAP AUV at Beginning of Period $7.17 $9.05 $9.87 $10.00 (3) AUV at End of Period $9.41 $7.17 $9.05 $9.87 Number of Accumulation Units Outstanding at End of Period 1,170,476 839,244 335,910 10,627 ING GET FUND -- SERIES T AUV at Beginning of Period $10.06 $10.00 (8) AUV at End of Period $10.42 $10.06 Number of Accumulation Units Outstanding at End of Period 2,451,345 171,909 ING GET FUND -- SERIES U AUV at Beginning of Period $10.00 $10.00 (9) AUV at End of Period $10.51 $10.00 Number of Accumulation Units Outstanding at End of Period 1,761,982 -- Access - 131789 A30 2003 2002 2001 2000 ---------------------------------------------------------------------- ING GET FUND -- SERIES V AUV at Beginning of Period $10.00 (10) AUV at End of Period $9.70 Number of Accumulation Units Outstanding at End of Period 4,476,244 ING GET U.S. CORE PORTFOLIO - SERIES 1 AUV at Beginning of Period $10.00 (10) AUV at End of Period $10.23 Number of Accumulation Units Outstanding at End of Period 2,469,139 ING GET U.S. CORE PORTFOLIO - SERIES 2 AUV at Beginning of Period $10.00 (12) AUV at End of Period $10.02 Number of Accumulation Units Outstanding at End of Period 2,272,395 ING GOLDMAN SACHS INTERNET TOLLKEEPER AUV at Beginning of Period $4.62 $7.60 $10.00 (4) AUV at End of Period $6.40 $4.62 $7.60 Number of Accumulation Units Outstanding at End of Period 417,880 181,315 69,117 ING HARD ASSETS AUV at Beginning of Period $13.36 $13.49 $15.62 $15.59 (1) AUV at End of Period $19.98 $13.36 $13.49 $15.62 Number of Accumulation Units Outstanding at End of Period 210,633 120,308 30,794 18,820 ING INTERNATIONAL EQUITY AUV at Beginning of Period $7.04 $8.55 $11.26 $14.84 (6) AUV at End of Period $8.94 $7.04 $8.55 $11.26 Number of Accumulation Units Outstanding at End of Period 522,021 261,177 100,590 ING JANUS GROWTH AND INCOME AUV at Beginning of Period $6.99 $8.83 $9.94 $10.00 (3) AUV at End of Period $8.42 $6.99 $8.83 $9.94 Number of Accumulation Units Outstanding at End of Period 2,197,627 1,307,256 638,396 21,427 ING JANUS SPECIAL EQUITY AUV at Beginning of Period $6.03 $8.29 $8.88 $10.00 (3) AUV at End of Period $8.91 $6.03 $8.29 $8.88 Number of Accumulation Units Outstanding at End of Period 356,949 292,321 197,279 5,866 ING JENNISON EQUITY OPPORTUNITIES AUV at Beginning of Period $14.48 $20.84 $24.38 $28.75 (1) AUV at End of Period $18.66 $14.48 $20.84 $24.38 Number of Accumulation Units Outstanding at End of Period 606,017 577,200 446,323 109,154 ING JP MORGAN FLEMING INTERNATIONAL AUV at Beginning of Period $10.00 (12) AUV at End of Period $11.86 Number of Accumulation Units Outstanding at End of Period 25,758 ING JP MORGAN FLEMING SMALLCAP AUV at Beginning of Period $7.83 $10.00 (7) AUV at End of Period $10.32 $7.83 Number of Accumulation Units Outstanding at End of Period 299,555 72,176 Access - 131789 A31 2003 2002 2001 2000 ---------------------------------------------------------------------- ING JULIUS BAER FOREIGN AUV at Beginning of Period $8.21 $10.00 (7) AUV at End of Period $10.58 $8.21 Number of Accumulation Units Outstanding at End of Period 22,762 9,890 ING LIMITED MATURITY BOND AUV at Beginning of Period $19.12 $18.15 $16.97 $16.01 (1) AUV at End of Period $19.32 $19.12 $18.15 $16.97 Number of Accumulation Units Outstanding at End of Period 1,037,485 1,001,053 342,317 73,720 ING LIQUID ASSETS AUV at Beginning of Period $15.01 $15.06 $14.76 $14.21 (1) AUV at End of Period $14.86 $15.01 $15.06 $14.76 Number of Accumulation Units Outstanding at End of Period 1,545,927 1,590,576 1,500,979 293,515 ING MARSICO GROWTH AUV at Beginning of Period $10.27 $14.84 $21.65 $28.78 (1) AUV at End of Period $13.39 $10.27 $14.84 $21.65 Number of Accumulation Units Outstanding at End of Period 1,718,678 1,379,116 1,104,093 437,723 ING MERCURY FOCUS VALUE AUV at Beginning of Period $8.35 $10.00 (7) AUV at End of Period $10.77 $8.35 Number of Accumulation Units Outstanding at End of Period 122,619 16,519 ING MERCURY FUNDAMENTAL GROWTH AUV at Beginning of Period $7.96 $10.00 (7) AUV at End of Period $9.92 $7.96 Number of Accumulation Units Outstanding at End of Period 120,271 16,838 ING MFS MID CAP GROWTH AUV at Beginning of Period $15.61 $31.04 $41.37 $37.94 (1) AUV at End of Period $21.34 $15.61 $31.04 $41.37 Number of Accumulation Units Outstanding at End of Period 1,057,927 911,394 577,692 162,554 ING MFS RESEARCH AUV at Beginning of Period $14.70 $19.91 $25.81 $26.51 (1) AUV at End of Period $17.99 $14.70 $19.91 $25.81 Number of Accumulation Units Outstanding at End of Period 978,846 792,216 588,415 160,258 ING MFS TOTAL RETURN AUV at Beginning of Period $18.68 $20.03 $20.29 $17.18 (1) AUV at End of Period $21.42 $18.68 $20.03 $20.29 Number of Accumulation Units Outstanding at End of Period 2,962,240 1,806,441 934,682 102,750 ING PIMCO CORE BOND AUV at Beginning of Period $12.34 $11.56 $11.48 $11.26 (1) AUV at End of Period $12.70 $12.34 $11.56 $11.48 Number of Accumulation Units Outstanding at End of Period 2,257,025 1,446,385 328,948 16,895 ING SALOMON BROTHERS AGGRESSIVE GROWTH AUV at Beginning of Period $10.00 (12) AUV at End of Period $10.80 Number of Accumulation Units Outstanding at End of Period 51,221 ING SALOMON BROTHERS ALL CAP AUV at Beginning of Period $8.46 $11.57 $11.56 $10.00 (1) AUV at End of Period $11.54 $8.46 $11.57 $11.56 Number of Accumulation Units Outstanding at End of Period 1,812,621 1,438,659 902,603 98,842 Access - 131789 A32 2003 2002 2001 2000 ---------------------------------------------------------------------- ING SALOMON BROTHERS INVESTORS AUV at Beginning of Period $7.99 $10.56 $11.23 $10.00 (1) AUV at End of Period $10.30 $7.99 $10.56 $11.23 Number of Accumulation Units Outstanding at End of Period 676,868 534,293 384,799 11,867 ING T. ROWE PRICE CAPITAL APPRECIATION AUV at Beginning of Period $26.57 $26.91 $24.92 $20.20 (1) AUV at End of Period $32.69 $26.57 $26.91 $24.92 Number of Accumulation Units Outstanding at End of Period 2,065,649 1,345,841 531,690 15,600 ING T. ROWE PRICE EQUITY INCOME AUV at Beginning of Period $19.44 $22.79 $22.89 $19.52 (1) AUV at End of Period $23.91 $19.44 $22.79 $22.89 Number of Accumulation Units Outstanding at End of Period 1,278,747 773,224 387,753 30,890 ING UBS U.S. BALANCED AUV at Beginning of Period $7.20 (14) AUV at End of Period $8.35 Number of Accumulation Units Outstanding at End of Period 529,916 ING VAN KAMPEN EQUITY GROWTH AUV at Beginning of Period $7.80 $10.00 (7) AUV at End of Period $9.48 $7.80 Number of Accumulation Units Outstanding at End of Period 230,006 20,988 ING VAN KAMPEN GLOBAL FRANCHISE AUV at Beginning of Period $8.83 $10.00 (7) AUV at End of Period $10.95 $8.83 Number of Accumulation Units Outstanding at End of Period 242,169 53,323 ING VAN KAMPEN GROWTH & INCOME AUV at Beginning of Period $17.58 $20.99 $24.27 $25.04 (1) AUV at End of Period $22.09 $17.58 $20.99 $24.27 Number of Accumulation Units Outstanding at End of Period 841,519 616,373 485,828 119,426 ING VAN KAMPEN REAL ESTATE AUV at Beginning of Period $26.67 $27.09 $25.50 $19.96 (1) AUV at End of Period $36.09 $26.67 $27.09 $25.50 Number of Accumulation Units Outstanding at End of Period 398,419 271,009 101,334 25,056 ING VP BOND PORTFOLIO AUV at Beginning of Period $10.62 $10.00 (7) AUV at End of Period $11.06 $10.62 Number of Accumulation Units Outstanding at End of Period 277,417 218,867 ING VP GROWTH OPPORTUNITIES AUV at Beginning of Period $5.23 $7.77 $10.00 (4) AUV at End of Period $6.81 $5.23 $7.77 Number of Accumulation Units Outstanding at End of Period 230,737 149,494 27,449 ING VP INDEX PLUS LARGE CAP AUV at Beginning of Period $10.00 (11) AUV at End of Period $8.90 Number of Accumulation Units Outstanding at End of Period 275,705 ING VP MAGNACAP AUV at Beginning of Period $7.06 $9.33 $10.00 (4) AUV at End of Period $9.06 $7.06 $9.33 Number of Accumulation Units Outstanding at End of Period 198,861 102,496 24,770 Access - 131789 A33 2003 2002 2001 2000 ---------------------------------------------------------------------- ING VP SMALLCAP OPPORTUNITIES AUV at Beginning of Period $4.59 $8.31 $10.00 (4) AUV at End of Period $6.25 $4.59 $8.31 Number of Accumulation Units Outstanding at End of Period 952,613 454,392 79,268 ING VP WORLDWIDE GROWTH AUV at Beginning of Period $5.16 $6.98 $8.73 $10.00 (2) AUV at End of Period $6.54 $5.16 $6.98 $8.73 Number of Accumulation Units Outstanding at End of Period 571,723 349,871 169,312 7,369 INVESCO VIF HEALTH SCIENCES AUV at Beginning of Period $7.61 $10.26 $10.00 (5) AUV at End of Period $9.56 $7.61 $10.26 Number of Accumulation Units Outstanding at End of Period 527,172 271,523 16,016 INVESCO VIF LEISURE FUND AUV at Beginning of Period $8.42 $10.00 (7) AUV at End of Period $10.64 $8.42 Number of Accumulation Units Outstanding at End of Period 231,095 41,608 INVESCO VIF FINANCIAL SERVICES AUV at Beginning of Period $7.82 $9.35 $10.00 (5) AUV at End of Period $9.95 $7.82 $9.35 Number of Accumulation Units Outstanding at End of Period 301,666 110,702 3,522 INVESCO VIF UTILITIES AUV at Beginning of Period $6.34 $8.09 $10.00 (5) AUV at End of Period $7.31 $6.34 $8.09 Number of Accumulation Units Outstanding at End of Period 249,623 94,266 3,860 JENNISON PORTFOLIO AUV at Beginning of Period $4.23 $6.26 $7.83 $10.00 (2) AUV at End of Period $5.39 $4.23 $6.26 $7.83 Number of Accumulation Units Outstanding at End of Period 781,985 565,738 273,112 19,630 PIMCO HIGH YIELD PORTFOLIO AUV at Beginning of Period $9.68 $9.97 $9.92 $10.10 (1) AUV at End of Period $11.68 $9.68 $9.97 $9.92 Number of Accumulation Units Outstanding at End of Period 2,442,654 1,004,330 489,627 64,046 PIMCO STOCKSPLUS GROWTH & INCOME AUV at Beginning of Period $7.92 $10.10 $11.61 $12.46 (1) AUV at End of Period $10.14 $7.92 $10.10 $11.61 Number of Accumulation Units Outstanding at End of Period 790,067 777,892 441,295 70,828 PIONEER FUND VCT AUV at Beginning of Period $7.43 $9.37 $10.00 (5) AUV at End of Period $9.02 $7.43 $9.37 Number of Accumulation Units Outstanding at End of Period 372,465 135,708 2,197 PIONEER MID CAP VALUE AUV at Beginning of Period $9.32 $10.71 $10.00 (5) AUV at End of Period $12.56 $9.32 $10.71 Number of Accumulation Units Outstanding at End of Period 671,453 218,154 5,378 PROFUND VP BULL AUV at Beginning of Period $6.63 $8.87 $10.00 (4) AUV at End of Period $8.18 $6.63 $8.87 Number of Accumulation Units Outstanding at End of Period 467,546 185,752 27,580 Access - 131789 A34 2003 2002 2001 2000 ---------------------------------------------------------------------- PROFUND VP EUROPE 30 AUV at Beginning of Period $6.02 $8.25 $10.00 (4) AUV at End of Period $8.20 $6.02 $8.25 Number of Accumulation Units Outstanding at End of Period 190,714 105,640 38,959 PROFUND VP RISING RATES OPPORTUNITY AUV at Beginning of Period $10.00 (13) AUV at End of Period $9.35 Number of Accumulation Units Outstanding at End of Period 74,879 PROFUND VP SMALL CAP AUV at Beginning of Period $7.17 $9.41 $10.00 (4) AUV at End of Period $10.05 $7.17 $9.41 Number of Accumulation Units Outstanding at End of Period 426,723 182,536 19,151 SP JENNISON INTERNATIONAL GROWTH AUV at Beginning of Period $4.08 $5.39 $8.56 $10.00 (3) AUV at End of Period $5.58 $4.08 $5.39 $8.56 Number of Accumulation Units Outstanding at End of Period 667,389 235,552 146,027 7,516
FOOTNOTES (1) Fund First Available during February 2000 (10) Fund First Available during June 2003 (2) Fund First Available during May 2000 (11) Fund First Available during August 2003 (3) Fund First Available during October 2000 (12) Fund First Available during September 2003 (4) Fund First Available during May 2001 (13) Fund First Available during October 2003 (5) Fund First Available during November 2001 (14) Fund First Available during November 2003 (6) Fund First Available during December 2001 (7) Fund First Available during May 2002 (8) Fund First Available during September 2002 (9) Fund First Available during December 2002
2003 2002 2001 2000 --------------------------------------------------------------------- SEPARATE ACCOUNT ANNUAL CHARGES OF 1.80% AIM VI DENT DEMOGRAPHIC TRENDS AUV at Beginning of Period $7.31 $10.98 $10.00 (5) AUV at End of Period $9.85 $7.31 $10.98 Number of Accumulation Units Outstanding at End of Period 574,799 144,579 7,111 COLONIAL SMALL CAP VALUE AUV at Beginning of Period $10.00 (15) AUV at End of Period $13.81 Number of Accumulation Units Outstanding at End of Period 243,070 FIDELITY(R) VIP EQUITY--INCOME AUV at Beginning of Period $7.79 $9.57 $10.00 (7) AUV at End of Period $9.94 $7.79 $9.57 Number of Accumulation Units Outstanding at End of Period 1,180,858 178,752 FIDELITY(R) VIP GROWTH AUV at Beginning of Period $6.33 $9.25 $10.00 (7) AUV at End of Period $8.25 $6.33 $9.25 Number of Accumulation Units Outstanding at End of Period 2,329,442 244,586 652 ING AIM MID CAP GROWTH AUV at Beginning of Period $9.61 $14.32 $18.50 $21.37 (1) AUV at End of Period $13.60 $9.61 $14.32 $18.50 Number of Accumulation Units Outstanding at End of Period 1,533,657 1,196,567 1,447,650 1,203,898 Access - 131789 A35 2003 2002 2001 2000 --------------------------------------------------------------------- ING ALLIANCE MID CAP GROWTH AUV at Beginning of Period $9.82 $14.30 $16.88 $19.86 (1) AUV at End of Period $16.11 $9.82 $14.30 $16.88 Number of Accumulation Units Outstanding at End of Period 2,304,112 1,761,535 1,586,391 1,171,869 ING AMERICAN FUNDS GROWTH AUV at Beginning of Period $10.00 (13) AUV at End of Period $10.76 Number of Accumulation Units Outstanding at End of Period 913,862 ING AMERICAN FUNDS GROWTH-INCOME AUV at Beginning of Period $10.00 (13) AUV at End of Period $10.98 Number of Accumulation Units Outstanding at End of Period 724,335 ING AMERICAN FUNDS INTERNATIONAL AUV at Beginning of Period $10.00 (13) AUV at End of Period $11.60 Number of Accumulation Units Outstanding at End of Period 261,151 ING CAPITAL GUARDIAN LARGE CAP VALUE AUV at Beginning of Period $7.44 $9.94 $10.51 $10.00 (1) AUV at End of Period $9.99 $7.44 $9.94 $10.51 Number of Accumulation Units Outstanding at End of Period 6,791,260 5,103,821 3,603,942 1,403,629 ING CAPITAL GUARDIAN MANAGED GLOBAL AUV at Beginning of Period $13.23 $16.87 $19.51 $21.72 (1) AUV at End of Period $17.70 $13.23 $16.87 $19.51 Number of Accumulation Units Outstanding at End of Period 1,938,963 1,564,288 1,137,846 621,115 ING CAPITAL GUARDIAN SMALL CAP AUV at Beginning of Period $12.77 $17.44 $18.03 $23.35 (1) AUV at End of Period $17.61 $12.77 $17.44 $18.03 Number of Accumulation Units Outstanding at End of Period 2,774,027 2,319,410 1,876,959 1,163,996 ING DEVELOPING WORLD AUV at Beginning of Period $6.11 $6.97 $7.49 $11.58 (1) AUV at End of Period $8.80 $6.11 $6.97 $7.49 Number of Accumulation Units Outstanding at End of Period 847,929 690,414 640,405 549,427 ING EAGLE ASSET VALUE EQUITY AUV at Beginning of Period $14.50 $17.80 $18.97 $17.17 (1) AUV at End of Period $17.84 $14.50 $17.80 $18.97 Number of Accumulation Units Outstanding at End of Period 983,871 923,702 706,803 298,983 ING FMR(SM) DIVERSIFIED MID--CAP AUV at Beginning of Period $7.17 $9.05 $9.87 $10.00 (3) AUV at End of Period $9.39 $7.17 $9.05 $9.87 Number of Accumulation Units Outstanding at End of Period 2,031,360 1,611,467 815,848 55,360 ING GET FUND -- SERIES T AUV at Beginning of Period $10.06 $10.00 (8) AUV at End of Period $10.41 $10.06 Number of Accumulation Units Outstanding at End of Period 416,352 508,431 ING GET FUND -- SERIES U AUV at Beginning of Period $10.00 $10.00 (9) AUV at End of Period $10.50 $10.00 Number of Accumulation Units Outstanding at End of Period 434,915 1,187 Access - 131789 A36 2003 2002 2001 2000 --------------------------------------------------------------------- ING GET FUND -- SERIES V AUV at Beginning of Period $10.00 (11) AUV at End of Period $9.70 Number of Accumulation Units Outstanding at End of Period 653,999 ING GET U.S. CORE PORTFOLIO - SERIES 1 AUV at Beginning of Period $10.00 (11) AUV at End of Period $10.23 Number of Accumulation Units Outstanding at End of Period 588,194 ING GET U.S. CORE PORTFOLIO - SERIES 2 AUV at Beginning of Period $10.00 (13) AUV at End of Period $10.02 Number of Accumulation Units Outstanding at End of Period 495,513 ING GOLDMAN SACHS INTERNET TOLLKEEPER AUV at Beginning of Period $4.62 $7.60 $10.00 (4) AUV at End of Period $6.39 $4.62 $7.60 Number of Accumulation Units Outstanding at End of Period 932,881 220,935 46,906 ING HARD ASSETS AUV at Beginning of Period $13.26 $13.40 $15.53 $15.50 (1) AUV at End of Period $19.83 $13.26 $13.40 $15.53 Number of Accumulation Units Outstanding at End of Period 496,935 302,602 94,214 42,632 ING INTERNATIONAL EQUITY AUV at Beginning of Period $7.02 $8.52 $11.23 $14.81 (6) AUV at End of Period $8.90 $7.02 $8.52 $11.23 Number of Accumulation Units Outstanding at End of Period 1,458,594 1,565,175 1,182,590 1,033,869 ING JANUS GROWTH AND INCOME AUV at Beginning of Period $6.99 $8.83 $9.93 $10.00 (3) AUV at End of Period $8.41 $6.99 $8.83 $9.93 Number of Accumulation Units Outstanding at End of Period 3,698,410 2,513,592 1,282,147 148,807 ING JANUS SPECIAL EQUITY AUV at Beginning of Period $6.02 $8.28 $8.88 $10.00 (3) AUV at End of Period $8.89 $6.02 $8.28 $8.88 Number of Accumulation Units Outstanding at End of Period 629,201 401,444 319,420 62,575 ING JENNISON EQUITY OPPORTUNITIES AUV at Beginning of Period $14.41 $20.74 $24.27 $28.64 (1) AUV at End of Period $18.55 $14.41 $20.74 $24.27 Number of Accumulation Units Outstanding at End of Period 1,511,002 1,643,362 1,587,677 981,676 ING JP MORGAN FLEMING INTERNATIONAL AUV at Beginning of Period $10.00 (13) AUV at End of Period $11.86 Number of Accumulation Units Outstanding at End of Period 80,497 ING JP MORGAN FLEMING SMALLCAP AUV at Beginning of Period $7.82 $10.00 (7) AUV at End of Period $10.31 $7.82 Number of Accumulation Units Outstanding at End of Period 681,441 95,249 ING JULIUS BAER FOREIGN AUV at Beginning of Period $8.20 $10.00 (7) AUV at End of Period $10.57 $8.20 Number of Accumulation Units Outstanding at End of Period 268,993 51,442 Access - 131789 A37 2003 2002 2001 2000 --------------------------------------------------------------------- ING LIMITED MATURITY BOND AUV at Beginning of Period $18.99 $18.03 $16.87 $15.92 (1) AUV at End of Period $19.18 $18.99 $18.03 $16.87 Number of Accumulation Units Outstanding at End of Period 2,934,073 2,793,640 1,730,153 507,893 ING LIQUID ASSETS AUV at Beginning of Period $14.91 $14.96 $14.67 $14.13 (1) AUV at End of Period $14.75 $14.91 $14.96 $14.67 Number of Accumulation Units Outstanding at End of Period 5,614,607 10,613,768 9,752,616 2,657,053 ING MARSICO GROWTH AUV at Beginning of Period $10.23 $14.79 $21.59 $28.72 (1) AUV at End of Period $13.34 $10.23 $14.79 $21.59 Number of Accumulation Units Outstanding at End of Period 5,319,525 4,731,610 5,132,970 3,791,737 ING MERCURY FOCUS VALUE AUV at Beginning of Period $8.35 $10.00 (7) AUV at End of Period $10.76 $8.35 Number of Accumulation Units Outstanding at End of Period 206,043 53,879 ING MERCURY FUNDAMENTAL GROWTH AUV at Beginning of Period $7.95 $10.00 (7) AUV at End of Period $9.92 $7.95 Number of Accumulation Units Outstanding at End of Period 111,582 27,465 ING MFS MID CAP GROWTH AUV at Beginning of Period $15.55 $30.92 $41.24 $37.84 (1) AUV at End of Period $21.24 $15.55 $30.92 $41.24 Number of Accumulation Units Outstanding at End of Period 2,586,393 2,356,960 2,066,676 1,240,675 ING MFS RESEARCH AUV at Beginning of Period $14.64 $19.84 $25.72 $26.43 (1) AUV at End of Period $17.90 $14.64 $19.84 $25.72 Number of Accumulation Units Outstanding at End of Period 2,135,321 2,132,959 1,666,295 1,007,294 ING MFS TOTAL RETURN AUV at Beginning of Period $18.60 $19.96 $20.22 $17.13 (1) AUV at End of Period $21.32 $18.60 $19.96 $20.22 Number of Accumulation Units Outstanding at End of Period 4,841,190 3,921,173 2,673,135.0 836,664.0 ING PIMCO CORE BOND AUV at Beginning of Period $12.29 $11.51 $11.44 $11.23 (1) AUV at End of Period $12.64 $12.29 $11.51 $11.44 Number of Accumulation Units Outstanding at End of Period 4,187,288 3,457,226 958,057 183,531 ING SALOMON BROTHERS AGGRESSIVE GROWTH AUV at Beginning of Period $10.00 (13) AUV at End of Period $10.80 Number of Accumulation Units Outstanding at End of Period 147,757 ING SALOMON BROTHERS ALL CAP AUV at Beginning of Period $8.45 $11.56 $11.55 $10.00 (1) AUV at End of Period $11.52 $8.45 $11.56 $11.55 Number of Accumulation Units Outstanding at End of Period 4,017,738 3,308,447 2,722,089 780,053 ING SALOMON BROTHERS INVESTORS AUV at Beginning of Period $7.98 $10.55 $11.22 $10.00 (1) AUV at End of Period $10.28 $7.98 $10.55 $11.22 Number of Accumulation Units Outstanding at End of Period 1,251,944 1,333,387 820,331 145,735 Access - 131789 A38 2003 2002 2001 2000 --------------------------------------------------------------------- ING T. ROWE PRICE CAPITAL APPRECIATION AUV at Beginning of Period $26.38 $26.74 $24.77 $20.08 (1) AUV at End of Period $32.45 $26.38 $26.74 $24.77 Number of Accumulation Units Outstanding at End of Period 4,498,234 3,716,910 1,927,531 400,243 ING T. ROWE PRICE EQUITY INCOME AUV at Beginning of Period $19.30 $22.64 $22.75 $19.41 (1) AUV at End of Period $23.73 $19.30 $22.64 $22.75 Number of Accumulation Units Outstanding at End of Period 2,387,635 1,769,554 1,103,377. 311,484. ING UBS U.S. BALANCED AUV at Beginning of Period $7.20 (15) AUV at End of Period $8.34 Number of Accumulation Units Outstanding at End of Period 1,112,008 ING VAN KAMPEN EQUITY GROWTH AUV at Beginning of Period $7.80 $10.00 (7) AUV at End of Period $9.47 $7.80 Number of Accumulation Units Outstanding at End of Period 423,091 37,952 ING VAN KAMPEN GLOBAL FRANCHISE AUV at Beginning of Period $8.82 $10.00 (7) AUV at End of Period $10.94 $8.82 Number of Accumulation Units Outstanding at End of Period 565,302 133,794 ING VAN KAMPEN GROWTH & INCOME AUV at Beginning of Period $17.50 $20.91 $24.18 $24.96 (1) AUV at End of Period $21.98 $17.50 $20.91 $24.18 Number of Accumulation Units Outstanding at End of Period 2,020,012 1,678,851 1,489,476 803,307 ING VAN KAMPEN REAL ESTATE AUV at Beginning of Period $26.48 $26.91 $25.34 $19.85 (1) AUV at End of Period $35.82 $26.48 $26.91 $25.34 Number of Accumulation Units Outstanding at End of Period 933,790 639,504 310,014 77,442 ING VP BOND PORTFOLIO AUV at Beginning of Period $10.62 $10.00 (7) AUV at End of Period $11.05 $10.62 Number of Accumulation Units Outstanding at End of Period 785,879 616,917 ING VP GROWTH OPPORTUNITIES AUV at Beginning of Period $5.23 $7.77 $10.00 (4) AUV at End of Period $6.80 $5.23 $7.77 Number of Accumulation Units Outstanding at End of Period 400,548 178,992 74,652 ING VP INDEX PLUS LARGE CAP AUV at Beginning of Period $7.19 (12) AUV at End of Period $8.89 Number of Accumulation Units Outstanding at End of Period 335,685 ING VP INDEX PLUS MID CAP AUV at Beginning of Period $8.51 (15) AUV at End of Period $11.03 Number of Accumulation Units Outstanding at End of Period 25,111 ING VP INDEX PLUS SMALL CAP AUV at Beginning of Period $8.57 (15) AUV at End of Period $11.43 Number of Accumulation Units Outstanding at End of Period 56,252 Access - 131789 A39 2003 2002 2001 2000 --------------------------------------------------------------------- ING VP MAGNACAP AUV at Beginning of Period $7.05 $9.33 $10.00 (4) AUV at End of Period $9.05 $7.05 $9.33 Number of Accumulation Units Outstanding at End of Period 304,573 190,988 102,246 ING VP SMALLCAP OPPORTUNITIES AUV at Beginning of Period $4.59 $8.31 $10.00 (4) AUV at End of Period $6.24 $4.59 $8.31 Number of Accumulation Units Outstanding at End of Period 1,478,756 696,664 222,328 ING VP WORLDWIDE GROWTH AUV at Beginning of Period $5.15 $6.98 $8.73 $10.00 (2) AUV at End of Period $6.53 $5.15 $6.98 $8.73 Number of Accumulation Units Outstanding at End of Period 910,436 598,428 468,772 84,578 INVESCO VIF HEALTH SCIENCES AUV at Beginning of Period $7.61 $10.25 $10.00 (5) AUV at End of Period $9.54 $7.61 $10.25 Number of Accumulation Units Outstanding at End of Period 833,580 375,102 25,836 INVESCO VIF LEISURE FUND AUV at Beginning of Period $8.42 $10.00 (7) AUV at End of Period $10.63 $8.42 Number of Accumulation Units Outstanding at End of Period 301,537 54,250 INVESCO VIF--FINANCIAL SERVICES AUV at Beginning of Period $7.81 $9.35 $10.00 (5) AUV at End of Period $9.94 $7.81 $9.35 Number of Accumulation Units Outstanding at End of Period 612,566 284,060 18,560 INVESCO VIF--UTILITIES AUV at Beginning of Period $6.33 $8.09 $10.00 (5) AUV at End of Period $7.30 $6.33 $8.09 Number of Accumulation Units Outstanding at End of Period 360,781 167,758 16,134 JENNISON PORTFOLIO AUV at Beginning of Period $4.23 $6.25 $7.82 $10.00 (2) AUV at End of Period $5.38 $4.23 $6.25 $7.82 Number of Accumulation Units Outstanding at End of Period 981,934 934,116 1,102,268 89,929 LIBERTY ASSET ALLOCATION AUV at Beginning of Period $10.00 (10) AUV at End of Period $11.95 Number of Accumulation Units Outstanding at End of Period 3,043 LIBERTY EQUITY AUV at Beginning of Period $6.48 $9.12 $11.36 $11.51 AUV at End of Period $7.90 $6.48 $9.12 $11.36 Number of Accumulation Units Outstanding at End of Period 6,418 9,491 14,708 14,623 LIBERTY SMALL COMPANY GROWTH AUV at Beginning of Period $10.00 (10) AUV at End of Period $14.94 Number of Accumulation Units Outstanding at End of Period 890 Access - 131789 A40 2003 2002 2001 2000 --------------------------------------------------------------------- PIMCO HIGH YIELD PORTFOLIO AUV at Beginning of Period $9.66 $9.95 $9.90 $10.09 (1) AUV at End of Period $11.65 $9.66 $9.95 $9.90 Number of Accumulation Units Outstanding at End of Period 5,849,065 3,639,545 1,847,566 631,991 PIMCO STOCKSPLUS GROWTH & INCOME AUV at Beginning of Period $7.90 $10.08 $11.59 $12.45 (1) AUV at End of Period $10.11 $7.90 $10.08 $11.59 Number of Accumulation Units Outstanding at End of Period 1,519,191 1,932,333 1,789,954 1,176,897 PIONEER FUND VCT AUV at Beginning of Period $7.43 $9.37 $10.00 (5) AUV at End of Period $9.00 $7.43 $9.37 Number of Accumulation Units Outstanding at End of Period 648,278 229,508 22,142 PIONEER MID CAP VALUE AUV at Beginning of Period $9.32 $10.71 $10.00 (5) AUV at End of Period $12.55 $9.32 $10.71 Number of Accumulation Units Outstanding at End of Period 1,373,009 503,892 23,811 PROFUND VP BULL AUV at Beginning of Period $6.62 $8.87 $10.00 (4) AUV at End of Period $8.17 $6.62 $8.87 Number of Accumulation Units Outstanding at End of Period 990,737 475,785 244,571 PROFUND VP EUROPE 30 AUV at Beginning of Period $6.01 $8.24 $10.00 (4) AUV at End of Period $8.19 $6.01 $8.24 Number of Accumulation Units Outstanding at End of Period 516,713 103,963 39,270 PROFUND VP RISING RATES OPPORTUNITY AUV at Beginning of Period $10.00 (14) AUV at End of Period $9.35 Number of Accumulation Units Outstanding at End of Period 108,486 PROFUND VP SMALL CAP AUV at Beginning of Period $7.16 $9.40 $10.00 (4) AUV at End of Period $10.04 $7.16 $9.40 Number of Accumulation Units Outstanding at End of Period 1,323,338 420,431 132,361 SP JENNISON INTERNATIONAL GROWTH AUV at Beginning of Period $4.08 $5.38 $8.55 $10.00 (3) AUV at End of Period $5.57 $4.08 $5.38 $8.55 Number of Accumulation Units Outstanding at End of Period 1,299,827 360,089 212,147 12,698
FOOTNOTES (1) Fund First Available during February 2000 (10) Fund First Available during April 2003 (2) Fund First Available during May 2000 (11) Fund First Available during June 2003 (3) Fund First Available during October 2000 (12) Fund First Available during August 2003 (4) Fund First Available during May 2001 (13) Fund First Available during September 2003 (5) Fund First Available during November 2001 (14) Fund First Available during October 2003 (6) Fund First Available during December 2001 (15) Fund First Available during November 2003 (7) Fund First Available during May 2002 (8) Fund First Available during September 2002 (9) Fund First Available during December 2002
Access - 131789 A41
2003 2002 2001 2000 --------------------------------------------------------------------- SEPARATE ACCOUNT ANNUAL CHARGES OF 1.90% AIM VI DENT DEMOGRAPHIC TRENDS AUV at Beginning of Period $7.30 $10.98 $10.00 (5) AUV at End of Period $9.83 $7.30 $10.98 Number of Accumulation Units Outstanding at End of Period 1,025,962 237,698 119,539 COLONIAL SMALL CAP VALUE AUV at Beginning of Period $10.00 (15) AUV at End of Period $13.80 Number of Accumulation Units Outstanding at End of Period 510,581 FIDELITY(R) VIP EQUITY--INCOME AUV at Beginning of Period $7.78 $9.57 $10.00 (7) AUV at End of Period $9.92 $7.78 $9.57 Number of Accumulation Units Outstanding at End of Period 1,794,730 250,947 FIDELITY(R) VIP GROWTH AUV at Beginning of Period $6.33 $9.25 $10.00 (7) AUV at End of Period $8.22 $6.33 $9.25 Number of Accumulation Units Outstanding at End of Period 3,360,732 473,547 ING AIM MID CAP GROWTH AUV at Beginning of Period $9.54 $14.23 $18.40 $21.27 (1) AUV at End of Period $13.49 $9.54 $14.23 $18.40 Number of Accumulation Units Outstanding at End of Period 2,013,485 1,357,779 1,475,163 1,103,423 ING ALLIANCE MID CAP GROWTH AUV at Beginning of Period $9.76 $14.21 $16.80 $19.78 (1) AUV at End of Period $15.99 $9.76 $14.21 $16.80 Number of Accumulation Units Outstanding at End of Period 2,753,698 1,863,528 1,557,259 874,247 ING AMERICAN FUNDS GROWTH AUV at Beginning of Period $10.00 (13) AUV at End of Period $10.75 Number of Accumulation Units Outstanding at End of Period 1,785,979 ING AMERICAN FUNDS GROWTH-INCOME AUV at Beginning of Period $10.00 (13) AUV at End of Period $10.97 Number of Accumulation Units Outstanding at End of Period 1,387,064 ING AMERICAN FUNDS INTERNATIONAL AUV at Beginning of Period $10.00 (13) AUV at End of Period $11.60 Number of Accumulation Units Outstanding at End of Period 564,361 ING CAPITAL GUARDIAN LARGE CAP VALUE AUV at Beginning of Period $7.42 $9.92 $10.50 $10.00 (1) AUV at End of Period $9.95 $7.42 $9.92 $10.50 Number of Accumulation Units Outstanding at End of Period 8,602,293 6,279,537 4,320,851 993,651 ING CAPITAL GUARDIAN MANAGED GLOBAL AUV at Beginning of Period $13.09 $16.72 $19.34 $21.56 (1) AUV at End of Period $17.50 $13.09 $16.72 $19.34 Number of Accumulation Units Outstanding at End of Period 2,098,781 1,515,003 1,118,604 522,271 ING CAPITAL GUARDIAN SMALL CAP AUV at Beginning of Period $12.68 $17.34 $17.94 $23.25 (1) AUV at End of Period $17.46 $12.68 $17.34 $17.94 Number of Accumulation Units Outstanding at End of Period 3,243,334 2,389,036 1,918,122 825,516 Access - 131789 A42 2003 2002 2001 2000 --------------------------------------------------------------------- ING DEVELOPING WORLD AUV at Beginning of Period $6.08 $6.94 $7.47 $11.56 (1) AUV at End of Period $8.75 $6.08 $6.94 $7.47 Number of Accumulation Units Outstanding at End of Period 1,334,968 847,173 509,513 259,187 ING EAGLE ASSET VALUE EQUITY AUV at Beginning of Period $14.38 $17.68 $18.85 $17.08 (1) AUV at End of Period $17.67 $14.38 $17.68 $18.85 Number of Accumulation Units Outstanding at End of Period 1,029,028 983,703 665,936 162,505 ING FMR(SM) DIVERSIFIED MID--CAP AUV at Beginning of Period $7.15 $9.04 $9.87 $10.00 (3) AUV at End of Period $9.36 $7.15 $9.04 $9.87 Number of Accumulation Units Outstanding at End of Period 3,090,180 2,302,131 1,385,134 89,462 ING GET FUND -- SERIES V AUV at Beginning of Period $10.00 (11) AUV at End of Period $9.69 Number of Accumulation Units Outstanding at End of Period 2,639,551 ING GET U.S. CORE PORTFOLIO - SERIES 1 AUV at Beginning of Period $10.00 (11) AUV at End of Period $10.23 Number of Accumulation Units Outstanding at End of Period 22,658 ING GET U.S. CORE PORTFOLIO - SERIES 2 AUV at Beginning of Period $10.00 (13) AUV at End of Period $10.02 Number of Accumulation Units Outstanding at End of Period 1,473,980 ING GET U.S. CORE PORTFOLIO - SERIES 3 AUV at Beginning of Period $10.00 (16) AUV at End of Period $9.99 Number of Accumulation Units Outstanding at End of Period 113,971 ING GOLDMAN SACHS INTERNET TOLLKEEPER AUV at Beginning of Period $4.61 $7.59 $10.00 (4) AUV at End of Period $6.37 $4.61 $7.59 Number of Accumulation Units Outstanding at End of Period 1,631,740 447,885 162,626 ING HARD ASSETS AUV at Beginning of Period $13.08 $13.22 $15.34 $15.33 (1) AUV at End of Period $19.53 $13.08 $13.22 $15.34 Number of Accumulation Units Outstanding at End of Period 1,330,707 932,327 315,574 227,856 ING INTERNATIONAL EQUITY AUV at Beginning of Period $6.97 $8.47 $11.18 $14.76 (6) AUV at End of Period $8.83 $6.97 $8.47 $11.18 Number of Accumulation Units Outstanding at End of Period 2,080,261 1,470,429 1,055,368 685,944 ING JANUS GROWTH AND INCOME AUV at Beginning of Period $6.97 $8.82 $9.93 $10.00 (3) AUV at End of Period $8.38 $6.97 $8.82 $9.93 Number of Accumulation Units Outstanding at End of Period 4,168,723 3,186,621 2,016,515 113,353 ING JANUS SPECIAL EQUITY AUV at Beginning of Period $6.01 $8.27 $8.88 $10.00 (3) AUV at End of Period $8.86 $6.01 $8.27 $8.88 Number of Accumulation Units Outstanding at End of Period 1,098,078 520,898 420,371 83,761 Access - 131789 A43 2003 2002 2001 2000 --------------------------------------------------------------------- ING JENNISON EQUITY OPPORTUNITIES AUV at Beginning of Period $14.25 $20.53 $24.06 $28.41 (1) AUV at End of Period $18.33 $14.25 $20.53 $24.06 Number of Accumulation Units Outstanding at End of Period 1,998,516 2,091,213 1,748,122 969,120 ING JP MORGAN FLEMING INTERNATIONAL AUV at Beginning of Period $10.00 (13) AUV at End of Period $11.85 Number of Accumulation Units Outstanding at End of Period 104,296 ING JP MORGAN FLEMING SMALLCAP AUV at Beginning of Period $7.82 $10.00 (7) AUV at End of Period $10.30 $7.82 Number of Accumulation Units Outstanding at End of Period 1,006,794 155,620 ING JULIUS BAER FOREIGN AUV at Beginning of Period $8.20 $10.00 (7) AUV at End of Period $10.55 $8.20 Number of Accumulation Units Outstanding at End of Period 582,823 138,594 ING LIMITED MATURITY BOND AUV at Beginning of Period $18.72 $17.80 $16.67 $15.74 (1) AUV at End of Period $18.89 $18.72 $17.80 $16.67 Number of Accumulation Units Outstanding at End of Period 2,747,067 2,647,005 1,441,971 273,264 ING LIQUID ASSETS AUV at Beginning of Period $14.70 $14.77 $14.50 $13.97 (1) AUV at End of Period $14.52 $14.70 $14.77 $14.50 Number of Accumulation Units Outstanding at End of Period 5,938,918 7,015,870 6,235,817 2,132,811 ING MARSICO GROWTH AUV at Beginning of Period $10.16 $14.71 $21.49 $28.61 (1) AUV at End of Period $13.23 $10.16 $14.71 $21.49 Number of Accumulation Units Outstanding at End of Period 5,372,714 4,149,074 4,093,894 2,741,325 ING MERCURY FOCUS VALUE AUV at Beginning of Period $8.34 $10.00 (7) AUV at End of Period $10.74 $8.34 Number of Accumulation Units Outstanding at End of Period 419,552 94,083 ING MERCURY FUNDAMENTAL GROWTH AUV at Beginning of Period $7.95 $10.00 (7) AUV at End of Period $9.90 $7.95 Number of Accumulation Units Outstanding at End of Period 199,717 62,915 ING MFS MID CAP GROWTH AUV at Beginning of Period $15.42 $30.70 $40.98 $37.63 (1) AUV at End of Period $21.04 $15.42 $30.70 $40.98 Number of Accumulation Units Outstanding at End of Period 3,633,581 2,751,561 2,275,455 1,099,617 ING MFS RESEARCH AUV at Beginning of Period $14.51 $19.69 $25.56 $26.29 (1) AUV at End of Period $17.74 $14.51 $19.69 $25.56 Number of Accumulation Units Outstanding at End of Period 2,358,725 2,110,645 1,829,741 807,166 ING MFS TOTAL RETURN AUV at Beginning of Period $18.44 $19.81 $20.10 $17.04 (1) AUV at End of Period $21.12 $18.44 $19.81 $20.10 Number of Accumulation Units Outstanding at End of Period 5,686,198 4,012,552 2,637,734 506,976 Access - 131789 A44 2003 2002 2001 2000 --------------------------------------------------------------------- ING PIMCO CORE BOND AUV at Beginning of Period $12.19 $11.43 $11.37 $11.17 (1) AUV at End of Period $12.52 $12.19 $11.43 $11.37 Number of Accumulation Units Outstanding at End of Period 5,824,732 5,600,337 1,352,337 101,577 ING SALOMON BROTHERS AGGRESSIVE GROWTH AUV at Beginning of Period $10.00 (13) AUV at End of Period $10.80 Number of Accumulation Units Outstanding at End of Period 291,189 ING SALOMON BROTHERS ALL CAP AUV at Beginning of Period $8.42 $11.54 $11.54 $10.00 (1) AUV at End of Period $11.47 $8.42 $11.54 $11.54 Number of Accumulation Units Outstanding at End of Period 6,946,527 5,615,264 4,291,401 986,100 ING SALOMON BROTHERS INVESTORS AUV at Beginning of Period $7.95 $10.53 $11.21 $10.00 (1) AUV at End of Period $10.24 $7.95 $10.53 $11.21 Number of Accumulation Units Outstanding at End of Period 2,433,238 2,079,377 1,766,107 191,223 ING T. ROWE PRICE CAPITAL APPRECIATION AUV at Beginning of Period $26.01 $26.39 $24.47 $19.86 (1) AUV at End of Period $31.96 $26.01 $26.39 $24.47 Number of Accumulation Units Outstanding at End of Period 5,130,780 3,927,375 1,940,881 183,884 ING T. ROWE PRICE EQUITY INCOME AUV at Beginning of Period $19.03 $22.35 $22.48 $19.19 (1) AUV at End of Period $23.37 $19.03 $22.35 $22.48 Number of Accumulation Units Outstanding at End of Period 3,453,724 2,273,204 1,364,874 238,986 ING UBS U.S. BALANCED AUV at Beginning of Period $7.18 (15) AUV at End of Period $8.31 Number of Accumulation Units Outstanding at End of Period 1,599,133 ING VAN KAMPEN EQUITY GROWTH AUV at Beginning of Period $7.79 $10.00 (7) AUV at End of Period $9.46 $7.79 Number of Accumulation Units Outstanding at End of Period 455,787 67,606 ING VAN KAMPEN GLOBAL FRANCHISE AUV at Beginning of Period $8.82 $10.00 (7) AUV at End of Period $10.92 $8.82 Number of Accumulation Units Outstanding at End of Period 898,110 201,786 ING VAN KAMPEN GROWTH & INCOME AUV at Beginning of Period $17.34 $20.73 $24.00 $24.80 (1) AUV at End of Period $21.75 $17.34 $20.73 $24.00 Number of Accumulation Units Outstanding at End of Period 2,428,852 1,920,555 1,546,448 713,282 ING VAN KAMPEN REAL ESTATE AUV at Beginning of Period $26.11 $26.56 $25.04 $19.63 (1) AUV at End of Period $35.28 $26.11 $26.56 $25.04 Number of Accumulation Units Outstanding at End of Period 1,166,070 768,503 474,135 192,508 ING VP BOND PORTFOLIO AUV at Beginning of Period $10.61 $10.00 (7) AUV at End of Period $11.04 $10.61 Number of Accumulation Units Outstanding at End of Period 889,844 456,891 Access - 131789 A45 2003 2002 2001 2000 --------------------------------------------------------------------- ING VP GROWTH OPPORTUNITIES AUV at Beginning of Period $5.22 $7.76 $10.00 (4) AUV at End of Period $6.78 $5.22 $7.76 Number of Accumulation Units Outstanding at End of Period 677,924 355,700 182,159 ING VP INDEX PLUS LARGE CAP AUV at Beginning of Period $10.00 (12) AUV at End of Period $8.87 Number of Accumulation Units Outstanding at End of Period 957,662 ING VP MAGNACAP AUV at Beginning of Period $7.04 $9.32 $10.00 (4) AUV at End of Period $9.03 $7.04 $9.32 Number of Accumulation Units Outstanding at End of Period 454,572 295,511 117,705 ING VP SMALLCAP OPPORTUNITIES AUV at Beginning of Period $4.58 $8.30 $10.00 (4) AUV at End of Period $6.22 $4.58 $8.30 Number of Accumulation Units Outstanding at End of Period 2,876,835 1,196,797 253,382 ING VP WORLDWIDE GROWTH AUV at Beginning of Period $5.14 $6.96 $8.72 $10.00 (2) AUV at End of Period $6.51 $5.14 $6.96 $8.72 Number of Accumulation Units Outstanding at End of Period 1,506,719 1,083,707 477,958 68,648 INVESCO VIF HEALTH SCIENCES AUV at Beginning of Period $7.59 $10.25 $10.00 (5) AUV at End of Period $9.52 $7.59 $10.25 Number of Accumulation Units Outstanding at End of Period 1,604,306 736,096 289,358 INVESCO VIF LEISURE FUND AUV at Beginning of Period $8.41 $10.00 (7) AUV at End of Period $10.62 $8.41 Number of Accumulation Units Outstanding at End of Period 510,398 100,699 INVESCO VIF--FINANCIAL SERVICES AUV at Beginning of Period $7.80 $9.34 $10.00 (5) AUV at End of Period $9.92 $7.80 $9.34 Number of Accumulation Units Outstanding at End of Period 1,036,218 407,036 18,432 INVESCO VIF--UTILITIES AUV at Beginning of Period $6.32 $8.09 $10.00 (5) AUV at End of Period $7.29 $6.32 $8.09 Number of Accumulation Units Outstanding at End of Period 617,033 173,346 23,627 JENNISON PORTFOLIO AUV at Beginning of Period $4.22 $6.24 $7.82 $10.00 (2) AUV at End of Period $5.36 $4.22 $6.24 $7.82 Number of Accumulation Units Outstanding at End of Period 2,247,327 1,916,839 1,029,815 152,003 LIBERTY EQUITY AUV at Beginning of Period $6.46 $9.10 $11.34 $11.50 AUV at End of Period $7.87 $6.46 $9.10 $11.34 Number of Accumulation Units Outstanding at End of Period 2,632 2,067 -- -- PIMCO HIGH YIELD PORTFOLIO AUV at Beginning of Period $9.61 $9.91 $9.88 $10.07 (1) AUV at End of Period $11.58 $9.61 $9.91 $9.88 Number of Accumulation Units Outstanding at End of Period 6,589,740 3,093,339 1,858,684 386,288 Access - 131789 A46 2003 2002 2001 2000 --------------------------------------------------------------------- PIMCO STOCKSPLUS GROWTH & INCOME AUV at Beginning of Period $7.86 $10.04 $11.56 $12.42 (1) AUV at End of Period $10.05 $7.86 $10.04 $11.56 Number of Accumulation Units Outstanding at End of Period 1,744,752 1,702,075 1,325,932 829,397 PIONEER FUND VCT AUV at Beginning of Period $7.42 $9.36 $10.00 (5) AUV at End of Period $8.98 $7.42 $9.36 Number of Accumulation Units Outstanding at End of Period 1,239,130 562,117 47,468 PIONEER MID CAP VALUE AUV at Beginning of Period $9.31 $10.71 $10.00 (5) AUV at End of Period $12.52 $9.31 $10.71 Number of Accumulation Units Outstanding at End of Period 2,287,184 740,867 72,420 PROFUND VP BULL AUV at Beginning of Period $6.61 $8.87 $10.00 (4) AUV at End of Period $8.15 $6.61 $8.87 Number of Accumulation Units Outstanding at End of Period 1,278,503 491,042 103,369 PROFUND VP EUROPE 30 AUV at Beginning of Period $6.00 $8.24 $10.00 (4) AUV at End of Period $8.17 $6.00 $8.24 Number of Accumulation Units Outstanding at End of Period 445,959 218,083 19,682 PROFUND VP RISING RATES OPPORTUNITY AUV at Beginning of Period $10.00 (14) AUV at End of Period $9.35 Number of Accumulation Units Outstanding at End of Period 812,145 PROFUND VP SMALL CAP AUV at Beginning of Period $7.15 $9.40 $10.00 (4) AUV at End of Period $10.01 $7.15 $9.40 Number of Accumulation Units Outstanding at End of Period 1,694,421 374,258 47,995 SP JENNISON INTERNATIONAL GROWTH AUV at Beginning of Period $4.07 $5.37 $8.55 $10.00 (3) AUV at End of Period $5.55 $4.07 $5.37 $8.55 Number of Accumulation Units Outstanding at End of Period 2,042,525 636,058 320,126 28,074
FOOTNOTES (1) Fund First Available during February 2000 (10) Fund First Available during April 2003 (2) Fund First Available during May 2000 (11) Fund First Available during June 2003 (3) Fund First Available during October 2000 (12) Fund First Available during August 2003 (4) Fund First Available during May 2001 (13) Fund First Available during September 2003 (5) Fund First Available during November 2001 (14) Fund First Available during October 2003 (6) Fund First Available during December 2001 (15) Fund First Available during November 2003 (7) Fund First Available during May 2002 (16) Fund First Available during December 2003 (8) Fund First Available during September 2002 (9) Fund First Available during December 2002
2003 2002 2001 ------------------------------------- SEPARATE ACCOUNT ANNUAL CHARGES OF 1.95% AIM VI DENT DEMOGRAPHIC TRENDS AUV at Beginning of Period $7.29 $10.98 $10.00 (2) AUV at End of Period $9.82 $7.29 $10.98 Number of Accumulation Units Outstanding at End of 19,072 2,381 -- Period Access - 131789 A47 2003 2002 2001 ------------------------------------- COLONIAL SMALL CAP VALUE AUV at Beginning of Period $10.00 (9) AUV at End of Period $13.80 Number of Accumulation Units Outstanding at End of 703 Period FIDELITY(R) VIP EQUITY--INCOME AUV at Beginning of Period $7.77 $9.57 (4) AUV at End of Period $9.91 $7.77 Number of Accumulation Units Outstanding at End of 58,993 9,459 Period FIDELITY(R) VIP GROWTH AUV at Beginning of Period $6.32 $9.25 (4) AUV at End of Period $8.21 $6.32 Number of Accumulation Units Outstanding at End of 63,067 7,613 Period ING AIM MID CAP GROWTH AUV at Beginning of Period $9.50 $14.19 $16.41 (1) AUV at End of Period $13.43 $9.50 $14.19 Number of Accumulation Units Outstanding at End of 2,798 431 32 Period ING ALLIANCE MID CAP GROWTH AUV at Beginning of Period $9.72 $14.17 $16.21 (1) AUV at End of Period $15.92 $9.72 $14.17 Number of Accumulation Units Outstanding at End of 220 -- -- Period ING AMERICAN FUNDS GROWTH AUV at Beginning of Period $10.00 (7) AUV at End of Period $10.75 Number of Accumulation Units Outstanding at End of 72,592 Period ING AMERICAN FUNDS GROWTH-INCOME AUV at Beginning of Period $10.00 (7) AUV at End of Period $10.97 Number of Accumulation Units Outstanding at End of 63,213 Period ING AMERICAN FUNDS INTERNATIONAL AUV at Beginning of Period $10.00 (7) AUV at End of Period $11.60 Number of Accumulation Units Outstanding at End of 17,513 Period ING CAPITAL GUARDIAN LARGE CAP VALUE AUV at Beginning of Period $7.41 $9.91 $10.53 (1) AUV at End of Period $9.93 $7.41 $9.91 Number of Accumulation Units Outstanding at End of 6,646 686 -- Period ING CAPITAL GUARDIAN MANAGED GLOBAL AUV at Beginning of Period $13.02 $16.64 $19.44 (1) AUV at End of Period $17.40 $13.02 $16.64 Number of Accumulation Units Outstanding at End of 822 -- -- Period ING CAPITAL GUARDIAN SMALL CAP AUV at Beginning of Period $12.64 $17.28 $17.66 (1) AUV at End of Period $17.39 $12.64 $17.28 Number of Accumulation Units Outstanding at End of 4,336 1,453 -- Period ING DEVELOPING WORLD AUV at Beginning of Period $6.07 $6.93 $7.35 (1) AUV at End of Period $8.72 $6.07 $6.93 Number of Accumulation Units Outstanding at End of 928 -- -- Period Access - 131789 A48 2003 2002 2001 ------------------------------------- ING EAGLE ASSET VALUE EQUITY AUV at Beginning of Period $14.32 $17.61 $19.31 (1) AUV at End of Period $17.59 $14.32 $17.61 Number of Accumulation Units Outstanding at End of 15,780 5,517 -- Period ING FMR(SM) DIVERSIFIED MID--CAP AUV at Beginning of Period $7.14 $9.03 $9.47 (1) AUV at End of Period $9.35 $7.14 $9.03 Number of Accumulation Units Outstanding at End of 635 1,419 -- Period ING GET FUND -- SERIES T AUV at Beginning of Period $10.06 $10.00 AUV at End of Period $10.39 $10.06 Number of Accumulation Units Outstanding at End of 269,373 402,294 Period ING GET FUND -- SERIES U AUV at Beginning of Period $9.99 $10.00 AUV at End of Period $10.49 Number of Accumulation Units Outstanding at End of 415,852 -- Period ING GET FUND -- SERIES V AUV at Beginning of Period $10.00 (5) AUV at End of Period $9.69 Number of Accumulation Units Outstanding at End of 917,111 Period ING GET U.S. CORE PORTFOLIO - SERIES 1 AUV at Beginning of Period $10.00 (5) AUV at End of Period $10.22 Number of Accumulation Units Outstanding at End of 569,199 Period ING GET U.S. CORE PORTFOLIO - SERIES 2 AUV at Beginning of Period $10.00 (7) AUV at End of Period $10.02 Number of Accumulation Units Outstanding at End of 267,014 Period ING GET U.S. CORE PORTFOLIO - SERIES 3 AUV at Beginning of Period $10.00 (10) AUV at End of Period $9.99 Number of Accumulation Units Outstanding at End of 2,302 Period ING GOLDMAN SACHS INTERNET TOLLKEEPER AUV at Beginning of Period $4.61 $7.59 $10.00 (1) AUV at End of Period $6.37 $4.61 $7.59 Number of Accumulation Units Outstanding at End of 6,815 -- -- Period ING HARD ASSETS AUV at Beginning of Period $12.98 $13.14 $15.45 (1) AUV at End of Period $19.38 $12.98 $13.14 Number of Accumulation Units Outstanding at End of 2,426 -- -- Period ING INTERNATIONAL EQUITY AUV at Beginning of Period $6.95 $8.45 $9.82 (3) AUV at End of Period $8.80 $6.95 $8.45 Number of Accumulation Units Outstanding at End of 2,824 -- -- Period ING JANUS GROWTH AND INCOME AUV at Beginning of Period $6.96 $8.81 $9.65 (1) AUV at End of Period $8.37 $6.96 $8.81 Number of Accumulation Units Outstanding at End of 26,957 5,288 -- Period Access - 131789 A49 2003 2002 2001 ------------------------------------- ING JANUS SPECIAL EQUITY AUV at Beginning of Period $6.00 $8.27 $8.98 (1) AUV at End of Period $8.85 $6.00 $8.27 Number of Accumulation Units Outstanding at End of 2,108 -- -- Period ING JENNISON EQUITY OPPORTUNITIES AUV at Beginning of Period $14.17 $20.43 $23.18 (1) AUV at End of Period $18.22 $14.17 $20.43 Number of Accumulation Units Outstanding at End of 98 -- -- Period ING JP MORGAN FLEMING INTERNATIONAL AUV at Beginning of Period $10.00 (7) AUV at End of Period $11.85 Number of Accumulation Units Outstanding at End of 8,655 Period ING JP MORGAN FLEMING SMALLCAP AUV at Beginning of Period $7.82 $10.00 (4) AUV at End of Period $10.29 $7.82 Number of Accumulation Units Outstanding at End of 26,587 2,108 Period ING JULIUS BAER FOREIGN AUV at Beginning of Period $8.19 $10.00 (4) AUV at End of Period $10.54 $8.19 Number of Accumulation Units Outstanding at End of 20,511 467 Period ING LIMITED MATURITY BOND AUV at Beginning of Period $18.62 $17.71 $17.02 (1) AUV at End of Period $18.78 $18.62 $17.71 Number of Accumulation Units Outstanding at End of 1,045 6,405 994 Period ING LIQUID ASSETS AUV at Beginning of Period $14.64 $14.72 $14.61 (1) AUV at End of Period $14.46 $14.64 $14.72 Number of Accumulation Units Outstanding at End of 66,946 19,321 92 Period ING MARSICO GROWTH AUV at Beginning of Period $10.13 $14.66 $19.14 (1) AUV at End of Period $13.18 $10.13 $14.66 Number of Accumulation Units Outstanding at End of 7,966 1,801 30 Period ING MERCURY FOCUS VALUE AUV at Beginning of Period $8.34 $10.00 (4) AUV at End of Period $10.73 $8.34 Number of Accumulation Units Outstanding at End of 328 -- Period ING MERCURY FUNDAMENTAL GROWTH AUV at Beginning of Period -- $10.00 (4) AUV at End of Period $9.89 Number of Accumulation Units Outstanding at End of -0- -- Period ING MFS MID CAP GROWTH AUV at Beginning of Period $15.35 $30.58 $39.64 (1) AUV at End of Period $20.94 $15.35 $30.58 Number of Accumulation Units Outstanding at End of 2,196 1,308 15 Period ING MFS RESEARCH AUV at Beginning of Period $14.45 $19.62 $23.34 (1) AUV at End of Period $17.65 $14.45 $19.62 Number of Accumulation Units Outstanding at End of 12,028 1,027 23 Period Access - 131789 A50 2003 2002 2001 ------------------------------------- ING MFS TOTAL RETURN AUV at Beginning of Period $18.37 $19.74 $20.20 (1) AUV at End of Period $21.02 $18.37 $19.74 Number of Accumulation Units Outstanding at End of 50,717 19,958 470 Period ING PIMCO CORE BOND AUV at Beginning of Period $12.13 $11.39 $10.99 (1) AUV at End of Period $12.46 $12.13 $11.39 Number of Accumulation Units Outstanding at End of 105,747 32,108 -- Period ING SALOMON BROTHERS AGGRESSIVE GROWTH AUV at Beginning of Period $10.00 (7) AUV at End of Period $10.79 Number of Accumulation Units Outstanding at End of 5,105 Period ING SALOMON BROTHERS ALL CAP AUV at Beginning of Period $8.41 $11.53 $12.25 (1) AUV at End of Period $11.45 $8.41 $11.53 Number of Accumulation Units Outstanding at End of 16,669 3,105 778 Period ING SALOMON BROTHERS INVESTORS AUV at Beginning of Period $7.94 $10.52 $11.49 (1) AUV at End of Period $10.22 $7.94 $10.52 Number of Accumulation Units Outstanding at End of 6,274 2,596 847 Period ING T. ROWE PRICE CAPITAL APPRECIATION AUV at Beginning of Period $25.83 $26.21 $26.07 (1) AUV at End of Period $31.72 $25.83 $26.21 Number of Accumulation Units Outstanding at End of 16,339 12,095 -- Period ING T. ROWE PRICE EQUITY INCOME AUV at Beginning of Period $18.90 $22.20 $22.61 (1) AUV at End of Period $23.19 $18.90 $22.20 Number of Accumulation Units Outstanding at End of 3,253 193 -- Period ING VAN KAMPEN EQUITY GROWTH AUV at Beginning of Period $7.79 $10.00 (4) AUV at End of Period $9.45 $7.79 Number of Accumulation Units Outstanding at End of 1,570 -- Period ING VAN KAMPEN GLOBAL FRANCHISE AUV at Beginning of Period $8.81 $10.00 (4) AUV at End of Period $10.91 Number of Accumulation Units Outstanding at End of 4,280 -- Period ING VAN KAMPEN GROWTH & INCOME AUV at Beginning of Period $17.26 $20.64 $21.93 (1) AUV at End of Period $21.63 $17.26 $20.64 Number of Accumulation Units Outstanding at End of 2,913 835 23 Period ING VAN KAMPEN REAL ESTATE AUV at Beginning of Period $25.92 $26.39 $24.63 (1) AUV at End of Period $35.01 $25.92 $26.39 Number of Accumulation Units Outstanding at End of 1,917 696 -- Period ING VP BOND PORTFOLIO AUV at Beginning of Period -- $10.00 (4) AUV at End of Period $11.03 Number of Accumulation Units Outstanding at End of -0- -- Period Access - 131789 A51 2003 2002 2001 ------------------------------------- ING VP GROWTH OPPORTUNITIES AUV at Beginning of Period -- $7.76 $10.11 (1) AUV at End of Period $6.77 $7.76 Number of Accumulation Units Outstanding at End of -- -- Period ING VP INDEX PLUS LARGE CAP AUV at Beginning of Period $7.18 (6) AUV at End of Period $8.86 Number of Accumulation Units Outstanding at End of 74,850 Period ING VP INDEX PLUS MID CAP AUV at Beginning of Period $8.49 (9) AUV at End of Period $10.99 Number of Accumulation Units Outstanding at End of 52,557 Period ING VP INDEX PLUS SMALL CAP AUV at Beginning of Period $8.55 (9) AUV at End of Period $11.38 Number of Accumulation Units Outstanding at End of 37,589 Period ING VP MAGNACAP AUV at Beginning of Period $7.04 $9.32 $10.11 (1) AUV at End of Period $9.02 $7.04 $9.32 Number of Accumulation Units Outstanding at End of 16,409 -- -- Period ING VP SMALLCAP OPPORTUNITIES AUV at Beginning of Period $4.58 $8.30 $10.01 (1) AUV at End of Period $6.21 $4.58 $8.30 Number of Accumulation Units Outstanding at End of 5,697 345 -- Period ING VP WORLDWIDE GROWTH AUV at Beginning of Period $5.13 $6.96 $8.35 (1) AUV at End of Period $6.50 $5.13 $6.96 Number of Accumulation Units Outstanding at End of 3,247 1,003 -- Period INVESCO VIF HEALTH SCIENCES AUV at Beginning of Period $7.59 $10.25 $10.00 (2) AUV at End of Period $9.51 $7.59 $10.25 Number of Accumulation Units Outstanding at End of 9,822 2,088 -- Period INVESCO VIF LEISURE FUND AUV at Beginning of Period $8.41 $10.00 (4) AUV at End of Period $10.61 $8.41 Number of Accumulation Units Outstanding at End of 6,530 758 Period INVESCO VIF FINANCIAL SERVICES AUV at Beginning of Period $7.79 $9.34 $10.00 (2) AUV at End of Period $9.90 $7.79 $9.34 Number of Accumulation Units Outstanding at End of 7,391 667 -- Period INVESCO VIF UTILITIES AUV at Beginning of Period $6.32 $8.09 $10.00 (2) AUV at End of Period $7.28 $6.32 $8.09 Number of Accumulation Units Outstanding at End of 10,109 2,188 -- Period JENNISON PORTFOLIO AUV at Beginning of Period $4.21 $6.24 $7.20 (1) AUV at End of Period $5.35 $4.21 $6.24 Number of Accumulation Units Outstanding at End of 3,603 5,385 -- Period Access - 131789 A52 2003 2002 2001 ------------------------------------- PIMCO HIGH YIELD PORTFOLIO AUV at Beginning of Period $9.59 $9.90 $9.83 (1) AUV at End of Period $11.55 $9.59 $9.90 Number of Accumulation Units Outstanding at End of 57,614 4,447 -- Period PIMCO STOCKSPLUS GROWTH & INCOME AUV at Beginning of Period -- $10.03 $11.01 (1) AUV at End of Period $10.03 $10.03 Number of Accumulation Units Outstanding at End of -0- -- -- Period PIONEER FUND VCT AUV at Beginning of Period $7.41 $9.36 $10.00 (2) AUV at End of Period $8.97 $7.41 $9.36 Number of Accumulation Units Outstanding at End of 37,110 6,687 -- Period PIONEER MID CAP VALUE AUV at Beginning of Period $9.30 $10.71 $10.00 (2) AUV at End of Period $12.50 $9.30 $10.71 Number of Accumulation Units Outstanding at End of 9,137 -- -- Period PROFUND VP BULL AUV at Beginning of Period $6.61 $8.86 $10.00 (1) AUV at End of Period $8.13 $6.61 $8.86 Number of Accumulation Units Outstanding at End of 705 305 -- Period PROFUND VP EUROPE 30 AUV at Beginning of Period $5.99 $8.24 $10.05 (1) AUV at End of Period $8.15 $5.99 $8.24 Number of Accumulation Units Outstanding at End of 2,410 -- -- Period PROFUND VP RISING RATES OPPORTUNITY AUV at Beginning of Period $10.00 (8) AUV at End of Period $9.35 Number of Accumulation Units Outstanding at End of 2,001 Period PROFUND VP SMALL CAP AUV at Beginning of Period $7.14 $9.39 $10.00 (1) AUV at End of Period $10.00 $7.14 $9.39 Number of Accumulation Units Outstanding at End of 15,408 -- -- Period SP JENNISON INT. GROWTH AUV at Beginning of Period $4.06 $5.37 $7.30 (1) AUV at End of Period $5.54 $4.06 $5.37 Number of Accumulation Units Outstanding at End of 8,883 3,559 -- Period FOOTNOTES (1) Fund First Available during May 2001 (2) Fund First Available during November 2001 (3) Fund First Available during December 2001 (4) Fund First Available during May 2002 (5) Fund First Available during June 2003 (6) Fund First Available during August 2003 (7) Fund First Available during September 2003 (8) Fund First Available during October 2003 (9) Fund First Available during November 2003 (10) Fund First Available during December 2003 Access - 131789 A53 2003 2002 2001 ------------------------------------- SEPARATE ACCOUNT ANNUAL CHARGES OF 2.05% AIM VI DENT DEMOGRAPHIC TRENDS AUV at Beginning of Period $7.28 $10.98 $10.00 (2) AUV at End of Period $9.80 $7.28 $10.98 Number of Accumulation Units Outstanding at End of Period 29,802 36,436 270 COLONIAL SMALL CAP VALUE AUV at Beginning of Period $10.00 (8) AUV at End of Period $13.79 Number of Accumulation Units Outstanding at End of Period 10,255 FIDELITY(R) VIP EQUITY--INCOME AUV at Beginning of Period $7.76 $9.56 (4) AUV at End of Period $9.88 $7.76 Number of Accumulation Units Outstanding at End of Period 58,675 18,936 FIDELITY(R) VIP GROWTH AUV at Beginning of Period $6.31 $9.24 (4) AUV at End of Period $8.19 $6.31 Number of Accumulation Units Outstanding at End of Period 79,104 4,842 ING AIM MID CAP GROWTH AUV at Beginning of Period $9.43 $14.10 $16.32 (1) AUV at End of Period $13.32 $9.43 $14.10 Number of Accumulation Units Outstanding at End of Period 28,481 22,032 9,284 ING ALLIANCE MID CAP GROWTH AUV at Beginning of Period $9.66 $14.09 $16.13 (1) AUV at End of Period $15.80 $9.66 $14.09 Number of Accumulation Units Outstanding at End of Period 81,203 30,975 13,857 ING AMERICAN FUNDS GROWTH AUV at Beginning of Period $10.00 (6) AUV at End of Period $10.75 Number of Accumulation Units Outstanding at End of Period 69,135 ING AMERICAN FUNDS GROWTH-INCOME AUV at Beginning of Period $10.00 (6) AUV at End of Period $10.97 Number of Accumulation Units Outstanding at End of Period 34,592 ING AMERICAN FUNDS INTERNATIONAL AUV at Beginning of Period $10.00 (6) AUV at End of Period $11.59 Number of Accumulation Units Outstanding at End of Period 9,590 ING CAPITAL GUARDIAN LARGE CAP VALUE AUV at Beginning of Period $7.39 $9.89 $10.52 (1) AUV at End of Period $9.89 $7.39 $9.89 Number of Accumulation Units Outstanding at End of Period 241,597 153,495 64,872 ING CAPITAL GUARDIAN MANAGED GLOBAL AUV at Beginning of Period $12.89 $16.48 $19.28 (1) AUV at End of Period $17.21 $12.89 $16.48 Number of Accumulation Units Outstanding at End of Period 64,806 44,003 24,750 ING CAPITAL GUARDIAN SMALL CAP AUV at Beginning of Period $12.55 $17.18 $17.56 (1) AUV at End of Period $17.25 $12.55 $17.18 Number of Accumulation Units Outstanding at End of Period 72,311 61,290 28,016 Access - 131789 A54 2003 2002 2001 ------------------------------------- ING DEVELOPING WORLD AUV at Beginning of Period $6.04 $6.90 $7.33 (1) AUV at End of Period $8.67 $6.04 $6.90 Number of Accumulation Units Outstanding at End of Period 55,208 45,609 32,140 ING EAGLE ASSET VALUE EQUITY AUV at Beginning of Period $14.21 $17.49 $19.19 (1) AUV at End of Period $17.43 $14.21 $17.49 Number of Accumulation Units Outstanding at End of Period 34,620 20,452 15,882 ING FMR(SM) DIVERSIFIED MID--CAP AUV at Beginning of Period $7.12 $9.02 $9.47 (1) AUV at End of Period $9.32 $7.12 $9.02 Number of Accumulation Units Outstanding at End of Period 98,923 78,294 30,405 ING GOLDMAN SACHS INTERNET TOLLKEEPER AUV at Beginning of Period $4.60 $7.58 $10.00 (1) AUV at End of Period $6.35 $4.60 $7.58 Number of Accumulation Units Outstanding at End of Period 87,869 41,859 9,038 ING HARD ASSETS AUV at Beginning of Period $12.80 $12.96 $15.25 (1) AUV at End of Period $19.09 $12.80 $12.96 Number of Accumulation Units Outstanding at End of Period 17,930 23,532 8,523 ING INTERNATIONAL EQUITY AUV at Beginning of Period $6.90 $8.40 $9.77 (3) AUV at End of Period $8.73 $6.90 $8.40 Number of Accumulation Units Outstanding at End of Period 19,122 8,795 -- ING JANUS GROWTH AND INCOME AUV at Beginning of Period $6.95 $8.80 $9.64 (1) AUV at End of Period $8.34 $6.95 $8.80 Number of Accumulation Units Outstanding at End of Period 149,704 132,024 41,232 ING JANUS SPECIAL EQUITY AUV at Beginning of Period $5.99 $8.25 $8.97 (1) AUV at End of Period $8.82 $5.99 $8.25 Number of Accumulation Units Outstanding at End of Period 18,885 13,630 7,008 ING JENNISON EQUITY OPPORTUNITIES AUV at Beginning of Period $14.02 $20.23 $22.97 (1) AUV at End of Period $18.01 $14.02 $20.23 Number of Accumulation Units Outstanding at End of Period 39,321 41,942 17,631 ING JP MORGAN FLEMING INTERNATIONAL AUV at Beginning of Period $10.00 (6) AUV at End of Period $11.85 Number of Accumulation Units Outstanding at End of Period 3,444 ING JP MORGAN FLEMING SMALLCAP AUV at Beginning of Period $7.81 $10.00 (4) AUV at End of Period $10.27 $7.81 Number of Accumulation Units Outstanding at End of Period 38,873 5,346 ING JULIUS BAER FOREIGN AUV at Beginning of Period $8.19 $10.00 (4) AUV at End of Period $10.52 $8.19 Number of Accumulation Units Outstanding at End of Period 14,401 1,613 Access - 131789 A55 2003 2002 2001 ------------------------------------- ING LIMITED MATURITY BOND AUV at Beginning of Period $18.36 $17.48 $16.81 (1) AUV at End of Period $18.49 $18.36 $17.48 Number of Accumulation Units Outstanding at End of Period 87,178 115,925 33,099 ING LIQUID ASSETS AUV at Beginning of Period $14.43 $14.53 $14.43 (1) AUV at End of Period $14.24 $14.43 $14.53 Number of Accumulation Units Outstanding at End of Period 232,021 327,509 329,210 ING MARSICO GROWTH AUV at Beginning of Period $10.06 $14.58 $19.04 (1) AUV at End of Period $13.07 $10.06 $14.58 Number of Accumulation Units Outstanding at End of Period 147,726 60,337 37,525 ING MERCURY FOCUS VALUE AUV at Beginning of Period $8.33 $10.00 (4) AUV at End of Period $10.71 $8.33 Number of Accumulation Units Outstanding at End of Period 8,599 5,396 ING MERCURY FUNDAMENTAL GROWTH AUV at Beginning of Period $7.94 $10.00 (4) AUV at End of Period $9.87 $7.94 Number of Accumulation Units Outstanding at End of Period 1,086 -- ING MFS MID CAP GROWTH AUV at Beginning of Period $15.22 $30.36 $39.38 (1) AUV at End of Period $20.75 $15.22 $30.36 Number of Accumulation Units Outstanding at End of Period 80,454 59,471 32,214 ING MFS RESEARCH AUV at Beginning of Period $14.33 $19.48 $23.19 (1) AUV at End of Period $17.49 $14.33 $19.48 Number of Accumulation Units Outstanding at End of Period 51,558 52,294 25,925 ING MFS TOTAL RETURN AUV at Beginning of Period $18.21 $19.59 $20.07 (1) AUV at End of Period $20.83 $18.21 $19.59 Number of Accumulation Units Outstanding at End of Period 156,989 108,560 48,787 ING PIMCO CORE BOND AUV at Beginning of Period $12.03 $11.30 $10.92 (1) AUV at End of Period $12.35 $12.03 $11.30 Number of Accumulation Units Outstanding at End of Period 151,480 134,070 45,492 ING SALOMON BROTHERS AGGRESSIVE GROWTH AUV at Beginning of Period $10.00 (6) AUV at End of Period $10.79 Number of Accumulation Units Outstanding at End of Period 1,223 ING SALOMON BROTHERS ALL CAP AUV at Beginning of Period $8.39 $11.50 $12.23 (1) AUV at End of Period $11.41 $8.39 $11.50 Number of Accumulation Units Outstanding at End of Period 204,499 186,269 101,330 ING SALOMON BROTHERS INVESTORS AUV at Beginning of Period $7.92 $10.49 $11.48 (1) AUV at End of Period $10.18 $7.92 $10.49 Number of Accumulation Units Outstanding at End of Period 46,270 88,534 50,349 Access - 131789 A56 2003 2002 2001 ------------------------------------- ING T. ROWE PRICE CAPITAL APPRECIATION AUV at Beginning of Period $25.46 $25.87 $25.75 (1) AUV at End of Period $31.24 $25.46 $25.87 Number of Accumulation Units Outstanding at End of Period 163,215 122,476 43,670 ING T. ROWE PRICE EQUITY INCOME AUV at Beginning of Period $18.63 $21.91 $22.33 (1) AUV at End of Period $22.84 $18.63 $21.91 Number of Accumulation Units Outstanding at End of Period 94,965 69,736 27,313 ING UBS U.S. BALANCED AUV at Beginning of Period $7.16 (8) AUV at End of Period $8.27 Number of Accumulation Units Outstanding at End of Period 40,435 ING VAN KAMPEN EQUITY GROWTH AUV at Beginning of Period $7.79 $10.00 (4) AUV at End of Period $9.43 Number of Accumulation Units Outstanding at End of Period 5,115 -- ING VAN KAMPEN GLOBAL FRANCHISE AUV at Beginning of Period $8.81 $10.00 (4) AUV at End of Period $10.89 $8.81 Number of Accumulation Units Outstanding at End of Period 14,218 5,968 ING VAN KAMPEN GROWTH & INCOME AUV at Beginning of Period $17.09 $20.47 $21.76 (1) AUV at End of Period $21.41 $17.09 $20.47 Number of Accumulation Units Outstanding at End of Period 52,462 40,928 20,784 ING VAN KAMPEN REAL ESTATE AUV at Beginning of Period $25.56 $26.04 $24.32 (1) AUV at End of Period $34.48 $25.56 $26.04 Number of Accumulation Units Outstanding at End of Period 40,493 28,955 8,514 ING VP BOND PORTFOLIO AUV at Beginning of Period $10.60 $10.00 (4) AUV at End of Period $11.01 $10.60 Number of Accumulation Units Outstanding at End of Period 61,348 9,277 ING VP GROWTH OPPORTUNITIES AUV at Beginning of Period $5.20 $7.76 $10.11 (1) AUV at End of Period $6.75 $5.20 $7.76 Number of Accumulation Units Outstanding at End of Period 14,496 4,918 6,308 ING VP INDEX PLUS LARGE CAP AUV at Beginning of Period $10.00 (5) AUV at End of Period $8.83 Number of Accumulation Units Outstanding at End of Period 9,730 ING VP MAGNACAP AUV at Beginning of Period $7.02 $9.31 $10.11 (1) AUV at End of Period $8.99 $7.02 $9.31 Number of Accumulation Units Outstanding at End of Period 13,071 18,132 11,483 ING VP SMALLCAP OPPORTUNITIES AUV at Beginning of Period $4.57 $8.30 $10.01 (1) AUV at End of Period $6.19 $4.57 $8.30 Number of Accumulation Units Outstanding at End of Period 66,684 54,433 21,418 Access - 131789 A57 2003 2002 2001 ------------------------------------- ING VP WORLDWIDE GROWTH AUV at Beginning of Period $5.12 $6.95 $8.34 (1) AUV at End of Period $6.47 $5.12 $6.95 Number of Accumulation Units Outstanding at End of Period 72,812 39,021 30,234 INVESCO VIF HEALTH SCIENCES AUV at Beginning of Period $7.58 $10.24 $10.00 (2) AUV at End of Period $9.49 $7.58 $10.24 Number of Accumulation Units Outstanding at End of Period 60,165 15,338 332 INVESCO VIF LEISURE FUND AUV at Beginning of Period $8.40 $10.00 (4) AUV at End of Period $10.59 $8.40 Number of Accumulation Units Outstanding at End of Period 17,964 3,612 INVESCO VIF FINANCIAL SERVICES AUV at Beginning of Period $7.78 $9.34 $10.00 (2) AUV at End of Period $9.88 $7.78 $9.34 Number of Accumulation Units Outstanding at End of Period 70,712 36,848 -- INVESCO VIF UTILITIES AUV at Beginning of Period $6.31 $8.08 $10.00 (2) AUV at End of Period $7.26 $6.31 $8.08 Number of Accumulation Units Outstanding at End of Period 9,527 814 -- JENNISON PORTFOLIO AUV at Beginning of Period $4.20 $6.23 $7.19 (1) AUV at End of Period $5.33 $4.20 $6.23 Number of Accumulation Units Outstanding at End of Period 18,949 22,367 21,785 PIMCO HIGH YIELD PORTFOLIO AUV at Beginning of Period $9.54 $9.86 $9.80 (1) AUV at End of Period $11.48 $9.54 $9.86 Number of Accumulation Units Outstanding at End of Period 394,260 186,396 54,726 PIMCO STOCKSPLUS GROWTH & INCOME AUV at Beginning of Period $7.80 $9.99 $10.97 (1) AUV at End of Period $9.97 $7.80 $9.99 Number of Accumulation Units Outstanding at End of Period 14,235 24,969 10,158 PIONEER FUND VCT AUV at Beginning of Period $7.40 $9.36 $10.00 (2) AUV at End of Period $8.95 $7.40 $9.36 Number of Accumulation Units Outstanding at End of Period 9,957 8,141 -- PIONEER MID CAP VALUE AUV at Beginning of Period $9.29 $10.70 $10.00 (2) AUV at End of Period $12.48 $9.29 $10.70 Number of Accumulation Units Outstanding at End of Period 50,383 28,194 660 PROFUND VP BULL AUV at Beginning of Period $6.59 $8.86 $10.00 (1) AUV at End of Period $8.11 $6.59 $8.86 Number of Accumulation Units Outstanding at End of Period 75,931 29,583 5,613 PROFUND VP EUROPE 30 AUV at Beginning of Period $5.98 $8.23 $10.05 (1) AUV at End of Period $8.13 $5.98 $8.23 Number of Accumulation Units Outstanding at End of Period 163,248 8,144 15,188 Access - 131789 A58 2003 2002 2001 ------------------------------------- PROFUND VP RISING RATES OPPORTUNITY AUV at Beginning of Period $10.00 (7) AUV at End of Period $9.35 Number of Accumulation Units Outstanding at End of Period 4,760 PROFUND VP SMALL CAP AUV at Beginning of Period $7.13 $9.39 $10.00 (1) AUV at End of Period $9.97 $7.13 $9.39 Number of Accumulation Units Outstanding at End of Period 132,957 7,373 12,960 SP JENNISON INTERNATIONAL GROWTH AUV at Beginning of Period $4.05 $5.36 $7.29 (1) AUV at End of Period $5.53 $4.05 $5.36 Number of Accumulation Units Outstanding at End of Period 60,765 34,977 11,906 FOOTNOTES (1) Fund First Available during May 2001 (2) Fund First Available during November 2001 (3) Fund First Available during December 2001 (4) Fund First Available during May 2002 (5) Fund First Available during August 2003 (6) Fund First Available during September 2003 (7) Fund First Available during October 2003 (8) Fund First Available during November 2003 2003 2002 2001 ------------------------------------- SEPARATE ACCOUNT ANNUAL CHARGES OF 2.10% AIM VI DENT DEMOGRAPHIC TRENDS AUV at Beginning of Period $7.28 $10.98 $10.00 (2) AUV at End of Period $9.79 $7.28 $10.98 Number of Accumulation Units Outstanding at End of Period 194,283 11,618 -- COLONIAL SMALL CAP VALUE AUV at Beginning of Period $10.00 (9) AUV at End of Period $13.79 Number of Accumulation Units Outstanding at End of Period 219,203 FIDELITY(R) VIP EQUITY--INCOME AUV at Beginning of Period $7.75 $9.56 (4) AUV at End of Period $9.87 $7.75 Number of Accumulation Units Outstanding at End of Period 448,420 54,904 FIDELITY(R) VIP GROWTH AUV at Beginning of Period $6.31 $9.24 (4) AUV at End of Period $8.18 $6.31 Number of Accumulation Units Outstanding at End of Period 875,428 107,165 ING AIM MID CAP GROWTH AUV at Beginning of Period $9.40 $14.05 $16.27 (1) AUV at End of Period $13.26 $9.40 $14.05 Number of Accumulation Units Outstanding at End of Period 224,903 63,802 21,990 ING ALLIANCE MID CAP GROWTH AUV at Beginning of Period $9.62 $14.05 $16.08 (1) AUV at End of Period $15.74 $9.62 $14.05 Number of Accumulation Units Outstanding at End of Period 439,259 184,179 63,924 ING AMERICAN FUNDS GROWTH AUV at Beginning of Period $10.00 (7) AUV at End of Period $10.75 Number of Accumulation Units Outstanding at End of Period 882,976 Access - 131789 A59 2003 2002 2001 ------------------------------------- ING AMERICAN FUNDS GROWTH-INCOME AUV at Beginning of Period $10.00 (7) AUV at End of Period $10.96 Number of Accumulation Units Outstanding at End of Period 709,118 ING AMERICAN FUNDS INTERNATIONAL AUV at Beginning of Period $10.00 (7) AUV at End of Period $11.59 Number of Accumulation Units Outstanding at End of Period 296,661 ING CAPITAL GUARDIAN LARGE CAP VALUE AUV at Beginning of Period $7.37 $9.88 $10.51 (1) AUV at End of Period $9.87 $7.37 $9.88 Number of Accumulation Units Outstanding at End of Period 2,105,769 916,295 261,939 ING CAPITAL GUARDIAN MANAGED GLOBAL AUV at Beginning of Period $12.82 $16.41 $19.19 (1) AUV at End of Period $17.11 $12.82 $16.41 Number of Accumulation Units Outstanding at End of Period 451,642 210,411 72,320 ING CAPITAL GUARDIAN SMALL CAP AUV at Beginning of Period $12.50 $17.12 $17.51 (1) AUV at End of Period $17.18 $12.50 $17.12 Number of Accumulation Units Outstanding at End of Period 734,792 350,649 77,139 ING DEVELOPING WORLD AUV at Beginning of Period $6.02 $6.89 $7.32 (1) AUV at End of Period $8.64 $6.02 $6.89 Number of Accumulation Units Outstanding at End of Period 251,031 87,622 52,358 ING EAGLE ASSET VALUE EQUITY AUV at Beginning of Period $14.15 $17.43 $19.13 (1) AUV at End of Period $17.35 $14.15 $17.43 Number of Accumulation Units Outstanding at End of Period 228,990 131,099 34,231 ING FMR(SM) DIVERSIFIED MID--CAP AUV at Beginning of Period $7.12 $9.01 $9.46 (1) AUV at End of Period $9.30 $7.12 $9.01 Number of Accumulation Units Outstanding at End of Period 724,929 492,026 76,525 ING GET FUND -- SERIES V AUV at Beginning of Period $10.00 (5) AUV at End of Period $9.68 Number of Accumulation Units Outstanding at End of Period 108,973 ING GET U.S. CORE PORTFOLIO - SERIES 1 AUV at Beginning of Period $10.00 (5) AUV at End of Period $10.21 Number of Accumulation Units Outstanding at End of Period 17,037 ING GOLDMAN SACHS INTERNET TOLLKEEPER AUV at Beginning of Period $4.59 $7.58 $10.00 (1) AUV at End of Period $6.34 $4.59 $7.58 Number of Accumulation Units Outstanding at End of Period 305,817 141,023 23,594 ING HARD ASSETS AUV at Beginning of Period $12.71 $12.88 $15.16 (1) AUV at End of Period $18.94 $12.71 $12.88 Number of Accumulation Units Outstanding at End of Period 147,526 43,248 2,531 Access - 131789 A60 2003 2002 2001 ------------------------------------- ING INTERNATIONAL EQUITY AUV at Beginning of Period $6.87 $8.37 $9.74 (3) AUV at End of Period $8.69 $6.87 $8.37 Number of Accumulation Units Outstanding at End of Period 291,624 132,383 2,399 ING JANUS GROWTH AND INCOME AUV at Beginning of Period $6.94 $8.79 $9.64 (1) AUV at End of Period $8.32 $6.94 $8.79 Number of Accumulation Units Outstanding at End of Period 854,803 584,691 164,770 ING JANUS SPECIAL EQUITY AUV at Beginning of Period $5.98 $8.25 $8.97 (1) AUV at End of Period $8.81 $5.98 $8.25 Number of Accumulation Units Outstanding at End of Period 149,245 96,355 38,065 ING JENNISON EQUITY OPPORTUNITIES AUV at Beginning of Period $13.94 $20.13 $22.86 (1) AUV at End of Period $17.90 $13.94 $20.13 Number of Accumulation Units Outstanding at End of Period 185,364 132,556 41,070 ING JP MORGAN FLEMING INTERNATIONAL AUV at Beginning of Period $10.00 (7) AUV at End of Period $11.85 Number of Accumulation Units Outstanding at End of Period 22,489 ING JP MORGAN FLEMING SMALLCAP AUV at Beginning of Period $7.81 $10.00 (4) AUV at End of Period $10.26 $7.81 Number of Accumulation Units Outstanding at End of Period 260,352 37,674 ING JULIUS BAER FOREIGN AUV at Beginning of Period $8.19 $10.00 (4) AUV at End of Period $10.51 $8.19 Number of Accumulation Units Outstanding at End of Period 128,362 6,369 ING LIMITED MATURITY BOND AUV at Beginning of Period $18.23 $17.36 $16.70 (1) AUV at End of Period $18.35 $18.23 $17.36 Number of Accumulation Units Outstanding at End of Period 390,766 187,662 63,527 ING LIQUID ASSETS AUV at Beginning of Period $14.33 $14.43 $14.34 (1) AUV at End of Period $14.13 $14.33 $14.43 Number of Accumulation Units Outstanding at End of Period 735,857 514,409 261,606 ING MARSICO GROWTH AUV at Beginning of Period $10.02 $14.53 $18.99 (1) AUV at End of Period $13.02 $10.02 $14.53 Number of Accumulation Units Outstanding at End of Period 845,399 311,442 126,140 ING MERCURY FOCUS VALUE AUV at Beginning of Period $8.33 $10.00 (4) AUV at End of Period $10.70 $8.33 Number of Accumulation Units Outstanding at End of Period 99,430 15,878 Access - 131789 A61 2003 2002 2001 ------------------------------------- ING MERCURY FUNDAMENTAL GROWTH AUV at Beginning of Period $7.94 $10.00 (4) AUV at End of Period $9.86 $7.94 Number of Accumulation Units Outstanding at End of Period 38,135 8,896 ING MFS MID CAP GROWTH AUV at Beginning of Period $15.16 $30.25 $39.25 (1) AUV at End of Period $20.65 $15.16 $30.25 Number of Accumulation Units Outstanding at End of Period 527,276 309,801 93,233 ING MFS RESEARCH AUV at Beginning of Period $14.27 $19.40 $23.11 (1) AUV at End of Period $17.41 $14.27 $19.40 Number of Accumulation Units Outstanding at End of Period 360,253 215,283 85,348 ING MFS TOTAL RETURN AUV at Beginning of Period $18.14 $19.52 $20.00 (1) AUV at End of Period $20.73 $18.14 $19.52 Number of Accumulation Units Outstanding at End of Period 1,114,951 687,305 203,036 ING PIMCO CORE BOND AUV at Beginning of Period $11.98 $11.26 $10.88 (1) AUV at End of Period $12.29 $11.98 $11.26 Number of Accumulation Units Outstanding at End of Period 1,262,012 836,451 221,684 ING SALOMON BROTHERS AGGRESSIVE GROWTH AUV at Beginning of Period $10.00 (7) AUV at End of Period $10.79 Number of Accumulation Units Outstanding at End of Period 109,745 ING SALOMON BROTHERS ALL CAP AUV at Beginning of Period $8.37 $11.49 $12.23 (1) AUV at End of Period $11.38 $8.37 $11.49 Number of Accumulation Units Outstanding at End of Period 1,445,599 892,250 225,937 ING SALOMON BROTHERS INVESTORS AUV at Beginning of Period $7.91 $10.48 $11.47 (1) AUV at End of Period $10.16 $7.91 $10.48 Number of Accumulation Units Outstanding at End of Period 474,812 294,204 136,482 ING T. ROWE PRICE CAPITAL APPRECIATION AUV at Beginning of Period $25.28 $25.70 $25.59 (1) AUV at End of Period $31.00 $25.28 $25.70 Number of Accumulation Units Outstanding at End of Period 998,381 442,657 92,605 ING T. ROWE PRICE EQUITY INCOME AUV at Beginning of Period $18.50 $21.77 $22.19 (1) AUV at End of Period $22.67 $18.50 $21.77 Number of Accumulation Units Outstanding at End of Period 860,125 425,112 107,272 ING UBS U.S. BALANCED AUV at Beginning of Period $7.15 (9) AUV at End of Period $8.26 Number of Accumulation Units Outstanding at End of Period 294,927 ING VAN KAMPEN EQUITY GROWTH AUV at Beginning of Period $7.78 $10.00 (4) AUV at End of Period $9.42 $7.78 Number of Accumulation Units Outstanding at End of Period 138,420 10,422 Access - 131789 A62 2003 2002 2001 ------------------------------------- ING VAN KAMPEN GLOBAL FRANCHISE AUV at Beginning of Period $8.80 $10.00 (4) AUV at End of Period $10.88 $8.80 Number of Accumulation Units Outstanding at End of Period 200,135 40,258 ING VAN KAMPEN GROWTH & INCOME AUV at Beginning of Period $17.01 $20.39 $21.68 (1) AUV at End of Period $21.30 $17.01 $20.39 Number of Accumulation Units Outstanding at End of Period 424,242 180,352 51,722 ING VAN KAMPEN REAL ESTATE AUV at Beginning of Period $25.38 $25.87 $24.17 (1) AUV at End of Period $34.22 $25.38 $25.87 Number of Accumulation Units Outstanding at End of Period 182,707 77,757 7,350 ING VP BOND PORTFOLIO AUV at Beginning of Period $10.59 $10.00 (4) AUV at End of Period $11.00 $10.59 Number of Accumulation Units Outstanding at End of Period 182,945 20,543 ING VP GROWTH OPPORTUNITIES AUV at Beginning of Period $5.20 $7.75 $10.11 (1) AUV at End of Period $6.74 $5.20 $7.75 Number of Accumulation Units Outstanding at End of Period 137,234 68,491 6,269 ING VP INDEX PLUS LARGE CAP AUV at Beginning of Period $10.00 (6) AUV at End of Period $8.82 Number of Accumulation Units Outstanding at End of Period 247,476 ING VP MAGNACAP AUV at Beginning of Period $7.02 $9.31 $10.11 (1) AUV at End of Period $8.98 $7.02 $9.31 Number of Accumulation Units Outstanding at End of Period 60,421 41,229 10,474 ING VP SMALLCAP OPPORTUNITIES AUV at Beginning of Period $4.57 $8.29 $10.01 (1) AUV at End of Period $6.19 $4.57 $8.29 Number of Accumulation Units Outstanding at End of Period 521,035 249,714 45,115 ING VP WORLDWIDE GROWTH AUV at Beginning of Period $5.11 $6.94 $8.34 (1) AUV at End of Period $6.46 $5.11 $6.94 Number of Accumulation Units Outstanding at End of Period 252,106 138,853 46,282 INVESCO VIF HEALTH SCIENCES AUV at Beginning of Period $7.57 $10.24 $10.00 (2) AUV at End of Period $9.47 $7.57 $10.24 Number of Accumulation Units Outstanding at End of Period 324,507 151,077 466 INVESCO VIF LEISURE FUND AUV at Beginning of Period $8.40 $10.00 (4) AUV at End of Period $10.58 $8.40 Number of Accumulation Units Outstanding at End of Period 125,871 40,592 INVESCO VIF FINANCIAL SERVICES AUV at Beginning of Period $7.78 $9.33 $10.00 (2) AUV at End of Period $9.87 $7.78 $9.33 Number of Accumulation Units Outstanding at End of Period 144,891 84,291 3,260 Access - 131789 A63 2003 2002 2001 ------------------------------------- INVESCO VIF UTILITIES AUV at Beginning of Period $6.30 $8.08 $10.00 (2) AUV at End of Period $7.25 $6.30 $8.08 Number of Accumulation Units Outstanding at End of Period 131,724 52,671 -- JENNISON PORTFOLIO AUV at Beginning of Period $4.19 $6.22 $7.19 (1) AUV at End of Period $5.32 $4.19 $6.22 Number of Accumulation Units Outstanding at End of Period 449,625 265,344 70,772 PIMCO HIGH YIELD PORTFOLIO AUV at Beginning of Period $9.52 $9.84 $9.79 (1) AUV at End of Period $11.45 $9.52 $9.84 Number of Accumulation Units Outstanding at End of Period 1,314,393 423,832 118,177 PIMCO STOCKSPLUS GROWTH & INCOME AUV at Beginning of Period $7.79 $9.97 $10.95 (1) AUV at End of Period $9.94 $7.79 $9.97 Number of Accumulation Units Outstanding at End of Period 255,345 218,962 61,575 PIONEER FUND VCT AUV at Beginning of Period $7.39 $9.35 $10.00 (2) AUV at End of Period $8.94 $7.39 $9.35 Number of Accumulation Units Outstanding at End of Period 342,392 57,294 -- PIONEER MID CAP VALUE AUV at Beginning of Period $9.29 $10.70 $10.00 (2) AUV at End of Period $12.46 $9.29 $10.70 Number of Accumulation Units Outstanding at End of Period 732,031 145,463 -- PROFUND VP BULL AUV at Beginning of Period $6.59 $8.85 $10.00 (1) AUV at End of Period $8.10 $6.59 $8.85 Number of Accumulation Units Outstanding at End of Period 83,177 23,783 1,814 PROFUND VP EUROPE 30 AUV at Beginning of Period $5.98 $8.23 $10.05 (1) AUV at End of Period $8.12 $5.98 $8.23 Number of Accumulation Units Outstanding at End of Period 67,213 17,650 -- PROFUND VP RISING RATES OPPORTUNITY AUV at Beginning of Period $10.00 (8) AUV at End of Period $9.34 Number of Accumulation Units Outstanding at End of Period 26,719 PROFUND VP SMALL CAP AUV at Beginning of Period $7.13 $9.39 $10.00 (1) AUV at End of Period $9.96 $7.13 $9.39 Number of Accumulation Units Outstanding at End of Period 255,439 68,579 12,110 SP JENNISON INTERNATIONAL GROWTH AUV at Beginning of Period $4.05 $5.36 $7.29 (1) AUV at End of Period $5.52 $4.05 $5.36 Number of Accumulation Units Outstanding at End of Period 640,197 156,994 86,394 FOOTNOTES (1) Fund First Available during May 2001 (2) Fund First Available during November 2001 (3) Fund First Available during December 2001 (4) Fund First Available during May 2002 (5) Fund First Available during June 2003 Access - 131789 A64 (6) Fund First Available during August 2003 (7) Fund First Available during September 2003 (8) Fund First Available during October 2003 (9) Fund First Available during November 2003 2003 2002 2001 ------------------------------------- SEPARATE ACCOUNT ANNUAL CHARGES OF 2.15% AIM VI DENT DEMOGRAPHIC TRENDS AUV at Beginning of Period $7.27 $10.98 $10.00 (2) AUV at End of Period $9.77 $7.27 $10.98 Number of Accumulation Units Outstanding at End of Period 17,993 8,919 228 COLONIAL SMALL CAP VALUE AUV at Beginning of Period $10.00 (8) AUV at End of Period $13.78 Number of Accumulation Units Outstanding at End of Period 12,195 FIDELITY(R) VIP EQUITY--INCOME AUV at Beginning of Period $7.75 $9.56 (4) AUV at End of Period $9.86 $7.75 Number of Accumulation Units Outstanding at End of Period 105,157 46,318 FIDELITY(R) VIP GROWTH AUV at Beginning of Period $6.30 $9.24 (4) AUV at End of Period $8.17 $6.30 Number of Accumulation Units Outstanding at End of Period 288,829 72,401 ING AIM MID CAP GROWTH AUV at Beginning of Period $9.36 $14.01 $16.23 (1) AUV at End of Period $13.21 $9.36 $14.01 Number of Accumulation Units Outstanding at End of Period 53,896 20,219 11,976 ING ALLIANCE MID CAP GROWTH AUV at Beginning of Period $9.59 $14.01 $16.04 (1) AUV at End of Period $15.67 $9.59 $14.01 Number of Accumulation Units Outstanding at End of Period 88,834 58,703 45,184 ING AMERICAN FUNDS GROWTH AUV at Beginning of Period $10.00 (6) AUV at End of Period $10.74 Number of Accumulation Units Outstanding at End of Period 10,783 ING AMERICAN FUNDS GROWTH-INCOME AUV at Beginning of Period $10.00 (6) AUV at End of Period $10.96 Number of Accumulation Units Outstanding at End of Period 5,853 ING AMERICAN FUNDS INTERNATIONAL AUV at Beginning of Period $10.00 (6) AUV at End of Period $11.59 Number of Accumulation Units Outstanding at End of Period 579 ING CAPITAL GUARDIAN LARGE CAP VALUE AUV at Beginning of Period $7.36 $9.87 $10.50 (1) AUV at End of Period $9.85 $7.36 $9.87 Number of Accumulation Units Outstanding at End of Period 293,879 190,461 82,699 Access - 131789 A65 2003 2002 2001 ------------------------------------- ING CAPITAL GUARDIAN MANAGED GLOBAL AUV at Beginning of Period $12.75 $16.33 $19.11 (1) AUV at End of Period $17.01 $12.75 $16.33 Number of Accumulation Units Outstanding at End of Period 83,078 59,805 32,608 ING CAPITAL GUARDIAN SMALL CAP AUV at Beginning of Period $12.46 $17.07 $17.47 (1) AUV at End of Period $17.11 $12.46 $17.07 Number of Accumulation Units Outstanding at End of Period 90,553 54,702 21,559 ING DEVELOPING WORLD AUV at Beginning of Period $6.01 $6.87 $7.30 (1) AUV at End of Period $8.62 $6.01 $6.87 Number of Accumulation Units Outstanding at End of Period 22,800 14,127 9,241 ING EAGLE ASSET VALUE EQUITY AUV at Beginning of Period $14.09 $17.36 $19.07 (1) AUV at End of Period $17.27 $14.09 $17.36 Number of Accumulation Units Outstanding at End of Period 27,223 19,840 7,195 ING FMR(SM) DIVERSIFIED MID--CAP AUV at Beginning of Period $7.11 $9.01 $9.46 (1) AUV at End of Period $9.28 $7.11 $9.01 Number of Accumulation Units Outstanding at End of Period 119,998 74,631 17,789 ING GOLDMAN SACHS INTERNET TOLLKEEPER AUV at Beginning of Period $4.59 $7.58 $10.00 (1) AUV at End of Period $6.33 $4.59 $7.58 Number of Accumulation Units Outstanding at End of Period 52,483 23,046 14,867 ING HARD ASSETS AUV at Beginning of Period $12.62 $12.79 $15.06 (1) AUV at End of Period $18.80 $12.62 $12.79 Number of Accumulation Units Outstanding at End of Period 18,382 11,015 6,076 ING INTERNATIONAL EQUITY AUV at Beginning of Period $6.85 $8.35 $9.72 (3) AUV at End of Period $8.66 $6.85 $8.35 Number of Accumulation Units Outstanding at End of Period 53,716 28,442 -- ING JANUS GROWTH AND INCOME AUV at Beginning of Period $6.93 $8.79 $9.64 (1) AUV at End of Period $8.31 $6.93 $8.79 Number of Accumulation Units Outstanding at End of Period 159,409 103,609 26,573 ING JANUS SPECIAL EQUITY AUV at Beginning of Period $5.97 $8.24 $8.97 (1) AUV at End of Period $8.79 $5.97 $8.24 Number of Accumulation Units Outstanding at End of Period 35,657 7,583 5,305 ING JENNISON EQUITY OPPORTUNITIES AUV at Beginning of Period $13.87 $20.03 $22.76 (1) AUV at End of Period $17.79 $13.87 $20.03 Number of Accumulation Units Outstanding at End of Period 35,728 34,166 10,853 ING JP MORGAN FLEMING INTERNATIONAL AUV at Beginning of Period $10.00 (6) AUV at End of Period $11.84 Number of Accumulation Units Outstanding at End of Period 326 Access - 131789 A66 2003 2002 2001 ------------------------------------- ING JP MORGAN FLEMING SMALLCAP AUV at Beginning of Period $7.81 $10.00 (4) AUV at End of Period $10.25 $7.81 Number of Accumulation Units Outstanding at End of Period 24,074 47 ING JULIUS BAER FOREIGN AUV at Beginning of Period $8.18 $10.00 (4) AUV at End of Period $10.50 $8.18 Number of Accumulation Units Outstanding at End of Period 20,181 4,137 ING LIMITED MATURITY BOND AUV at Beginning of Period $18.10 $17.25 $16.60 (1) AUV at End of Period $18.21 $18.10 $17.25 Number of Accumulation Units Outstanding at End of Period 130,050 102,238 14,995 ING LIQUID ASSETS AUV at Beginning of Period $14.23 $14.34 $14.25 (1) AUV at End of Period $14.03 $14.23 $14.34 Number of Accumulation Units Outstanding at End of Period 127,143 102,402 131,130 ING MARSICO GROWTH AUV at Beginning of Period $9.99 $14.49 $18.95 (1) AUV at End of Period $12.97 $9.99 $14.49 Number of Accumulation Units Outstanding at End of Period 106,576 62,460 50,456 ING MERCURY FOCUS VALUE AUV at Beginning of Period $8.33 $10.00 (4) AUV at End of Period $10.69 $8.33 Number of Accumulation Units Outstanding at End of Period 116,975 20,649 ING MERCURY FUNDAMENTAL GROWTH AUV at Beginning of Period $7.93 $10.00 (4) AUV at End of Period $9.86 $7.93 Number of Accumulation Units Outstanding at End of Period 1,932 297 ING MFS MID CAP GROWTH AUV at Beginning of Period $15.10 $30.14 $39.11 (1) AUV at End of Period $20.55 $15.10 $30.14 Number of Accumulation Units Outstanding at End of Period 83,428 60,108 29,442 ING MFS RESEARCH AUV at Beginning of Period $14.21 $19.33 $23.03 (1) AUV at End of Period $17.32 $14.21 $19.33 Number of Accumulation Units Outstanding at End of Period 60,270 58,224 35,638 ING MFS TOTAL RETURN AUV at Beginning of Period $18.06 $19.45 $19.93 (1) AUV at End of Period $20.63 $18.06 $19.45 Number of Accumulation Units Outstanding at End of Period 244,840 123,964 62,233 ING PIMCO CORE BOND AUV at Beginning of Period $11.93 $11.22 $10.84 (1) AUV at End of Period $12.23 $11.93 $11.22 Number of Accumulation Units Outstanding at End of Period 276,508 299,610 75,861 ING SALOMON BROTHERS AGGRESSIVE GROWTH AUV at Beginning of Period $10.00 (6) AUV at End of Period $10.79 Number of Accumulation Units Outstanding at End of Period 5,179 Access - 131789 A67 2003 2002 2001 ------------------------------------- ING SALOMON BROTHERS ALL CAP AUV at Beginning of Period $8.36 $11.48 $12.22 (1) AUV at End of Period $11.36 $8.36 $11.48 Number of Accumulation Units Outstanding at End of Period 155,281 142,958 31,699 ING SALOMON BROTHERS INVESTORS AUV at Beginning of Period $7.89 $10.47 $11.46 (1) AUV at End of Period $10.14 $7.89 $10.47 Number of Accumulation Units Outstanding at End of Period 46,480 33,194 16,003 ING T. ROWE PRICE CAPITAL APPRECIATION AUV at Beginning of Period $25.10 $25.53 $25.43 (1) AUV at End of Period $30.76 $25.10 $25.53 Number of Accumulation Units Outstanding at End of Period 261,019 164,221 43,006 ING T. ROWE PRICE EQUITY INCOME AUV at Beginning of Period $18.37 $21.62 $22.05 (1) AUV at End of Period $22.50 $18.37 $21.62 Number of Accumulation Units Outstanding at End of Period 138,973 90,035 25,078 ING UBS U.S. BALANCED AUV at Beginning of Period $7.14 (8) AUV at End of Period $8.24 Number of Accumulation Units Outstanding at End of Period 49,854 ING VAN KAMPEN EQUITY GROWTH AUV at Beginning of Period $7.78 $10.00 (4) AUV at End of Period $9.42 Number of Accumulation Units Outstanding at End of Period 11,021 -- ING VAN KAMPEN GLOBAL FRANCHISE AUV at Beginning of Period $8.80 $10.00 (4) AUV at End of Period $10.87 $8.80 Number of Accumulation Units Outstanding at End of Period 18,945 1,758 ING VAN KAMPEN GROWTH & INCOME AUV at Beginning of Period $16.93 $20.30 $21.59 (1) AUV at End of Period $21.19 $16.93 $20.30 Number of Accumulation Units Outstanding at End of Period 93,569 38,925 13,112 ING VAN KAMPEN REAL ESTATE AUV at Beginning of Period $25.20 $25.70 $24.02 (1) AUV at End of Period $33.96 $25.20 $25.70 Number of Accumulation Units Outstanding at End of Period 34,934 17,947 6,621 ING VP BOND PORTFOLIO AUV at Beginning of Period $10.59 $10.00 (4) AUV at End of Period $10.99 $10.59 Number of Accumulation Units Outstanding at End of Period 29,781 45,162 ING VP GROWTH OPPORTUNITIES AUV at Beginning of Period $5.19 $7.75 $10.11 (1) AUV at End of Period $6.73 $5.19 $7.75 Number of Accumulation Units Outstanding at End of Period 22,604 11,587 2,926 ING VP INDEX PLUS LARGE CAP AUV at Beginning of Period $10.00 (5) AUV at End of Period $8.81 Number of Accumulation Units Outstanding at End of Period 27,484 Access - 131789 A68 2003 2002 2001 ------------------------------------- ING VP MAGNACAP AUV at Beginning of Period $7.01 $9.31 $10.11 (1) AUV at End of Period $8.97 $7.01 $9.31 Number of Accumulation Units Outstanding at End of Period 12,012 12,376 4,684 ING VP SMALLCAP OPPORTUNITIES AUV at Beginning of Period $4.56 $8.29 $10.01 (1) AUV at End of Period $6.18 $4.56 $8.29 Number of Accumulation Units Outstanding at End of Period 55,730 46,046 6,290 ING VP WORLDWIDE GROWTH AUV at Beginning of Period $5.10 $6.93 $8.33 (1) AUV at End of Period $6.45 $5.10 $6.93 Number of Accumulation Units Outstanding at End of Period 61,656 57,393 20,405 INVESCO VIF HEALTH SCIENCES AUV at Beginning of Period $7.57 $10.24 $10.00 (2) AUV at End of Period $9.46 $7.57 $10.24 Number of Accumulation Units Outstanding at End of Period 56,040 9,189 1,063 INVESCO VIF LEISURE FUND AUV at Beginning of Period $8.40 $10.00 (4) AUV at End of Period $10.57 $8.40 Number of Accumulation Units Outstanding at End of Period 113,886 17,360 INVESCO VIF FINANCIAL SERVICES AUV at Beginning of Period $7.77 $9.33 $10.00 (2) AUV at End of Period $9.85 $7.77 $9.33 Number of Accumulation Units Outstanding at End of Period 10,908 8,074 3,752 INVESCO VIF UTILITIES AUV at Beginning of Period $6.30 $8.08 $10.00 (2) AUV at End of Period $7.24 $6.30 $8.08 Number of Accumulation Units Outstanding at End of Period 15,817 24,927 -- JENNISON PORTFOLIO AUV at Beginning of Period $4.19 $6.22 $7.18 (1) AUV at End of Period $5.31 $4.19 $6.22 Number of Accumulation Units Outstanding at End of Period 248,869 78,264 14,542 PIMCO HIGH YIELD PORTFOLIO AUV at Beginning of Period $9.50 $9.82 $9.77 (1) AUV at End of Period $11.42 $9.50 $9.82 Number of Accumulation Units Outstanding at End of Period 176,459 64,823 27,443 PIMCO STOCKSPLUS GROWTH & INCOME AUV at Beginning of Period $7.77 $9.95 $10.94 (1) AUV at End of Period $9.91 $7.77 $9.95 Number of Accumulation Units Outstanding at End of Period 43,840 59,533 20,309 PIONEER FUND VCT AUV at Beginning of Period $7.39 $9.35 $10.00 (2) AUV at End of Period $8.93 $7.39 $9.35 Number of Accumulation Units Outstanding at End of Period 27,046 19,166 -- PIONEER MID CAP VALUE AUV at Beginning of Period $9.28 $10.70 $10.00 (2) AUV at End of Period $12.45 $9.28 $10.70 Number of Accumulation Units Outstanding at End of Period 78,912 25,875 -- Access - 131789 A69 2003 2002 2001 ------------------------------------- PROFUND VP BULL AUV at Beginning of Period $6.58 $8.85 $10.00 (1) AUV at End of Period $8.09 $6.58 $8.85 Number of Accumulation Units Outstanding at End of Period 46,761 32,743 900 PROFUND VP EUROPE 30 AUV at Beginning of Period $5.97 $8.22 $10.05 (1) AUV at End of Period $8.11 $5.97 $8.22 Number of Accumulation Units Outstanding at End of Period 7,179 1,104 7,153 PROFUND VP RISING RATES OPPORTUNITY AUV at Beginning of Period $10.00 (7) AUV at End of Period $9.34 Number of Accumulation Units Outstanding at End of Period 4,883 PROFUND VP SMALL CAP AUV at Beginning of Period $7.12 $9.38 $10.00 (1) AUV at End of Period $9.95 $7.12 $9.38 Number of Accumulation Units Outstanding at End of Period 50,629 12,461 4,031 SP JENNISON INTERNATIONAL GROWTH AUV at Beginning of Period $4.05 $5.36 $7.29 (1) AUV at End of Period $5.51 $4.05 $5.36 Number of Accumulation Units Outstanding at End of Period 54,941 16,084 3,450 FOOTNOTES (1) Fund First Available during May 2001 (2) Fund First Available during November 2001 (3) Fund First Available during December 2001 (4) Fund First Available during May 2002 (5) Fund First Available during August 2003 (6) Fund First Available during September 2003 (7) Fund First Available during October 2003 (8) Fund First Available during November 2003 2003 2002 2001 ------------------------------------- SEPARATE ACCOUNT ANNUAL CHARGES OF 2.25% AIM VI DENT DEMOGRAPHIC TRENDS AUV at Beginning of Period $7.27 $10.97 $10.00 (2) AUV at End of Period $9.75 $7.27 $10.97 Number of Accumulation Units Outstanding at End of Period 122,172 109,981 724 COLONIAL SMALL CAP VALUE AUV at Beginning of Period $10.00 (8) AUV at End of Period $13.77 Number of Accumulation Units Outstanding at End of Period 48,951 FIDELITY(R) VIP EQUITY--INCOME AUV at Beginning of Period $7.74 $9.55 (4) AUV at End of Period $9.83 $7.74 Number of Accumulation Units Outstanding at End of Period 90,841 7,498 FIDELITY(R) VIP GROWTH AUV at Beginning of Period $6.29 $9.23 (4) AUV at End of Period $8.15 $6.29 Number of Accumulation Units Outstanding at End of Period 193,182 13,477 Access - 131789 A70 2003 2002 2001 ------------------------------------- ING AIM MID CAP GROWTH AUV at Beginning of Period $9.29 $13.92 $16.13 (1) AUV at End of Period $13.10 $9.29 $13.92 Number of Accumulation Units Outstanding at End of Period 74,897 28,984 32,366 ING ALLIANCE MID CAP GROWTH AUV at Beginning of Period $9.52 $13.93 $15.96 (1) AUV at End of Period $15.55 $9.52 $13.93 Number of Accumulation Units Outstanding at End of Period 161,397 67,393 35,302 ING AMERICAN FUNDS GROWTH AUV at Beginning of Period $10.00 (6) AUV at End of Period $10.74 Number of Accumulation Units Outstanding at End of Period 193,356 ING AMERICAN FUNDS GROWTH-INCOME AUV at Beginning of Period $10.00 (6) AUV at End of Period $10.96 Number of Accumulation Units Outstanding at End of Period 148,093 ING AMERICAN FUNDS INTERNATIONAL AUV at Beginning of Period $10.00 (6) AUV at End of Period $11.58 Number of Accumulation Units Outstanding at End of Period 35,476 ING CAPITAL GUARDIAN LARGE CAP VALUE AUV at Beginning of Period $7.34 $9.86 $10.49 (1) AUV at End of Period $9.81 $7.34 $9.86 Number of Accumulation Units Outstanding at End of Period 628,349 486,302 172,888 ING CAPITAL GUARDIAN MANAGED GLOBAL AUV at Beginning of Period $12.62 $16.18 $18.94 (1) AUV at End of Period $16.82 $12.62 $16.18 Number of Accumulation Units Outstanding at End of Period 163,908 102,390 55,217 ING CAPITAL GUARDIAN SMALL CAP AUV at Beginning of Period $12.37 $16.97 $17.37 (1) AUV at End of Period $16.97 $12.37 $16.97 Number of Accumulation Units Outstanding at End of Period 170,485 69,008 36,881 ING DEVELOPING WORLD AUV at Beginning of Period $5.98 $6.85 $7.28 (1) AUV at End of Period $8.57 $5.98 $6.85 Number of Accumulation Units Outstanding at End of Period 58,908 39,283 28,075 ING EAGLE ASSET VALUE EQUITY AUV at Beginning of Period $13.98 $17.24 $18.95 (1) AUV at End of Period $17.12 $13.98 $17.24 Number of Accumulation Units Outstanding at End of Period 58,776 48,682 50,098 ING FMR(SM) DIVERSIFIED MID--CAP AUV at Beginning of Period $7.09 $8.99 $9.46 (1) AUV at End of Period $9.25 $7.09 $8.99 Number of Accumulation Units Outstanding at End of Period 221,767 181,302 78,758 ING GET FUND -- SERIES V AUV at Beginning of Period $10.00 AUV at End of Period $9.66 Number of Accumulation Units Outstanding at End of Period 7,052 Access - 131789 A71 2003 2002 2001 ------------------------------------- ING GOLDMAN SACHS INTERNET TOLLKEEPER AUV at Beginning of Period $4.58 $7.57 $10.00 (1) AUV at End of Period $6.31 $4.58 $7.57 Number of Accumulation Units Outstanding at End of Period 140,904 80,240 12,668 ING HARD ASSETS AUV at Beginning of Period $12.44 $12.63 $14.88 (1) AUV at End of Period $18.51 $12.44 $12.63 Number of Accumulation Units Outstanding at End of Period 61,074 23,773 9,098 ING INTERNATIONAL EQUITY AUV at Beginning of Period $6.80 $8.30 $9.67 (3) AUV at End of Period $8.59 $6.80 $8.30 Number of Accumulation Units Outstanding at End of Period 58,270 28,307 -- ING JANUS GROWTH AND INCOME AUV at Beginning of Period $6.91 $8.78 $9.63 (1) AUV at End of Period $8.28 $6.91 $8.78 Number of Accumulation Units Outstanding at End of Period 311,748 255,764 80,339 ING JANUS SPECIAL EQUITY AUV at Beginning of Period $5.96 $8.23 $8.96 (1) AUV at End of Period $8.76 $5.96 $8.23 Number of Accumulation Units Outstanding at End of Period 63,791 19,023 5,941 ING JENNISON EQUITY OPPORTUNITIES AUV at Beginning of Period $13.72 $19.84 $22.55 (1) AUV at End of Period $17.58 $13.72 $19.84 Number of Accumulation Units Outstanding at End of Period 60,940 61,196 49,630 ING JP MORGAN FLEMING INTERNATIONAL AUV at Beginning of Period $10.00 (6) AUV at End of Period $11.84 Number of Accumulation Units Outstanding at End of Period 35,164 ING JP MORGAN FLEMING SMALLCAP AUV at Beginning of Period $7.80 $10.00 (4) AUV at End of Period $10.23 $7.80 Number of Accumulation Units Outstanding at End of Period 80,744 8,559 ING JULIUS BAER FOREIGN AUV at Beginning of Period $8.18 $10.00 (4) AUV at End of Period $10.49 $8.18 Number of Accumulation Units Outstanding at End of Period 59,011 3,184 ING LIMITED MATURITY BOND AUV at Beginning of Period $17.84 $17.02 $16.39 (1) AUV at End of Period $17.94 $17.84 $17.02 Number of Accumulation Units Outstanding at End of Period 166,520 117,720 33,665 ING LIQUID ASSETS AUV at Beginning of Period $14.03 $14.15 $14.07 (1) AUV at End of Period $13.81 $14.03 $14.15 Number of Accumulation Units Outstanding at End of Period 298,953 300,238 255,667 ING MARSICO GROWTH AUV at Beginning of Period $9.92 $14.41 $18.85 (1) AUV at End of Period $12.87 $9.92 $14.41 Number of Accumulation Units Outstanding at End of Period 280,718 134,110 58,239 Access - 131789 A72 2003 2002 2001 ------------------------------------- ING MERCURY FOCUS VALUE AUV at Beginning of Period $8.32 $10.00 (4) AUV at End of Period $10.68 $8.32 Number of Accumulation Units Outstanding at End of Period 48,504 8,470 ING MERCURY FUNDAMENTAL GROWTH AUV at Beginning of Period $7.93 $10.00 (4) AUV at End of Period $9.84 Number of Accumulation Units Outstanding at End of Period 11,989 -- ING MFS MID CAP GROWTH AUV at Beginning of Period $14.97 $29.91 $38.85 (1) AUV at End of Period $20.36 $14.97 $29.91 Number of Accumulation Units Outstanding at End of Period 153,096 106,352 50,086 ING MFS RESEARCH AUV at Beginning of Period $14.09 $19.19 $22.88 (1) AUV at End of Period $17.16 $14.09 $19.19 Number of Accumulation Units Outstanding at End of Period 108,671 87,205 49,977 ING MFS TOTAL RETURN AUV at Beginning of Period $17.91 $19.30 $19.80 (1) AUV at End of Period $20.44 $17.91 $19.30 Number of Accumulation Units Outstanding at End of Period 365,773 192,907 77,305 ING PIMCO CORE BOND AUV at Beginning of Period $11.83 $11.14 $10.77 (1) AUV at End of Period $12.11 $11.83 $11.14 Number of Accumulation Units Outstanding at End of Period 413,995 390,105 70,210 ING SALOMON BROTHERS AGGRESSIVE GROWTH AUV at Beginning of Period $10.00 (6) AUV at End of Period $10.78 Number of Accumulation Units Outstanding at End of Period 18,268 ING SALOMON BROTHERS ALL CAP AUV at Beginning of Period $8.34 $11.46 $12.20 (1) AUV at End of Period $11.32 $8.34 $11.46 Number of Accumulation Units Outstanding at End of Period 453,453 381,030 202,778 ING SALOMON BROTHERS INVESTORS AUV at Beginning of Period $7.87 $10.45 $11.45 (1) AUV at End of Period $10.10 $7.87 $10.45 Number of Accumulation Units Outstanding at End of Period 226,875 215,195 96,447 ING T. ROWE PRICE CAPITAL APPRECIATION AUV at Beginning of Period $24.75 $25.20 $25.11 (1) AUV at End of Period $30.30 $24.75 $25.20 Number of Accumulation Units Outstanding at End of Period 322,552 217,796 93,509 ING T. ROWE PRICE EQUITY INCOME AUV at Beginning of Period $18.11 $21.34 $21.78 (1) AUV at End of Period $22.16 $18.11 $21.34 Number of Accumulation Units Outstanding at End of Period 199,468 94,236 36,453 ING UBS U.S. BALANCED AUV at Beginning of Period $7.12 (8) AUV at End of Period $8.22 Number of Accumulation Units Outstanding at End of Period 84,959 Access - 131789 A73 2003 2002 2001 ------------------------------------- ING VAN KAMPEN EQUITY GROWTH AUV at Beginning of Period $7.78 $10.00 (4) AUV at End of Period $9.40 $7.78 Number of Accumulation Units Outstanding at End of Period 38,293 852 ING VAN KAMPEN GLOBAL FRANCHISE AUV at Beginning of Period $8.80 $10.00 (4) AUV at End of Period $10.85 $8.80 Number of Accumulation Units Outstanding at End of Period 104,916 34,646 ING VAN KAMPEN GROWTH & INCOME AUV at Beginning of Period $16.77 $20.13 $21.43 (1) AUV at End of Period $20.97 $16.77 $20.13 Number of Accumulation Units Outstanding at End of Period 120,772 69,528 27,685 ING VAN KAMPEN REAL ESTATE AUV at Beginning of Period $24.84 $25.36 $23.72 (1) AUV at End of Period $33.44 $24.84 $25.36 Number of Accumulation Units Outstanding at End of Period 88,514 48,341 16,849 ING VP BOND PORTFOLIO AUV at Beginning of Period $10.58 $10.00 (4) AUV at End of Period $10.97 $10.58 Number of Accumulation Units Outstanding at End of Period 49,929 93,174 ING VP GROWTH OPPORTUNITIES AUV at Beginning of Period $5.19 $7.75 $10.11 (1) AUV at End of Period $6.71 $5.19 $7.75 Number of Accumulation Units Outstanding at End of Period 100,540 49,553 5,215 ING VP INDEX PLUS LARGE CAP AUV at Beginning of Period $10.00 (5) AUV at End of Period $8.79 Number of Accumulation Units Outstanding at End of Period 129,806 ING VP MAGNACAP AUV at Beginning of Period $7.00 $9.30 $10.11 (1) AUV at End of Period $8.94 $7.00 $9.30 Number of Accumulation Units Outstanding at End of Period 14,130 27,970 11,700 ING VP SMALLCAP OPPORTUNITIES AUV at Beginning of Period $4.55 $8.28 $10.01 (1) AUV at End of Period $6.16 $4.55 $8.28 Number of Accumulation Units Outstanding at End of Period 198,039 177,135 29,300 ING VP WORLDWIDE GROWTH AUV at Beginning of Period $5.09 $6.92 $8.32 (1) AUV at End of Period $6.42 $5.09 $6.92 Number of Accumulation Units Outstanding at End of Period 101,857 78,478 27,011 INVESCO VIF HEALTH SCIENCES AUV at Beginning of Period $7.56 $10.23 $10.00 (2) AUV at End of Period $9.44 $7.56 $10.23 Number of Accumulation Units Outstanding at End of Period 113,659 45,837 5,379 INVESCO VIF LEISURE FUND AUV at Beginning of Period $8.39 $10.00 (4) AUV at End of Period $10.55 $8.39 Number of Accumulation Units Outstanding at End of Period 18,403 7,579 Access - 131789 A74 2003 2002 2001 ------------------------------------- INVESCO VIF FINANCIAL SERVICES AUV at Beginning of Period $7.76 $9.33 $10.00 (2) AUV at End of Period $9.83 $7.76 $9.33 Number of Accumulation Units Outstanding at End of Period 45,305 32,860 107 INVESCO VIF UTILITIES AUV at Beginning of Period $6.29 $8.08 $10.00 (2) AUV at End of Period $7.22 $6.29 $8.08 Number of Accumulation Units Outstanding at End of Period 54,391 2,946 -- JENNISON PORTFOLIO AUV at Beginning of Period $4.18 $6.21 $7.17 (1) AUV at End of Period $5.29 $4.18 $6.21 Number of Accumulation Units Outstanding at End of Period 133,897 158,536 88,316 PIMCO HIGH YIELD PORTFOLIO AUV at Beginning of Period $9.45 $9.79 $9.74 (1) AUV at End of Period $11.35 $9.45 $9.79 Number of Accumulation Units Outstanding at End of Period 423,315 218,538 92,431 PIMCO STOCKSPLUS GROWTH & INCOME AUV at Beginning of Period $7.73 $9.91 $10.90 (1) AUV at End of Period $9.85 $7.73 $9.91 Number of Accumulation Units Outstanding at End of Period 117,178 103,647 74,639 PIONEER FUND VCT AUV at Beginning of Period $7.38 $9.35 $10.00 (2) AUV at End of Period $8.90 $7.38 $9.35 Number of Accumulation Units Outstanding at End of Period 38,234 21,067 -- PIONEER MID CAP VALUE AUV at Beginning of Period $9.27 $10.70 $10.00 (2) AUV at End of Period $12.42 $9.27 $10.70 Number of Accumulation Units Outstanding at End of Period 193,871 74,644 598 PROFUND VP BULL AUV at Beginning of Period $6.57 $8.84 $10.00 (1) AUV at End of Period $8.07 $6.57 $8.84 Number of Accumulation Units Outstanding at End of Period 55,447 19,327 4,584 PROFUND VP EUROPE 30 AUV at Beginning of Period $5.96 $8.22 $10.05 (1) AUV at End of Period $8.09 $5.96 $8.22 Number of Accumulation Units Outstanding at End of Period 51,496 30,092 15,212 PROFUND VP RISING RATES OPPORTUNITY AUV at Beginning of Period $10.00 (7) AUV at End of Period $9.34 Number of Accumulation Units Outstanding at End of Period 2,400 PROFUND VP SMALL CAP AUV at Beginning of Period $7.11 $9.38 $10.00 (1) AUV at End of Period $9.92 $7.11 $9.38 Number of Accumulation Units Outstanding at End of Period 143,775 83,442 3,530 SP JENNISON INTERNATIONAL GROWTH AUV at Beginning of Period $4.04 $5.35 $7.28 (1) AUV at End of Period $5.49 $4.04 $5.35 Number of Accumulation Units Outstanding at End of Period 134,829 39,549 24,815 Access - 131789 A75 FOOTNOTES (1) Fund First Available during May 2001 (2) Fund First Available during November 2001 (3) Fund First Available during December 2001 (4) Fund First Available during May 2002 (5) Fund First Available during August 2003 (6) Fund First Available during September 2003 (7) Fund First Available during October 2003 (8) Fund First Available during November 2003 Access - 131789 A76 -------------------------------------------------------------------------------- APPENDIX B -------------------------------------------------------------------------------- THE INVESTMENT PORTFOLIOS During the accumulation phase, you may allocate your premium payments and contract value to any of the investment portfolios available under this Contract. They are listed in this appendix. You bear the entire investment risk for amounts you allocate to any investment portfolio, and you may lose your principal. The investment results of the mutual funds (funds) are likely to differ significantly and there is no assurance that any of the funds will achieve their respective investment objectives. You should consider the investment objectives, risks and charges and expenses of the funds carefully before investing. Please refer to the fund prospectuses for this and additional information. Shares of the funds will rise and fall in value and you could lose money by investing in the funds. Shares of the funds are not bank deposits and are not guaranteed, endorsed or insured by any financial institution, the Federal Deposit Insurance Corporation or any other government agency. Except as noted, all funds are diversified, as defined under the Investment Company Act of 1940. Fund prospectuses may be obtained free of charge, from our Customer Service Center at the address and telephone number listed in the prospectus, by accessing the SEC's web site or by contacting the SEC Public Reference Room. Certain funds offered under the contracts have investment objectives and policies similar to other funds managed by the fund's investment adviser. The investment results of a fund may be higher or lower than those of other funds managed by the same adviser. There is no assurance and no representation is made that the investment results of any fund will be comparable to those of another fund managed by the same investment adviser. Certain funds are designated as "Master-Feeder" or "LifeStyle Funds". Funds offered in a Master-Feeder structure (such as the American Funds) or fund of funds structure (such as the LifeStyle Funds) may have higher fees and expenses than a fund that invests directly in debt and equity securities.
LIST OF FUND NAME CHANGES ------------------------------------------------------------------------------------------------------------------------------ FORMER FUND NAME CURRENT FUND NAME ING Eagle Asset Value Equity Portfolio ING Eagle Asset Capital Appreciation Portfolio ING Janus Growth and Income Portfolio ING Legg Mason Value Portfolio JP Morgan Fleming Small Cap Equity Portfolio JP Morgan Small Cap Equity Portfolio PIMCO High Yield Portfolio ING PIMCO High Yield Portfolio SP Jennison International Growth Portfolio SP William Blair International Growth Portfolio FUND NAME AND INVESTMENT ADVISER/SUBADVISER INVESTMENT OBJECTIVE ------------------------------------------------------------------------------------------------------------------------------ ING INVESTORS TRUST 7337 E. Doubletree Ranch Road, Scottsdale, AZ 85258 ------------------------------------------------------------------------------------------------------------------------------ ING AIM MID CAP GROWTH PORTFOLIO (Class S) Seeks capital appreciation. The Portfolio seeks to meet its INVESTMENT ADVISER: Directed Services, Inc. objective by investing, normally, at least 80% of its INVESTMENT SUBADVISER: A I M Capital Management, Inc. assets in equity securities of mid-capitalization companies. ------------------------------------------------------------------------------------------------------------------------------
Access - 131180 B1
FUND NAME AND INVESTMENT ADVISER/SUBADVISER INVESTMENT OBJECTIVE ------------------------------------------------------------------------------------------------------------------------------ ING ALLIANCE MID CAP GROWTH PORTFOLIO Seeks long-term total return. The Portfolio invests (Class S) primarily in common stocks of middle capitalization INVESTMENT ADVISER: Directed Services, Inc. companies. The Portfolio normally invests substantially all INVESTMENT SUBADVISER: Alliance Capital Management, L.P. of its assets in high-quality common stocks that Alliance expects to increase in value. ----------------------------------------------------------------------------------------------------------------------------- ING AMERICAN FUNDS GROWTH PORTFOLIO Seeks to make your investment grow. The Portfolio INVESTMENT ADVISER: ING Investments, LLC operates as a "feeder fund" which invests all of its INVESTMENT SUBADVISER: Capital Research and Management assets in the "master fund" which is Class 2 shares of the Company Growth Fund, a series of American Funds Insurance Series(R), a registered open-end investment company. The master fund invests primarily in common stocks of companies that appear to offer superior opportunities for growth of capital. The Growth Fund is designed for investors seeking long-term capital appreciation through stocks. ----------------------------------------------------------------------------------------------------------------------------- ING AMERICAN FUNDS GROWTH-INCOME PORTFOLIO Seeks to make your investment grow and provide you with INVESTMENT ADVISER: ING Investments, LLC income over time. The Portfolio operates as a "feeder INVESTMENT SUBADVISER: Capital Research and Management fund" which invests all of its assets in the "master fund" Company which is Class 2 shares of the Growth-Income Fund, a series of American Funds Insurance Series(R), a registered open-end investment company. The master fund invests primarily in common stocks or other securities which demonstrate the potential for appreciation and/or dividends. The Growth-Income Fund is designed for investors seeking both capital appreciation and income. ----------------------------------------------------------------------------------------------------------------------------- ING AMERICAN FUNDS INTERNATIONAL PORTFOLIO Seeks to make your investment grow over time. The INVESTMENT ADVISER: ING Investments, LLC Portfolio operates as a "feeder fund" which invests all of INVESTMENT SUBADVISER: Capital Research and Management its assets in the "master fund" which is Class 2 shares of Company the International Fund, a series of American Funds Insurance Series(R), a registered open-end investment company. The master fund invests primarily in common stocks of companies located outside the United States. The International Fund is designed for investors seeking capital appreciation through stocks. ------------------------------------------------------------------------------------------------------------------------------ ING CAPITAL GUARDIAN LARGE CAP VALUE PORTFOLIO Seeks long-term growth of capital and income. The Portfolio (Class S) Manager seeks to achieve the Portfolio's investment INVESTMENT ADVISER: Directed Services, Inc. objective by investing, under normal market conditions, at INVESTMENT SUBADVISER: Capital Guardian Trust Company least 80% of its assets in equity and equity-related securities of companies with market capitalizations greater than $1 billion at the time of investment. ------------------------------------------------------------------------------------------------------------------------------ ING CAPITAL GUARDIAN MANAGED GLOBAL PORTFOLIO Seeks capital appreciation. Current income is only an (Class S) incidental consideration. This portfolio is not INVESTMENT ADVISER: Directed Services, Inc. diversified. The Portfolio invests primarily in common INVESTMENT SUBADVISER: Capital Guardian Trust Company stocks traded in securities markets throughout the world. The Portfolio may invest up to 100% of its total assets in securities traded in securities markets outside the United States. The Portfolio generally invests at least 65% of its total assets in at least three different countries, one of which may be the United States. ------------------------------------------------------------------------------------------------------------------------------
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FUND NAME AND INVESTMENT ADVISER/SUBADVISER INVESTMENT OBJECTIVE ------------------------------------------------------------------------------------------------------------------------------ ING CAPITAL GUARDIAN SMALL CAP PORTFOLIO Seeks long-term capital appreciation. The Portfolio invests (Class S) at least 80% of its assets in equity securities of small INVESTMENT ADVISER: Directed Services, Inc. capitalization ("small-cap") companies. INVESTMENT SUBADVISER: Capital Guardian Trust Company ------------------------------------------------------------------------------------------------------------------------------ ING DEVELOPING WORLD PORTFOLIO (Class S) Seeks capital appreciation. The Portfolio normally invests INVESTMENT ADVISER: Directed Services, Inc. at least 80% of its assets in securities of issuers located INVESTMENT SUBADVISER: ING Investment Management Advisors in at least three countries with emerging securities B.V. markets. The Portfolio may invest up to 20% of its assets in securities of U.S. and other developed market issuers, including investment-grade debt securities of U.S. issuers. ------------------------------------------------------------------------------------------------------------------------------ ING EAGLE ASSET CAPITAL APPRECIATION PORTFOLIO (Class S) Seeks capital appreciation. Dividend income is a secondary (formerly ING Eagle Asset Value Equity Portfolio) objective. The Portfolio normally invests at least 80% of INVESTMENT ADVISER: Directed Services, Inc. its assets in equity securities of domestic and foreign INVESTMENT SUBADVISER: Eagle Asset Management, Inc. issuers that meet quantitative standards relating to financial soundness and high intrinsic value relative to price. ------------------------------------------------------------------------------------------------------------------------------ ING EVERGREEN HEALTH SCIENCES PORTFOLIO A nondiversified Portfolio that seeks long-term capital (Class S) growth. The Portfolio normally invests at least 80% of its assets in the equity securities of healthcare companies. INVESTMENT ADVISER: Directed Services, Inc.INVESTMENT The Portfolio may invest in securities of relatively SUBADVISER: Evergreen Investment Management Co., Inc. well-known and large companies as well as small- and medium- sized companies. ------------------------------------------------------------------------------------------------------------------------------ ING EVERGREEN OMEGA PORTFOLIO (Class S) Seeks long-term capital growth. The Portfolio invests primarily in common stocks and securities convertible into INVESTMENT ADVISER: Directed Services, Inc.INVESTMENT common stocks of U.S. companies across all market SUBADVISER: Evergreen Investment Management Co., Inc. capitalizations. The Portfolio may temporarily invest up to 100% of its assets in high quality money market instruments in order to protect the value of the portfolio in response to adverse economic, political or market conditions. ------------------------------------------------------------------------------------------------------------------------------ ING FMR(SM) DIVERSIFIED MID CAP PORTFOLIO Seeks long-term growth of capital. The Portfolio Manager (Class S) normally invests the Portfolio's assets primarily in common INVESTMENT ADVISER: Directed Services, Inc. stocks. The Portfolio Manager normally invests at least 80% INVESTMENT SUBADVISER: Fidelity Management & Research Co. of the Portfolio's assets in securities of companies with medium market capitalizations. ------------------------------------------------------------------------------------------------------------------------------ ING GOLDMAN SACHS INTERNET TOLLKEEPER(SM) PORTFOLIO* (Class S) Seeks long-term growth of capital. The Portfolio invests, under normal circumstances, at least 80% of its net assets * Goldman Sachs Internet Tollkeeper(SM) is a service plus any borrowings for investment purposes (measured at mark of Goldman Sachs & Co. time of investment) in equity investments in "Internet INVESTMENT ADVISER: Directed Services, Inc. Tollkeeper" companies, which are companies in the media, INVESTMENT SUBADVISER: Goldman Sachs Asset Management, L.P. telecommunications, technology and internet sectors, which provide access, infrastructure, content and services to internet companies and internet users. ------------------------------------------------------------------------------------------------------------------------------ ING HARD ASSETS PORTFOLIO (Class S) A nondiversified Portfolio that seeks long-term capital INVESTMENT ADVISER: Directed Services, Inc. appreciation. The Portfolio normally invests at least 80% INVESTMENT SUBADVISER: Baring International Investment of its assets in the equities of producers of commodities. Limited ------------------------------------------------------------------------------------------------------------------------------
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FUND NAME AND INVESTMENT ADVISER/SUBADVISER INVESTMENT OBJECTIVE ------------------------------------------------------------------------------------------------------------------------------ ING INTERNATIONAL PORTFOLIO (Class S) Seeks long-term growth of capital. Under normal conditions, INVESTMENT ADVISER: Directed Services, Inc. the Portfolio invests at least 80% of its net assets and INVESTMENT SUBADVISER: Aeltus Investment Management, Inc. borrowings for investment purposes in equity securities of issuers located in countries outside of the United States. ------------------------------------------------------------------------------------------------------------------------------ ING JANUS SPECIAL EQUITY PORTFOLIO (Class S) A nondiversified Portfolio that seeks capital appreciation. INVESTMENT ADVISER: Directed Services, Inc. The Portfolio invests, under normal circumstances, at least INVESTMENT SUBADVISER: Janus Capital Management, LLC 80% of its net assets (plus borrowings for investment purposes) in equity securities with the potential for long-term growth of capital. ------------------------------------------------------------------------------------------------------------------------------ ING JENNISON EQUITY OPPORTUNITIES PORTFOLIO Seeks long-term capital growth. The Portfolio normally (Class S) invests at least 80% of its net assets (plus any borrowings INVESTMENT ADVISER: Directed Services, Inc. for investment purposes) in attractively valued equity INVESTMENT SUBADVISER: Jennison Associates, LLC securities of companies with current or emerging earnings growth the Portfolio Manager believes to be not fully appreciated or recognized by the market. ------------------------------------------------------------------------------------------------------------------------------ ING JPMORGAN SMALL CAP EQUITY PORTFOLIO A nondiversified Portfolio that seeks capital growth over (Class S) the long term. Under normal market conditions, the (formerly ING JP Morgan Fleming Small Cap Equity Portfolio) Portfolio invests at least 80% of its total assets in INVESTMENT ADVISER: Directed Services, Inc. equity securities of small-cap companies. INVESTMENT SUBADVISER: J.P. Morgan Investment Management Inc. ------------------------------------------------------------------------------------------------------------------------------ ING JULIUS BAER FOREIGN PORTFOLIO (Class S) Seeks long-term growth of capital. The Portfolio, under INVESTMENT ADVISER: Directed Services, Inc. normal circumstances, invests in a wide variety of INVESTMENT SUBADVISER: Julius Baer Investment Management, international equity securities issued through the world, Inc. normally excluding the United States. The Portfolio normally invests at least 80% of its assets in equity securities tied economically to countries outside the United States. ------------------------------------------------------------------------------------------------------------------------------ ING LEGG MASON VALUE PORTFOLIO (Class S) Seeks long-term growth of capital. The Portfolio normally (formerly ING Janus Growth and Income Portfolio) invests in equity securities that offer the potential for capital growth. The Portfolio may also invest in companies INVESTMENT ADVISER: Directed Services, Inc. with market capitalizations greater than $5 billion, but INVESTMENT SUBADVISER: Legg Mason Funds Management, Inc. may invest in companies of any size. The Portfolio may also invest up to 25% of its total assets in long-term debt securities. ------------------------------------------------------------------------------------------------------------------------------ ING LIFESTYLE AGGRESSIVE GROWTH PORTFOLIO Seeks to provide growth of capital. The Portfolio invests in a combination of ING portfolios according to a fixed INVESTMENT ADVISER: ING Investments, LLC formula that over time should reflect an allocation of approximately 100% in equity securities. Please see below for a list of portfolios that may be included in one or more of the ING LifeStyle Portfolios. ------------------------------------------------------------------------------------------------------------------------------ ING LIFESTYLE GROWTH PORTFOLIO Seeks to provide growth of capital and some current income. The Portfolio invests in a combination of ING INVESTMENT ADVISER: ING Investments, LLC portfolios according to a fixed formula that over time should reflect an allocation of approximately 80% in equity securities and 20% in fixed income securities. Please see below for a list of portfolios that may be included in one or more of the ING LifeStyle Portfolios. ------------------------------------------------------------------------------------------------------------------------------
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FUND NAME AND INVESTMENT ADVISER/SUBADVISER INVESTMENT OBJECTIVE ------------------------------------------------------------------------------------------------------------------------------ ING LIFESTYLE MODERATE GROWTH PORTFOLIO Seeks to provide growth of capital and a low to moderate level of current income. The Portfolio invests in a INVESTMENT ADVISER: ING Investments, LLC combination of ING portfolios according to a fixed formula that over time should reflect an allocation of approximately 65% in equity securities and 35% in fixed income securities. Please see below for a list of portfolios that may be included in one or more of the ING LifeStyle Portfolios. ------------------------------------------------------------------------------------------------------------------------------ ING LIFESTYLE MODERATE PORTFOLIO Seeks to provide growth and capital and current income. The Portfolio invests in a combination of ING portfolios INVESTMENT ADVISER: ING Investments, LLC according to a fixed formula that over time should reflect an allocation of approximately 50% in equity securities and 50% in fixed income securities. Please see below for a list of portfolios that may be included in one or more of the ING LifeStyle Portfolios. ------------------------------------------------------------------------------------------------------------------------------ ING LIQUID ASSETS PORTFOLIO (Class S) Seeks high level of current income consistent with the INVESTMENT ADVISER: Directed Services, Inc. preservation of capital and liquidity. The Portfolio INVESTMENT SUBADVISER: Aeltus Investment Management, Inc. Manager strives to maintain a stable $1 per share net asset value and its investment strategy focuses on safety of principal, liquidity and yield, in order of importance, to achieve this goal. ------------------------------------------------------------------------------------------------------------------------------ ING MARSICO GROWTH PORTFOLIO (Class S) Seeks capital appreciation. The Portfolio invests primarily INVESTMENT ADVISER: Directed Services, Inc. in equity securities selected for their growth potential. INVESTMENT SUBADVISER: Marsico Capital Management, LLC The Portfolio may invest in companies of any size, from larger, well-established companies to smaller, emerging growth companies. ------------------------------------------------------------------------------------------------------------------------------ ING MERCURY FOCUS VALUE PORTFOLIO (Class S) Seeks long-term growth of capital. The Portfolio invests INVESTMENT ADVISER: Directed Services, Inc. primarily in a diversified portfolio consisting of equity INVESTMENT SUBADVISER: Mercury Advisors securities that the Portfolio Manager believes are undervalued relative to its assessment of the current or prospective condition of the issuer. ------------------------------------------------------------------------------------------------------------------------------ ING MERCURY FUNDAMENTAL GROWTH PORTFOLIO Seeks long-term growth of capital. The Portfolio invests in (Class S) a diversified portfolio consisting primarily of common INVESTMENT ADVISER: Directed Services, Inc. stocks. The Portfolio will generally invest at least 65% of INVESTMENT SUBADVISER: Mercury Advisors its total assets in the following equity securities: common stock, convertible preferred stock, securities convertible into common stock and rights and warrants to subscribe to common stock. ------------------------------------------------------------------------------------------------------------------------------ ING MFS MID CAP GROWTH PORTFOLIO (Class S) A nondiversified Portfolio that seeks long-term growth of INVESTMENT ADVISER: Directed Services, Inc. capital. The Portfolio normally invests at least 80% of its INVESTMENT SUBADVISER: Massachusetts Financial Services net assets in common stocks and related securities (such as Company preferred stocks, convertible securities and depositary receipts) of companies with medium market capitalizations (or "mid-cap companies") which the Portfolio Manager believes have above-average growth potential. ------------------------------------------------------------------------------------------------------------------------------ ING MFS RESEARCH PORTFOLIO (Class S) Seeks long-term growth of capital and future income. The INVESTMENT ADVISER: Directed Services, Inc. Portfolio normally invests at least 80% of its net assets INVESTMENT SUBADVISER: Massachusetts Financial Services in common stocks and related securities (such as preferred Company stocks, convertible securities and depositary receipts). ------------------------------------------------------------------------------------------------------------------------------
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FUND NAME AND INVESTMENT ADVISER/SUBADVISER INVESTMENT OBJECTIVE ------------------------------------------------------------------------------------------------------------------------------ ING MFS TOTAL RETURN PORTFOLIO (Class S) Seeks above-average income (compared to a portfolio INVESTMENT ADVISER: Directed Services, Inc. entirely invested in equity securities) consistent with the INVESTMENT SUBADVISER: Massachusetts Financial Services prudent employment of capital. Secondarily seeks reasonable Company opportunity for growth of capital and income. The Portfolio invests in a combination of equity and fixed income securities. ------------------------------------------------------------------------------------------------------------------------------ ING PIMCO CORE BOND PORTFOLIO (Class S) Seeks maximum total return, consistent with preservation of INVESTMENT ADVISER: Directed Services, Inc. capital and prudent investment management. The Portfolio is INVESTMENT SUBADVISER: Pacific Investment Management diversified and seeks to achieve its investment objective Company LLC by investing under normal circumstances at least 80% of its net assets (plus borrowings for investment purposes) in a diversified portfolio of fixed income instruments of varying maturities. ------------------------------------------------------------------------------------------------------------------------------ ING PIMCO HIGH YIELD PORTFOLIO (Class S) Seeks maximum total return, consistent with preservation of (formerly PIMCO High Yield Portfolio) capital and prudent investment management. The Portfolio normally invests at least 80% of its assets in a INVESTMENT ADVISER: Directed Services, Inc. diversified portfolio of high yield securities ("junk INVESTMENT SUBADVISER: Pacific Investment Management bonds") rated below investment grade but rated at least B-. Company LLC ------------------------------------------------------------------------------------------------------------------------------ ING SALOMON BROTHERS ALL CAP PORTFOLIO A nondiversified Portfolio that seeks capital appreciation (Class S) through investment in securities which the Subadviser INVESTMENT ADVISER: Directed Services, Inc. believes have above-average capital appreciation potential. INVESTMENT SUBADVISER: Salomon Brothers Asset Management, The Portfolio invests primarily in common stocks and common Inc. stock equivalents, such as preferred stocks and securities convertible into common stocks, of companies the Portfolio Manager believes are undervalued in the marketplace. ------------------------------------------------------------------------------------------------------------------------------ ING SALOMON BROTHERS INVESTORS PORTFOLIO Seeks long-term growth of capital. Secondarily seeks (Class S) current income. The Portfolio invests primarily in equity INVESTMENT ADVISER: Directed Services, Inc. securities of U.S. companies. The Portfolio may also invest INVESTMENT SUBADVISER: Salomon Brothers Asset Management, in other equity securities. To a lesser degree, the Inc. Portfolio invests in income producing securities such as debt securities. ------------------------------------------------------------------------------------------------------------------------------ ING T. ROWE PRICE CAPITAL APPRECIATION PORTFOLIO Seeks, over the long-term, a high total investment return, (Class S) consistent with the preservation of capital and prudent INVESTMENT ADVISER: Directed Services, Inc. investment risk. The Portfolio pursues an active asset INVESTMENT SUBADVISER: T. Rowe Price Associates, Inc. allocation strategy whereby investments are allocated among three asset classes - equity securities, debt securities and money market instruments. ------------------------------------------------------------------------------------------------------------------------------ ING T. ROWE PRICE EQUITY INCOME PORTFOLIO Seeks substantial dividend income as well as long-term (Class S) growth of capital. The Portfolio normally invests at least INVESTMENT ADVISER: Directed Services, Inc. 80% of its assets in common stocks, with 65% in the common INVESTMENT SUBADVISER: T. Rowe Price Associates, Inc. stocks of well-established companies paying above-average dividends. The Portfolio may also invest in convertible securities, warrants and preferred stocks, foreign securities, debt securities including high-yield debt securities and future and options. ------------------------------------------------------------------------------------------------------------------------------
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FUND NAME AND INVESTMENT ADVISER/SUBADVISER INVESTMENT OBJECTIVE ------------------------------------------------------------------------------------------------------------------------------ ING UBS U.S. BALANCED PORTFOLIO (Class S) Seeks to maximize total return over the long term by INVESTMENT ADVISER: Directed Services, Inc. allocating its assets among stocks, bonds, short-term INVESTMENT SUBADVISER: UBS Global Asset Management instruments and other investments. The Portfolio Manager (Americas) Inc. allocates the Portfolio's assets among the following classes, or types, of investments: stocks, bonds, and short-term money market debt obligations. ------------------------------------------------------------------------------------------------------------------------------ ING VAN KAMPEN EQUITY GROWTH PORTFOLIO Seeks long-term capital appreciation. The Portfolio Manager (Class S) seeks to maximize long-term capital appreciation by INVESTMENT ADVISER: Directed Services, Inc. investing primarily in growth-oriented equity securities of INVESTMENT SUBADVISER: Van Kampen large-capitalization U.S. and, to a limited extent, foreign companies that are listed on U.S. exchanges or traded in U.S. markets. ------------------------------------------------------------------------------------------------------------------------------ ING VAN KAMPEN GLOBAL FRANCHISE PORTFOLIO A nondiversified Portfolio that seeks long-term capital appreciation. The Portfolio Manager invests primarily in (Class S) equity securities of issuers located throughout the world INVESTMENT ADVISER: Directed Services, Inc. that it believes have, among other things, resilient INVESTMENT SUBADVISER: Van Kampen business franchises and growth potential. The Portfolio may invest of in the securities of companies of any size. ------------------------------------------------------------------------------------------------------------------------------ ING VAN KAMPEN GROWTH AND INCOME PORTFOLIO Seeks long-term growth of capital and income. Under normal (Class S) market conditions, the Portfolio Manager seeks to achieve INVESTMENT ADVISER: Directed Services, Inc. the Portfolio's investment objective by investing primarily INVESTMENT SUBADVISER: Van Kampen in what it believes to be income-producing equity securities, including common stocks and convertible securities; although investments are also made in non-convertible preferred stocks and debt securities rated "investment grade," which are securities rated within the four highest grades assigned by Standard & Poor's ("S&P") or by Moody's Investors Service, Inc. ("Moody's"). ------------------------------------------------------------------------------------------------------------------------------ ING VAN KAMPEN REAL ESTATE PORTFOLIO A nondiversified Portfolio that seeks capital appreciation. (Class S) Secondarily seeks current income. The Portfolio invests at INVESTMENT ADVISER: Directed Services, Inc. least 80% of its assets in equity securities of companies INVESTMENT SUBADVISER: Van Kampen in the U.S. real estate industry that are listed on national exchanges or the National Association of Securities Dealers Automated Quotation System ("NASDAQ"). ------------------------------------------------------------------------------------------------------------------------------ ING PARTNERS, INC. 151 Farmington Avenue, Hartford, CT 06156-8962 ------------------------------------------------------------------------------------------------------------------------------ ING JPMORGAN FLEMING INTERNATIONAL PORTFOLIO Seeks long-term growth of capital. Invests primarily (at (Service Class) least 65% of total assets) in the equity securities of INVESTMENT ADVISER: ING Life Insurance and Annuity foreign companies that the subadviser believes have high Company growth potential. Will normally invest in securities of at INVESTMENT SUBADVISER: J.P. Morgan Fleming Asset Management least three different countries other than the U.S. and (London) Ltd. will invest in both developed and developing markets. ------------------------------------------------------------------------------------------------------------------------------ ING SALOMON BROTHERS AGGRESSIVE GROWTH PORTFOLIO Seeks long-term growth of capital. Invests primarily (at (Service Class) least 80% of net assets under normal circumstances) in INVESTMENT ADVISER: ING Life Insurance and Annuity common stocks and related securities, such as preferred Company stocks, convertible securities and depositary receipts, of INVESTMENT SUBADVISER: Salomon Brothers Asset Management emerging growth companies. Inc. ------------------------------------------------------------------------------------------------------------------------------
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FUND NAME AND INVESTMENT ADVISER/SUBADVISER INVESTMENT OBJECTIVE ------------------------------------------------------------------------------------------------------------------------------ ING VARIABLE INSURANCE TRUST 7337 E. Doubletree Ranch Road, Scottsdale, AZ 85258 ------------------------------------------------------------------------------------------------------------------------------ ING VP WORLDWIDE GROWTH PORTFOLIO Seeks long-term capital appreciation. A nondiversified INVESTMENT ADVISER: ING Investments, LLC Portfolio that under normal conditions, invests at least INVESTMENT SUBADVISER: Aeltus Investment Management, Inc. 65% of net assets in equity securities of issuers located in at least three countries, one of which may be the U.S. Generally invests at least 75% of total assets in common and preferred stocks, warrants and convertible securities. ------------------------------------------------------------------------------------------------------------------------------ ING VARIABLE PORTFOLIOS, INC. 7337 E. Doubletree Ranch Road, Scottsdale, AZ 85258 ------------------------------------------------------------------------------------------------------------------------------ ING VP INDEX PLUS LARGECAP PORTFOLIO Seeks to outperform the total return performance of the (Class S) Standard & Poor's 500 Composite Stock Price Index (S&P 500 INVESTMENT ADVISER: ING Investments, LLC Index), while maintaining a market level of risk. Invests INVESTMENT SUBADVISER: Aeltus Investment at least 80% of assets in stocks included in the S&P 500 Management, Inc. Index. The subadviser's objective is to overweight those stocks in the S&P 500 Index that it believes will outperform the index and underweight or avoid those stocks it believes will underperform the index. ------------------------------------------------------------------------------------------------------------------------------ ING VP INDEX PLUS MIDCAP PORTFOLIO Seeks to outperform the total return performance of the (Class S) Standard & Poor's MidCap 400 Index (S&P MidCap 400 Index), while maintaining a market level of risk. Invests at least INVESTMENT ADVISOR: ING Investments, LLC INVESTMENT 80% of assets in stocks included in the S&P MidCap 400 SUBADVISER: Aeltus Investment Management, Inc. Index. The subadviser's objective is to overweight those stocks in the S&P MidCap 400 Index that it believes will outperform the index and underweight or avoid those stocks that it believes will underperform the index. ------------------------------------------------------------------------------------------------------------------------------ ING VP INDEX PLUS SMALLCAP PORTFOLIO Seeks to outperform the total return performance of the (Class S) Standard & Poor's SmallCap 600 Index (S&P 600 Index), while maintaining a market level of risk. Invests at least 80% INVESTMENT ADVISOR: ING Investments, LLC of assets in stocks included in the S&P 600 Index. The INVESTMENT SUBADVISER: Aeltus Investment Management, Inc. subadviser's objective is to overweight those stocks in the S&P 600 Index that it believes will outperform the index and underweight or avoid those stocks that it believes will underperform the index. ------------------------------------------------------------------------------------------------------------------------------ ING VARIABLE PRODUCTS TRUST 7337 E. Doubletree Ranch Road, Scottsdale, AZ 85258 ------------------------------------------------------------------------------------------------------------------------------ ING VP FINANCIAL SERVICES PORTFOLIO Seeks long-term capital appreciation. Invests, under (Class S) normal market conditions, at least 80% of assets in equity securities and equity equivalent securities of companies INVESTMENT ADVISER: ING Investments, LLC principally engaged in the financial services industry. As INVESTMENT SUBADVISER: Aeltus Investment Management, Inc. a general matter, the Portfolio expects these investments to be in common stocks of large-, mid- and small-sized companies. May invest remaining 20% of assets in equity or debt securities of financial services companies or companies that are not financial services companies, and in money market instruments. ------------------------------------------------------------------------------------------------------------------------------
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FUND NAME AND INVESTMENT ADVISER/SUBADVISER INVESTMENT OBJECTIVE ------------------------------------------------------------------------------------------------------------------------------ ING VP MAGNACAP PORTFOLIO (Class S) Seeks growth of capital, with dividend income as a secondary consideration. Normally invests at least 80% of INVESTMENT ADVISER: ING Investments, LLC assets in common stocks of large companies, which are those INVESTMENT SUBADVISER: Aeltus Investment Management, Inc. included in the 500 largest U.S. companies, as measured by total revenues, net assets, cash flow or earnings, or the 1,000 largest companies as measured by equity market capitalization. ------------------------------------------------------------------------------------------------------------------------------ ING VP MIDCAP OPPORTUNITIES PORTFOLIO Seeks long-term capital appreciation. Normally invests at least 80% of assets in the common stocks of mid-sized U.S. (Class S) companies that the subadviser believes have above average INVESTMENT ADVISER: ING Investments, LLC prospects for growth. For this Portfolio, mid-size companies INVESTMENT SUBADVISER: Aeltus Investment Management, Inc. are those with market capitalizations that fall within the range of companies in the Russell MidCap Growth Index. ------------------------------------------------------------------------------------------------------------------------------ ING VP SMALLCAP OPPORTUNITIES PORTFOLIO Seeks long-term capital appreciation. Normally invests at (Class S) least 80% of assets in the common stock of smaller, INVESTMENT ADVISER: ING Investments, LLC lesser-known U.S. companies that are believed to have above average prospects for growth. For this Portfolio, smaller companies are those with market capitalizations that fall within the range of companies in the Russell 2000 Index. ------------------------------------------------------------------------------------------------------------------------------ ING VP BOND PORTFOLIO ------------------------------------------------------------------------------------------------------------------------------ ING VP BOND PORTFOLIO (Class S) Seeks to maximize total return as is consistent with INVESTMENT ADVISER: ING Investments, LLC reasonable risk, through investment in a diversified INVESTMENT SUBADVISER: Aeltus Investment portfolio consisting of investment-grade corporate bonds, Management, Inc. and debt securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities. Under normal market conditions, invests at least 80% of assets in high-grade corporate bonds, mortgage-related and other asset-backed securities, and securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities. The Portfolio may also invest up to 15% of total assets in high-yield instruments and up to 25% of total assets in foreign debt securities. ------------------------------------------------------------------------------------------------------------------------------ AIM VARIABLE INSURANCE FUNDS 11 Greenway Plaza, Suite 100, Houston, TX 77046-1173 ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. DENT DEMOGRAPHIC TRENDS FUND Seeks long-term growth of capital. Seeks to meet its (Series II) objective by investing in securities of companies that are INVESTMENT ADVISER: A I M Advisors, Inc. likely to benefit from changing demographic, economic and INVESTMENT SUBADVISER: H.S. Dent Advisors, Inc. lifestyle trends. These securities may include common stocks, convertible bonds, convertible preferred stocks and warrants of companies within a broad range of market capitalizations. ------------------------------------------------------------------------------------------------------------------------------ FIDELITY(R) VARIABLE INSURANCE PRODUCTS 82 Devonshire Street, Boston, MA 02109 ------------------------------------------------------------------------------------------------------------------------------ FIDELITY(R) VIP EQUITY-INCOME PORTFOLIO Seeks reasonable income. Also considers the potential for (Service Class 2) capital appreciation. Seeks to achieve a yield which INVESTMENT ADVISER: Fidelity Management & Research Co. exceeds the composite yield on the securities comprising INVESTMENT SUBADVISER: FMR Co., Inc. the Standard & Poor's 500(SM) Index. Normally invests at least 80% of total assets in income-producing equity securities (which tends to lead to investments in large cap "value" stocks). ------------------------------------------------------------------------------------------------------------------------------
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FUND NAME AND INVESTMENT ADVISER/SUBADVISER INVESTMENT OBJECTIVE ------------------------------------------------------------------------------------------------------------------------------ FIDELITY(R)VIP GROWTH PORTFOLIO (Service Class 2) Seeks to achieve capital appreciation. Normally invests INVESTMENT ADVISER: Fidelity Management & Research Co. primarily in common stocks of companies, investing in both INVESTMENT SUBADVISER: FMR Co., Inc. domestic and foreign issuers. Invests in either "growth" stocks or "value" stocks or both. ------------------------------------------------------------------------------------------------------------------------------ INVESCO VARIABLE INVESTMENT FUNDS, INC. 7800 East Union Avenue, Denver, CO 80237 ------------------------------------------------------------------------------------------------------------------------------ INVESCO VIF -- LEISURE FUND (Series I) Seeks capital growth. The Fund normally invests at least 80% of its net assets in the equity securities and INVESTMENT ADVISER: A I M Advisors, Inc. equity-related instruments of companies engaged in the INVESTMENT SUBADVISER: INVESCO Institutional (N.A.), Inc. design, production, and distribution of products related to leisure activities. These industries include, but are not limited to, hotels/gaming, publishing, advertising, beverages, audio/video, broadcasting-radio/TV, cable & satellite operators, cable & satellite programmers, motion pictures & TV, recreation services/entertainment, retail, and toys. At any given time, 20% of the Fund's assets are not required to be invested in the sector. ------------------------------------------------------------------------------------------------------------------------------ INVESCO VIF-- UTILITIES FUND (Series I) Seeks capital growth. It also seeks current income. The Fund normally invests at least 80% of its net assets in the INVESTMENT ADVISER: A I M Advisors, Inc. equity securities and equity-related instruments of INVESTMENT SUBADVISER: INVESCO Institutional (N.A.), Inc. companies engaged in utilities-related industries. These include, but are not limited to, companies that produce, generate, transmit, or distribute natural gas or electricity, as well as in companies that provide telecommunications services, including local, long distance and wireless. A portion of the Fund's assets is not required to be invested in the sector. ------------------------------------------------------------------------------------------------------------------------------ LIBERTY VARIABLE INSURANCE TRUST 600 Atlantic Avenue, Boston, MA 02210 ------------------------------------------------------------------------------------------------------------------------------ COLONIAL SMALL CAP VALUE FUND Seeks long-term growth by investing primarily in small INVESTMENT ADVISER: Columbia Management Advisors, Inc. capitalization equities. ------------------------------------------------------------------------------------------------------------------------------ PIONEER VARIABLE CONTRACTS TRUST 60 State Street, Boston, MA 02109 ------------------------------------------------------------------------------------------------------------------------------ PIONEER FUND VCT PORTFOLIO (Class II) Seeks reasonable income and capital growth. Invests in a INVESTMENT ADVISER: Pioneer Investment Management, Inc. broad list of carefully selected, reasonably priced securities rather than in securities whose prices reflect a premium resulting from their current market popularity. Invests the major portion of its assets in equity securities, primarily of U.S. issuers. ------------------------------------------------------------------------------------------------------------------------------
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FUND NAME AND INVESTMENT ADVISER/SUBADVISER INVESTMENT OBJECTIVE ------------------------------------------------------------------------------------------------------------------------------ PIONEER MID CAP VALUE VCT PORTFOLIO (Class II) Seeks capital appreciation by investing in a diversified INVESTMENT ADVISER: Pioneer Investment Management, Inc. portfolio of securities consisting primarily of common stocks. Normally, invests at least 80% of total assets in equity securities of mid-size companies, that is, companies with market values within the range of market values of companies included in the Russell Midcap(R) Value Index. ------------------------------------------------------------------------------------------------------------------------------ PRO FUNDS VP 3435 Stelzer Road, Suite 1000, P.O. Box 182100, Columbus, OH 43218-2000 ------------------------------------------------------------------------------------------------------------------------------ PROFUND VP BULL Seeks daily investment results, before fees and expenses, INVESTMENT ADVISER: ProFund Advisors LLC that correspond to the daily performance of the S&P 500 Index. ------------------------------------------------------------------------------------------------------------------------------ PROFUND VP EUROPE 30 Seeks daily investment results, before fees and expenses, INVESTMENT ADVISER: ProFund Advisors LLC that correspond to the daily performance of the ProFunds Europe 30 Index. ------------------------------------------------------------------------------------------------------------------------------ PROFUND VP RISING RATES OPPORTUNITY Seeks daily investment results, before fees and expenses, INVESTMENT ADVISER: ProFund Advisors LLC that correspond to one and one-quarter times (125%) the inverse (opposite) of the daily price movement of the most recently issued 30-year U.S. Treasury Bond ("Long Bond"). ------------------------------------------------------------------------------------------------------------------------------ PROFUND VP SMALL-CAP Seeks daily investment results, before fees and expenses, INVESTMENT ADVISER: ProFund Advisors LLC that correspond to the daily performance of the Russell 2000 Index. ------------------------------------------------------------------------------------------------------------------------------ PRUDENTIAL SERIES FUND, INC. 751 Broad Street, Newark, NJ 07102 ------------------------------------------------------------------------------------------------------------------------------ JENNISON PORTFOLIO (Class II) Seeks to achieve long-term growth of capital. Invests INVESTMENT ADVISER: Prudential Investments LLC primarily in equity securities of major, established INVESTMENT SUBADVISER: Jennison Associates LLC corporations that the investment adviser believes offer above-average growth prospects. May invest up to 30% of total assets in foreign securities. Normally invests 65% of total assets in common stocks and preferred stocks of companies with capitalization in excess of $1 billion. ------------------------------------------------------------------------------------------------------------------------------ SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO (Class II) Seeks long-term growth of capital. Invests in (formerly SP Jennison International Growth Portfolio) equity-related securities of foreign issuers that the INVESTMENT ADVISER: Prudential Investments LLC subadviser thinks will increase in value over a period of INVESTMENT SUBADVISER: William Blair & Company LLC years. Invests primarily in the common stock of large and medium-sized foreign companies. Under normal circumstances, invests at least 65% of total assets in common stock of foreign companies operating or based in at least five different countries. ------------------------------------------------------------------------------------------------------------------------------
THE FOLLOWING PORTFOLIOS ARE WITHIN THE CURRENT GROUP OF ING PORTFOLIOS INCLUDED IN ONE OR MORE OF THE LIFESTYLE PORTFOLIOS:
ING Alliance Mid Cap Growth Portfolio ING Salomon Brothers All Cap Portfolio ING JP Morgan Fleming International Portfolio ING Salomon Brothers Investors Portfolio ING Julius Baer Foreign Portfolio ING VP Bond Portfolio ING Legg Mason Value Portfolio ING VP Growth Portfolio ING Liquid Asset Portfolio ING VP Index Plus MidCap Portfolio ING Marsico Growth Portfolio ING VP Index Plus SmallCap Portfolio ING PIMCO Core Bond Portfolio ING VP Small Company Portfolio ING PIMCO High Yield Portfolio ING Salomon Brothers Aggressive Growth
Access - 131180 B11 THE FOLLOWING PORTFOLIOS ARE THOSE WITHIN THE GROUP OF ING PORTFOLIOS THAT MAY BE INCLUDED IN ONE OR MORE OF THE ING LIFESTYLE PORTFOLIOS:
ING AIM Mid Cap Growth Portfolio ING OpCap Balanced Value Portfolio ING Alger Aggressive Growth Portfolio ING PIMCO Core Bond Portfolio ING Alger Growth Portfolio ING PIMCO High Yield Portfolio ING Alliance Mid Cap Growth Portfolio ING Salomon Brothers Aggressive Growth Portfolio ING American Century SmallCap Value Portfolio ING Salomon Brothers All Cap Portfolio ING Baron SmallCap Growth Portfolio ING Salomon Brothers Investors Portfolio ING Capital Guardian Large Cap Value Portfolio ING T. Rowe Price Growth Equity Portfolio ING Capital Guardian Managed Global Portfolio ING T. Rowe Price Capital Appreciation Portfolio ING Capital Guardian Small Cap Portfolio ING T. Rowe Price Equity Income Portfolio ING Eagle Asset Value Equity Portfolio ING UBS U.S. Balanced Portfolio ING Evergreen Omega Portfolio ING UBS U.S. Large Cap Equity Portfolio ING FMR Diversified Mid Cap Portfolio ING Van Kampen Comstock Portfolio ING International Portfolio ING Van Kampen Equity Growth Portfolio ING Janus Special Equity Portfolio ING Van Kampen Global Franchise Portfolio ING Jennison Equity Opportunities Portfolio ING Van Kampen Growth and Income Portfolio ING JPMorgan Fleming International Portfolio ING VP Balanced Portfolio ING JPMorgan Small Cap Equity Portfolio ING VP Bond Portfolio ING JP Morgan MidCap Value Portfolio ING VP Growth & Income Portfolio ING Julius Baer Foreign Portfolio ING VP Growth Portfolio ING Legg Mason Value Portfolio ING VP Index Plus LargeCap Portfolio ING Liquid Asset Portfolio ING VP Index Plus MidCap Portfolio ING Marsico Growth Portfolio ING VP Index Plus SmallCap Portfolio ING Mercury Focus Value Portfolio ING VP MidCap Opportunities Portfolio ING MFS Capital Opportunities Portfolio ING VP Small Company Portfolio ING MFS Mid Cap Growth Portfolio ING VP SmallCap Opportunities Portfolio ING MFS Research Portfolio ING VP Value Opportunity Portfolio ING MFS Total Return Portfolio ING VP Worldwide Growth Portfolio
THE PROSPECTUS FOR THE ING LIFESTYLE PORTFOLIO CONTAINS INFORMATION ABOUT THE UNDERLYING PORTFOLIOS INCLUDED IN THE ING LIFESTYLE PORTFOLIO. Access - 131180 B12 -------------------------------------------------------------------------------- APPENDIX C -------------------------------------------------------------------------------- FIXED ACCOUNT I Fixed Account I ("Fixed Account") is an optional fixed interest allocation offered during the accumulation phase of your variable annuity contract between you and ING USA Annuity and Life Insurance Company ("ING USA," the "Company," "we" or "our"). The Fixed Account, which is a segregated asset account of ING USA, provides a means for you to invest on a tax-deferred basis and earn a guaranteed interest for guaranteed interest periods (Fixed Interest Allocation(s)). We will credit your Fixed Interest Allocation(s) with a fixed rate of interest. We currently offer Fixed Interest Allocations with guaranteed interest periods of 5, 7 and 10 years. In addition, we may offer DCA Fixed Interest Allocations, which are 6-month and 1-year Fixed Interest Allocations available exclusively in connection with our dollar cost averaging program. We may offer additional guaranteed interest periods in some or all states, may not offer all guaranteed interest periods on all contracts or in all states and the rates for a given guaranteed interest period may vary among contracts. We set the interest rates periodically. We may credit a different interest rate for each interest period. The interest you earn in the Fixed Account as well as your principal is guaranteed by ING USA, as long as you do not take your money out before the maturity date for the applicable interest period. If you take your money out from a Fixed Interest Allocation more than 30 days before the applicable maturity date, we will apply a market value adjustment ("Market Value Adjustment"). A Market Value Adjustment could increase or decrease your contract value and/or the amount you take out. A surrender charge may also apply to withdrawals from your contract. You bear the risk that you may receive less than your principal because of the Market Value Adjustment. For contracts sold in some states, not all Fixed Interest Allocations are available. You have a right to return a contract for a refund as described in the prospectus. THE FIXED ACCOUNT You may allocate premium payments and transfer your Contract value to the guaranteed interest periods of the Fixed Account during the accumulation period as described in the prospectus. Every time you allocate money to the Fixed Account, we set up a Fixed Interest Allocation for the guaranteed interest period you select. We will credit your Fixed Interest Allocation with a guaranteed interest rate for the interest period you select, so long as you do not withdraw money from that Fixed Interest Allocation before the end of the guaranteed interest period. Each guaranteed interest period ends on its maturity date which is the last day of the month in which the interest period is scheduled to expire. Your Contract value in the Fixed Account is the sum of your Fixed Interest Allocations and the interest credited as adjusted for any withdrawals, transfers or other charges we may impose, including any Market Value Adjustment. Your Fixed Interest Allocation will be credited with the guaranteed interest rate in effect for the guaranteed interest period you selected when we receive and accept your premium or reallocation of Contract value. We will credit interest daily at a rate that yields the quoted guaranteed interest rate. If you surrender, withdraw, transfer or annuitize your investment in a Fixed Interest Allocation more than 30 days before the end of the guaranteed interest period, we will apply a Market Value Adjustment to the transaction. A Market Value Adjustment could increase or decrease the amount you surrender, withdraw, transfer or annuitize, depending on current interest rates at the time of the transaction. You bear the risk that you may receive less than your principal because of the Market Value Adjustment. GUARANTEED INTEREST RATES Each Fixed Interest Allocation will have an interest rate that is guaranteed as long as you do not take your money out until its maturity date. We do not have a specific formula for establishing the guaranteed interest rates for the different guaranteed interest periods. We determine guaranteed interest rates at our sole discretion. We cannot predict the level of future interest rates. For more information see the prospectus for the Fixed Account. Access - 131789 C1 TRANSFERS FROM A FIXED INTEREST ALLOCATION You may transfer your Contract value in a Fixed Interest Allocation to one or more new Fixed Interest Allocations with new guaranteed interest periods, or to any of the subaccounts of ING USA's Separate Account B as described in the prospectus on the maturity date of a guaranteed interest period. The minimum amount that you can transfer to or from any Fixed Interest Allocation is $100. Transfers from a Fixed Interest Allocation may be subject to a Market Value Adjustment. If you have a special Fixed Interest Allocation that was offered exclusively with our dollar cost averaging program, canceling dollar cost averaging will cause a transfer of the entire Contract value in such Fixed Interest Allocation to the Liquid Assets subaccount, and such a transfer will be subject to a Market Value Adjustment. Please be aware that the benefit we pay under certain optional benefit riders will be adjusted by any transfers you make to and from the Fixed Interest Allocations during specified periods while the rider is in effect. See "Optional Riders" in the prospectus. WITHDRAWALS FROM A FIXED INTEREST ALLOCATION During the accumulation phase, you may withdraw a portion of your Contract value in any Fixed Interest Allocation. You may make systematic withdrawals of only the interest earned during the prior month, quarter or year, depending on the frequency chosen, from a Fixed Interest Allocation under our systematic withdrawal option. A withdrawal from a Fixed Interest Allocation may be subject to a Market Value Adjustment and a contract surrender charge. Be aware that withdrawals may have federal income tax consequences, including a 10% penalty tax, as well as state income tax consequences. Please be aware that the benefit we pay under any of the optional benefit riders will be reduced by any withdrawals you made from the Fixed Interest Allocations during the period while the rider is in effect. See "Optional Riders" in the prospectus. MARKET VALUE ADJUSTMENT A Market Value Adjustment may decrease, increase or have no effect on your Contract value. We will apply a Market Value Adjustment (i) whenever you withdraw or transfer money from a Fixed Interest Allocation (unless made within 30 days before the maturity date of the applicable guaranteed interest period, or under the systematic withdrawal or dollar cost averaging program) and (ii) if on the annuity start date a guaranteed interest period for any Fixed Interest Allocation does not end on or within 30 days of the annuity start date. A Market Value Adjustment may be positive, negative or result in no change. In general, if interest rates are rising, you bear the risk that any Market Value Adjustment will likely be negative and reduce your Contract value. On the other hand, if interest rates are falling, it is more likely that you will receive a positive Market Value Adjustment that increases your Contract value. In the event of a full surrender, transfer or annuitization from a Fixed Interest Allocation, we will add or subtract any Market Value Adjustment from the amount surrendered, transferred or annuitized. In the event of a partial withdrawal, transfer or annuitization, we will add or subtract any Market Value Adjustment from the total amount withdrawn, transferred or annuitized in order to provide the amount requested. If a negative Market Value Adjustment exceeds your Contract value in the Fixed Interest Allocation, we will consider your request to be a full surrender, transfer or annuitization of the Fixed Interest Allocation. CONTRACT VALUE IN THE FIXED INTEREST ALLOCATIONS On the contract date, the Contract value in any Fixed Interest Allocation in which you are invested is equal to the portion of the initial premium paid and designated for allocation to the Fixed Interest Allocation. On each business day after the contract date, we calculate the amount of Contract value in each Fixed Interest Allocation as follows: (1) We take the Contract value in the Fixed Interest Allocation at the end of the preceding business day. (2) We credit a daily rate of interest on (1) at the guaranteed rate since the preceding business day. (3) We add (1) and (4) We subtract from (3) any transfers from that Fixed Interest Allocation. (5) We subtract from (4) any withdrawals, and then subtract any contract fees (including any rider charges) and premium taxes. Access - 131789 C2 Additional premium payments and transfers allocated to the Fixed Account will be placed in a new Fixed Interest Allocation. The Contract value on the date of allocation will be the amount allocated. Several examples which illustrate how the Market Value Adjustment works are included in the prospectus for the Fixed Account CASH SURRENDER VALUE The cash surrender value is the amount you receive when you surrender the Contract. The cash surrender value of amounts allocated to the Fixed Account will fluctuate daily based on the interest credited to Fixed Interest Allocations, any Market Value Adjustment, and any surrender charge. We do not guarantee any minimum cash surrender value. On any date during the accumulation phase, we calculate the cash surrender value as follows: we start with your Contract value, then we adjust for any Market Value Adjustment, and then we deduct any surrender charge, any charge for premium taxes, the annual contract administrative fee (unless waived), and any optional benefit rider charge, and any other charges incurred but not yet deducted. DOLLAR COST AVERAGING FROM FIXED INTEREST ALLOCATIONS You may elect to participate in our dollar cost averaging program if you have at least $1,200 of Contract value in Fixed Account Interest Allocations with a guaranteed interest period of 1 year or less. The Fixed Interest Allocations serve as the source accounts from which we will, on a monthly basis, automatically transfer a set dollar amount of money to other Fixed Interest Allocations or contract investment portfolio subaccounts selected by you. The dollar cost averaging program is designed to lessen the impact of market fluctuation on your investment. Since we transfer the same dollar amount to subaccounts each month, more units of a subaccount are purchased if the value of its unit is low and fewer units are purchased if the value of its unit is high. Therefore, a lower than average value per unit may be achieved over the long term. However, we cannot guarantee this. When you elect the dollar cost averaging program, you are continuously investing in securities regardless of fluctuating price levels. You should consider your tolerance for investing through periods of fluctuating price levels. You elect the dollar amount you want transferred under this program. Each monthly transfer must be at least $100. You may change the transfer amount once each contract year. Transfers from a Fixed Interest Allocation under the dollar cost averaging program are not subject to a Market Value Adjustment. We may in the future offer additional subaccounts or withdraw any subaccount or FIXED Interest Allocation to or from the dollar cost averaging program or otherwise modify, suspend or terminate this program. Of course, such change will not affect any dollar cost averaging programs in operation at the time. SUSPENSION OF PAYMENTS We have the right to delay payment of amounts from a Fixed Interest Allocation for up to 6 months. MORE INFORMATION See the prospectus for Fixed Account I. Access - 131789 C3 -------------------------------------------------------------------------------- APPENDIX D -------------------------------------------------------------------------------- FIXED INTEREST DIVISION A Fixed Interest Division option is available through the group and individual deferred variable annuity contracts offered by ING USA Annuity and Life Insurance Company. The Fixed Interest Division is part of the ING USA General Account. Interests in the Fixed Interest Division have not been registered under the Securities Act of 1933, and neither the Fixed Interest Division nor the General Account are registered under the Investment Company Act of 1940. Interests in the Fixed Interest Division are offered in certain states through an Offering Brochure, dated May 1, 2004. The Fixed Interest Division is different from the Fixed Account which is described in the prospectus but which is not available in your state. If you are unsure whether the Fixed Account is available in your state, please contact our Customer Service Center at (800) 366-0066. When reading through the Prospectus, the Fixed Interest Division should be counted among the various investment options available for the allocation of your premiums, in lieu of the Fixed Account. The Fixed Interest Division may not be available in some states. Some restrictions may apply. You will find more complete information relating to the Fixed Interest Division in the Offering Brochure. Please read the Offering Brochure carefully before you invest in the Fixed Interest Division. Access - 131789 D1 -------------------------------------------------------------------------------- APPENDIX E -------------------------------------------------------------------------------- EXAMPLES OF WITHDRAWAL ADJUSTMENT FOR 7% SOLUTION DEATH BENEFIT FOR CONTRACT CATEGORIES OTHER THAN MAY-2002, YR-2003 AND YR-2004* These examples assume that withdrawals have not exceeded 7% of premium in any year. They apply to the 7% Solution Death Benefit Element of the Max 7 Death Benefit. EXAMPLE #1: THE CONTRACT VALUE (AV) IS LOWER THAN THE DEATH BENEFIT Assume a premium payment of $100,000, AV at the time of withdrawal of $87,000 and a 7% Solution minimum guarantee death benefit ("MGDB") at the time of withdrawal of $127,000. A total withdrawal of $27,000 is made. The withdrawal is a combination of Special Withdrawal and Pro-rata Withdrawal. Calculate the Effect of the Withdrawal 1. The Special Withdrawal is $7,000 (7% of $100,000). MGDB after Special Withdrawal = $120,000 ($127,000 - $7,000) AV after Special Withdrawal = $80,000 ($87,000 - $7,000) The Pro-rata Withdrawal is $20,000 ($27,000 - $7,000). 2. Pro-rata Withdrawal Adjustment to MGDB = $30,000 ($120,000 * ($20,000 / $80,000)) MGDB after Pro-rata Withdrawal = $90,000 ($120,000 - $30,000) AV after Pro-rata Withdrawal = $60,000 ($80,000 - $20,000) EXAMPLE #2: THE CONTRACT VALUE (AV) IS GREATER THAN THE DEATH BENEFIT Assume a premium payment of $100,000, AV at the time of withdrawal of $167,000 and a 7% Solution minimum guarantee death benefit ("MGDB") at the time of withdrawal of $127,000. A total withdrawal of $27,000 is made. The withdrawal is a combination of Special Withdrawal and Pro-rata Withdrawal. Calculate the Effect of the Withdrawal 1. The Special Withdrawal is $7,000 (7% of $100,000). MGDB after Special Withdrawal = $120,000 ($127,000 - $7,000) AV after Special Withdrawal = $160,000 ($167,000 - $7,000) The Pro-rata Withdrawal is $20,000 ($27,000 - $7,000). 2. Pro-rata Withdrawal Adjustment to MGDB = $15,000 ($120,000 * ($20,000 / $160,000)) MGDB after Pro-rata Withdrawal = $105,000 ($120,000 - $15,000) AV after Pro-rata Withdrawal = $140,000 ($160,000 - $20,000) Access - 131789 E1 EXAMPLE #3: THE CONTRACT VALUE (AV) IS EQUAL TO THE DEATH BENEFIT Assume a premium payment of $100,000, AV at the time of withdrawal of $127,000 and a 7% Solution minimum guarantee death benefit ("MGDB") at the time of withdrawal of $127,000. A total withdrawal of $27,000 is made. The withdrawal is a combination of Special Withdrawal and Pro-rata Withdrawal. Calculate the Effect of the Withdrawal 1. The Special Withdrawal is $7,000 (7% of $100,000). MGDB after Special Withdrawal = $120,000 ($127,000 - $7,000) AV after Special Withdrawal = $120,000 ($127,000 - $7,000) The Pro-rata Withdrawal is $20,000 ($27,000 - $7,000). 2. Pro-rata Withdrawal Adjustment to MGDB = $20,000 ($120,000 * ($20,000 / $120,000)) MGDB after Pro-rata Withdrawal = $100,000 ($120,000 - $20,000) AV after Pro-rata Withdrawal = $100,000 ($120,000 - $20,000) *Withdrawals from Contracts in the May-2002, Yr-2003 and Yr-2004 categories are made on a pro-rata basis for the 7% Solution Enhanced Death Benefit or the 7% Solution Element of the Max 7 Enhanced Death Benefit, as applicable. Access - 131789 E2 -------------------------------------------------------------------------------- APPENDIX F -------------------------------------------------------------------------------- SPECIAL FUNDS AND EXCLUDED FUNDS EXAMPLES EXAMPLE #1: The following examples are intended to demonstrate the impact on your 7% Solution Death Benefit Element ("7% MGDB") of allocating your Contract Value to Special Funds.
----------------------------------------- --------------------------------------- -------------------------------------- 7% MGDB IF 50% INVESTED 7% MGDB IF 0% INVESTED 7% MGDB IF 100% INVESTED IN SPECIAL FUNDS IN SPECIAL FUNDS IN SPECIAL FUNDS ----------------------------------------- --------------------------------------- -------------------------------------- END OF YR COVERED SPECIAL TOTAL END OF YR COVERED SPECIAL TOTAL END OF YR COVERED SPECIAL TOTAL 0 500 500 1,000 0 1,000 -- 1,000 0 0 1000 1000 1 535 500 1,035 1 1,070 -- 1,070 1 0 1000 1000 2 572 500 1,072 2 1,145 -- 1,145 2 0 1000 1000 3 613 500 1,113 3 1,225 -- 1,225 3 0 1000 1000 4 655 500 1,155 4 1,311 -- 1,311 4 0 1000 1000 5 701 500 1,201 5 1,403 -- 1,403 5 0 1000 1000 6 750 500 1,250 6 1,501 -- 1,501 6 0 1000 1000 7 803 500 1,303 7 1,606 -- 1,606 7 0 1000 1000 8 859 500 1,359 8 1,718 -- 1,718 8 0 1000 1000 9 919 500 1,419 9 1,838 -- 1,838 9 0 1000 1000 10 984 500 1,484 10 1,967 -- 1,967 10 0 1000 1000 ----------------------------------------- --------------------------------------- --------------------------------------
----------------------------------------- --------------------------------------- 7% MGDB IF TRANSFERRED TO 7% MGDB IF TRANSFERRED TO SPECIAL FUNDS COVERED FUNDS AT THE BEGINNING OF YEAR 6 AT THE BEGINNING OF YEAR 6 ----------------------------------------- --------------------------------------- END OF YR COVERED SPECIAL TOTAL END OF YR COVERED SPECIAL TOTAL 0 1,000 -- 1,000 0 -- 1,000 1,000 1 1,070 -- 1,070 1 -- 1,000 1,000 2 1,145 -- 1,145 2 -- 1,000 1,000 3 1,225 -- 1,225 3 -- 1,000 1,000 4 1,311 -- 1,311 4 -- 1,000 1,000 5 1,403 -- 1,403 5 -- 1,000 1,000 6 -- 1,403 1,403 6 1,070 -- 1,070 7 -- 1,403 1,403 7 1,145 -- 1,145 8 -- 1,403 1,403 8 1,225 -- 1,225 9 -- 1,403 1,403 9 1,311 -- 1,311 10 -- 1,403 1,403 10 1,403 -- 1,403 ----------------------------------------- ---------------------------------------
Access - 131789 F1 EXAMPLE #2: The following examples are intended to demonstrate the impact on your 7% Solution Death Benefit Element ("7% MGDB") of allocating your Contract Value to Excluded Funds. --------------------------------------------------------------- 7% MGDB IF 50% INVESTED IN EXCLUDED FUNDS --------------------------------------------------------------- Covered Excluded Total ---------------------------------------------- 7% 7% 7% Death End of yr MGDB AV MGDB AV MGDB AV Benefit 0 500 500 500 500 1,000 1,000 1,000 1 535 510 535 510 1,045 1,020 1,045 2 572 490 572 490 1,062 980 1,062 3 613 520 613 520 1,133 1,040 1,133 4 655 550 655 550 1,205 1,100 1,205 5 701 450 701 450 1,151 900 1,151 6 750 525 750 525 1,275 1,050 1,275 7 803 600 803 600 1,403 1,200 1,403 8 859 750 859 750 1,609 1,500 1,609 9 919 500 919 500 1,419 1,000 1,419 10 984 300 984 300 1,284 600 1,284 --------------------------------------------------------------- --------------------------------- --------------------------------- 7% MGDB IF 0% INVESTED 7% MGDB IF 100% INVESTED IN EXCLUDED FUNDS IN EXCLUDED FUNDS --------------------------------- --------------------------------- Covered Excluded ---------------- ----------------- 7% Death 7% Death End of yr MGDB AV Benefit End of yr MGDB AV Benefit 0 1,000 1,000 1,000 0 1,000 1,000 1,000 1 1,070 1,020 1,070 1 1,070 1,020 1,020 2 1,145 980 1,145 2 1,145 980 980 3 1,225 1,040 1,225 3 1,225 1,040 1,040 4 1,311 1,100 1,311 4 1,311 1,100 1,100 5 1,403 900 1,403 5 1,403 900 900 6 1,501 1,050 1,501 6 1,501 1,050 1,050 7 1,606 1,200 1,606 7 1,606 1,200 1,200 8 1,718 1,500 1,718 8 1,718 1,500 1,500 9 1,838 1,000 1,838 9 1,838 1,000 1,000 10 1,967 600 1,967 10 1,967 600 600 --------------------------------- --------------------------------- Note: AV are hypothetical illustrative values. Not a projection. "7% MGDB" for Excluded funds is notional. Not payable as a benefit. Death Benefit for Excluded Funds equals Accumulation Value (AV) Access - 131789 F2 ----------------------------------------------------------------------- TRANSFER FROM COVERED FUNDS TO EXCLUDED FUNDS AT THE BEGINNING OF YEAR 6 ----------------------------------------------------------------------- Covered Excluded Total -------------------------------------------------- 7% 7% 7% Death end of yr MGDB AV MGDB AV MGDB AV Benefit -- 1,000 1,000 -- -- 1,000 1,000 1,000 1 1,050 1,020 -- -- 1,050 1,020 1,050 2 1,103 980 -- -- 1,103 980 1,103 3 1,158 1,040 -- -- 1,158 1,040 1,158 4 1,216 1,100 -- -- 1,216 1,100 1,216 5 1,276 900 -- -- 1,276 900 1,276 6 -- -- 1,340 1,050 1,050 1,050 1,050 7 -- -- 1,407 1,200 1,200 1,200 1,200 8 -- -- 1,477 1,500 1,500 1,500 1,500 9 -- -- 1,551 1,000 1,000 1,000 1,000 10 -- -- 1,629 600 600 600 600 ------------------------------------------------------------------------ Note: 7% MGDB transferred to Excluded Funds equals the 7% MGDB in Covered Funds (or pro-rata portion thereof for partial transfer). Transfers from Special Funds to Excluded Funds work the same as Covered to Excluded (except 7% MGDB in Special Funds does not accumulate). ----------------------------------------------------------------------- TRANSFER FROM EXCLUDED FUNDS TO COVERED FUNDS AT THE BEGINNING OF YEAR 6 ----------------------------------------------------------------------- Covered Excluded Total -------------------------------------------------- 7% 7% 7% Death end of yr MGDB AV MGDB AV MGDB AV Benefit -- -- -- 1,000 1,000 1,000 1,000 1,000 1 -- -- 1,050 1,020 1,020 1,020 1,020 2 -- -- 1,103 980 980 980 980 3 -- -- 1,158 1,040 1,040 1,040 1,040 4 -- -- 1,216 1,100 1,100 1,100 1,100 5 -- -- 1,276 900 900 900 900 6 945 1,050 -- -- 945 1,050 1,050 7 992 1,200 -- -- 992 1,200 1,200 8 1,042 1,500 -- -- 1,042 1,500 1,500 9 1,094 1,000 -- -- 1,094 1,000 1,094 10 1,149 600 -- -- 1,149 600 1,149 ----------------------------------------------------------------------- Note: 7% MGDB transferred to Covered Funds is the lesser of 7% MGDB in Excluded Funds (or portion thereof for partial transfer) and AV transferred to Covered Funds. Transfers from Excluded Funds to Special Funds work the same as Excluded to Covered (except 7% MGDB in Special Funds does not accumulate). Access - 131789 F3 -------------------------------------------------------------------------------- APPENDIX G -------------------------------------------------------------------------------- EXAMPLES OF ADJUSTMENTS TO THE MGWB WITHDRAWAL ACCOUNT AND THE MAXIMUM ANNUAL WITHDRAWAL AMOUNT FOR WITHDRAWALS IN EXCESS OF THE MAXIMUM ANNUAL WITHDRAWAL AMOUNT ("EXCESS WITHDRAWAL AMOUNT") EXAMPLE #1: OWNER HAS INVESTED ONLY IN COVERED FUNDS Assume the Contract Value (CV) before the withdrawal is $100,000 and is invested in Covered Funds only, the Eligible Payment Amount (EPA) is $100,000, the Maximum Annual Withdrawal Amount (MAW) is $7,000, the MGWB Withdrawal Account allocated to Covered Funds ("Covered Withdrawal Account") is $120,000, and a withdrawal of $10,000 is made. The effect of the withdrawal is calculated as follows: The new CV is $90,000 ($100,000 - $10,000). The Excess Withdrawal Amount is $3,000 ($10,000 - $7,000). The Covered Withdrawal Account is first reduced dollar-for-dollar by the portion of the withdrawal up to the MAW to $113,000 ($120,000 - $7,000), and is then reduced pro-rata based on the ratio of the Excess Withdrawal Amount to the CV (after being reduced for the withdrawal up to the MAW) to $109,354.84 ($113,000 * (1 - $3,000 / $93,000)). The EPA is reduced pro-rata based on the ratio of the Excess Withdrawal Amount to the CV (after being reduced for the withdrawal up to the MAW) to $96,774.19 ($100,000 * (1 - $3,000 / $93,000)). The reduction to the EPA for withdrawals of Excess Withdrawal Amount is applied pro-rata regardless of whether CV is allocated to Covered or Excluded Funds. The MAW is then recalculated to be 7% of the new EPA, $6,774.19 ($96,774.19 * 7%). EXAMPLE #2: OWNER HAS INVESTED ONLY IN EXCLUDED FUNDS Assume the Contract Value (CV) before the withdrawal is $100,000 and is invested in Excluded Funds only, the Eligible Payment Amount (EPA) is $100,000, the Maximum Annual Withdrawal Amount (MAW) is $7,000, the MGWB Withdrawal Account allocated to Excluded Funds ("Excluded Withdrawal Account") is $120,000, and a withdrawal of $10,000 is made. The effect of the withdrawal is calculated as follows: The new CV is $90,000 ($100,000 - $10,000). The Excess Withdrawal Amount is $3,000 ($10,000 - $7.000). The Excluded Withdrawal Account is reduced pro-rata based on the ratio of the entire amount withdrawn to the CV (before the withdrawal) to $108,000 ($120,000 * (1 - $10,000 / $100,000)). The EPA is reduced pro-rata based on the ratio of the Excess Withdrawal Amount to the CV (after being reduced for the withdrawal up to the MAW) to $96,774.19 ($100,000 * (1 - $3,000/$93,000)). The reduction to the EPA for withdrawals of Excess Withdrawal Amount is applied pro-rata regardless of whether CV is allocated to Covered or Excluded Funds. The MAW is then recalculated to be 7% of the new EPA, $6,774.19 ($96,774.19 * 7%). Access - 131789 G1 EXAMPLE #3: OWNER HAS INVESTED IN BOTH COVERED AND EXCLUDED FUNDS Assume the Contract Value (CV) before the withdrawal is $100,000 and is invested $60,000 in Covered Funds and $40,000 in Excluded Funds. Further assume that the Eligible Payment Amount (EPA) is $100,000, the Maximum Annual Withdrawal Amount (MAW) is $7,000, the MGWB Withdrawal Account allocated to Covered Funds ("Covered Withdrawal Account") is $75,000, the MGWB Withdrawal Account allocated to Excluded Funds ("Excluded Withdrawal Account") is $45,000, and a withdrawal is made of $10,000 ($8,000 from Covered Funds and $2,000 from Excluded Funds). The new CV for Covered Funds is $52,000 ($60,000 - $8,000), and the new CV for Excluded Funds is $38,000 ($40,000 - $2,000). The Covered Withdrawal Account is first reduced dollar-for-dollar by the lesser of the MAW ($7,000) and the amount withdrawn from Covered Funds ($8,000) to $68,000 ($75,000 - $7,000), and is then reduced pro-rata based on the ratio of any Excess Withdrawal Amount from Covered Funds to the CV in Covered Funds (after being reduced for the withdrawal up to the MAW) to $66,716.98 ($68,000 * (1 - $1,000 / $53,000). The Excluded Withdrawal Account is reduced pro-rata based on the ratio of the amount withdrawn from Excluded Funds to the CV in Excluded Funds (prior to the withdrawal) to $42,750 ($45,000 * (1 - $2,000 / $40,000)). The EPA is reduced pro-rata based on the ratio of the Excess Withdrawal Amount to the CV (after being reduced for the withdrawal up to the MAW) to $96,774.19 ($100,000 * (1 - $3,000 / $93,000)). The reduction to the EPA for withdrawals of Excess Withdrawal Amount is applied pro-rata regardless of whether CV is allocated to Covered or Excluded Funds. The MAW is then recalculated to be 7% of the new EPA, $6,774.19 ($96,774.19 * 7%). EXAMPLE #4: OWNER TRANSFERS FUNDS FROM EXCLUDED FUNDS TO COVERED FUNDS Assume the Contract Value (CV) before the transfer is $100,000 and is invested $60,000 in Covered Funds and $40,000 in Excluded Funds. Further assume that the MGWB Withdrawal Account allocated to Covered Funds ("Covered Withdrawal Account") is $75,000, the MGWB Withdrawal Account allocated to Excluded Funds ("Excluded Withdrawal Account") is $45,000, and a transfer is made of $10,000 from Excluded Funds to Covered Funds. The new CV for Covered Funds is $70,000 ($60,000 + $10,000), and the new CV for Excluded Funds is $30,000 ($40,000 - $10,000). The Excluded Withdrawal Account is reduced pro-rata based on the ratio of the amount transferred from Excluded Funds to the CV in Excluded Funds (prior to the transfer) to $33,750 ($45,000 * (1 - $10,000 / $40,000)). The Covered Withdrawal Account is increased by the lesser of the reduction of the Excluded Withdrawal Account of $11,250 ($45,000 - $33,750) and the actual amount transferred of $10,000. Thus, the Covered Withdrawal Account is increased to $85,000 ($75,000 + $10,000). EXAMPLE #5: OWNER TRANSFERS FUNDS FROM COVERED FUNDS TO EXCLUDED FUNDS Assume the Contract Value (CV) before the transfer is $100,000 and is invested $60,000 in Covered Funds and $40,000 in Excluded Funds. Further assume that the MGWB Withdrawal Account allocated to Covered Funds ("Covered Withdrawal Account") is $75,000, the MGWB Withdrawal Account allocated to Excluded Funds ("Excluded Withdrawal Account") is $45,000, and a transfer is made of $10,000 from Covered Funds to Excluded Funds. Access - 131789 G2 The new CV for Covered Funds is $50,000 ($60,000 - $10,000), and the new CV for Excluded Funds is $50,000 ($40,000 + $10,000). The Covered Withdrawal Account is reduced pro-rata based on the ratio of the amount transferred from Covered Funds to the CV in Covered Funds (prior to the transfer) to $62,500 ($75,000 * (1 - $10,000 / $60,000)). The Excluded Withdrawal Account is increased by the reduction of the Covered Withdrawal Account of $12,500 ($75,000 - $62,500) to $57,500 ($45,000 + $12,500). Access - 131789 G3 -------------------------------------------------------------------------------- APPENDIX H -------------------------------------------------------------------------------- DEATH BENEFITS FOR PRE-2000 AND YR-2000 CONTRACT OWNERS The purpose of this appendix is to describe the death benefits and the mortality and expense risk charges applicable to contract owners in the Pre-2000 and Yr-2000 categories. OTHER THAN AS SPECIFIED BELOW, PLEASE SEE THE PROSPECTUS FOR A FULL DESCRIPTION OF YOUR DEATH BENEFIT OPTIONS AND OTHER CONTRACT FEATURES. CAPITALIZED TERMS HAVE THE SAME MEANING AS DESCRIBED IN THE PROSPECTUS. IF YOU ARE UNSURE OF WHICH CATEGORY APPLIES TO YOU, PLEASE CALL OUR CUSTOMER SERVICE CENTER. DEATH BENEFIT Under the STANDARD DEATH BENEFIT, if you die before the annuity start date, your beneficiary will receive the greatest of: 1) the contract value; 2) the total premium payments made under the Contract reduced by a pro-rata adjustment for any withdrawal*; or 3) the cash surrender value. * For contracts in Pre-2000, total premium payments less any withdrawals. Under the 7% SOLUTION ENHANCED DEATH BENEFIT, if you die before the annuity start date, your beneficiary will receive the greatest of: 1) the contract value; 2) the total premium payments reduced by a pro-rata adjustment for any withdrawals*; 3) the cash surrender value; or 4) the enhanced death benefit, which we determine as follows: IF YOU ARE IN PRE-2000: We credit interest each business day at the 7% annual effective rate to the enhanced death benefit from the preceding day (which would be the initial premium if the preceding day is the contract date), then we add additional premiums paid since the preceding day, then we subtract any withdrawals (including any market value adjustment applied to such withdrawal) since the preceding day, and then we subtract any associated surrender charges. The maximum enhanced death benefit is 2 times all premium payments, less an amount to reflect withdrawals. Note: The actual interest rate used for calculating the death benefit for the Liquid Assets and Limited Maturity Bond investment portfolios will be the lesser of the 7% annual effective rate or the net rate of return for such portfolios during the applicable period. The interest rate used for calculating the death benefit for your investment in the Fixed Account will be the lesser of the 7% annual effective rate or the interest credited to such investment during the applicable period. Thus, selecting these investments may limit the enhanced death benefit. IF YOU ARE IN YR-2000: We credit interest each business day at the 7% annual effective rate to the enhanced death benefit from the preceding day (which would be the initial premium if the preceding day is the contract date), then we add additional premiums paid since the preceding day, then we adjust for any withdrawals (including any market value adjustment applied to such withdrawal and any associated surrender Access - 131789 H1 charges) since the preceding day. Special withdrawals are withdrawals of up to 7% per year of cumulative premiums. Special withdrawals shall reduce the 7% Solution Enhanced Death Benefit by the amount of contract value withdrawn. For any withdrawals in excess of the amount available as a special withdrawal, a pro-rata adjustment to the death benefit is made. The maximum enhanced death benefit is 3 times all premium payments, adjusted to reflect withdrawals. Each accumulated initial or additional premium payment will continue to grow at the 7% annual effective rate until the maximum enhanced death is reached or the contract owner attains age 80, if earlier. Note for current Special Funds: Certain investment portfolios and the Fixed Account are designated as "Special Funds" for purposes of calculating the 7% Solution Enhanced Death Benefit. For Contracts issued on or after May 1, 2003, the following investment options are designated as Special Funds: the ING Liquid Assets Portfolio; the ING Limited Maturity Bond Portfolio; the ING VP Bond Portfolio; the ING PIMCO Core Bond Portfolio; the Fixed Account; the Fixed Interest Division; and the TSA Special Fixed Account. For Contracts issued before May 1, 2003, the ING VP Bond Portfolio and the ING PIMCO Core Bond Portfolio are not designated as Special Funds. For Contracts issued on or after September 2, 2003, the ProFunds VP Rising Rates Opportunity Portfolio is designated as a Special Fund. The actual interest rate used for calculating the 7% Solution Enhanced Death Benefit for Special Funds will be the lesser of (1) 7% and (2) the interest rate, positive or negative, providing a yield on the enhanced death benefit for Special Funds equal to the net return for the current valuation period on the contract value allocated to Special Funds. We may, with 30 days notice to you, designate any investment portfolio as a Special Fund on existing contracts with respect to new premiums added to such investment portfolio and also with respect to new transfers to such investment portfolio. Thus selecting these investment portfolios and/or the Fixed Account may limit or reduce the enhanced death benefit. * For contracts in Pre-2000, total premium payments less any withdrawals. Under the ANNUAL RATCHET ENHANCED DEATH BENEFIT, if you die before the annuity start date, your beneficiary will receive the greatest of: 1) the contract value; 2) the total premium payments reduced by a pro-rata adjustment for any withdrawal*; 3) the cash surrender value; or 4) the enhanced death benefit, which is determined as follows: On each contract anniversary that occurs on or before the contract owner turns age 80, we compare the prior enhanced death benefit to the contract value and select the larger amount as the new enhanced death benefit. On all other days, the enhanced death benefit is the following amount: On a daily basis we first take the enhanced death benefit from the preceding day (which would be the initial premium added if the preceding day is the contract date), then we add additional premiums paid since the preceding day, and then reduce the enhanced death benefit pro-rata for any contract value withdrawn.** That amount becomes the new enhanced death benefit. * For contracts in Pre-2000, total premium payments less any withdrawals. ** For contracts in Pre-2000, we subtract withdrawals made (including any market value adjustment applied to such withdrawal) since the preceding day. Under the MAX 7 ENHANCED DEATH BENEFIT, if you die before the annuity start date, your beneficiary will receive the greater of the 7% Solution Enhanced Death Benefit and the Annual Ratchet Enhanced Death Benefit. Under this benefit option, the 7% Solution Enhanced Death Benefit and the Annual Ratchet Enhanced Death Benefit are calculated in the same manner as if each were the elected benefit. THE MAX 7 ENHANCED DEATH BENEFIT IS NOT AVAILABLE TO PRE-2000 CONTRACT OWNERS. Note: In all cases described above, the amount of the death benefit could be reduced by premium taxes owed and withdrawals not previously deducted. ALL ENHANCED DEATH BENEFITS MAY NOT BE AVAILABLE IN EVERY STATE OR UNDER ALL CONTRACTS. Access - 131789 H2 MORTALITY AND EXPENSE RISK CHARGE The mortality and expense risk charge depends on the category of contract owners to which you belong and on the death benefit that you chose. The mortality and expense risk charge (depending on the death benefit you chose) and the asset-based administrative charge, on an annual basis, for Pre-2000 and Yr-2000 contract owners are as follows: PRE-2000:
------------------------------------------------------------------------------- STANDARD ENHANCED DEATH BENEFITS DEATH BENEFIT ANNUAL RATCHET 7% SOLUTION ------------------------------------------------------------------------------- Mortality & Expense Risk Charge 1.25% 1.40% 1.55% Asset-Based Administrative Charge 0.15% 0.15% 0.15% ----- ----- ----- Total 1.40% 1.55% 1.70% -------------------------------------------------------------------------------
The mortality and expense risk charge is deducted each business day at the rate of .003446% (Standard); .003863% (Annual Ratchet); or .004280% (7% Solution), respectively, for each day since the previous business day. YR-2000:
------------------------------------------------------------------------------------- STANDARD ENHANCED DEATH BENEFITS DEATH BENEFIT ANNUAL RATCHET 7% SOLUTION MAX 7 ------------------------------------------------------------------------------------- Mortality & Expense Risk Charge 1.30% 1.45% 1.65% 1.75% Asset-Based Administrative Charge 0.15% 0.15% 0.15% 0.15% ----- ----- ----- ----- Total 1.45% 1.60% 1.80% 1.90% -------------------------------------------------------------------------------------
The mortality and expense risk charge is deducted each business day at the rate of .003585% (Standard); .004002% (Annual Ratchet); .004558% (7% Solution); or .004837% (Max 7), respectively, for each day since the previous business day. DEATH BENEFIT FOR EXCLUDED FUNDS FOR PRE-2000 AND YR-2000 We will be designating certain investment portfolios as "Excluded Funds." Excluded Funds will include certain investment portfolios that, due to their volatility, will be excluded from the death benefit guarantees that might otherwise be provided. We may add new portfolios as Excluded Funds. We may also reclassify an existing portfolio as an Excluded Fund or remove such classification upon 30 days notice to you. Such reclassification will apply only to amounts transferred or otherwise added to such portfolio after the effective date of the reclassification. Investment in Excluded Funds will impact your death benefit. For the period of time, and to the extent, that you allocate premium or contract value to Excluded Funds, your death benefit attributable to that allocation will equal the contract value of that allocation. Any guarantee of death benefit in excess of contract value otherwise provided with regard to allocations to Non-Excluded Funds, does not apply to allocations to Excluded Funds. The death benefit provided under the Contract may be reduced to the extent that you allocate premium or contract value to Excluded Funds. Transfers from Excluded Funds to Non-Excluded funds will reduce all death benefit components for Excluded Funds on a pro-rata basis. Except with respect to any maximum guaranteed death benefit, the resulting increase in the Non-Excluded Funds death benefit component will equal the lesser of the reduction in the death benefit for Excluded Funds and the contract value transferred. With respect to the maximum guaranteed death benefit, where applicable, the resulting increase in the Non-Excluded Funds maximum guaranteed death benefit will equal the reduction in the maximum guaranteed death benefit for Excluded Funds. Transfers from Non-Excluded Funds to Excluded Funds will reduce the Non-Excluded Funds death benefit components on a pro-rata basis. The resulting increase in the death benefit components of Excluded Funds will equal the reduction in the Non-Excluded Funds death benefit components. Access - 131789 H3 -------------------------------------------------------------------------------- APPENDIX I -------------------------------------------------------------------------------- DEATH BENEFITS FOR YR-2001 AND MAY-2001 CONTRACT OWNERS The purpose of this appendix is to describe the death benefits applicable to contract owners in the Yr-2001 and May-2001 categories, and to describe the mortality and expense risk charges for contract owners in the Yr-2001 category. OTHER THAN AS DESCRIBED BELOW, PLEASE SEE THE PROSPECTUS FOR A FULL DESCRIPTION OF YOUR DEATH BENEFIT OPTIONS AND OTHER CONTRACT FEATURES. CAPITALIZED TERMS HAVE THE SAME MEANING AS DESCRIBED IN THE PROSPECTUS. AS USED IN THIS APPENDIX, "NON-SPECIAL FUNDS" HAS THE SAME MEANING AS "COVERED FUNDS" IN THE PROSPECTUS. IF YOU ARE UNSURE OF WHICH CATEGORY APPLIES TO YOU, PLEASE CALL OUR CUSTOMER SERVICE CENTER. DEATH BENEFITS We use the Base Death Benefit to help determine the minimum death benefit payable under each of the death benefit options described below. You do not elect the Base Death Benefit. The Base Death Benefit is equal to the greater of: 1) the contract value; and 2) the cash surrender value. The STANDARD DEATH BENEFIT equals the GREATEST of the Base Death Benefit, the floor, and the SUM of: 1) the contract value allocated to Special Funds; and 2) the Standard Minimum Guaranteed Death Benefit for amounts allocated to Non-Special Funds. The Standard Minimum Guaranteed Death Benefit equals: 1) the initial premium payment allocated to Special and Non-Special Funds, respectively; 2) increased by premium payments and adjusted for transfers, allocated to Special and Non-Special Funds, respectively, after issue; and 3) reduced by a pro-rata adjustment for any withdrawal or transfer taken from the Special and Non-Special Funds, respectively. In the event of transfers from Special to Non-Special funds, the increase in the Minimum Guaranteed Death Benefit of the Non-Special Fund will equal the lesser of the reduction in the Minimum Guaranteed Death Benefit in the Special Fund and the contract value transferred. In the event of transfers from Non-Special to Special Funds, the increase in the Minimum Guaranteed Death Benefit of the Special Fund will equal the reduction in the Minimum Guaranteed Death Benefit in the Non-Special Fund. THE FLOOR FOR THE DEATH BENEFIT IS the total premium payments made under the Contract reduced by a pro-rata adjustment for any withdrawal. ENHANCED DEATH BENEFIT OPTIONS. Under the Enhanced Death Benefit options, if you die before the annuity start date, your beneficiary will receive the greater of the Standard Death Benefit and the Enhanced Death Benefit option elected. For purposes of calculating the Enhanced Death Benefits, certain investment portfolios, and the Fixed Account are designated as "Special Funds." For Contracts issued on or after May 1, 2003, the following investment options are designated as Special Funds: the ING Liquid Assets Portfolio; the ING Limited Maturity Bond Portfolio; the ING VP Bond Portfolio; the ING PIMCO Core Bond Portfolio; the Fixed Account; the Fixed Interest Division; and the TSA Special Fixed Account. For Contracts issued before May 1, 2003, the ING VP Bond Portfolio and the ING PIMCO Core Bond Portfolio are not designated as Special Funds. For Contracts issued on or after September 2, 2003, the ProFunds VP Rising Rates Opportunity Portfolio is designated as a Special Fund. Access - 131789 I1 We may, with 30 days notice to you, designate any investment portfolio as a Special Fund on existing contracts with respect to new premiums added to such investment portfolio and also with respect to new transfers to such investment portfolio. Selecting a Special Fund may limit or reduce the enhanced death benefit. For the period during which a portion of the contract value is allocated to a Special Fund, we may, at our discretion, reduce the mortality and expense risk charge attributable to that portion of the contract value. The reduced mortality and expense risk charge will be applicable only during that period. The 7% SOLUTION ENHANCED DEATH BENEFIT, equals the GREATEST of: 1) the Standard Death Benefit; 2) the floor; and 3) the sum of the contract value allocated to Special Funds and the 7% Solution Minimum Guaranteed Death Benefit for Non-Special Funds. The 7% Solution Minimum Guaranteed Death Benefit for Special and Non-Special Funds equals the lesser of: 1) premiums, adjusted for withdrawals and transfers, accumulated at 7% until the earlier of attainment of age 80 or reaching the cap (equal to 3 times all premium payments, as reduced by adjustments for withdrawals) and thereafter at 0%, subject to a floor as described below, and 2) the cap. Withdrawals of up to 7% per year of cumulative premiums are referred to as special withdrawals. Special withdrawals reduce the 7% Solution Minimum Guaranteed Death Benefit and the cap by the amount of contract value withdrawn. For any other withdrawals (withdrawals in excess of the amount available as a special withdrawal), a pro-rata adjustment to the 7% Solution Minimum Guaranteed Death Benefit and the cap is made. The amount of the pro-rata adjustment for withdrawals from Non-Special Funds will equal (a) times (b) divided by (c): where (a) is the 7% Solution Minimum Guaranteed Death Benefit for Non-Special Funds prior to the withdrawal; (b) is the contract value of the withdrawal; and (c) is the contract value allocated to Non-Special Funds before the withdrawal. The amount of the pro-rata adjustment for withdrawals from Special Funds will equal (a) times (b) divided by (c): where (a) is the 7% Solution Minimum Guaranteed Death Benefit for Special Funds prior to the withdrawal; (b) is the contract value of the withdrawal; and (c) is the contract value allocated to Special Funds before the withdrawal. Transfers from Special to Non-Special Funds will reduce the 7% Solution Minimum Guaranteed Death Benefit and the cap for Special Funds on a pro-rata basis. The resulting increase in the 7% Solution Minimum Guaranteed Death Benefit in the Non-Special Funds will equal the lesser of the reduction in the 7% Solution Minimum Guaranteed Death Benefit in the Special Funds and the contract value transferred. The increase in the cap for Non-Special Funds will equal the reduction in the cap for Special Funds. Transfers from Non-Special to Special Funds will reduce the 7% Solution Minimum Guaranteed Death Benefit and the cap in the Non-Special Funds on a pro-rata basis. The resulting increase in the 7% Solution Minimum Guaranteed Death Benefit and the cap for the Special Funds will equal the reduction in the 7% Solution Minimum Guaranteed Death Benefit and the cap for the Non-Special Funds. THE FLOOR FOR THE 7 % SOLUTION ENHANCED DEATH BENEFIT is determined by the same calculations described above for the 7% Solution Minimum Guaranteed Death Benefit except as follows: If you transfer contract value to a Special Fund, the minimum floor will not be reduced by the transfer. Instead, a portion of the floor (equal to the percentage of contract value transferred) just prior to the transfer will be frozen (with 0% subsequent growth) unless the contract value is transferred back to the Non-Special Funds. Upon such transfer back to Non-Special Funds, we will resume accumulating that portion of the floor at the 7% annual effective rate as described above, subject to the age limit and the cap described above. Similarly, for contract value allocated directly to Special Funds, that portion of the floor will be the contract value allocated, and will not accumulate while invested in Special Funds. Withdrawals will reduce the floor as described for the minimum guaranteed death benefit above. Your death benefit will be the greater of the floor and the death benefit determined as described above. The ANNUAL RATCHET ENHANCED DEATH BENEFIT equals the GREATEST of: 1) the Standard Death Benefit; Access - 131789 I2 2) the floor; and 3) the sum of the contract value allocated to Special Funds and the Annual Ratchet Minimum Guaranteed Death Benefit allocated to Non-Special Funds. The Annual Ratchet Minimum Guaranteed Death Benefit equals: 1) the initial premium allocated at issue to Special and Non-Special Funds, respectively; 2) increased dollar for dollar by any premium allocated after issue to Special and Non-Special funds, respectively; 3) for Non-Special Funds, adjusted on each anniversary that occurs on or prior to attainment of age 90 to the greater of the Annual Ratchet Minimum Guaranteed Death Benefit for Non-Special Funds from the prior anniversary (adjusted for new premiums, partial withdrawals allocated to Non-Special Funds, and transfers between Special and Non-Special Funds) and the current contract value allocated to Non-Special Funds; for Special Funds, adjusted on each anniversary that occurs on or prior to attainment of age 90 to the greater of the Annual Ratchet Minimum Guaranteed Death Benefit for Special Funds from the prior anniversary (adjusted for new premiums, partial withdrawals allocated to Special Funds, and transfers between Special and Non-Special and Non-Special Funds) and the current contract value allocated to Special Funds. Withdrawals reduce the Annual Ratchet Minimum Guaranteed Death Benefit on a pro-rata basis, based on the amount withdrawn from the Special and Non-Special Funds, respectively. The amount of the pro-rata adjustment for withdrawals from Non-Special Funds will equal (a) times (b) divided by (c): where (a) is the Annual Ratchet Minimum Guaranteed Death Benefit for Non-Special Funds prior to the withdrawal; (b) is the contract value of the withdrawal; and (c) is the contract value allocated to Non-Special Funds before withdrawal. The amount of the pro-rata adjustment for Special Funds will equal (a) times (b) divided by (c): where (a) is the Annual Ratchet Minimum Guaranteed Death Benefit for Special Funds prior to the withdrawal; (b) is the contract value of the withdrawal; and (c) is the contract value allocated to Special Funds before the withdrawal. Transfers from Special to Non-Special Funds will reduce the Annual Ratchet Minimum Guaranteed Death Benefit for Special Funds on a pro-rata basis. The resulting increase in the Annual Ratchet Minimum Guaranteed Death Benefit in the Non-Special Funds will equal the lesser of the reduction in the Annual Ratchet Minimum Guaranteed Death Benefit in the Special Funds and the contract value transferred. Transfers from Non-Special to Special Funds will reduce the Annual Ratchet Minimum Guaranteed Death Benefit for Non-Special Funds on a pro-rata basis. The resulting increase in the Annual Ratchet Minimum Guaranteed Death Benefit for the Special Funds will equal the reduction in the Annual Ratchet Minimum Guaranteed Death Benefit for the Non-Special Funds. THE FLOOR FOR THE ANNUAL RATCHET ENHANCED DEATH BENEFIT is determined as described above for the Annual Ratchet Minimum Guaranteed Death Benefit except that all investments will be treated as Non-Special Funds. The MAX 7 ENHANCED DEATH BENEFIT equals the greater of the 7% Solution Enhanced Death Benefit and the Annual Ratchet Enhanced Death Benefit. Under this death benefit option, the 7% Solution Enhanced Death Benefit and the Annual Ratchet Enhanced Death Benefit are calculated in the same manner as if each were the elected benefit. Note: In all cases described above, the amount of the death benefit could be reduced by premium taxes owed and withdrawals not previously deducted. The enhanced death benefits may not be available in all states. MORTALITY AND EXPENSE RISK CHARGE The mortality and expense risk charge depends on the category of contract owners to which you belong and on the death benefit that you chose. The mortality and expense risk charge (depending on the death benefit you chose) and the asset-based administrative charge, on an annual basis, for Yr-2001 contract owners are as follows: Access - 131789 I3 YR-2001:
------------------------------------------------------------------------------------- STANDARD ENHANCED DEATH BENEFITS DEATH BENEFIT ANNUAL RATCHET 7% SOLUTION MAX 7 ------------------------------------------------------------------------------------- Mortality & Expense Risk Charge 1.30% 1.55% 1.65% 1.75% Asset-Based Administrative Charge 0.15% 0.15% 0.15% 0.15% Total 1.45% 1.70% 1.80% 1.90% -------------------------------------------------------------------------------------
The mortality and expense risk charge is deducted each business day at the rate of .003585% (Standard); .004280% (Annual Ratchet); .004558% (7% Solution); or .004837% (Max 7), respectively, for each day since the previous business day. DEATH BENEFIT FOR EXCLUDED FUNDS We will be designating certain investment portfolios as "Excluded Funds." Excluded Funds will include certain investment portfolios that, due to their volatility, will be excluded from the death benefit guarantees that might otherwise be provided. We may add new portfolios as Excluded Funds. We may also reclassify an existing portfolio as an Excluded Fund or remove such classification upon 30 days notice to you. Such reclassification will apply only to amounts transferred or otherwise added to such portfolio after the effective date of the reclassification. Investment in Excluded Funds will impact your death benefit. For the period of time, and to the extent, that you allocate premium or contract value to Excluded Funds, your death benefit attributable to that allocation will equal the contract value of that allocation. Any guarantee of death benefit in excess of contract value otherwise provided with regard to allocations to Non-Excluded Funds, does not apply to allocations to Excluded Funds. The death benefit provided under the Contract may be reduced to the extent that you allocate premium or contract value to Excluded Funds. Transfers from Excluded Funds to Non-Excluded funds will reduce all death benefit components for Excluded Funds on a pro-rata basis. Except with respect to any maximum guaranteed death benefit, the resulting increase in the Non-Excluded Funds death benefit component will equal the lesser of the reduction in the death benefit for Excluded Funds and the contract value transferred. With respect to the maximum guaranteed death benefit, where applicable, the resulting increase in the Non-Excluded Funds maximum guaranteed death benefit will equal the reduction in the maximum guaranteed death benefit for Excluded Funds. Transfers from Non-Excluded Funds to Excluded Funds will reduce the Non-Excluded Funds death benefit components on a pro-rata basis. The resulting increase in the death benefit components of Excluded Funds will equal the reduction in the Non-Excluded Funds death benefit components. Access - 131789 I4 -------------------------------------------------------------------------------- APPENDIX J -------------------------------------------------------------------------------- DEATH BENEFITS FOR MAY-2002 AND YR-2003 CONTRACT OWNERS The following is a description of the 7% Solution Enhanced Death Benefit and the Annual Ratchet Enhanced Death Benefit for May-2002 and Yr-2003 contract owners. Other than as described below, please see the prospectus for a full description of your death benefit options and other Contract features. Capitalized terms have the same meaning as described in the prospectus. The 7% SOLUTION ENHANCED DEATH BENEFIT is the greater of: 1) the Standard Death Benefit; and 2) the lesser of: a) 3 times all premium payments, adjusted for withdrawals (the "cap"); and b) the sum of the 7% Solution Minimum Guaranteed Death Benefit ("7% MGDB") allocated to Covered Funds, the 7% MGDB allocated to Special Funds, and the contract value allocated to Excluded Funds. For purposes of calculating the 7% Solution Enhanced Death Benefit, the following investment options are designated as Special Funds: the ING Liquid Assets Portfolio, the ING Limited Maturity Bond Portfolio, the ING VP Bond Portfolio, the ING PIMCO Core Bond Portfolio, the ProFunds VP Rising Rates Opportunity Portfolio, the Fixed Account, the Fixed Interest Division, and the TSA Special Fixed Account. For Contracts issued prior to May 1, 2003, the ING VP Bond Portfolio and the ING PIMCO Core Bond Portfolio are not designated as Special Funds. For Contracts issued prior to September 2, 2003, the ProFunds VP Rising Rates Opportunity Portfolio is not designated as a Special Fund. No investment options are currently designated as Excluded Funds. The 7% MGDB allocated to Covered Funds equals premiums allocated to Covered Funds, adjusted for withdrawals and transfers, accumulated at 7% until age 80 or the 7% MGDB reaches the cap. There is no accumulation once the cap is reached. Payment of additional premiums may cause the accumulation to resume, but there is no catch-up for any period where accumulation was suspended. The 7% MGDB allocated to Special Funds equals premiums allocated to Special Funds, adjusted for withdrawals and transfers. There is no accumulation of Minimum Guaranteed Death Benefit allocated to Special Funds. The 7% MGDB allocated to Excluded Funds is determined in the same way as the 7% MGDB for Covered Funds, but the calculation is not used for benefit purposes, but only to determine the impact of transfers to and from Excluded Funds. Withdrawals reduce the 7% MGDB on a pro-rata basis. The percentage reduction in the 7% MGDB for each Fund category (i.e. Covered, Special or Excluded) equals the percentage reduction in contract value in that Fund category resulting from the withdrawal. The percentage reduction in the cap equals the percentage reduction in total contract value resulting from the withdrawal. The pro-rata adjustment is based on the change in contract value resulting from the withdrawal, not the amount requested. Transfers among Fund categories do not reduce the overall 7% MGDB, but do affect the amount of the 7% MGDB in a particular Fund category. Net transfers from among the Funds will reduce the 7% MGDB in the Funds on a pro-rata basis. The ANNUAL RATCHET ENHANCED DEATH BENEFIT equals the greater of: Access - 131789 J1 1) the Standard Death Benefit; and 2) the Annual Ratchet Minimum Guaranteed Death Benefit ("Annual Ratchet MGDB") allocated to Covered Funds plus the contract value allocated to Excluded Funds. No funds are currently designated as Excluded Funds for purposes of the Annual Ratchet MGDB. The Annual Ratchet MGDB allocated to Covered Funds on the contract date equals the premium allocated to Covered Funds. On each contract anniversary that occurs on or prior to attainment of age 90, the Annual Ratchet MGDB in Covered Funds will be set to the greater of: 1) the current contract value in Covered Funds (after deductions occurring as of that date); or 2) the Annual Ratchet MGDB in Covered Funds from the prior contract anniversary (after deductions occurring on that date), adjusted for new premiums, and partial withdrawals attributable to Covered Funds, and transfers. Other than on contract anniversaries, the Annual Ratchet MGDB in the Covered Funds is equal to the Annual Ratchet MGDB in the Covered Funds from the last contract anniversary, adjusted for new premiumsand partial withdrawals attributable to Covered Funds, and transfers. The Annual Ratchet MGDB allocated to Excluded Funds on the contract date equals the premium allocated to Excluded Funds. The calculation is not used for benefit purposes, but only to determine the impact of transfers to and from Excluded Funds. On the contract date, the Annual Ratchet MGDB allocated to Excluded Funds is equal to the premium allocated to Excluded Funds. On each contract anniversary that occurs on or prior to attainment of age 90, the Annual Ratchet MGDB in Excluded Funds will be set to the greater of: 1) the current contract value in Excluded Funds (after deductions occurring as of that date); or 2) the Annual Ratchet MGDB in the Excluded Funds from the prior contract anniversary (after deductions occurring on that date), adjusted for new premiums and partial withdrawals attributable to Excluded Funds, and transfers. Other than on contract anniversaries, the Annual Ratchet MGDB in the Excluded Funds is equal to the Annual Ratchet MGDB in the Excluded Funds from the last contract anniversary, adjusted for new premiumsand partial withdrawals attributable to Excluded Funds, and transfers. Withdrawals reduce the Annual Ratchet MGDB on a pro-rata basis. The pro-rata adjustment is based on the change in contract value resulting from the withdrawal, not the amount requested. Net transfers from Covered Funds to Special or Excluded Funds will reduce the 7% MGDB in Covered Funds on a pro-rata basis. The increase in the 7% MGDB allocated to Special or Excluded Funds, as applicable, will equal the decrease in the 7% MGDB in Covered Funds. Net transfers from Excluded Funds to Covered Funds will reduce the Annual Ratchet MGDB in Excluded Funds on a pro-rata basis. The increase in the Annual Ratchet MGDB allocated to Covered Funds will equal the lesser of the net contract value transferred and the reduction in the Annual Ratchet MGDB in Excluded Funds. The MAX 7 ENHANCED DEATH BENEFIT equals the greater of the 7% Solution Enhanced Death Benefit or the Annual Ratchet Enhanced Death Benefit described above. Each Enhanced Death Benefit is determined independently of the other at all times. MORTALITY AND EXPENSE RISK CHARGE The mortality and expense risk charge depends on the category of contract owners to which you belong and on the death benefit that you chose. The mortality and expense risk charge (depending on the death benefit you chose) and the asset-based administrative charge, on an annual basis, for Yr-2003 contract owners are as follows: Access - 131789 J2 YR-2003: ----------------------------------------------------------------------------- STANDARD ENHANCED DEATH BENEFITS DEATH ANNUAL BENEFIT RATCHET 7% SOLUTION MAX 7 ----------------------------------------------------------------------------- Mortality & Expense Risk Charge 1.65% 1.90% 2.00% 2.10% Asset-Based Administrative Charge 0.15% 0.15% 0.15% 0.15% ----- ----- ----- ----- Total 1.80% 2.05% 2.15% 2.25% ----------------------------------------------------------------------------- The mortality and expense risk charge is deducted each business day at the rate of .004558% (Standard); .005255% (Annual Ratchet); .005535% (7% Solution); or .005815% (Max 7), respectively, for each day since the previous business day. Access - 131789 J3 -------------------------------------------------------------------------------- APPENDIX K -------------------------------------------------------------------------------- OPTIONAL RIDER BENEFITS FOR PRE-2000 AND YR-2000 CONTRACT OWNERS The following is a description of the optional rider benefits for Pre-2000 and Yr-2000 contract owners who elected an optional rider benefit. OTHER THAN AS SPECIFIED BELOW, PLEASE SEE THE PROSPECTUS FOR A COMPLETE DESCRIPTION OF YOUR OPTIONAL RIDER BENEFITS. CAPITALIZED TERMS HAVE THE SAME MEANING AS DESCRIBED IN THE PROSPECTUS. We may be designating certain investment portfolios as "Excluded Funds." We may add new portfolios as Excluded Funds. We may also reclassify an existing portfolio as an Excluded Fund or remove such classification upon 30 days notice to you. Such reclassification will apply only to amounts transferred or otherwise added to such portfolio after the effective date of the reclassification. Investment in Excluded Funds will impact the benefit under any optional rider that you have elected. IF YOU NEVER INVEST IN EXCLUDED FUNDS, YOUR RIDER BENEFITS WILL BE UNAFFECTED. OPTIONAL RIDER CHARGES MINIMUM GUARANTEED ACCUMULATION BENEFIT (MGAB). The quarterly charge for the MGAB rider is as follows: ----------------------------------------------------------------- Waiting Period Quarterly Charge ----------------------------------------------------------------- 10 Year 0.125% of the MGAB Charge Base (0.50% annually) 20 Year 0.125% of the MGAB Charge Base (0.50% annually) ----------------------------------------------------------------- The MGAB Charge Base is the total of (i) the MGAB Base on the rider date and (ii) premiums during the 2-year period commencing on the rider date, reduced pro-rata for withdrawals and reduced for transfers made within the last 3 years prior to the MGAB Benefit Date. We will deduct charges only during your ten-year or twenty-year waiting period, as applicable. If you surrender or annuitize your Contract, we will deduct a pro-rata portion of the charge for the current quarter based on the current quarterly charge rate and MGAB Charge Base immediately prior to the surrender or annuitization. The MGAB Charge Base is adjusted for transfers between Special and Non-Special Funds or Excluded Funds. MINIMUM GUARANTEED INCOME BENEFIT (MGIB). The quarterly charge for the MGIB rider is as follows: ----------------------------------------------------------------- MGIB Rate Quarterly Charge ----------------------------------------------------------------- 7% 0.125% of the MGIB Charge Base (0.50% annually) ----------------------------------------------------------------- The MGIB Charge Base is the total of premiums paid more than 5 years before the earliest MGIB Benefit Date, reduced pro-rata for all withdrawals taken while the MGIB rider is in effect, and accumulated at the MGIB Rate (7%) to the earlier of age 80 and reaching the MGIB Base Maximum. If you surrender or annuitize your Contract, we will deduct a pro-rata portion of the charge for the current quarter based on the current quarterly charge rate and your MGIB Charge Base immediately prior to the surrender or annuitization. The MGIB Charge Base is adjusted for transfers between Special and Non-Special Funds or Excluded Funds. MINIMUM GUARANTEED WITHDRAWAL BENEFIT (MGWB). The quarterly charge for the MGWB rider is 0.125% (0.50% annually) of the original MGWB Eligible Payment Amount. The original MGWB Eligible Payment Amount is equal to all premiums paid during the first two contract years following the rider date. When we calculate the MGWB rider charge, we do not reduce the Eligible Payment Amount by the amount of any withdrawals taken while the MGWB rider is in effect. We will deduct charges only during the period before your Contract's Automatic Periodic Benefit Status. If you surrender or annuitize your Contract, we will deduct a pro-rata portion of the charge Access - 131789 K1 for the current quarter based on the current quarterly charge rate and your original MGWB Eligible Payment Amount immediately prior to the surrender or annuitization. OPTIONAL RIDER BENEFITS For the period of time, and to the extent, that you allocate premium or contract value to Excluded Funds, any guarantee of an optional rider benefit does not apply to those amounts. The optional rider benefit provided under the Contract may be reduced to the extent that you allocate premium or contract value to Excluded Funds. For each rider benefit component contained in your rider, a corresponding component will be created for allocations to Excluded Funds. Transfers from Excluded Funds to Non-Excluded funds will reduce all rider benefit components for Excluded Funds on a pro-rata basis. Except with respect to any maximum guaranteed rider benefit, the resulting increase in the Non-Excluded Funds rider benefit component will equal the lesser of the reduction in the rider benefit component for Excluded Funds and the contract value transferred. With respect to the maximum guaranteed benefit, where applicable, the resulting increase in the Non-Excluded Funds maximum guaranteed benefit will equal the reduction in the maximum guaranteed benefit for Excluded Funds. Transfers from Non-Excluded Funds to Excluded Funds will reduce the Non-Excluded Funds rider benefit component on a pro-rata basis. The resulting increase in the rider benefit components of Excluded Funds will equal the reduction in the Non-Excluded Funds benefit. Adjustments for transfers involving both Excluded Funds and Special Funds will be calculated separately from adjustments for transfers involving Excluded Funds and Non-Special Funds, where applicable. OPTIONAL RIDER BENEFIT FOR NON-EXCLUDED FUNDS A. MINIMUM GUARANTEED ACCUMULATION BENEFIT ("MGAB"). We calculate your MGAB as follows: 1. WE FIRST DETERMINE YOUR MGAB BASE. The MGAB Base is only a calculation used to determine the MGAB. The MGAB Base does not represent a contract value, nor does it guarantee performance of the subaccounts in which you are invested. It is also not used in determining the amount of your annuity income, cash surrender value and death benefits. If you purchased the MGAB rider on the contract date, and (i) elected the ten-year option, your MGAB Base is equal to your initial premium, plus any additional premiumadded to your Contract during the 2-year period after your rider date, reduced pro-rata for any withdrawals and reduced for any transfers made within the last 3 years prior to the MGAB Benefit Date; or (ii) elected the twenty-year option, except for the Special Funds which require special calculations, your MGAB Base is equal to your initial premium, plus any additional premium added to your Contract during the 2-year period after your contract date, accumulated at the MGAB Base Rate, reduced pro-rata for any withdrawals and reduced for any transfers made within the last 3 years prior to the MGAB Benefit Date. The MGAB Base Rate for allocations other than allocations to the Special Funds is the annual effective rate of 3.5265%. Accumulation of eligible additional premiums starts on the date the premium was received. ONLY PREMIUMS ADDED TO YOUR CONTRACT DURING THE 2-YEAR PERIOD AFTER YOUR RIDER DATE ARE INCLUDED IN THE MGAB BASE. ANY ADDITIONAL PREMIUM PAYMENTS YOU ADDED TO YOUR CONTRACT AFTER THE SECOND RIDER ANNIVERSARY ARE NOT INCLUDED IN THE MGAB BASE. Thus, the MGAB rider may not be appropriate for you if you plan to add substantial premium payments after your second rider anniversary. If you purchased the MGAB rider after the contract date, your MGAB Base is equal to your contract value on the rider date, plus premiums added during the 2-year period after your rider date. Withdrawals taken while the MGAB rider is in effect, as well as transfers made within 3 years prior to the MGAB Benefit Date, will reduce the value of your MGAB Base pro-rata. This means that the MGAB Base (and the MGAB Charge Base) will be reduced by the same percent as the percent of contract value that was withdrawn (or transferred). We will look to your contract value immediately before the withdrawal or transfer when we determine this percent. Access - 131789 K2 For any Special Fund under the twenty-year option, if the actual interest credited to and/or the investment earnings of the contract value allocated to the Special Fund over the calculation period is less than the amount calculated under the formula above, that lesser amount becomes the increase in your MGAB Base for the Special Fund for that period. THE MGAB BASE RATE FOR EACH SPECIAL FUND MAY BE POSITIVE OR NEGATIVE. Thus, investing in the Special Funds may limit the MGAB benefit. If you add the 20-year option rider after the contract date, any payment of premiums after the rider date, and/or investments in the Special Funds, may prevent the MGAB Base from doubling over the waiting period. 2. WE THEN SUBTRACT YOUR CONTRACT VALUE ON THE MGAB BENEFIT DATE FROM YOUR MGAB BASE. The contract value that we subtract includes both the contract value in the subaccounts in which you are invested and the contract value in your Fixed Interest Allocations, if any. 3. ANY POSITIVE DIFFERENCE IS YOUR MGAB. If there is a MGAB, we will automatically credit it on the MGAB Benefit Date to the subaccounts in which you are invested pro-rata based on the proportion of your contract value in the subaccounts on that date, unless you have previously given us other allocation instructions. If you do not have an investment in any subaccount on the MGAB Benefit Date, we will allocate the MGAB to the Liquid Assets subaccount on your behalf. After the crediting of the MGAB, the amount of your annuity income, cash surrender value and death benefits will reflect the crediting of the MGAB to your contract value to the extent the contract value is used to determine such value. B. MINIMUM GUARANTEED INCOME BENEFIT ("MGIB"). On the MGIB Benefit Date, we calculate your MGIB annuity income as follows: 1. WE FIRST DETERMINE YOUR MGIB BASE. The MGIB Base is only a calculation used to determine the MGIB. The MGIB Base does not represent a contract value, nor does it guarantee performance of the subaccounts in which you are invested. It is also not used in determining the amount of your cash surrender value and death benefits. Any reset of contract value under provisions of the Contract or other riders will not increase the MGIB Base or MGIB Base Maximum. (i) If you purchased the MGIB rider on the contract date, except for the Special Funds which require special calculations, the MGIB Base is equal to your initial premium, plus any additional premiums added to your Contract during the 5-year period after your contract date, accumulated at the MGIB Base Rate (7% for all portfolios except the Special Funds), reduced pro-rata by all withdrawals taken while the MGIB rider is in effect. Premiums paid less than 5 years prior to the earliest MGIB Benefit Date are excluded from the MGIB Base. (ii) If you purchased the MGIB rider after the contract date, except for the Special Funds which require special calculations, your MGIB Base is equal to your contract value on the rider date plus any eligible premiums added to your Contract during the 5-year period after your rider date, accumulated at the MGIB Base Rate (7% for all portfolios except the Special Funds), reduced pro-rata by all withdrawals taken while the MGIB rider is in effect. Eligible additional premium payments are those added more than 5 years before the earliest MGIB Benefit Date and are included in the MGIB Base. Premiums paid after the 5th rider anniversary are excluded from the MGIB Base. (iii) For any Special Fund, if the actual earnings and/or the interest credited to the contract value allocated to the Special Fund over the calculation period are less than the amount determined under the formula above, that lesser amount becomes the change in your MGIB Base for the Special Fund. THE MGIB BASE RATE FOR EACH SPECIAL FUND MAY BE POSITIVE OR NEGATIVE. Thus, investing in the Special Funds may limit the MGIB benefit. Of course, regardless of when purchased or how you invest, withdrawals will reduce the value of your MGIB Base pro-rata to the percentage of the contract value withdrawn. We offer a 7% MGIB Base Rate, except for the Special Funds. The Company may at its discretion discontinue offering this rate. The MGIB Base Rate is an annual effective rate. Access - 131789 K3 The MGIB Base is subject to the MGIB Base Maximum. The MGIB Base Maximum is the amount calculated above until the earlier of: (i) the date the oldest contract owner reaches age 80, or (ii) the date the MGIB Base reaches two times the MGIB Eligible Premiums, adjusted for any withdrawals. MGIB Eligible Premiums is the total of premiums paid more than 5 years before the earliest MGIB Benefit Date. 2. Then we determine the MGIB annuity income by multiplying your MGIB Base (adjusted for any Market Value Adjustment, surrender charge and premium taxes) by the income factor, and then divide by $1,000. Two MGIB Income Options are available under the MGIB Rider: (i) Income for Life (Single Life or Joint with 100% Survivor) and 10-30 Year Certain; (ii) Income for a 20-30 Year Period Certain; or (iii) Any other income plan offered by the Company in connection with the MGIB rider on the MGIB Benefit Date. On the MGIB Benefit Date, we would apply the MGIB Base using the Table of Income Factors specified in the MGIB rider for the Income Option you selected. The guaranteed factors contained in the MGIB rider generally provide lower payout per $1,000 of value applied than the guaranteed factors found in your Contract. Then we compare the MGIB annuity income under the rider guarantee for the option selected with the annuity income under your Contract guarantee for the same option. The greater amount of income will be available to you on the MGIB Benefit Date. C. MINIMUM GUARANTEED WITHDRAWAL BENEFIT (MGWB) RIDER. The MGWB Withdrawal Account is only a calculation which represents the remaining amount available for periodic payments under the MGWB rider. It does not represent a contract value, nor does it guarantee performance of the subaccounts in which you are invested. It will not affect your annuitization, surrender and death benefits. The MGWB Withdrawal Account is equal to the Eligible Payment Amount adjusted for any withdrawals. Withdrawals of up to 7% per year of the Eligible Payment Amount will reduce the value of your MGWB Withdrawal Account by the dollar amount of the withdrawal. Any withdrawals greater than 7% per year of the Eligible Payment Amount will cause a reduction in both the MGWB Withdrawal Account and the Eligible Payment Amount by the proportion that the withdrawal bears to the contract value at the time of the withdrawal. The MGWB Withdrawal Account is also reduced by the amount of any periodic payments paid under the MGWB rider once your contract value is zero. GUARANTEED WITHDRAWAL STATUS. You may continue to make withdrawals in any amount permitted under your Contract so long as your contract value is greater than zero. See "Withdrawals." However, making any withdrawals in any year greater than 7% per year of the Eligible Payment Amount will reduce the Eligible Payment Amount for future withdrawals and payments under the MGWB rider by the proportion that the withdrawal bears to the contract value at the time of the withdrawal. The MGWB rider will remain in force and you may continue to make withdrawals each year so long as: (i) your contract value is greater than zero; (ii) your MGWB Withdrawal Account is greater than zero; (iii) your latest allowable annuity start date has not been reached; (iv) you have not elected to annuitize your Contract; and (v) you have not died (unless your spouse has elected to continue the contract), changed the ownership of the Contract or surrendered the Contract. The standard Contract provision limiting withdrawals to no more than 90% of the cash surrender value is not applicable under the MGWB rider. WITHDRAWAL ADJUSTMENTS. We will reduce the MGWB Withdrawal Account by the dollar amount of any withdrawal taken up to 7% per year of the Eligible Payment Amount. Any withdrawal taken in excess of 7% per year of the Eligible Payment Amount will reduce both the MGWB Withdrawal Account and the Eligible Payment Access - 131789 K4 Amount pro-rata in proportion to the percentage of contract value withdrawn. If a withdrawal reduces the MGWB Withdrawal Account to zero, the MGWB rider terminates and no further benefits are payable under the rider. AUTOMATIC PERIODIC BENEFIT STATUS. Under the MGWB rider, in the event your contract value is reduced to zero your Contract is given what we refer to as Automatic Periodic Benefit Status, if: (i) your MGWB Withdrawal Account is greater than zero; (ii) your latest allowable annuity start date has not been reached; (iii) you have not elected to annuitize your Contract; and (iv) you have not died, changed the ownership of the Contract or surrendered the Contract. Once your Contract is given Automatic Periodic Benefit Status, we will pay you the annual MGWB periodic payments, beginning on the next contract anniversary, equal to the lesser of the remaining MGWB Withdrawal Account or 7% annually of your Eligible Payment Amount until the earliest of (i) your contract's latest annuity start date, (ii) the death of the owner; or (iii) until your MGWB Withdrawal Account is exhausted. We will reduce the MGWB Withdrawal Account by the amount of each payment. Once your Contract is given Automatic Periodic Benefit Status, we will not accept any additional premium payments in your Contract and the Contract will not provide any benefits except those provided by the MGWB rider. Any other rider terminates. Your Contract will remain in Automatic Periodic Benefit Status until the earliest of (i) payment of all MGWB periodic payments (ii) payment of the Commuted Value (defined below) or (iii) the owner's death has occurred. On the contract's latest annuity start date, in lieu of making the remaining MGWB periodic payments, we will pay you the Commuted Value of your MGWB periodic payments remaining. We may, at our option, extend your annuity start date in order to continue the MGWB periodic payments. The Commuted Value is the present value of any then remaining MGWB periodic payments at the current interest rate plus 0.50%. The current interest rate will be determined by the average of the Ask Yields for U.S. Treasury STRIPS as quoted by a national quoting service for period(s) applicable to the remaining payments. Once the last MGWB periodic payment is made or we pay you the Commuted Value, your Contract and the MGWB rider terminate. Access - 131789 K5 -------------------------------------------------------------------------------- APPENDIX L -------------------------------------------------------------------------------- OPTIONAL RIDER BENEFITS FOR YR-2001 AND MAY-2001 CONTRACT OWNERS The following is a description of the optional rider benefits for Yr-2001 and May-2001 contract owners who elected an optional rider benefit. OTHER THAN AS SPECIFIED BELOW, PLEASE SEE THE PROSPECTUS FOR A COMPLETE DESCRIPTION OF YOUR OPTIONAL RIDER BENEFITS. CAPITALIZED TERMS HAVE THE SAME MEANING AS DESCRIBED IN THE PROSPECTUS. We may be designating certain investment portfolios as "Excluded Funds". We may add new portfolios as Excluded Funds. We may also reclassify an existing portfolio as an Excluded Fund or remove such classification upon 30 days notice to you. Such reclassification will apply only to amounts transferred or otherwise added to such portfolio after the effective date of the reclassification. Investment in Excluded Funds will impact the benefit under any optional rider that you have elected. If you never invest in Excluded Funds, your rider benefits will be unaffected. OPTIONAL RIDER CHARGES MINIMUM GUARANTEED ACCUMULATION BENEFIT (MGAB). The quarterly charge for the MGAB rider is as follows: ----------------------------------------------------------------- Waiting Period Quarterly Charge ----------------------------------------------------------------- 10 Year 0.125% of the MGAB Charge Base (0.50% annually) 20 Year 0.125% of the MGAB Charge Base (0.50% annually) ----------------------------------------------------------------- The MGAB Charge Base is the total of (i) the MGAB Base on the rider date and (ii) premiums during the 2-year period commencing on the rider date, reduced pro-rata for withdrawals and reduced for transfers made within the last 3 years prior to the MGAB Benefit Date. We will deduct charges only during your ten-year or twenty-year waiting period, as applicable. If you surrender or annuitize your Contract, we will deduct a pro-rata portion of the charge for the current quarter based on the current quarterly charge rate and MGAB Charge Base immediately prior to the surrender or annuitization. The MGAB Charge Base is adjusted for transfers between Special and Non-Special Funds or Excluded Funds. MINIMUM GUARANTEED INCOME BENEFIT (MGIB). The quarterly charge for the MGIB rider is as follows: ----------------------------------------------------------------- MGIB Rate Quarterly Charge ----------------------------------------------------------------- 7% 0.125% of the MGIB Charge Base (0.50% annually) ----------------------------------------------------------------- The MGIB Charge Base is the total of premiums paid more than 5 years before the earliest MGIB Benefit Date, reduced pro-rata for all withdrawals taken while the MGIB rider is in effect, and accumulated at the MGIB Rate (7%) to the earlier of age 80 and reaching the MGIB Base Maximum. If you surrender or annuitize your Contract, we will deduct a pro-rata portion of the charge for the current quarter based on the current quarterly charge rate and your MGIB Charge Base immediately prior to the surrender or annuitization. The MGIB Charge Base is adjusted for transfers between Special and Non-Special Funds or Excluded Funds. MINIMUM GUARANTEED WITHDRAWAL BENEFIT (MGWB). The quarterly charge for the MGWB rider is 0.125% (0.50% annually) of the original MGWB Eligible Payment Amount. The original MGWB Eligible Payment Amount is equal to all premiums paid during the first two contract years following the rider date. When we calculate the MGWB rider charge, we do not reduce the Eligible Payment Amount by the amount of any withdrawals taken while the MGWB rider is in effect. We will deduct charges only during the period before your Contract's Automatic Periodic Benefit Status. If you surrender or annuitize your Contract, we will deduct a pro-rata portion of the charge Access - 131789 L1 for the current quarter based on the current quarterly charge rate and your original MGWB Eligible Payment Amount immediately prior to the surrender or annuitization. OPTIONAL RIDER BENEFITS MINIMUM GUARANTEED ACCUMULATION BENEFIT (MGAB) RIDER. The MGAB rider is an optional benefit which provides you with an MGAB benefit intended to guarantee a minimum contract value at the end of a specified waiting period. The MGAB is a one-time adjustment to your contract value in the event your contract value on the MGAB Benefit Date is less than a specified amount. The MGAB rider may offer you protection in the event your Contract loses value during the MGAB waiting period. For discussion of the charges we deduct under the MGAB rider, see "Optional Rider Charges." The MGAB rider offers a ten-year option and a twenty-year option, of which you may purchase only one. The ten-year option has a waiting period of ten years and, other than for allocations to Special Funds, guarantees that your contract value at the end of ten years will at least equal your initial premium payment, reduced pro-rata for withdrawals. Transfers made within 3 years prior to the MGAB Benefit Date will also reduce the benefit pro-rata. The twenty-year option has a waiting period of twenty years and, other than allocations to Special Funds, guarantees that your contract value at the end of twenty years will at least equal two times your initial premium payment, reduced pro-rata for withdrawals and reduced for transfers made within 3 years prior to the MGAB Benefit Date. If you add the 20-year option rider after the contract date, any payment of premiums after the rider date, and/or investments in the Special Funds, may prevent the MGAB Base from doubling over the waiting period. On the MGAB Benefit Date, which is the next business day after the applicable waiting period, we calculate your Minimum Guaranteed Accumulation Benefit. CALCULATING THE MGAB. We calculate your MGAB as follows: 1. WE FIRST DETERMINE YOUR MGAB BASE. The MGAB Base is only a calculation used to determine the MGAB. It does not represent a contract value, nor does it guarantee performance of the subaccounts in which you are invested. It is also not used in determining the amount of your annuity income, cash surrender value and death benefits. The MGAB Base is tracked separately for Special and Non-Special Funds, based on the initial allocation of premium (or contract value), subsequently allocated eligible premiums, withdrawals and transfers. Contract value is used as the initial value if the rider is added after the contract date. The aggregate MGAB Base is used to determine the MGAB on the MGAB Benefit Date. THE AGGREGATE MGAB BASE EQUALS THE SUM OF (1) THE LESSER OF THE MGAB BASE ALLOCATED TO SPECIAL FUNDS AND THE CONTRACT VALUE IN THE SPECIAL FUNDS; AND (2) THE MGAB BASE FOR NON-SPECIAL FUNDS. THUS, INVESTING IN THE SPECIAL FUNDS MAY LIMIT THE MGAB BENEFIT. HOWEVER, THE MGAB BASE IS ALSO SUBJECT TO A "FLOOR" WHICH MAY PARTIALLY OFFSET THE EFFECTS OF INVESTING IN SPECIAL FUNDS. If you purchased the MGAB rider on the contract date, and (i) elected the ten-year option, your MGAB Base for Special and Non-Special Funds is equal to your initial premium plus any additional premium added to your Contract during the 2-year period after your rider date, reduced pro-rata for any withdrawals and any transfers made within 3 years prior to the MGAB Benefit Date; or (ii) elected the twenty-year option your MGAB Base for Special and Non-Special Funds is equal to your initial premium, plus any additional premium added to your Contract during the 2-year period after your contract date, accumulated at the MGAB Rate reduced pro-rata for any withdrawals and reduced for any transfers made within 3 years prior to the MGAB Benefit Date. The MGAB Rate is the annual effective rate of 3.5265%. Accumulation of eligible additional premiums starts on the date the premium was received. If you purchased the MGAB rider after the contract date, your MGAB Base is equal to your contract value on the rider date, plus premiums added during the 2-year period after your rider date, accumulated at the MGAB Rate (if applicable, as described above) and adjusted pro-rata for withdrawals and transfers as described below. Only premiums added to your Contract during the 2-year period after your rider date are included in the MGAB Base. Any additional premium payments you added to your contract after the second rider Access - 131789 L2 anniversary are not included in the MGAB Base. Thus, the MGAB rider may not be appropriate for you if you plan to add substantial premium payments after your second rider anniversary. Withdrawals taken while the MGAB rider is in effect, as well as transfers made within 3 years prior to the MGAB Benefit Date, will reduce the value of your MGAB Base pro-rata. This means that the MGAB Base (and the MGAB Charge Base) will be reduced by the same percent as the percent of contract value that was withdrawn (or transferred). We will look to your contract value immediately before the withdrawal or transfer when we determine this percent. Net transfers from Special Funds to Non-Special Funds will reduce the MGAB Base and MGAB Charge Base allocated to Special Funds on a pro-rata basis. If the transfer is made more than 3 years before the Benefit Date, there will be a corresponding increase in the MGAB Base for Non-Special Funds equal to the lesser of the reduction in the MGAB Base for Special Funds and the net contract value transferred. Net transfers from Non-Special Funds to Special Funds will reduce the MGAB Base and MGAB Charge Base allocated to Non-Special Funds on a pro-rata basis. If the transfer is made more than 3 years before the Benefit Date, there will be a corresponding increase in the MGAB Base for Special Funds equal to the reduction in the MGAB Base for Non-Special Funds. 2. THEN WE DETERMINE THE FLOOR. The floor will be calculated in the same manner as the MGAB Base described above, except as follows: For the ten-year option, all investments will be treated as Non-Special Funds. For the twenty-year option, if you transfer contract value to a Special Fund more than 3 years before the Benefit Date, the floor will not be reduced by the transfer. Instead, a portion of the floor (equal to the percentage of contract value transferred) just prior to the transfer will be frozen (with 0% subsequent growth) unless the contract value is transferred back to the Non-Special Funds. Upon such transfer back to Non-Special Funds, we will resume accumulating that portion of the floor at the MGAB Rate described above. Similarly, for contract value allocated directly to Special Funds, that portion of the floor will be the contract value allocated, and will not accumulate while invested in Special Funds. Withdrawals and other transfers will reduce the floor as described for the MGAB Base above. 3. WE THEN SUBTRACT YOUR CONTRACT VALUE ON THE MGAB BENEFIT DATE FROM THE GREATER OF THE FLOOR AND YOUR AGGREGATE MGAB BASE. The contract value that we subtract includes both the contract value in the subaccounts in which you are invested and the contract value in your Fixed Interest Allocations, if any. 4. ANY POSITIVE DIFFERENCE IS YOUR MGAB. If there is a MGAB, we will automatically credit it to the subaccounts in which you are invested pro-rata based on the proportions of your then contract value in the subaccounts on that date, unless you have previously given us other allocation instructions. If you do not have an investment in any subaccount on the MGAB Benefit Date, we will allocate the MGAB to the Liquid Assets subaccount on your behalf. After the crediting of the MGAB, the amount of your annuity income, cash surrender value and death benefits will reflect the crediting of the MGAB to your contract value to the extent the contract value is used to determine such value. PURCHASE. To purchase the MGAB rider, you must be age 80 or younger on the Rider Date if you choose the ten-year option and age 65 or younger on the rider date if you choose the twenty-year option. The waiting period must end at or before your annuity start date. The MGAB rider may be purchased (i) on the contract date, and (ii) within 30 days following the contract date. For contracts issued more than 30 days before the date this rider first became available in your state, the Company may in its discretion allow purchase of this rider during the 30-day period preceding the first contract anniversary after the date of this prospectus, or the date of state approval, whichever is later. THE MGAB BENEFIT DATE. If you purchased the MGAB rider on the contract date or added the MGAB rider within 30 days following the contract date, the MGAB Benefit Date is your 10th contract anniversary for the ten-year option or 20th contract anniversary for the twenty-year option. If you added the MGAB rider during the 30-day period preceding your first contract anniversary after the date of this prospectus, your MGAB Benefit Date will be the first contract anniversary occurring after 10 years (for the ten-year option) or 20 years (for the twenty-year option) after the rider date. The MGAB rider is not available if the MGAB Benefit Date would fall beyond the latest annuity start date. Access - 131789 L3 CANCELLATION. If you elected the twenty-year option, you have a one-time right to cancel the MGAB rider on your first contract anniversary that is at least 10 years after the rider date. If you purchased the MGAB rider during the 30-day period following the contract date, your one-time right to cancel the rider occurs on the tenth anniversary of your contract date. To cancel, you need to send written notice to our Customer Service Center at least 30 days before such anniversary date. If the MGAB rider is terminated before the MGAB Benefit Date, you will not be credited with the MGAB and we assess the pro-rata portion of the MGAB rider changes for the current quarter. NOTIFICATION. Any crediting of the MGAB will be reported in your first quarterly statement following the MGAB Benefit Date. MINIMUM GUARANTEED INCOME BENEFIT (MGIB) RIDER. The MGIB rider is an optional benefit which guarantees a minimum amount of annuity income will be available to you if you annuitize on the MGIB Benefit Date, regardless of fluctuating market conditions. The amount of the Minimum Guaranteed Income Benefit will depend on the amount of premiums you pay during the five contract years after you purchase the rider, the amount of contract value you allocate or transfer to the Special Funds, the MGIB Rate, the adjustment for Special Fund transfers, and any withdrawals you take while the rider is in effect. Thus, investing in Special Funds may limit the MGIB benefit. However, the MGIB Benefit Base is also subject to a "floor" which may partially offset the effects of investing in Special Funds. For a discussion of the charges we deduct under the MGIB rider, see "Optional Rider Charges." Ordinarily, the amount of income that will be available to you on the annuity start date is based on your contract value, the annuity option you selected and the guaranteed or the income factors in effect on the date you annuitize. If you purchase the MGIB rider, the amount of income that will be available to you upon annuitization on the MGIB Benefit Date is the greatest of: (i) your annuity income based on your contract value adjusted for any Market Value Adjustment (see the ING USA Fixed Account prospectus) on the MGIB Benefit Date applied to the guaranteed income factors specified in your Contract for the annuity option you selected; (ii) your annuity income based on your contract value adjusted for any Market Value Adjustment (see the ING USA Fixed Account prospectus) on the MGIB Benefit Date applied to the then current income factors in effect for the annuity option you selected; and (iii) the MGIB annuity income based on the greater of the floor and your MGIB Benefit Base on the MGIB Benefit Date applied to the MGIB income factors specified in your rider for the MGIB annuity option you selected. Prior to applying the MGIB income factors, we will adjust both the floor and the MGIB Benefit Base for any premium tax recovery and Market Value Adjustment (see the ING USA Fixed Account prospectus) that would otherwise apply at annuitization. Prior to your latest annuity start date, you may choose to exercise your right to receive payments under the MGIB rider. Payments under the rider begin on the MGIB Benefit Date. We require a 10-year waiting period before you can annuitize the MGIB rider benefit. The MGIB must be exercised in the 30-day period prior to the end of the waiting period or any subsequent contract anniversary. At your request, the Company may in its discretion extend the latest contract annuity start date without extending the MGIB Benefit Date. DETERMINING THE MGIB ANNUITY INCOME. On the MGIB Benefit Date, we calculate your MGIB annuity income as follows: 1. WE FIRST DETERMINE YOUR MGIB BENEFIT BASE. The MGIB Benefit Base is only a calculation used to determine the MGIB. The MGIB Benefit Base does not represent a contract value, nor does it guarantee performance of the subaccounts in which you are invested. It is also not used in determining the amount of your cash surrender value and death benefits. Any reset of contract value under provisions of the Contract or other riders will not increase the MGIB Base or MGIB Base Maximum. The MGIB Base is tracked separately for Special and Non-Special Funds, based on initial allocation of eligible premium (or contract value) and subsequently allocated eligible premiums, withdrawals and transfers. Contract value is used as the initial value if the rider is added after the contract date. The Access - 131789 L4 MGIB Benefit Base equals the sum of (1) the contract value of Special Funds, and (2) the MGIB Base for Non-Special Funds. The MGIB Base is equal to the lesser of (i) and (ii) where: (a) is your initial premium (or contract value on the rider date if you purchased the MGIB rider after the contract date), plus any eligible additional premiums added to your Contract, reduced pro-rata by all withdrawals taken while the MGIB rider is in effect, accumulated at the MGIB Rate to the earlier of the oldest owner reaching age 80 and the MGIB Base reaching the MGIB Base Maximum, and at 0% thereafter; and (b) is the MGIB Base Maximum, which equals 200% of allocated eligible premiums, adjusted for withdrawals and transfers. Eligible additional premium payments are those added more than 5 years before the earliest MGIB Benefit Date and are included in the MGIB Base. Premiums paid after that are excluded from the MGIB Base. Net transfers from Special Funds to Non-Special Funds will reduce the MGIB Base and MGIB Base Maximum allocated to Special Funds on a pro-rata basis. The resulting increase in the MGIB Base for Non-Special Funds will equal the lesser of the reduction in the MGIB Base for Special Funds and the net contract value transferred. The increase in the MGIB Base Maximum for Non-Special Funds equals the reduction in the MGIB Base Maximum for Special Funds. Net transfers from Non-Special Funds to Special Funds will reduce the MGIB Base and MGIB Base Maximum allocated to Non-Special Funds on a pro-rata basis. The resulting increase in the MGIB Base and the MGIB Base Maximum for Special Funds equals the reduction in the MGIB Base and MGIB Base Maximum for Non-Special Funds. Transfers to one or more Special Funds could reduce the MGIB Benefit. The MGIB Rate is currently 7%. The Company may at its discretion discontinue offering this rate. The MGIB Rate is an annual effective rate. 2. WE THEN DETERMINE THE FLOOR. The floor will be calculated in the same manner as the MGIB Base described above, except as follows: If you transfer contract value to a Special Fund, the floor will not be reduced by the transfer. Instead, a portion of the floor (equal to the percentage of contract value transferred) just prior to the transfer will be frozen (with 0% subsequent growth) unless the contract value is transferred back to the Non-Special Funds. Upon such transfer back to Non-Special Funds, we will resume accumulating that portion of the floor at the MGIB Rate described above, subject to the age limit and the Maximum described above. Similarly, for contract value allocated directly to Special Funds, that portion of the floor will be the contract value allocated, and will not accumulate while invested in Special Funds. Withdrawals will reduce the floor as described for the MGIB Base above. 3. THEN WE DETERMINE THE MGIB ANNUITY INCOME BY MULTIPLYING THE GREATER OF THE minimum FLOOR AND YOUR MGIB BENEFIT BASE (ADJUSTED FOR ANY MARKET VALUE ADJUSTMENT AND PREMIUM TAXES) BY THE APPLICABLE INCOME FACTOR, AND THEN DIVIDING BY $1,000. The MGIB Income Options are available under the MGIB Rider: (i) Income for Life (Single Life or Joint with 100% Survivor) and 10-30 Year Certain; (ii) Income for a 20-30 Year Period Certain; or (iii) Any other income plan offered by the Company in connection with the MGIB rider on the MGIB Benefit Date. On the MGIB Benefit Date, we would apply the greater of the floor and the MGIB Benefit Base under the Table of Income Factors specified in the MGIB rider for the Income Option you selected. The guaranteed factors contained in the MGIB rider generally provide lower payout per $1,000 of value applied than the guaranteed factors found in your Contract. Access - 131789 L5 Then we compare the MGIB annuity income under the rider guarantee for the option selected with the annuity income under your Contract for the same option. The greater amount of income will be available to you on the MGIB Benefit Date. PURCHASE. To purchase the MGIB rider, you must be age 79 or younger on the rider date and the ten-year waiting period must end at or prior to the latest annuity start date. The MGIB rider must be purchased (i) on the contract date, or (ii) within thirty days after the contract date. For contracts issued more than 30 days before the date this rider first became available in your state, the Company may in its discretion allow purchase of this rider during the 30-day period preceding the first contract anniversary after the date of this prospectus, or the date of state approval, whichever is later. There is a ten-year waiting period before the MGIB rider can be exercised. THE MGIB BENEFIT DATE. If you purchased the MGIB rider on the contract date or added the MGIB rider within 30 days following the contract date, the MGIB Benefit Date is the contract anniversary next following or is incident with exercise of your option to annuitize after a ten-year waiting period from the contract date. If you added the MGIB rider at any other time, your MGIB Benefit Date is the contract anniversary at least 10 years after the rider date when you decide to exercise your right to annuities under the MGIB rider. NO CHANGE OF ANNUITANT. Once the MGIB rider is purchased, the annuitant may not be changed except for the following exception. If an annuitant who is not a contract owner dies prior to annuitization, a new annuitant may be named in accordance with the provisions of your Contract. The MGIB Base is unaffected and continues to accumulate. NOTIFICATION. On or about 30 days prior to the MGIB Benefit Date, we will provide you with notification which will include an estimate of the amount of MGIB annuity benefit available if you choose to exercise. The actual amount of the MGIB annuity benefit will be determined as of the MGIB Benefit Date. THE MGIB RIDER DOES NOT RESTRICT OR LIMIT YOUR RIGHT TO ANNUITIZE THE CONTRACT AT ANY TIME PERMITTED UNDER THE CONTRACT. THE MGIB RIDER DOES NOT RESTRICT YOUR RIGHT TO ANNUITIZE THE CONTRACT USING CONTRACT VALUES THAT MAY BE HIGHER THAN THE MGIB ANNUITY BENEFIT. THE BENEFITS ASSOCIATED WITH THE MGIB RIDER ARE AVAILABLE ONLY IF YOU ANNUITIZE YOUR CONTRACT UNDER THE RIDER AND IN ACCORDANCE WITH THE PROVISIONS SET FORTH ABOVE. ANNUITIZING USING THE MGIB MAY RESULT IN THE MORE FAVORABLE STREAM OF INCOME PAYMENTS UNDER YOUR CONTRACT. BECAUSE THE MGIB RIDER IS BASED ON CONSERVATIVE ACTUARIAL FACTORS, THE LEVEL OF LIFETIME INCOME THAT IT GUARANTEES MAY BE LESS THAN THE LEVEL THAT MIGHT BE PROVIDED BY THE APPLICATION OF YOUR CONTRACT VALUE TO THE CONTRACT'S APPLICABLE ANNUITY FACTORS. YOU SHOULD CONSIDER ALL OF YOUR OPTIONS AT THE TIME YOU BEGIN THE INCOME PHASE OF YOUR CONTRACT. MINIMUM GUARANTEED WITHDRAWAL BENEFIT (MGWB) RIDER. The MGWB rider is an optional benefit which guarantees that if your contract value is reduced to zero, you will receive periodic payments equal to all premium payments paid during the first two contract years (Eligible Payment Amount) adjusted for any prior withdrawals. To maintain this guarantee, withdrawals in any contract year may not exceed 7% of your adjusted Eligible Payment Amount. If your contract value is reduced to zero, your periodic payments will be 7% of your Eligible Payment Amount every year. Payments continue until your MGWB Withdrawal Account is reduced to zero. For a discussion of the charges we deduct under the MGWB rider, see "Optional Rider Charges." Your original Eligible Payment Amount depends on when you purchase the MGWB rider and is: (i) if you purchased the MGWB rider on the contract date, your premium payments received during the first two contract years; or (ii) if you purchased the MGWB rider after the contract date, your contract value on the rider date, including any premiums received that day, and any subsequent premium payments received during the two-year period commencing on the rider date. THE MGWB WITHDRAWAL ACCOUNT. The MGWB Withdrawal Account is only a calculation which represents the remaining amount available for periodic payments. It does not represent a contract value, nor does it guarantee performance of the subaccounts in which you are invested. It will not affect your annuitization, surrender and death benefits. The MGWB Withdrawal Account is equal to the Eligible Payment Amount, tracked separately for Special and Non-Special Funds, adjusted for any withdrawals and transfers between Special and Non-Special Funds. THE MGWB WITHDRAWAL ACCOUNT EQUALS THE SUM OF (A) THE MGWB WITHDRAWAL ACCOUNT ALLOCATED TO NON-SPECIAL FUNDS, AND (B) THE LESSER OF (1) THE MGWB WITHDRAWAL ACCOUNT ALLOCATED TO SPECIAL FUNDS AND (2) THE Access - 131789 L6 CONTRACT VALUE IN THE SPECIAL FUNDS. THUS, INVESTING IN THE SPECIAL FUNDS MAY LIMIT THE MGWB WITHDRAWAL ACCOUNT. However, the MGWB Withdrawal Account is also subject to a "floor" which may partially offset the effects of investing in Special Funds. Withdrawals of up to 7% per year of the Eligible Payment Amount will reduce the value of your MGWB Withdrawal Account by the dollar amount of the withdrawal for Non-Special Funds and pro-rata for Special Funds, based on the source of the withdrawal. Any withdrawals greater than 7% per year of the Eligible Payment Amount will cause a reduction in the MGWB Withdrawal Account of the Special and Non-Special Funds by the proportion that the withdrawal bears to the Contract Value of the Special and Non-Special Funds, respectively, at the time of the withdrawal. If a single withdrawal involves both Special and Non-Special Funds and causes the 7% to be exceeded, the withdrawal will be treated as taken first from Non-Special Funds. Any withdrawals greater than 7% per year of the Eligible Payment Amount will also cause a reduction in the Eligible Payment Amount by the proportion that the withdrawal bears to the contract value at the time of the withdrawal. The MGWB Withdrawal Account is also reduced by the amount of any periodic payments paid under the MGWB rider once your contract value is zero. If the MGWB Withdrawal Account is greater than the floor and a withdrawal reduces the MGWB Withdrawal Account to zero, the MGWB rider terminates and no further benefits are payable under the rider. Net transfers from Special Funds to Non-Special Funds will reduce the MGWB Withdrawal Account allocated to Special Funds on a pro-rata basis. The resulting increase in the MGWB Withdrawal Account allocated to Non-Special Funds will equal the lesser of the reduction in the MGWB Withdrawal Account for Special Funds and the net contract value transferred. Net transfers from Non-Special Funds to Special Funds will reduce the MGWB Withdrawal Account allocated to Non-Special Funds on a pro-rata basis. The resulting increase in the MGWB Withdrawal Account allocated to Special Funds equals the reduction in the MGWB Withdrawal Account for Non-Special Funds. THE FLOOR FOR YOUR MGWB WITHDRAWAL ACCOUNT is equal to the Eligible Payment Amount adjusted for any withdrawals. Withdrawals of up to 7% per year of the Eligible Payment Amount will reduce the floor by the dollar amount of the withdrawal. Any withdrawals greater than 7% per year of the Eligible Payment Amount will cause a reduction in the floor for the MGWB Withdrawal Account and the Eligible Payment Amount by the proportion that the withdrawal bears to the contract value at the time of the withdrawal. The floor is also reduced by the amount of any periodic payments paid under the MGWB rider once your contract value is zero. If the floor is greater than the MGWB Withdrawal Account and a withdrawal reduces the floor to zero, the MGWB rider terminates and no further benefits are payable under the rider. GUARANTEED WITHDRAWAL STATUS. You may continue to make withdrawals in any amount permitted under your Contract so long as your contract value is greater than zero. See "Withdrawals." Making any withdrawals in any year greater than 7% per year of the Eligible Payment Amount will reduce the Eligible Payment Amount for future withdrawals and payments under the MGWB rider by the proportion that the withdrawal bears to the contract value at the time of the withdrawal. The MGWB rider, will remain in force, and you may continue to make withdrawals so long as: (i) your contract value is greater than zero; (ii) your MGWB Withdrawal Account or the floor is greater than zero; (iii) your latest allowable annuity start date has not been reached; (iv) you have not elected to annuitize your Contract; and (v) you have not died (unless your spouse has elected to continue the contract), changed the ownership of the Contract or surrendered the Contract. The standard Contract provision limiting withdrawals to no more than 90% of the cash surrender value is not applicable under the MGWB rider. AUTOMATIC PERIODIC BENEFIT STATUS. Under the MGWB rider, in the event your contract value is reduced to zero your Contract is given what we refer to as Automatic Periodic Benefit Status if the following conditions exist: (i) your MGWB Withdrawal Account or the floor is greater than zero; (ii) your latest allowable annuity start date has not been reached; Access - 131789 L7 (iii) you have not elected to annuitize your Contract; and (iv) you have not died, changed the ownership of the Contract or surrendered the Contract. Once your Contract is given Automatic Periodic Benefit Status, the greater of the floor and the MGWB Withdrawal Account will be treated as the MGWB Withdrawal Account to determine any rider benefits. We will pay you the annual MGWB periodic payments, beginning on the next contract anniversary equal to the lesser of the remaining MGWB Withdrawal Account or 7% annually of your Eligible Payment Amount until the earliest of (i) your contract's latest annuity start date, (ii) the death of the owner; or (iii) until your MGWB Withdrawal Account is exhausted. We will reduce the MGWB Withdrawal Account by the amount of each payment. Once your Contract is given Automatic Periodic Benefit Status (that is, your contract value is zero), we will not accept any additional premium payments in your Contract, and the Contract will not provide any benefits except those provided by the MGWB rider. Any other rider terminates. Your Contract will remain in Automatic Periodic Benefit Status until the earliest of (i) payment of all MGWB periodic payments, and (ii) payment of the Commuted Value (defined below) or (iii) the owner's death has occurred. On the Contract's latest annuity start date, in lieu of making the remaining MGWB periodic payments, we will pay you the Commuted Value of your MGWB periodic payments remaining. We may, at our option, extend your annuity start date in order to continue the MGWB periodic payments. The Commuted Value is the present value of any then remaining MGWB periodic payments at the current interest rate plus 0.50%. The current interest rate will be determined by the average of the Ask Yields for U.S. Treasury STRIPS as quoted by a national quoting service for period(s) applicable to the remaining payments. Once the last MGWB periodic payment is made or we pay you the Commuted Value, your Contract and the MGWB rider terminate. DEATH BENEFIT DURING AUTOMATIC PERIODIC BENEFIT STATUS. If you have never withdrawn more than 7% per year of the Eligible Payment Amount and you elected the 7% Solution Enhanced Death Benefit in your Contract (or you elected the Max 7 Enhanced Death Benefit resulting in the 7% Solution Enhanced Death Benefit as the actual benefit), the death benefit otherwise payable under the terms of your Contract will remain in force during any Automatic Periodic Benefit Status. In determining the amount of the death benefit during the Automatic Periodic Benefit Status, we deem your contract value to be zero and treat the MGWB periodic payments as withdrawals. In all other cases, the death benefit payable during Automatic Periodic Benefit Status is the greater of the floor and your MGWB Withdrawal Account which equals the sum of the remaining MGWB periodic payments. If you elected the Max 7 Enhanced Death Benefit, then the 7% Solution and the Annual Ratchet components shall each be calculated as if each were the elected death benefit option. PURCHASE. To purchase the MGWB rider, your must be age 80 or younger on the Rider Date. The MGWB rider must be purchased (i) on the contract date, or (ii) within 30 days after the contract date. For contracts issued more than 30 days before the date this rider first became available in your state, the Company may in its discretion allow purchase of this rider during the 30-day period preceding the first contract anniversary after the date of this prospectus, or the date of state approval whichever is later. Access - 131789 L8 -------------------------------------------------------------------------------- APPENDIX M -------------------------------------------------------------------------------- OPTIONAL RIDER BENEFIT CHARGES AND MINIMUM GUARANTEED INCOME BENEFIT FOR MAY-2002 CONTRACT OWNERS The following is a description of the optional rider benefits for May-2002 contract owners who elected an optional rider benefit. OTHER THAN AS SPECIFIED BELOW, PLEASE SEE THE PROSPECTUS FOR A COMPLETE DESCRIPTION OF YOUR OPTIONAL RIDER BENEFITS. CAPITALIZED TERMS HAVE THE SAME MEANING AS DESCRIBED IN THE PROSPECTUS. OPTIONAL RIDER CHARGES MINIMUM GUARANTEED ACCUMULATION BENEFIT (MGAB). The quarterly charge for the MGAB rider is as follows: ----------------------------------------------------------------- Waiting Period Quarterly Charge ----------------------------------------------------------------- 10 Year 0.125% of the MGAB Charge Base (0.50% annually) 20 Year 0.125% of the MGAB Charge Base (0.50% annually) ----------------------------------------------------------------- The MGAB Charge Base is the total of (i) the MGAB Base on the rider date and (ii) premiums during the 2-year period commencing on the rider date, reduced pro-rata for withdrawals and reduced for transfers made within the last 3 years prior to the MGAB Benefit Date. We will deduct charges only during your ten-year or twenty-year waiting period, as applicable. If you surrender or annuitize your Contract, we will deduct a pro-rata portion of the charge for the current quarter based on the current quarterly charge rate and MGAB Charge Base immediately prior to the surrender or annuitization. The MGAB Charge Base is adjusted for transfers between Special and Non-Special Funds or Excluded Funds. MINIMUM GUARANTEED INCOME BENEFIT (MGIB). The quarterly charge for the MGIB rider is as follows: ----------------------------------------------------------------- MGIB Rate Quarterly Charge ----------------------------------------------------------------- 7% 0.125% of the MGIB Charge Base (0.50% annually) ----------------------------------------------------------------- The MGIB Charge Base is the total of premiums paid more than 5 years before the earliest MGIB Benefit Date, reduced pro-rata for all withdrawals taken while the MGIB rider is in effect, and accumulated at the MGIB Rate (7%) to the earlier of age 80 and reaching the MGIB Base Maximum. If you surrender or annuitize your Contract, we will deduct a pro-rata portion of the charge for the current quarter based on the current quarterly charge rate and your MGIB Charge Base immediately prior to the surrender or annuitization. The MGIB Charge Base is adjusted for transfers between Special and Non-Special Funds or Excluded Funds. MINIMUM GUARANTEED WITHDRAWAL BENEFIT (MGWB). The quarterly charge for the MGWB rider is 0.125% (0.50% annually) of the original MGWB Eligible Payment Amount. The original MGWB Eligible Payment Amount is equal to all premiums paid during the first two contract years following the rider date. When we calculate the MGWB rider charge, we do not reduce the Eligible Payment Amount by the amount of any withdrawals taken while the MGWB rider is in effect. We will deduct charges only during the period before your Contract's Automatic Periodic Benefit Status. If you surrender or annuitize your Contract, we will deduct a pro-rata portion of the charge for the current quarter based on the current quarterly charge rate and your original MGWB Eligible Payment Amount immediately prior to the surrender or annuitization. OPTIONAL RIDER BENEFITS MINIMUM GUARANTEED INCOME BENEFIT (MGIB) RIDER. The MGIB rider is an optional benefit which guarantees a minimum amount of annuity income will be available to you if you annuitize on the MGIB Benefit Date, regardless of fluctuating market conditions. The amount of the Minimum Guaranteed Income Benefit will depend on the Access - 131789 M1 amount of premiums you pay during the five contract years after you purchase the rider, the amount of contract value you allocate or transfer to Special Funds or Excluded Funds, the MGIB Rate, the adjustment for Special Fund or Excluded Fund transfers, and any withdrawals you take while the rider is in effect. Thus, investing in Special Funds or Excluded Funds may limit the MGIB benefit. For Contracts issued on or after May 1, 2003, the following investment options are designated as Special Funds: the ING Liquid Assets Portfolio; the ING Limited Maturity Bond Portfolio; the ING VP Bond Portfolio; the ING PIMCO Core Bond Portfolio; the Fixed Account; the Fixed Interest Division; and the TSA Special Fixed Account. For Contracts issued before May 1, 2003, the ING VP Bond Portfolio and the ING PIMCO Core Bond Portfolio are not designated as Special Funds. For Contracts issued on or after September 2, 2003, the ProFunds VP Rising Rates Opportunity Portfolio is designated as a Special Fund. For a discussion of the charges we deduct under the MGIB rider, see "Optional Rider Charges." Ordinarily, the amount of income that will be available to you on the annuity start date is based on your contract value, the annuity option you selected and the guaranteed or the income factors in effect on the date you annuitize. If you purchase the MGIB rider, the amount of income that will be available to you upon annuitization on the MGIB Benefit Date is the greatest of: (i) your annuity income based on your contract value adjusted for any Market Value Adjustment (see the ING USA Fixed Account prospectus) on the MGIB Benefit Date applied to the guaranteed income factors specified in your Contract for the annuity option you selected; (ii) your annuity income based on your contract value adjusted for any Market Value Adjustment (see the ING USA Fixed Account prospectus) on the MGIB Benefit Date applied to the then current income factors in effect for the annuity option you selected; and (iii) the MGIB annuity income based on your MGIB Benefit Base on the MGIB Benefit Date applied to the MGIB income factors specified in your rider for the MGIB annuity option you selected. Prior to applying the MGIB income factors, we will adjust the MGIB Benefit Base for any premium tax recovery and Market Value Adjustment (see the ING USA Fixed Account prospectus) that would otherwise apply at annuitization. Prior to your latest annuity start date, you may choose to exercise your right to receive payments under the MGIB rider. Payments under the rider begin on the MGIB Benefit Date. We require a 10-year waiting period before you can annuitize the MGIB rider benefit. The MGIB must be exercised in the 30-day period prior to the end of the waiting period or any subsequent contract anniversary. At your request, the Company may in its discretion extend the latest contract annuity start date without extending the MGIB Benefit Date. DETERMINING THE MGIB ANNUITY INCOME. On the MGIB Benefit Date, we calculate your MGIB annuity income as follows: 1. WE FIRST DETERMINE YOUR MGIB BENEFIT BASE. The MGIB Benefit Base is only a calculation used to determine the MGIB. The MGIB Benefit Base does not represent a contract value, nor does it guarantee performance of the subaccounts in which you are invested. It is also not used in determining the amount of your cash surrender value and death benefits. Any reset of contract value under provisions of the Contract or other riders will not increase the MGIB Base or MGIB Base Maximum. The MGIB Base is tracked separately for Covered, Special and Excluded Funds, based on initial allocation of eligible premium (or contract value) and subsequently allocated eligible premiums, withdrawals and transfers. Contract value is used as the initial value if the rider is added after the contract date. The MGIB Benefit Base equals the lesser of (a) and (b) where: a) is the Maximum MGIB Base; and b) is the sum of: 1) the MGIB Base allocated to Covered Funds; 2) the MGIB Base allocated to Special Funds; and 3) the contract value allocated to Excluded Funds. Access - 131789 M2 The Maximum MGIB Base is 200% of eligible premiums, adjusted pro-rata for withdrawals. The Maximum MGIB Base is not allocated by Fund category. The MGIB Base allocated to Covered Funds equals the eligible premiums allocated to Covered Funds, adjusted for subsequent withdrawals and transfers taken or made while the MGIB rider is in effect, accumulated at the MGIB Rate to the earlier of the oldest owner reaching age 80 and the MGIB Base reaching the Maximum MGIB Base, and at 0% thereafter. The MGIB Base allocated to Special Funds equals the eligible premiums allocated to Special Funds, adjusted for subsequent withdrawals and transfers taken or made while the MGIB rider is in effect. THERE IS NO ACCUMULATION OF MGIB BASE ALLOCATED TO SPECIAL FUNDS. The MGIB Base allocated to Excluded Funds equals the eligible premiums allocated to Excluded Funds, adjusted for subsequent withdrawals and transfers taken or made while the MGIB rider is in effect, accumulated at the MGIB Rate to the earlier of the oldest owner reaching age 80 and the MGIB Base reaching the Maximum MGIB Base, and at 0% thereafter. THE MGIB BASE ALLOCATED TO EXCLUDED FUNDS IS USED ONLY FOR TRANSFER ADJUSTMENTS AND RIDER CHARGES. IT IS NOT USED TO DETERMINE BENEFITS. Eligible premiums are those added more than 5 years before the earliest MGIB Benefit Date. Premiums paid after that are excluded from the MGIB Base. The MGIB Rate is currently 7%. We may, at our discretion, discontinue offering this rate. The MGIB Rate is an annual effective rate. Withdrawals reduce the MGIB Base on a pro-rata basis. The percentage reduction in the MGIB Base for each Fund category (i.e. Covered, Special or Excluded) equals the percentage reduction in contract value in that Fund category resulting from the withdrawal. For example, the value of the MGIB Base in Covered Funds after a withdrawal from one or more Covered Funds equals the value of the MGIB Base in Covered Funds before the withdrawal times the contract value in Covered Funds after the withdrawal divided by the contract value in Covered Funds before the withdrawal. Net transfers from Covered Funds will reduce the MGIB Base allocated to Covered Funds on a pro-rata basis. The resulting increase in the MGIB Base allocated to Special or Excluded Funds, as applicable, will equal the reduction in the MGIB Base allocated to Covered Funds. Net transfers from Special Funds will reduce the MGIB Base allocated to Special Funds on a pro-rata basis. The resulting increase in the MGIB Base allocated to Covered or Excluded Funds, as applicable, will equal the reduction in the MGIB Base allocated to Special Funds. Net transfers from Excluded Funds will reduce the MGIB Base allocated to Excluded Funds on a pro-rata basis. The resulting increase in the MGIB Base allocated to Covered or Special Funds, as applicable, will equal the lesser of the net contract value transferred and the change in the MGIB Base allocated to Excluded Funds. 2. THEN WE DETERMINE THE MGIB ANNUITY INCOME BY MULTIPLYING YOUR MGIB BENEFIT BASE (ADJUSTED FOR ANY MARKET VALUE ADJUSTMENT AND PREMIUM TAXES) BY THE APPLICABLE INCOME FACTOR, AND THEN DIVIDING BY $1,000. The MGIB Income Options are available under the MGIB Rider: (i) Income for Life (Single Life or Joint with 100% Survivor) and 10-30 Year Certain; (ii) Income for a 20-30 Year Period Certain; or (iii) Any other income plan offered by the Company in connection with the MGIB rider on the MGIB Benefit Date. On the MGIB Benefit Date, we would apply the MGIB Benefit Base under the Table of Income Factors specified in the MGIB rider for the Income Option you selected. The guaranteed factors contained in the MGIB rider generally provide lower payout per $1,000 of value applied than the guaranteed factors found in your Contract. Access - 131789 M3 Then we compare the MGIB annuity income under the rider guarantee for the option selected with the annuity income under your Contract for the same option. The greater amount of income will be available to you on the MGIB Benefit Date. PURCHASE. To purchase the MGIB rider, you must be age 79 or younger on the rider date and the ten-year waiting period must end at or prior to the latest annuity start date. The MGIB rider must be purchased (i) on the contract date, or (ii) within thirty days after the contract date. For contracts issued more than 30 days before the date this rider first became available in your state, the Company may in its discretion allow purchase of this rider during the 30-day period preceding the first contract anniversary after the date of this prospectus, or the date of state approval, whichever is later. There is a ten-year waiting period before you can annuitize under the MGIB rider. THE MGIB BENEFIT DATE. If you purchased the MGIB rider on the contract date or added the MGIB rider within 30 days following the contract date, the MGIB Benefit Date is the contract anniversary on or after the tenth contract anniversary when you decide to exercise your right to annuitize under the MGIB rider. If you added the MGIB rider at any other time, your MGIB Benefit Date is the contract anniversary at least 10 years after the rider date when you decide to exercise your right to annuitize under the MGIB rider. NO CHANGE OF ANNUITANT. Once the MGIB rider is purchased, the annuitant may not be changed except for the following exception. If an annuitant who is not a contract owner dies prior to annuitization, a new annuitant may be named in accordance with the provisions of your Contract. The MGIB Base is unaffected and continues to accumulate. NOTIFICATION. On or about 30 days prior to the MGIB Benefit Date, we will provide you with notification which will include an estimate of the amount of MGIB annuity benefit available if you choose to exercise. The actual amount of the MGIB annuity benefit will be determined as of the MGIB Benefit Date. THE MGIB RIDER DOES NOT RESTRICT OR LIMIT YOUR RIGHT TO ANNUITIZE THE CONTRACT AT ANY TIME PERMITTED UNDER THE CONTRACT. THE MGIB RIDER DOES NOT RESTRICT YOUR RIGHT TO ANNUITIZE THE CONTRACT USING CONTRACT VALUES THAT MAY BE HIGHER THAN THE MGIB ANNUITY BENEFIT. THE BENEFITS ASSOCIATED WITH THE MGIB RIDER ARE AVAILABLE ONLY IF YOU ANNUITIZE YOUR CONTRACT UNDER THE RIDER AND IN ACCORDANCE WITH THE PROVISIONS SET FORTH ABOVE. ANNUITIZING USING THE MGIB MAY RESULT IN THE MORE FAVORABLE STREAM OF INCOME PAYMENTS, AND DIFFERENT TAX CONSEQUENCES, UNDER YOUR CONTRACT. BECAUSE THE MGIB RIDER IS BASED ON CONSERVATIVE ACTUARIAL FACTORS, THE LEVEL OF LIFETIME INCOME THAT IT GUARANTEES MAY BE LESS THAN THE LEVEL THAT MIGHT BE PROVIDED BY THE APPLICATION OF YOUR CONTRACT VALUE TO THE CONTRACT'S APPLICABLE ANNUITY FACTORS. YOU SHOULD CONSIDER ALL OF YOUR OPTIONS AT THE TIME YOU BEGIN THE INCOME PHASE OF YOUR CONTRACT. Access - 131789 M4 -------------------------------------------------------------------------------- APPENDIX N -------------------------------------------------------------------------------- OPTIONAL RIDER BENEFIT CHARGES AND OPTIONAL RIDER BENEFITS FOR MAY-2002 AND YR-2003 CONTRACT OWNERS The following is a description of the Minimum Guaranteed Accumulation Benefit and the Minimum Guaranteed Withdrawal Benefit for May-2002 and Yr-2003 contract owners who elected an optional rider benefit. OTHER THAN AS SPECIFIED BELOW, PLEASE SEE THE PROSPECTUS FOR A COMPLETE DESCRIPTION OF YOUR OPTIONAL RIDER BENEFITS. CAPITALIZED TERMS HAVE THE SAME MEANING AS DESCRIBED IN THE PROSPECTUS. OPTIONAL RIDER CHARGES Minimum Guaranteed Accumulation Benefit rider:*
---------------------------------------------------------------------------------- Waiting Period As an Annual Charge As a Quarterly Charge ---------------------------------------------------------------------------------- 10 Year 0.65% of the MGAB Charge Base 0.1625% of the MGAB Charge Base 20 Year 0.65% of the MGAB Charge Base 0.1625% of the MGAB Charge Base ----------------------------------------------------------------------------------
* The MGAB Charge Base is the total of premiums added during the two-year period commencing on the rider date if you purchase the rider on the contract date, or, your contract value on the rider date plus premiums added during the two-year period commencing on the rider date if you purchased the rider after the contract date, reduced pro-rata for all withdrawals taken while the MGAB rider is in effect, and reduced pro-rata for transfers made during the three year period before the MGAB Date. The MGAB Charge Base is tracked separately for Covered, Special and Excluded Funds, based on initial allocation of premium (or contract value), subsequent allocation of eligible premium, withdrawals and transfers. Withdrawals and transfers may reduce the applicable MGAB Charge Base by more than the amount withdrawn or transferred. Minimum Guaranteed Withdrawal Benefit rider:
--------------------------------------------------------------------------- As an Annual Charge As a Quarterly Charge --------------------------------------------------------------------------- 0.65% of contract value 0.1625% of the MGWB Eligible Payment Amount** ---------------------------------------------------------------------------
** The MGWB Eligible Payment Amount is (i) the total of premiums paid during the 2-year period commencing on the rider date if you purchase the rider on the contract date; or (ii) your contract value on the rider date plus subsequent premiums applied during the two-year period commencing on the rider date. OPTIONAL RIDER BENEFITS MINIMUM GUARANTEED ACCUMULATION BENEFIT RIDER (MGAB). The MGAB rider is an optional benefit which provides you with an MGAB intended to guarantee a minimum contract value at the end of a specified waiting period. Only premiums added to your Contract during the first two-year period after your rider date are included in the MGAB Base. Any additional premium payments added after the second rider anniversary are not included in the MGAB Base. Thus, the MGAB rider may not be appropriate for you if you plan to add substantial premium payments after your second rider anniversary The MGAB is a one-time adjustment to your contract value if your contract value on the MGAB Date is less than the MGAB Base. The MGAB Date is the next business day after the applicable waiting period. We calculate your Minimum Guaranteed Accumulation Benefit on this date. The MGAB rider may offer you protection if your Contract loses value during the MGAB waiting period. For a discussion of the charges we deduct under the MGAB rider, see "Optional Rider Charges." Access - 131789 N1 The MGAB rider offers a ten-year option and a twenty-year option, of which you may purchase only one. The ten-year option has a waiting period of ten years and, other than for allocations to Excluded Funds and certain transfers, guarantees that your contract value at the end of ten years will at least equal your initial premium payment, reduced pro-rata for withdrawals. Transfers made within 3 years prior to the MGAB Date will also reduce the MGAB Base pro-rata. The twenty-year option has a waiting period of twenty years and, other than allocations to Special Funds or Excluded Funds, guarantees that your contract value at the end of twenty years will at least equal two times your initial premium payment, reduced pro-rata for withdrawals and reduced for transfers made within 3 years prior to the MGAB Date. If you add the 20 year option rider after the contract date, any payment of premiums after the rider date, and/or investments in the Special or Excluded Funds, may prevent the MGAB Base from doubling over the waiting period. CALCULATING THE MGAB. We calculate your MGAB as follows: 1) WE FIRST DETERMINE YOUR MGAB BASE. The MGAB Base is only a calculation used to determine the MGAB. It does not represent a contract value, nor does it guarantee performance of the subaccounts in which you are invested. It is also not used in determining the amount of your annuity income, cash surrender value and death benefits. The MGAB Base is tracked separately for Covered, Special and Excluded Funds, based on the initial allocation of premium (or contract value), subsequently allocated eligible premiums, withdrawals and transfers. Contract value is used as the initial value if the rider is added after the contract date. The aggregate MGAB Base is used to determine the MGAB on the MGAB Date. The aggregate MGAB Base equals the sum of: a) the MGAB Base allocated to Covered Funds; b) the MGAB Base allocated to Special Funds; and c) the LESSER OF the contract value allocated to Excluded Funds or MGAB Base allocated to Excluded Funds. No investment options are currently designated as Special Funds for the ten-year MGAB. The following investment options are designated as Special Funds for the twenty-year MGAB: the ING Liquid Assets Portfolio; the ING Limited Maturity Bond Portfolio; the ING VP Bond Portfolio; the ING PIMCO Core Bond Portfolio; the ProFund VP Rising Rates Opportunity Portfolio; the Fixed Account; the Fixed Interest Division; and the TSA Special Fixed Account. For Contracts issued prior to May 1, 2003, the ING VP Bond Portfolio and the ING PIMCO Core Bond Portfolio are not designated as Special Funds. For Contracts issued prior to September 2, 2003, the ProFund VP Rising Rates Opportunity Portfolio is not designated as a Special Fund. No investment options are currently designated as Excluded Funds. The MGAB Base for both the Covered Funds and the Excluded Funds equals the allocated eligible premiums, adjusted for subsequent withdrawals and transfers, accumulated until the MGAB Date at 0% for the ten-year MGAB and 3.5265% for the twenty-year MGAB. The MGAB Base for Special Funds equals the allocated eligible premiums, adjusted for subsequent withdrawals and transfers. There is no accumulation of MGAB Base for Special Funds for either the ten-year or twenty-year MGAB. If you purchased the MGAB optional benefit rider after the contract date, your MGAB Base equals your allocated contract value, plus premiums added during the two-year period after your rider date, accumulated at the appropriate MGAB rate described above, and adjusted for withdrawals and transfers. We use the MGAB Charge Base to determine the periodic MGAB rider charges. The MGAB Charge Base equals the eligible premiums, adjusted for subsequent withdrawals and transfers, as allocated by fund category. The MGAB Charge Base is tracked separately for Covered, Special and Excluded Access - 131789 N2 Funds, and separate rates may apply to each. Currently, the same deduction method and rate apply to all categories. Withdrawals reduce the MGAB Base and MGAB Charge Base on a pro-rata basis. The percentage reduction in the MGAB Base and MGAB Charge Base for each Fund category (i.e. Covered, Special or Excluded) equals the percentage reduction in contract value in that Fund category resulting from the withdrawal. Net Transfers from Covered Funds or Special Funds to Excluded Funds reduce the MGAB Base and MGAB Charge Base allocated to Covered Funds or Special Funds on a pro-rata basis. Any resulting increase in MGAB Base and MGAB Charge Base allocated to Excluded Funds will equal the reduction in the MGAB Base and MGAB Charge Base allocated to Covered Funds or Special Funds. There will be no such increase if the transfer occurs within 3 years of the MGAB Date. Net Transfers from Excluded Funds to other funds reduce the MGAB Base and MGAB Charge Base allocated to Excluded Funds on a pro-rata basis. The resulting increase in MGAB Base and MGAB Charge Base allocated to other funds will equal the LESSER OF the contract value transferred and the change in the MGAB Base and MGAB Charge Base allocated to Excluded Funds. There will be no such increase if the transfer occurs within 3 years of the MGAB Date. Any transfer within 3 years of the MGAB Date (regardless of the funds involved) reduces the MGAB Base and MGAB Charge Base for Covered, Special or Excluded Funds, as applicable, on a pro-rata basis, based on the percentage of contract value transferred, without any corresponding increase. 2) WE THEN SUBTRACT YOUR CONTRACT VALUE ON THE MGAB DATE FROM YOUR AGGREGATE MGAB BASE. The contract value that we subtract includes both the contract value in the subaccounts in which you are invested and the contract value in your Fixed Interest Allocations, if any. 3) ANY POSITIVE DIFFERENCE IS YOUR MGAB. If there is a MGAB, we will automatically credit it on the MGAB Date to the subaccounts in which you are invested pro-rata based on the proportion of your contract value in the subaccounts on that date, unless you have previously given us other allocation instructions. If you do not have an investment in any subaccount on the MGAB Date, we will allocate the MGAB to the Liquid Assets subaccount on your behalf. After we credit the MGAB, the amount of your annuity income, cash surrender value and death benefits will reflect the crediting of the MGAB to your contract value to the extent the contract value is used to determine such value. PURCHASE. To purchase the MGAB rider, you must be age 80 or younger on the Rider Date if you choose the ten-year option and age 65 or younger on the rider date if you choose the twenty-year option. The waiting period must end at or before your annuity start date. The MGAB rider may be purchased (i) on the contract date, and (ii) within 30 days following the contract date. For contracts issued more than 30 days before the date this rider first became available in your state, the Company may in its discretion allow purchase of this rider during the 30-day period preceding the first contract anniversary after the date of this prospectus, or the date of state approval, whichever is later. THE MGAB DATE. If you purchased the MGAB rider on the contract date or added the MGAB rider within 30 days following the contract date, the MGAB Date is your 10th contract anniversary for the ten-year option or 20th contract anniversary for the twenty-year option. If you added the MGAB rider during the 30-day period preceding your first contract anniversary after the date of this prospectus, your MGAB Date will be the first contract anniversary occurring after 10 years (for the ten-year option) or 20 years (for the twenty-year option) after the rider date. The MGAB rider is not available if the MGAB Date would fall beyond the latest annuity start date. CANCELLATION. If you elected the twenty-year option, you have a one-time right to cancel the MGAB rider on your first contract anniversary that is at least 10 years after the rider date. If you purchased the MGAB rider during the 30-day period following the contract date, your one-time right to cancel the rider occurs on the tenth anniversary of your contract date. To cancel, you need to send written notice to our Customer Service Center at least 30 days before such anniversary date. If you terminate the MGAB rider before the MGAB Date, we will not credit you with the MGAB and we will assess the pro-rata portion of the MGAB rider charge for the current quarter. NOTIFICATION. We will report any crediting of the MGAB in your first quarterly statement following the MGAB Date. Access - 131789 N3 MINIMUM GUARANTEED WITHDRAWAL BENEFIT RIDER (MGWB). The MGWB rider is an optional benefit which guarantees that if your contract value is reduced to zero you will receive periodic payments equal to all premium payments paid during the first two contract years (Eligible Payment Amount) adjusted for any prior withdrawals. To maintain this guarantee, withdrawals in any contract year may not exceed 7% of your adjusted Eligible Payment Amount. If your contract value is reduced to zero, your periodic payments will be 7% of your Eligible Payment Amount every year. Payments continue until your MGWB Withdrawal Account is reduced to zero. For a discussion of the charges we deduct under the MGWB rider, see "Charges and Fees -- Optional Rider Charges." Each payment you receive under the MGWB rider will be taxed as a withdrawal and may be subject to a penalty tax. See "Withdrawals" and "Federal Tax Considerations" for more information. Your original Eligible Payment Amount depends on when you purchase the MGWB rider and equals: 1) your premium payments received during the first two contract years, if you purchased the MGWB rider on the contract date; 2) otherwise, your contract value on the rider date, including any premiums received that day, and any subsequent premium payments received during the two-year period commencing on the rider date, if you purchased the MGWB rider after the contract date. THE MGWB WITHDRAWAL ACCOUNT. The MGWB Withdrawal Account is only a calculation which represents the remaining amount available for periodic payments. It does not represent a contract value, nor does it guarantee performance of the subaccounts in which you are invested. It will not affect your annuitization, surrender and death benefits. The MGWB Withdrawal Account is equal to the Eligible Payment Amount, tracked separately for Covered and Excluded Funds, adjusted for any withdrawals and transfers between Covered and Excluded Funds. THE MGWB WITHDRAWAL ACCOUNT EQUALS THE SUM OF (A) THE MGWB WITHDRAWAL ACCOUNT ALLOCATED TO COVERED FUNDS, AND (B) THE LESSER OF (I) THE MGWB WITHDRAWAL ACCOUNT ALLOCATED TO EXCLUDED FUNDS AND (II) THE CONTRACT VALUE IN EXCLUDED FUNDS. THUS, INVESTING IN THE EXCLUDED FUNDS MAY LIMIT THE MGWB WITHDRAWAL ACCOUNT. No investment options are currently designated as Excluded Funds for the Minimum Guaranteed Withdrawal Benefit. Withdrawals of up to 7% per year of the Eligible Payment Amount will reduce the value of your MGWB Withdrawal Account by the dollar amount of the withdrawal for Covered Funds and pro rata for Excluded Funds, based on the source of the withdrawal. Any withdrawals greater than the 7% per year of the Eligible Payment Amount will cause a reduction in the MGWB Withdrawal Account of the Covered and Excluded Funds, by the proportion that the withdrawal bears to the contract value in Covered and Excluded Funds, respectively, at the time of the withdrawal. If a single withdrawal involves both Covered and Excluded Funds and exceeds 7%, the withdrawal will be treated as taken first from Covered Funds. Any withdrawals greater than 7% per year of the Eligible Payment Amount will also cause a reduction in the Eligible Payment Amount by the proportion that the withdrawal bears to the contract value at the time of the withdrawal. Once your contract value is zero, any periodic payments paid under the MGWB rider also reduce the MGWB Withdrawal Account. If a withdrawal reduces the MGWB Withdrawal Account to zero, the MGWB rider terminates and no further benefits are payable under the rider. Net transfers from Covered Funds to Excluded Funds will reduce the MGWB Withdrawal Account allocated to Covered Funds on a pro rata basis. The resulting increase in the MGWB Withdrawal Account allocated to Excluded Funds equals the reduction in the MGWB Withdrawal Account for Covered Funds. Net transfers from Excluded Funds to Covered Funds will reduce the MGWB Withdrawal Account allocated to Excluded Funds on a pro rata basis. The resulting increase in the MGWB Withdrawal Account allocated to Covered Funds will equal the lesser of the reduction in the MGWB Withdrawal Account for Excluded Funds or the net contract value transferred. GUARANTEED WITHDRAWAL STATUS. You may continue to make withdrawals in any amount permitted under your Contract so long as your contract value is greater than zero. See "Withdrawals." However, making any withdrawals in any year greater than 7% per year of the Eligible Payment Amount will reduce the Eligible Payment Amount for future withdrawals and payments under the MGWB rider by the proportion that the withdrawal bears to the contract value at the time of the withdrawal. The MGWB rider will remain in force and you may continue to make withdrawals each year so long as: Access - 131789 N4 1) your contract value is greater than zero; 2) your MGWB Withdrawal Account is greater than zero; 3) you have not reached your latest allowable annuity start date; 4) you have not elected to annuitize your Contract; and 5) you have not died (unless your spouse has elected to continue the Contract), changed the ownership of the Contract or surrendered the Contract. The standard Contract provision limiting withdrawals to no more than 90% of the cash surrender value is not applicable under the MGWB rider. AUTOMATIC PERIODIC BENEFIT STATUS. Under the MGWB rider, in the event your contract value is reduced to zero, your Contract is given Automatic Periodic Benefit Status, if: 1) your MGWB Withdrawal Account is greater than zero; 2) you have not reached your latest allowable annuity start date; 3) you have not elected to annuitize your Contract; and 4) you have not died, changed the ownership of the Contract or surrendered the Contract. Once your Contract is given Automatic Periodic Benefit Status, we will pay you the annual MGWB periodic payments, beginning on the next contract anniversary. These payments are equal to the lesser of the remaining MGWB Withdrawal Account or 7% annually of your Eligible Payment Amount, until the earliest of (i) your Contract's latest annuity start date, (ii) the death of the owner; or (iii) your MGWB Withdrawal Account is exhausted. We will reduce the MGWB Withdrawal Account by the amount of each payment. Once your Contract is given Automatic Periodic Benefit Status, we will not accept any additional premium payments in your Contract and the Contract will not provide any benefits except those provided by the MGWB rider. Any other rider terminates. Your Contract will remain in Automatic Periodic Benefit Status until the earliest of (i) payment of all MGWB periodic payments, (ii) payment of the Commuted Value (defined below) or (iii) the owner's death. On the Contract's latest annuity start date, in lieu of making the remaining MGWB periodic payments, we will pay you the Commuted Value of your MGWB periodic payments remaining. We may, at our option, extend your annuity start date in order to continue the MGWB periodic payments. The Commuted Value is the present value of any then-remaining MGWB periodic payments at the current interest rate plus 0.50%. The current interest rate will be determined by the average of the Ask Yields for U.S. Treasury STRIPS as quoted by a national quoting service for period(s) applicable to the remaining payments. Once we pay you the last MGWB periodic payment or the Commuted Value, your Contract and the MGWB rider terminate. DEATH BENEFIT DURING AUTOMATIC PERIODIC BENEFIT STATUS. The death benefit payable during Automatic Periodic Benefit Status is your MGWB Withdrawal Account which equals the sum of the remaining MGWB periodic payments. PURCHASE. To purchase the MGWB rider, you must be age 80 or younger on the Rider Date. The MGWB rider must be purchased (i) on the contract date, or (ii) within 30 days after the contract date. If the rider is not yet available in your state, the Company may in its discretion allow purchase of this rider during the 30-day period preceding the first contract anniversary after the date of this prospectus, or the date of state approval, whichever is later. Access - 131789 N5 ING [LOGO] ING USA ANNUITY AND LIFE INSURANCE COMPANY ING USA Annuity and Life Insurance Company is a stock company domiciled in Iowa. Access - 131789 05/01/2004 PART B STATEMENT OF ADDITIONAL INFORMATION GOLDENSELECT ACCESS DEFERRED COMBINATION VARIABLE AND FIXED ANNUITY CONTRACT ISSUED BY SEPARATE ACCOUNT B OF ING USA ANNUITY AND LIFE INSURANCE COMPANY This Statement of Additional Information is not a prospectus. The information contained herein should be read in conjunction with the Prospectus for the ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company) Deferred Variable Annuity Contract, which is referred to herein. The Prospectus sets forth information that a prospective investor ought to know before investing. For a copy of the Prospectus, send a written request to ING USA Annuity and Life Insurance Company, Customer Service Center, P.O. Box 9271 Des Moines, IA 50306-9271 or telephone 1-800-366-0066. DATE OF PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION: May 1, 2004 TABLE OF CONTENTS ITEM PAGE Introduction............................................................... Description of ING USA Annuity and Life Insurance Company.................. Separate Account B ........................................................ Safekeeping of Assets ..................................................... The Administrator.......................................................... Independent Auditors....................................................... Distribution of Contracts.................................................. IRA Partial Withdrawal Option.............................................. Other Information.......................................................... Consolidated Financial Statements of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company)...... Financial Statements of Separate Account B................................. INTRODUCTION This Statement of Additional Information provides background information regarding Separate Account B. DESCRIPTION OF ING USA ANNUITY AND LIFE INSURANCE COMPANY ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company) ("ING USA") is an Iowa stock life insurance company, which was originally incorporated in Minnesota on January 2, 1973. ING USA is a wholly owned subsidiary of Lion Connecticut Holdings Inc. ("Lion Connecticut"), which in turn is a wholly owned subsidiary of ING Groep N.V. ("ING"), a global financial services holding company based in The Netherlands. ING USA is authorized to sell insurance and annuities in all states, except New York and the District of Columbia. ING USA's consolidated financial statements appear in the Statement of Additional Information. As of December 31, 2003, ING USA had approximately $1,343.1 million in stockholder's equity and approximately $24.2 billion in total assets, including approximately $17 billion of separate account assets. ING USA is authorized to do business in all jurisdictions except New York. ING USA offers variable insurance products. ReliaStar Life Insurance Company of New York ("RLNY") an affiliate of ING is licensed to do variable annuity business in the state of New York. SEPARATE ACCOUNT B Separate Account B is a separate account established by the Company for the purpose of funding variable annuity contracts issued by the Company. The separate account is registered with the Securities and Exchange Commission ("SEC") as a unit investment trust under the Investment Company act of 1940, as amended. Purchase payments to accounts under the contract may be allocated to one or more of the subaccounts. Each subaccount invests in the shares of only one of the funds offered under the contracts. We may make additions to, deletions from or substitutions of available investment options as permitted by law and subject to the conditions of the contract. The availability of the funds is subject to applicable regulatory authorization. Not all funds are available in all jurisdictions or under all contracts. SAFEKEEPING OF ASSETS ING USA acts as its own custodian for Separate Account B. THE ADMINISTRATOR Effective January 1, 1997, Equitable Life Insurance Company of Iowa ("Equitable Life") and ING USA became parties to a service agreement pursuant to which Equitable Life agreed to provide certain accounting, actuarial, tax, underwriting, sales, management and other services to ING USA. Expenses incurred by Equitable Life in relation to this service agreement were reimbursed by ING USA on an allocated cost basis. Equitable Life billed ING USA $2,344,000, and $570,000 pursuant to the service agreement in 2003 and 2002, respectively. Effective January 1, 2004, Equitable Life was merged into ING USA. INDEPENDENT AUDITORS Ernst & Young LLP, Suite 2800, 600 Peachtree Street, Atlanta GA 30308, independent auditors, performs annual audits of ING USA (formerly Golden American Life Insurance Company) and Separate Account B. DISTRIBUTION OF CONTRACTS The offering of contracts under the prospectus associated with this Statement of Additional Information is continuous. Directed Services, Inc. ("DSI"), an affiliate of ING USA, acts as the principal underwriter (as defined in the Securities Act of 1933 and the Investment Company Act of 1940, as amended) of the variable insurance products (the "variable insurance products") issued by ING USA. The contracts are distributed through registered representatives of other broker-dealers who have entered into selling agreements with DSI. For the years ended 2003, 2002 and 2001 commissions paid by ING USA, including amounts paid by its affiliated Company, RLNY, to DSI aggregated $270,633,000, $287,208,000, and $223,321,000, respectively. All commissions received by the distributor were passed through to the broker-dealers who sold the contracts. DSI is located at 1475 Dunwoody Drive, West Chester, Pennsylvania 19380-1478. Under a management services agreement, last amended in 1995, ING USA provides to DSI certain of its personnel to perform management, administrative and clerical services and the use of certain facilities. ING USA charges DSI for such expenses and all other general and administrative costs, first on the basis of direct charges when identifiable, and the remainder allocated based on the estimated amount of time spent by ING USA's employees on behalf of DSI. In the opinion of management, this method of cost allocation is reasonable. This fee, calculated as a percentage of average assets in the variable separate accounts, was $27,898,000, $25,914,000, and $23,138,000, for the years ended 2003, 2002, and 2001, respectively. PUBLISHED RATINGS From time to time, the rating of ING USA as an insurance company by A.M. Best may be referred to in advertisements or in reports to contract owners. Each year the A.M. Best Company reviews the financial status of thousands of insurers, culminating in the assignment of Best's Ratings. These ratings reflect their current opinion of the relative financial strength and operating performance of an insurance company in comparison to the norms of the life/health insurance industry. Best's ratings range from A+ + to F. An A++ and A+ ratings mean, in the opinion of A.M. Best, that the insurer has demonstrated the strongest ability to meet its respective policyholder and other contractual obligations. ACCUMULATION UNIT VALUE The calculation of the Accumulation Unit Value ("AUV") is discussed in the prospectus for the Contracts under Condensed Financial Information. Note that in your Contract, accumulation unit value is referred to as the Index of Investment Experience. The following illustrations show a calculation of a new AUV and the purchase of Units (using hypothetical examples). Note that the examples below are calculated for a Contract issued with the death benefit option with the highest mortality and expense risk charge. The mortality and expense risk charge associated with other death benefit options are lower than that used in the examples and would result in higher AUV's or contract values. ILLUSTRATION OF CALCULATION OF AUV EXAMPLE 1. 1. AUV, beginning of period $ 10.00 2. Value of securities, beginning of period $ 10.00 3. Change in value of securities $ 0.10 4. Gross investment return (3) divided by (2) 0.01 5. Less daily mortality and expense charge 0.00004280 6. Less asset based administrative charge 0.00000411 7. Net investment return (4) minus (5) minus (6) 0.009953092 8. Net investment factor (1.000000) plus (7) 1.009953092 9. AUV, end of period (1) multiplied by (8) $ 10.09953092 ILLUSTRATION OF PURCHASE OF UNITS (ASSUMING NO STATE PREMIUM TAX) EXAMPLE 2. 1. Initial premium payment $ 1,000 2. AUV on effective date of purchase (see Example 1) $ 10.00 3. Number of units purchased (1) divided by (2) 100 4. AUV for valuation date following purchase (see Example 1) $ 10.09953092 5. Contract Value in account for valuation date following purchase (3) multiplied by (4) $ 1,009.95 IRA PARTIAL WITHDRAWAL OPTION If the contract owner has an IRA contract and will attain age 70 1/2 in the current calendar year, distributions will be made in accordance with the requirements of Federal tax law. This option is available to assure that the required minimum distributions from qualified plans under the Internal Revenue Code (the "Code") are made. Under the Code, distributions must begin no later than April 1st of the calendar year following the calendar year in which the contract owner attains age 70 1/2. If the required minimum distribution is not withdrawn, there may be a penalty tax in an amount equal to 50% of the difference between the amount required to be withdrawn and the amount actually withdrawn. Even if the IRA Partial Withdrawal Option is not elected, distributions must nonetheless be made in accordance with the requirements of Federal tax law. ING USA notifies the contract owner of these regulations with a letter mailed in the calendar year in which the contract owner reaches age 70 1/2 which explains the IRA Partial Withdrawal Option and supplies an election form. If electing this option, the owner specifies whether the withdrawal amount will be based on a life expectancy calculated on a single life basis (contract owner's life only) or, if the contract owner is married, on a joint life basis (contract owner's and spouse's lives combined). The contract owner selects the payment mode on a monthly, quarterly or annual basis. If the payment mode selected on the election form is more frequent than annually, the payments in the first calendar year in which the option is in effect will be based on the amount of payment modes remaining when ING USA receives the completed election form. ING USA calculates the IRA Partial Withdrawal amount each year based on the minimum distribution rules. We do this by dividing the contract value by the life expectancy. In the first year withdrawals begin, we use the contract value as of the date of the first payment. Thereafter, we use the contract value on December 31st of each year. The life expectancy is recalculated each year. Certain minimum distribution rules govern payouts if the designated beneficiary is other than the contract owner's spouse and the beneficiary is more than ten years younger than the contract owner. OTHER INFORMATION Registration statements have been filed with the SEC under the Securities Act of 1933, as amended, with respect to the Contracts discussed in this Statement of Additional Information. Not all of the information set forth in the registration statements, amendments and exhibits thereto has been included in this Statement of Additional Information. Statements contained in this Statement of Additional Information concerning the content of the Contracts and other legal instruments are intended to be summaries. For a complete statement of the terms of these documents, reference should be made to the instruments filed with the SEC. CONSOLIDATED FINANCIAL STATEMENTS OF ING USA ANNUITY AND LIFE INSURANCE COMPANY The audited consolidated financial statements of ING USA Annuity and Life Insurance Company, the statutory financial statements of acquired businesses and unaudited pro forma financial information are listed below and are included in this Statement of Additional Information: Report of Independent Auditors Audited Consolidated Financial Statements of ING USA Annuity and Life Insurance Company Consolidated Income Statements for the years ended December 31, 2003, 2002 and 2001 Consolidated Balance Sheets as of December 31, 2003 and 2002 Consolidated Statements of Changes in Shareholder's Equity for the years ended December 31, 2003, 2002 and 2001 Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2002 and 2001 Notes to Consolidated Financial Statements Other Financial Statements Financial Statements of Business Acquired Financial Statements-Statutory Basis of Equitable Life Insurance Company of Iowa as of December 31, 2003 and 2002 Financial Statements-Statutory Basis of United Life and Annuity Insurance Company as of December 31, 2003 and 2002 Financial Statements-Statutory Basis of USG Annuity & Life Company as of December 31, 2003 and 2002 Unaudited Pro Forma Financial Information in Accordance with Accounting Principles Generally Accepted in the United States of America FINANCIAL STATEMENTS OF SEPARATE ACCOUNT B The audited financial statements of Separate Account B are listed below and are included in this Statement of Additional Information: Report of Independent Auditors Audited Financial Statements of ING USA Annuity and Life Insurance Company Separate Account B Statement of Assets and Liabilities as of December 31, 2003 Statement of Operations for the year ended December 31, 2003 Statements of Changes in Net Assets for the years ended December 31, 2003 and 2002 Notes to Financial Statements Item 8. Financial Statements and Supplementary Data Index to Consolidated Financial Statements Page Report of Independent Auditors C-2 Consolidated Financial Statements: Consolidated Income Statements for the years ended December 31, 2003, 2002 and 2001 C-3 Consolidated Balance Sheets as of December 31, 2003 and 2002 C-4 Consolidated Statements of Changes in Shareholder's Equity for the years ended December 31, 2003, 2002 and 2001 C-5 Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2002 and 2001 C-6 Notes to Consolidated Financial Statements C-7
C-1 Report of Independent Auditors The Board of Directors ING USA Annuity and Life Insurance Company We have audited the accompanying consolidated balance sheets of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company) and Subsidiary as of December 31, 2003 and 2002, and the related consolidated income statements, statements of changes in shareholder's equity, and statements of cash flows for each of the three years in the period ended December 31, 2003. 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 auditing standards generally accepted in the 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of ING USA Annuity and Life Insurance Company as of December 31, 2003 and 2002, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States. As discussed in Note 1 to the financial statements, the Company changed the accounting principle for goodwill and other intangible assets effective January 1, 2002. /s/ Ernst & Young LLP Atlanta, Georgia March 22, 2004 C-2 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Consolidated Income Statements (Millions) Year ended Year ended Year ended December 31, December 31, December 31, 2003 2002* 2001* ------------------ ------------------- ------------------ Revenues: Fee income $ 330.2 $ 245.9 $ 219.1 Net investment income 320.3 197.7 94.4 Net realized capital gains (losses) (36.2) 4.2 (6.5) Other income (loss) (0.2) 3.5 - ------------------ ------------------- ------------------ Total revenue $ 614.1 $ 451.3 $ 307.0 ------------------ ------------------- ------------------ Benefits, losses and expenses: Benefits: Interest credited and other benefits to policyholders 320.1 318.4 239.2 Underwriting, acquisition, and insurance expenses: General expenses 123.8 139.7 119.9 Commissions 250.3 288.7 232.4 Policy acquisition costs deferred (210.8) (292.2) (128.2) Amortization: Deferred policy acquisition costs and value of business acquired 184.7 127.8 49.6 Goodwill - - 4.2 Other: Expense and charges reimbursed under modified coinsurance agreements (131.6) (104.9) (225.6) Interest expense 13.7 16.0 19.4 ------------------ ------------------- ------------------ Total benefits, losses and expenses 550.2 493.5 310.9 ------------------ ------------------- ------------------ Income (loss) before income taxes and cumulative effect of change in accounting principle 63.9 (42.2) (3.9) Income tax expense (benefit) 2.5 (12.5) 0.1 ------------------ ------------------- ------------------ Income (loss) before cumulative effect of change in accounting principle 61.4 (29.7) (4.0) Cumulative effect of change in accounting principle - (135.3) - ------------------ ------------------- ------------------ Net income (loss) $ 61.4 $ (165.0) $ (4.0) ================== =================== ================== *See Note 1. The accompanying notes are an integral part of these consolidated financial statements.
C-3 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Consolidated Balance Sheets (Millions) As of December 31, 2003 2002 ----------------- ----------------- Assets Investments: Fixed maturities, available for sale, at fair value (amortized cost of $5,047.0 at 2003 and $4,720.1 at 2002) $ 5,223.3 $ 4,936.4 Equity securities at fair value: Investment in mutual funds (cost of $5.3 at 2003 and $22.9 at 2002) 5.6 19.0 Mortgage loans on real estate 847.6 482.4 Policy loans 17.5 16.0 Short-term investments 17.7 2.2 ----------------- ----------------- Total investments 6,111.7 5,456.0 Cash and cash equivalents 17.9 148.5 Accrued investment income 65.4 61.9 Reinsurance recoverable 13.0 196.9 Deferred policy acquisition costs 835.3 678.0 Value of business acquired 8.5 8.5 Receivable for securities sold 10.2 - Due from affiliates 4.2 - Other assets 14.7 5.3 Assets held in separate accounts 17,112.6 11,029.3 ----------------- ----------------- Total assets $ 24,193.5 $ 17,584.4 ================= ================= Liabilities and Shareholder's Equity Policy liabilities and accruals: Future policy benefits and claims' reserves $ 5,277.3 $ 5,159.1 ----------------- ----------------- Total policy liabilities and accruals 5,277.3 5,159.1 Surplus notes 170.0 170.0 Current income taxes 3.9 42.4 Deferred income taxes 126.0 79.8 Dollar roll obligations 120.1 40.0 Other liabilities 31.0 64.7 Liabilities related to separate accounts 17,112.6 11,029.3 ----------------- ----------------- Total liabilities 22,840.9 16,585.3 ----------------- ----------------- Shareholder's equity: Common stock (250,000 shares authorized, issued and outstanding; $10.00 per share par value) 2.5 2.5 Additional paid-in capital 1,358.4 1,128.4 Accumulated other comprehensive income 64.2 2.1 Retained deficit (72.5) (133.9) ----------------- ----------------- Total shareholder's equity 1,352.6 999.1 ----------------- ----------------- Total liabilities and shareholder's equity $ 24,193.5 $ 17,584.4 ================= ================= The accompanying notes are an integral part of these consolidated financial statements.
C-4 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Consolidated Statements of Changes in Shareholder's Equity (Millions) Accumulated Additional Other Retained Total Common Paid-In Comprehensive Earnings Shareholder's Stock Capital Income (Loss) (Deficit) Equity --------------- --------------- ---------------- ---------------- ---------------- Balance at December 31, 2000 $ 2.5 $ 583.6 $ (4.1) $ 35.1 $ 617.1 Contribution of capital 196.8 196.8 Comprehensive income: Net (loss) - - - (4.0) (4.0) Other comprehensive income net of tax: Unrealized gain on securities ($12.2 pretax) - - 7.9 - 7.9 ---------------- Comprehensive income 3.9 --------------- --------------- ---------------- ---------------- ---------------- Balance at December 31, 2001 2.5 780.4 3.8 31.1 817.8 Contribution of capital 356.3 356.3 Other (8.3) (8.3) Comprehensive income: Net (loss) - - - (165.0) (165.0) Other comprehensive income net of tax: Unrealized (loss) on securities ($(2.6) pretax) - - (1.7) - (1.7) ---------------- Comprehensive loss (166.7) --------------- --------------- ---------------- ---------------- ---------------- Balance at December 31, 2002 2.5 1,128.4 2.1 (133.9) 999.1 Contribution of capital - 230.0 - - 230.0 Comprehensive income: Net income - - - 61.4 61.4 Other comprehensive income net of tax: Unrealized gain on securities ($95.6 pretax) - - 62.1 - 62.1 ---------------- Comprehensive income 123.5 --------------- --------------- ---------------- ---------------- ---------------- Balance at December 31, 2003 $ 2.5 $ 1,358.4 $ $ 64.2 $ (72.5) $ 1,352.6 =============== =============== ================ ================ ================ The accompanying notes are an integral part of these consolidated financial statements.
C-5 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Consolidated Statements of Cash Flows (Millions) Year ended Year ended Year ended December 31, December 31, December 31, 2003 2002 2001 ----------------- ------------------ ----------------- Cash Flows from Operating Activities: Net income (loss) $ 61.4 $ (165.0) $ (4.0) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Interest credited and charges on interest sensitive products 306.3 282.2 191.0 Net realized capital (gains) losses 36.2 (4.2) 6.5 Increase in accrued investment income (3.5) (39.5) (13.2) Increase in guaranteed benefits reserve (91.6) 107.1 28.2 Other changes in insurance reserve liabilities 13.3 - - Policy acquisition cost deferred (210.8) (292.2) (128.2) Amortization of deferred policy acquisition costs 180.4 121.2 45.2 Amortization of value of business acquired 4.3 6.6 4.4 Impairment of goodwill - 151.3 - Other non-cash reconciling items and other changes in assets and liabilities (87.0) 21.3 110.6 Provision for deferred income taxes 12.8 (85.7) (0.6) ----------------- ------------------ ----------------- Net cash provided by operating activities 221.8 103.1 239.9 ----------------- ------------------ ----------------- Cash Flows from Investing Activities: Proceeds from the sale, maturity, or repayment of: Fixed maturities available for sale 7,025.8 7,297.1 880.7 Equity securities 16.2 7.8 6.9 Mortgage loans 51.9 285.0 136.0 Acquisition of investments: Fixed maturities available for sale (7,267.3) (10,068.3) (2,070.8) Equity securities - (22.8) - Short-term and other investments (15.4) - (4.7) Mortgage loans (417.1) (553.7) (250.3) Increase in policy loans (1.5) (1.2) (1.5) (Increase) decrease in property and equipment (0.7) 1.1 1.2 Proceeds from sale of interest in subsidiary - 27.7 - Loss on valuation of interest in subsidiary - 3.0 - Other - 0.6 - ----------------- ------------------ ----------------- Net cash used for investing activities (608.1) (3,023.7) (1,302.5) ----------------- ------------------ ----------------- Cash Flows from Financing Activities: Deposits and interest credited for investment contracts 1,383.5 3,818.5 1,933.1 Maturities and withdrawals from insurance contracts (332.3) (171.2) (134.8) Transfers to separate accounts (1,160.0) (1,053.8) (902.9) Proceeds received on reinsurance recapture 134.5 - - Proceeds of notes payable - - 3.1 Repayment of notes payable - (1.4) (1.7) Proceeds from reciprocal loan agreement borrowings - - 69.3 Repayment of reciprocal loan agreement borrowings - (75.0) (69.3) Contributions of capital by parent 230.0 356.3 196.8 ----------------- ------------------ ----------------- Net cash provided by financing activities 255.7 2,873.4 1,093.6 ----------------- ------------------ ----------------- Net increase (decrease) in cash and cash equivalents (130.6) (47.2) 31.0 Cash and cash equivalents, beginning of period 148.5 195.7 164.7 ----------------- ------------------ ----------------- Cash and cash equivalents, end of period $ 17.9 $ 148.5 $ 195.7 ================= ================== ================= Supplemental cash flow information: Income taxes (received) paid, net $ 28.2 $ (141.5) $ 0.4 ================= ================== ================= Interest paid $ 13.0 $ 20.8 $ 15.0 ================= ================== ================= The accompanying notes are an integral part of these consolidated financial statements.
C-6 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- 1. Significant Accounting Policies Principles of Consolidation ING USA Annuity and Life Insurance Company (formerly known as Golden American Life Insurance Company) ("ING USA" or the "Company" as appropriate), a wholly-owned subsidiary of Lion Connecticut Holdings Inc. ("Lion" or "Parent"), is a stock life insurance company organized under the laws of the State of Iowa. ING USA was originally incorporated under the laws of the State of Minnesota on January 2, 1973, in the name of St. Paul Life Insurance Company. On December 21, 1993, the Company redomesticated from Minnesota to Delaware. On January 1, 2004 several events occurred. First, the Company redomesticated from Delaware to Iowa. Secondly, on January 1, 2004 (the "merger date"), Equitable Life Insurance Company of Iowa ("Equitable Life"), USG Annuity & Life Company ("USG") and United Life & Annuity Insurance Company ("ULA") (the "Merger Companies"), merged with and into Golden American Life Insurance Company ("Golden American"). Also on January 1, 2004, immediately after the merger, Golden American changed its name to ING USA Annuity and Life Insurance Company. As of the merger date, the Merger Companies ceased to exist and were merged into ING USA. Lion is an indirect, wholly-owned subsidiary of ING Groep N.V. ("ING"), a global financial services holding company based in The Netherlands. ING USA is authorized to do business in the District of Columbia and all states except New York. ING USA is licensed as a life insurance company under the laws of the State of Delaware until December 31, 2003 and Iowa since January 1, 2004. Prior to the merger date, ING USA was a wholly-owned subsidiary of Equitable Life from December 30, 2001 through December 31, 2003. Formerly, from October 24, 1997, until December 30, 2001, Equitable of Iowa Companies, Inc. ("EIC" or "Former Holding Company") directly owned 100% of Golden American's stock. On December 3, 2001, the Board of Directors of EIC approved a plan to contribute its holding of stock of Golden American to another wholly-owned subsidiary, Equitable Life. The contribution of stock occurred on December 31, 2001, following approval by the Insurance Department of Delaware. As of April 1, 2002, ING USA sold First Golden American Life Insurance Company of New York ("First Golden") to its sister company, ReliaStar Life Insurance Company ("ReliaStar"). ReliaStar, the parent of Security-Connecticut Life Insurance Company ("Security-Connecticut"), which in turn is the parent of ReliaStar Life Insurance Company of New York ("RLNY"), merged the First Golden business into RLNY operations and dissolved First Golden at book value for $27.7 million in cash and a receivable totaling $0.2 million from RLNY. The receivable from RLNY was assumed by Equitable Life, and ultimately by ING. The consideration was based on First Golden's statutory-basis book value. RLNY's payable to the Company was assumed by ING and subsequently forgiven. ING USA realized a loss of $3.0 million related to the sale of First Golden, which was recorded as a capital transaction. Approval for the merger was obtained from the Insurance Departments of the States of New York and Delaware. C-7 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- As of October 1, 2003, RLNY's parent, Security-Connecticut merged with and into its parent, ReliaStar. Statement of Financial Accounting Standards ("FAS") No. 141, "Business Combinations" excludes transfers of net assets or exchanges of shares between entities under common control and is therefore covered by Accounting Principles Board ("APB") Opinion No. 16, "Business Combinations". RLNY presented combined results of operations including First Golden activity as of the beginning of the period ending December 31, 2002. The first three months of First Golden activity is not reflected in the ING USA statement of financial position or other financial information for the period ended December 31, 2002, as the amounts were not material. Description of Business The Company offers a portfolio of variable and fixed insurance products designed to meet customer needs for a tax-advantaged savings for retirement and protection from death. The Company's variable and fixed insurance products are marketed by broker/dealers, financial institutions, and insurance agents. The Company's primary customers are consumers and corporations. Recently Adopted Accounting Standards Accounting for Goodwill and Intangible Assets During 2002, the Company adopted Financial Accounting Standards Board ("FASB") FAS No. 142, "Goodwill and Other Intangible Assets". The adoption of this standard resulted in an impairment loss of $135.3 million. The Company, in accordance with FAS No. 142, recorded the impairment loss retroactive to the first quarter of 2002; prior quarters of 2002 were restated accordingly. This impairment loss represented the entire carrying amount of goodwill, net of accumulated amortization. This impairment charge was shown as a change in accounting principle on the December 31, 2002 Consolidated Income Statement. C-8 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- Application of the nonamortization provision (net of tax) of the standard resulted in an increase in net income of $3.8 million for the twelve months ended December 31, 2002. Had the Company been accounting for goodwill under FAS No. 142 for all periods presented, the Company's net income (loss) would have been as follow: Year ended December 31, (Millions) 2001 Reported net income (loss) $ (4.0) Add back goodwill amortization, net of tax 3.8 ----------------- Adjusted net income (loss) $ (0.2) =================
Accounting for Derivative Instruments and Hedging Activities In June 1998, the FASB issued FAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", as amended and interpreted by FAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement 133, and FAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities - an Amendment of FASB 133, and certain FAS 133 implementation issues". This standard, as amended, requires companies to record all derivatives on the balance sheet as either assets or liabilities and measure those instruments at fair value. The manner in which companies are to record gains or losses resulting from changes in the fair values of those derivatives depends on the use of the derivative and whether it qualifies for hedge accounting. FAS No. 133 was effective for the Company's financial statements beginning January 1, 2001. Adoption of FAS No. 133 did not have a material effect on the Company's financial position or results of operations given the Company's limited derivative holdings and embedded derivatives. The Company occasionally purchases a financial instrument that contains a derivative that is "embedded" in the instrument. In addition, the Company's insurance products are reviewed to determine whether they contain an embedded derivative. The Company assesses whether the economic characteristics of the embedded derivative are clearly and closely related to the economic characteristics of the remaining component of the financial instrument or insurance product (i.e., the host contract) and whether a separate instrument with the same terms as the embedded instrument would meet the definition of a derivative instrument. When it is determined that the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract and that a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is separated from the host contract and carried at fair value. However, in cases where the host contract is measured at fair value, with changes in fair value reported in current period earnings or the Company is unable to reliably identify and measure the embedded derivative for separation from its host contracts, the entire contract is carried on the balance sheet at fair value and is not C-9 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- designated as a hedging instrument. The Company did not have embedded derivatives at December 31, 2003 or 2002. The Derivative Implementation Group ("DIG") responsible for issuing guidance on behalf of the FASB for implementation of FAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" recently issued Statement Implementation Issue No. B36, "Embedded Derivatives: Modified Coinsurance Arrangements and Debt Instruments" That Incorporate Credit Risk Exposures That Are Unrelated or Only Partially Related to the Credit Worthiness of the Obligor under Those Instruments ("DIG B36"). Under this interpretation, modified coinsurance and coinsurance with funds withheld reinsurance agreements as well as other types of receivables and payables where interest is determined by reference to a pool of fixed maturity assets or total return debt index may be determined to contain embedded derivatives that are required to be bifurcated. The required date of adoption of DIG B36 for the Company was October 1, 2003. The Company completed its evaluation of DIG B36 and determined that the Company had modified coinsurance treaties that required implementation of the guidance. The applicable contracts, however, were determined to generate embedded derivatives with a fair value of zero. Therefore, the guidance, while implemented, did not impact the Company's financial position, results of operations or cash flows. Guarantees In November 2002, the FASB issued Interpretation No.45 ("FIN 45"), "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others", to clarify accounting and disclosure requirements relating to a guarantor's issuance of certain types of guarantees, or groups of similar guarantees, even if the likelihood of the guarantor's having to make any payments under the guarantee is remote. The disclosure provisions are effective for financial statements for fiscal years ended after December 15, 2002. For certain guarantees, the interpretation also requires that guarantors recognize a liability equal to the fair value of the guarantee upon its issuance. This initial recognition and measurement provision is to be applied only on a prospective basis to guarantees issued or modified after December 31, 2002. The Company has performed an assessment of its guarantees and believes that all of its guarantees are excluded from the scope of this interpretation. Variable Interest Entities In January 2003, the Financial Accounting Standards Board (FASB) issued FASB Interpretation 46, "Consolidation of Variable Interest Entities, an Interpretation of ARB No.51" (FIN 46). In December 2003, the FASB modified FIN 46 to make certain technical corrections and address certain implementation issues that had arisen. FIN 46 provides a new framework for identifying variable interest entities (VIEs) and determining when a company should include the assets, liabilities, noncontrolling interests and results of activities of a VIE in its consolidated financial statements. C-10 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- In general, a VIE is a corporation, partnership, limited- liability corporation, trust, or any other legal structure used to conduct activities or hold assets that either (1) has an insufficient amount of equity to carry out its principal activities without additional subordinated financial support, (2) has a group of equity owners that are unable to make significant decisions about its activities, or (3) has a group of equity owners that do not have the obligation to absorb losses or the right to receive returns generated by its operations. FIN 46 requires a VIE to be consolidated if a party with an ownership, contractual or other financial interest in the VIE (a variable interest holder) is obligated to absorb a majority of the risk of loss from the VIE's activities, is entitled to receive a majority of the VIE's residual returns (if no party absorbs a majority of the VIE's losses), or both. A variable interest holder that consolidates the VIE is called the primary beneficiary. Upon consolidation, the primary beneficiary generally must initially record all of the VIE's assets, liabilities and noncontrolling interests at fair value and subsequently account for the VIE as if it were consolidated based on majority voting interest. FIN 46 also requires disclosures about VIEs that the variable interest holder is not required to consolidate but in which it has a significant variable interest. At December 31, 2003, the Company held the following investments that, for purposes of FIN 46, were evaluated and determined that the investments do not require consolidation in the Company's financial statements: Asset Type Purpose Book Value (1) Market Value ---------------------- ------------------- ------------------- ------------------ Private Corporate Securities - synthetic leases; project financings; credit tenant leases Investment Holdings $ 1,057.2 $ 1,114.6 Foreign Securities - US VIE subsidiaries of foreign companies Investment Holdings 190.3 203.0 Commercial Mortgage Obligations (CMO) Investment Holdings 888.5 893.9 Collateralized Debt Obligations (CDO) Investment Holdings and/or Collateral Manager 4.9 4.3 Asset-Backed Securities (ABS) Investment Holdings 479.9 482.3 Commercial Mortgage Backed Securities (CMBS) Investment Holdings 325.4 342.0 (1) Represents maximum exposure to loss except for those structures for which the Company also receives asset management fees.
New Accounting Pronouncements In July 2003, the American Institute of Certified Public Accountants ("AICPA") issued Statement of Position ("SOP") 03-1, "Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts," which the Company intends to adopt during first quarter 2004. The impact on the financial statements is not known at this time. C-11 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- Reclassifications and Changes to Prior Year Presentation Certain reclassifications have been made to prior year financial information to conform to the current year classifications. During 2003, certain changes were made to the 2002 and 2001 Income Statements to reflect the correct balances. These changes had no impact on net income or net shareholder's equity of the Company. The following summarizes the corrections to each financial statement line item (in millions): Previously Reported Restated 2002 Adjustments 2002 ------------------- ------------------ ------------------ Fee income $ 204.0 $ 41.9 $ 245.9 ------------------- ------------------ ------------------ Total revenue $ 409.4 $ 41.9 $ 451.3 =================== ================== ================== Interest credited and other benefits to policyholders 276.5 41.9 318.4 ------------------- ------------------ ------------------ Total expense $ 451.6 $ 41.9 $ 493.5 =================== ================== ================== Previously Reported Restated 2002 Adjustments 2002 ------------------- ------------------ ------------------ Fee income $ 188.9 $ 30.2 $ 219.1 ------------------- ------------------ ------------------ Total revenue $ 276.8 $ 30.2 $ 307.0 =================== ================== ================== Interest credited and other benefits to policyholders 209.0 30.2 239.2 ------------------- ------------------ ------------------ Total expense $ 280.7 $ 30.2 $ 310.9 =================== ================== ==================
Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from reported results using those estimates. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, money market instruments and other debt issues with a maturity of 90 days or less when purchased. C-12 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- Investments All of the Company's fixed maturity and equity securities are currently designated as available-for-sale. Available-for-sale securities are reported at fair value and unrealized gains and losses on these securities are included directly in shareholder's equity, after adjustment for related charges in deferred policy acquisition costs, value of business acquired, and deferred income taxes. The Company analyzes the general account investments to determine whether there has been an other than temporary decline in fair value below the amortized cost basis in accordance with FAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities." Management considers the length of the time and the extent to which the market value has been less than cost; the financial condition and near-term prospects of the issuer; future economic conditions and market forecasts; and the Company's intent and ability to retain the investment in the issuer for a period of time sufficient to allow for recovery in market value. If it is probable that all amounts due according to the contractual terms of a debt security will not be collected, an other than temporary impairment is considered to have occurred. In addition, the Company invests in structured securities that meet the criteria of Emerging Issues Task Force ("EITF") Issue No. 99-20, "Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets". Under Issue No. EITF 99-20, a determination of the required impairment is based on credit risk and the possibility of significant prepayment risk that restricts the Company's ability to recover the investment. An impairment is recognized if the fair value of the security is less than amortized cost and there has been an adverse change in cash flow since the remeasurement date. When a decline in fair value is determined to be other than temporary, the individual security is written down to fair value and the loss is accounted for as a realized loss. Realized capital gains and losses on all other investments are included in the consolidated income statements. Unrealized capital gains and losses on all other investments are reflected in shareholder's equity, net of related income taxes. 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. Fair values for fixed maturities are obtained from independent pricing services or broker/dealer quotations. Fair values for privately placed bonds are determined using a matrix-based model. The matrix-based model considers the level of risk-free interest rates, current corporate spreads, the credit quality of the issuer and cash flow characteristics of the C-13 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- security. The fair values for equity securities are based on quoted market prices. For equity securities not actively traded, estimated fair values are based upon values of issues of comparable yield and quality or conversion value where applicable. The Company engages in securities lending whereby certain securities from its portfolio are loaned to other institutions for short periods of time. Initial collateral, primarily cash, is required at a rate of 102% of the market value of the loaned domestic securities. The collateral is deposited by the borrower with a lending agent, and retained and invested by the lending agent according to the Company's guidelines to generate additional income. The market value of the loaned securities is monitored on a daily basis with additional collateral obtained or refunded as the market value of the loaned securities fluctuates. Reverse dollar repurchase agreement and reverse repurchase agreement transactions are accounted for as collateralized borrowings, where the amount borrowed is equal to the sales price of the underlying securities. The investment in mutual funds represents an investment in mutual funds managed by the Company, and is carried at fair value. Mortgage loans on real estate are reported at amortized cost less impairment writedowns. If the value of any mortgage loan is determined to be impaired (i.e., when it is probable the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement), the carrying value of the mortgage loan is reduced to the present value of expected cash flows from the loan, discounted at the loan's effective interest rate, or to the loan's observable market price, or the fair value of the underlying collateral. The carrying value of the impaired loans is reduced by establishing a permanent writedown charged to realized loss. Policy loans are carried at unpaid principal balances, net of impairment reserves. Short-term investments, consisting primarily of money market instruments and other fixed maturities issues purchased with an original maturity of 91 days to one year, are considered available for sale and are carried at fair value, which approximates amortized cost. The Company's use of derivatives is limited to hedging purposes. The Company enters into interest rate and currency contracts, including swaps, caps, and floors to reduce and manage risks associated with changes in value, yield, price, cash flow or exchange rates of assets or liabilities held or intended to be held. Changes in the fair value of open derivative contracts are recorded in net realized capital gains and losses. On occasion, the Company sells call options written on underlying securities that are carried at fair value. Changes in fair value of these options are recorded in net realized capital gains or losses. C-14 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- Deferred Policy Acquisition Costs and Value of Business Acquired Deferred Policy Acquisition Costs ("DAC") is an asset, which represents certain costs of acquiring certain insurance business, which are deferred and amortized. These costs, all of which vary with and are primarily related to the production of new and renewal business, consist principally of commissions, certain underwriting and contract issuance expenses, and certain agency expenses. Value of Business Acquired ("VOBA") is an asset, which represents the present value of estimated net cash flows embedded in the Company's contracts, which existed at the time the Company was acquired by ING. DAC and VOBA are evaluated for recoverability at each balance sheet date and these assets would be reduced to the extent that gross profits are inadequate to recover the asset. The amortization methodology varies by product type based upon two accounting standards: FAS No. 60, "Accounting and Reporting by Insurance Enterprises" ("FAS No. 60") and FAS No. 97, "Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and Realized Gains and Losses from the Sale of Investments" ("FAS No. 97"). Under FAS No. 60, acquisition costs for traditional life insurance products, which primarily include whole life and term life insurance contracts, are amortized over the premium payment period in proportion to the premium revenue recognition. Under FAS No. 97, acquisition costs for universal life and investment-type products, which include universal life policies and fixed and variable deferred annuities, are amortized over the life of the blocks of policies (usually 25 years) in relation to the emergence of estimated gross profits from surrender charges, investment margins, mortality and expense margins, asset-based fee income, and actual realized gains (losses) on investments. Amortization is adjusted retrospectively when estimates of current or future gross profits to be realized from a group of products are revised. DAC and VOBA are written off to the extent that it is determined that future policy premiums and investment income or gross profits are not adequate to cover related expenses. C-15 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- Activity for the years ended December 31, 2003, 2002 and 2001 within VOBA was as follows: (Millions) Balance at December 31, 2000 $ 25.9 Adjustment for FAS No. 115 (1.3) Interest accrued at 7% 1.6 Amortization (6.0) ----------------- Balance at December 31, 2001 20.2 Adjustment for FAS No. 115 (5.1) Additions (3.3) Interest accrued at 7% 1.3 Amortization (4.6) ----------------- Balance at December 31, 2002 8.5 Adjustment for FAS No. 115 4.3 Additions - Interest accrued at (4% - 5%) 0.4 Amortization (4.7) ----------------- Balance at December 31, 2003 $ 8.5 =================
The estimated amount of VOBA to be amortized, net of interest, over the next five years is $7.7 million, $5.7 million, $4.1 million, $3.3 million and $2.6 million for the years 2004, 2005, 2006, 2007 and 2008, respectively. Actual amortization incurred during these years may vary as assumptions are modified to incorporate actual results. As part of the regular analysis of DAC/VOBA, at the end of third quarter of 2002, the Company unlocked its long-term rate of return assumptions. The Company reset long-term assumptions for the separate account returns to 9.0% (gross before fund management fees and mortality and expense and other policy charges), as of December 31, 2002, reflecting a blended return of equity and other sub-accounts. The initial unlocking adjustment in 2002 was primarily driven by the sustained downturn in the equity markets and revised expectations for future returns. During 2002, the Company recorded an acceleration of DAC/VOBA amortization totaling $91.5 million before tax, or $59.5 million, net of $32.0 million of federal income tax benefit. The Company has remained unlocked during 2003, and reset long-term assumptions for the separate account returns from 9.0% to 8.5% (gross before fund management fees and mortality and expense and other policy charges), as of December 31, 2003, maintaining a blended return of equity and other sub-accounts. The 2003 unlocking adjustment from the previous year was primarily driven by improved market performance. For the year ended December 31, 2003, the Company recorded a deceleration of DAC/VOBA amortization totaling $41.3 million before tax, or $26.9 million, net of $14.4 million of federal income tax expense. C-16 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- Policy Liabilities and Accruals Reserves for immediate annuities with life contingent payout contracts are computed on the basis of assumed investment yield, mortality, and expenses, including a margin for adverse deviations. Such assumptions generally vary by plan, year of issue and policy duration. Reserve interest rates range from 3.0% to 3.5% for all years presented. Investment yield is based on the Company's experience. Mortality and withdrawal rate assumptions are based on relevant Company experience and are periodically reviewed against both industry standards and experience. Other policyholders' funds include reserves for deferred annuity investment contracts and immediate annuities without life contingent payouts. Reserves on such contracts are equal to cumulative deposits less charges and withdrawals plus credited interest thereon (rates range from 2.4% to 7.5% for all years presented) net of adjustments for investment experience that the Company is entitled to reflect in future credited interest. Revenue Recognition For certain annuity contracts, charges assessed against policyholders' funds for the cost of insurance, surrender, expenses, actuarial margin and other fees are recorded as revenue as charges are assessed against policyholders. Other amounts received for these contracts are reflected as deposits and are not recorded as revenue. Related policy benefits are recorded in relation to the associated premiums or gross profit so that profits are recognized over the expected lives of the contracts. When annuity payments with life contingencies begin under contracts that were initially investment contracts, the accumulated balance in the account is treated as a single premium for the purchase of an annuity and reflected as an offsetting amount in both premiums and current and future benefits in the Consolidated Income Statement. Separate Accounts Separate Account assets and liabilities generally represent funds maintained to meet specific investment objectives of contractholders who bear the investment risk, subject, in some cases, to minimum guaranteed rates. Investment income and investment gains and losses generally accrue directly to such contractholders. The assets of each account are legally segregated and are not subject to claims that arise out of any other business of the Company. Separate Account assets supporting variable options under universal life and annuity contracts are invested, as designated by the contractholder or participant under a contract (who bears the investment risk subject, in limited cases, to minimum guaranteed rates) in shares of mutual funds which are managed by the Company, or other selected mutual funds not managed by the Company. C-17 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- Separate Account assets are carried at fair value. At December 31, 2003 and 2002, unrealized gains of $112.8 million and of $133.4 million, respectively, after taxes, on assets supporting a guaranteed interest option are reflected in shareholder's equity. Separate Account liabilities are carried at fair value, except for those relating to the guaranteed interest option. Reserves relating to the guaranteed interest option are maintained at fund value and reflect interest credited at rates ranging from 2.4% to 7.5% in 2003 and 2.4% to 11.0% in 2002. Separate Account assets and liabilities are shown as separate captions in the Consolidated Balance Sheets. Deposits, investment income and net realized and unrealized capital gains and losses of the Separate Accounts are not reflected in the Consolidated Financial Statements (with the exception of realized and unrealized capital gains and losses on the assets supporting the guaranteed interest option). The Consolidated Statements of Cash Flows do not reflect investment activity of the Separate Accounts. Reinsurance The Company utilizes indemnity reinsurance agreements to reduce its exposure to large losses in all aspects of its insurance business. Such reinsurance permits recovery of a portion of losses from reinsurers, although it does not discharge the primary liability of the Company as direct insurer of the risks reinsured. The Company evaluates the financial strength of potential reinsurers and continually monitors the financial condition of reinsurers. Only those reinsurance recoverable balances deemed probable of recovery are reflected as assets on the Company's Balance Sheets. Income Taxes The Company is taxed at regular corporate rates after adjusting income reported for financial statement purposes for certain items. Deferred income tax expenses/benefits result from changes during the year in cumulative temporary differences between the tax basis and book basis of assets and liabilities. C-18 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- Deferred corporate tax is stated at the face value and is calculated for temporary valuation differences between carrying amounts of assets and liabilities in the balance sheet and tax bases based on tax rates that are expected to apply in the period when the assets are realized or the liabilities are settled. Deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which the deductible temporary differences can be utilized. A deferred tax asset is recognized for the carryforward of unused tax losses to the extent that it is probable that future taxable profits will be available for compensation. 2. Investments Fixed maturities available for sale as of December 31 were as follows: Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value ------------- ------------- -------------- ------------- 2003 (Millions) U.S. government and government agencies and authorities $ 23.8 $ 0.1 $ - $ 23.9 State, municipalities and political subdivisions 5.0 - 0.4 4.6 U.S. corporate securities: Public utilities 482.1 35.7 3.7 514.1 Other corporate securities 2,630.8 128.7 12.1 2,747.4 ------------- ------------- -------------- ------------- Total U.S. corporate securities 3,112.9 164.4 15.8 3,261.5 ------------- ------------- -------------- ------------- Foreign securities: Government 68.5 1.0 1.0 68.5 Other 559.7 30.3 5.5 584.5 ------------- ------------- -------------- ------------- Total foreign securities 628.2 31.3 6.5 653.0 ------------- ------------- -------------- ------------- Mortgage-backed securities 790.0 6.0 4.6 791.4 Other assets-backed securities 487.1 5.5 3.7 488.9 ------------- ------------- -------------- ------------- Total fixed maturities $ 5,047.0 $ 207.3 $ 31.0 $ 5,223.3 ============= ============= ============== =============
C-19 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- Fixed maturities available for sale as of December 31 were as follows: Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value ------------- ------------- -------------- ------------- 2002 (Millions) U.S. government and government agencies and authorities $ 207.3 $ 2.3 $ 0.1 $ 209.5 U.S. corporate securities: Public utilities 335.7 15.5 1.9 349.3 Other corporate securities 2,739.5 163.2 6.4 2,896.4 ------------- ------------- -------------- ------------- Total U.S. corporate securities 3,075.2 178.7 8.3 3,245.7 ------------- ------------- -------------- ------------- Foreign securities: Government 64.8 2.9 - 67.7 Other 436.3 27.7 2.6 461.3 ------------- ------------- -------------- ------------- Total foreign securities 501.1 30.6 2.6 529.0 ------------- ------------- -------------- ------------- Mortgage-backed securities 641.7 12.0 0.2 653.5 Other assets-backed securities 294.8 7.0 3.1 298.7 ------------- ------------- -------------- ------------- Total fixed maturities $ 4,720.1 $ 230.6 $ 14.3 $ 4,936.4 ============= ============= ============== =============
At December 31, 2003 and 2002, net unrealized appreciation is $176.3 million and $216.3 million, respectively, on available-for-sale fixed maturities. The aggregate unrealized losses and related fair values of investments with unrealized losses as of December 31, 2003, are shown below by duration: Unrealized Fair Loss Value ------------ ----------- (Millions) Duration category: Less than six months below cost $ 9.3 $ 675.3 More than six months and less than twelve months below cost 20.4 679.7 More than twelve months below cost 1.3 7.9 ------------ ----------- Fixed maturities $ 31.0 $ 1,362.9 ============ ===========
C-20 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- Of the losses more than 6 months and less than 12 months in duration of $20.4 million, there were $9.1 million in unrealized losses that are primarily related to interest rate movement or spread widening for other than credit-related reasons. Business and operating fundamentals are performing as expected. The remaining losses of $11.3 million as of December 31, 2003 included the following significant items: $3.6 million of unrealized losses related to securities reviewed for impairment under the guidance prescribed by EITF 99-20. This category includes U.S. government-backed securities, principal protected securities and structured securities which did not have an adverse change in cash flows for which the carrying amount was $195.1 million. $6.3 million of unrealized losses relating to the energy/utility industry, for which the carrying amount was $125.7 million. During 2003, the energy sector recovered due to a gradually improving economic picture and the lack of any material accounting irregularities similar to those experienced in the prior two years. The Company's year-end analysis indicates that the Company expects the debt to be serviced in accordance with the contractual terms. The remaining unrealized losses totaling $1.4 million relate to a carrying amount of $61.9 million. Of the losses more than 12 months in duration of $1.3 million, there were $0.6 million related to securities reviewed for impairment under the guidance prescribed by EITF 99-20. This category includes U.S. government-backed securities, principal protected securities and structured securities which did not have an adverse change in cash flows for which the carrying amount was $4.0 million. The amortized cost and fair value of total fixed maturities for the year-ended December 31, 2003 are shown below by contractual maturity. Actual maturities may differ from contractual maturities because securities may be restructured, called, or prepaid. Amortized Fair Cost Value ------------ ----------- (Millions) Due to mature: One year or less $ 30.6 $ 31.0 After one year through five years 880.9 921.1 After five years through ten years 1,866.6 1,962.7 After ten years 666.4 686.2 Mortgage-backed securities 1,115.4 1,133.3 Other asset-backed securities 487.1 489.0 ------------ ----------- Fixed maturities $ 5,047.0 $ 5,223.3 ============ ===========
C-21 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- At December 31, 2003 and 2002, fixed maturities with fair values of $2.9 million and $7.5 million, respectively, were on deposit as required by regulatory authorities. The Company did not have any investments in a single issuer, other than obligations of the U.S. government, with a carrying value in excess of 10% of the Company's shareholder's equity at December 31, 2003. Beginning in April 2001, the Company entered into reverse dollar repurchase agreement and reverse repurchase agreement transactions to increase its return on investments and improve liquidity. These transactions involve a sale of securities and an agreement to repurchase substantially the same securities as those sold. The dollar rolls and reverse repurchase agreements are accounted for as short-term collateralized financings and the repurchase obligation is reported on the Consolidated Balance Sheets. The repurchase obligation totaled $120.1 and $40.0 million at December 31, 2003 and 2002, respectively. The primary risk associated with short-term collateralized borrowings is that the counterparty will be unable to perform under the terms of the contract. The Company's exposure is limited to the excess of the net replacement cost of the securities over the value of the short-term investments, an amount that was not material at December 31, 2003. The Company believes the counterparties to the dollar roll and reverse repurchase agreements are financially responsible and that the counterparty risk is immaterial. During 2003, the Company determined that five fixed maturities had other than temporary impairments. As a result, at December 31, 2003, the Company recognized a pre-tax loss of $5.7 million to reduce the carrying value of the fixed maturities to their fair value of $4.2 million. During 2002, the Company determined that thirteen fixed maturities had other than temporary impairments. As a result, at December 31, 2002, the Company recognized a pre-tax loss of $8.9 million to reduce the carrying value of the fixed maturities to their combined fair value of $123.5 million. During 2001, the Company determined that ten fixed maturities had other than temporary impairments. As a result, at December 31, 2001, the Company recognized a pre-tax loss of $0.7 million to reduce the carrying value of the fixed maturities to their fair value of $0.7 million. 3. Financial Instruments Estimated Fair Value The following disclosures are made in accordance with the requirements of FAS No. 107, "Disclosures about Fair Value of Financial Instruments". FAS No. 107 requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. C-22 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates, in many cases, could not be realized in immediate settlement of the instrument. FAS No. 107 excludes certain financial instruments 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 above financial instruments: Fixed maturities securities: The fair values for the actively traded marketable bonds are determined based upon the quoted market prices. The fair values for marketable bonds without an active market are obtained through several commercial pricing services which provide the estimated fair values. Fair values of privately placed bonds are determined using a matrix-based pricing model. The model considers the current level of risk-free interest rates, current corporate spreads, the credit quality of the issuer and cash flow characteristics of the security. Using this data, the model generates estimated market values which the Company considers reflective of the fair value of each privately placed bond. Fair values for privately placed bonds are determined through consideration of factors such as the net worth of the borrower, the value of collateral, the capital structure of the borrower, the presence of guarantees and the Company's evaluation of the borrower's ability to compete in their relevant market. Equity securities: Fair values of these securities are based upon quoted market value. Mortgage loans on real estate: The fair values for mortgage loans on real estate are estimated using discounted cash flow analyses and rates currently being offered in the marketplace for similar loans to borrowers with similar credit ratings. Loans with similar characteristics are aggregated for purposes of the calculations. Cash, short-term investments and policy loans: The carrying amounts for these assets approximate the assets' fair values. Assets held in separate accounts: Assets held in separate accounts are reported at the quoted fair values of the individual securities in the separate accounts. Surplus notes: Estimated fair value of the Company's surplus notes were based upon discounted future cash flows using a discount rate approximating the current market value. Investment contract liabilities (included in future policy benefits and claims' reserves): With a fixed maturity: Fair value is estimated by discounting cash flows at interest rates currently being offered by, or available to, the Company for similar contracts. C-23 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- Without a fixed maturity: Fair value is estimated as the amount payable to the policyholder upon demand. However, the Company has the right under such contracts to delay payment of withdrawals which may ultimately result in paying an amount different than that determined to be payable on demand. Liabilities related to separate accounts: Liabilities related to separate accounts are reported at full account value in the Company's historical balance sheet. Estimated fair values of separate account liabilities are equal to their carrying amount. The carrying values and estimated fair values of certain of the Company's financial instruments at December 31, 2003 and 2002 were as follows: 2003 2002 -------------------------- -------------------------- Carrying Fair Carrying Fair Value Value Value Value ---------- --------- ---------- --------- (Millions) Assets: Fixed maturity $ 5,223.3 $ 5,223.3 $ 4,936.4 $ 4,936.4 Equity securities 5.6 5.6 19.0 19.0 Mortgage loans on real estate 847.6 878.1 482.4 522.2 Policy loans 17.5 17.5 16.0 16.0 Cash and short-term investments 35.6 35.6 150.7 150.7 Assets held in separate accounts 17,112.6 17,112.6 11,029.3 11,029.3 Liabilities: Surplus notes 170.0 267.7 170.0 260.0 Investment contract liabilities: Deferred annuities 5,180.2 4,872.0 5,128.0 4,802.9 Supplementary contracts and immediate annuities 12.9 12.9 8.0 8.0 Liabilities related to separate account 17,112.6 17,112.6 11,029.3 11,029.3
Fair value estimates are made at a specific point in time, based on available market information and judgment about various financial instruments, such as estimates of timing and amounts of future cash flows. Such estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument, nor do they consider the tax impact of the realization of unrealized gains or losses. In many cases, the fair value estimates cannot be substantiated by comparison to independent markets, nor can the disclosed value be realized in immediate settlement of the instruments. In evaluating the Company's management of interest rate, price and liquidity risks, the fair values of all assets and liabilities should be taken into consideration, not only those presented above. C-24 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- Derivative Financial Instruments Interest Rate Swaps Interest rate swaps are used to manage the interest rate risk in the Company's bond 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. The notional amount, carrying value and estimated fair value of the Company's open interest rate swaps as of December 31, 2003 were $250.0 million, $22.8 million and $22.8 million, respectively. The Company did not have interest rate swaps at December 31, 2002. 4. Net Investment Income Sources of net investment income were as follows: Year ended Year ended Year ended December 31, December 31, December 31, 2003 2002 2001 ------------------- -------------------- ------------------- (Millions) Fixed maturities $ 287.7 $ 185.6 $ 83.7 Mortgage loans 36.2 19.6 11.2 Policy loans 0.8 0.6 0.8 Short-term investments and cash equivalents 0.7 2.6 2.6 Other 16.1 0.4 0.6 ------------------- -------------------- ------------------- Gross investment income 341.5 208.8 98.9 Less: investment expenses 21.2 11.1 4.5 ------------------- -------------------- ------------------- Net investment $ 320.3 $ 197.7 $ 94.4 =================== ==================== ===================
5. Dividend Restrictions and Shareholder's Equity The Company's ability to pay dividends to its Parent is subject to the prior approval of insurance regulatory authorities for payment of dividends, which exceed an annual limit. The Company did not pay common stock dividends during 2003, 2002 and 2001. The Insurance Departments of the State of Delaware and the State of Iowa (the "Department") recognize as net income and capital and surplus those amounts determined in conformity with statutory accounting practices prescribed or permitted by the Department, which differ in certain respects from accounting principles generally accepted in the United States. Statutory net income (loss) was $7.6 million, $(303.0) million, and $(156.4) million for the years ended December 31, 2003, 2002 and 2001, respectively. Statutory capital and surplus was $733.9 million and $424.9 million as of December 31, 2003 and 2002, respectively. C-25 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- As of December 31, 2003, the Company does not utilize any statutory accounting practices, which are not prescribed by state regulatory authorities that, individually or in the aggregate, materially affect statutory capital and surplus. The Company maintains a $40.0 million revolving note facility with ING America Insurance Holdings, Inc. ("ING AIH"), a perpetual $75.0 million revolving note facility with Bank of New York and a $125.0 million revolving note facility with SunTrust Bank, which expires on July 30, 2004. 6. Capital Gains and Losses Realized capital gains or losses are the difference between the carrying value and sale proceeds of specific investments sold. Net realized capital (losses) gains on investments were as follows: Year ended Year ended Year ended December 31, December 31, December 31, (Millions) 2003 2002 2001 ----------------- ----------------- ------------------ Fixed maturities $ 99.7 $ 4.2 $ (4.9) Equity securities (1.0) - (1.6) Derivatives (134.9) - - ----------------- ----------------- ------------------ Pretax realized capital gains (losses) $ (36.2) $ 4.2 $ (6.5) ================= ================= ================== After-tax realized capital gains (losses) $ (23.5) $ 2.7 $ (4.2) ================= ================= ==================
Proceeds from the sale of total fixed maturities and the related gross gains and losses were as follows: Year ended Year ended Year ended December 31, December 31, December 31, (Millions) 2003 2002 2001 ----------------- ----------------- ------------------ Proceeds on sales $ 5,806.4 $ 6,281.7 $ 880.7 Gross gains 136.3 76.8 6.9 Gross losses 36.6 72.6 11.8
C-26 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- Changes in shareholder's equity related to changes in accumulated other comprehensive income were as follows: Year ended Year ended Year ended December 31, December 31, December 31, (Millions) 2003 2002 2001 ----------------- ----------------- ------------------ Fixed maturities $ (40.0) $ 204.0 $ 18.4 Equity securities 4.2 (3.9) - DAC/VOBA 131.4 (202.8) (8.4) ----------------- ----------------- ------------------ Subtotal 95.6 (2.7) 10.0 Increase in deferred income taxes 33.5 1.0 2.1 ----------------- ----------------- ------------------ Net changes in accumulated other comprehensive income (loss) $ 62.1 $ (1.7) $ 7.9 ================= ================= ==================
Shareholder's equity included the following accumulated other comprehensive income (loss): As of As of As of December 31, December 31, December 31, (Millions) 2003 2002 2001 ----------------- ----------------- ------------------ Net unrealized capital gains (losses): Fixed maturities $ 176.3 $ 216.3 $ 12.3 Equity securities 0.3 (3.9) - DAC/VOBA (77.8) (209.2) (6.4) ----------------- ----------------- ------------------ Subtotal 98.8 3.2 5.9 Less: deferred income taxes 34.6 1.1 2.1 ----------------- ----------------- ------------------ Net accumulated other comprehensive income $ 64.2 $ 2.1 $ 3.8 ================= ================= ==================
Changes in accumulated other comprehensive income related to changes in unrealized gains (losses) on securities, were as follows: Year ended Year ended Year ended December 31, December 31, December 31, (Millions) 2003 2002 2001 ----------------- ----------------- ------------------ Unrealized holding gains (losses) arising the year(1) $ (2.1) $ (8.7) $ 11.1 Less: reclassification adjustment for gains (losses) and other items included in net income(2) 64.2 7.0 (3.2) ----------------- ----------------- ------------------ Net unrealized gains (losses) on securities $ 62.1 $ (1.7) $ 7.9 ================= ================= ==================
C-27 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- (1) Pretax unrealized holding gains (losses) arising during the year were $(3.3) million, $(13.4) million and $17.1 million for the years ended December 31, 2003, 2002 and 2001, respectively. (2) Pretax reclassification adjustments for gains (losses) and other items included in net income were $98.8 million, $10.8 million and $(4.9) million for the years ended December 31, 2003, 2002 and 2001, respectively. 7. Severance In December 2001, ING announced its intentions to further integrate and streamline the U.S. based operations of ING Americas, (which includes the Company), in order to build a more customer-focused organization. During the first quarter 2003, the Company performed a detail analysis of its severance accrual. As part of this analysis, the Company corrected the initial planned number of people to eliminate from 252 to 228 (corrected from the 2002 Annual Report on Form 10K) and extended the date of expected completion for severance actions to June 30, 2003. Activity for the year ended December 31, 2003 within the severance liability and positions elimination related to such actions were as follows: Severance (Millions) Liability Positions --------------- --------------- Balance at December 31, 2002 $ 0.8 34 Payments (0.8) - Positions eliminated due to internal replacement jobs - (34) --------------- --------------- Balance at December 31, 2003 $ - - =============== ===============
8. Income Taxes In 2003 and 2002, ING USA joined in the filing of a consolidated federal income tax return with its former parent, Equitable Life and other affiliates. The Company had a tax allocation agreement with Equitable Life whereby the Company was charged for taxes it would have incurred were it not a member of the consolidated group and was credited for losses at the statutory tax rate. Prior to joining the Equitable Life consolidated group, the Company was the parent of a different consolidated group. At December 31, 2003, the Company has net operating loss carryforwards of approximately $206.5 million for federal income tax purposes which are available to offset future taxable income. If not used, these carryforwards will expire between 2014 and 2016. C-28 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- Income tax expense (benefit) from continuing operations included in the consolidated financial statements are as follows: Year ended Year ended Year ended December 31, December 31, December 31, (Millions) 2003 2002 2001 ----------------- ----------------- ----------------- Current taxes (benefits): Federal $ (10.3) $ (98.2) $ 0.6 ----------------- ----------------- ----------------- Total current taxes (benefits) (10.3) (98.2) 0.6 ----------------- ----------------- ----------------- Deferred taxes (benefits): Operations and capital loss carryforwards 53.3 (3.9) (55.3) Other federal deferred taxes (40.5) 89.6 54.8 ----------------- ----------------- ----------------- Total deferred taxes (benefits) 12.8 85.7 (0.5) ----------------- ----------------- ----------------- Total income tax expense $ 2.5 $ (12.5) $ 0.1 ================= ================= =================
Income taxes were different from the amount computed by applying the federal income tax rate to income from continuing operations before income taxes for the following reasons: Year ended Year ended, Year ended, December 31, December 31, December 31, (Millions) 2003 2002 2001 ----------------- ----------------- ----------------- Income before income taxes $ 63.9 $ (42.2) $ (3.9) Tax rate 35% 35% 35% ----------------- ----------------- ----------------- Income tax at federal statutory rate 22.4 (14.8) (1.4) Tax effect of: Goodwill amortization - - 1.0 Meals and entertainment 0.3 0.6 0.5 Dividend received deduction (10.8) - - Refinement of deferred tax balances (9.5) - - Other 0.1 1.7 - ----------------- ----------------- ----------------- Income taxes $ 2.5 $ (12.5) $ 0.1 ================= ================= =================
C-29 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities at December 31 are presented below: (Millions) 2003 2002 ----------------- ----------------- Deferred tax assets: Operations and capital loss carryforwards $ 72.3 $ 125.6 Future policy benefits 86.9 134.5 Goodwill 9.8 11.1 Investments 0.2 0.2 Other 12.2 - ----------------- ----------------- Total gross assets 181.4 271.4 ----------------- ----------------- Deferred tax liabilities: Unrealized gains on investments (61.9) (74.3) Deferred policy acquisition cost (232.6) (254.8) Value of purchased insurance in force (3.0) (5.0) Other (9.9) (17.1) ----------------- ----------------- Deferred tax liability before allowance (307.4) (351.2) ----------------- ----------------- Valuation allowance - - ----------------- ----------------- Net deferred income tax liability $ (126.0) $ (79.8) ================= =================
The Company establishes reserves for possible proposed adjustments by various taxing authorities. Management believes there are sufficient reserves provided for, or adequate defenses against any such adjustments. 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 subsidiaries and affiliates (excluding certain employees) are eligible to participate, including the Company's employees. 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) earn a benefit under a final average compensation formula. Subsequent to December 31, 2001, ING North America is responsible for all Retirement Plan liabilities. The costs allocated to the Company for its employees' participation in the Retirement Plan were $7.3 million for 2003, $3.4 million for 2002, and $1.2 million for 2001, respectively. C-30 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- Defined Contribution Plan ING North America sponsors the ING Savings Plan and ESOP (the "Savings Plan"). Substantially all employees of ING North America and its subsidiaries and affiliates (excluding certain employees) are eligible to participate, including the Company's employees. The Savings Plan is a tax-qualified profit sharing and stock bonus plan, which includes an employee stock ownership plan ("ESOP") component. Savings Plan benefits are not guaranteed by the PBGC. The Savings Plan allows eligible participants to defer into the Savings Plan a specified percentage of eligible compensation on a pre-tax basis. ING North America matches such pre-tax contributions, up to a maximum of 6% of eligible compensation. All matching contributions are subject to a 4-year graded vesting schedule (although certain specified participants are subject to a 5-year graded vesting schedule). All contributions made to the Savings Plan are subject to certain limits imposed by applicable law. Pre-tax charges of operations of the Company for the Savings Plan were $2.3 million in 2003, $2.3 million in 2002, and $0.9 million in 2001, respectively. Other Benefit Plans During 2003 and 2002, benefit charges to the Company related to the ING Americas Supplemental Executive Retirement Plan that covers certain employees of the Company were not significant. 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: Resources and services are provided to Security Life of Denver Insurance Company ("SLDIC) and Southland Life Insurance Company ("SLIC"). For the years ended December 31, 2003, 2002 and 2001 revenues for these services, which reduced general expenses incurred, were $4.8 million, $4.2 million and $0.3 million, respectively for SLDIC and $1.6 million, $1.0 million and $0.1 million, respectively for SLIC. Underwriting and distribution agreement with Directed Services, Inc. ("DSI"), for the variable insurance products issued by the Company. DSI 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, 2003, 2002 and 2001 commission expenses were incurred in the amounts of $253.8 million, $282.9 million and $229.7 million, respectively. Asset management agreement with ING Investment Management LLC ("IIM"), in which IIM provides asset management and accounting services. The Company records a fee, which is paid quarterly, based on the value of C-31 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- the assets under management. For the years ended December 31, 2003, 2002 and 2001 expenses were incurred in the amounts of $20.8 million, $11.0 million and $4.4 million, respectively. Service agreement with Equitable Life in which administrative and financial related services are provided. For the years ended December 31, 2003, 2002 and 2001 expenses were incurred in the amounts of $2.4 million, $0.6 million and $0.3 million, respectively. Managerial and supervisory services to DSI. The fee paid by DSI for these services is calculated as a percentage of average assets in the variable separate accounts. For the years ended December 31, 2003, 2002 and 2001 revenue for these services was $26.0 million, $23.7 million and $23.1 million, respectively. Advisory, computer, and other resources and services are provided to Equitable Life and United Life & Annuity Insurance Company ("ULAIC"). For the years ended December 31, 2003, 2002 and 2001 revenues for these services, which reduced general expenses incurred, totaled $10.8 million, $9.8 million and $8.2 million, respectively for Equitable Life and $0.3 million, $0.3 million and $0.4 million, respectively for ULAIC. Expense sharing agreements with ING AIH for administrative, management, financial, and information technology services, which were approved in 2001. For the years ended December 31, 2003 and 2002, ING USA incurred expenses of $30.2 million and $41.0 million, respectively. Guaranty agreement with Equitable Life. In consideration of an annual fee, payable June 30, Equitable Life guarantees that it will make funds available, if needed, to pay the contractual claims made under the provisions of ING USA's life insurance and annuity contracts. The agreement is not, and nothing contained therein or done pursuant thereto by Equitable Life shall be deemed to constitute, a direct or indirect guaranty by Equitable Life of the payment of any debt or other obligation, indebtedness, or liability, of any kind or character whatsoever, of ING USA. The agreement does not guarantee the value of the underlying assets held in separate accounts in which funds of variable life insurance and variable annuity policies have been invested. The calculation of the annual fee is based on risk based capital. No amounts were payable under this agreement as of December 31, 2003, 2002 and 2001. Reinsurance Agreements ING USA participates in a modified coinsurance agreement with Equitable Life, covering a considerable portion of ING USA's variable annuities issued on or after January 1, 2000, excluding those with an interest rate guarantee. The financial statements are presented net of the effects of the agreement. Under this agreement, ING USA received a net reimbursement of expenses and charges of $132.5 million, $100.9 million and $224.5 million for the years ended December 31, 2003, 2002 and 2001, respectively. This was offset by a decrease in policy acquisition costs deferred of $182.1 million, $143.5 million and $257.5 million, respectively, for the same periods. At December 31, 2003, 2002 and 2001, ING USA also had a payable to Equitable Life of $34.5 million, $7.1 million, and $22.6 million, respectively, due to the C-32 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- overpayment by Equitable Life of the cash settlement for the modified coinsurance agreement. ING USA entered into a reinsurance agreement with Security Life of Denver International, Ltd. ("SLDI"), an affiliate, covering variable annuity minimum guaranteed death benefits and minimum guaranteed living benefits of variable annuities issued after January 1, 2000. In March 2003, the Company amended its reinsurance agreement with SLDI. Under this amendment, the Company terminated the reinsurance agreement for all inforce and new business and recaptured all inforce business reinsured under the reinsurance agreement between the Company and SLDI retroactive to January 1, 2003 and the Company reduced its reinsurance recoverable related to these liabilities by $150.1 million. On March 28, 2003, SLDI transferred assets to the Company in the amount of $185.6 million. The difference in amounts transferred on March 28, 2003 and the reduction of the reinsurance recoverables as of January 1, 2003 reflects adjustments on the investment of the reinsurance recoverable as of January 1, 2003 reflects adjustments on the investment income on the assets and letter of credit costs between January 1, 2003 and the date of the asset transfer. It also encompasses the net effect of a recapture fee paid in the amount of $5.0 million offset by the receipt of a $24.1 million negative ceding commission. The net impact of which was deferred in policy acquisition costs and is being amortized over the period of estimated future profits. Reciprocal Loan Agreement ING USA maintains a reciprocal loan agreement with ING AIH, a Delaware corporation and affiliate, to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Under this agreement, which expires December 31, 2007, ING USA and ING AIH can borrow up to $40.0 million from one another. Prior to lending funds to ING AIH, ING USA must obtain the approval from the Department of Insurance of the State of Delaware. Interest on any ING USA borrowings is charged at the rate of ING AIH's cost of funds for the interest period plus 0.15%. Interest on any ING AIH borrowings is charged at a rate based on the prevailing interest rate of U.S. commercial paper available for purchase with a similar duration. Under this agreement, ING USA incurred interest expense of $66,087, $33,000, and $26,000 for the years ended December 31, 2003, 2002 and 2001, respectively. At December 31, 2003, 2002 and 2001, ING USA did not have any borrowings or receivables from ING AIH under this agreement. Surplus Notes ING USA issued multiple 30-year surplus notes (see below table). Payment of the notes and related accrued interest is subordinate to payments due to policyholders, claimant and beneficiary claims, as well as debts owed to all other classes of debtors, other than surplus note holders, of ING USA. Any payment of principal and/or interest made is subject to the prior C-33 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- approval of the Delaware Insurance Commissioner. Interest expense for the years ended December 31: (Millions) Surplus Maturity Note Amount Affiliate Date 2003 2002 2001 8.2% 50.0 *Equitable Life 12/29/2029 - 2.0 4.1 8.0% 35.0 Security Life of Denver 12/7/2029 2.8 2.8 2.8 7.8% 75.0 Equitable Life 9/29/2029 5.8 5.8 5.8 7.3% 60.0 Equitable Life 12/29/2028 4.4 4.4 4.4 8.3% 25.0 *Equitable Life 12/17/2026 - 1.0 2.1
*Surplus notes redeemed June 28, 2002. Capital Transactions During 2003, 2002 and 2001, ING USA received capital contributions of $230.0 million, $356.3 million and $196.8 million respectively. 11. Reinsurance At December 31, 2003, ING USA had reinsurance treaties with four unaffiliated reinsurers and two affiliated reinsurers covering a significant portion of the mortality risks and guaranteed death and living benefits under its variable contracts. ING USA 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 $79.3 million and $90.7 million at December 31, 2003 and 2002, respectively. At December 31, 2003 and 2002, the Company had net receivables of $13.0 million and $196.9 million, respectively for reinsurance claims, reserve credits, or other receivables from these reinsurers. At December 31, 2003 and 2002, respectively, these net receivables were comprised of the following: $15.0 million and $36.7 million for claims recoverable from reinsurers; $5.8 million and $6.3 million payable for reinsurance premiums; $(20.2) million and $137.2 million for reserve credits; and $21.1 million and $24.0 million for reinsured surrenders and allowances due from an unaffiliated reinsurer. Included in the accompanying consolidated financial statements, excluding the modified coinsurance agreements, are net considerations to reinsurers of $8.9 million, $50.8 million and $30.3 million and net policy benefits recoveries of $34.1 million, $49.5 million and $21.8 million for the years ended December 21, 2003, 2002 and 2001, respectively. ING USA participates in a modified coinsurance agreement with an unaffiliated reinsurer. The accompanying consolidated financial statements are presented net of the effects of the treaty which increased (decreased) income by $(1.9) million, $(2.9) million and $(0.5) million for the years ended December 31, 2003, 2002 and 2001, respectively. C-34 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- 12. Commitments and Contingent Liabilities Leases For the year ended December 31, 2003 and 2002 rent expense for leases was $2.6 million and $2.4 million, respectively. The future net minimum payments under noncancelable leases for the years ended December 31, 2004 through 2008 are estimated to be $2.2 million, $2.3 million, $2.4 million, $2.4 million and $2.4 million, respectively, and $3.4 million, thereafter. The Company pays substantially all expenses associated with its leased and subleased office properties. Expenses not paid directly by the Company are paid for by an affiliate and allocated back to the Company. Commitments Through the normal course of investment operations, the Company commits to either purchase or sell securities, commercial mortgage loans or money market instruments at a specified future date and at a specified price or yield. The inability of counterparties to honor these commitments may result in either higher or lower replacement cost. Also, there is likely to be a change in the value of the securities underlying the commitments. At December 31, 2003 and 2002, the Company had off-balance sheet commitments to purchase investments equal to their fair value of $25.2 million and $77.0 million, respectively. Litigation The Company is a party to threatened or pending lawsuits arising from the normal conduct of business. Due to the climate in insurance and business litigation, 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, in light of existing insurance, reinsurance and established reserves, it is the opinion of management that the disposition of such lawsuits will not have a materially adverse effect on the Company's operations or financial position. Other Regulatory Matters Like many financial services companies, certain U.S. affiliates of ING Groep N.V. have received informal and formal requests for information since September 2003 from various governmental and self-regulatory agencies in connection with investigations related to mutual funds and variable insurance products. ING has cooperated fully with each request. In addition to responding to regulatory requests, ING management initiated an internal review of trading in ING insurance, retirement, and mutual fund products. The goal of this review has been to identify whether there have C-35 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- been any instances of inappropriate trading in those products by third parties or by ING investment professionals and other ING personnel. This internal review is being conducted by independent special counsel and auditors. Additionally, ING reviewed its controls and procedures in a continuing effort to deter improper frequent trading in ING products. ING's internal reviews related to mutual fund trading are continuing. The internal review has identified several arrangements allowing third parties to engage in frequent trading of mutual funds within our variable insurance and mutual fund products, and identified other circumstances where frequent trading occurred despite measures taken by ING intended to combat market timing. Most of the identified arrangements were initiated prior to ING's acquisition of the businesses in question. In each arrangement identified, ING has terminated the inappropriate trading, taken steps to discipline or terminate employees who were involved, and modified policies and procedures to deter inappropriate activity. While the review is not completed, management believes the activity identified does not represent a systemic problem in the businesses involved. These instances included agreements (initiated in 1998) that permitted one variable life insurance customer of Reliastar Life Insurance Company ("Reliastar") to engage in frequent trading, and to submit orders until 4pm Central Time, instead of 4pm Eastern Time. Reliastar was acquired by ING in 2000. The late trading arrangement was immediately terminated when current senior management became aware of it in 2002. ING believes that no profits were realized by the customer from the late trading aspect of the arrangement. In addition, the review has identified five arrangements that allowed frequent trading of funds within variable insurance products issued by Reliastar and by ING USA; and in certain ING Funds. ING entities did not receive special benefits in return for any of these arrangements, which have all been terminated. The internal review also identified two investment professionals who engaged in improper frequent trading in ING Funds. ING will reimburse any ING Fund or its shareholders affected by inappropriate trading for any profits that accrued to any person who engaged in improper frequent trading for which ING is responsible. Management believes that the total amount of such reimbursements will not be material to ING or its U.S. business. 13. Subsequent Event On January 1, 2004, Equitable Life, USG, and ULA, merged with and into the Company. Also on January 1, 2004, immediately after the merger, the Company changed its name to ING USA Annuity and Life Insurance Company. As of the merger date, the Merger Companies ceased to exist and were succeeded by ING USA. The merger was accounted for based on the pooling-of-interests method. FAS 141, excludes transfers of net assets or exchanges of shares between entities under common control, and notes that certain provisions under APB 16, provide a source of guidance for such transactions. C-36 ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Notes to Consolidated Financial Statements -------------------------------------------------------------------------------- Prior to the merger date, the Merger Companies were affiliated companies of ING USA and indirect, wholly-owned subsidiaries of ING. Equitable Life was domiciled in Iowa and offered various insurance products, including deferred and immediate annuities, variable annuities, and interest sensitive and traditional life insurance. ULA was also domiciled in Iowa and primarily offered annuity related insurance products, as well as life and health insurance that was ceded to other insurers. USG was domiciled in Oklahoma and offered various insurance products, including deferred fixed annuities, immediate annuities, and interest-sensitive life insurance. A Form 8-K for ING USA describing the merger, was filed on January 4, 2004 and includes unaudited pro forma condensed consolidated financial information as of, and for the periods ended, September 30, 2003 and 2002, and December 31, 2002, 2001, and 2000. Revenue and net income for the period ended December 31, 2003, had the pooling been consummated at the date of the financial statements, is $1,509.5 million and $57.3 million, respectively (unaudited). C-37 QUARTERLY DATA (UNAUDITED) (Millions) 2003 First Second Third Fourth ---- --------------- --------------- ---------------- ---------------- Total revenue $ 173.1 $ 150.3 $ 159.8 $ 130.9 --------------- --------------- ---------------- ---------------- Income (loss) before income taxes (12.4) 60.3* (1.0) 17.0 Income tax expense (benefit) (4.3) 19.4 (7.8) (4.8) --------------- --------------- ---------------- ---------------- Net income (loss) $ (8.1) 40.9 $ 6.8 $ 21.8 =============== =============== ================ ================ (Millions) 2002 First Second Third Fourth ---- --------------- --------------- ---------------- ---------------- Total revenue previously reported $ 69.4 $ 89.2 $ 141.4 $ 109.4 Adjustment (see Note 1) 12.6 12.6 11.1 5.6 --------------- --------------- ---------------- ---------------- Total revenue restated 82.0 101.8 152.5 115.0 --------------- --------------- ---------------- ---------------- Income (loss) before income taxes (3.2) (16.0) (60.2) 37.2 Income tax expense (benefit) (1.0) (5.5) (19.2) 13.2 --------------- --------------- ---------------- ---------------- Income (loss) before cumulative effect of change in accounting principle (2.2) (10.5) (41.0) 24.0 --------------- --------------- ---------------- ---------------- Cumulative effect of change in accounting principle (135.3) - - - --------------- --------------- ---------------- ---------------- Net income (loss) $ (137.5) $ (10.5) $ (41.0) $ 24.0 =============== =============== ================ ================
* The Amendment No. 1 on Form 10-Q/A was filed with respect to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2003, filed with the Securities and Exchange Commission on August 12, 2003. The amendment No. 1 reflected an adjustment to the Company's net income for the six months ended June 30, 2003 and did not impact results for the three months ended June 30, 2003. The adjustment for the six months ended June 30, 2003 related to a transposition error in the line item "Policy acquisition costs deferred," with a corresponding tax effect in the line item "Income tax expense (Benefit)" in Part 1, Item I, Condensed Consolidated Statements of Income. Consequently, Part I, Item 2, Management's Narrative Analysis of the Results of Operations and Financial Condition, was updated to reflect these adjustments. Additionally, in accordance with Regulation S-X, the Certifications required by Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002 were attached as exhibits to the 10-Q/A in Part II, Item 6, Exhibits and Reports on Form 8-K. The Amendment No. 1 did not contain updates to reflect any events occurring after the original August 12, 2003 filing of the Company's Form 10-Q for the quarterly period ended June 30, 2003. All information contained in the Amendment No. 1 was subject to updating and supplementing as provided in the Company's reports filed with the Securities and Exchange Commission, as may be amended, for periods subsequent to the date of the original filing of the Form 10-Q for the quarterly period ended June 30, 2003. C-38 Financial Statements and Exhibits (a) Financial Statements of Businesses Acquired Included are the financial statements of ELIC (the survivor to the merger with Ameribest Life Insurance Company, an affiliate, on January 1, 2003), USG, and ULA, prepared in conformity with statutory accounting principles ("SAP") (financial statements for these entities were not historically prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP")). These statements include audited statutory basis financial statements for the years ended December 31, 2003 and 2002. See (c) Exhibits for financial statements. (b) Pro Forma Financial Information in Accordance with Accounting Principles Generally Accepted in the United States of America Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2003 Unaudited Pro Forma Condensed Consolidated Statements of Income for the Years Ended December 31, 2003, 2002 and 2001. Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements as of December 31, 2003, and for the periods ended December 31, 2003, 2002 and 2001. The following unaudited pro forma condensed consolidated financial information is based on the historical financial statements of ING USA, ELIC, USG, and ULA, and has been prepared to illustrate the effects of the merger of ELIC, USG, and ULA, with and into Golden. The unaudited pro forma condensed consolidated financial information is presented for illustration purposes only, and is not necessarily indicative of the operating results or financial position that would have occurred if the merger had been consummated, nor is it necessarily indicative of future operating results or financial position of the consolidated company. 1 Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2003 -------------------------------------------------------------------------------- Pro Forma Pro Forma (Millions) ING USA ELIC USG ULA Adjustments Consolidated ------------------------------------------------------------------------------- Assets Investments: Fixed maturities, available for sale, at fair value $ 5,223.3 $ 3,873.7 $ 6,406.5 $ 594.4 $ - $16,097.9 Equity securities, at fair value: Common stock 5.6 18.1 - - - 23.7 Preferred stock - 0.4 1.3 - - 1.7 Investment in mutual funds - 94.9 - - - 94.9 Investment in subsidiaries - 1,799.0 - - (1,799.0)(1) - Mortgage loans on real estate 847.6 1,027.2 1,477.0 36.8 - 3,388.6 Real estate - 1.8 2.7 - - 4.5 Policy loans 17.5 126.5 32.2 0.9 - 177.1 Short-term investments 17.7 - 0.3 - - 18.0 Other investments - 237.9 (72.3) 7.7 (135.0)(2) 38.3 ------------------------------------------------------------------------------- Total investments 6,111.7 7,179.5 7,847.7 639.8 (1,934.0) 19,844.7 Cash and cash equivalents 17.9 32.3 34.0 3.7 - 87.9 Accrued investment income 65.4 44.1 68.6 7.6 - 185.7 Reinsurance recoverable 13.0 2.1 0.3 - - 15.4 Receivable for securities sold 10.2 0.1 0.3 - - 10.6 Deferred policy acquisition costs 835.3 825.1 162.9 3.4 - 1,826.7 Value of business acquired 8.5 64.3 34.4 4.3 - 111.5 Due from affiliates 4.2 - - - - 4.2 Other assets 14.7 8.0 (2.4) 0.9 - 21.2 Assets held in separate accounts 17,112.6 1,044.4 - 63.2 - 18,220.2 ------------------------------------------------------------------------------- Total assets $ 24,193.5 $ 9,199.9 $ 8,145.8 $ 722.9 $(1,934.0) $ 40,328.1 =============================================================================== Liabilities and Shareholder's Equity Policy liabilities and accruals: Future policy benefits and claims reserves $ 5,277.3 $ 5,644.7 $ 7,298.2 $ 560.8 $ - $ 18,781.0 Notes to affiliates 170.0 - - - (135.0)(2) 35.0 Due to affiliates - (54.4) 0.2 1.4 - (52.8) Payables for securities purchased - - - - - - Borrowed money 120.1 177.0 309.8 - - 606.9 Current income taxes 3.9 18.4 (2.3) (0.6) - 19.4 Deferred income taxes 126.0 (54.8) 10.6 (2.8) - 79.0 Other liabilities 31.0 94.4 82.9 1.8 - 210.1 Liabilities related to separate accounts 17,112.6 1,044.4 - 63.2 - 18,220.2 ------------------------------------------------------------------------------- Total liabilities 22,840.9 6,869.7 7,699.4 623.8 (135.0) 37,898.8 ------------------------------------------------------------------------------- Shareholder's equity Common stock 2.5 5.0 2.5 8.4 (15.9)(1)(3) 2.5 Additional paid-in capital 1,358.4 3,600.3 1,468.2 188.7 (2,815.7)(1)(3) 3,799.9 Accumulated other comprehensive income 64.2 138.6 48.2 5.4 (112.4)(1) 144.0 Retained deficit (72.5) (1,413.7) (1,072.5) (103.4) 1,145.0 (1) (1,517.1) ------------------------------------------------------------------------------- Total shareholder's equity 1,352.6 2,330.2 446.4 99.1 (1,799.0) 2,429.3 ------------------------------------------------------------------------------- Total liabilities and shareholder's equity $ 24,193.5 $ 9,199.9 $ 8,145.8 $ 722.9 $(1,934.0) $ 40,328.1 ===============================================================================
2 Unaudited Pro Forma Condensed Consolidated Statement of Income for the Year Ended December 31, 2003 -------------------------------------------------------------------------------- Pro Forma Pro Forma (Millions) ING USA ELIC USG ULA Adjustments Consolidated -------------- ------------- -------------- -------------- -------------- -------------- Revenue: Premiums $ - $ 26.7 $ 0.8 $ - $ - $ 27.5 Fee income 330.2 47.8 16.0 2.2 - 396.2 Net investment income 320.3 314.3 452.5 34.0 (10.2)(2) 1,110.9 Net realized capital gains (losses) (36.2) (0.5) (3.7) 11.0 - (29.4) Other income (loss) (0.2) 4.5 (1.1) 0.6 - 3.8 -------------- ------------- -------------- -------------- -------------- -------------- Total revenue 614.1 392.8 464.5 47.8 (10.2) 1,509.0 -------------- ------------- -------------- -------------- -------------- -------------- Benefits, losses and expenses: Benefits: Interest credited and other benefits to policyholders 320.1 306.6 370.7 23.7 - 1,021.1 Underwriting, acquisition, and insurance expenses: General expenses 123.8 58.2 37.6 3.3 - 222.9 Commissions 250.3 37.2 48.1 0.5 - 336.1 Policy acquisition costs deferred (210.8) (219.5) (61.4) (0.4) - (492.1) Amortization of deferred policy acquisition costs and value of business acquired 184.7 99.4 57.8 6.1 - 348.0 Other: Expense and charges reimbursed under modified coinsurance agreements (131.6) 132.5 - - - 0.9 Interest expense 13.7 6.5 5.7 - (10.2)(2) 15.7 -------------- ------------- -------------- -------------- -------------- -------------- Total benefits, losses and expenses 550.2 420.9 458.5 33.2 (10.2) 1,452.6 -------------- ------------- -------------- -------------- -------------- -------------- Income (loss) before income taxes 63.9 (28.1) 6.0 14.6 - 56.4 Income tax expense (benefit) 2.5 (10.5) 2.1 5.1 - (0.8) Equity in subsidiaries - 65.3 - - (65.3)(4) - -------------- ------------- -------------- -------------- -------------- -------------- Net income (loss) $ 61.4 $ 47.7 $ 3.9 $ 9.5 $ (65.3) $ 57.2 ============== ============= ============== ============== ============== ==============
3 Unaudited Pro Forma Condensed Consolidated Statement of Income for the Year Ended December 31, 2002 -------------------------------------------------------------------------------- Pro Forma Pro Forma (Millions) ING USA ELIC USG ULA Adjustments Consolidated ------------ ------------- ------------ ------------ -------------- -------------- Revenue: Premiums $ - $ 30.2 $ 1.1 $ - $ - $ 31.3 Fee income 204.0 54.0 20.0 3.7 - 281.7 Net investment income 197.7 249.7 416.6 44.1 (12.2)(2) 895.9 Net realized capital gains (losses) 4.2 (43.7) (65.7) 2.1 - (103.1) Other income (loss) 3.5 10.3 2.4 0.1 - 16.3 ------------ ------------- ------------ ------------ -------------- -------------- Total revenue 409.4 300.5 374.4 50.0 (12.2) 1,122.1 ------------ ------------- ------------ ------------ -------------- -------------- Benefits, losses and expenses: Benefits: Interest credited and other benefits to policyholders 276.5 246.0 370.5 26.8 - 919.8 Underwriting, acquisition, and insurance expenses: General expenses 139.7 46.5 33.0 1.0 - 220.2 Commissions 288.7 41.5 71.7 0.6 - 402.5 Policy acquisition costs deferred (292.2) (186.6) (80.2) - - (559.0) Amortization of deferred policy acquisition costs and value of business acquired 127.8 126.0 44.5 3.8 - 302.1 Other: Expense and charges reimbursed under modified coinsurance agreements (104.9) 100.9 - - - (4.0) Interest expense 16.0 6.9 6.1 - (12.2)(2) 16.8 ------------ ------------- ------------ ------------ -------------- -------------- Total benefits, losses and expenses 451.6 381.2 445.6 32.2 (12.2) 1,298.4 ------------ ------------- ------------ ------------ -------------- -------------- Income (loss) before income taxes (42.2) (80.7) (71.2) 17.8 - (176.3) Income tax expense (benefit) (12.5) (29.0) (24.9) 6.2 - (60.2) Equity in subsidiaries - (76.0) - - 76.0(4) - ------------ ------------- ------------ ------------ -------------- -------------- Income (loss) before cumulative effect of change in accounting principle $ (29.7) $ (127.7) $ (46.3) $ 11.6 $ 76.0 $ (116.1) ============ ============= ============ ============ ============== ==============
4 Unaudited Pro Forma Condensed Consolidated Statement of Income for the Year Ended December 31, 2001 -------------------------------------------------------------------------------- Pro Forma Pro Forma (Millions) ING USA ELIC USG ULA Adjustments Consolidated -------------- -------------- ------------- -------------- -------------- -------------- Revenue: Premiums $ - $ 33.2 $ 1.1 $ - $ - $ 34.3 Fee income 188.9 56.7 23.9 4.8 - 274.3 Net investment income 94.4 234.7 481.0 54.1 (14.3)(2) 849.9 Net realized capital gains (losses) (6.5) (32.7) (55.5) 1.3 - (93.4) Other income (loss) - 9.4 1.4 - - 10.8 -------------- -------------- ------------- -------------- -------------- -------------- Total revenue 276.8 301.3 451.9 60.2 (14.3) 1,075.9 -------------- -------------- ------------- -------------- -------------- -------------- Benefits, losses and expenses: Benefits: Interest credited and other benefits to policyholders 209.0 179.2 356.1 38.9 - 783.2 Underwriting, acquisition, and insurance expenses: General expenses 119.9 94.7 23.3 3.3 - 241.2 Commissions 232.4 51.0 35.4 0.7 - 319.5 Policy acquisition costs deferred (128.2) (312.6) (47.1) (0.6) - (488.5) Amortization of deferred policy acquisition costs and value of business acquired 49.6 55.6 65.3 4.4 - 174.9 Goodwill 4.2 13.0 19.1 1.1 - 37.4 Other: Expense and charges reimbursed under modified coinsurance agreements (225.6) 224.6 - - - (1.0) Interest expense 19.4 7.3 10.8 0.3 (14.3)(2) 23.5 -------------- -------------- ------------- -------------- -------------- -------------- Total benefits, losses and expenses 280.7 312.8 462.9 48.1 (14.3) 1,090.2 -------------- -------------- ------------- -------------- -------------- -------------- Income (loss) before income taxes (3.9) (11.5) (11.0) 12.1 - (14.3) Income tax expense (benefit) 0.1 0.5 2.8 4.6 - 8.0 Equity in subsidiaries - (17.8) - - 17.8(4) - -------------- -------------- ------------- -------------- -------------- -------------- Net income (loss) $ (4.0) $ (29.8) $ (13.8) $ 7.5 $ 17.8 $ (22.3) ============== ============== ============= ============== ============== ==============
5 1. Pro Forma Consolidation Statement of Financial Accounting Standards No. 141, Business Combinations ("FAS 141"), excludes transfers of net assets or exchanges of shares between entities under common control, and notes that certain provisions under Accounting Principles Board Opinion No. 16, Business Combinations ("APB 16"), provide a source of guidance for such transactions. In accordance with APB 16, financial information of the combined entity is presented as if the entities had been combined for the full year, and all comparative financial statements are restated and presented as if the entities had previously been combined, in a manner similar to a pooling-of-interests. The unaudited pro forma condensed consolidated financial statements have been prepared in a manner similar to a pooling-of-interests, in accordance with the provisions of APB 16 in order to present the condensed financial position and results of operations of ING USA Annuity and Life Insurance Company ("ING USA"), Equitable Life Insurance Company of Iowa ("ELIC"), United Life & Annuity Insurance Company ("ULA"), and USG Annuity & Life Company ("USG"), as if the entities had previously been combined. The unaudited pro forma condensed consolidated balance sheet and income statements give effect to the consolidation transaction as if it had occurred on December 31, 2003 and January 1, 2000, respectively. Following is a description of the pro forma adjustments that have been made to the financial statements. All pro forma adjustments are elimination entries related to intercompany transactions between the entities, as required by accounting principles generally accepted in the United States of America. There were no other pro forma adjustments. (1) Prior to the merger, ING USA and USG were wholly owned subsidiaries of ELIC. The pro forma adjustment eliminates the ELIC investment in ING USA and USG subsidiaries. (2) Prior to the merger, ING USA had an outstanding surplus note payable to ELIC. The pro forma adjustment eliminates the surplus note and related interest between ING USA and ELIC. (3) All of the shares of capital stock of ELIC, USG, and ULA, will be canceled and retired, and ceased to exist, as of the merger with ING USA. (4) Prior to the merger, ING USA and USG were wholly owned subsidiaries of ELIC. The pro forma adjustment eliminates the ELIC equity in ING USA and USG income. 6 2. Accounting for Goodwill and Intangible Assets The cumulative effect of change in accounting principle for the unaudited pro forma condensed consolidated income statements for the year ended December 31, 2002, reflects the adoption of Financial Accounting Standards Board Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, ("FAS 142"). During 2002, ING USA and the Merger Companies adopted FAS 142. The adoption of this standard resulted in an impairment loss of $1,298.5 million in 2002. This impairment loss represented the entire carrying amount of goodwill, net of accumulated amortization, and is recorded as a change in accounting principle for year ended December 31, 2002. Effective January 1, 2002, ING USA and the Merger Companies applied the non-amortization provision (net of tax) of the new standard, which resulted in an increase in net income of $37.0 million for the twelve months ended December 31, 2002. Had ING USA and the Merger Companies been accounting for goodwill under FAS 142 for all periods presented, the Company's net income (loss) would have been as follows: Year ended December 31, (Millions) 2001 -------------- Pro forma consolidated net income (loss) $ (22.3) Add back goodwill amortization, net of tax 37.0 -------------- Adjusted pro forma consolidated net income $ 14.7 ==============
3. Statutory Merger On January 1, 2003, Ameribest Life Insurance Company ("AMB"), an affiliated life insurance company domiciled in Georgia, was merged with ELIC. As FAS 141 excludes transfers of net assets or exchanges of shares between entities under common control, the merger was based on certain provisions under APB 16, which provide a source of guidance for such transactions. The unaudited pro forma condensed consolidated financial statements have been prepared in a manner similar to a pooling-of-interests, in accordance with the provisions of APB 16, in order to present the condensed results of operations of ELIC and AMB as if the entities had previously been combined. The pro forma condensed consolidated income statements give effect to the consolidation transaction as if it had occurred on January 1, 2001. (c) Exhibits Reference Number Page Exhibit Description 99.1 1-40 Audited statutory basis financial statements for the years ended December 31, 2003 and 2002, for Equitable Life Insurance Company of Iowa, including Report of Independent Auditors. 99.2 1-27 Audited statutory basis financial statements for the year ended December 31, 2002, for Ameribest Life Insurance Company, including Report of Independent Auditors. 99.3 1-33 Audited statutory basis financial statements for the years ended December 31, 2003 and 2002, for USG Annuity & Life Company, including Report of Independent Auditors. 99.4 1-32 Audited statutory basis financial statements for the years ended December 31, 2003 and 2002, for United Life & Annuity Insurance Company, including Report of Independent Auditors. Exhibit 99.1 Report of Independent Auditors Board of Directors and Stockholder ING USA Annuity and Life Insurance Company We have audited the accompanying statutory basis balance sheets of Equitable Life Insurance Company of Iowa ("the Company" which, effective January 1, 2004, merged with an affiliate ING USA Annuity and Life Insurance Company, an indirect wholly owned subsidiary of ING America Insurance Holdings, Inc.) as of December 31, 2003 and 2002, and the related statutory basis statements of operations, changes in capital and surplus, and cash flows for the years then ended. 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 auditing standards generally accepted in the 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As described in Note 1 to the financial statements, the Company presents its financial statements in conformity with accounting practices prescribed or permitted by the Iowa Division of Regulatory Agencies of the State of Iowa, Iowa Insurance Division, which practices differ from accounting principles generally accepted in the United States. The variances between such practices and accounting principles generally accepted in the United States are described in Note 1. The effects on the financial statements of these variances are not reasonably determinable but are presumed to be material. In our opinion, because of the effects of the matter described in the preceding paragraph, the financial statements referred to above do not present fairly, in conformity with accounting principles generally accepted in the United States, the financial position of Equitable Life Insurance Company of Iowa at December 31, 2003 and 2002 or the results of its operations or its cash flows for the years then ended. 1 However, in our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Equitable Life Insurance Company of Iowa at December 31, 2003 and 2002, and the results of its operations and its cash flows for the years then ended, in conformity with accounting practices prescribed or permitted by the Iowa Insurance Division. /s/ Ernst & Young March 22, 2004 2 Equitable Life Insurance Company of Iowa Balance Sheets - Statutory Basis December 31 2003 2002 ----------------------------------- (In Thousands) Admitted assets Cash and invested assets: Bonds $ 3,758,375 $ 3,207,349 Preferred stocks 441 441 Common stocks 112,959 120,285 Subsidiaries 1,073,826 811,079 Mortgage loans 1,024,031 864,597 Real estate, less accumulated depreciation (2003-$0; 2002-$339) 1,800 3,651 Contract loans 126,488 130,790 Other invested assets 247,753 180,120 Cash and short-term investments 136,325 28,002 ----------------------------------- Total cash and invested assets 6,481,998 5,346,314 Deferred and uncollected premiums, less loading (2003- $801, 2002- $785) 63,386 64,607 Accrued investment income 44,056 47,007 Reinsurance balances recoverable 1,805 785 Data processing equipment, less accumulated depreciation (2003-$6,791; 2002-$5,459) 58 186 Indebtedness from related parties 5,015 108,320 Federal income tax recoverable (including $20,472 and $571 net deferred tax assets at December 31, 2003 and 2002, respectively) 20,472 53,912 Separate account assets 1,044,925 959,377 Other assets 442,871 303,168 ----------------------------------- Total admitted assets $ 8,104,586 $ 6,883,676 ===================================
The accompanying notes are an integral part of these financial statements. 3 Equitable Life Insurance Company of Iowa Balance Sheets - Statutory Basis December 31 2003 2002 ---------------------------------- (In Thousands, except share amounts) Liabilities and capital surplus Liabilities: Policy and contract liabilities: Life and annuity reserves $ 4,818,747 $ 4,294,323 Deposit type contracts 620,717 190,201 Policyholders' funds 252 310 Dividends payable 16,905 23,795 Unpaid claims 1,195 2,227 ---------------------------------- Total policy and contract liabilities 5,457,816 4,510,856 Accounts payable and accrued expenses 36,740 31,714 Indebtedness to related parties 133,258 66,265 Asset valuation reserve 38,410 26,123 Interest maintenance reserve 29,987 15,472 Federal income taxes payable 18,417 - Borrowed money, net 176,983 148,996 Other liabilities (13,244) (19,337) Separate account liabilities 1,044,925 959,377 ---------------------------------- Total liabilities 6,923,292 5,739,466 Capital and surplus: Common stock: $1.00 par value; authorized 7,500,000 shares, issued and outstanding 5,000,300 shares 5,000 5,000 Paid in and contributed surplus 1,236,632 1,236,632 Unassigned deficit (60,338) (97,422) ---------------------------------- Total capital and surplus 1,181,294 1,144,210 ---------------------------------- Total liabilities and capital and surplus $ 8,104,586 $ 6,883,676 ==================================
The accompanying notes are an integral part of these financial statements. 4 Equitable Life Insurance Company of Iowa Statements of Operations - Statutory Basis Year ended December 31 2003 2002 ---------------------------------- (In Thousands) Premiums and other revenues: Life, annuity, and accident and health premiums $ 2,133,311 $ 1,839,818 Policy proceeds and dividends left on deposit 2,026 1,840 Net investment income 307,296 247,193 Amortization of interest maintenance reserve (2,855) (1,930) Commissions, expenses paid and other miscellaneous expenses 86 179 Other income 17,534 23,058 ---------------------------------- Total premiums and other revenues 2,457,398 2,110,158 Benefits paid or provided: Death benefits 41,587 44,630 Annuity benefits 114,717 124,590 Surrender benefits 683,949 692,942 Interest on policy or contract funds 10,524 5,440 Other benefits 6,398 7,943 Increase in life, annuity, and accident and health reserves 1,433,202 1,201,144 Net transfers from separate accounts (121,443) (135,686) ---------------------------------- Total benefits paid or provided 2,168,934 1,941,003 Insurance expenses: Commissions 206,214 158,533 General expenses 54,442 44,751 Insurance taxes, licenses and fees, excluding federal income taxes 2,581 3,824 Other deductions 2,281 756 ---------------------------------- Total insurance expenses 265,518 207,864 ---------------------------------- Gain (loss) from operations before policyholder dividends, federal income taxes and net realized capital gains (losses) 22,946 (38,709) Dividends to policyholders 13,683 23,406 ---------------------------------- Gain (loss) from operations before federal income taxes and net realized capital gains (losses) 9,263 (62,115) Federal income taxes 26,865 37,810 ---------------------------------- Loss from operations before net realized capital gains (losses) (17,602) (99,925) Net realized capital gains (losses) net of income tax expense (benefit) 2003 - $(9,263) and 2002 - $(10,546); and excluding net transfers to the interest maintenance reserve 2003 - $11,660 and 2002 - $3,157 2,597 (22,521) ---------------------------------- Net loss $ (15,005) $ (122,446) ==================================
The accompanying notes are an integral part of these financial statements. 5 Equitable Life Insurance Company of Iowa Statements of Changes in Capital and Surplus - Statutory Basis Year ended December 31 2003 2002 ---------------- ---------------- (In Thousands) Common stock: Balance at beginning and end of year $ 5,000 $ 5,000 ------------- ------------- Paid-in and contributed surplus: Balance at beginning of year 1,236,632 721,632 Capital contributions - 515,000 ------------- ------------- Balance at end of year 1,236,632 1,236,632 ------------- ------------- Unassigned deficit: Balance at beginning of year (97,422) 329,096 Net loss (15,005) (122,446) Change in net unrealized capital gains or losses 40,085 (307,450) Change in nonadmitted assets 7,194 (58,896) Change in asset valuation reserve (12,287) 670 Change in net deferred income tax 17,097 61,604 ------------- ------------- Balance at end of year (60,338) (97,422) ------------- ------------- Total capital and surplus $ 1,181,294 $ 1,144,210 ============= =============
The accompanying notes are an integral part of these financial statements. 6 Equitable Life Insurance Company of Iowa Statements of Cash Flows - Statutory Basis Year ended December 31 2003 2002 ------------- --------------- (In Thousands) Operations Premiums, policy proceeds, and other considerations received, net of reinsurance paid $ 2,134,739 $ 1,780,915 Net investment income received 375,667 293,438 Commissions, expenses paid and miscellaneous expenses (1,130,672) (920,278) Benefits paid (990,503) (875,116) Net transfers from separate accounts 125,168 148,848 Dividends paid to policyholders (20,097) (23,568) Federal income taxes received (paid) 54,155 (47,836) Other revenues 19,771 24,690 ------------- --------------- Net cash provided by operations 568,228 381,093 Investment activities Proceeds from sales, maturities, or repayments of investments: Bonds 4,136,759 3,714,591 Preferred and common stocks 28,835 357 Mortgage loans 164,802 103,567 Real estate 1,550 2,241 Other invested assets 970 51,647 Net (losses) gains on cash and short term investments (312) 3 Miscellaneous proceeds 139 84,645 ------------- -------------- Net proceeds from sales, maturities, or repayments of investments 4,332,743 3,957,051 Cost of investments acquired: Bonds 4,739,924 4,117,843 Preferred and common stocks 246,024 556,492 Mortgage loans 324,206 121,122 Other invested assets 509 844 Miscellaneous applications 71,432 106,949 ------------- -------------- Total cost of investments acquired 5,382,095 4,903,250 Net change in contract loans 4,302 9,638 ------------- -------------- Net cash used in investment activities (1,045,050) (936,561) Financing and miscellaneous activities Cash provided: Capital and surplus paid-in - 506,300 Borrowed money 27,987 13,008 Net deposits on deposit-type contract funds 412,265 21,616 Other uses 144,893 (42,858) ------------- -------------- Net cash provided by financing and miscellaneous activities 585,145 498,066 ------------- -------------- Net change in cash and short-term investments 108,323 (57,402) Cash and short-term investments: Beginning of year 28,002 85,404 ------------- -------------- End of year $ 136,325 $ 28,002 ============= ==============
The accompanying notes are an integral part of these financial statements. 7 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- 1. Nature of Operations and Significant Accounting Policies Equitable Life Insurance Company of Iowa (the Company) is domiciled in Iowa and is a wholly owned subsidiary of Lion Connecticut Holdings, Inc., which is a wholly-owned subsidiary of ING America Insurance Holdings, Inc. ("ING AIH"). Effective January 1, 2004, the Company merged into an affiliate, ING USA Annuity and Life Insurance Company, a wholly-owned subsidiary of Lion Connecticut Holdings, Inc. The Company offers various insurance products including deferred and immediate annuities, variable annuities, and interest sensitive and traditional life insurance. These products are marketed by the Company's career agency force, independent insurance agents, broker/dealers, and financial institutions. The Company's primary customers are individuals. The Company is presently licensed in 49 states, the District of Columbia and Puerto Rico. The preparation of financial statements of insurance companies requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein. On December 12, 2002, the Board of Directors of the Company approved a plan of merger with an affiliate of the Company, Ameribest Life Insurance Company, a Georgia domiciled company, effective January 1, 2003. The Company was the surviving corporation of the transaction. The 1,666,666.67 issued and outstanding shares of Ameribest Life Insurance Company were retired and canceled upon the effective time and date of the merger. The Georgia Department of Insurance approved the merger on December 18, 2002 and the Iowa Department of Insurance approved the merger on December 27, 2002, with the effective date of the merger being January 1, 2003. The accompanying financial statements have been restated as though the merger took place prior to all periods presented. Pre-merger separate company revenue, net loss and other capital and surplus adjustments for the twelve months ended December 31, 2002, were $2,082,573,000, $(119,795,000) and $210,415,000 respectively for the Company and $27,585,000, $(2,651,000) and $513,000 respectively for Ameribest. Basis of Presentation The accompanying financial statements of the Company have been prepared in conformity with accounting practices prescribed or permitted by the State of Iowa (Iowa Insurance Division), which practices differ from accounting principles generally accepted in the United States ("GAAP"). The most significant variances from GAAP are as follows: 8 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- Investments: Investments in bonds and mandatorily redeemable preferred stocks are reported at amortized cost or market value based on the National Association of Insurance Commissioners ("NAIC") rating; for GAAP, such fixed maturity investments are designated at purchase as held-to-maturity, trading or available-for-sale. Held-to-maturity investments are reported at amortized cost, and the remaining fixed maturity investments are reported at fair value with unrealized capital gains and losses reported in operations for those designated as trading and as a separate component of other comprehensive income in stockholder's equity for those designated as available-for-sale. For structured securities, when a negative yield results from a revaluation based on new prepayment assumptions (i.e., undiscounted cash flows are less than current book value), an other than temporary impairment is considered to have occurred and the asset is written down to the value of the undiscounted cash flows. For GAAP, assets are re-evaluated based on the discounted cash flows using a current market rate. Impairments are recognized when there has been an adverse change in cash flows and the fair value is less than book. The asset is then written down to fair value. Investments in real estate are reported net of related obligations rather than on a gross basis. Real estate owned and occupied by the Company is included in investments rather than reported as an operating asset as under GAAP, and investment income and operating expenses include rent for the Company's occupancy of those properties. Changes between depreciated cost and admitted asset investment amounts are credited or charged directly to unassigned surplus rather than income as would be required under GAAP. SSAP 31 applies to derivative transactions prior to January 1, 2003. The Company also follows the newly adopted hedge accounting guidance in SSAP 86 for derivative transactions entered into or modified on or after January 1, 2003. Under this guidance, derivatives that are deemed effective hedges are accounted for in a manner which is consistent with the underlying hedged item. Derivatives used in hedging transactions that do not meet the requirements of SSAP 86 as an effective hedge are carried at fair value with the change in value recorded in surplus as unrealized gains or losses. Embedded derivatives are not accounted for separately from the host contract. Under GAAP, the effective and ineffective portions of a single hedge are accounted for separately. An embedded derivative within a contract that is not clearly and closely related to the economic characteristics and risk of the host contract is accounted for separately from the host contract and valued and reported at fair value, and the change in fair value for cash flow hedges is credited or charged directly to a separate component of shareholders' equity rather than to income as required for fair value hedges. Valuation Reserves: The asset valuation reserve ("AVR") is determined by an NAIC-prescribed formula and is reported as a liability rather than as a valuation allowance or an appropriation of surplus. The change in AVR is reported directly to unassigned surplus. Under a formula prescribed by the NAIC, the Company defers the portion of realized gains and losses on sales of fixed-income investments, principally bonds and mortgage loans, attributable to changes in the general level of interest rates and amortizes those deferrals over the remaining period to maturity based on groupings of individual securities sold in five-year bands. The net deferral is reported as the interest maintenance reserve (IMR) in the accompanying balance sheets. 9 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- Realized gains and losses on investments are reported in operations net of federal income tax and transfers to the IMR. Under GAAP, realized capital gains and losses are reported in the statements of operations on a pretax basis in the period that the asset giving rise to the gain or loss is sold and valuation allowances are provided when there has been a decline in value deemed other than temporary, in which case the provision for such declines is charged to income. Valuation allowances, if necessary, are established for mortgage loans based on the difference between the net value of the collateral, determined as the fair value of the collateral less estimated costs to obtain and sell, and the recorded investment in the mortgage loan. Under GAAP, such allowances are based on the present value of expected future cash flows discounted at the loan's effective interest rate or, if foreclosure is probable, on the estimated fair value of the collateral. The initial valuation allowance and subsequent changes in the allowance for mortgage loans as a result of a temporary impairment are charged or credited directly to unassigned surplus, rather than being included as a component of earnings as would be required under GAAP. Policy Acquisition Costs: The costs of acquiring and renewing business are expensed when incurred. Under GAAP, acquisition costs related to traditional life insurance, to the extent recoverable from future policy revenues, are deferred and amortized over the premium-paying period of the related policies using assumptions consistent with those used in computing policy benefit reserves. For universal life insurance and investment products, to the extent recoverable from future gross profits, acquisition costs are amortized generally in proportion to the present value of expected gross margins from surrender charges and investment, mortality, and expense margins. Premiums: Life premiums are recognized as revenue when due. Premiums for annuity policies with mortality and morbidity risk, except for guaranteed interest and group annuity contracts, are also recognized as revenue when due. Premiums received for annuity policies without mortality or morbidity risk and for guaranteed interest and group annuity contracts are recorded using deposit accounting. 10 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- Under GAAP, premiums for traditional life insurance products, which include those products with fixed and guaranteed premiums and benefits and consist primarily of whole life insurance policies, are recognized as revenue when due. Group insurance premiums are recognized as premium revenue over the time period to which the premiums relate. Revenues for universal life, annuities and guaranteed interest contracts consist of policy charges for the cost of insurance, policy administration charges, amortization of policy initiation fees and surrender charges assessed during the period. Benefit and Contract Reserves: Life policy and contract reserves under statutory accounting practices are calculated based upon both the net level premium and Commissioners' Reserve Valuation methods using statutory rates for mortality and interest. GAAP requires that policy reserves for traditional products be based upon the net level premium method utilizing reasonably conservative estimates of mortality, interest, and withdrawals prevailing when the policies were sold. For interest-sensitive products, the GAAP policy reserve is equal to the policy fund balance plus an unearned revenue reserve which reflects the unamortized balance of early year policy loads over renewal year policy loads. Reinsurance: For business ceded to unauthorized reinsurers, statutory accounting practices require that reinsurance credits permitted by the treaty be recorded as an offsetting liability and charged against unassigned surplus. Under GAAP, an allowance for amounts deemed uncollectible would be established through a charge to earnings. Statutory income recognized on certain reinsurance treaties representing financing arrangements is not recognized on a GAAP basis. Policy and contract liabilities ceded to reinsurers have been reported as reductions of the related reserves rather than as assets as required under GAAP. Commissions allowed by reinsurers on business ceded are reported as income when received rather than being deferred and amortized with deferred policy acquisition costs as required under GAAP. Subsidiaries: The accounts and operations of the Company's subsidiaries are not consolidated with the accounts and operations of the Company as would be required under GAAP. Nonadmitted Assets: Certain assets designated as "nonadmitted," principally deferred federal income tax assets, disallowed interest maintenance reserves, non-operating software, past-due agents' balances, furniture and equipment, intangible assets, and other assets not specifically identified as an admitted asset within the NAIC Accounting Practices and Procedures Manual are excluded from the accompanying balance sheets and are charged directly to unassigned surplus. Under GAAP, such assets are included in the balance sheet. Employee Benefits: For purposes of calculating the Company's postretirement benefit obligation, only vested participants and current retirees are included in the valuation. Under GAAP, active participants not currently vested are also included. 11 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- Universal Life and Annuity Policies: Revenues for universal life and annuity policies consist of the entire premium received and benefits incurred represent the total of death benefits paid and the change in policy reserves. Under GAAP, premiums received in excess of policy charges would not be recognized as premium revenue and benefits would represent the excess of benefits paid over the policy account value and interest credited to the account values. Policyholder Dividends: Policyholder dividends are recognized when declared rather than over the term of the related policies. Deferred Income Taxes: Deferred tax assets are provided for and admitted to an amount determined under a standard formula. This formula considers the amount of differences that will reverse in the subsequent year, taxes paid in prior years that could be recovered through carrybacks, surplus limits and the amount of deferred tax liabilities available for offset. Any deferred tax assets not covered under the formula are non-admitted. Deferred taxes do not include any amounts for state taxes. Under GAAP, a deferred tax asset is recorded for the amount of gross deferred tax assets that are expected to be realized in future years and a valuation allowance is established for the portion that is not realizable. Surplus Notes: Surplus notes are reported as a component of surplus. Under statutory accounting practices, no interest is recorded on the surplus notes until payment has been approved by the Iowa Division of Insurance. Under GAAP, surplus notes are reported as liabilities and the related interest is reported as a charge to earnings over the term of the note. Statements of Cash Flows: Cash and short-term investments in the statements of cash flows represent cash balances and investments with initial maturities of one year or less. Under GAAP, the corresponding caption of cash and cash equivalents include cash balances and investments with initial maturities of three months or less. The effects of the preceding variances from GAAP on the accompanying statutory basis financial statements have not been determined, but are presumed to be material. Other significant accounting practices are as follows: Investments Investments are stated at values prescribed by the NAIC, as follows: Bonds not backed by other loans are principally stated at amortized cost using the interest method. 12 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- Single class and multi-class mortgage-backed/asset-backed securities are valued at amortized cost using the interest method including anticipated prepayments. Prepayment assumptions are obtained from dealer surveys or internal estimates and are based on the current interest rate and economic environment. The retrospective adjustment method is used to value all such securities except for higher-risk asset backed securities, which are valued using the prospective method. Redeemable preferred stocks rated as high quality or better are reported at cost or amortized cost. All other redeemable preferred stocks are reported at the lower of cost, amortized cost, or market value. Nonredeemable preferred stocks are reported at market value or the lower of cost or market value as determined by the Securities Valuation Office of the NAIC ("SVO"). Common stocks are reported at market value as determined by the SVO and the related unrealized capital gains/(losses) are reported in unassigned surplus along with adjustment for federal income taxes. The Company analyzes the general account investments to determine whether there has been an other than temporary decline in fair value below the amortized cost basis. Management considers the length of the time and the extent to which the market value has been less than cost; the financial condition and near-term prospects of the issuer; future economic conditions and market forecasts; and the Company's intent and ability to retain the investment in the issuer for a period of time sufficient to allow for recovery in market value. If it is probable that all amounts due according to the contractual terms of a debt security will not be collected, an other than temporary impairment is considered to have occurred. The Company uses derivatives such as interest rate swaps, caps and floors and options as part of its overall interest rate risk management strategy for certain life insurance and annuity products. As the Company only uses derivatives for hedging purposes, the Company values all derivative instruments on a consistent basis with the hedged item. Upon termination, gains and losses on those instruments are included in the carrying values of the underlying hedged items and are amortized over the remaining lives of the hedged items as adjustments to investment income or benefits from the hedged items. Any unamortized gains or losses are recognized when the underlying hedged items are sold. Interest rate swap contracts are used to convert the interest rate characteristics (fixed or variable) of certain investments to match those of the related insurance liabilities that the investments are supporting. The net interest effect of such swap transactions is reported as an adjustment of interest income from the hedged items as incurred. Interest rate caps and floors are used to limit the effects of changing interest rates on yields of variable rate or short-term assets or liabilities. The initial cost of any such agreement is amortized to net investment income over the life of the agreement. Periodic payments that are receivable as a result of the agreements are accrued as an adjustment of interest income or benefits from the hedged items. 13 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- The derivatives are reported in a manner that is consistent with the hedged asset or liability. All derivatives are reported at amortized cost with the exception of the S&P Options. The S&P Options are reported at fair value since the liabilities that are being hedged are reported at fair value. The unrealized gains or losses from the S&P Options are reported in investment income. Upon termination of a derivative that qualified for hedge accounting, the gain or loss is deferred in IMR or adjusts the basis of the hedged item. The Company's insurance subsidiaries are reported at their underlying statutory basis net assets plus the admitted portion of goodwill. Dividends from subsidiaries are included in net investment income. The remaining net change in the subsidiaries' equity is included in the change in net unrealized capital gains or losses. Mortgage loans are reported at amortized cost, less allowance for impairments. Contract loans are reported at unpaid principal balances. Land is reported at cost. Real estate occupied by the company is reported at depreciated cost; other real estate is reported at the lower of depreciated cost or fair value. Depreciation is calculated on a straight-line basis over the estimated useful lives of the properties. For reverse repurchase agreements, Company policies require a minimum of 95% of the fair value of securities purchased under reverse repurchase agreements to be maintained as collateral. Cash collateral received is invested in short-term investments and the offsetting collateral liability is included in miscellaneous liabilities. Reverse dollar repurchase agreements are accounted for as collateral borrowings, where the amount borrowed is equal to the sales price of the underlying securities. Short-term investments are reported at amortized cost. Short-term investments include investments with maturities of less than one year at the date of acquisition. Partnership agreements, which are included in other invested assets, are reported at the underlying audited GAAP equity of the investee. Residual collateralized mortgage obligations, which are included in other invested assets, are reported at amortized cost using the effective interest rate method. Realized capital gains and losses are determined using the specific identification method. Cash on hand includes cash equivalents. Cash equivalents are short-term investments that are both readily convertible to cash and have an original maturity date of three months or less. Short-term investments are carried at amortized cost, which approximates market value. 14 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- Aggregate Reserve for Life Policies and Contracts Life, annuity, and accident and health reserves are developed by actuarial methods and are determined based on published tables using statutorily specified interest rates and valuation methods that will provide, in the aggregate, reserves that are greater than or equal to the minimum or guaranteed policy cash value or the amounts required by law. Interest rates range from 2.25% to 10%. The Company waives the deduction of deferred fractional premiums upon the death of the insured. It is the Company's practice to return a pro rata portion of any premium paid beyond the policy month of death, although it is not contractually required to do so for certain issues. The methods used in valuation of substandard policies are as follows: For life, endowment and term policies issued substandard, the standard reserve during the premium-paying period is increased by 50% of the gross annual extra premium. Standard reserves are held on Paid-Up Limited Pay contracts. For reinsurance accepted with table rating, the reserve established is a multiple of the standard reserve corresponding to the table rating. For reinsurance with flat extra premiums, the standard reserve is increased by 50% of the flat extra. The amount of insurance in force for which the gross premiums are less than the net premiums, according to the standard of valuation required by the State of Iowa is $239,161,000 at December 31, 2003. The amount of reserves for policies on which gross premiums are less than the net premiums deficiency reserves is $1,514,000 at December 31, 2003. The tabular interest has been determined from the basic data for the calculation of policy reserves for all direct ordinary life insurance and for the portion of group life insurance classified as group Section 79. The tabular interest of funds not involving life contingencies is calculated as the current year reserves, plus payments, less prior year reserves, less funds added. Reinsurance Reinsurance premiums, commissions, expense reimbursements, and reserves related to reinsured business are accounted for on bases consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Reserves are based on the terms of the reinsurance contract and are consistent with the risks assumed. Premiums and benefits ceded to other companies have been reported as a reduction of premium revenue and benefits expense. Amounts applicable to reinsurance ceded for reserves and unpaid claim liabilities have been reported as reductions of these items, and expense allowances received in connection with reinsurance ceded have been reflected in operations. 15 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- Data Processing Equipment Electronic data processing equipment is carried at cost less accumulated depreciation. Depreciation for major classes of assets is calculated on a straight-line basis over the estimated useful lives of the assets. Participating Insurance Participating business approximates less than 12% of the Company's ordinary life insurance in force and less than 1% of premium income. The amount of dividends to be paid is determined annually by the Board of Directors. Amounts allocable to participating policyholders are based on published dividend projections or expected dividend scales. Dividends of $13,683,000 and $23,406,000 were incurred 2003 and 2002, respectively. Pension Plans The Company provides noncontributory retirement plans for substantially all employees and certain agents. Pension costs are charged to operations as contributions are made to the plan. The Company also provides a contributory retirement plan for substantially all employees. Nonadmitted Assets Nonadmitted assets are summarized as follows: December 31 2003 2002 ---------------- --------------- (In Thousands) Deferred federal income taxes $ 154,178 $ 160,490 Agents' debt balances 376 267 Furniture and equipment 2,668 4,337 Leasehold improvements 902 1,033 Deferred and uncollected premium 145 426 Commuted commission 829 1,108 Suspense debts 4,264 3,586 Other 922 231 ---------------- --------------- Total nonadmitted assets $ 164,284 $ 171,478 ================ ===============
Changes in nonadmitted assets are generally reported directly in surplus as an increase or decrease in nonadmitted assets. Certain changes are reported directly in surplus as a change in unrealized capital gains or losses. 16 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- Cash Flow Information Cash and short-term investments include cash on hand, demand deposits and short-term fixed maturity instruments (with a maturity of less than one year at date of acquisition). The Company borrowed $665,500,000 and repaid $698,900,000 in 2003, and borrowed $1,267,535,000 and repaid $1,267,535,000 in 2002. These borrowings were on a short-term basis at an interest rate that approximated current money market rates and exclude borrowings from reverse dollar repurchase transactions. Interest paid on borrowed money was $61,876 and $206,000 during 2003 and 2002, respectively. Separate Accounts Separate account assets and liabilities held by the Company represent funds held for the benefit of the Company's variable annuity policy and contract holders who bear all of the investment risk associated with the policies. Such policies are of a non-guaranteed nature. All net investment experience, positive or negative, is attributed to the policy and contract holders' account values. The assets and liabilities of these accounts are carried at fair value. Reserves related to the Company's mortality risk associated with these policies are included in life and annuity reserves. The operations of the separate accounts are not included in the accompanying statements of operations. Reclassifications Certain prior year amounts in the Company's statutory basis financial statements have been reclassified to conform to the 2003 financial statement presentation. 2. Permitted Statutory Basis Accounting Practices The financial statements of the Company are presented on the basis of accounting practices prescribed or permitted by the State of Iowa. The Iowa State Insurance Division recognizes only statutory accounting practices prescribed or permitted by the State of Iowa for determining and reporting the financial condition and results of operations of an insurance company, for determining its solvency in under the Iowa Insurance Laws. NAIC Accounting Practices and Procedures Manual has been adopted as a component of prescribed or permitted practices by the State of Iowa. The Commissioner of Insurance has the right to permit other specific practices that deviate from prescribed practices. The Company is required to identify those significant accounting practices that are permitted, and obtain written approval of the practices from the Iowa Division of Insurance. As of December 31, 2003 and 2002, the Company had no such permitted accounting practices. 17 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- 3. Investments The amortized cost and fair value of bonds and equity securities are as follows: Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value ----------- ---------- ----------- ---------- (In Thousands) At December 31, 2003: U.S. Treasury securities $ 63,442 $ 746 $ 41 $ 64,147 obligations of U.S. government corporations and agencies States, municipalities, and political subdivisions 15,248 12 1,208 14,052 Foreign government 95,347 9,942 525 104,764 Public utilities securities 358,013 18,034 2,097 373,950 Corporate securities 1,767,783 96,572 12,490 1,851,865 Mortgage-backed securities 947,342 17,669 16,982 948,029 Commercial mortgage-backed securities 172,654 11,602 584 183,672 Other structured securities 339,186 5,674 11,660 333,200 ----------- ---------- ----------- ---------- Total fixed maturities 3,759,015 160,251 45,587 3,873,679 ----------- ---------- ----------- ---------- Preferred stocks 441 - - 441 Common stocks 108,680 4,304 25 112,959 ----------- ---------- ----------- ---------- Total equity securities 109,121 4,304 25 113,400 ----------- ---------- ----------- ---------- Total $3,868,136 $ 164,555 $ 45,612 $3,987,079 =========== ========== =========== ========== December 31, 2002: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 23,522 $ 1,617 $ - $ 25,139 States, municipalities, and political subdivisions 248 11 - 259 Foreign government 172,130 12,466 4,538 180,058 Public utilities securities 213,753 10,027 3,722 220,058 Corporate securities 1,508,444 97,591 12,406 1,593,629 Mortgage-backed securities 911,369 41,639 20,820 932,188 Other structured securities 378,523 23,113 19,667 381,969 ----------- ---------- ----------- ---------- Total fixed maturities 3,207,989 186,464 61,153 3,333,300 ----------- ---------- ----------- ---------- Preferred stocks 441 - - 441 Common stocks 120,051 234 - 120,285 ----------- ---------- ----------- ---------- Total equity securities 120,492 234 - 120,726 ----------- ---------- ----------- ---------- Total $3,328,481 $ 186,698 $ 61,153 $3,454,026 =========== ========== =========== ==========
18 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- As of December 31, 2003, the aggregate fair value of debt securities with unrealized losses and the time period that cost exceeded fair value are as follows: More than 6 months and less Less than 6 than 12 months More than 12 months below cost below cost months below cost Total ------------------- ------------------- ------------------- ------------------ (In Thousands) Fair value $ 521,371 $ 315,592 $ 53,556 $ 890,519 Unrealized loss 4,839 21,102 19,646 45,587
Of the unrealized losses more than 6 months and less than 12 months in duration of $21,102,000, there were $4,481,000 in unrealized losses that are primarily related to interest rate movement or spread widening for other than credit-related reasons. Business and operating fundamentals are performing as expected. The remaining unrealized losses of $16,621,000 as of December 31, 2003 included the following significant items: $9,004,000 of unrealized losses related to mortgage-backed and structure securities reviewed for impairment under the guidance prescribed by SSAP No. 43 Loan-backed and Structured Securities. This category includes U.S. government-backed securities, principal protected securities and structured securities which did not have an adverse change in cash flows for which the fair value was $118,777,000. $4,324,000 of unrealized losses related to the energy/utility industry, for which the fair value was $75,347,000. During 2003, the energy sector recovered due to a gradually improving economic picture. Current analysis indicates the debt will be serviced in accordance with the contractual terms. $1,895,000 of unrealized losses relating to non-domestic issues, with no unrealized loss exposure per country in excess of $1,858,000 for which the fair value was $11,796,000. Credit exposures are in the beverage industry in Italy and Great Britain. $1,398,000 of unrealized losses related to the telecommunications/cable/media industry, for which the fair value was $26,033,000. During 2003, the sector recovered somewhat due to a gradually improving economy. Credit exposure is primarily focused in what management believes to be the largest and most financially secure companies in the sector. 19 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- Of the unrealized losses more than 12 months in duration of $19,645,000, there were $197,000 in unrealized losses that are primarily related to interest rate movement or spread widening for other than credit-related reasons. Business and operating fundamentals are performing as expected. The remaining losses of $19,448,000 as of December 31, 2003 included the following significant items: $17,930,000 of unrealized losses related to mortgage-backed and structured securities reviewed for impairment under the guidance prescribed by SSAP No. 43 Loan-backed and Structured Securities. This category includes U.S. government-backed securities, principal protected securities and structured securities which did not have an adverse change in cash flows for which the fair value was $31,213,000. $654,000 of unrealized losses related to the airline industry, for which the fair value was $10,725,000. During 2003, the airline industry continued to suffer from decreased passenger volumes partially offset by a gradually improving economy. The majority of the airline investments are comprised of Enhanced Equipment Trust Certificates for which the specific collateral is represented by newer models that are expected to be retained as individual airlines reduce their fleets. The remaining unrealized losses totaling $864,000 relate to a fair value of $9,161,000. The amortized cost and fair value of investments in bonds at December 31, 2003, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Amortized Fair Cost Value ---------------- ---------------- (In Thousands) December 31, 2003 Maturity: Due in 1 year or less $ 23,004 $ 23,270 Due after 1 year through 5 years 948,836 997,266 Due after 5 years through 10 years 950,055 997,168 Due after 10 years 377,938 391,074 ---------------- ---------------- 2,299,833 2,408,778 Mortgage-backed securities 947,342 948,029 Commercial mortgage-backed securities 172,654 183,672 Other structured securities 339,186 333,200 ---------------- ---------------- Total $ 3,759,015 $ 3,873,679 ================ ================
At December 31, 2003, investments in certificates of deposit and bonds, with an admitted asset value of $2,434,000, were on deposit with state insurance departments to satisfy regulatory requirements. 20 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- Reconciliation of bonds from amortized cost to carrying value as of December 31, 2003 and 2002 is as follows: December 31 2003 2002 ---------------- ---------------- (In Thousands) Amortized cost $ 3,759,015 $ 3,207,989 Less nonadmitted bonds (640) (640) ---------------- ---------------- Carrying value $ 3,758,375 $ 3,207,349 ================ ================
Proceeds from the sales of investments in bonds and other fixed maturity interest securities were $2,329,158,000 and $2,334,028,000 in 2003 and 2002, respectively. Gross gains of $48,928,000 and $43,441,000 and gross losses of $11,521,000 and $37,946,000 during 2003 and 2002, respectively, were realized on those sales. A portion of the gains realized in 2003 and 2002 has been deferred to future periods in the interest maintenance reserve. Major categories of net investment income are summarized as follows: December 31 2003 2002 ---------------- ---------------- (In Thousands) Equity securities - affiliated $ 5,349 $ 35 Equity securities - unaffiliated 215 - Bonds 222,611 249,688 Mortgage loans 67,158 66,004 Contract loans 6,464 7,840 Real estate 367 757 Other 26,435 (58,291) ---------------- ---------------- Total investment income 328,599 266,033 Investment expenses (21,303) (18,840) ---------------- ---------------- Net investment income $ 307,296 $ 247,193 ================ ================
As part of its overall investment strategy, the Company has entered into agreements to purchase securities as follows: December 31 2003 2002 ---------------- ---------------- (In Thousands) Investment purchase commitments $ 37,678 $ 47,317
21 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- The Company entered into reverse dollar repurchase transactions to increase its return on investments and improve liquidity. Reverse dollar repurchases involve a sale of securities and an agreement to repurchase substantially the same securities as those sold. The reverse dollar repurchases are accounted for as short term collateralized financing and the repurchase obligation is reported in borrowed money. The repurchase obligation totaled $126,983,000 and $95,972,777 at December 31, 2003 and 2002, respectively. The securities underlying these agreements are mortgage-backed securities with a book value of $126,317,000 and $95,936,000 and a fair value of $127,423,000 and $97,433,000 at December 31, 2003 and 2002, respectively. The securities have a weighted average coupon of 5.4% and have maturities ranging from December 2018 through December 2033. The primary risk associated with short-term collateralized borrowings is that the counterparty may 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, which was not material at December 31, 2003. The Company believes the counterparties to the reverse dollar repurchase agreements are financially responsible and that the counterparty risk is minimal. The Company participates in reverse repurchase transactions. Such transactions include the sale of corporate securities to a major securities dealer and a simultaneous agreement to repurchase the same security in the near term. The proceeds are invested in new securities of intermediate durations. As of December 31, 2003 and 2002, the amounts outstanding on these agreements were $0 and $3,000,000, respectively. The securities underlying these agreements are mortgage-backed securities with a book value of $0 and $3,135,000 and a fair value of $0 and $3,163,000 at December 31, 2003 and 2002, respectively. The maximum and minimum lending rates for new long-term commercial mortgage loans during 2003 were 6.20% and 2.78%. Fire insurance is required on all properties covered by mortgage loans and must at least equal the excess of the loan over the maximum loan which would be permitted by law on the land without the buildings. The maximum percentage of any loan to the value of collateral at the time of the loan, exclusive of insured or guaranteed or purchase money mortgages, was 89.7% on commercial properties. As of December 31, 2003, the Company held no mortgages with interest more than 180 days overdue. Total interest due on mortgages as of December 31, 2003 and 2002 was $54,000 and $23,000, respectively. 4. Derivative Financial Instruments Held for Purposes Other than Trading The Company enters into interest rate and currency contracts, including swaps, caps, floors, and options, to reduce and manage risks, which include the risk of a change in the value, yield, price, cash flows, exchange rates or quantity of, or a degree of exposure with respect to, assets, liabilities, or future cash flows, which the Company has acquired or incurred. Hedge accounting practices are supported by cash flow matching, scenario testing and duration matching. 22 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- The Company uses interest rate swaps to reduce market risks from changes in interest rates and to alter interest rate exposure arising from mismatches between assets and liabilities. Interest rate swap agreements generally involve the exchange of fixed and floating interest payments over the life of the agreement without an exchange of the underlying principal amount. Currency swap agreements generally involve the exchange of local and foreign currency payments over the life of the agreements without an exchange of the underlying principal amount. Interest rate cap and interest rate floor agreements owned entitle the Company to receive payments to the extent reference interest rates exceed or fall below strike levels in the contracts based on the notional amounts. The Company uses S&P Options to hedge against an increase in the S&P Index. Such increase results in increased reserve liabilities, and the options offset this increased expense. The options are accounted for in a consistent manner with the underlying reserve liabilities, both of which are carried at far value with the change in value running through the income statement. If the options mature in the money, the amount received is recorded in income to offset the increased expense for the reserve liabilities. Premiums paid for the purchase of interest rate contracts are included in other invested assets and are being amortized to interest expense over the remaining terms of the contracts or in a manner consistent with the financial instruments being hedged. Amounts paid or received, if any, from such contracts are included in interest expense or income. Accrued amounts payable to or receivable from counterparties are included in other liabilities or other invested assets. Gains or losses realized as a result of early terminations of interest rate contracts are amortized to investment income over the remaining term of the items being hedged to the extent the hedge is considered to be effective; otherwise, they are recognized upon termination. Interest rate contracts that are matched or otherwise designated to be associated with other financial instruments are recorded at fair value if the related financial instruments mature, are sold, or are otherwise terminated or if the interest rate contracts cease to be effective hedges. Changes in the fair value of derivatives are recorded as investment income. The Company manages the potential credit exposure from interest rate contracts through careful evaluation of the counterparties' credit standing, collateral agreements, and master netting agreements. The Company is exposed to credit loss in the event of nonperformance by counterparties on derivative contracts; however, the Company does not anticipate nonperformance by any of these counterparties. The amount of such exposure is generally the unrealized gains in such contracts. 23 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- The table below summarizes the Company's interest rate contracts included in other invested assets at December 31, 2003 and 2002: Notional Carrying Fair Amount Value Value ---------- ---------- --------- (In Thousands) December 31, 2003 Interest rate contracts: Swaps $ 316,584 $ - $ (9,103) Caps owned 595,000 1,231 10 Options owned 1,287,802 100,942 100,942 ---------- ---------- --------- Total derivatives $2,199,386 $ 102,173 $ 91,849 ========== ========== ========= December 31, 2002 Interest rate contracts: Swaps $ 266,098 $ - $ (4,428) Caps owned 743,000 2,508 908 Options owned 856,438 30,325 30,325 ---------- ---------- --------- Total derivatives $1,865,536 $ 32,833 $ 26,805 ========== ========== =========
5. Concentrations of Credit Risk The Company held less-than-investment-grade corporate bonds with an aggregate book value of $244,590,000 and $215,967,000 and with an aggregate market value of $256,968,000 and $201,208,000 at December 31, 2003 and 2002, respectively. Those holdings amounted to 6.5% of the Company's investments in bonds and 3.5% of total admitted assets at December 31, 2003. The holdings of less-than-investment-grade bonds are widely diversified and of satisfactory quality based on the Company's investment policies and credit standards. The Company held unrated bonds of $96,917,000 and $73,548,000 with an aggregate NAIC market value of $99,937,000 and $79,056,000 at December 31, 2003 and 2002, respectively. The carrying value of these holdings amounted to 2.5% of the Company's investment in bonds and 1.4% of the Company's total admitted assets at December 31, 2003. At December 31, 2003, the Company's commercial mortgages involved a concentration of properties located in California (18.74%) and Texas (9.18%). The remaining commercial mortgages relate to properties located in 38 other states. The portfolio is well diversified; covering many different types of income-producing properties on which the Company has first mortgage liens. The maximum mortgage outstanding on any individual property is $29,000,000. 24 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- 6. Annuity Reserves At December 31, 2003 and 2002, the Company's annuity reserves, including those held in separate accounts and deposit fund liabilities that are subject to discretionary withdrawal with adjustment, subject to discretionary withdrawal without adjustment, and not subject to discretionary withdrawal provisions are summarized as follows: Amount Percent ------------- ---------- (In Thousands) December 31, 2003 Subject to discretionary withdrawal (with adjustment): With market value adjustment $ 2,005,225 34.0% At book value less surrender charge 1,270,988 21.5 At fair value 1,020,807 17.3 ------------- ---------- Subtotal 4,297,020 72.8 Subject to discretionary withdrawal (without adjustment): At book value with minimal or no charge or adjustment 716,305 12.1 Not subject to discretionary withdrawal 885,463 15.1 ------------- ---------- Total annuity reserves and deposit fund liabilities before reinsurance 5,898,788 100.0% ========== Less reinsurance ceded 556,052 ------------- Net annuity reserves and deposit fund liabilities $ 5,342,736 ============= December 31, 2002 Subject to discretionary withdrawal (with adjustment): With market value adjustment $ 1,813,570 37.2% At book value less surrender charge 864,057 17.7 At fair value 1,079,649 22.2 ------------- ---------- Subtotal 3,757,276 77.1 Subject to discretionary withdrawal (without adjustment): At book value with minimal or no charge or adjustment 447,961 9.2 Not subject to discretionary withdrawal 669,775 13.7 ------------- ---------- Total annuity reserves and deposit fund liabilities before reinsurance 4,875,012 100.0% ========== Less reinsurance ceded 576,980 ------------- Net annuity reserves and deposit fund liabilities $ 4,298,032 =============
25 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- 7. Employee Benefit Plans Pension Plan and Postretirement Benefits Effective December 31, 2001, the qualified noncontributory defined benefit retirement plans of the Company, along with certain other US subsidiaries of ING AIH, were merged into one plan, which is recognized in ING AIH's financial statements. As a result of this plan merger, the Company transferred its qualified pension asset to ING North America Insurance Corporation, an affiliate. In addition, the Company maintains a nonqualified unfunded Supplemental Employees Retirement Plan ("SERP"). The Company also provides certain health care and life insurance benefits for retired employees. A summary of assets, obligations and assumptions of the Pension and Other Postretirement Benefits Plans are as follows: Pension Benefits Other Benefits ----------------------- ---------------------- 2003 2002 2003 2002 ---------- ----------- ---------- ---------- (In Thousands) Change in benefit obligation Benefit obligation at beginning of year $ 8,115 $ 13,015 $ 6,694 $ 5,383 Service cost - 546 676 210 Interest cost 540 1,008 410 400 Contribution by plan participants - - 2,048 376 Actuarial gain (loss) 2,103 (6,153) (1,471) 373 Benefits paid (415) (301) (2,667) (847) Plan amendments - - - 799 ---------- ----------- ---------- ---------- Benefit obligation at end of year $ 10,343 $ 8,115 $ 5,690 $ 6,694 ========== =========== ========== ========== Change in plan assets Fair value of plan assets at beginning of year $ - $ - $ - $ - Actual return on plan assets - - - - Employer contribution 415 301 619 471 Plan participants' contributions - - 2,048 376 Benefits paid (415) (301) (2,667) (847) ---------- ----------- ---------- ---------- Fair value of plan assets at end of year $ - $ - $ - $ - ========== =========== ========== ==========
26 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- Pension Benefits Other Benefits ------------------------- ------------------------ 2003 2002 2003 2002 ----------- ------------ ------------ ----------- (In Thousands) Funded status $ (10,343) $ (8,115) $ (5,690) $ (6,694) Unamortized prior service credit (290) (318) (648) (746) Unrecognized net (gain) or loss (1,276) (3,715) (1,917) 2,566 Remaining net obligation 28 31 2,733 - ----------- ------------ ------------ ----------- Net amount recognized $ (11,881) $(12,117) $ (5,522) $ (4,874) =========== ============ ============ =========== Components of net periodic benefit cost Service cost $ - $ 546 $ 676 $ 210 Interest cost 540 1,008 410 400 Expected return on plan assets - - - - Amortization of unrecognized transition obligation or transition assets 2 2 304 304 Amount of recognized gains and losses (336) 100 (25) (42) Amount of prior service cost recognized (28) (28) (98) 701 Amount of gain or loss recognized due to a settlement or curtailment - - - - ------------ ------------ ------------ ----------- Total net periodic benefit cost $ 178 $ 1,628 $ 1,267 $ 1,573 ============ ============ ============ ===========
In addition, the Company has a pension benefit obligation and an other benefit obligation for non-vested employees as of December 31, 2003 and 2002 in the amount of $623,000 and $682,000, and $3,665,000 and $2,633,000 (OPEB obligation), respectively. Assumptions used in determining the accounting for the defined benefit plans and other post-retirement benefit plans as of December 31, 2003 and 2002 were as follows: 2003 2002 ---------------- ----------------- Weighted-average discount rate 6.25 % 6.75 % Rate of increase in compensation level 3.75 % 3.75 % Expected long-term rate of return on assets 8.75 % 9.00 %
The annual assumed rate of increase in the per capita cost of covered benefits (i.e., health care cost trend rate) for the medical plan is 10.0% graded to 5.0% thereafter. The health care cost trend rate assumption has a significant effect on the amounts reported. For example, increasing the assumed health care cost trend rates by one percentage point in each year would increase the accumulated postretirement benefit obligation for the medical plan as of December 31, 2003 by $48,000. Decreasing the assumed health care cost trend rates by one percentage point in each year would decrease the accumulated postretirement benefit obligation for the medical plan as of December 31, 2003 by $46,000. 27 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- 401(k) Plan The ING Savings Plan is a defined contribution plan, which is available to substantially all employees. Participants may make contributions to the plan through salary reductions up to a maximum of $12,000 for 2003 and $11,000 for 2002. Such contributions are not currently taxable to the participants. The Company matches up to 6% of pre-tax eligible pay at 100%. Company matching contributions were $569,000 and $681,000 for 2003 and 2002, respectively. 8. Separate Accounts Separate account assets and liabilities represent funds segregated by the Company for the benefit of certain policy and contract holders who bear the investment risk. All such policies are of a nonguaranteed return nature. Revenues and expenses on the separate account assets and related liabilities equal the benefits paid to the separate account policy and contract holders. 28 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- The general nature and characteristics of the separate accounts business follows: Nonguaranteed Separate Accounts -------------- (In Thousands) December 31, 2003 Premium, consideration or deposits for year ended December 31, 2003 $ 23,144 ============== Reserves for accounts with assets at: Market value $ 1,020,807 Amortized cost - -------------- Total reserves $ 1,020,807 ============== Reserves for separate accounts by withdrawal characteristics: Subject to discretionary withdrawal: With market value adjustment $ - At book value without market value adjustment less current surrender charge of 5% or more - At market value 1,020,807 At book value without market value adjustment less current surrender charge of less than 5% - -------------- Subtotal 1,020,807 Not subject to discretionary withdrawal - -------------- Total separate account reserves $ 1,020,807 ============== December 31, 2002 Premium, consideration or deposits for year ended December 31, 2002 $ 33,970 ============== Reserves for accounts with assets at: Market value $ 931,533 Amortized cost - -------------- Total reserves $ 931,533 ============== Reserves for separate accounts by withdrawal characteristics: Subject to descretionary withdrawal: With market value adjustment $ - At book value without market value adjustment less current surrender charge of 5% or more - At market value 931,533 At book value without market value adjustment less current surrender charge of less than 5% - -------------- Subtotal 931,533 Not subject to discretionary withdrawal - -------------- Total separate account reserves $ 931,533 ==============
29 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- A reconciliation of the amounts transferred to and from the separate accounts is presented below: December 31 2003 2002 ---------------- ---------------- (In Thousands) Transfers as reported in the Summary of Operations of the Separate Accounts Statement: Transfers to separate accounts $ 23,144 $ 33,970 Transfers from separate accounts 144,588 169,689 ---------------- ---------------- Net transfers from separate accounts (121,444) (135,719) Reconciling adjustments: Other transfers 1 33 ---------------- ---------------- Transfers as reported in the Statement of Operations $ (121,443) $ (135,686) ================ ================
9. Reinsurance The Company is involved in both ceded and assumed reinsurance with other companies for the purpose of diversifying risk and limiting exposure on larger risks. To the extent that the assuming companies become unable to meet their obligations under these treaties, the Company remains contingently liable to its policyholders for the portion reinsured. To minimize its exposure to significant losses from retrocessionaire insolvencies, the Company evaluates the financial condition of the retrocessionaire and monitors concentrations of credit risk. Assumed premiums amounted to $1,912,796,000 and $1,299,151,000 for the years ended December 31, 2003 and 2002, respectively. The Company's ceded reinsurance arrangements reduced certain items in the accompanying financial statements by the following amounts: December 31 2003 2002 ------------- ------------- (In Thousands) Premiums $ 5,107 $ 5,223 Benefits paid or provided 7,356 8,481 Policy and contract liabilities at year end 585,318 604,861
During 2003 and 2002, the Company had ceded blocks of insurance under reinsurance treaties to provide funds for financing and other purposes. These reinsurance transactions, generally known as "financial reinsurance," represent financing arrangements. Financial reinsurance has the effect of increasing current statutory surplus while reducing future statutory surplus as the reinsurers recapture amounts. 30 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- 10. Federal Income Taxes The Company files a consolidated federal income tax return with its subsidiaries. The method of tax allocation is governed by a written tax sharing agreement. The tax sharing agreement provides that each member of the consolidated return shall reimburse the Company for its respective share of the consolidated federal income tax liability and shall receive a benefit for its losses at the statutory rate. The components of the net deferred tax asset (liability) at December 31 are as follows: December 31 2003 2002 ------------- ------------ (In Thousands) Total gross deferred tax assets $ 180,746 $ 166,200 Total deferred tax liabilities (6,096) (5,139) ------------- ------------ Net deferred tax asset 174,650 161,061 Deferred tax asset nonadmitted (154,178) (160,490) ------------- ------------ Net admitted deferred tax asset $ 20,472 $ 571 ============= ============ Decrease (increase) in nonadmitted asset $ 6,312 $ (63,007) ============= ============
Significant components of income taxes incurred as of December 31 are: Current income taxes incurred consisted of the following major components: December 31 2003 2002 ------------- ------------ (In Thousands) Federal taxes on stand alone operations $ 26,865 $ (18,201) Federal taxes paid to affiliates under tax sharing agreement - 67,278 Consolidated operations loss carryback utilized - (11,267) ------------- ------------ Total taxes on operations 26,865 37,810 ------------- ------------ Federal taxes on capital gains (9,263) (1,301) Federal taxes paid to affiliates under tax sharing agreement - 3,896 Consolidated operations loss carryback utilized - (12,625) ------------- ------------ Total taxes on capital gains (9,263) (10,030) ------------- ------------ Total taxes incurred $ 17,602 $ 27,780 ============= ============
31 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- The main components of deferred tax assets and deferred tax liabilities are as follows: December 31 2003 2002 -------------- -------------- (In Thousands) Deferred tax assets resulting from book/tax differences in: Deferred acquisition costs $ 25,293 $ 31,238 Insurance reserves 21,429 21,250 Investments 18,791 19,753 Policyholder dividends 5,917 8,328 Nonadmitted assets 3,484 3,700 Unrealized loss on investments - 704 Goodwill 799 880 Operations loss carryforwards 92,808 72,890 AMT carryforward 4,000 - Other 8,225 7,457 -------------- -------------- Total deferred tax assets 180,746 166,200 Deferred tax assets nonadmitted (154,178) (160,490) -------------- -------------- Admitted deferred tax assets 26,568 5,710 -------------- -------------- Deferred tax liabilities resulting from book/tax differences in: Fixed assets 62 2,164 Investments 746 132 Due & deferred premiums 2,196 2,488 Unrealized gains on investments 3,092 - Other - 355 -------------- -------------- Total deferred tax liabilities 6,096 5,139 -------------- -------------- Net admitted deferred tax asset $ 20,472 $ 571 ============== ==============
The change in net deferred income taxes is comprised of the following: December 31 2003 2002 Change ---------- ---------- ---------- (In Thousands) Total deferred tax asset $ 180,746 $ 166,199 $ 14,547 Total deferred tax liabilities 6,096 5,139 957 ---------- ---------- ---------- Net deferred tax asset $ 174,650 $ 161,060 $ 13,590 ========== ========== Remove current year change in unrealized gains 3,507 ---------- Change in net deferred income tax 17,097 Remove other items in surplus: Current year change in non-admitted assets 216 Other 289 --------- $ 17,602 =========
32 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- The provision for federal income taxes incurred and change in deferred taxes is different from that which would be obtained by applying the statutory Federal income tax rate to income, (including capital items) before income taxes. The significant items causing this difference are: Year Ended December 31, 2003 ----------------- (In Thousands) Ordinary income $ 9,263 Capital gains (losses) 4,994 ----------------- Total pre-tax income $ 14,257 ================= Provision computed at statutory rate $ 4,990 Refinement of deferred tax balances (4,529) Interest maintenance reserve 999 Dividends received deduction (1,483) Other 23 ----------------- Total $ - ================= Federal income taxes incurred $ 17,602 Change in net deferred income taxes (17,602) ----------------- Total statutory income taxes $ - =================
The Company has operations loss carryforwards of $265,165,000, which expire in 2017. The Company had a payable to the United States Treasury of $15,723,000 and a receivable from the United States Treasury of $55,341,000 for federal income taxes as of December 31, 2003 and 2002, respectively. In addition, under the inter-company tax sharing agreement, the Company has a net payable of $11,526,000 and a net receivable of $28,301,000 at December 31, 2003 and 2002, respectively, for federal income taxes with its subsidiaries. Prior to 1984, the Company was allowed certain special deductions for federal income tax reporting purposes that were required to be accumulated in a "policyholders' surplus account" (PSA). In the event those amounts are distributed to shareholders, or the balance of the account exceeds certain limitations prescribed by the Internal Revenue Code, the excess amounts would be subject to income tax at current rates. Income taxes also would be payable at current rates if the Company ceases to qualify as a life insurance company for tax reporting purposes, or if the income tax deferral status of the PSA is modified by future tax legislation. Management does not intend to take any actions nor does management expect any events to occur that would cause income taxes to become payable on the PSA balance. Accordingly, the Company has not accrued income taxes on the PSA balance of $14,388,000 at December 31, 2003. However, if such taxes were assessed, the amount of the taxes payable would be $5,036,000. No deferred tax liabilities are recognized related to the PSA. 33 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- 11. Investment in and Advances to Subsidiaries Amounts invested in and advanced to the Company's subsidiaries are summarized as follows: December 31 2003 2002 ---------------- ---------------- (In Thousands) Common stock $ 1,073,826 $ 811,079 (Payable to) receivable from subsidiaries (94,524) 2,102
Summarized financial information for these subsidiaries is as follows: December 31 2003 2002 ---------------- ---------------- (In Thousands) Revenues $ 5,835,610 $ 7,929,991 Income (loss) before net realized gains on investments 113,648 (235,729) Net loss 39,172 (277,136) Admitted assets 31,161,112 24,301,380 Liabilities 30,087,287 23,490,301
12. Capital and Surplus Under Iowa insurance regulations, the Company is required to maintain a minimum total capital and surplus which is the lower of $5,000,000 or risk based capital. Additionally, the amount of dividends which can be paid by the Company to its stockholder without prior approval of the Iowa Division of Insurance is limited to the greater of the statutory net gain from operations or ten percent of surplus at December 31 of the preceding year. In 2004, the Company can pay dividends of $118,000,000 without prior approved from the Iowa Division of Insurance. Life and health insurance companies are subject to certain Risk-Based Capital ("RBC") requirements as specified by the NAIC. Under those requirements, the amount of capital and surplus maintained by a life and health insurance company is to be determined based on the various risk factors related to it. At December 31, 2003, the Company met the RBC requirements. 34 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- 13. Fair Values of Financial Instruments Life insurance liabilities that contain mortality risk and all nonfinancial instruments have been excluded from the disclosure requirements. However, the fair values of liabilities under all insurance contracts are taken into consideration in the Company's overall management of interest rate risk, such that the Company's exposure to changing interest rates is minimized through the matching of investment maturities with amounts due under insurance contracts. The carrying amounts and fair values of the Company's financial instruments are summarized as follows: December 31 2003 2002 ------------------------ ------------------------ Carrying Fair Carrying Fair Value Value Value Value ------------ ------------ ------------ ----------- (In Thousands) Assets: Bonds $ 3,758,375 $ 3,873,679 $ 3,207,349 $ 3,333,300 Preferred stocks 441 441 441 441 Unaffiliated common stocks 108,680 112,959 285 285 Mortgage loans 1,024,031 1,086,163 864,597 948,750 Contract loans 126,488 126,488 130,790 130,790 Derivative securities 102,173 91,849 32,833 26,805 Short-term investments 104,000 104,000 22,821 22,821 Cash 32,325 32,325 5,181 5,181 Investment in surplus notes 135,000 167,805 135,000 191,228 Indebtedness from related parties 5,015 5,015 108,320 108,319 Separate account assets 1,044,925 1,044,925 959,377 959,377 Receivable for securities 176 176 210 210 Liabilities: Individual and group annuities 3,701,212 3,591,686 3,131,561 3,052,911 Guaranteed investment contracts 425,401 425,449 - - Deposit type contract 195,316 195,316 190,201 191,677 Policyholder funds 18,351 18,351 26,333 26,333 Indebtedness to related parties 133,258 133,258 66,265 66,265 Separate account liabilities 1,044,925 1,044,925 959,377 959,377
The following methods and assumptions were used by the Company in estimating the fair value disclosures for financial instruments in the accompanying financial statements and notes thereto: Cash and short-term investments: The carrying amounts reported in the accompanying balance sheets for these financial instruments approximate their fair values. 35 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- Fixed maturities and equity securities: The fair values for bonds, preferred stocks and common stocks, reported herein, are based on quoted market prices, where available. For securities not actively traded, fair values are estimated using values obtained from independent pricing services or, in the case of private placements, collateralized mortgage obligations and other mortgage derivative investments, are estimated by discounting the expected future cash flows. The discount rates used vary as a function of factors such as yield, credit quality, and maturity, which fall within a range between 2% and 11% over the total portfolio. Fair values determined on this basis can differ from values published by the NAIC Securities Valuation Office. Fair value as determined by the NAIC as of December 31, 2003 and 2002 is $4,968,378,000 and $4,232,177,000, respectively. Mortgage loans: Estimated fair values for commercial real estate loans were generated using a discounted cash flow approach. Loans in good standing are discounted using interest rates determined by U.S. Treasury yields on December 31 and spreads applied on new loans with similar characteristics. The amortizing features of all loans are incorporated in the valuation. Where data on option features is available, option values are determined using a binomial valuation method, and are incorporated into the mortgage valuation. Restructured loans are valued in the same manner; however, these loans were discounted at a greater spread to reflect increased risk. All residential loans are valued at their outstanding principal balances, which approximate their fair values. Derivative financial instruments: Fair values for on-balance-sheet derivative financial instruments (caps, options and floors) and off-balance-sheet derivative financial instruments (swaps) are based on broker/dealer valuations or on internal discounted cash flow pricing models taking into account current cash flow assumptions and the counterparties' credit standing. Investment in surplus notes: Estimated fair values for investment in surplus notes are generated using a discounted cash flow approach. Cash flows were discounted using interest rates determined by U.S. Treasury yields on December 31 and spreads applied on surplus notes with similar characteristics. Guaranteed investment contracts: The fair values of the Company's guaranteed investment contracts are estimated using discounted cash flow calculations, based on interest rates currently being offered for similar contracts with maturities consistent with those remaining for the contracts being valued. Other investment-type insurance contracts: The fair values of the Company's deferred annuity contracts are estimated based on the cash surrender values. The carrying values of other policyholder liabilities, including immediate annuities, dividend accumulations, supplementary contracts without life contingencies, and premium deposits, approximate their fair values. The carrying value of all other financial instruments approximates their fair value. 36 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- 14. Commitments and Contingencies Subsidiary Guarantees The Company guarantees contractual policy claims of its subsidiaries, Golden American Life Insurance Company and USG Annuity & Life Company. In the unlikely event that Golden American Life Insurance Company and USG Annuity & Life Company were unable to fulfill their obligations to policyholders, the Company would be obligated to assume the guaranteed policy obligations, but any ultimate contingent losses in connection with such guarantees will not have a material adverse impact on the Company's future operations or financial position. The Company leases its home office space and certain other equipment under operating leases that expire through 2017. During the years ended December 31, 2003 and 2002, rent expense totaled $5,528,000 and $4,951,000, respectively. At December 31, 2003, minimum rental payments due under all non-cancelable operating leases are: 2004 - $5,326,000, 2005 - $5,324,000, 2006 - $5,324,000, 2007 - $5,135,000 and 2008 - $4,948,000 and $42,466,000 thereafter. Litigation The Company is a party to threatened or pending lawsuits arising from the normal conduct of business. Due to the climate in insurance and business litigation, 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 pending lawsuits, in light of existing insurance, reinsurance and established reserves, it is the opinion of management that the disposition of such lawsuits will not have a materially adverse effect on the Company's operations or financial position. Other Matters Like many financial services companies, certain U.S. affiliates of ING Groep N.V. ("ING"), the Company's ultimate parent, ave received informal and formal requests for information since September 2003 from various governmental and self-regulatory agencies in connection with investigations related to mutual funds and variable insurance products. ING has cooperated fully with each request. In addition to reporting to regulatory requests, ING management initiated an internal review of trading in ING insurance, retirement, and mutual fund products. The goal of this review has been to identify whether there have been any instances of inappropriate trading in those products by third parties or by ING investment professionals and other ING personnel. This internal review is being conducted by independent special counsel and auditors. Additionally, ING reviewed its controls and procedures in a continuing effort to deter improper frequent trading in ING products. ING's internal reviews related to mutual fund trading are continuing. 37 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- The internal review has identified several arrangements allowing third parties to engage in frequent trading of mutual funds within our variable insurance and mutual fund products, and identified other circumstances where frequent trading occurred despite measures taken by ING intended to combat market timing. Most of the identified arrangements were initiated prior to ING's acquisition of the businesses in question. In each arrangement identified, ING has terminated the inappropriate trading, taken steps to discipline or terminate employees who were involved, and modified policies and procedures to deter inappropriate activity. While the review is not completed, management believes the activity identified does not represent a systemic problem in the businesses involved. These instances included agreements (initiated in 1998) that permitted on variable life insurance customer or ReliaStar Life Insurance Company ("ReliaStar"), an affiliate of the Company, to engage in frequent trading, and to submit orders until 4pm Central Time, instead of 4pm Eastern Time. ReliaStar was acquired by ING in 2000. The late trading arrangement was immediately terminated when current senior management became aware of it in 2002. ING believes that no profits were realized by the customer from the late trading aspect of the arrangement. ING will reimburse any ING Fund or its shareholders affected by inappropriate trading for any profits that accrued to any person who engaged in improper frequent trading for which ING is responsible. Management believes that the total amount of such reimbursements will not be material to ING or its U.S. business. 15. Financing Agreements The Company maintains a revolving loan agreement with SunTrust Bank, Atlanta (the "Bank"). Under this agreement, which expires July 30, 2004, the Company can borrow up to $100,000,000 from the Bank. Interest on any borrowing accrues at an annual rate equal to: (1) the cost of funds for the Bank for the period applicable for the advance plus 0.225% or (2) a rate quoted by the Bank to the Company for the borrowing. Under the agreement, the Company incurred interest expense of $0 and $171,000 for the years ended December 31, 2003 and 2002, respectively. At December 31, 2003 and 2002, the Company had $0 payable to the Bank. The Company also maintains a revolving loan agreement with Bank of New York, New York (the "BONY"). Under this agreement, the Company can borrow up to $100,000,000 from BONY. Interest on any of the Company borrowing accrues at an annual rate equal to: (1) the cost of funds for BONY for the period applicable for the advance plus 0.35% or (2) a rate quoted by BONY to the Company for the borrowing. Under this agreement, the Company incurred interest expense of $0 and $16,000 for the years ended December 31, 2003 and 2002, respectively. At December 31, 2003 and 2002, the Company had $0 payable to BONY. 38 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- 16. Related Party Transactions Affiliates Management and service contracts and all cost sharing arrangements with other affiliated ING United States Life Insurance Companies are allocated among companies in accordance with normal, generally accepted expense and cost allocation methods. Investment Management: The Company has entered into an investment advisory agreement and an administrative services agreement with ING Investment Management, LLC ("IIM") under which IIM provides the Company with investment management and asset liability management services. Total fees under the agreement were approximately $14,461,000 and $11,118,000 for the years ended December 31, 2003 and 2002, respectively. Inter-insurer Services Agreement: The Company has entered into a services agreement with certain of its affiliated insurance companies in the United States ("affiliated insurers") whereby the affiliated insurers provide certain administrative, management, professional, advisory, consulting and other services to each other. Net amounts received under these agreements were $15,551,000 and $3,029,000 for the years ended December 31, 2003 and 2002, respectively. Reciprocal Loan Agreement: The Company maintains a reciprocal loan agreement with ING AIH, to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Under this agreement, which expires December 31, 2007, the Company and ING AIH can borrow up to $104,000,000 from one another. Interest on any Company borrowing is charged at the rate of ING AIH's cost of funds for the interest period plus 0.15%. Interest on any ING AIH borrowings is charged at a rate based on the prevailing interest rate of U.S. commercial paper available for purchase with a similar duration. Under this agreement, the Company incurred interest expense of $61,000 and interest income of $730,000 for the year ended December 31, 2003. At December 31, 2003, the Company had $0 payable to ING AIH and $104,000,000 receivable from ING AIH, which is reported on the balance sheets in cash and short-term investments. Promissory note: The Company has a promissory note in the amount of $50,000,000 payable to Lion Connecticut Holdings, Inc. The note was issued on April 15, 1997. Interest is charged at an annual rate of 8.75%, and the face amount is due on April 1, 2007. The Company incurred interest expense of $4,375,000 on this note for the years ended December 31, 2003 and 2002, respectively. There are no collateral requirements on this promissory note. This note is reported on the balance sheets in borrowed money. Tax Sharing Agreements: The Company has entered into federal tax sharing agreements with a member of an affiliated group as defined in Section 1504 of the Internal Revenue Code of 1986, as amended. The agreement provides for the manner of calculation and the amounts/timing of the payments between the parties as well as other related matters in connection with the filing of consolidated federal income tax returns. The Company has also entered into a state tax sharing agreement with ING AIH and each of the specific subsidiaries that are parties to the agreement. The state tax agreement applies to situations in which ING AIH and all or some of the subsidiaries join in the filing of a state or local franchise, income tax or other tax return on a consolidated, combined or unitary basis. 39 Equitable Life Insurance Company of Iowa Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- Services Agreement with ING Financial Adviser, LLC: The Company has entered into a services agreement with ING Financial Advisors, LLC ("ING FA") to provide certain administrative, management, professional advisory, consulting and other services to the Company for the benefit of its customers. Charges for these services are to be determined in accordance with fair and reasonable standards with neither party realizing a profit nor incurring a loss as a result of the services provided to the Company. The Company will reimburse ING FA for direct and indirect costs incurred on behalf of the Company. Subsidiaries The Company owned, as of December 31, 2003, 100% of the capital stock, valued on the equity basis of, USG Annuity and Life Insurance Company (an Oklahoma domestic insurer) and Golden American Life Insurance Company (a Delaware domestic insurer). Assets and liabilities along with related revenues and expenses recorded as a result of transactions and agreements with affiliates may not be the same as those recorded if the Company was not a wholly-owned subsidiary of its parent. 17. Guaranty Fund Assessments Insurance companies are assessed the costs of funding the insolvencies of other insurance companies by the various state guaranty associations, generally based on the amount of premiums companies collect in that state. The Company accrues the cost of future guaranty fund assessments based on estimates of insurance company insolvencies provided by the National Organization of Life and Health Insurance Guaranty Associations and the amount of premiums written in each state. The Company has estimated this liability to be $3,492,000 and $3,494,000 as of December 31, 2003 and 2002, respectively, and has recorded a liability. The Company has also recorded an asset of $81,000 and $473,000 as of December 31, 2003 and 2002, respectively, for future credits to premium taxes for assessments already paid. 18. Subsequent Events Golden American Life Insurance Company ("Golden"), requested that the Delaware Insurance Department approve the redomestication of Golden from Delaware to Iowa effective January 1, 2004. The Company, United Life & Annuity Insurance Company ("ULA"), and USG Annuity and Life Company ("USG") requested the Iowa Division of Insurance (for the Company and ULA) and the Oklahoma Department of Insurance (for USG) approve the merger of the affiliated life insurance company operations of the Company, ULA, Golden, and USG with Golden being the survivor. The sequence of events, effective January 1, 2004, is as follows: redomestication of Golden to Iowa, merger of the four affiliated insurers with Golden being the survivor, and the renaming of Golden to ING USA Annuity and Life Insurance Company ("ING USA"). The Delaware Insurance Department provided a "no objection letter" for the redomestication of Golden to Iowa on August 25, 2003. The Iowa Division of Insurance approved the merger on July 21, 2003 and the Oklahoma Department of Insurance on August 11, 2003. 40 Exhibit 99.2 Report of Independent Auditors Board of Directors and Stockholder ING USA Annuity and Life Insurance Company We have audited the accompanying statutory basis balance sheets of United Life & Annuity Insurance Company ("the Company" which, effective January 1, 2004, merged into an affiliate, ING USA Annuity and Life Insurance Company, a wholly owned subsidiary of ING America Insurance Holdings, Inc.) as of December 31, 2003 and 2002, and the related statutory basis statements of operations, changes in capital and surplus, and cash flows for the years then ended. 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 auditing standards generally accepted in the 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As described in Note 1 to the financial statements, the Company presents its financial statements in conformity with accounting practices prescribed or permitted by the Insurance Department of the State of Iowa ("Iowa Insurance Department"), which practices differ from accounting principles generally accepted in the United States. The variances between such practices and accounting principles generally accepted in the United States are described in Note 1. The effects on the financial statements of these variances are not reasonably determinable but are presumed to be material. In our opinion, because of the effects of the matter described in the preceding paragraph, the financial statements referred to above do not present fairly, in conformity with accounting principles generally accepted in the United States, the financial position of United Life & Annuity Insurance Company at December 31, 2003 and 2002 or the results of its operations or its cash flows for the years then ended. 1 However, in our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of United Life & Annuity Insurance Company at December 31, 2003 and 2002, and the results of its operations and its cash flows for the years then ended, in conformity with accounting practices prescribed or permitted by the Iowa Insurance Department. /s/ Ernst and Young March 22, 2004 2 United Life & Annuity Insurance Company Balance Sheets - Statutory Basis December 31 2003 2002 --------------- --------------- (In Thousands) Admitted assets Cash and invested assets: Bonds $ 580,896 $ 608,870 Common stocks 2 10 Subsidiary 25 25 Mortgage loans 36,853 34,829 Policy loans 880 933 Other invested assets 6,739 13,908 Cash and short-term investments 3,700 14,741 --------------- --------------- Total cash and invested assets 629,095 673,316 Deferred and uncollected premiums, less loading (2003 - $0; 2002 - $0) (30) (30) Accrued investment income 7,614 8,523 Reinsurance balances recoverable 45 112 Federal income tax recoverable (including $2,639 and $5,385 net deferred tax assets at December 31, 2003 and 2002, respectively) 3,246 6,791 Separate account assets 63,193 64,410 Other assets 784 375 --------------- --------------- Total admitted assets $ 703,947 $ 753,497 =============== ===============
The accompanying notes are an integral part of these financial statements. 3 United Life & Annuity Insurance Company Balance Sheets - Statutory Basis December 31 2003 2002 --------------- --------------- (In Thousands) except share amounts) Liabilities and capital and surplus Liabilities: Policy and contract liabilities: Life and annuity reserves $ 540,198 $ 586,755 Deposit type contracts 13,869 14,926 Unpaid claims - 25 ---------------- --------------- Total policy and contract liabilities 554,067 601,706 Interest maintenance reserve 4,800 188 Accounts payable and accrued expenses 2,657 1,243 Indebtedness to related parties 1,293 1,634 Asset valuation reserve 5,966 5,743 Other liabilities (2,878) (2,633) Separate account liabilities 63,193 64,410 ---------------- --------------- Total liabilities 629,098 672,291 Capital and surplus: Common stock, authorized 4,200,528 shares of $2.00 par value, 4,200,528 issued and outstanding 8,401 8,401 Paid-in and contributed surplus 41,241 41,241 Unassigned surplus 25,207 31,564 ---------------- --------------- Total capital and surplus 74,849 81,206 ---------------- --------------- Total liabilities and capital and surplus $ 703,947 $ 753,497 ================ ===============
The accompanying notes are an integral part of these financial statements. 4 United Life & Annuity Insurance Company Statements of Operations - Statutory Basis Year ended December 31 2003 2002 ---------------- ---------------- (In Thousands) Premiums and other revenues: Life, annuity, and accident and health premiums $ 1,629 $ 1,228 Policy proceeds and dividends left on deposit 491 205 Net investment income 34,743 44,256 Amortization of interest maintenance reserve 1,075 1,656 Commissions, expense allowances and reserve adjustments on reinsurance ceded 383 502 Other income 1,599 1,598 ---------------- ---------------- Total premiums and other revenues 39,920 49,445 Benefits paid or provided: Annuity benefits 19,306 20,309 Surrender benefits 67,727 100,443 Interest on policy or contract funds 231 598 Other benefits (25) 25 Life contract withdrawals 1,712 1,170 Decrease in life, annuity, and accident and health reserves (46,557) (69,041) Net transfers from separate accounts (12,060) (17,382) ---------------- ---------------- Total benefits paid or provided 30,334 36,122 Insurance expenses: Commissions 529 611 General expenses 3,478 1,877 Insurance taxes, licenses and fees, excluding federal income taxes 464 (536) Other - 4 ---------------- ---------------- Total insurance expenses 4,471 1,956 ---------------- ---------------- Gain from operations before federal income taxes and net realized capital gains (losses) 5,115 11,367 Federal income tax benefit (1,413) (5,786) ---------------- ---------------- Gain from operations before net realized capital gains (losses) 6,528 17,153 Net realized capital gains (losses) net of income tax expense (benefit): 2003 - $0; 2002 - $(3,926) and excluding net transfers to the interest maintenance reserve 2003- $5,687; 2002- $(2,310) 2,501 (5,602) ---------------- ---------------- Net income $ 9,029 $ 11,551 ================ ================
The accompanying notes are an integral part of these financial statements. 5 United Life & Annuity Insurance Company Statements of Operations - Statutory Basis Year ended December 31 2003 2002 ---------------- ---------------- (In Thousands) Common stock: Balance at beginning and end of year $ 8,401 $ 8,401 ---------------- ---------------- Paid-in and contributed surplus Balance at beginning and end of year 41,241 41,241 ---------------- ---------------- Unassigned surplus: Balance at beginning of year 31,564 16,997 Net income 9,029 11,551 Change in net unrealized capital gains or losses 86 (1,396) Change in nonadmitted assets 2,016 (5,406) Change in asset valuation reserve (223) 2,909 Change in surplus as a result of reinsurance (359) (475) Change in net deferred income tax (4,506) 7,388 Dividends to stockholder (12,400) - Other adjustments - (4) ---------------- ---------------- Balance at end of year 25,207 31,564 ---------------- ---------------- Total capital and surplus $ 74,849 $ 81,206 ================ ================
The accompanying notes are an integral part of these financial statements. 6 United Life & Annuity Insurance Company Statements of Cash Flows - Statutory Basis Year ended December 31 2003 2002 ---------------- ---------------- (In Thousands) Operations Premiums, policy proceeds, and other considerations received, net of reinsurance paid $ 1,627 $ 1,219 Net investment income received 36,628 47,009 Commissions, expenses paid and miscellaneous expenses (2,790) (2,766) Benefits paid (89,793) (125,136) Net transfers to separate accounts 12,010 19,650 Federal income taxes received 2,210 1,697 Other revenues 1,989 1,637 ---------------- -------------- Net cash used in operations (38,119) (56,690) Investment activities Proceeds from sales, maturities, or repayments of investments: Bonds 997,840 697,696 Mortgage loans 2,456 3,117 Other invested assets 308 82 Net losses on cash and short-term investments - (262) Miscellaneous proceeds 7,923 660 ---------------- -------------- Net proceeds from sales, maturities, or repayments of investments 1,008,527 701,293 Cost of investments acquired: Bonds 962,486 632,726 Mortgage loans 4,480 7,078 Other invested assets 396 229 Miscellaneous applications 690 9,273 ---------------- -------------- Total cost of investments acquired 968,052 649,306 Net change in contract loans (53) (95) ---------------- -------------- Net cash provided by investment activities 40,528 52,082 Financing and miscellaneous activities Cash provided: Borrowed money, net (4) - Net deposits on deposit-type contract funds 117 (2,938) Dividends to stockholder (12,400) - Other sources (1,163) 3,988 ---------------- -------------- Net cash (used) provided by financing and miscellaneous activities (13,450) 1,050 ---------------- -------------- Net decrease in cash and short-term investments (11,041) (3,558) Cash and short-term investments: Beginning of year 14,741 18,299 ---------------- -------------- End of year $ 3,700 $ 14,741 ================ ==============
The accompanying notes are an integral part of these financial statements. 7 United Life & Annuity Insurance Company Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- 1. Nature of Operations and Significant Accounting Policies United Life & Annuity Insurance Company (the "Company") is domiciled in Iowa and is a direct, wholly-owned subsidiary of Lion Connecticut Holdings, Inc., which in turn is a wholly-owned subsidiary of ING America Insurance Holdings, Inc. ("ING AIH"). Effective January 1, 2004, the Company merged into an affiliate, ING USA Annuity and Life Insurance Company, a wholly-owned subsidiary of Lion Connecticut Holdings, Inc. The primary insurance products offered by the Company are annuity related. The Company also offers life and health insurance products, however all life and health business is ceded to other insurers. The Company is presently licensed in 47 states, the District of Columbia and Puerto Rico. The preparation of financial statements of insurance companies requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein. Basis of Presentation The accompanying financial statements of the Company have been prepared in conformity with accounting practices prescribed or permitted by the Insurance Department of the State of Iowa ("Iowa Insurance Department"), which practices differ from accounting principles generally accepted in the United States ("GAAP"). The most significant variances from GAAP are as follows: Investments: Investments in bonds and mandatorily redeemable preferred stocks are reported at amortized cost or market value based on the National Association of Insurance Commissioners ("NAIC") rating; for GAAP, such fixed maturity investments are designated at purchase as held-to-maturity, trading or available-for-sale. Held-to-maturity investments are reported at amortized cost, and the remaining fixed maturity investments are reported at fair value with unrealized capital gains and losses reported in operations for those designated as trading and as a separate component of other comprehensive income in stockholder's equity for those designated as available-for-sale. For structured securities, when a negative yield results from a revaluation based on new prepayment assumptions (i.e., undiscounted cash flows are less than current book value), an other than temporary impairment is considered to have occurred and the asset is written down to the value of the undiscounted cash flows. For GAAP, assets are re-evaluated based on the discounted cash flows using a current market rate. Impairments are recognized when there has been an adverse change in cash flows and the fair value is less than book value. The asset is then written down to fair value. 8 United Life & Annuity Insurance Company Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- Common stocks are reported at market value as determined by the Securities Valuation Office of the NAIC ("SVO") and the related unrealized capital gains/losses are reported in unassigned surplus along with adjustment for federal income taxes. Valuation Reserves: The asset valuation reserve ("AVR") is determined by an NAIC-prescribed formula and is reported as a liability rather than as a valuation allowance or an appropriation of surplus. The change in AVR is reported directly to unassigned surplus. Under a formula prescribed by the NAIC, the Company defers the portion of realized gains and losses on sales of fixed-income investments, principally bonds and mortgage loans, attributable to changes in the general level of interest rates, and amortizes those deferrals over the remaining period to maturity based on groupings of individual securities sold in five-year bands. The net deferral or interest maintenance reserve ("IMR") is reported as a component of other liabilities in the accompanying balance sheets. Realized gains and losses on investments are reported in operations net of federal income tax and transfers to the IMR. Under GAAP, realized capital gains and losses are reported in the statements of operations on a pretax basis in the period that the asset giving rise to the gain or loss is sold and valuation allowances are provided when there has been a decline in value deemed other than temporary, in which case the provision for such declines is charged to income. Valuation allowances, if necessary, are established for mortgage loans based on the difference between the net value of the collateral, determined as the fair value of the collateral less estimated costs to obtain and sell, and the recorded investment in the mortgage loan. Under GAAP, such allowances are based on the present value of expected future cash flows discounted at the loan's effective interest rate or, if foreclosure is probable, on the estimated fair value of the collateral. The initial valuation allowance and subsequent changes in the allowance for mortgage loans as a result of a temporary impairment are charged or credited directly to unassigned surplus, rather than being included as a component of earnings as would be required under GAAP. Policy Acquisition Costs: The costs of acquiring and renewing business are expensed when incurred. Under GAAP, acquisition costs related to traditional life insurance, to the extent recoverable from future policy revenues, are deferred and amortized over the premium-paying period of the related policies using assumptions consistent with those used in computing policy benefit reserves. For universal life insurance and investment products, to the extent recoverable from future gross profits, acquisition costs are amortized generally in proportion to the present value of expected gross margins from surrender charges and investment, mortality, and expense margins. 9 United Life & Annuity Insurance Company Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- Premiums: Life premiums are recognized as revenue when due. Premiums for annuity policies with mortality and morbidity risk, except for guaranteed interest and group annuity contracts, are also recognized as revenue when due. Premiums received for annuity policies without mortality or morbidity risk and for guaranteed interest and group annuity contracts are recorded using deposit accounting. Under GAAP, premiums for traditional life insurance products, which include those products with fixed and guaranteed premiums and benefits and consist primarily of whole life insurance policies, are recognized as revenue when due. Group insurance premiums are recognized as premium revenue over the time period to which the premiums relate. Revenues for universal life, annuities and guaranteed interest contracts consist of policy charges for the cost of insurance, policy administration charges, amortization of policy initiation fees and surrender charges assessed during the period. Benefit and Contract Reserves: Life policy and contract reserves under statutory accounting practices are calculated based upon both the net level premium and Commissioners' Reserve Valuation methods using statutory rates for mortality and interest. GAAP requires that policy reserves for traditional products be based upon the net level premium method utilizing reasonably conservative estimates of mortality, interest, and withdrawals prevailing when the policies were sold. For interest-sensitive products, the GAAP policy reserve is equal to the policy fund balance plus an unearned revenue reserve which reflects the unamortized balance of early year policy loads over renewal year policy loads. Reinsurance: For business ceded to unauthorized reinsurers, statutory accounting practices require that reinsurance credits permitted by the treaty be recorded as an offsetting liability and charged against unassigned surplus. Under GAAP, an allowance for amounts deemed uncollectible would be established through a charge to earnings. Statutory income recognized on certain reinsurance treaties representing financing arrangements is not recognized on a GAAP basis. Policy and contract liabilities ceded to reinsurers have been reported as reductions of the related reserves rather than as assets as required under GAAP. Commissions allowed by reinsurers on business ceded are reported as income when received rather than being deferred and amortized with deferred policy acquisition costs as required under GAAP. Subsidiary: The accounts and operations of the Company's subsidiary are not consolidated with the accounts and operations of the Company as would be required under GAAP. 10 United Life & Annuity Insurance Company Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- Nonadmitted Assets: Certain assets designated as "nonadmitted," principally deferred federal income tax assets, disallowed interest maintenance reserves, non-operating software, past-due agents' balances, furniture and equipment, intangible assets, and other assets not specifically identified as an admitted asset within the Accounting Practices and Procedures Manual are excluded from the accompanying balance sheets and are charged directly to unassigned surplus. Under GAAP, such assets are included in the balance sheets. Universal Life and Annuity Policies: Revenues for universal life and annuity policies consist of the entire premium received and benefits incurred represent the total of death benefits paid and the change in policy reserves. Under GAAP, premiums received in excess of policy charges would not be recognized as premium revenue and benefits would represent the excess of benefits paid over the policy account value and interest credited to the account values. Deferred Income Taxes: Deferred tax assets are provided for and admitted to an amount determined under a standard formula. This formula considers the amount of differences that will reverse in the subsequent year, taxes paid in prior years that could be recovered through carrybacks, surplus limits, and the amount of deferred tax liabilities available for offset. Any deferred tax assets not covered under the formula are non-admitted. Deferred taxes do not include any amounts for state taxes. Under GAAP, a deferred tax asset is recorded for the amount of gross deferred tax assets that are expected to be realized in future years and a valuation allowance is established for the portion that is not realizable. Statements of Cash Flows: Cash and short-term investments in the statements of cash flows represent cash balances and investments with initial maturities of one year or less. Under GAAP, the corresponding caption of cash and cash equivalents include cash balances and investments with initial maturities of three months or less. Reconciliation to GAAP The effects of the preceding variances from GAAP on the accompanying statutory basis financial statements have not been determined, but are presumed to be material. Other significant accounting practices are as follows: Investments Investments are stated at values prescribed by the NAIC, as follows: Bonds not backed by other loans are principally stated at amortized cost using the interest method. 11 United Life & Annuity Insurance Company Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- Single class and multi-class mortgage-backed/asset-backed securities are valued at amortized cost using the interest method including anticipated prepayments. Prepayment assumptions are obtained from dealer surveys or internal estimates and are based on the current interest rate and economic environment. The retrospective adjustment method is used to value all such securities except for higher-risk asset backed securities, which are valued using the prospective method. Common stocks are reported at market value as determined by the SVO and the related unrealized capital gains/losses are reported in unassigned surplus with adjustment for federal income taxes. The Company analyzes the general account investments to determine whether there has been an other than temporary decline in fair value below the amortized cost basis. Management considers the length of time and the extent to which the market value has been less than cost, the financial condition and near-term prospects of the issuer, future economic conditions and market forecasts, and the Company's intent and ability to retain the investment in the issuer for a period of time sufficient to allow for recovery in market value. If it is probable that all amounts due according to the contractual terms of a debt security will not be collected, an other than temporary impairment is considered to have occurred. The Company's noninsurance subsidiary is carried at cost. Mortgage loans are reported at amortized cost, less allowance for impairments. Contract loans are reported at unpaid principal balances. Short-term investments are reported at amortized cost. Short-term investments include investments with maturities of less than one year at the date of acquisition. Partnership interests, which are included in other invested assets, are reported at the underlying GAAP equity of the investee. Realized capital gains and losses are determined using the specific identification method. Cash on hand includes cash equivalents. Cash equivalents are short-term investments that are both readily convertible to cash and have an original maturity date of three months or less. Short-term investments are carried at amortized cost, which approximates market value. 12 United Life & Annuity Insurance Company Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- Aggregate Reserve for Life Policies and Contracts Life, annuity, and accident and health reserves are developed by actuarial methods and are determined based on published tables using statutorily specified interest rates and valuation methods that will provide, in the aggregate, reserves that are greater than or equal to the minimum or guaranteed policy cash value or the amounts required by law. Interest rates range from 3% to 10%. The Company waives the deduction of deferred fractional premiums upon the death of the insured. It is the Company's practice to return a pro rata portion of any premium paid beyond the policy month of death, although it is not contractually required to do so for certain issues. The methods used in valuation of substandard policies are as follows: For life, endowment and term policies issued substandard, the standard reserve during the premium-paying period is increased by 50% of the gross annual extra premium. Standard reserves are held on Paid-Up Limited Pay contracts. For reinsurance accepted with table rating, the reserve established is a multiple of the standard reserve corresponding to the table rating. For reinsurance with flat extra premiums, the standard reserve is increased by 50% of the flat extra. The tabular interest has been determined from the basic data for the calculation of policy reserves for all direct ordinary life insurance and for the portion of group life insurance classified as group Section 79. The tabular interest of funds not involving life contingencies is calculated as the current year reserves, plus payments, less prior year reserves, less funds added. Reinsurance Reinsurance premiums, commissions, expense reimbursements, and reserves related to reinsured business are accounted for on bases consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Reserves are based on the terms of the reinsurance contract and are consistent with the risks assumed. Premiums and benefits ceded to other companies have been reported as a reduction of premium revenue and benefits expense. Amounts applicable to reinsurance ceded for reserves and unpaid claim liabilities have been reported as reductions of these items, and expense allowances received in connection with reinsurance ceded have been reflected in operations. 13 United Life & Annuity Insurance Company Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- Nonadmitted Assets Nonadmitted assets are summarized as follows: December 31 2003 2002 ---------------- --------------- (In Thousands) Deferred federal income taxes $ 10,369 $ 12,175 Agents' debit balances (7) 22 Other - 181 ---------------- --------------- Total nonadmitted assets $ 10,362 $ 12,378 ================ ===============
Changes in nonadmitted assets are generally reported directly in unassigned surplus as an increase or decrease in nonadmitted assets. Certain changes are reported directly in unassigned surplus as a change in unrealized capital gains or losses. Claims and Claims Adjustment Expenses Claims expenses represent the estimated ultimate net cost of all reported and unreported claims incurred through December 31, 2003. The Company does not discount claims and claims adjustment expense reserves. Such estimates are based on actuarial projections applied to historical claims payment data. Such liabilities are considered to be reasonable and adequate to discharge the Company's obligations for claims incurred but unpaid as of December 31, 2003. Cash Flow Information Cash and short-term investments include cash on hand, demand deposits and short-term fixed maturity instruments with a maturity of less than one year at date of acquisition. The Company borrowed $123,000,000 and repaid $123,000,000 in 2003 and borrowed $91,220,000 and repaid $91,220,000 in 2002. These borrowings were on a short-term basis, at an interest rate that approximated current money market rates and exclude borrowings from reverse dollar repurchase transactions. Interest paid on borrowed money was $17,000 and $13,000 during 2003 and 2002, respectively. Separate Accounts Separate account assets and liabilities held by the Company represent funds held for the benefit of the Company's variable annuity policy and contract holders who bear all of the investment risk associated with the policies. Such policies are of a non-guaranteed nature. All net investment experience, positive or negative, is attributed to the policy and contract holders' account values. The assets and liabilities of these accounts are carried at fair value. 14 Reserves related to the Company's mortality risk associated with these policies are included in annuity reserves. The operations of the separate accounts are not included in the accompanying statements of operations. Reclassifications Certain prior year amounts in the Company's statutory basis financial statements have been reclassified to conform to the 2003 financial statement presentation. 2. Permitted Statutory Basis Accounting Practices The financial statements of the Company are presented on the basis of accounting practices prescribed or permitted by the Iowa Insurance Department. The Iowa Insurance Department recognizes only statutory accounting practices prescribed or permitted by the State of Iowa for determining and reporting the financial condition and results of operations of an insurance company for determining its solvency under the Iowa Insurance Laws. The NAIC Accounting Practices and Procedures Manual has been adopted as a component of prescribed or permitted practices by the State of Iowa. The Commissioner of Insurance has the right to permit other specific practices that deviate from prescribed practices. The Company is required to identify those significant accounting practices that are permitted, and obtain written approval of the practices from the Iowa Department of Insurance. As of December 31, 2003 and 2002, the Company had no such permitted accounting practices. 15 United Life & Annuity Insurance Company Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- 3. Investments The amortized cost and fair value of bonds and equity securities are as follows: Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value ------------- ------------ ------------ ------------- (In Thousands) At December 31, 2003: U.S. Treasury securities and obligations $ 48,426 $ 798 $ 69 $ 49,155 States, municipalities, and political subdivisions 418 29 - 447 Foreign government 30,752 113 75 30,790 Public utilities securities 30,435 1,509 83 31,861 Corporate securities 322,331 13,447 2,135 333,643 Mortgage-backed securities 80,500 739 1,778 79,461 Commercial mortgage-backed securities 27,892 1,563 130 29,325 Other asset-backed securities 40,142 420 824 39,738 ------------- ------------ ------------ ------------- Total fixed maturities 580,896 18,618 5,094 594,420 Common stocks - 2 - 2 ------------- ------------ ------------ ------------- Total equity securities - 2 - 2 ------------- ------------ ------------ ------------- Total $ 580,896 $ 18,620 $ 5,094 $ 594,422 ============= ============ ============ ============= At December 31, 2002: U.S. Treasury securities and obligations $ 112,154 $ 3,593 $ - $ 115,747 States, municipalities, and political subdivisions 452 39 - 491 Public utilities securities 22,776 853 780 22,849 Corporate securities 288,160 12,781 1,452 299,489 Mortgage-backed securities 128,750 6,063 1,149 133,664 Commerical mortgage-backed securities 24,221 1,465 62 25,624 Other asset-backed securities 32,357 330 6,202 26,485 ------------- ------------ ------------ ------------- Total fixed maturities 608,870 25,124 9,645 624,349 Common stocks 20 8 18 10 ------------- ------------ ------------ ------------- Total equity securities 20 8 18 10 ------------- ------------ ------------ ------------- Total $ 608,890 $ 25,132 $ 9,663 $ 624,359 ============= ============ ============ =============
16 United Life & Annuity Insurance Company Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- As of December 31, 2003, the aggregate fair value of debt securities with unrealized losses and the time period that cost exceeded fair value are as follows: More than 6 Less than 6 months and less More than 12 months below than 12 months months below cost below cost cost Total ----------------- ------------------ ----------------- ------------------ (In Thousands) Fair value $ 77,073 $ 86,922 $ 13,324 $ 177,389 Unrealized loss 497 2,725 1,872 5,094
Of the unrealized losses more than 6 months and less than 12 months in duration of $2,725,000, there were $958,000 in unrealized losses that are primarily related to interest rate movement or spread widening for other than credit-related reasons. Business and operating fundamentals are performing as expected. The remaining unrealized losses of $1,767,000 as of December 31, 2003 included the following significant items: $1,258,000 of unrealized losses related to mortgage-backed and structured securities reviewed for impairment under the guidance prescribed by SSAP 43 Loan-backed and Structured Securities. This category includes U.S. government-backed securities, principal protected securities and structured securities which did not have an adverse change in cash flows for which the fair value was $35,618,000. $384,000 of unrealized losses related to the energy/utility industry, for which the fair value was $12,734,000. During 2003, the energy sector recovered due to a gradually improving economic picture and the lack of any material accounting irregularities similar to those experienced in the prior two years. Current analysis indicates that the debt will be serviced in accordance with the contractual terms. The remaining unrealized losses totaling $125,000 relate to a fair value of $4,754,000. Of the unrealized losses more than 12 months in duration of $1,872,000, there were $1,413,000 in unrealized losses that are primarily related to mortgage-backed and structured securities reviewed for impairment under the guidance prescribed by SSAP 43 Loan-backed and Structured Securities. This category includes U.S. government-backed securities, principal protected securities and structured securities which did not have an adverse change in cash flows for which the fair value was $8,574,000. The remaining unrealized losses of $459,000 as of December 31, 2003 included the following: $446,000 of unrealized losses related to the airline industry, for which the fair value was $3,265,000. During 2003, the airline industry continued to suffer from decreased passenger volumes offset by a gradually improving economy. The majority of the airline investments are comprised of Enhanced Equipment Trust Certificates ("EETC"). Current analysis indicates the specific collateral backing EETC investments is predominantly represented by newer models that are expected to be retained as individual airlines reduce their fleets. 17 United Life & Annuity Insurance Company Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- The amortized cost and fair value of investments in bonds at December 31, 2003, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Amortized Fair Cost Value -------------- --------------- (In Thousands) Maturity: Due in 1 year or less $ 19,841 $ 20,040 Due after 1 year through 5 years 227,329 232,957 Due after 5 years through 10 years 122,529 127,444 Due after 10 years 62,663 65,455 -------------- --------------- Total maturities 432,362 445,896 Mortgage-backed securities 80,500 79,461 Commercial mortgage-backed securities 27,892 29,325 Other asset-backed securities 40,142 39,738 -------------- --------------- Total $ 580,896 $ 594,420 ============== ===============
At December 31, 2003, investments in certificates of deposit and bonds, with an admitted asset value of $11,377,000, were on deposit with state insurance departments to satisfy regulatory requirements. Proceeds from the sales of investments in bonds and other fixed maturity interest securities were $890,061,000 and $600,173,000 in 2003 and 2002, respectively. Gross gains of $12,342,000 and $15,128,000 and gross losses of $2,375,000 and $13,017,000 during 2003 and 2002, respectively, were realized on those sales. A portion of the gains realized in 2003 and 2002 has been deferred to future periods in the interest maintenance reserve. Major categories of net investment income are summarized as follows: Year ended December 31 2003 2002 ---------------- ---------------- (In Thousands) Income: Bonds $ 33,926 $ 42,754 Mortgage loans 2,568 2,617 Contract loans 72 27 Other 309 635 ---------------- ---------------- Total investment income 36,875 46,033 Investment expenses 2,132 1,777 ---------------- ---------------- Net investment income $ 34,743 $ 44,256 ================ ================
18 United Life & Annuity Insurance Company Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- As part of its overall investment strategy, the Company has entered into agreements to purchase securities as follows: December 31 2003 2002 ---------------- ---------------- (In Thousands) Investment purchase commitments $ 165 $ 558
The lending rate for long-term mortgage loans during 2003 was 4.21%. Fire insurance is required on all properties covered by mortgage loans and must at least equal the excess of the loan over the maximum loan which would be permitted by law on the land without the buildings. The maximum percentage of any loan to the value of collateral at the time of the loan, exclusive of insured or guaranteed or purchase money mortgages, was 62.1% on commercial properties. As of December 31, 2003, the Company held no mortgages with interest more than 180 days overdue. 4. Concentrations of Credit Risk The Company held less-than-investment-grade bonds with an aggregate book value of $49,623,000 and $40,723,000 and with an aggregate market value of $51,584,000 and $40,582,000 at December 31, 2003 and 2002, respectively. Those holdings amounted to 8.5% of the Company's investments in bonds and 7.7% of total admitted assets at December 31, 2003. The holdings of less-than-investment-grade bonds are widely diversified and of satisfactory quality based on the Company's investment policies and credit standards. The Company held unrated bonds of $2,480,000 and $17,624,000 with an aggregate NAIC market value of $1,951,000 and $17,726,000 at December 31, 2003 and 2002, respectively. The carrying value of these holdings amounted to 0.43% of the Company's investment in bonds and 0.35% of the Company's total admitted assets at December 31, 2003. At December 31, 2003, the Company's commercial mortgages involved a concentration of properties located in California (46.0%) and Pennsylvania (13.5%). The remaining commercial mortgages relate to properties located in 18 other states. The portfolio is well diversified covering many different types of income-producing properties on which the Company has first mortgage liens. The maximum mortgage outstanding on any individual property is $6,290,000. 19 United Life & Annuity Insurance Company Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- 5. Annuity Reserves At December 31, 2003 and 2002, the Company's annuity reserves, including those held in separate accounts and deposit fund liabilities that are subject to discretionary withdrawal with adjustment, subject to discretionary withdrawal without adjustment, and not subject to discretionary withdrawal provisions are summarized as follows: Amount Percent ---------------- -------------- (In Thousands) December 31, 2003 Subject to discretionary withdrawal (with adjustment): With market value adjustment $ 1,124 0.2% At book value less surrender charge of 5% or more 44,238 7.2 At fair value 60,233 9.7 ---------------- -------------- Subtotal 105,595 17.1 Subject to discretionary withdrawal (without adjustment): At book value with minimal or no charge or adjustment 490,524 79.4 Not subject to discretionary withdrawal 21,806 3.5 ---------------- -------------- Total annuity reserves and deposit fund liabilities before reinsurance 617,925 100.0% ============= Less reinsurance ceded 5,739 ---------------- Net annuity reserves and deposit fund liabilities $ 612,186 ================ December 31, 2002 Subject to discretionary withdrawal (with adjustment): With market value adjustment $ 889 0.1% At book value less surrender charge of 5% or more 94,326 14.2 At fair value 61,500 9.3 ---------------- -------------- Subtotal 156,715 23.6 Subject to discretionary withdrawal (without adjustment): At book value with minimal or no charge or adjustment 482,267 72.6 Not subject to discretionary withdrawal 25,543 3.8 ---------------- -------------- Total annuity reserves and deposit fund liabilities before reinsurance 664,525 100.0% ============== Less reinsurance ceded 1,925 ---------------- Net annuity reserves and deposit fund liabilities $ 662,600 ================
20 United Life & Annuity Insurance Company Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- 6. Separate Accounts Separate account assets and liabilities held by the Company represent funds held for the benefit of the Company's variable annuity policy and contract holders who bear all the investment risk associated with the policies. Such policies are of a non-guaranteed nature. All net investment experience, positive or negative, is attributed to the policy and contract holders' account values. The assets of these accounts are carried at fair value. Premiums, deposits, and other considerations received for the years ended December 31, 2003 and 2002 were $201,000 and $408,000, respectively. The general nature and characteristics of the Company's nonguaranteed separate accounts business follows: December 31 2003 2002 ---------------- ---------------- (In Thousands) December 31, 2003 Premium, consideration or deposits $ 201 $ 408 ================ ================ Reserves for accounts with assets at: Market value $ 60,233 $ 61,500 Amortized cost - - ---------------- ---------------- Total reserves $ 60,233 $ 61,500 ================ ================ Reserves for separate accounts by withdrawal characteristics: Subject to descretionary withdrawal: With market value adjustment $ - $ - At book value without market value adjustments and with current surrender charge of 5% or more - - At market value 60,233 61,500 At book value without market value adjustments and with current surrender charge of less than 5% - - ---------------- ---------------- Subtotal 60,233 61,500 Not subject to discretionary withdrawal - - ---------------- ---------------- Total separate account aggregate reserves $ 60,233 $ 61,500 ================ ================
21 United Life & Annuity Insurance Company Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- A reconciliation of the amounts transferred to and from the separate accounts is presented below: Year ended December 31 2003 2002 ---------------- ---------------- (In Thousands) Transfers as reported in the Summary of Operations of the Separate Accounts Statement: Transfers to separate accounts $ 201 $ 408 Transfers from separate accounts (12,261) (17,790) ---------------- ---------------- Transfers as reported in the Statement of Operations $ (12,060) $ (17,382) ================ ================
7. Reinsurance The Company is involved in ceded reinsurance with other companies for the purpose of diversifying risk and limiting exposure on larger risks. To the extent that the assuming companies become unable to meet their obligations under these treaties, the Company remains contingently liable to its policyholders for the portion reinsured. To minimize its exposure to significant losses from retrocessionaire insolvencies, the Company evaluates the financial condition of the retrocessionaire and monitors concentrations of credit risk. The Company's ceded reinsurance arrangements reduced certain items in the accompanying financial statements by the following amounts: December 31 2003 2002 -------------- --------------- (In Thousands) Premiums $ 2,550 $ 2,832 Benefits paid or provided 11,049 6,101 Policy and contract liabilities at year end 83,857 91,095
22 United Life & Annuity Insurance Company Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- 8. Federal Income Taxes The components of the net deferred tax asset/(liability) are as follows: December 31 2003 2002 ---------------- ---------------- (In Thousands) Total deferred tax assets $ 13,725 $ 18,420 Total deferred tax liabilities (717) (859) ---------------- ---------------- Net deferred tax assets 13,008 17,561 Deferred tax asset nonadmitted (10,369) (12,176) ---------------- ---------------- Net admitted deferred tax asset $ 2,639 $ 5,385 ================ ================ Decrease (increase) in nonadmitted asset $ 1,807 $ (6,537) ================ ================
Current income taxes incurred consisted of the following major components: Year ended December 31 2003 2002 --------------- ---------------- (In Thousands) Federal taxes on operations $ (1,413) $ (5,786) Federal taxes on capital gains 2,925 3,926 Capital loss on carryovers utilized (2,925) (675) --------------- ---------------- Total current taxes incurred $ (1,413) $ (2,535) =============== ================
23 United Life & Annuity Insurance Company Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- The main components of deferred tax assets and deferred tax liabilities are as follows: December 31 2003 2002 --------------- ---------------- (In Thousands) Deferred tax assets resulting from book/tax differences in: Present value of insurance in force $ 7,291 $ 8,751 Capital loss carryovers 705 3,446 Investments 3,155 3,270 Deferred acquisition costs 924 1,096 Unrealized loss on investments 972 1,019 Insurance reserves 185 113 Other 493 725 --------------- ---------------- Total deferred tax assets 13,725 18,420 Deferred tax assets nonadmitted 10,369 12,176 --------------- ---------------- Admitted deferred tax assets 3,356 6,244 --------------- ---------------- Deferred tax liabilities resulting from book/tax differences in: Investments 633 725 Other 84 134 --------------- ---------------- Total deferred tax liabilities 717 859 --------------- ---------------- Net admitted deferred tax asset $ 2,639 $ 5,385 =============== ================
The change in net deferred income taxes is comprised of the following: December 31 2003 2002 Change -------------- -------------- -------------- (In Thousands) Total deferred tax assets $ 13,725 $ 18,420 $ (4,695) Total deferred tax liabilities 717 859 (142) -------------- -------------- -------------- Net deferred tax asset $ 13,008 $ 17,561 (4,553) ============== ============== Remove current year change in unrealized gains 47 -------------- Change in net deferred income tax (4,506) Remove other items in surplus: Current year change in non-admitted assets 74 -------------- Change in deferred taxes for rate reconciliation $ (4,432) ==============
24 United Life & Annuity Insurance Company Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- The provision for federal income taxes incurred and change in deferred taxes is different from that which would be obtained by applying the statutory Federal income tax rate to income (including capital items) before income taxes. The significant items causing this difference are: Year Ended December 31, 2003 --------------------- (In Thousands) Ordinary income $ 5,115 Capital gains 8,188 --------------------- Total pre-tax book income $ 13,303 ===================== Provision computed at statutory rate $ 4,656 Refinement of deferred tax balances (455) Interest maintenance reserve (376) Nondeductible general expenses 2 Amortization of reinsurance gain (764) Other (44) --------------------- Total $ 3,019 ===================== Federal income taxes incurred $ (1,413) Change in net deferred income taxes 4,432 --------------------- Total statutory income taxes $ 3,019 =====================
The amount of federal income taxes incurred that will be available for recoupment in the event of future net losses is $0 and $738,000 from 2003 and 2002 respectively. The Company has a recoverable of $607,000 at December 31, 2003 and $1,406,000 at December 31, 2002 from the United States Treasury for federal income taxes. The Company has gross capital loss carry forwards, which expire as follows: Expiration Year Amount ---------------------- -------------------- (In Thousands) 2005 $ 2,014
9. Investment in and Advances to Subsidiaries The Company has one wholly owned noninsurance subsidiary at December 31, 2003, United Variable Services, Inc. 25 United Life & Annuity Insurance Company Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- Amounts invested in and advanced to the Company's subsidiary is summarized as follows: December 31 2003 2002 --------------- --------------- (In Thousands) Common stock (cost $25,000 in 2003 and in 2002) $ 25 $ 25
10. Capital and Surplus Under Iowa insurance regulations, the Company is required to maintain a minimum total capital and surplus of $7,806,000. Additionally, the amount of dividends that can be paid by the Company to its stockholder without prior approval of the Iowa Insurance Department is limited to the greater of 10% of statutory surplus or the statutory net gain from operations of the preceding year. Life and health insurance companies are subject to certain Risk-Based Capital ("RBC") requirements as specified by the NAIC. Under those requirements, the amount of capital and surplus maintained by a life and health insurance company is to be determined based on the various risk factors related to it. At December 31, 2003, the Company meets the RBC requirements. 26 United Life & Annuity Insurance Company Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- 11. Fair Values of Financial Instruments Life insurance liabilities that contain mortality risk and all nonfinancial instruments have been excluded from the disclosure requirements. However, the fair values of liabilities under all insurance contracts are taken into consideration in the Company's overall management of interest rate risk, such that the Company's exposure to changing interest rates is minimized through the matching of investment maturities with amounts due under insurance contracts. The carrying amounts and fair values of the Company's financial instruments are summarized as follows: December 31 2003 2002 ----------------------------- ------------------------------ Carrying Fair Carrying Fair Amount Value Amount Value ------------- ------------ ------------- ------------- (In Thousands) Assets: Bonds $ 580,896 $ 594,420 $ 608,870 $ 624,349 Unaffiliated common stocks 2 2 10 10 Mortgage loans 36,853 40,955 34,829 39,729 Policy loans 880 880 933 933 Short-term investments 3,450 3,450 14,450 14,450 Cash 250 250 291 291 Separate account assets 63,193 63,193 64,410 64,410 Receivable for securities 1,081 1,081 8,308 8,308 Liabilities: Individual and group annuities 530,146 529,848 578,170 575,913 Deposit type contract 13,869 13,882 14,926 14,939 Indebtedness to related parties 1,293 1,293 1,634 1,634 Separate account liabilities 63,193 63,193 64,410 64,410
The following methods and assumptions were used by the Company in estimating the fair value disclosures for financial instruments in the accompanying financial statements and notes thereto: Cash and short-term investments: The carrying amounts reported in the accompanying balance sheets for these financial instruments approximate their fair values. 27 United Life & Annuity Insurance Company Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- Fixed maturities and equity securities: The fair values for bonds and common stocks reported herein are based on quoted market prices, where available. For securities not actively traded, fair values are estimated using values obtained from independent pricing services or, in the case of private placements, are estimated by discounting the expected future cash flows. The discount rates used vary as a function of factors such as yield, credit quality, and maturity, which fall within a range between 3% and 8% over the total portfolio. Fair values determined on this basis can differ from values published by the SVO. Fair value as determined by the SVO as of December 31, 2003 and 2002 is $584,169,000 and $611,948,000, respectively. Mortgage loans: Estimated market values for commercial real estate loans were generated using a discounted cash flow approach. Loans in good standing are discounted using interest rates determined by U.S. Treasury yields on December 31 and spreads applied on new loans with similar characteristics. The amortizing features of all loans are incorporated in the valuation. Where data on option features is available, option values are determined using a binomial valuation method, and are incorporated into the mortgage valuation. Restructured loans are valued in the same manner; however, these loans were discounted at a greater spread to reflect increased risk. All residential loans are valued at their outstanding principal balances, which approximate their fair values. Other investment-type insurance contracts: The fair values of the Company's deferred annuity contracts are estimated based on the cash surrender values. The carrying values of other policyholder liabilities, including immediate annuities, dividend accumulations, supplementary contracts without life contingencies, and premium deposits, approximate their fair values. The carrying value of all other financial instruments approximates their fair value. 12. Commitments and Contingencies The Company is a party to threatened or pending lawsuits arising from the normal conduct of business. Due to the climate in insurance and business litigation, 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 pending lawsuits, in light of existing insurance, reinsurance and established reserves, it is the opinion of management that the disposition of such lawsuits will not have a materially adverse effect on the Company's operations or financial position. 28 United Life & Annuity Insurance Company Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- Other Matters Like many financial services companies, certain U.S. affiliates of ING Groep N.V. ("ING"), the Company's ultimate parent, have received informal and formal requests for information since September 2003 from various governmental and self-regulatory agencies in connection with investigations related to mutual funds and variable insurance products. ING has cooperated fully with each request. In addition to responding to regulatory requests, ING management initiated an internal review of trading in ING insurance, retirement, and mutual fund products. The goal of this review has been to identify whether there have been any instances of inappropriate trading in those products by third parties or by ING investment professionals and other ING personnel. This internal review is being conducted by independent special counsel and auditors. Additionally, ING reviewed its controls and procedures in a continuing effort to deter improper frequent trading in ING products. ING's internal reviews related to mutual fund trading are continuing. The internal review has identified several arrangements allowing third parties to engage in frequent trading of mutual funds within the Company's variable insurance and mutual fund products, and identified other circumstances where frequent trading occurred despite measures taken by ING intended to combat market timing. Most of the identified arrangements were initiated prior to ING's acquisition of the businesses in question. In each arrangement identified, ING has terminated the inappropriate trading, taken steps to discipline or terminate employees who were involved, and modified policies and procedures to deter inappropriate activity. While the review is not completed, management believes the activity identified does not represent a systemic problem in the businesses involved. These instances included agreements (initiated in 1998) that permitted one variable life insurance customer of Reliastar Life Insurance Company ("Reliastar"), an affiliate of the Company, to engage in frequent trading, and to submit orders until 4pm Central Time, instead of 4pm Eastern Time. Reliastar was acquired by ING in 2000. The late trading arrangement was immediately terminated when current senior management became aware of it in 2002. ING believes that no profits were realized by the customer from the late trading aspect of the arrangement. In addition, the review has identified five arrangements that allowed frequent trading of funds within variable insurance products issued by Reliastar and by ING USA Annuity & Life Insurance Company and in certain ING Funds. ING entities did not receive special benefits in return for any of these arrangements, which have all been terminated. The internal review also identified two investment professionals who engaged in improper frequent trading in ING Funds. ING will reimburse any ING Fund or its shareholders affected by inappropriate trading for any profits that accrued to any person who engaged in improper frequent trading for which ING is responsible. Management believes that the total amount of such reimbursements will not be material to ING or its U.S. business. 29 United Life & Annuity Insurance Company Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- 13. Financing Agreements The Company maintains a revolving loan agreement with SunTrust Bank, Atlanta (the "Bank"). Under this agreement, which expires July 31, 2004, the Company can borrow up to $25,000,000 from the Bank. Interest on any Company borrowing accrues at an annual rate equal to: (1) the cost of funds for the Bank for the period applicable for the advance plus 0.225% or (2) a rate quoted by the Bank to the Company for the borrowing. Under this agreement, the Company incurred interest expense of $182 for the year ended December 31, 2003. At December 31, 2003, the Company had no amounts payable to the Bank. The Company also maintains a revolving loan agreement with Bank of New York, New York ("BONY"). Under this agreement, the Company can borrow up to $50,000,000 from BONY. Interest on any Company borrowing accrues at an annual rate equal to: (1) the cost of funds for BONY for the period applicable for the advance plus 0.35% or (2) a rate quoted by BONY to the Company for the borrowing. Under this agreement, the Company incurred no interest expense for the year ended December 31, 2003. At December 31, 2003, the Company had no amounts payable to BONY. 14. Related Party Transactions Affiliates Management and service contracts and all cost sharing arrangements with other affiliated ING U.S. life insurance companies are allocated among companies in accordance with normal, generally accepted expense and cost allocation methods. Investment Management: The Company has entered into an investment advisory agreement and an administrative services agreement with ING Investment Management, LLC ("IIM") under which IIM provides the Company with investment management and asset liability management services. Total fees under this agreement were approximately $1,871,000 and $1,617,000 for the years ended December 31, 2003 and 2002, respectively. Inter-insurer Services Agreement: The Company has entered into a services agreement with certain of its affiliated insurance companies in the United States ("affiliated insurers") whereby the affiliated insurers provide certain administrative, management, professional, advisory, consulting and other services to each other. Net amounts paid under these agreements were $2,304,000 and $384,000 for the years ended December 31, 2003 and 2002, respectively. 30 United Life & Annuity Insurance Company Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- Reciprocal Loan Agreement: The Company maintains a reciprocal loan agreement with ING AIH to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Under this agreement, which expires April 1, 2011, the Company and ING AIH can borrow up to $22,400,000 from one another. Interest on any borrowing is charged at the rate of ING AIH's cost of funds for the interest period plus 0.15%. Interest on any ING AIH borrowings is charged at the rate based on the prevailing interest rate of U.S. commercial paper available for purchase with a similar duration. Under this agreement, the Company incurred interest expense of $17,000 and interest income of $36,000 for the year ended December 31, 2003. At December 31, 2003, the Company had no amounts payable to or receivable from ING AIH. Assets and liabilities, along with related revenues and expenses, recorded as a result of transactions and agreements with affiliates may not be the same as those recorded if the Company was not a wholly-owned subsidiary of its parent. 15. Guaranty Fund Assessments Insurance companies are assessed the costs of funding the insolvencies of other insurance companies by the various state guaranty associations, generally based on the amount of premiums companies collect in that state. The Company accrues the cost of future guaranty fund assessments based on estimates of insurance company insolvencies provided by the National Organization of Life and Health Insurance Guaranty Associations ("NOLHGA") and the amount of premiums written in each state. The Company has recorded $490,000 and $474,000 for this liability as of December 31, 2003 and 2002, respectively. The Company has also recorded an asset of $26,000 and $351,000 as of December 31, 2003 and 2002, respectively, for future credits to premium taxes for assessments already paid. 16. Subsequent Events Golden American Life Insurance Company ("Golden") requested that the Delaware Insurance Department approve the redomestication of Golden from Delaware to Iowa effective January 1, 2004. Equitable Life Insurance Company of Iowa ("Equitable"), the Company, and USG Annuity and Life Company ("USG") requested the Iowa Department of Insurance (for Equitable and the Company) and the Oklahoma Department of Insurance (for USG) to approve the merger of the affiliated life insurance company operations of Equitable, the Company, Golden, and USG with Golden being the survivor. The sequence of events, effective January 1, 2004, is as follows: redomestication of Golden to Iowa, merger of the four affiliated insurers with Golden being the survivor, and the renaming of Golden to ING USA Annuity and Life Insurance Company ("ING USA"). 31 United Life & Annuity Insurance Company Notes to Financial Statements - Statutory Basis -------------------------------------------------------------------------------- The Delaware Insurance Department provided a "no objection letter" for the redomestication of Golden to Iowa on August 25, 2003. The Iowa Department of Insurance approved the merger on July 21, 2003 and the Oklahoma Department of Insurance approved it on August 11, 2003. 17. Reconciliation to the Annual Statement During 2002, the Company recorded prior year adjustments in its summary of operations in the 2002 Annual Statement. As a result, the differences below exist between the 2002 Annual Statement and the accompanying statutory basis financial statements: Capital and Net Income Surplus -------------- --------------- (In Thousands) Amounts as reported in the 2002 Annual Statement $ 8,817 $ 82,852 Capital gains tax (1,935) - Mortgage loan income 198 - Federal income taxes 4,471 - Asset valuation reserve - (1,646) -------------- --------------- $ 11,551 $ 81,206 ============== ===============
32 Exhibit 99.3 Report of Independent Auditors Board of Directors and Stockholder ING USA Annuity and Life Insurance Company We have audited the accompanying statutory basis balance sheets of USG Annuity & Life Company ("the Company" which, effective January 1, 2004, merged into an affiliate, ING USA Annuity and Life Insurance Company, a wholly owned subsidiary of ING America Insurance Holdings, Inc.) as of December 31, 2003 and 2002, and the related statutory basis statements of operations, changes in capital and surplus, and cash flows for the years then ended. 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 auditing standards generally accepted in the 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As described in Note 1 to the financial statements, the Company presents its financial statements in conformity with accounting practices prescribed or permitted by the Commissioner of Insurance of the State of Oklahoma ("Oklahoma Insurance Department"), which practices differ from accounting principles generally accepted in the United States. The variances between such practices and accounting principles generally accepted in the United States are described in Note 1. The effects on the financial statements of these variances are not reasonably determinable but are presumed to be material. In our opinion, because of the effects of the matter described in the preceding paragraph, the financial statements referred to above do not present fairly, in conformity with accounting principles generally accepted in the United States, the financial position of USG Annuity & Life Company at December 31, 2003 and 2002 or the results of its operations or its cash flows for the years then ended. 1 However, in our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of USG Annuity & Life Company at December 31, 2003 and 2002, and the results of its operations and its cash flows for the years then ended, in conformity with accounting practices prescribed or permitted by the Oklahoma Insurance Department. /s/ Ernst & Young March 22, 2004 USG Annuity & Life Company Balance Sheets - Statutory Basis December 31 2003 2002 --------------- --------------- (In Thousands) Admitted assets Cash and invested assets: Bonds $ 6,231,961 $ 6,116,495 Preferred stocks 1,273 1,088 Mortgage loans 1,471,607 1,483,855 Real estate, less accumulated depreciation (2003-$29, 2002-$304) 2,679 1,477 Contract loans 32,247 32,454 Other invested assets 41,017 47,704 Cash and short-term investments 27,739 9,116 --------------- --------------- Total cash and invested assets 7,808,523 7,692,189 Deferred and uncollected premiums, less loading (2003-$12, 2002-$58) 284 386 Accrued investment income 68,590 77,674 Reinsurance balances recoverable 252 335 Indebtedness from related parties 19,597 25 Federal income tax recoverable (including $18,475 and $15,601 net deferred tax assets at December 31, 2003 and 2002, respectively) 20,761 22,163 Other assets 33 2,451 --------------- --------------- Total admitted assets $ 7,918,040 $ 7,795,223 =============== ===============
The accompanying notes are an integral part of these financial statements. 3 USG Annuity & Life Company Balance Sheets - Statutory Basis December 31 2003 2002 --------------- --------------- (In Thousands) except share amounts) Liabilities and capital and surplus Liabilities: Policy and contract liabilities: Life and annuity reserves $ 6,918,897 $ 6,859,914 Deposit type contracts 224,767 246,501 Policyholders' funds 16 53 Unpaid claims 3,064 3,622 --------------- --------------- Total policy and contract liabilities 7,146,744 7,110,090 Interest maintenance reserve 41,337 11,799 Accounts payable and accrued expenses 17,684 13,807 Indebtedness to related parties 16,587 22,147 Asset valuation reserve 51,181 50,634 Borrowed money 286,886 184,450 Other liabilities 17,667 16,110 --------------- --------------- Total liabilities 7,578,086 7,409,037 Capital and surplus: Common stock: authorized 1,000 shares of $3,000 par value, 833 issued and outstanding 2,500 2,500 Paid-in and contributed surplus 316,963 316,963 Unassigned surplus 20,491 66,723 --------------- --------------- Total capital and surplus 339,954 386,186 --------------- --------------- Total liabilities and capital and surplus $ 7,918,040 $ 7,795,223 =============== ===============
The accompanying notes are an integral part of these financial statements. 4 USG Annuity & Life Company Statements of Operations - Statutory Basis Year ended December 31 2003 2002 --------------- --------------- (In Thousands) Premiums and other revenues: Life, annuity, and accident and health premiums $ 423,362 $ 1,285,640 Policy proceeds and dividends left on deposit 7,710 9,267 Net investment income 452,278 536,206 Amortization of interest maintenance reserve (6,647) (7,446) Commissions, expense allowances and reserve adjustments on reinsurance ceded 42,615 14,159 Other income - 1,619 --------------- --------------- Total premiums and other revenues 919,318 1,839,445 Benefits paid or provided: Death benefits 5,182 112,299 Annuity benefits 250,745 250,411 Surrender benefits 522,262 582,708 Interest on policy or contract funds 6,384 8,033 Other benefits 11 - Life contract withdrawals 9,827 8,968 Increase in life, annuity, and accident and health reserves 58,983 648,698 --------------- --------------- Total benefits paid or provided 853,394 1,611,117 Insurance expenses: Commissions 71,151 86,074 General expenses 32,567 33,272 Insurance taxes, licenses and fees, excluding federal income taxes 3,748 (231) Other 1,287 856 --------------- --------------- Total insurance expenses 108,753 119,971 --------------- --------------- (Loss) gain from operations before federal income taxes and net realized capital losses (42,829) 108,357 Federal income tax (benefit) expense (27,668) 41,015 --------------- --------------- (Loss) gain from operations before net realized capital losses (15,161) 67,342 Net realized capital losses; net of income tax (benefit) expense: 2003 - $18,494 and 2002 - ($6,049); and excluding net transfers to the interest maintenance reserve 2003- $22,891 and 2002- ($638) (31,599) (41,467) --------------- --------------- Net (loss) income $ (46,760) $ 25,875 =============== ===============
The accompanying notes are an integral part of these financial statements. 5 USG Annuity & Life Company Statements of Changes and Surplus - Statutory Basis Year ended December 31 2003 2002 --------------- --------------- (In Thousands) Common stock: Balance at beginning and end of year $ 2,500 $ 2,500 --------------- --------------- Paid-in and contributed surplus: Balance at beginning of year 316,963 286,963 Capital contribution - 30,000 --------------- --------------- Balance at end of year 316,963 316,963 --------------- --------------- Unassigned surplus: Balance at beginning of year 66,723 19,994 Net (loss) income (46,760) 25,875 Change in net unrealized capital losses (395) (7,240) Change in nonadmitted assets (742) 3,284 Change in asset valuation reserve (547) 20,987 Change in net deferred income tax 2,212 3,480 Other - 343 --------------- --------------- Balance at end of year 20,491 66,723 --------------- --------------- Total capital and surplus $ 339,954 $ 386,186 =============== ===============
The accompanying notes are an integral part of these financial statements. 6 USG Annuity & Life Company Statements of Cash Flows - Statutory Basis Year ended December 31 2003 2002 --------------- --------------- (In Thousands) Operations Premiums, policy proceeds, and other considerations received, net of reinsurance paid $ 423,582 $ 1,295,738 Net investment income received 620,710 647,957 Commission and expense allowances received on reinsurance ceded - 14,159 Benefits paid (821,273) (998,100) Insurance expenses paid (109,625) (122,791) Federal income taxes received (paid) 13,451 (53,696) Net other revenue 37,575 89 ------------------ ------------------ Net cash provided by operations 164,420 783,356 Investment activities Proceeds from sales, maturities, or repayments of investments: Bonds 8,021,572 8,709,883 Stocks - 357 Mortgage loans 329,751 275,949 Real estate 1,450 - Other invested assets 4,156 6,856 ------------------ ------------------ Net proceeds from sales, maturities, or repayments of investments 8,356,929 8,993,045 Cost of investments acquired: Bonds 8,253,561 9,713,052 Stocks 185 1,230 Mortgage loans 317,467 100,251 Real estate 2,708 - Other invested assets 10,530 14,594 ------------------ ------------------ Total cost of investments acquired 8,584,451 9,829,127 Change in contract loans (207) (279) ------------------ ------------------ Net cash used in investment activities (227,315) (835,803) Financing and miscellaneous activities Cash provided: Capital and surplus paid-in - 30,000 Borrowed money, net 102,436 1,102 Net deposits on deposit-type contract funds (21,734) (8) Other sources (uses) 816 (72,379) ------------------ ------------------ Net cash provided by (used in) financing and miscellaneous activities 81,518 (41,285) ------------------ ------------------ Net increase (decrease) in cash and short-term investments 18,623 (93,732) Cash and short-term investments: Beginning of year 9,116 102,848 ------------------ ------------------ End of year $ 27,739 $ 9,116 ================== ==================
The accompanying notes are an integral part of these financial statements. 7 USG ANNUITY & LIFE COMPANY Notes to Financial Statements - Statutory Policies -------------------------------------------------------------------------------- 1. Nature of Operations and Significant Accounting Policies USG Annuity & Life Company (the "Company") is domiciled in Oklahoma and is a wholly owned subsidiary of Equitable Life Insurance Company of Iowa ("Equitable"), an Iowa domiciled insurance company. Equitable is a wholly owned subsidiary of Lion Connecticut Holdings, Inc., which in turn is a wholly-owned subsidiary of ING America Insurance Holdings, Inc. ("ING AIH"). Effective January 1, 2004, the Company merged into an affiliate, ING USA Annuity and Life Insurance Company, a wholly-owned subsidiary of Lion Connecticut Holdings, Inc. The Company offers various insurance products, including deferred fixed annuities, immediate annuities, and interest-sensitive life insurance. These products are primarily marketed to individuals by independent insurance broker/dealers, financial institutions, and a career agency force. The Company is licensed in 48 states and the District of Columbia. The preparation of financial statements of insurance companies requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein. Basis of Presentation The accompanying financial statements of the Company have been prepared in conformity with accounting practices prescribed or permitted by the Commissioner of Insurance of the State of Oklahoma ("Oklahoma Insurance Department"), which practices differ from accounting principles generally accepted in the United States ("GAAP"). The most significant variances from GAAP are as follows: Investments: Investments in bonds and mandatorily redeemable preferred stocks are reported at amortized cost or market value based on the National Association of Insurance Commissioners ("NAIC") rating; for GAAP, such fixed maturity investments are designated at purchase as held-to-maturity, trading or available-for-sale. Held-to-maturity investments are reported at amortized cost, and the remaining fixed maturity investments are reported at fair value with unrealized capital gains and losses reported in operations for those designated as trading and as a component of other comprehensive income in stockholder's equity for those designated as available-for-sale. Investments in real estate are reported net of related obligations rather than on a gross basis. Changes between depreciated cost and admitted asset investment amounts are credited or charged directly to unassigned surplus rather than income as would be required under GAAP. 7 8 USG ANNUITY & LIFE COMPANY Notes to Financial Statements - Statutory Policies -------------------------------------------------------------------------------- SSAP 31 applies to derivative transactions prior to January 1, 2003. The Company also follows the newly adopted hedge accounting guidance in SSAP 86 for derivative transactions entered into or modified on or after January 1, 2003. Under this guidance, derivatives that are deemed effective hedges are accounted for in a manner which is consistent with the underlying hedged item. Derivatives used in hedging transactions that do not meet the requirements of SSAP 86 as an effective hedge are carried at fair value with the change in value recorded in surplus as unrealized gains or losses. Embedded derivatives are not accounted for separately from the host contract. Under GAAP, the effective and ineffective portions of a single hedge are accounted for separately, an embedded derivative within a contract that is not clearly and closely related to the economic characteristics and risk of the host contract is accounted for separately from the host contract and valued and reported at fair value, and the change in fair value for cash flow hedges is credited or charged directly to a separate component of shareholder's equity rather than to income as required for fair value hedges. The Company invests in structured securities, including mortgage-backed securities/collateralized mortgage obligations, asset-backed securities, collateralized debt obligations, and commercial mortgage-backed securities. For these structured securities, management compares the undiscounted cash flows to the carrying value. An other than temporary impairment is considered to have occurred when the undiscounted cash flows are less than the carrying value. When a decline in fair value is determined to be other than temporary, the individual security is written down to fair value and the loss accounted for as a realized loss. Valuation Reserves: The asset valuation reserve ("AVR") is determined by an NAIC-prescribed formula and is reported as a liability rather than as a valuation allowance or an appropriation of surplus. The change in AVR is reported directly to unassigned surplus. Under a formula prescribed by the NAIC, the Company defers the portion of realized gains and losses on sales of fixed-income investments, principally bonds and mortgage loans, attributable to changes in the general level of interest rates, and amortizes those deferrals over the remaining period to maturity based on groupings of individual securities sold in five-year bands. The net deferral is reported as the interest maintenance reserve ("IMR") in the accompanying balance sheets. Realized gains and losses on investments are reported in operations net of federal income tax and transfers to the IMR. Under GAAP, realized capital gains and losses are reported in the statements of operations on a pretax basis in the period that the asset giving rise to the gain or loss is sold and valuation allowances are provided when there has been a decline in value deemed other than temporary, in which case the provision for such declines is charged to income. 9 USG ANNUITY & LIFE COMPANY Notes to Financial Statements - Statutory Policies -------------------------------------------------------------------------------- Valuation allowances, if necessary, are established for mortgage loans based on the difference between the net value of the collateral, determined as the fair value of the collateral less estimated costs to obtain and sell, and the recorded investment in the mortgage loan. Under GAAP, such allowances are based on the present value of expected future cash flows discounted at the loan,s effective interest rate or, if foreclosure is probable, on the estimated fair value of the collateral. The initial valuation allowance and subsequent changes in the allowance for mortgage loans as a result of a temporary impairment are charged or credited directly to unassigned surplus, rather than being included as a component of earnings as would be required under GAAP. Policy Acquisition Costs: The costs of acquiring and renewing business are expensed when incurred. Under GAAP, acquisition costs related to traditional life insurance, to the extent recoverable from future policy revenues, are deferred and amortized over the premium-paying period of the related policies using assumptions consistent with those used in computing policy benefit reserves. For universal life insurance and investment products, to the extent recoverable from future gross profits, acquisition costs are amortized generally in proportion to the present value of expected gross margins from surrender charges and investment, mortality, and expense margins. Premiums: Life premiums are recognized as revenue when due. Premiums for annuity policies with mortality and morbidity risk, except for guaranteed interest and group annuity contracts, are also recognized as revenue when due. Premiums received for annuity policies without mortality or morbidity risk and for guaranteed interest and group annuity contracts are recorded using deposit accounting. Under GAAP, premiums for traditional life insurance products, which include those products with fixed and guaranteed premiums and benefits and consist primarily of whole life insurance policies, are recognized as revenue when due. Group insurance premiums are recognized as premium revenue over the time period to which the premiums relate. Revenues for universal life, annuities and guaranteed interest contracts consist of policy charges for the cost of insurance, policy administration charges, amortization of policy initiation fees and surrender charges assessed during the period. Benefit and Contract Reserves: Life policy and contract reserves under statutory accounting practices are calculated based upon both the net level premium and Commissioners' Reserve Valuation methods using statutory rates for mortality and interest. GAAP requires that policy reserves for traditional products be based upon the net level premium method utilizing reasonably conservative estimates of mortality, interest, and withdrawals prevailing when the policies were sold. For interest-sensitive products, the GAAP policy reserve is equal to the policy fund balance plus an unearned revenue reserve which reflects the unamortized balance of early year policy loads over renewal year policy loads. 10 USG ANNUITY & LIFE COMPANY Notes to Financial Statements - Statutory Policies -------------------------------------------------------------------------------- Reinsurance: For business ceded to unauthorized reinsurers, statutory accounting practices require that reinsurance credits permitted by the treaty be recorded as an offsetting liability and charged against unassigned surplus. Under GAAP, an allowance for amounts deemed uncollectible would be established through a charge to earnings. Statutory income recognized on certain reinsurance treaties representing financing arrangements is not recognized on a GAAP basis. Policy and contract liabilities ceded to reinsurers have been reported as reductions of the related reserves rather than as assets as required under GAAP. Commissions allowed by reinsurers on business ceded are reported as income when received rather than being deferred and amortized with deferred policy acquisition costs as required under GAAP. Nonadmitted Assets: Certain assets designated as "nonadmitted," principally deferred federal income tax assets, disallowed interest maintenance reserves, non-operating software, past-due agents' balances, furniture and equipment, intangible assets, and other assets not specifically identified as an admitted asset within the NAIC Accounting Practices and Procedures Manual are excluded from the accompanying balance sheets and are charged directly to unassigned surplus. Under GAAP, such assets are included in the balance sheets. Universal Life and Annuity Policies: Revenues for universal life and annuity policies consist of the entire premium received and benefits incurred represent the total of death benefits paid and the change in policy reserves. Under GAAP, premiums received in excess of policy charges would not be recognized as premium revenue and benefits would represent the excess of benefits paid over the policy account value and interest credited to the account values. Deferred Income Taxes: Deferred tax assets are provided for and admitted to an amount determined under a standard formula. This formula considers the amount of differences that will reverse in the subsequent year, taxes paid in prior years that could be recovered through carrybacks, surplus limits, and the amount of deferred tax liabilities available for offset. Any deferred tax assets not covered under the formula are non-admitted. Deferred taxes do not include any amounts for state taxes. Under GAAP, a deferred tax asset is recorded for the amount of gross deferred tax assets that are expected to be realized in future years and a valuation allowance is established for the portion that is not realizable. Statements of Cash Flows: Cash and short-term investments in the statements of cash flows represent cash balances and investments with initial maturities of one year or less. Under GAAP, the corresponding caption of cash and cash equivalents includes cash balances and investments with initial maturities of three months or less. 11 USG ANNUITY & LIFE COMPANY Notes to Financial Statements - Statutory Policies -------------------------------------------------------------------------------- Reconciliation to GAAP The effects of the preceding variances from GAAP on the accompanying statutory basis financial statements have not been determined, but are presumed to be material. Other significant accounting practices are as follows: Investments Investments are stated at values prescribed by the NAIC, as follows: Bonds not backed by other loans are principally stated at amortized cost using the interest method. Single class and multi-class mortgage-backed/asset-backed securities are valued at amortized cost using the interest method including anticipated prepayments. Prepayment assumptions are obtained from dealer surveys or internal estimates and are based on the current interest rate and economic environment. The retrospective adjustment method is used to value all such securities except for higher-risk asset backed securities, which are valued using the prospective method. The Company has elected to use the book value as of January 1, 1994, as the cost for applying the retrospective method to securities purchased prior to that date where historical cash flows are not readily available. Redeemable preferred stocks rated as high quality or better are reported at cost or amortized cost. All other redeemable preferred stocks are reported at the lower of cost, amortized cost, or market value and nonredeemable preferred stocks are reported at market value or the lower of cost or market value as determined by the Securities Valuation Office of the NAIC ("SVO"). The Company analyzes the general account investments to determine whether there has been an other than temporary decline in fair value below the amortized cost basis. Management considers the length of time and the extent to which the market value has been less than cost, the financial condition and near-term prospects of the issuer, future economic conditions and market forecasts, and the Company's intent and ability to retain the investment in the issuer for a period of time sufficient to allow for recovery in market value. If it is probable that all amounts due according to the contractual terms of a debt security will not be collected, an other than temporary impairment is considered to have occurred. 12 USG ANNUITY & LIFE COMPANY Notes to Financial Statements - Statutory Policies -------------------------------------------------------------------------------- The Company uses derivatives such as interest rate swaps, caps and floors, and options as part of its overall interest rate risk management strategy for certain life insurance and annuity products. As the Company only uses derivatives for hedging purposes, the Company values all derivative instruments on a consistent basis with the hedged item. Upon termination, gains and losses on those instruments are included in the carrying values of the underlying hedged items and are amortized over the remaining lives of the hedged items as adjustments to investment income or benefits from the hedged items. Any unamortized gains or losses are recognized when the underlying hedged items are sold. Interest rate swap contracts are used to convert the interest rate characteristics (fixed or variable) of certain investments to match those of the related insurance liabilities that the investments are supporting. The net interest effect of such swap transactions is reported as an adjustment of interest income from the hedged items as incurred. Interest rate caps and floors are used to limit the effects of changing interest rates on yields of variable rate or short-term assets or liabilities. The initial cost of any such agreement is amortized to net investment income over the life of the agreement. Periodic payments that are receivable as a result of the agreements are accrued as an adjustment of interest income or benefits from the hedged items. The derivatives are reported in a manner that is consistent with the hedged asset or liability. All derivatives are reported at amortized cost. Upon termination of a derivative that qualified for hedge accounting, the gain or loss is deferred in IMR or adjusts the basis of the hedged item. Mortgage loans are reported at amortized cost, less allowance for impairments. Contract loans are reported at unpaid principal balances. Land is reported at cost. Real estate is reported at the lower of depreciated cost or fair value. Depreciation is calculated on a straight-line basis over the estimated useful lives of the properties. For reverse repurchase agreements, Company policies require a minimum of 95% of the fair value of securities purchased under reverse repurchase agreements to be maintained as collateral. Cash collateral received is invested in short-term investments and the offsetting collateral liability is included in miscellaneous liabilities. 13 USG ANNUITY & LIFE COMPANY Notes to Financial Statements - Statutory Policies -------------------------------------------------------------------------------- Reverse dollar repurchase agreements are accounted for as collateral borrowings, where the amount borrowed is equal to the sales price of the underlying securities. The Company engages in securities lending whereby certain domestic bonds from its portfolio are loaned to other institutions for short periods of time. Collateral, primarily cash, which is in excess of the market value of the loaned securities, is deposited by the borrower with a lending agent, and retained and invested by the lending agent to generate additional income for the Company. The Company does not have access to the collateral. The Company's policy requires a minimum of 102% of the fair value of securities loaned to be maintained as collateral. The market value of the loaned securities is monitored on a daily basis with additional collateral obtained or refunded as the market value fluctuates. Short-term investments are reported at amortized cost. Short-term investments include investments with maturities of less than one year at the date of acquisition. Partnership interests, which are included in other invested assets, are reported at the underlying audited GAAP equity of the investee. Residual collateralized mortgage obligations, which are included in other invested assets, are reported at amortized cost using the effective interest method. Realized capital gains and losses are determined using the specific identification method. Cash on hand includes cash equivalents. Cash equivalents are short-term investments that are both readily convertible to cash and have an original maturity date of three months or less. Short-term investments are carried at amortized cost, which approximates market value. Aggregate Reserve for Life Policies and Contracts Life, annuity, and accident and health reserves are developed by actuarial methods and are determined based on published tables using statutorily specified interest rates and valuation methods that will provide, in the aggregate, reserves that are greater than or equal to the minimum or guaranteed policy cash value or the amounts required by law. Interest rates range from 3.00% to 8.75%. The Company waives the deduction of deferred fractional premiums upon the death of the insured. It is the Company's practice to return a pro rata portion of any premium paid beyond the policy month of death, although it is not contractually required to do so for certain issues. 14 USG ANNUITY & LIFE COMPANY Notes to Financial Statements - Statutory Policies -------------------------------------------------------------------------------- The methods used in valuation of substandard policies are as follows: For life, endowment and term policies issued substandard, the standard reserve during the premium-paying period is increased by 50% of the gross annual extra premium. Standard reserves are held on Paid-Up Limited Pay contracts. For reinsurance accepted with table rating, the reserve established is a multiple of the standard reserve corresponding to the table rating. For reinsurance with flat extra premiums, the standard reserve is increased by 50% of the flat extra. The tabular interest has been determined from the basic data for the calculation of policy reserves for all direct ordinary life insurance and for the portion of group life insurance classified as group Section 79. The tabular interest of funds not involving life contingencies is calculated as the current year reserves, plus payments, less prior year reserves, less funds added. Reinsurance Reinsurance premiums, commissions, expense reimbursements, and reserves related to reinsured business are accounted for on bases consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Reserves are based on the terms of the reinsurance contract and are consistent with the risks assumed. Premiums and benefits ceded to other companies have been reported as a reduction of premium revenue and benefits expense. Amounts applicable to reinsurance ceded for reserves and unpaid claim liabilities have been reported as reductions of these items, and expense allowances received in connection with reinsurance ceded have been reflected in operations. Nonadmitted Assets Nonadmitted assets are summarized as follows: December 31 2003 2002 ---------------- ---------------- (In Thousands) Deferred federal income taxes $ 55,372 $ 54,496 Agents' debit balances 603 519 Deferred and uncollected premium 35 119 Other 751 885 ---------------- ---------------- Total nonadmitted assets $ 56,761 $ 56,019 ================ ================
15 USG ANNUITY & LIFE COMPANY Notes to Financial Statements - Statutory Policies -------------------------------------------------------------------------------- Changes in nonadmitted assets are generally reported directly in unassigned surplus as an increase or decrease in nonadmitted assets. Changes in nonadmitted invested assets are reported directly in unassigned surplus as a component of the change in unrealized capital gains or losses. Claims and Claims Adjustment Expenses Claims expenses represent the estimated ultimate net cost of all reported and unreported claims incurred through December 31, 2003. The Company does not discount claims and claims adjustment expense reserves. Such estimates are based on actuarial projections applied to historical claims payment data. Such liabilities are considered to be reasonable and adequate to discharge the Company's obligations for claims incurred but unpaid as of December 31, 2003. Cash Flow Information Cash and short-term investments include cash on hand, demand deposits and short-term fixed maturity instruments with a maturity of less than one year at date of acquisition. The Company borrowed $1,342,670,000 and repaid $1,342,670,000 in 2003 and borrowed $1,021,035,000 and repaid $1,021,035,000 in 2002. These borrowings were on a short-term basis, at an interest rate that approximated current money market rates and exclude borrowings from reverse dollar repurchase transactions. Interest paid on borrowed money was $140,000 and $109,000 during 2003 and 2002, respectively. Reclassifications Certain prior year amounts in the Company's statutory basis financial statements have been reclassified to conform to the 2003 financial statement presentation. 2. Permitted Statutory Basis Accounting Practices The financial statements of the Company are presented on the basis of accounting practices prescribed or permitted by the Oklahoma Insurance Department. The Oklahoma Insurance Department recognizes only statutory accounting practices prescribed or permitted by the State of Oklahoma for determining and reporting the financial condition and results of operations of an insurance company for determining its solvency under the Oklahoma Insurance Laws. The NAIC Accounting Practices and Procedures Manual has been adopted as a component of prescribed or permitted practices by the state of Oklahoma. The Commissioner of Insurance has the right to permit other specific practices that deviate from prescribed practices. The Company is required to identify those significant accounting practices that are permitted, and obtain written approval of the practices from the Oklahoma Insurance Department. As of December 31, 2003 and 2002, the Company had no such permitted accounting practices. 16 USG ANNUITY & LIFE COMPANY Notes to Financial Statements - Statutory Policies -------------------------------------------------------------------------------- 3. Investments The amortized cost and fair value of fixed maturities and equity securities are as follows: Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value ------------- ------------ ------------ ------------- (In Thousands) At December 31, 2003: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 59,838 $ 363 $ 27 $ 60,174 States, municipalities, and political subdivisions 11,000 - 886 10,114 Foreign government 292,529 10,584 2,314 300,799 Public utilities securities 468,119 31,654 2,243 497,530 Corporate securities 3,263,827 157,736 26,919 3,394,644 Mortgage-backed securities 1,447,813 40,896 40,369 1,448,340 Commercial mortgage-backed securities 249,580 13,801 429 262,952 Other structured securities 443,419 5,181 16,690 431,910 ------------- ------------ ------------ ------------- Total fixed maturities 6,236,125 260,215 89,877 6,406,463 Preferred stocks 1,273 - - 1,273 ------------- ------------ ------------ ------------- Total equity securities 1,273 - - 1,273 ------------- ------------ ------------ ------------- Total $ 6,237,398 $ 260,215 $ 89,877 $ 6,407,736 ============= ============ ============ ============= At December 31, 2002: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 285,347 $ 4,998 $ 36 $ 290,309 Foreign government 120,649 4,200 2,385 122,464 Public utilities securities 270,390 14,526 4,008 280,908 Corporate securities 3,244,826 182,420 34,973 3,392,273 Mortgage-backed securities 1,668,901 90,300 46,006 1,713,195 Other structured securities 320,274 9,786 28,080 301,980 Commerical mortgage-backed securities 217,028 18,254 76 235,206 ------------- ------------ ------------ ------------- Total fixed maturities 6,127,415 324,484 115,564 6,336,335 Preferred stocks 1,088 - - 1,088 ------------- ------------ ------------ ------------- Total equity securities 1,088 - - 1,088 ------------- ------------ ------------ ------------- Total $ 6,128,503 $ 324,484 $ 115,564 $ 6,337,423 ============= ============ ============ =============
17 USG ANNUITY & LIFE COMPANY Notes to Financial Statements - Statutory Policies -------------------------------------------------------------------------------- As of December 31, 2003, the aggregate market values of debt securities with unrealized losses and the time period that cost exceeded market value are as follows: More than 6 Less than 6 months and less More than 12 months below that 12 months months below cost below cost cost Total ----------------- ------------------ ----------------- ------------------ (In Thousands) Fair value $ 912,922 $ 781,315 $ 99,880 $ 1,794,117 Unrealized loss 13,888 40,720 35,269 89,877
Of the unrealized losses more than 6 months and less than 12 months in duration of $40,720,000, there were $8,509,000 in unrealized losses that are primarily related to interest rate movement or spread widening for other than credit-related reasons. For these securities business and operating fundamentals are performing as expected. The remaining unrealized losses of $32,211,000 as of December 31, 2003 included the following significant items: $18,193,000 of unrealized losses related to mortgage-backed and structured securities reviewed for impairment under the guidance prescribed by SSAP 43 Loan-backed and Structured Securities. This category includes U.S. government-backed securities, principal protected securities and structured securities which did not have an adverse change in cash flows for which the fair value was $257,131,000. $3,265,000 of unrealized losses related to the energy/utility industry, for which the fair value was $66,629,000. During 2003, the energy sector recovered due to a gradually improving economic picture and the lack of any material accounting irregularities similar to those experienced in the prior two years. Current analysis indicates that the debt will be serviced in accordance with the contractual terms. $8,488,000 of unrealized losses related to non-domestic issues, with no unrealized loss exposure per country in excess of $2,036,000 for which the fair value was $194,288,000. Credit exposures are primarily in the construction industry in Italy. The remaining unrealized losses totaling $2,265,000 related to a fair value of $31,760,000. Of the unrealized losses more than 12 months in duration of $35,269,000, there were $449,000 in unrealized losses that are primarily related to interest rate movement or spread widening for other than credit-related reasons. Business and operating fundamentals are performing as expected. The remaining losses of $34,820,000 as of December 31, 2003 included the following significant items: 18 USG ANNUITY & LIFE COMPANY Notes to Financial Statements - Statutory Policies -------------------------------------------------------------------------------- $32,683,000 of unrealized losses related to mortgage-backed and structured securities reviewed for impairment under the guidance prescribed by SSAP 43 Loan-backed and Structured Securities. This category includes U.S. government-backed securities, principal protected securities and structured securities which did not have an adverse change in cash flows for which the fair value was $81,284,000. $1,453,000 of unrealized losses related to the energy/utility industry, for which the fair value was $9,278,000. During 2003, the energy sector recovered due to a gradually improving economic picture and the lack of any material accounting irregularities similar to those experienced in the prior two years. Current analysis indicates that the debt will be serviced in accordance with the contractual terms. $679,000 of unrealized losses related to the airline industries, for which the fair value was $4,075,000. During 2003, the airline industry continued to suffer from decreased passenger volumes offset by a gradually improving economy. The majority of the airline investments are comprised of Enhanced Equipment Trust Certificates ("EETC"). Current analysis indicates the specific collateral backing the EETC investments is predominantly represented by newer models that are expected to be retained as individual airlines reduce their fleets. The remaining unrealized losses totaling $5,000 relate to a fair value of $245,000. The amortized cost and fair value of investments in bonds at December 31, 2003, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Amortized Fair Cost Value -------------- --------------- (In Thousands) Maturity: Due in 1 year or less $ 57,631 $ 58,607 Due after 1 year through 5 years 1,320,691 1,382,661 Due after 5 years through 10 years 1,804,228 1,882,506 Due after 10 years 912,763 939,487 -------------- --------------- 4,095,313 4,263,261 Mortgage-backed securities 1,447,813 1,448,340 Commercial mortgage-backed securities 249,580 262,952 Other structured securities 443,419 431,910 -------------- --------------- Total $ 6,236,125 $ 6,406,463 ============== ===============
19 USG ANNUITY & LIFE COMPANY Notes to Financial Statements - Statutory Policies -------------------------------------------------------------------------------- At December 31, 2003, investments in certificates of deposit and bonds, with an admitted asset value of $3,310,000, were on deposit with state insurance departments to satisfy regulatory requirements. Reconciliation of bonds from amortized cost to carrying value is as follows: December 31 2003 2002 ---------------- ---------------- (In Thousands) Amortized cost $ 6,236,125 $ 6,127,415 Less nonadmitted bonds 4,164 10,920 ---------------- ---------------- Carrying value $ 6,231,961 $ 6,116,495 ================ ================
Proceeds from the sales of investments in bonds and other fixed maturity interest securities were $4,610,345,000 and $5,811,132,000 in 2003 and 2002, respectively. Gross gains of $107,661,000 and $125,255,000 and gross losses of $25,138,000 and $103,039,000 during 2003 and 2002, respectively, were realized on those sales. A portion of the gains realized in 2003 and 2002 has been deferred to future periods in the interest maintenance reserve. Major categories of net investment income are summarized as follows: Year ended December 31 2003 2002 ---------------- ---------------- (In Thousands) Income: Bonds $ 404,578 $ 459,813 Mortgage loans 112,905 128,230 Contract loans 1,522 1,091 Company-occupied property 244 376 Other (34,857) (26,548) ---------------- ---------------- Total investment income 484,392 562,962 Investment expenses (32,114) (26,756) ---------------- ---------------- Net investment income $ 452,278 $ 536,206 ================ ================
As part of its overall investment strategy, the Company has entered into agreements to purchase securities as follows: December 31 2003 2002 ---------------- ---------------- (In Thousands) Investment purchase commitments $ 90,956 $ 87,963
20 USG ANNUITY & LIFE COMPANY Notes to Financial Statements - Statutory Policies -------------------------------------------------------------------------------- The Company entered into reverse dollar repurchase transactions to increase its return on investments and improve liquidity. Reverse dollar repurchases involve a sale of securities and an agreement to repurchase substantially the same securities as those sold. The reverse dollar repurchases are accounted for as short term collateralized financing and the repurchase obligation is reported in borrowed money. The repurchase obligation totaled $286,886,000 and $173,448,000 at December 31, 2003 and 2002, respectively. The securities underlying these agreements are mortgage-backed securities with a book value of $285,832,000 and $173,246,000 and fair value of $288,285,000 and $176,504,000 as of December 31, 2003 and 2002, respectively. The securities have a weighted average coupon rate of 5.8% and have maturities ranging from December 2018 through December 2033. The primary risk associated with short-term collateralized borrowings is that the counterparty may 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, which was not material at December 31, 2003. The Company believes the counterparties to the reverse dollar repurchase agreements are financially responsible and that the counterparty risk is minimal. The Company participates in reverse repurchase transactions. Such transactions include the sale of corporate securities to a major securities dealer and a simultaneous agreement to repurchase the same security in the near term. The proceeds are invested in new securities of intermediate durations. As of December 31, 2003, there were no outstanding amounts on these agreements. The securities underlying these agreements are mortgage-backed securities with a book value of $11,394,000 and fair value of $11,520,000 at December 31, 2002. At December 31, 2003 and 2002, the Company had loaned securities (which are reflected as invested assets on the balance sheet) with a market value of approximately $22,330,000 and $32,662,000, respectively. The maximum and minimum lending rates for long-term mortgage loans during 2003 were 6.07% and 3.40%. Fire insurance is required on all properties covered by mortgage loans and must at least equal the excess of the loan over the maximum loan which would be permitted by law on the land without the buildings. The maximum percentage of any loan to the value of collateral at the time of the loan, exclusive of insured or guaranteed or purchase money mortgages, was 74.7% on commercial properties. As of December 31, 2003, the Company held no mortgages with interest more than 180 days overdue. Total interest due, as of December 31, 2003 is $9,000. In the course of the Company's asset management, securities are sold and reacquired within 30 days of the sale date to enhance the Company's return on the investment portfolio or to manage interest rate risk. 21 USG ANNUITY & LIFE COMPANY Notes to Financial Statements - Statutory Policies -------------------------------------------------------------------------------- The details by NAIC designation 3 or below of securities sold during 2003 and reacquired within 30 days of the sale date are: Cost of Number of Securities Transactions Book Value Repurchased Gain --------------- --------------- --------------- --------------- (In Thousands) NAIC 3 2 $ 4,730 $ 6,948 $ 1,095
4. Derivative Financial Instruments Held for Purposes Other than Trading The Company enters into derivatives such as swaps caps and floors, to reduce and manage risks, which include the risk of a change in the value, yield, price, cash flows, exchange rates or quantity of, or a degree of exposure with respect to, assets, liabilities, or future cash flows, which the Company has acquired or incurred. Hedge accounting practices are supported by cash flow matching, scenario testing and duration matching. The Company uses interest rate swaps to reduce market risks from changes in interest rates and to alter interest rate exposure arising from mismatches between assets and liabilities. Interest rate swap agreements generally involve the exchange of fixed and floating interest payments over the life of the agreement without an exchange of the underlying principal amount. Interest rate cap and interest rate floor agreements owned entitle the Company to receive payments to the extent reference interest rates exceed or fall below strike levels in the contracts based on the notional amounts. Premiums paid for the purchase of interest rate contracts are included in other invested assets and are being amortized to interest expense over the remaining terms of the contracts or in a manner consistent with the financial instruments being hedged. Amounts paid or received, if any, from such contracts are included in interest expense or income. Accrued amounts payable to or receivable from counterparties are included in other liabilities or other invested assets. Gains or losses realized as a result of early terminations of interest rate contracts are amortized to investment income over the remaining term of the items being hedged to the extent the hedge is considered to be effective; otherwise, they are recognized upon termination. 22 USG ANNUITY & LIFE COMPANY Notes to Financial Statements - Statutory Policies -------------------------------------------------------------------------------- Interest rate contracts that are matched or otherwise designated to be associated with other financial instruments are recorded at fair value if the related financial instruments mature, are sold, or are otherwise terminated, or if the interest rate contracts cease to be effective hedges. Changes in the fair value of derivatives are recorded as investment income. The Company manages the potential credit exposure from interest rate contracts through careful evaluation of the counterparties' credit standing, collateral agreements, and master netting agreements. The Company is exposed to credit loss in the event of nonperformance by counterparties on interest rate contracts; however, the Company does not anticipate nonperformance by any of these counterparties. The amount of such exposure is generally the unrealized gains in such contracts. The table below summarizes the Company's interest rate contracts included in other invested assets at December 31, 2003 and 2002: Notional Carrying Fair Amount Value Value --------------- -------------- --------------- (In Thousands) December 31, 2003 Swaps $ 828,066 $ - $ (124,226) Caps and floors 441,243 1,554 7 --------------- -------------- --------------- Total derivatives $ 1,269,309 $ 1,554 $ (124,219) =============== ============== =============== December 31, 2002 Swaps $ 1,146,498 $ - $ (138,473) Caps and floors 548,465 3,393 1,296 --------------- -------------- --------------- Total derivatives $ 1,694,963 $ 3,393 $ (137,177) =============== ============== ===============
5. Concentrations of Credit Risk The Company held less-than-investment-grade bonds with an aggregate book value of $479,259,000 and $435,061,000 and with an aggregate market value of $497,620,000 and $413,437,000 at December 31, 2003 and 2002, respectively. These holdings amounted to 7.7% of the Company's investments in bonds and 6.1% of total admitted assets at December 31, 2003. The holdings of less-than-investment-grade bonds are widely diversified and of satisfactory quality based on the Company's investment policies and credit standards. The Company held unrated bonds of $159,686,000 and $204,268,000 with an aggregate NAIC market value of $161,201,000 and $208,297,000 at December 31, 2003 and 2002, respectively. The carrying value of these holdings amounted to 2.0% of the Company's investment in bonds and 2.0% of the Company's total admitted assets at December 31, 2003. 23 USG ANNUITY & LIFE COMPANY Notes to Financial Statements - Statutory Policies -------------------------------------------------------------------------------- At December 31, 2003, the Company's commercial mortgages involved a concentration of properties located in California (14.06%) and Pennsylvania (9.05%). The remaining commercial mortgages relate to properties located in 37 other states. The portfolio is well diversified; covering many different types of income-producing properties on which the Company has first mortgage liens. The maximum mortgage outstanding on any individual property is $30,000,000. 6. Annuity Reserves At December 31, 2003 and 2002, the Company's annuity reserves, including those held in deposit fund liabilities that are subject to discretionary withdrawal with adjustment, subject to discretionary withdrawal without adjustment, and not subject to discretionary withdrawal provisions are summarized as follows: Amount Percent ---------------- ---------------- (In Thousands) December 31, 2003 Subject to discretionary withdrawal (with adjustment): With market value adjustment $ 4,536,520 54.0 % At book value less surrender charge of 5% or more 1,995,432 23.7 ---------------- -------------- Subtotal $ 6,531,952 77.7 Subject to discretionary withdrawal (without adjustment): At book value with minimal or no charge or adjustment 1,258,530 15.0 Not subject to discretionary withdrawal 614,236 7.3 ---------------- -------------- Total annuity reserves and deposit fund liabilities before reinsurance $ 8,404,718 100.0 % ============== Less reinsurance ceded 1,346,600 ---------------- Net annuity reserves and deposit fund liabilities $ 7,058,118 ================ December 31, 2002 Subject to discretionary withdrawal (with adjustment): With market value adjustment $ 4,447,295 56.2 % At book value less surrender charge of 5% or more 1,635,038 20.6 ---------------- -------------- Subtotal 6,082,333 76.8 Subject to discretionary withdrawal (without adjustment): At book value with minimal or no charge or adjustment 1,194,281 15.1 Not subject to discretionary withdrawal 641,496 8.1 ---------------- -------------- Total annuity reserves and deposit fund liabilities before reinsurance $ 7,918,110 100.0 % ============== Less reinsurance ceded 895,734 ---------------- Net annuity reserves and deposit fund liabilities $ 7,022,376 ================
24 USG ANNUITY & LIFE COMPANY Notes to Financial Statements - Statutory Policies -------------------------------------------------------------------------------- 7. Reinsurance The Company is involved in both ceded and assumed reinsurance with other companies for the purpose of diversifying risk and limiting exposure on larger risks. To the extent that the assuming companies become unable to meet their obligations under these treaties, the Company remains contingently liable to its policyholders for the portion reinsured. To minimize its exposure to significant losses from retrocessionaire insolvencies, the Company evaluates the financial condition of the retrocessionaire and monitors concentrations of credit risk. Assumed premiums amounted to $7,000 and $136,400,000 for the years ended December 31, 2003 and 2002, respectively. The Company's ceded reinsurance arrangements reduced certain items in the accompanying financial statements by the following amounts: December 31 2003 2002 -------------- --------------- (In Thousands) Premiums $ 561,792 $ 260,544 Benefits paid or provided 13,168 9,447 Policy and contract liabilities at year end 1,347,473 896,762
8. Federal Income Taxes The Company joins in filing a consolidated federal income tax return with its parent, Equitable, and other affiliates. The method of tax allocation is governed by a written tax sharing agreement. The tax sharing agreement provides that each member of the consolidated return shall reimburse Equitable for its respective share of the consolidated federal income tax liability and shall receive a benefit for its losses at the statutory rate. The components of the net deferred tax asset (liability) are as follows: December 31 2003 2002 ---------------- ---------------- (In Thousands) Total deferred tax assets $ 75,954 $ 70,328 Total deferred tax liabilities (2,107) (231) ---------------- ---------------- Net deferred tax asset 73,847 70,097 Deferred tax asset nonadmitted (55,372) (54,496) ---------------- ---------------- Net admitted deferred tax asset $ 18,475 $ 15,601 ================ ================ (Increase) decrease in nonadmitted asset $ (876) $ 1,337 ================ ================
25 USG ANNUITY & LIFE COMPANY Notes to Financial Statements - Statutory Policies -------------------------------------------------------------------------------- Current income taxes incurred consist of the following major components: Year ended December 31 2003 2002 --------------- ---------------- (In Thousands) Federal tax (benefit) expense on operations $ (27,668) $ 41,015 Federal tax expense (benefit) on capital gains 18,494 (6,049) --------------- ---------------- Total current tax (benefit) expense incurred $ (9,174) $ 34,966 =============== ================
The main components of deferred tax assets and deferred tax liabilities are as follows: December 31 2003 2002 ---------------- ---------------- (In Thousands) Deferred tax assets resulting from book/tax differences in: Deferred acquisition costs $ 24,803 $ 23,431 Insurance reserves 10,751 8,423 Investments 29,808 32,290 Guaranty assessments 4,348 4,339 Unrealized loss on investments 5,346 499 Other 898 1,346 ---------------- ---------------- Total deferred tax assets 75,954 70,328 Deferred tax assets nonadmitted (55,372) (54,496) ---------------- ---------------- Admitted deferred tax assets 20,582 15,832 ---------------- ---------------- Deferred tax liabilities resulting from book/tax differences in: Due and deferred premiums $ 150 231 Investments 1,951 - Other 6 - ---------------- ---------------- Total deferred tax liabilities 2,107 231 ---------------- ---------------- Net admitted deferred tax asset $ 18,475 $ 15,601 ================ ================
26 USG ANNUITY & LIFE COMPANY Notes to Financial Statements - Statutory Policies -------------------------------------------------------------------------------- The change in net deferred income taxes is comprised of the following: December 31 2003 2002 Change -------------- -------------- -------------- (In Thousands) Total deferred tax assets $ 75,954 $ 70,328 $ 5,626 Total deferred tax liabilities 2,107 231 1,876 -------------- -------------- -------------- Net deferred tax asset $ 73,847 $ 70,097 $ 3,750 ============== ============== Remove current year change in unrealized gains (1,538) -------------- Change in net deferred income tax 2,212 Remove other items in surplus: Current year change in non-admitted assets 44 Other (3,310) -------------- Change in deferred taxes for rate reconciliation $ (1,054) ==============
The provision for federal income taxes incurred and change in deferred taxes is different from that which would be obtained by applying the statutory federal income tax rate to income (including capital items) before income taxes. The significant items causing this difference are: Year Ended December 31, 2003 ----------------- (In Thousands) Ordinary loss $ (42,829) Capital gains 9,786 ------------------ Total pre-tax book loss (33,043) ================== Provision (benefit) computed at statutory rate (11,565) Refinement of deferred tax balances 1,116 Interest maintenance reserve 2,326 Other 2 ------------------ Total $ (8,121) ================== Federal income tax incurred $ (9,175) Change in net deferred income tax 1,054 ------------------ Total statutory income tax benefit $ (8,121) ==================
There are no federal income taxes incurred that will be available for recoupment in the event of future net losses for 2003 and 2002. The Company had receivables of $2,285,000 and $6,562,000 at December 31, 2003 and 2002, respectively, for federal income taxes under the intercompany tax sharing agreement 27 USG ANNUITY & LIFE COMPANY Notes to Financial Statements - Statutory Policies -------------------------------------------------------------------------------- 9. Capital and Surplus Under Oklahoma insurance regulations, the Company is required to maintain a minimum total capital and surplus of $750,000. Additionally, the amount of dividends that can be paid by the Company to its stockholder without prior approval of the Oklahoma Insurance Department is limited to the greater of 10% of statutory surplus or the statutory net gain from operations. Life and health insurance companies are subject to certain Risk-Based Capital ("RBC") requirements as specified by the NAIC. Under those requirements, the amount of capital and surplus maintained by a life and health insurance company is to be determined based on the various risk factors related to it. At December 31, 2003, the Company meets the RBC requirements. 10. Fair Values of Financial Instruments Life insurance liabilities that contain mortality risk and all nonfinancial instruments have been excluded from the disclosure requirements. However, the fair values of liabilities under all insurance contracts are taken into consideration in the Company's overall management of interest rate risk, such that the Company's exposure to changing interest rates is minimized through the matching of investment maturities with amounts due under insurance contracts. The carrying amounts and fair values of the Company's financial instruments are summarized as follows: December 31 2003 2002 ----------------------------- ------------------------------ Carrying Fair Carrying Fair Amount Value Amount Value ------------- ------------ ------------- ------------- (In Thousands) Assets: Bonds $ 6,231,961 $ 6,406,763 $ 6,116,495 $ 6,336,335 Preferred stocks 1,273 1,273 1,088 1,088 Mortgage loans 1,471,607 1,576,183 1,483,855 1,632,720 Contract loans 32,247 32,247 32,454 32,454 Derivative securities 1,554 (124,219) 3,393 (137,177) Short-term investments 16,651 16,651 5,650 5,650 Cash 11,088 11,088 3,466 3,466 Receivable for securities 341 341 2,873 2,873 Liabilities: Individual and group annuities 6,833,372 6,645,174 6,775,875 6,621,753 Deposit type contract 224,767 235,291 246,501 258,945
The following methods and assumptions were used by the Company in estimating the fair value disclosures for financial instruments in the accompanying financial statements and notes thereto: 28 USG ANNUITY & LIFE COMPANY Notes to Financial Statements - Statutory Policies -------------------------------------------------------------------------------- Cash and short-term investments: The carrying amounts reported in the accompanying balance sheets for these financial instruments approximate their fair values. Fixed maturities: The fair values for bonds and preferred stocks reported herein are based on quoted market prices, where available. For securities not actively traded, fair values are estimated using values obtained from independent pricing services or, in the case of private placements, collateralized mortgage obligations and other mortgage derivative investments, are estimated by discounting the expected future cash flows. The discount rates used vary as a function of factors such as yield, credit quality, and maturity, which fall within a range between 2% and 12% over the total portfolio. Fair values determined on this basis can differ from values published by the SVO. Market value as determined by the SVO as of December 31, 2003 and 2002 is $6,263,837,000 and $6,154,770,000, respectively. Mortgage loans: Estimated market values for commercial real estate loans were generated using a discounted cash flow approach. Loans in good standing are discounted using interest rates determined by U.S. Treasury yields on December 31 and spreads applied on new loans with similar characteristics. The amortizing features of all loans are incorporated in the valuation. Where data on option features is available, option values are determined using a binomial valuation method, and are incorporated into the mortgage valuation. Restructured loans are valued in the same manner; however, these loans were discounted at a greater spread to reflect increased risk. All residential loans are valued at their outstanding principal balances, which approximate their fair values. Derivative financial instruments: Fair values for on-balance-sheet derivative financial instruments (caps and floors) and off-balance-sheet derivative financial instruments (swaps) are based on broker/dealer valuations or on internal discounted cash flow pricing models taking into account current cash flow assumptions and the counterparties' credit standing. Other investment-type insurance contracts: The fair values of the Company's deferred annuity contracts are estimated based on the cash surrender values. The carrying values of other policyholder liabilities, including immediate annuities, dividend accumulations, supplementary contracts without life contingencies, and premium deposits, approximate their fair values. The carrying value of all other financial instruments approximates their fair value. 1. 29 USG ANNUITY & LIFE COMPANY Notes to Financial Statements - Statutory Policies -------------------------------------------------------------------------------- 11. Commitments and Contingencies The Company is a party to threatened or pending lawsuits arising from the normal conduct of business. Due to the climate in insurance and business litigation, 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 pending lawsuits, in light of existing insurance, reinsurance and established reserves, it is the opinion of management that the disposition of such lawsuits will not have a materially adverse effect on the Company's operations or financial position. The Company has committed to provide additional capital contributions of $31,599,000 in partnership investments at December 31, 2003. 12. Financing Agreements The Company maintains a revolving loan agreement with SunTrust Bank, Atlanta (the "Bank"). Under this agreement, which expires July 30, 2004, the Company can borrow up to $75,000,000 from the Bank. Interest on any borrowing accrues at an annual rate equal to: the cost of funds for the Bank for the period applicable for the advance plus 0.225%, or a rate quoted by the Bank to the Company for the borrowing. Under this agreement, the Company incurred interest expense of $9,000 and $20,000 for the years ended December 31, 2003 and 2002, respectively. At December 31, 2003 and 2002, the Company had no amounts payable to the Bank. The Company also maintains a revolving loan agreement with Bank of New York, New York (the "BONY"). Under this agreement, the Company can borrow up to $100,000,000 from BONY. Interest on any of the Company borrowing accrues at an annual rate equal to: the cost of funds for BONY for the period applicable for the advance plus .35% or a rate quoted by BONY to the Company for the borrowing. Under this agreement, the Company incurred interest expense of $4,000 and $31,000 for the years ended December 31, 2003 and 2002, respectively. At December 31, 2003 and 2002, the Company had no amounts payable to BONY. 13. Related Party Transactions Affiliates Management and service contracts and all cost sharing arrangements with other affiliated ING U.S. life insurance companies are allocated among companies in accordance with normal, generally accepted expense and cost allocation methods. 31 USG ANNUITY & LIFE COMPANY Notes to Financial Statements - Statutory Policies -------------------------------------------------------------------------------- The Company maintains a reciprocal loan agreement with ING AIH to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Under this agreement, which expires April 1, 2007, the companies can borrow up to $95,800,000 from one another. Interest on any Company borrowings is charged at the rate of ING AIH's cost of funds for the interest period plus 0.15%. Interest on any ING AIH borrowings is charged at a rate based on the prevailing interest rate of U.S. commercial paper available for purchase with a similar duration. Under this agreement, the Company incurred interest expense of $125,000 and interest income of $275,000 for the year ended December 31, 2003. At December 31, 2003, the Company had no amounts payable to ING AIH and $16,400,000 receivable from ING AIH. Investment Management: The Company has entered into an investment advisory agreement and an administrative services agreement with ING Investment Management, LLC ("IIM") under which IIM provides the Company with investment management and asset liability management services. Total fees under the agreement were approximately $25,272,000 and $19,698,000 for the years ended December 31, 2003 and 2002, respectively. Inter-insurer Services Agreement: The Company has entered into a services agreement with certain of its affiliated insurance companies in the United States ("affiliated insurers") whereby the affiliated insurers provide certain administrative, management, professional, advisory, consulting and other services to each other. Net amounts received under these agreements were $30,727,000 and $31,437,000 for the years ended December 31, 2003 and 2002, respectively. Tax Sharing Agreements: The Company has entered into federal tax sharing agreements with members of an affiliated group as defined in Section 1504 of the Internal Revenue Code of 1986, as amended. The agreement provides for the manner of calculation and the amounts/timing of the payments between the parties as well as other related matters in connection with the filing of consolidated federal income tax returns. The Company has also entered into a state tax sharing agreement with ING AIH and each of the specific subsidiaries that are parties to the agreement. The state tax agreement applies to situations in which ING AIH and all or some of the subsidiaries join in the filing of a state or local franchise, income tax or other tax return on a consolidated, combined or unitary basis. Services Agreement with ING Financial Advisors, LLC: The Company has entered into a services agreement with Services Agreement with ING Financial Advisors, LLC ("ING FA") to provide certain administrative, management, professional advisory, consulting and other services to the Company for the benefit of its customers. Charges for these services are to be determined in accordance with fair and reasonable standards with neither party realizing a profit nor incurring a loss as a result of the services provided to the Company. The Company will reimburse ING FA for direct and indirect costs incurred on behalf of the Company. 32 USG ANNUITY & LIFE COMPANY Notes to Financial Statements - Statutory Policies -------------------------------------------------------------------------------- Assets and liabilities along with related revenues and expenses recorded as a result of transactions and agreements with affiliates may not be the same as those recorded if the Company was not a wholly-owned subsidiary of its parent. 14. Guaranty Fund Assessments Insurance companies are assessed the costs of funding the insolvencies of other insurance companies by the various state guaranty associations, generally based on the amount of premiums companies collect in that state. The Company accrues the cost of future guaranty fund assessments based on estimates of insurance company insolvencies provided by the National Organization of Life and Health Insurance Guaranty Associations ("NOLHGA") and the amount of premiums written in each state. The Company has estimated this liability to be $12,422,000 and $12,397,000 as of December 31, 2003 and 2002, respectively and has recorded a reserve. The Company has also recorded an asset of $34,000 and $2,451,000 as of December 31, 2003 and 2002, respectively, for future credits to premium taxes for assessments already paid. 15. Subsequent Events Effective January 1, 2004, the Company was a party to a merger with its parent, Equitable, and two other affiliated companies, United Life and Annuity Insurance Company ("ULA") and Golden American Life Insurance Company ("Golden"). Golden requested that the Delaware Insurance Department approve the redomestication of Golden from Delaware to Iowa effective January 1, 2004. Equitable, ULA, and the Company requested the Iowa Department of Insurance (for Equitable and ULA) and the Oklahoma Insurance Department (for the Company) approve the merger of the affiliated life insurance company operations of Equitable, ULA, Golden, and the Company with Golden being the survivor. The sequence of events, effective January 1, 2004, was as follows: redomestication of Golden to Iowa, merger of the four affiliated insurers with Golden being the survivor, and the renaming of Golden to ING USA Annuity and Life Insurance Company. The Delaware Insurance Department provided a "no objection letter" for the redomestication of Golden to Iowa on August 25, 2003. The Iowa Department of Insurance approved the merger on July 21, 2003 and the Oklahoma Insurance Department approved it on August 11, 2003. 33 Financial Statements Separate Account B of ING USA Annuity and Life Insurance Company Year ended December 31, 2003 with Report of Independent Auditors This page intentionally left blank. Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Financial Statements Year ended December 31, 2003 Contents Report of Independent Auditors 1 Audited Financial Statements Statements of Assets and Liabilities 6 Statements of Operations 40 Statements of Changes in Net Assets 75 Notes to Financial Statements 119 This page intentionally left blank. Report of Independent Auditors The Board of Directors and Participants ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company) We have audited the accompanying statements of assets and liabilities of Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) (the "Account") as of December 31, 2003, and the related statements of operations and changes in net assets for the periods disclosed in the financial statements. These financial statements are the responsibility of the Account's management. Our responsibility is to express an opinion on these financial statements based on our audits. The Account is comprised of the following Divisions: ING GET Fund: ING Capital Guardian Large Cap Value Portfolio ING GET Fund - Series N (Service Class) ING GET Fund - Series P ING Capital Guardian Large Cap Value Portfolio ING GET Fund - Series Q (Advisor Class) ING GET Fund - Series R ING Capital Guardian Managed Global Portfolio ING GET Fund - Series S (Service Class) ING GET Fund - Series T ING Capital Guardian Managed Global Portfolio ING GET Fund - Series U (Advisor Class) ING GET Fund - Series V ING Capital Guardian Small Cap Portfolio (Service ING Investors Trust: Class) ING AIM Mid-Cap Growth Portfolio (Service Class) ING Capital Guardian Small Cap Portfolio (Advisor ING AIM Mid-Cap Growth Portfolio (Advisor Class) Class) ING Alliance Mid-Cap Growth Portfolio (Service Class) ING Developing World Portfolio (Service Class) ING Alliance Mid-Cap Growth Portfolio (Advisor Class) ING Developing World Portfolio (Advisor Class) ING American Funds Growth Portfolio (Service Class) ING Eagle Asset Value Equity Portfolio (Service ING American Funds Growth-Income Portfolio (Service Class) Class) ING Eagle Asset Value Equity Portfolio (Advisor ING American Funds International Portfolio (Service Class) Class) ING FMR Diversified Mid-Cap Portfolio (Service Class) ING FMR Diversified Mid-Cap Portfolio (Advisor Class)
ING Investors Trust (continued): ING MFS(R) Research Portfolio (Service Class) ING Goldman Sachs Internet Tollkeeper Portfolio ING MFS(R) Research Portfolio (Advisor Class) (Service Class) ING MFS(R) Total Return Portfolio (Service Class) ING Goldman Sachs Internet Tollkeeper Portfolio ING MFS(R) Total Return Portfolio (Advisor Class) (Advisor Class) ING PIMCO Core Bond Portfolio (Service Class) ING Hard Assets Portfolio (Service Class) ING PIMCO Core Bond Portfolio (Advisor Class) ING Hard Assets Portfolio (Advisor Class) ING Salomon Brothers All Cap Portfolio (Service ING International Portfolio (Service Class) Class) ING International Portfolio (Advisor Class) ING Salomon Brothers All Cap Portfolio (Advisor ING Janus Growth and Income Portfolio (Service Class) Class) ING Janus Growth and Income Portfolio (Advisor Class) ING Salomon Brothers Investors Portfolio (Service ING Janus Special Equity Portfolio (Service Class) Class) ING Janus Special Equity Portfolio (Advisor Class) ING Salomon Brothers Investors Portfolio (Advisor ING Jennison Equity Opportunities Portfolio (Service Class) Class) ING T. Rowe Price Capital Appreciation Portfolio ING Jennison Equity Opportunities Portfolio (Advisor (Service Class) Class) ING T. Rowe Price Capital Appreciation Portfolio ING JPMorgan Fleming Small Cap Equity Portfolio (Advisor Class) (Service Class) ING T. Rowe Price Equity Income Portfolio (Service ING JPMorgan Fleming Small Cap Equity Portfolio Class) (Advisor Class) ING T. Rowe Price Equity Income Portfolio (Advisor ING Julius Baer Foreign Portfolio (Service Class) Class) ING Julius Baer Foreign Portfolio (Advisor Class) ING UBS U.S. Balanced Portfolio (Service Class) ING Limited Maturity Bond Portfolio (Service Class) ING UBS U.S. Balanced Portfolio (Advisor Class) ING Liquid Assets Portfolio (Service Class) ING Van Kampen Equity Growth Portfolio (Service ING Liquid Assets Portfolio (Advisor Class) Class) ING Marisco Growth Portfolio (Service Class) ING Van Kampen Equity Growth Portfolio (Advisor ING Marisco Growth Portfolio (Advisor Class) Class) ING Mercury Focus Value Portfolio (Service Class) ING Van Kampen Global Franchise Portfolio (Service ING Mercury Focus Value Portfolio (Advisor Class) Class) ING Mercury Fundamental Growth Portfolio (Service Class) ING Van Kampen Global Franchise Portfolio (Advisor ING Mercury Fundamental Growth Portfolio (Advisor Class) Class) ING MFS(R) Mid-Cap Growth Portfolio (Service Class) ING Van Kampen Growth and Income Portfolio (Service ING MFS(R) Mid-Cap Growth Portfolio (Advisor Class) Class) ING Van Kampen Growth and Income Portfolio (Advisor Class) ING Van Kampen Real Estate Portfolio (Service Class) ING Van Kampen Real Estate Portfolio (Advisor Class) ING Partners, Inc.: ING Alger Aggressive Growth Portfolio (Service Class)
ING Partners, Inc (continued): ING VP International Equity Portfolio (Service Class) ING Alger Growth Portfolio (Service Class) ING VP Small Company Portfolio (Service Class) ING American Century Small Cap Value Portfolio (Service ING VP Value Opportunity Portfolio (Service Class) Class) ING Variable Products Trust: ING Baron Small Cap Growth Portfolio (Service Class) ING VP Convertible Portfolio (Service Class) ING JPMorgan Fleming International Portfolio (Service ING VP Growth and Income Portfolio (Service Class) Class) ING VP Growth Opportunities Portfolio (Service Class) ING JPMorgan Mid Cap Value Portfolio (Service Class) ING VP International Value Portfolio (Service Class) ING MFS(R) Capital Opportunities Portfolio (Initial Class) ING VP Large Company Value Portfolio (Service Class) ING MFS(R) Capital Opportunities Portfolio (Service Class) ING VP LargeCap Growth Portfolio (Service Class) ING MFS(R) Global Growth Portfolio (Service Class) ING VP MagnaCap Portfolio (Service Class) ING MFS(R) Research Equity Portfolio (Service Class) ING VP MidCap Opportunities Portfolio (Service Class) ING OpCap Balanced Value Portfolio (Service Class) ING VP SmallCap Opportunities Portfolio (Service ING PIMCO Total Return Portfolio (Service Class) Class) ING Salomon Brothers Aggressive Growth Portfolio AIM Variable Insurance Funds: (Service Class) AIM V.I. Capital Appreciation Fund (Class II) ING Salomon Brothers Fundamental Value Portfolio AIM V.I. Core Equity Fund (Class II) (Service Class) AIM V.I. Dent Demographic Trends Fund (Class II) ING Salomon Brothers Investors Value Portfolio (Service AIM V.I. Growth Fund (Class II) Class) AIM V.I. Premier Equity Fund (Class II) ING T. Rowe Price Growth Equity Portfolio (Service AllianceBernstein Variable Products Series Fund, Inc.: Class) AllianceBernstein Growth and Income Portfolio (Class ING UBS Tactical Asset Allocation Portfolio (Service B) Class) AllianceBernstein Premier Growth Portfolio (Class B) ING Van Kampen Comstock Fund (Service Class) AllianceBernstein Value Portfolio (Class B) ING Variable Insurance Trust: Fidelity Variable Insurance Products Fund: ING GET U.S. Core Portfolio - Series 1 Fidelity(R) VIP Contrafund(R) Portfolio (Class S2) ING GET U.S. Core Portfolio - Series 2 (Guaranteed) Fidelity(R) VIP Equity-Income Portfolio (Class S2) ING GET U.S. Core Portfolio - Series 3 Fidelity(R) VIP Growth Portfolio (Class S2) ING VIT Worldwide Growth Fidelity(R) VIP Overseas Portfolio (Class S2) ING Variable Portfolios, Inc.: ING VP Balanced Portfolio (Service Class) ING VP Bond Portfolio (Service Class) ING VP Growth Portfolio (Service Class) ING VP Index Plus LargeCap Portfolio (Service Class) ING VP Index Plus MidCap Portfolio (Service Class) ING VP Index Plus SmallCap Portfolio (Service Class)
Franklin Templeton Variable Insurance Products Trust: PIMCO Variable Insurance Trust: Franklin Small Cap Value Securities Fund (Class 2) PIMCO High Yield Portfolio The Galaxy VIP Fund: PIMCO StocksPLUS Growth and Income Portfolio Galaxy VIP Asset Allocation Fund Pioneer Variable Contracts Trust: Galaxy VIP Growth and Income Fund Pioneer Equity-Income VCT Portfolio (Class II) Galaxy VIP High Quality Bond Fund Pioneer Fund VCT Portfolio (Class II) Galaxy VIP Small Company Growth Fund Pioneer Mid-Cap Value VCT Greenwich Street Series Fund: Pioneer Small Company VCT Portfolio (Class II) Greenwich Appreciation Portfolio ProFunds VP: INVESCO Variable Investment Funds, Inc.: ProFund VP Bull INVESCO VIF - Financial Services Fund ProFund VP Europe 30 INVESCO VIF - Health Sciences Fund ProFund VP Rising Rates Opportunity INVESCO VIF - Leisure Fund ProFund VP Small Cap INVESCO VIF - Utilities Fund Prudential Series Fund, Inc.: Janus Aspen Series: Jennison Portfolio (Class II) Janus Aspen Series Balanced Portfolio (Class S) SP Jennison International Growth Portfolio (Class II) Janus Aspen Series Flexible Income Portfolio (Class S) Putnam Variable Trust: Janus Aspen Series Growth Portfolio (Class S) Putnam VT Discovery Growth Fund (Class IB) Janus Aspen Series Worldwide Growth Portfolio (Class S) Putnam VT Growth and Income (Class IB) Liberty Variable Insurance Trust: Putnam VT International Growth and Income (Class IB) Colonial Small Cap Value Fund (Class B) Travelers Series Fund Inc.: Liberty Variable Series: Smith Barney High Income Liberty Asset Allocation Fund Variable Series (Class A) Smith Barney International All Cap Growth Liberty Equity Fund Variable Series (Class A) Smith Barney Large Cap Value Liberty Federal Securities Fund Variable Series (Class Smith Barney Money Market A) UBS Series Trust: Liberty Small Company Growth Fund Variable Series UBS Tactical Allocation Portfolio (Class I) (Class A) Wells Fargo: Oppenheimer Variable Accounts Fund: Wells Fargo VT Asset Allocation Oppenheimer Global Securities Fund/VA (Class S) Wells Fargo VT Equity Income Fund Oppenheimer Strategic Bond Fund/VA (Class S) Wells Fargo VT Large Company Growth Wells Fargo VT Small Cap Growth
We conducted our audits in accordance with auditing standards generally accepted in the 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2003, by correspondence with the transfer agents. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as 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 each of the Divisions comprising the Separate Account B of ING USA Annuity and Life Insurance Company at December 31, 2003, and the results of their operations and changes in their net assets for the periods disclosed in the financial statements, in conformity with accounting principles generally accepted in the United States.with accounting principles generally accepted in the United States. /s/ Ernst & Young LLP Atlanta, Georgia March 15, 2004 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) ING GET ING GET ING GET ING GET ING GET Fund- Fund- Fund- Fund- Fund- Series N Series P Series Q Series R Series S -------------- -------------- -------------- -------------- -------------- Assets Investments in mutual funds at fair value $ 23,359 $ 110,106 $ 131,121 $ 134,782 $ 161,841 -------------- -------------- -------------- -------------- -------------- Total assets 23,359 110,106 131,121 134,782 161,841 Liabilities Payable to Golden American Life Insurance Company 2 5 26 27 21 -------------- -------------- -------------- -------------- -------------- Total liabilities 2 5 26 27 21 -------------- -------------- -------------- -------------- -------------- Net assets $ 23,357 $ 110,101 $ 131,095 $ 134,755 $ 161,820 ============== ============== ============== ============== ============== Net assets Accumulation units $ 23,357 $ 110,101 $ 131,095 $ 134,755 $ 161,820 Contracts in payout (annuitization) period - - - - - -------------- -------------- -------------- -------------- -------------- Total net assets $ 23,357 $ 110,101 $ 131,095 $ 134,755 $ 161,820 ============== ============== ============== ============== ============== Total number of mutual fund shares 2,272,268 10,679,507 12,416,773 12,584,677 15,196,346 ============== ============== ============== ============== ============== Cost of mutual fund shares $ 22,900 $ 107,312 $ 124,504 $ 126,099 $ 152,322 ============== ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 6 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) ING AIM ING AIM ING GET ING GET ING GET Mid-Cap Mid-Cap Fund- Fund- Fund- Growth Growth Series T Series U Series V (Service Class) (Advisor Class) -------------- -------------- -------------- ---------------- ---------------- Assets Investments in mutual funds at fair value $ 162,893 $ 168,964 $ 326,053 $ 221,793 $ 3,194 -------------- -------------- -------------- ---------------- ---------------- Total assets 162,893 168,964 326,053 221,793 3,194 Liabilities Payable to ING USA Annuity and Life Insurance Company 11 38 69 60 - -------------- -------------- -------------- ---------------- ---------------- Total liabilities 11 38 69 60 - -------------- -------------- -------------- ---------------- ---------------- Net assets $ 162,882 $ 168,926 $ 325,984 $ 221,733 $ 3,194 ============== ============== ============== ================ ================ Net assets Accumulation units $ 162,882 $ 168,926 $ 325,984 $ 221,557 $ 3,194 Contracts in payout (annuitization) period - - - 176 - -------------- -------------- -------------- -------------- -------------- Total net assets $ 162,882 $ 168,926 $ 325,984 $ 221,733 $ 3,194 ============== ============== ============== ================ ================ Total number of mutual fund shares 15,223,598 15,717,557 33,034,731 17,113,637 247,027 ============== ============== ============== ================ ================ Cost of mutual fund shares $ 152,616 $ 157,440 $ 330,758 $ 171,531 $ 2,770 ============== ============== ============== ================ ================
The accompanying notes are an integral part of these financial statements. 7 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) ING Alliance ING Alliance ING ING ING Mid-Cap Mid-Cap American American American Growth Growth Funds Funds Funds (Service Class) (Advisor Class) Growth Growth-Income International ---------------- ---------------- -------------- ---------------- ------------- Assets Investments in mutual funds at fair value $ 462,929 $ 4,624 $ 132,332 $ 99,968 $ 45,343 ---------------- ---------------- -------------- ---------------- ------------- Total assets 462,929 4,624 132,332 99,968 45,343 Liabilities Payable to ING USA Annuity and Life Insurance Company 105 - 12 9 3 ---------------- ---------------- -------------- ---------------- ------------- Total liabilities 105 - 12 9 3 ---------------- ---------------- -------------- ---------------- ------------- Net assets $ 462,824 $ 4,624 $ 132,320 $ 99,959 $ 45,340 ================ ================ ============== ================ ============= Net assets Accumulation units $ 462,824 $ 4,624 $ 132,320 $ 99,959 $ 45,340 Contracts in payout (annuitization) period - - - - - -- -------------- ---------------- -------------- --------------- ------------- Total net assets $ 462,824 $ 4,624 $ 132,320 $ 99,959 $ 45,340 ================ ================ ============== ================ ============= Total number of mutual fund shares 31,069,059 310,782 2,910,312 2,969,047 3,351,277 ================ ================ ============== ================ ============= Cost of mutual fund shares $ 320,771 $ 3,910 $ 126,082 $ 94,431 $ 42,625 ================ ================ ============== ================ =============
The accompanying notes are an integral part of these financial statements. 8 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) ING Capital ING Capital ING Capital ING Capital Guardian Guardian Guardian Guardian ING Capital Large Cap Large Cap Managed Managed Guardian Value Value Global Global Small Cap (Service Class) (Advisor Class) (Service Class) (Advisor Class) (Service Class) ---------------- ---------------- ---------------- ---------------- ---------------- Assets Investments in mutual funds at fair value $ 561,384 $ 6,806 $ 352,450 $ 2,084 $ 537,409 ---------------- ---------------- ---------------- ---------------- ---------------- Total assets 561,384 6,806 352,450 2,084 537,409 Liabilities Payable to ING USA Annuity and Life Insurance Company 96 1 63 - 123 ---------------- ---------------- ---------------- ---------------- ---------------- Total liabilities 96 1 63 - 123 ---------------- ---------------- ---------------- ---------------- ---------------- Net assets $ 561,288 $ 6,805 $ 352,387 $ 2,084 $ 537,286 ================ ================ ================ ================ ================ Net assets Accumulation units $ 561,288 $ 6,805 $ 352,277 $ 2,084 $ 537,245 Contracts in payout (annuitization) period - - 110 - 41 Total net assets $ 561,288 $ 6,805 $ 352,387 $ 2,084 $ 537,286 ================ ================ ================ ================ ================ Total number of mutual fund shares 53,060,912 643,306 31,190,300 184,432 48,899,787 ================ ================ ================ ================ ================ Cost of mutual fund shares $ 498,628 $ 5,643 $ 304,884 $ 1,818 $ 407,012 ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 9 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) ING Capital ING ING ING Eagle ING Eagle Guardian Developing Developing Asset Value Asset Value Small Cap World World Equity Equity (Advisor (Service (Advisor (Service (Advisor Class) Class) Class) Class) Class) ---------------- -------------- -------------- --------------- -------------- Assets Investments in mutual funds at fair value $ 4,148 $ 109,283 $ 1,956 $ 212,193 $ 1,022 ---------------- -------------- -------------- --------------- -------------- Total assets 4,148 109,283 1,956 212,193 1,022 Liabilities Payable to ING USA Annuity and Life Insurance Company - 25 - 44 - ---------------- -------------- -------------- --------------- -------------- Total liabilities - 25 - 44 - ---------------- -------------- -------------- --------------- -------------- Net assets $ 4,148 $ 109,258 $ 1,956 $ 212,149 $ 1,022 ================ ============== ============== =============== ============== Net assets Accumulation units $ 4,148 $ 109,183 $ 1,956 $ 212,140 $ 1,022 Contracts in payout (annuitization) period - 75 - 9 - Total net assets $ 4,148 $ 109,258 $ 1,956 $ 212,149 $ 1,022 ================ ============== ============== =============== ============== Total number of mutual fund shares 377,100 11,776,159 211,178 13,262,040 63,859 ================ ============== ============== =============== ============== Cost of mutual fund shares $ 3,574 $ 85,958 $ 1,611 $ 195,521 $ 866 ================ ============== ============== =============== ==============
The accompanying notes are an integral part of these financial statements. 10 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) ING FMR ING FMR Diversified Diversified ING Goldman ING Goldman ING Hard Mid-Cap Mid-Cap Sachs Internet Sachs Internet Assets (Service (Advisor Tollkeeper Tollkeeper (Service Class) Class) (Service Class) (Advisor Class) Class) --------------- -------------- ---------------- ---------------- -------------- Assets Investments in mutual funds at fair value $ 164,235 $ 3,755 $ 53,631 $ 2,595 $ 140,040 --------------- -------------- ---------------- ---------------- -------------- Total assets 164,235 3,755 53,631 2,595 140,040 Liabilities Payable to ING USA Annuity and Life Insurance Company 30 1 9 - 24 --------------- -------------- ---------------- ---------------- -------------- Total liabilities 30 1 9 - 24 --------------- -------------- ---------------- ---------------- -------------- Net assets $ 164,205 $ 3,754 $ 53,622 $ 2,595 $ 140,016 =============== ============== ================ ================ ============== Net assets Accumulation units $ 164,205 $ 3,754 $ 53,622 $ 2,595 $ 139,971 Contracts in payout (annuitization) period - - - - 45 --------------- -------------- ---------------- ---------------- -------------- Total net assets $ 164,205 $ 3,754 $ 53,622 $ 2,595 $ 140,016 =============== ============== ================ ================ ============== Total number of mutual fund shares 16,606,184 379,255 7,992,635 387,330 9,404,968 =============== ============== ================ ================ ============== Cost of mutual fund shares $ 142,762 $ 3,140 $ 44,927 $ 2,342 $ 107,436 =============== ============== ================ ================ ==============
The accompanying notes are an integral part of these financial statements. 11 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) ING Janus ING Janus ING Hard ING ING Growth Growth Assets International International and Income and Income (Advisor (Service (Advisor (Service (Advisor Class) Class) Class) Class) Class) -------------- --------------- --------------- --------------- -------------- Assets Investments in mutual funds at fair value $ 3,037 $ 162,117 $ 4,980 $ 224,767 $ 7,196 -------------- --------------- --------------- --------------- -------------- Total assets 3,037 162,117 4,980 224,767 7,196 Liabilities Payable to ING USA Annuity and Life Insurance Company - 35 - 45 1 -------------- --------------- --------------- --------------- -------------- Total liabilities - 35 - 45 1 -------------- --------------- --------------- --------------- -------------- Net assets $ 3,037 $ 162,082 $ 4,980 $ 224,722 $ 7,195 ============== =============== =============== =============== ============== Net assets Accumulation units $ 3,037 $ 162,082 $ 4,980 $ 224,722 $ 7,195 Contracts in payout (annuitization) period - - - - - -------------- --------------- --------------- --------------- -------------- Total net assets $ 3,037 $ 162,082 $ 4,980 $ 224,722 $ 7,195 ============== =============== =============== =============== ============== Total number of mutual fund shares 203,846 18,256,391 560,183 25,483,737 814,947 ============== =============== =============== =============== ============== Cost of mutual fund shares $ 2,394 $ 139,301 $ 4,167 $ 211,766 $ 6,282 ============== =============== =============== =============== ==============
The accompanying notes are an integral part of these financial statements. 12 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) ING Janus ING Janus ING ING Special Special Jennison Jennison ING JPMorgan Equity Equity Equity Equity Fleming Small (Service (Advisor Opportunities Opportunities Cap Equity Class) Class) (Service Class) (Advisor Class) (Service Class) --------------- -------------- --------------- --------------- ---------------- Assets Investments in mutual funds at fair value $ 53,922 $ 801 $ 333,465 $ 1,639 $ 65,493 --------------- -------------- --------------- --------------- ---------------- Total assets 53,922 801 333,465 1,639 65,493 Liabilities Payable to ING USA Annuity and Life Insurance Company 11 - 85 - 9 --------------- -------------- --------------- --------------- ---------------- Total liabilities 11 - 85 - 9 --------------- -------------- --------------- --------------- ---------------- Net assets $ 53,911 $ 801 $ 333,380 $ 1,639 $ 65,484 =============== ============== =============== =============== ================ Net assets Accumulation units $ 53,911 $ 801 $ 333,168 $ 1,639 $ 65,484 Contracts in payout (annuitization) period - - 212 - - --------------- -------------- --------------- --------------- ---------------- Total net assets $ 53,911 $ 801 $ 333,380 $ 1,639 $ 65,484 =============== ============== =============== =============== ================ Total number of mutual fund shares 5,736,404 85,349 25,377,891 124,702 6,161,189 =============== ============== =============== =============== ================ Cost of mutual fund shares $ 46,878 $ 679 $ 297,441 $ 1,381 $ 55,411 =============== ============== =============== =============== ================
The accompanying notes are an integral part of these financial statements. 13 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) ING ING ING JPMorgan Julius Baer Julius Baer ING ING Liquid Fleming Small Foreign Foreign Limited Assets Cap Equity (Service (Advisor Maturity (Service (Advisor Class) Class) Class) Bond Class) ---------------- -------------- --------------- --------------- --------------- Assets Investments in mutual funds at fair value $ 11,089 $ 34,648 $ 2,550 $ 535,051 $ 745,809 ---------------- -------------- --------------- --------------- --------------- Total assets 11,089 34,648 2,550 535,051 745,809 Liabilities Payable to ING USA Annuity and Life Insurance Company 1 4 - 97 135 ---------------- -------------- --------------- --------------- --------------- Total liabilities 1 4 - 97 135 ---------------- -------------- --------------- --------------- --------------- Net assets $ 11,088 $ 34,644 $ 2,550 $ 534,954 $ 745,674 ================ ============== =============== =============== =============== Net assets Accumulation units $ 11,088 $ 34,644 $ 2,550 $ 534,844 $ 745,655 Contracts in payout (annuitization) period - - - 110 19 ---------------- -------------- --------------- --------------- --------------- Total net assets $ 11,088 $ 34,644 $ 2,550 $ 534,954 $ 745,674 ================ ============== =============== =============== =============== Total number of mutual fund shares 1,046,160 3,321,979 244,268 45,927,099 745,808,930 ================ ============== =============== =============== =============== Cost of mutual fund shares $ 9,457 $ 31,767 $ 2,236 $ 524,076 $ 745,809 ================ ============== =============== =============== ===============
The accompanying notes are an integral part of these financial statements. 14 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) ING ING ING Liquid ING Marisco ING Marisco Mercury Mercury Assets Growth Growth Foucs Value Foucs Value (Advisor (Service (Advisor (Service (Advisor Class) Class) Class) Class) Class) --------------- -------------- -------------- --------------- --------------- Assets Investments in mutual funds at fair value $ 4,838 $ 778,928 $ 8,325 $ 26,188 $ 805 --------------- -------------- -------------- --------------- --------------- Total assets 4,838 778,928 8,325 26,188 805 Liabilities Payable to ING USA Annuity and Life Insurance Company 1 228 1 4 - --------------- -------------- -------------- --------------- --------------- Total liabilities 1 228 1 4 - --------------- -------------- -------------- --------------- --------------- Net assets $ 4,837 $ 778,700 $ 8,324 $ 26,184 $ 805 =============== ============== ============== =============== =============== Net assets Accumulation units $ 4,837 $ 778,700 $ 8,324 $ 26,184 $ 805 Contracts in payout (annuitization) period - - - - - --------------- -------------- -------------- --------------- --------------- Total net assets $ 4,837 $ 778,700 $ 8,324 $ 26,184 $ 805 =============== ============== ============== =============== =============== Total number of mutual fund shares 4,837,568 60,381,996 646,360 2,385,041 73,464 =============== ============== ============== =============== =============== Cost of mutual fund shares $ 4,838 $ 617,153 $ 7,358 $ 22,694 $ 709 =============== ============== ============== =============== ===============
The accompanying notes are an integral part of these financial statements. 15 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) ING MFS(R) ING MFS(R) ING Mercury ING Mercury Mid-Cap Mid-Cap ING MFS(R) Fundamental Fundamental Growth Growth Research Growth Growth (Service (Advisor (Service (Service Class) (Advisor Class) Class) Class) Class) ---------------- ---------------- --------------- -------------- -------------- Assets Investments in mutual funds at fair value $ 13,632 $ 856 $ 634,527 $ 9,626 $ 495,038 ---------------- ---------------- --------------- -------------- -------------- Total assets 13,632 856 634,527 9,626 495,038 Liabilities Payable to ING USA Annuity and Life Insurance Company 2 - 170 1 127 ---------------- ---------------- --------------- -------------- -------------- Total liabilities 2 - 170 1 127 ---------------- ---------------- --------------- -------------- -------------- Net assets $ 13,630 $ 856 $ 634,357 $ 9,625 $ 494,911 ================ ================ =============== ============== ============== Net assets Accumulation units $ 13,630 $ 856 $ 634,292 $ 9,625 $ 494,911 Contracts in payout (annuitization) period - - 65 - - ---------------- ---------------- --------------- -------------- -------------- Total net assets $ 13,630 $ 856 $ 634,357 $ 9,625 $ 494,911 ================ ================ =============== ============== ============== Total number of mutual fund shares 1,333,889 83,878 62,824,480 954,045 33,291,067 ================ ================ =============== ============== ============== Cost of mutual fund shares $ 11,675 $ 735 $ 487,268 $ 8,386 $ 478,930 ================ ================ =============== ============== ==============
The accompanying notes are an integral part of these financial statements. 16 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) ING MFS(R) ING MFS(R) ING MFS(R) ING PIMCO ING PIMCO Research Total Return Total Return Core Bond Core Bond (Advisor (Service (Advisor (Service (Advisor Class) Class) Class) Class) Class) --------------- -------------- -------------- --------------- --------------- Assets Investments in mutual funds at fair value $ 1,951 $ 1,142,629 $ 16,259 $ 514,106 $ 16,547 --------------- -------------- -------------- --------------- --------------- Total assets 1,951 1,142,629 16,259 514,106 16,547 Liabilities Payable to ING USA Annuity and Life Insurance Company - 221 2 79 2 --------------- -------------- -------------- --------------- --------------- Total liabilities - 221 2 79 2 --------------- -------------- -------------- --------------- --------------- Net assets $ 1,951 $ 1,142,408 $ 16,257 $ 514,027 $ 16,545 =============== ============== ============== =============== =============== Net assets Accumulation units $ 1,951 $ 1,142,408 $ 16,257 $ 514,027 $ 16,545 Contracts in payout (annuitization) period - - - - - --------------- -------------- -------------- --------------- --------------- Total net assets $ 1,951 $ 1,142,408 $ 16,257 $ 514,027 $ 16,545 =============== ============== ============== =============== =============== Total number of mutual fund shares 131,129 66,393,297 946,395 48,002,384 1,546,485 =============== ============== ============== =============== =============== Cost of mutual fund shares $ 1,704 $ 1,079,064 $ 14,890 $ 498,723 $ 16,455 =============== ============== ============== =============== ===============
The accompanying notes are an integral part of these financial statements. 17 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) ING ING Salomon ING Salomon ING Salomon ING Salomon T. Rowe Price Brothers Brothers Brothers Brothers Capital All Cap All Cap Investors Investors Appreciation (Service Class) (Advisor Class) (Service Class) (Advisor Class) (Service Class) ---------------- ---------------- ---------------- ---------------- ---------------- Assets Investments in mutual funds at fair value $ 421,562 $ 6,125 $ 136,169 $ 1,014 $ 1,365,933 ---------------- ---------------- ---------------- ---------------- ---------------- Total assets 421,562 6,125 136,169 1,014 1,365,933 Liabilities Payable to ING USA Annuity and Life Insurance Company 80 1 22 - 254 ---------------- ---------------- ---------------- ---------------- ---------------- Total liabilities 80 1 22 - 254 ---------------- ---------------- ---------------- ---------------- ---------------- Net assets $ 421,482 $ 6,124 $ 136,147 $ 1,014 $ 1,365,679 ================ ================ ================ ================ ================ Net assets Accumulation units $ 421,482 $ 6,124 $ 136,147 $ 1,014 $ 1,365,109 Contracts in payout (annuitization) period - - - - 570 ---------------- --------------- ---------------- ---------------- ---------------- Total net assets $ 421,482 $ 6,124 $ 136,147 $ 1,014 $ 1,365,679 ================ ================ ================ ================ ================ Total number of mutual fund shares 35,485,028 515,106 12,956,141 96,425 63,948,168 ================ ================ ================ ================ ================ Cost of mutual fund shares $ 386,341 $ 5,223 $ 129,305 $ 839 $ 1,134,728 ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 18 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) ING ING ING ING ING T. Rowe Price T. Rowe Price T. Rowe Price UBS U.S. UBS U.S. Capital Equity Equity Balanced Balanced Appreciation Income Income (Service (Advisor (Advisor Class) (Service Class) (Advisor Class) Class) Class) ---------------- ---------------- ---------------- -------------- -------------- Assets Investments in mutual funds at fair value $ 20,208 $ 643,973 $ 10,820 $ 68,677 $ 963 ---------------- ---------------- ---------------- -------------- -------------- Total assets 20,208 643,973 10,820 68,677 963 Liabilities Payable to ING USA Annuity and Life Insurance Company 2 115 1 13 - ---------------- ---------------- ---------------- -------------- -------------- Total liabilities 2 115 1 13 - ---------------- ---------------- ---------------- -------------- -------------- Net assets $ 20,206 $ 643,858 $ 10,819 $ 68,664 $ 963 ================ ================ ================ ============== ============== Net assets Accumulation units $ 20,206 $ 643,292 $ 10,819 $ 68,664 $ 963 Contracts in payout (annuitization) period - 566 - - - ---------------- ---------------- ---------------- -------------- -------------- Total net assets $ 20,206 $ 643,858 $ 10,819 $ 68,664 $ 963 ================ ================ ================ ============== ============== Total number of mutual fund shares 946,490 53,133,112 892,766 7,939,510 111,384 ================ ================ ================ ============== ============== Cost of mutual fund shares $ 17,575 $ 596,012 $ 9,330 $ 67,133 $ 912 ================ ================ ================ ============== ==============
The accompanying notes are an integral part of these financial statements. 19 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) ING ING ING ING ING Van Kampen Van Kampen Van Kampen Van Kampen Van Kampen Global Global Growth and Equity Growth Equity Growth Franchise Franchise Income (Service Class) (Advisor Class) (Service Class) (Advisor Class) (Service Class) ---------------- ---------------- ---------------- ---------------- ----------------- Assets Investments in mutual funds at fair value $ 29,853 $ 5,910 $ 58,027 $ 14,508 $ 705,413 ---------------- ---------------- ---------------- ---------------- ----------------- Total assets 29,853 5,910 58,027 14,508 705,413 Liabilities Payable to ING USA Annuity and Life Insurance Company 5 1 8 2 160 ---------------- ---------------- ---------------- ---------------- ----------------- Total liabilities 5 1 8 2 160 ---------------- ---------------- ---------------- ---------------- ----------------- Net assets $ 29,848 $ 5,909 $ 58,019 $ 14,506 $ 705,253 ================ ================ ================ ================ ================= Net assets Accumulation units $ 29,848 $ 5,909 $ 58,019 $ 14,506 $ 705,138 Contracts in payout (annuitization) period - - - - 115 ---------------- ---------------- ---------------- ---------------- ----------------- Total net assets $ 29,848 $ 5,909 $ 58,019 $ 14,506 $ 705,253 ================ ================ ================ ================ ================= Total number of mutual fund shares 3,093,616 612,387 5,176,339 1,296,518 32,093,383 ================ ================ ================ ================ ================= Cost of mutual fund shares $ 26,813 $ 5,332 $ 48,777 $ 12,192 $ 719,088 ================ ================ ================ ================ =================
The accompanying notes are an integral part of these financial statements. 20 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) ING Van Kampen ING ING Growth and Van Kampen Van Kampen ING Alger Income Real Estate Real Estate Aggressive ING Alger (Advisor Class) (Service Class) (Advisor Class) Growth Growth ---------------- ---------------- ---------------- ------------- ------------- Assets Investments in mutual funds at fair value $ 24,061 $ 330,930 $ 6,247 $ 557 $ 142 ---------------- ---------------- ---------------- ------------- ------------- Total assets 24,061 330,930 6,247 557 142 Liabilities Payable to ING USA Annuity and Insurance Company 3 66 1 - - ---------------- ---------------- ---------------- ------------- ------------- Total liabilities 3 66 1 - - ---------------- ---------------- ---------------- ------------- ------------- Net assets $ 24,058 $ 330,864 $ 6,246 $ 557 $ 142 ================ ================ ================ ============= ============= Net assets Accumulation units $ 24,058 $ 330,775 $ 6,246 $ 557 $ 142 Contracts in payout (annuitization) period - 89 - - - ---------------- ---------------- ---------------- ------------- ------------- Total net assets $ 24,058 $ 330,864 $ 6,246 $ 557 $ 142 ================ ================ ================ ============= ============= Total number of mutual fund shares 1,094,187 16,174,480 305,168 75,639 16,072 ================ ================ ================ ============= ============= Cost of mutual fund shares $ 20,580 $ 270,564 $ 5,335 $ 506 $ 122 ================ ================ ================ ============= =============
The accompanying notes are an integral part of these financial statements. 21 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) ING American ING ING ING MFS(R) Century ING Baron JPMorgan JPMorgan Capital Small Cap Small Cap Fleming Mid Cap Opportunities Value Growth International Value (Initial Class) -------------- ----------- ------------- ------------- --------------- Assets Investments in mutual funds at fair value $ 162 $ 1,028 $ 8,020 $ 6,151 $ 3,009 -------------- ----------- ------------- ------------- --------------- Total assets 162 1,028 8,020 6,151 3,009 Liabilities Payable to ING USA Annuity and Life Insurance Company - - 1 - - -------------- ----------- ------------- ------------- --------------- Total liabilities - - 1 - - -------------- ----------- ------------- ------------- --------------- Net assets $ 162 $ 1,028 $ 8,019 $ 6,151 $ 3,009 ============== =========== ============= ============= =============== Net assets Accumulation units $ 162 $ 1,028 $ 8,019 $ 6,151 $ 3,009 Contracts in payout (annuitization) period - - - - - -------------- ----------- ------------- ------------- --------------- Total net assets $ 162 $ 1,028 $ 8,019 $ 6,151 $ 3,009 ============== =========== ============= ============= =============== Total number of mutual fund shares 15,049 87,931 768,197 517,301 124,279 ============== =========== ============= ============= =============== Cost of mutual fund shares $ 137 $ 935 $ 7,454 $ 5,660 $ 2,751 ============== =========== ============= ============= ===============
The accompanying notes are an integral part of these financial statements. 22 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) ING MFS(R) Capital ING MFS(R) ING MFS(R) ING OpCap ING PIMCO Opportunities Global Research Balanced Total (Service Class) Growth Equity Value Return ---------------- ------------ ------------- ------------- --------------- Assets Investments in mutual funds at fair value $ 391 $ 1,586 $ 97 $ 408 $ 1,918 ---------------- ------------ ------------- ------------- --------------- Total assets 391 1,586 97 408 1,918 Liabilities Payable to ING USA Annuity and Life Insurance Company - - - - - ---------------- ------------ ------------- ------------- --------------- Total liabilities - - - - - ---------------- ------------ ------------- ------------- --------------- Net assets $ 391 $ 1,586 $ 97 $ 408 $ 1,918 ================ ============ ============= ============= =============== Net assets Accumulation units $ 391 $ 1,586 $ 97 $ 408 $ 1,918 Contracts in payout (annuitization) period - - - - - ---------------- ------------ ------------- ------------- --------------- Total net assets $ 391 $ 1,586 $ 97 $ 408 $ 1,918 ================ ============ ============= ============= =============== Total number of mutual fund shares 16,214 143,392 12,902 33,174 180,782 ================ ============ ============= ============= =============== Cost of mutual fund shares $ 350 $ 1,425 $ 84 $ 358 $ 1,944 ================ ============ ============= ============= ===============
The accompanying notes are an integral part of these financial statements. 23 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) ING ING ING ING Salomon Salomon Salomon ING ING UBS Brothers Brothers Brothers T. Rowe Price Tactical Aggressive Fundamental Investors Growth Asset Growth Value Value Equity Allocation --------------- -------------- -------------- -------------- ------------- Assets Investments in mutual funds at fair value $ 13,881 $ 600 $ 362 $ 2,295 $ 89 --------------- -------------- -------------- -------------- ------------- Total assets 13,881 600 362 2,295 89 Liabilities Payable to ING USA Annuity and Life Insurance Company 1 - - - - --------------- -------------- -------------- -------------- ------------- Total liabilities 1 - - - - --------------- -------------- -------------- -------------- ------------- Net assets $ 13,880 $ 600 $ 362 $ 2,295 $ 89 =============== ============== ============== ============== ============= Net assets Accumulation units $ 13,880 $ 600 $ 362 $ 2,295 $ 89 Contracts in payout (annuitization) period - - - - - --------------- -------------- -------------- -------------- ------------- Total net assets $ 13,880 $ 600 $ 362 $ 2,295 $ 89 =============== ============== ============== ============== ============= Total number of mutual fund shares 383,127 36,192 27,917 50,870 2,948 =============== ============== ============== ============== ============= Cost of mutual fund shares $ 13,172 $ 525 $ 318 $ 1,991 $ 80 =============== ============== ============== ============== =============
The accompanying notes are an integral part of these financial statements. 24 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) ING GET ING GET ING GET ING Van U.S. Core U.S. Core U.S. Core ING VIT Kampen Portfolio Portfolio Portfolio Worldwide Comstock - Series 1 - Series 2 - Series 3 Growth ------------- ------------- ------------- -------------- -------------- Assets Investments in mutual funds at fair value $ 37,587 $ 220,835 $ 167,346 $ 8,966 $ 50,329 ------------- ------------- ------------- -------------- -------------- Total assets 37,587 220,835 167,346 8,966 50,329 Liabilities Payable to ING USA Annuity and Life Insurance Company 4 30 15 - 10 ------------- ------------- ------------- -------------- -------------- Total liabilities 4 30 15 - 10 ------------- ------------- ------------- -------------- -------------- Net assets $ 37,583 $ 220,805 $ 167,331 $ 8,966 $ 50,319 ============= ============= ============= ============== ============== Net assets Accumulation units $ 37,583 $ 220,805 $ 167,331 $ 8,966 $ 50,319 Contracts in payout (annuitization) period - - - - - ------------- ------------- ------------- -------------- -------------- Total net assets $ 37,583 $ 220,805 $ 167,331 $ 8,966 $ 50,319 ============= ============= ============= ============== ============== Total number of mutual fund shares 3,552,661 21,336,742 16,601,752 896,140 7,231,238 ============= ============= ============= ============== ============== Cost of mutual fund shares $ 33,313 $ 213,499 $ 166,106 $ 8,963 $ 44,401 ============= ============= ============= ============== ==============
The accompanying notes are an integral part of these financial statements. 25 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) ING VP ING VP ING VP ING VP ING VP Index Plus Index Plus Balanced Bond Growth LargeCap MidCap -------------- -------------- -------------- -------------- -------------- Assets Investments in mutual funds at fair value $ 1,231 $ 71,497 $ 292 $ 59,698 $ 19,895 -------------- -------------- -------------- -------------- -------------- Total assets 1,231 71,497 292 59,698 19,895 Liabilities Payable to ING USA Annuity and Life Insurance Company - 14 - 5 2 -------------- -------------- -------------- -------------- -------------- Total liabilities - 14 - 5 2 -------------- -------------- -------------- -------------- -------------- Net assets $ 1,231 $ 71,483 $ 292 $ 59,693 $ 19,893 ============== ============== ============== ============== ============== Net assets Accumulation units $ 1,231 $ 71,483 $ 292 $ 59,693 $ 19,893 Contracts in payout (annuitization) period - - - - - -------------- -------------- -------------- -------------- -------------- Total net assets $ 1,231 $ 71,483 $ 292 $ 59,693 $ 19,893 ============== ============== ============== ============== ============== Total number of mutual fund shares 98,561 5,059,935 32,906 4,425,334 1,277,784 ============== ============== ============== ============== ============== Cost of mutual fund shares $ 1,157 $ 70,593 $ 260 $ 54,808 $ 17,041 ============== ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 26 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) ING VP ING VP ING VP ING VP Index Plus International Small Value ING VP SmallCap Equity Company Opportunity Convertible -------------- -------------- -------------- -------------- -------------- Assets Investments in mutual funds at fair value $ 16,343 $ 197 $ 876 $ 2,271 $ 3,925 -------------- -------------- -------------- -------------- -------------- Total assets 16,343 197 876 2,271 3,925 Liabilities Payable to ING USA Annuity and Life Insurance Company 2 - - 1 - -------------- -------------- -------------- -------------- -------------- Total liabilities 2 - - 1 - -------------- -------------- -------------- -------------- -------------- Net assets $ 16,341 $ 197 $ 876 $ 2,270 $ 3,925 ============== ============== ============== ============== ============== Net assets Accumulation units $ 16,341 $ 197 $ 876 $ 2,270 $ 3,925 Contracts in payout (annuitization) period - - - - - -------------- -------------- -------------- -------------- -------------- Total net assets $ 16,341 $ 197 $ 876 $ 2,270 $ 3,925 ============== ============== ============== ============== ============== Total number of mutual fund shares 1,214,170 26,147 50,079 188,790 341,049 ============== ============== ============== ============== ============== Cost of mutual fund shares $ 14,016 $ 176 $ 765 $ 2,141 $ 3,577 ============== ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 27 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) ING VP ING VP ING VP ING VP Growth and Growth International LargeCap ING VP Income Opportunities Value Growth MagnaCap -------------- -------------- -------------- -------------- -------------- Assets Investments in mutual funds at fair value $ 1,723 $ 26,052 $ 534 $ 1,941 $ 27,555 -------------- -------------- -------------- -------------- -------------- Total assets 1,723 26,052 534 1,941 27,555 Liabilities Payable to ING USA Annuity and Life Insurance Company - 5 - - 4 -------------- -------------- -------------- -------------- -------------- Total liabilities - 5 - - 4 -------------- -------------- -------------- -------------- -------------- Net assets $ 1,723 $ 26,047 $ 534 $ 1,941 $ 27,551 ============== ============== ============== ============== ============== Net assets Accumulation units $ 1,723 $ 26,047 $ 534 $ 1,941 $ 27,551 Contracts in payout (annuitization) period - - - - - -------------- -------------- -------------- -------------- -------------- Total net assets $ 1,723 $ 26,047 $ 534 $ 1,941 $ 27,551 ============== ============== ============== ============== ============== Total number of mutual fund shares 94,357 5,231,383 47,836 232,699 3,103,038 ============== ============== ============== ============== ============== Cost of mutual fund shares $ 1,535 $ 23,264 $ 476 $ 1,557 $ 24,449 ============== ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 28 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) AIM V.I. ING VP ING VP AIM V.I. AIM V.I. Dent MidCap SmallCap Capital Core Demographic Opportunities Opportunities Appreciation Equity Trends ---------------- --------------- -------------- ------------ -------------- Assets Investments in mutual funds at fair value $ 280 $ 90,469 $ 77 $ 175 $ 58,317 ---------------- --------------- -------------- ------------ -------------- Total assets 280 90,469 77 175 58,317 Liabilities Payable to ING USA Annuity and Life Insurance Company - 16 - - 10 ---------------- --------------- -------------- ------------ -------------- Total liabilities - 16 - - 10 ---------------- --------------- -------------- ------------ -------------- Net assets $ 280 $ 90,453 $ 77 $ 175 $ 58,307 ================ =============== ============== ============ ============== Net assets Accumulation units $ 280 $ 90,453 $ 77 $ 175 $ 58,307 Contracts in payout (annuitization) period - - - - - ---------------- --------------- -------------- ------------ -------------- Total net assets $ 280 $ 90,453 $ 77 $ 175 $ 58,307 ================ =============== ============== ============ ============== Total number of mutual fund shares 45,879 6,162,752 3,622 8,374 11,236,332 ================ =============== ============== ============ ============== Cost of mutual fund shares $ 238 $ 83,036 $ 70 $ 148 $ 50,454 ================ =============== ============== ============ ==============
The accompanying notes are an integral part of these financial statements. 29 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) Alliance- Alliance- AIM V.I. Bernstein Bernstein Alliance- AIM V.I. Premier Growth and Premier Bernstein Growth Equity Income Growth Value -------------- -------------- --------------- -------------- -------------- Assets Investments in mutual funds at fair value $ 2,729 $ 174 $ 11,498 $ 3,540 $ 6,561 -------------- -------------- --------------- -------------- -------------- Total assets 2,729 174 11,498 3,540 6,561 Liabilities Payable to ING USA Annuity and Life Insurance Company - - 1 - 1 -------------- -------------- --------------- -------------- -------------- Total liabilities - - 1 - 1 -------------- -------------- --------------- -------------- -------------- Net assets $ 2,729 $ 174 $ 11,497 $ 3,540 $ 6,560 ============== ============== =============== ============== ============== Net assets Accumulation units $ 2,729 $ 174 $ 11,497 $ 3,540 $ 6,560 Contracts in payout (annuitization) period - - - - - -------------- -------------- --------------- -------------- -------------- Total net assets $ 2,729 $ 174 $ 11,497 $ 3,540 $ 6,560 ============== ============== =============== ============== ============== Total number of mutual fund shares 185,047 8,623 531,821 165,958 587,880 ============== ============== =============== ============== ============== Cost of mutual fund shares $ 2,357 $ 152 $ 10,365 $ 3,105 $ 5,535 ============== ============== =============== ============== ==============
The accompanying notes are an integral part of these financial statements. 30 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) Fidelity(R) Franklin Fidelity(R) VIP Fidelity(R) Fidelity(R) Small Cap VIP Equity- VIP VIP Value Contrafund(R) Income Growth Overseas Securities --------------- -------------- -------------- -------------- -------------- Assets Investments in mutual funds at fair value $ 21,315 $ 145,276 $ 185,667 $ 860 $ 236 --------------- -------------- -------------- -------------- -------------- Total assets 21,315 145,276 185,667 860 236 Liabilities Payable to ING USA Annuity and Life Insurance Company 2 20 25 - - --------------- -------------- -------------- -------------- -------------- Total liabilities 2 20 25 - - --------------- -------------- -------------- -------------- -------------- Net assets $ 21,313 $ 145,256 $ 185,642 $ 860 $ 236 =============== ============== ============== ============== ============== Net assets Accumulation units $ 21,313 $ 145,256 $ 185,642 $ 860 $ 236 Contracts in payout (annuitization) period - - - - - --------------- -------------- -------------- -------------- -------------- Total net assets $ 21,313 $ 145,256 $ 185,642 $ 860 $ 236 =============== ============== ============== ============== ============== Total number of mutual fund shares 929,566 6,327,331 6,043,838 55,492 18,631 =============== ============== ============== ============== ============== Cost of mutual fund shares $ 18,647 $ 125,342 $ 165,276 $ 840 $ 197 =============== ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 31 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) INVESCO INVESCO VIF - VIF - INVESCO INVESCO Greenwich Financial Health VIF - VIF - Appreciation Services Sciences Leisure Utilities -------------- -------------- -------------- -------------- -------------- Assets Investments in mutual funds at fair value $ 663 $ 59,614 $ 86,679 $ 34,415 $ 26,972 -------------- -------------- -------------- -------------- -------------- Total assets 663 59,614 86,679 34,415 26,972 Liabilities Payable to ING USA Annuity and Life Insurance Company - 10 15 5 4 -------------- -------------- -------------- -------------- -------------- Total liabilities - 10 15 5 4 -------------- -------------- -------------- -------------- -------------- Net assets $ 663 $ 59,604 $ 86,664 $ 34,410 $ 26,968 ============== ============== ============== ============== ============== Net assets Accumulation units $ 663 $ 59,604 $ 86,664 $ 34,410 $ 26,968 Contracts in payout (annuitization) period - - - - - -------------- -------------- -------------- -------------- -------------- Total net assets $ 663 $ 59,604 $ 86,664 $ 34,410 $ 26,968 ============== ============== ============== ============== ============== Total number of mutual fund shares 30,441 4,402,792 4,933,366 3,140,073 2,081,152 ============== ============== ============== ============== ============== Cost of mutual fund shares $ 637 $ 51,581 $ 75,553 $ 29,560 $ 24,292 ============== ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 32 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) Janus Aspen Janus Aspen Janus Aspen Series Janus Aspen Series Colonial Series Flexible Series Worldwide Small Cap Balanced Income Growth Growth Value -------------- -------------- -------------- -------------- -------------- Assets Investments in mutual funds at fair value $ 4,464 $ 1,873 $ 1,007 $ 7,201 $ 40,999 -------------- -------------- -------------- -------------- -------------- Total assets 4,464 1,873 1,007 7,201 40,999 Liabilities Payable to ING USA Annuity and Life Insurance Company - - - 1 4 -------------- -------------- -------------- -------------- -------------- Total liabilities - - - 1 4 -------------- -------------- -------------- -------------- -------------- Net assets $ 4,464 $ 1,873 $ 1,007 $ 7,200 $ 40,995 ============== ============== ============== ============== ============== Net assets Accumulation units $ 4,464 $ 1,873 $ 1,007 $ 7,200 $ 40,995 Contracts in payout (annuitization) period - - - - - -------------- -------------- -------------- -------------- -------------- Total net assets $ 4,464 $ 1,873 $ 1,007 $ 7,200 $ 40,995 ============== ============== ============== ============== ============== Total number of mutual fund shares 187,401 142,763 52,887 280,211 2,882,921 ============== ============== ============== ============== ============== Cost of mutual fund shares $ 4,147 $ 1,868 $ 874 $ 6,364 $ 38,148 ============== ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 33 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) Liberty Liberty Liberty Small Oppenheimer Asset Liberty Federal Company Global Allocation Equity Securities Growth Securities -------------- -------------- -------------- ------------ --------------- Assets Investments in mutual funds at fair value $ 601 $ 648 $ 87 $ 75 $ 2,901 -------------- -------------- -------------- ------------ --------------- Total assets 601 648 87 75 2,901 Liabilities Payable to ING USA Annuity and Life Insurance Company - - - - - -------------- -------------- -------------- ------------ --------------- Total liabilities - - - - - -------------- -------------- -------------- ------------ --------------- Net assets $ 601 $ 648 $ 87 $ 75 $ 2,901 ============== ============== ============== ============ =============== Net assets Accumulation units $ 601 $ 648 $ 87 $ 75 $ 2,901 Contracts in payout (annuitization) period - - - - - -------------- -------------- -------------- ------------ --------------- Total net assets $ 601 $ 648 $ 87 $ 75 $ 2,901 ============== ============== ============== ============ =============== Total number of mutual fund shares 43,574 45,335 7,751 7,516 116,225 ============== ============== ============== ============ =============== Cost of mutual fund shares $ 496 $ 875 $ 85 $ 49 $ 2,417 ============== ============== ============== ============ ===============
The accompanying notes are an integral part of these financial statements. 34 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) PIMCO Oppenheimer PIMCO StocksPLUS Pioneer Strategic High Growth and Equity- Pioneer Bond Yield Income Income Fund --------------- ------------- ------------- ------------- -------------- Assets Investments in mutual funds at fair value $ 702 $ 608,873 $ 190,579 $ 1,010 $ 62,541 --------------- ------------- ------------- ------------- -------------- Total assets 702 608,873 190,579 1,010 62,541 Liabilities Payable to ING USA Annuity and Life Insurance Company - 98 43 - 8 --------------- ------------- ------------- ------------- -------------- Total liabilities - 98 43 - 8 --------------- ------------- ------------- ------------- -------------- Net assets $ 702 $ 608,775 $ 190,536 $ 1,010 $ 62,533 =============== ============= ============= ============= ============== Net assets Accumulation units $ 702 $ 608,775 $ 190,536 $ 1,010 $ 62,533 Contracts in payout (annuitization) period - - - - - --------------- ------------- ------------- ------------- -------------- Total net assets $ 702 $ 608,775 $ 190,536 $ 1,010 $ 62,533 =============== ============= ============= ============= ============== Total number of mutual fund shares 136,850 74,343,442 20,580,832 55,516 3,351,596 =============== ============= ============= ============= ============== Cost of mutual fund shares $ 688 $ 562,398 $ 171,321 $ 902 $ 54,257 =============== ============= ============= ============= ==============
The accompanying notes are an integral part of these financial statements. 35 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) Pioneer Pioneer ProFund VP Mid-Cap Small ProFund ProFund Rising Rates Value Company VP Bull VP Europe 30 Opportunity -------------- -------------- -------------- -------------- -------------- Assets Investments in mutual funds at fair value $ 190,518 $ 6,392 $ 85,681 $ 32,879 $ 22,978 -------------- -------------- -------------- -------------- -------------- Total assets 190,518 6,392 85,681 32,879 22,978 Liabilities Payable to ING USA Annuity and Life Insurance Company 25 1 17 5 3 -------------- -------------- -------------- -------------- -------------- Total liabilities 25 1 17 5 3 -------------- -------------- -------------- -------------- -------------- Net assets $ 190,493 $ 6,391 $ 85,664 $ 32,874 $ 22,975 ============== ============== ============== ============== ============== Net assets Accumulation units $ 190,493 $ 6,391 $ 85,664 $ 32,874 $ 22,975 Contracts in payout (annuitization) period - - - - - -------------- -------------- -------------- -------------- -------------- Total net assets $ 190,493 $ 6,391 $ 85,664 $ 32,874 $ 22,975 ============== ============== ============== ============== ============== Total number of mutual fund shares 9,375,863 563,167 3,331,309 1,317,284 985,348 ============== ============== ============== ============== ============== Cost of mutual fund shares $ 162,456 $ 5,821 $ 82,002 $ 31,013 $ 23,586 ============== ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 36 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) SP Jennison Putnam VT Putnam VT ProFund VP International Discovery Growth and Small Cap Jennison Growth Growth Income -------------- -------------- -------------- -------------- -------------- Assets Investments in mutual funds at fair value $ 127,268 $ 58,735 $ 68,622 $ 3,173 $ 3,201 -------------- -------------- -------------- -------------- -------------- Total assets 127,268 58,735 68,622 3,173 3,201 Liabilities Payable to ING USA Annuity and Life Insurance Company 23 11 9 - - -------------- -------------- -------------- -------------- -------------- Total liabilities 23 11 9 - - -------------- -------------- -------------- -------------- -------------- Net assets $ 127,245 $ 58,724 $ 68,613 $ 3,173 $ 3,201 ============== ============== ============== ============== ============== Net assets Accumulation units $ 127,245 $ 58,724 $ 68,613 $ 3,173 $ 3,201 Contracts in payout (annuitization) period - - - - - -------------- -------------- -------------- -------------- -------------- Total net assets $ 127,245 $ 58,724 $ 68,613 $ 3,173 $ 3,201 ============== ============== ============== ============== ============== Total number of mutual fund shares 4,024,936 3,568,342 11,770,441 686,721 137,599 ============== ============== ============== ============== ============== Cost of mutual fund shares $ 122,543 $ 48,914 $ 60,070 $ 2,855 $ 2,793 ============== ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 37 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) Smith Putnam VT Barney Smith Smith International Smith International Barney Barney Growth and Barney All Cap Large Money Income High Income Growth Cap Value Market --------------- -------------- -------------- ------------- ------------- Assets Investments in mutual funds at fair value $ 4,300 $ 308 $ 221 $ 405 $ 50 --------------- -------------- -------------- ------------- ------------- Total assets 4,300 308 221 405 50 Liabilities Payable to ING USA Annuity and Life Insurance Company 1 - - - - --------------- -------------- -------------- ------------- ------------- Total liabilities 1 - - - - --------------- -------------- -------------- ------------- ------------- Net assets $ 4,299 $ 308 $ 221 $ 405 $ 50 =============== ============== ============== ============= ============= Net assets Accumulation units $ 4,299 $ 308 $ 221 $ 405 $ 50 Contracts in payout (annuitization) period - - - - - --------------- -------------- -------------- ------------- ------------- Total net assets $ 4,299 $ 308 $ 221 $ 405 $ 50 =============== ============== ============== ============= ============= Total number of mutual fund shares 380,173 41,423 19,901 24,394 49,742 =============== ============== ============== ============= ============= Cost of mutual fund shares $ 3,489 $ 388 $ 314 $ 472 $ 50 =============== ============== ============== ============= =============
The accompanying notes are an integral part of these financial statements. 38 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Assets and Liabilities December 31, 2003 (Dollars in thousands) Wells Fargo Wells Fargo Wells Fargo VT Large Wells Fargo UBS Tactical VT Asset VT Equity Company VT SmallCap Allocation Allocation Income Growth Growth -------------- -------------- -------------- -------------- --------------- Assets Investments in mutual funds at fair value $ 4,584 $ 25 $ 11 $ 34 $ 7 -------------- -------------- -------------- -------------- --------------- Total assets 4,584 25 11 34 7 Liabilities Payable to ING USA Annuity and Life Insurance Company - - - - - -------------- -------------- -------------- -------------- --------------- Total liabilities - - - - - -------------- -------------- -------------- -------------- --------------- Net assets $ 4,584 $ 25 $ 11 $ 34 $ 7 ============== ============== ============== ============== =============== Net assets Accumulation units $ 4,584 $ 25 $ 11 $ 34 $ 7 Contracts in payout (annuitization) period - - - - - -------------- -------------- -------------- -------------- --------------- Total net assets $ 4,584 $ 25 $ 11 $ 34 $ 7 ============== ============== ============== ============== =============== Total number of mutual fund shares 373,310 1,969 707 3,917 1,020 ============== ============== ============== ============== =============== Cost of mutual fund shares $ 4,144 $ 25 $ 11 $ 33 $ 7 ============== ============== ============== ============== ===============
The accompanying notes are an integral part of these financial statements. 39 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) ING GET ING GET ING GET ING GET ING GET Fund- Fund- Fund- Fund- Fund- Series N Series P Series Q Series R Series S -------------- -------------- ------------- ------------- ------------- Net investment income (loss) Income: Dividends $ 711 $ 3,275 $ 3 $ 21 $ 181 -------------- -------------- ------------- ------------- ------------- Total investment income 711 3,275 3 21 181 Expenses: Mortality and expense risk and other charges 545 2,640 3,164 3,267 4,158 Annual administrative charges 5 1,452 37 41 50 Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges 34 178 173 125 142 Other contract charges - - - - - -------------- -------------- ------------- ------------- ------------- Total expenses 584 4,270 3,374 3,433 4,350 -------------- -------------- ------------- ------------- ------------- Net investment income (loss) 127 (995) (3,371) (3,412) (4,169) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments 87 949 1,500 1,886 2,646 Capital gains distributions - - - - - -------------- -------------- ------------- ------------- ------------- Net realized gain (loss) on investments and capital gains distributions 87 949 1,500 1,886 2,646 Net unrealized appreciation (depreciation) of investments 336 857 6,401 7,326 8,506 -------------- -------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $ 550 $ 811 $ 4,530 $ 5,800 $ 6,983 ============== ============== ============= ============= =============
The accompanying notes are an integral part of these financial statements. 40 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) ING AIM ING AIM Mid-Cap Mid-Cap ING GET ING GET ING GET Growth Growth Fund- Fund- Fund- (Service (Advisor Series T Series U Series V Class) Class) -------------- -------------- ------------- ------------- ------------- Net investment income (loss) Income: Dividends $ 266 $ 2 $ - $ - $ - -------------- -------------- ------------- ------------- ------------- Total investment income 266 2 - - - Expenses: Mortality and expense risk and other charges 4,314 3,632 4,344 2,725 20 Annual administrative charges 55 55 95 181 1 Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges 152 66 122 87 - Other contract charges 5 6 4 253 5 -------------- -------------- ------------- ------------- ------------- Total expenses 4,526 3,759 4,565 3,246 26 -------------- -------------- ------------- ------------- ------------- Net investment income (loss) (4,260) (3,757) (4,565) (3,246) (26) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments 3,572 5,263 (1,614) 12,008 11 Capital gains distributions - - - - - -------------- -------------- ------------- ------------- ------------- Net realized gain (loss) on investments and capital gains distributions 3,572 5,263 (1,614) 12,008 11 Net unrealized appreciation (depreciation) of investments 7,977 11,523 (4,705) 50,126 425 -------------- -------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $ 7,289 $ 13,029 $ (10,884) $ 58,888 $ 410 ============== ============== ============= ============= =============
The accompanying notes are an integral part of these financial statements. 41 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) ING Alliance ING Alliance ING Mid-Cap Mid-Cap ING American ING Growth Growth American Funds American (Service (Advisor Funds Growth- Funds Class) Class) Growth Income International -------------- -------------- -------------- -------------- --------------- Net investment income (loss) Income: Dividends $ - $ - $ - $ - $ - -------------- -------------- -------------- -------------- --------------- Total investment income - - - - - Expenses: Mortality and expense risk and other charges 5,419 27 312 230 95 Annual administrative charges 290 1 14 12 4 Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges 239 - 14 13 - Other contract charges 335 7 36 22 11 -------------- -------------- -------------- -------------- --------------- Total expenses 6,283 35 376 277 110 -------------- -------------- -------------- -------------- --------------- Net investment income (loss) (6,283) (35) (376) (277) (110) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments 29,527 57 - - 3 Capital gains distributions - - - - - -------------- -------------- -------------- -------------- --------------- Net realized gain (loss) on investments and capital gains distributions 29,527 57 - - 3 Net unrealized appreciation (depreciation) of investments 140,666 720 6,250 5,537 2,718 -------------- -------------- -------------- -------------- --------------- Net increase (decrease) in net assets resulting from operations $ 163,910 $ 742 $ 5,874 $ 5,260 $ 2,611 ============== ============== ============== ============== ===============
The accompanying notes are an integral part of these financial statements. 42 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) ING Capital ING Capital ING Capital ING Capital Guardian Guardian Guardian Guardian ING Capital Large Cap Large Cap Managed Managed Guardian Value Value Global Global Small Cap (Service Class) (Advisor Class) (Service Class) (Advisor Class) (Service Class) ---------------- ---------------- ---------------- ---------------- ---------------- Net investment income (loss) Income: Dividends $ 221 $ - $ - $ - $ 678 ---------------- ---------------- ---------------- ---------------- ---------------- Total investment income 221 - - - 678 Expenses: Mortality and expense risk and other charges 6,712 56 4,242 12 6,634 Annual administrative charges 186 1 155 - 312 Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges 211 - 116 - 209 Other contract charges 930 15 472 3 597 ---------------- ---------------- ---------------- ---------------- ---------------- Total expenses 8,039 72 4,985 15 7,752 ---------------- ---------------- ---------------- ---------------- ---------------- Net investment income (loss) (7,818) (72) (4,985) (15) (7,074) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments (4,588) (30) (2,433) 17 (13,248) Capital gains distributions - - - - - ---------------- ---------------- ---------------- ---------------- ---------------- Net realized gain (loss) on investments and capital gains distributions (4,588) (30) (2,433) 17 (13,248) Net unrealized appreciation (depreciation) of investments 131,558 1,177 89,795 267 154,436 ---------------- ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations $ 119,152 $ 1,075 $ 82,377 $ 269 $ 134,114 ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 43 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) ING Capital ING ING ING Eagle ING Eagle Guardian Developing Developing Asset Value Asset Value Small Cap World World Equity Equity (Advisor (Service (Advisor (Service (Advisor Class) Class) Class) Class) Class) -------------- -------------- --------------- -------------- -------------- Net investment income (loss) Income: Dividends $ 4 $ 177 $ 2 $ 427 $ 1 -------------- -------------- --------------- -------------- -------------- Total investment income 4 177 2 427 1 Expenses: Mortality and expense risk and other charges 28 1,133 12 2,871 10 Annual administrative charges - 53 - 117 - Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges - 31 - 119 - Other contract charges 8 105 3 222 2 -------------- -------------- --------------- -------------- -------------- Total expenses 36 1,322 15 3,329 12 -------------- -------------- --------------- -------------- -------------- Net investment income (loss) (32) (1,145) (13) (2,902) (11) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments 2 (728) 4 (9,173) - Capital gains distributions - - - - - -------------- -------------- --------------- -------------- -------------- Net realized gain (loss) on investments and capital gains distributions 2 (728) 4 (9,173) - Net unrealized appreciation (depreciation) of investments 573 29,880 347 50,235 159 -------------- -------------- --------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations $ 543 $ 28,007 $ 338 $ 38,160 $ 148 ============== ============== =============== ============== ==============
The accompanying notes are an integral part of these financial statements. 44 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) ING FMR ING FMR Diversified Diversified ING Goldman ING Goldman ING Hard Mid-Cap Mid-Cap Sachs Internet Sachs Internet Assets (Service (Advisor Tollkeeper Tollkeeper (Service Class) Class) (Service Class) (Advisor Class) Class) -------------- -------------- ---------------- ---------------- ------------- Net investment income (loss) Income: Dividends $ 2 $ - $ - $ - $ 388 -------------- -------------- ---------------- ---------------- ------------- Total investment income 2 - - - 388 Expenses: Mortality and expense risk and other charges 2,048 30 498 15 1,379 Annual administrative charges 54 1 14 - 49 Minimum death benefit guarantee charges - - - - 1 Contingent deferred sales charges 52 1 9 - 38 Other contract charges 340 8 104 4 118 -------------- -------------- ---------------- ---------------- ------------- Total expenses 2,494 40 625 19 1,585 -------------- -------------- ---------------- ---------------- ------------- Net investment income (loss) (2,492) (40) (625) (19) (1,197) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments (876) 4 1,039 43 2,794 Capital gains distributions - - - - - -------------- -------------- ---------------- ---------------- ------------- Net realized gain (loss) on investments and capital gains distributions (876) 4 1,039 43 2,794 Net unrealized appreciation (depreciation) of investments 37,624 619 8,672 257 37,546 -------------- -------------- ---------------- ---------------- ------------- Net increase (decrease) in net assets resulting from operations $ 34,256 $ 583 $ 9,086 $ 281 $ 39,143 ============== ============== ================ ================ =============
The accompanying notes are an integral part of these financial statements. 45 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) ING Janus ING Janus ING Hard ING ING Growth Growth Assets International International and Income and Income (Advisor (Service (Advisor (Service (Advisor Class) Class) Class) Class) Class) -------------- -------------- -------------- -------------- -------------- Net investment income (loss) Income: Dividends $ 7 $ 349 $ 8 $ 58 $ - -------------- -------------- -------------- -------------- -------------- Total investment income 7 349 8 58 - Expenses: Mortality and expense risk and other charges 17 2,133 37 2,992 67 Annual administrative charges - 95 1 78 1 Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges - 72 - 94 1 Other contract charges 5 156 10 486 20 -------------- -------------- -------------- -------------- -------------- Total expenses 22 2,456 48 3,650 89 -------------- -------------- -------------- -------------- -------------- Net investment income (loss) (15) (2,107) (40) (3,592) (89) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments 22 16,547 5 (1,267) 18 Capital gains distributions - - - - - -------------- -------------- -------------- -------------- -------------- Net realized gain (loss) on investments and capital gains distributions 22 16,547 5 (1,267) 18 Net unrealized appreciation (depreciation) of investments 641 19,653 813 38,839 929 -------------- -------------- -------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations $ 648 $ 34,093 $ 778 $ 33,980 $ 858 ============== ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 46 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) ING Janus ING Janus ING ING Special Special Jennison Jennison ING JPMorgan Equity Equity Equity Equity Fleming Small (Service (Advisor Opportunities Opportunities Cap Equity Class) Class) (Service Class) (Advisor Class) (Service Class) -------------- -------------- ---------------- ---------------- ---------------- Net investment income (loss) Income: Dividends $ - $ - $ 268 $ 1 $ - -------------- -------------- ---------------- ---------------- ---------------- Total investment income - - 268 1 - Expenses: Mortality and expense risk and other charges 554 5 4,505 12 500 Annual administrative charges 20 - 250 - 12 Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges 11 - 190 - 6 Other contract charges 95 1 350 3 96 -------------- -------------- ---------------- ---------------- ---------------- Total expenses 680 6 5,295 15 614 -------------- -------------- ---------------- ---------------- ---------------- Net investment income (loss) (680) (6) (5,027) (14) (614) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments (642) 4 (51,233) 10 (64) Capital gains distributions - - - - - -------------- -------------- ---------------- ---------------- ---------------- Net realized gain (loss) on investments and capital gains distributions (642) 4 (51,233) 10 (64) Net unrealized appreciation (depreciation) of investments 14,396 122 130,334 258 10,493 -------------- -------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations $ 13,074 $ 120 $ 74,074 $ 254 $ 9,815 ============== ============== ================ ================ ================
The accompanying notes are an integral part of these financial statements. 47 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) ING ING ING JPMorgan Julius Baer Julius Baer ING ING Liquid Fleming Small Foreign Foreign Limited Assets Cap Equity (Service (Advisor Maturity (Service (Advisor Class) Class) Class) Bond Class) ---------------- -------------- -------------- -------------- -------------- Net investment income (loss) Income: Dividends $ - $ 196 $ 14 $ 4,049 $ 6,940 ---------------- -------------- -------------- -------------- -------------- Total investment income - 196 14 4,049 6,940 Expenses: Mortality and expense risk and other charges 74 244 18 9,314 14,952 Annual administrative charges 1 6 - 230 571 Minimum death benefit guarantee charges - - - 1 4 Contingent deferred sales charges - 2 - 453 26,087 Other contract charges 21 48 5 682 955 ---------------- -------------- -------------- -------------- -------------- Total expenses 96 300 23 10,680 42,569 ---------------- -------------- -------------- -------------- -------------- Net investment income (loss) (96) (104) (9) (6,631) (35,629) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments 1 1,260 9 9,119 - Capital gains distributions - 1,017 81 1,138 - ---------------- -------------- -------------- -------------- -------------- Net realized gain (loss) on investments and capital gains distributions 1 2,277 90 10,257 - Net unrealized appreciation (depreciation) of investments 1,641 2,852 315 1,985 - ---------------- -------------- -------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations $ 1,546 $ 5,025 $ 396 $ 5,611 $ (35,629) ================ ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 48 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) ING ING ING Liquid ING Marisco ING Marisco Mercury Mercury Assets Growth Growth Foucs Value Foucs Value (Advisor (Service (Advisor (Service (Advisor Class) Class) Class) Class) Class) -------------- -------------- --------------- -------------- -------------- Net investment income (loss) Income: Dividends $ 27 $ - $ - $ 34 $ 1 -------------- -------------- --------------- -------------- -------------- Total investment income 27 - - 34 1 Expenses: Mortality and expense risk and other charges 84 10,330 60 220 6 Annual administrative charges 1 746 1 6 - Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges 12 467 - 4 - Other contract charges 23 751 17 42 1 -------------- -------------- --------------- -------------- -------------- Total expenses 120 12,294 78 272 7 -------------- -------------- --------------- -------------- -------------- Net investment income (loss) (93) (12,294) (78) (238) (6) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments - (10,462) 15 86 4 Capital gains distributions - - - 206 6 -------------- -------------- --------------- -------------- -------------- Net realized gain (loss) on investments and capital gains distributions - (10,462) 15 292 10 Net unrealized appreciation (depreciation) of investments - 190,448 972 3,584 98 -------------- -------------- --------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations $ (93) $ 167,692 $ 909 $ 3,638 $ 102 ============== ============== =============== ============== ==============
The accompanying notes are an integral part of these financial statements. 49 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) ING MFS(R) ING MFS(R) ING Mercury ING Mercury Mid-Cap Mid-Cap ING MFS(R) Fundamental Fundamental Growth Growth Research Growth Growth (Service (Advisor (Service (Service Class) (Advisor Class) Class) Class) Class) ---------------- ---------------- ------------- ------------- ------------- Net investment income (loss) Income: Dividends $ - $ - $ - $ - $ 941 ---------------- ---------------- ------------- ------------- ------------- Total investment income - - - - 941 Expenses: Mortality and expense risk and other charges 126 7 8,502 70 7,178 Annual administrative charges 3 - 550 1 389 Minimum death benefit guarantee charges - - 1 - - Contingent deferred sales charges 4 - 332 - 332 Other contract charges 29 2 814 19 569 ---------------- ---------------- ------------- ------------- ------------- Total expenses 162 9 10,199 90 8,468 ---------------- ---------------- ------------- ------------- ------------- Net investment income (loss) (162) (9) (10,199) (90) (7,527) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments 3 4 (77,150) 18 (121,817) Capital gains distributions - - - - - ---------------- ---------------- ------------- ------------- ------------- Net realized gain (loss) on investments and capital gains distributions 3 4 (77,150) 18 (121,817) Net unrealized appreciation (depreciation) of investments 2,071 126 248,319 1,249 219,580 ---------------- ---------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $ 1,912 $ 121 $ 160,970 $ 1,177 $ 90,236 ================ ================ ============= ============= =============
The accompanying notes are an integral part of these financial statements. 50 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) ING MFS(R) ING MFS(R) ING MFS(R) ING PIMCO ING PIMCO Research Total Return Total Return Core Bond Core Bond (Advisor (Service (Advisor (Service (Advisor Class) Class) Class) Class) Class) -------------- -------------- --------------- -------------- -------------- Net investment income (loss) Income: Dividends $ 2 $ 5,242 $ 64 $ 2,244 $ 59 -------------- -------------- --------------- -------------- -------------- Total investment income 2 5,242 64 2,244 59 Expenses: Mortality and expense risk and other charges 19 15,637 133 8,739 173 Annual administrative charges - 523 2 170 2 Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges - 536 - 313 1 Other contract charges 4 1,380 37 1,086 51 -------------- -------------- --------------- -------------- -------------- Total expenses 23 18,076 172 10,308 227 -------------- -------------- --------------- -------------- -------------- Net investment income (loss) (21) (12,834) (108) (8,064) (168) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments 11 (1,736) 2 11,491 33 Capital gains distributions - - - 5,908 188 -------------- -------------- --------------- -------------- -------------- Net realized gain (loss) on investments and capital gains distributions 11 (1,736) 2 17,399 221 Net unrealized appreciation (depreciation) of investments 250 150,200 1,398 3,595 95 -------------- -------------- --------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations $ 240 $ 135,630 $ 1,292 $ 12,930 $ 148 ============== ============== =============== ============== ==============
The accompanying notes are an integral part of these financial statements. 51 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) ING Salomon ING Salomon ING Salomon ING Salomon ING Brothers Brothers Brothers Brothers T. Rowe Price All Cap All Cap Investors Investors Capital (Service (Advisor (Service (Advisor Appreciation Class) Class) Class) Class) (Service Class) --------------- --------------- --------------- --------------- ---------------- Net investment income (loss) Income: Dividends $ 191 $ - $ 205 $ 1 $ 4,171 --------------- --------------- --------------- --------------- ---------------- Total investment income 191 - 205 1 4,171 Expenses: Mortality and expense risk and other charges 5,331 41 1,808 10 17,556 Annual administrative charges 165 1 42 - 533 Minimum death benefit guarantee charges - - - - 1 Contingent deferred sales charges 172 - 59 - 605 Other contract charges 744 12 269 2 1,913 --------------- --------------- --------------- --------------- ---------------- Total expenses 6,412 54 2,178 12 20,608 --------------- --------------- --------------- --------------- ---------------- Net investment income (loss) (6,221) (54) (1,973) (11) (16,437) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments (8,074) 7 (4,397) 3 5,046 Capital gains distributions - - - - 1,545 --------------- --------------- --------------- --------------- ---------------- Net realized gain (loss) on investments and capital gains distributions (8,074) 7 (4,397) 3 6,591 Net unrealized appreciation (depreciation) of investments 113,725 903 34,032 175 247,300 --------------- --------------- --------------- --------------- ---------------- Net increase (decrease) in net assets resulting from operations $ 99,430 $ 856 $ 27,662 $ 167 $ 237,454 =============== =============== =============== =============== ================
The accompanying notes are an integral part of these financial statements. 52 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) ING ING ING ING ING T. Rowe Price T. Rowe Price T. Rowe Price UBS U.S. UBS U.S. Capital Equity Equity Balanced Balanced Appreciation Income Income (Service (Advisor (Advisor Class) (Service Class) (Advisor Class) Class) Class) ---------------- ---------------- ---------------- -------------- -------------- Net investment income (loss) Income: Dividends $ 51 $ 1,609 $ 22 $ 8 $ - ---------------- ---------------- ---------------- -------------- -------------- Total investment income 51 1,609 22 8 - Expenses: Mortality and expense risk and other charges 154 7,667 85 877 3 Annual administrative charges 3 268 2 24 - Minimum death benefit guarantee charges - 3 - - - Contingent deferred sales charges - 213 - 25 - Other contract charges 42 845 24 129 1 ---------------- ---------------- ---------------- -------------- -------------- Total expenses 199 8,996 111 1,055 4 ---------------- ---------------- ---------------- -------------- -------------- Net investment income (loss) (148) (7,387) (89) (1,047) (4) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments 34 (3,737) (1) (1,392) - Capital gains distributions 22 741 12 - - ---------------- ---------------- ---------------- -------------- -------------- Net realized gain (loss) on investments and capital gains distributions 56 (2,996) 11 (1,392) - Net unrealized appreciation (depreciation) of investments 2,652 117,245 1,510 10,222 51 ---------------- ---------------- ---------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations $ 2,560 $ 106,862 $ 1,432 $ 7,783 $ 47 ================ ================ ================ ============== ==============
The accompanying notes are an integral part of these financial statements. 53 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) ING ING ING ING ING Van Kampen Van Kampen Van Kampen Van Kampen Van Kampen Global Global Growth and Equity Growth Equity Growth Franchise Franchise Income (Service Class) (Advisor Class) (Service Class) (Advisor Class) (Service Class) ---------------- ---------------- ---------------- ---------------- ---------------- Net investment income (loss) Income: Dividends $ 4 $ - $ 298 $ 67 $ 1,613 ---------------- ---------------- ---------------- ---------------- ---------------- Total investment income 4 - 298 67 1,613 Expenses: Mortality and expense risk and other charges 250 49 522 109 9,383 Annual administrative charges 7 1 12 2 457 Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges 4 1 7 1 355 Other contract charges 48 13 101 32 551 ---------------- ---------------- ---------------- ---------------- ---------------- Total expenses 309 64 642 144 10,746 ---------------- ---------------- ---------------- ---------------- ---------------- Net investment income (loss) (305) (64) (344) (77) (9,133) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments (22) 5 352 20 (16,135) Capital gains distributions 308 62 10 2 - ---------------- ---------------- ---------------- ---------------- ---------------- Net realized gain (loss) on investments and capital gains distributions 286 67 362 22 (16,135) Net unrealized appreciation (depreciation) of investments 3,210 600 9,459 2,310 164,870 ---------------- ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations $ 3,191 $ 603 $ 9,477 $ 2,255 $ 139,602 ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 54 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) ING ING ING Van Kampen Van Kampen Van Kampen Growth and Real Estate Real Estate ING Alger Income (Service (Advisor Aggressive ING Alger (Advisor Class) Class) Class) Growth Growth ---------------- -------------- -------------- -------------- -------------- Net investment income (loss) Income: Dividends $ 42 $ 510 $ 6 $ - $ - ---------------- -------------- -------------- -------------- -------------- Total investment income 42 510 6 - - Expenses: Mortality and expense risk and other charges 186 3,899 48 2 1 Annual administrative charges 4 141 1 - - Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges 5 128 1 - - Other contract charges 47 458 14 - - ---------------- -------------- -------------- -------------- -------------- Total expenses 242 4,626 64 2 1 ---------------- -------------- -------------- -------------- -------------- Net investment income (loss) (200) (4,116) (58) (2) (1) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments 20 467 6 20 - Capital gains distributions - 1,987 37 - - ---------------- -------------- -------------- -------------- -------------- Net realized gain (loss) on investments and capital gains distributions 20 2,454 43 20 - Net unrealized appreciation (depreciation) of investments 3,492 75,798 914 51 24 ---------------- -------------- -------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations $ 3,312 $ 74,136 $ 899 $ 69 $ 23 ================ ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 55 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) ING American ING ING ING MFS(R) Century ING Baron JPMorgan JPMorgan Capital Small Cap Small Cap Fleming Mid Cap Opportunities Value Growth International Value (Initial Class) -------------- ------------ --------------- ------------- --------------- Net investment income (loss) Income: Dividends $ - $ - $ 2 $ 16 $ 3 -------------- ------------ --------------- ------------- --------------- Total investment income - - 2 16 3 Expenses: Mortality and expense risk and other charges 1 2 21 28 27 Annual administrative charges - - 1 1 1 Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges - - - - 1 Other contract charges - - 1 - - -------------- ------------ --------------- ------------- --------------- Total expenses 1 2 23 29 29 -------------- ------------ --------------- ------------- --------------- Net investment income (loss) (1) (2) (21) (13) (26) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments - - 130 8 (106) Capital gains distributions 4 - - 42 - -------------- ------------ --------------- ------------- --------------- Net realized gain (loss) on investments and capital gains distributions 4 - 130 50 (106) Net unrealized appreciation (depreciation) of investments 25 93 567 483 539 -------------- ------------ --------------- ------------- --------------- Net increase (decrease) in net assets resulting from operations $ 28 $ 91 $ 676 $ 520 $ 407 ============== ============ =============== ============= ===============
The accompanying notes are an integral part of these financial statements. 56 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) ING MFS(R) Capital ING MFS(R) ING MFS(R) ING OpCap ING PIMCO Opportunities Global Research Balanced Total (Service Class) Growth Equity Value Return ---------------- ------------- -------------- -------------- -------------- Net investment income (loss) Income: Dividends $ - $ - $ - $ 6 $ 52 ---------------- ------------- -------------- -------------- -------------- Total investment income - - - 6 52 Expenses: Mortality and expense risk and other charges 2 7 - 2 9 Annual administrative charges - - - - - Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges - - - - - Other contract charges - - - - - ---------------- ------------- -------------- -------------- -------------- Total expenses 2 7 - 2 9 ---------------- ------------- -------------- -------------- -------------- Net investment income (loss) (2) (7) - 4 43 Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments - 13 - - 2 Capital gains distributions - - - - 10 ---------------- ------------- -------------- -------------- -------------- Net realized gain (loss) on investments and capital gains distributions - 13 - - 12 Net unrealized appreciation (depreciation) of investments 54 161 13 55 (20) ---------------- ------------- -------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations $ 52 $ 167 $ 13 $ 59 $ 35 ================ ============= ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 57 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) ING ING ING Salomon Salomon Salomon ING ING UBS Brothers Brothers Brothers T. Rowe Price Tactical Aggressive Fundamental Investors Growth Asset Growth Value Value Equity Allocation -------------- -------------- ------------- -------------- -------------- Net investment income (loss) Income: Dividends $ - $ 5 $ 1 $ 2 $ - -------------- -------------- ------------- -------------- -------------- Total investment income - 5 1 2 - Expenses: Mortality and expense risk and other charges 34 2 1 8 - Annual administrative charges 1 - - - - Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges - - - - - Other contract charges 5 - - - - -------------- -------------- ------------- -------------- -------------- Total expenses 40 2 1 8 - -------------- -------------- ------------- -------------- -------------- Net investment income (loss) (40) 3 - (6) - Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments 38 1 - (3) - Capital gains distributions - - - - - -------------- -------------- ------------- -------------- -------------- Net realized gain (loss) on investments and capital gains distributions 38 1 - (3) - Net unrealized appreciation (depreciation) of investments 709 75 44 322 9 -------------- -------------- ------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations $ 707 $ 79 $ 44 $ 313 $ 9 ============== ============== ============= ============== ==============
The accompanying notes are an integral part of these financial statements. 58 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) ING GET ING GET ING GET ING Van U.S. Core U.S. Core U.S. Core ING VIT Kampen Portfolio Portfolio Portfolio Worldwide Comstock - Series 1 - Series 2 - Series 3 Growth -------------- -------------- ------------- ------------- ------------- Net investment income (loss) Income: Dividends $ 210 $ - $ - $ - $ - -------------- -------------- ------------- ------------- ------------- Total investment income 210 - - - - Expenses: Mortality and expense risk and other charges 271 1,574 222 5 624 Annual administrative charges 5 36 17 - 18 Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges 1 19 1 - 18 Other contract charges 61 1 - - 123 -------------- -------------- ------------- ------------- ------------- Total expenses 338 1,630 240 5 783 -------------- -------------- ------------- ------------- ------------- Net investment income (loss) (128) (1,630) (240) (5) (783) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments 123 372 3 - (1,417) Capital gains distributions 600 - - - - -------------- -------------- ------------- ------------- ------------- Net realized gain (loss) on investments and capital gains distributions 723 372 3 - (1,417) Net unrealized appreciation (depreciation) of investments 4,267 7,336 1,240 3 11,402 -------------- -------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $ 4,862 $ 6,078 $ 1,003 $ (2) $ 9,202 ============== ============== ============= ============= =============
The accompanying notes are an integral part of these financial statements. 59 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) ING VP ING VP ING VP ING VP ING VP Index Plus Index Plus Balanced Bond Growth LargeCap MidCap -------------- -------------- ------------- ------------- ------------- Net investment income (loss) Income: Dividends $ - $ 1,301 $ - $ 157 $ 27 -------------- -------------- ------------- ------------- ------------- Total investment income - 1,301 - 157 27 Expenses: Mortality and expense risk and other charges 3 1,207 1 325 137 Annual administrative charges - 27 - 8 3 Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges - 78 - 13 2 Other contract charges - 171 - 37 - -------------- -------------- ------------- ------------- ------------- Total expenses 3 1,483 1 383 142 -------------- -------------- ------------- ------------- ------------- Net investment income (loss) (3) (182) (1) (226) (115) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments 2 1,465 5 901 (100) Capital gains distributions - - - - - -------------- -------------- ------------- ------------- ------------- Net realized gain (loss) on investments and capital gains distributions 2 1,465 5 901 (100) Net unrealized appreciation (depreciation) of investments 74 1,098 36 4,973 2,998 -------------- -------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $ 73 $ 2,381 $ 40 $ 5,648 $ 2,783 ============== ============== ============= ============= =============
The accompanying notes are an integral part of these financial statements. 60 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) ING VP ING VP ING VP ING VP Index Plus International Small Value ING VP SmallCap Equity Company Opportunity Convertible -------------- -------------- ------------- ------------- ------------- Net investment income (loss) Income: Dividends $ 6 $ - $ 1 $ 10 $ 64 -------------- -------------- ------------- ------------- ------------- Total investment income 6 - 1 10 64 Expenses: Mortality and expense risk and other charges 105 - 3 22 31 Annual administrative charges 3 - - 1 - Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges 3 - - - - Other contract charges - - - - - -------------- -------------- ------------- ------------- ------------- Total expenses 111 - 3 23 31 -------------- -------------- ------------- ------------- ------------- Net investment income (loss) (105) - (2) (13) 33 Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments 45 - (5) (34) 46 Capital gains distributions - - - - 59 -------------- -------------- ------------- ------------- ------------- Net realized gain (loss) on investments and capital gains distributions 45 - (5) (34) 105 Net unrealized appreciation (depreciation) of investments 2,362 21 164 379 400 -------------- -------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $ 2,302 $ 21 $ 157 $ 332 $ 538 ============== ============== ============= ============= =============
The accompanying notes are an integral part of these financial statements. 61 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) ING ING VP ING VP ING VP VP Large ING VP Growth and Growth International Company LargeCap Income Opportunities Value Value Growth -------------- -------------- -------------- -------------- -------------- Net investment income (loss) Income: Dividends $ - $ - $ 1 $ 11 $ - -------------- -------------- -------------- -------------- -------------- Total investment income - - 1 11 - Expenses: Mortality and expense risk and other charges 5 277 2 17 22 Annual administrative charges - 8 - - 1 Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges - 3 - 1 - Other contract charges - 52 - - - -------------- -------------- -------------- -------------- -------------- Total expenses 5 340 2 18 23 -------------- -------------- -------------- -------------- -------------- Net investment income (loss) (5) (340) (1) (7) (23) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments - (492) 19 82 23 Capital gains distributions - - - - - -------------- -------------- -------------- -------------- -------------- Net realized gain (loss) on investments and capital gains distributions - (492) 19 82 23 Net unrealized appreciation (depreciation) of investments 188 5,210 68 158 432 -------------- -------------- -------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations $ 183 $ 4,378 $ 86 $ 233 $ 432 ============== ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 62 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) ING VP ING VP AIM V.I. AIM V.I. ING VP MidCap SmallCap Capital Core MagnaCap Opportunities Opportunities Appreciation Equity -------------- -------------- -------------- -------------- -------------- Net investment income (loss) Income: Dividends $ 147 $ - $ - $ - $ 1 -------------- -------------- -------------- -------------- -------------- Total investment income 147 - - - 1 Expenses: Mortality and expense risk and other charges 295 1 916 - 1 Annual administrative charges 8 - 25 - - Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges 5 - 17 - - Other contract charges 43 - 197 - - -------------- -------------- -------------- -------------- -------------- Total expenses 351 1 1,155 - 1 -------------- -------------- -------------- -------------- -------------- Net investment income (loss) (204) (1) (1,155) - - Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments (278) - (1,179) (6) - Capital gains distributions - - - - - -------------- -------------- -------------- -------------- -------------- Net realized gain (loss) on investments and capital gains distributions (278) - (1,179) (6) - Net unrealized appreciation (depreciation) of investments 5,308 46 19,418 14 30 -------------- -------------- -------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations $ 4,826 $ 45 $ 17,084 $ 8 $ 30 ============== ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 63 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) AIM V.I. Alliance- Alliance- Dent AIM V.I. Bernstein Bernstein Demographic AIM V.I. Premier Growth and Premier Trends Growth Equity Income Growth -------------- -------------- ------------- -------------- --------------- Net investment income (loss) Income: Dividends $ - $ - $ - $ 50 $ - -------------- -------------- ------------- -------------- --------------- Total investment income - - - 50 - Expenses: Mortality and expense risk and other charges 510 22 1 102 44 Annual administrative charges 16 - - 2 1 Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges 12 1 - 4 2 Other contract charges 92 - - - - -------------- -------------- ------------- -------------- --------------- Total expenses 630 23 1 108 47 -------------- -------------- ------------- -------------- --------------- Net investment income (loss) (630) (23) (1) (58) (47) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments (826) (59) (6) (169) 61 Capital gains distributions - - - - - -------------- -------------- ------------- -------------- --------------- Net realized gain (loss) on investments and capital gains distributions (826) (59) (6) (169) 61 Net unrealized appreciation (depreciation) of investments 9,992 456 29 2,108 540 -------------- -------------- ------------- -------------- --------------- Net increase (decrease) in net assets resulting from operations $ 8,536 $ 374 $ 22 $ 1,881 $ 554 ============== ============== ============= ============== ===============
The accompanying notes are an integral part of these financial statements. 64 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) Alliance- Fidelity(R) Fidelity(R) Fidelity(R) Fidelity(R) Bernstein VIP VIP VIP VIP Value Contrafund(R) Equity-Income Growth Overseas -------------- -------------- --------------- -------------- -------------- Net investment income (loss) Income: Dividends $ 32 $ 17 $ 401 $ 33 $ - -------------- -------------- --------------- -------------- -------------- Total investment income 32 17 401 33 - Expenses: Mortality and expense risk and other charges 69 142 1,030 1,422 1 Annual administrative charges 1 3 28 38 - Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges 2 11 25 33 - Other contract charges - - 170 230 - -------------- -------------- --------------- -------------- -------------- Total expenses 72 156 1,253 1,723 1 -------------- -------------- --------------- -------------- -------------- Net investment income (loss) (40) (139) (852) (1,690) (1) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments (77) 17 1,150 3,517 70 Capital gains distributions - - - - - -------------- -------------- --------------- -------------- -------------- Net realized gain (loss) on investments and capital gains distributions (77) 17 1,150 3,517 70 Net unrealized appreciation (depreciation) of investments 1,249 2,949 19,809 21,592 20 -------------- -------------- --------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations $ 1,132 $ 2,827 $ 20,107 $ 23,419 $ 89 ============== ============== =============== ============== ==============
The accompanying notes are an integral part of these financial statements. 65 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) Franklin Galaxy Small Cap Galaxy VIP Galaxy VIP Galaxy VIP VIP Small Value Asset Growth and High Quality Company Securities Allocation Income Bond Growth -------------- -------------- ------------- ------------- ------------- Net investment income (loss) Income: Dividends $ - $ 4 $ - $ 2 $ - -------------- -------------- ------------- ------------- ------------- Total investment income - 4 - 2 - Expenses: Mortality and expense risk and other charges 1 2 - 1 - Annual administrative charges - - - - - Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges - 1 - - - Other contract charges - - - - - -------------- -------------- ------------- ------------- ------------- Total expenses 1 3 - 1 - -------------- -------------- ------------- ------------- ------------- Net investment income (loss) (1) 1 - 1 - Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments - (237) (53) 5 (37) Capital gains distributions - - - - - -------------- -------------- ------------- ------------- ------------- Net realized gain (loss) on investments and capital gains distributions - (237) (53) 5 (37) Net unrealized appreciation (depreciation) of investments 42 244 49 (6) 33 -------------- -------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $ 41 $ 8 $ (4) $ - $ (4) ============== ============== ============= ============= =============
The accompanying notes are an integral part of these financial statements. 66 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) INVESCO INVESCO VIF - VIF - INVESCO INVESCO Greenwich Financial Health VIF - VIF - Appreciation Services Sciences Leisure Utilities -------------- -------------- ------------- ------------- ------------- Net investment income (loss) Income: Dividends $ 4 $ 276 $ - $ - $ 281 -------------- -------------- ------------- ------------- ------------- Total investment income 4 276 - - 281 Expenses: Mortality and expense risk and other charges 8 622 900 286 250 Annual administrative charges 1 16 23 8 6 Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges - 26 20 4 4 Other contract charges - 106 153 60 43 -------------- -------------- ------------- ------------- ------------- Total expenses 9 770 1,096 358 303 -------------- -------------- ------------- ------------- ------------- Net investment income (loss) (5) (494) (1,096) (358) (22) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments (15) 1,322 285 (11) (293) Capital gains distributions - - - - - -------------- -------------- ------------- ------------- ------------- Net realized gain (loss) on investments and capital gains distributions (15) 1,322 285 (11) (293) Net unrealized appreciation (depreciation) of investments 141 8,589 12,824 4,839 2,884 -------------- -------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $ 121 $ 9,417 $ 12,013 $ 4,470 $ 2,569 ============== ============== ============= ============= =============
The accompanying notes are an integral part of these financial statements. 67 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) Janus Aspen Janus Aspen Janus Aspen Series Janus Aspen Series Colonial Series Flexible Series Worldwide Small Cap Balanced Income Growth Growth Value -------------- -------------- ------------- ------------- ------------- Net investment income (loss) Income: Dividends $ 57 $ 46 $ - $ 45 $ 104 -------------- -------------- ------------- ------------- ------------- Total investment income 57 46 - 45 104 Expenses: Mortality and expense risk and other charges 20 8 4 71 119 Annual administrative charges - - - 2 5 Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges - - - 1 1 Other contract charges - - - - 22 -------------- -------------- ------------- ------------- ------------- Total expenses 20 8 4 74 147 -------------- -------------- ------------- ------------- ------------- Net investment income (loss) 37 38 (4) (29) (43) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments (1) 22 (8) 461 85 Capital gains distributions - - - - 497 -------------- -------------- ------------- ------------- ------------- Net realized gain (loss) on investments and capital gains distributions (1) 22 (8) 461 582 Net unrealized appreciation (depreciation) of investments 346 (5) 165 941 2,851 -------------- -------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $ 382 $ 55 $ 153 $ 1,373 $ 3,390 ============== ============== ============= ============= =============
The accompanying notes are an integral part of these financial statements. 68 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) Liberty Liberty Liberty Small Oppenheimer Asset Liberty Federal Company Global Allocation Equity Securities Growth Securities -------------- -------------- ------------- ------------- -------------- Net investment income (loss) Income: Dividends $ - $ 2 $ - $ - $ 3 -------------- -------------- ------------- ------------- -------------- Total investment income - 2 - - 3 Expenses: Mortality and expense risk and other charges 6 9 1 1 9 Annual administrative charges 1 1 - - - Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges - - - - - Other contract charges - - - - - -------------- -------------- ------------- ------------- -------------- Total expenses 7 10 1 1 9 -------------- -------------- ------------- ------------- -------------- Net investment income (loss) (7) (8) (1) (1) (6) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments 5 (56) 1 4 (4) Capital gains distributions - - - - - -------------- -------------- ------------- ------------- -------------- Net realized gain (loss) on investments and capital gains distributions 5 (56) 1 4 (4) Net unrealized appreciation (depreciation) of investments 105 193 2 26 523 -------------- -------------- ------------- ------------- -------------- Net increase (decrease) in net assets resulting from operations $ 103 $ 129 $ 2 $ 29 $ 513 ============== ============== ============= ============= ==============
The accompanying notes are an integral part of these financial statements. 69 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) PIMCO Oppenheimer PIMCO StocksPLUS Pioneer Strategic High Growth and Equity- Pioneer Bond Yield Income Income Fund -------------- ------------- ------------- ------------- -------------- Net investment income (loss) Income: Dividends $ 2 $ 33,724 $ 3,873 $ 12 $ 360 -------------- ------------- ------------- ------------- -------------- Total investment income 2 33,724 3,873 12 360 Expenses: Mortality and expense risk and other charges 2 7,725 3,019 5 612 Annual administrative charges - 211 127 - 12 Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges - 291 202 - 17 Other contract charges - 772 232 - 117 -------------- ------------- ------------- ------------- -------------- Total expenses 2 8,999 3,580 5 758 -------------- ------------- ------------- ------------- -------------- Net investment income (loss) - 24,725 293 7 (398) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments 21 (3,672) (32,864) (2) (651) Capital gains distributions - - - - - -------------- ------------- ------------- ------------- -------------- Net realized gain (loss) on investments and capital gains distributions 21 (3,672) (32,864) (2) (651) Net unrealized appreciation (depreciation) of investments 14 61,195 78,606 128 9,623 -------------- ------------- ------------- ------------- -------------- Net increase (decrease) in net assets resulting from operations $ 35 $ 82,248 $ 46,035 $ 133 $ 8,574 ============== ============= ============= ============= ==============
The accompanying notes are an integral part of these financial statements. 70 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) Pioneer Pioneer ProFund VP Mid-Cap Small ProFund ProFund Rising Rates Value Company VP Bull VP Europe 30 Opportunity -------------- -------------- ------------- ------------- ------------- Net investment income (loss) Income: Dividends $ 209 $ - $ - $ 31 $ - -------------- -------------- ------------- ------------- ------------- Total investment income 209 - - 31 - Expenses: Mortality and expense risk and other charges 1,648 65 829 260 91 Annual administrative charges 40 1 28 7 4 Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges 40 1 32 8 1 Other contract charges 266 - 93 23 3 -------------- -------------- ------------- ------------- ------------- Total expenses 1,994 67 982 298 99 -------------- -------------- ------------- ------------- ------------- Net investment income (loss) (1,785) (67) (982) (267) (99) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments (273) (73) 7,956 3,373 (117) Capital gains distributions - - - - - -------------- -------------- ------------- ------------- ------------- Net realized gain (loss) on investments and capital gains distributions (273) (73) 7,956 3,373 (117) Net unrealized appreciation (depreciation) of investments 34,933 1,100 4,488 2,207 (608) -------------- -------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $ 32,875 $ 960 $ 11,462 $ 5,313 $ (824) ============== ============== ============= ============= =============
The accompanying notes are an integral part of these financial statements. 71 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) SP Jennison Putnam VT Putnam VT ProFund VP International Discovery Growth and Small Cap Jennison Growth Growth Income -------------- -------------- -------------- ------------- -------------- Net investment income (loss) Income: Dividends $ - $ - $ - $ - $ 34 -------------- -------------- -------------- ------------- -------------- Total investment income - - - - 34 Expenses: Mortality and expense risk and other charges 997 806 518 37 34 Annual administrative charges 35 20 14 1 1 Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges 38 14 9 1 1 Other contract charges 129 129 83 - - -------------- -------------- -------------- ------------- -------------- Total expenses 1,199 969 624 39 36 -------------- -------------- -------------- ------------- -------------- Net investment income (loss) (1,199) (969) (624) (39) (2) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments 13,339 690 3,034 (50) (94) Capital gains distributions - - - - - -------------- -------------- -------------- ------------- -------------- Net realized gain (loss) on investments and capital gains distributions 13,339 690 3,034 (50) (94) Net unrealized appreciation (depreciation) of investments 6,166 11,818 9,129 703 648 -------------- -------------- -------------- ------------- -------------- Net increase (decrease) in net assets resulting from operations $ 18,306 $ 11,539 $ 11,539 $ 614 $ 552 ============== ============== ============== ============= ==============
The accompanying notes are an integral part of these financial statements. 72 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) Smith Putnam VT Barney Smith Smith International Smith International Barney Barney Growth and Barney All Cap Large Money Income High Income Growth Cap Value Market -------------- ------------- -------------- -------------- -------------- Net investment income (loss) Income: Dividends $ 51 $ 21 $ 2 $ 6 $ 1 -------------- ------------- -------------- -------------- -------------- Total investment income 51 21 2 6 1 Expenses: Mortality and expense risk and other charges 50 4 3 5 2 Annual administrative charges 1 1 - 1 - Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges 1 - - - 10 Other contract charges - - - - - -------------- ------------- -------------- -------------- -------------- Total expenses 52 5 3 6 12 -------------- ------------- -------------- -------------- -------------- Net investment income (loss) (1) 16 (1) - (11) Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments (129) (81) (25) (41) - Capital gains distributions - - - - - -------------- ------------- -------------- -------------- -------------- Net realized gain (loss) on investments and capital gains distributions (129) (81) (25) (41) - Net unrealized appreciation (depreciation) of investments 1,208 134 71 125 - -------------- ------------- -------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations $ 1,078 $ 69 $ 45 $ 84 $ (11) ============== ============= ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 73 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Operations December 31, 2003 (Dollars in thousands) Wells Fargo Wells Fargo Wells Fargo VT Large Wells Fargo UBS Tactical VT Asset VT Equity Company VT SmallCap Allocation Allocation Income Growth Growth -------------- -------------- ------------- ------------- ------------- Net investment income (loss) Income: Dividends $ 15 $ - $ - $ - $ - -------------- -------------- ------------- ------------- ------------- Total investment income 15 - - - - Expenses: Mortality and expense risk and other charges 36 - - - - Annual administrative charges 1 - - - - Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges - - - - - Other contract charges - - - - - -------------- -------------- ------------- ------------- ------------- Total expenses 37 - - - - -------------- -------------- ------------- ------------- ------------- Net investment income (loss) (22) - - - - Realized and unrealized gain (loss) on investments Net realized gain (loss) on investments (51) - - - - Capital gains distributions - - - - - -------------- -------------- ------------- ------------- ------------- Net realized gain (loss) on investments and capital gains distributions (51) - - - - Net unrealized appreciation (depreciation) of investments 694 - - 1 - -------------- -------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations $ 621 $ - $ - $ 1 $ - ============== ============== ============= ============= =============
The accompanying notes are an integral part of these financial statements. 74 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING GET ING GET ING GET ING GET Fund- Fund- Fund- Fund- Series N Series P Series Q Series R -------------- -------------- -------------- -------------- Net assets at January 1, 2002 $ 30,868 $ 153,045 $ 1,904 $ - Increase (decrease) in net assets from operations Operations: Net investment income (loss) (225) (1,613) 335 320 Net realized gain (loss) on investments and capital gains distributions 1 (70) (3) 48 Net unrealized appreciation (depreciation) of investments (538) 1,644 217 1,356 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations (762) (39) 549 1,724 Changes from contract transactions: Purchase payments (8) (437) 2,717 2,413 Contract distributions and terminations (792) (3,496) (2,304) (2,081) Transfer payments from (to) other Divisions (including the fixed accounts), net (645) (5,227) 166,163 168,470 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions (1,445) (9,160) 166,576 168,802 -------------- -------------- -------------- -------------- Total increase (decrease) (2,207) (9,199) 167,125 170,526 -------------- -------------- -------------- -------------- Net assets at December 31, 2002 28,661 143,846 169,029 170,526 Increase (decrease) in net assets from operations Operations: Net investment income (loss) 127 (995) (3,371) (3,412) Net realized gain (loss) on investments 87 949 1,500 1,886 Net unrealized appreciation (depreciation) of investments and capital gains distributions 336 857 6,401 7,326 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations 550 811 4,530 5,800 Changes from contract transactions: Purchase payments (25) (112) (123) (88) Contract distributions and terminations (1,353) (6,238) (6,340) (5,347) Transfer payments from (to) other Divisions (including the fixed accounts), net (4,476) (28,206) (36,001) (36,136) -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions (5,854) (34,556) (42,464) (41,571) -------------- -------------- -------------- -------------- Total increase (decrease) (5,304) (33,745) (37,934) (35,771) -------------- -------------- -------------- -------------- Net assets at December 31, 2003 $ 23,357 $ 110,101 $ 131,095 $ 134,755 ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 75 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING GET ING GET ING GET ING GET Fund- Fund- Fund- Fund- Series S Series T Series U Series V -------------- -------------- -------------- -------------- Net assets at January 1, 2002 $ - $ - $ - $ - Increase (decrease) in net assets from operations Operations: Net investment income (loss) (132) (298) - - Net realized gain (loss) on investments and capital gains distributions (15) 8 - - Net unrealized appreciation (depreciation) of investments 1,013 2,300 - - -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations 866 2,010 - - Changes from contract transactions: Purchase payments 3,067 6,518 466 - Contract distributions and terminations (1,591) (152) - - Transfer payments from (to) other Divisions (including the fixed accounts), net 216,928 229,572 582 - Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions 218,404 235,938 1,048 - -------------- -------------- -------------- -------------- Total increase (decrease) 219,270 237,948 1,048 - -------------- -------------- -------------- -------------- Net assets at December 31, 2002 219,270 237,948 1,048 - Increase (decrease) in net assets from operations Operations: Net investment income (loss) (4,169) (4,260) (3,757) (4,565) Net realized gain (loss) on investments 2,646 3,572 5,263 (1,614) Net unrealized appreciation (depreciation) of investments and capital gains distributions 8,506 7,977 11,523 (4,705) -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations 6,983 7,289 13,029 (10,884) Changes from contract transactions: Purchase payments (100) (258) 5,900 12,238 Contract distributions and terminations (6,106) (6,877) (4,265) (4,915) Transfer payments from (to) other Divisions (including the fixed accounts), net (58,227) (75,220) 153,214 329,545 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions (64,433) (82,355) 154,849 336,868 -------------- -------------- -------------- -------------- Total increase (decrease) (57,450) (75,066) 167,878 325,984 -------------- -------------- -------------- -------------- Net assets at December 31, 2003 $ 161,820 $ 162,882 $ 168,926 $ 325,984 ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 76 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING AIM ING AIM ING Alliance ING Alliance Mid-Cap Mid-Cap Mid-Cap Mid-Cap Growth Growth Growth Growth (Service (Advisor (Service (Advisor Class) Class) Class) Class) --------------- -------------- -------------- --------------- Net assets at January 1, 2002 $ 259,382 $ - $ 395,434 $ - Increase (decrease) in net assets from operations Operations: Net investment income (loss) (3,672) - (5,491) - Net realized gain (loss) on investments and capital gains distributions (113,239) - (211,562) - Net unrealized appreciation (depreciation) of investments 38,088 (1) 97,211 (6) --------------- -------------- -------------- --------------- Net increase (decrease) in net assets from operations (78,823) (1) (119,842) (6) Changes from contract transactions: Purchase payments 15,000 61 22,649 150 Contract distributions and terminations (9,725) - (16,524) - Transfer payments from (to) other Divisions (including the fixed accounts), net (45,983) 18 (34,948) 4 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company 1 - - - --------------- -------------- -------------- --------------- Net increase (decrease) in net assets derived from principal transactions (40,707) 79 (28,823) 154 --------------- -------------- -------------- --------------- Total increase (decrease) (119,530) 78 (148,665) 148 --------------- -------------- -------------- --------------- Net assets at December 31, 2002 139,852 78 246,769 148 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (3,246) (26) (6,283) (35) Net realized gain (loss) on investments 12,008 11 29,527 57 Net unrealized appreciation (depreciation) of investments and capital gains distributions 50,126 425 140,666 720 --------------- -------------- -------------- --------------- Net increase (decrease) in net assets from operations 58,888 410 163,910 742 Changes from contract transactions: Purchase payments 28,579 2,392 41,672 3,213 Contract distributions and terminations (8,002) (12) (18,672) (13) Transfer payments from (to) other Divisions (including the fixed accounts), net 2,416 326 29,145 534 --------------- -------------- -------------- --------------- Net increase (decrease) in net assets derived from principal transactions 22,993 2,706 52,145 3,734 --------------- -------------- -------------- --------------- Total increase (decrease) 81,881 3,116 216,055 4,476 --------------- -------------- -------------- --------------- Net assets at December 31, 2003 $ 221,733 $ 3,194 $ 462,824 $ 4,624 =============== ============== ============== ===============
The accompanying notes are an integral part of these financial statements. 77 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING ING Capital ING American ING Guardian American Funds American Large Cap Funds Growth- Funds Value Growth Income International (Service Class) ------------- ------------ -------------- ---------------- Net assets at January 1, 2002 $ - $ - $ - $ 275,489 Increase (decrease) in net assets from operations Operations: Net investment income (loss) - - - (4,985) Net realized gain (loss) on investments and capital gains distributions - - - (12,529) Net unrealized appreciation (depreciation) of investments - - - (66,466) ------------- ------------ -------------- ---------------- Net increase (decrease) in net assets from operations - - - (83,980) Changes from contract transactions: Purchase payments - - - 90,790 Contract distributions and terminations - - - (11,843) Transfer payments from (to) other Divisions (including the fixed accounts), net - - - 25,232 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - ------------- ------------ -------------- ---------------- Net increase (decrease) in net assets derived from principal transactions - - - 104,179 ------------- ------------ -------------- ---------------- Total increase (decrease) - - - 20,199 ------------- ------------ -------------- ---------------- Net assets at December 31, 2002 - - - 295,688 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (376) (277) (110) (7,818) Net realized gain (loss) on investments - - 3 (4,588) Net unrealized appreciation (depreciation) of investments and capital gains distributions 6,250 5,537 2,718 131,558 ------------- ------------ -------------- ---------------- Net increase (decrease) in net assets from operations 5,874 5,260 2,611 119,152 Changes from contract transactions: Purchase payments 65,269 49,855 24,658 117,569 Contract distributions and terminations (658) (467) (90) (17,769) Transfer payments from (to) other Divisions (including the fixed accounts), net 61,835 45,311 18,161 46,648 ------------- ------------ -------------- ---------------- Net increase (decrease) in net assets derived from principal transactions 126,446 94,699 42,729 146,448 ------------- ------------ -------------- ---------------- Total increase (decrease) 132,320 99,959 45,340 265,600 ------------- ------------ -------------- ---------------- Net assets at December 31, 2003 $ 132,320 $ 99,959 $ 45,340 $ 561,288 ============= ============ ============== ================
The accompanying notes are an integral part of these financial statements. 78 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING Capital ING Capital ING Capital Guardian Guardian Guardian ING Capital Large Cap Managed Managed Guardian Value Global Global Small Cap (Advisor Class) (Service Class) (Advisor Class) (Service Class) ---------------- ---------------- ---------------- ---------------- Net assets at January 1, 2002 $ - $ 250,388 $ - $ 480,513 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (1) (3,977) - (7,335) Net realized gain (loss) on investments and capital gains distributions - (2,654) - (87,705) Net unrealized appreciation (depreciation) of investments (14) (50,119) (2) (39,390) ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets from operations (15) (56,750) (2) (134,430) Changes from contract transactions: Purchase payments 307 48,234 31 64,429 Contract distributions and terminations - (12,917) - (23,540) Transfer payments from (to) other Divisions (including the fixed accounts), net 41 (5,872) 21 (45,826) Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - 1 - - ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets derived from principal transactions 348 29,446 52 (4,937) ---------------- ---------------- ---------------- ---------------- Total increase (decrease) 333 (27,304) 50 (139,367) ---------------- ---------------- ---------------- ---------------- Net assets at December 31, 2002 333 223,084 50 341,146 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (72) (4,985) (15) (7,074) Net realized gain (loss) on investments (30) (2,433) 17 (13,248) Net unrealized appreciation (depreciation) of investments and capital gains distributions 1,177 89,795 267 154,436 ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets from operations 1,075 82,377 269 134,114 Changes from contract transactions: Purchase payments 5,282 53,400 1,684 66,650 Contract distributions and terminations (465) (12,470) (40) (18,324) Transfer payments from (to) other Divisions (including the fixed accounts), net 580 5,996 121 13,700 ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets derived from principal transactions 5,397 46,926 1,765 62,026 ---------------- ---------------- ---------------- ---------------- Total increase (decrease) 6,472 129,303 2,034 196,140 ---------------- ---------------- ---------------- ---------------- Net assets at December 31, 2003 $ 6,805 $ 352,387 $ 2,084 $ 537,286 ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 79 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING Capital ING ING ING Eagle Guardian Developing Developing Asset Value Small Cap World World Equity (Advisor (Service (Advisor (Service Class) Class) Class) Class) --------------- -------------- -------------- --------------- Net assets at January 1, 2002 $ - $ 71,466 $ - $ 199,039 Increase (decrease) in net assets from operations Operations: Net investment income (loss) - (1,356) - (2,233) Net realized gain (loss) on investments and capital gains distributions - 1,932 - (11,165) Net unrealized appreciation (depreciation) of investments 1 (8,556) (2) (27,107) --------------- -------------- -------------- --------------- Net increase (decrease) in net assets from operations 1 (7,980) (2) (40,505) Changes from contract transactions: Purchase payments 85 11,601 81 24,266 Contract distributions and terminations - (4,659) - (9,725) Transfer payments from (to) other Divisions (including the fixed accounts), net 235 (10,428) - 164 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - --------------- -------------- -------------- --------------- Net increase (decrease) in net assets derived from principal transactions 320 (3,486) 81 14,705 --------------- -------------- -------------- --------------- Total increase (decrease) 321 (11,466) 79 (25,800) --------------- -------------- -------------- --------------- Net assets at December 31, 2002 321 60,000 79 173,239 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (32) (1,145) (13) (2,902) Net realized gain (loss) on investments 2 (728) 4 (9,173) Net unrealized appreciation (depreciation) of investments and capital gains distributions 573 29,880 347 50,235 --------------- -------------- -------------- --------------- Net increase (decrease) in net assets from operations 543 28,007 338 38,160 Changes from contract transactions: Purchase payments 2,853 14,583 1,305 20,666 Contract distributions and terminations (7) (3,396) - (9,738) Transfer payments from (to) other Divisions (including the fixed accounts), net 438 10,064 234 (10,178) --------------- -------------- -------------- --------------- Net increase (decrease) in net assets derived from principal transactions 3,284 21,251 1,539 750 --------------- -------------- -------------- --------------- Total increase (decrease) 3,827 49,258 1,877 38,910 --------------- -------------- -------------- --------------- Net assets at December 31, 2003 $ 4,148 $ 109,258 $ 1,956 $ 212,149 =============== ============== ============== ===============
The accompanying notes are an integral part of these financial statements. 80 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING Eagle ING FMR ING FMR ING Goldman Asset Value Diversified Diversified Sachs Internet Equity Mid-Cap Mid-Cap Tollkeeper (Advisor (Service (Advisor (Service Class) Class) Class) Class) -------------- -------------- -------------- --------------- Net assets at January 1, 2002 $ - $ 57,814 $ - $ 5,389 Increase (decrease) in net assets from operations Operations: Net investment income (loss) 1 (1,405) - (169) Net realized gain (loss) on investments and capital gains distributions - (1,645) - (3,259) Net unrealized appreciation (depreciation) of investments (3) (16,949) (4) 32 -------------- -------------- -------------- --------------- Net increase (decrease) in net assets from operations (2) (19,999) (4) (3,396) Changes from contract transactions: Purchase payments 62 38,230 136 7,425 Contract distributions and terminations - (3,572) - (281) Transfer payments from (to) other Divisions (including the fixed accounts), net 47 18,686 88 3,665 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- -------------- -------------- --------------- Net increase (decrease) in net assets derived from principal transactions 109 53,344 224 10,809 -------------- -------------- -------------- --------------- Total increase (decrease) 107 33,345 220 7,413 -------------- -------------- -------------- --------------- Net assets at December 31, 2002 107 91,159 220 12,802 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (11) (2,492) (40) (625) Net realized gain (loss) on investments - (876) 4 1,039 Net unrealized appreciation (depreciation) of investments and capital gains distributions 159 37,624 619 8,672 -------------- -------------- -------------- --------------- Net increase (decrease) in net assets from operations 148 34,256 583 9,086 Changes from contract transactions: Purchase payments 728 38,594 2,739 20,789 Contract distributions and terminations (6) (4,100) (32) (1,153) Transfer payments from (to) other Divisions (including the fixed accounts), net 45 4,296 244 12,098 -------------- -------------- -------------- --------------- Net increase (decrease) in net assets derived from principal transactions 767 38,790 2,951 31,734 -------------- -------------- -------------- --------------- Total increase (decrease) 915 73,046 3,534 40,820 -------------- -------------- -------------- --------------- Net assets at December 31, 2003 $ 1,022 $ 164,205 $ 3,754 $ 53,622 ============== ============== ============== ===============
The accompanying notes are an integral part of these financial statements. 81 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING Goldman ING Hard ING Hard ING Sachs Internet Assets Assets International Tollkeeper (Service (Advisor (Service (Advisor Class) Class) Class) Class) ---------------- ------------- ------------- -------------- Net assets at January 1, 2002 $ - $ 33,209 $ - $ 144,061 Increase (decrease) in net assets from operations Operations: Net investment income (loss) - (642) - (1,510) Net realized gain (loss) on investments and capital gains distributions - (2,333) - (18,218) Net unrealized appreciation (depreciation) of investments (4) (1,937) 1 (1,709) ---------------- ------------- ------------- -------------- Net increase (decrease) in net assets from operations (4) (4,912) 1 (21,437) Changes from contract transactions: Purchase payments 42 10,388 63 15,966 Contract distributions and terminations - (2,996) - (6,869) Transfer payments from (to) other Divisions (including the fixed accounts), net 15 32,064 33 (11,244) Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - ---------------- ------------- ------------- -------------- Net increase (decrease) in net assets derived from principal transactions 57 39,456 96 (2,147) ---------------- ------------- ------------- -------------- Total increase (decrease) 53 34,544 97 (23,584) ---------------- ------------- ------------- -------------- Net assets at December 31, 2002 53 67,753 97 120,477 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (19) (1,197) (15) (2,107) Net realized gain (loss) on investments 43 2,794 22 16,547 Net unrealized appreciation (depreciation) of investments and capital gains distributions 257 37,546 641 19,653 ---------------- ------------- ------------- -------------- Net increase (decrease) in net assets from operations 281 39,143 648 34,093 Changes from contract transactions: Purchase payments 2,167 17,646 1,982 19,354 Contract distributions and terminations (63) (5,336) (3) (5,614) Transfer payments from (to) other Divisions (including the fixed accounts), net 157 20,810 313 (6,228) ---------------- ------------- ------------- -------------- Net increase (decrease) in net assets derived from principal transactions 2,261 33,120 2,292 7,512 ---------------- ------------- ------------- -------------- Total increase (decrease) 2,542 72,263 2,940 41,605 ---------------- ------------- ------------- -------------- Net assets at December 31, 2003 $ 2,595 $ 140,016 $ 3,037 $ 162,082 ================ ============= ============= ==============
The accompanying notes are an integral part of these financial statements. 82 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING Janus ING Janus ING Janus ING Growth Growth Special International and Income and Income Equity (Advisor (Service (Advisor (Service Class) Class) Class) Class) --------------- -------------- -------------- ------------- Net assets at January 1, 2002 $ - $ 92,720 $ - $ 24,325 Increase (decrease) in net assets from operations Operations: Net investment income (loss) 1 (1,869) - (504) Net realized gain (loss) on investments and capital gains distributions - (4,040) - (1,565) Net unrealized appreciation (depreciation) of investments - (22,039) (15) (6,229) --------------- -------------- -------------- ------------- Net increase (decrease) in net assets from operations 1 (27,948) (15) (8,298) Changes from contract transactions: Purchase payments 218 55,155 541 6,311 Contract distributions and terminations - (4,880) - (834) Transfer payments from (to) other Divisions (including the fixed accounts), net 35 15,298 61 290 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - --------------- -------------- -------------- ------------- Net increase (decrease) in net assets derived from principal transactions 253 65,573 602 5,767 --------------- -------------- -------------- ------------- Total increase (decrease) 254 37,625 587 (2,531) --------------- -------------- -------------- ------------- Net assets at December 31, 2002 254 130,345 587 21,794 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (40) (3,592) (89) (680) Net realized gain (loss) on investments 5 (1,267) 18 (642) Net unrealized appreciation (depreciation) of investments and capital gains distributions 813 38,839 929 14,396 --------------- -------------- -------------- ------------- Net increase (decrease) in net assets from operations 778 33,980 858 13,074 Changes from contract transactions: Purchase payments 3,679 57,855 4,981 11,922 Contract distributions and terminations (8) (6,459) (50) (1,281) Transfer payments from (to) other Divisions (including the fixed accounts), net 277 9,001 819 8,402 --------------- -------------- -------------- ------------- Net increase (decrease) in net assets derived from principal transactions 3,948 60,397 5,750 19,043 --------------- -------------- -------------- ------------- Total increase (decrease) 4,726 94,377 6,608 32,117 --------------- -------------- -------------- ------------- Net assets at December 31, 2003 $ 4,980 $ 224,722 $ 7,195 $ 53,911 =============== ============== ============== =============
The accompanying notes are an integral part of these financial statements. 83 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING Janus ING ING Special Jennison Jennison ING JPMorgan Equity Equity Equity Fleming Small (Advisor Opportunities Opportunities Cap Equity Class) (Service Class) (Advisor Class) (Service Class) -------------- ---------------- ---------------- ---------------- Net assets at January 1, 2002 $ - $ 440,209 $ - $ - Increase (decrease) in net assets from operations Operations: Net investment income (loss) - (5,971) - (56) Net realized gain (loss) on investments and capital gains distributions - (150,767) - (90) Net unrealized appreciation (depreciation) of investments (1) 21,921 - (411) -------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets from operations (1) (134,817) - (557) Changes from contract transactions: Purchase payments 36 34,448 32 5,453 Contract distributions and terminations - (17,174) - (116) Transfer payments from (to) other Divisions (including the fixed accounts), net 21 (41,715) 2 4,710 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - 3 - - -------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets derived from principal transactions 57 (24,438) 34 10,047 -------------- ---------------- ---------------- ---------------- Total increase (decrease) 56 (159,255) 34 9,490 -------------- ---------------- ---------------- ---------------- Net assets at December 31, 2002 56 280,954 34 9,490 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (6) (5,027) (14) (614) Net realized gain (loss) on investments 4 (51,233) 10 (64) Net unrealized appreciation (depreciation) of investments and capital gains distributions 122 130,334 258 10,493 -------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets from operations 120 74,074 254 9,815 Changes from contract transactions: Purchase payments 451 13,680 1,124 30,395 Contract distributions and terminations (6) (16,077) (11) (550) Transfer payments from (to) other Divisions (including the fixed accounts), net 180 (19,251) 238 16,334 -------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets derived from principal transactions 625 (21,648) 1,351 46,179 -------------- ---------------- ---------------- ---------------- Total increase (decrease) 745 52,426 1,605 55,994 -------------- ---------------- ---------------- ---------------- Net assets at December 31, 2003 $ 801 $ 333,380 $ 1,639 $ 65,484 ============== ================ ================ ================
The accompanying notes are an integral part of these financial statements. 84 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING ING ING JPMorgan Julius Baer Julius Baer ING Fleming Small Foreign Foreign Limited Cap Equity (Service (Advisor Maturity (Advisor Class) Class) Class) Bond ---------------- ------------- ------------- ------------- Net assets at January 1, 2002 $ - $ - $ - $ 364,062 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (1) (24) - 8,171 Net realized gain (loss) on investments and capital gains distributions - (285) - 6,401 Net unrealized appreciation (depreciation) of investments (9) 29 (1) 9,830 ---------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations (10) (280) (1) 24,402 Changes from contract transactions: Purchase payments 462 2,749 166 96,571 Contract distributions and terminations - (61) - (30,028) Transfer payments from (to) other Divisions (including the fixed accounts), net 59 2,582 - 103,934 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - ---------------- ------------- ------------- ------------- Net increase (decrease) in net assets derived from principal transactions 521 5,270 166 170,477 ---------------- ------------- ------------- ------------- Total increase (decrease) 511 4,990 165 194,879 ---------------- ------------- ------------- ------------- Net assets at December 31, 2002 511 4,990 165 558,941 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (96) (104) (9) (6,631) Net realized gain (loss) on investments 1 2,277 90 10,257 Net unrealized appreciation (depreciation) of investments and capital gains distributions 1,641 2,852 315 1,985 ---------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations 1,546 5,025 396 5,611 Changes from contract transactions: Purchase payments 7,957 12,400 1,870 112,379 Contract distributions and terminations (43) (325) (4) (37,669) Transfer payments from (to) other Divisions (including the fixed accounts), net 1,117 12,554 123 (104,308) ---------------- ------------- ------------- ------------- Net increase (decrease) in net assets derived from principal transactions 9,031 24,629 1,989 (29,598) ---------------- ------------- ------------- ------------- Total increase (decrease) 10,577 29,654 2,385 (23,987) ---------------- ------------- ------------- ------------- Net assets at December 31, 2003 $ 11,088 $ 34,644 $ 2,550 $ 534,954 ================ ============= ============= =============
The accompanying notes are an integral part of these financial statements. 85 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING Liquid ING Liquid ING Marisco ING Marisco Assets Assets Growth Growth (Service (Advisor (Service (Advisor Class) Class) Class) Class) --------------- -------------- -------------- --------------- Net assets at January 1, 2002 $ 1,071,485 $ - $ 1,002,892 $ - Increase (decrease) in net assets from operations Operations: Net investment income (loss) (35,023) (2) (13,950) - Net realized gain (loss) on investments and capital gains distributions - - (524,085) - Net unrealized appreciation (depreciation) of investments - - 244,425 (5) --------------- -------------- -------------- --------------- Net increase (decrease) in net assets from operations (35,023) (2) (293,610) (5) Changes from contract transactions: Purchase payments 454,243 3,191 56,919 68 Contract distributions and terminations (594,093) - (35,962) - Transfer payments from (to) other Divisions (including the fixed accounts), net 126,567 (1,389) (170,198) 29 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - --------------- -------------- -------------- --------------- Net increase (decrease) in net assets derived from principal transactions (13,283) 1,802 (149,241) 97 --------------- -------------- -------------- --------------- Total increase (decrease) (48,306) 1,800 (442,851) 92 --------------- -------------- -------------- --------------- Net assets at December 31, 2002 1,023,179 1,800 560,041 92 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (35,629) (93) (12,294) (78) Net realized gain (loss) on investments - - (10,462) 15 Net unrealized appreciation (depreciation) of investments and capital gains distributions - - 190,448 972 --------------- -------------- -------------- --------------- Net increase (decrease) in net assets from operations (35,629) (93) 167,692 909 Changes from contract transactions: Purchase payments 415,072 9,725 80,708 6,065 Contract distributions and terminations (582,769) (491) (32,653) (46) Transfer payments from (to) other Divisions (including the fixed accounts), net (74,179) (6,104) 2,912 1,304 --------------- -------------- -------------- --------------- Net increase (decrease) in net assets derived from principal transactions (241,876) 3,130 50,967 7,323 --------------- -------------- -------------- --------------- Total increase (decrease) (277,505) 3,037 218,659 8,232 --------------- -------------- -------------- --------------- Net assets at December 31, 2003 $ 745,674 $ 4,837 $ 778,700 $ 8,324 =============== ============== ============== ===============
The accompanying notes are an integral part of these financial statements. 86 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING ING Mercury Mercury ING Mercury ING Mercury Foucs Value Foucs Value Fundamental Fundamental (Service (Advisor Growth Growth Class) Class) (Service Class) (Advisor Class) -------------- -------------- ---------------- ---------------- Net assets at January 1, 2002 $ - $ - $ - $ - Increase (decrease) in net assets from operations Operations: Net investment income (loss) (39) - (12) - Net realized gain (loss) on investments and capital gains distributions (201) - (17) - Net unrealized appreciation (depreciation) of investments (90) (2) (114) (5) -------------- -------------- ---------------- ---------------- Net increase (decrease) in net assets from operations (330) (2) (143) (5) Changes from contract transactions: Purchase payments 3,044 23 1,709 99 Contract distributions and terminations (96) - (21) - Transfer payments from (to) other Divisions (including the fixed accounts), net 3,313 27 1,197 14 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- -------------- ---------------- ---------------- Net increase (decrease) in net assets derived from principal transactions 6,261 50 2,885 113 -------------- -------------- ---------------- ---------------- Total increase (decrease) 5,931 48 2,742 108 -------------- -------------- ---------------- ---------------- Net assets at December 31, 2002 5,931 48 2,742 108 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (238) (6) (162) (9) Net realized gain (loss) on investments 292 10 3 4 Net unrealized appreciation (depreciation) of investments and capital gains distributions 3,584 98 2,071 126 -------------- -------------- ---------------- ---------------- Net increase (decrease) in net assets from operations 3,638 102 1,912 121 Changes from contract transactions: Purchase payments 10,747 573 6,401 516 Contract distributions and terminations (273) - (198) (4) Transfer payments from (to) other Divisions (including the fixed accounts), net 6,141 82 2,773 115 -------------- -------------- ---------------- ---------------- Net increase (decrease) in net assets derived from principal transactions 16,615 655 8,976 627 -------------- -------------- ---------------- ---------------- Total increase (decrease) 20,253 757 10,888 748 -------------- -------------- ---------------- ---------------- Net assets at December 31, 2003 $ 26,184 $ 805 $ 13,630 $ 856 ============== ============== ================ ================
The accompanying notes are an integral part of these financial statements. 87 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING MFS(R) ING MFS(R) Mid-Cap Mid-Cap ING MFS(R) ING MFS(R) Growth Growth Research Research (Service (Advisor (Service (Advisor Class) Class) Class) Class) -------------- -------------- -------------- -------------- Net assets at January 1, 2002 $ 928,290 $ - $ 637,711 $ - Increase (decrease) in net assets from operations Operations: Net investment income (loss) (11,581) - (7,743) - Net realized gain (loss) on investments and capital gains distributions (502,998) - (159,946) - Net unrealized appreciation (depreciation) of investments 41,552 (9) 3,501 (3) -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations (473,027) (9) (164,188) (3) Changes from contract transactions: Purchase payments 86,280 231 51,406 254 Contract distributions and terminations (30,288) - (28,260) - Transfer payments from (to) other Divisions (including the fixed accounts), net (75,674) 327 (75,634) 75 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions (19,682) 558 (52,488) 329 -------------- -------------- -------------- -------------- Total increase (decrease) (492,709) 549 (216,676) 326 -------------- -------------- -------------- -------------- Net assets at December 31, 2002 435,581 549 421,035 326 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (10,199) (90) (7,527) (21) Net realized gain (loss) on investments (77,150) 18 (121,817) 11 Net unrealized appreciation (depreciation) of investments and capital gains distributions 248,319 1,249 219,580 250 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations 160,970 1,177 90,236 240 Changes from contract transactions: Purchase payments 70,479 6,803 42,251 1,306 Contract distributions and terminations (26,211) (14) (24,773) (14) Transfer payments from (to) other Divisions (including the fixed accounts), net (6,462) 1,110 (33,838) 93 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions 37,806 7,899 (16,360) 1,385 -------------- -------------- -------------- -------------- Total increase (decrease) 198,776 9,076 73,876 1,625 -------------- -------------- -------------- -------------- Net assets at December 31, 2003 $ 634,357 $ 9,625 $ 494,911 $ 1,951 ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 88 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING MFS(R) ING MFS(R) ING PIMCO ING PIMCO Total Return Total Return Core Bond Core Bond (Service (Advisor (Service (Advisor Class) Class) Class) Class) -------------- -------------- -------------- -------------- Net assets at January 1, 2002 $ 793,394 $ - $ 114,996 $ - Increase (decrease) in net assets from operations Operations: Net investment income (loss) 4,052 17 4,398 15 Net realized gain (loss) on investments and capital gains distributions 704 1 2,237 1 Net unrealized appreciation (depreciation) of investments (67,592) (29) 10,717 (3) -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations (62,836) (11) 17,352 13 Changes from contract transactions: Purchase payments 155,432 976 135,019 872 Contract distributions and terminations (47,311) - (11,442) - Transfer payments from (to) other Divisions (including the fixed accounts), net 14,587 (10) 169,200 107 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions 122,708 966 292,777 979 -------------- -------------- -------------- -------------- Total increase (decrease) 59,872 955 310,129 992 -------------- -------------- -------------- -------------- Net assets at December 31, 2002 853,266 955 425,125 992 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (12,834) (108) (8,064) (168) Net realized gain (loss) on investments (1,736) 2 17,399 221 Net unrealized appreciation (depreciation) of investments and capital gain distributions 150,200 1,398 3,595 95 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations 135,630 1,292 12,930 148 Changes from contract transactions: Purchase payments 180,209 11,852 161,509 14,672 Contract distributions and terminations (53,967) (33) (28,070) (192) Transfer payments from (to) other Divisions (including the fixed accounts), net 27,270 2,191 (57,467) 925 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions 153,512 14,010 75,972 15,405 -------------- -------------- -------------- -------------- Total increase (decrease) 289,142 15,302 88,902 15,553 -------------- -------------- -------------- -------------- Net assets at December 31, 2003 $1,142,408 $ 16,257 $ 514,027 $ 16,545 ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 89 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING Salomon ING Salomon ING Salomon ING Salomon Brothers Brothers Brothers Brothers All Cap All Cap Investors Investors (Service (Advisor (Service (Advisor Class) Class) Class) Class) --------------- -------------- -------------- --------------- Net assets at January 1, 2002 $ 299,314 $ - $ 91,400 $ - Increase (decrease) in net assets from operations Operations: Net investment income (loss) (5,038) - (1,156) 1 Net realized gain (loss) on investments and capital gains distributions (14,267) - (2,693) - Net unrealized appreciation (depreciation) of investments (74,887) (1) (23,933) - --------------- -------------- -------------- --------------- Net increase (decrease) in net assets from operations (94,192) (1) (27,782) 1 Changes from contract transactions: Purchase payments 83,489 136 33,925 267 Contract distributions and terminations (12,299) - (3,916) - Transfer payments from (to) other Divisions (including the fixed accounts), net (28,572) 41 (1,491) 29 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - --------------- -------------- -------------- --------------- Net increase (decrease) in net assets derived from principal transactions 42,618 177 28,518 296 --------------- -------------- -------------- --------------- Total increase (decrease) (51,574) 176 736 297 --------------- -------------- -------------- --------------- Net assets at December 31, 2002 247,740 176 92,136 297 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (6,221) (54) (1,973) (11) Net realized gain (loss) on investments (8,074) 7 (4,397) 3 Net unrealized appreciation (depreciation) of investments and capital gains distributions 113,725 903 34,032 175 --------------- -------------- -------------- --------------- Net increase (decrease) in net assets from operations 99,430 856 27,662 167 Changes from contract transactions: Purchase payments 63,595 4,569 23,253 430 Contract distributions and terminations (13,162) (9) (4,531) (22) Transfer payments from (to) other Divisions (including the fixed accounts), net 23,879 532 (2,373) 142 --------------- -------------- -------------- --------------- Net increase (decrease) in net assets derived from principal transactions 74,312 5,092 16,349 550 --------------- -------------- -------------- --------------- Total increase (decrease) 173,742 5,948 44,011 717 --------------- -------------- -------------- --------------- Net assets at December 31, 2003 $ 421,482 $ 6,124 $ 136,147 $ 1,014 =============== ============== ============== ===============
The accompanying notes are an integral part of these financial statements. 90 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING ING ING ING T. Rowe Price T. Rowe Price T. Rowe Price T. Rowe Price Capital Capital Equity Equity Appreciation Appreciation Income Income (Service Class) (Advisor Class) (Service Class) (Advisor Class) ---------------- ---------------- ---------------- ---------------- Net assets at January 1, 2002 $ 644,971 $ - $ 416,763 $ - Increase (decrease) in net assets from operations Operations: Net investment income (loss) (1,345) 9 (1,888) 6 Net realized gain (loss) on investments and capital gains distributions 13,721 9 (13,856) 3 Net unrealized appreciation (depreciation) of investments (34,916) (20) (56,537) (20) ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets from operations (22,540) (2) (72,281) (11) Changes from contract transactions: Purchase payments 223,105 900 85,631 591 Contract distributions and terminations (43,624) - (20,848) - Transfer payments from (to) other Divisions (including the fixed accounts), net 133,166 (4) 403 60 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company 1 - 2 - ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets derived from principal transactions 312,648 896 65,188 651 ---------------- ---------------- ---------------- ---------------- Total increase (decrease) 290,108 894 (7,093) 640 ---------------- ---------------- ---------------- ---------------- Net assets at December 31, 2002 935,079 894 409,670 640 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (16,437) (148) (7,387) (89) Net realized gain (loss) on investments 6,591 56 (2,996) 11 Net unrealized appreciation (depreciation) of investments and capital gains distributions 247,300 2,652 117,245 1,510 ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets from operations 237,454 2,560 106,862 1,432 Changes from contract transactions: Purchase payments 241,070 14,945 127,708 7,340 Contract distributions and terminations (58,806) (208) (24,248) (12) Transfer payments from (to) other Divisions (including the fixed accounts), net 10,882 2,015 23,866 1,419 ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets derived from principal transactions 193,146 16,752 127,326 8,747 ---------------- ---------------- ---------------- ---------------- Total increase (decrease) 430,600 19,312 234,188 10,179 ---------------- ---------------- ---------------- ---------------- Net assets at December 31, 2003 $ 1,365,679 $ 20,206 $ 643,858 $ 10,819 ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 91 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING ING UBS U.S. UBS U.S. ING ING Balanced Balanced Van Kampen Van Kampen (Service (Advisor Equity Growth Equity Growth Class) Class) (Service Class) (Advisor Class) -------------- -------------- ---------------- ---------------- Net assets at January 1, 2002 $ 49,242 $ - $ - $ - Increase (decrease) in net assets from operations Operations: Net investment income (loss) (511) - (19) (1) Net realized gain (loss) on investments and capital gains distributions (2,018) - (88) - Net unrealized appreciation (depreciation) of investments (8,019) - (170) (22) -------------- -------------- ---------------- ---------------- Net increase (decrease) in net assets from operations (10,548) - (277) (23) Changes from contract transactions: Purchase payments 11,948 - 2,518 468 Contract distributions and terminations (2,730) - (48) - Transfer payments from (to) other Divisions (including the fixed accounts), net (671) - 2,169 13 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- -------------- ---------------- ---------------- Net increase (decrease) in net assets derived from principal transactions 8,547 - 4,639 481 -------------- -------------- ---------------- ---------------- Total increase (decrease) (2,001) - 4,362 458 -------------- -------------- ---------------- ---------------- Net assets at December 31, 2002 47,241 - 4,362 458 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (1,047) (4) (305) (64) Net realized gain (loss) on investments (1,392) - 286 67 Net unrealized appreciation (depreciation) of investments and capital gains distributions 10,222 51 3,210 600 -------------- -------------- ---------------- ---------------- Net increase (decrease) in net assets from operations 7,783 47 3,191 603 Changes from contract transactions: Purchase payments 10,455 819 16,184 4,187 Contract distributions and terminations (2,191) - (338) (38) Transfer payments from (to) other Divisions (including the fixed accounts), net 5,376 97 6,449 699 -------------- -------------- ---------------- ---------------- Net increase (decrease) in net assets derived from principal transactions 13,640 916 22,295 4,848 -------------- -------------- ---------------- ---------------- Total increase (decrease) 21,423 963 25,486 5,451 -------------- -------------- ---------------- ---------------- Net assets at December 31, 2003 $ 68,664 $ 963 $ 29,848 $ 5,909 ============== ============== ================ ================
The accompanying notes are an integral part of these financial statements. 92 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING ING ING ING Van Kampen Van Kampen Van Kampen Van Kampen Global Global Growth and Growth and Franchise Franchise Income Income (Service Class) (Advisor Class) (Service Class) (Advisor Class) ---------------- ---------------- ---------------- ---------------- Net assets at January 1, 2002 $ - $ - $ 732,049 $ - Increase (decrease) in net assets from operations Operations: Net investment income (loss) (84) (1) (6,430) 5 Net realized gain (loss) on investments and capital gains distributions (154) - (9,833) 1 Net unrealized appreciation (depreciation) of investments (208) 6 (100,836) (12) ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets from operations (446) 5 (117,099) (6) Changes from contract transactions: Purchase payments 7,816 690 44,218 960 Contract distributions and terminations (161) - (36,216) - Transfer payments from (to) other Divisions (including the fixed accounts), net 7,461 13 (68,345) 36 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - 1 - ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets derived from principal transactions 15,116 703 (60,342) 996 ---------------- ---------------- ---------------- ---------------- Total increase (decrease) 14,670 708 (177,441) 990 ---------------- ---------------- ---------------- ---------------- Net assets at December 31, 2002 14,670 708 554,608 990 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (344) (77) (9,133) (200) Net realized gain (loss) on investments 362 22 (16,135) 20 Net unrealized appreciation (depreciation) of investments and capital gains distributions 9,459 2,310 164,870 3,492 ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets from operations 9,477 2,255 139,602 3,312 Changes from contract transactions: Purchase payments 24,852 9,904 63,751 16,830 Contract distributions and terminations (672) (105) (34,738) (318) Transfer payments from (to) other Divisions (including the fixed accounts), net 9,692 1,744 (17,970) 3,244 ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets derived from principal transactions 33,872 11,543 11,043 19,756 ---------------- ---------------- ---------------- ---------------- Total increase (decrease) 43,349 13,798 150,645 23,068 ---------------- ---------------- ---------------- ---------------- Net assets at December 31, 2003 $ 58,019 $ 14,506 $ 705,253 $ 24,058 ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 93 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING ING Van Kampen Van Kampen Real Estate Real Estate ING Alger (Service (Advisor Aggressive ING Alger Class) Class) Growth Growth --------------- -------------- ------------- ------------- Net assets at January 1, 2002 $ 126,169 $ - $ - $ - Increase (decrease) in net assets from operations Operations: Net investment income (loss) 3,164 7 - - Net realized gain (loss) on investments and capital gains distributions 5,522 2 - - Net unrealized appreciation (depreciation) of investments (16,719) (2) - (4) --------------- -------------- ------------- ------------- Net increase (decrease) in net assets from operations (8,033) 7 - (4) Changes from contract transactions: Purchase payments 44,924 243 - 43 Contract distributions and terminations (8,734) - - - Transfer payments from (to) other Divisions (including the fixed accounts), net 33,281 26 - - Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - --------------- -------------- ------------- ------------- Net increase (decrease) in net assets derived from principal transactions 69,471 269 - 43 --------------- -------------- ------------- ------------- Total increase (decrease) 61,438 276 - 39 --------------- -------------- ------------- ------------- Net assets at December 31, 2002 187,607 276 - 39 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (4,116) (58) (2) (1) Net realized gain (loss) on investments 2,454 43 20 - Net unrealized appreciation (depreciation) of investments and capital gains distributions 75,798 914 51 24 --------------- -------------- ------------- ------------- Net increase (decrease) in net assets from operations 74,136 899 69 23 Changes from contract transactions: Purchase payments 60,739 4,313 509 80 Contract distributions and terminations (12,633) (10) - - Transfer payments from (to) other Divisions (including the fixed accounts), net 21,015 768 (21) - --------------- -------------- ------------- ------------- Net increase (decrease) in net assets derived from principal transactions 69,121 5,071 488 80 --------------- -------------- ------------- ------------- Total increase (decrease) 143,257 5,970 557 103 --------------- -------------- ------------- ------------- Net assets at December 31, 2003 $ 330,864 $ 6,246 $ 557 $ 142 =============== ============== ============= =============
The accompanying notes are an integral part of these financial statements. 94 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING American ING ING Century ING Baron JPMorgan JPMorgan Small Cap Small Cap Fleming Mid Cap Value Growth International Value -------------- -------------- -------------- -------------- Net assets at January 1, 2002 $ - $ - $ - $ - Increase (decrease) in net assets from operations Operations: Net investment income (loss) - - - - Net realized gain (loss) on investments and capital gains distributions - - - (4) Net unrealized appreciation (depreciation) of investments - - - 7 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations - - - 3 Changes from contract transactions: Purchase payments 2 - 7 140 Contract distributions and terminations - - - - Transfer payments from (to) other Divisions (including the fixed accounts), net - - - 158 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions 2 - 7 298 -------------- -------------- -------------- -------------- Total increase (decrease) 2 - 7 301 -------------- -------------- -------------- -------------- Net assets at December 31, 2002 2 - 7 301 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (1) (2) (21) (13) Net realized gain (loss) on investments 4 - 130 50 Net unrealized appreciation (depreciation) of investments and capital gains distributions 25 93 567 483 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations 28 91 676 520 Changes from contract transactions: Purchase payments 132 717 4,202 2,381 Contract distributions and terminations - - (23) (35) Transfer payments from (to) other Divisions (including the fixed accounts), net - 220 3,157 2,984 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions 132 937 7,336 5,330 -------------- -------------- -------------- -------------- Total increase (decrease) 160 1,028 8,012 5,850 -------------- -------------- -------------- -------------- Net assets at December 31, 2003 $ 162 $ 1,028 $ 8,019 $ 6,151 ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 95 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING MFS(R) ING MFS(R) Capital Capital ING MFS(R) ING MFS(R) Opportunities Opportunities Global Research (Initial Class) (Service Class) Growth Equity ---------------- ---------------- ------------- ------------- Net assets at January 1, 2002 $ 698 $ - $ - $ - Increase (decrease) in net assets from operations Operations: Net investment income (loss) (17) - - - Net realized gain (loss) on investments and capital gains distributions (59) - - - Net unrealized appreciation (depreciation) of investments (329) (13) - - ---------------- ---------------- ------------- ------------- Net increase (decrease) in net assets from operations (405) (13) - - Changes from contract transactions: Purchase payments 717 85 66 - Contract distributions and terminations (25) - - - Transfer payments from (to) other Divisions (including the fixed accounts), net 295 - 9 - Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - ---------------- ---------------- ------------- ------------- Net increase (decrease) in net assets derived from principal transactions 987 85 75 - ---------------- ---------------- ------------- ------------- Total increase (decrease) 582 72 75 - ---------------- ---------------- ------------- ------------- Net assets at December 31, 2002 1,280 72 75 - Increase (decrease) in net assets from operations Operations: Net investment income (loss) (26) (2) (7) - Net realized gain (loss) on investments (106) - 13 - Net unrealized appreciation (depreciation) of investments and capital gain distributions 539 54 161 13 ---------------- ---------------- ------------- ------------- Net increase (decrease) in net assets from operations 407 52 167 13 Changes from contract transactions: Purchase payments 855 267 706 84 Contract distributions and terminations (76) - (17) - Transfer payments from (to) other Divisions (including the fixed accounts), net 543 - 655 - ---------------- ---------------- ------------- ------------- Net increase (decrease) in net assets derived from principal transactions 1,322 267 1,344 84 ---------------- ---------------- ------------- ------------- Total increase (decrease) 1,729 319 1,511 97 ---------------- ---------------- ------------- ------------- Net assets at December 31, 2003 $ 3,009 $ 391 $ 1,586 $ 97 ================ ================ ============= =============
The accompanying notes are an integral part of these financial statements. 96 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING ING ING Salomon Salomon ING OpCap ING PIMCO Brothers Brothers Balanced Total Aggressive Fundamental Value Return Growth Value -------------- -------------- --------------- -------------- Net assets at January 1, 2002 $ - $ - $ - $ - Increase (decrease) in net assets from operations Operations: Net investment income (loss) - 13 - - Net realized gain (loss) on investments and capital gains distributions - 1 - - Net unrealized appreciation (depreciation) of investments (5) (5) - - -------------- -------------- --------------- -------------- Net increase (decrease) in net assets from operations (5) 9 - - Changes from contract transactions: Purchase payments 131 585 - 9 Contract distributions and terminations - - - - Transfer payments from (to) other Divisions (including the fixed accounts), net - (1) - - Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- -------------- --------------- -------------- Net increase (decrease) in net assets derived from principal transactions 131 584 - 9 -------------- -------------- --------------- -------------- Total increase (decrease) 126 593 - 9 -------------- -------------- --------------- -------------- Net assets at December 31, 2002 126 593 - 9 Increase (decrease) in net assets from operations Operations: Net investment income (loss) 4 43 (40) 3 Net realized gain (loss) on investments - 12 38 1 Net unrealized appreciation (depreciation) of investments and capital gains distributions 55 (20) 709 75 -------------- -------------- --------------- -------------- Net increase (decrease) in net assets from operations 59 35 707 79 Changes from contract transactions: Purchase payments 164 1,454 7,413 462 Contract distributions and terminations - (51) (33) - Transfer payments from (to) other Divisions (including the fixed accounts), net 59 (113) 5,793 50 -------------- -------------- --------------- -------------- Net increase (decrease) in net assets derived from principal transactions 223 1,290 13,173 512 -------------- -------------- --------------- -------------- Total increase (decrease) 282 1,325 13,880 591 -------------- -------------- --------------- -------------- Net assets at December 31, 2003 $ 408 $ 1,918 $ 13,880 $ 600 ============== ============== =============== ==============
The accompanying notes are an integral part of these financial statements. 97 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING Salomon ING ING UBS Brothers T. Rowe Price Tactical ING Van Investors Growth Asset Kampen Value Equity Allocation Comstock -------------- --------------- -------------- ------------- Net assets at January 1, 2002 $ - $ - $ - $ - Increase (decrease) in net assets from operations Operations: Net investment income (loss) - - - 2 Net realized gain (loss) on investments and capital gains distributions - - - - Net unrealized appreciation (depreciation) of investments - (19) - 7 -------------- --------------- -------------- ------------- Net increase (decrease) in net assets from operations - (19) - 9 Changes from contract transactions: Purchase payments 4 163 - 1,591 Contract distributions and terminations - - - (13) Transfer payments from (to) other Divisions (including the fixed accounts), net - - 2 150 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- --------------- -------------- ------------- Net increase (decrease) in net assets derived from principal transactions 4 163 2 1,728 -------------- --------------- -------------- ------------- Total increase (decrease) 4 144 2 1,737 -------------- --------------- -------------- ------------- Net assets at December 31, 2002 4 144 2 1,737 Increase (decrease) in net assets from operations Operations: Net investment income (loss) - (6) - (128) Net realized gain (loss) on investments - (3) - 723 Net unrealized appreciation (depreciation) of investments and capital gains distributions 44 322 9 4,267 -------------- --------------- -------------- ------------- Net increase (decrease) in net assets from operations 44 313 9 4,862 Changes from contract transactions: Purchase payments 273 1,701 59 28,099 Contract distributions and terminations - (16) (1) (707) Transfer payments from (to) other Divisions (including the fixed accounts), net 41 153 20 3,592 -------------- --------------- -------------- ------------- Net increase (decrease) in net assets derived from principal transactions 314 1,838 78 30,984 -------------- --------------- -------------- ------------- Total increase (decrease) 358 2,151 87 35,846 -------------- --------------- -------------- ------------- Net assets at December 31, 2003 $ 362 $ 2,295 $ 89 $ 37,583 ============== =============== ============== =============
The accompanying notes are an integral part of these financial statements. 98 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING GET ING GET ING GET U.S. Core U.S. Core U.S. Core ING VIT Portfolio Portfolio Portfolio Worldwide - Series 1 - Series 2 - Series 3 Growth -------------- -------------- -------------- -------------- Net assets at January 1, 2002 $ - $ - $ - $ 20,014 Increase (decrease) in net assets from operations Operations: Net investment income (loss) - - - (536) Net realized gain (loss) on investments and capital gains distributions - - - (2,830) Net unrealized appreciation (depreciation) of investments - - - (4,792) -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations - - - (8,158) Changes from contract transactions: Purchase payments - - - 15,820 Contract distributions and terminations - - - (673) Transfer payments from (to) other Divisions (including the fixed accounts), net - - - 355 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions - - - 15,502 -------------- -------------- -------------- -------------- Total increase (decrease) - - - 7,344 -------------- -------------- -------------- -------------- Net assets at December 31, 2002 - - - 27,358 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (1,630) (240) (5) (783) Net realized gain (loss) on investments 372 3 - (1,417) Net unrealized appreciation (depreciation) of investments and capital gains distributions 7,336 1,240 3 11,402 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations 6,078 1,003 (2) 9,202 Changes from contract transactions: Purchase payments 5,774 3,179 7,124 13,165 Contract distributions and terminations (1,572) (344) (5) (1,291) Transfer payments from (to) other Divisions (including the fixed accounts), net 210,525 163,493 1,849 1,885 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions 214,727 166,328 8,968 13,759 -------------- -------------- -------------- -------------- Total increase (decrease) 220,805 167,331 8,966 22,961 -------------- -------------- -------------- -------------- Net assets at December 31, 2003 $ 220,805 $ 167,331 $ 8,966 $ 50,319 ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 99 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING VP ING VP ING VP ING VP Index Plus Balanced Bond Growth LargeCap -------------- -------------- -------------- -------------- Net assets at January 1, 2002 $ - $ - $ - $ 812 Increase (decrease) in net assets from operations Operations: Net investment income (loss) - 1,106 - (31) Net realized gain (loss) on investments and capital gains distributions - 134 - (505) Net unrealized appreciation (depreciation) of investments - (195) (5) (104) -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations - 1,045 (5) (640) Changes from contract transactions: Purchase payments - 11,426 51 3,070 Contract distributions and terminations - (720) - (85) Transfer payments from (to) other Divisions (including the fixed accounts), net - 37,839 - 1,432 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions - 48,545 51 4,417 -------------- -------------- -------------- -------------- Total increase (decrease) - 49,590 46 3,777 -------------- -------------- -------------- -------------- Net assets at December 31, 2002 - 49,590 46 4,589 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (3) (182) (1) (226) Net realized gain (loss) on investments 2 1,465 5 901 Net unrealized appreciation (depreciation) of investments and capital gains distributions 74 1,098 36 4,973 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations 73 2,381 40 5,648 Changes from contract transactions: Purchase payments 1,087 36,354 225 34,119 Contract distributions and terminations - (4,072) (19) (679) Transfer payments from (to) other Divisions (including the fixed accounts), net 71 (12,770) - 16,016 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions 1,158 19,512 206 49,456 -------------- -------------- -------------- -------------- Total increase (decrease) 1,231 21,893 246 55,104 -------------- -------------- -------------- -------------- Net assets at December 31, 2003 $ 1,231 $ 71,483 $ 292 $ 59,693 ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 100 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING VP ING VP ING VP ING VP Index Plus Index Plus International Small MidCap SmallCap Equity Company -------------- -------------- -------------- -------------- Net assets at January 1, 2002 $ 820 $ 680 $ - $ - Increase (decrease) in net assets from operations Operations: Net investment income (loss) (48) (32) - - Net realized gain (loss) on investments and capital gains distributions (505) (394) - (5) Net unrealized appreciation (depreciation) of investments (180) (90) - (53) -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations (733) (516) - (58) Changes from contract transactions: Purchase payments 4,161 3,269 - 237 Contract distributions and terminations (74) (43) - - Transfer payments from (to) other Divisions (including the fixed accounts), net 1,735 615 - (23) Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions 5,822 3,841 - 214 -------------- -------------- -------------- -------------- Total increase (decrease) 5,089 3,325 - 156 -------------- -------------- -------------- -------------- Net assets at December 31, 2002 5,909 4,005 - 156 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (115) (105) - (2) Net realized gain (loss) on investments (100) 45 - (5) Net unrealized appreciation (depreciation) of investments and capital gains distributions 2,998 2,362 21 164 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations 2,783 2,302 21 157 Changes from contract transactions: Purchase payments 7,716 5,242 158 599 Contract distributions and terminations (181) (136) - (24) Transfer payments from (to) other Divisions (including the fixed accounts), net 3,666 4,928 18 (12) -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions 11,201 10,034 176 563 -------------- -------------- -------------- -------------- Total increase (decrease) 13,984 12,336 197 720 -------------- -------------- -------------- -------------- Net assets at December 31, 2003 $ 19,893 $ 16,341 $ 197 $ 876 ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 101 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING VP ING VP ING VP Value ING VP Growth and Growth Opportunity Convertible Income Opportunities -------------- -------------- -------------- -------------- Net assets at January 1, 2002 $ 298 $ 194 $ - $ 5,219 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (12) 12 - (170) Net realized gain (loss) on investments and capital gains distributions (45) (15) - (662) Net unrealized appreciation (depreciation) of investments (250) (53) - (2,425) -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations (307) (56) - (3,257) Changes from contract transactions: Purchase payments 981 673 - 6,716 Contract distributions and terminations (24) (11) - (246) Transfer payments from (to) other Divisions (including the fixed accounts), net 138 234 - 1,486 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions 1,095 896 - 7,956 -------------- -------------- -------------- -------------- Total increase (decrease) 788 840 - 4,699 -------------- -------------- -------------- -------------- Net assets at December 31, 2002 1,086 1,034 - 9,918 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (13) 33 (5) (340) Net realized gain (loss) on investments (34) 105 - (492) Net unrealized appreciation (depreciation) of investments and capital gains distributions 379 400 188 5,210 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations 332 538 183 4,378 Changes from contract transactions: Purchase payments 640 1,226 1,540 8,829 Contract distributions and terminations (32) (67) - (416) Transfer payments from (to) other Divisions (including the fixed accounts), net 244 1,194 - 3,338 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions 852 2,353 1,540 11,751 -------------- -------------- -------------- -------------- Total increase (decrease) 1,184 2,891 1,723 16,129 -------------- -------------- -------------- -------------- Net assets at December 31, 2003 $ 2,270 $ 3,925 $ 1,723 $ 26,047 ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 102 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING ING VP VP Large ING VP International Company LargeCap ING VP Value Value Growth MagnaCap -------------- -------------- -------------- -------------- Net assets at January 1, 2002 $ - $ 156 $ 533 $ 5,402 Increase (decrease) in net assets from operations Operations: Net investment income (loss) - (1) (9) (96) Net realized gain (loss) on investments and capital gains distributions - (40) (292) (437) Net unrealized appreciation (depreciation) of investments (10) (163) (52) (2,222) -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations (10) (204) (353) (2,755) Changes from contract transactions: Purchase payments 52 575 719 7,453 Contract distributions and terminations - (15) (40) (335) Transfer payments from (to) other Divisions (including the fixed accounts), net - 446 147 2,573 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions 52 1,006 826 9,691 -------------- -------------- -------------- -------------- Total increase (decrease) 42 802 473 6,936 -------------- -------------- -------------- -------------- Net assets at December 31, 2002 42 958 1,006 12,338 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (1) (7) (23) (204) Net realized gain (loss) on investments 19 82 23 (278) Net unrealized appreciation (depreciation) of investments and capital gains distributions 68 158 432 5,308 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations 86 233 432 4,826 Changes from contract transactions: Purchase payments 366 563 577 6,703 Contract distributions and terminations (1) (109) (29) (672) Transfer payments from (to) other Divisions (including the fixed accounts), net 41 (1,645) (45) 4,356 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions 406 (1,191) 503 10,387 -------------- -------------- -------------- -------------- Total increase (decrease) 492 (958) 935 15,213 -------------- -------------- -------------- -------------- Net assets at December 31, 2003 $ 534 $ - $ 1,941 $ 27,551 ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 103 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) ING VP ING VP AIM V.I. AIM V.I. MidCap SmallCap Capital Core Opportunities Opportunities Appreciation Equity --------------- -------------- ------------- ------------- Net assets at January 1, 2002 $ - $ 14,437 $ - $ - Increase (decrease) in net assets from operations Operations: Net investment income (loss) - (493) - - Net realized gain (loss) on investments and capital gains distributions - (1,185) - - Net unrealized appreciation (depreciation) of investments (4) (12,282) (7) (3) --------------- -------------- ------------- ------------- Net increase (decrease) in net assets from operations (4) (13,960) (7) (3) Changes from contract transactions: Purchase payments 16 24,037 24 41 Contract distributions and terminations - (584) - - Transfer payments from (to) other Divisions (including the fixed accounts), net - 6,188 10 3 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - --------------- -------------- ------------- ------------- Net increase (decrease) in net assets derived from principal transactions 16 29,641 34 44 --------------- -------------- ------------- ------------- Total increase (decrease) 12 15,681 27 41 --------------- -------------- ------------- ------------- Net assets at December 31, 2002 12 30,118 27 41 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (1) (1,155) - - Net realized gain (loss) on investments - (1,179) (6) - Net unrealized appreciation (depreciation) of investments and capital gains distributions 46 19,418 14 30 --------------- -------------- ------------- ------------- Net increase (decrease) in net assets from operations 45 17,084 8 30 Changes from contract transactions: Purchase payments 220 31,301 48 100 Contract distributions and terminations - (1,526) - - Transfer payments from (to) other Divisions (including the fixed accounts), net 3 13,476 (6) 4 --------------- -------------- ------------- ------------- Net increase (decrease) in net assets derived from principal transactions 223 43,251 42 104 --------------- -------------- ------------- ------------- Total increase (decrease) 268 60,335 50 134 --------------- -------------- ------------- ------------- Net assets at December 31, 2003 $ 280 $ 90,453 $ 77 $ 175 =============== ============== ============= =============
The accompanying notes are an integral part of these financial statements. 104 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) AIM V.I. Alliance- Dent AIM V.I. Bernstein Demographic AIM V.I. Premier Growth and Trends Growth Equity Income -------------- -------------- -------------- -------------- Net assets at January 1, 2002 $ 3,550 $ 443 $ - $ 1,653 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (159) (11) - 86 Net realized gain (loss) on investments and capital gains distributions (1,222) (108) - (72) Net unrealized appreciation (depreciation) of investments (2,117) (102) (7) (1,016) -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations (3,498) (221) (7) (1,002) Changes from contract transactions: Purchase payments 9,229 663 69 3,457 Contract distributions and terminations (233) (18) - (100) Transfer payments from (to) other Divisions (including the fixed accounts), net 2,287 (19) 18 722 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions 11,283 626 87 4,079 -------------- -------------- -------------- -------------- Total increase (decrease) 7,785 405 80 3,077 -------------- -------------- -------------- -------------- Net assets at December 31, 2002 11,335 848 80 4,730 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (630) (23) (1) (58) Net realized gain (loss) on investments (826) (59) (6) (169) Net unrealized appreciation (depreciation) of investments and capital gains distributions 9,992 456 29 2,108 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations 8,536 374 22 1,881 Changes from contract transactions: Purchase payments 24,832 961 89 2,715 Contract distributions and terminations (908) (34) - (314) Transfer payments from (to) other Divisions (including the fixed accounts), net 14,512 580 (17) 2,485 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions 38,436 1,507 72 4,886 -------------- -------------- -------------- -------------- Total increase (decrease) 46,972 1,881 94 6,767 -------------- -------------- -------------- -------------- Net assets at December 31, 2003 $ 58,307 $ 2,729 $ 174 $ 11,497 ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 105 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) Alliance- Bernstein Alliance- Fidelity(R) Fidelity(R) Premier Bernstein VIP VIP Growth Value Contrafund(R) Equity-Income -------------- -------------- -------------- ---------------- Net assets at January 1, 2002 $ 1,091 $ 595 $ 1,183 $ 1,949 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (26) (24) (35) (53) Net realized gain (loss) on investments and capital gains distributions (413) (19) (35) (1,606) Net unrealized appreciation (depreciation) of investments (166) (241) (331) 62 -------------- -------------- -------------- ---------------- Net increase (decrease) in net assets from operations (605) (284) (401) (1,597) Changes from contract transactions: Purchase payments 942 1,019 3,038 12,283 Contract distributions and terminations (74) (44) (57) (287) Transfer payments from (to) other Divisions (including the fixed accounts), net 740 1,423 675 11,503 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- -------------- -------------- ---------------- Net increase (decrease) in net assets derived from principal transactions 1,608 2,398 3,656 23,499 -------------- -------------- -------------- ---------------- Total increase (decrease) 1,003 2,114 3,255 21,902 -------------- -------------- -------------- ---------------- Net assets at December 31, 2002 2,094 2,709 4,438 23,851 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (47) (40) (139) (852) Net realized gain (loss) on investments 61 (77) 17 1,150 Net unrealized appreciation (depreciation) of investments and capital gains distributions 540 1,249 2,949 19,809 -------------- -------------- -------------- ---------------- Net increase (decrease) in net assets from operations 554 1,132 2,827 20,107 Changes from contract transactions: Purchase payments 676 1,637 9,959 65,306 Contract distributions and terminations (120) (248) (321) (2,043) Transfer payments from (to) other Divisions (including the fixed accounts), net 336 1,330 4,410 38,035 -------------- -------------- -------------- ---------------- Net increase (decrease) in net assets derived from principal transactions 892 2,719 14,048 101,298 -------------- -------------- -------------- ---------------- Total increase (decrease) 1,446 3,851 16,875 121,405 -------------- -------------- -------------- ---------------- Net assets at December 31, 2003 $ 3,540 $ 6,560 $ 21,313 $ 145,256 ============== ============== ============== ================
The accompanying notes are an integral part of these financial statements. 106 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) Franklin Fidelity(R) Fidelity(R) Small Cap Galaxy VIP VIP VIP Value Asset Growth Overseas Securities Allocation -------------- -------------- -------------- -------------- Net assets at January 1, 2002 $ 693 $ - $ - $ 1,260 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (130) - - 4 Net realized gain (loss) on investments and capital gains distributions (725) - - (192) Net unrealized appreciation (depreciation) of investments (1,237) - (3) (40) -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations (2,092) - (3) (228) Changes from contract transactions: Purchase payments 13,555 9 20 1 Contract distributions and terminations (197) - - (25) Transfer payments from (to) other Divisions (including the fixed accounts), net 11,253 - - (377) Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions 24,611 9 20 (401) -------------- -------------- -------------- -------------- Total increase (decrease) 22,519 9 17 (629) -------------- -------------- -------------- -------------- Net assets at December 31, 2002 23,212 9 17 631 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (1,690) (1) (1) 1 Net realized gain (loss) on investments 3,517 70 - (237) Net unrealized appreciation (depreciation) of investments and capital gains distributions 21,592 20 42 244 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations 23,419 89 41 8 Changes from contract transactions: Purchase payments 95,702 124 180 - Contract distributions and terminations (2,427) - - (22) Transfer payments from (to) other Divisions (including the fixed accounts), net 45,736 638 (2) (617) -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions 139,011 762 178 (639) -------------- -------------- -------------- -------------- Total increase (decrease) 162,430 851 219 (631) -------------- -------------- -------------- -------------- Net assets at December 31, 2003 $ 185,642 $ 860 $ 236 $ - ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 107 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) Galaxy Galaxy VIP Galaxy VIP VIP Small Growth and High Quality Company Greenwich Income Bond Growth Appreciation -------------- -------------- -------------- -------------- Net assets at January 1, 2002 $ 201 $ 152 $ 84 $ 723 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (2) 4 (1) - Net realized gain (loss) on investments and capital gains distributions (5) 2 (7) (11) Net unrealized appreciation (depreciation) of investments (42) 3 (23) (130) -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations (49) 9 (31) (141) Changes from contract transactions: Purchase payments 4 - 12 15 Contract distributions and terminations (14) (4) (5) (5) Transfer payments from (to) other Divisions (including the fixed accounts), net (20) (27) (3) (3) Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions (30) (31) 4 7 -------------- -------------- -------------- -------------- Total increase (decrease) (79) (22) (27) (134) -------------- -------------- -------------- -------------- Net assets at December 31, 2002 122 130 57 589 Increase (decrease) in net assets from operations Operations: Net investment income (loss) - 1 - (5) Net realized gain (loss) on investments (53) 5 (37) (15) Net unrealized appreciation (depreciation) of investments and capital gains distributions 49 (6) 33 141 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations (4) - (4) 121 Changes from contract transactions: Purchase payments - - - 6 Contract distributions and terminations (2) (1) - (24) Transfer payments from (to) other Divisions (including the fixed accounts), net (116) (129) (53) (29) -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions (118) (130) (53) (47) -------------- -------------- -------------- -------------- Total increase (decrease) (122) (130) (57) 74 -------------- -------------- -------------- -------------- Net assets at December 31, 2003 $ - $ - $ - $ 663 ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 108 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) INVESCO INVESCO VIF - VIF - INVESCO INVESCO Financial Health VIF - VIF - Services Sciences Leisure Utilities -------------- -------------- -------------- -------------- Net assets at January 1, 2002 $ 2,404 $ 10,790 $ - $ 964 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (96) (434) (40) (28) Net realized gain (loss) on investments and capital gains distributions (1,999) (4,162) (157) (205) Net unrealized appreciation (depreciation) of investments (590) (1,617) 16 (198) -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations (2,685) (6,213) (181) (431) Changes from contract transactions: Purchase payments 11,708 14,819 4,483 2,753 Contract distributions and terminations (419) (1,044) (74) (128) Transfer payments from (to) other Divisions (including the fixed accounts), net 11,933 12,206 1,869 4,625 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions 23,222 25,981 6,278 7,250 -------------- -------------- -------------- -------------- Total increase (decrease) 20,537 19,768 6,097 6,819 -------------- -------------- -------------- -------------- Net assets at December 31, 2002 22,941 30,558 6,097 7,783 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (494) (1,096) (358) (22) Net realized gain (loss) on investments 1,322 285 (11) (293) Net unrealized appreciation (depreciation) of investments and capital gains distributions 8,589 12,824 4,839 2,884 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations 9,417 12,013 4,470 2,569 Changes from contract transactions: Purchase payments 21,142 36,226 16,623 10,772 Contract distributions and terminations (1,462) (1,743) (448) (470) Transfer payments from (to) other Divisions (including the fixed accounts), net 7,566 9,610 7,668 6,314 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions 27,246 44,093 23,843 16,616 -------------- -------------- -------------- -------------- Total increase (decrease) 36,663 56,106 28,313 19,185 -------------- -------------- -------------- -------------- Net assets at December 31, 2003 $ 59,604 $ 86,664 $ 34,410 $ 26,968 ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 109 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) Janus Aspen Janus Aspen Janus Aspen Series Janus Aspen Series Series Flexible Series Worldwide Balanced Income Growth Growth -------------- -------------- -------------- -------------- Net assets at January 1, 2002 $ - $ - $ - $ 1,298 Increase (decrease) in net assets from operations Operations: Net investment income (loss) 6 5 (1) (40) Net realized gain (loss) on investments and capital gains distributions (3) - - (682) Net unrealized appreciation (depreciation) of investments (29) 10 (32) (169) -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations (26) 15 (33) (891) Changes from contract transactions: Purchase payments 548 270 225 3,277 Contract distributions and terminations (2) (1) - (141) Transfer payments from (to) other Divisions (including the fixed accounts), net (24) (1) - (9) Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions 522 268 225 3,127 -------------- -------------- -------------- -------------- Total increase (decrease) 496 283 192 2,236 -------------- -------------- -------------- -------------- Net assets at December 31, 2002 496 283 192 3,534 Increase (decrease) in net assets from operations Operations: Net investment income (loss) 37 38 (4) (29) Net realized gain (loss) on investments (1) 22 (8) 461 Net unrealized appreciation (depreciation) of investments and capital gains distributions 346 (5) 165 941 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations 382 55 153 1,373 Changes from contract transactions: Purchase payments 3,680 1,919 759 3,026 Contract distributions and terminations (22) (71) - (209) Transfer payments from (to) other Divisions (including the fixed accounts), net (72) (313) (97) (524) -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions 3,586 1,535 662 2,293 -------------- -------------- -------------- -------------- Total increase (decrease) 3,968 1,590 815 3,666 -------------- -------------- -------------- -------------- Net assets at December 31, 2003 $ 4,464 $ 1,873 $ 1,007 $ 7,200 ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 110 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) Colonial Liberty Liberty Small Cap Asset Liberty Federal Value Allocation Equity Securities -------------- -------------- -------------- -------------- Net assets at January 1, 2002 $ - $ - $ 807 $ - Increase (decrease) in net assets from operations Operations: Net investment income (loss) - - (11) - Net realized gain (loss) on investments and capital gains distributions - - (84) - Net unrealized appreciation (depreciation) of investments - - (126) - -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations - - (221) - Changes from contract transactions: Purchase payments - - 15 - Contract distributions and terminations - - (33) - Transfer payments from (to) other Divisions (including the fixed accounts), net - - (81) - Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions - - (99) - -------------- -------------- -------------- -------------- Total increase (decrease) - - (320) - -------------- -------------- -------------- -------------- Net assets at December 31, 2002 - - 487 - Increase (decrease) in net assets from operations Operations: Net investment income (loss) (43) (7) (8) (1) Net realized gain (loss) on investments 582 5 (56) 1 Net unrealized appreciation (depreciation) of investments and capital gains distributions 2,851 105 193 2 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations 3,390 103 129 2 Changes from contract transactions: Purchase payments 19,000 - - - Contract distributions and terminations (212) (8) (11) (2) Transfer payments from (to) other Divisions (including the fixed accounts), net 18,817 506 43 87 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions 37,605 498 32 85 -------------- -------------- -------------- -------------- Total increase (decrease) 40,995 601 161 87 -------------- -------------- -------------- -------------- Net assets at December 31, 2003 $ 40,995 $ 601 $ 648 $ 87 ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 111 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) Liberty Small Oppenheimer Oppenheimer PIMCO Company Global Strategic High Growth Securities Bond Yield -------------- --------------- -------------- ------------- Net assets at January 1, 2002 $ - $ - $ - $ 236,343 Increase (decrease) in net assets from operations Operations: Net investment income (loss) - (1) - 16,659 Net realized gain (loss) on investments and capital gains distributions - (6) (1) (18,706) Net unrealized appreciation (depreciation) of investments - (38) 1 (3,581) -------------- --------------- -------------- ------------- Net increase (decrease) in net assets from operations - (45) - (5,628) Changes from contract transactions: Purchase payments - 273 51 55,612 Contract distributions and terminations - (3) - (15,056) Transfer payments from (to) other Divisions (including the fixed accounts), net - (20) (35) 33,966 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- --------------- -------------- ------------- Net increase (decrease) in net assets derived from principal transactions - 250 16 74,522 -------------- --------------- -------------- ------------- Total increase (decrease) - 205 16 68,894 -------------- --------------- -------------- ------------- Net assets at December 31, 2002 - 205 16 305,237 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (1) (6) - 24,725 Net realized gain (loss) on investments 4 (4) 21 (3,672) Net unrealized appreciation (depreciation) of investments and capital gains distributions 26 523 14 61,195 -------------- --------------- -------------- ------------- Net increase (decrease) in net assets from operations 29 513 35 82,248 Changes from contract transactions: Purchase payments - 2,095 582 138,449 Contract distributions and terminations (2) (3) (4) (25,898) Transfer payments from (to) other Divisions (including the fixed accounts), net 48 91 73 108,739 -------------- --------------- -------------- ------------- Net increase (decrease) in net assets derived from principal transactions 46 2,183 651 221,290 -------------- --------------- -------------- ------------- Total increase (decrease) 75 2,696 686 303,538 -------------- --------------- -------------- ------------- Net assets at December 31, 2003 $ 75 $ 2,901 $ 702 $ 608,775 ============== =============== ============== =============
The accompanying notes are an integral part of these financial statements. 112 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) PIMCO StocksPLUS Pioneer Pioneer Growth and Equity- Pioneer Mid-Cap Income Income Fund Value -------------- -------------- -------------- -------------- Net assets at January 1, 2002 $ 241,065 $ - $ 2,275 $ 5,139 Increase (decrease) in net assets from operations Operations: Net investment income (loss) 1,636 2 (98) (478) Net realized gain (loss) on investments and capital gains distributions (63,970) - (1,493) 76 Net unrealized appreciation (depreciation) of investments 10,124 (21) (1,359) (6,968) -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations (52,210) (19) (2,950) (7,370) Changes from contract transactions: Purchase payments 25,548 198 10,991 22,661 Contract distributions and terminations (10,918) - (339) (1,418) Transfer payments from (to) other Divisions (including the fixed accounts), net (21,848) - 10,087 34,050 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions (7,218) 198 20,739 55,293 -------------- -------------- -------------- -------------- Total increase (decrease) (59,428) 179 17,789 47,923 -------------- -------------- -------------- -------------- Net assets at December 31, 2002 181,637 179 20,064 53,062 Increase (decrease) in net assets from operations Operations: Net investment income (loss) 293 7 (398) (1,785) Net realized gain (loss) on investments (32,864) (2) (651) (273) Net unrealized appreciation (depreciation) of investments and capital gains distributions 78,606 128 9,623 34,933 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations 46,035 133 8,574 32,875 Changes from contract transactions: Purchase payments 13,029 688 23,708 78,759 Contract distributions and terminations (12,150) (1) (1,307) (3,194) Transfer payments from (to) other Divisions (including the fixed accounts), net (38,015) 11 11,494 28,991 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions (37,136) 698 33,895 104,556 -------------- -------------- -------------- -------------- Total increase (decrease) 8,899 831 42,469 137,431 -------------- -------------- -------------- -------------- Net assets at December 31, 2003 $ 190,536 $ 1,010 $ 62,533 $ 190,493 ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 113 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) Pioneer ProFund VP Small ProFund ProFund Rising Rates Company VP Bull VP Europe 30 Opportunity -------------- -------------- -------------- -------------- Net assets at January 1, 2002 $ 938 $ 20,583 $ 6,312 $ - Increase (decrease) in net assets from operations Operations: Net investment income (loss) (39) (488) (191) - Net realized gain (loss) on investments and capital gains distributions (35) (7,045) (1,793) - Net unrealized appreciation (depreciation) of investments (577) (1,022) (425) - -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations (651) (8,555) (2,409) - Changes from contract transactions: Purchase payments 2,180 5,734 2,797 - Contract distributions and terminations (56) (1,352) (941) - Transfer payments from (to) other Divisions (including the fixed accounts), net 1,006 14,855 9,868 - Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions 3,130 19,237 11,724 - -------------- -------------- -------------- -------------- Total increase (decrease) 2,479 10,682 9,315 - -------------- -------------- -------------- -------------- Net assets at December 31, 2002 3,417 31,265 15,627 - Increase (decrease) in net assets from operations Operations: Net investment income (loss) (67) (982) (267) (99) Net realized gain (loss) on investments (73) 7,956 3,373 (117) Net unrealized appreciation (depreciation) of investments and capital gains distributions 1,100 4,488 2,207 (608) -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations 960 11,462 5,313 (824) Changes from contract transactions: Purchase payments 1,012 14,159 4,055 2,018 Contract distributions and terminations (57) (2,243) (807) (251) Transfer payments from (to) other Divisions (including the fixed accounts), net 1,059 31,021 8,686 22,032 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions 2,014 42,937 11,934 23,799 -------------- -------------- -------------- -------------- Total increase (decrease) 2,974 54,399 17,247 22,975 -------------- -------------- -------------- -------------- Net assets at December 31, 2003 $ 6,391 $ 85,664 $ 32,874 $ 22,975 ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 114 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) SP Jennison Putnam VT ProFund VP International Discovery Small Cap Jennison Growth Growth -------------- -------------- --------------- ------------- Net assets at January 1, 2002 $ 19,968 $ 45,991 $ 11,310 $ 577 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (628) (821) (297) (20) Net realized gain (loss) on investments and capital gains distributions (6,274) (12,816) (2,827) (8) Net unrealized appreciation (depreciation) of investments (1,582) (2,790) (897) (431) -------------- -------------- --------------- ------------- Net increase (decrease) in net assets from operations (8,484) (16,427) (4,021) (459) Changes from contract transactions: Purchase payments 11,484 16,384 7,906 1,233 Contract distributions and terminations (4,103) (2,130) (550) (19) Transfer payments from (to) other Divisions (including the fixed accounts), net 19,747 (6,070) 696 313 Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- -------------- --------------- ------------- Net increase (decrease) in net assets derived from principal transactions 27,128 8,184 8,052 1,527 -------------- -------------- --------------- ------------- Total increase (decrease) 18,644 (8,243) 4,031 1,068 -------------- -------------- --------------- ------------- Net assets at December 31, 2002 38,612 37,748 15,341 1,645 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (1,199) (969) (624) (39) Net realized gain (loss) on investments 13,339 690 3,034 (50) Net unrealized appreciation (depreciation) of investments and capital gains distributions 6,166 11,818 9,129 703 -------------- -------------- --------------- ------------- Net increase (decrease) in net assets from operations 18,306 11,539 11,539 614 Changes from contract transactions: Purchase payments 20,314 11,809 30,145 811 Contract distributions and terminations (2,824) (1,725) (802) (91) Transfer payments from (to) other Divisions (including the fixed accounts), net 52,837 (647) 12,390 194 -------------- -------------- --------------- ------------- Net increase (decrease) in net assets derived from principal transactions 70,327 9,437 41,733 914 -------------- -------------- --------------- ------------- Total increase (decrease) 88,633 20,976 53,272 1,528 -------------- -------------- --------------- ------------- Net assets at December 31, 2003 $ 127,245 $ 58,724 $ 68,613 $ 3,173 ============== ============== =============== =============
The accompanying notes are an integral part of these financial statements. 115 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) Smith Putnam VT Barney Putnam VT International Smith International Growth and Growth and Barney All Cap Income Income High Income Growth -------------- -------------- -------------- -------------- Net assets at January 1, 2002 $ 455 $ 604 $ 370 $ 300 Increase (decrease) in net assets from operations Operations: Net investment income (loss) - (29) 77 (1) Net realized gain (loss) on investments and capital gains distributions (30) (12) (33) (9) Net unrealized appreciation (depreciation) of investments (254) (412) (62) (67) -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations (284) (453) (18) (77) Changes from contract transactions: Purchase payments 1,270 2,192 - - Contract distributions and terminations (94) (25) (17) (3) Transfer payments from (to) other Divisions (including the fixed accounts), net 315 663 (16) (19) Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions 1,491 2,830 (33) (22) -------------- -------------- -------------- -------------- Total increase (decrease) 1,207 2,377 (51) (99) -------------- -------------- -------------- -------------- Net assets at December 31, 2002 1,662 2,981 319 201 Increase (decrease) in net assets from operations Operations: Net investment income (loss) (2) (1) 16 (1) Net realized gain (loss) on investments (94) (129) (81) (25) Net unrealized appreciation (depreciation) of investments and capital gains distributions 648 1,208 134 71 -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations 552 1,078 69 45 Changes from contract transactions: Purchase payments 1,279 856 - - Contract distributions and terminations (93) (47) (18) (5) Transfer payments from (to) other Divisions (including the fixed accounts), net (199) (569) (62) (20) -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions 987 240 (80) (25) -------------- -------------- -------------- -------------- Total increase (decrease) 1,539 1,318 (11) 20 -------------- -------------- -------------- -------------- Net assets at December 31, 2003 $ 3,201 $ 4,299 $ 308 $ 221 ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 116 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) Smith Smith Barney Barney Wells Fargo Large Money UBS Tactical VT Asset Cap Value Market Allocation Allocation -------------- -------------- -------------- -------------- Net assets at January 1, 2002 $ 563 $ 221 $ 787 $ - Increase (decrease) in net assets from operations Operations: Net investment income (loss) 11 (8) (12) - Net realized gain (loss) on investments and capital gains distributions (24) - (15) - Net unrealized appreciation (depreciation) of investments (133) - (299) - -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations (146) (8) (326) - Changes from contract transactions: Purchase payments - - 768 - Contract distributions and terminations (9) (174) (87) - Transfer payments from (to) other Divisions (including the fixed accounts), net (37) 104 406 - Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - - -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions (46) (70) 1,087 - -------------- -------------- -------------- -------------- Total increase (decrease) (192) (78) 761 - -------------- -------------- -------------- -------------- Net assets at December 31, 2002 371 143 1,548 - Increase (decrease) in net assets from operations Operations: Net investment income (loss) - (11) (22) - Net realized gain (loss) on investments (41) - (51) - Net unrealized appreciation (depreciation) of investments and capital gains distributions 125 - 694 - -------------- -------------- -------------- -------------- Net increase (decrease) in net assets from operations 84 (11) 621 - Changes from contract transactions: Purchase payments - - 784 25 Contract distributions and terminations (24) (310) (133) - Transfer payments from (to) other Divisions (including the fixed accounts), net (26) 228 1,764 - -------------- -------------- -------------- -------------- Net increase (decrease) in net assets derived from principal transactions (50) (82) 2,415 25 -------------- -------------- -------------- -------------- Total increase (decrease) 34 (93) 3,036 25 -------------- -------------- -------------- -------------- Net assets at December 31, 2003 $ 405 $ 50 $ 4,584 $ 25 ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 117 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Statements of Changes in Net Assets December 31, 2003 (Dollars in thousands) Wells Fargo Wells Fargo VT Large Wells Fargo VT Equity Company VT Small Cap Income Growth Growth --------------- --------------- --------------- Net assets at January 1, 2002 $ - $ - $ - Increase (decrease) in net assets from operations Operations: Net investment income (loss) - - - Net realized gain (loss) on investments and capital gains distributions - - - Net unrealized appreciation (depreciation) of investments - - - --------------- --------------- --------------- Net increase (decrease) in net assets from operations - - - Changes from contract transactions: Purchase payments - - - Contract distributions and terminations - - - Transfer payments from (to) other Divisions (including the fixed accounts), net - - - Additions to assets retained in the Account by ING USA Annuity and Life Insurance Company - - - --------------- --------------- --------------- Net increase (decrease) in net assets derived from principal transactions - - - --------------- --------------- --------------- Total increase (decrease) - - - --------------- --------------- --------------- Net assets at December 31, 2002 - - - Increase (decrease) in net assets from operations Operations: Net investment income (loss) - - - Net realized gain (loss) on investments - - - Net unrealized appreciation (depreciation) of investments and capital gains distributions - 1 - --------------- --------------- --------------- Net increase (decrease) in net assets from operations - 1 - Changes from contract transactions: Purchase payments 11 33 7 Contract distributions and terminations - - - Transfer payments from (to) other Divisions (including the fixed accounts), net - - - --------------- --------------- --------------- Net increase (decrease) in net assets derived from principal transactions 11 33 7 --------------- --------------- --------------- Total increase (decrease) 11 34 7 --------------- --------------- --------------- Net assets at December 31, 2003 $ 11 $ 34 $ 7 =============== =============== ===============
The accompanying notes are an integral part of these financial statements. 118 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements 1. Organization Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) (the "Account") was established by ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company) ("ING USA" or the "Company") to support the operations of variable annuity contracts ("Contracts"). The Company is an indirect, wholly-owned subsidiary of ING Groep, N.V. ("ING"), a global financial services holding company based in The Netherlands. On January 1, 2004 (the "merger date"), Equitable Life Insurance Company of Iowa, USG Annuity & Life Company, and United Life & Annuity Insurance Company (the "Merger Companies"), merged with and into Golden American Life Insurance Company ("Golden American"). Also on January 1, 2004, immediately after the merger, Golden American changed its name to ING USA Annuity and Life Insurance Company. As of the merger date, the Merger Companies ceased to exist and were succeeded by ING USA. In conjunction with the Golden American name change, the Account changed its name to Separate Account B of ING USA Annuity and Life Insurance Company. The Account is registered as a unit investment trust with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended. ING USA provides for variable accumulation and benefits under the Contracts by crediting annuity considerations to one or more divisions within the Account or the ING USA guaranteed interest division, the ING USA fixed interest division, and the fixed separate account, which are not part of the Account, as directed by the Contractowners. The portion of the Account's assets applicable to Contracts will not be charged with liabilities arising out of any other business ING USA may conduct, but obligations of the Account, including the promise to make benefit payments, are obligations of ING USA. The assets and liabilities of the Account are clearly identified and distinguished from the other assets and liabilities of ING USA. During 2003, the Account had ING GoldenSelect Contracts, ING SmartDesign Contracts, ING Rollover Choice Contracts, ING Focus Variable Annuity ("Focus VA") Contracts, and Wells Fargo ING Contracts. ING GoldenSelect Contracts sold by ING USA during 2003 included Access, Premium Plus, ESII, Access One, Landmark, Generations, and Opportunities Contracts. ING SmartDesign Contracts included Variable Annuity ("VA"), Advantage, and Signature Contracts. Wells Fargo ING Contracts included Opportunities Contracts and Landmark Contracts. The Account discontinued offering DVA 80 Contracts in May 1991 and discontinued registering DVA and DVA Series 100 Contracts for sale to the public as of May 1, 2000. 119 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements The Account also includes The Fund For Life Division, which is not included in the accompanying financial statements, and which ceased to accept new Contracts effective December 31, 1994. At December 31, 2003, the Account had 170 investment divisions (the "Divisions"), 53 of which invest in independently managed mutual funds and 117 of which invest in mutual funds managed by affiliates, either Direct Services, Inc., ING Investments, LLC, or ING Life Insurance and Annuity Company. The assets in each Division are invested in shares of a designated series ("Series," which may also be referred to as "Portfolio" or "Fund") of various investment trusts (the "Trusts"). Investment Divisions at December 31, 2003 and related Trusts are as follows: ING GET Fund: ING Eagle Asset Value Equity Portfolio (Service ING GET Fund - Series N Class) ING GET Fund - Series P ING Eagle Asset Value Equity Portfolio (Advisor ING GET Fund - Series Q Class) * ING GET Fund - Series R * ING FMR Diversified Mid-Cap Portfolio (Service ING GET Fund - Series S * Class) ING GET Fund - Series T * ING FMR Diversified Mid-Cap Portfolio (Advisor ING GET Fund - Series U * Class) * ING GET Fund - Series V ** ING Goldman Sachs Internet Tollkeeper Portfolio ING Investors Trust: (Service Class) ING AIM Mid-Cap Growth Portfolio (Service Class) ING Goldman Sachs Internet Tollkeeper Portfolio ING AIM Mid-Cap Growth Portfolio (Advisor Class) * (Advisor Class) * ING Alliance Mid-Cap Growth Portfolio (Service ING Hard Assets Portfolio (Service Class) Class) ING Hard Assets Portfolio (Advisor Class) * ING Alliance Mid-Cap Growth Portfolio (Advisor ING International Portfolio (Service Class) Class) * ING International Portfolio (Advisor Class) * ING American Funds Growth Portfolio (Service ING Janus Growth and Income Portfolio (Service Class) ** Class) ING American Funds Growth-Income Portfolio ING Janus Growth and Income Portfolio (Advisor (Service Class) ** Class) * ING American Funds International Portfolio ING Janus Special Equity Portfolio (Service (Service Class) ** Class) ING Capital Guardian Large Cap Value Portfolio ING Janus Special Equity Portfolio (Advisor (Service Class) Class) * ING Capital Guardian Large Cap Value Portfolio ING Jennison Equity Opportunities Portfolio (Advisor Class) * (Service Class) ING Capital Guardian Managed Global Portfolio ING Jennison Equity Opportunities Portfolio (Service Class) (Advisor Class) * ING Capital Guardian Managed Global Portfolio ING JPMorgan Fleming Small Cap Equity Portfolio (Advisor Class) * (Service Class) * ING Capital Guardian Small Cap Portfolio (Service ING JPMorgan Fleming Small Cap Equity Portfolio Class) (Advisor Class) * ING Capital Guardian Small Cap Portfolio (Advisor ING Julius Baer Foreign Portfolio (Service Class) * Class) * ING Developing World Portfolio (Service Class) ING Julius Baer Foreign Portfolio (Advisor ING Developing World Portfolio (Advisor Class) * Class)* ING Limited Maturity Bond Portfolio (Service Class) ING Liquid Assets Portfolio (Service Class) ING Liquid Assets Portfolio (Advisor Class) *
120 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements ING Investors Trust (continued): ING Partners, Inc.: ING Marisco Growth Portfolio (Service Class) ING Alger Aggressive Growth Portfolio (Service ING Marisco Growth Portfolio (Advisor Class) * Class) ** ING Mercury Focus Value Portfolio (Service Class) * ING Alger Growth Portfolio (Service Class) * ING Mercury Focus Value Portfolio (Advisor Class) * ING American Century Small Cap Value Portfolio ING Mercury Fundamental Growth Portfolio (Service (Service Class) * Class) * ING Baron Small Cap Growth Portfolio (Service ING Mercury Fundamental Growth Portfolio (Advisor Class) ** Class) * ING JPMorgan Fleming International Portfolio ING MFS(R) Mid-Cap Growth Portfolio (Service Class) (Service Class) * ING MFS(R) Mid-Cap Growth Portfolio (Advisor ING JPMorgan Mid Cap Value Portfolio (Service Class) * Class) * ING MFS(R) Research Portfolio (Service Class) ING MFS(R) Capital Opportunities Portfolio ING MFS(R) Research Portfolio (Advisor Class) * (Initial Class) ING MFS(R) Total Return Portfolio (Service Class) ING MFS(R) Capital Opportunities Portfolio ING MFS(R) Total Return Portfolio (Advisor Class) * (Service Class) * ING PIMCO Core Bond Portfolio (Service Class) ING MFS(R) Global Growth Portfolio (Service Class) ING PIMCO Core Bond Portfolio (Advisor Class) * * ING Salomon Brothers All Cap Portfolio (Service ING MFS(R) Research Equity Portfolio (Service Class) Class) ** ING Salomon Brothers All Cap Portfolio (Advisor ING OpCap Balanced Value Portfolio (Service Class) * Class) * ING Salomon Brothers Investors Portfolio (Service ING PIMCO Total Return Portfolio (Service Class) Class) * ING Salomon Brothers Investors Portfolio (Advisor ING Salomon Brothers Aggressive Growth Portfolio Class) * (Service Class) ** ING T. Rowe Price Capital Appreciation Portfolio ING Salomon Brothers Fundamental Value Portfolio (Service Class) (Service Class) * ING T. Rowe Price Capital Appreciation Portfolio ING Salomon Brothers Investors Value Portfolio (Advisor Class) * (Service Class) * ING T. Rowe Price Equity Income Portfolio (Service ING T. Rowe Price Growth Equity Portfolio Class) (Service Class) * ING T. Rowe Price Equity Income Portfolio (Advisor ING UBS Tactical Asset Allocation Portfolio Class) * (Service Class) * ING UBS U.S. Balanced Portfolio (Service Class) ING Van Kampen Comstock Fund (Service Class) * ING UBS U.S. Balanced Portfolio (Advisor Class) ** ING Variable Insurance Trust: ING Van Kampen Equity Growth Portfolio (Service ING GET U.S. Core Portfolio - Series 1 ** Class) * ING GET U.S. Core Portfolio - Series 2 ING Van Kampen Equity Growth Portfolio (Advisor (Guaranteed) ** Class) * ING GET U.S. Core Portfolio - Series 3 ** ING Van Kampen Global Franchise Portfolio (Service ING VIT Worldwide Growth Class) * ING Variable Portfolios, Inc.: ING Van Kampen Global Franchise Portfolio (Advisor ING VP Balanced Portfolio (Service Class) ** Class) * ING VP Bond Portfolio (Service Class) * ING Van Kampen Growth and Income Portfolio ING VP Growth Portfolio (Service Class) * (Service Class) ING VP Index Plus LargeCap Portfolio (Service ING Van Kampen Growth and Income Portfolio Class) (Advisor Class) * ING VP Index Plus MidCap Portfolio (Service ING Van Kampen Real Estate Portfolio (Service Class) Class) ING VP Index Plus SmallCap Portfolio (Service ING Van Kampen Real Estate Portfolio (Advisor Class) Class) * ING VP International Equity Portfolio (Service Class) ** ING VP Small Company Portfolio (Service Class) * ING VP Value Opportunity Portfolio (Service Class)
121 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements ING Variable Products Trust: Oppenheimer Variable Accounts Fund: ING VP Convertible Portfolio (Service Class) Oppenheimer Global Securities Fund/VA (Class S) * ING VP Growth and Income Portfolio (Service Oppenheimer Strategic Bond Fund/VA (Class S) * Class) ** PIMCO Variable Insurance Trust: ING VP Growth Opportunities Portfolio (Service PIMCO High Yield Portfolio Class) PIMCO StocksPLUS Growth and Income Portfolio ING VP International Value Portfolio (Service Pioneer Variable Contracts Trust: Class) * Pioneer Equity-Income VCT Portfolio (Class II) * ING VP LargeCap Growth Portfolio (Service Class) Pioneer Fund VCT Portfolio (Class II) ING VP MagnaCap Portfolio (Service Class) Pioneer Mid-Cap Value VCT ING VP MidCap Opportunities Portfolio (Service Pioneer Small Company VCT Portfolio (Class II) Class) * ProFunds VP: ING VP SmallCap Opportunities Portfolio (Service ProFund VP Bull Class) ProFund VP Europe 30 AIM Variable Insurance Funds: ProFunds VP (continued): AIM V.I. Capital Appreciation Fund (Class II) * ProFund VP Rising Rates Opportunity ** AIM V.I. Core Equity Fund (Class II) * ProFund VP Small Cap AIM V.I. Dent Demographic Trends Fund (Class II) Prudential Series Fund, Inc.: AIM V.I. Growth Fund (Class II) Jennison Portfolio (Class II) AIM V.I. Premier Equity Fund (Class II) * SP Jennison International Growth Portfolio AllianceBernstein Variable Products Series Fund, Inc.: (Class II) AllianceBernstein Growth and Income Portfolio Putnam Variable Trust: (Class B) Putnam VT Discovery Growth Fund (Class IB) AllianceBernstein Premier Growth Portfolio (Class Putnam VT Growth and Income (Class IB) B) Putnam VT International Growth and Income (Class AllianceBernstein Value Portfolio (Class B) IB) Fidelity Variable Insurance Products Fund: Travelers Series Fund Inc.: Fidelity(R) VIP Contrafund(R) Portfolio (Class S2) Smith Barney High Income Fidelity(R) VIP Equity-Income Portfolio (Class S2) Smith Barney International All Cap Growth Fidelity(R) VIP Growth Portfolio (Class S2) Smith Barney Large Cap Value Fidelity(R) VIP Overseas Portfolio (Class S2) * Smith Barney Money Market Franklin Templeton Variable Insurance Products Trust: UBS Series Trust: Franklin Small Cap Value Securities Fund (Class 2) UBS Tactical Allocation Portfolio (Class I) * Wells Fargo: Greenwich Street Series Fund: Wells Fargo VT Asset Allocation ** Greenwich Appreciation Portfolio Wells Fargo VT Equity Income Fund ** INVESCO Variable Investment Funds, Inc.: Wells Fargo VT Large Company Growth ** INVESCO VIF - Financial Services Fund Wells Fargo VT Small Cap Growth ** INVESCO VIF - Health Sciences Fund INVESCO VIF - Leisure Fund * * Investment added in 2002 INVESCO VIF - Utilities Fund ** Investment added in 2003 Janus Aspen Series: Janus Aspen Series Balanced Portfolio (Class S) * Janus Aspen Series Flexible Income Portfolio (Class S) * Janus Aspen Series Growth Portfolio (Class S) * Janus Aspen Series Worldwide Growth Portfolio (Class S) Liberty Variable Insurance Trust: Colonial Small Cap Value Fund (Class B) ** Liberty Variable Series: Liberty Asset Allocation Fund Variable Series (Class A) ** Liberty Equity Fund Variable Series (Class A) Liberty Federal Securities Fund Variable Series (Class A) ** Liberty Small Company Growth Fund Variable Series (Class A) **
122 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements The names of certain Divisions were changed during 2003. The following is a summary of current and former names for those Divisions: Current Name Former Name --------------------------------------------------------- -------------------------------------------------------- ING Investors Trust: The GCG Trust: ING AIM Mid-Cap Growth (Service Class) Strategic Equity ING AIM Mid-Cap Growth (Advisor Class) Strategic Equity Advisor ING Alliance Mid-Cap Growth (Service Class) Capital Growth ING Alliance Mid-Cap Growth (Advisor Class) Capital Growth Advisor ING Capital Guardian Large Cap Value (Service Class) Large Cap Value ING Capital Guardian Large Cap Value (Advisor Class) Large Cap Value Advisor ING Capital Guardian Managed Global (Service Class) Managed Global ING Capital Guardian Managed Global (Advisor Class) Managed Global Advisor ING Capital Guardian Small Cap (Service Class) Capital Guardian Small Cap ING Capital Guardian Small Cap (Advisor Class) Capital Guardian Small Cap Advisor ING Developing World (Service Class) Developing World ING Developing World (Advisor Class) Developing World Advisor ING Eagle Asset Value Equity (Service Class) Value Equity ING Eagle Asset Value Equity (Advisor Class) Value Equity Advisor ING FMR Diversified Mid-Cap (Service Class) Diversified Mid-Cap ING FMR Diversified Mid-Cap (Advisor Class) Diversified Mid-Cap Advisor ING Goldman Sachs Internet Tollkeeper (Service Class) Internet Tollkeeper ING Goldman Sachs Internet Tollkeeper (Advisor Class) Internet Tollkeeper Advisor ING Hard Assets (Service Class) Hard Assets ING Hard Assets (Advisor Class) Hard Assets Advisor ING International (Service Class) International Equity ING International (Advisor Class) International Equity Advisor ING Janus Growth and Income (Service Class) Janus Growth and Income ING Janus Growth and Income (Advisor Class) Janus Growth and Income Advisor ING Janus Special Equity (Service Class) Special Situations ING Janus Special Equity (Advisor Class) Special Situations Advisor ING Jennison Equity Opportunities (Service Class) Equity Opportunity ING Jennison Equity Opportunities (Advisor Class) Equity Opportunity Advisor ING JPMorgan Fleming Small Cap Equity (Service Class) JPMorgan Fleming Small Cap Equity ING JPMorgan Fleming Small Cap Equity (Advisor Class) JPMorgan Fleming Small Cap Equity Advisor ING Julius Baer Foreign (Service Class) International Enhanced EAFE ING Julius Baer Foreign (Advisor Class) International Enhanced EAFE Advisor ING Limited Maturity Bond Limited Maturity Bond ING Liquid Assets (Service Class) Liquid Assets ING Liquid Assets (Advisor Class) Liquid Assets Advisor ING Marisco Growth (Service Class) Growth ING Marisco Growth (Advisor Class) Growth Advisor ING Mercury Focus Value (Service Class) Focus Value ING Mercury Focus Value (Advisor Class) Focus Value Advisor ING Mercury Fundamental Growth (Service Class) Fundamental Growth Focus ING Mercury Fundamental Growth (Advisor Class) Fundamental Growth Focus Advisor
123 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Current Name Former Name ---------------------------------------------------------- ------------------------------------------------- ING Investors Trust (continued): The GCG Trust (continued): ING MFS Mid-Cap Growth (Service Class) Mid-Cap Growth ING MFS Mid-Cap Growth (Advisor Class) Mid-Cap Growth Advisor ING MFS Research (Service Class) Research ING MFS Research (Advisor Class) Research Advisor ING MFS Total Return (Service Class) Total Return ING MFS Total Return (Advisor Class) Total Return Advisor ING PIMCO Core Bond (Service Class) Core Bond ING PIMCO Core Bond (Advisor Class) Core Bond Advisor ING Salomon Brothers All Cap (Service Class) All Cap ING Salomon Brothers All Cap (Advisor Class) All Cap Advisor ING Salomon Brothers Investors (Service Class) Investors ING Salomon Brothers Investors (Advisor Class) Investors Advisor ING T. Rowe Price Capital Appreciation (Service Class) Fully Managed ING T. Rowe Price Capital Appreciation (Advisor Class) Fully Managed Advisor ING T. Rowe Price Equity Income (Service Class) Equity Income ING T. Rowe Price Equity Income (Advisor Class) Equity Income Advisor ING UBS U.S. Balanced (Service Class) Asset Allocation Growth ING Van Kampen Equity Growth (Service Class) Equity Growth ING Van Kampen Equity Growth (Advisor Class) Equity Growth Advisor ING Van Kampen Global Franchise (Service Class) Global Franchise ING Van Kampen Global Franchise (Advisor Class) Global Franchise Advisor ING Van Kampen Growth and Income (Service Class) Van Kampen Growth and Income ING Van Kampen Growth and Income (Advisor Class) Van Kampen Growth and Income Advisor ING Van Kampen Real Estate (Service Class) Real Estate ING Van Kampen Real Estate (Advisor Class) Real Estate Advisor ING Partners, Inc.: ING Partners, Inc.: ING JPMorgan Fleming International ING Scudder International Growth ING Salomon Brothers Fundamental Value ING Salomon Bros. Capital AllianceBernstein Variable Products Series Fund, Inc.: Alliance Variable Products Series Fund, Inc.: AllianceBernstein Growth and Income Alliance Growth and Income AllianceBernstein Premier Growth Alliance Premier Growth Liberty Variable Series: The Galaxy VIP Fund: Liberty Equity Galaxy VIP Equity Putnam Variable Trust: Putnam Variable Trust: Putnam VT Discovery Growth Putnam VT Voyager II
During 2003, the ING VP Large Company Value Portfolio (Service Class), Galaxy VIP Asset Allocation Fund, Galaxy VIP Growth and Income Fund, Galaxy VIP High Quality Bond Fund, and Galaxy VIP Small Company Growth Fund, were closed to Contractowners. 124 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements 2. Significant Accounting Policies The following is a summary of the significant accounting policies of the Account: Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Investments Investments are made in shares of a Series or Portfolio of the Trusts and are recorded at fair value, determined by the net asset value per share of the respective Series or Portfolio of the Trusts. Investment transactions in each Series or Portfolio of the Trusts are recorded on the trade date. Distributions of net investment income and capital gains from each Series or Portfolio of the Trusts are recognized on the ex-distribution date. Realized gains and losses on redemptions of the shares of the Series or Portfolio of the Trusts are determined on the specific identification basis. The difference between cost and current market value of investments owned on the day of measurement is recorded as unrealized appreciation or depreciation of investments. Federal Income Taxes Operations of the Account form a part of, and are taxed with, the total operations of Golden American, which is taxed as a life insurance company under the Internal Revenue Code. Earnings and realized capital gains of the Account attributable to the Contractowners are excluded in the determination of the federal income tax liability of Golden American. Transfers Transfers between the Account and ING USA relate to gains and losses resulting from actual mortality experience, the full responsibility for which is assumed by ING USA, Contractowner transfers between the general account and the Divisions, and other Contractowner activity, including Contract deposits and withdrawals. Unsettled transactions as of the reporting date appear on a net basis in the line Payable to ING USA Annuity and Life Insurance Company on the Statements of Assets and Liabilities. 125 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements 3. Charges and Fees Prior to February 1, 2000, DVA Plus, Access, and Premium Plus Contracts each had three different death benefit options referred to as Standard, Annual Ratchet, and 7% Solution; however, in the state of Washington, the 5.5% Solution is offered instead of the 7% Solution. After February 1, 2000, DVA Plus, Access and Premium Plus each had four different death benefit options referred to as Standard, Annual Ratchet, 7% Solution and Max 7. In the state of Washington, the 5.5% Solution is offered instead of the 7% Solution and Max 5.5 is offered instead of Max 7 after February 1, 2000. ES II, Generations, Landmark and Opportunities contracts each have four different death benefit options referred to as Standard, Annual Ratchet, 7% Solution and Max 7. In the state of Washington, the 5.5% Solution is offered instead of the 7% Solution and Max 5.5 is offered instead of Max 7. Granite PrimElite has two death benefit options referred to as Standard and Annual Ratchet. Under the terms of all Contracts, certain charges are allocated to the Contracts to cover ING USA's expenses in connection with the issuance and administration of the Contracts. Following is a summary of these charges: Mortality and Expense Risk Charges ING USA assumes mortality and expense risks related to the operations of the Account and, in accordance with the terms of the Contracts, deducts a daily charge from the assets of the Account. 126 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Daily charges deducted at annual rates to cover these risks follows: Series Annual Rates ------------------------------------------------------------------------ ---------------- DVA 80 0.80% DVA 0.90 DVA Series 100 1.25 DVA Plus (pre February 2000) Standard 1.10 DVA Plus (post January 2000) Standard 1.15 DVA Plus (post 2000) Standard 1.15 DVA Plus (pre February 2000) Annual Ratchet 1.25 DVA Plus (pre February 2000) 5.5% Solution 1.25 DVA Plus (post January 2000) 5.5% Solution 1.25 DVA Plus (post 2000) 5.5% Solution 1.30 DVA Plus (post January 2000) Annual Ratchet 1.30 DVA Plus (pre February 2000) 7% Solution 1.40 DVA Plus (post January 2000) Max 5.5 1.40 DVA Plus (post 2000) Annual Ratchet 1.40 DVA Plus (post 2000) Max 5.5 1.45 DVA Plus (post January 2000) 7% Solution 1.50 DVA Plus (post 2000) 7% Solution 1.50 DVA Plus (post January 2000) Max 7 1.60 DVA Plus (post 2000) Max 7 1.60 Access (pre February 2000) Standard 1.25 Access (post January 2000) Standard 1.30 Access (post 2000) Standard 1.30 Access (pre February 2000) Annual Ratchet 1.40 Access (pre February 2000) 5.5% Solution 1.40 Access (post January 2000) Annual Ratchet 1.45 Access (post January 2000) 5.5 % Solution 1.45 Access (post 2000) 5.5% Solution 1.45 Access (pre February 2000) 7% Solution 1.55 Access (post January 2000) Max 5.5 1.55 Access (post 2000) Annual Ratchet 1.55 Access (post 2000) Max 5.5 1.60 Access (post January 2000) 7% Solution 1.65
127 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Series Annual Rates ------------------------------------------------------------------------ ---------------- Access (post 2000) 7% Solution 1.65% Access (post April 2001) Standard 1.65 Access (post January 2000) Max 7 1.75 Access (post 2000) Max 7 1.75 Access (post April 2001) 5.5% Solution 1.80 Access (post April 2001) Annual Ratchet 1.90 Access (post April 2001) Max 5.5 1.95 Access (post April 2001) 7% Solution 2.00 Access (post April 2001) Max 7 2.10 Premium Plus (pre February 2000) Standard 1.25 Premium Plus (post January 2000) Standard 1.30 Premium Plus (post 2000) Standard 1.30 Premium Plus (pre February 2000) Annual Ratchet 1.40 Premium Plus (pre February 2000) 5.5% Solution 1.40 Premium Plus (post January 2000) Annual Ratchet 1.45 Premium Plus (post January 2000) 5.5% Solution 1.45 Premium Plus (post 2000) 5.5% Solution 1.45 Premium Plus (pre February 2000) 7% Solution 1.55 Premium Plus (post January 2000) Max 5.5 1.55 Premium Plus (post 2000) Annual Ratchet 1.55 Premium Plus (post 2000) Max 5.5 1.60 Premium Plus (post January 2000) 7% Solution 1.65 Premium Plus (post 2000) 7% Solution 1.65 Premium Plus (post January 2000) Max 7 1.75 Premium Plus (post 2000) Max 7 1.75 ES II (pre 2001) 1.25 ES II (post 2000) Standard 1.25 ES II (post 2000) Deferred Ratchet 1.30 ES II (post 2000) 5.5% 1.40 ES II (post 2000) Annual Ratchet 1.50 ES II (post 2000) Max 5.5 1.55 ES II (post 2000) 7% Solution 1.60 ES II (post 2000) Max 7 1.70 Value Standard 0.75 Access One 0.35 Granite PrimElite-Standard 1.10 Granite PrimElite-Annual Ratchet 1.25 Generations-Standard 1.25 Generations-Deferred Ratchet 1.30 Generations-Annual Ratchet 1.50 Generations-7% Solution 1.60 Generations-Max 7 1.70 Landmark-Standard 1.50
128 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Series Annual Rates ------------------------------------------------------------------------ ---------------- Landmark-5.5% Solution 1.65% Landmark-Annual Ratchet 1.75 Landmark-Max 5.5 1.80 Landmark-7% Solution 1.85 Landmark-Max 7 1.95 VA Option I 0.80 VA Option II 1.10 VA Option III 1.25 VA Bonus Option I 1.30 VA Bonus Option II 1.60 VA Bonus Option III 1.75 Advantage Option I 2.05 Advantage Option II 2.25 Advantage Option III 2.40 Rollover Choice Option I 0.60 Rollover Choice Option II 0.80 Rollover Choice Option III 0.95 Opportunities-Standard 1.25 Opportunities-5.5% Solution 1.40 Opportunities-Annual Ratchet 1.50 Opportunities-7% Solution 1.60 Opportunities-Max 5.5 1.55 Opportunities-Max 7 1.70 Signature Option I 1.10 Signature Option II 1.30 Signature Option III 1.45 Focus VA Option I 0.60 Focus VA Option II 0.80
Asset Based Administrative Charges A daily charge at an annual rate of 0.10% is deducted from assets attributable to DVA and DVA Series 100 Contracts. A daily charge at an annual rate of 0.15% is deducted from the assets attributable to the DVA Plus, Access, Premium Plus, ESII, Value, Access One, Granite PrimElite, Generations, Landmark, VA, Advantage, Rollover Choice, Focus VA, and Opportunities Contracts. 129 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Administrative Charges An administrative charge is deducted from the accumulation value of deferred annuity contracts to cover ongoing administrative expenses. The charge is $30 per Contract year for ES II, Value, VA, Advantage, and Rollover Choice Contracts. For DVA Series 100 and Access One Contracts there is no charge. For all other Contracts, the charge is $40. The charge is incurred at the beginning of the Contract processing period and deducted at the end of the Contract processing period. This charge had been waived for certain offerings of the Contracts. For certain Contracts, a minimum death benefit guarantee charge of up to $1.20 per $1,000 of guaranteed death benefit per Contract year is deducted from the accumulation value of each Contract on its anniversary date. Contingent Deferred Sales Charges Under DVA 80, DVA, DVA Plus, Premium Plus, ES II, Value, Granite PrimElite, Landmark, VA, Advantage, and Rollover Choice Contracts, a contingent deferred sales charge ("Surrender Charge") is imposed as a percentage of each premium payment if the Contract is surrendered or an excess partial withdrawal is taken. The following table reflects the Surrender Charge that is assessed based upon the date a premium payment is received. Complete Granite Years Elapsed PrimElite Opportunities, Since Premium DVA 80 & DVA Premium ES II & Signature Rollover Payment & DVA Plus Plus Generations Value Advantage Landmark & VA Choice Focus VA ------------- --------- ----------- ---------- ---------------- ------- ---------- ----------- ----------- --------- ---------- 0 6 % 7 % 8 % 8 % 6 % 6 % 6 % 7 % 6 % 3 % 1 5 7 8 7 6 5 5 7 6 2 2 4 6 8 6 6 4 4 6 5 1 3 3 5 8 5 5 - 3 6 4 - 4 2 4 7 4 4 - - 5 3 - 5 1 3 6 3 3 - - 4 2 - 6 - 1 5 2 1 - - 3 1 - 7 - - 3 1 - - - - - - 8 - - 1 - - - - - - - 9+ - - - - - - - - - -
Other Contract Charges Under DVA 80, DVA, and DVA Series 100 Contracts, a charge is deducted from the accumulation value for Contractowners taking more than one conventional partial withdrawal during a Contract year. For DVA 80 and DVA Contracts, annual distribution fees are deducted from the Contracts' accumulation values. 130 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Deferred Sales Load Under Contracts offered prior to October 1995, a sales load of up to 7.5% was assessed against each premium payment for sales-related expenses, as specified in the Contracts. For DVA Series 100, the sales load is deducted in equal annual installments over the period the Contract is in force, not to exceed 10 years. For DVA 80 and DVA Contracts, although the sales load is chargeable to each premium when ING USA receives it, the amount of such charge is initially advanced by ING USA to Contractowners and included in the accumulation value, and then deducted in equal installments on each Contract anniversary date over a period of six years. Upon surrender of the Contract, the unamortized deferred sales load is deducted from the accumulation value. In addition, when partial withdrawal limits are exceeded, a portion of the unamortized deferred sales load is deducted. Premium Taxes For certain Contracts, premium taxes are deducted, where applicable, from the accumulation value of each Contract. The amount and timing of the deduction depends on the Contractowner's state of residence and currently ranges up to 3.5% of premiums. Fees Waived by Golden American Certain charges and fees for various types of Contracts are currently waived by ING USA. ING USA reserves the right to discontinue these waivers at its discretion or to conform with changes in the law. Net Assets Retained in the Account by ING USA Annuity and Life Insurance Company A summary of the net assets retained in the Account, representing the unamortized deferred sales load and premium taxes advanced by Golden American previously noted, follows: Year ended December 31, 2002 ------------------------- (Dollars in thousands) Balance at beginning of year $ 135 Sales load advanced 9 Amortization of deferred sales load and premium tax (144) ------------------------- Balance at end of year $ - =========================
131 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements 4. Related Party Transactions During the year ended December 31, 2003, management and service fees were paid indirectly to Directed Services, Inc., an affiliate of the Company, in its capacity as investment manager to the ING Investors. The Trust's advisory agreement provided for a fee at annual rates ranging from 0.53% to 1.85% of the average net assets of each respective Series. In addition, management and service fees were paid to ING Investments, LLC, in its capacity as investment adviser to the ING GET Fund, the ING Variable Insurance Trust, ING VP Bond Portfolio, ING Variable Portfolios, Inc., and the ING Variable Products Trust. The Trusts' advisory agreement provided for fees at annual rates ranging from 0.35% to 1.00% of the average net assets of each respective Portfolio. Management and service fees were paid to ING Life Insurance and Annuity Company, an affiliate of the Company, in its capacity as investment adviser to ING Partners, Inc. The Trust's advisory agreement provided for a fee at annual rates ranging from 0.50% to 1.00% of the average net assets of each respective Portfolio. 5. Subsequent Events On January 1, 2004, Equitable Life Insurance Company of Iowa, USG Annuity & Life Company, and United Life & Annuity Insurance Company (the "Merger Companies"), merged with and into Golden American. Also on January 1, 2004, immediately after the merger, Golden American changed its name to ING USA Annuity and Life Insurance Company. As of the merger date, the Merger Companies ceased to exist and were succeeded by ING USA. Prior to the merger date, the Merger Companies were affiliated companies of ING USA and indirect, wholly-owned subsidiaries of ING. In conjunction with the Golden American name change, the Account changed its name to Separate Account B of ING USA Annuity and Life Insurance Company. 132 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements 6. Purchases and Sales of Investment Securities The aggregate cost of purchases and proceeds from sales of investments follows: Year ended December 31 2003 2002 -------------------------- -------------------------- Purchases Sales Purchases Sales ------------ ------------ ------------- ------------ (Dollars in thousands) ING GET Fund: ING GET Fund - Series N $ 719 $ 6,446 $ 733 $ 2,401 ING GET Fund - Series P 3,277 37,406 6,579 18,769 ING GET Fund - Series Q 143 45,984 182,185 15,241 ING GET Fund - Series R 729 45,720 184,803 15,647 ING GET Fund - Series S 209 68,817 227,944 9,645 ING GET Fund - Series T 841 87,461 237,424 1,768 ING GET Fund - Series U 260,067 108,937 1,047 - ING GET Fund - Series V 385,428 53,056 - - ING Investors Trust: ING AIM Mid-Cap Growth (Service Class) 146,376 126,554 403,752 448,147 ING AIM Mid-Cap Growth (Advisor Class) 2,750 70 79 - ING Alliance Mid-Cap Growth (Service Class) 202,510 156,537 271,861 306,181 ING Alliance Mid-Cap Growth (Advisor Class) 3,912 213 154 - ING American Funds Growth 126,082 - - - ING American Funds Growth-Income 94,431 - - - ING American Funds International 43,141 519 - - ING Capital Guardian Large Cap Value (Service Class) 158,785 20,113 137,118 37,870 ING Capital Guardian Large Cap Value (Advisor Class) 5,891 565 347 - ING Capital Guardian Managed Global (Service Class) 77,858 35,871 439,191 413,705 ING Capital Guardian Managed Global (Advisor Class) 1,883 133 51 - ING Capital Guardian Small Cap (Service Class) 198,157 143,109 830,463 842,708 ING Capital Guardian Small Cap (Advisor Class) 3,260 8 320 - ING Developing World (Service Class) 67,328 47,207 256,419 261,252 ING Developing World (Advisor Class) 1,546 20 81 - ING Eagle Asset Value Equity (Service Class) 34,721 36,843 102,513 90,027 ING Eagle Asset Value Equity (Advisor Class) 872 116 110 - ING FMR Diversified Mid-Cap (Service Class) 41,284 4,975 58,638 6,680 ING FMR Diversified Mid-Cap (Advisor Class) 3,042 130 224 - ING Goldman Sachs Internet Tollkeeper (Service Class) 37,453 6,338 16,754 6,112 ING Goldman Sachs Internet Tollkeeper (Advisor Class) 2,452 210 57 - ING Hard Assets (Service Class) 98,184 66,246 102,835 64,011 ING Hard Assets (Advisor Class) 2,370 93 95 - ING International (Service Class) 288,321 282,883 684,796 688,451 ING International (Advisor Class) 3,936 28 254 - ING Janus Growth and Income (Service Class) 63,371 6,551 77,366 13,632 ING Janus Growth and Income (Advisor Class) 6,371 709 602 - ING Janus Special Equity (Service Class) 22,316 3,948 11,468 6,198 ING Janus Special Equity (Advisor Class) 658 39 56 -
133 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Year ended December 31 2003 2002 --------------------------- --------------------------- Purchases Sales Purchases Sales ------------- ------------- ------------- ------------- (Dollars in thousands) ING Investors Trust (continued): ING Jennison Equity Opportunities (Service Class) $ 59,176 $ 85,768 $ 147,404 $ 177,811 ING Jennison Equity Opportunities (Advisor Class) 1,388 51 34 - ING JPMorgan Fleming Small Cap Equity (Service Class) 46,793 1,220 10,549 557 ING JPMorgan Fleming Small Cap Equity (Advisor Class) 9,013 77 520 - ING Julius Baer Foreign (Service Class) 41,204 15,658 18,536 13,290 ING Julius Baer Foreign (Advisor Class) 2,121 60 166 - ING Limited Maturity Bond 135,215 170,287 289,313 109,521 ING Liquid Assets (Service Class) 1,736,952 2,014,414 6,067,854 6,116,068 ING Liquid Assets (Advisor Class) 12,886 9,848 3,353 1,553 ING Marisco Growth (Service Class) 151,832 112,858 922,370 1,085,634 ING Marisco Growth (Advisor Class) 7,334 88 97 - ING Mercury Focus Value (Service Class) 18,337 1,751 6,954 731 ING Mercury Focus Value (Advisor Class) 692 37 50 - ING Mercury Fundamental Growth (Service Class) 9,541 725 3,288 415 ING Mercury Fundamental Growth (Advisor Class) 660 42 113 - ING MFS(R) Mid-Cap Growth (Service Class) 238,851 211,017 672,311 703,631 ING MFS(R) Mid-Cap Growth (Advisor Class) 8,015 205 558 - ING MFS(R) Research (Service Class) 113,001 136,752 171,313 231,552 ING MFS(R) Research (Advisor Class) 1,498 134 329 - ING MFS(R) Total Return (Service Class) 222,700 81,903 268,590 141,319 ING MFS(R) Total Return (Advisor Class) 14,146 242 1,034 51 ING PIMCO Core Bond (Service Class) 213,083 139,250 332,380 34,599 ING PIMCO Core Bond (Advisor Class) 17,218 1,791 995 - ING Salomon Brothers All Cap (Service Class) 106,924 38,799 99,898 62,269 ING Salomon Brothers All Cap (Advisor Class) 5,067 28 177 - ING Salomon Brothers Investors (Service Class) 25,471 11,089 37,278 9,900 ING Salomon Brothers Investors (Advisor Class) 556 17 297 - ING T. Rowe Price Capital Appreciation (Service Class) 219,954 41,604 383,713 62,233 ING T. Rowe Price Capital Appreciation (Advisor Class) 17,090 462 946 34 ING T. Rowe Price Equity Income (Service Class) 148,931 28,175 166,618 101,344 ING T. Rowe Price Equity Income (Advisor Class) 9,266 595 673 13 ING UBS U.S. Balanced (Service Class) 18,600 6,006 18,227 10,179 ING UBS U.S. Balanced (Advisor Class) 918 6 - - ING Van Kampen Equity Growth (Service Class) 22,819 517 5,244 623 ING Van Kampen Equity Growth (Advisor Class) 4,889 42 480 - ING Van Kampen Global Franchise (Service Class) 41,286 7,742 19,859 4,824 ING Van Kampen Global Franchise (Advisor Class) 11,725 255 744 42 ING Van Kampen Growth and Income (Service Class) 63,901 61,838 60,273 127,038 ING Van Kampen Growth and Income (Advisor Class) 20,621 1,062 1,031 31 ING Van Kampen Real Estate (Service Class) 110,208 43,180 137,466 62,909 ING Van Kampen Real Estate (Advisor Class) 5,076 25 278 -
134 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Year ended December 31 2003 2002 ---------------------------- ---------------------------- Purchases Sales Purchases Sales ------------- ------------- ------------- ------------- (Dollars in thousands) ING Partners, Inc.: ING Alger Aggressive Growth $ 591 $ 105 $ - $ - ING Alger Growth Portfolio 80 1 43 - ING American Century Small Cap Value 136 1 2 - ING Baron Small Cap Growth 937 2 - - ING JPMorgan Fleming International 11,322 4,006 8 - ING JPMorgan Mid Cap Value 5,429 70 357 60 ING MFS(R) Capital Opportunities (Initial Class) 1,674 378 1,163 193 ING MFS(R) Capital Opportunities (Service Class) 267 2 85 - ING MFS(R) Global Growth 1,477 140 76 1 ING MFS(R) Research Equity 84 - - - ING OpCap Balanced Value 229 2 131 - ING PIMCO Total Return 1,557 214 627 29 ING Salomon Brothers Aggressive Growth 16,007 2,873 - - ING Salomon Brothers Fundamental Value 518 3 9 - ING Salomon Brothers Investors Value 317 3 4 - ING T. Rowe Price Growth Equity 1,860 28 162 - ING UBS Tactical Asset Allocation 81 3 2 - ING Van Kampen Comstock 33,171 1,711 1,785 55 ING Variable Insurance Trust: ING GET U.S. Core Portfolio - Series 1 238,806 25,679 - - ING GET U.S. Core Portfolio - Series 2 166,567 464 - - ING GET U.S. Core Portfolio - Series 3 8,964 1 - - ING VIT Worldwide Growth 19,828 6,849 24,169 9,196 ING Variable Portfolios, Inc.: ING VP Balanced 1,197 42 - - ING VP Bond 89,990 70,653 63,496 13,839 ING VP Growth 261 56 51 1 ING VP Index Plus LargeCap 62,351 13,117 7,078 2,691 ING VP Index Plus MidCap 16,264 5,177 9,240 3,466 ING VP Index Plus SmallCap 13,623 3,693 8,715 4,883 ING VP International Equity 183 7 - - ING VP Small Company 653 92 251 37 ING VP Value Opportunity 1,009 169 1,251 169 ING Variable Products Trust: ING VP Convertible 3,324 879 1,096 187 ING VP Growth and Income 1,606 71 - - ING VP Growth Opportunities 13,123 1,710 10,173 2,384 ING VP International Value 576 171 53 1 ING VP Large Company Value 1,392 2,590 1,376 372 ING VP LargeCap Growth 1,248 768 1,869 1,053 ING VP MagnaCap 12,289 2,104 13,443 3,846 ING VP MidCap Opportunities 223 1 16 - ING VP SmallCap Opportunities 46,178 4,073 31,124 1,969
135 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Year ended December 31 2003 2002 ----------------------------- ----------------------------- Purchases Sales Purchases Sales -------------- -------------- -------------- -------------- (Dollars in thousands) AIM Variable Insurance Funds: AIM V.I. Capital Appreciation $ 66 $ 24 $ 34 $ - AIM V.I. Core Equity 105 1 44 - AIM V.I. Dent Demographic Trends 42,067 4,254 16,368 5,241 AIM V.I. Growth 1,911 427 987 372 AIM V.I. Premier Equity 88 17 87 - AllianceBernstein Variable Products Series Fund, Inc.: AllianceBernstein Growth and Income 5,730 902 4,785 619 AllianceBernstein Premier Growth 2,862 2,017 3,175 1,593 AllianceBernstein Value 3,623 943 2,631 257 Fidelity Variable Insurance Products Fund: Fidelity(R) VIP Contrafund(R) 14,431 521 4,406 783 Fidelity(R) VIP Equity-Income 118,197 17,735 62,498 39,048 Fidelity(R) VIP Growth 188,912 51,570 48,243 23,758 Fidelity(R) VIP Overseas 7,214 6,453 9 - Franklin Templeton Variable Insurance Products Trust: Franklin Small Cap Value Securities 180 3 20 - The Galaxy VIP Fund: Galaxy VIP Asset Allocation 15 653 33 431 Galaxy VIP Growth and Income - 118 - 32 Galaxy VIP High Quality Bond 2 131 32 58 Galaxy VIP Small Company Growth 10 63 13 11 Greenwich Street Series Fund: Greenwich Appreciation 34 86 81 74 INVESCO Variable Investment Funds, Inc.: INVESCO VIF - Financial Services 58,467 31,710 63,673 40,543 INVESCO VIF - Health Sciences 81,144 38,138 83,757 58,204 INVESCO VIF - Leisure 24,801 1,312 7,516 1,277 INVESCO VIF - Utilities 19,832 3,235 8,167 944 Janus Aspen Series: Janus Aspen Series Balanced 3,875 252 565 37 Janus Aspen Series Flexible Income 2,046 473 276 3 Janus Aspen Series Growth 742 84 225 1 Janus Aspen Series Worldwide Growth 19,777 17,513 104,529 101,442 Liberty Variable Insurance Trust: Colonial Small Cap Value 38,705 642 - - Liberty Variable Series: Liberty Asset Allocation 575 84 - - Liberty Equity 98 74 22 132 Liberty Federal Securities 124 40 - - Liberty Small Company Growth 62 17 - - Oppenheimer Variable Accounts Fund: Oppenheimer Global Securities 2,204 27 274 24 Oppenheimer Strategic Bond 968 317 53 36
136 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Year ended December 31 2003 2002 ----------------------------- ---------------------------- Purchases Sales Purchases Sales -------------- -------------- -------------- ------------- (Dollars in thousands) PIMCO Variable Insurance Trust: PIMCO High Yield $ 412,507 $ 166,432 $ 217,839 $ 126,620 PIMCO StocksPLUS Growth and Income 27,584 64,388 92,182 97,761 Pioneer Variable Contracts Trust: Pioneer Equity-Income 718 13 200 1 Pioneer Fund 39,976 6,474 27,454 6,810 Pioneer Mid-Cap Value 104,888 2,103 69,537 13,624 Pioneer Small Company 2,653 706 3,491 398 ProFunds VP: ProFund VP Bull 255,458 213,494 114,057 95,299 ProFund VP Europe 30 145,136 133,466 318,634 307,100 ProFund VP Rising Rates Opportunity 32,296 8,593 - - ProFund VP Small Cap 317,059 247,916 321,292 294,784 Prudential Series Fund, Inc.: Jennison 19,753 11,282 223,318 215,947 SP Jennison International Growth 74,583 33,468 44,081 36,323 Putnam Variable Trust: Putnam VT Discovery Growth 1,239 364 1,601 94 Putnam VT Growth and Income 1,626 641 1,662 172 Putnam VT International Growth and Income 1,554 1,314 3,063 261 Travelers Series Fund Inc.: Smith Barney High Income 25 89 82 38 Smith Barney International All Cap Growth 10 36 4 26 Smith Barney Large Cap Value 32 82 19 54 Smith Barney Money Market 34 127 2 80 UBS Series Trust: UBS Tactical Allocation 2,728 335 1,316 240 Wells Fargo: Wells Fargo VT Asset Allocation 25 - - - Wells Fargo VT Equity Income 11 - - - Wells Fargo VT Large Company Growth 33 - - - Wells Fargo VT Small Cap Growth 7 - - -
137 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements 7. Changes in Units The changes in units outstanding for the years ended December 31, 2003 and 2002 are shown in the following table. The activity includes Contractowners electing to update a DVA 100 or DVA Series 100 Contract to a DVA Contract. Updates to DVA Contracts resulted in both a redemption (surrender of the old Contract) and an issue (acquisition of the new Contract). Year ended December 31 2003 2002 ----------------------------------- ----------------------------------- Net Net Units Units Increase Units Units Increase Issued Redeemed (Decrease) Issued Redeemed (Decrease) ---------- ---------- ----------- ---------- ---------- ----------- ING GET Fund: ING GET Fund - Series N 2,813 582,838 (580,025) 43,042 189,804 (146,762) ING GET Fund - Series P 427,496 3,875,525 (3,448,029) 772,618 1,720,085 (947,467) ING GET Fund - Series Q 540,093 4,702,920 (4,162,827) 18,122,750 1,458,265 16,664,485 ING GET Fund - Series R 662,537 4,700,603 (4,038,066) 18,803,947 1,893,348 16,910,599 ING GET Fund - Series S 778,306 7,069,347 (6,291,041) 22,953,264 1,085,776 21,867,488 ING GET Fund - Series T 1,110,001 9,134,206 (8,024,205) 23,875,059 232,370 23,642,689 ING GET Fund - Series U 27,424,655 11,466,254 15,958,401 104,774 - 104,774 ING GET Fund - Series V 39,493,072 5,925,624 33,567,448 - - - ING Investors Trust: ING AIM Mid-Cap Growth (Service Class) 20,239,308 18,505,860 1,733,448 39,062,471 42,593,565 (3,531,094) ING AIM Mid-Cap Growth (Advisor Class) 244,294 17,832 226,462 8,044 - 8,044 ING Alliance Mid-Cap Growth (Service Class) 30,683,632 27,132,870 3,550,762 12,673,641 14,350,360 (1,676,719) ING Alliance Mid-Cap Growth (Advisor Class) 289,350 33,689 255,661 3,459 - 3,459 ING American Funds Growth 13,769,489 1,471,401 12,298,088 - - - ING American Funds Growth-Income 10,140,145 1,034,017 9,106,128 - - - ING American Funds International 4,737,237 831,014 3,906,223 - - - ING Capital Guardian Large Cap Value (Service Class) 31,963,365 15,626,833 16,336,532 22,131,127 10,157,539 11,973,588 ING Capital Guardian Large Cap Value (Advisor Class) 626,639 164,468 462,171 32,499 - 32,499 ING Capital Guardian Managed Global (Service Class) 9,589,344 6,596,769 2,992,575 29,219,248 27,211,114 2,008,134
138 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Year ended December 31 2003 2002 ------------------------------------ --------------------------------------- Net Net Units Units Increase Units Units Increase Issued Redeemed (Decrease) Issued Redeemed (Decrease) ----------- ------------ ----------- ----------- ----------- --------------- ING Investors Trust (continued): ING Capital Guardian Managed Global (Advisor Class) 160,376 13,074 147,302 4,848 - 4,848 ING Capital Guardian Small Cap (Service Class) 23,836,823 20,086,014 3,750,809 31,167,383 33,693,558 (2,526,175) ING Capital Guardian Small Cap (Advisor Class) 288,617 11,915 276,702 14,125 - 14,125 ING Developing World (Service Class) 13,707,508 11,144,731 2,562,777 31,632,928 7,268,250 24,364,678 ING Developing World (Advisor Class) 141,785 9,786 131,999 96,894 124 96,770 ING Eagle Asset Value Equity (Service Class) 5,456,564 5,513,235 (56,671) 8,835,743 8,086,769 748,974 ING Eagle Asset Value Equity (Advisor Class) 91,756 16,399 75,357 12,051 923 11,128 ING FMR Diversified Mid-Cap (Service Class) 9,117,415 4,385,125 4,732,290 38,357,135 38,795,832 (438,697) ING FMR Diversified Mid-Cap (Advisor Class) 312,293 32,870 279,423 8,162 3 8,159 ING Goldman Sachs Internet Tollkeeper (Service Class) 9,293,284 3,690,700 5,602,584 3,969,315 1,909,841 2,059,474 ING Goldman Sachs Internet Tollkeeper (Advisor Class) 202,253 27,084 175,169 5,119 - 5,119 ING Hard Assets (Service Class) 9,957,046 8,031,960 1,925,086 8,767,576 6,176,025 2,591,551 ING Hard Assets (Advisor Class) 214,555 17,599 196,956 9,841 - 9,841 ING International (Service Class) 45,122,881 44,094,402 1,028,479 88,470,226 88,235,675 234,551 ING International (Advisor Class) 392,995 17,995 375,000 25,956 3 25,953 ING Janus Growth and Income (Service Class) 15,080,009 7,058,656 8,021,353 11,879,305 3,750,330 8,128,975 ING Janus Growth and Income (Advisor Class) 676,501 120,816 555,685 60,374 - 60,374 ING Janus Special Equity (Service Class) 4,712,526 2,282,039 2,430,487 2,057,335 1,380,067 677,268 ING Janus Special Equity (Advisor Class) 54,493 3,864 50,629 5,773 - 5,773 ING Jennison Equity Opportunities (Service Class) 7,487,170 8,997,369 (1,510,199) 10,707,624 7,860,701 2,846,923 ING Jennison Equity Opportunities (Advisor Class) 134,102 6,870 127,232 68,680 3,462 65,218 ING JPMorgan Fleming Small Cap Equity (Service Class) 6,441,180 1,314,781 5,126,399 1,450,310 238,479 1,211,831 ING JPMorgan Fleming Small Cap Equity (Advisor Class) 886,242 51,332 834,910 53,904 3 53,901 ING Julius Baer Foreign (Service Class) 5,465,920 2,801,803 2,664,117 2,304,452 1,696,647 607,805 ING Julius Baer Foreign (Advisor Class) 208,049 21,627 186,422 16,921 29 16,892
139 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Year ended December 31 2003 2002 -------------------------------------- ------------------------------------- Net Net Units Units Increase Units Units Increase Issued Redeemed (Decrease) Issued Redeemed (Decrease) ------------ ------------ ------------ ------------ ----------- ---------- ING Investors Trust (continued): ING Limited Maturity Bond 22,024,027 23,493,026 (1,468,999) 19,089,421 10,093,155 8,996,266 ING Liquid Assets (Service Class) 263,960,840 281,659,270 (17,698,430) 432,718,159 435,462,419 (2,744,260) ING Liquid Assets (Advisor Class) 1,605,225 1,295,814 309,411 376,779 196,446 180,333 ING Marisco Growth (Service Class) 27,316,330 23,711,846 3,604,484 88,418,811 101,385,523 (12,966,712) ING Marisco Growth (Advisor Class) 692,233 47,674 644,559 9,416 - 9,416 ING Mercury Focus Value (Service Class) 2,390,740 669,562 1,721,178 927,802 217,748 710,054 ING Mercury Focus Value (Advisor Class) 62,575 5,799 56,776 4,735 - 4,735 ING Mercury Fundamental Growth (Service Class) 1,342,793 314,981 1,027,812 412,537 67,974 344,563 ING Mercury Fundamental Growth (Advisor Class) 68,767 7,459 61,308 11,445 7 11,438 ING MFS(R) Mid-Cap Growth (Service Class) 25,134,567 23,309,608 1,824,959 37,536,301 39,509,334 (1,973,033) ING MFS(R) Mid-Cap Growth (Advisor Class) 730,445 64,597 665,848 56,277 2 56,275 ING MFS(R) Research (Service Class) 13,516,901 14,641,938 (1,125,037) 14,355,356 17,693,135 (3,337,779) ING MFS(R) Research (Advisor Class) 151,542 20,594 130,948 33,623 - 33,623 ING MFS(R) Total Return (Service Class) 24,648,572 17,000,181 7,648,391 17,689,754 11,652,054 6,037,700 ING MFS(R) Total Return (Advisor Class) 1,428,064 107,319 1,320,745 100,210 5,006 95,204 ING PIMCO Core Bond (Service Class) 41,045,236 35,097,502 5,947,734 58,286,404 59,112,337 (825,933) ING PIMCO Core Bond (Advisor Class) 2,063,501 587,700 1,475,801 32,995 27 32,968 ING Salomon Brothers All Cap (Service Class) 21,857,383 14,656,980 7,200,403 14,295,321 10,877,332 3,417,989 ING Salomon Brothers All Cap (Advisor Class) 477,684 24,492 453,192 18,492 - 18,492 ING Salomon Brothers Investors (Service Class) 5,618,795 3,949,522 1,669,273 5,380,431 2,510,400 2,870,031 ING Salomon Brothers Investors (Advisor Class) 55,667 5,391 50,276 30,514 17 30,497 ING T. Rowe Price Capital Appreciation (Service Class) 18,480,713 11,934,957 6,545,756 16,893,498 5,743,297 11,150,201 ING T. Rowe Price Capital Appreciation (Advisor Class) 1,667,923 111,132 1,556,791 92,813 3,431 89,382 ING T. Rowe Price Equity Income (Service Class) 13,716,461 7,870,709 5,845,752 715,898 157,257 558,641 ING T. Rowe Price Equity Income (Advisor Class) 946,179 115,013 831,166 47,562 - 47,562
140 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Year ended December 31 2003 2002 ----------------------------- ---------------------------------- Net Net Units Units Increase Units Units Increase Issued Redeemed (Decrease) Issued Redeemed (Decrease) --------- --------- ---------- ---------- ---------- ----------- ING Investors Trust (continued): ING UBS U.S. Balanced (Service Class) 3,555,272 1,900,413 1,654,859 2,524,223 1,691,382 832,841 ING UBS U.S. Balanced (Advisor Class) 85,480 597 84,883 - - - ING Van Kampen Equity Growth (Service Class) 3,278,306 691,267 2,587,039 8,678,192 2,364,577 6,313,615 ING Van Kampen Equity Growth (Advisor Class) 481,686 23,976 457,710 23,763 590 23,173 ING Van Kampen Global Franchise (Service Class) 6,033,511 2,399,718 3,633,793 2,512,607 851,207 1,661,400 ING Van Kampen Global Franchise (Advisor Class) 1,292,472 134,695 1,157,777 78,879 4,514 74,365 ING Van Kampen Growth and Income (Service Class) 9,697,228 9,299,298 397,930 5,686,825 8,964,808 (3,277,983) ING Van Kampen Growth and Income (Advisor Class) 2,180,618 321,267 1,859,351 105,373 4,220 101,153 ING Van Kampen Real Estate (Service Class) 7,319,516 5,201,384 2,118,132 6,070,387 3,723,970 2,346,417 ING Van Kampen Real Estate (Advisor Class) 505,929 53,365 452,564 28,719 3 28,716 ING Partners, Inc.: ING Alger Aggressive Growth 65,235 12,689 52,546 - - - ING Alger Growth Portfolio 12,186 2,782 9,404 5,956 - 5,956 ING American Century Small Cap Value 14,721 287 14,434 215 - 215 ING Baron Small Cap Growth 90,459 1,243 89,216 - - - ING JPMorgan Fleming International 1,355,419 677,674 677,745 1,232 - 1,232 ING JPMorgan Mid Cap Value 527,569 33,903 493,666 950 31 919 ING MFS(R) Capital Opportunities (Initial Class) 275,325 95,137 180,188 39,538 6,696 32,842 ING MFS(R) Capital Opportunities (Service Class) 32,298 15 32,283 169,917 39,170 130,747 ING MFS(R) Global Growth 160,424 22,562 137,862 10,569 - 10,569 ING MFS(R) Research Equity 10,430 37 10,393 - - - ING OpCap Balanced Value 23,882 68 23,814 9,184 144 9,040 ING PIMCO Total Return 158,515 37,896 120,619 16,208 - 16,208 ING Salomon Brothers Aggressive Growth 1,900,446 615,504 1,284,942 - - - ING Salomon Brothers Fundamental Value 62,039 7,006 55,033 57,930 2,748 55,182
141 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Year ended December 31 2003 2002 ------------------------------------------- -------------------------------------------- Net Net Units Units Increase Units Units Increase Issued Redeemed (Decrease) Issued Redeemed (Decrease) ------------- ------------- ------------- -------------- -------------- -------------- ING Partners, Inc. (continued): ING Salomon Brothers Investors Value 37,838 2,273 35,565 487 - 487 ING T. Rowe Price Growth Equity 227,525 17,367 210,158 19,085 - 19,085 ING UBS Tactical Asset Allocation 10,498 1,710 8,788 297 - 297 ING Van Kampen Comstock 4,136,428 795,326 3,341,102 218,552 8,852 209,700 ING Variable Insurance Trust: ING GET U.S. Core Portfolio - Series 1 24,292,343 2,721,588 21,570,755 - - - ING GET U.S. Core Portfolio - Series 2 16,910,671 218,793 16,691,878 - - - ING GET U.S. Core Portfolio - Series 3 915,632 18,683 896,949 - - - ING VIT Worldwide Growth 5,334,548 2,955,189 2,379,359 4,884,109 2,447,811 2,436,298 ING Variable Portfolios, Inc.: ING VP Balanced 116,275 6,785 109,490 - - - ING VP Bond 15,174,268 13,388,596 1,785,672 7,230,384 2,562,132 4,668,252 ING VP Growth 39,910 14,404 25,506 6,679 110 6,569 ING VP Index Plus LargeCap 9,215,533 3,211,932 6,003,601 989,798 442,688 547,110 ING VP Index Plus MidCap 2,015,920 923,833 1,092,087 1,075,901 467,221 608,680 ING VP Index Plus SmallCap 1,534,395 579,748 954,647 1,032,462 634,554 397,908 ING VP International Equity 20,184 2,092 18,092 - - - ING VP Small Company 74,835 13,928 60,907 27,484 6,772 20,712 ING VP Value Opportunity 159,786 42,748 117,038 162,657 30,086 132,571 ING Variable Products Trust: ING VP Convertible 330,356 111,896 218,460 111,643 22,720 88,923 ING VP Growth and Income 161,032 18,186 142,846 - - - ING VP Growth Opportunities 3,154,558 1,227,767 1,926,791 1,984,390 760,395 1,223,995 ING VP International Value 61,584 18,501 43,083 5,020 82 4,938 ING VP Large Company Value 195,658 315,735 (120,077) 151,517 46,425 105,092
142 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Year ended December 31 2003 2002 ------------------------------------------- -------------------------------------------- Net Net Units Units Increase Units Units Increase Issued Redeemed (Decrease) Issued Redeemed (Decrease) ------------- ------------- ------------- -------------- -------------- -------------- ING Variable Products Trust (continued): ING VP LargeCap Growth 198,724 122,054 76,670 281,373 173,739 107,634 ING VP MagnaCap 2,070,135 782,965 1,287,170 1,873,780 706,779 1,167,001 ING VP MidCap Opportunities 26,831 8 26,823 1,700 - 1,700 ING VP SmallCap Opportunities 12,410,160 4,513,193 7,896,967 6,167,933 1,352,225 4,815,708 AIM Variable Insurance Funds: AIM V.I. Capital Appreciation 7,484 3,211 4,273 3,701 - 3,701 AIM V.I. Core Equity 12,098 8 12,090 4,961 - 4,961 AIM V.I. Dent Demographic Trends 6,647,819 2,292,483 4,355,336 2,175,335 948,298 1,227,037 AIM V.I. Growth 274,535 93,371 181,164 129,633 51,493 78,140 AIM V.I. Premier Equity 10,766 3,838 6,928 11,714 - 11,714 AllianceBernstein Variable Products Series Fund, Inc.: AllianceBernstein Growth and Income 812,719 251,537 561,182 585,752 114,322 471,430 AllianceBernstein Premier Growth 460,022 333,463 126,559 467,717 260,296 207,421 AllianceBernstein Value 472,742 183,509 289,233 298,200 42,183 256,017 Fidelity Variable Insurance Products Fund: Fidelity(R) VIP Contrafund(R) 1,779,394 347,498 1,431,896 540,071 148,494 391,577 Fidelity(R) VIP Equity-Income 18,102,244 6,614,886 11,487,358 8,251,501 5,400,874 2,850,627 Fidelity(R) VIP Growth 38,300,438 19,520,348 18,780,090 8,076,321 4,495,778 3,580,543 Fidelity(R) VIP Overseas 613,141 545,358 67,783 1,171 - 1,171 Franklin Templeton Variable Insurance Products Trust: Franklin Small Cap Value Securities 18,497 377 18,120 1,965 25 1,940 The Galaxy VIP Fund: Galaxy VIP Asset Allocation 1,260 78,971 (77,711) 1,789 52,447 (50,658) Galaxy VIP Growth and Income 8 16,213 (16,205) 561 3,752 (3,191) Galaxy VIP High Quality Bond - 10,297 (10,297) 2,096 4,759 (2,663) Galaxy VIP Small Company Growth 1,242 7,799 (6,557) 1,172 1,052 120
143 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Year ended December 31 2003 2002 ------------------------------------------- -------------------------------------------- Net Net Units Units Increase Units Units Increase Issued Redeemed (Decrease) Issued Redeemed (Decrease) ------------- ------------- ------------- -------------- -------------- -------------- Greenwich Street Series Fund: Greenwich Appreciation 2,140 5,725 (3,585) 4,624 4,584 40 INVESCO Variable Investment Funds, Inc.: - INVESCO VIF - Financial Services 9,715,318 6,670,182 3,045,136 8,952,534 6,278,761 2,673,773 INVESCO VIF - Health Sciences 15,231,350 10,188,192 5,043,158 11,553,067 8,591,990 2,961,077 INVESCO VIF - Leisure 3,256,460 748,922 2,507,538 1,002,159 278,062 724,097 INVESCO VIF - Utilities 4,192,548 1,736,129 2,456,419 1,413,473 305,358 1,108,115 Janus Aspen Series: Janus Aspen Series Balanced 421,393 47,868 373,525 57,501 3,830 53,671 Janus Aspen Series Flexible Income 181,934 42,626 139,308 25,934 170 25,764 Janus Aspen Series Growth 92,866 16,222 76,644 26,711 20 26,691 Janus Aspen Series Worldwide Growth 3,066,592 2,725,678 340,914 13,323,220 12,946,666 376,554 Liberty Variable Insurance Trust: Colonial Small Cap Value 3,666,414 699,990 2,966,424 - - - Liberty Variable Series: Liberty Asset Allocation 58,374 8,193 50,181 - - - Liberty Equity 17,945 11,418 6,527 2,539 15,793 (13,254) Liberty Federal Securities 12,474 3,869 8,605 - - - Liberty Small Company Growth 6,299 1,313 4,986 - - - Oppenheimer Variable Accounts Fund: Oppenheimer Global Securities 243,106 13,364 229,742 29,681 2,882 26,799 Oppenheimer Strategic Bond 88,167 29,331 58,836 5,028 3,500 1,528 PIMCO Variable Insurance Trust: PIMCO High Yield 70,549,933 50,078,253 20,471,680 27,197,895 19,409,516 7,788,379 PIMCO StocksPLUS Growth and Income 8,167,955 12,300,696 (4,132,741) 13,357,877 14,285,763 (927,886)
144 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Year ended December 31 2003 2002 --------------------------------------------- ---------------------------------------------- Net Net Units Units Increase Units Units Increase Issued Redeemed (Decrease) Issued Redeemed (Decrease) -------------- --------------- -------------- -------------- --------------- --------------- Pioneer Variable Contracts Trust: Pioneer Equity-Income 91,561 14,035 77,526 21,635 61 21,574 Pioneer Fund 6,575,983 2,345,851 4,230,132 3,769,608 1,315,200 2,454,408 Pioneer Mid-Cap Value 12,983,227 3,520,104 9,463,123 7,875,737 2,670,048 5,205,689 Pioneer Small Company 380,789 153,965 226,824 431,876 92,472 339,404 ProFunds VP: ProFund VP Bull 45,236,028 39,510,148 5,725,880 18,816,487 16,427,269 2,389,218 ProFund VP Europe 30 27,515,639 26,105,711 1,409,928 50,746,741 48,922,218 1,824,523 ProFund VP Rising Rates Opportunity 3,678,414 1,221,881 2,456,533 - - - ProFund VP Small Cap 51,869,933 44,621,619 7,248,314 44,254,935 41,001,972 3,252,963 Prudential Series Fund, Inc.: Jennison 7,101,405 5,126,319 1,975,086 45,072,785 43,503,839 1,568,946 SP Jennison International Growth 20,418,826 11,908,116 8,510,710 10,464,472 8,810,383 1,654,089 Putnam Variable Trust: Putnam VT Discovery Growth 210,296 78,555 131,741 227,745 22,636 205,109 Putnam VT Growth and Income 245,886 127,759 118,127 199,811 27,845 171,966 Putnam VT International Growth and Income 218,826 196,346 22,480 355,859 48,525 307,334 Travelers Series Fund Inc.: Smith Barney High Income 453 7,012 (6,559) 35 3,035 (3,000) Smith Barney International All Cap Growth 996 3,826 (2,830) 80 2,233 (2,153) Smith Barney Large Cap Value 1,738 5,226 (3,488) 114 3,173 (3,059) Smith Barney Money Market 20,411 27,723 (7,312) 16 6,191 (6,175) UBS Series Trust: UBS Tactical Allocation 360,783 67,068 293,715 165,483 32,046 133,437
145 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Year ended December 31 2003 2002 -------------------------------------------- -------------------------------------------- Net Net Units Units Increase Units Units Increase Issued Redeemed (Decrease) Issued Redeemed (Decrease) ------------- --------------- -------------- -------------- --------------- ------------- Wells Fargo: Wells Fargo VT Asset Allocation 2,338 1 2,337 - - - Wells Fargo VT Equity Income 982 - 982 - - - Wells Fargo VT Large Company Growth 3,283 - 3,283 - - - Wells Fargo VT Small Cap Growth 661 - 661 - - -
146 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements 8. Unit Summary Accumulation unit value information for units outstanding, by Contract type, as of December 31, 2003 follows: Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING GET Fund - Series N Contracts in accumulation period: Band 26 306,666.873 $ 10.38 $ 3,183,202 Band 27 199,118.420 10.30 2,050,920 Band 28 115,223.762 10.26 1,182,196 Band 29 738,715.417 10.25 7,571,833 Band 30 541,175.985 10.17 5,503,760 Band 31 381,361.424 10.14 3,867,005 ------------------- ------------------ 2,282,261.881 $ 23,358,916 =================== ================== ING GET Fund - Series P Contracts in accumulation period: Band 9 61,366.316 $ 10.10 $ 619,800 Band 13 10,492.650 10.06 105,556 Band 15 3,664.446 10.02 36,718 Band 26 1,300,508.766 10.26 13,343,220 Band 27 836,558.715 10.18 8,516,168 Band 28 329,076.712 10.15 3,340,129 Band 29 3,664,915.838 10.14 37,162,247 Band 30 2,915,675.476 10.07 29,360,852 Band 31 1,599,890.221 10.03 16,046,899 Band 32 97,874.282 9.97 975,807 Band 33 34,537.491 9.92 342,612 Band 34 25,855.135 9.89 255,707 ------------------- ------------------ 10,880,416.048 $ 110,105,715 =================== ================== ING GET Fund - Series Q Contracts in accumulation period: Band 9 525,008.360 $ 10.33 $ 5,423,336 Band 13 207,578.538 10.29 2,135,983 Band 15 77,172.441 10.25 791,018 Band 26 1,505,112.868 10.47 15,758,532 Band 27 1,216,248.482 10.40 12,648,984 Band 28 368,577.614 10.37 3,822,150 Band 29 3,411,365.277 10.36 35,341,744 Band 30 2,803,457.777 10.29 28,847,581 Band 31 1,369,896.037 10.26 14,055,133 Band 32 810,606.091 10.20 8,268,182 Band 33 161,789.072 10.16 1,643,777 Band 34 232,820.281 10.13 2,358,469 Band 35 2,495.775 10.51 26,231 ------------------- ------------------ 12,692,128.613 $ 131,121,120 =================== ================== ING GET Fund - Series R Contracts in accumulation period: Band 9 914,950.709 $ 10.48 $ 9,588,683 Band 13 176,700.935 10.44 1,844,758 Band 15 90,893.722 10.41 946,204
147 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING GET Fund - Series R (continued) Band 26 1,584,726.532 $ 10.60 $ 16,798,101 Band 27 846,381.098 10.54 8,920,857 Band 28 414,555.023 10.51 4,356,973 Band 29 3,182,193.328 10.50 33,413,030 Band 30 2,586,380.269 10.44 27,001,810 Band 31 1,402,678.454 10.42 14,615,909 Band 32 828,953.862 10.36 8,587,962 Band 33 381,559.358 10.32 3,937,693 Band 34 445,753.456 10.30 4,591,261 Band 35 12,641.311 10.64 134,504 Band 36 4,164.678 10.60 44,146 ------------------- ------------------ 12,872,532.735 $ 134,781,891 =================== ================== ING GET Fund - Series S Contracts in accumulation period: Band 9 865,343.638 $ 10.40 $ 8,999,574 Band 13 493,211.782 10.36 5,109,674 Band 15 226,258.832 10.34 2,339,516 Band 26 1,945,925.181 10.50 20,432,214 Band 27 800,378.701 10.45 8,363,957 Band 28 393,880.369 10.43 4,108,172 Band 29 4,136,296.637 10.42 43,100,211 Band 30 2,619,451.377 10.37 27,163,711 Band 31 1,565,123.193 10.35 16,199,025 Band 32 1,335,643.674 10.30 13,757,130 Band 33 868,639.548 10.27 8,920,928 Band 34 306,605.126 10.24 3,139,636 Band 35 14,897.421 10.54 157,019 Band 36 4,792.179 10.50 50,318 ------------------- ------------------ 15,576,447.658 $ 161,841,085 =================== ================== ING GET Fund - Series T Contracts in accumulation period: Band 6 40,072.976 $ 10.47 $ 419,564 Band 9 1,117,865.088 10.44 11,670,512 Band 10 19,502.374 10.43 203,410 Band 12 125,394.606 10.42 1,306,612 Band 13 416,352.344 10.41 4,334,228 Band 15 269,372.655 10.39 2,798,782 Band 20 68,358.049 10.40 710,924 Band 26 1,444,611.269 10.53 15,211,757 Band 27 785,952.098 10.49 8,244,638 Band 28 293,092.363 10.47 3,068,677 Band 29 3,952,416.085 10.46 41,342,272 Band 30 2,325,950.664 10.42 24,236,406 Band 31 1,700,529.135 10.40 17,685,503 Band 32 1,589,097.556 10.36 16,463,051
148 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING GET Fund - Series T (continued) Band 33 841,476.477 $ 10.33 $ 8,692,452 Band 34 530,293.976 10.31 5,467,331 Band 35 96,751.905 10.56 1,021,700 Band 36 1,394.248 10.53 14,681 ------------------- ------------------ 15,618,483.868 $ 162,892,500 =================== ================== ING GET Fund - Series U Contracts in accumulation period: Band 6 269,723.866 $ 10.55 $ 2,845,587 Band 9 1,896,116.573 10.53 19,966,108 Band 10 6,370.325 10.52 67,016 Band 12 34,269.306 10.51 360,170 Band 13 434,915.187 10.50 4,566,609 Band 15 415,851.683 10.49 4,362,284 Band 20 194,409.460 10.50 2,041,299 Band 26 1,587,162.392 10.60 16,823,921 Band 27 591,364.282 10.57 6,250,720 Band 28 548,393.800 10.55 5,785,555 Band 29 3,652,785.395 10.54 38,500,358 Band 30 1,727,713.074 10.51 18,158,264 Band 31 1,198,705.146 10.49 12,574,417 Band 32 1,576,747.812 10.46 16,492,782 Band 33 931,659.888 10.44 9,726,529 Band 34 728,767.611 10.42 7,593,759 Band 35 262,177.797 10.62 2,784,328 Band 36 6,041.319 10.60 64,038 ------------------- ------------------ 16,063,174.916 $ 168,963,744 =================== ================== ING GET Fund - Series V Contracts in accumulation period: Band 6 374,572.464 $ 9.73 $ 3,644,590 Band 7 5,272.363 9.73 51,300 Band 9 2,946,384.912 9.72 28,638,861 Band 10 57,051.690 9.71 553,972 Band 12 63,445.335 9.70 615,420 Band 13 653,998.959 9.70 6,343,790 Band 14 12,130.715 9.69 117,547 Band 15 917,110.678 9.69 8,886,802 Band 17 108,973.342 9.68 1,054,862 Band 19 7,051.923 9.66 68,122 Band 20 102,454.126 9.70 993,805 Band 26 3,891,594.220 9.77 38,020,876 Band 27 997,359.657 9.74 9,714,283 Band 28 652,416.000 9.73 6,348,008 Band 29 9,197,569.170 9.73 89,492,348 Band 30 4,412,798.330 9.70 42,804,144 Band 31 2,627,419.972 9.69 25,459,700
149 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING GET Fund - Series V (continued) Band 32 3,252,228.838 $ 9.67 $ 31,449,053 Band 33 1,003,898.930 9.65 9,687,625 Band 34 1,617,654.799 9.64 15,594,192 Band 35 626,952.919 9.78 6,131,600 Band 36 19,697.056 9.77 192,440 Band 37 19,411.677 9.76 189,458 ------------------- ------------------ 33,567,448.075 $ 326,052,798 =================== ================== ING AIM Mid-Cap Growth (Service Class) Currently payable annuity contracts: Band 2 12,111.255 $ 14.54 $ 176,098 Contracts in accumulation period: Band 1 7,913.416 14.78 116,960 Band 2 121,383.844 14.54 1,764,921 Band 3 6,081.762 14.12 85,874 Band 4 227,339.440 14.26 3,241,860 Band 5 153,177.125 14.18 2,172,052 Band 6 2,884,535.198 14.08 40,614,256 Band 7 2,190,339.352 14.01 30,686,654 Band 8 1,824,860.839 13.91 25,383,814 Band 9 680,328.569 13.83 9,408,944 Band 10 477,375.136 13.77 6,573,456 Band 11 2,492,964.282 13.72 34,203,470 Band 12 542,810.495 13.66 7,414,791 Band 13 1,533,656.739 13.60 20,857,732 Band 14 2,013,485.063 13.49 27,161,914 Band 15 2,798.367 13.43 37,582 Band 16 28,481.371 13.32 379,372 Band 17 224,903.425 13.26 2,982,219 Band 18 53,896.345 13.21 711,971 Band 19 74,897.327 13.10 981,155 Band 20 392,810.109 13.54 5,318,649 Band 21 90,471.301 13.37 1,209,601 Band 25 21,104.424 14.66 309,391 ------------------- ------------------ 16,057,725.184 $ 221,792,736 =================== ================== ING AIM Mid-Cap Growth (Advisor Class) Contracts in accumulation period: Band 6 44,565.755 $ 13.68 $ 609,660 Band 10 20,359.369 13.63 277,498 Band 11 768.519 13.62 10,467 Band 12 29,384.378 13.62 400,215 Band 20 139,428.065 13.60 1,896,222 ------------------- ------------------ 234,506.086 $ 3,194,062 =================== ==================
150 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING Alliance Mid-Cap Growth (Service Class) Contracts in accumulation period: Band 1 1,611.319 $ 17.43 $ 28,085 Band 2 133,925.966 17.16 2,298,170 Band 3 7,243.628 16.69 120,896 Band 4 305,659.817 16.83 5,144,255 Band 5 210,563.291 16.76 3,529,041 Band 6 5,531,902.003 16.63 91,995,530 Band 7 2,956,815.879 16.56 48,964,871 Band 8 4,192,754.178 16.43 68,886,951 Band 9 691,121.518 16.37 11,313,659 Band 10 845,093.901 16.31 13,783,482 Band 11 5,800,164.205 16.24 94,194,667 Band 12 888,765.283 16.18 14,380,222 Band 13 2,304,112.209 16.11 37,119,248 Band 14 2,753,698.265 15.99 44,031,635 Band 15 219.990 15.92 3,502 Band 16 81,202.977 15.80 1,283,007 Band 17 439,259.479 15.74 6,913,944 Band 18 88,833.572 15.67 1,392,022 Band 19 161,397.438 15.55 2,509,730 Band 20 719,928.443 16.05 11,554,852 Band 21 144,730.959 15.86 2,295,433 Band 25 68,581.801 17.29 1,185,779 ------------------- ------------------ 28,327,586.121 $ 462,928,981 =================== ================== ING Alliance Mid-Cap Growth (Advisor Class) Contracts in accumulation period: Band 6 81,438.095 $ 17.21 $ 1,401,550 Band 7 2,796.127 17.20 48,093 Band 10 13,026.156 17.15 223,399 Band 11 269.397 17.14 4,617 Band 12 39,890.948 17.13 683,332 Band 20 132,365.662 17.10 2,263,453 ------------------- ------------------ 269,786.385 $ 4,624,444 =================== ================== ING American Funds Growth Contracts in accumulation period: Band 2 5,392.223 $ 10.79 $ 58,182 Band 4 15,975.213 10.78 172,213 Band 5 48,699.833 10.78 524,984 Band 6 1,622,037.822 10.77 17,469,347 Band 7 1,642,217.260 10.77 17,686,680 Band 8 388,436.206 10.77 4,183,458 Band 9 141,174.360 10.76 1,519,036 Band 10 1,003,540.584 10.76 10,798,097 Band 11 964,596.171 10.76 10,379,055 Band 12 601,447.857 10.76 6,471,579
151 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING American Funds Growth (continued) Band 13 913,862.154 $ 10.76 $ 9,833,157 Band 14 1,714,683.933 10.75 18,432,852 Band 15 68,411.491 10.75 735,424 Band 16 69,134.969 10.75 743,201 Band 17 855,247.641 10.75 9,193,912 Band 18 10,783.134 10.74 115,811 Band 19 193,355.922 10.74 2,076,643 Band 20 911,850.157 10.76 9,811,508 Band 21 290,166.954 10.75 3,119,295 Band 26 67,366.693 10.79 726,887 Band 27 96,407.187 10.78 1,039,269 Band 28 25,616.661 10.77 275,891 Band 29 221,914.697 10.77 2,390,021 Band 30 112,359.464 10.76 1,208,988 Band 31 71,294.696 10.75 766,418 Band 32 65,585.576 10.74 704,389 Band 33 39,614.483 10.74 425,460 Band 34 92,431.090 10.73 991,786 Band 41 12,574.365 10.76 135,300 Band 42 4,180.380 10.75 44,939 Band 43 27,728.687 10.75 298,083 ------------------- ------------------ 12,298,087.863 $ 132,331,865 =================== ================== ING American Funds Growth-Income Contracts in accumulation period: Band 2 3,218.112 $ 11.01 $ 35,431 Band 4 35,321.437 11.00 388,536 Band 5 17,838.244 10.99 196,042 Band 6 1,024,471.344 10.99 11,258,940 Band 7 1,106,559.418 10.99 12,161,088 Band 8 397,600.019 10.98 4,365,648 Band 9 179,926.349 10.98 1,975,591 Band 10 536,261.484 10.98 5,888,151 Band 11 801,372.964 10.98 8,799,075 Band 12 440,852.611 10.98 4,840,562 Band 13 724,334.677 10.98 7,953,195 Band 14 1,307,734.550 10.97 14,345,848 Band 15 62,449.180 10.97 685,068 Band 16 34,591.800 10.97 379,472 Band 17 687,519.700 10.96 7,535,216 Band 18 5,852.945 10.96 64,148 Band 19 148,092.710 10.96 1,623,096 Band 20 563,173.275 10.97 6,178,011 Band 21 234,072.562 10.97 2,567,776 Band 26 61,848.113 11.01 680,948 Band 27 74,703.953 11.00 821,743 Band 28 8,019.393 10.99 88,133
152 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING American Funds Growth-Income (continued) Band 29 241,790.217 $ 10.99 $ 2,657,274 Band 30 96,956.040 10.98 1,064,577 Band 31 79,329.564 10.97 870,245 Band 32 63,314.049 10.96 693,922 Band 33 42,882.033 10.95 469,558 Band 34 98,515.108 10.95 1,078,740 Band 41 5,164.329 10.98 56,704 Band 42 763.633 10.97 8,377 Band 43 21,597.902 10.96 236,713 ------------------- ------------------ 9,106,127.715 $ 99,967,828 =================== ================== ING American Funds International Contracts in accumulation period: Band 2 1,685.690 $ 11.63 $ 19,605 Band 4 8,123.614 11.62 94,396 Band 5 20,350.247 11.62 236,470 Band 6 580,504.856 11.62 6,745,466 Band 7 560,899.752 11.62 6,517,655 Band 8 137,440.405 11.61 1,595,683 Band 9 74,169.412 11.61 861,107 Band 10 241,840.493 11.61 2,807,768 Band 11 252,099.512 11.61 2,926,875 Band 12 173,633.511 11.60 2,014,149 Band 13 261,150.620 11.60 3,029,347 Band 14 532,960.314 11.60 6,182,340 Band 15 17,024.830 11.60 197,488 Band 16 9,589.556 11.59 111,143 Band 17 295,090.463 11.59 3,420,098 Band 18 579.223 11.59 6,713 Band 19 35,476.007 11.58 410,812 Band 20 255,174.387 11.60 2,960,023 Band 21 71,826.555 11.59 832,470 Band 26 40,607.943 11.64 472,676 Band 27 118,109.480 11.62 1,372,432 Band 28 8,572.460 11.62 99,612 Band 29 80,952.582 11.62 940,669 Band 30 32,143.782 11.60 372,868 Band 31 31,400.753 11.60 364,249 Band 32 25,451.566 11.59 294,984 Band 33 10,618.018 11.58 122,957 Band 34 23,925.966 11.57 276,823 Band 41 2,761.702 11.60 32,036 Band 42 488.357 11.60 5,665 Band 43 1,570.590 11.59 18,203 ------------------- ------------------ 3,906,222.646 $ 45,342,782 =================== ==================
153 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ---------------------------------------------------------- ------------------- -------------- ------------------ ING Capital Guardian Large Cap Value (Service Class) Contracts in accumulation period: Band 2 92,867.115 $ 10.31 $ 957,460 Band 3 2,150.089 10.17 21,866 Band 4 181,696.852 10.21 1,855,125 Band 5 765,936.940 10.19 7,804,897 Band 6 6,231,899.788 10.15 63,253,783 Band 7 9,374,552.928 10.13 94,964,221 Band 8 2,408,097.915 10.09 24,297,708 Band 9 1,352,700.519 10.07 13,621,694 Band 10 3,956,878.864 10.05 39,766,633 Band 11 5,242,836.259 10.03 52,585,648 Band 12 3,953,848.421 10.01 39,578,023 Band 13 6,791,259.937 9.99 67,844,687 Band 14 8,602,292.520 9.95 85,592,811 Band 15 6,646.170 9.93 65,996 Band 16 241,597.497 9.89 2,389,399 Band 17 2,105,769.024 9.87 20,783,940 Band 18 293,878.532 9.85 2,894,704 Band 19 628,348.853 9.81 6,164,102 Band 20 2,657,551.167 9.97 26,495,785 Band 21 897,773.250 9.91 8,896,933 Band 24 1,323.158 10.52 13,920 Band 25 148,177.455 10.36 1,535,118 ------------------- ------------------ 55,938,083.253 $ 561,384,453 =================== ================== ING Capital Guardian Large Cap Value (Advisor Class) Contracts in accumulation period: Band 6 190,134.611 $ 13.81 $ 2,625,759 Band 7 1,590.909 13.80 21,955 Band 10 12,221.772 13.76 168,172 Band 11 1,256.406 13.75 17,276 Band 12 76,903.410 13.74 1,056,653 Band 20 212,562.552 13.72 2,916,358 ------------------- ------------------ 494,669.660 $ 6,806,173 =================== ================== ING Capital Guardian Managed Global (Service Class) Currently payable annuity contracts: Band 2 5,668.922 $ 19.42 $ 110,090 Contracts in accumulation period: Band 1 9,169.659 19.86 182,109 Band 2 1,030,091.194 19.42 20,004,371 Band 3 15,761.005 18.68 294,416 Band 4 344,196.639 18.87 6,494,991 Band 5 299,049.209 18.74 5,604,182 Band 6 2,320,223.778 18.55 43,040,151 Band 7 2,876,283.130 18.42 52,981,135 Band 8 2,499,767.677 18.24 45,595,762
154 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value --------------------------------------------------------- ------------------- -------------- ----------------- ING Capital Guardian Managed Global (Service Class) (continued) Band 9 583,925.242 $ 18.11 $ 10,574,886 Band 10 1,411,895.733 18.01 25,428,242 Band 11 1,425,811.732 17.91 25,536,288 Band 12 805,342.391 17.80 14,335,095 Band 13 1,938,963.334 17.70 34,319,651 Band 14 2,098,781.303 17.50 36,728,673 Band 15 821.678 17.40 14,297 Band 16 64,805.666 17.21 1,115,306 Band 17 451,641.584 17.11 7,727,588 Band 18 83,077.703 17.01 1,413,152 Band 19 163,907.667 16.82 2,756,927 Band 20 688,342.991 17.60 12,114,837 Band 21 204,339.644 17.30 3,535,076 Band 24 1,150.502 20.51 23,597 Band 25 128,549.328 19.60 2,519,567 ------------------- ----------------- 19,451,567.711 $ 352,450,389 =================== ================= ING Capital Guardian Managed Global (Advisor Class) Contracts in accumulation period: Band 6 21,176.240 $ 13.76 $ 291,385 Band 7 649.283 13.75 8,928 Band 10 6,002.923 13.72 82,360 Band 12 34,405.343 13.70 471,353 Band 20 89,915.984 13.68 1,230,051 ------------------- ----------------- 152,149.773 $ 2,084,077 =================== ================= ING Capital Guardian Small Cap (Service Class) Currently payable annuity contracts: Band 2 2,158.064 $ 18.78 $ 40,528 Contracts in accumulation period: Band 1 11,698.567 19.09 223,326 Band 2 189,632.908 18.78 3,561,306 Band 3 10,693.501 18.26 195,263 Band 4 290,583.447 18.41 5,349,641 Band 5 283,315.553 18.33 5,193,174 Band 6 5,701,158.596 18.19 103,704,075 Band 7 3,883,331.662 18.11 70,327,136 Band 8 3,768,841.098 17.97 67,726,075 Band 9 933,033.596 17.89 16,691,971 Band 10 1,326,176.319 17.82 23,632,462 Band 11 4,195,335.581 17.75 74,467,207 Band 12 1,161,532.589 17.68 20,535,896 Band 13 2,774,026.836 17.61 48,850,613 Band 14 3,243,333.821 17.46 56,628,609 Band 15 4,336.373 17.39 75,410 Band 16 72,310.808 17.25 1,247,361
155 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING Capital Guardian Small Cap (Service Class) (continued) Band 17 734,791.729 $ 17.18 $ 12,623,722 Band 18 90,552.930 17.11 1,549,361 Band 19 170,484.909 16.97 2,893,129 Band 20 927,953.844 17.53 16,267,031 Band 21 210,070.040 17.32 3,638,413 Band 24 1,340.173 19.55 26,200 Band 25 103,579.001 18.93 1,960,750 ------------------- ------------------ 30,090,271.945 $ 537,408,659 =================== ================== ING Capital Guardian Small Cap (Advisor Class) Contracts in accumulation period: Band 6 81,529.273 $ 13.45 $ 1,096,569 Band 7 7,772.620 13.44 104,464 Band 10 14,297.114 13.40 191,581 Band 11 1,563.844 13.39 20,940 Band 12 28,630.217 13.38 383,072 Band 20 175,876.763 13.37 2,351,472 ------------------- ------------------ 309,669.831 $ 4,148,098 =================== ================== ING Developing World (Service Class) Currently payable annuity contracts: Band 2 8,107.076 $ 9.23 $ 74,828 Contracts in accumulation period: Band 1 14,201.669 9.34 132,644 Band 2 404,830.062 9.23 3,736,581 Band 3 13,202.419 9.04 119,350 Band 4 166,780.362 9.09 1,516,033 Band 5 150,155.866 9.07 1,361,914 Band 6 2,328,297.363 9.01 20,977,959 Band 7 1,925,673.976 8.99 17,311,809 Band 8 1,347,744.852 8.93 12,035,362 Band 9 459,146.221 8.91 4,090,993 Band 10 472,272.814 8.88 4,193,783 Band 11 1,492,155.083 8.85 13,205,572 Band 12 410,102.047 8.83 3,621,201 Band 13 847,928.806 8.80 7,461,773 Band 14 1,334,968.093 8.75 11,680,971 Band 15 927.665 8.72 8,089 Band 16 55,207.921 8.67 478,653 Band 17 251,030.941 8.64 2,168,907 Band 18 22,799.723 8.62 196,534 Band 19 58,907.593 8.57 504,838 Band 20 380,832.094 8.77 3,339,897 Band 21 80,874.288 8.70 703,606 Band 25 38,950.784 9.28 361,463 ------------------- ------------------ 12,265,097.718 $ 109,282,760 =================== ==================
156 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING Developing World (Advisor Class) Contracts in accumulation period: Band 6 30,921.112 $ 14.00 $ 432,896 Band 7 8,004.844 14.00 112,068 Band 10 18,761.198 13.96 261,906 Band 11 3,860.569 13.95 53,855 Band 12 26,375.415 13.94 367,673 Band 20 52,234.545 13.92 727,105 ------------------- ------------------ 140,157.683 $ 1,955,503 =================== ================== ING Eagle Asset Value Equity (Service Class) Currently payable annuity contracts: Band 2 484.309 $ 19.18 $ 9,289 Contracts in accumulation period: Band 1 4,086.003 19.53 79,800 Band 2 213,285.821 19.18 4,090,822 Band 3 8,927.676 18.58 165,876 Band 4 207,752.833 18.77 3,899,521 Band 5 115,811.317 18.67 2,162,197 Band 6 2,180,938.255 18.52 40,390,976 Band 7 1,291,039.694 18.41 23,768,041 Band 8 1,905,658.988 18.27 34,816,390 Band 9 266,585.502 18.16 4,841,193 Band 10 364,190.935 18.08 6,584,572 Band 11 1,958,386.717 17.99 35,231,377 Band 12 390,049.160 17.92 6,989,681 Band 13 983,870.712 17.84 17,552,254 Band 14 1,015,032.571 17.67 17,935,626 Band 15 15,779.790 17.59 277,567 Band 16 34,620.288 17.43 603,432 Band 17 228,990.248 17.35 3,972,981 Band 18 27,222.612 17.27 470,135 Band 19 58,775.546 17.12 1,006,237 Band 20 242,601.463 17.75 4,306,176 Band 21 78,240.292 17.51 1,369,988 Band 25 12,788.967 19.35 247,467 Band 26 15,302.960 19.27 294,888 Band 27 7,938.110 18.75 148,840 Band 28 562.331 18.49 10,398 Band 29 12,865.256 18.41 236,849 Band 30 16,345.235 17.91 292,743 Band 31 13,995.827 17.67 247,306 Band 32 8,400.123 17.21 144,566 Band 33 2,229.256 16.90 37,674 Band 34 475.512 16.67 7,927 ------------------- ------------------ 11,683,234.309 $ 212,192,789 =================== ==================
157 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING Eagle Asset Value Equity (Advisor Class) Contracts in accumulation period: Band 6 21,736.856 $ 11.87 $ 258,016 Band 7 451.996 11.86 5,361 Band 10 881.972 11.83 10,434 Band 12 14,549.959 11.82 171,981 Band 20 48,863.931 11.80 576,594 ------------------- ------------------ 86,484.714 $ 1,022,386 =================== ================== ING FMR Diversified Mid-Cap (Service Class) Contracts in accumulation period: Band 2 15,323.029 $ 9.64 $ 147,714 Band 3 1,885.203 9.53 17,966 Band 4 44,499.325 9.56 425,414 Band 5 176,724.716 9.55 1,687,721 Band 6 2,137,834.265 9.52 20,352,182 Band 7 2,850,228.843 9.50 27,077,174 Band 8 492,657.009 9.47 4,665,462 Band 9 241,130.260 9.45 2,278,681 Band 10 1,236,348.705 9.44 11,671,132 Band 11 1,406,797.479 9.42 13,252,032 Band 12 1,170,476.118 9.41 11,014,180 Band 13 2,031,359.511 9.39 19,074,466 Band 14 3,090,180.234 9.36 28,924,087 Band 15 635.125 9.35 5,938 Band 16 98,923.303 9.32 921,965 Band 17 724,928.935 9.30 6,741,839 Band 18 119,997.610 9.28 1,113,578 Band 19 221,766.981 9.25 2,051,345 Band 20 1,113,986.198 9.38 10,449,191 Band 21 207,579.625 9.33 1,936,718 Band 25 44,046.481 9.68 426,370 ------------------- ------------------ 17,427,308.955 $ 164,235,155 =================== ================== ING FMR Diversified Mid-Cap (Advisor Class) Contracts in accumulation period: Band 6 85,074.410 $ 12.46 $ 1,060,027 Band 7 777.643 12.45 9,682 Band 10 18,203.284 12.42 226,085 Band 11 910.875 12.41 11,304 Band 12 43,522.997 12.40 539,685 Band 20 154,106.870 12.38 1,907,843 ------------------- ------------------ 302,596.079 $ 3,754,626 =================== ==================
158 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING Goldman Sachs Internet Tollkeeper (Service Class) Contracts in accumulation period: Band 2 1,884.986 $ 6.53 $ 12,309 Band 3 1,486.247 6.47 9,616 Band 4 10,976.319 6.49 71,236 Band 5 35,807.107 6.48 232,030 Band 6 976,838.896 6.46 6,310,379 Band 7 1,534,118.701 6.45 9,895,066 Band 8 228,337.954 6.44 1,470,496 Band 9 96,371.604 6.43 619,669 Band 10 555,046.476 6.42 3,563,398 Band 11 559,222.434 6.41 3,584,616 Band 12 417,879.664 6.40 2,674,430 Band 13 932,881.163 6.39 5,961,111 Band 14 1,631,740.460 6.37 10,394,187 Band 15 6,815.081 6.37 43,412 Band 16 87,869.005 6.35 557,968 Band 17 305,816.527 6.34 1,938,877 Band 18 52,482.557 6.33 332,215 Band 19 140,904.298 6.31 889,106 Band 20 704,091.988 6.38 4,492,107 Band 21 77,659.771 6.36 493,916 Band 25 12,890.538 6.55 84,433 ------------------- ------------------ 8,371,121.776 $ 53,630,577 =================== ================== ING Goldman Sachs Internet Tollkeeper (Advisor Class) Contracts in accumulation period: Band 6 36,659.475 $ 14.46 $ 530,096 Band 10 8,035.974 14.41 115,798 Band 11 262.191 14.40 3,776 Band 12 37,416.150 14.39 538,418 Band 20 97,913.949 14.37 1,407,023 ------------------- ------------------ 180,287.739 $ 2,595,111 =================== ================== ING Hard Assets (Service Class) Currently payable annuity contracts: Band 2 2,020.057 $ 22.37 $ 45,189 Contracts in accumulation period: Band 1 29,984.555 23.06 691,444 Band 2 186,973.774 22.37 4,182,603 Band 3 10,853.430 21.22 230,310 Band 4 55,640.341 21.58 1,200,719 Band 5 42,368.048 21.39 906,253 Band 6 742,286.361 21.09 15,654,819 Band 7 826,627.504 20.91 17,284,781 Band 8 549,898.027 20.62 11,338,897 Band 9 101,131.759 20.44 2,067,133 Band 10 349,772.216 20.28 7,093,381
159 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING Hard Assets (Service Class) (continued) Band 11 1,031,494.033 $ 20.13 $ 20,763,975 Band 12 210,632.773 19.98 4,208,443 Band 13 496,935.444 19.83 9,854,230 Band 14 1,330,706.785 19.53 25,988,704 Band 15 2,426.210 19.38 47,020 Band 16 17,930.098 19.09 342,286 Band 17 147,526.100 18.94 2,794,144 Band 18 18,382.094 18.80 345,583 Band 19 61,073.869 18.51 1,130,477 Band 20 591,336.391 19.68 11,637,500 Band 21 46,295.847 19.23 890,269 Band 25 59,058.615 22.72 1,341,812 ------------------- ------------------ 6,911,354.331 $ 140,039,972 =================== ================== ING Hard Assets (Advisor Class) Contracts in accumulation period: Band 6 53,933.075 $ 14.74 $ 794,974 Band 7 1,596.565 14.73 23,517 Band 10 13,333.904 14.70 196,008 Band 11 2,330.199 14.69 34,231 Band 12 31,790.322 14.68 466,682 Band 20 103,812.626 14.66 1,521,893 ------------------- ------------------ 206,796.691 $ 3,037,305 =================== ================== ING International (Service Class) Contracts in accumulation period: Band 1 1,431.094 $ 9.63 $ 13,781 Band 2 14,398.922 9.48 136,502 Band 3 1,275.424 9.22 11,759 Band 4 8,226.140 9.30 76,503 Band 5 94,950.069 9.26 879,238 Band 6 3,949,926.597 9.12 36,023,331 Band 7 2,278,888.640 9.15 20,851,831 Band 8 1,583,400.059 9.08 14,377,273 Band 9 588,682.557 9.04 5,321,690 Band 10 460,646.171 9.01 4,150,422 Band 11 3,838,885.601 8.97 34,434,804 Band 12 522,021.404 8.94 4,666,871 Band 13 1,458,594.480 8.90 12,981,491 Band 14 2,080,261.285 8.83 18,368,707 Band 15 2,824.067 8.80 24,852 Band 16 19,121.769 8.73 166,933 Band 17 291,623.544 8.69 2,534,209 Band 18 53,716.217 8.66 465,182 Band 19 58,270.098 8.59 500,540 Band 20 454,200.749 8.87 4,028,761 Band 21 191,230.337 8.76 1,675,178 Band 25 44,700.725 9.55 426,892 ------------------- ------------------ 17,997,275.949 $ 162,116,750 =================== ==================
160 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING International (Advisor Class) Contracts in accumulation period: Band 6 77,931.489 $ 12.47 $ 971,806 Band 8 598.946 12.45 7,457 Band 10 17,849.255 12.43 221,866 Band 12 109,335.405 12.42 1,357,946 Band 20 195,237.861 12.40 2,420,949 ------------------- ------------------ 400,952.956 $ 4,980,024 =================== ================== ING Janus Growth and Income (Service Class) Contracts in accumulation period: Band 2 18,238.453 $ 8.63 $ 157,398 Band 3 3,729.437 8.53 31,812 Band 4 121,675.937 8.56 1,041,546 Band 5 335,953.366 8.55 2,872,401 Band 6 2,871,432.508 8.52 24,464,605 Band 7 4,328,568.168 8.50 36,792,829 Band 8 754,836.167 8.48 6,401,011 Band 9 328,257.366 8.46 2,777,057 Band 10 2,048,406.120 8.45 17,309,032 Band 11 2,181,919.434 8.43 18,393,581 Band 12 2,106,216.660 8.42 17,734,344 Band 13 3,698,409.545 8.41 31,103,624 Band 14 4,126,254.579 8.38 34,578,013 Band 15 26,957.126 8.37 225,631 Band 16 149,703.736 8.34 1,248,529 Band 17 853,351.031 8.32 7,099,881 Band 18 159,408.940 8.31 1,324,688 Band 19 311,748.148 8.28 2,581,275 Band 20 1,292,405.270 8.39 10,843,280 Band 21 307,687.270 8.35 2,569,189 Band 25 58,259.344 8.66 504,526 Band 26 132,740.585 8.65 1,148,206 Band 27 59,502.828 8.56 509,344 Band 28 16,062.844 8.52 136,855 Band 29 171,330.033 8.50 1,456,305 Band 30 91,081.184 8.42 766,904 Band 31 42,468.423 8.38 355,885 Band 32 8,989.522 8.30 74,613 Band 33 21,187.834 8.24 174,588 Band 34 8,581.507 8.20 70,368 Band 41 329.378 10.81 3,561 Band 43 1,451.593 10.80 15,677 ------------------- ------------------ 26,637,144.336 $ 224,766,558 =================== ==================
161 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING Janus Growth and Income (Advisor Class) Contracts in accumulation period: Band 6 128,810.334 $ 11.73 $ 1,510,945 Band 7 1,586.724 11.72 18,596 Band 10 57,279.985 11.69 669,603 Band 11 3,638.740 11.68 42,500 Band 12 183,002.745 11.67 2,135,642 Band 20 241,740.683 11.66 2,818,696 ------------------- ------------------ 616,059.211 $ 7,195,982 =================== ================== ING Janus Special Equity (Service Class) Contracts in accumulation period: Band 2 15,195.182 $ 9.13 $ 138,732 Band 3 238.632 9.03 2,155 Band 4 6,042.471 9.06 54,745 Band 5 92,519.836 9.04 836,379 Band 6 856,121.104 9.01 7,713,651 Band 7 934,004.354 9.00 8,406,039 Band 8 240,606.036 8.97 2,158,236 Band 9 169,752.220 8.95 1,519,282 Band 10 344,836.901 8.94 3,082,842 Band 11 553,067.702 8.92 4,933,364 Band 12 356,948.614 8.91 3,180,412 Band 13 629,201.039 8.89 5,593,597 Band 14 1,098,077.852 8.86 9,728,970 Band 15 2,108.329 8.85 18,659 Band 16 18,885.418 8.82 166,569 Band 17 149,245.254 8.81 1,314,851 Band 18 35,657.497 8.79 313,429 Band 19 63,791.381 8.76 558,813 Band 20 384,529.360 8.88 3,414,621 Band 21 78,179.962 8.84 691,111 Band 25 10,452.123 9.16 95,741 ------------------- ------------------ 6,039,461.267 $ 53,922,198 =================== ================== ING Janus Special Equity (Advisor Class) Contracts in accumulation period: Band 6 10,723.940 $ 14.27 $ 153,031 Band 10 1,155.425 14.22 16,430 Band 12 19,367.100 14.20 275,013 Band 20 25,155.076 14.19 356,951 ------------------- ------------------ 56,401.541 $ 801,425 =================== ================== ING Jennison Equity Opportunities (Service Class) Currently payable annuity contracts: Band 2 10,402.758 $ 20.39 $ 212,112 Contracts in accumulation period: Band 1 13,520.205 20.87 282,167
162 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING Jennison Equity Opportunities (Service Class) (continued) Band 2 1,005,109.201 $ 20.39 $ 20,494,177 Band 3 15,125.505 19.56 295,855 Band 4 229,031.506 19.82 4,539,404 Band 5 183,069.708 19.68 3,602,812 Band 6 2,581,561.314 19.47 50,262,999 Band 7 1,900,373.651 19.33 36,734,223 Band 8 2,572,696.508 19.13 49,215,684 Band 9 633,989.339 18.99 12,039,458 Band 10 463,550.587 18.88 8,751,835 Band 11 3,080,079.212 18.77 57,813,087 Band 12 606,016.779 18.66 11,308,273 Band 13 1,511,001.580 18.55 28,029,079 Band 14 1,998,515.787 18.33 36,632,794 Band 15 97.564 18.22 1,778 Band 16 39,320.561 18.01 708,163 Band 17 185,363.910 17.90 3,318,014 Band 18 35,727.644 17.79 635,595 Band 19 60,940.418 17.58 1,071,333 Band 20 296,297.253 18.44 5,463,721 Band 21 68,656.764 18.11 1,243,374 Band 25 39,241.379 20.63 809,550 ------------------- ------------------ 17,529,689.133 $ 333,465,487 =================== ================== ING Jennison Equity Opportunities (Advisor Class) Contracts in accumulation period: Band 6 29,760.887 $ 12.59 $ 374,690 Band 10 3,200.091 12.55 40,161 Band 11 695.344 12.54 8,720 Band 12 13,652.055 12.53 171,060 Band 20 83,383.060 12.52 1,043,956 ------------------- ------------------ 130,691.437 $ 1,638,587 =================== ================== ING JPMorgan Fleming Small Cap Equity (Service Class) Contracts in accumulation period: Band 1 307.272 $ 10.49 $ 3,223 Band 2 7,352.743 10.45 76,836 Band 4 4,313.937 10.41 44,908 Band 5 56,893.563 10.40 591,693 Band 6 824,537.407 10.38 8,558,698 Band 7 1,208,974.758 10.37 12,537,068 Band 8 99,604.851 10.36 1,031,906 Band 9 72,864.199 10.35 754,144 Band 10 506,710.923 10.34 5,239,391 Band 11 498,967.398 10.33 5,154,333 Band 12 265,899.317 10.32 2,744,081 Band 13 681,441.412 10.31 7,025,661 Band 14 961,310.914 10.30 9,901,502
163 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING JPMorgan Fleming Small Cap Equity (Service Class) (continued) Band 15 26,442.000 $ 10.29 $ 272,088 Band 16 38,873.478 10.27 399,231 Band 17 259,872.196 10.26 2,666,289 Band 18 24,073.628 10.25 246,755 Band 19 80,743.790 10.23 826,009 Band 20 376,173.684 10.30 3,874,589 Band 21 121,614.412 10.28 1,250,196 Band 25 15,842.120 10.47 165,867 Band 26 30,405.780 10.46 318,044 Band 27 20,560.832 10.41 214,038 Band 28 448.402 10.38 4,654 Band 29 42,750.856 10.37 443,326 Band 30 27,008.973 10.32 278,733 Band 31 45,483.273 10.30 468,478 Band 32 11,236.621 10.24 115,063 Band 33 11,750.728 10.21 119,975 Band 34 8,500.387 10.18 86,534 Band 41 6,646.882 11.02 73,249 Band 42 144.692 11.01 1,593 Band 43 479.925 11.01 5,284 ------------------- ------------------ 6,338,231.353 $ 65,493,439 =================== ================== ING JPMorgan Fleming Small Cap Equity (Advisor Class) Contracts in accumulation period: Band 6 285,412.257 $ 12.52 $ 3,573,361 Band 7 1,007.513 12.51 12,604 Band 10 64,681.399 12.48 807,224 Band 11 8,023.500 12.47 100,053 Band 12 144,863.341 12.46 1,804,997 Band 20 384,823.804 12.45 4,791,056 ------------------- ------------------ 888,811.814 $ 11,089,295 =================== ================== ING Julius Baer Foreign (Service Class) Contracts in accumulation period: Band 2 23,654.089 $ 10.71 $ 253,335 Band 4 5,095.030 10.67 54,364 Band 5 27,428.113 10.66 292,384 Band 6 505,047.822 10.64 5,373,709 Band 7 447,901.906 10.63 4,761,197 Band 8 108,889.932 10.61 1,155,322 Band 9 26,857.067 10.60 284,685 Band 10 296,301.043 10.59 3,137,828 Band 11 189,657.898 10.59 2,008,477 Band 12 149,527.696 10.58 1,582,003 Band 13 268,992.809 10.57 2,843,254 Band 14 567,009.504 10.55 5,981,950 Band 15 19,973.759 10.54 210,523
164 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING Julius Baer Foreign (Service Class) (continued) Band 16 14,401.314 $ 10.52 $ 151,502 Band 17 128,361.660 10.51 1,349,081 Band 18 20,181.298 10.50 211,904 Band 19 59,010.628 10.49 619,021 Band 20 122,689.156 10.56 1,295,597 Band 21 45,762.500 10.53 481,879 Band 25 4,864.183 10.73 52,193 Band 26 37,732.388 10.72 404,491 Band 27 47,206.361 10.67 503,692 Band 28 1,286.933 10.64 13,693 Band 29 54,649.311 10.63 580,922 Band 30 22,761.665 10.58 240,818 Band 31 15,813.245 10.55 166,830 Band 32 18,673.699 10.50 196,074 Band 33 18,930.376 10.46 198,012 Band 34 22,722.745 10.44 237,225 Band 42 537.150 11.69 6,279 ------------------- ------------------ 3,271,921.280 $ 34,648,244 =================== ================== ING Julius Baer Foreign (Advisor Class) Contracts in accumulation period: Band 6 34,036.529 $ 12.60 $ 428,860 Band 7 8,924.720 12.59 112,362 Band 10 8,492.946 12.55 106,586 Band 12 53,077.833 12.54 665,596 Band 20 98,782.286 12.52 1,236,754 ------------------- ------------------ 203,314.314 $ 2,550,158 =================== ================== ING Limited Maturity Bond Currently payable annuity contracts: Band 1 1,325.281 $ 22.32 $ 29,580 Band 2 3,692.647 21.66 79,983 Contracts in accumulation period: Band 1 28,074.497 22.32 626,623 Band 2 705,085.799 21.66 15,272,158 Band 3 13,694.537 20.54 281,286 Band 4 292,573.723 20.90 6,114,791 Band 5 378,428.825 20.69 7,829,692 Band 6 5,262,645.164 20.44 107,568,467 Band 7 4,019,585.111 20.22 81,276,011 Band 8 2,413,915.779 19.98 48,230,037 Band 9 614,145.706 19.77 12,141,661 Band 10 1,154,036.996 19.62 22,642,206 Band 11 3,602,660.537 19.50 70,251,880 Band 12 1,037,485.098 19.32 20,044,212 Band 13 2,934,073.045 19.18 56,275,521 Band 14 2,747,066.792 18.89 51,892,092
165 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING Limited Maturity Bond (continued) Band 15 1,045.192 $ 18.78 $ 19,629 Band 16 87,178.393 18.49 1,611,928 Band 17 390,765.794 18.35 7,170,552 Band 18 130,049.956 18.21 2,368,210 Band 19 166,520.393 17.94 2,987,376 Band 20 750,831.314 19.07 14,318,353 Band 21 187,232.332 18.64 3,490,011 Band 24 5,353.615 23.37 125,114 Band 25 109,192.878 22.01 2,403,335 ------------------- ------------------ 27,036,659.404 $ 535,050,708 =================== ================== ING Liquid Assets (Service Class) Currently payable annuity contracts: Band 2 1,135.261 $ 16.69 $ 18,948 Contracts in accumulation period: Band 1 162,792.274 17.20 2,800,027 Band 2 519,161.211 16.69 8,664,801 Band 3 39,620.556 15.83 627,193 Band 4 657,453.196 16.10 10,584,996 Band 5 257,123.095 15.91 4,090,828 Band 6 7,860,941.105 15.74 123,731,213 Band 7 8,871,898.547 15.55 137,958,022 Band 8 3,967,467.852 15.39 61,059,330 Band 9 1,702,970.732 15.20 25,885,155 Band 10 1,848,566.742 15.09 27,894,872 Band 11 6,180,280.792 15.02 92,827,817 Band 12 1,358,557.118 14.86 20,188,159 Band 13 5,614,607.321 14.75 82,815,458 Band 14 5,640,001.421 14.52 81,892,821 Band 15 50,238.046 14.46 726,442 Band 16 232,020.966 14.24 3,303,979 Band 17 735,334.662 14.13 10,390,279 Band 18 127,143.104 14.03 1,783,818 Band 19 298,952.519 13.81 4,128,534 Band 20 953,624.187 14.68 13,999,203 Band 21 247,661.980 14.35 3,553,949 Band 24 13,258.961 18.00 238,661 Band 25 65,738.231 16.95 1,114,263 Band 26 172,805.609 16.82 2,906,590 Band 27 70,424.585 16.08 1,132,427 Band 28 18,414.889 15.71 289,298 Band 29 650,408.544 15.60 10,146,373 Band 30 187,369.734 14.90 2,791,809 Band 31 298,916.863 14.57 4,355,219 Band 32 111,894.149 13.94 1,559,804 Band 33 56,073.775 13.52 758,117 Band 34 47,009.497 13.22 621,466
166 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING Liquid Assets (Service Class) (continued) Band 35 23,814.939 $ 17.34 $ 412,951 Band 36 1,753.842 16.82 29,500 Band 38 33,868.904 9.99 338,350 Band 39 1,668.190 9.98 16,649 Band 42 16,707.932 9.96 166,411 Band 43 522.213 9.95 5,196 ------------------- ------------------ 49,098,203.544 $ 745,808,928 =================== ================== ING Liquid Assets (Advisor Class) Contracts in accumulation period: Band 6 186,420.284 $ 9.91 $ 1,847,425 Band 7 9,973.981 9.90 98,742 Band 8 215.748 9.89 2,134 Band 10 16,707.243 9.88 165,068 Band 12 138,372.345 9.86 1,364,351 Band 20 138,055.719 9.85 1,359,849 ------------------- ------------------ 489,745.320 $ 4,837,569 =================== ================== ING Marsico Growth (Service Class) Contracts in accumulation period: Band 1 12,413.492 $ 14.42 $ 179,003 Band 2 325,663.376 14.20 4,624,420 Band 3 8,537.409 13.81 117,902 Band 4 500,524.385 13.92 6,967,299 Band 5 493,864.882 13.87 6,849,906 Band 6 11,921,200.160 13.76 164,035,714 Band 7 6,824,703.327 13.71 93,566,683 Band 8 7,363,429.072 13.60 100,142,635 Band 9 2,163,883.591 13.55 29,320,623 Band 10 1,979,403.765 13.49 26,702,157 Band 11 10,340,318.548 13.44 138,973,881 Band 12 1,718,678.370 13.39 23,013,103 Band 13 5,319,924.615 13.34 70,967,794 Band 14 5,372,714.171 13.23 71,081,008 Band 15 7,966.475 13.18 104,998 Band 16 147,726.038 13.07 1,930,779 Band 17 845,398.531 13.02 11,007,089 Band 18 106,575.985 12.97 1,382,291 Band 19 280,718.299 12.87 3,612,845 Band 20 1,329,455.018 13.28 17,655,163 Band 21 339,228.939 13.13 4,454,076 Band 24 808.345 14.76 11,931 Band 25 155,586.977 14.31 2,226,450 ------------------- ------------------ 57,558,723.770 $ 778,927,750 =================== ==================
167 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING Marsico Growth (Advisor Class) Contracts in accumulation period: Band 6 117,513.167 $ 12.79 $ 1,502,993 Band 7 6,764.238 12.78 86,447 Band 10 34,151.241 12.74 435,087 Band 11 1,617.073 12.73 20,585 Band 12 108,523.535 12.73 1,381,505 Band 20 385,405.470 12.71 4,898,504 ------------------- ------------------ 653,974.724 $ 8,325,121 =================== ================== ING Mercury Focus Value (Service Class) Contracts in accumulation period: Band 2 63.224 $ 10.90 $ 689 Band 3 400.078 10.84 4,337 Band 4 5,350.813 10.86 58,110 Band 5 8,396.632 10.85 91,103 Band 6 289,419.207 10.83 3,134,410 Band 7 392,802.152 10.82 4,250,119 Band 8 78,050.210 10.80 842,942 Band 9 24,096.214 10.79 259,998 Band 10 128,265.325 10.79 1,383,983 Band 11 178,758.572 10.78 1,927,017 Band 12 122,619.021 10.77 1,320,607 Band 13 206,042.645 10.76 2,217,019 Band 14 419,552.498 10.74 4,505,994 Band 15 328.044 10.73 3,520 Band 16 8,598.898 10.71 92,094 Band 17 99,429.694 10.70 1,063,898 Band 18 116,975.420 10.69 1,250,467 Band 19 48,503.780 10.68 518,020 Band 20 281,611.158 10.75 3,027,320 Band 21 18,966.487 10.72 203,321 Band 25 3,001.806 10.92 32,780 ------------------- ------------------ 2,431,231.878 $ 26,187,748 =================== ================== ING Mercury Focus Value (Advisor Class) Contracts in accumulation period: Band 6 9,360.692 $ 13.15 $ 123,093 Band 10 1,782.325 13.10 23,348 Band 11 1,103.693 13.10 14,458 Band 12 19,077.186 13.09 249,720 Band 20 30,187.164 13.07 394,546 ------------------- ------------------ 61,511.060 $ 805,165 =================== ================== ING Mercury Fundamental Growth (Service Class) Contracts in accumulation period: Band 2 1,263.411 $ 10.05 $ 12,697 Band 5 10,243.121 10.00 102,431
168 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ------------------------------------------------------ ------------------- -------------- ----------------- ING Mercury Fundamental Growth (Service Class) (continued) Band 6 158,395.960 $ 9.98 $ 1,580,792 Band 7 237,787.205 9.97 2,370,738 Band 8 30,926.329 9.96 308,026 Band 9 4,515.384 9.95 44,928 Band 10 161,256.140 9.94 1,602,886 Band 11 113,463.033 9.93 1,126,688 Band 12 120,270.800 9.92 1,193,086 Band 13 111,582.449 9.92 1,106,898 Band 14 199,717.108 9.90 1,977,199 Band 16 1,085.701 9.87 10,716 Band 17 38,135.085 9.86 376,012 Band 18 1,932.030 9.86 19,050 Band 19 11,988.726 9.84 117,969 Band 20 145,460.092 9.91 1,441,510 Band 21 23,790.830 9.88 235,053 Band 25 562.517 10.07 5,665 ------------------- ----------------- 1,372,375.921 $ 13,632,344 =================== ================= ING Mercury Fundamental Growth (Advisor Class) Contracts in accumulation period: Band 6 15,559.636 $ 11.81 $ 183,759 Band 10 2,610.804 11.77 30,729 Band 12 35,198.614 11.75 413,584 Band 20 19,376.875 11.74 227,485 ------------------- ----------------- 72,745.929 $ 855,557 =================== ================= ING MFS(R) Mid-Cap Growth (Service Class) Currently payable annuity contracts: Band 2 2,845.649 $ 22.89 $ 65,137 Contracts in accumulation period: Band 1 24,114.922 23.32 562,360 Band 2 583,730.685 22.89 13,361,595 Band 3 9,154.495 22.15 202,772 Band 4 288,001.815 22.36 6,439,721 Band 5 288,977.564 22.26 6,432,641 Band 6 5,259,347.829 22.02 115,810,839 Band 7 3,776,333.921 21.95 82,890,530 Band 8 3,416,000.324 21.75 74,298,007 Band 9 975,307.278 21.64 21,105,649 Band 10 1,153,663.407 21.54 24,849,910 Band 11 4,377,953.771 21.44 93,863,329 Band 12 1,057,927.231 21.34 22,576,167 Band 13 2,586,393.026 21.24 54,934,988 Band 14 3,633,580.719 21.04 76,450,538 Band 15 2,196.211 20.94 45,989 Band 16 80,454.311 20.75 1,669,427 Band 17 527,276.404 20.65 10,888,258
169 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING MFS(R) Mid-Cap Growth (Service Class) (continued) Band 18 83,428.207 $ 20.55 $ 1,714,450 Band 19 153,095.775 20.36 3,117,030 Band 20 821,081.229 21.14 17,357,657 Band 21 164,911.533 20.85 3,438,405 Band 22 2,253.420 22.36 50,386 Band 23 19,131.647 22.02 421,279 Band 24 52.657 23.98 1,263 Band 25 85,630.292 23.11 1,978,916 ------------------- ------------------ 29,372,844.322 $ 634,527,243 =================== ================== ING MFS(R) Mid-Cap Growth (Advisor Class) Contracts in accumulation period: Band 6 150,862.997 $ 13.39 $ 2,020,056 Band 7 6,841.632 13.38 91,541 Band 8 675.744 13.36 9,028 Band 10 30,839.553 13.34 411,400 Band 11 1,365.357 13.33 18,200 Band 12 132,880.685 13.32 1,769,971 Band 20 398,656.670 13.31 5,306,120 ------------------- ------------------ 722,122.638 $ 9,626,316 =================== ================== ING MFS(R) Research (Service Class) Contracts in accumulation period: Band 1 4,195.183 $ 19.66 $ 82,477 Band 2 131,156.986 19.29 2,530,018 Band 3 10,445.264 18.67 195,013 Band 4 349,602.864 18.85 6,590,014 Band 5 183,827.819 18.76 3,448,610 Band 6 5,400,160.744 18.60 100,442,990 Band 7 2,782,103.594 18.50 51,468,916 Band 8 4,358,135.928 18.33 79,884,632 Band 9 726,673.466 18.24 13,254,524 Band 10 933,001.015 18.16 16,943,298 Band 11 5,236,618.377 18.07 94,625,694 Band 12 941,140.362 17.99 16,931,115 Band 13 2,135,320.839 17.91 38,243,596 Band 14 2,339,603.896 17.74 41,504,573 Band 15 12,027.645 17.65 212,288 Band 16 51,557.715 17.49 901,744 Band 17 360,252.995 17.41 6,272,005 Band 18 60,269.726 17.32 1,043,872 Band 19 108,670.551 17.16 1,864,787 Band 20 600,565.765 17.82 10,702,082 Band 21 159,402.159 17.57 2,800,696 Band 22 1,443.461 18.85 27,209 Band 23 25,280.133 18.60 470,210 Band 25 73,031.577 19.48 1,422,655
170 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING MFS(R) Research (Service Class) Band 26 18,072.908 $ 19.38 $ 350,253 Band 27 7,463.487 18.85 140,687 Band 28 7,496.346 18.59 139,357 Band 29 54,727.064 18.50 1,012,451 Band 30 37,705.894 17.99 678,329 Band 31 19,120.878 17.73 339,013 Band 32 7,553.893 17.26 130,380 Band 33 1,554.732 16.94 26,337 Band 34 21,457.513 16.70 358,340 ------------------- ------------------ 27,159,640.779 $ 495,038,165 =================== ================== ING MFS(R) Research (Advisor Class) Contracts in accumulation period: Band 6 20,423.167 $ 11.92 $ 243,444 Band 7 2,013.897 11.91 23,986 Band 10 3,880.538 11.88 46,101 Band 12 37,952.155 11.86 450,113 Band 20 100,300.881 11.84 1,187,562 ------------------- ------------------ 164,570.638 $ 1,951,206 =================== ================== ING MFS(R) Total Return (Service Class) Contracts in accumulation period: Band 1 4,923.343 $ 23.41 $ 115,255 Band 2 160,507.275 22.98 3,688,457 Band 3 5,225.289 22.24 116,210 Band 4 532,865.173 22.45 11,962,823 Band 5 472,863.609 22.34 10,563,773 Band 6 9,169,678.516 22.14 203,016,682 Band 7 6,329,199.518 22.03 139,432,265 Band 8 5,459,084.420 21.83 119,171,813 Band 9 932,449.941 21.73 20,262,137 Band 10 2,396,434.770 21.62 51,810,920 Band 11 8,577,563.892 21.52 184,589,175 Band 12 2,736,457.499 21.42 58,614,920 Band 13 4,841,190.366 21.32 103,214,179 Band 14 5,601,226.219 21.12 118,297,898 Band 15 50,139.947 21.02 1,053,942 Band 16 156,989.404 20.83 3,270,089 Band 17 1,101,311.238 20.73 22,830,182 Band 18 244,840.344 20.63 5,051,056 Band 19 365,772.615 20.44 7,476,392 Band 20 1,739,275.860 21.22 36,907,434 Band 21 512,064.285 20.93 10,717,505 Band 22 3,008.539 22.45 67,542 Band 23 28,541.470 22.14 631,908 Band 24 243.729 24.07 5,867 Band 25 118,902.463 23.19 2,757,348
171 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ------------------------------------------------------- ------------------- -------------- ------------------- ING MFS(R) Total Return (Service Class) (continued) Band 26 208,038.658 $ 23.08 $ 4,801,532 Band 27 99,063.272 22.45 2,223,970 Band 28 17,473.235 22.13 386,683 Band 29 316,012.543 22.03 6,961,756 Band 30 218,258.904 21.42 4,675,106 Band 31 84,972.202 21.12 1,794,613 Band 32 99,827.872 20.55 2,051,463 Band 33 31,971.348 20.17 644,862 Band 34 38,233.087 19.89 760,456 Band 35 66,352.404 23.52 1,560,609 Band 36 231.236 23.09 5,339 Band 37 3,199.994 22.77 72,864 Band 38 60,822.620 10.92 664,183 Band 39 12,607.484 10.91 137,548 Band 40 2,756.634 10.90 30,047 Band 41 7,524.075 10.67 80,282 Band 42 576.866 10.66 6,149 Band 43 13,639.898 10.66 145,401 ------------------- ------------------- 52,822,322.056 $ 1,142,628,635 =================== =================== ING MFS(R) Total Return (Advisor Class) Contracts in accumulation period: Band 6 291,540.628 $ 11.53 $ 3,361,463 Band 7 81,142.335 11.52 934,760 Band 8 14,110.300 11.51 162,410 Band 10 112,169.731 11.49 1,288,830 Band 11 16,674.700 11.48 191,426 Band 12 262,128.497 11.47 3,006,614 Band 20 638,182.425 11.46 7,313,571 ------------------- ------------------- 1,415,948.616 $ 16,259,074 =================== =================== ING PIMCO Core Bond (Service Class) Contracts in accumulation period: Band 1 355.811 $ 13.88 $ 4,939 Band 2 88,413.140 13.62 1,204,187 Band 3 4,443.633 13.18 58,567 Band 4 151,608.550 13.31 2,017,910 Band 5 374,197.121 13.25 4,958,112 Band 6 5,300,341.694 13.12 69,540,483 Band 7 5,813,246.423 13.06 75,920,998 Band 8 1,936,849.121 12.94 25,062,828 Band 9 642,676.727 12.88 8,277,676 Band 10 2,698,621.318 12.82 34,596,325 Band 11 4,594,825.220 12.76 58,629,970 Band 12 1,826,461.298 12.70 23,196,058 Band 13 4,187,287.965 12.64 52,927,320 Band 14 5,691,679.648 12.52 71,259,829
172 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ------------------------------------------------------ ------------------ -------------- ------------------ ING PIMCO Core Bond (Service Class) (continued) Band 15 103,986.953 $ 12.46 $ 1,295,677 Band 16 151,479.733 12.35 1,870,775 Band 17 1,257,766.011 12.29 15,457,944 Band 18 276,507.637 12.23 3,381,688 Band 19 413,995.198 12.11 5,013,482 Band 20 1,759,463.621 12.58 22,134,052 Band 21 685,840.908 12.40 8,504,427 Band 25 83,008.881 13.75 1,141,372 Band 26 363,092.654 13.68 4,967,108 Band 27 184,492.488 13.31 2,455,595 Band 28 69,572.902 13.12 912,796 Band 29 601,805.708 13.06 7,859,583 Band 30 418,199.140 12.70 5,311,129 Band 31 133,052.220 12.52 1,665,814 Band 32 142,024.891 12.18 1,729,863 Band 33 61,035.526 11.96 729,985 Band 34 120,494.718 11.79 1,420,633 Band 35 22,525.885 13.94 314,011 Band 36 4,579.292 13.68 62,645 Band 39 3,244.193 10.27 33,318 Band 41 12,364.104 10.26 126,856 Band 42 1,759.601 10.26 18,054 Band 43 4,246.204 10.25 43,524 ------------------ ------------------ 40,185,546.137 $ 514,105,533 ================== ================== ING PIMCO Core Bond (Advisor Class) Contracts in accumulation period: Band 6 295,463.137 $ 10.57 $ 3,123,045 Band 7 52,328.492 10.56 552,589 Band 8 933.695 10.55 9,850 Band 10 80,576.576 10.53 848,471 Band 11 3,795.557 10.53 39,967 Band 12 449,659.701 10.52 4,730,420 Band 20 689,813.912 10.50 7,243,046 ------------------ ------------------ 1,572,571.070 $ 16,547,388 ================== ================== ING Salomon Brothers All Cap (Service Class) Contracts in accumulation period: Band 2 55,087.085 $ 11.89 $ 654,985 Band 3 1,189.380 11.73 13,951 Band 4 154,102.989 11.78 1,815,333 Band 5 435,599.574 11.75 5,118,295 Band 6 4,509,280.851 11.71 52,803,679 Band 7 5,817,481.921 11.68 67,948,189 Band 8 1,646,964.648 11.64 19,170,669 Band 9 920,674.056 11.61 10,689,026 Band 10 2,190,114.811 11.59 25,383,431
173 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING Salomon Brothers All Cap (Service Class) (continued) Band 11 3,873,359.392 $ 11.57 $ 44,814,768 Band 12 1,788,094.472 11.54 20,634,610 Band 13 4,017,738.462 11.52 46,284,347 Band 14 6,915,012.795 11.47 79,315,197 Band 15 16,669.058 11.45 190,861 Band 16 204,499.474 11.41 2,333,339 Band 17 1,444,838.655 11.38 16,442,264 Band 18 155,281.417 11.36 1,763,997 Band 19 453,453.338 11.32 5,133,092 Band 20 1,254,826.819 11.50 14,430,508 Band 21 403,321.338 11.43 4,609,963 Band 25 81,938.512 11.94 978,346 Band 26 5,375.484 11.17 60,044 Band 27 3,289.583 11.15 36,679 Band 28 1,536.823 11.15 17,136 Band 29 17,529.796 11.15 195,457 Band 30 23,075.287 11.14 257,059 Band 31 31,514.077 11.13 350,752 Band 32 5,199.089 11.12 57,814 Band 33 1,313.247 11.11 14,590 Band 34 1,722.298 11.11 19,135 Band 41 1,451.629 11.14 16,171 Band 43 760.114 11.12 8,452 ------------------- ------------------ 36,432,296.474 $ 421,562,139 =================== ================== ING Salomon Brothers All Cap (Advisor Class) Contracts in accumulation period: Band 6 97,126.612 $ 13.04 $ 1,266,531 Band 7 3,485.254 13.03 45,413 Band 10 37,941.758 13.00 493,243 Band 11 2,125.747 12.99 27,613 Band 12 99,621.513 12.98 1,293,087 Band 20 231,383.423 12.96 2,998,729 ------------------- ------------------ 471,684.307 $ 6,124,616 =================== ================== ING Salomon Brothers Investors (Service Class) Contracts in accumulation period: Band 2 6,731.001 $ 10.61 $ 71,416 Band 3 1,831.313 10.47 19,174 Band 4 30,612.707 10.51 321,740 Band 5 229,199.620 10.49 2,404,304 Band 6 1,526,538.498 10.45 15,952,327 Band 7 2,052,076.504 10.42 21,382,637 Band 8 565,048.228 10.38 5,865,201 Band 9 292,658.937 10.36 3,031,947 Band 10 1,081,823.946 10.34 11,186,060 Band 11 1,438,353.754 10.32 14,843,811
174 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------------- ------------------- --------------- ----------------- ING Salomon Brothers Investors (Service Class) (continued) Band 12 670,124.126 $ 10.30 $ 6,902,279 Band 13 1,251,944.412 10.28 12,869,989 Band 14 2,432,122.256 10.24 24,904,932 Band 15 6,273.965 10.22 64,120 Band 16 46,269.899 10.18 471,028 Band 17 474,812.466 10.16 4,824,095 Band 18 46,479.523 10.14 471,302 Band 19 226,875.329 10.10 2,291,441 Band 20 521,864.659 10.26 5,354,331 Band 21 200,600.561 10.20 2,046,126 Band 25 59,643.502 10.65 635,203 Band 26 3,928.793 11.13 43,727 Band 29 8,574.500 11.11 95,263 Band 30 5,270.650 11.10 58,504 Band 31 1,115.550 11.09 12,371 Band 32 2,650.175 11.08 29,364 Band 41 1,472.850 11.10 16,349 ------------------- ----------------- 13,184,897.724 $ 136,169,041 =================== ================= ING Salomon Brothers Investors (Advisor Class) Contracts in accumulation period: Band 6 14,636.661 $ 12.61 $ 184,568 Band 7 673.770 12.61 8,496 Band 10 11,083.785 12.57 139,323 Band 12 9,030.087 12.55 113,328 Band 20 45,348.880 12.54 568,675 ------------------- ----------------- 80,773.183 $ 1,014,390 =================== ================= ING T. Rowe Price Capital Appreciation (Service Class) Currently payable annuity contracts: Band 1 299.576 $ 37.73 $ 11,303 Band 2 15,272.792 36.61 559,137 Contracts in accumulation period: Band 1 39,467.370 37.73 1,489,104 Band 2 955,310.348 36.61 34,973,912 Band 3 19,381.379 34.73 673,115 Band 4 385,165.668 35.31 13,600,200 Band 5 334,523.422 35.00 11,708,320 Band 6 6,071,997.442 34.52 209,605,352 Band 7 5,743,180.850 34.21 196,474,217 Band 8 3,717,807.461 33.75 125,476,002 Band 9 662,357.870 33.45 22,155,871 Band 10 1,938,760.406 33.19 64,347,458 Band 11 5,299,315.016 32.94 174,559,437 Band 12 2,065,649.096 32.69 67,526,069 Band 13 4,498,233.874 32.45 145,967,689 Band 14 5,130,779.670 31.96 163,979,718
175 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------------- ------------------- -------------- ------------------- ING T. Rowe Price Capital Appreciation (Service Class) (continued) Band 15 16,339.256 $ 31.72 $ 518,281 Band 16 163,215.122 31.24 5,098,840 Band 17 998,381.235 31.00 30,949,818 Band 18 261,019.278 30.76 8,028,953 Band 19 322,552.465 30.30 9,773,340 Band 20 1,921,554.605 32.20 61,874,058 Band 21 415,984.259 31.47 13,091,025 Band 25 93,939.230 37.17 3,491,721 ------------------- ------------------- 41,070,487.690 $ 1,365,932,940 =================== =================== ING T. Rowe Price Capital Appreciation (Advisor Class) Contracts in accumulation period: Band 6 261,452.013 $ 12.33 $ 3,223,703 Band 7 918.084 12.32 11,311 Band 10 63,625.291 12.29 781,955 Band 11 5,308.384 12.28 65,187 Band 12 511,448.878 12.27 6,275,478 Band 20 803,419.270 12.26 9,849,920 ------------------- ------------------- 1,646,171.920 $ 20,207,554 =================== =================== ING T. Rowe Price Equity Income (Service Class) Currently payable annuity contracts: Band 1 637.534 $ 27.59 $ 17,590 Band 2 20,499.959 26.77 548,784 Contracts in accumulation period: Band 1 105,492.663 27.59 2,910,542 Band 2 1,778,558.657 26.77 47,612,015 Band 3 27,394.545 25.39 695,548 Band 4 202,280.612 25.82 5,222,885 Band 5 247,853.042 25.59 6,342,559 Band 6 3,283,741.121 25.24 82,881,626 Band 7 3,297,899.665 25.02 82,513,450 Band 8 2,135,369.224 24.68 52,700,912 Band 9 372,503.837 24.46 9,111,444 Band 10 1,543,749.106 24.27 37,466,791 Band 11 3,460,523.283 24.09 83,364,006 Band 12 1,278,746.532 23.91 30,574,830 Band 13 2,387,634.961 23.73 56,658,578 Band 14 3,453,723.983 23.37 80,713,529 Band 15 3,252.879 23.19 75,434 Band 16 94,964.731 22.84 2,168,994 Band 17 860,124.691 22.67 19,499,027 Band 18 138,972.740 22.50 3,126,887 Band 19 199,468.046 22.16 4,420,212 Band 20 1,089,873.819 23.55 25,666,528 Band 21 336,482.622 23.02 7,745,830 Band 24 875.252 28.87 25,269 Band 25 70,274.064 27.18 1,910,049 ------------------- ------------------- 26,390,897.568 $ 643,973,319 =================== ===================
176 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING T. Rowe Price Equity Income (Advisor Class) Contracts in accumulation period: Band 6 170,838.793 $ 12.12 $ 2,070,566 Band 8 638.354 12.10 7,724 Band 10 80,596.716 12.08 973,608 Band 11 15,526.382 12.07 187,403 Band 12 208,905.331 12.07 2,521,487 Band 20 419,878.778 12.05 5,059,539 ------------------- ------------------ 896,384.354 $ 10,820,327 =================== ================== ING UBS U.S. Balanced (Service Class) Contracts in accumulation period: Band 2 19,418.215 $ 8.56 $ 166,220 Band 4 36,073.593 8.49 306,265 Band 5 75,420.397 8.48 639,565 Band 6 870,956.832 8.45 7,359,585 Band 7 1,411,580.029 8.44 11,913,735 Band 8 284,097.833 8.41 2,389,263 Band 9 190,068.560 8.40 1,596,576 Band 10 434,716.461 8.38 3,642,924 Band 11 699,233.355 8.37 5,852,583 Band 12 529,915.740 8.35 4,424,796 Band 13 1,112,007.575 8.34 9,274,143 Band 14 1,599,133.419 8.31 13,288,799 Band 16 40,434.869 8.27 334,396 Band 17 294,926.596 8.26 2,436,094 Band 18 49,854.470 8.24 410,801 Band 19 84,959.144 8.22 698,364 Band 20 314,295.597 8.33 2,618,082 Band 21 138,004.836 8.29 1,144,060 Band 25 21,013.896 8.59 180,509 ------------------- ------------------ 8,206,111.417 $ 68,676,760 =================== ================== ING UBS U.S. Balanced (Advisor Class) Contracts in accumulation period: Band 6 25,905.066 $ 11.37 $ 294,541 Band 8 16,683.142 11.36 189,520 Band 10 1,354.158 11.35 15,370 Band 11 11,180.942 11.34 126,792 Band 12 6,652.773 11.34 75,442 Band 20 23,107.219 11.33 261,805 ------------------- ------------------ 84,883.300 $ 963,470 =================== ================== ING Van Kampen Equity Growth (Service Class) Contracts in accumulation period: Band 2 8,199.792 $ 9.60 $ 78,718 Band 3 3,340.664 9.54 31,870 Band 4 3,797.513 9.56 36,304
177 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ------------------------------------------------------ ------------------ -------------- ------------------ ING Van Kampen Equity Growth (Service Class) (continued) Band 5 29,136.485 $ 9.55 $ 278,253 Band 6 349,932.652 9.54 3,338,358 Band 7 566,447.758 9.53 5,398,247 Band 8 122,975.284 9.51 1,169,495 Band 9 47,310.608 9.50 449,451 Band 10 186,267.820 9.50 1,769,544 Band 11 279,599.490 9.49 2,653,399 Band 12 230,006.004 9.48 2,180,457 Band 13 423,090.583 9.47 4,006,668 Band 14 455,787.310 9.46 4,311,748 Band 15 1,569.520 9.45 14,832 Band 16 5,114.852 9.43 48,233 Band 17 138,420.470 9.42 1,303,921 Band 18 11,021.468 9.42 103,822 Band 19 38,292.684 9.40 359,951 Band 20 173,317.670 9.46 1,639,585 Band 21 69,963.356 9.44 660,454 Band 25 2,087.670 9.62 20,083 ------------------ ------------------ 3,145,679.653 $ 29,853,393 ================== ================== ING Van Kampen Equity Growth (Advisor Class) Contracts in accumulation period: Band 6 75,033.905 $ 11.75 $ 881,648 Band 8 423.090 11.73 4,963 Band 10 43,598.263 11.71 510,536 Band 11 1,030.046 11.70 12,052 Band 12 67,591.567 11.70 790,821 Band 20 317,595.075 11.68 3,709,510 ------------------ ------------------ 505,271.946 $ 5,909,530 ================== ================== ING Van Kampen Global Franchise (Service Class) Contracts in accumulation period: Band 1 595.835 $ 11.12 $ 6,626 Band 2 1,338.768 11.09 14,847 Band 4 7,436.678 11.04 82,101 Band 5 48,477.330 11.03 534,705 Band 6 758,774.048 11.01 8,354,102 Band 7 885,642.925 11.00 9,742,072 Band 8 189,265.613 10.98 2,078,136 Band 9 55,092.384 10.97 604,363 Band 10 441,247.035 10.97 4,840,480 Band 11 396,477.240 10.96 4,345,391 Band 12 242,169.478 10.95 2,651,756 Band 13 565,301.831 10.94 6,184,402 Band 14 898,110.290 10.92 9,807,364 Band 15 4,279.501 10.91 46,689 Band 16 14,218.047 10.89 154,835
178 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value -------------------------------------------------------- ------------------ -------------- ------------------ ING Van Kampen Global Franchise (Service Class) (continued) Band 17 200,135.249 $ 10.88 $ 2,177,472 Band 18 18,944.794 10.87 205,930 Band 19 104,915.850 10.85 1,138,337 Band 20 360,519.247 10.93 3,940,475 Band 21 92,037.930 10.90 1,003,213 Band 25 10,213.007 11.11 113,467 ------------------ ------------------ 5,295,193.080 $ 58,026,763 ================== ================== ING Van Kampen Global Franchise (Advisor Class) Contracts in accumulation period: Band 6 315,603.821 $ 11.82 $ 3,730,437 Band 7 4,167.287 11.81 49,216 Band 8 471.518 11.80 5,564 Band 10 90,627.100 11.78 1,067,587 Band 11 8,423.022 11.77 99,139 Band 12 256,082.045 11.77 3,014,086 Band 20 556,766.660 11.75 6,542,008 ------------------ ------------------ 1,232,141.453 $ 14,508,037 ================== ================== ING Van Kampen Growth and Income (Service Class) Currently payable annuity contracts: Band 1 306.212 $ 24.37 $ 7,462 Band 2 4,489.398 23.87 107,162 Contracts in accumulation period: Band 1 9,547.725 24.37 232,678 Band 2 975,926.868 23.87 23,295,374 Band 3 37,833.964 23.02 870,938 Band 4 662,030.250 23.29 15,418,685 Band 5 233,668.197 23.15 5,409,419 Band 6 5,707,684.458 22.94 130,934,281 Band 7 2,615,475.143 22.79 59,606,679 Band 8 6,186,430.645 22.59 139,751,468 Band 9 456,690.159 22.44 10,248,127 Band 10 1,070,652.941 22.32 23,896,974 Band 11 6,539,927.506 22.21 145,251,790 Band 12 842,518.972 22.09 18,611,244 Band 13 2,020,012.181 21.98 44,399,868 Band 14 2,428,851.870 21.75 52,827,528 Band 15 2,912.826 21.63 63,004 Band 16 52,462.033 21.41 1,123,212 Band 17 424,242.467 21.30 9,036,365 Band 18 93,569.006 21.19 1,982,727 Band 19 120,772.450 20.97 2,532,598 Band 20 619,369.129 21.86 13,539,409 Band 21 233,333.900 21.52 5,021,346 Band 24 48.633 25.14 1,223 Band 25 51,534.201 24.12 1,243,005 ------------------ ------------------ 31,390,291.134 $ 705,412,566 ================== ==================
179 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value -------------------------------------------------------- ------------------ -------------- ------------------ ING Van Kampen Growth and Income (Advisor Class) Contracts in accumulation period: Band 6 395,947.902 $ 12.33 $ 4,882,038 Band 7 10,884.327 12.32 134,095 Band 8 606.599 12.30 7,461 Band 10 80,613.916 12.29 990,745 Band 11 5,873.667 12.28 72,129 Band 12 455,683.553 12.27 5,591,237 Band 20 1,010,894.454 12.25 12,383,457 ------------------ ------------------ 1,960,504.418 $ 24,061,162 ================== ================== ING Van Kampen Real Estate (Service Class) Currently payable annuity contracts: Band 2 2,202.851 $ 40.42 $ 89,039 Contracts in accumulation period: Band 1 11,373.349 41.65 473,700 Band 2 237,418.101 40.42 9,596,440 Band 3 3,216.218 38.33 123,278 Band 4 89,474.827 38.97 3,486,834 Band 5 83,292.947 38.63 3,217,607 Band 6 1,388,196.264 38.11 52,904,160 Band 7 1,439,332.079 37.77 54,363,573 Band 8 740,624.440 37.25 27,588,260 Band 9 168,123.074 36.92 6,207,104 Band 10 395,687.378 36.64 14,497,986 Band 11 1,057,431.626 36.36 38,448,214 Band 12 398,419.309 36.09 14,378,953 Band 13 933,789.819 35.82 33,448,351 Band 14 1,166,069.626 35.28 41,138,936 Band 15 1,916.570 35.01 67,099 Band 16 40,492.584 34.48 1,396,184 Band 17 182,706.935 34.22 6,252,231 Band 18 34,933.632 33.96 1,186,346 Band 19 88,514.107 33.44 2,959,912 Band 20 462,356.093 35.55 16,436,759 Band 21 58,411.800 34.74 2,029,226 Band 24 73.307 43.58 3,195 Band 25 15,508.418 41.04 636,465 ------------------ ------------------ 8,999,565.354 $ 330,929,852 ================== ================== ING Van Kampen Real Estate (Advisor Class) Contracts in accumulation period: Band 6 100,982.121 $ 13.03 $ 1,315,797 Band 7 9,624.021 13.03 125,401 Band 8 103.812 13.01 1,351 Band 10 21,398.766 12.99 277,970 Band 11 1,999.995 12.98 25,960 Band 12 96,185.676 12.97 1,247,528 Band 20 250,986.083 12.96 3,252,780 ------------------ ------------------ 481,280.474 $ 6,246,787 ================== ==================
180 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING Alger Aggressive Growth Contracts in accumulation period: Band 35 32,473.033 $ 9.85 $ 319,859 Band 36 1,720.680 9.81 16,880 Band 37 439.360 9.78 4,297 Band 38 17,687.873 12.04 212,962 Band 40 225.306 12.02 2,708 ------------------- ------------------ 52,546.252 $ 556,706 =================== ================== ING Alger Growth Contracts in accumulation period: Band 35 12,632.668 $ 8.74 $ 110,410 Band 38 2,727.469 11.67 31,830 ------------------- ------------------ 15,360.137 $ 142,240 =================== ================== ING American Century Small Cap Value Contracts in accumulation period: Band 35 11,451.377 $ 10.91 $ 124,935 Band 36 864.257 10.87 9,394 Band 38 1,838.821 11.83 21,753 Band 39 494.580 11.82 5,846 ------------------- ------------------ 14,649.035 $ 161,928 =================== ================== ING Baron Small Cap Growth Contracts in accumulation period: Band 35 53,076.221 $ 11.54 $ 612,500 Band 36 12,488.360 11.51 143,741 Band 37 500.512 11.48 5,746 Band 38 15,935.593 11.49 183,100 Band 39 6,976.950 11.48 80,095 Band 40 238.520 11.48 2,738 ------------------- ------------------ 89,216.156 $ 1,027,920 =================== ================== ING JPMorgan Fleming International Contracts in accumulation period: Band 4 332.039 $ 11.88 $ 3,945 Band 5 5,700.502 11.88 67,722 Band 6 75,921.700 11.87 901,191 Band 7 63,194.042 11.87 750,113 Band 8 11,752.929 11.87 139,507 Band 9 7,836.535 11.87 93,020 Band 10 56,919.099 11.86 675,061 Band 11 32,413.717 11.86 384,427 Band 12 21,504.406 11.86 255,042 Band 13 80,497.006 11.86 954,694 Band 14 85,474.640 11.85 1,012,874 Band 15 8,655.374 11.85 102,566 Band 16 3,444.061 11.85 40,812
181 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING JPMorgan Fleming International (continued) Band 17 22,489.212 $ 11.85 $ 266,497 Band 18 325.968 11.84 3,859 Band 19 35,164.472 11.84 416,347 Band 20 58,637.751 11.86 695,444 Band 21 13,820.993 11.85 163,779 Band 26 14,886.284 11.89 176,998 Band 27 22.823 11.88 271 Band 29 14,760.927 11.87 175,212 Band 30 4,253.916 11.86 50,451 Band 31 18,821.706 11.85 223,037 Band 32 4,218.068 11.84 49,942 Band 33 4,637.378 11.83 54,860 Band 34 3,658.856 11.83 43,284 Band 35 21,669.455 10.46 226,663 Band 36 707.559 10.42 7,373 Band 38 6,943.293 12.24 84,986 ------------------- ------------------ 678,664.711 $ 8,019,977 =================== ================== ING JPMorgan Mid Cap Value Contracts in accumulation period: Band 4 1,196.777 $ 10.99 $ 13,153 Band 9 19,125.860 11.71 223,964 Band 13 11,472.604 11.67 133,885 Band 15 37,877.284 11.64 440,892 Band 26 48,704.169 11.84 576,657 Band 27 24,324.910 11.78 286,547 Band 28 4,934.658 11.75 57,982 Band 29 108,852.703 11.74 1,277,931 Band 30 64,770.418 11.68 756,518 Band 31 82,437.201 11.65 960,393 Band 32 34,572.554 11.59 400,696 Band 33 29,210.435 11.55 337,381 Band 34 38,561.767 11.52 444,232 Band 35 13,543.221 11.88 160,893 Band 36 1,977.398 11.84 23,412 Band 38 1,330.848 11.44 15,225 Band 39 2,830.298 11.43 32,350 Band 41 290.811 10.97 3,190 Band 43 493.927 10.95 5,409 ------------------- ------------------ 526,507.843 $ 6,150,710 =================== ================== ING MFS(R) Capital Opportunities (Initial Class) Contracts in accumulation period: Band 4 2,192.243 $ 10.73 $ 23,523 Band 9 19,794.105 7.71 152,613 Band 13 18,605.108 7.67 142,701 Band 15 25,223.963 7.64 192,711
182 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING MFS(R) Capital Opportunities (Initial Class) (continued) Band 26 40,717.366 $ 7.83 $ 318,817 Band 27 27,741.824 7.78 215,831 Band 28 16,464.929 7.75 127,603 Band 29 82,473.322 7.74 638,344 Band 30 45,229.330 7.68 347,361 Band 31 57,505.036 7.65 439,914 Band 32 32,730.098 7.59 248,421 Band 33 10,558.559 7.56 79,823 Band 34 8,193.794 7.53 61,699 Band 41 1,814.889 10.71 19,437 ------------------- ------------------ 389,244.566 $ 3,008,798 =================== ================== ING MFS(R) Capital Opportunities (Service Class) Contracts in accumulation period: Band 35 35,845.772 $ 8.69 $ 311,500 Band 38 7,006.084 11.29 79,099 ------------------- ------------------ 42,851.856 $ 390,599 =================== ================== ING MFS(R) Global Growth Contracts in accumulation period: Band 9 9,449.741 $ 10.77 $ 101,774 Band 13 1,218.695 10.73 13,077 Band 15 678.047 10.70 7,255 Band 26 28,048.722 10.89 305,451 Band 27 15,200.868 10.83 164,625 Band 28 2,345.341 10.80 25,330 Band 29 30,149.209 10.79 325,310 Band 30 16,831.002 10.74 180,765 Band 31 16,759.743 10.71 179,497 Band 32 8,222.724 10.66 87,654 Band 33 8,847.693 10.62 93,963 Band 34 2,158.087 10.60 22,876 Band 35 3,128.061 10.92 34,158 Band 36 1,761.405 10.89 19,182 Band 39 2,102.402 11.89 24,998 ------------------- ------------------ 146,901.740 $ 1,585,915 =================== ================== ING MFS(R) Research Equity Contracts in accumulation period: Band 35 7,244.971 $ 9.08 $ 65,784 Band 37 2,041.391 9.02 18,413 Band 38 376.278 11.25 4,233 Band 40 730.798 11.23 8,207 ------------------- ------------------ 10,393.438 $ 96,637 =================== ==================
183 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING OpCap Balanced Value Contracts in accumulation period: Band 35 36,432.370 $ 10.08 $ 367,238 Band 38 1,063.351 11.28 11,995 Band 39 2,526.673 11.27 28,476 ------------------- ------------------ 40,022.394 $ 407,709 =================== ================== ING PIMCO Total Return Contracts in accumulation period: Band 35 131,991.443 $ 11.11 $ 1,466,425 Band 36 3,443.409 11.07 38,119 Band 37 1,150.566 11.04 12,702 Band 38 8,451.141 10.23 86,455 Band 39 28,461.298 10.22 290,874 Band 40 2,303.295 10.21 23,517 ------------------- ------------------ 175,801.152 $ 1,918,092 =================== ================== ING Salomon Brothers Aggressive Growth Contracts in accumulation period: Band 2 1,174.990 $ 10.83 $ 12,725 Band 4 1,411.288 10.82 15,270 Band 5 8,542.667 10.82 92,432 Band 6 100,971.470 10.82 1,092,511 Band 7 174,679.678 10.81 1,888,287 Band 8 16,859.606 10.81 182,252 Band 9 10,182.408 10.81 110,072 Band 10 94,035.935 10.81 1,016,528 Band 11 96,652.904 10.80 1,043,851 Band 12 45,661.802 10.80 493,147 Band 13 147,756.704 10.80 1,595,772 Band 14 290,892.127 10.80 3,141,635 Band 15 5,104.678 10.79 55,079 Band 16 1,222.547 10.79 13,191 Band 17 109,745.462 10.79 1,184,154 Band 18 5,179.363 10.79 55,885 Band 19 18,267.584 10.78 196,925 Band 20 95,577.544 10.80 1,032,237 Band 21 7,732.941 10.79 83,438 Band 26 856.200 10.83 9,273 Band 27 4,646.802 10.82 50,278 Band 29 17,348.734 10.81 187,540 Band 30 5,309.474 10.80 57,342 Band 31 296.881 10.80 3,206 Band 32 9,088.421 10.79 98,064 Band 33 3,896.228 10.78 42,001 Band 34 11,598.037 10.77 124,911 Band 41 249.257 10.80 2,692 ------------------- ------------------ 1,284,941.732 $ 13,880,698 =================== ==================
184 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING Salomon Brothers Fundamental Value Contracts in accumulation period: Band 35 44,075.147 $ 10.35 $ 456,178 Band 36 124.312 10.31 1,282 Band 38 11,590.501 11.85 137,347 Band 40 474.840 11.84 5,622 ------------------- ------------------ 56,264.800 $ 600,429 =================== ================== ING Salomon Brothers Investors Value Contracts in accumulation period: Band 35 32,121.941 $ 9.92 $ 318,650 Band 37 1,096.632 9.85 10,802 Band 38 2,219.589 11.62 25,792 Band 39 613.570 11.61 7,124 ------------------- ------------------ 36,051.732 $ 362,368 =================== ================== ING T. Rowe Price Growth Equity Contracts in accumulation period: Band 35 173,019.006 $ 9.75 $ 1,686,935 Band 36 20,177.812 9.71 195,927 Band 37 1,595.364 9.68 15,443 Band 38 23,820.839 11.51 274,178 Band 39 10,629.925 11.50 122,244 ------------------- ------------------ 229,242.946 $ 2,294,727 =================== ================== ING UBS Tactical Asset Allocation Contracts in accumulation period: Band 35 7,594.110 $ 9.50 $ 72,144 Band 38 758.436 11.48 8,707 Band 40 732.158 11.46 8,391 ------------------- ------------------ 9,084.704 $ 89,242 =================== ================== ING Van Kampen Comstock Contracts in accumulation period: Band 4 2,114.507 $ 11.10 $ 23,471 Band 6 529,612.798 10.61 5,619,192 Band 7 24,037.533 10.60 254,798 Band 9 43,374.669 10.58 458,904 Band 10 130,443.061 10.57 1,378,783 Band 11 8,548.697 10.56 90,274 Band 12 516,050.320 10.55 5,444,331 Band 13 19,928.733 10.54 210,049 Band 15 33,230.631 10.51 349,254 Band 20 1,575,806.365 10.53 16,593,241 Band 26 76,872.836 10.69 821,771 Band 27 60,550.929 10.64 644,262 Band 28 6,130.318 10.61 65,043 Band 29 104,171.408 10.60 1,104,217
185 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING Van Kampen Comstock (continued) Band 30 73,478.728 $ 10.55 $ 775,201 Band 31 54,491.493 10.52 573,251 Band 32 34,041.118 10.47 356,411 Band 33 17,940.911 10.43 187,124 Band 34 49,362.809 10.41 513,867 Band 35 89,527.023 10.73 960,625 Band 36 7,936.984 10.69 84,846 Band 38 68,494.944 11.58 793,171 Band 39 24,259.044 11.57 280,677 Band 41 396.262 11.08 4,391 ------------------- ------------------ 3,550,802.121 $ 37,587,154 =================== ================== ING GET U.S. Core Portfolio - Series 1 Contracts in accumulation period: Band 6 145,532.393 $ 10.25 $ 1,491,707 Band 7 24,801.793 10.25 254,218 Band 9 2,023,884.155 10.24 20,724,574 Band 10 56,854.261 10.24 582,188 Band 12 34,785.136 10.23 355,852 Band 13 588,193.560 10.23 6,017,220 Band 14 22,657.826 10.23 231,790 Band 15 569,199.159 10.22 5,817,215 Band 17 17,037.367 10.21 173,952 Band 20 104,082.184 10.23 1,064,761 Band 26 1,905,767.783 10.28 19,591,293 Band 27 638,397.526 10.26 6,549,959 Band 28 245,214.304 10.25 2,513,447 Band 29 6,149,688.510 10.25 63,034,307 Band 30 2,434,353.625 10.23 24,903,438 Band 31 2,255,488.657 10.22 23,051,094 Band 32 2,373,173.261 10.21 24,230,099 Band 33 725,301.980 10.20 7,398,080 Band 34 772,157.924 10.19 7,868,289 Band 35 433,744.773 10.29 4,463,234 Band 36 31,548.309 10.28 324,317 Band 38 5,138.559 10.29 52,876 Band 39 13,751.743 10.28 141,368 ------------------- ------------------ 21,570,754.788 $ 220,835,278 =================== ================== ING GET U.S. Core Portfolio - Series 2 Contracts in accumulation period: Band 5 2,698.513 $ 10.04 $ 27,093 Band 6 186,570.428 10.03 1,871,301 Band 9 1,906,764.350 10.03 19,124,846 Band 10 25,108.969 10.03 251,843 Band 12 49,223.805 10.02 493,223 Band 13 495,513.426 10.02 4,965,045
186 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ------------------------------------------------------ ------------------- --------------- ----------------- ING GET U.S. Core Portfolio - Series 2 (continued) Band 14 21,685.492 $ 10.02 $ 217,289 Band 15 267,014.166 10.02 2,675,482 Band 20 20,080.259 10.02 201,204 Band 26 1,884,156.355 10.05 18,935,771 Band 27 452,547.195 10.04 4,543,574 Band 28 227,087.468 10.03 2,277,687 Band 29 4,356,517.351 10.03 43,695,869 Band 30 2,223,171.584 10.02 22,276,179 Band 31 1,452,294.756 10.02 14,551,993 Band 32 1,441,340.114 10.01 14,427,815 Band 33 949,211.384 10.00 9,492,114 Band 34 562,754.191 10.00 5,627,542 Band 35 73,611.621 10.05 739,797 Band 38 94,526.640 10.05 949,993 ------------------- ----------------- 16,691,878.067 $ 167,345,660 =================== ================= ING GET U.S. Core Portfolio - Series 3 Contracts in accumulation period: Band 6 199.898 $ 10.00 $ 1,999 Band 9 99,988.806 10.00 999,888 Band 13 35,583.916 10.00 355,839 Band 14 13,426.869 9.99 134,134 Band 15 2,301.612 9.99 22,993 Band 26 68,047.721 10.00 680,477 Band 27 11,853.934 10.00 118,539 Band 28 8,096.482 10.00 80,965 Band 29 244,152.847 10.00 2,441,528 Band 30 35,820.613 10.00 358,206 Band 31 100,544.182 9.99 1,004,436 Band 32 163,623.087 9.99 1,634,595 Band 33 7,853.374 9.99 78,455 Band 34 72,917.931 9.99 728,450 Band 38 32,537.372 10.00 325,374 ------------------- ----------------- 896,948.644 $ 8,965,878 =================== ================= ING VIT Worldwide Growth Contracts in accumulation period: Band 2 4,652.127 $ 6.73 $ 31,309 Band 4 12,256.009 6.67 81,748 Band 5 90,863.607 6.65 604,243 Band 6 794,098.666 6.63 5,264,874 Band 7 1,254,634.665 6.62 8,305,681 Band 8 116,479.234 6.59 767,598 Band 9 123,770.602 6.58 814,411 Band 10 424,273.105 6.57 2,787,474 Band 11 450,251.860 6.56 2,953,652 Band 12 546,670.112 6.54 3,575,223
187 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING VIT Worldwide Growth (continued) Band 13 910,435.618 $ 6.53 $ 5,945,145 Band 14 1,486,059.220 6.51 9,674,246 Band 15 3,246.636 6.50 21,103 Band 16 72,812.299 6.47 471,096 Band 17 252,106.302 6.46 1,628,607 Band 18 61,655.665 6.45 397,679 Band 19 101,857.494 6.42 653,925 Band 20 619,542.538 6.52 4,039,417 Band 21 113,211.560 6.48 733,611 Band 25 30,258.085 6.75 204,242 Band 26 33,614.392 6.74 226,561 Band 27 23,178.675 6.67 154,602 Band 28 3,475.864 6.63 23,045 Band 29 49,216.088 6.62 325,811 Band 30 25,053.220 6.54 163,848 Band 31 20,659.676 6.51 134,494 Band 32 8,684.757 6.44 55,930 Band 33 42,473.177 6.39 271,404 Band 34 2,903.037 6.35 18,434 ------------------- ------------------ 7,678,394.290 $ 50,329,413 =================== ================== ING VP Balanced Contracts in accumulation period: Band 35 71,913.958 $ 11.34 $ 815,504 Band 37 1,273.477 11.31 14,403 Band 38 33,288.584 11.05 367,839 Band 39 3,013.984 11.04 33,274 ------------------- ------------------ 109,490.003 $ 1,231,020 =================== ================== ING VP Bond Contracts in accumulation period: Band 1 7,632.652 $ 11.24 $ 85,791 Band 2 17,047.269 11.20 190,929 Band 3 439.925 11.14 4,901 Band 4 15,515.819 11.16 173,157 Band 5 53,210.053 11.15 593,292 Band 6 1,026,869.086 11.13 11,429,053 Band 7 897,486.059 11.12 9,980,045 Band 8 314,718.145 11.10 3,493,371 Band 9 76,854.916 11.09 852,321 Band 10 337,030.597 11.08 3,734,299 Band 11 587,972.634 11.07 6,508,857 Band 12 277,417.361 11.06 3,068,236 Band 13 785,878.502 11.05 8,683,957 Band 14 889,844.118 11.04 9,823,879 Band 16 61,347.706 11.01 675,438 Band 17 182,944.928 11.00 2,012,394
188 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING VP Bond (continued) Band 18 29,781.181 $ 10.99 $ 327,295 Band 19 49,929.119 10.97 547,722 Band 20 650,221.783 11.04 7,178,448 Band 21 49,551.135 11.02 546,054 Band 25 11,009.256 11.22 123,524 Band 35 113,933.269 11.25 1,281,749 Band 36 3,638.443 11.21 40,787 Band 38 12,126.778 10.36 125,633 Band 40 1,523.227 10.34 15,750 ------------------- ------------------ 6,453,923.961 $ 71,496,882 =================== ================== ING VP Growth Contracts in accumulation period: Band 35 23,794.529 $ 8.96 $ 213,199 Band 37 6,225.801 8.90 55,410 Band 38 1,579.589 11.49 18,149 Band 40 475.027 11.47 5,449 ------------------- ------------------ 32,074.946 $ 292,207 =================== ================== ING VP Index Plus LargeCap Contracts in accumulation period: Band 2 6,544.445 $ 9.07 $ 59,358 Band 4 33,240.498 9.01 299,497 Band 5 67,278.993 9.00 605,511 Band 6 452,480.772 8.98 4,063,277 Band 7 805,872.915 8.97 7,228,680 Band 8 65,973.217 8.94 589,801 Band 9 68,649.065 8.93 613,036 Band 10 392,887.868 8.92 3,504,560 Band 11 295,431.116 8.91 2,632,291 Band 12 156,052.383 8.90 1,388,866 Band 13 335,685.424 8.89 2,984,243 Band 14 894,271.308 8.87 7,932,187 Band 15 71,551.570 8.86 633,947 Band 16 9,729.787 8.83 85,914 Band 17 241,627.466 8.82 2,131,154 Band 18 27,483.905 8.81 242,133 Band 19 129,805.639 8.79 1,140,992 Band 20 454,341.917 8.88 4,034,556 Band 21 73,288.634 8.84 647,872 Band 26 302,563.368 9.08 2,747,275 Band 27 75,057.456 9.01 676,268 Band 28 42,291.918 8.98 379,781 Band 29 433,236.245 8.97 3,886,129 Band 30 116,154.838 8.90 1,033,778 Band 31 63,391.034 8.87 562,278
189 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING VP Index Plus LargeCap (continued) Band 32 44,012.564 $ 8.80 $ 387,311 Band 33 40,925.946 8.76 358,511 Band 34 45,881.863 8.72 400,090 Band 35 714,142.640 9.13 6,520,122 Band 36 31,451.292 9.08 285,578 Band 37 10,669.559 9.05 96,560 Band 38 82,959.543 11.48 952,376 Band 39 39,178.033 11.47 449,372 Band 40 486.538 11.47 5,581 Band 41 3,497.520 10.99 38,438 Band 42 3,298.306 10.98 36,215 Band 43 5,848.705 10.98 64,219 ------------------- ------------------ 6,637,244.290 $ 59,697,757 =================== ================== ING VP Index Plus MidCap Contracts in accumulation period: Band 4 1,794.621 $ 11.05 $ 19,831 Band 7 1,026.406 11.13 11,424 Band 9 139,797.631 11.09 1,550,356 Band 13 25,110.809 11.03 276,972 Band 15 47,579.160 10.99 522,895 Band 26 280,175.490 11.27 3,157,578 Band 27 109,452.776 11.18 1,223,682 Band 28 33,406.513 11.14 372,149 Band 29 316,191.360 11.13 3,519,210 Band 30 188,213.825 11.04 2,077,881 Band 31 113,912.228 11.00 1,253,035 Band 32 58,660.616 10.92 640,574 Band 33 45,984.065 10.87 499,847 Band 34 67,787.748 10.83 734,141 Band 35 258,277.906 11.32 2,923,706 Band 36 32,538.909 11.27 366,714 Band 37 1,567.700 11.23 17,605 Band 38 34,454.003 11.87 408,969 Band 39 13,061.649 11.86 154,911 Band 40 2,057.348 11.86 24,400 Band 41 1,468.837 11.03 16,201 Band 42 4,978.038 11.02 54,858 Band 43 6,185.476 11.02 68,164 ------------------- ------------------ 1,783,683.114 $ 19,895,103 =================== ================== ING VP Index Plus SmallCap Contracts in accumulation period: Band 4 4,431.267 $ 11.06 $ 49,010 Band 7 1,336.904 11.53 15,415
190 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING VP Index Plus SmallCap (continued) Band 9 139,268.587 $ 11.48 $ 1,598,803 Band 13 56,252.168 11.43 642,962 Band 15 32,978.808 11.38 375,299 Band 26 208,711.104 11.67 2,435,659 Band 27 103,839.776 11.58 1,202,465 Band 28 23,183.739 11.54 267,540 Band 29 253,989.531 11.53 2,928,499 Band 30 127,538.806 11.44 1,459,044 Band 31 101,972.241 11.40 1,162,484 Band 32 69,979.624 11.31 791,470 Band 33 77,682.791 11.26 874,708 Band 34 51,075.454 11.22 573,067 Band 35 128,984.883 11.73 1,512,993 Band 36 3,910.606 11.67 45,637 Band 37 541.510 11.63 6,298 Band 38 23,837.571 11.99 285,812 Band 39 396.400 11.98 4,749 Band 41 724.745 11.04 8,001 Band 42 4,609.882 11.03 50,847 Band 43 4,711.984 11.03 51,973 ------------------- ------------------ 1,419,958.381 $ 16,342,735 =================== ================== ING VP International Equity Contracts in accumulation period: Band 35 8,857.850 $ 9.52 $ 84,327 Band 38 9,234.012 12.19 112,563 ------------------- ------------------ 18,091.862 $ 196,890 =================== ================== ING VP Small Company Contracts in accumulation period: Band 35 52,291.336 $ 10.33 $ 540,170 Band 36 4,206.807 10.29 43,288 Band 37 3,101.003 10.26 31,816 Band 38 11,107.884 11.84 131,517 Band 39 10,451.985 11.83 123,647 Band 40 460.371 11.83 5,446 ------------------- ------------------ 81,619.386 $ 875,884 =================== ================== ING VP Value Opportunity Contracts in accumulation period: Band 9 10,996.653 $ 8.01 $ 88,083 Band 13 4,692.797 7.97 37,402 Band 15 4,823.559 7.94 38,299 Band 26 53,319.166 8.14 434,018
191 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING VP Value Opportunity (continued) Band 27 16,703.022 $ 8.08 $ 134,960 Band 28 9,651.348 8.05 77,693 Band 29 64,239.028 8.04 516,482 Band 30 34,458.303 7.98 274,977 Band 31 13,515.662 7.95 107,450 Band 32 21,398.980 7.89 168,838 Band 33 1,525.435 7.85 11,975 Band 34 17,301.616 7.82 135,299 Band 35 29,876.504 8.18 244,390 Band 36 157.530 8.14 1,282 ------------------- ------------------ 282,659.603 $ 2,271,148 =================== ================== ING VP Convertible Contracts in accumulation period: Band 9 18,144.678 $ 12.01 $ 217,918 Band 13 3,859.590 11.95 46,122 Band 15 8,981.459 11.90 106,879 Band 26 90,070.672 12.21 1,099,763 Band 27 32,053.061 12.11 388,163 Band 28 3,957.934 12.07 47,772 Band 29 66,419.278 12.05 800,352 Band 30 65,753.302 11.96 786,409 Band 31 6,963.867 11.92 83,009 Band 32 16,708.413 11.83 197,661 Band 33 6,970.002 11.77 82,037 Band 34 5,450.835 11.73 63,938 Band 43 485.162 11.24 5,453 ------------------- ------------------ 325,818.253 $ 3,925,476 =================== ================== ING VP Growth and Income Contracts in accumulation period: Band 35 124,019.146 $ 12.14 $ 1,505,592 Band 38 11,076.465 11.55 127,933 Band 39 7,750.586 11.54 89,442 ------------------- ------------------ 142,846.197 $ 1,722,967 =================== ================== ING VP Growth Opportunities Contracts in accumulation period: Band 4 3,991.265 $ 6.90 $ 27,540 Band 5 29,307.139 6.89 201,926 Band 6 351,903.919 6.87 2,417,580 Band 7 696,848.254 6.86 4,780,379 Band 8 119,046.080 6.84 814,275 Band 9 53,290.272 6.83 363,973
192 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING VP Growth Opportunities (continued) Band 10 240,861.697 $ 6.82 $ 1,642,677 Band 11 283,852.699 6.82 1,935,875 Band 12 230,737.482 6.81 1,571,322 Band 13 400,547.755 6.80 2,723,725 Band 14 677,924.212 6.78 4,596,326 Band 16 14,496.481 6.75 97,851 Band 17 137,234.263 6.74 924,959 Band 18 22,603.834 6.73 152,124 Band 19 100,540.079 6.71 674,624 Band 20 392,295.786 6.79 2,663,688 Band 21 50,836.456 6.76 343,654 Band 25 8,490.211 6.96 59,092 Band 35 5,353.657 6.99 37,422 Band 38 1,999.416 11.64 23,273 ------------------- ------------------ 3,822,160.957 $ 26,052,285 =================== ================== ING VP International Value Contracts in accumulation period: Band 35 38,095.675 $ 10.91 $ 415,624 Band 36 1,153.919 10.86 12,532 Band 38 8,311.062 12.05 100,148 Band 39 460.173 12.04 5,540 ------------------- ------------------ 48,020.829 $ 533,844 =================== ================== ING VP LargeCap Growth Contracts in accumulation period: Band 9 5,005.291 $ 8.05 $ 40,293 Band 13 380.502 8.01 3,048 Band 15 12,568.332 7.98 100,295 Band 26 69,776.794 8.18 570,774 Band 27 35,014.135 8.12 284,315 Band 28 6,658.887 8.09 53,870 Band 29 54,784.445 8.08 442,658 Band 30 27,054.485 8.02 216,977 Band 31 18,214.912 7.99 145,537 Band 32 6,163.808 7.93 48,879 Band 33 2,317.658 7.89 18,286 Band 34 2,007.414 7.86 15,778 ------------------- ------------------ 239,946.663 $ 1,940,710 =================== ================== ING VP MagnaCap Contracts in accumulation period: Band 2 6,982.276 $ 9.25 $ 64,586 Band 4 10,579.487 9.19 97,225
193 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING VP MagnaCap (continued) Band 5 17,330.670 $ 9.18 $ 159,096 Band 6 317,550.339 9.15 2,905,586 Band 7 558,846.608 9.14 5,107,858 Band 8 47,645.687 9.11 434,052 Band 9 56,264.669 9.10 512,008 Band 10 219,722.426 9.09 1,997,277 Band 11 202,659.013 9.08 1,840,144 Band 12 147,080.743 9.06 1,332,552 Band 13 304,573.329 9.05 2,756,389 Band 14 401,696.689 9.03 3,627,321 Band 15 16,408.736 9.02 148,007 Band 16 13,070.667 8.99 117,505 Band 17 60,420.883 8.98 542,580 Band 18 12,011.862 8.97 107,746 Band 19 14,129.602 8.94 126,319 Band 20 190,775.553 9.04 1,724,611 Band 21 34,265.728 9.00 308,392 Band 25 5,393.117 9.28 50,048 Band 26 63,558.494 9.26 588,552 Band 27 44,437.286 9.19 408,379 Band 28 20,286.404 9.15 185,621 Band 29 88,989.709 9.14 813,366 Band 30 51,779.883 9.06 469,126 Band 31 22,875.737 9.03 206,568 Band 32 28,446.812 8.96 254,883 Band 33 65,246.205 8.91 581,344 Band 34 9,902.574 8.87 87,836 ------------------- ------------------ 3,032,931.188 $ 27,554,977 =================== ================== ING VP MidCap Opportunities Contracts in accumulation period: Band 35 28,402.219 $ 9.82 $ 278,910 Band 38 120.854 11.66 1,409 ------------------- ------------------ 28,523.073 $ 280,319 =================== ================== ING VP SmallCap Opportunities Contracts in accumulation period: Band 2 12,185.182 $ 6.37 $ 77,620 Band 4 21,971.008 6.33 139,076 Band 5 172,366.635 6.32 1,089,357 Band 6 1,851,940.815 6.31 11,685,747 Band 7 2,408,687.469 6.30 15,174,731 Band 8 269,276.668 6.28 1,691,057 Band 9 106,296.463 6.27 666,479 Band 10 951,109.004 6.26 5,953,942
194 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ING VP SmallCap Opportunities (continued) Band 11 948,468.014 $ 6.25 $ 5,927,925 Band 12 952,612.914 6.25 5,953,831 Band 13 1,478,756.194 6.24 9,227,439 Band 14 2,876,834.531 6.22 17,893,911 Band 15 5,697.083 6.21 35,379 Band 16 66,684.488 6.19 412,777 Band 17 521,035.369 6.19 3,225,209 Band 18 55,730.142 6.18 344,412 Band 19 198,038.983 6.16 1,219,920 Band 20 1,204,049.954 6.23 7,501,231 Band 21 249,210.106 6.20 1,545,103 Band 25 67,189.898 6.39 429,343 Band 35 19,260.743 6.42 123,654 Band 38 12,567.121 12.02 151,057 ------------------- ------------------ 14,449,968.784 $ 90,469,200 =================== ================== AIM V.I. Capital Appreciation Contracts in accumulation period: Band 35 6,076.282 $ 9.49 $ 57,664 Band 36 694.513 9.45 6,563 Band 37 699.950 9.42 6,594 Band 38 503.543 11.56 5,821 ------------------- ------------------ 7,974.288 $ 76,642 =================== ================== AIM V.I. Core Equity Contracts in accumulation period: Band 35 16,052.414 $ 10.17 $ 163,253 Band 38 998.215 11.36 11,340 ------------------- ------------------ 17,050.629 $ 174,593 =================== ================== AIM V.I. Dent Demographic Trends Contracts in accumulation period: Band 2 15,347.872 $ 10.03 $ 153,939 Band 4 12,370.086 9.97 123,330 Band 5 59,090.235 9.96 588,539 Band 6 755,320.121 9.94 7,507,882 Band 7 955,638.070 9.93 9,489,486 Band 8 178,911.005 9.91 1,773,008 Band 9 74,555.752 9.90 738,102 Band 10 343,647.308 9.89 3,398,672 Band 11 496,352.989 9.87 4,899,004 Band 12 315,345.878 9.86 3,109,310 Band 13 574,799.476 9.85 5,661,775 Band 14 995,736.968 9.83 9,788,094
195 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ AIM V.I. Dent Demographic Trends (continued) Band 15 19,071.801 $ 9.82 $ 187,285 Band 16 29,802.021 9.80 292,060 Band 17 194,283.350 9.79 1,902,034 Band 18 17,992.865 9.77 175,790 Band 19 122,172.211 9.75 1,191,179 Band 20 488,691.873 9.84 4,808,728 Band 21 84,410.573 9.81 828,068 Band 25 2,308.837 10.05 23,204 Band 26 22,075.396 10.04 221,637 Band 27 2,840.972 9.97 28,324 Band 28 1,336.419 9.94 13,284 Band 29 53,899.916 9.93 535,226 Band 30 19,370.870 9.86 190,997 Band 31 30,225.045 9.83 297,112 Band 32 28,041.310 9.77 273,964 Band 33 5,592.180 9.72 54,356 Band 34 4,533.477 9.69 43,929 Band 41 1,700.459 10.73 18,246 ------------------- ------------------ 5,905,465.335 $ 58,316,564 =================== ================== AIM V.I. Growth Contracts in accumulation period: Band 4 953.995 $ 10.83 $ 10,332 Band 9 6,905.606 9.02 62,289 Band 13 13,259.967 8.98 119,075 Band 15 3,272.301 8.95 29,287 Band 26 39,641.330 9.15 362,718 Band 27 11,677.470 9.09 106,148 Band 28 5,800.281 9.06 52,551 Band 29 110,374.596 9.05 998,890 Band 30 38,328.542 8.99 344,574 Band 31 38,446.245 8.96 344,478 Band 32 21,116.335 8.90 187,935 Band 33 7,480.886 8.86 66,281 Band 34 4,320.090 8.83 38,146 Band 41 328.423 10.81 3,550 Band 42 295.051 10.81 3,190 ------------------- ------------------ 302,201.118 $ 2,729,444 =================== ================== AIM V.I. Premier Equity Contracts in accumulation period: Band 35 7,416.817 $ 8.47 $ 62,820 Band 36 5,604.006 8.43 47,242 Band 38 2,572.034 11.32 29,115 Band 39 3,049.487 11.31 34,490 ------------------- ------------------ 18,642.344 $ 173,667 =================== ==================
196 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ AllianceBernstein Growth and Income Contracts in accumulation period: Band 4 950.520 $ 11.04 $ 10,494 Band 9 43,089.456 9.54 411,073 Band 13 21,386.500 9.49 202,958 Band 15 51,953.463 9.45 490,960 Band 26 180,355.332 9.69 1,747,643 Band 27 115,036.597 9.62 1,106,652 Band 28 52,833.627 9.58 506,146 Band 29 300,082.587 9.57 2,871,790 Band 30 184,160.996 9.50 1,749,529 Band 31 117,421.115 9.46 1,110,804 Band 32 52,809.941 9.40 496,413 Band 33 41,312.202 9.35 386,269 Band 34 42,847.817 9.31 398,913 Band 43 756.096 11.01 8,325 ------------------- ------------------ 1,204,996.249 $ 11,497,969 =================== ================== AllianceBernstein Premier Growth Contracts in accumulation period: Band 4 456.091 $ 10.58 $ 4,825 Band 9 23,739.820 7.89 187,307 Band 13 11,631.089 7.85 91,304 Band 15 2,870.687 7.82 22,449 Band 26 55,059.637 8.02 441,578 Band 27 92,962.914 7.96 739,985 Band 28 11,768.855 7.93 93,327 Band 29 65,124.468 7.92 515,786 Band 30 81,240.907 7.86 638,554 Band 31 60,539.637 7.83 474,025 Band 32 14,293.455 7.78 111,203 Band 33 22,309.966 7.74 172,679 Band 34 6,077.657 7.71 46,859 ------------------- ------------------ 448,075.183 $ 3,539,881 =================== ================== AllianceBernstein Value Contracts in accumulation period: Band 4 1,077.139 $ 11.21 $ 12,075 Band 9 19,096.912 10.84 207,011 Band 13 8,463.995 10.79 91,327 Band 15 26,194.284 10.75 281,589 Band 26 75,187.748 11.02 828,569 Band 27 59,885.610 10.94 655,149 Band 28 12,144.792 10.90 132,378 Band 29 151,387.106 10.88 1,647,092 Band 30 141,413.413 10.80 1,527,265
197 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ AllianceBernstein Value (continued) Band 31 50,671.360 $ 10.76 $ 545,224 Band 32 16,641.641 10.68 177,733 Band 33 10,118.458 10.63 107,559 Band 34 25,366.222 10.59 268,628 Band 41 6,577.842 11.19 73,606 Band 43 495.140 11.18 5,536 ------------------- ------------------ 604,721.662 $ 6,560,741 =================== ================== Fidelity(R) VIP Contrafund(R) Contracts in accumulation period: Band 4 1,333.787 $ 11.01 $ 14,685 Band 7 2,054.359 10.92 22,434 Band 9 67,398.848 10.88 733,299 Band 13 45,391.307 10.83 491,588 Band 15 93,150.685 10.79 1,005,096 Band 26 286,989.095 11.06 3,174,099 Band 27 179,324.595 10.98 1,968,984 Band 28 24,048.790 10.93 262,853 Band 29 362,567.178 10.92 3,959,234 Band 30 203,416.553 10.84 2,205,035 Band 31 73,652.538 10.80 795,447 Band 32 67,994.458 10.72 728,901 Band 33 79,528.195 10.67 848,566 Band 34 63,101.378 10.63 670,768 Band 35 234,385.849 11.11 2,604,027 Band 36 40,201.134 11.06 444,625 Band 37 9,123.108 11.02 100,537 Band 38 56,253.727 11.62 653,668 Band 39 30,076.274 11.61 349,186 Band 40 4,896.894 11.60 56,804 Band 41 6,749.381 10.99 74,176 Band 42 563.840 10.98 6,191 Band 43 13,182.781 10.98 144,747 ------------------- ------------------ 1,945,384.754 $ 21,314,950 =================== ================== Fidelity(R) VIP Equity-Income Contracts in accumulation period: Band 2 25,119.917 $ 10.14 $ 254,716 Band 3 1,015.606 10.06 10,217 Band 4 33,628.091 10.08 338,971 Band 5 128,997.921 10.07 1,299,009 Band 6 2,246,269.907 10.04 22,552,550 Band 7 2,121,771.901 10.03 21,281,372 Band 8 591,446.665 10.01 5,920,381 Band 9 175,077.384 9.99 1,749,023
198 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ Fidelity(R) VIP Equity-Income (continued) Band 10 947,457.719 $ 9.98 $ 9,455,628 Band 11 881,407.742 9.97 8,787,635 Band 12 722,634.284 9.96 7,197,437 Band 13 1,180,858.201 9.94 11,737,731 Band 14 1,717,826.998 9.92 17,040,844 Band 15 55,379.402 9.91 548,810 Band 16 58,674.581 9.88 579,705 Band 17 440,726.131 9.87 4,349,967 Band 18 105,156.703 9.86 1,036,845 Band 19 90,840.960 9.83 892,967 Band 20 1,139,371.758 9.93 11,313,962 Band 21 221,381.201 9.89 2,189,460 Band 25 12,005.461 10.17 122,096 Band 26 301,688.927 10.16 3,065,160 Band 27 123,143.328 10.08 1,241,285 Band 28 28,783.708 10.04 288,988 Band 29 323,643.885 10.03 3,246,148 Band 30 258,519.187 9.96 2,574,851 Band 31 76,902.931 9.92 762,877 Band 32 47,674.823 9.85 469,597 Band 33 68,047.989 9.80 666,870 Band 34 32,068.074 9.76 312,984 Band 35 321,037.117 10.21 3,277,789 Band 36 6,929.059 10.16 70,399 Band 37 3,417.458 10.12 34,585 Band 38 33,633.393 11.73 394,520 Band 39 608.050 11.72 7,126 Band 41 6,786.730 11.23 76,215 Band 42 3,614.025 11.22 40,549 Band 43 7,694.076 11.21 86,251 ------------------- ------------------ 14,541,241.293 $ 145,275,520 =================== ================== Fidelity(R) VIP Growth Contracts in accumulation period: Band 1 2,400.459 $ 8.45 $ 20,284 Band 2 9,759.042 8.41 82,074 Band 3 1,626.444 8.34 13,565 Band 4 42,789.133 8.36 357,717 Band 5 100,959.243 8.35 843,010 Band 6 3,301,250.042 8.33 27,499,413 Band 7 3,494,948.105 8.32 29,077,968 Band 8 502,111.508 8.30 4,167,526 Band 9 161,544.552 8.29 1,339,204 Band 10 1,641,661.989 8.28 13,592,961 Band 11 1,487,202.805 8.27 12,299,167 Band 12 892,018.608 8.26 7,368,074
199 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ Fidelity(R) VIP Growth (continued) Band 13 2,329,442.351 $ 8.25 $ 19,217,899 Band 14 3,256,614.128 8.22 26,769,368 Band 15 63,606.967 8.21 522,213 Band 16 79,104.440 8.19 647,865 Band 17 875,428.052 8.18 7,161,001 Band 18 288,828.756 8.17 2,359,731 Band 19 193,182.193 8.15 1,574,435 Band 20 2,085,897.011 8.23 17,166,932 Band 21 376,537.796 8.20 3,087,610 Band 25 23,795.673 8.43 200,598 Band 26 250,993.102 8.42 2,113,362 Band 27 81,712.027 8.36 683,113 Band 28 25,594.687 8.33 213,204 Band 29 294,494.665 8.32 2,450,196 Band 30 114,854.474 8.26 948,698 Band 31 104,118.116 8.22 855,851 Band 32 40,959.382 8.16 334,229 Band 33 30,334.119 8.12 246,313 Band 34 17,372.450 8.09 140,543 Band 35 232,091.206 8.46 1,963,492 Band 36 4,544.306 8.42 38,263 Band 37 2,913.084 8.39 24,441 Band 38 20,788.783 11.65 242,189 Band 39 1,655.846 11.64 19,274 Band 40 467.672 11.63 5,439 Band 41 1,804.270 10.79 19,468 ------------------- ------------------ 22,435,407.486 $ 185,666,690 =================== ================== Fidelity(R) VIP Overseas Contracts in accumulation period: Band 35 6,204.290 $ 11.20 $ 69,488 Band 38 62,749.629 12.60 790,645 ------------------- ------------------ 68,953.919 $ 860,133 =================== ================== Franklin Small Cap Value Securities Contracts in accumulation period: Band 35 11,104.536 $ 11.79 $ 130,922 Band 36 8,954.730 11.74 105,129 ------------------- ------------------ 20,059.266 $ 236,051 =================== ================== Greenwich Appreciation Contracts in accumulation period: Band 22 405.442 $ 17.25 $ 6,994 Band 23 38,457.682 17.05 655,703 ------------------- ------------------ 38,863.124 $ 662,697 =================== ==================
200 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ INVESCO VIF - Financial Services Contracts in accumulation period: Band 1 532.381 $ 10.19 $ 5,425 Band 2 1,379.949 10.14 13,993 Band 3 645.849 10.05 6,491 Band 4 6,341.678 10.08 63,924 Band 5 21,189.705 10.07 213,380 Band 6 797,437.998 10.04 8,006,278 Band 7 1,269,116.418 10.03 12,729,238 Band 8 160,101.292 10.00 1,601,013 Band 9 45,809.587 9.99 457,638 Band 10 368,145.503 9.98 3,674,092 Band 11 377,242.406 9.97 3,761,107 Band 12 262,526.227 9.95 2,612,136 Band 13 612,566.243 9.94 6,088,908 Band 14 1,014,388.459 9.92 10,062,734 Band 15 6,890.120 9.90 68,212 Band 16 70,711.790 9.88 698,632 Band 17 141,129.875 9.87 1,392,952 Band 18 10,908.030 9.85 107,444 Band 19 45,304.867 9.83 445,347 Band 20 440,963.995 9.93 4,378,772 Band 21 89,689.727 9.89 887,031 Band 25 5,532.418 10.17 56,265 Band 26 46,102.372 10.15 467,939 Band 27 20,912.759 10.08 210,801 Band 28 5,768.807 10.04 57,919 Band 29 76,847.807 10.03 770,784 Band 30 38,847.716 9.95 386,535 Band 31 21,829.563 9.91 216,331 Band 32 4,814.020 9.84 47,370 Band 33 4,438.962 9.79 43,457 Band 34 3,162.912 9.76 30,870 Band 41 292.370 11.16 3,263 Band 42 500.683 11.15 5,583 Band 43 3,761.310 11.15 41,939 ------------------- ------------------ 5,975,833.798 $ 59,613,803 =================== ================== INVESCO VIF - Health Sciences Contracts in accumulation period: Band 1 9,636.449 $ 9.79 $ 94,341 Band 2 2,826.951 9.74 27,535 Band 3 517.129 9.65 4,990 Band 4 12,744.820 9.68 123,370 Band 5 51,678.769 9.67 499,734 Band 6 1,014,256.189 9.64 9,777,430 Band 7 1,782,226.825 9.63 17,162,844
201 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ INVESCO VIF - Health Sciences (continued) Band 8 180,195.428 $ 9.60 $ 1,729,876 Band 9 105,120.046 9.59 1,008,101 Band 10 507,002.660 9.58 4,857,085 Band 11 703,868.759 9.57 6,736,024 Band 12 467,931.704 9.56 4,473,427 Band 13 833,580.074 9.54 7,952,354 Band 14 1,526,624.917 9.52 14,533,469 Band 15 9,821.914 9.51 93,406 Band 16 60,164.769 9.49 570,964 Band 17 322,399.454 9.47 3,053,123 Band 18 56,039.636 9.46 530,135 Band 19 113,659.323 9.44 1,072,944 Band 20 727,697.839 9.53 6,934,960 Band 21 159,877.412 9.50 1,518,835 Band 25 14,126.180 9.76 137,872 Band 26 64,630.061 9.75 630,143 Band 27 27,836.859 9.68 269,461 Band 28 12,135.808 9.64 116,989 Band 29 98,945.093 9.63 952,841 Band 30 59,240.107 9.56 566,335 Band 31 77,681.086 9.52 739,524 Band 32 24,345.990 9.45 230,070 Band 33 11,612.473 9.40 109,157 Band 34 15,838.871 9.37 148,410 Band 43 2,107.463 11.15 23,498 ------------------- ------------------ 9,056,371.058 $ 86,679,247 =================== ================== INVESCO VIF - Leisure Contracts in accumulation period: Band 2 885.242 $ 10.78 $ 9,543 Band 4 6,092.927 10.73 65,377 Band 5 22,370.762 10.72 239,815 Band 6 354,586.579 10.71 3,797,622 Band 7 535,823.471 10.70 5,733,311 Band 8 57,778.815 10.68 617,078 Band 9 57,181.943 10.67 610,131 Band 10 224,254.381 10.66 2,390,552 Band 11 155,027.456 10.65 1,651,042 Band 12 210,755.384 10.64 2,242,437 Band 13 301,536.919 10.63 3,205,337 Band 14 505,163.837 10.62 5,364,840 Band 15 6,530.434 10.61 69,288 Band 16 17,964.074 10.59 190,240 Band 17 124,635.260 10.58 1,318,641 Band 18 113,886.237 10.57 1,203,778 Band 19 18,403.009 10.55 194,152
202 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ INVESCO VIF - Leisure (continued) Band 20 352,917.451 $ 10.62 $ 3,747,983 Band 21 79,557.206 10.60 843,306 Band 26 7,507.143 10.79 81,002 Band 27 6,846.813 10.73 73,466 Band 28 814.274 10.71 8,721 Band 29 31,972.207 10.70 342,103 Band 30 20,339.136 10.64 216,408 Band 31 5,233.784 10.61 55,530 Band 32 7,872.775 10.56 83,137 Band 33 1,083.364 10.53 11,408 Band 34 3,377.401 10.50 35,463 Band 43 1,235.926 10.91 13,484 ------------------- ------------------ 3,231,634.210 $ 34,415,195 =================== ================== INVESCO VIF - Utilities Contracts in accumulation period: Band 1 32.022 $ 7.49 $ 240 Band 2 5,006.203 7.45 37,296 Band 4 3,538.247 7.41 26,218 Band 5 23,559.916 7.40 174,343 Band 6 307,965.174 7.38 2,272,783 Band 7 520,912.786 7.37 3,839,127 Band 8 91,472.486 7.35 672,323 Band 9 99,200.116 7.34 728,129 Band 10 212,385.613 7.33 1,556,787 Band 11 376,279.642 7.32 2,754,367 Band 12 229,947.378 7.31 1,680,915 Band 13 360,780.641 7.30 2,633,699 Band 14 606,337.722 7.29 4,420,202 Band 15 10,108.763 7.28 73,592 Band 16 9,527.414 7.26 69,169 Band 17 131,724.050 7.25 954,999 Band 18 15,816.881 7.24 114,514 Band 19 54,390.500 7.22 392,699 Band 20 374,537.672 7.30 2,734,125 Band 21 80,760.638 7.27 587,130 Band 26 38,318.468 7.46 285,856 Band 27 23,799.930 7.41 176,357 Band 28 2,340.216 7.38 17,271 Band 29 67,520.240 7.37 497,624 Band 30 19,675.756 7.31 143,830 Band 31 10,695.572 7.29 77,971 Band 32 1,120.857 7.23 8,104 Band 33 1,890.391 7.20 13,611 Band 34 3,967.417 7.17 28,446 ------------------- ------------------ 3,683,612.711 $ 26,971,727 =================== ==================
203 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ Janus Aspen Series Balanced Contracts in accumulation period: Band 35 383,283.690 $ 10.44 $ 4,001,482 Band 36 22,469.602 10.39 233,459 Band 37 8,984.813 10.36 93,083 Band 38 8,526.431 10.91 93,023 Band 39 3,931.051 10.90 42,848 ------------------- ------------------ 427,195.587 $ 4,463,895 =================== ================== Janus Aspen Series Flexible Income Contracts in accumulation period: Band 35 131,137.964 $ 11.58 $ 1,518,578 Band 36 2,379.763 11.54 27,462 Band 37 1,634.370 11.50 18,795 Band 38 4,055.585 10.31 41,813 Band 39 25,864.671 10.30 266,406 ------------------- ------------------ 165,072.353 $ 1,873,054 =================== ================== Janus Aspen Series Growth Contracts in accumulation period: Band 35 84,419.788 $ 9.38 $ 791,858 Band 37 2,289.037 9.31 21,311 Band 38 11,008.110 11.66 128,355 Band 39 5,617.586 11.65 65,445 ------------------- ------------------ 103,334.521 $ 1,006,969 =================== ================== Janus Aspen Series Worldwide Growth Contracts in accumulation period: Band 4 80.752 $ 11.19 $ 904 Band 9 12,509.552 8.33 104,205 Band 13 8,419.340 8.28 69,712 Band 15 14,538.102 8.25 119,939 Band 26 128,770.848 8.46 1,089,401 Band 27 51,849.701 8.40 435,537 Band 28 13,191.477 8.37 110,413 Band 29 158,766.720 8.36 1,327,290 Band 30 77,331.249 8.29 641,076 Band 31 66,884.621 8.26 552,467 Band 32 11,610.157 8.20 95,203 Band 33 22,684.853 8.16 185,108 Band 34 3,113.512 8.13 25,313 Band 35 270,864.472 8.50 2,302,348 Band 36 7,654.008 8.46 64,753 Band 37 4,205.759 8.43 35,455 Band 38 2,333.211 11.60 27,065
204 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ Janus Aspen Series Worldwide Growth (continued) Band 39 1,126.001 $ 11.59 $ 13,050 Band 42 196.501 11.16 2,193 ------------------- ------------------ 856,130.836 $ 7,201,432 =================== ================== Colonial Small Cap Value Contracts in accumulation period: Band 4 7,626.940 $ 13.87 $ 105,786 Band 5 12,504.161 13.86 173,308 Band 6 368,371.824 13.85 5,101,950 Band 7 504,034.466 13.85 6,980,877 Band 8 82,669.241 13.84 1,144,142 Band 9 21,739.403 13.83 300,656 Band 10 202,533.034 13.83 2,801,032 Band 11 203,540.247 13.82 2,812,926 Band 12 159,276.868 13.82 2,201,206 Band 13 243,069.984 13.81 3,356,796 Band 14 510,581.280 13.80 7,046,022 Band 15 702.640 13.80 9,696 Band 16 10,254.651 13.79 141,412 Band 17 219,202.814 13.79 3,022,807 Band 18 12,195.280 13.78 168,051 Band 19 48,950.775 13.77 674,052 Band 20 288,410.425 13.81 3,982,948 Band 21 70,759.885 13.79 975,779 ------------------- ------------------ 2,966,423.918 $ 40,999,446 =================== ================== Liberty Asset Allocation Contracts in accumulation period: Band 6 10,795.453 $ 11.99 $ 129,437 Band 7 24,315.979 11.99 291,549 Band 8 3,319.228 11.98 39,764 Band 9 6,287.336 11.97 75,259 Band 11 2,420.303 11.96 28,947 Band 13 3,042.693 11.95 36,360 ------------------- ------------------ 50,180.992 $ 601,316 =================== ================== Liberty Equity Contracts in accumulation period: Band 6 11,638.993 $ 8.04 $ 93,578 Band 7 44,063.828 8.02 353,392 Band 8 8,745.587 7.99 69,877 Band 9 3,460.398 7.97 27,579 Band 11 4,085.988 7.94 32,443 Band 13 6,417.678 7.90 50,700 Band 14 2,632.254 7.87 20,716 ------------------- ------------------ 81,044.726 $ 648,285 =================== ==================
205 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ Liberty Federal Securities Contracts in accumulation period: Band 6 4,014.988 $ 10.09 $ 40,511 Band 7 3,089.615 10.09 31,174 Band 9 1,206.436 10.08 12,161 Band 11 294.269 10.07 2,963 ------------------- ------------------ 8,605.308 $ 86,809 =================== ================== Liberty Small Company Growth Contracts in accumulation period: Band 6 1,432.500 $ 14.98 $ 21,459 Band 7 1,018.404 14.98 15,256 Band 8 1,232.056 14.97 18,444 Band 9 413.244 14.96 6,182 Band 13 889.866 14.94 13,295 ------------------- ------------------ 4,986.070 $ 74,636 =================== ================== Oppenheimer Global Securities Contracts in accumulation period: Band 35 154,288.488 $ 10.87 $ 1,677,116 Band 36 26,374.483 10.83 285,636 Band 37 7,477.749 10.80 80,760 Band 38 43,091.673 12.54 540,370 Band 39 22,846.204 12.53 286,263 Band 40 2,462.095 12.52 30,825 ------------------- ------------------ 256,540.692 $ 2,900,970 =================== ================== Oppenheimer Strategic Bond Contracts in accumulation period: Band 35 24,209.429 $ 12.40 $ 300,197 Band 36 4,772.358 12.35 58,939 Band 37 337.824 12.32 4,162 Band 38 15,327.454 10.92 167,376 Band 39 5,453.561 10.91 59,498 Band 40 10,263.108 10.90 111,868 ------------------- ------------------ 60,363.734 $ 702,040 =================== ================== PIMCO High Yield Contracts in accumulation period: Band 1 4,099.678 $ 12.34 $ 50,590 Band 2 106,978.746 12.20 1,305,141 Band 4 388,868.046 12.02 4,674,194 Band 5 428,028.611 11.99 5,132,063 Band 6 8,508,429.574 11.92 101,420,481
206 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ PIMCO High Yield (continued) Band 7 6,994,147.717 $ 11.89 $ 83,160,416 Band 8 3,503,280.276 11.82 41,408,773 Band 9 796,025.462 11.78 9,377,180 Band 10 3,143,112.215 11.75 36,931,569 Band 11 6,864,118.309 11.72 80,447,467 Band 12 2,252,401.933 11.68 26,308,055 Band 13 5,849,064.961 11.65 68,141,607 Band 14 6,487,505.101 11.58 75,125,309 Band 15 57,613.819 11.55 665,440 Band 16 394,259.757 11.48 4,526,102 Band 17 1,307,369.695 11.45 14,969,383 Band 18 176,458.920 11.42 2,015,161 Band 19 423,315.413 11.35 4,804,630 Band 20 2,084,914.085 11.62 24,226,702 Band 21 548,635.672 11.52 6,320,283 Band 24 3,970.381 12.55 49,828 Band 25 135,163.848 12.27 1,658,460 Band 26 317,102.682 12.23 3,878,166 Band 27 82,291.838 12.02 989,148 Band 28 80,241.333 11.92 956,477 Band 29 374,144.514 11.88 4,444,837 Band 30 184,011.424 11.68 2,149,253 Band 31 102,234.615 11.58 1,183,877 Band 32 91,164.442 11.39 1,038,363 Band 33 71,336.359 11.26 803,247 Band 34 50,962.218 11.16 568,738 Band 41 6,240.986 10.70 66,779 Band 43 7,022.910 10.69 75,075 ------------------- ------------------ 51,824,515.540 $ 608,872,794 =================== ================== PIMCO StocksPLUS Growth and Income Contracts in accumulation period: Band 1 395.966 $ 10.71 $ 4,241 Band 2 54,134.169 10.59 573,281 Band 3 1,731.830 10.38 17,976 Band 4 125,076.258 10.44 1,305,796 Band 5 133,109.080 10.41 1,385,666 Band 6 3,653,649.019 10.35 37,815,267 Band 7 1,818,112.068 10.32 18,762,917 Band 8 2,681,600.534 10.26 27,513,221 Band 9 390,278.112 10.23 3,992,545 Band 10 676,563.137 10.20 6,900,944 Band 11 4,207,500.688 10.17 42,790,282 Band 12 790,067.492 10.14 8,011,284 Band 13 1,519,191.058 10.11 15,359,022 Band 14 1,744,752.063 10.05 17,534,758
207 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value -------------------------------------------------------- ------------------- --------------- ----------------- PIMCO StocksPLUS Growth and Income (continued) Band 16 14,234.802 $ 9.97 $ 141,921 Band 17 255,345.110 9.94 2,538,130 Band 18 43,840.484 9.91 434,459 Band 19 117,177.956 9.85 1,154,203 Band 20 276,324.000 10.08 2,785,346 Band 21 134,618.600 10.00 1,346,186 Band 25 19,817.800 10.65 211,060 ------------------- ----------------- 18,657,520.226 $ 190,578,505 =================== ================= Pioneer Equity-Income Contracts in accumulation period: Band 35 55,946.556 $ 10.05 $ 562,263 Band 36 27,693.124 10.01 277,208 Band 37 3,655.448 9.98 36,481 Band 38 2,082.799 11.35 23,640 Band 39 8,986.440 11.34 101,906 Band 40 735.126 11.33 8,329 ------------------- ----------------- 99,099.493 $ 1,009,827 =================== ================= Pioneer Fund Contracts in accumulation period: Band 1 1,283.342 $ 9.23 $ 11,845 Band 2 617.598 9.19 5,676 Band 4 27,381.518 9.13 249,993 Band 5 85,808.482 9.12 782,573 Band 6 914,700.048 9.09 8,314,623 Band 7 775,872.660 9.08 7,044,924 Band 8 258,851.382 9.06 2,345,194 Band 9 73,198.264 9.05 662,444 Band 10 600,837.805 9.04 5,431,574 Band 11 545,155.783 9.03 4,922,757 Band 12 317,257.750 9.02 2,861,665 Band 13 648,277.997 9.00 5,834,502 Band 14 1,191,747.959 8.98 10,701,897 Band 15 37,109.587 8.97 332,873 Band 16 9,957.011 8.95 89,115 Band 17 342,391.521 8.94 3,060,980 Band 18 27,046.196 8.93 241,523 Band 19 38,233.721 8.90 340,280 Band 20 501,379.449 8.99 4,507,401 Band 21 126,991.680 8.96 1,137,845 Band 25 3,427.094 9.21 31,564 Band 26 87,212.903 9.20 802,359 Band 27 27,952.509 9.13 255,206 Band 28 13,846.551 9.09 125,865
208 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ Pioneer Fund (continued) Band 29 108,867.802 $ 9.08 $ 988,520 Band 30 55,207.096 9.01 497,416 Band 31 47,381.698 8.98 425,488 Band 32 22,307.520 8.92 198,983 Band 33 7,157.215 8.87 63,485 Band 34 7,355.697 8.84 65,024 Band 35 21,146.885 9.24 195,397 Band 37 473.271 9.16 4,335 Band 38 652.602 11.43 7,459 ------------------- ------------------ 6,927,088.596 $ 62,540,785 =================== ================== Pioneer Mid-Cap Value Contracts in accumulation period: Band 1 664.511 $ 12.82 $ 8,519 Band 2 24,327.039 12.77 310,656 Band 4 36,297.722 12.70 460,981 Band 5 133,280.872 12.68 1,690,001 Band 6 2,142,900.865 12.66 27,129,125 Band 7 2,350,778.125 12.64 29,713,836 Band 8 597,100.706 12.61 7,529,440 Band 9 146,267.997 12.60 1,842,977 Band 10 1,315,891.653 12.59 16,567,076 Band 11 1,411,357.187 12.57 17,740,760 Band 12 671,453.467 12.56 8,433,456 Band 13 1,373,009.318 12.55 17,231,267 Band 14 2,287,184.333 12.52 28,635,548 Band 15 9,136.777 12.50 114,210 Band 16 50,383.354 12.48 628,784 Band 17 732,031.077 12.46 9,121,107 Band 18 78,912.110 12.45 982,456 Band 19 193,871.182 12.42 2,407,880 Band 20 1,262,275.872 12.53 15,816,317 Band 21 269,824.054 12.49 3,370,102 Band 25 23,566.334 12.80 301,649 Band 35 27,680.506 12.84 355,418 Band 36 1,728.001 12.78 22,084 Band 37 1,242.352 12.74 15,828 Band 38 6,298.716 11.95 75,270 Band 39 1,071.598 11.94 12,795 ------------------- ------------------ 15,148,535.728 $ 190,517,542 =================== ================== Pioneer Small Company Contracts in accumulation period: Band 9 25,664.942 $ 9.62 $ 246,897 Band 13 10,610.712 9.57 101,545
209 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ Pioneer Small Company (continued) Band 15 19,669.506 $ 9.54 $ 187,647 Band 26 125,797.606 9.78 1,230,301 Band 27 44,965.209 9.71 436,612 Band 28 9,720.152 9.67 93,994 Band 29 171,771.370 9.66 1,659,311 Band 30 71,952.479 9.58 689,305 Band 31 92,688.421 9.55 885,174 Band 32 28,821.317 9.48 273,226 Band 33 23,848.502 9.43 224,891 Band 34 37,760.284 9.40 354,947 Band 41 247.060 10.61 2,621 Band 43 516.285 10.60 5,473 ------------------- ------------------ 664,033.845 $ 6,391,944 =================== ================== ProFund VP Bull Contracts in accumulation period: Band 2 6,253.658 $ 8.35 $ 52,218 Band 4 27,245.509 8.29 225,865 Band 5 25,715.735 8.28 212,926 Band 6 1,824,762.362 8.26 15,072,537 Band 7 3,660,029.041 8.25 30,195,240 Band 8 354,863.550 8.22 2,916,978 Band 9 123,574.175 8.21 1,014,544 Band 10 212,538.377 8.20 1,742,815 Band 11 548,337.681 8.19 4,490,886 Band 12 462,337.097 8.18 3,781,917 Band 13 990,736.669 8.17 8,094,319 Band 14 1,275,993.859 8.15 10,399,350 Band 15 704.728 8.13 5,729 Band 16 75,931.024 8.11 615,801 Band 17 83,176.877 8.10 673,733 Band 18 46,761.129 8.09 378,298 Band 19 55,447.328 8.07 447,460 Band 20 525,851.868 8.16 4,290,951 Band 21 79,556.347 8.12 645,998 Band 25 11,922.292 8.37 99,790 Band 26 1,317.076 8.36 11,011 Band 29 13,905.402 8.24 114,581 Band 30 5,209.316 8.18 42,612 Band 31 2,509.124 8.14 20,424 Band 32 2,304.544 8.08 18,621 Band 33 14,511.586 8.04 116,673 ------------------- ------------------ 10,431,496.354 $ 85,681,277 =================== ==================
210 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ProFund VP Europe 30 Contracts in accumulation period: Band 2 2,216.067 $ 8.37 $ 18,548 Band 3 2,080.720 8.29 17,249 Band 4 7,125.977 8.31 59,217 Band 5 53,761.147 8.30 446,218 Band 6 648,260.452 8.28 5,367,597 Band 7 772,120.792 8.27 6,385,439 Band 8 147,114.663 8.24 1,212,225 Band 9 71,707.563 8.23 590,153 Band 10 118,461.943 8.22 973,757 Band 11 538,226.586 8.21 4,418,840 Band 12 187,999.688 8.20 1,541,597 Band 13 516,712.537 8.19 4,231,876 Band 14 441,725.820 8.17 3,608,900 Band 15 2,410.059 8.15 19,642 Band 16 163,248.053 8.13 1,327,207 Band 17 67,212.593 8.12 545,766 Band 18 7,178.779 8.11 58,220 Band 19 51,495.887 8.09 416,602 Band 20 132,490.966 8.18 1,083,776 Band 21 30,483.000 8.14 248,132 Band 25 1,861.831 8.39 15,621 Band 26 7,305.935 8.38 61,224 Band 27 1,337.153 8.31 11,112 Band 28 673.488 8.28 5,576 Band 29 14,370.069 8.27 118,840 Band 30 1,344.002 8.20 11,021 Band 31 4,233.493 8.17 34,588 Band 32 115.862 8.10 938 Band 33 3,846.809 8.06 31,005 Band 34 244.916 8.02 1,964 Band 41 1,370.572 12.09 16,570 ------------------- ------------------ 3,998,737.422 $ 32,879,420 =================== ================== ProFund VP Rising Rates Opportunity Contracts in accumulation period: Band 2 1,372.865 $ 9.38 $ 12,877 Band 4 193.233 9.37 1,811 Band 5 506.362 9.37 4,745 Band 6 98,300.716 9.37 921,078 Band 7 180,880.980 9.36 1,693,046 Band 8 137,980.685 9.36 1,291,499 Band 9 6,864.780 9.36 64,254 Band 10 29,130.683 9.36 272,663 Band 11 404,097.541 9.36 3,782,353 Band 12 64,765.439 9.35 605,557
211 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ------------------------------------------------------ ------------------- --------------- ----------------- ProFund VP Rising Rates Opportunity (continued) Band 13 108,486.272 $ 9.35 $ 1,014,347 Band 14 809,189.238 9.35 7,565,919 Band 15 2,000.907 9.35 18,708 Band 16 4,760.267 9.35 44,509 Band 17 26,718.993 9.34 249,555 Band 18 4,883.390 9.34 45,611 Band 19 2,436.262 9.34 22,755 Band 20 382,409.089 9.35 3,575,525 Band 21 92,406.024 9.35 863,996 Band 26 16,784.685 9.38 157,440 Band 27 6,741.074 9.37 63,164 Band 28 565.665 9.37 5,300 Band 29 33,629.364 9.36 314,771 Band 30 10,113.072 9.35 94,557 Band 31 2,955.793 9.35 27,637 Band 32 4,040.163 9.34 37,735 Band 33 18,682.480 9.33 174,308 Band 34 5,637.386 9.33 52,597 ------------------- ----------------- 2,456,533.408 $ 22,978,317 =================== ================= ProFund VP Small Cap Contracts in accumulation period: Band 2 13,190.364 $ 10.26 $ 135,333 Band 3 577.626 10.16 5,869 Band 4 23,414.928 10.19 238,598 Band 5 72,950.625 10.18 742,637 Band 6 2,307,078.257 10.15 23,416,844 Band 7 2,966,005.079 10.14 30,075,292 Band 8 424,033.518 10.11 4,286,979 Band 9 251,399.721 10.10 2,539,137 Band 10 550,359.216 10.08 5,547,621 Band 11 1,076,230.997 10.07 10,837,646 Band 12 401,763.580 10.05 4,037,724 Band 13 1,323,337.562 10.04 13,286,309 Band 14 1,665,508.290 10.01 16,671,738 Band 15 15,408.210 10.00 154,082 Band 16 132,956.758 9.97 1,325,579 Band 17 254,960.420 9.96 2,539,406 Band 18 50,629.298 9.95 503,762 Band 19 143,775.281 9.92 1,426,251 Band 20 697,737.420 10.03 6,998,306 Band 21 93,986.778 9.99 938,928 Band 25 17,563.391 10.29 180,727 Band 26 9,644.684 10.27 99,051 Band 27 1,073.024 10.19 10,934 Band 28 259.746 10.15 2,636
212 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ ProFund VP Small Cap (continued) Band 29 49,451.130 $ 10.14 $ 501,434 Band 30 23,541.253 10.05 236,590 Band 31 28,912.651 10.01 289,416 Band 32 8,201.606 9.93 81,442 Band 33 8,152.556 9.88 80,547 Band 34 5,757.559 9.84 56,654 Band 41 1,417.986 11.07 15,697 Band 43 478.714 11.06 5,295 ------------------- ------------------ 12,619,758.228 $ 127,268,464 =================== ================== Jennison Contracts in accumulation period: Band 2 11,560.511 $ 5.54 $ 64,045 Band 4 18,279.209 5.49 100,353 Band 5 222,864.373 5.48 1,221,297 Band 6 1,121,853.504 5.46 6,125,320 Band 7 1,684,880.924 5.45 9,182,601 Band 8 309,725.266 5.43 1,681,808 Band 9 204,234.818 5.42 1,106,953 Band 10 650,697.426 5.41 3,520,273 Band 11 902,884.248 5.40 4,875,575 Band 12 742,627.353 5.39 4,002,761 Band 13 981,933.707 5.38 5,282,803 Band 14 2,238,130.618 5.36 11,996,380 Band 15 3,603.133 5.35 19,277 Band 16 18,949.326 5.33 101,000 Band 17 449,624.783 5.32 2,392,004 Band 18 248,868.546 5.31 1,321,492 Band 19 133,896.661 5.29 708,313 Band 20 564,392.190 5.37 3,030,786 Band 21 144,335.164 5.34 770,750 Band 25 33,817.642 5.56 188,026 Band 26 41,016.776 5.55 227,643 Band 27 16,002.022 5.49 87,851 Band 28 2,842.309 5.46 15,519 Band 29 63,230.569 5.45 344,607 Band 30 39,357.637 5.39 212,138 Band 31 9,196.298 5.36 49,292 Band 32 12,480.558 5.30 66,147 Band 33 3,255.437 5.26 17,124 Band 34 4,355.086 5.23 22,777 ------------------- ------------------ 10,878,896.094 $ 58,734,915 =================== ==================
213 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ SP Jennison International Growth Contracts in accumulation period: Band 2 2,386.457 $ 5.72 $ 13,651 Band 4 17,893.531 5.67 101,456 Band 5 145,483.270 5.67 824,890 Band 6 1,721,530.112 5.65 9,726,645 Band 7 1,957,064.546 5.64 11,037,844 Band 8 188,211.814 5.62 1,057,750 Band 9 110,259.164 5.61 618,554 Band 10 940,235.032 5.60 5,265,316 Band 11 926,785.447 5.59 5,180,731 Band 12 623,810.683 5.58 3,480,864 Band 13 1,299,827.231 5.57 7,240,038 Band 14 2,019,061.444 5.55 11,205,791 Band 15 8,883.433 5.54 49,214 Band 16 60,765.114 5.53 336,031 Band 17 638,848.652 5.52 3,526,445 Band 18 54,940.851 5.51 302,724 Band 19 134,828.893 5.49 740,211 Band 20 817,351.313 5.56 4,544,473 Band 21 285,492.516 5.54 1,581,629 Band 25 62,298.362 5.74 357,593 Band 26 48,367.682 5.73 277,147 Band 27 21,276.488 5.67 120,638 Band 28 2,236.785 5.65 12,638 Band 29 78,402.775 5.64 442,192 Band 30 37,262.750 5.58 207,926 Band 31 23,463.553 5.55 130,223 Band 32 13,514.884 5.50 74,332 Band 33 4,342.501 5.46 23,710 Band 34 9,329.939 5.44 50,755 Band 41 6,315.325 11.78 74,395 Band 43 1,347.913 11.77 15,865 ------------------- ------------------ 12,261,818.460 $ 68,621,671 =================== ================== Putnam VT Discovery Growth Contracts in accumulation period: Band 9 19,279.057 $ 7.87 $ 151,726 Band 13 3,869.898 7.83 30,301 Band 15 19,784.686 7.80 154,321 Band 26 60,592.047 8.00 484,736 Band 27 31,623.979 7.94 251,094 Band 28 8,339.229 7.91 65,963 Band 29 133,599.175 7.90 1,055,433 Band 30 49,450.154 7.84 387,689 Band 31 20,965.675 7.81 163,742 Band 32 15,967.317 7.76 123,906
214 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ Putnam VT Discovery Growth (continued) Band 33 33,625.251 $ 7.72 $ 259,587 Band 34 5,741.962 7.69 44,156 ------------------- ------------------ 402,838.430 $ 3,172,654 =================== ================== Putnam VT Growth and Income Contracts in accumulation period: Band 9 12,772.297 $ 9.28 $ 118,527 Band 13 3,672.774 9.23 33,900 Band 15 5,775.387 9.19 53,076 Band 26 67,305.258 9.62 647,477 Band 27 9,960.070 9.55 95,119 Band 28 1,582.508 9.51 15,050 Band 29 133,373.397 9.50 1,267,047 Band 30 54,143.239 9.43 510,571 Band 31 24,360.124 9.39 228,742 Band 32 16,797.135 9.13 153,358 Band 33 5,139.005 9.09 46,714 Band 34 3,423.411 9.05 30,982 ------------------- ------------------ 338,304.605 $ 3,200,563 =================== ================== Putnam VT International Growth and Income Contracts in accumulation period: Band 9 9,608.883 $ 10.89 $ 104,641 Band 13 2,852.787 10.84 30,924 Band 15 18,930.640 10.80 204,451 Band 26 115,297.908 11.07 1,276,348 Band 27 22,120.180 10.99 243,101 Band 28 9,901.116 10.94 108,318 Band 29 108,389.829 10.93 1,184,701 Band 30 29,956.508 10.85 325,028 Band 31 39,221.981 10.81 423,990 Band 32 11,934.050 10.73 128,052 Band 33 3,670.054 10.68 39,196 Band 34 21,711.082 10.64 231,006 ------------------- ------------------ 393,595.018 $ 4,299,756 =================== ================== Smith Barney High Income Contracts in accumulation period: Band 22 3,089.374 $ 14.37 $ 44,394 Band 23 18,574.118 14.18 263,381 ------------------- ------------------ 21,663.492 $ 307,775 =================== ==================
215 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ Smith Barney International All Cap Growth Contracts in accumulation period: Band 22 1,458.481 $ 11.23 $ 16,379 Band 23 18,441.894 11.09 204,521 ------------------- ------------------ 19,900.375 $ 220,900 =================== ================== Smith Barney Large Cap Value Contracts in accumulation period: Band 22 2,166.306 $ 17.96 $ 38,907 Band 23 20,658.879 17.73 366,282 ------------------- ------------------ 22,825.185 $ 405,189 =================== ================== Smith Barney Money Market Contracts in accumulation period: Band 23 3,999.484 $ 12.44 $ 49,754 ------------------- ------------------ 3,999.484 $ 49,754 =================== ================== UBS Tactical Allocation Contracts in accumulation period: Band 4 766.296 $ 11.01 $ 8,437 Band 7 9,573.280 8.96 85,777 Band 9 20,061.248 8.92 178,946 Band 13 12,331.075 8.88 109,500 Band 15 9,988.615 8.85 88,399 Band 26 160,746.605 9.07 1,457,972 Band 27 35,385.950 9.00 318,474 Band 28 17,999.562 8.97 161,456 Band 29 141,363.527 8.96 1,266,617 Band 30 44,488.261 8.89 395,501 Band 31 31,625.878 8.86 280,205 Band 32 15,111.452 8.79 132,830 Band 33 10,467.646 8.75 91,592 Band 34 979.271 8.72 8,539 ------------------- ------------------ 510,888.666 $ 4,584,245 =================== ================== Wells Fargo VT Asset Allocation Contracts in accumulation period: Band 14 2,336.655 $ 10.54 $ 24,628 ------------------- ------------------ 2,336.655 $ 24,628 =================== ================== Wells Fargo VT Equity Income Contracts in accumulation period: Band 14 981.866 $ 10.75 $ 10,555 ------------------- ------------------ 981.866 $ 10,555 =================== ==================
216 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Division/Contract Units Unit Value Extended Value ----------------------------------------------------- ------------------- -------------- ------------------ Wells Fargo VT Large Company Growth Contracts in accumulation period: Band 14 3,283.464 $ 10.26 $ 33,688 ------------------- ------------------ 3,283.464 $ 33,688 =================== ================== Wells Fargo VT Small Cap Growth Contracts in accumulation period: Band 14 661.268 $ 10.64 $ 7,036 ------------------- ------------------ 661.268 $ 7,036 =================== ==================
217 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Bands Products ------------------- --------------------------------------------------------------------------------------------------------------- Band 1 DVA 80 Band 2 DVA Band 3 DVA Series 100 Band 4 DVA Plus - Standard (pre February 2000) Band 5 DVA Plus - Standard (post January 2000 & post 2000) Band 6 DVA Plus - Annual Ratchet (pre February 2000) & 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard, Opportunities - Standard Band 7 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet Band 8 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre Feburary 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000), Opportunities - 5.5% Solution Band 9 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% Solution (post January 2000 and post 2000) Band 10 DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard, Opportunities - Annual Ratchet Band 11 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), Premium Plus - Max 5.5 (post January 2000), Opportunities - Max 5.5 Band 12 Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution, Opportunities - 7% Solution Band 13 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution Band 14 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet Band 15 Access - 5.5% Solution (post April 2001), Landmark - Max 5.5% Band 16 Access - Annual Ratchet (post April 2001) Band 17 Access - Max 5.5 (post April 2001), Landmark - Max 7 Band 18 Access - 7% Solution (post April 2001) Band 19 Access - Max 7 (post April 2001) Band 20 ES II - Max 7 (post 2000), Generations - Max 7, Opportunities - Max 7 Band 21 Landmark - 7% Solution Band 22 Granite PrimElite - Standard Band 23 Granite PrimElite - Annual Ratchet Band 24 Access One Band 25 Value Band 26 VA Option I Band 27 VA Option II Band 28 VA Option III Band 29 VA Bonus Option I Band 30 VA Bonus Option II Band 31 VA Bonus Option III Band 32 SmartDesign Advantage Option I Band 33 SmartDesign Advantage Option II Band 34 SmartDesign Advantage Option III Band 35 ING Rollover Choice Option I (pre August 7, 2003), Focus VA Option I Band 36 ING Rollover Choice Option II (pre August 7, 2003), Focus VA Option II Band 37 ING Rollover Choice Option III (pre August 7, 2003) Band 38 ING Rollover Choice Option I (post August 6, 2003) Band 39 ING Rollover Choice Option II (post August 6, 2003) Band 40 ING Rollover Choice Option III (post August 6, 2003) Band 41 SmartDesign Signature Option I Band 42 SmartDesign Signature Option II Band 43 SmartDesign Signature Option III
218 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements 9. Financial Highlights A summary of unit values and units outstanding for variable annuity Contracts, expense ratios, excluding expenses of underlying Funds, investment income ratios, and total return for the years ended December 31, 2003, 2002, and 2001, along with unit values and units outstanding for the year ended December 31, 2000, follows: Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------ ------------ -------------------- ------------------- ING GET Fund - Series N 2003 2,282 $10.14 to $10.38 $ 23,357 2.73 % 1.45% to 2.40% 1.81% to 2.77% 2002 2,862 $9.96 to $10.10 28,661 1.35 0.95% to 1.90% -2.73% to -1.75% 2001 3,009 $10.24 to $10.28 30,868 2.25 0.95% to 1.90% ** 2000 ** ** ** ** ** ** ING GET Fund - Series P 2003 10,880 $9.89 to $10.26 110,101 2.58 1.45% to 3.05% 0.82% to 2.40% 2002 14,328 $9.81 to $10.02 143,846 0.07 0.75% to 2.55% -1.80% to -0.20% 2001 15,276 $9.99 to $10.04 153,045 ** 0.95% to 2.55% ** 2000 ** ** ** ** ** ** ING GET Fund - Series Q 2003 12,692 $10.13 to $10.51 131,095 - 1.25% to 3.05% 2.01% to 3.85% 2002 16,855 $9.93 to $10.12 169,029 2.51 0.75% to 2.55% -0.70% to 1.20% 2001 190 $10.00 1,904 ** 0.95% to 1.90% ** 2000 ** ** ** ** ** ** ING GET Fund - Series R 2003 12,873 $10.30 to $10.64 134,755 0.01 1.25 % to 3.05% 2.90% to 4.72% 2002 16,911 $10.01 to $10.16 170,526 *** 0.75% to 2.55% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** ***
219 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------ ------------ -------------------- ------------------- ING GET Fund - Series S 2003 15,576 $10.24 to $10.54 $ 161,820 0.09 % 1.25% to 3.05% 2.61% to 4.56% 2002 21,867 $9.98 to $10.08 219,270 *** 0.75% to 2.55% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING GET Fund - Series T 2003 15,618 $10.31 to $10.56 162,882 0.13 1.25% to 3.05% 2.69% to 4.55% 2002 23,643 $10.04 to $10.10 237,948 *** 0.75% to 2.55% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING GET Fund - Series U 2003 16,063 $10.42 to $10.62 168,926 - 1.25% to 3.05% 4.30% to 6.20% 2002 105 $9.99 to $10.00 1,048 *** 0.75% to 2.20% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING GET Fund - Series V 2003 33,567 $9.64 to $9.78 325,984 **** 1.25% to 3.05% **** 2002 **** **** **** **** **** **** 2001 **** **** **** **** **** **** 2000 **** **** **** **** **** **** ING AIM Mid-Cap Growth (Service Class) 2003 16,058 $13.10 to $14.78 221,733 - 0.80% to 2.25% 41.01% to 42.94% 2002 14,324 $9.29 to $10.34 139,852 - 0.80% to 2.25% -33.26% to -32.24% 2001 17,855 $13.92 to $15.26 259,382 - 0.80% to 2.25% -22.66% to -21.78% 2000 19,182 $18.40 to $19.51 359,734 * * *
220 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------ ------------ -------------------- ------------------- ING AIM Mid-Cap Growth (Advisor Class) 2003 235 $13.60 to $13.68 $ 3,194 - % 1.40% to 1.85% 41.23% to 41.76% 2002 8 $9.63 to $9.65 78 *** 1.40% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING Alliance Mid-Cap Growth (Service Class) 2003 28,328 $15.55 to $17.43 462,824 - 0.80% to 2.25% 63.34% to 65.68% 2002 24,777 $9.52 to $10.52 246,769 - 0.80% to 2.25% -31.66% to -30.56% 2001 27,303 $13.93 to $15.15 395,434 - 0.80% to 2.25% -15.42% to -14.46% 2000 27,139 $16.80 to $17.71 463,399 * * * ING Alliance Mid-Cap Growth (Advisor Class) 2003 270 $17.10 to $17.21 4,624 - 1.40% to 1.85% 63.64% to 64.53% 2002 14 $10.45 to $10.46 148 *** 1.40% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING American Funds Growth 2003 12,298 $10.73 to $10.79 132,320 **** 0.95% to 2.55% **** 2002 **** **** **** **** **** **** 2001 **** **** **** **** **** **** 2000 **** **** **** **** **** **** ING American Funds Growth- Income 2003 9,106 $10.95 to $11.01 99,959 **** 0.95% to 2.55% **** 2002 **** **** **** **** **** **** 2001 **** **** **** **** **** **** 2000 **** **** **** **** **** ****
221 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------ ------------ -------------------- ------------------- ING American Funds International 2003 3,906 $11.57 to $11.64 $ 45,340 **** % 0.95% to 2.55% **** 2002 **** **** **** **** **** **** 2001 **** **** **** **** **** **** 2000 **** **** **** **** **** **** ING Capital Guardian Large Cap Value (Service Class) 2003 55,938 $9.81 to $10.52 561,288 0.05 0.50% to 2.25% 33.65% to 36.09% 2002 39,602 $7.34 to $7.73 295,688 0.25 0.50% to 2.25% -25.48% to -24.22% 2001 27,628 $9.85 to $10.20 275,489 0.25 0.50% to 2.25% -5.43% to -4.44% 2000 9,362 $10.50 to $10.59 98,545 * * * ING Capital Guardian Large Cap Value (Advisor Class) 2003 495 $13.72 to $13.81 6,805 - 1.40% to 1.85% 33.85% to 34.47% 2002 32 $10.25 to $10.27 333 *** 1.40% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING Capital Guardian Managed Global (Service Class) 2003 19,452 $16.82 to $20.51 352,387 - 0.50% to 2.25% 33.28% to 35.65% 2002 16,459 $12.62 to $15.12 223,084 0.13 0.50% to 2.25% -22.00% to -20.59% 2001 14,451 $16.18 to $19.04 250,388 0.13 0.50% to 2.25% -13.60% to -12.34% 2000 11,365 $19.34 to $21.72 228,347 * * * ING Capital Guardian Managed Global (Advisor Class) 2003 152 $13.68 to $13.76 2,084 - 1.40% to 1.85% 33.72% to 34.38% 2002 5 $10.23 50 *** 1.75% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** ***
222 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------ ------------ -------------------- ------------------- ING Capital Guardian Small Cap (Service Class) 2003 30,090 $16.97 to $19.55 $ 537,286 0.15 % 0.50% to 2.25% 37.19% to 39.64% 2002 26,339 $12.37 to $14.00 341,146 0.12 0.80% to 2.25% -27.11% to -25.80% 2001 27,165 $16.97 to $18.87 480,513 0.13 0.50% to 2.25% -3.40% to -1.97% 2000 23,107 $17.94 to $19.25 422,097 * * * ING Capital Guardian Small Cap (Advisor Class) 2003 310 $13.37 to $13.45 4,148 0.18 1.40% to 1.85% 37.55% to 38.23% 2002 33 $9.72 to $9.73 321 *** 1.40% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING Developing World (Service Class) 2003 12,265 $8.57 to $9.34 109,258 0.21 0.80% to 2.25% 43.31% to 45.48% 2002 9,702 $5.98 to $6.42 60,000 - 0.80% to 2.25% -12.70% to -11.45% 2001 10,141 $6.85 to $7.25 71,466 1.18 0.80% to 2.25% -7.10% to -5.97% 2000 7,211 $7.47 to $7.71 54,398 * * * ING Developing World (Advisor Class) 2003 140 $13.92 to $14.00 1,956 0.20 1.40% to 1.85% 43.51% to 44.18% 2002 8 $9.70 to $9.71 79 *** 1.40% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING Eagle Asset Value Equity (Service Class) 2003 11,683 $16.67 to $19.53 212,149 0.22 0.80% to 2.55% 22.12% to 24.24% 2002 11,740 $13.65 to $15.72 173,239 0.69 0.80% to 2.55% -20.82% to -17.70% 2001 10,991 $17.24 to $19.10 199,039 0.85 0.80% to 2.25% -6.21% to -5.21% 2000 9,358 $18.85 to $20.15 180,722 * * *
223 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------ ------------ -------------------- ------------------- ING Eagle Asset Value Equity (Advisor Class) 2003 86 $11.80 to $11.87 $ 1,022 0.18 % 1.40% to 1.85% 22.79% to 23.26% 2002 11 $9.61 to $9.63 107 *** 1.40% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** IMG FMR Diversified Mid-Cap (Service Class) 2003 17,427 $9.25 to $9.68 164,205 - 0.90% to 2.25% 30.47% to 32.42% 2002 12,695 $7.09 to $7.31 91,159 0.29 0.90% to 2.25% -21.13% to -20.11% 2001 6,381 $8.99 to $9.15 57,814 0.48 0.90% to 2.25% -8.41% to -7.79% 2000 1,150 $9.87 to $9.88 11,358 * * * IMG FMR Diversified Mid-Cap (Advisor Class) 2003 303 $12.38 to $12.46 3,754 - 1.40% to 1.85% 30.73% to 31.43% 2002 23 $9.47 to $9.48 220 *** 1.40% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING Goldman Sachs Internet Tollkeeper (Service Class) 2003 8,371 $6.31 to $6.55 53,622 - 0.90% to 2.25% 37.77% to 39.66% 2002 2,769 $4.58 to $4.69 12,802 - 0.90% to 2.25% -39.50% to -38.61% 2001 709 $7.57 to $7.64 5,389 ** 0.90% to 2.25% ** 2000 ** ** ** ** ** ** ING Goldman Sachs Internet Tollkeeper (Advisor Class) 2003 180 $14.37 to $14.46 2,595 - 1.40% to 1.85% 38.17% to 38.77% 2002 5 $10.40 to $10.42 53 *** 1.40% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** ***
224 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------ ------------ -------------------- ------------------- ING Hard Assets (Service Class) 2003 6,911 $18.51 to $23.06 $ 140,016 0.37 % 0.80% to 2.25% 48.79% to 51.02% 2002 4,986 $12.44 to $15.93 67,753 0.68 0.50% to 2.25% -1.50% to 4.32% 2001 2,395 $12.63 to $15.27 33,209 - 0.80% to 2.25% -13.82% to -12.84% 2000 2,584 $15.34 to $17.52 41,509 * * * ING Hard Assets (Advisor Class) 2003 207 $14.66 to $14.74 3,037 0.45 1.40% to 1.85% 49.29% to 49.95% 2002 10 $9.82 to $9.83 97 *** 1.40% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING International (Service Class) 2003 17,997 $8.59 to $9.63 162,082 0.25 0.80% to 2.25% 26.32% to 28.23% 2002 16,969 $6.80 to $7.46 120,477 0.75 0.90% to 2.25% -18.76% to -16.93% 2001 16,734 $8.37 to $8.98 144,061 - 0.90% to 2.10% -24.87% to -22.18% 2000 17,171 $11.23 to $11.73 194,618 * * * ING International (Advisor Class) 2003 401 $12.40 to $12.47 4,980 0.31 1.40% to 1.85% 26.66% to 27.24% 2002 26 $9.79 to $9.80 254 *** 1.40% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING Janus Growth and Income (Service Class) 2003 26,637 $8.20 to $10.81 224,722 0.03 0.90% to 2.55% 19.36% to 21.49% 2002 18,616 $6.87 to $7.13 130,345 0.45 0.90% to 2.55% -21.75% to -20.16% 2001 10,487 $8.78 to $8.93 92,720 1.02 0.90% to 2.25% -11.18% to -10.34% 2000 1,280 $9.93 to $9.96 12,726 * * *
225 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------ ------------ -------------------- ------------------- ING Janus Growth and Income (Advisor Class) 2003 616 $11.66 to $11.73 $ 7,195 - % 1.40% to 1.85% 20.06% to 20.58% 2002 60 $9.71 to $9.73 587 *** 1.40% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING Janus Special Equity (Service Class) 2003 6,039 $8.76 to $9.16 53,911 - 0.90% to 2.25% 46.98% to 48.94% 2002 3,609 $5.96 to $6.15 21,794 - 0.90% to 2.25% -27.58% to -26.61% 2001 2,932 $8.23 to $8.38 24,325 0.37 0.90% to 2.25% -6.87% to -6.19% 2000 663 $8.88 to $8.89 5,891 * * * ING Janus Special Equity (Advisor Class) 2003 56 $14.91 to $14.27 801 - 1.40% to 1.85% 47.51% to 48.18% 2002 6 $9.62 to $9.63 56 *** 1.40% to 1.75% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING Jennison Equity Opportunities (Service Class) 2003 17,530 $17.58 to $20.87 333,380 0.09 0.80% to 2.25% 28.13% to 30.03% 2002 19,040 $13.72 to $16.05 280,954 0.13 0.80% to 2.25% -30.85% to -29.82% 2001 20,717 $19.84 to $22.87 440,209 0.07 0.80% to 2.25% -14.67% to -13.67% 2000 19,193 $24.06 to $26.49 477,934 * * * ING Jennison Equity Opportunities (Advisor Class) 2003 131 $12.52 to $12.59 1,639 0.12 1.40% to 1.85% 28.54% to 29.13% 2002 3 $9.74 to $9.75 34 *** 1.40% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** ***
226 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------ ------------- -------------------- ------------------- ING JPMorgan Fleming Small Cap Equity (Service Class) 2003 6,338 $10.18 to $11.02 $ 65,484 - % 0.80% to 2.55% 30.85% to 33.12% 2002 1,212 $7.79 to $7.87 9,490 *** 0.90% to 2.40% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING JPMorgan Fleming Small Cap Equity (Advisor Class) 2003 889 $12.45 to $12.52 11,088 - 1.40% to 1.85% 31.33% to 31.93% 2002 54 $9.48 to $9.49 511 *** 1.40% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING Julius Baer Foreign (Service Class) 2003 3,272 $10.44 to $11.69 34,644 0.99 0.90% to 2.55% 27.94% to 30.06% 2002 608 $8.17 to $8.25 4,990 *** 0.90% to 2.40% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING Julius Baer Foreign (Advisor Class) 2003 203 $12.52 to $12.60 2,550 1.03 1.40% to 1.85% 28.54% to 29.10% 2002 17 $9.74 to $9.76 165 *** 1.40% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING Limited Maturity Bond 2003 27,037 $17.94 to $23.37 534,954 0.74 0.50% to 2.25% 0.56% to 2.32% 2002 28,506 $17.84 to $22.84 558,941 3.62 0.50% to 2.25% 4.82% to 6.68% 2001 19,509 $17.02 to $21.41 364,062 4.84 0.50% to 2.25% 6.78% to 8.30% 2000 11,438 $16.67 to $19.77 200,958 * * *
227 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------- ------------ ------------------- ------------------- ING Liquid Assets (Service Class) 2003 49,098 $9.95 to $18.00 $ 745,674 0.78 % 0.50% to 2.55% -1.78% to 0.22% 2002 66,797 $13.46 to $17.34 1,023,179 1.42 0.50% to 2.55% -1.17% to 0.96% 2001 69,541 $13.62 to $17.79 1,071,485 3.59 0.50% to 2.55% 1.86% to 3.01% 2000 44,678 $14.50 to $16.61 679,666 * * * ING Liquid Assets (Advisor Class) 2003 490 $9.85 to $9.91 4,837 0.81 1.40% to 1.85% -1.30% to -0.80% 2002 180 $9.98 to $9.99 1,800 *** 1.40% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING Marisco Growth (Service Class) 2003 57,559 $12.87 to $14.76 778,700 - 0.50% to 2.25% 29.74% to 32.02% 2002 53,954 $9.92 to $11.18 560,041 - 0.50% to 2.25% -31.16% to -29.91% 2001 66,921 $14.41 to $15.95 1,002,892 - 0.50% to 2.25% -31.55% to -30.59% 2000 67,525 $21.49 to $22.98 1,474,980 * * * ING Marisco Growth (Advisor Class) 2003 654 $12.71 to $12.79 8,324 - 1.40% to 1.85% 30.23% to 30.81% 2002 9 $9.76 to $9.78 92 *** 1.40% to 1.75% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING Mercury Focus Value (Service Class) 2003 2,431 $10.68 to %10.92 26,184 0.21 0.90% to 2.25% 28.33% to 30.00% 2002 710 $8.32 to $8.40 5,931 *** 0.90% to 2.25% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** ***
228 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------- ------------ ------------------- ------------------- ING Mercury Focus Value (Advisor Class) 2003 61,511 $13.07 to $13.15 $ 805 0.23 % 1.40% to 1.85% 28.64% to 29.30% 2002 5 $10.16 to $10.17 48 *** 1.65% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING Mercury Fundamental Growth (Service Class) 2003 1,372 $9.84 to $10.07 13,630 - 0.90% to 2.25% 24.09% to 25.88% 2002 345 $7.93 to $8.00 2,742 *** 0.90% to 2.15% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING Mercury Fundamental Growth (Advisor Class) 2003 72,746 $11.74 to $11.81 856 - 1.40% to 1.85% 24.36% to 24.97% 2002 11 $9.44 to $9.45 108 *** 1.40% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING MFS(R) Mid-Cap Growth (Service Class) 2003 29,373 $20.36 to $23.98 634,357 - 0.50% to 2.25% 36.01% to 38.45% 2002 27,548 $14.97 to $17.32 435,581 - 0.50% to 2.25% -49.97% to -49.07% 2001 29,521 $29.92 to $34.01 928,290 0.37 0.50% to 2.25% -25.09% to -24.25% 2000 27,623 $40.98 to $43.92 1,158,061 * * * ING MFS(R) Mid-Cap Growth (Advisor Class) 2003 722 $13.31 to $13.39 9,625 - 1.40% to 1.85% 36.48% to 37.05% 2002 56 $9.75 to $9.77 549 *** 1.40% to 1.80% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** ***
229 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------- ------------ ------------------- ------------------- ING MFS(R) Research (Service Class) 2003 27,160 $16.70 to $19.66 $ 494,911 0.21 % 0.80% to 2.55% 21.45% to 23.57% 2002 28,285 $13.75 to $15.91 421,035 0.41 0.80% to 2.55% -28.35% to -25.45% 2001 31,622 $19.19 to $21.34 637,711 0.12 0.80% to 2.25% -22.97% to -22.09% 2000 30,638 $25.56 to $27.39 800,528 * * * ING MFS(R) Research (Advisor Class) 2003 165 $11.84 to $11.92 1,951 0.18 1.40% to 1.85% 22.06% to 22.66% 2002 34 $9.70 to $9.72 326 *** 1.40% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING MFS(R) Total Return (Service Class) 2003 52,822 $10.66 to $24.07 1,142,408 0.53 0.50% to 2.55% 13.79% to 16.17% 2002 45,174 $17.48 to $20.72 853,266 2.36 0.50% to 2.55% -7.51% to -5.56% 2001 39,136 $18.90 to $21.94 793,394 4.88 0.50% to 2.55% -1.44% to -0.32% 2000 29,621 $20.10 to $21.54 608,868 * * * ING MFS(R) Total Return (Advisor Class) 2003 1,416 $11.46 to $11.53 16,257 0.74 1.40% to 1.85% 14.26% to 14.84% 2002 95 $10.03 to $10.04 955 *** 1.40% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING PIMCO Core Bond (Service Class) 2003 40,186 $10.25 to $13.94 514,027 0.48 0.75% to 2.55% 2.08% to 3.97% 2002 34,238 $11.55 to $13.41 425,125 3.72 0.80% to 2.55% 3.69% to 8.23% 2001 9,873 $11.14 to $12.39 114,996 0.40 0.80% to 2.25% 0.53% to 1.64% 2000 3,438 $11.37 to $12.19 40,000 * * *
230 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------ ------------ -------------------- ------------------- ING PIMCO Core Bond (Advisor Class) 2003 1,573 $10.50 to $10.57 $ 16,545 0.67 % 1.40% to 1.85% 2.54% to 3.02% 2002 97 $10.24 to $10.26 992 *** 1.40% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING Salomon Brothers All Cap (Service Class) 2003 36,433 $11.11 to $11.94 421,482 0.06 0.90% to 2.55% 35.73% to 37.56% 2002 29,232 $8.34 to $8.68 247,740 0.22 0.90% to 2.55% -27.23% to -26.19% 2001 25,814 $11.46 to $11.76 299,314 1.47 0.90% to 2.25% 0.00% to 0.94% 2000 9,062 $11.54 to $11.65 104,883 * * * ING Salomon Brothers All Cap (Advisor Class) 2003 472 $12.96 to $13.04 6,124 - 1.40% to 1.85% 36.13% to 36.83% 2002 18 $9.52 to $9.53 176 *** 1.40% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING Salomon Brothers Investors (Service Class) 2003 13,185 $10.10 to $11.13 136,147 0.18 0.90% to 2.25% 28.34% to 30.04% 2002 11,516 $7.87 to $8.19 92,136 0.81 0.90% to 2.25% -24.69% to -23.67% 2001 8,646 $10.45 to $10.73 91,400 1.30 0.90% to 2.25% -6.16% to -5.13% 2000 1,917 $11.21 to $11.31 21,558 * * * ING Salomon Brothers Investors (Advisor Class) 2003 81 $12.54 to $12.61 1,014 0.15 1.40% to 1.85% 28.72% to 29.20% 2002 30 $9.74 to $9.75 297 *** 1.65% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** ***
231 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) ------------------------------- ---------- -------------------- -------------- ------------ ------------------- ------------------ ING T. Rowe Price Capital Appreciation (Service Class) 2003 41,070 $30.30 to $37.73 $1,365,679 0.36 % 0.80% to 2.25% 22.42% to 24.23% 2002 34,525 $24.75 to $30.37 935,079 1.72 0.80% to 2.25% -1.79% to -0.33% 2001 23,375 $25.20 to $30.47 644,971 3.34 0.80% to 2.25% 7.85% to 9.02% 2000 13,395 $24.47 to $27.95 345,651 * * * ING T. Rowe Price Capital Appreciation (Advisor Class) 2003 1,646 $12.26 to $12.33 20,206 0.48 1.40% to 1.85% 22.70% to 23.18% 2002 89 $9.99 to $10.01 894 *** 1.40% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING T. Rowe Price Equity Income (Service Class) 2003 26,391 $22.16 to $28.87 643,858 0.31 0.50% to 2.25% 22.36% to 24.55% 2002 20,545 $18.11 to $23.18 409,670 1.34 0.50% to 2.25% -15.14% to -13.64% 2001 17,698 $21.34 to $26.84 416,763 1.95 0.50% to 2.25% -0.58% to 1.46% 2000 12,207 $22.48 to $26.61 291,793 * * * ING T. Rowe Price Equity Income (Advisor Class) 2003 896 $12.05 to $12.12 10,819 0.38 1.40% to 1.85% 22.83% to 23.30% 2002 65 $9.81 to $9.83 640 *** 1.40% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING UBS U.S. Balanced (Service Class) 2003 8,206 $8.22 to $8.59 68,664 0.01 0.90% to 2.25% 15.41% to 16.87% 2002 6,551 $7.12 to $7.35 47,241 1.11 0.90% to 2.25% -16.73% to -15.52% 2001 5,718 $8.55 to $8.70 49,242 1.78 0.90% to 2.25% -8.32% to -7.68% 2000 501 $9.37 to $9.38 4,696 * * *
232 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------- ------------ ------------------- ------------------- ING UBS U.S. Balanced (Advisor Class) 2003 85 $11.33 to $11.37 $ 963 **** % 1.40% to 1.85% **** 2002 **** **** **** **** **** **** 2001 **** **** **** **** **** **** 2000 **** **** **** **** **** **** ING Van Kampen Equity Growth (Service Class) 2003 3,146 $9.40 to $9.62 29,848 0.02 0.90% to 2.25% 20.82% to 22.55% 2002 559 $7.78 to $7.85 4,362 *** 0.90% to 2.25% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING Van Kampen Equity Growth (Advisor Class) 2003 505 $11.68 to $11.75 5,909 - 1.40% to 1.85% 21.29% to 21.89% 2002 48 $9.63 to $9.64 458 *** 1.40% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING Van Kampen Global Franchise (Service Class) 2003 5,295 $10.85 to $11.12 58,019 0.82 0.80% to 2.25% 23.30% to 25.23% 2002 1,661 $8.80 to $8.88 14,670 *** 0.80% to 2.25% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING Van Kampen Global Franchise (Advisor Class) 2003 1,232 $11.75 to $11.82 14,506 0.88 1.40% to 1.85% 23.55% to 24.16% 2002 74 $9.51 to $9.52 708 *** 1.40% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** ***
233 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- ------------------- ------------ ------------ ------------------- ------------------- ING Van Kampen Growth and Income (Service Class) 2003 31,390 $20.97 to $25.14 $ 705,253 0.26 % 0.50% to 2.25% 25.04% to 27.23% 2002 30,992 $16.77 to $19.76 554,608 0.84 0.50% to 2.25% -16.69% to -15.19% 2001 34,270 $20.13 to $23.30 732,049 0.30 0.50% to 2.25% -13.63% to -12.68% 2000 34,836 $24.00 to $26.02 860,338 * * * ING Van Kampen Growth and Income (Advisor Class) 2003 1,961 $12.25 to $12.33 24,058 0.34 1.40% to 1.85% 25.26% to 25.94 2002 101 $9.78 to $9.79 990 *** 1.40% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING Van Kampen Real Estate (Service Class) 2003 9,000 $33.44 to $43.58 330,864 0.20 0.50% to 2.25% 34.62% to 37.04% 2002 6,881 $24.84 to $31.80 187,607 3.73 0.50% to 2.25% -2.05% to 0.31% 2001 4,535 $25.36 to $31.90 126,169 4.29 0.50% to 2.25% 6.07% to 7.28% 2000 3,804 $25.04 to $28.59 100,303 * * * ING Van Kampen Real Estate (Advisor Class) 2003 481 $12.96 to $13.03 6,246 0.18 1.40% to 1.85% 35.00% to 35.59% 2002 29 $9.60 to $9.61 276 *** 1.40% to 1.85% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING Alger Aggressive Growth 2003 53 $9.78 to $12.04 557 **** 0.75% to 1.35% **** 2002 **** **** **** **** **** **** 2001 **** **** **** **** **** **** 2000 **** **** **** **** **** ****
234 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------- ------------ ------------------- ------------------- ING Alger Growth 2003 15 $8.74 to $11.67 $ 142 - % 0.75% to 1.00% 33.23% 2002 6 $6.56 39 *** 0.75% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING American Century Small Cap Value 2003 15 $10.87 to $11.83 162 - 0.75% to 1.20% 34.20% to 34.53% 2002 - $8.10 2 *** 0.95% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING Baron Small Cap Growth 2003 89 $11.48 to $11.54 1,028 **** 0.75% to 1.35% **** 2002 **** **** **** **** **** **** 2001 **** **** **** **** **** **** 2000 **** **** **** **** **** **** ING JPMorgan Fleming International 2003 679 $10.42 to $12.24 8,019 0.05 0.75% to 2.55% 28.17% to 28.50% 2002 1 $8.13 to $8.14 7 *** 0.75% to 0.95% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING JPMorgan Mid Cap Value 2003 527 $10.95 to $11.88 6,151 0.50 0.75% to 2.55% 26.73% to 29.13% 2002 33 $9.09 to $9.19 301 *** 0.95% to 2.55% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** ***
235 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------- ------------ ------------------- ------------------- ING MFS(R) Capital Opportunities (Initial Class) 2003 389 $7.53 to $10.73 $ 3,009 0.14 % 0.95% to 2.55% 24.88% to 26.70% 2002 209 $6.04 to $6.18 1,280 - 0.95% to 2.40% -37.64% to -32.29% 2001 78 $8.92 to $9.91 698 ** 0.95% to 1.90% ** 2000 ** ** ** ** ** ** ING MFS(R) Capital Opportunities (Service Class) 2003 43 $8.69 to $11.29 391 - 0.75% to 1.00% 26.86% 2002 11 $6.85 72 *** 0.75% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING MFS(R) Global Growth 2003 147 $10.60 to $11.89 1,586 - 0.75% to 2.55% 28.48% to 30.78% 2002 9 $8.27 to $8.35 75 *** 0.75% to 2.20% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING MFS(R) Research Equity 2003 10 $9.02 to $11.25 97 **** 0.75% to 1.35% **** 2002 **** **** **** **** **** **** 2001 **** **** **** **** **** **** 2000 **** **** **** **** **** **** ING OpCap Balanced Value 2003 40 $10.08 to $11.28 408 2.25 0.75% to 1.20% 29.23% 2002 16 $7.80 126 *** 0.75% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** ***
236 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------- ------------ ------------------- ------------------- ING PIMCO Total Return 2003 176 $10.21 to $11.11 $ 1,918 4.14 % 0.75% to 1.35% 2.89% to 3.35% 2002 55 $10.75 593 *** 0.75% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING Salomon Brothers Aggressive Growth 2003 1,285 $10.77 to $10.83 13,880 **** 0.95% to 2.55% **** 2002 **** **** **** **** **** **** 2001 **** **** **** **** **** **** 2000 **** **** **** **** **** **** ING Salomon Brothers Fundamental Value 2003 56 $10.31 to $11.85 600 1.64 0.75% to 1.35% 39.32% to 39.68% 2002 1 $7.41 9 *** 0.75% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING Salomon Brothers Investors Value 2003 36 $9.85 to $11.62 362 0.55 0.75% to 1.20% 29.95% to 30.35% 2002 - $7.61 4 *** 0.75% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING T. Rowe Price Growth Equity 2003 229 $9.68 to $11.51 2,295 0.16 0.75% to 1.20% 29.07% to 29.65% 2002 19 $7.51 to $7.52 144 *** 0.75% to 0.95% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** ***
237 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------- ------------ ------------------- ------------------- ING UBS Tactical Asset Allocation 2003 9 $9.50 to $11.48 $ 89 - % 0.75% to 1.35% 25.99% 2002 - $7.54 2 *** 0.75% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING Van Kampen Comstock 2003 3,551 $10.41 to $11.58 37,583 1.07 0.75% to 2.55% 26.33% to 28.66% 2002 210 $8.24 to $8.34 1,737 *** 0.75% to 2.40% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING GET U.S. Core Portfolio - Series 1 2003 21,571 $10.19 to $10.29 220,805 **** 1.25% to 3.05% **** 2002 **** **** **** **** **** **** 2001 **** **** **** **** **** **** 2000 **** **** **** **** **** **** ING GET U.S. Core Portfolio - Series 2 2003 16,692 $10.00 to $10.05 167,331 **** 1.25% to 3.05% **** 2002 **** **** **** **** **** **** 2001 **** **** **** **** **** **** 2000 **** **** **** **** **** **** ING GET U.S. Core Portfolio - Series 3 2003 897 $9.99 to $10.00 8,966 **** 0.95% to 2.55% **** 2002 **** **** **** **** **** **** 2001 **** **** **** **** **** **** 2000 **** **** **** **** **** ****
238 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------- ------------ ------------------- ------------------- ING VIT Worldwide Growth 2003 7,678 $6.35 to $6.75 $ 50,319 - % 0.90% to 2.55% 25.74% to 27.95% 2002 5,299 $5.05 to $5.28 27,358 0.02 0.90% to 2.55% -27.02% to -25.42% 2001 2,863 $6.92 to $7.08 20,014 - 0.90% to 2.25% -20.18% to -19.36% 2000 635 $8.72 to $8.78 5,554 * * * ING VP Balanced 2003 109 $11.04 to $11.34 1,231 **** 0.75% to 1.20% **** 2002 **** **** **** **** **** **** 2001 **** **** **** **** **** **** 2000 **** **** **** **** **** **** ING VP Bond 2003 6,454 $10.34 to $11.25 71,483 2.15 0.75% to 2.25% 3.69% to 5.14% 2002 4,668 $10.58 to $10.69 49,590 *** 0.80% to 2.25% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING VP Growth 2003 32 $8.90 to $11.49 292 - 0.75% to 1.35% 28.61% to 29.11% 2002 7 $6.94 46 *** 0.75% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING VP Index Plus LargeCap 2003 6,637 $8.72 to $11.48 59,693 0.49 0.75% to 2.55% 22.64% to 24.90% 2002 634 $7.11 to $7.31 4,589 0.15 0.75% to 2.55% -29.03% to -22.23% 2001 87 $9.36 to $9.40 812 2.73 0.95% to 1.90% ** 2000 ** ** ** ** ** **
239 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------- ------------ ------------------- ------------------- ING VP Index Plus MidCap 2003 1,784 $10.83 to $11.87 $ 19,893 0.21 % 0.75% to 2.55% 28.78% to 31.02% 2002 692 $8.41 to $8.64 5,909 0.31 0.75% to 2.55% -14.79 to -12.82% 2001 83 $9.87 to $9.91 820 ** 0.95% to 1.90% ** 2000 ** ** ** ** ** ** ING VP Index Plus SmallCap 2003 1,420 $11.03 to $11.99 16,341 0.06 0.75% to 2.55% 32.47% to 34.83% 2002 465 $8.47 to $8.70 4,005 0.36 0.75% to 2.55% -15.89% to -13.95% 2001 67 $10.07 to $10.11 680 ** 0.95% to 1.90% ** 2000 ** ** ** ** ** ** ING VP International Equity 2003 18 $9.52 to $12.19 197 **** 0.75% to 1.00% **** 2002 **** **** **** **** **** **** 2001 **** **** **** **** **** **** 2000 **** **** **** **** **** **** ING VP Small Company 2003 82 $10.26 to $11.84 876 0.19 0.75% to 1.35% 36.25% to 36.64% 2002 21 $7.54 to $7.56 156 *** 0.75% to 0.95% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING VP Value Opportunity 2003 283 $7.82 to $8.18 2,270 0.60 0.75% to 2.55% 21.05% to 23.38% 2002 166 $6.46 to $6.63 1,086 0.40 0.75% to 2.55% -28.22% to -26.66% 2001 33 $9.00 to $9.04 298 ** 0.95% to 1.90% ** 2000 ** ** ** ** ** **
240 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------- ------------ ------------------- ------------------- ING VP Convertible 2003 326 $11.24 to $12.21 $ 3,925 4.96 % 0.95% to 2.55% 23.73% to 25.88% 2002 107 $9.48 to $9.70 1,034 3.17 0.95% to 2.55% -9.37% to -7.79% 2001 18 $10.46 to $10.52 194 (10.36) 0.95% to 2.20% ** 2000 ** ** ** ** ** ** ING VP Growth and Income 2003 143 $11.54 to $12.14 1,723 **** 0.75% to 1.20% **** 2002 **** **** **** **** **** **** 2001 **** **** **** **** **** **** 2000 **** **** **** **** **** **** ING VP Growth Opportunities 2003 3,822 $6.71 to $11.64 26,047 - 0.75% to 2.25% 29.29% to 31.39% 2002 1,895 $5.19 to $5.32 9,918 - 0.75% to 2.25% -33.03% to -32.10% 2001 671 $7.75 to $7.82 5,219 ** 0.90% to 2.25% ** 2000 ** ** ** ** ** ** ING VP International Value 2003 48 $10.86 to $12.05 534 0.35 0.75% to 1.20% 28.52% to 28.81% 2002 5 $8.45 to $8.47 42 *** 0.75% to 0.95% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING VP LargeCap Growth 2003 240 $7.86 to $8.18 1,941 - 0.95% to 2.55% 29.70% to 31.72% 2002 163 $6.06 to $6.21 1,006 0.48 0.95% to 2.25% -36.68% to -35.45% 2001 56 $9.57 to $9.62 533 ** 0.95% to 1.90% ** 2000 ** ** ** ** ** **
241 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------- ------------ ------------------- ------------------- ING VP MagnaCap 2003 3,033 $8.87 to $9.28 $ 27,551 0.74 % 0.90% to 2.55% 27.26% to 29.61% 2002 1,746 $7.00 to $7.16 12,338 1.02 0.90% to 2.25% -24.73% to -23.74% 2001 579 $9.30 to $9.39 5,402 1.36 0.90% to 2.25% ** 2000 ** ** ** ** ** ** ING VP MidCap Opportunities 2003 29 $9.82 to $11.66 280 - 0.75% to 1.00% 15.94% 2002 2 $7.24 12 *** 0.75% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** ING VP SmallCap Opportunities 2003 14,450 $6.16 to $12.02 90,453 - 0.75% to 2.25% 35.38% to 37.47% 2002 6,553 $4.55 to $4.67 30,118 - 0.75% to 2.25% -45.05% to -44.14% 2001 1,737 $8.28 to $8.36 14,437 ** 0.90% to 2.25% ** 2000 ** ** ** ** ** ** AIM V.I. Capital Appreciation 2003 8 $9.42 to $11.56 77 - 0.75% to 1.10% 28.24% 2002 4 $7.40 27 *** 0.75% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** AIM V.I. Core Equity 2003 17 $10.17 to $11.36 175 0.93 0.75% to 1.00% 23.12% 2002 5 $8.26 41 *** 0.75% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** ***
242 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------- ------------ ------------------- ------------------- AIM V.I. Dent Demographic Trends 2003 5,905 $9.69 to $10.73 $ 58,307 - % 0.90% to 2.55% 33.84% to 36.04% 2002 1,550 $7.24 to $7.38 11,335 - 0.95% to 2.55% -34.00% to -32.91% 2001 323 $10.97 to $11.00 3,550 ** 0.95% to 2.25% ** 2000 ** ** ** ** ** ** AIM V.I. Growth 2003 302 $8.83 to $10.83 2,729 - 0.95% to 2.55% 27.60% to 29.60% 2002 121 $6.92 to $7.06 848 - 0.95% to 2.55% -32.94% to -31.79% 2001 43 $10.32 to $10.35 443 1.09 0.95% to 1.90% ** 2000 ** ** ** ** ** ** AIM V.I. Premier Equity 2003 19 $8.43 to $11.32 174 - 0.75 % to 1.20% 23.61% to 23.83% 2002 12 $6.82 to $6.84 80 *** 0.75 % to 0.95% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** AllianceBernstein Growth and Income 2003 1,205 $9.31 to $11.04 11,497 0.62 0.95% to 2.55% 28.77% to 30.95% 2002 644 $7.23 to $7.40 4,730 3.91 0.95% to 2.55% -24.45% to -23.00% 2001 172 $9.57 to $9.61 1,653 ** 0.95% to 1.90% ** 2000 ** ** ** ** ** ** AllianceBernstein Premier Growth 2003 448 $7.71 to $10.58 3,540 - 0.95% to 2.55% 20.28% to 22.26% 2002 322 $6.41 to $6.56 2,094 - 0.95% to 2.55% -32.66% to -31.52% 2001 114 $9.52 to $9.58 1,091 ** 0.95% to 2.40% ** 2000 ** ** ** ** ** **
243 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------- ------------ ------------------- ------------------- AllianceBernstein Value 2003 605 $10.59 to $11.21 $ 6,560 0.69 % 0.95% to 2.55% 25.18% to 27.25% 2002 315 $8.46 to $8.66 2,709 0.17 0.95% to 2.55% -15.23% to -13.83% 2001 59 $9.98 to $10.05 595 ** 0.95% to 2.40% ** 2000 ** ** ** ** ** ** Fidelity(R) VIP Contrafund(R) 2003 1,945 $10.63 to $11.62 21,313 0.13 0.75% to 2.55% 25.06% to 27.26% 2002 513 $8.50 to $8.73 4,438 0.37 0.75% to 2.55% -12.19% to -10.28% 2001 122 $9.68 to $9.73 1,183 ** 0.95% to 1.90% ** 2000 ** ** ** ** ** ** Fidelity(R) VIP Equity-Income 2003 14,541 $9.76 to $11.73 145,256 0.47 0.75% to 2.55% 26.75% to 29.08% 2002 3,054 $7.70 to $7.91 23,851 1.09 0.75% to 2.55% -18.95% to -17.69% 2001 203 $9.55 to $9.61 1,949 ** 0.95% to 2.20% ** 2000 ** ** ** ** ** ** Fidelity(R) VIP Growth 2003 22,435 $8.09 to $11.65 185,642 0.03 0.75% to 2.55% 29.23% to 31.57% 2002 3,655 $6.26 to $6.43 23,212 0.02 0.90% to 2.55% -32.32% to -30.79% 2001 75 $9.25 to $9.29 693 ** 0.95% to 1.90% ** 2000 ** ** ** ** ** ** Fidelity(R) VIP Overseas 2003 69 $11.20 to $12.60 860 - 0.75% to 1.00% 41.95% 2002 1 $7.89 9 *** 0.75% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** ***
244 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------- ------------ ------------------- ------------------- Franklin Small Cap Value Securities 2003 20 $11.74 to $11.79 $ 236 - 0.75% to 0.95% 30.88% to 31.15% 2002 2 $8.97 to $8.99 17 *** 0.75% to 0.95% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** Greenwich Appreciation 2003 39 $17.05 to $17.25 663 0.64 1.25% to 1.40% 22.84% to 23.04% 2002 42 $13.88 to $14.02 589 1.50 1.25% to 1.40% -18.69% to -18.58% 2001 42 $17.07 to $17.22 723 1.15 1.25% to 1.40% -5.32% to -5.18% 2000 46 $18.03 to $18.16 831 * * * INVESCO VIF - Financial Services 2003 5,976 $9.76 to $11.16 59,604 0.67 0.80% to 2.55% 26.26% to 28.50% 2002 2,931 $7.73 to $7.92 22,941 1.15 0.90% to 2.55% -17.15% to -15.76% 2001 256 $9.33 to $9.39 2,404 2.70 0.95% to 2.25% ** 2000 ** ** ** ** ** ** INVESCO VIF - Health Sciences 2003 9,056 $9.37 to $11.15 86,664 - 0.80% to 2.55% 24.60% to 26.81% 2002 4,013 $7.52 to $7.72 30,558 - 0.90% to 2.55% -26.42% to -24.98% 2001 1,052 $10.22 to $10.29 10,790 3.60 0.95% to 2.55% ** 2000 ** ** ** ** ** ** INVESCO VIF - Leisure 2003 3,232 $10.50 to $10.91 34,410 - 0.95% to 2.55% 25.45% to 27.42% 2002 724 $8.39 to $8.47 6,097 *** 0.95% to 2.25% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** ***
245 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------- ------------ ------------------- ------------------- INVESCO VIF - Utilities 2003 3,684 $7.17 to $7.49 $ 26,968 1.62 % 0.80% to 2.55% 14.54% to 16.49% 2002 1,227 $6.26 to $6.43 7,783 1.12 0.95% to 2.55% -22.62% to -20.91% 2001 119 $8.09 to $8.13 964 3.07 0.95% to 1.90% ** 2000 ** ** ** ** ** ** Janus Aspen Series Balanced 2003 427 $10.36 to $10.91 4,464 2.30 0.75% to 1.20% 12.49% to 12.86% 2002 54 $9.21 to $9.25 496 *** 0.75% to 1.10% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** Janus Aspen Series Flexible Income 2003 165 $10.30 to $11.58 1,873 4.27 0.75% to 1.20% 5.02% to 5.37% 2002 26 $10.97 to $10.99 283 *** 0.75% to 0.95% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** Janus Aspen Series Growth 2003 103 $9.31 to $11.66 1,007 - 0.75% to 1.20% 30.03% to 30.46% 2002 27 $7.19 192 *** 0.75% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** Janus Aspen Series Worldwide Growth 2003 856 $8.13 to $11.60 7,200 0.84 0.75% to 2.55% 20.44% to 22.66% 2002 515 $6.75 to $6.93 3,534 0.52 0.75% to 2.55% -27.58% to 26.20% 2001 139 $9.32 to $9.39 1,298 0.33 0.95% to 2.40% ** 2000 ** ** ** ** ** **
246 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------- ------------ ------------------- ------------------- Colonial Small Cap Value 2003 2,966 $13.77 to $13.87 $ 40,999 **** % 1.25% to 2.25% **** 2002 **** **** **** **** **** **** 2001 **** **** **** **** **** **** 2000 **** **** **** **** **** **** Liberty Asset Allocation 2003 50 $11.95 to $11.99 601 **** 1.40% to 1.80% **** 2002 **** **** **** **** **** **** 2001 **** **** **** **** **** **** 2000 **** **** **** **** **** **** **** **** **** Liberty Equity 2003 81 $7.87 to $8.04 648 0.35 1.40% to 1.90% 21.83% to 22.37% 2002 75 $6.46 to $6.57 487 0.23 1.40% to 1.90% -29.17% to -28.66% 2001 88 $9.12 to $9.21 807 - 1.40% to 1.80% -19.72% to -19.28% 2000 94 $11.36 to $11.41 1,071 * * * Liberty Federal Securities 2003 9 $10.07 to $10.09 87 **** 1.40% to 1.70% **** 2002 **** **** **** **** **** **** 2001 **** **** **** **** **** **** 2000 **** **** **** **** **** **** Liberty Small Company Growth 2003 5 $14.94 to $14.98 75 **** 1.40% to 1.80% **** 2002 **** **** **** **** **** **** 2001 **** **** **** **** **** **** 2000 **** **** **** **** **** ****
247 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------- ------------ ------------------- ------------------- Oppenheimer Global Securities 2003 257 $10.80 to $12.54 $ 2,901 0.19 % 0.75% to 1.35% 41.36% to 41.72% 2002 27 $7.64 to $7.67 205 *** 0.75% to 1.10% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** Oppenheimer Strategic Bond 2003 60 $10.90 to $12.40 702 0.56 0.75% to 1.35% 15.90% to 16.21% 2002 2 $10.65 to $10.67 16 *** 0.75% to 0.95% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** *** PIMCO High Yield 2003 51,825 $10.69 to $12.55 608,775 7.38 0.50% to 2.55% 19.74% to 22.20% 2002 31,353 $9.32 to $10.27 305,237 8.20 0.80% to 2.55% -4.80% to -1.63% 2001 23,564 $9.79 to $10.44 236,343 7.91 0.50% to 2.25% 0.30% to 1.57% 2000 16,336 $9.88 to $10.17 162,857 * * * PIMCO StocksPLUS Growth and Income 2003 18,658 $9.85 to $10.71 190,536 2.08 0.80% to 2.25% 27.43% to 29.35% 2002 22,790 $7.73 to $8.28 181,637 2.69 0.80% to 2.25% -22.00% to -20.84% 2001 23,718 $9.91 to $10.46 241,065 4.22 0.80% to 2.25% -13.15% to -12.17% 2000 22,158 $11.56 to $11.91 258,484 * * * Pioneer Equity-Income 2003 99 $9.98 to $11.35 1,010 2.02 0.75% to 1.35% 20.97% to 21.38% 2002 22 $8.27 to $8.28 179 *** 0.75% to 0.95% *** 2001 *** *** *** *** *** *** 2000 *** *** *** *** *** ***
248 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------- ------------ ------------------- ------------------- Pioneer Fund 2003 6,927 $8.84 to $11.43 $ 62,533 0.87 % 0.75% to 2.55% 20.27% to 22.55% 2002 2,697 $7.35 to $7.54 20,064 1.08 0.80% to 2.55% -21.47% to -19.87% 2001 243 $9.36 to $9.41 2,275 0.91 0.95% to 1.90% ** 2000 ** ** ** ** ** ** Pioneer Mid-Cap Value 2003 15,149 $11.94 to $12.84 190,493 0.17 0.75% to 2.25% 33.98% to 36.16% 2002 5,685 $9.27 to $9.43 53,062 0.56 0.75% to 2.25% -13.36% to -12.03% 2001 480 $10.70 to $10.72 5,139 ** 1.25% to 2.25% ** 2000 ** ** ** ** ** ** Pioneer Small Company 2003 664 $9.40 to $10.61 6,391 - 0.95% to 2.55% 22.08% to 23.95% 2002 437 $7.70 to $7.89 3,417 0.03 0.95% to 2.55% -19.29% to -17.90% 2001 98 $9.54 to $9.61 938 ** 0.95% to 2.55% ** 2000 ** ** ** ** ** ** ProFund VP Bull 2003 10,431 $8.04 to $8.37 85,664 - 0.90% to 2.40% 22.83% to 24.55% 2002 4,706 $6.57 to $6.72 31,265 - 0.90% to 2.25% -25.68% to -24.66% 2001 2,316 $8.84 to $8.92 20,583 ** 1.25% to 2.25% ** 2000 ** ** ** ** ** ** ProFund VP Europe 30 2003 3,999 $8.02 to $12.09 32,874 0.13 0.90% to 2.55% 35.74% to 37.54% 2002 2,589 $5.96 to $6.10 15,627 - 0.90% to 2.25% -27.49% to -26.42% 2001 764 $8.22 to $8.29 6,312 ** 0.90% to 2.25% ** 2000 ** ** ** ** ** **
249 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------- ------------- ------------------- ------------------- ProFund VP Rising Rates Opportunity 2003 2,457 $9.33 to $9.38 $ 22,975 **** % 0.95% to 2.55% **** 2002 **** **** **** **** **** **** 2001 **** **** **** **** **** **** 2000 **** **** **** **** **** **** ProFund VP Small Cap 2003 12,620 $9.84 to $11.07 127,245 - 0.90% to 2.55% 39.52% to 41.54% 2002 5,371 $7.11 to $7.27 38,612 - 0.90% to 2.25% -24.20% to -23.15% 2001 2,118 $9.38 to $9.46 19,968 ** 1.25% to 2.25% ** 2000 ** ** ** ** ** ** Jennison 2003 10,879 $5.23 to $5.56 58,724 - 0.90% to 2.55% 26.33% to 28.41% 2002 8,904 $4.14 to $4.33 37,748 - 0.90% to 2.55% -33.33% to -31.81% 2001 7,335 $6.21 to $6.35 45,991 - 0.90% to 2.25% -20.20% to -19.62% 2000 987 $7.82 to $7.85 7,732 * * * SP Jennison International Growth 2003 12,262 $5.44 to $11.78 68,613 - 0.90% to 2.55% 35.66% to 37.98% 2002 3,751 $4.01 to $4.16 15,341 - 0.90% to 2.55% -25.05% to -23.53% 2001 2,097 $5.35 to $5.44 11,310 0.24 0.90% to 2.25% -37.19% to -36.52% 2000 318 $8.55 to $8.57 2,720 * * * Putnam VT Discovery Growth 2003 403 $7.69 to $8.00 3,173 - 0.95% to 2.55% 28.60% to 30.72% 2002 271 $5.98 to $6.12 1,645 - 0.95% to 2.55% -31.34% to -30.22% 2001 66 $8.71 to $8.77 577 ** 0.95% to 2.40% ** 2000 ** ** ** ** ** **
250 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------- ------------ ------------------- ------------------- Putnam VT Growth and Income 2003 338 $9.05 to $9.62 $ 3,201 1.40 % 0.95% to 2.55% 24.31% to 26.25% 2002 220 $7.28 to $7.62 1,662 1.62 0.95% to 2.55% -21.30% to -19.79% 2001 48 $9.25 to $9.50 455 ** 0.95% to 2.20% ** 2000 ** ** ** ** ** ** Putnam VT International Growth and Income 2003 394 $10.64 to $11.07 4,299 1.40 0.95% to 2.55% 34.51% to 36.67% 2002 371 $7.91 to $8.10 2,981 0.28 0.95% to 2.55% -16.21% to -14.65% 2001 64 $9.44 to $9.49 604 ** 0.95% to 1.90% ** 2000 ** ** ** ** ** ** Smith Barney High Income 2003 22 $14.18 to $14.37 308 6.70 1.25% to 1.40% 25.71% to 25.94% 2002 28 $11.28 to $11.41 319 24.02 1.25% to 1.40% -4.57% to -4.44% 2001 31 $11.82 to $11.94 370 12.01 1.25% to 1.40% -5.14% to -4.94% 2000 36 $12.46 to $12.56 446 * * * Smith Barney International All Cap Growth 2003 20 $11.09 to $11.23 221 0.95 1.25% to 1.40% 25.74% to 25.90% 2002 23 $8.82 to $8.92 201 0.95 1.25% to 1.40% -26.74% to -26.64% 2001 25 $12.04 to $12.16 300 - 1.25% to 1.40% -32.13% to -32.03% 2000 26 $17.74 to $17.89 455 * * * Smith Barney Large Cap Value 2003 23 $17.73 to $17.96 405 1.55 1.25% to 1.40% 25.83% to 25.95% 2002 26 $14.09 to $14.26 371 3.74 1.25% to 1.40% -26.46% to -26.30% 2001 29 $19.16 to $19.35 563 1.39 1.25% to 1.40% -9.45% to -9.33% 2000 33 $21.16 to $21.34 692 * * *
251 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------- ------------ ------------------- ------------------- Smith Barney Money Market 2003 4 $12.44 $ 50 1.04 % 1.40% -0.72% 2002 11 $12.53 to $12.68 143 1.30 1.25% to 1.40% -0.16% to 0.00% 2001 17 $12.55 to $12.68 221 3.49 1.25% to 1.40% 2.28% to 2.42% 2000 13 $12.27 to $12.38 156 * * * UBS Tactical Allocation 2003 511 $8.72 to $11.01 4,584 0.49 0.95% to 2.55% 24.22% to 26.15% 2002 217 $7.02 to $7.19 1,548 0.45 0.95% to 2.55% -25.08% to -23.67% 2001 84 $9.37 to $9.42 787 ** 0.95% to 2.20% ** 2000 ** ** ** ** ** ** WellsFargo VT Asset Allocation 2003 2 $10.54 25 **** 1.90% **** 2002 **** **** **** **** **** **** 2001 **** **** **** **** **** **** 2000 **** **** **** **** **** **** WellsFargo VT Equity Income 2003 1 $10.75 11 **** 1.90% **** 2002 **** **** **** **** **** **** 2001 **** **** **** **** **** **** 2000 **** **** **** **** **** **** WellsFargo VT Large Company Growth 2003 3 $10.26 34 **** 1.90% **** 2002 **** **** **** **** **** **** 2001 **** **** **** **** **** **** 2000 **** **** **** **** **** ****
252 Separate Account B of ING USA Annuity and Life Insurance Company (formerly Golden American Life Insurance Company Separate Account B) Notes to Financial Statements Investment Units Unit Fair Value Net Assets Income Expense Ratio(B) Total Return(C) Division (000's) (lowest to highest) (000's) Ratio(A) (lowest to highest) (lowest to highest) -------------------------------- ---------- -------------------- ------------- ------------ ------------------- ------------------- Wells Fargo VT Small Cap Growth 2003 1 $10.64 $ 7 **** % 1.90% **** 2002 **** **** **** **** **** **** 2001 **** **** **** **** **** **** 2000 **** **** **** **** **** ****
* Not provided for 2000. ** As investment Division was not available until 2001, this data is not meaningful and is therefore not presented. *** As investment Division was not available until 2002, this data is not meaningful and is therefore not presented. **** As investment Division was not available until 2003, this data is not meaningful and is therefore not presented. A The Investment Income Ratio represents dividends received by the Division, excluding capital gains distributions, divided by the average net assets. The recognition of investment income is determined by the timing of the declaration of dividends by the underlying fund in which the Division invests. B The Expense Ratio considers only the expenses borne directly by the Account and is equal to the mortality and expense charge, plus the annual administrative charge, as defined in Note 3. Certain items in this table are presented as a range of minimum and maximum values; however, such information is calculated independently for each column in the table. C Total Return is calculated as the change in unit value for each Band presented in Note 8. Certain items in this table are presented as a range of minimum and maximum values; however, such information is calculated independently for each column in the table. 253 PART C - OTHER INFORMATION ITEM 24: FINANCIAL STATEMENTS AND EXHIBITS FINANCIAL STATEMENTS (a) (1) All financial statements are included in the Prospectus or the Statement of Additional Information as indicated therein (2) Schedules I and IV follow. All other schedules to the consolidated financial statements required by Article 7 of Regulation S-X are omitted because they are not applicable or because the information is included elsewhere in the consolidated financial statements or notes thereto. ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Schedule I Summary of Investments - Other than Investments in Affiliates As of December 31, 2003 (Millions) Amount Shown on Type of Investments Cost Value* Balance Sheet --------------- --------------- ---------------- Fixed maturities: U.S. government and government agencies and authorities $ 23.8 $ 23.9 $ 23.9 State, municipalities and political subdivisions 5.0 4.6 4.6 Public utilities securities 482.1 514.1 514.1 Other U.S. corporate securities 2,630.8 2,747.4 2,747.4 Foreign securities (1) 628.2 653.0 653.0 Mortgage-backed securities 790.0 791.4 791.4 Other asset-backed securities 487.1 488.9 488.9 --------------- --------------- ---------------- Total fixed maturities 5,047.0 5,223.3 5,223.3 --------------- --------------- ---------------- Total equity securities 5.3 5.6 5.6 --------------- --------------- ---------------- Short term investments 17.7 17.7 17.7 Mortgage loans 847.6 878.1 847.6 Policy loans 17.5 17.5 17.5 --------------- --------------- ---------------- Total other investments $ 882.8 $ 913.3 $ 882.8 =============== =============== ================
* See Notes 2 and 3 of Notes to Consolidated Financial Statements. (1) The term "foreign" includes foreign governments, foreign political subdivisions, foreign public utilities and all other bonds of foreign issuers. Substantially all of the Company's foreign securities are denominated in U.S. dollars. ING USA Annuity and Life Insurance Company, formerly Golden American Life Insurance Company (A wholly-owned subsidiary of Lion Connecticut Holdings Inc.) Schedule IV Reinsurance Information As of and for the years ended December 31, 2003, 2002 and 2001 (Millions) Percentage of (Millions) Gross Ceded Assumed Net assumed to net ------------- ------------- ------------- ------------- --------------- Year ended December 31, 2003 Life insurance in force $ 154.0 $ 79.3 $ - $ 74.7 0.0% Year ended December 31, 2002 Life insurance in force $ 158.7 $ 90.7 $ - $ 68.0 0.0% Year ended December 31, 2001 Life insurance in force $ 169.3 $ 94.8 $ - $ 74.5 0.0%
(b) EXHIBITS (1) Resolution of the board of directors of Depositor authorizing the establishment of the Registrant (1) (2) N/A (3)(a) Distribution Agreement between the Depositor and Directed Services, Inc. (1) (b) Dealers Agreement. (1) (c) Organizational Agreement (1) (d) Assignment Agreement for Organizational Agreement. (1) (e) Amendment to the Distribution Agreement between ING USA and DSI. (17) (4)(a) Individual Deferred Combination Variable and Fixed Annuity Contract. (3) (b) Group Deferred Combination Variable and Fixed Annuity Contract. (3) (c) Individual Deferred Variable Annuity Contract. (3) (d) Individual Retirement Annuity Rider. (12) (e) ROTH Individual Retirement Annuity Rider. (12) (f) Minimum Guaranteed Income Benefit Rider. (11) (g) Minimum Guaranteed Withdrawal Benefit Rider. (16) (h) Minimum Guaranteed Withdrawal Benefit with Reset and Step Up Option. (16) (i) Living Benefit Rider Endorsement (Inforce Riders). (16) (j) Death Benefit Endorsement No.1 (7% Solution Enhanced). (16) (k) Death Benefit Endorsement No.2 (Ratchet Enhanced). (16) (l) Death Benefit Endorsement No.3 (Standard). (16) (m) Death Benefit Endorsement No.4 (Max 7 Enhanced). (16) (n) Death Benefit Endorsement No.5 (Base Death Benefit). (16) (o) Death Benefit Endorsement No.6 (Inforce Contracts). (16) (p) Earnings Enhancement Death Benefit Rider. (7) (q) Simple Retirement Annuity Rider. (12) (r) 403(b) Retirement Annuity Rider. (12) (s) Company Address and Name Change Endorsement. (16) (5)(a) Individual Deferred Combination Variable and Fixed Annuity Application. (15) (b) Group Deferred Combination Variable and Fixed Annuity Enrollment Form.(4) (6)(a) Amended and Restated Articles of Incorporation of ING USA Annuity and Life Insurance Company, dated (01/01/04). (16) (b) Amended and Restated By-Laws of ING USA annuity and Life Insurance Company, dated (01/01/04). (16) (c) Resolution of the board of directors for Powers of Attorney, dated (04/23/99) (3) (d) Articles of Merger and Agreement and Plan of Merger of USGALC, ULAIC, ELICI into GALIC and renamed ING USA Annuity and Life Insurance Company, dated (06/25/03). (16) (7) Not applicable (8)(a) Participation Agreement between Golden American and The PIMCO Variable Insurance Trust. (3) (b) Administrative Services Agreement between Golden American and Equitable Life Insurance Company of Iowa. (2) (c) Service Agreement between Golden American and Directed Services, Inc. (2) (d) Participation Agreement between Golden American and The Prudential Series Fund, Inc. (5) (e) Amendment to the Participation Agreement between Golden American and The Prudential Series Fund, Inc. (6) (f) Form of Participation Agreement between Golden American and ProFunds. (8) (g) Form of Services Agreement among Golden American Life Insurance Company and ING affiliated Insurance Companies. (9) (h) Form of Services Agreement between Golden American Life Insurance Company and ING North American Insurance Corporation, Inc. (9) (i) Form of Shared Services Center Agreement among ING North American Insurance Corporation, Inc. and ING affiliated Insurance Companies. (9) (j) Participation Agreement between Golden American and ING Variable Products Trust. (10) (k) Participation Agreement between Golden American and ING Variable Insurance Trust. (10) (l) Participation Agreement between Golden American and AIM Variable Insurance Funds, Inc. (10) (m) Participation Agreement between Golden American and INVESCO Variable Investment Funds, Inc. (10) (n) Participation Agreement between Golden American and Pioneer Variable Contracts Trust. (10) (o) Participation Agreement between Golden American and Fidelity Distributors Corporation. (10) (p) Form of Participation Agreement between Golden American, American Funds Insurance Series and Capital Research and Management Company. (14) (9) Opinion and Consent of Kimberly J. Smith. (10)(a) Consent of Ernst & Young LLP, Independent Auditors. (b) Consent of Kimberly J. Smith, incorporated in Item 9 of this Part C, together with the Opinion of Kimberly J. Smith. (11) Not applicable (12) Not applicable (13) Not applicable (14) Not applicable (15) Powers of Attorney. (18) ------------------------------- 1) Incorporated herein by reference to Pre-Effective Amendment No. 1 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 September 24, 1997 (File Nos. 333-28769, 811-5626). 2) Incorporated herein to Post-Effective Amendment No. 2 to a Registration Statement on Form N-4 for on Form N-4 for Golden American Life Insurance Company Separate Account B filed with the Securities and Exchange Commission on April 30, 1998 (File Nos. 333-28769, 811-5626). 3) Incorporated herein by reference to Post-Effective Amendment No. 3 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 23, 1999 (File Nos. 333-28769, 811-5626). 4) 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 December 3, 1999 (File Nos. 333-28769, 811-5626). 5) Incorporated herein by reference to Post-Effective Amendment No. 6 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 26, 2000 (File Nos. 333-28769, 811-5626). 6) Incorporated herein by reference to Post-Effective Amendment No. 10 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 December 15, 2000 (File Nos. 333-28769, 811-5626). 7) Incorporated herein by reference to Post-Effective Amendment No. 11 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 February 23, 2001 (File Nos. 333-28769, 811-5626). 8) Incorporated herein by reference to Post-Effective Amendment No. 12 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 23, 2001 (File Nos. 333-28769, 811-5626). 9) Incorporated herein by reference to Post-Effective Amendment No. 14 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 December 14, 2001 (File Nos. 333-28769, 811-5626). 10) Incorporated herein by reference to Post-Effective Amendment No. 32 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 29, 2002 (File Nos. 033-23351, 811-5626). 11) Incorporated herein by reference to Post-Effective Amendment No. 20 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 October 28, 2002 (File Nos. 333-28769, 811-5626). 12) 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 Nos. 033-23351, 811-5626). 13) Incorporated herein by reference to Post-Effective Amendment No. 3 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 June 5, 2003 (File Nos. 333-70600, 811-5626). 14) Incorporated herein by Reference to Pre-Effective Amendment No. 1 to a Registration Statement on Form N-6, for ReliaStar Life Insurance Company Select * Life Variable Account filed with the Securities and Exchange Commission on July 17, 2003 (File Number 333-105319). 15) Incorporated herein by reference to Post-Effective Amendment No. 24 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 November 12, 2003 (File Nos. 333-28769, 811-5626). 16) 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 Nos. 333-28679, 811-5626). 17) Incorporated herein by reference to Post-Effective Amendment No. 26 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 13, 2004 (File Nos. 333-28755, 811-5626). 18) Incorporated by reference to Post-Effective Amendment No. 1 to Registration Statement on Form S-2 of ING Life Insurance and Annuity Company (File No. 333-104456), as filed on April 5, 2004. ITEM 25: DIRECTORS AND OFFICERS OF THE DEPOSITOR Principal Position(s) Name Business Address with Depositor ---- ---------------- -------------- Keith Gubbay ING Insurance Operations Director and President 5780 Powers Ferry Road Atlanta, GA 30327-4390 Boyd G. Combs ING Insurance Operations Senior Vice President 5780 Powers Ferry Road Atlanta, GA 30327-4390 Jacques de Vaucleroy ING Insurance Operations Director and Senior 5780 Powers Ferry Road Vice President Atlanta, GA 30327-4390 Shaun P. Mathews ING Financial Services Senior Vice President 151 Farmington Avenue Hartford, CT 06156 James R. Gelder ReliaStar Life Insurance Co. Senior Vice President 20 Washington Avenue South Minneapolis, MN 55402 James R. McInnis ING USA Annuity and Life In. Co. Senior Vice President 1475 Dunwoody Drive West Chester, PA 19380 Stephen J. Preston ING USA Annuity and Life In. Co. Senior Vice President 1475 Dunwoody Drive West Chester, PA 19380 Kathleen A. Murphy ING Insurance Operations Director 5780 Powers Ferry Road Atlanta, GA 30327-4390 Thomas J. McInerney ING Insurance Operations Director and Chairman 5780 Powers Ferry Road Atlanta, GA 30327-4390 David A. Wheat ING Insurance Operations Chief Financial Officer 5780 Powers Ferry Road Director and Senior Vice Atlanta, GA 30327-4390 President David L. Jacobson ING USA Annuity and Life In. Co. Vice President, Chief 1475 Dunwoody Drive Compliance Officer and West Chester, PA 19380 Assistant Secretary David S. Pendergrass ING Insurance Operations Vice President and 5780 Powers Ferry Road Treasurer Atlanta, GA 30327-4390 Paula Cludray-Engelke ReliaStar Life Insurance Co. Secretary 20 Washington Avenue South Minneapolis, MN 55402 ITEM 26: PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR REGISTRANT The following persons control or are under common control with the Depositor: DIRECTED SERVICES, INC. ("DSI") - This corporation is a general business corporation organized under the laws of the State of New York, and is wholly owned by ING Groep, N.V. ("ING"). The primary purpose of DSI is to act as a broker-dealer in securities. It acts as the principal underwriter and distributor of variable insurance products including variable annuities as required by the SEC. The contracts are issued by the Depositor. DSI also has the power to carry on a general financial, securities, distribution, advisory or investment advisory business; to act as a general agent or broker for insurance companies and to render advisory, managerial, research and consulting services for maintaining and improving managerial efficiency and operation. DSI is also registered with the SEC as an investment adviser. The Depositor is under common control with a New York company, ReliaStar Life Insurance Company of New York ("RLNY"). The primary purpose of RLNY is to offer variable products in the state of New York. The registrant is a segregated asset account of the Company and is therefore owned and controlled by the Company. All of the Company's outstanding stock is owned and controlled by ING. Various companies and other entities controlled by ING may therefore be considered to be under common control with the registrant or the Company. Such other companies and entities, together with the identity of their controlling persons (where applicable), are set forth on the following organizational chart. Subsidiaries of ING Groep N.V. incorporated herein by reference to Item 26 in Post-Effective Amendment No. 2 to Registration Statement on Form N-4 (File No. 333-90516), as filed on April 9, 2004 for Separate Account B of ING USA Annuity and Life Insurance Company. ITEM 27: NUMBER OF CONTRACT OWNERS As of March 31, 2004, there are 150,701 qualified contract owners and 130,571 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. 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) At present, Directed Services, Inc. ("DSI"), the Registrant's Distributor, serves as principal underwriter for all contracts issued by ING USA Annuity and Life Insurance Company. DSI is the principal underwriter for Separate Account A, Separate Account B, ING USA Separate Account EQ (formerly known as Equitable Life Insurance Company of Iowa Separate Account A), ReliaStar Life Insurance Company of New York Separate Account NY-B, Alger Separate Account A of ING USA and the ING Investors Trust. (b) The following information is furnished with respect to the principal officers and directors of Directed Services, Inc., the Registrant's Distributor. The principal business address for each officer and director following is 1475 Dunwoody Drive, West Chester, PA 19380-1478, unless otherwise noted. Name and Principal Positions and Offices Business Address with Underwriter -------------------- --------------------- James R. McInnis Director and President Alan G. Hoden Director Stephen J. Preston Director David S. Pendergrass Vice President and Treasurer ING Insurance Operations 5780 Powers Ferry Road Atlanta, GA 30327-4390 David L. Jacobson Senior Vice President Kimberly J. Smith Secretary (c) 2003 Net Name of Underwriting Compensation Principal Discounts and on Brokerage Underwriter Commissions Redemption Commissions Compensation ----------- ------------ ------------- ----------- ------------ DSI $270,633,000 $0 $0 $0 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, PA 19380 and at 5780 Powers Ferry Road, N.W., Atlanta, GA 30327-4390. ITEM 31: MANAGEMENT SERVICES None. ITEM 32: UNDERTAKINGS (a) Registrant hereby undertakes 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 so long as payments under the variable annuity contracts may be accepted. (b) Registrant hereby undertakes 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; and, (c) Registrant hereby undertakes to deliver any Statement of Additional Information and any financial statements required to be made available under this Form promptly upon written or oral request. REPRESENTATIONS 1. The account meets the definition of a "separate account" under federal securities laws. 2. ING USA Annuity and Life Insurance Company hereby represents 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. 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 and has caused this Post-Effective Amendment to be signed on its behalf in the City of West Chester and Commonwealth of Pennsylvania on this 15th day of April, 2004. SEPARATE ACCOUNT B (Registrant) By: ING USA ANNUITY AND LIFE INSURANCE COMPANY (Depositor) By: -------------------- Keith Gubbay* President (principle executive officer) By: /s/ Linda E. Senker ------------------------ Linda E. Senker Counsel of Depositor As required by the Securities Act of 1933, this Amendment to Registration Statement has been signed by the following persons in the capacities indicated on April 15, 2004. Signature Title --------- ----- President and Director -------------------- (principle executive officer) Keith Gubbay* DIRECTORS OF DEPOSITOR ---------------------- David A. Wheat* Chief Financial Officer (principle accounting officer) ---------------------- Thomas J. McInerney* ---------------------- Kathleen A. Murphy* ---------------------- Jacques de Vaucleroy* By: /s/ Linda E. Senker ------------------------ Linda E. Senker Counsel of Depositor *Executed by Linda E. Senker on behalf of those indicated pursuant to Power of Attorney. EXHIBIT INDEX ITEM EXHIBIT PAGE # ---- ------- ------ 9 Opinion and Consent of Kimberly J. Smith EX-99.B9 10(a) Consent of Ernst & Young LLP, Independent Auditors EX-99.B10A