-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IVUgRzXH5R4wahYDVtKl37C5uN2gRBJsiicalOiFy+EsQPNiq7D6dOFKzERD0aCE OupNXHcyznJzHHaWsDILUA== 0000837276-04-000345.txt : 20040908 0000837276-04-000345.hdr.sgml : 20040908 20040908100449 ACCESSION NUMBER: 0000837276-04-000345 CONFORMED SUBMISSION TYPE: N-4 PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 20040908 DATE AS OF CHANGE: 20040908 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEPARATE ACCOUNT B OF ING USA ANNUITY LIFE INSURANCE CO CENTRAL INDEX KEY: 0000836687 STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-118851 FILM NUMBER: 041019672 BUSINESS ADDRESS: STREET 1: 1475 DUNWOODY DRIVE STREET 2: SUITE 400 CITY: WEST CHESTER STATE: PA ZIP: 19380-1478 BUSINESS PHONE: 610-425-3400 MAIL ADDRESS: STREET 1: 1475 DUNWOODY DRIVE STREET 2: P.O. BOX 2700 CITY: WEST CHESTER STATE: PA ZIP: 19380-2700 FORMER COMPANY: FORMER CONFORMED NAME: SEPARATE ACCOUNT B OF ING USA ANNUITY & LIFE INSURANCE CO DATE OF NAME CHANGE: 20031230 FORMER COMPANY: FORMER CONFORMED NAME: SEPARATE ACCOUNT B OF GOLDEN AMERICAN LIFE INSURANCE CO DATE OF NAME CHANGE: 19930506 FORMER COMPANY: FORMER CONFORMED NAME: SPECIALTY MANAGERS SEPARATE ACCOUNT B DATE OF NAME CHANGE: 19910529 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEPARATE ACCOUNT B OF ING USA ANNUITY LIFE INSURANCE CO CENTRAL INDEX KEY: 0000836687 STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-4 SEC ACT: 1940 Act SEC FILE NUMBER: 811-05626 FILM NUMBER: 041019673 BUSINESS ADDRESS: STREET 1: 1475 DUNWOODY DRIVE STREET 2: SUITE 400 CITY: WEST CHESTER STATE: PA ZIP: 19380-1478 BUSINESS PHONE: 610-425-3400 MAIL ADDRESS: STREET 1: 1475 DUNWOODY DRIVE STREET 2: P.O. BOX 2700 CITY: WEST CHESTER STATE: PA ZIP: 19380-2700 FORMER COMPANY: FORMER CONFORMED NAME: SEPARATE ACCOUNT B OF ING USA ANNUITY & LIFE INSURANCE CO DATE OF NAME CHANGE: 20031230 FORMER COMPANY: FORMER CONFORMED NAME: SEPARATE ACCOUNT B OF GOLDEN AMERICAN LIFE INSURANCE CO DATE OF NAME CHANGE: 19930506 FORMER COMPANY: FORMER CONFORMED NAME: SPECIALTY MANAGERS SEPARATE ACCOUNT B DATE OF NAME CHANGE: 19910529 N-4 1 n4incomegen.txt REGISTRATION STATEMENT As filed with the Securities and Exchange Commission on September 8, 2004 Registration Nos. 333-______; 811-7935 - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-4 INITIAL Registration Statement under The Securities Act of 1933 and/or Registration Statement under The Investment Company Act of 1940 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. James Shuchart, Esq. ING ING 1475 Dunwoody Drive 1475 Dunwoody Drive West Chester, PA 19380-1478 West Chester, PA 19380-1478 (610) 425-4139 (610) 425-3563 (Name and Address of Agent for Service of Process) - ------------------------------------------------------------------------------- Approximate date of Proposed Public Offering: As soon as practicable after the effectiveness of this Registration Statement. Title of Securities Being Registered: Interests in a separate account under single premium immediate combination variable and fixed annuity contracts. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. - -------------------------------------------------------------------------------- PART A ING USA Annuity and Life Insurance Company Separate Account B of ING USA Annuity and Life Insurance Company Single Premium Immediate Combination Variable and Fixed Annuity Prospectus ING INCOME GENERATION ANNUITY [ ], 2004 THE CONTRACT. This prospectus describes ING Income Generation Annuity, a group and individual single premium immediate combination variable and fixed annuity contract (the "Contract") offered by ING USA Annuity and Life Insurance Company ("ING USA" the "Company," "we," 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"). WHY READING THIS PROSPECTUS IS IMPORTANT. This prospectus contains facts about the contract and its investment options that you should know before purchasing. The information will help you decide if the contract is right for you. Please read this prospectus carefully. INVESTMENT OPTIONS. The contract offers variable investment options and a fixed dollar option. When you purchase the contract, your premium payment will be applied to the investment options you select. Some investment options may be unavailable through your contract or in your state. VARIABLE INCOME PAYMENTS. If you select variable income payments, the amount of your income payments will vary based on the performance of the variable investment options that you select. These options are called subaccounts. The subaccounts are within ING USA Separate Account B (the separate account), a separate account of the Company. Each subaccount invests in one of the mutual funds (funds) listed on the inside cover of this prospectus. Subaccount performance will vary depending upon the performance of its underlying fund. You do not invest directly in or hold shares of the funds. RISKS ASSOCIATED WITH INVESTING IN THE FUNDS. Information about the risks of investing in the funds is located in Appendix II -- "Description of Underlying Funds", and in each fund prospectus. Read this prospectus in conjunction with the fund prospectuses, and retain the prospectuses for future reference. GETTING ADDITIONAL INFORMATION. You may obtain free of charge the [ ], 2004, Statement of Additional Information (SAI) about the separate account by indicating your request on your application or calling us at 1-800-366-0066. You may also obtain an SAI for any of the funds by calling that number. This prospectus, the SAI and other information about the separate account may be obtained by accessing the Securities and Exchange Commission's (SEC) website, www.sec.gov. Copies of this information may also be obtained, after paying a duplicating fee, by contacting the SEC Public Reference Room. Information on the operation of the Public Reference Room may be obtained by calling 1-202-942-8090 or 1-800-SEC-0330, e-mailing publicinfo@sec.gov or by writing to SEC Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. 20549. The SAI table of contents is listed on page 38 of this prospectus. The SAI is incorporated into this prospectus by reference. 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. ADDITIONAL DISCLOSURE INFORMATION. Neither the SEC, nor any state securities commission, has approved or disapproved the securities offered through this prospectus or passed on the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. We do not intend for this prospectus to be an offer to sell or a solicitation of an offer to buy these securities in any state that does not permit their sale. We have not authorized anyone to provide you with information that is different than that contained in this prospectus. FIXED INCOME PAYMENTS. If you select fixed payments, your purchase payment will be applied to the fixed dollar option and your payment amount will not vary. Except as specifically mentioned, this prospectus describes only the variable investment options. However, we describe the fixed dollar option in Appendix I of this prospectus. Income Generation-133006 i 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 ING Alliance Mid Cap Growth Portfolio (Class S) Portfolio (Service Class) ING American Funds Growth Portfolio ING Salomon Brothers Aggressive Growth ING American Funds Growth-Income Portfolio 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 ING Developing World Portfolio (Class S) (Class S) ING Eagle Asset Capital Appreciation ING VP Index Plus MidCap Portfolio Portfolio (Class S) ING VP Index Plus SmallCap Portfolio ING Evergreen Health Sciences Portfolio (Class S) (Class S) ING Evergreen Omega Portfolio (Class S) ING FMRSM Diversified Mid Cap Portfolio (Class S) ING VARIABLE PRODUCTS TRUST ING Goldman Sachs TollkeeperSM Portfolio (Class S) ING VP Financial Services Portfolio ING Hard Assets Portfolio (Class S) (Class S) ING International Portfolio (Class S) ING VP MagnaCap Portfolio (Class S) ING Janus Special Equity Portfolio (Class S) ING VP MidCap Opportunities Portfolio ING Jennison Equity Opportunities Portfolio (Class S) (Class S) ING VP SmallCap Opportunities Portfolio ING JPMorgan Small Cap Equity Portfolio (Class S) (Class S) ING Julius Baer Foreign Portfolio (Class S) ING Legg Mason Value Portfolio (Class S) ING VP INTERMEDIATE BOND PORTFOLIO (CLASS S) ING LifeStyle Aggressive Growth Portfolio ING LifeStyle Growth Portfolio AIM VARIABLE INSURANCE FUNDS ING LifeStyle Moderate Growth Portfolio ING LifeStyle Moderate Portfolio AIM V.I. Dent Demographic Trends Fund ING Liquid Assets Portfolio (Class S) (Series II) ING Marsico Growth Portfolio (Class S) INVESCO VIF - Leisure Fund (Series I) ING Mercury Focus Value Portfolio (Class S) INVESCO VIF - Utilities Fund (Series I) ING Mercury Large Cap Growth Portfolio (Class S) ING MFS Mid Cap Growth Portfolio (Class S) FIDELITY VARIABLE INSURANCE PRODUCTS PORTFOLIO ING MFS Total Return Portfolio (Class S) ING Oppenheimer Main Street Core Portfolio Fidelity VIP Equity-Income Portfolio (Class S) (Service Class 2) ING PIMCO Core Bond Portfolio (Class S Fidelity VIP Growth Portfolio (Service Class 2) ING PIMCO High Yield Portfolio (Class S) ING Salomon Brothers All Cap Portfolio (Class S) LIBERTY VARIABLE INSURANCE TRUST ING Salomon Brothers Investors Portfolio (Class S) ING T. Rowe Price Capital Appreciation Portfolio Colonial Small Cap Value Fund (Class S) ING T. Rowe Price Equity Income Portfolio PIONEER VARIABLE CONTRACTS TRUST (Class S) ING UBS U.S. Balanced Portfolio (Class S) Pioneer Fund VCT Portfolio (Class II) Portfolio (Class S) Pioneer Mid Cap Value VCT Portfolio (Class II) ING Van Kampen Equity Growth Portfolio (Class S) ING Van Kampen Global Franchise Portfolio PROFUNDS VP (Class S) ING Van Kampen Growth and Income Portfolio ProFund VP Bull (Class S) ProFund VP Europe 30 ING Van Kampen Real Estate Portfolio (Class S) ProFund VP Rising Rate Opportunity ProFund VP Small-Cap PRUDENTIAL SERIES FUND, INC. Jennison Portfolio (Class II) SP William Blair International Growth Portfolio (Class II)
Income Generation-133006 ii TABLE OF CONTENTS
FEES AND EXPENSES................................................................................................ 1 CONDENSED FINANCIAL INFORMATION.................................................................................. 8 ING USA ANNUITY AND LIFE INSURANCE COMPANY....................................................................... 9 ING USA SEPARATE ACCOUNT B....................................................................................... 9 THE TRUSTS AND FUNDS............................................................................................ 10 CHARGES AND FEES................................................................................................ 10 THE ANNUITY CONTRACT............................................................................................ 13 PURCHASE........................................................................................................ 13 RIGHT TO CANCEL................................................................................................. 13 INCOME PAYMENTS................................................................................................. 14 GUARANTEED MINIMUM INCOME FEATURE............................................................................... 15 PAYMENT OPTIONS................................................................................................. 16 FLEXIBLE PERIOD OPTION.......................................................................................... 17 CALCULATING VARIABLE INCOME PAYMENTS............................................................................ 17 INVESTMENT OPTIONS ............................................................................................. 18 DEATH BENEFIT .................................................................................................. 21 WITHDRAWALS .................................................................................................... 22 TAXATION ....................................................................................................... 23 OTHER TOPICS ................................................................................................... 31 Contract Distribution -- Payment Delay or Suspension -- Voting Rights -- Contract Modifications -- Transfer of Ownership -- Trading - Industry Developments -- Legal Proceedings -- Experts CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION ............................................................ 34 APPENDIX I FIXED DOLLAR OPTION ................................................................................ I-1 APPENDIX II INVESTMENT OPTION ................................................................................ II-1 APPENDIX III INVESTMENT OPTIONS NOT AVAILABLE WITH GUARANTEED MINIMUM INCOME FEATURE .......................................................................................... III-1
Income Generation-133006 iii - -------------------------------------------------------------------------------- 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. The tables and examples in this section show the fees that may affect the amount of variable income payments. For fees applicable to fixed income payments, see Appendix I. See "Fees" for additional information. The fees shown below do not reflect any premium tax that may apply. CONTRACT OWNER TRANSACTION EXPENSES SURRENDER CHARGE (As a percentage of the amount withdrawn)(1) SURRENDER CHARGE SCHEDULE Variable Period Certain Only - --------------------------------------- --------------------------------- Number of Years from - -------------------------------------- Surrender Charge ---------------- Contract Effective Date* 7% - ------------------------ Fewer than 1 6% 1 or more but fewer than 2 5% 2 or more but fewer than 3 4% 3 or more but fewer than 4 3% 4or more but fewer than 5 2% 5 or more but fewer than 6 1% 6 or more but fewer than 7 0% 7 or more - --------------------------------------- --------------------------------- All other Payout Options - --------------------------------------- --------------------------------- Number of Years from Contract Effective Date* Surrender Charge - ------------------------ ---------------- Fewer than 1 N/A** 1 or more but fewer than 2 6% 2 or more but fewer than 3 5% 3 or more but fewer than 4 4% 4or more but fewer than 5 3% 5 or more but fewer than 6 2% 6 or more but fewer than 7 1% 7 or more 0% - --------------------------------------- --------------------------------- * For participants under a group contract, the surrender charge will be calculated based upon the number of years from the certificate effective date. ** Withdrawals during the first contract year are permitted only from the variable portion of a period certain only payout option. If you invested in a Fixed Interest Allocation, a Market Value Adjustment may apply to certain transactions. TRANSFER CHARGE1 ..... $25 per transfer, if you make more than 12 transfers in a contract year. 1 We currently do not impose this charge, but may do so in the future. Income Generation-133006 1 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. SEPARATE ACCOUNT ANNUAL CHARGES FOR CONTRACTS WITHOUT THE GUARANTEED MINIMUM INCOME FEATURE: Mortality and Expense Risk Charge 1.25%(1) Administrative Expense Charge 0.25%(2) Total 1.50% FOR CONTRACTS WITH THE GUARANTEED MINIMUM INCOME FEATURE: Mortality and Expense Risk Charge 1.25%(1) Administrative Expense Charge 0.25%(2) Guaranteed Minimum Income Feature Charge 1.00%(3) Total 2.50% (1) As a percentage of net rate of return. The mortality and expense risk charge and the asset-based administrative charge, if applicable, are deducted daily. (2) We currently do not impose an administrative expense charge; however, we reserve the right to impose this charge for new contracts and to deduct a daily charge from the net rate of return equivalent to not more than 0.25% annually. (3) This charge terminates after five years. TRUST OR FUND EXPENSES The next item shows the minimum and maximum total operating expenses charged by a Trust or Fund that you may pay periodically during the time that you own the Contract. The minimum and maximum expenses listed below are based on expenses for the Trust or Fund's most recent fiscal year ends without taking into account any fee waiver or expense reimbursement arrangements that may apply. More detail concerning each Trust or Fund's fees and expenses is contained in the prospectus for each Trust or Fund. ---------------------------------------------------- ----------- ------------ TOTAL ANNUAL TRUST OR FUND OPERATING EXPENSES1 MINIMUM MAXIMUM ---------------------------------------------------- ----------- ------------ ---------------------------------------------------- ----------- ------------ (expenses that are deducted from Trust or Fund assets, including management fees, distribution 0.53% 1.91% and/or service (12b-1) fees2, and other expenses): ---------------------------------------------------- ----------- ------------ 1 The minimum and maximum total operating expenses charged by a Trust or Fund including applicable expense reimbursement or fee waiver arrangements would also be 0.53% to 1.91%. The expense reimbursement or fee arrangement reflected is expected to continue through December 31, 2004. 2 The Company may receive compensation from each of the funds or the funds' affiliates based on an annual percentage of the average net assets held in that fund by the Company. The percentage paid may vary from one fund company to another. For certain funds, some of this compensation may be paid out of 12b-1 fees or service fees that are deducted from fund assets. Any such fees deducted from fund assets are disclosed in the Fund 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. Income Generation-133006 2 HOW FEES ARE DEDUCTED. Fund fees are not deducted directly from your income payments. When a subaccount purchases shares of a fund, the fees are reflected in that purchase price, so income payments based on investments in that subaccount will be impacted indirectly by the fund fees. 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 such reimbursement or waiver is contractual and is expected to continue through May 1, 2005. Expenses shown are actual expenses for year ended as of December 31, 2003 unless otherwise noted.
FUND NAME INVESTMENT DISTRIBUTION OTHER EXPENSES TOTAL FUND TOTAL NET FUND ADVISORY AND/OR ANNUAL WAIVERS OR ANNUAL FEES SERVICE EXPENSES REDUCTIONS EXPENSES FEES WAIVERS AFTER OR WAIVERS OR REDUCTIONS REDUCTIONS --------------------------------------------------------------------------------------------------------------------------- AIM V.I. Dent Demographic Trends Fund (Series II) (7) 0.77% 0.25% 0.45% 1.47% 0.02% 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 FMRSM 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 Large Cap Growth Portfolio (Class S) (2)(3) 0.80% 0.25% 0.00% 1.05% 0.00% 1.05% Income Generation-133006 3 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 Oppenheimer Main Street Core 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 S) (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% 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 Intermediate 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% 0.00% 1.15% 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)(19) 0.75% 0.25% 0.40% 1.40% 0.00% 1.40% 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) 1.00% 0.25% 0.50% 1.75% 0.00% 1.75% 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%. Income Generation-133006 4 (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. (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 Income Generation-133006 5 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. (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. Income Generation-133006 6 (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. 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 examples below. EXAMPLE (For contracts without the Guaranteed Minimum Income Feature) This example is intended to help you compare the costs of investing in the Contract with the cost of investing in other variable annuity Contracts. These costs include contract owner transaction expenses, contract fees, separate account annual expenses, and Trust or Fund fees and expenses. The examples assume that you invest $10,000 in the Contract for the time periods indicated. The examples also assume that your investment has a 5% return each year and assumes the maximum fees and expenses of the Contracts and of any of the Trusts or Funds. For the purpose of these examples, we deducted total annual fund expenses and the maximum charges under the contract (i.e., a mortality and expense risk charge of 1.25% annually and an administrative expense charge of 0.25% annually) and assume you have selected the non-lifetime period certain income payment option for a 15-year period with a 3% assumed annual net return rate. Although your actual costs may be higher or lower, based on these assumptions, your costs would be: - -------------------------------------------------------------------------------- 1) If you withdraw your remaining guaranteed payments at the end of the periods shown, you would pay the following fees, including any applicable surrender charge: 1 year 3 years 5 years 10 years $1,102 $1,712 $2,331 $4,139 - ---------------- ---------------------- ---------------------- ----------------- 2) If you do not withdraw your remaining guaranteed payments, you would pay the following fees at the end of the periods shown (no surrender charge is reflected): 1 year 3 years 5 years 10 years $395 $1,196 $2,014 $4,139 - ----------------- ---------------------- ---------------------- ---------------- EXAMPLE (For contracts with the Guaranteed Minimum Income Feature) This example is intended to help you compare the costs of investing in the Contract with the cost of investing in other variable annuity Contracts These costs include contract owner transaction expenses, contract fees, separate account annual expenses, and Trust or Fund fees and expenses. The examples assume that you invest $10,000 in the Contract for the time periods indicated. The examples also assume that your investment has a 5% return each year and assumes the maximum fees and expenses of the Contracts and of any of the Trusts or Funds. For the purpose of these examples, we deducted total annual fund expenses and the maximum charges under the contract (i.e., a mortality and expense risk charge of 1.25% annually, an administrative expense charge of 0.25% annually, and the guaranteed minimum income charge of 1.00% annually for the first five years) and assume you have selected the non-lifetime period certain income payment option for a 15 year period with a 3% assumed annual investment rate. Although your actual costs may be higher or lower, based on these assumptions, your costs would be: Income Generation-133006 7 ------------------------------------------------------------------------------- 1) If you withdraw your remaining guaranteed payments at the end of the periods shown, you would pay the following fees, including any applicable surrender charge: 1 year 3 years 5 years 10 years $1,193 $1,979 $2,767 $4,940 ------------------ ----------------------- ---------------------- ------------- 2) If you do not withdraw your remaining guaranteed payments you would pay the following fees at the end of the periods shown (no surrender charge is reflected): 1 year 3 years 5 years 10 years $493 $1,478 $2,465 $4,940 - --------------- ----------------------- ---------------------- ----------------- Compensation is paid for the sale of the Contracts. For information about this compensation, see "Selling the Contract." - -------------------------------------------------------------------------------- CONDENSED FINANCIAL INFORMATION - -------------------------------------------------------------------------------- We use accumulation units to calculate the value of a Contract. Each subaccount of Separate Account B of ING USA ("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. Because no Contracts had been issued as of the date of this prospectus, no condensed financial information is included in this prospectus. - -------------------------------------------------------------------------------- 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 Income Generation-133006 8 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 II -- 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. 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. - -------------------------------------------------------------------------------- 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. For example, the surrender charge collected may not fully cover all of the distribution expenses incurred by us with the service or benefits provided. 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. Income Generation-133006 9 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: SURRENDER CHARGE. We will deduct a contingent deferred sales charge (a "surrender charge") if you surrender your Contract or if you take a withdrawal during the 7-year period from the effective date of the Contract. The surrender charge is a percentage of and deducted from the amount withdrawn. This charge is intended to cover sales expenses that we have incurred. We will never charge more than the maximum surrender charges. The percentage deducted at the time of surrender or withdrawal depends on the number of complete years that have elapsed since the effective date of the Contract. We determine the surrender charge as a percentage of each premium payment as follows: Variable Period Certain Only - --------------------------------------- ---------------------------- Number of Years from - -------------------------------------- Surrender Charge ---------------- Contract Effective Date* 7% - ------------------------ Fewer than 1 6% 1 or more but fewer than 2 5% 2 or more but fewer than 3 4% 3 or more but fewer than 4 3% 4or more but fewer than 5 2% 5 or more but fewer than 6 1% 6 or more but fewer than 7 0% 7 or more - --------------------------------------- ---------------------------- All other Payout Options - --------------------------------------- ----------------------------- Number of Years from Contract Effective Date* Surrender Charge - ------------------------ ---------------- Fewer than 1 N/A 1 or more but fewer than 2 6% 2 or more but fewer than 3 5% 3 or more but fewer than 4 4% 4or more but fewer than 5 3% 5 or more but fewer than 6 2% 6 or more but fewer than 7 1% 7 or more 0% - --------------------------------------- ----------------------------- 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. CHARGES DEDUCTED FROM THE SUBACCOUNTS MORTALITY AND EXPENSE RISK CHARGE. We deduct a charge of 0.0041% on a daily basis from the Net Rate of Return for mortality and expense risks (equivalent to an annual charge of 1.50%). If the amount Income Generation-133006 10 we deduct for this charge is not enough to cover our mortality costs and expenses under the contract, we will bear the loss. We may use any excess to recover distribution costs relating to the contract and as a source of profit. We expect to make a profit from this charge. ASSET BASED ADMINISTRATIVE CHARGE. We deduct a charge of 0.0007% on a daily basis from the Net Rate of Return (equivalent to an annual charge of 0.25%) to compensate us for a portion of our ongoing administrative expenses. GUARANTEED MINIMUM INCOME FEATURE CHARGE. We deduct a charge of 0. 0028% on a daily basis from the Net Rate of Return for additional mortality and expense risks we assume by guaranteeing minimum income payments (equivalent to an annual charge of 1.00%). This charge will be assessed only during the first five contract years. REDEMPTION FEES. We may deduct the amount of any redemption fees imposed by a mutual fund or other investment company in which the subaccounts invest as a result of any full or partial withdrawals, reallocations or other transactions directed by you. PREMIUM AND OTHER TAXES. Some states and municipalities charge a premium tax on annuities. These taxes currently range from 0% to 4%, depending upon the jurisdiction. Our current practice is to deduct a charge for premium taxes from your premium payment on the contract effective date. We reserve the right, however, to reflect the cost of premium taxes in our income payment rates. We will not deduct a charge for any municipal premium tax of 1% or less, but we reserve the right to reflect such an expense in our annuity purchase rates. In addition, we reserve the right to assess a charge for any federal taxes due against the separate account. REDUCTION OR ELIMINATION OF CERTAIN FEES When sales of the contract are made to individuals or a group of individuals in a manner that results in savings of sales or administration expenses, we may reduce or eliminate the surrender charge or mortality and expense risk charge. Our decision to reduce or eliminate either of these charges will be based on one or more of the following: >> The size and type of group of individuals to whom the contract is issued; >> A prior or existing relationship with the Company, such as being an employee or former employee of the Company or one of its affiliates, receiving distributions or making transfers from other contracts issued by us or one of our affiliates, or transferring amounts held under qualified plans sponsored by the Company or an affiliate; or >> The type and frequency of administrative and sales services to be provided. The reduction or elimination of any of these charges will not be unfairly discriminatory against any person and will be done according to our rules in effect at the time the contract is issued. We reserve the right to change these rules from time to time. The right to reduce or eliminate any of these charges may be subject to state approval. 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. Income Generation-133006 11 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 and Fund Expenses." - -------------------------------------------------------------------------------- THE ANNUITY CONTRACT - -------------------------------------------------------------------------------- The Contract described in this prospectus is a group and individual single premium immediate combination variable and fixed annuity contract. The Contract is designed for persons who would like to receive regular income payments from an annuity contract. It is available as either a nonqualified contract or as a qualified contract. We reserve the right to limit purchase of an individual contract to natural persons. PURCHASE FACTORS TO CONSIDER IN THE PURCHASE DECISION. You should discuss your decision to purchase a contract with your sales representative. You should understand the investment options it provides, its other features, the risks and potential benefits it includes, and the fees and expenses you will incur. HOW TO PURCHASE. You may purchase the contract by submitting your premium payment, the application and other information necessary for processing the Contract. PURCHASE PAYMENT AMOUNT. To purchase a contract you must make one payment of at least $10,000. After your initial payment, no additional purchase payments may be made. We reserve the right to lower the required minimum payment, to establish a maximum payment amount and to reject any payment exceeding the maximum. ACCEPTANCE OR REJECTION. We must accept or reject your application within two business days of receipt. If the forms are incomplete, we may hold any forms and accompanying premium payment for five business days pending completion. In all cases, we may hold a premium payment for longer periods with your permission and if we deposit the payment in the ING Liquid Assets subaccount until the forms are completed (or for a maximum of 105 days). If we reject your application, we will return the forms and any premium payment. We may also refuse to accept certain forms of premium payments. In addition, we may require information as to why a particular form of payment was used (third party checks, for example) and the Income Generation-133006 12 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. AGE REQUIREMENTS. The maximum issue age is 90. We reserve the right to modify the maximum issue age. ALLOCATION OF YOUR PURCHASE PAYMENT TO THE INVESTMENT OPTIONS. We will allocate your premium payment, less any applicable premium taxeS, among the investment options you select. You may also select the fixed dollar option and allocate all or a portion of your purchase payment to the Fixed Account. Allocations must be in whole percentages. Any premium payment received before we accept the application will be invested as of the day we do accept them. RIGHT TO CANCEL WHEN AND HOW TO CANCEL. You may cancel your contract within ten days of receipt (some states require more than ten days) by returning it to our Customer Service Center along with a written notice of cancellation. REFUNDS. On the day we receive the request for cancellation in good order, we will calculate your contract value. Your refund will equal that value and will reflect deduction of any income payments made. This amount may be more or less than your premium payment. In certain states (or if you have purchased the contract as an IRA), we may be required to return your entire premium payment. We will issue your refund within seven days of our receipt of your request in good order. INCOME PAYMENTS Under the Contract, we will make regular income payments to you or to a payee you designate in writing. INITIATING PAYMENTS. To initiate income payments, you must make the following selections on your application: o Payment Start Date; o Payment frequency (i.e., monthly, quarterly, semi-annually or annually); o Income payment option and any special features, such as a right to withdraw or a Guaranteed Minimum Income Feature; o Fixed, variable or a combination of both fixed and variable payments; o The subaccounts to allocate your premium payment among (only if variable payments are elected); and o An assumed investment return rate (only if variable payments are elected). Your sales representative can help you consider what selections may be appropriate for your financial goals. Generally, your selections may not be changed after the Contract is issued. Some changes, such as transfers among subaccounts, may be allowed. Payments need to conform to required minimum distributions if applicable. WHAT AFFECTS INCOME PAYMENT AMOUNTS? Some of the factors that may affect the amount of your income payments include your age, gender, the amount of your premium payment, the income payment option selected, the number of guaranteed income payments selected (if any), whether you select fixed, variable or a combination of both fixed and variable payments, and, for variable payments, the assumed investment return rate selected. You must provide evidence of your date of birth satisfactory to us if you elect a lifetime option. Income Generation-133006 13 PAYMENT DUE DATES. You will generally receive your first income payment on the last day of the selected payment period. For example, if you elect to receive one payment a year, we will make the payment on the day before the anniversary of the contract effective date. An alternative first payment date may be elected subject to our approval and in compliance with IRS regulations. MINIMUM PAYMENT AMOUNTS. For all payment options, the initial income payment must be at least $50 per month, if monthly payments, or, otherwise, total yearly payments of at least $250. ASSUMED INVESTMENT RETURN RATE. If you select variable income payments, you must also select an assumed investment return rate of either 3% or 5%. If you select a 5% rate, your first income payment will be higher, but subsequent payments will increase only if the investment performance of the subaccounts you selected is greater than 5% annually, after deduction of fees. Payment amounts will decline if the investment performance is less than 5%, after deduction of fees. If you select a 3% rate, your first income payment will be lower, but subsequent payments will increase more rapidly and decline more slowly depending upon the investment performance of the subaccounts you selected. GUARANTEED MINIMUM INCOME FEATURE GUARANTEED MINIMUM INCOME FEATURE. If you select this feature, we guarantee that during the first five contract years your variable payment will never be less than the guaranteed minimum payment amount shown in your Contract. The guaranteed minimum payment amount equals 90% of your estimated initial payment. ESTIMATED INITIAL PAYMENT AMOUNT. On the date we issue your Contract we estimate the amount of your initial payment based on the value of the annuity units your payment purchases on that date. See "Calculating Variable Income Payments - Annuity Units." Your guaranteed minimum payment amount equals 90% of this estimated amount. Requirements for Electing the Guaranteed Minimum Income Feature: >> Available only at issue >> Available with all annuity options except: 1) period certain only options where the period certain is less than 15 years; and 2) lifetime payment options with two lives when the surviving annuitant receives a reduced payment >> Not available for life income with period certain option if you elect the right to withdraw >> Must elect 100% variable payments >> If you elect this feature, you may not invest in or transfer to any of the investment options listed in Appendix III. You are unable to invest in these funds as long as this feature is in effect >> In addition to other contract fees, if you select this feature, the guaranteed minimum income charge of 1.0% will apply for the first five contract years >> The Flexible Period Option is not available while this feature is in effect >> The assumed annual investment return rate must be 3% >> Certain age restrictions may also apply TERMINATION. This feature terminates at the end of the fifth contract year. It cannot be terminated earlier, and is not renewable. If you select this feature, any withdrawal during the first five contract years will result in a proportionate reduction in your guaranteed minimum payment amount. START DATE. The contract is designed to be viewed as an immediate annuity contract under the Tax Income Generation-133006 14 Code. For nonqualified contracts you may elect to delay your income payment start date for up to 12 months following purchase of the contract. See "Taxation" for rules applicable where death occurs before the annuity starting date under a nonqualified annuity. Consult a tax adviser before electing a delay. Annuity payments under a qualified contract must meet the required beginning date applicable to your qualified plan. TAXATION. The Tax Code has rules regarding income payments. For example, for qualified contracts, guaranteed payments may not extend beyond (a) the estimated life expectancy of the annuitant or (b) the joint life expectancies of the annuitant and beneficiary. Payments must comply with the required minimum distributions of Tax Code section 401(a)(9). In some cases tax penalties will apply if rules are not followed. For tax rules that may apply to the contract see "Taxation." Income Generation-133006 15 PAYMENT OPTIONS The following table lists the income payment options and their accompanying death benefits and rights to withdraw. We may offer additional income payment options under the contract from time to time. You must select the same period certain for the variable and fixed portions of your Contract, if applicable.
- -------------------------------------------------------------------------------------------------------------------------------- Lifetime Payment Options - -------------------------------------------------------------------------------------------------------------------------------- - --------------------------- ---------------------------------------------------------------------------------------------------- Life Income LENGTH OF PAYMENTS: For as long as the annuitant lives. It is possible that no payment will be made if the annuitant dies prior to the first payment's due date. DEATH BENEFIT--NONE: All payments end upon the annuitant's death. RIGHT TO WITHDRAW--NONE. - --------------------------- ---------------------------------------------------------------------------------------------------- - --------------------------- ---------------------------------------------------------------------------------------------------- Life Income-- LENGTH OF PAYMENTS: For as long as the annuitant lives, with payments guaranteed for your choice Period Certain of 5-50 years (or other periods we may make available at the time you select this option). DEATH BENEFIT--PAYMENT TO THE BENEFICIARY: If the annuitant dies before we have made all the guaranteed payments, payments will continue to the beneficiary. RIGHT TO WITHDRAW: At the time of purchase, you may elect the right to withdraw all or a portion of any remaining guaranteed payments (some restrictions apply, see "Withdrawals"). - --------------------------- ---------------------------------------------------------------------------------------------------- - --------------------------- ---------------------------------------------------------------------------------------------------- Life Income-- LENGTH OF PAYMENTS: For as long as either annuitant lives. It is possible that no payment will be Two Lives made if both the annuitant and joint annuitant die before the first payment's due date. CONTINUING PAYMENTS: When you select this option you will also choose either: (a) Full or reduced payments to continue to the surviving annuitant after the first annuitant's death; or (b) 100% of the payment to continue to the annuitant on the joint annuitant's death, and a reduced payment to continue to the joint annuitant on the annuitant's death. In either case, payments cease upon the death of the surviving annuitant. Any reduction in payment will result in a corresponding reduction to the amount of the guaranteed minimum income payment, if applicable. DEATH BENEFIT--NONE: All payments end upon the death of both annuitants. RIGHT TO WITHDRAW--NONE. - --------------------------- ---------------------------------------------------------------------------------------------------- - --------------------------- ---------------------------------------------------------------------------------------------------- Life Income-- LENGTH OF PAYMENTS: For as long as either annuitant lives, with payments guaranteed for your Two Lives-- choice of 5-50 years (or other periods we may make available at the time you select this option.) Period Certain CONTINUING PAYMENTS: 100% of the payment will continue to the surviving annuitant after the first annuitant's death. DEATH BENEFIT--PAYMENT TO THE BENEFICIARY: If both annuitants die before the guaranteed payments have all been paid, payments will continue to the beneficiary. RIGHT TO WITHDRAW: At the time of purchase, you may elect the right to withdraw all or a portion of any remaining guaranteed payments (some restrictions apply, see "Withdrawals"). - -------------------------------------------------------------------------------------------------------------------------------- Non-Lifetime Period Certain Payment Option - -------------------------------------------------------------------------------------------------------------------------------- - --------------------------- ---------------------------------------------------------------------------------------------------- Non-Lifetime Period LENGTH OF PAYMENTS: Payments will continue for your choice of 5-50 years for variable payments; Certain 5-30 years for fixed payments (or other periods we may make available at the time you select this option). DEATH BENEFIT-- PAYMENT TO THE BENEFICIARY: If the annuitant dies before we make all the guaranteed payments, payments will continue to the beneficiary. RIGHT TO WITHDRAW: (a) If you are receiving variable income payments you may withdraw all or a portion of any remaining guaranteed payments at any time. (b) If you elect to receive fixed income payments at the time of purchase, you may elect the right to withdraw all or a portion of any remaining guaranteed payments (some restrictions apply, see "Withdrawals"). - --------------------------- ----------------------------------------------------------------------------------------------------
Income Generation-133006 16 FLEXIBLE PERIOD OPTION If you are receiving payments under a non-lifetime period certain option, you may shorten or lengthen the period for which the guaranteed payments will be made or change to a lifetime payment option, subject to the following: (a) You may make the change on any contract anniversary beginning on the second contract anniversary; (b) If the period certain is changed, and the resulting payment is below $50 monthly (or $250 annually), we will shorten the period certain until those minimums are reached. (c) If the Guaranteed Minimum Income Feature is elected, the Flexible Period Option is not available until the fifth contract anniversary; (d) If you elect a non-lifetime period certain option and the Right to Withdrawal, the Flexible Period Option is added to your Contract automatically; (e) Any change request must be in writing and received by us in good order within 30 days prior to the contract anniversary as of which the change is to be effective; (f) The withdrawal value on the contract anniversary of the change, without application of surrender charges, but subject to any applicable market value adjustment, is used to determine the amount of the new annuity payments; and (g) We will terminate your withdrawal rights if a life annuity option is chosen. If period certain decreases: (a) A guaranteed payment period may not be shortened to a period sooner than 10 years from the contract effective date; (b) The remaining period may not be less than 5 years; and (c) Multiple decreases may be made during the life of the Contract within current guidelines. If period certain increases: (a) For nonqualified contracts, a guaranteed payment period may be lengthened to a period not greater than 50 years from the contract effective date or age 100, whichever is earlier; (b) For nonqualified contracts, multiple increases may be made during the life of the Contract, within current guidelines; and (c) For qualified contracts, a guaranteed payment period may not extend beyond your life expectancy or age 100, whichever is earlier. Life annuity conversion: (a) Life annuity rates will be based on then current age(s); and (b) You may not change back to a non-lifetime period certain option after a change to a lifetime annuity option. The Flexible Period Option may not be available in all states. Certain other conditions and restrictions may apply. A change to a lifetime payment option and any change in the guaranteed payment period may have an impact on the amount of each payment and the amount of each payment that is taxable. For advice about how any such change will affect your taxes, consult your tax adviser. CALCULATING VARIABLE INCOME PAYMENTS The amount of any variable income payment is determined by multiplying the number of annuity units Income Generation-133006 17 that you own by an annuity unit value (AUV) for each unit. ANNUITY UNITS. When you select variable income payments, your initial premium payment purchases annuity units of the Separate Account B subaccounts corresponding to the investment options you select. The number of units purchased is based on your premium payment amount and the value of each unit on the day the premium payment is invested. Generally, the number of units will not vary over the life of the Contract, but the value of each unit will vary daily based on the performance of the underlying fund and deduction of fees. Some events may result in a change in the number of units, including withdrawals, death of an annuitant if a reduction in payment to a surviving annuitant was selected, transfers among subaccounts, or a change in a period certain. While the number of units may change if you transfer among subaccounts or make a change in a period certain, the current value of your Contract will not change as a result of either of these events. ANNUITY UNIT VALUE (AUV). The value of each annuity unit in a subaccount is called the annuity unit value or AUV. The AUV varies daily in relation to the underlying fund's investment performance. The value also reflects daily deductions for fund fees and expenses, the mortality and expense risk charge, the administrative expense charge (if any) and the guaranteed minimum income charge (if applicable). VALUATION. We determine the AUV every normal business day after the close of the New York Stock Exchange (normally at 4:00 p.m. Eastern Time). At that time we calculate the current AUV by multiplying the AUV last calculated by the net return factor of the subaccount, and by a factor to reflect the assumed annual investment rate. The net return factor measures the investment performance of the subaccount from one valuation to the next. The assumed annual investment rate will be either 3% or 5% as you selected. Current AUV = Prior AUV x Net Return Factor x Assumed Annual Investment Rate Factor NET RETURN FACTOR. The net return factor for a subaccount between two consecutive valuations equals the sum of 1.0000 plus the net return rate. The net return rate is computed according to a formula that is equivalent to the following: >> The net assets of the fund held by the subaccount as of the current valuation; minus >> The net assets of the fund held by the subaccount at the preceding valuation; plus or minus >> Taxes or provisions for taxes, if any, due to subaccount operations (with any federal income tax liability offset by foreign tax credits to the extent allowed); divided by >> The total value of the subaccount's units at the preceding valuation; minus >> A daily deduction for the mortality and expense risk charge, the administrative expense charge (if any) and the guaranteed minimum income charge (if applicable). The net return rate may be either positive or negative. INVESTMENT OPTIONS When you purchase the contract, your premium payment (less any applicable premium tax) will be applied to the investment options you select. If you select variable investment options, you will receive variable income payments. If you select the fixed dollar option, you will receive fixed income payments. If you select one or more variable investment options and the fixed dollar option, a portion of your payment will vary and a portion will remain fixed. VARIABLE INCOME PAYMENTS. If you select variable income payments, the amount of your income payments will vary based on the performance of the variable investment options that you select. These options are called subaccounts. The subaccounts are within Separate Account B (the separate account), a Income Generation-133006 18 separate account of the Company. Each subaccount invests in a specific mutual fund (fund). You do not invest directly in or hold shares of the funds. MUTUAL FUND DESCRIPTIONS. We provide brief descriptions of the funds in Appendix II. Investment results of the funds are likely to differ significantly and there is no assurance that any of the funds will achieve their respective investment objectives. Shares of the funds will rise and fall in value and you could lose money by investing in the funds. Shares of the funds are not bank deposits and are not guaranteed, endorsed or insured by any financial institution, the Federal Deposit Insurance Corporation or any other government agency. Unless otherwise noted, all funds are diversified as defined under the Investment Company Act of 1940. Please refer to the fund prospectuses for additional information. Fund prospectuses may be obtained, free of charge, from our Customer Service Center at the address and telephone number listed in "Contract Overview--Questions: Contacting the Company," by accessing the SEC's website or by contacting the SEC Public Reference Room. FIXED INCOME PAYMENTS. If you select fixed payments, your premium payment will be applied to the fixed dollar option, and the amount of your payments will not vary. Except where noted, this prospectus describes only the variable investment options. The fixed dollar option is described in Appendix I. SELECTING INVESTMENT OPTIONS o CHOOSE OPTIONS APPROPRIATE FOR YOU. Your sales representative can help you evaluate which investment options may be appropriate for your financial goals. o UNDERSTAND THE RISKS ASSOCIATED WITH THE OPTIONS YOU CHOOSE. Some subaccounts invest in funds that are considered riskier than others. Funds with additional risks are expected to have values that rise and fall more rapidly and to a greater degree than other funds. For example, funds investing in foreign or international securities are subject to risks not associated with domestic investments, and their investment performance may vary accordingly. Also, funds using derivatives in their investment strategy may be subject to additional risks. o BE INFORMED. Read this prospectus, the fund prospectuses and the Fixed Dollar Option appendix in this prospectus. ADDITIONAL RISKS OF INVESTING IN THE FUNDS (MIXED AND SHARED FUNDING) "Shared funding" occurs when shares of a fund, which the subaccounts buy for variable annuity contracts, are also bought by other insurance companies for their variable annuity contracts. "Mixed funding" occurs when shares of a fund, which the subaccounts buy for variable annuity contracts, are bought for variable life insurance contracts issued by us or other insurance companies. >> Shared--bought by more than one company. >> Mixed--bought for annuities and life insurance. It is possible that a conflict of interest may arise due to mixed and/or shared funding, which could adversely impact the value of a fund. For example, if a conflict of interest occurred and one of the subaccounts withdrew its investment in a fund, the fund may be forced to sell its securities at disadvantageous prices, causing its share value to decrease. Each fund's board of directors or trustees will monitor events to identify any conflicts which may arise and to determine what action, if any, should be taken to address such conflicts. LIMITS ON AVAILABILITY OF OPTIONS. Some funds may be unavailable through your contract or plan or in some states. We may add, withdraw or substitute funds, subject to the conditions in your contract and in compliance with regulatory requirements. In the case of a substitution, the new fund may have different fees and charges than the fund it replaced. Income Generation-133006 19 TRANSFERS AMONG VARIABLE INVESTMENT OPTIONS. You may transfer amounts among the available subaccounts. The Company reserves the right to limit such transfers to 12 in any calendar year and to establish a minimum transfer amount. Transfers are not allowed into or out of the fixed dollar option. TRANSFER REQUESTS. Requests may be made, after the contract is issued, in writing, by telephone or, where applicable, electronically. LIMITS IMPOSED BY THE UNDERLYING FUND. Orders for the purchase of fund shares may be subject to acceptance or rejection by the fund. We reserve the right to reject, without prior notice, any allocation of a purchase payment to a subaccount if the subaccount's investment in its corresponding fund is not accepted by the fund for any reason. LIMITS ON FREQUENT TRANSFERS. The contract is not designed to serve as a vehicle for frequent trading in response to short-term fluctuations in the market. Such 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, organizations or individuals 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. Income Generation-133006 20 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. TELEPHONE AND ELECTRONIC TRANSACTIONS: SECURITY MEASURES. To prevent fraudulent use of telephone and electronic transactions (including, but not limited to, internet transactions), we have established security procedures. These include recording calls on our toll-free telephone lines and requiring use of a personal identification number (PIN) to execute transactions. You are responsible for keeping your PIN and account information confidential. If we fail to follow reasonable security procedures, we may be liable for losses due to unauthorized or fraudulent telephone or other electronic transactions. We are not liable for losses resulting from telephone or electronic instructions we believe to be genuine. If a loss occurs when we rely on such instructions, you will bear the loss. - -------------------------------------------------------------------------------- DEATH BENEFIT - -------------------------------------------------------------------------------- The following describes the death benefit applicable to variable income payments. These are also outlined under "Income Payments--Payment Options." For information on the death benefit applicable to the fixed dollar option, refer to Appendix I. See "Income Payments" for a definition of annuitant and beneficiary as used in this section. PAYMENT OF DEATH BENEFIT. Upon the death of the annuitant and any surviving joint annuitant, if applicable, a death benefit may be payable if your Contract is issued under any of the following income payment options: 1. Life Income -- Period Certain; 2. Life Income -- Two Lives -- Period Certain; or 3. Non-lifetime -- Period Certain. Any death benefit will be paid in the form specified in the Contract and will be distributed at least as rapidly as under the method of distribution in effect upon the date of death. See "Taxation" for rules where you have elected to delay your payment start date under a nonqualified annuity and you die before the income payment start date. Under payment options 1 and 2 above, a lump-sum payment of the present value of any death benefit may be requested 1. within six months following the date of death; or 2. at any time (even after the six month period) if you had elected the right to withdraw. Under payment option 3 above, a lump-sum payment of the present value of any death benefit may be requested at any time. Unless you elect otherwise, the payment will be made into an interest bearing account, backed by our general account that is accessed by the beneficiary through a checkbook feature. The beneficiary may access death benefit proceeds at any time without penalty. Interest earned on this account may be less than interest paid on other settlement options. If a lump-sum payment is requested, no surrender charge is applied and payment will be made within seven days following our receipt of your request in good order. Income Generation-133006 21 CALCULATION OF LUMP-SUM PAYMENT OF THE DEATH BENEFIT. The value of the lump-sum payment of the death benefit will equal the present value of any remaining guaranteed income payments, calculated using the same rate we used to calculate the income payments (i.e., the 3% or 5% assumed annual investment rate used for variable payments). No surrender charge is deducted. We will calculate this value on the next valuation date following our receipt of proof of death acceptable to us and payment request in good order. Such value will reflect any payments made after the date of death. See Appendix I--Fixed Dollar Option for information on calculation of a lump-sum payment of the death benefit applicable to the fixed dollar option. WHO RECEIVES DEATH BENEFIT PROCEEDS? The beneficiary is the person entitled to receive any death benefit proceeds. We will pay any death benefit proceeds based on the last written beneficiary designation on file at our Customer Service Center as of the date of death. CHANGES IN BENEFICIARY DESIGNATIONS. The designated beneficiary may be changed at any time during the lifetime of the annuitant and the joint annuitant (if applicable). Such change must be submitted to us in writing, and will become effective as of the date written notice of the change is received and recorded by us. However, our obligation to pay death benefits will be fully discharged upon payment to the beneficiary named in the written notice of beneficiary designation that we last received as of the date of such payment. Some restrictions may apply to beneficiary changes under qualified contracts. DEATH OF OWNER. No death benefit is payable upon the death of the owner, if the owner is not also the annuitant. Payments will continue under the chosen option and to the same payee. If neither the annuitant nor any other payee survives the owner, payments will be made to the owner's estate. - -------------------------------------------------------------------------------- WITHDRAWALS - -------------------------------------------------------------------------------- WITHDRAWALS OF VARIABLE INCOME PAYMENTS You may make partial or full withdrawals of the present value of any remaining guaranteed variable income payments if you are receiving payments under either one of the following: >> A lifetime payment option with period certain and you elected a right to make withdrawals. In this circumstance withdrawals are allowed once each year, beginning after the first contract year (subject to state approval). >> The non-lifetime payment option. Partial withdrawals are allowed only if each remaining period certain payment will be at least $50. OTHER THAN THE NON-LIFETIME PAYMENT OPTION, NO WITHDRAWALS ARE PERMITTED DURING THE FIRST CONTRACT YEAR OR DURING THE PERIOD BEFORE THE FIRST PAYMENT IF IT EXTENDS BEYOND THE FIRST CONTRACT YEAR. If you selected the Guaranteed Minimum Income Feature, you may not make any withdrawals. Income Generation-133006 22 WITHDRAWALS OF FIXED INCOME PAYMENTS (FOR ADDITIONAL DETAILS SEE APPENDIX I--FIXED DOLLAR OPTION.) You may make partial or full withdrawals of the present value of any remaining fixed income payments if you are receiving payments under either one of the following: >> A lifetime payment option with period certain payments and you elected a right to make withdrawals. In this circumstance withdrawals are allowed once each year, beginning after the first contract year (subject to state approval). >> The non-lifetime payment option and you elected a right to make withdrawals. In this circumstance withdrawals are allowed once each year, beginning after the first contract year. Partial withdrawals are allowed only if each remaining period certain payment will be at least $50 monthly, if monthly payments or, otherwise, $250 annually. No withdrawals are permitted during the first contract year or during the period before the first payment if it extends beyond the first contract year. The withdrawal right must be elected at issue. WITHDRAWAL VALUE VARIABLE INCOME PAYMENTS. For any withdrawal of remaining variable guaranteed income payments, the amount available for withdrawal is equal to the present value of any remaining guaranteed variable payments (less any applicable surrender charge) calculated using the same rate we used to calculate the income payments (i.e., the 3% or 5% assumed annual net return rate stated in your contract). Withdrawal values are determined as of the valuation date following our receipt of your written request in good order at our Customer Service Center. FIXED INCOME PAYMENTS. See Appendix I for details regarding the withdrawal value of fixed payments. COMBINATION OF VARIABLE AND FIXED INCOME PAYMENTS. If a combination of variable and fixed income payments are selected, then the rules regarding withdrawal rights will apply separately to each portion. SURRENDER CHARGE Withdrawals may be subject to a surrender charge as described in "Fees--Surrender Charge." REDUCTION OF REMAINING PAYMENTS Any withdrawal will result in a proportionate reduction of any remaining period certain payments and any applicable guaranteed minimum payment amount. Additionally, the withdrawal amount will be taken from the subaccounts proportionately, unless you designate otherwise. For lifetime income payment options, any payments to be made beyond the period certain will be unaffected by any withdrawals. - -------------------------------------------------------------------------------- TAXATION - -------------------------------------------------------------------------------- INTRODUCTION This section discusses our understanding of current federal income tax laws affecting the contract. You should keep the following in mind when reading it: o Your tax position (or the tax position of the designated beneficiary, as applicable) determines federal taxation of amounts held or paid out under the contract; o Tax laws change. It is possible that a change in the future could affect contracts issued in the past; Income Generation-133006 23 o This section addresses federal income tax rules and does not discuss federal estate and gift tax implications, state and local taxes or any other tax provisions; o We do not make any guarantee about the tax treatment of the contract or a transaction involving the contract; and o Contract owner means the person to whom we issue an individually owned contract or the participant under a group 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. CONTRACT TYPE The contract is designed for use on a non-tax qualified basis as a nonqualified contract, or as a qualified contract under certain retirement arrangements under Tax Code sections 401, 403(b), or 408(b). TAX RULES. The tax rules vary according to whether the contract is a nonqualified contract or qualified contract used with a qualified retirement arrangement. If used under a qualified retirement arrangement, you need to know the Tax Code section under which your arrangement qualifies. Contact your plan sponsor, sales representative or the Company to learn which Tax Code section applies to your arrangement. THE CONTRACT. Contract owners are responsible for determining that contributions, distributions and other transactions satisfy applicable laws. Legal counsel and a tax adviser should be consulted regarding the suitability of the contract. If the contract is purchased in conjunction with a retirement plan, the plan is not a part of the contract and we are not bound by the plan's terms or conditions. WITHDRAWALS AND OTHER DISTRIBUTIONS Certain tax rules apply to distributions from the contract. A distribution is any amount taken from the contract including income payments, full or partial withdrawals of the value of remaining payments (if permitted under the contract), rollovers, exchanges and death benefit proceeds. We report the taxable portion of all distributions to the Internal Revenue Service (IRS). NONQUALIFIED CONTRACTS. A full withdrawal of the present value of any remaining guaranteed payments under a nonqualified contract is taxable to the extent that the amount received exceeds any remaining investment in the contract. If a partial withdrawal of the present value of any remaining payments is made and the continuing payments you receive are reduced because of the partial withdrawal, a part of the withdrawal may not be taxable. The part that is not taxable is equal to any remaining investment in the contract multiplied by a fraction. The numerator (top part of the fraction) is the reduction in each payment because of the partial withdrawal. The denominator (bottom part of the fraction) is the full amount of each payment originally provided. For income payments, a portion of each payment which represents the investment in the contract is not taxable. An exclusion ratio is calculated to determine the nontaxable portion. For fixed income payments, in general, there is no tax on the portion of each payment which represents the same ratio that the investment in the contract bears to the total dollar amount of the expected payments as defined in Tax Code section 72(c). The entire annuity payment will be taxable once the recipient has recovered the investment in the contract. Income Generation-133006 24 For variable income payments, an equation is used to establish a specific dollar amount of each payment that is not taxed. The dollar amount is determined by dividing the investment in the contract by the total number of expected periodic payments. The entire payment will be taxable once the recipient has recovered the investment in the contract. 401 AND 403(B) PLANS. All distributions from these plans are taxed as received, unless: 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, depending upon the type of distribution, a portion may be excluded from gross income according to rules detailed in the Tax Code. A payment can be an eligible rollover distribution only if it is both of the following: o Made under a non-lifetime payment option with a period of less than ten years; and o Only to the extent it is not attributable to after-tax contributions and/or is not a required minimum distribution under Tax Code section 401(a)(9). RESTRICTIONS ON DISTRIBUTIONS. Distribution of amounts restricted under Tax Code section 403(b)(11) may only occur upon your death, attainment of age 59 1/2, severance from employment, disability, or financial hardship. Such distributions remain subject to other applicable restrictions under the Tax Code. Subject to the terms of your 401(k) plan, distributions from your 401(k) employee account, and possibly all or a portion of your 401(k) employer account, may only occur upon: retirement, death, attainment of age 59 1/2, disability, severance from employment, financial hardship, and termination of the plan in certain circumstances. Such distributions remain subject to other applicable restrictions under the Tax Code. 408(B) IRAS. 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 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. A payment can be rolled over only if it is: o Not attributable to after-tax contributions; and o Not a required minimum distribution under Tax Code section 401(a)(9). There are limitations on the number of rollovers that may be made in any one year period. You should consult a tax adviser prior to making a rollover. TAXATION OF DEATH BENEFIT PROCEEDS. In general, payments received by your beneficiaries after your death are taxed in the same manner as if you had received those payments. 10% PENALTY TAX Under certain circumstances, the Tax Code may impose a 10% penalty tax on the taxable portion of any distribution from a nonqualified contract or from a contract used with a 401, 403(b) or 408(b) arrangement. Income Generation-133006 25 NONQUALIFIED CONTRACTS. There is an exception to the 10% penalty tax if payment is made under an immediate annuity contract. An immediate annuity is defined as a contract to which all of the following apply: o Is purchased with a single premium; o Has an annuity starting date, as defined by the Tax Code, no later than one year from date of purchase; and o Provides for a series of substantially equal periodic payments to be made no less frequently than annually. For purposes of determining whether the contract qualifies as an immediate annuity, the IRS has ruled that where an immediate annuity is received in exchange for a deferred annuity contract in a Tax Code section 1035 exchange, the purchase date of the contract will be deemed to be the date the deferred annuity was purchased. This might cause the contract to fail to qualify as an immediate annuity and the contract will be subject to the 10% penalty tax unless one of the other exceptions to the penalty applies. In addition to the immediate annuity exception, the 10% penalty tax does not apply to the taxable portion of distributions made under certain exceptions, including one or more of the following: o You have attained age 59 1/2; o You have become disabled as defined in the Tax Code; o You have died; or o The distribution is made in substantially equal periodic payments (at least annually) over your life or life expectancy or the joint lives or joint life expectancies of you and your designated beneficiary. Modification of the series of payments prior to the later of age 59 1/2 or five years may result in an additional tax in the year of modification equal to the penalty which would have been imposed, plus interest, if the exception had not applied. In addition, if you select an increasing annuity or an early withdrawal of the value of remaining income payments, the payment or distribution may be subject to the 10% penalty tax unless one of the other exceptions applies. You should consult with a tax adviser to determine how this will affect your tax liability. 401 AND 403(B) PLANS. The 10% penalty tax applies to the taxable portion of a distribution from a 401(a), 401(k) or a 403(b) plan, unless certain exceptions, including one or more of the following have occurred: o You have attained age 59 1/2; o You have become disabled as defined in the Tax Code; o You have died; o You have separated from service with the plan sponsor at or after age 55; o The distribution is rolled over into another plan of the same type or to an IRA in accordance with the Tax Code; o You have separated from service with the plan sponsor and the distribution is made in substantially equal periodic payments (at least annually) over your life or life expectancy or the joint lives or joint life expectancies of you and your designated beneficiary; o The distribution is due to an IRS levy upon your account. 408(B) IRAS. In general, except for the exception relating to separation from service with the plan sponsor at or after age 55, the exceptions listed above for 401 and 403(b) plans also apply to distributions from an IRA. The penalty tax is also waived on a distribution made from an IRA to pay for health insurance premiums for certain unemployed individuals or used for a qualified first-time home purchase or for qualified higher education expenses. Income Generation-133006 26 WITHHOLDING FOR FEDERAL INCOME TAX LIABILITY Any taxable distributions under the contract are generally subject to withholding. Federal income tax liability rates vary according to the type of distribution and the recipient's tax status. NONQUALIFIED CONTRACTS. Generally, you or a designated beneficiary may elect not to have tax withheld from distributions. 401 AND 403(B) PLANS. Generally, distributions from these plans are subject to a mandatory 20% federal income tax withholding. However, mandatory withholding will not be required if you elect a direct rollover of the distributions to an eligible retirement plan or in the case of certain distributions described in the Tax Code. 408(B) IRAS. Generally, you or a designated beneficiary may elect not to have tax withheld from distributions. NON-RESIDENT ALIENS. If you or a designated beneficiary is a non-resident alien, then any withholding is governed by Tax Code section 1441 based on the individual's citizenship, the country of domicile and treaty status. RULES SPECIFIC TO CERTAIN PLANS 401 PLANS. Tax Code section 401(a) permits certain employers to establish various types of retirement plans for employees, and permits self-employed individuals to establish various types of retirement plans for themselves and for their employees. These retirement plans may permit the purchase of the contracts to accumulate retirement savings under the plans. ASSIGNMENT OR TRANSFER OF CONTRACTS. Adverse tax consequences to the 401(a) plan and/or to you may result if your beneficial interest in the contract is assigned or transferred to persons other than: o A plan participant as a means to provide benefit payments; o An alternate payee under a qualified domestic relations order in accordance with Tax Code section 414(p); or o To the Company as collateral for a loan. EXCLUSION FROM GROSS INCOME. The Tax Code imposes a maximum limit on annual payments to your 401(a) account(s) that may be excluded from gross income. The employer must calculate this limit under the plan in accordance with Tax Code section 415. This limit is generally the lesser of 100% of your compensation or $41,000, subject to future indexing. Compensation means your compensation from the employer sponsoring the plan and, for years beginning after December 31, 1997, includes any elective deferrals under Tax Code section 402(g) and any amounts not includable in gross income under Tax Code sections 125 or 457. This limit applies to your contributions as well as any contributions made by your employer on your behalf. 403(B) PLANS. Under Tax Code section 403(b), contributions made by public school systems or nonprofit healthcare organizations and other Tax Code section 501(c)(3) tax exempt organizations to purchase annuity contracts for their employees are generally excludable from the gross income of the employee. >> Assignment or Transfer of Contracts. Adverse tax consequences to the plan and/or to you may result if your beneficial interest in the contract is assigned or transferred to any person except to an alternate payee under a qualified domestic relations order in accordance with Tax Code section 414(p). Income Generation-133006 27 >> Restrictions on Distributions. Tax Code section 403(b)(11) restricts the distribution under 403(b) contracts of the following: o Salary reduction contributions made after December 31, 1988; o Earnings on those contributions; and o Earnings during such period on amounts held as of December 31, 1988. Distribution of those amounts may only occur upon your death, attainment of age 59 1/2, separation from service, disability, or financial hardship. Income attributable to salary reduction contributions and credited on or after January 1, 1989 may not be distributed in the case of hardship. 401(K) AND 403(B) PLANS - ADDITIONAL PROVISIONS: An additional limit specifically limits your salary reduction contributions to a 401(k) or 403(b) plan to generally no more than $11,000 in 2002. This limit is scheduled to increase as follows: o $12,000 in 2003; o $13,000 in 2004; o $14,000 in 2005; o $15,000 in 2006. After 2006, contribution limits will be subject to indexing. Your own limit may be higher or lower, depending upon certain conditions. Payments to your account(s) will be excluded from your gross income only if the plan meets certain nondiscrimination requirements. CATCH-UP CONTRIBUTIONS. Notwithstanding the contribution limit provided for above, for any plan year beginning on or after January 1, 2002, a participant in a 401(k) or 403(b) plan who is at least age 50 by the end of the plan year may contribute an additional amount not to exceed the lesser of: o $1,000 as adjusted under Code Section 414(v)(2)(B) and (C) or o the participant's compensation for the year reduced by any other elective deferrals of the participant for the year. 408(B) IRAS. Tax Code section 408(b) permits eligible individuals to contribute to a traditional IRA on a pre-tax (deductible) basis. Employers may establish Simplified Employee Pension (SEP) plans and contribute to a traditional IRA owned by the employee. o Assignment or Transfer of Contracts. Adverse tax consequences may result if you assign or transfer your interest in the contract to persons other than your spouse incident to a divorce. o Rollovers and Transfers. Rollovers and direct transfers are permitted from a 401, 403(a), a 403(b) arrangement, or another traditional IRA to a traditional IRA. NONQUALIFIED CONTRACTS NON-NATURAL OWNERS OF A NONQUALIFIED CONTRACT. If you are not a natural person, a nonqualified contract generally is not treated as an annuity for income tax purposes and the income on the contract for the taxable year is currently taxable as ordinary income. This rule does not apply to an immediate annuity which is defined in the same way as for penalty tax purposes (see "10% Penalty Tax--Nonqualified Contracts" in this section) or to contracts held by a trust or other entity as agent for a natural person. Therefore, if you elect an increasing annuity or elect to receive an early withdrawal of all Income Generation-133006 28 or a portion of the value of any remaining payments, you should consult with a tax adviser to determinehow this will affect your tax liability. A non-natural person exempt from federal income taxes should consult with its tax adviser regarding treatment of income on the contract for purposes of the unrelated business income tax. DIVERSIFICATION Tax Code section 817(h) requires that in a nonqualified contract the investments of the funds be "adequately diversified" in accordance with Treasury Regulations in order for the contract to qualify as an annuity contract under federal tax law. The separate account, through the funds, intends to comply with the diversification requirements prescribed by the Treasury in Reg. Sec. 1.817-5, which affects how the funds' assets may be invested. Additionally, 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 owner from being considered the federal tax owner of a pro rata share of the assets of the separate account. ASSIGNMENT OF RIGHT TO PAYMENTS A transfer of a contract, the transfer of the right to payments under a nonqualified contract or the exchange of a contract may have tax consequences. Anyone contemplating any such assignment or exchange should contact a tax adviser regarding the potential tax effects of such a transaction. DELAY OF START DATE If you have elected to delay your annuity starting date, as defined below, and you die before the annuity starting date, specific rules for payment of any death benefit apply. The annuity starting date is defined by the Tax Code to mean the first day of the period (month, quarter, half year, year depending upon whether payments will be made monthly, quarterly, semi-annually or annually) which ends on the date of the first annuity payment. A delayed annuity starting date occurs any time a monthly payment begins later than one month, a quarterly payment begins later than three months or a semi-annual payment begins later than six months from date of purchase. For example, if you purchase the contract on June 1 with monthly payments to begin October 1, your annuity starting date is September 1, and would be considered a delayed annuity starting date. For nonqualified contracts, if you die before a delayed annuity starting date, the entire interest in the account must be paid within five years of the date of death, or payments may be made over the life or over a period not extending beyond the life expectancy of the designated beneficiary or payee, as applicable, provided such payments begin not later than one year after the date of death. This rule does not apply if the beneficiary or payee is your spouse. For qualified contracts, generally if your death occurs before the required beginning date, your interest in the account must be distributed by December 31 of the calendar year containing the fifth anniversary of the date of your death. However, if distributions begin by December 31 of the calendar year following Income Generation-133006 29 the calendar year of your death, then payments may be made over the life of the beneficiary or over a period not extending beyond the life expectancy of the beneficiary. For details regarding rules specific to your retirement plan, consult your tax adviser. OTHER TAX CONSEQUENCES As noted above, the foregoing comments about the federal tax consequences under the Contracts are not exhaustive, and special rules are provided with respect to other tax situations not discussed in this prospectus. Further, the federal income tax consequences discussed herein reflect our understanding of current law, and the law may change. Federal estate and state and local estate, inheritance and other tax consequences of ownership or receipt of distributions under a Contract depend on the individual circumstances of each contract owner or recipient of the distribution. A competent tax adviser should be consulted for further information. POSSIBLE CHANGES IN TAXATION Although the likelihood of legislative change is uncertain, there is always the possibility that the tax treatment of the Contracts could change by legislation or other means. It is also possible that any change could be retroactive (that is, effective before the date of the change). You should consult a tax adviser with respect to legislative developments and their effect on the Contract. FEDERAL INCOME TAX WITHHOLDING We will withhold and remit to the U.S. government a part of the taxable portion of each distribution made under a Contract unless the distributee notifies us at or before the time of the distribution that he or she elects not to have any amounts withheld. In certain circumstances, we may be required to withhold tax, as explained above. The withholding rates applicable to the taxable portion of periodic annuity payments (other than eligible rollover distributions) are the same as the withholding rates generally applicable to payments of wages. In addition, a 10% withholding rate applies to the taxable portion of non-periodic payments (including withdrawals prior to the annuity starting date) and conversions of, and rollovers from, non-Roth IRAs to Roth IRAs. Regardless of whether you elect not to have federal income tax withheld, you are still liable for payment of federal income tax on the taxable portion of the payment. As discussed above, the withholding rate applicable to eligible rollover distributions is 20%. 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. Income Generation-133006 30 In summary, we do not expect that we will incur any federal income tax liability attributable to the separate account and we do not intend to make any provision for such taxes. However, changes in federal tax laws and/or their interpretation may result in our being taxed on income or gains attributable to the separate account. In this case, we may impose a charge against the separate account (with respect to some or all of the contracts) to set aside provisions to pay such taxes. We may deduct this amount from the separate account, including from your account value invested in the subaccounts. - -------------------------------------------------------------------------------- OTHER TOPICS - -------------------------------------------------------------------------------- CONTRACT DISTRIBUTION 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 and the length of the payout period chosen. Selling firms may receive commissions of up to 6.0% of premium payments. In addition, selling firms may receive ongoing annual compensation of up to 4.5% of income payments under 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 6.0% 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. Income Generation-133006 31 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. PAYMENT DELAY OR SUSPENSION We reserve the right to suspend or postpone the date of any payment of benefits or values under the following circumstances: >> On any valuation date when the New York Stock Exchange is closed (except customary holidays or weekends) or when trading on the New York Stock Exchange is restricted; >> When an emergency exists as determined by the SEC so that disposal of the securities held in the subaccounts is not reasonably practicable or it is not reasonably practicable to determine the value of the subaccount's assets; or >> During any other periods the SEC permits for the protection of investors. The conditions under which restricted trading or an emergency exists shall be determined by the rules and regulations of the SEC. VOTING RIGHTS Each of the subaccounts holds shares in a fund and each is entitled to vote at regular and special meetings of that fund. Under our current view of applicable law, we will vote the shares for each subaccount as instructed by persons having a voting interest in the subaccount. We will vote shares for which instructions have not been received in the same proportion as those for which we received instructions. Each person who has a voting interest in the separate account will receive periodic reports relating to the funds in which he or she has an interest, as well as any proxy materials and a form on which to give voting instructions. Voting instructions will be solicited by a written communication at least 14 days before the meeting. The number of votes (including fractional votes) you are entitled to direct will be determined as of the record date set by any fund you invest in through the subaccounts. The number of votes is equal to the portion of reserves set aside for the contract's share of the fund, divided by the net asset value of one share of that fund. CONTRACT MODIFICATION We may change the contract as required by federal or state law or as otherwise permitted in the contract. In addition, we may, upon 30 days' written notice to the group contract owner, make other changes to a group contract that would apply only to individuals who become participants under that contract after the effective date of such changes. If a group contract owner does not agree to a change, we reserve the right to refuse to establish new accounts under the contract. Certain changes will require the approval of appropriate state or federal regulatory authorities. TRANSFER OF OWNERSHIP Ownership of the contract may be changed to the extent permitted by law. You should immediately notify the Company, in writing, of any change in ownership. No such ownership change will be binding until such notification is received and recorded at our Customer Service Center. We reserve the right to reject transfer of ownership to a non-natural person. A transfer of ownership may have tax consequences and you should consult with a qualified tax adviser before transferring ownership of the contract. Income Generation-133006 32 TRADING-INDUSTRY DEVELOPMENTS As with many financial services companies, the Company and affiliates of the Company have received requests for information from various governmental and self-regulatory agencies in connection with investigations related to trading in investment company shares. In each case, full cooperation and responses are being provided. The Company is also reviewing its policies and procedures in this area. LEGAL 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. 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, an independent registered public accounting firm, 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. Income Generation-133006 33 CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION The Statement of Additional Information (SAI) contains more specific information on the separate account and the contract, as well as the financial statements of the separate account and the Company. A list of the contents of the SAI is set forth below: General Information and History Variable Annuity Account B Offering and Purchase of Contracts Income Payments Sales Material and Advertising Independent Auditors Financial Statements of the Separate Account Financial Statements of ING USA Annuity and Life Insurance Company You may request an SAI by calling the Company at the number listed in "Contract Overview--Questions: Contacting the Company." APPENDIX I FIXED DOLLAR OPTION The following summarizes material information concerning the fixed dollar option. You may choose to allocate all or a portion of your purchase payment to the fixed dollar option. If you choose the fixed dollar option, your income payments will generally remain fixed as specified in your contract over the term of the contract. Your fixed payment may vary due to factors including your selection of an increasing annuity or your election and use of a right to withdraw. In certain cases, you may elect a right to withdraw any remaining guaranteed payments, (see "Withdrawals" in this appendix). Amounts allocated to the fixed dollar option are held in the Company's Fixed Account II, which is a segregated asset account of ING USA that supports annuity obligations. PAYMENT OPTIONS All of the payment options described under "Income Payments" in this prospectus are available for the fixed dollar option. If you allocate all of your purchase payment to the fixed dollar option, you may also elect one of the following features in connection with your fixed income payments: (A) A CASH REFUND FEATURE. (Only available if you select 100% fixed payments.) With this feature, if the annuitant or both annuitants (as applicable) die, then the beneficiary will receive a lump-sum payment equal to the purchase payment allocated to the fixed dollar option less any premium tax and less the total amount of fixed income payments paid prior to such death. The cash refund feature may be elected only with a "life income" or "life income-two lives" payment option that has no reduction in payment to the survivor, see "Income Payments--Payment Options." You may not elect a right to withdraw or elect an increasing annuity with this feature. (B) AN INCREASING ANNUITY. (Only available if you select 100% fixed payments.) With this feature you may elect for your payments to increase by either one, two, or three percent, compounded annually. The higher your percentage, the lower your initial payment will be. This is available with any payment option, except for those with a reduction in payment to the survivor, see "Income Payments--Payment Options." You may not elect a right to withdraw or elect the cash refund feature with an increasing annuity. FIXED INCOME PAYMENT AMOUNTS The amount of each payment depends upon (1) the premium payment that you allocate to the fixed dollar option, less any premium tax, and (2) the payment option and features chosen. WITHDRAWALS WITHDRAWAL VALUE. If you select a lifetime payment option with period certain or the non-lifetime payment option and elect the right to make withdrawals, the withdrawal amount available from any fixed portion of remaining period certain payments is equal to the present value of the remaining fixed portion of period certain payments calculated using the contract rate less any market value adjustment and less any applicable surrender charge. MARKET VALUE ADJUSTMENT The market value adjustment formula is: [(1+I)/(1+J+.005)]^(N/365)-1, where I is based on the index for the month the Contract is issued (or the date the certain period was last Income Generation-133006 I-1 changed under the Flexible Period Option, if later), based on the average of the Ask Yields for the U.S. Treasury Strips where the maturity is equal to the certain period divided by 2 and rounded up to the nearest whole number. J is based on the index for the month the withdrawal request is effective, similarly defined as in I, where the maturity is equal to the remaining certain period divided by 2 (to approximate an average remaining duration), rounded up to the nearest whole number. N is equal to the number of days remaining in the certain period divided by 2. SURRENDER CHARGE Withdrawals may be subject to a surrender charge. The charge is a percentage of the amount that you withdraw. The percentage will be determined by the following surrender charge schedule : ------------------------------------------------------------------- SCHEDULE ------------------------------------------------------------------- -------------------------------------- ---------------------------- NUMBER OF YEARS FROM SURRENDER CHARGE CONTRACT EFFECTIVE DATE* 1 or more, but fewer than 2 6% 2 or more, but fewer than 3 5% 3 or more, but fewer than 4 4% 4 or more, but fewer than 5 3% 5 or more, but fewer than 6 2% 6 or more, but fewer than 7 1% 7 or more 0% -------------------------------------- ---------------------------- The surrender charge, in effect, is a deferred sales charge imposed to reimburse the Company for unrecovered acquisition and distribution costs. REDUCTION OR ELIMINATION OF THE SURRENDER CHARGE. We may reduce or eliminate the surrender charge when sales of the contract are made to individuals or a group of individuals in such a manner that results in savings of sales expenses. The entitlement to such a reduction in the surrender charge will be based on one or more of the following criteria: (a) The size and type of group of individuals to whom the contract is offered; (b) The type and frequency of administrative and sales services to be provided; or (c) Whether there is a prior or existing relationship with the Company such as being an employee or former employee of the Company or one of its affiliate; receiving distributions or making internal transfers from other contracts issued by the Company or one of its affiliates; or making transfers of amounts held under qualified plans sponsored by the Company or an affiliate. Any reduction or elimination of the surrender charge will not be unfairly discriminatory against any person. DEATH BENEFIT If the annuitant or both annuitants, as applicable, die before all guaranteed payments are paid, payments will continue to the beneficiary in the manner stated in your contract. PAYMENT OF DEATH BENEFIT. Any death benefit will be paid in the form specified in the Contract and will be distributed at least as rapidly as under the method of distribution in effect upon the date of death. See "Taxation" for rules that apply if you have elected to delay your payment start date under a Income Generation-133006 I-2 nonqualified annuity and you die before the annuity starting date. A lump-sum payment of any death benefit may be requested within six months following the date of death. If a lump-sum payment is requested, no surrender charge is applied and payment will be sent within seven days following our receipt of request in good order. A lump-sum payment may be requested at anytime (even after the six month period) if you had elected the right to withdraw. If a cash refund feature was elected, the death benefit will be paid in one lump sum to the beneficiary. Unless you elect otherwise, the payment will be made into an interest bearing account, backed by our general account, that is accessed by the beneficiary through a checkbook feature. The beneficiary may access death benefit proceeds at any time without penalty. Interest earned on this account may be less than interest paid on other settlement options. If the contract owner who is not the annuitant dies, income payments will continue to be paid to the payee in the form specified in the contract. If no payee survives the death of the contract owner, income payments will be made to the annuitant. Such payments will be paid at least as rapidly as under the method of distribution then in effect. DEATH BENEFIT AMOUNT. If you elect a right to withdraw, the death benefit value will be determined as described under "Withdrawal Amount" in this appendix. No surrender charge will apply. If the contract is issued with period certain and with no right to withdraw, the rate used to determine the value of the remaining period certain payments will be the fixed annuity present value interest rate shown in the contract. The value of the death benefit will be determined as of the next valuation following the Company's receipt at its Customer Service Center of proof of death acceptable to us and a request for payment in good order. Income Generation-133006 I-3 APPENDIX II 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.
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 objective by investing, normally, at least 80% of its INVESTMENT ADVISER: Directed Services, Inc. assets in equity securities of mid-capitalization companies. INVESTMENT SUBADVISER: A I M Capital Management, Inc. - ----------------------------------------------------------------- ------------------------------------------------------------- - ----------------------------------------------------------------- ------------------------------------------------------------- ING ALLIANCE MID CAP GROWTH PORTFOLIO Seeks long-term total return. The Portfolio invests (Class S) primarily in common stocks of middle capitalization companies. The Portfolio normally invests substantially all INVESTMENT ADVISER: Directed Services, Inc. of its assets in high-quality common stocks that Alliance INVESTMENT SUBADVISER: Alliance Capital Management, L.P. expects to increase in value. - ----------------------------------------------------------------- ------------------------------------------------------------- Income Generation-133006 II-1 - ----------------------------------------------------------------- ------------------------------------------------------------ ING AMERICAN FUNDS GROWTH PORTFOLIO Seeks to make your investment grow. The Portfolio operates as a "feeder fund" which invests all of its INVESTMENT ADVISER: ING Investments, LLC assets in the "master fund" which is Class 2 shares of the INVESTMENT SUBADVISER: Capital Research and Management Growth Fund, a series of American Funds Insurance Series(R), Company 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 income over time. The Portfolio operates as a "feeder fund" which INVESTMENT ADVISER: ING Investments, LLC invests all of its assets in the "master fund", which is Class 2 INVESSTMENT SUBADVISER: Capital Research and Management shares of the Growth-Income Fun, a series of American Funds Company Insurance Series(R), a registered open-end investment company. The master fund invests primarily in common stocks or other securities which demonstrate the potential for appreciation and/or dividends. The Growth-Income Fund is designed for investors seeking both capital appreciation and income. - ----------------------------------------------------------------- ------------------------------------------------------------ - ----------------------------------------------------------------- ------------------------------------------------------------ ING AMERICAN FUNDS INTERNATIONAL PORTFOLIO Seeks to make your investment grow over time. The Portfolio operates as a "feeder fund" which invests all of its assets INVESTMENT ADVISER: ING Investments, LLC in the "master fund" which is Class 2 shares of the INVESTMENT SUBADVISER: Capital Research and Management 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 (Class S) Portfolio Manager seeks to achieve the Portfolio's INVESTMENT ADVISER: Directed Services, Inc. investment objective by investing, under normal market INVESTMENT ADVISER: Directed Services, Inc. conditions, at least 80% of its assets in equity and INVESTMENT SUBADVISER: Capital Guaradian Trust Company 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 diversified. The Portfolio invests primarily in common INVESTMENT ADVISER: Directed Services, Inc. stocks traded in securities markets throughout the world. The INVESTMENT SUBADVISER: Capital Guardian Trust Company 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.----------------------- - ----------------------------------------------------------------- ------------------------------------------------------------- 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 capitalization ("small-cap") companies. INVESTMENT ADVISER: Directed Services, Inc. INVESTMENT SUBADVISER: Capital Guardian Trust Company - ----------------------------------------------------------------- ------------------------------------------------------------- - ----------------------------------------------------------------- ------------------------------------------------------------- ING DEVELOPING WORLD PORTFOLIO (Class S) Seeks capital appreciation. The Portfolio normally invests at least 80% of its assets in securities of issuers located INVESTMENT ADVISER: Directed Services, Inc. in at least three countries with emerging securities INVESTMENT SUBADVISER: ING Investment Manager Advisors markets. The Portfolio may invest up to 20% of its assets Advisors B.V. in securities of U.S. and other developed market issuers, including investment-grade debt securities of U.S. issuers. - ----------------------------------------------------------------- ------------------------------------------------------------- Income Generation-133006 II-2 - ----------------------------------------------------------------- ------------------------------------------------------------- ING EAGLE ASSET CAPITAL APPRECIATION PORTFOLIO Seeks capital appreciation. Dividend income is a secondary (Class S) objective. The Portfolio normally invests at least 80% of its assets in equity securities of domestic and foreign INVESTMENT ADVISER: Directed Services, Inc. issuers that meet quantitative standards relating to INVESTMENT SUBADVISER: Eagle Asset Management, Inc. 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. The Portfolio may invest in securities of relatively INVESTMENT SUBADVISER: Evergreen Investment Management well-known and large companies as well as small- and Co., Inc. 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. common stocks of U.S. companies across all market INVESTMENT SUBADVISER: Evergreen Investment Management Co., capitalizations. The Portfolio may temporarily invest up Inc. 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 stocks. The Portfolio Manager normally invests at least INVESTMENT ADVISER: Directed Services, Inc. 80% of the Portfolio's assets in securities of companies INVESTMENT SUBADVISER: Fidelity Management & Research Co. with medium market capitalizations. - ----------------------------------------------------------------- ------------------------------------------------------------- - ----------------------------------------------------------------- ------------------------------------------------------------- ING GOLDMAN SACHS TOLLKEEPERSM PORTFOLIO* Seeks long-term growth of capital. The Portfolio invests, (Class S) under normal circumstances, at least 80% of its net assets plus any borrowings for investment purposes (measured at * Goldman Sachs Internet Tollkeeper (SM) is a service mark of time of investment) in equity investments in "Tollkeeper Goldman Sachs & Co. companies, which are high-quality technology, media, or service companies that adopt or use technology to improve INVESTMENT ADVISER: Directed Services, Inc. cost structure, revenue opportunities or competitive INVESTMENT SUBADVISER: Goldman Sachs Asset Management, L.P. advantage. The Portfolio seeks to achieve its investment objective by investing in equity investments of companies that the Portfolio Manager believes are well-positioned to benefit from the proliferation of technology. - ----------------------------------------------------------------- ------------------------------------------------------------- - ----------------------------------------------------------------- ------------------------------------------------------------- ING HARD ASSETS PORTFOLIO (Class S) A NONDIVERSIFIED Portfolio that seeks long-term capital appreciation. The Portfolio normally invests at least 80% INVESTMENT ADVISER: Directed Services, Inc. of its assets in the equities of producers of commodities. INVESTMENT SUBADVISER: Baring International Investment Limited - ----------------------------------------------------------------- ------------------------------------------------------------- - ----------------------------------------------------------------- ------------------------------------------------------------- ING INTERNATIONAL PORTFOLIO (Class S) Seeks long-term growth of capital. Under normal conditions, the Portfolio invests at least 80% of its net assets and INVESTMENT ADVISER: Directed Services, Inc. borrowings for investment purposes in equity securities of INVESTMENT SUBADVISER: Aeltus Investment Management, Inc. issuers located in countries outside of the United States. - ----------------------------------------------------------------- ------------------------------------------------------------- Income Generation-133006 II-3 - ----------------------------------------------------------------- ------------------------------------------------------------- ING JANUS SPECIAL EQUITY PORTFOLIO (Class S) A NONDIVERSIFIED Portfolio that seeks capital INVESTMENT ADVISER: Directed Services, Inc. appreciation. The Portfolio invests, under normal INVESTMENT SUBADVISER: Janus Capital Management, LLC circumstances, at least 80% of its net assets (plus borrowings for investment purposes) in equity securities with the potential for lon. - ----------------------------------------------------------------- ------------------------------------------------------------- - ----------------------------------------------------------------- ------------------------------------------------------------- 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 for investment purposes) in attractively valued equity INVESTMENT ADVISER: Directed Services, Inc. securities of companies with current or emerging earnings INVESTMENT SUBADVISER: Jennison Associates, growth the Portfolio Manager believes to be not fully LLC 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 equity securities of small-cap companies. INVESTMENT ADVISER: Directed Services, Inc. INVESTMENT SUBADVISER: J.P. Morgan Investment Management Inc. - ----------------------------------------------------------------- ------------------------------------------------------------- - ----------------------------------------------------------------- ------------------------------------------------------------- ING JULIUS BAER FOREIGN PORTFOLIO (Class S) Seeks long-term growth of capital. The Portfolio, under normal circumstances, invests in a wide variety of INVESTMENT ADVISER: Directed Services, Inc. international equity securities issued through the world, INVESTMENT SUBADVISER: Julius Baer Investment Management, normally excluding the United States. The Portfolio LLC. 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. - ------------------------------------------------------------------------------------------------------------------------------- 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. - ------------------------------------------------------------------------------------------------------------------------------- Income Generation-133006 II-4 NG 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 preservation of capital and liquidity. The Portfolio INVESTMENT ADVISER: Directed Services, Inc. Manager strives to maintain a stable $1 per share net asset INVESTMENT SUBADVISER: Aeltus Investment Management, Inc. 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 in equity securities selected for their growth INVESTMENT ADVISER: Directed Services, Inc. potential. The Portfolio may invest in companies of any INVESTMENT SUBADVISER: Marsico Capital Management, LLC 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 primarily in a diversified portfolio consisting of equity INVESTMENT ADVISER: Directed Services, Inc. securities that the Portfolio Manager believes are INVESTMENT SUBADVISER: Mercury Advisors undervalued relative to its assessment of the current or prospective condition of the issuer. - ----------------------------------------------------------------- ------------------------------------------------------------- - ----------------------------------------------------------------- ------------------------------------------------------------- ING MERCURY LARGE CAP GROWTH PORTFOLIO Seeks long-term growth of capital. The Portfolio invests at (Class S) least 80% of its assets in equity securities of large capitalization companies. The Portfolio will provide INVESTMENT ADVISER: Directed Services, Inc. shareholders with at last 60 days' prior notice of any INVESTMENT SUBADVISER: Mercury Advisors changes in this investment strategy. The Portfolio will invest primarily in equity securities of companies located in the United States that the Portfolio Manager believes have good prospects for earnings growth. - ----------------------------------------------------------------- ------------------------------------------------------------- - ----------------------------------------------------------------- ------------------------------------------------------------- ING MFS MID CAP GROWTH PORTFOLIO (Class S) A NONDIVERSIFIED Portfolio that seeks long-term growth of capital. The Portfolio normally invests at least 80% of INVESTMENT ADVISER: Directed Services, Inc. its net assets in common stocks and related securities INVESTMENT SUBADVISER: Massachusetts Financial Services (such as preferred stocks, convertible securities and Company depositary receipts) of companies with medium market capitalizations (or "mid-cap companies") which the Portfolio Manager believes have above-average growth potential. - ----------------------------------------------------------------- ------------------------------------------------------------- - ----------------------------------------------------------------- ------------------------------------------------------------- ING OPPENHEIMER MAIN STREET CORE PORTFOLIO (Class S) Seeks long-term growth of capital and future income. The Portfolio normally invests at least 80% of its net assets INVESTMENT ADVISER: Directed Services, Inc. in common stocks and related securities (such as preferred INVESTMENT SUBADVISER: Oppenheimers Funds, Inc. stocks, convertible securities and depositary receipts). - ----------------------------------------------------------------- ------------------------------------------------------------- - ----------------------------------------------------------------- ------------------------------------------------------------- ING MFS TOTAL RETURN PORTFOLIO (Class S) Seeks above-average income (compared to a portfolio entirely invested in equity securities) consistent with the INVESTMENT ADVISER: Directed Services, Inc. prudent employment of capital. Secondarily seeks reasonable INVESTMENT SUBADVISER: Massachusetts Financial Services opportunity for growth of capital and income. The Company Portfolio invests in a combination of equity and fixed income securities. - ----------------------------------------------------------------- ------------------------------------------------------------- - ----------------------------------------------------------------- ------------------------------------------------------------- ING MFS TOTAL RETURN PORTFOLIO (Class S) Seeks above-average income (compared to a portfolio entirely invested in equity securities) consistent with the INVESTMENT ADVISER: Directed Services, Inc. prudent employment of capital. Secondarily seeks reasonable INVESTMENT SUBADVISER: Massachusetts Financial Services opportunity for growth of capital and income. The Company Portfolio invests in a combination of equity and fixed income securities. - ----------------------------------------------------------------- ------------------------------------------------------------- Income Generation-133006 II-5 - ----------------------------------------------------------------- ------------------------------------------------------------- ING PIMCO HIGH YIELD PORTFOLIO (Class S) Seeks maximum total return, consistent with preservation of 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 believes have above-average capital appreciation INVESTMENT ADVISER: Directed Services, Inc. potential. The Portfolio invests primarily in common INVESTMENT SUBADVISER: Salomon Brothers Asset Management, stocks and common stock equivalents, such as preferred Inc. 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 securities of U.S. companies. The Portfolio may also INVESTMENT ADVISER: Directed Services, Inc. invest in other equity securities. To a lesser degree, the INVESTMENT SUBADVISER: Salomon Brothers Asset Management, Portfolio invests in income producing securities such as Inc. 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 risk. The Portfolio pursues an active asset INVESTMENT ADVISER: Directed Services, Inc. allocation strategy whereby investments are allocated among INVESTMENT SUBADVISER: T. Rowe Price Associates, Inc. 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 80% of its assets in common stocks, with 65% in the common INVESTMENT ADVISER: Directed Services, Inc. stocks of well-established companies paying above-average INVESTMENT SUBADVISER: T. Rowe Price Associates, Inc. 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. - ------------------------------------------------------------------------------------------------------------------------------- ING UBS U.S. BALANCED PORTFOLIO (Class S) Seeks to maximize total return over the long term by allocating its assets among stocks, bonds, short-term INVESTMENT ADVISER: Directed Services, Inc. instruments and other investments. The Portfolio Manager INVESTMENT SUBADVISER: UBS Global Asset Management allocates the Portfolio's assets among the following (Americas) Inc. 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 (Class S) Manager seeks to maximize long-term capital appreciation by investing primarily in growth-oriented equity securities of INVESTMENT ADVISER: Directed Services, Inc. large-capitalization U.S. and, to a limited extent, foreign INVESTMENT SUBADVISER: Van Kampen companies that are listed on U.S. exchanges or traded in U.S. markets. Income Generation-133006 II-6 - ------------------------------------------------------------------------------------------------------------------------------- ING VAN KAMPEN GLOBAL FRANCHISE PORTFOLIO A NONDIVERSIFIED Portfolio that seeks long-term capital (Class S) appreciation. The Portfolio Manager invests primarily in 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 the Portfolio's investment objective by investing primarily INVESTMENT ADVISER: Directed Services, Inc. in what it believes to be income-producing equity INVESTMENT SUBADVISER: Van Kampen 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 least 80% of its assets in equity securities of companies INVESTMENT ADVISER: Directed Services, Inc. in the U.S. real estate industry that are listed on INVESTMENT SUBADVISER: Van Kampen 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 foreign companies that the subadviser believes have high INVESTMENT ADVISER: ING Life Insurance and Annuity growth potential. Will normally invest in securities of at Company least three different countries other than the U.S. and INVESTMENT SUBADVISER: J.P. Morgan Fleming Asset will invest in both developed and developing markets. Management (London) Ltd. - ----------------------------------------------------------------- ------------------------------------------------------------- - ----------------------------------------------------------------- ------------------------------------------------------------- ING SALOMON BROTHERS AGGRESSIVE GROWTH PORTFOLIO (Service Class) Seeks long-term growth of capital. Invests primarily (at least 80% of net assets under normal circumstances) in INVESTMENT ADVISER: ING Life Insurance and Annuity common stocks and related securities, such as preferred Company stocks, convertible securities and depositary receipts, of INVESTMENT SUBADVISER: Salomon Brothers emerging growth companies. Asset Management Inc. - ----------------------------------------------------------------- ------------------------------------------------------------- - ----------------------------------------------------------------- ------------------------------------------------------------- ING VARIABLE INSURANCE TRUST 7337 E. Doubletree Ranch Road, Scottsdale, AZ 85258 - ----------------------------------------------------------------- ------------------------------------------------------------- - ----------------------------------------------------------------- ------------------------------------------------------------- ING VP WORLDWIDE GROWTH PORTFOLIO Seeks long-term capital appreciation. A nondiversified Portfolio that under normal conditions, invests at least INVESTMENT ADVISER: ING Investments, LLC 65% of net assets in equity securities of issuers located INVESTMENT SUBADVISER: ING Investment Management Co. 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 Index), while maintaining a market level of risk. Invests INVESTMENT ADVISER: ING Investments, LLC at least 80% of assets in stocks included in the S&P 500 INVESTMENT SUBADVISER: ING Investment Management Co. 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. - ----------------------------------------------------------------- ------------------------------------------------------------- Income Generation-133006 II-7 - ----------------------------------------------------------------- ------------------------------------------------------------- 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 80% of assets in stocks included in the S&P MidCap 400 INVESTMENT SUBADVISER: INGInvestment Management, Co . 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: ING Investment Management Co. 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. - ----------------------------------------------------------------- ------------------------------------------------------------- - ----------------------------------------------------------------- ------------------------------------------------------------- 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 (Class S) at least 80% of assets in the common stocks of mid-sized U.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, lesser-known U.S. companies that are believed to have above INVESTMENT ADVISER: ING Investments, LLC average prospects for growth. For this Portfolio, smaller companies are those with market capitalizations that fall within the range of companies in the Russell 200 Index - ----------------------------------------------------------------- ------------------------------------------------------------- ING VP INTERMEDIATE BOND PORTFOLIO - ----------------------------------------------------------------- ------------------------------------------------------------- Income Generation-133006 II-8 - ----------------------------------------------------------------- ------------------------------------------------------------- ING VP INTERMEDIATE BOND PORTFOLIO (Class S) Seeks to maximize total return as is consistent with reasonable risk, through investment in a diversified INVESTMENT ADVISER: ING Investments, LLC portfolio consisting of investment-grade corporate bonds, INVESTMENT SUBADVISER: ING Investment Management Co. 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 likely to benefit from changing demographic, economic and INVESTMENT ADVISER: A I M Advisors, Inc. lifestyle trends. These securities may include common INVESTMENT SUBADVISER: H.S. Dent Advisors, Inc. stocks, convertible bonds, convertible preferred stocks and warrants of companies within a broad range of market capitalizations. - ----------------------------------------------------------------- ------------------------------------------------------------- - ----------------------------------------------------------------- ------------------------------------------------------------- NVESCO 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. - ------------------------------------------------------------------------------------------------------------------------------- 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 exceeds the composite yield on the securities comprising INVESTMENT ADVISER: Fidelity Management & Research Co. the Standard & Poor's 500SM Index. Normally invests at INVESTMENT SUBADVISER: FMR Co., Inc. least 80% of total assets in income-producing equity securities (which tends to lead to investments in large cap "value" stocks). - ----------------------------------------------------------------- ------------------------------------------------------------- - ----------------------------------------------------------------- ------------------------------------------------------------- FIDELITY(R)VIP GROWTH PORTFOLIO (Service Class 2) Seeks to achieve capital appreciation. Normally invests primarily in common stocks of companies, investing in both INVESTMENT ADVISER: Fidelity Management & Research Co. domestic and foreign issuers. Invests in either "growth" INVESTMENT SUBADVISER: FMR Co., Inc. stocks or "value" stocks or both. - ----------------------------------------------------------------- ------------------------------------------------------------- Income Generation-133006 II-9 - ----------------------------------------------------------------- ------------------------------------------------------------- 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 broad list of carefully selected, reasonably priced INVESTMENT ADVISER: Pioneer Investment Management, Inc. 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. - ----------------------------------------------------------------- ------------------------------------------------------------- - ----------------------------------------------------------------- ------------------------------------------------------------- PIONEER MID CAP VALUE VCT PORTFOLIO (Class II) Seeks capital appreciation by investing in a diversified portfolio of securities consisting primarily of common INVESTMENT ADVISER: Pioneer Investment Management, Inc. 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, that correspond to the daily performance of the S&P 500 INVESTMENT ADVISER: ProFund Advisors LLC 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, that correspond to one and one-quarter times (125%) the INVESTMENT ADVISER: ProFund Advisors LLC 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, that correspond to the daily performance of the Russell INVESTMENT ADVISER: ProFund Advisors LLC 2000 Index. - ----------------------------------------------------------------- ------------------------------------------------------------- - ----------------------------------------------------------------- ------------------------------------------------------------- PRUDENTIAL SERIES FUND, INC. 751 Broad Street, Newark, NJ 07102 - ----------------------------------------------------------------- ------------------------------------------------------------- Income Generation-133006 II-10 - ----------------------------------------------------------------- ------------------------------------------------------------- JENNISON PORTFOLIO (Class II) Seeks to achieve long-term growth of capital. Invests primarily in equity securities of major, established INVESTMENT ADVISER: Prudential Investments corporations that the investment adviser believes offer LLC above-average growth prospects. May invest up to 30% of INVESTMENT SUBADVISER: Jennison Associates total assets in foreign securities. Normally invests 65% of LLC 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 subadviser thinks will increase in value over a period of INVESTMENT ADVISER: Prudential Investments LLC years. Invests primarily in the common stock of large and INVESTMENT SUBADVISER: William Blair & Company LLC 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 Aggressive Growth ING JP Morgan Fleming International Portfolio ING Salomon Brothers All Cap Portfolio ING Julius Baer Foreign Portfolio ING Salomon Brothers Investors Portfolio ING Legg Mason Value Portfolio ING VP Intermediate Bond Portfolio ING Liquid Asset Portfolio ING VP Growth Portfolio ING Marsico Growth Portfolio ING VP Index Plus MidCap Portfolio ING PIMCO Core Bond Portfolio ING VP Index Plus SmallCap Portfolio ING PIMCO High Yield Portfolio ING VP Small Company Portfolio
Income Generation-133006 II-11
ING AIM Mid Cap Growth Portfolio ING PIMCO Core Bond Portfolio ING Alger Aggressive Growth Portfolio ING PIMCO High Yield Portfolio ING Alger Growth Portfolio ING Salomon Brothers Aggressive Growth Portfolio ING Alliance Mid Cap Growth Portfolio ING Salomon Brothers All Cap Portfolio ING American Century SmallCap Value Portfolio ING Salomon Brothers Investors Portfolio ING Baron SmallCap Growth Portfolio ING T. Rowe Price Growth Equity Portfolio ING Capital Guardian Large Cap Value Portfolio ING T. Rowe Price Capital Appreciation Portfolio ING Capital Guardian Managed Global Portfolio ING T. Rowe Price Equity Income Portfolio ING Capital Guardian Small Cap Portfolio ING UBS U.S. Balanced Portfolio ING Eagle Asset Value Equity Portfolio ING UBS U.S. Large Cap Equity Portfolio ING Evergreen Omega Portfolio ING Van Kampen Comstock Portfolio ING FMR Diversified Mid Cap Portfolio ING Van Kampen Equity Growth Portfolio ING International Portfolio ING Van Kampen Global Franchise Portfolio ING Janus Special Equity Portfolio ING Van Kampen Growth and Income Portfolio ING Jennison Equity Opportunities Portfolio ING VP Balanced Portfolio ING JPMorgan Fleming International Portfolio ING VP Bond Portfolio ING JPMorgan Small Cap Equity Portfolio ING VP Growth & Income Portfolio ING JP Morgan MidCap Value Portfolio ING VP Growth Portfolio ING Julius Baer Foreign Portfolio ING VP Index Plus LargeCap Portfolio ING Legg Mason Value Portfolio ING VP Index Plus MidCap Portfolio ING Liquid Asset Portfolio ING VP Index Plus SmallCap Portfolio ING Marscico Growth Portfolio ING VP MidCap Opportunities Portfolio ING Mercury Focus Value Portfolio ING VP Small Company Portfolio ING MFS Capital Opportunities Portfolio ING VP SmallCap Opportunities Portfolio ING MFS Mid Cap Growth Portfolio ING VP Value Opportunity Portfolio ING MFS Research Portfolio ING VP Worldwide Growth Portfolio ING MFS Total Return Portfolio ING OpCap Balanced Value Portfolio
THE PROSPECTUS FOR THE ING LIFESTYLE PORTFOLIO CONTAINS INFORMATION ABOUT THE UNDERLYING PORTFOLIOS INCLUDED IN THE ING LIFESTYLE PORTFOLIO. Income Generation-133006 II-12 APPENDIX III FUNDS NOT AVAILABLE WITH GUARANTEED MINIMUM INCOME FEATURE The following portfolios are not available as investment options under your Contract when the Guaranteed Minimum Income Feature is in effect: AIM V.I. Dent Demographic Trends Fund ING Alliance Mid Cap Growth Portfolio ING Capital Guardian Large Cap Value Portfolio ING Eagle Asset Capital Appreciation Portfolio ING Goldman Sachs Tollkeeper (SM) Portfolio ING Mercury Focus Value Portfolio ING MFS Mid Cap Growth Portfolio ING Oppenheimer Main Street Core Portfolio ING Salomon Brothers Investors Portfolio ING VP MidCap Opportunities Portfolio Jennison Portfolio ProFund VP Europe 30 ProFund VP Rising Rates Opportunity PART B STATEMENT OF ADDITIONAL INFORMATION GOLDENSELECT INCOME GENERATION SINGLE PREMIUM IMMEDIATE 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) Single Premium Immediate Combination Variable and Fixed 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: [ ], 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 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 1-33 Audited statutory basis financial statements for the years ended December 31, 2003 and 2002, for USG Annuity & Life Company, including Report of Independent Auditors. 99.3 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. 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. (12) (4)(a) Single Premium Immediate Fixed and Variable Annuity Contract. (b) Single Premium Immediate Fixed and Variable Annuity Group Master Contract (c) Single Premium Immediate Fixed and Variable Annuity Certificate. (d) Guaranteed Minimum Income Rider. (e) Simple Retirement Annuity Rider. (9) (f) 403(b) Retirement Annuity Rider. (5)(a) Single Premium Immediate Annuity Customer Data Form. (6)(a) Amended and Restated Articles of Incorporation of ING USA Annuity and Life Insurance Company, dated (01/01/04). (11) (b) Amended and Restated By-Laws of ING USA annuity and Life Insurance Company, dated (01/01/04). (11) (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). (11) (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. (4) (e) Amendment to the Participation Agreement between Golden American and The Prudential Series Fund, Inc. (5) (f) Form of Participation Agreement between Golden American and ProFunds. (6) (g) Form of Services Agreement among Golden American Life Insurance Company and ING affiliated Insurance Companies. (7) (h) Form of Services Agreement between Golden American Life Insurance Company and ING North American Insurance Corporation, Inc. (7) (i) Form of Shared Services Center Agreement among ING North American Insurance Corporation, Inc. and ING affiliated Insurance Companies. (7) (j) Participation Agreement between Golden American and ING Variable Products Trust. (8) (k) Participation Agreement between Golden American and ING Variable Insurance Trust. (8) (l) Participation Agreement between Golden American and AIM Variable Insurance Funds, Inc. (8) (m) Participation Agreement between Golden American and INVESCO Variable Investment Funds, Inc. (8) (n) Participation Agreement between Golden American and Pioneer Variable Contracts Trust. (8) (o) Participation Agreement between Golden American and Fidelity Distributors Corporation. (8) (p) Form of Participation Agreement between Golden American, American Funds Insurance Series and Capital Research and Management Company. (10) (9) Opinion and Consent of James Shuchart. (10)(a) Consent of Independent Registered Public Accounting Firm. - to be filed by amendment. (b) Consent of James Shuchart, incorporated in Item 9 of this Part C, together with the Opinion of James Shuchart. (11) Not applicable. (12) Not applicable. (13) Not applicable. (14) Not applicable. (15) Powers of Attorney. - ------------------------------- 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 by reference 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. 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). 5) 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). 6) 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). 7) 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). 8) 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). 9) 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). 10) 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). 11) 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). 12) 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). 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 Roger W. Fisher ING Insurance Operations Vice President and Chief 5780 Powers Ferry Road Accounting Officer Atlanta, GA 30327-4390 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 August 31, 2004, there are 194,991 qualified contract owners and 188,463 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 Terrence O. Davis Secretary and General Counsel (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, Separate Account B, has duly caused this Registration Statement to be signed on its behalf in the City of West Chester, Commonwealth of Pennsylvania, on the 8th day of September, 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 Registration Statement has been signed by the following persons in the capacities indicated on September 8th, 2004. Signature Title - --------- ----- President and Director - -------------------- (principle executive officer) Keith Gubbay* Chief Accounting Officer - -------------------- Roger W. Fisher* DIRECTORS - ---------------------- David A. Wheat* Chief Financial 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 # - ---- ------- ------ 4(a) Single Premium Immediate Fixed and Variable Annuity Contract EX-99.B4A 4(b) Single Premium Immediate Fixed and Variable Annuity Group Master Contract EX-99.B4B 4(c) Single Premium Immediate Fixed and Variable Annuity Certificate EX-99.B4C 4(d) Guaranteed Minimum Income Rider EX-99.B4D 4(f) 403(b) Retirement Annuity Rider EX-99.B4F 5(a) Single Premium Immediate Annuity Customer Data Form EX-99.B5A 9 Opinion and Consent of James Shuchart EX-99.B9 15 Power of Attorney EX-99.15 EX-99.B4A 2 iuia-contract.txt SINGLE PREMIUM IMM. FIXED & VA CONTRACT ING USA SINGLE PREMIUM IMMEDIATE ANNUITY AND LIFE FIXED AND VARIABLE ANNUITY INSURANCE COMPANY CONTRACT ING USA is a stock company domiciled in Iowa - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Annuitant Owner [THOMAS J. DOE] [JOHN Q. DOE] - ------------------------------------------------------------------------------- Initial Premium Annuity Option Contract Date [$10,000] [20-YEAR PERIOD CERTAIN] [JANUARY 1, 2004] - ------------------------------------------------------------------------------- Separate Account(s) Contract Number [SEPARATE ACCOUNT B] [123456] - ------------------------------------------------------------------------------- This is a legal Contract between its Owner and us. Please read it carefully. We, our or us refers to ING USA Annuity and Life Insurance Company. If this Contract is in force and the Annuitant is living, we will make the Fixed Annuity Payments or Variable Annuity Payments, or a combination thereof, under the Annuity Option elected by you beginning on the First Annuity Payment Date shown in the Schedule. All payments and values, when based on the investment experience of the variable separate account, may increase or decrease in dollar amount, depending on the contract's investment results. Amounts withdrawn from any portion of the contract representing fixed payments may be subject to a market value adjustment, the operation of which may cause such amounts to increase or decrease. RIGHT TO EXAMINE THIS CONTRACT: You may return this contract to us or the agent through whom you purchased it within 10 days after you receive it. If so returned, we will treat the contract as though it were never issued. Upon receipt we will promptly refund the premium paid, plus any charges we have deducted, plus any increase or minus any decrease in the value of amounts allocated to the separate account as of the date the returned contract is received by us. Secretary: Customer Service Center Paula Cludray Engelke [P.O. Box 9271 Des Moines, IA 50306-9271 1-800-366-0066] President: Keith Gubbay - -------------------------------------------------------------------------------- SINGLE PREMIUM IMMEDIATE FIXED AND VARIABLE ANNUITY CONTRACT - NO DIVIDENDS Non-participating. Investment results reflected in values. IU-IA-3000 CONTRACT CONTENTS - -------------------------------------------------------------------------------- SCHEDULE OF BENEFITS...........................................3 IMPORTANT TERMS................................................4 GENERAL PROVISIONS.............................................6 The Contract The Owner The Beneficiary Change of Owner or Beneficiary Single Premium Payment Premium Taxes Market Value Adjustments DEATH BENEFIT PROVISIONS.......................................8 Death of Contract Owner Prior to the First Annuity Payment Date Spousal Continuation upon Death of owner Death After the First Annuity Payment Date Death of Annuitant Death of Contract Owner How to Claim Payments to Beneficiary VARIABLE ANNUITY PROVISIONS....................................9 The Variable Separate Account Variable Separate Account Divisions Changes Within the Variable Separate Account Variable Annuity Payments Annuity Unit Value Net Return Factor Deductions from the Variable Separate Account Divisions Mortality and Expense Risk Charges and Administrative Expenses Redemption Fees Your Right to Make Allocation Changes OTHER IMPORTANT INFORMATION...............................................12 Sending Notice to Us Reports to Owner Assignment - Using this Contract as Collateral Security Contract Changes - Applicable Tax Law Misstatement of Age or Sex Non-Participating Contestability Authority to Make Agreements Required Note on Our Computations Payments We May Defer Surrender/Loan Value Copies of any additional Riders and Endorsements are at the back of this Contract. THE SCHEDULE The Schedule gives specific facts about this Contract and its coverage. Please refer to the Schedule while reading this Contract. IU-IA-3000 2 SCHEDULE OF BENEFITS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Annuitant Owner [THOMAS J. DOE] [THOMAS J. DOE] - -------------------------------------------------------------------------------- Annuitant's Issue Age Annuitant's Sex Owner's Issue Age [55] [MALE] [55] - -------------------------------------------------------------------------------- Premium Annuity Option Residence Status [$10,000] [20-YEAR PERIOD CERTAIN] [IOWA] - -------------------------------------------------------------------------------- Contract Date First Annuity Payment Date Payment Mode [JANUARY 1, 2004] [FEBRUARY 1, 2004] [MONTHLY] - -------------------------------------------------------------------------------- Separate Account(s) [SEPARATE ACCOUNT B] - -------------------------------------------------------------------------------- ANNUITY OPTION: [ 20 -YEAR PERIOD CERTAIN ANNUITY] Annuity payments will begin on the First Annuity Payment Date shown above if the Annuitant is then living and continue until the Number of Guaranteed Payments shown below has been made. All Annuity Payments Will be Made On a [Variable and Fixed] Basis Number of Guaranteed Payments: [240] [Fixed Annuity Payment: [$1039.24] Fixed Annuity Payment Rate: [1.5%] [Increasing Fixed Annuity Payment Option: Under this option, the Fixed Annuity Payment shown above will increase annually by [1%], compounded annually. ] [Initial] Estimated Variable Annuity Payment: [$2239.02] Variable annuity payments are not guaranteed and will fluctuate according to the investment experience of the Divisions of the Variable Separate Account as elected by you.] [Variable Annuity Assumed Interest Rate: [3.0%] OPTIONAL RIDERS [Guaranteed Minimum Income Rider (GMIR) GMIR Payment: [$ 2015.12] GMIR Factor: [90%] of the Initial Estimated Variable Annuity Payment Maximum GMIR Charge: [0.005535]% deducted daily (equivalent to an annual rate of [2.00%])] GMIR Period: [5 years] beginning on the Contract Date.] [VARIABLE SEPARATE ACCOUNT DIVISIONS ELECTED BY YOU Your Premium has been invested as follows: Variable Separate Account Divisions Percentage of Premium Payment [Pioneer Mid-Cap Value [50% Fidelity VIP Growth Portfolio] 50%] - ---------------------------------------- --------------------------------- Total 100% IU-IA-3000 3A SCHEDULE OF BENEFITS (Continued) - -------------------------------------------------------------------------------- [RIGHT TO WITHDRAW OPTION You have the right to take withdrawals under the Contract. To take a withdrawal, you must provide written notice satisfactory to us at our Customer Service Center. For withdrawals from any portion of the Contract representing Fixed Annuity Payments, if applicable, only one withdrawal may be made per Contract Year and no withdrawals may be made before the later of (a) the end of the first Certificate Year; or (b) the First Annuity Payment Date. We may collect a Surrender Charge for early withdrawals and any redemption fees imposed by the mutual fund or other investment company as a result of the transaction. The Surrender Charge, if any, will be calculated using the Surrender Charge Schedule shown below. Our approval is needed if, after a Partial Withdrawal, any remaining Annuity Payments would be less than [$50] monthly or [$250] annually for all other modes. After a Partial Withdrawal, any portion of Guaranteed Payments withdrawn will reduce remaining Guaranteed Payments proportionately. [Amount Available for Withdrawal - Fixed Annuity The amount available for withdrawal from any portion of the Contract representing Fixed Annuity Payments is equal to the present value of any remaining Fixed Annuity Guaranteed Payments determined by using the Fixed Annuity Payment Rate as of the Valuation Date immediately following the date we receive your written request, adjusted by any Market Value Adjustment, less any applicable Surrender Charge. ] [Amount Available for Withdrawal - Variable Annuity The amount available for withdrawal from any portion of the Contract representing Variable Annuity Payments is equal to the present value of any remaining Variable Annuity Guaranteed Payments determined by using the Variable Annuity Assumed Interest Rate shown in the Schedule as of the Valuation Date immediately following the date we receive your written request, less any applicable Surrender Charge and redemption fees.] SURRENDER CHARGE SCHEDULE A Surrender Charge may be imposed as a percentage of the amount withdrawn in the event a full or partial withdrawal is taken under the Right to Withdraw Option. The percentage imposed at time of withdrawal depends on the number of complete years that have elapsed since the Contract Date as follows: [Complete Years Elapsed Since Contract Date: [0 1 2 3 4 5 6 7+ - --------------------------------------------- --- --- --- --- --- --- --- --- Surrender Charges (Variable Payments): 7% 6% 5% 4% 3% 2% 1% 0%]] [Complete Years Elapsed Since Contract Date: [0 1 2 3 4 5 6 7+ - -------------------------------------------- --- --- --- --- --- --- --- --- Surrender Charges (Fixed Payments): NA* 6% 5% 4% 3% 2% 1% 0%] *No withdrawals are allowed from Fixed Annuity Payments during the first Contract Year]] [FLEXIBLE PERIOD OPTION Beginning on the second Contract Anniversary and each Contract Anniversary thereafter, you may elect to change the duration of your Guaranteed Payments or convert your Annuity Option shown in the Schedule to a Life Income Annuity provided: (1) The Contract is issued as a Period Certain Annuity (with no Life contingency); (2) There are Guaranteed Payments remaining under the Contract; (3) You have the right to make withdrawals under the Contract, as shown in the Schedule; and (4) No optional Guaranteed Minimum Income Rider is attached and made a part of this Contract, in which case this option may not be exercised while such Rider is in effect. IU-IA-3000 3A CONT'D SCHEDULE OF BENEFITS (Continued) - -------------------------------------------------------------------------------- To exercise this Option, you must provide us your written request satisfactory to us at our Customer Service Center at least 30 days prior to any Contract Anniversary after the first. The change will take effect on the Contract Anniversary immediately following the date we receive your written request ("the FPO Effective Date"). Any change to the duration of your Annuity Payments must meet the following conditions: (1) The period during which remaining Guaranteed Payments are to be made must be at least 5 years in duration; (2) any decrease in the period in which remaining Guaranteed Payments are to be made must result in no less than a total period of 10 years from the Contract Date; and (3) any increase in the period in which remaining Guaranteed Payments are to be made must not exceed the earlier of: (i) in the case of a Contract issued as a qualified plan, the Annuitant(s) remaining life expectancy; otherwise, 50 years (30 years for Fixed Annuity Payments) from the Contract Date; or (ii) age 100. Our approval is needed if, after a Partial Withdrawal, any remaining Annuity Payments would be less than [$50] monthly or [$250] annually for all other modes. If you elect to convert your Annuity Payment option to Life Income Annuity, you may not exercise this Option again. The withdrawal value used to calculate the new Annuity Payments is equal to: . (1) Under the Fixed Annuity portion of the Contract, the present value of any remaining Fixed Annuity Guaranteed Payments determined by using the Fixed Annuity Payment Rate, adjusted by any Market Value Adjustment, as of the FPO Effective Date; and (2) Under the Variable Annuity portion of the Contract, the present value of any remaining Variable Annuity Guaranteed Payments determined by using the Assumed Interest Rate as of the FPO Effective Date. No Surrender Charges will apply in calculating the withdrawal value under this option. [DEDUCTIONS FROM THE VARIABLE SEPARATE ACCOUNT DIVISIONS Mortality and Expense Risk Charge - We deduct a charge of not more than [0.004141%] from the Net Rate of Return on a daily basis (equivalent to an annual maximum rate of [1.50%]) for mortality and expense risks. Asset-Based Administrative Charge - We deduct a charge of not more than [0.000686%] from the Net Rate of Return on a daily basis [equivalent to an annual maximum rate of [0.25%] to compensate us for a portion of our ongoing administrative expenses. Redemption Fees - We may deduct the amount of any redemption fees imposed by a mutual fund or other investment company in which the Separate Account Divisions invest as a result of any full or partial withdrawals, reallocations or other transactions directed by you. EXCESS ALLOCATION CHARGE [$25.] Any charge will be deducted from the Annuity Payment next following the date of any excess allocation change(s). ] IU-IA-3000 3A CONT'D IMPORTANT TERMS - -------------------------------------------------------------------------------- ANNUITANT - The person designated by you to be the measuring life in determining Annuity Payments and whose death may result in payment of any death proceeds. The Annuitant must be a natural person. You are the Annuitant unless another Annuitant has been named by you and is shown in the Schedule. ANNUITY - a periodic payment to begin at a specified or contingent date and to continue for a fixed period (the Period Certain) and/or for the duration of a designated life or lives. ANNUITY OPTION - The option selected by you and shown in the Schedule that determines the form and amount of Annuity Payments. ANNUITY PAYMENT - The periodic payment you, or the Payee if different, receive on either a variable basis or fixed basis, or a combination thereof, as elected by you. ANNUITY UNIT - the measure for valuing a Variable Annuity on and after the First Annuity Payment Date. The dollar value of each unit fluctuates with the experience of the Variable Separate Account Divisions available for investment under the Contract. ASSUMED INTEREST RATE - The rate selected by you which is used to calculate the Variable Annuity Payments under the Contract and to determine withdrawal values, as appropriate. The Assumed Interest Rate is shown in the Schedule. BENEFICIARY - The person designated by you to receive death proceeds in the case of the Annuitant's death (or joint Annuitant's death if applicable) if there is no surviving Owner or joint Owner. BUSINESS DAY - Any day the New York Stock Exchange ("NYSE") is open for trading, or any day on which the Securities and Exchange Commission ("SEC") requires that mutual funds, unit investment trusts or other investment portfolios be valued, excluding federal holidays, CONTRACT ANNIVERSARY - The anniversary of the Contract Date. CONTRACT DATE - The date we received your premium and upon which we begin determining the Contract values. This date is used to determine Contract months, processing dates, years, and anniversaries. CONTRACT YEAR - the period between Contract Anniversaries. CONTRACTHOLDER - The entity to whom the group contract is issued. ESTIMATED VARIABLE ANNUITY PAYMENT - The estimated periodic payments you receive, if so elected by you, under a Variable Annuity which, when based on the experience of a separate account, are not guaranteed and will fluctuate according to the investment experience of the Variable Separate Account Divisions elected by you. The estimated Variable Annuity Payment, if any, is shown in the Schedule. FIXEDANNUITY - An Annuity with benefit payments which are fixed and will not fluctuate during the payment period. FIXEDANNUITY PAYMENT - The fixed periodic payment you receive, if so elected by you, under a Fixed Annuity. Such payments, if any, are supported by the General Account and are shown in the Schedule. FIXEDANNUITY PAYMENT RATE - The rate used to calculate the Fixed Annuity Payments, if any, under the Contract and to determine withdrawal values, as appropriate. The initial Fixed Annuity Payment Rate is shown in the Schedule. This rate may change if any Flexible Period Option is exercised. FIRST ANNUITY PAYMENT DATE - the date on which the first annuity periodic payment is paid. GENERAL ACCOUNT - An account which contains all of our other assets other than those held in our Separate Account. It is used to support Fixed Annuity Payments. IU-IA-3000 4 IMPORTANT TERMS (continued) - -------------------------------------------------------------------------------- GUARANTEED PAYMENT - A periodic payment that is due whether or not the Annuitant, or Joint Annuitant if applicable, is living on date the Guaranteed Payment is due. ISSUEAGE -The age of the Owner, or that of the Annuitant if different, on his or her birthday nearest the Contract Date. JOINTLIFE INCOME ANNUITY - An Annuity issued on the lives of two individuals for which payments are based on whether or not at least one of the Annuitants is living on the date the Annuity Payment is due. Payments cease at the death of both Annuitants. JOINTLIFE INCOME WITH PERIOD CERTAIN ANNUITY - An Annuity issued on the lives of two individuals with Guaranteed Payments that continue for a specified period of time without being dependent upon the survival of the Annuitant or joint Annuitant and continue thereafter in whole or in part as long as at least one of the Annuitants is living. LIFE INCOME ANNUITY - An Annuity for which payments are based soley on whether or not the Annuitant is living on the date the Annuity Payment is due. Payments cease at the Annuitant's death. LIFE INCOME WITH PERIOD CERTAIN ANNUITY - An Annuity with Guaranteed Payments that continue for a specified period of time and continue thereafter as long as the Annuitant is living. MARKET VALUE ADJUSTMENT - A positive or negative adjustment applied (a) to any portion of Fixed Annuity Guaranteed Payments withdrawn; or (b) to determine the withdrawal value under Flexible Period Option, if applicable. NET RATE OF RETURN - The Net Rate of Return is equal to: (1) The value of the shares of the Division at the end of a Valuation Date; minus (2) The value of shares of the Division at the start of the Valuation Date; plus or minus (3) Taxes (or reserves for taxes) on the Separate Account (if any); divided by (4) The value of shares of the Division at the start of the Valuation Date; minus (5) The daily Asset Based Administrative Charges and Mortality and Expense Risk Charges described in the Schedule for each day in the Valuation Period. A Net Rate of Return may be more or less than 0%. The value of a share in a Division is equal to the net assets of the Division divided by the number of shares outstanding. Refer to the Variable Annuity Provisions of this Contract for additional information. OWNER- You are the Owner of this Contract. You have the rights and options described in this Contract. "You" and "Your" refer to the Owner. PAYEE- The person designated by you to receive the Annuity Payments under the Contract. You are the Payee, unless you name someone else. If the Payee dies before all payments have been made under the Contract, the contingent Payee will become the Payee. If there no contingent Payee, you will become the Payee. PERIOD CERTAIN ANNUITY - An Annuity with Guaranteed Payments that continue for a specified period of time without being dependent upon the survival of the Annuitant. VALUATION DATE - The day at the end of a Valuation Period when each Division is valued. VALUATION PERIOD - Each business day together with any non-business days before it. VARIABLE ANNUITY - an Annuity with payments that fluctuate based on the net investment experience of the divisions of the Variable Separate Account. VARIABLE SEPARATE ACCOUNT DIVISION - Under a Variable Annuity, an investment option available in the Variable Separate Account. Any Variable Separate Account Divisions elected by you for the allocation of some or all of your Premium Payment are shown in the Schedule. IU-IA-3000 5 GENERAL PROVISIONS - -------------------------------------------------------------------------------- THE CONTRACT This is a legal Contract between you and us. We provide benefits as stated in this Contract. In return, you supply us with the single Premium Payment required to put this Contract in effect. This Contract, together with any attached Riders or Endorsements, constitutes the entire Contract. Riders and Endorsements add provisions or change the terms of the basic Contract. Riders and Endorsements added to comply with applicable tax law do not require your consent, but are subject to regulatory approval. THE OWNER You are the Owner of this Contract. You are also the Annuitant unless another Annuitant has been named by you and is shown in the Schedule. You have the rights and options described in this Contract. One or more people may own this Contract. The sole Owner's estate will be the Beneficiary if no Beneficiary designation is in effect, or if the designated Beneficiary has predeceased the Owner. In the case of a joint Owner dying prior to the First Annuity Payment Date, the surviving Owner(s) will be deemed to be the Beneficiary(ies) and any other Beneficiary(ies) of record will be treated as the contingent Beneficiary(ies). See Death Benefit Provisions for more information. THE BENEFICIARY The Beneficiary will receive any remaining Guaranteed Payments due under this Contract at the death of the Annuitant, and joint Annuitant if applicable, if there is no surviving Owner or joint Owner. We pay any remaining Guaranteed Payments to the primary Beneficiary. If the primary Beneficiary dies before the Annuitant, any remaining Guaranteed Payments are paid to the contingent Beneficiary, if any. If there is no contingent Beneficiary, we pay any remaining Guaranteed Payments to the Owner, if living, otherwise to the Owner's estate or legal successors. One or more persons may be named as primary Beneficiary or contingent Beneficiary. In the case of more than one Beneficiary, we will assume any remaining Guaranteed Payments are to be paid in equal shares to the surviving Beneficiaries. You may specify other than equal shares. See Death Benefit Provisions for more information. CHANGE OF OWNER OR BENEFICIARY During the Annuitant's lifetime and while this Contract is in effect you can transfer ownership of this Contract. To make a Change of Owner, you must send us written notice of the change in a form satisfactory to us. If there are joint Owners, both must agree to the change. The change will take effect as of the day the notice is signed. The change will not affect any payment made or action taken by us before recording the change at our Customer Service Center. You also have the right to change Beneficiaries, unless you designate the primary Beneficiary as irrevocable. When an irrevocable Beneficiary has been designated, you and the irrevocable Beneficiary may have to act together to exercise the rights and options under this Contract. When naming or changing the Beneficiary(ies), you may specify the form of any remaining Guaranteed Payments as described under the Death Benefit Provision of this Contract. We will honor the specified form of payment to the extent permitted under Section 72(s) of the Internal Revenue Code or the equivalent provisions of the U.S. Treasury Department rules for qualified plans. IU-IA-3000 6 GENERAL PROVISIONS(continued) - -------------------------------------------------------------------------------- SINGLE PREMIUM PAYMENT This is a single premium annuity. However, the single premium may be paid in one lump sum or in installments anytime prior to the First Annuity Payment Date. Any such planned installments must be identified at the time the Contract is issued and be received by us at our Customer Service Center prior to the First Annuity Payment Date. You may allocate your Premium Payment to Fixed Annuity Payments, Variable Annuity Payments, or a combination thereof. The amount of the premium applied to this Contract will be the initial premium received as shown in the Schedule, minus a deduction for Premium Taxes, if any. If any subsequent payments are received after the Contract Date, but before the First Annuity Payment Date, the initial calculation of Fixed Annuity Payments will be considered an estimate until the First Annuity Payment Date. We may defer acceptance of or return any subsequent Premium Payments received before the First Annuity Payment Date. PREMIUM TAXES We deduct the amount of any premium or other state and local taxes levied by any state or governmental entity when such taxes are incurred. MARKET VALUE ADJUSTMENTS A Market Value Adjustment will be applied to any portion of a Fixed Annuity Payment withdrawn to determine the withdrawal value under the Contract. The Market Value Adjustment is determined by multiplying the amount withdrawn by the following factor: 1 + I N/365 ------------------------ 1 + J + .0050 - 1 The applicable maturity for Index Rate I is the certain period divided by 2 rounded up to the nearest whole number and the applicable maturity for Index Rate J is the remaining certain period divided by 2 rounded up to the nearest whole number. The calendar month of Index Rate determination for Index Rate I is the month the Contract was issued or the month of the most recent change (if any) under the Flexible Period Option. The calendar month of Index Rate determination for Index Rate J is the month the transaction is effective. N is equal to the number of days remaining in the certain period, divided by 2. Index Rate The Index Rate is the average of the Ask Yields for the U.S. Treasury Strips as reported by a national quoting service for the applicable maturity. The average is based on the period from the 22nd day of the calendar month two months prior to the calendar month of Index Rate determination to the 21st day of the calendar month immediately prior to the month of determination. The applicable maturity date for these U.S. Treasury Strips is derived from the length of the Period Certain ("certain period"). If the Ask Yields are no longer available, the Index Rate will be determined using a suitable replacement method subject to any required regulatory approval. We currently set the Index Rate once each calendar month. However, we reserve the right to set the Index Rate more frequently than monthly, but in no event will such Index Rate be based on a period less than 28 days. Market Value Adjustments will be applied as follows: (1) The Market Value Adjustment will be applied to the amount withdrawn before deduction of any applicable Surrender Charge. (2) The Market Value Adjustment will be calculated on the total amount that must be withdrawn in order to provide the amount requested IU-IA-3000 7 DEATH BENEFIT PROVISIONS - -------------------------------------------------------------------------------- DEATH OF OWNER PRIOR TO THE FIRST ANNUITY PAYMENT DATE If you die prior to the First Annuity Payment Date, the entire interest in the Contract must be distributed within five years of the date of death, or payments may be made over a period not extending beyond the life expectancy of the Beneficiary, provided such payments begin not later than one year after the date of death. The "entire interest" means the Premium Paid plus any increase or minus any decrease in the value of amounts allocated to the Separate Account as of the date we receive due proof of death. Spousal Continuation upon Death of Owner If, at the death of the Owner (who is not also the Annuitant), the surviving spouse of the deceased Owner is the Beneficiary, then such surviving spouse may elect to continue the Contract as their own pursuant to Internal Revenue Code Section 72(s) or the equivalent provisions of the U.S. Treasury Department rules for qualified plans. However, on the death of the surviving spouse, this provision may not be used again. DEATH AFTER THE FIRST ANNUITY PAYMENT DATE Death of Annuitant If the Annuitant, and Joint Annuitant if applicable, dies and there is no surviving Owner or joint Owner, any remaining Guaranteed Payments will be paid to the Beneficiary in the form specified in the Schedule upon receipt of due proof of the Annuitant's death at our Customer Service Center. Such payments will be paid at least as rapidly as under the method of distribution then in effect. In all events, distributions under the Contract must be made as required by applicable law. If this Contract is issued as a Life with Period Certain Annuity, within six months of such death, the Beneficiary may elect to receive the withdrawal value of any remaining Guaranteed Payments in a lump sum. If this Contract is issued as a Period Certain Annuity or if you have the right to make withdrawals under the Contract as shown in the Schedule, the Beneficiary may elect to receive the withdrawal value of any remaining Guaranteed Payments in a lump sum at any time. The withdrawal value under this provision is equal to: (a) Under the Fixed Annuity portion of the Contract, if applicable, the present value of any remaining Fixed Annuity Guaranteed Payments determined by using the Fixed Annuity Payment Rate as of the Valuation Date immediately following the date we receive due proof of the Annuitant's death, adjusted by any Market Value Adjustment; and (b) Under the Variable Annuity portion of the Contract, if applicable, the present value of any remaining Variable Annuity Guaranteed Payments determined by using the Assumed Interest Rate as of the Valuation Date immediately following the date we receive due proof of the Annuitant's death. No Surrender Charges will apply in calculating the withdrawal value under this provision. To take the withdrawal value of any remaining Variable and/or Fixed Annuity Guaranteed Payments, as applicable, you must provide us with your written request satisfactory to us at our Customer Service Center. Death of Owner If you die and you are not the Annuitant, payments will continue to the Payee in the form specified in the Schedule. If no Payee designated by you survives you, payments will be made to your estate. Such payments will be paid at least as rapidly as under the method of distribution then in effect. How to Claim Payments to Beneficiary We must receive proof of the Annuitant's death (and Joint Annuitant's death if applicable) at our Customer Service Center before we will make any remaining payments to the Beneficiary. We will calculate any proceeds payable as of the date we receive due proof of death. The Beneficiary should contact our Customer Service Center for instructions IU-IA-3000 8 - -------------------------------------------------------------------------------- VARIABLE ANNUITY PROVISIONS - -------------------------------------------------------------------------------- THE VARIABLE SEPARATE ACCOUNT The Variable Annuity Payments under this Contract, if any, are provided through investments which may be made in our Separate Account (the "Account"), a unit investment trust Separate Account, organized in and governed by the laws of the State of Iowa, our state of Domicile. The Account is divided into Divisions, each of which is available for investment under this Contract. The Account is kept separate from our General Account and any other Separate Accounts we may have. It is used to support Variable Annuity Contracts and may be used for other purposes permitted by applicable laws and regulations. We own the assets in the Separate Account. Assets equal to the reserves and other liabilities of the account will not be charged with liabilities that arise from any other business we conduct; but, we may transfer to our General Account assets which exceed the reserves and other liabilities of the Variable Separate Account. Income and realized and unrealized gains or losses from assets in the Variable Separate Account are credited to or charged against the Account without regard to other income, gains or losses in our other investment accounts. The Variable Separate Account will invest in mutual funds, unit investment trusts and other investment portfolios which we determine to be suitable for this Contract's purposes. The Variable Separate Account is treated as a unit investment trust under Federal securities laws. It is registered with the Securities and Exchange Commission ("SEC") under the Investment Company Act of 1940. The Variable Separate Account is also governed by state law as described above. Variable Separate Account Divisions A unit investment trust Separate Account is divided into Divisions, each investing in a designated investment portfolio. The Divisions and the investment portfolios designated may be managed by a separate investment adviser. Such adviser may be registered under the Investment Advisers Act of 1940. Changes within the Variable Separate Account We may, from time to time, make additional Variable Separate Account Divisions available to you. These Divisions will invest in investment portfolios we find suitable for the group contract. We also have the right to eliminate Divisions from a Variable Separate Account, to combine two or more Divisions or to substitute a new portfolio for the portfolio in which a Division invests. A substitution may become necessary if, in our judgment, a portfolio or Division no longer suits the purpose of the group contract. This may happen due to a change in laws or regulations, a change in a portfolio's investment objectives or restrictions, because the portfolio or Division is no longer available for investment, or for some other reason. We will obtain any required regulatory approvals before making such a substitution Subject to any required regulatory approvals, we reserve the right to transfer assets of the Variable Separate Account which we determine to be associated with the class of contracts to which the group contract belongs, to another Variable Separate Account or Division. When permitted by law, we reserve the right to: (1) deregister a Variable Separate Account under the Investment Company Act of 1940; (2) operate a Variable Separate Account as a management company under the Investment Company Act of 1940, if it is operating as a unit investment trust; (3) operate a Variable Separate Account as a unit investment trust under the Investment Company Act of 1940, if it is operating as a managed Variable Separate Account; (4) restrict or eliminate any voting rights of Owners, or other persons who have voting rights to a Variable Separate Account; and (5) combine a Variable Separate Account with other Variable Separate Accounts. IU-IA-3000 9 VARIABLE ANNUITY PROVISIONS (Continued) - -------------------------------------------------------------------------------- VARIABLE ANNUITY PAYMENTS If Variable Annuity Payments are chosen, the initial payment for the option chosen reflects the Variable Annuity Assumed Interest Rate shown in the Schedule. Thereafter, the Divisions of the Variable Separate Account must earn the Assumed Interest Rate shown in the Schedule plus enough to cover any deductions stated in the Contract if future Annuity Payments are to remain level. If earnings exceed this amount, Variable Annuity Payments will increase; if earnings are less than this amount, Variable Annuity Payments will decrease. Annuity Units The Number of Annuity Units is equal to the portion of the first Estimated Variable Annuity Payment allocated to each Division divided by the appropriate Annuity Unit Value on the Valuation Date. Thereafter, the number of Annuity Units remains unchanged except when you make an allocation change. Each Variable Annuity Payment is equal to the sum of the products of each Annuity Unit Value on the Valuation Date for that payment multiplied by the appropriate number of Annuity Units for each Division. Annuity Unit Value On any Valuation Date, an Annuity Unit Value is equal to: (1) The Annuity Unit Value on the previous Valuation Day; multiplied by (2) The Annuity Net Return Factor(s) for the Valuation Date; multiplied by (3) A Factor to reflect the Assumed Interest Rate shown in the Schedule The Annuity Unit Value and Annuity Payment amount may go up or down due to investment gain or loss. Net Return Factor The Net Return Factor(s) is(are) used to compute all Variable Annuity Payments for any Division in the Variable Separate Account. The Net Return Factor for each Division is equal to 1.0000 plus the Net Rate of Return. The Net Rate of Return is equal to: (1) The value of the shares of the Division at the end of a Valuation Date; minus (2) The value of shares of the Division at the start of the Valuation Date; plus or minus (3) Taxes (or reserves for taxes) on the Separate Account (if any); divided by (4) The value of shares of the Division at the start of the Valuation Date; minus (6) The daily Asset Based Administrative Charges and Mortality and Expense Risk Charges described in the Schedule for each day in the Valuation Period. A Net Rate of Return may be more or less than 0%. The value of a share in a Division is equal to the net assets of the Division divided by the number of shares outstanding. Annuity Payments shall not be changed due to mortality or expense results. DEDUCTIONS FROM THE VARIABLE SEPARATE ACCOUNT DIVISIONS Mortality and Expense Risk Charges and Administrative Expenses We deduct a charge from the Net Rate of Return on a daily basis for mortality and expense risks and to compensate us for a portion of our ongoing administrative expenses. The maximum charges for these expenses as of the Contract Date are shown in the Schedule, but we may charge less than the maximum. IU-IA-3000 10 VARIABLE ANNUITY PROVISIONS (Continued) - -------------------------------------------------------------------------------- REDEMPTION FEES We may deduct the amount of any redemption fees imposed by a mutual fund or other investment company in which the Separate Account Divisions invest as a result of any full or partial withdrawals, reallocations or other transactions directed by you YOUR RIGHT TO MAKE ALLOCATION CHANGES You may make allocation changes among the available Divisions of the Variable Separate Account after the end of the Right to Examine period. Allocation changes in excess of twelve in any Contract Year are subject to an Excess Allocation Charge as shown in the Schedule. Any charge will be deducted from the Annuity Payment next following the date of any excess allocation change(s). To make an allocation change, you must provide us with satisfactory notice at our Customer Service Center. The change will take effect when we receive the notice. We will monitor transfer activity and will restrict transfers that constitute Frequent Trading. Our current definition of Frequent Trading is more than one purchase and sale of the same underlying fund within a 30-day period. We may modify our general standard, or the standard as it may apply to a particular fund, at any time without prior notice, if required by the underlying fund(s) in which Separate Account Divisions invest and/or by state or federal regulatory requirements, or based on our business judgement. We will notify you in writing within 30 days of such modification. IU-IA-3000 11 OTHER IMPORTANT INFORMATION - -------------------------------------------------------------------------------- SENDING NOTICE TO US Whenever written notice is required, send it to our Customer Service Center. The address of our Customer Service Center is shown on the cover page. Please include your Contract number in all correspondence. REPORTS TO OWNER We will send you a report at least once during each Contract Year. The report will show the Annuity Unit values as of the end of the Contract Year. The report will also show the allocation of the Annuity Unit values as of such date and the amounts, if any, deducted from or added to the Annuity Unit value since the last report. The report will also include any information that may be currently required by the insurance supervisory official of the jurisdiction in which the Contract is delivered. We will also send you copies of any shareholder reports of the portfolios in which the Divisions of the Variable Separate Account invest, as well as any other reports, notices or documents required by law to be furnished to Owners. ASSIGNMENT - USING THIS CONTRACT AS COLLATERAL SECURITY You may assign this Contract as collateral security for a loan or other obligation. This does not change the ownership. Your rights and any Beneficiary's right are subject to the terms of the assignment. The Beneficiary's rights may be subordinate to those of an assignee unless the Beneficiary was designated as an irrevocable Beneficiary prior to the assignment. To make or release an assignment, we must receive written notice satisfactory to us, at our Customer Service Center. We are not responsible for the validity of any assignment. CONTRACT CHANGES - APPLICABLE TAX LAW We reserve the right to make changes in this Contract or its Riders to the extent necessary to continue to qualify this Contract as an annuity. Any such changes will apply uniformly to all Contracts that are affected. You will be given advance written notice of such changes. MISSTATEMENT OF AGE OR SEX If an age or sex has been misstated, the amounts payable or benefits provided by this Contract will be those that the Premium Payment made would have bought at the correct age or sex. NON-PARTICIPATING This Contract does not participate in our divisible surplus. CONTESTABILITY This Contract is incontestable from its date of issue. IU-IA-3000 12 OTHER IMPORTANT INFORMATION (Continued) - -------------------------------------------------------------------------------- AUTHORITY TO MAKE AGREEMENTS All agreements made by us must be signed by one of our officers. No other person, including an insurance agent or broker, has the authority to: (1) change any of this Contract's terms; (2) extend the time for Premium Payments; or (3) make any agreement binding on us. REQUIRED NOTE ON OUR COMPUTATIONS We have filed a detailed statement of our computations with the insurance supervisory official in the jurisdiction where this Contract is delivered. The values are not less than those required by the law of that state or jurisdiction. Any benefit provided by an attached optional benefit rider will not increase these values unless otherwise stated in that rider. PAYMENTS WE MAY DEFER We may not be able to determine the value of the assets in the Variable Separate Account because: (1) The NYSE is closed for trading; (2) the SEC determines that a state of emergency exists; (3) an order or pronouncement of the SEC permits a delay for the protection of Owners; or (4) the check used to pay the premium has not cleared through the banking system. This may take up to 15 days. During such times, as to amounts allocated to the Variable Separate Account, we may delay: (1) determination and payment of any death benefit if death occurs before the First Annuity Payment Date; (2) allocation changes among the available Divisions of the Variable Separate Account; or (3) making a Variable Annuity Payment. SURRENDER/LOAN VALUE Except as provided in the Right to Examine provision, this Contract has no loan or surrender value. IU-IA-3000 13 SINGLE PREMIUM IMMEDIATE FIXED AND VARIABLE ANNUITY CONTRACT - NO DIVIDENDS - -------------------------------------------------------------------------------- Non-participating. Investment results reflected in Variable Annuity Payments. IU-IA-3000 EX-99.B4B 3 iump3000.txt SINGLE PREMIUM GROUP MASTER CONTRACT ING USA SINGLE PREMIUM IMMEDIATE ANNUITY AND LIFE FIXED AND VARIABLE ANNUITY INSURANCE COMPANY GROUP MASTER CONTRACT ING USA is a stock company domiciled in Iowa - -------------------------------------------------------------------------------- Offices: 1475 Dunwoody Drive, West Chester, Pennsylvania 19380 CONTRACTHOLDER: Golden Investor Trust, Inc. GROUP CONTRACT NUMBER: G-000029-OE ISSUED IN: Delaware CONTRACT ISSUE DATE: August 1, 2004 In this Contract, we, our and us refer to the ING USA Annuity and Life Insurance Company. In consideration of application for this Contract and the payment of premiums, we agree, subject to the terms and conditions of this Contract, to provide the benefits described in this Contract to the persons eligible (herein called "Annuitants") under the terms of this Contract. If this Contract is in force, we will make income payments to the Certificate Owner, or Payee if different, starting on the First Annuity Payment Date shown in each Certificate. If the Annuitant dies after income payments have commenced and there is no surviving Certificate Owner or joint Certificate Owner, we will pay any remaining Guaranteed Payments ("death proceeds") to the Beneficiary. The amounts of such benefits are subject to the terms of this Contract. Any death proceeds due under this Contract will be paid according to the Beneficiary designation and the provisions of this Contract. Payment of any death proceeds by us will completely discharge our liability with respect to the amounts so paid. All provisions set forth on the following pages are a part of this Contract. Signed for ING USA Annuity and Life Insurance Company on the Contract Date. [GRAPHIC OMITTED][GRAPHIC OMITTED] Secretary: Customer Service Center P.O. Box 9271 [GRAPHIC OMITTED][GRAPHIC OMITTED] Des Moines, IA 50306-9271 President: 1-800-366-0066 - -------------------------------------------------------------------------------- SINGLE PREMIUM IMMEDIATE FIXED AND VARIABLE ANNUITY GROUP MASTER CONTRACT - NO DIVIDENDS Non-participating. Investment results reflected in values. IU-MP-3000 2 CERTIFICATE CONTENTS - -------------------------------------------------------------------------------- SCHEDULE OF BENEFITS....................................................3 IMPORTANT TERMS.........................................................4 GENERAL PROVISIONS......................................................6 Eligibility The Certificate Owner The Beneficiary Change of Certificate Owner or Beneficiary Single Premium Payment Premium Taxes Market Value Adjustments DEATH BENEFIT PROVISIONS.................................................8 Death of Certificate Owner Prior to the First Annuity Payment Date Spousal Continuation upon Death of Certificate Owner Death After the First Annuity Payment Date Death of Annuitant Death of Certificate Owner How to Claim Payments to Beneficiary VARIABLE ANNUITY PROVISIONS..............................................9 The Variable Separate Account Variable Separate Account Divisions Changes Within the Variable Separate Account Variable Annuity Payments Annuity Unit Value Net Return Factor Deductions from the Variable Separate Account Divisions Mortality and Expense Risk Charges and Administrative Expenses Redemption Fees Certificate Owner's Right to Make Allocation Changes OTHERIMPORTANT INFORMATION........................................................12 Entire Contract Sending Notice to Us Reports to Certificate Owner Assignment - Using this Certificate as Collateral Security Contract Changes - Applicable Tax Law Misstatement of Age or Sex Non-Participating Incontestability Certificates Conformity with Law Facility of Payment Authority to Make Agreements Required Note on Our Computations Payments We May Defer Surrender/Loan Value Records Certificate Owner's Right to Examine the Certificate Copies of any additional Riders and Endorsements are at the back of this Certificate. IU-MP-3000 2 SCHEDULE OF BENEFITS - -------------------------------------------------------------------------------- PREMIUM PAYMENT AND INVESTMENT INFORMATION Investment Minimum Single Premium Payment $10,000 Variable Annuity Assumed Interest As shown in each Certificate Fixed Annuity Contract Rate As shown in each Certificate Guaranteed Payments cannot extend beyond: Qualified: earlier of (a) age 100 and (b) life expectancy Non-Qualified: age 100 Allocations - Variable Separate Account Divisions Maximum Divisions at any one time: Twenty Maximum allocation changes per Certificate Year without Charge: 12 Index Rate The Index Rate is the average of the Ask Yields for the U.S. Treasury Strips as reported by a national quoting service for the applicable maturity. The average is based on the period from the 22nd day of the calendar month two months prior to the calendar month of Index Rate determination to the 21st day of the calendar month immediately prior to the month of determination. The applicable maturity date for these U.S. Treasury Strips is derived from the length of the Period Certain ("certain period"). If the Ask Yields are no longer available, the Index Rate will be determined using a suitable replacement method subject to any required regulatory approval. We currently set the Index Rate once each calendar month. However, we reserve the right to set the Index Rate more frequently than monthly, but in no event will such Index Rate be based on a period less than 28 days. CONTRACT FACTS Certificate Date: As shown in each Certificate Annuity Option As shown in each Certificate First Annuity Payment Date: As shown in each Certificate Death Benefits: As shown in each Certificate Right to Withdraw Option As shown in each Certificate Flexible Period Option As shown in each Certificate Option Riders: As shown in each Certificate CHARGES Initial Administrative Charge: None Excess Allocation Charge: $25 Covers the cost of allocations in excess of the 12 free allocations changes allowed per Certificate Year. Deducted from the Annuity Payment next following any allocation change(s) Surrender Charges As shown in each Certificate Deductions from the Divisions: Mortality & Expense Risk Charge As shown in each Certificate Asset Based Administrative Charge As shown in each Certificate Redemption Fees As shown in each Certificate IU-MP-3000 3 IMPORTANT TERMS - -------------------------------------------------------------------------------- ANNUITANT - The person designated by the Certificate Owner to be the measuring life in determining Annuity Payments and whose death may result in payment of any death proceeds. The Annuitant must be a natural person. ANNUITY - a periodic payment to begin at a specified or contingent date and to continue for a fixed period (the Period Certain) and/or for the duration of a designated life or lives. ANNUITY OPTIONS - Options the Certificate Owner selects that determine the form and amount of Annuity Payments. ANNUITY PAYMENT - The periodic payment the Certificate Owner, or Payee if different, receives on either a variable basis or fixed basis, or a combination thereof. ANNUITY UNIT - the measure for valuing a Variable Annuity on and after the First Annuity Payment Date. The dollar value of each unit fluctuates with the experience of the Variable Separate Account Divisions available for investment under the Certificate. ASSUMED INTEREST RATE - The rate selected by the Certificate Owner which is used to calculate the Variable Annuity Payments under the Certificate and to determine withdrawal values, as appropriate. The Assumed Interest Rate is shown in the Certificate Schedule. BENEFICIARY - The person designated by the Certificate Owner to receive death proceeds in the case of the Annuitant's death (or joint Annuitant's death if applicable) if there is no surviving Certificate Owner or joint Certificate Owner. BUSINESS DAY - Any day the New York Stock Exchange ("NYSE") is open for trading, or any day on which the Securities and Exchange Commission ("SEC") requires that mutual funds, unit investment trusts or other investment portfolios be valued, excluding federal holidays, CERTIFICATE - A summary of the benefits and provisions provided under this Contract. CERTIFICATE ANNIVERSARY - The anniversary of the Certificate Date. CERTIFICATE DATE - The date we received the Premium and upon which we begin determining the Certificate values. This date is used to determine Certificate months, processing dates, years, and anniversaries. CONTRACT ISSUE DATE - The date this Contract is issued at our Customer Service Center. CERTIFICATE OWNER - The individual who owns the Certificate and is entitled to exercise all rights under the Certificate. CERTIFICATE YEAR - The period between Certificate Anniversaries. CONTRACTHOLDER - The entity to whom this contract is issued. ESTIMATED VARIABLE ANNUITY PAYMENT - The estimated periodic payments a Certificate Owner, or Payee if different, receives under a Variable Annuity which, when based on the experience of a separate account, are not guaranteed and will fluctuate according to the investment experience of the Variable Separate Account Divisions. The estimated Variable Annuity Payment, if any, is shown in the Certificate Schedule. FIXED ANNUITY - An Annuity with benefit payments which are fixed and will not fluctuate during the payment period. FIXEDANNUITY PAYMENT - The fixed periodic payment a Certificate owner receives under a Fixed Annuity. Such payments, if any, are supported by the General Account and are shown in the Certificate Schedule. FIXEDANNUITY PAYMENT RATE - The rate used to calculate the Fixed Annuity Payments, if any, under the Certificate and to determine withdrawal values, as appropriate. GENERAL ACCOUNT - An account which contains all of our other assets other than those held in our Separate Account. It is used to support Fixed Annuity Payments. IU-MP-3000 4 IMPORTANT TERMS (continued) - -------------------------------------------------------------------------------- GUARANTEED PAYMENT - A periodic payment that is due whether or not the Annuitant, or joint Annuitant if applicable, is living on date the Guaranteed Payment is due. FIRST ANNUITY PAYMENT DATE - the date on which the first annuity periodic payment is paid under the Certificate. ISSUEAGE -The age of the Certificate Owner, or that of the Annuitant if different, on his or her birthday nearest a Certificate Date. JOINTLIFE INCOME ANNUITY - An Annuity issued on the lives of two individuals for which payments are based on whether or not at least one of the Annuitants is living on the date the Annuity Payment is due. Payments cease at the death of both Annuitants. JOINTLIFE INCOME WITH PERIOD CERTAIN ANNUITY - An Annuity issued on the lives of two individuals with Guaranteed Payments that continue for a specified period of time without being dependent upon the survival of the Annuitant or joint Annuitant and continue thereafter in whole or in part as long as at least one of the Annuitants is living. LIFE INCOME ANNUITY - An Annuity for which payments are based soley on whether or not the Annuitant is living on the date the Annuity Payment is due. Payments cease at the Annuitant's death. LIFE INCOME WITH PERIOD CERTAIN ANNUITY - An Annuity with Guaranteed Payments that continue for a specified period of time and continue thereafter as long as the Annuitant is living. MARKET VALUE ADJUSTMENT - A positive or negative adjustment applied (a) to any portion of Fixed Annuity Guaranteed Payments withdrawn; or (b) to determine the withdrawal value under Flexible Period Option, if applicable. NET RATE OF RETURN - The Net Rate of Return is equal to: (1) The value of the shares of the Division at the end of a Valuation Date; minus (2) The value of shares of the Division at the start of the Valuation Date; plus or minus (3) Taxes (or reserves for taxes) on the Separate Account (if any); divided by (4) The value of shares of the Division at the start of the Valuation Date; minus (5) The daily Asset Based Administrative Charges and Mortality and Expense Risk Charges described in the Schedule for each day in the Valuation Period. A Net Rate of Return may be more or less than 0%. The value of a share in a Division is equal to the net assets of the Division divided by the number of shares outstanding. Refer to the Variable Annuity Provisions of this Certificate for additional information. PAYEE- The person designated by the Certificate Owner to receive the Annuity Payments under the Certificate. The Certificate Owner is the Payee, unless someone else is named. If the Payee dies before all payments have been made under the Certificate, the contingent Payee will become the Payee. If there no contingent Payee, the Certificate Owner will become the Payee. PERIOD CERTAIN ANNUITY - An Annuity with Guaranteed Payments that continue for a specified period of time without being dependent upon the survival of the Annuitant. VALUATION DATE - The day at the end of a Valuation Period when each Division is valued. VALUATION PERIOD - Each business day together with any non-business days before it. VARIABLE ANNUITY - an Annuity with payments that fluctuate based on the net investment experience of the divisions of the Variable Separate Account. VARIABLE SEPARATE ACCOUNT DIVISION - Under a Variable Annuity, an investment option available in the Variable Separate Account. Any Variable Separate Account Divisions elected by the Certificate Owner for the allocation of some or all of the Premium Payment are shown in each Certificate. IU-MP-3000 5 GENERAL PROVISIONS - -------------------------------------------------------------------------------- ELIGIBILITY Eligible persons as stated in the application for this Contract and who have enrolled and for whom the Initial Premium has been paid are eligible to receive the benefits under this Contract. THE CERTIFICATE OWNER The Certificate Owner is also the Annuitant unless another Annuitant has been named and is shown in the Certificate. The Certificate Owner has the rights and options described in this Contract. One or more people may own a Certificate. The sole certificate Owner's estate will be the beneficiary if no beneficiary designation is in effect, or if the sole designated beneficiary has predeceased the certificate Owner. In the case of a joint certificate Owner dying prior to the First Annuity Payment Date, the surviving Owner(s) will be deemed to be the Beneficiary(ies) and any other Beneficiary(ies) of record will be treated as the contingent Beneficiary(ies). THE BENEFICIARY The Beneficiary will receive any remaining Guaranteed Payments due under this Certificate at the death of the Annuitant, and joint Annuitant if applicable, if there is no surviving Certificate Owner or joint Certificate Owner. We pay any remaining Guaranteed Payments to the primary Beneficiary. If the primary Beneficiary dies before the Annuitant, any remaining Guaranteed Payments are paid to the contingent Beneficiary, if any. If there is no contingent Beneficiary, we pay any remaining Guaranteed Payments to the Certificate Owner, if living, otherwise to the Certificate Owner's estate or legal successors. One or more persons may be named as primary Beneficiary or contingent Beneficiary. In the case of more than one Beneficiary, we will assume any remaining Guaranteed Payments are to be paid in equal shares to the surviving Beneficiaries. The Certificate Owner may specify other than equal shares. See Death Benefit Provisions for more information. CHANGE OF CERTIFICATE OWNER OR BENEFICIARY During the Annuitant's lifetime and while the Certificate is in effect under this Contract, the Certificate Owner can transfer ownership of the Certificate or change the Beneficiaries, unless the primary Beneficiary has been designated as irrevocable. To make any of these changes, we require written notice of the change in a form satisfactory to us. If there are joint Certificate Owners, both must agree to the change. The change will take effect as of the day the notice is signed. The change will not affect any payment made or action taken by us before recording the change at our Customer Service Center. SINGLE PREMIUM PAYMENT This is a single premium annuity. However, the single premium may be paid in one lump sum or in installments anytime prior to the First Annuity Payment Date shown in the Schedule of each Certificate. Any such planned installments must be identified at the time a Certificate is issued and be received by us at our Customer Service Center prior to such First Annuity Payment Date. The Certificate Holder may allocate Premium Payment to Fixed Annuity Payments, Variable Annuity Payments, or a combination thereof. The amount of the premium applied to a Certificate will be the initial premium received as shown in the Certificate Schedule, minus a deduction for Premium Taxes, if any. If any subsequent payments are received after a Certificate Date, but before the First Annuity Payment Date, the initial calculation of Fixed Annuity Payments under a Certificate will be considered an estimate until the First Annuity Payment Date. We may defer acceptance of or return any subsequent Premium Payments received before the First Annuity Payment Date. IU-MP-3000 6 GENERAL PROVISIONS(continued) - -------------------------------------------------------------------------------- PREMIUM TAXES We deduct the amount of any premium or other state and local taxes levied by any state or governmental entity when such taxes are incurred. MARKET VALUE ADJUSTMENTS A Market Value Adjustment will be applied to any portion of a Fixed Annuity Payment withdrawn to determine the withdrawal value under the Certificate. The Market Value Adjustment is determined by multiplying the amount withdrawn by the following factor: 1 + I N/365 ------------------------ 1 + J + .0050 - 1 The applicable maturity for Index Rate I is the certain period divided by 2 rounded up to the nearest whole number and the applicable maturity for Index Rate J is the remaining certain period divided by 2 rounded up to the nearest whole number. The calendar month of Index Rate determination for Index Rate I is the month the Certificate was issued or the month of the most recent change (if any) under the Flexible Period Option. The calendar month of Index Rate determination for Index Rate J is the month the transaction is effective. N is equal to the number of days remaining in the certain period, divided by 2. Index Rate The Index Rate is the average of the Ask Yields for the U.S. Treasury Strips as reported by a national quoting service for the applicable maturity. The average is based on the period from the 22nd day of the calendar month two months prior to the calendar month of Index Rate determination to the 21st day of the calendar month immediately prior to the month of determination. The applicable maturity date for these U.S. Treasury Strips is derived from the length of the Period Certain ("certain period"). If the Ask Yields are no longer available, the Index Rate will be determined using a suitable replacement method subject to any required regulatory approval. We currently set the Index Rate once each calendar month. However, we reserve the right to set the Index Rate more frequently than monthly, but in no event will such Index Rate be based on a period less than 28 days. Market Value Adjustments will be applied as follows: (1) The Market Value Adjustment will be applied to the amount withdrawn before deduction of any applicable Surrender Charge. (2) The Market Value Adjustment will be calculated on the total amount that must be withdrawn in order to provide the amount requested IU-MP-3000 7 DEATH BENEFIT PROVISIONS - -------------------------------------------------------------------------------- DEATH OF CERTIFICATE OWNER PRIOR TO THE FIRST ANNUITY PAYMENT DATE If a Certificate Owner dies prior to the First Annuity Payment Date, the entire interest in the Certificate must be distributed within five years of the date of death, or payments may be made over a period not extending beyond the life expectancy of the Beneficiary, provided such payments begin not later than one year after the date of death. The "entire interest" means the Premium Paid plus any increase or minus any decrease in the value of amounts allocated to the Separate Account as of the date we receive due proof of death. Spousal Continuation upon Death of Certificate Owner If, at the death of the Certificate Owner (who is not also the Annuitant), the surviving spouse of the deceased Certificate Owner is the Beneficiary, then such surviving spouse may elect to continue the Certificate as their own pursuant to Internal Revenue Code Section 72(s) or the equivalent provisions of the U.S. Treasury Department rules for qualified plans. However, on the death of the surviving spouse, this provision may not be used again. DEATH AFTER THE FIRST ANNUITY PAYMENT DATE Death of Annuitant If the Annuitant, and Joint Annuitant if applicable, dies and there is no surviving Certificate Owner or joint Certificate Owner, any remaining Guaranteed Payments will be paid to the Beneficiary in the form specified in the Schedule upon receipt of due proof of the Annuitant's death at our Customer Service Center. Such payments will be paid at least as rapidly as under the method of distribution then in effect. In all events, distributions under the Certificate must be made as required by applicable law. If this Certificate is issued as a Life with Period Certain Annuity, within six months of such death, the Beneficiary may elect to receive the withdrawal value of any remaining Guaranteed Payments in a lump sum. If the Certificate is issued as a Period Certain Annuity or if there are rights to make withdrawals under the Certificate as shown in the Certificate Schedule, the Beneficiary may elect to receive the withdrawal value of any remaining Guaranteed Payments in a lump sum at any time. The withdrawal value under this provision is equal to: (a) Under the Fixed Annuity portion of the Certificate, if applicable, the present value of any remaining Fixed Annuity Guaranteed Payments determined by using the Fixed Annuity Payment Rate as of the Valuation Date immediately following the date we receive due proof of the Annuitant's death, adjusted by any Market Value Adjustment; and (b) Under the Variable Annuity portion of the Certificate, if applicable, the present value of any remaining Variable Annuity Guaranteed Payments determined by using the Assumed Interest Rate as of the Valuation Date immediately following the date we receive due proof of the Annuitant's death. No Surrender Charges will apply in calculating the withdrawal value under this provision. To take the withdrawal value of any remaining Variable and/or Fixed Annuity Guaranteed Payments, as applicable, we must receive a written request satisfactory to us at our Customer Service Center. Death of Certificate Owner If a Certificate Owner, who is not also the Annuitant, dies, payments will continue to the Payee in the form specified in the Schedule. If no Payee designated by the Certificate Owner survives the Certificate Owner, payments will be made to the Certificate Owner's estate. Such payments will be paid at least as rapidly as under the method of distribution then in effect. How to Claim Payments to Beneficiary We must receive proof of the Annuitant's death (and joint Annuitant's death if applicable) at our Customer Service Center before we will make any remaining payments to the Beneficiary. We will calculate any proceeds payable as of the date we receive due proof of death. The Beneficiary should contact our Customer Service Center for instructions IU-MP-3000 8 - -------------------------------------------------------------------------------- VARIABLE ANNUITY PROVISIONS - -------------------------------------------------------------------------------- THE VARIABLE SEPARATE ACCOUNT The Variable Annuity Payments under this Certificate, if any, are provided through investments which may be made in our Separate Account (the "Account"), a unit investment trust Separate Account, organized in and governed by the laws of the State of Iowa, our state of Domicile. The Account is divided into Divisions, each of which is available for investment under this Certificate. The Account is kept separate from our General Account and any other Separate Accounts we may have. It is used to support Variable Annuity Certificates and may be used for other purposes permitted by applicable laws and regulations. We own the assets in the Separate Account. Assets equal to the reserves and other liabilities of the account will not be charged with liabilities that arise from any other business we conduct; but, we may transfer to our General Account assets which exceed the reserves and other liabilities of the Variable Separate Account. Income and realized and unrealized gains or losses from assets in the Variable Separate Account are credited to or charged against the Account without regard to other income, gains or losses in our other investment accounts. The Variable Separate Account will invest in mutual funds, unit investment trusts and other investment portfolios which we determine to be suitable for this Certificate's purposes. The Variable Separate Account is treated as a unit investment trust under Federal securities laws. It is registered with the Securities and Exchange Commission ("SEC") under the Investment Company Act of 1940. The Variable Separate Account is also governed by state law as described above. Variable Separate Account Divisions A unit investment trust Separate Account is divided into Divisions, each investing in a designated investment portfolio. The Divisions and the investment portfolios designated may be managed by a separate investment adviser. Such adviser may be registered under the Investment Advisers Act of 1940. Changes within the Variable Separate Account We may, from time to time, make additional Variable Separate Account Divisions available to Certificate Owners. These Divisions will invest in investment portfolios we find suitable for the group contract. We also have the right to eliminate Divisions from a Variable Separate Account, to combine two or more Divisions or to substitute a new portfolio for the portfolio in which a Division invests. A substitution may become necessary if, in our judgment, a portfolio or Division no longer suits the purpose of the group contract. This may happen due to a change in laws or regulations, a change in a portfolio's investment objectives or restrictions, because the portfolio or Division is no longer available for investment, or for some other reason. We will obtain any required regulatory approvals before making such a substitution Subject to any required regulatory approvals, we reserve the right to transfer assets of the Variable Separate Account which we determine to be associated with the class of contracts to which the group contract belongs, to another Variable Separate Account or Division. When permitted by law, we reserve the right to: (1) deregister a Variable Separate Account under the Investment Company Act of 1940; (2) operate a Variable Separate Account as a management company under the Investment Company Act of 1940, if it is operating as a unit investment trust; (3) operate a Variable Separate Account as a unit investment trust under the Investment Company Act of 1940, if it is operating as a managed Variable Separate Account; (4) restrict or eliminate any voting rights of Certificate Owners, or other persons who have voting rights to a Variable Separate Account; and (5) combine a Variable Separate Account with other Variable Separate Accounts. IU-MP-3000 9 VARIABLE ANNUITY PROVISIONS (Continued) - -------------------------------------------------------------------------------- VARIABLE ANNUITY PAYMENTS If Variable Annuity Payments are chosen, the initial payment for the option chosen reflects the Variable Annuity Assumed Interest Rate shown in the Certificate Schedule. Thereafter, the Divisions of the Variable Separate Account must earn the Assumed Interest Rate shown in the Schedule plus enough to cover any deductions stated in the Certificate if future Annuity Payments are to remain level. If earnings exceed this amount, Variable Annuity Payments will increase; if earnings are less than this amount, Variable Annuity Payments will decrease. Annuity Units The Number of Annuity Units is equal to the portion of the first Estimated Variable Annuity Payment allocated to each Division divided by the appropriate Annuity Unit Value on the Valuation Date. Thereafter, the number of Annuity Units remains unchanged except when an allocation change is made. Each Variable Annuity Payment is equal to the sum of the products of each Annuity Unit Value on the Valuation Date for that payment multiplied by the appropriate number of Annuity Units for each Division. Annuity Unit Value On any Valuation Date, an Annuity Unit Value is equal to: (1) The Annuity Unit Value on the previous Valuation Day; multiplied by (2) The Annuity Net Return Factor(s) for the Valuation Date; multiplied by (3) A Factor to reflect the Assumed Interest Rate shown in the Schedule The Annuity Unit Value and Annuity Payment amount may go up or down due to investment gain or loss. Net Return Factor The Net Return Factor(s) is(are) used to compute all Variable Annuity Payments for any Division in the Variable Separate Account. The Net Return Factor for each Division is equal to 1.0000 plus the Net Rate of Return. The Net Rate of Return is equal to: (1) The value of the shares of the Division at the end of a Valuation Date; minus (2) The value of shares of the Division at the start of the Valuation Date; plus or minus (3) Taxes (or reserves for taxes) on the Separate Account (if any); divided by (4) The value of shares of the Division at the start of the Valuation Date; minus (6) The daily Asset Based Administrative Charges and Mortality and Expense Risk Charges described in the Schedule for each day in the Valuation Period. A Net Rate of Return may be more or less than 0%. The value of a share in a Division is equal to the net assets of the Division divided by the number of shares outstanding. Annuity Payments shall not be changed due to mortality or expense results. DEDUCTIONS FROM THE VARIABLE SEPARATE ACCOUNT DIVISIONS Mortality and Expense Risk Charges and Administrative Expenses We deduct a charge from the Net Rate of Return on a daily basis for mortality and expense risks and to compensate us for a portion of our ongoing administrative expenses. The maximum charges for these expenses as of a Certificate Date are shown in each Certificate Schedule, but we may charge less than the maximum. IU-MP-3000 10 VARIABLE ANNUITY PROVISIONS (Continued) - -------------------------------------------------------------------------------- REDEMPTION FEES We may deduct the amount of any redemption fees imposed by a mutual fund or other investment company in which the Separate Account Divisions invest as a result of any full or partial withdrawals, reallocations or other transactions directed by the Certificate Owner. THE CERTIFICATE OWNER'S RIGHT TO MAKE ALLOCATION CHANGES The Certificate Owner may make allocation changes among the available Divisions of the Variable Separate Account after the end of the Right to Examine period. Allocation changes in excess of twelve in any Certificate Year are subject to an Excess Allocation Charge as shown in the Schedule. Any charge will be deducted from the Annuity Payment next following the date of any excess allocation change(s). To make an allocation change, we must receive satisfactory notice at our Customer Service Center. The change will take effect when we receive the notice. We will monitor transfer activity and will restrict transfers that constitute Frequent Trading. Our current definition of Frequent Trading is more than one purchase and sale of the same underlying fund within a 30-day period. We may modify our general standard, or the standard as it may apply to a particular fund, at any time without prior notice, if required by the underlying fund(s) in which Separate Account Divisions invest and/or by state or federal regulatory requirements, or based on our business judgement. We will notify each Certificate Owner in writing within 30 days of such modification. IU-MP-3000 11 OTHER IMPORTANT INFORMATION - -------------------------------------------------------------------------------- ENTIRE CONTRACT This Contract, including any attached Riders, endorsements, amendments and the application of the Contractholder, constitute the entire contract between the Contractholder and us. All statements made by the Contractholder, any Certificate Owner or any Annuitant will be deemed representations and not warranties. SENDING NOTICE TO US Whenever written notice is required, send it to our Customer Service Center. REPORTS TO CERTIFICATE OWNERS We will send to each Certificate Owner a report at least once during each Certificate Year. The report will show the Annuity Unit values as of the end of a Certificate Year. The report will also show the allocation of the Annuity Unit values as of such date and the amounts, if any, deducted from or added to the Annuity Unit value since the last report. The report will also include any information that may be currently required by the insurance supervisory official of the jurisdiction in which a Certificate is delivered. We will also send copies of any shareholder reports of the portfolios in which the Divisions of the Variable Separate Account invest, as well as any other reports, notices or documents required by law to be furnished to Certificate Owners. ASSIGNMENT - USING THIS CERTIFICATE AS COLLATERAL SECURITY Benefits under a Certificate may be assigned as collateral security for a loan or other obligation. This does not change the ownership. The Certificate Owner's rights and any Beneficiary's right are subject to the terms of the assignment. The Beneficiary's rights may be subordinate to those of an assignee unless the Beneficiary was designated as an irrevocable Beneficiary prior to the assignment. To make or release an assignment, we must receive written notice satisfactory to us, at our Customer Service Center. We are not responsible for the validity of any assignment. CONTRACT CHANGES - APPLICABLE TAX LAW We reserve the right to make changes in this Contract or its Riders to the extent necessary to continue to qualify this Contract as an annuity. Any such changes will apply uniformly to all Certificates that are affected. The Contractholder and Certificate Owner will be given advance written notice of such changes. MISSTATEMENT OF AGE OR SEX If an age or sex has been misstated, the amounts payable or benefits provided by the Contract will be those that the Premium Payment made would have bought at the correct age or sex. NON-PARTICIPATING This Contract does not participate in our divisible surplus. INCONTESTABILITY The benefits under this Contract will not be contested, except for nonpayment of premiums, after it has been in effect during the annuitant's lifetime for two years from the certificate date. CERTIFICATES Certificates will be furnished by us. CONFORMITY WITH LAW If any provision of this Contract is contrary to any law to which it is subject, such provision is considered amended to conform to such law. IU-MP-3000 12 OTHER IMPORTANT INFORMATION (Continued) - -------------------------------------------------------------------------------- FACILITY OF PAYMENT If no beneficiary is named, we reserve the right to pay an amount not to exceed $2,000 to any person we determine to be entitled to such amount by reason of incurred expenses incident to the last illness or death of a Certificate Owner. AUTHORITY TO MAKE AGREEMENTS All agreements made by us must be signed by one of our officers. No other person, including an insurance agent or broker, has the authority to: (1) change any of this Contract's terms; (2) extend the time for Premium Payments; or (3) make any agreement binding on us. REQUIRED NOTE ON OUR COMPUTATIONS We have filed a detailed statement of our computations with the insurance supervisory official in the appropriate jurisdictions where each Certificate is delivered. The values are not less than those required by the law of that state or jurisdiction. Any benefit provided by an attached optional benefit rider will not increase these values unless otherwise stated in that rider. PAYMENTS WE MAY DEFER We may not be able to determine the value of the assets in the Variable Separate Account because: (1) The NYSE is closed for trading; (2) the SEC determines that a state of emergency exists; (3) an order or pronouncement of the SEC permits a delay for the protection of Certificate Owners; or (4) the check used to pay the premium has not cleared through the banking system. This may take up to 15 days. During such times, as to amounts allocated to the Variable Separate Account, we may delay: (1) determination and payment of any death benefit if death occurs before the First Annuity Payment Date; (2) allocation changes among the available Divisions of the Variable Separate Account; or (3) making a Variable Annuity Payment. SURRENDER/LOAN VALUE Except as provided in the Right to Examine provision, this Contract has no loan or surrender value. RECORDS The Contractholder will furnish us information relative to this Contract as we may require to administer this Contract. Such records, which in our opinion have a bearing on this Contract, will be open to us for inspection at all reasonable times. CERTIFICATE OWNER'S RIGHT TO EXAMINE THE CERTIFICATE A Certificate Owner may return a Certificate to us or the agent through whom it was purchased within 10 days of receipt. If so returned, we will treat the Certificate as though it were never issued. Upon receipt we will promptly refund the Accumulation Value plus any charges we have deducted as of the date the returned Certificate is received by us. IU-MP-3000 13 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SINGLE PREMIUM IMMEDIATE FIXED AND VARIABLE ANNUITY GROUP MASTER CONTRACT - NO DIVIDENDS Non-participating. Investment results reflected in Variable Annuity Payments. EX-99.B4C 4 iuca-cert.txt SINGLE PREMIUM IMM. FIXED & VA CERT. ING USA SINGLE PREMIUM IMMEDIATE ANNUITY AND LIFE FIXED AND VARIABLE ANNUITY INSURANCE COMPANY CERTIFICATE ING USA is a stock company domiciled in Iowa - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Contractholder Group Contract Number [Golden Investors Trust] [G000029-OE] - ------------------------------------------------------------------------------- Annuitant Owner [THOMAS J. DOE] [JOHN Q. DOE] - ------------------------------------------------------------------------------- Initial Premium Annuity Option Contract Date [$10,000] [20-YEAR PERIOD CERTAIN] [JANUARY 1, 2004] - ------------------------------------------------------------------------------- Separate Account(s) Contract Number [SEPARATE ACCOUNT B] [123456] - ------------------------------------------------------------------------------- In this Certificate you or your refers to the Owner shown above. We, our or us refers to ING USA Annuity and Life Insurance Company. This Certificate describes the benefits and provisions of the group contract. Please read it carefully. The group contract, as issued to the Contractholder by us with any Riders or Endorsements, alone makes up the agreement under which benefits are paid. The group contract may be inspected at the office of the Contractholder. In consideration of any application for this Certificate and the payment of the initial premium, we agree, subject to the terms and conditions of the group contract, to provide the benefits described in this Certificate. The Annuitant under this Certificate must be eligible under the terms of the group contract. If the Annuitant is living, we will make the Fixed Annuity Payments or Variable Annuity Payments, or a combination thereof, under the Annuity Option elected by you beginning on the First Annuity Payment Date shown in the Schedule. All payments and values, when based on the investment experience of the variable separate account, may increase or decrease in dollar amount, depending on the certificate's investment results. Amounts withdrawn from any portion of the certificate representing fixed payments may be subject to a market value adjustment, the operation of which may cause such amounts to increase or decrease. RIGHT TO EXAMINE THIS CERTIFICATE: You may return this certificate to us or the agent through whom you purchased it within 10 days after you receive it. If so returned, we will treat the certificate as though it were never issued. Upon receipt we will promptly refund the premium paid, plus any charges we have deducted, plus any increase or minus any decrease in the value of amounts allocated to the separate account as of the date the returned certificate is received by us. Secretary: Customer Service Center Paula Cludray Engelke [P.O. Box 9271 Des Moines, IA 50306-9271 1-800-366-0066] President: Keith Gubbay - -------------------------------------------------------------------------------- SINGLE PREMIUM IMMEDIATE FIXED AND VARIABLE ANNUITY CERTIFICATE - NO DIVIDENDS Non-participating. Investment results reflected in values. IU-CA-3000 CERTIFICATE CONTENTS - -------------------------------------------------------------------------------- SCHEDULE OF BENEFITS...........................................3 IMPORTANT TERMS................................................4 GENERAL PROVISIONS.............................................6 The Certificate The Owner The Beneficiary Change of Owner or Beneficiary Single Premium Payment Premium Taxes Market Value Adjustments DEATH BENEFIT PROVISIONS.......................................8 Death of Certificate Owner Prior to the First Annuity Payment Date Spousal Continuation upon Death of owner Death After the First Annuity Payment Date Death of Annuitant Death of Certificate Owner How to Claim Payments to Beneficiary VARIABLE ANNUITY PROVISIONS....................................9 The Variable Separate Account Variable Separate Account Divisions Changes Within the Variable Separate Account Variable Annuity Payments Annuity Unit Value Net Return Factor Deductions from the Variable Separate Account Divisions Mortality and Expense Risk Charges and Administrative Expenses Redemption Fees Your Right to Make Allocation Changes OTHER IMPORTANT INFORMATION...............................................12 Entire Contract Sending Notice to Us Reports to Owner Assignment - Using this Certificate as Collateral Security Certificate Changes - Applicable Tax Law Misstatement of Age or Sex Non-Participating Contestability Authority to Make Agreements Required Note on Our Computations Payments We May Defer Surrender/Loan Value Copies of any additional Riders and Endorsements are at the back of this Certificate. THE SCHEDULE The Schedule gives specific facts about this Certificate and its coverage. Please refer to the Schedule while reading this Certificate. IU-CA-3000 2 SCHEDULE OF BENEFITS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Annuitant Owner [THOMAS J. DOE] [THOMAS J. DOE] - -------------------------------------------------------------------------------- Annuitant's Issue Age Annuitant's Sex Owner's Issue Age [55] [MALE] [55] - -------------------------------------------------------------------------------- Premium Annuity Option Residence Status [$10,000] [20-YEAR PERIOD CERTAIN] [IOWA] - -------------------------------------------------------------------------------- Contract Date First Annuity Payment Date Payment Mode [JANUARY 1, 2004] [FEBRUARY 1, 2004] [MONTHLY] - -------------------------------------------------------------------------------- Separate Account(s) [SEPARATE ACCOUNT B] - -------------------------------------------------------------------------------- ANNUITY OPTION: [ 20 -YEAR PERIOD CERTAIN ANNUITY] Annuity payments will begin on the First Annuity Payment Date shown above if the Annuitant is then living and continue until the Number of Guaranteed Payments shown below has been made. ALL ANNUITY PAYMENTS WILL BE MADE ON A [VARIABLE AND FIXED] BASIS NUMBER OF GUARANTEED PAYMENTS: [240] [FIXED ANNUITY PAYMENT: [$1039.24] FIXED ANNUITY PAYMENT RATE: [1.5%] [INCREASING FIXED ANNUITY PAYMENT OPTION: Under this option, the Fixed Annuity Payment shown above will increase annually by [1%], compounded annually. ] [INITIAL] ESTIMATED VARIABLE ANNUITY PAYMENT: [$2239.02] Variable annuity payments are not guaranteed and will fluctuate according to the investment experience of the Divisions of the Variable Separate Account as elected by you.] [VARIABLE ANNUITY ASSUMED INTEREST RATE: [3.0%] OPTIONAL RIDERS [Guaranteed Minimum Income Rider (GMIR) GMIR Payment: [$ 2015.12] GMIR Factor: [90%] of the Initial Estimated Variable Annuity Payment Maximum GMIR Charge: [0.005535]% deducted daily (equivalent to an annual rate of [2.00%]) GMIR Period: [5 years] beginning on the Certificate Date.] [VARIABLE SEPARATE ACCOUNT DIVISIONS ELECTED BY YOU Your Premium has been invested as follows: Variable Separate Account Divisions Percentage of Premium Payment [Pioneer Mid-Cap Value [50% Fidelity VIP Growth Portfolio] 50%] - ------------------------------------- --------------------------------- Total 100% IU-CA-3000 3A SCHEDULE OF BENEFITS (Continued) - -------------------------------------------------------------------------------- [RIGHT TO WITHDRAW OPTION You have the right to take withdrawals under the Certificate. To take a withdrawal, you must provide written notice satisfactory to us at our Customer Service Center. For withdrawals from any portion of the Certificate representing Fixed Annuity Payments, if applicable, only one withdrawal may be made per Certificate Year and no withdrawals may be made before the later of (a) the end of the first Certificate Year; or (b) the First Annuity Payment Date. We may collect a Surrender Charge for early withdrawals and any redemption fees imposed by the mutual fund or other investment company as a result of the transaction. The Surrender Charge, if any, will be calculated using the Surrender Charge Schedule shown below. Our approval is needed if, after a Partial Withdrawal, any remaining Annuity Payments would be less than [$50] monthly or [$250] annually for all other modes. After a Partial Withdrawal, any portion of Guaranteed Payments withdrawn will reduce remaining Guaranteed Payments proportionately. [Amount Available for Withdrawal - Fixed Annuity The amount available for withdrawal from any portion of the Certificate representing Fixed Annuity Payments is equal to the present value of any remaining Fixed Annuity Guaranteed Payments determined by using the Fixed Annuity Payment Rate as of the Valuation Date immediately following the date we receive your written request, adjusted by any Market Value Adjustment, less any applicable Surrender Charge. ] [Amount Available for Withdrawal - Variable Annuity The amount available for withdrawal from any portion of the Certificate representing Variable Annuity Payments is equal to the present value of any remaining Variable Annuity Guaranteed Payments determined by using the Variable Annuity Assumed Interest Rate shown in the Schedule as of the Valuation Date immediately following the date we receive your written request, less any applicable Surrender Charge and redemption fees.] SURRENDER CHARGE SCHEDULE A Surrender Charge may be imposed as a percentage of the amount withdrawn in the event a full or partial withdrawal is taken under the Right to Withdraw Option. The percentage imposed at time of withdrawal depends on the number of complete years that have elapsed since the Certificate Date as follows: [Complete Years Elapsed Since Certificate Date: [0 1 2 3 4 5 6 7+ - ----------------------------------------------- --- --- --- --- --- --- --- --- Surrender Charges (Variable Payments): 7% 6% 5% 4% 3% 2% 1% 0%]] [Complete Years Elapsed Since Certificate Date: [0 1 2 3 4 5 6 7+ - ----------------------------------------------- --- --- --- --- --- --- --- --- Surrender Charges (Fixed Payments): NA* 6% 5% 4% 3% 2% 1% 0%] *No withdrawals are allowed from Fixed Annuity Payments during the first Certificate Year]] [FLEXIBLE PERIOD OPTION Beginning on the second Certificate Anniversary and each Certificate Anniversary thereafter, you may elect to change the duration of your Guaranteed Payments or convert your Annuity Option shown in the Schedule to a Life Income Annuity provided: (1) The Certificate is issued as a Period Certain Annuity (with no Life contingency); (2) There are Guaranteed Payments remaining under the Certificate; (3) You have the right to make withdrawals under the Certificate, as shown in the Schedule; and (4) No optional Guaranteed Minimum Income Rider is attached and made a part of this Certificate, in which case this option may not be exercised while such Rider is in effect. IU-CA-3000 3A CONT'D SCHEDULE OF BENEFITS (Continued) - -------------------------------------------------------------------------------- To exercise this Option, you must provide us your written request satisfactory to us at our Customer Service Center at least 30 days prior to any Certificate Anniversary after the first. The change will take effect on the Certificate Anniversary immediately following the date we receive your written request ("the FPO Effective Date"). Any change to the duration of your Annuity Payments must meet the following conditions: (1) The period during which remaining Guaranteed Payments are to be made must be at least 5 years in duration; (2) any decrease in the period in which remaining Guaranteed Payments are to be made must result in no less than a total period of 10 years from the Certificate Date; and (3) any increase in the period in which remaining Guaranteed Payments are to be made must not exceed the earlier of: (i) in the case of a Certificate issued as a qualified plan, the Annuitant(s) remaining life expectancy; otherwise, 50 years (30 years for Fixed Annuity Payments) from the Certificate Date; or (ii) age 100. Our approval is needed if, after a Partial Withdrawal, any remaining Annuity Payments would be less than [$50] monthly or [$250] annually for all other modes. If you elect to convert your Annuity Payment option to Life Income Annuity, you may not exercise this Option again. The withdrawal value used to calculate the new Annuity Payments is equal to: (1) Under the Fixed Annuity portion of the Certificate, the present value of any remaining Fixed Annuity Guaranteed Payments determined by using the Fixed Annuity Payment Rate, adjusted by any Market Value Adjustment, as of the FPO Effective Date; and (2) Under the Variable Annuity portion of the Certificate, the present value of any remaining Variable Annuity Guaranteed Payments determined by using the Assumed Interest Rate as of the FPO Effective Date. No Surrender Charges will apply in calculating the withdrawal value under this option. [DEDUCTIONS FROM THE VARIABLE SEPARATE ACCOUNT DIVISIONS Mortality and Expense Risk Charge - We deduct a charge of not more than [0.004141%] from the Net Rate of Return on a daily basis (equivalent to an annual maximum rate of [1.50%]) for mortality and expense risks. Asset-Based Administrative Charge - We deduct a charge of not more than [0.000686%] from the Net Rate of Return on a daily basis [equivalent to an annual maximum rate of [0.25%] to compensate us for a portion of our ongoing administrative expenses. Redemption Fees - We may deduct the amount of any redemption fees imposed by a mutual fund or other investment company in which the Separate Account Divisions invest as a result of any full or partial withdrawals, reallocations or other transactions directed by you. EXCESS ALLOCATION CHARGE [$25.] Any charge will be deducted from the Annuity Payment next following the date of any excess allocation change(s). ] IU-CA-3000 3A CONT'D IMPORTANT TERMS - -------------------------------------------------------------------------------- ANNUITANT - The person designated by you to be the measuring life in determining Annuity Payments and whose death may result in payment of any death proceeds. The Annuitant must be a natural person. You are the Annuitant unless another Annuitant has been named by you and is shown in the Schedule. ANNUITY - a periodic payment to begin at a specified or contingent date and to continue for a fixed period (the Period Certain) and/or for the duration of a designated life or lives. ANNUITY OPTION - The option selected by you and shown in the Schedule that determines the form and amount of Annuity Payments. ANNUITY PAYMENT - The periodic payment you, or the Payee if different, receive on either a variable basis or fixed basis, or a combination thereof, as elected by you. ANNUITY UNIT - the measure for valuing a Variable Annuity on and after the First Annuity Payment Date. The dollar value of each unit fluctuates with the experience of the Variable Separate Account Divisions available for investment under the Certificate. ASSUMED INTEREST RATE - The rate selected by you which is used to calculate the Variable Annuity Payments under the Certificate and to determine withdrawal values, as appropriate. The Assumed Interest Rate is shown in the Schedule. BENEFICIARY - The person designated by you to receive death proceeds in the case of the Annuitant's death (or joint Annuitant's death if applicable) if there is no surviving Owner or joint Owner. BUSINESS DAY - Any day the New York Stock Exchange ("NYSE") is open for trading, or any day on which the Securities and Exchange Commission ("SEC") requires that mutual funds, unit investment trusts or other investment portfolios be valued, excluding federal holidays, CERTIFICATE ANNIVERSARY - The anniversary of the Certificate Date. CERTIFICATE DATE - The date we received your premium and upon which we begin determining the Certificate values. This date is used to determine Certificate months, processing dates, years, and anniversaries. CERTIFICATE YEAR - the period between Certificate Anniversaries. CONTRACTHOLDER - The entity to whom the group contract is issued. ESTIMATED VARIABLE ANNUITY PAYMENT - The estimated periodic payments you receive, if so elected by you, under a Variable Annuity which, when based on the experience of a separate account, are not guaranteed and will fluctuate according to the investment experience of the Variable Separate Account Divisions elected by you. The estimated Variable Annuity Payment, if any, is shown in the Schedule. FIXEDANNUITY - An Annuity with benefit payments which are fixed and will not fluctuate during the payment period. FIXEDANNUITY PAYMENT - The fixed periodic payment you receive, if so elected by you, under a Fixed Annuity. Such payments, if any, are supported by the General Account and are shown in the Schedule. FIXEDANNUITY PAYMENT RATE - The rate used to calculate the Fixed Annuity Payments, if any, under the Certificate and to determine withdrawal values, as appropriate. The initial Fixed Annuity Payment Rate is shown in the Schedule. This rate may change if any Flexible Period Option is exercised. FIRST ANNUITY PAYMENT DATE - the date on which the first annuity periodic payment is paid. GENERAL ACCOUNT - An account which contains all of our other assets other than those held in our Separate Account. It is used to support Fixed Annuity Payments. IU-CA-3000 4 IMPORTANT TERMS (continued) - -------------------------------------------------------------------------------- GUARANTEED PAYMENT - A periodic payment that is due whether or not the Annuitant, or Joint Annuitant if applicable, is living on date the Guaranteed Payment is due. ISSUEAGE -The age of the Owner, or that of the Annuitant if different, on his or her birthday nearest the Certificate Date. JOINT LIFE INCOME ANNUITY - An Annuity issued on the lives of two individuals for which payments are based on whether or not at least one of the Annuitants is living on the date the Annuity Payment is due. Payments cease at the death of both Annuitants. JOINT LIFE INCOME WITH PERIOD CERTAIN ANNUITY - An Annuity issued on the lives of two individuals with Guaranteed Payments that continue for a specified period of time without being dependent upon the survival of the Annuitant or joint Annuitant and continue thereafter in whole or in part as long as at least one of the Annuitants is living. LIFE INCOME ANNUITY - An Annuity for which payments are based soley on whether or not the Annuitant is living on the date the Annuity Payment is due. Payments cease at the Annuitant's death. LIFE INCOME WITH PERIOD CERTAIN ANNUITY - An Annuity with Guaranteed Payments that continue for a specified period of time and continue thereafter as long as the Annuitant is living. MARKET VALUE ADJUSTMENT - A positive or negative adjustment applied (a) to any portion of Fixed Annuity Guaranteed Payments withdrawn; or (b) to determine the withdrawal value under Flexible Period Option, if applicable. NET RATE OF RETURN - The Net Rate of Return is equal to: (1) The value of the shares of the Division at the end of a Valuation Date; minus (2) The value of shares of the Division at the start of the Valuation Date; plus or minus (3) Taxes (or reserves for taxes) on the Separate Account (if any); divided by (4) The value of shares of the Division at the start of the Valuation Date; minus (5) The daily Asset Based Administrative Charges and Mortality and Expense Risk Charges described in the Schedule for each day in the Valuation Period. A Net Rate of Return may be more or less than 0%. The value of a share in a Division is equal to the net assets of the Division divided by the number of shares outstanding. Refer to the Variable Annuity Provisions of this Certificate for additional information. OWNER- You are the Owner of this Certificate. You have the rights and options described in this Certificate. "You" and "Your" refer to the Owner. PAYEE- The person designated by you to receive the Annuity Payments under the Certificate. You are the Payee, unless you name someone else. If the Payee dies before all payments have been made under the Certificate, the contingent Payee will become the Payee. If there no contingent Payee, you will become the Payee. PERIOD CERTAIN ANNUITY - An Annuity with Guaranteed Payments that continue for a specified period of time without being dependent upon the survival of the Annuitant. VALUATION DATE - The day at the end of a Valuation Period when each Division is valued. VALUATION PERIOD - Each business day together with any non-business days before it. VARIABLE ANNUITY - an Annuity with payments that fluctuate based on the net investment experience of the divisions of the Variable Separate Account. VARIABLE SEPARATE ACCOUNT DIVISION - Under a Variable Annuity, an investment option available in the Variable Separate Account. Any Variable Separate Account Divisions elected by you for the allocation of some or all of your Premium Payment are shown in the Schedule. IU-CA-3000 5 GENERAL PROVISIONS - -------------------------------------------------------------------------------- THE CERTIFICATE We provide benefits as stated in this Certificate. In return, you supply us with the single Premium Payment required to put this Certificate in effect. This Certificate, together with any attached Riders or Endorsements, constitutes the entire Certificate. Riders and Endorsements add provisions or change the terms of the basic Certificate. Riders and Endorsements added to comply with applicable tax law do not require your consent, but are subject to regulatory approval. THE OWNER You are the Owner of this Certificate. You are also the Annuitant unless another Annuitant has been named by you and is shown in the Schedule. You have the rights and options described in this Certificate. One or more people may own this Certificate. The sole Owner's estate will be the Beneficiary if no Beneficiary designation is in effect, or if the designated Beneficiary has predeceased the Owner. In the case of a joint Owner dying prior to the First Annuity Payment Date, the surviving Owner(s) will be deemed to be the Beneficiary(ies) and any other Beneficiary(ies) of record will be treated as the contingent Beneficiary(ies). See Death Benefit Provisions for more information. THE BENEFICIARY The Beneficiary will receive any remaining Guaranteed Payments due under this Certificate at the death of the Annuitant, and joint Annuitant if applicable, if there is no surviving Owner or joint Owner. We pay any remaining Guaranteed Payments to the primary Beneficiary. If the primary Beneficiary dies before the Annuitant, any remaining Guaranteed Payments are paid to the contingent Beneficiary, if any. If there is no contingent Beneficiary, we pay any remaining Guaranteed Payments to the Owner, if living, otherwise to the Owner's estate or legal successors. One or more persons may be named as primary Beneficiary or contingent Beneficiary. In the case of more than one Beneficiary, we will assume any remaining Guaranteed Payments are to be paid in equal shares to the surviving Beneficiaries. You may specify other than equal shares. See Death Benefit Provisions for more information. CHANGE OF OWNER OR BENEFICIARY During the Annuitant's lifetime and while this Certificate is in effect you can transfer ownership of this Certificate. To make a Change of Owner, you must send us written notice of the change in a form satisfactory to us. If there are joint Owners, both must agree to the change. The change will take effect as of the day the notice is signed. The change will not affect any payment made or action taken by us before recording the change at our Customer Service Center. You also have the right to change Beneficiaries, unless you designate the primary Beneficiary as irrevocable. When an irrevocable Beneficiary has been designated, you and the irrevocable Beneficiary may have to act together to exercise the rights and options under this Certificate. When naming or changing the Beneficiary(ies), you may specify the form of any remaining Guaranteed Payments as described under the Death Benefit Provision of this Certificate. We will honor the specified form of payment to the extent permitted under Section 72(s) of the Internal Revenue Code or the equivalent provisions of the U.S. Treasury Department rules for qualified plans. IU-CA-3000 6 GENERAL PROVISIONS(continued) - -------------------------------------------------------------------------------- SINGLE PREMIUM PAYMENT This is a single premium annuity. However, the single premium may be paid in one lump sum or in installments anytime prior to the First Annuity Payment Date. Any such planned installments must be identified at the time the Certificate is issued and be received by us at our Customer Service Center prior to the First Annuity Payment Date. You may allocate your Premium Payment to Fixed Annuity Payments, Variable Annuity Payments, or a combination thereof. The amount of the premium applied to this Certificate will be the initial premium received as shown in the Schedule, minus a deduction for Premium Taxes, if any. If any subsequent payments are received after the Certificate Date, but before the First Annuity Payment Date, the initial calculation of Fixed Annuity Payments will be considered an estimate until the First Annuity Payment Date. We may defer acceptance of or return any subsequent Premium Payments received before the First Annuity Payment Date. PREMIUM TAXES We deduct the amount of any premium or other state and local taxes levied by any state or governmental entity when such taxes are incurred. MARKET VALUE ADJUSTMENTS A Market Value Adjustment will be applied to any portion of a Fixed Annuity Payment withdrawn to determine the withdrawal value under the Certificate. The Market Value Adjustment is determined by multiplying the amount withdrawn by the following factor: 1 + I N/365 ------------------------ 1 + J + .0050 - 1 The applicable maturity for Index Rate I is the certain period divided by 2 rounded up to the nearest whole number and the applicable maturity for Index Rate J is the remaining certain period divided by 2 rounded up to the nearest whole number. The calendar month of Index Rate determination for Index Rate I is the month the Certificate was issued or the month of the most recent change (if any) under the Flexible Period Option. The calendar month of Index Rate determination for Index Rate J is the month the transaction is effective. N is equal to the number of days remaining in the certain period, divided by 2. Index Rate The Index Rate is the average of the Ask Yields for the U.S. Treasury Strips as reported by a national quoting service for the applicable maturity. The average is based on the period from the 22nd day of the calendar month two months prior to the calendar month of Index Rate determination to the 21st day of the calendar month immediately prior to the month of determination. The applicable maturity date for these U.S. Treasury Strips is derived from the length of the Period Certain ("certain period"). If the Ask Yields are no longer available, the Index Rate will be determined using a suitable replacement method subject to any required regulatory approval. We currently set the Index Rate once each calendar month. However, we reserve the right to set the Index Rate more frequently than monthly, but in no event will such Index Rate be based on a period less than 28 days. Market Value Adjustments will be applied as follows: (1) The Market Value Adjustment will be applied to the amount withdrawn before deduction of any applicable Surrender Charge. (2) The Market Value Adjustment will be calculated on the total amount that must be withdrawn in order to provide the amount requested IU-CA-3000 7 DEATH BENEFIT PROVISIONS - -------------------------------------------------------------------------------- DEATH OF OWNER PRIOR TO THE FIRST ANNUITY PAYMENT DATE If you die prior to the First Annuity Payment Date, the entire interest in the Certificate must be distributed within five years of the date of death, or payments may be made over a period not extending beyond the life expectancy of the Beneficiary, provided such payments begin not later than one year after the date of death. The "entire interest" means the Premium Paid plus any increase or minus any decrease in the value of amounts allocated to the Separate Account as of the date we receive due proof of death. Spousal Continuation upon Death of Owner If, at the death of the Owner (who is not also the Annuitant), the surviving spouse of the deceased Owner is the Beneficiary, then such surviving spouse may elect to continue the Certificate as their own pursuant to Internal Revenue Code Section 72(s) or the equivalent provisions of the U.S. Treasury Department rules for qualified plans. However, on the death of the surviving spouse, this provision may not be used again. DEATH AFTER THE FIRST ANNUITY PAYMENT DATE Death of Annuitant If the Annuitant, and Joint Annuitant if applicable, dies and there is no surviving Owner or joint Owner, any remaining Guaranteed Payments will be paid to the Beneficiary in the form specified in the Schedule upon receipt of due proof of the Annuitant's death at our Customer Service Center. Such payments will be paid at least as rapidly as under the method of distribution then in effect. In all events, distributions under the Certificate must be made as required by applicable law. If this Certificate is issued as a Life with Period Certain Annuity, within six months of such death, the Beneficiary may elect to receive the withdrawal value of any remaining Guaranteed Payments in a lump sum. If this Certificate is issued as a Period Certain Annuity or if you have the right to make withdrawals under the Certificate as shown in the Schedule, the Beneficiary may elect to receive the withdrawal value of any remaining Guaranteed Payments in a lump sum at any time. The withdrawal value under this provision is equal to: (a) Under the Fixed Annuity portion of the Certificate, if applicable, the present value of any remaining Fixed Annuity Guaranteed Payments determined by using the Fixed Annuity Payment Rate as of the Valuation Date immediately following the date we receive due proof of the Annuitant's death, adjusted by any Market Value Adjustment; and (b) Under the Variable Annuity portion of the Certificate, if applicable, the present value of any remaining Variable Annuity Guaranteed Payments determined by using the Assumed Interest Rate as of the Valuation Date immediately following the date we receive due proof of the Annuitant's death. No Surrender Charges will apply in calculating the withdrawal value under this provision. To take the withdrawal value of any remaining Variable and/or Fixed Annuity Guaranteed Payments, as applicable, you must provide us with your written request satisfactory to us at our Customer Service Center. Death of Owner If you die and you are not the Annuitant, payments will continue to the Payee in the form specified in the Schedule. If no Payee designated by you survives you, payments will be made to your estate. Such payments will be paid at least as rapidly as under the method of distribution then in effect. How to Claim Payments to Beneficiary We must receive proof of the Annuitant's death (and Joint Annuitant's death if applicable) at our Customer Service Center before we will make any remaining payments to the Beneficiary. We will calculate any proceeds payable as of the date we receive due proof of death. The Beneficiary should contact our Customer Service Center for instructions IU-CA-3000 8 VARIABLE ANNUITY PROVISIONS - -------------------------------------------------------------------------------- THE VARIABLE SEPARATE ACCOUNT The Variable Annuity Payments under this Certificate, if any, are provided through investments which may be made in our Separate Account (the "Account"), a unit investment trust Separate Account, organized in and governed by the laws of the State of Iowa, our state of Domicile. The Account is divided into Divisions, each of which is available for investment under this Certificate. The Account is kept separate from our General Account and any other Separate Accounts we may have. It is used to support Variable Annuity Certificates and may be used for other purposes permitted by applicable laws and regulations. We own the assets in the Separate Account. Assets equal to the reserves and other liabilities of the account will not be charged with liabilities that arise from any other business we conduct; but, we may transfer to our General Account assets which exceed the reserves and other liabilities of the Variable Separate Account. Income and realized and unrealized gains or losses from assets in the Variable Separate Account are credited to or charged against the Account without regard to other income, gains or losses in our other investment accounts. The Variable Separate Account will invest in mutual funds, unit investment trusts and other investment portfolios which we determine to be suitable for this Certificate's purposes. The Variable Separate Account is treated as a unit investment trust under Federal securities laws. It is registered with the Securities and Exchange Commission ("SEC") under the Investment Company Act of 1940. The Variable Separate Account is also governed by state law as described above. Variable Separate Account Divisions A unit investment trust Separate Account is divided into Divisions, each investing in a designated investment portfolio. The Divisions and the investment portfolios designated may be managed by a separate investment adviser. Such adviser may be registered under the Investment Advisers Act of 1940. Changes within the Variable Separate Account We may, from time to time, make additional Variable Separate Account Divisions available to you. These Divisions will invest in investment portfolios we find suitable for the group contract. We also have the right to eliminate Divisions from a Variable Separate Account, to combine two or more Divisions or to substitute a new portfolio for the portfolio in which a Division invests. A substitution may become necessary if, in our judgment, a portfolio or Division no longer suits the purpose of the group contract. This may happen due to a change in laws or regulations, a change in a portfolio's investment objectives or restrictions, because the portfolio or Division is no longer available for investment, or for some other reason. We will obtain any required regulatory approvals before making such a substitution Subject to any required regulatory approvals, we reserve the right to transfer assets of the Variable Separate Account which we determine to be associated with the class of contracts to which the group contract belongs, to another Variable Separate Account or Division. When permitted by law, we reserve the right to: (1) deregister a Variable Separate Account under the Investment Company Act of 1940; (2) operate a Variable Separate Account as a management company under the Investment Company Act of 1940, if it is operating as a unit investment trust; (3) operate a Variable Separate Account as a unit investment trust under the Investment Company Act of 1940, if it is operating as a managed Variable Separate Account; (4) restrict or eliminate any voting rights of Owners, or other persons who have voting rights to a Variable Separate Account; and (5) combine a Variable Separate Account with other Variable Separate Accounts. IU-CA-3000 9 VARIABLE ANNUITY PROVISIONS (Continued) - -------------------------------------------------------------------------------- VARIABLE ANNUITY PAYMENTS If Variable Annuity Payments are chosen, the initial payment for the option chosen reflects the Variable Annuity Assumed Interest Rate shown in the Schedule. Thereafter, the Divisions of the Variable Separate Account must earn the Assumed Interest Rate shown in the Schedule plus enough to cover any deductions stated in the Certificate if future Annuity Payments are to remain level. If earnings exceed this amount, Variable Annuity Payments will increase; if earnings are less than this amount, Variable Annuity Payments will decrease. Annuity Units The Number of Annuity Units is equal to the portion of the first Estimated Variable Annuity Payment allocated to each Division divided by the appropriate Annuity Unit Value on the Valuation Date. Thereafter, the number of Annuity Units remains unchanged except when you make an allocation change. Each Variable Annuity Payment is equal to the sum of the products of each Annuity Unit Value on the Valuation Date for that payment multiplied by the appropriate number of Annuity Units for each Division. Annuity Unit Value On any Valuation Date, an Annuity Unit Value is equal to: (1) The Annuity Unit Value on the previous Valuation Day; multiplied by (2) The Annuity Net Return Factor(s) for the Valuation Date; multiplied by (3) A Factor to reflect the Assumed Interest Rate shown in the Schedule The Annuity Unit Value and Annuity Payment amount may go up or down due to investment gain or loss. Net Return Factor The Net Return Factor(s) is(are) used to compute all Variable Annuity Payments for any Division in the Variable Separate Account. The Net Return Factor for each Division is equal to 1.0000 plus the Net Rate of Return. The Net Rate of Return is equal to: (1) The value of the shares of the Division at the end of a Valuation Date; minus (2) The value of shares of the Division at the start of the Valuation Date; plus or minus (3) Taxes (or reserves for taxes) on the Separate Account (if any); divided by (4) The value of shares of the Division at the start of the Valuation Date; minus (5) The daily Asset Based Administrative Charges and Mortality and Expense Risk Charges described in the Schedule for each day in the Valuation Period. A Net Rate of Return may be more or less than 0%. The value of a share in a Division is equal to the net assets of the Division divided by the number of shares outstanding. Annuity Payments shall not be changed due to mortality or expense results. DEDUCTIONS FROM THE VARIABLE SEPARATE ACCOUNT DIVISIONS Mortality and Expense Risk Charges and Administrative Expenses We deduct a charge from the Net Rate of Return on a daily basis for mortality and expense risks and to compensate us for a portion of our ongoing administrative expenses. The maximum charges for these expenses as of the Certificate Date are shown in the Schedule, but we may charge less than the maximum. IU-CA-3000 10 VARIABLE ANNUITY PROVISIONS (Continued) - -------------------------------------------------------------------------------- REDEMPTION FEES We may deduct the amount of any redemption fees imposed by a mutual fund or other investment company in which the Separate Account Divisions invest as a result of any full or partial withdrawals, reallocations or other transactions directed by you YOUR RIGHT TO MAKE ALLOCATION CHANGES You may make allocation changes among the available Divisions of the Variable Separate Account after the end of the Right to Examine period. Allocation changes in excess of twelve in any Certificate Year are subject to an Excess Allocation Charge as shown in the Schedule. Any charge will be deducted from the Annuity Payment next following the date of any excess allocation change(s). To make an allocation change, you must provide us with satisfactory notice at our Customer Service Center. The change will take effect when we receive the notice. We will monitor transfer activity and will restrict transfers that constitute Frequent Trading. Our current definition of Frequent Trading is more than one purchase and sale of the same underlying fund within a 30-day period. We may modify our general standard, or the standard as it may apply to a particular fund, at any time without prior notice, if required by the underlying fund(s) in which Separate Account Divisions invest and/or by state or federal regulatory requirements, or based on our business judgement. We will notify you in writing within 30 days of such modification. IU-CA-3000 11 OTHER IMPORTANT INFORMATION - -------------------------------------------------------------------------------- ENTIRE CONTRACT The group contract, including any attached Riders, endorsements, amendments and the application of the Contractholder, constitute the entire contract between the Contractholder and us. All statements made by the Contractholder, any Owner or any Annuitant will be deemed representations and not warranties. SENDING NOTICE TO US Whenever written notice is required, send it to our Customer Service Center. The address of our Customer Service Center is shown on the cover page. Please include your Certificate number in all correspondence. REPORTS TO OWNER We will send you a report at least once during each Certificate Year. The report will show the Annuity Unit values as of the end of the Certificate Year. The report will also show the allocation of the Annuity Unit values as of such date and the amounts, if any, deducted from or added to the Annuity Unit value since the last report. The report will also include any information that may be currently required by the insurance supervisory official of the jurisdiction in which the Certificate is delivered. We will also send you copies of any shareholder reports of the portfolios in which the Divisions of the Variable Separate Account invest, as well as any other reports, notices or documents required by law to be furnished to Owners. ASSIGNMENT - USING THIS CERTIFICATE AS COLLATERAL SECURITY You may assign this Certificate as collateral security for a loan or other obligation. This does not change the ownership. Your rights and any Beneficiary's right are subject to the terms of the assignment. The Beneficiary's rights may be subordinate to those of an assignee unless the Beneficiary was designated as an irrevocable Beneficiary prior to the assignment. To make or release an assignment, we must receive written notice satisfactory to us, at our Customer Service Center. We are not responsible for the validity of any assignment. CERTIFICATE CHANGES - APPLICABLE TAX LAW We reserve the right to make changes in this Certificate or its Riders to the extent necessary to continue to qualify this Certificate as an annuity. Any such changes will apply uniformly to all Certificates that are affected. You will be given advance written notice of such changes. MISSTATEMENT OF AGE OR SEX If an age or sex has been misstated, the amounts payable or benefits provided by this Certificate will be those that the Premium Payment made would have bought at the correct age or sex. NON-PARTICIPATING This Certificate does not participate in our divisible surplus. CONTESTABILITY This Certificate is incontestable from its date of issue. IU-CA-3000 12 OTHER IMPORTANT INFORMATION (Continued) - -------------------------------------------------------------------------------- AUTHORITY TO MAKE AGREEMENTS All agreements made by us must be signed by one of our officers. No other person, including an insurance agent or broker, has the authority to: (1) change any of this Certificate's terms; (2) extend the time for Premium Payments; or (3) make any agreement binding on us. REQUIRED NOTE ON OUR COMPUTATIONS We have filed a detailed statement of our computations with the insurance supervisory official in the jurisdiction where this Certificate is delivered. The values are not less than those required by the law of that state or jurisdiction. Any benefit provided by an attached optional benefit rider will not increase these values unless otherwise stated in that rider. PAYMENTS WE MAY DEFER We may not be able to determine the value of the assets in the Variable Separate Account because: (1) The NYSE is closed for trading; (2) the SEC determines that a state of emergency exists; (3) an order or pronouncement of the SEC permits a delay for the protection of Owners; or (4) the check used to pay the premium has not cleared through the banking system. This may take up to 15 days. During such times, as to amounts allocated to the Variable Separate Account, we may delay: (1) determination and payment of any death benefit if death occurs before the First Annuity Payment Date; (2) allocation changes among the available Divisions of the Variable Separate Account; or (3) making a Variable Annuity Payment. SURRENDER/LOAN VALUE Except as provided in the Right to Examine provision, this Certificate has no loan or surrender value. IU-CA-3000 13 SINGLE PREMIUM IMMEDIATE FIXED AND VARIABLE ANNUITY CERTIFICATE - NO DIVIDENDS - -------------------------------------------------------------------------------- Non-participating. Investment results reflected in Variable Annuity Payments. IU-CA-3000 EX-99.B4D 5 iura-gmir.txt GUARANTEED MINIMUM INCOME RIDER ING USA GUARANTEED MINIMUM ANNUITY AND LIFE INCOME RIDER INSURANCE COMPANY ING USA is a stock company domiciled in Iowa - -------------------------------------------------------------------------------- ING USA ANNUITY AND LIFE INSURANCE COMPANY (HEREINAFTER CALLED WE, US AND OUR) The Contract to which this Rider is attached is hereby modified by the provisions of this Rider. This Rider's provisions control where there is a conflict between this Rider and the Contract. Where used in this Rider, the term Contract shall mean Certificate when this Rider is attached to a Certificate, and the term "GMIR" shall mean Guaranteed Minimum Income Rider. This Rider becomes effective as of the Contract Date (the "Rider Date"). Benefits provided and charges made under the terms and conditions of this Rider are described below. This Rider provides benefits only to the end of the GMIR Period shown in the Contract Schedule. This Rider will remain in effect until terminated under any one of the conditions described under the Rider Termination provision below. Beginning with the initial Variable Annuity Payment, and each Variable Annuity Payment thereafter, to the end of the GMIR Period shown in the Contract Schedule, the Variable Annuity Payment due under the Contract to which this Rider is attached is guaranteed to never be less than the GMIR Payment shown in the Contract Schedule, provided the following conditions are met: (1) The total amount applied to the Annuity Option shown in the Contract Schedule is taken as a Variable Annuity Payment; and (2) The Variable Annuity Payments are made based on one of the following Annuity Options as shown in the Contract Schedule: (i) a Single or Joint Life Income, other than a Joint Life Income with Reduced Payments to Survivor; (ii) a Single or Joint Life Income with Period Certain wherein payments are guaranteed for 15 years or more, unless you have elected the Right to Withdraw Option as shown in the Contract Schedule; or (iii)a Period Certain Annuity (with no Life contingency) wherein payments are guaranteed for 15 years or more. The GMIR Payment is determined by multiplying the Initial Estimated Variable Annuity Payment by the GMIR Factor shown in the Contract Schedule. If, at any time prior to the end of the GMIR Period shown in the Contract Schedule and during the term of this Rider, the Variable Annuity Payment due under the Contract falls below the GMIR Payment shown in the Contract Schedule, we will pay the difference between (1) and (2) where (1) is equal to the GMIR Payment shown in the Contract Schedule and (2) is equal to the Variable Annuity Payment due at that time, so that the total Variable Annuity Payment on a payment date will never be less than the GMIR Payment shown in the Contract Schedule. While this Rider is in effect, no changes may be made to the Annuity Option shown in the Contract Schedule. Partial Withdrawals If withdrawals are taken under the Contract, the Estimated Variable Annuity Payment and GMIR Payment will be reduced proportionately each time a partial withdrawal is made. IU-RA-3003 RIDER CHARGE We deduct a charge for this Rider on a daily basis from the Net Rate of Return. The Maximum Charge on the Rider Date is stated in the Contract Schedule, but we may charge less than the maximum. If the Contract to which this Rider is attached is terminated for any reason, the Rider Charge for the current period will be deducted from the Net Rate of Return prior to termination of the Contract. RIDER TERMINATION This Rider cannot be canceled by you. However, it will terminate upon the occurrence of any one of the following events: 1. The Contract to which this Rider is attached terminates; 2. You die, unless the Contract is continued on the life of your spouse, in which case the Rider will continue with your surviving spouse as Owner; 3. Death proceeds become payable under the Contract; or 4. The end of the GMIR Period shown in the Contract Schedule. This Rider has no surrender value or other non-forfeiture benefits upon termination. All other terms and provisions of the Contract will continue to apply. Rider Date: ------------------------ Signed;[ Keith Gubbay ] President IU-RA-3003 2 EX-99.B4F 6 gara1039403b.txt 403(B) RETIREMENT ANNUITY RIDER/NON LOAN |||GOLDEN |||||AMERICAN 403(b) RIDER |||||||LIFE INSURANCE ||||COMPANY Golden American is a stock company domiciled in Delaware. - ------------------------------------------------------------------------------- The following language amends and takes precedence over contrary language in the Contract to which it is attached. The Effective Date of this Rider shall be the later of January 1, 2002, or the Contract Date. On the basis of the application for which this Contract is issued and to which this Rider is attached, the Contract is intended to qualify under Section 403(b) of the Internal Revenue Code. In the event of any conflict between the provisions of this Rider and the Contract, the provisions of this Rider will control. 1. All references in this Rider to: (a) "IRC" means the Internal Revenue Code of 1986, as amended from time to time. (b) "Contract" means the Contract or Certificate to which this Rider is attached. (c) "Employee or Owner" means the Owner of the Contract to which this Rider is attached. (d) "Designated Beneficiary" means the beneficiary named by the Owner in the Contract. (e) "We", "our", and "us" means Golden American Life Insurance Company. 2. This Contract is nontransferable. Other than to us, it may not be sold, assigned, discounted or pledged as collateral for a loan or as security for the performance of an obligation or for any other purpose. 3. This Contract is valid only if it is purchased: (a) for an Employee by an employer as described in IRC Section 501(c)(3) which is exempt from income tax under IRC Section 501(a); or (b) for an Employee who performs services for an educational organization described in IRC Section 170(b)(1)(A)(ii), by an employer which is a state, a political subdivision of a state, or an agency or instrumentality of a state or political subdivision thereof; or (c) by an individual in a rollover as permitted by IRC Sections 402(c)(1), 403(b)(8), 403(b)(10) and 408(d)(3); or (d) by an individual in a direct transfer meeting the requirements of Internal Revenue Service Rev. Rul. 90-24. 4. The premium payments applicable to this contract must be attributable to the Employee's salary reduction agreement, or to permitted employer contributions, except in the case of a rollover contribution or direct transfer. The premium payments must be in cash. Except as provided in Paragraph 5 below, the total of applicable premium payments made pursuant to a salary reduction agreement for any tax year shall not exceed the lesser of: (a) $11,000 (or such higher amount as may be permitted under IRC Section 402(g)(1) in effect for such tax year, except to the extent of any alternative limitation permitted under IRC Section 402(g)(7)); or (b) the applicable limit described in IRC Section 415. Except as provided in Paragraph 5 below or in the case of a rollover contribution or direct transfer, total premium payments in any tax year, whether attributable to the Employee's salary reduction agreement, or to permitted employer contributions, shall not exceed the applicable limit described in IRC Section 415. In addition, premium payments under this Contract may not exceed those permitted under the incidental death benefit rules of Treasury Regulations Section 1.401-1(b)(1)(i), as interpreted by applicable Revenue Rulings. Accordingly, in no event shall the aggregate amount of premiums under this Contract, at any time, exceed fifty percent (50%) of the aggregate amount of the cumulative employer contributions (including salary reduction contributions) allocated to the Employee under the tax sheltered annuity program with respect to which this Contract is purchased. We reserve the right to refund premiums when necessary to comply with the foregoing limits. GA-RA-1039 5. An Employee who is eligible to make contributions to this Contract pursuant to a salary reduction agreement for any year and who has attained age 50 before the close of the year shall be eligible to make catch-up contributions in accordance with, and subject to the limitations of, IRC Section 414(v). Such catch-up contributions shall not be taken into account for purposes of the provisions of the Contract implementing the required limitations of IRC Sections 402(g), 403(b) and 415. The Contract shall not be treated as failing to satisfy the requirements of IRC Section 403(b)(12) by reason of the making of such catch-up contributions. 6. To the extent attributable to contributions made pursuant to salary reduction agreements, distribution of the assets of this Contract may not be made before the Owner: (a) attains age 59 1/2; (b) has a severance from employment; (c) dies; (d) becomes disabled; or (e) incurs a financial hardship (limited to contributions only, not earnings). The above restrictions do not apply with respect to that portion of the value of the Contract that is equal to the value of the Contract as of December 31, 1988. 7. (a) Notwithstanding any provision of this Contract to the contrary, the distribution of the Owner's interest in the Contract shall be made in accordance with the requirements of IRC Sections 403(b)(10) and 401(a)(9) and the regulations there under, the provisions of which are herein incorporated by reference, including Section 1.403(b)-3 of the Income Tax Regulations. The portion of this Contract that is equal to the undistributed value of the Contract as of December 31, 1986, shall be distributed in accordance with the incidental benefit requirements described in Q&A-3 of Section 1.403(b)-3 of the Income Tax Regulations. The required minimum distributions for this Contract may be withdrawn from another IRC 403(b) contract of the Owner in accordance with Q&A-4 of Section 1.403(b)-3 of the Income Tax Regulations. (b) If distributions are made in the form of an annuity on an irrevocable basis (except for acceleration), then distributions must satisfy the requirements of Q&A-4 of Section 1.401(a)(9)-6T of the Temporary Income Tax Regulations, rather than Paragraphs 7(c), 7(d), 7(e), and 8 below. (c) The Owner's entire interest in the Contract will commence to be distributed no later than the Owner's "required beginning date." The Owner's "required beginning date" will be the first day of April following the later of: (i) the calendar year in which the Owner attains age 70 1/2, or (ii) the calendar year in which the Owner retires from employment with the employer maintaining the plan applicable to this Contract. The Owner's "first distribution calendar year" will be the calendar year immediately preceding the Owner's required beginning date. (d) The amount to be distributed each year, beginning with the Owner's first distribution calendar year and continuing through the year of death, shall not be less than the quotient obtained by dividing the value of the Contract as of the end of the preceding year by the distribution period in the Uniform Lifetime Table in Q&A-2 of Section 1.401(a)(9)-9 of the Income Tax Regulations, using the Owner's age as of his or her birthday in the year. However, if the Owner's sole designated beneficiary is his or her spouse and such spouse is more than 10 years younger than the Owner, then the distribution period is determined under the Joint and Last Survivor Table in Q&A-3 of Section 1.401(a)(9)-9 of the Income Tax Regulations, using the ages as of the Owner's and spouse's birthdays in the year. (e) The required minimum distribution for the first distribution calendar year can be made as late as the Owner's required beginning date. The required minimum distribution for any other year must be made by the end of such year. GA-RA-1039 2 8. (a) Death On or After Required Distributions Commence. If the Owner dies on or after the required beginning date, the remaining portion of his or her interest will be distributed at least as rapidly as follows: (i) If the designated beneficiary is someone other than the Owner's surviving spouse, the remaining interest will be distributed over the remaining life expectancy of the designated beneficiary, with such life expectancy determined using the age of the beneficiary as of his or her birthday in the year following the year of the Owner's death, or over the period described in Paragraph 8(a)(iii) if longer. (ii) If the Owner's sole designated beneficiary is the Owner's surviving spouse, the remaining interest will be distributed over such spouse's life or over the period described in Paragraph 8(a)(iii) if longer. Any interest remaining after such spouse's death will be distributed over such spouse's remaining life expectancy determined using the spouse's age as of his or her birthday in the year of the spouse's death, or, if the distributions are being made over the period described in Paragraph 8(a)(iii), over such period. (iii)If there is no designated beneficiary, or if applicable by operation of Paragraph 8(a)(i) or 8(a)(ii), the remaining interest will be distributed over the Owner's remaining life expectancy determined in the year of the Owner's death. (iv) The amount to be distributed each year under Paragraph 8(a)(i), 8(a)(ii) or 8(a)(iii), beginning with the calendar year following the calendar year of the Owner's death, is the quotient obtained by dividing the value of the Contract as of the end of the preceding year by the remaining life expectancy specified in such paragraph. Life expectancy is determined using the Single Life Table in Q&A-1 of Section 1.401(a)(9)-9 of the Income Tax Regulations. If distributions are being made to a surviving spouse as the sole designated beneficiary, such spouse's remaining life expectancy for a year is the number in the Single Life Table corresponding to such spouse's age in the year. In all other cases, remaining life expectancy for a year is the number in the Single Life Table corresponding to the beneficiary's or Owner's age, as the case may be, in the year specified in Paragraph 8(a)(i), 8(a)(ii) or 8(a)(iii) and reduced by 1 for each subsequent year. (b) Death Before Required Beginning Date. If the Owner dies before the required beginning date, his or her entire interest will be distributed at least as rapidly as follows: (i) If the designated beneficiary is someone other than the Owner's surviving spouse, the entire interest will be distributed, starting by the end of the calendar year following the calendar year of the Owner's death, over the remaining life expectancy of the designated beneficiary, with such life expectancy determined using the age of the beneficiary as of his or her birthday in the year following the year of the Owner's death, or, if elected, in accordance with Paragraph 8(b)(iii). (ii) If the Owner's sole designated beneficiary is the Owner's surviving spouse, the entire interest will be distributed, starting by the end of the calendar year following the calendar year of the Owner's death (or by the end of the calendar year in which the Owner would have attained age 70 1/2, if later), over such spouse's life, or, if elected, in accordance with Paragraph 8(b)(iii). If the surviving spouse dies before distributions are required to begin, the remaining interest will be distributed, starting by the end of the Calendar year following the calendar year of the spouse's death, over the spouse's designated beneficiary's remaining life expectancy determined using such beneficiary's age as of his or her birthday in the year following the death of the spouse, or, if elected, will be distributed in accordance with Paragraph 8(b)(iii). If the surviving spouse dies after the distributions are required to begin, any remaining GA-RA-1039 3 interest will continue to be distributed over the spouse's remaining life expectancy determined using the spouse's age as of his or her birthday in the year of the spouse's death. (iii)If there is no designated beneficiary, or if applicable by operation of Paragraph 8(b)(i) or 8(b)(ii), the entire interest will be distributed by the end of the calendar year containing the fifth anniversary of the Owner's death (or of the spouse's death in the case of the surviving spouse's death before distributions are required to begin under Paragraph 8(b)(ii)). (iv) The amount to be distributed each year under Paragraph 8(b)(i) or 8(b)(ii) is the quotient obtained by dividing the value of the Contract as of the end of the preceding year by the remaining life expectancy specified in such paragraph. Life expectancy is determined using the Single Life Table in Q&A-1 of Section 1.401(a)(9)-9 of the Income Tax Regulations. If distributions are being made to a surviving spouse as the sole designated beneficiary, such spouse's remaining life expectancy for a year is the number in the Single Life Table corresponding to such spouse's age in the year. In all other cases, remaining life expectancy for a year is the number in the Single Life Table corresponding to the beneficiary's age in the year specified in Paragraph 8(b)(i) or 8(b)(ii) and reduced by 1 for each subsequent year. (c) The "value" of the Contract includes the amount of any outstanding rollover and transfer under Q&As-7 and -8 of Section 1.408-8 of the Income Tax Regulations. 9. Notwithstanding any provision of this Contract to the contrary that would otherwise limit an Owner's election under this Contract, an Owner may elect, at any time and in the manner prescribed by us, to have any portion of an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan specified by the Owner in a Direct Rollover. For the purpose of this paragraph, the following definitions apply: (a) ELIGIBLE ROLLOVER DISTRIBUTION is any distribution of all or any portion of the assets of the Contract, not including: (i) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Owner or the joint lives (or joint life expectances) of the Owner and the Owner's designated beneficiary, or for a specified period of ten years or more; (ii) any distribution to the extent such distribution is required under IRC Sections 401(a)(9) or 403(b)(10); and (iii) any amount that is distributed on account of hardship. In addition, the portion of any distribution that is not includible in the gross income of the Owner may be considered part of an Eligible Rollover Distribution; provided, however, such portion may be transferred only to an individual retirement account or annuity described in IRC Section 408(a) or (b), or to another annuity described in Section 403(b) that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible. (b) ELIGIBLE RETIREMENT PLAN IS: (i) an annuity described in IRC Section 403(b); (ii) an individual retirement account described in IRC Section 408(a); (iii)an individual retirement annuity described in IRC Section 408(b); (iv) an employee's qualified trust described in IRC Section 401(a) which is exempt from tax under IRC Section 501(a); (v) an annuity plan described in IRC Section 403(a); or (vi) an eligible deferred compensation plan under IRC Section 457(b) which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state GA-RA-1039 4 or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this Contract. (c) DIRECT ROLLOVER is a payment by us to the Eligible Retirement Plan specified by the Owner. (d) Owner, for the purposes of this paragraph, includes the Owner's surviving spouse and the Owner's spouse or former spouse who is an alternate payee under a qualified domestic relations order, as defined in IRC Section 414(p). 10. This Contract shall be for the exclusive benefit of the Owner or his or her beneficiary. The Owner's rights under this Contract will be non-forfeitable. 11. We reserve the right to amend or administer the Contract and Rider as necessary to comply with the provisions of the IRC, Internal Revenue Service Regulations or published Internal Revenue Service Rulings. We will send a copy of such amendment to the Owner. It will be mailed to the last post office address known to us. Any such changes will apply uniformly to all Policies that are affected and the Owner will have the right to accept or reject such changes. 12. Except in the case of a Contract purchased by a church, no premium payments applicable to this Contract can be made unless all employees of the employer may elect to have the employer make contributions of more than $200 under a salary reduction agreement. For purposes of this paragraph any Employee who is a participant in (a), (b) or (c) below may be excluded. (a) an eligible deferred compensation plan under IRC Section 457(b); (b) a qualified cash or deferred arrangement; or (c) another IRC Section 403(b) annuity. In addition, any non-resident aliens and students who normally work less than twenty (20) hours per week may be excluded. SIGNED FOR GOLDEN AMERICAN LIFE INSURANCE COMPANY: President /s/Keith Gubbay GA-RA-1039 5 EX-99.B5A 7 gacdf3002.txt CUSTOMER DATA FORM Variable Annuities ING INCOME GENERATION ANNUITY SINGLE PREMIUM IMMEDIATE ANNUITY CUSTOMER DATA FORM ING USA Annuity and Life Insurance Company Service Office: P.O. Box 9271, Des Moines, IA 50306-9271 Overnight Address: 909 Locust Street, Des Moines, IA 50309-2899 Phone: 800-366-0066 FOR AGENT USE ONLY: Client's Account Number:________________________________________________________ 1 OWNER Name:______________________________________________Trust Date:__________________ SSN or Tax ID:____________________Date of Birth:_______________ __Male __Female Permanent Address:__________________City:_____________State:_______ Zip:________ Telephone: Home:______________Work:_____________EMail Address:__________________ 1(a)JOINT OWNER (Optional. Non-Qualified Plans Only. Option Package I only.) Name:______________________________________________Trust Date:__________________ SSN or Tax ID:____________________Date of Birth:_______________ __Male __Female Permanent Address:__________________City:_____________State:_______ Zip:________ Telephone: Home:______________Work:_____________EMail Address:__________________ 2 ANNUITANT (If other than owner. For Qualified contracts, must be the same as the owner. Annuitant may not be changed.) Name:______________________________________________Trust Date:__________________ SSN or Tax ID:____________________Date of Birth:_______________ __Male __Female Permanent Address:__________________City:_____________State:_______ Zip:________ 2(a) CONTINGENT ANNUITANT (Optional. The Owner is the Contingent Annuitant unless someone else is names.) Name:______________________________________________Trust Date:__________________ SSN or Tax ID:____________________Date of Birth:_______________ __Male __Female Permanent Address:__________________City:_____________State:_______ Zip:________ GA-CDF-3002 Page 1 of 9 132770 10/21/2004 3 BENEFICIARY(S) (Must be completed.) PRIMARY BENEFICIARY Name:___________________________________Date of Birth:________________ ________% SSN or Tax ID:__________________________Relationship to Owner:__________________ Address:________________________________________________________________________ __PRIMARY __CONTINGENT BENEFICIARY Name:___________________________________Date of Birth:________________ ________% SSN or Tax ID:__________________________Relationship to Owner:__________________ Address:________________________________________________________________________ __PRIMARY __CONTINGENT BENEFICIARY Name:___________________________________Date of Birth:________________ ________% SSN or Tax ID:__________________________Relationship to Owner:__________________ Address:________________________________________________________________________ __PRIMARY __CONTINGENT BENEFICIARY Name:___________________________________Date of Birth:________________ ________% SSN or Tax ID:__________________________Relationship to Owner:__________________ Address:________________________________________________________________________ For additional Beneficiary designations, please use the space provided in section 16. If no percentages are provided, beneficiary proceeds will be split equally. SAMPLE BENEFICIARY DESIGNATIONS Be sure to use given names such as "Mary M. Doe", not "Mrs. John Doe", and include the address and relationship of the beneficiary(s) to the owner. The following designations may be helpful to you: Name Relationship to Owner Percent One Primary Beneficiary Mary M. Doe Sister 100% Two Primary Beneficiaries Jane J. Doe Mother 50% John J. Doe Father 50% One Primary Beneficiary Jane J. Doe Wife 100% One Contingent John J. Doe Son 100% Estate Estate of John Doe Estate 100% Trust ABC Trust Trust 100% Dtd 1/1/85 Testamentary Trust Trust created by the Testamentary Trust 100% (Trust established Last Will and within the owner's will) Testament of John Doe GA-CDF-3002 Page 2 of 9 132770 10/21/2004 4 INITIAL INVESTMENT Please make any checks payable to ING USA Annuity and Life Insurance Company. __Initial Premium Paid:$______________________________________________________ __Estimated amount of Transfer/1035 Exchange:$________________________________ 5 PRODUCT SELECTION PRODUCT _X_ ING Income Generation Annuity ANNUITY OPTIONS (Please select one Annuity Option only.) For an IRA, 401(k), 403(b) or 457 Government Contract the Annuity Option elected must comply with IRC 401(a)(9) Regulations. Unless spousal consent is provided, contracts subject to ERISA must elect the Joint Lifetime Option. NON-LIFETIME OPTION __A. Period Certain of:________ (5-50 Years)1 (5-30 Years for Fixed Payments)1 SINGLE LIFETIME OPTIONS2 __B. Single Life Only __C. Single Life with Guaranteed payments for:________ (5-50 Years)1 (5-30 Years for Fixed Payments)1 JOINT LIFETIME OPTIONS2 __D. Joint & 100% Survivor __E. Joint & 100% Survivor with Guaranteed payments for:________(5-50 Years)1 (5-30 Years for Fixed Payments)1 __F. Joint & 75% Survivor __G. Joint & 662/3% Survivor __H. Joint & 50% Survivor __I. Joint & 75% Contingent Survivor __J. Joint & 662/3% Contingent Survivor __K. Joint & 50% Contingent Survivor 1 Guaranteed Payment Periods cannot exceed age 100 for non-qualified contracts, or the lesser of age 100 and life expectancy for qualified contracts. 2 REQUIRED DOCUMENTATION NOTICE: With all lifetime annuity options satisfactory evidence of date of birth of the Annuitant and Joint Annuitant (if applicable) must be provided. A copy of the birth certificate or valid driver's license is acceptable. If the birth certificate or valid driver's license is not available, we will accept copies of two federally recognized forms of identification that include the date of birth. PAYMENT OPTIONS (Please select one Payment Option only.) __100% Fixed Payments __100% Variable Payment __Combination Variable/Fixed Payments (Indicate allocation of 1% - 99%) Fixed:_____________% Variable:_____________% Do the percentages allocated to variable and fixed payments total 100%? Assumed Annual Interest Rate (AIR). Not available with 100% Fixed payments. (Select one) __3% __5% (3% will be assumed if no election is made. If the Guaranteed Minimum Income Benefit is elected, only an AIR of 3% is allowed.) Frequency: __Monthly __Quarterly __Semi-Annually __Annually Day of Month_______ Beginning the month of__________ Year_________ GA-CDF-3002 Page 3 of 9 132770 10/21/2004 6 VARIABLE PAYMENT OPTIONAL FEATURES Select Variable investment Options on page 6. __Right to Withdraw Privileges1 Available with Annuity Options A, C and E. Note: this option is automatically included with Annuity Option A where some or all of the Premium has been allocated to Variable Payments. With Annuity Option A the Flexible Period Option2 is automatically added when Right to Withdraw Privileges is elected. __Guaranteed Minimum Income Rider This Benefit, when elected, guarantees that for the first 5 years your variable payment will never be less than 90% of your initial estimated variable annuity payment. In order to elect this option, the Assumed Interest Rate must be 3% and the total Premium applied to Variable Payments must equal 100%. Available with Annuity Option A with Guaranteed Payments of 15 years or more; Annuity Option B; Annuity Option C with Guaranteed Payments of 15 years or more, unless you have elected Right To Withdraw Privileges; and Annuity Options D and E. 1 Withdrawals may be subject to Surrender Charges. Withdrawals are not available during the first contract year or before the First Annuity Payment Date, if that date is later than the first contract anniversary. Thereafter, only one withdrawal is allowed annually. However, this does not apply to withdrawals from the variable portion of a Period Certain Annuity (Annuity Option A). Refer to the prospectus for additional information about this option. 2 When elected, the Flexible Period Option may not be exercised until the second contract anniversary, and then only on each contract anniversary thereafter. If you have also elected the Guaranteed Minimum Income Benefit Rider, this option may not be exercised until 5 years have elapsed since the Contract Date. Refer to the Prospectus for additional information about this option. 7 FIXED PAYMENT OPTIONAL FEATURES __Right to Withdraw Privileges3 Available with Annuity Options A, C and E. Not available with the Increasing Fixed Annuity Payment Option or Cash Refund Option shown below. With Annuity Option A the Flexible Period Option4 is automatically added when Right to Withdraw Privileges is elected. __Increasing Fixed Annuity Payment Option Annual Increase Percentage (Select one) __1% __2% __3% This feature is available with Annuity Options A, B, C, D and E. In order to elect this option, total Premium applied to Fixed Payments must equal 100%. Not available with Right to Withdraw Privileges or the Cash Refund Option. Refer to the Prospectus for additional information associated with this option. __Cash Refund Option Available only with Annuity Options B and D. Not available with the Right to Withdraw Privileges or the Increasing Fixed Annuity Payment Option. Refer to the Prospectus for additional information about this option. 3 Withdrawals may be subject to a Market Value Adjustment and Surrender Charges. Withdrawals are not available during the first contract year or before the First Annuity Payment Date, if that date is later than the first contract anniversary. Thereafter, only one withdrawal is allowed annually. However, this does not apply to withdrawals from the variable portion of a Period Certain Annuity (Annuity Option A). Refer to the prospectus for additional information about this option. 4 When elected, the Flexible Period Option may not be exercised until the second contract anniversary and then only on each contract anniversary thereafter. Refer to the Prospectus for additional information about this option. GA-CDF-3002 Page 4 of 9 132770 10/21/2004 8 TELEPHONE REALLOCATION AUTHORIZATION I authorize ING USA Annuity and Life Insurance Company (the Company) to act upon reallocation instructions, given by electronic means or voice command from the agent named in section 14 and/or the following individuals listed below upon furnishing their Social Security Number or alternative identification number. To authorize the agent, the Owner must initial:_____________________ Provide the name and Social Security Number of other authorized individuals below1: Name:__________________________Social Security Number:__________________________ Name:__________________________Social Security Number:__________________________ Neither the Company nor any person authorized by the Company will be responsible for any claim, loss, liability or expense if the Company or authorized person acts in good faith in reliance upon this authorization in connection with oral/electronic instructions. The Company will continue to act upon this authorization until such time as the person indicated above is no longer affiliated with the broker/dealer under which my contract was purchased or until such time as I notify the Company in writing of a change in instructions. The Company may discontinue or limit this privilege at any time. 1If the authorized person's Social Security Number is not provided, the individual will not be authorized. 9 PLAN TYPE FOR NEW CONTRACT (Qualified or Non-Qualified. Please select only one.) __Non-Qualified __1035 Exchange __IRA __IRA Transfer __IRA Rollover from Qualified Plan __SEP-IRA __403(b) __Qualified Other:______________________________________________________________ Indicate contribution amount and appropriate tax year:__________________________ __Roth IRA. If transfer, provide original conversion /establishment date and amount:_________________________________________________________________________ Simple IRA. If transfer, provide original establishment date and amount:________ 10 IMPORTANT NOTICE REGARDING REPLACEMENT Do you currently have any existing annuity or life insurance policies or coverage? __Yes (Proceed below.) __No (Proceed to section 11.) This purchase may involve discontinuing or changing an existing policy or contract. If so, a replacement is occurring. Financed purchases are also considered replacements. A replacement occurs when a new policy or contract is purchased and in connection with the sale you discontinue making premium payments on the existing policy or contract or an existing policy or contract is surrendered, forfeited, assigned to the replacing insurer or otherwise terminated or used in a financed purchase. A financed purchase occurs when the purchase of a new life insurance policy or an annuity contract involves the use of funds obtained by the withdrawal or surrender of or by borrowing some or all of the policy values including accumulated dividends of an existing policy to pay all or part of any premium or payment due on the new policy. A financed purchase is a replacement. You should carefully consider whether a replacement is in your best interest. You will pay acquisition costs and there may be surrender costs deducted from your policy or contract. You may be able to make changes to your existing policy or contract to meet your insurance needs at less cost. A financed purchase will reduce the value of your existing policy and may reduce the amount paid upon the death of the insured. We want you to understand the effects of replacements before you make your purchase decision and ask that you answer the following questions. 1. Are you considering discontinuing making premium payments, surrendering, forfeiting, assigning to the insurer, or otherwise terminating your existing policy or contract? __Yes __No 2. Are you considering using funds from your existing policies or contracts to pay premiums due on this new policy or contract? __Yes __No If you answered "Yes" to either of the above questions, please complete and return with this form a copy of the appropriate state replacement form(s), if applicable. I do not want this notice read aloud to me. _____________ (Owner/Applicants must initial here ONLY if they do not want the above notice read aloud.) GA-CDF-3002 Page 5 of 9 132770 10/21/2004 11 VARIABLE INVESTMENT OPTIONS Complete this section if 100% Variable Payments or Combination Variable/Fixed Payments is elected. Variable Investment Allocations are not required and will not be processed if 100% Fixed Payments is elected. VARIABLE ALLOCATIONS Use whole percentages only. __% AIM V.I. Dent Demographic Trends 1,2 __% ING MFS Mid Cap Growth1,2 __% Colonial Small Cap Value __% ING MFS Research1,2 __% Fidelity VP Equity-Income1 __% ING MFS Total Return1 __% Fidelity VP Growth1 __% ING PIMCO High Yield1 __% ING AM Mid Cap Growth1 __% ING PIMCO Core Bond1 __% ING Alliance Mid Cap Growth1,2 __% ING Salomon Bros Aggr Growth1 __% ING American Funds Growth1 __% ING Salomon Bros All Cap1 __% ING American Funds Growth-Income1 __% ING Salomon Bros Investors 1,2 __% ING American Funds Int'l1 __% ING T. Rowe Price Capital Appr1 __% ING Cap Guardian Large Cap1,2 __% ING T. Rowe Price Equity Income1 __% ING Cap Guardian Managed Global1 __% ING UBS US Balanced1 __% ING Cap Guardian Small Cap1 __% ING VP Bond1 __% ING Developing Word1 __% SP William Blair Int'l Growth1 __% ING Eagle Asset Capital Appr1,2 __% ING VP Financial Services1 __% ING Evergreen Heath Sciences1 __% ING VP Index Pus LargeCap1 __% ING Evergreen Omega1 __% ING VP Index Pus MidCap1 __% ING FMR Diversified Mid Cap1 __% ING VP Index Pus SmallCap1 __% ING Goldman Sachs Tollkeeper1,2 __% ING VP Magnacap1 __% ING Hard Assets1 __% ING VP MidCap Opportunities1,2 __% ING International1 __% ING VP SmallCap Opportunities1 __% ING Janus Special Equity1 __% ING VP Worldwide Growth1 __% ING Jennison Equity Opp1 __% ING Van Kampen Equity Growth1 __% ING JPMorgan Fleming Int'l1 __% ING Van Kampen Global Franchise1 __% ING JPMorgan Small Cap Equity1 __% ING Van Kampen Growth and Income1 __% ING Julius Baer Foreign1 __% ING Van Kampen Real Estate1 __% ING Legg Mason Value1 __% INVESCO VF Leisure Fund1 __% ING Lifestyle Aggressive Growth1 __% INVESCO VF Utilities Fund1 __% ING Lifestyle Growth Portfolio1 __% Jennison Portfolio1,2 __% ING Lifestyle Moderate Growth1 __% Pioneer Fund VCT1 __% ING Lifestyle Moderate1 __% Pioneer Mid-Cap Value VCT1 __% ING Liquid Assets1 __% ProFund VP Bull __% ING Marsico Growth1 __% ProFund VP Europe 30 __% ING Mercury Focus Value1,2 __% ProFund VP Rising Rates Opp1,2 __% ING Mercury Fundamental Growth __% ProFund VP Small-Cap 100% Variable Allocation Total Do the variable allocations total 100%? 1The available share class is subject to distribution and/or service (12b-1) fees. 2 These funds are not available if the Guaranteed Minimum Income Benefit is elected. GA-CDF-3002 Page 6 of 9 132770 10/21/2004 12 PAYMENT OPTIONS Please complete and return a Withholding Certificate of Pension or Annuity Payments (Form W-4P) with this Customer Data Form. A check will be made payable to the owner and mailed to owner's address (as entered on page 1 of the application) unless otherwise instructed below. __By check payable to the order of another party. (Complete Alternate Payee Information below.) __Direct Deposit to a Financial Institution. (Complete Bank Account Information below.) ALTERNATE PAYEE INFORMATION Name:___________________________________________________________________________ SSN/TIN:__________________________________________________DOB:__________________ Address:________________________________________________________________________ City:_______________________________State:________________Zip:__________________ Telephone Number:Day:_____________________Evening:______________________________ BANK ACCOUNT INFORMATION (Please verify this information with your bank prior to submission.) I hereby authorize the Company to initiate a debit/credit entry(ies) to the account indicated below and in the amount and frequency listed above. This authorization shall remain in force until I give the Company written notice of termination of this authorization. A voided check or savings account deposit slip is required. Bank Account Owner Name:________________________________________________________ Bank Account Joint Owner Name (if applicable): _________________________________ Bank Name:______________________________Bank Telephone Number:__________________ Bank Address:___________________________________________________________________ City:_________________________________State:____________ Zip:___________________ __Checking Account __Savings Account ABA/Routing Number:___________________Account Number:___________________________ ATTACH VOIDED CHECK/ DEPOSIT SLIP HERE GA-CDF-3002 Page 7 of 9 132770 10/21/2004 13 STATE REQUIRED NOTICES Below are notices that apply only in certain states. Please read the following carefully to see if any apply in your state. Arkansas and Louisiana: "Any person who knowingly presents a false or fraudulent claim for payment of a loss or benefit or knowingly presents false information in an application for insurance is guilty of a crime and may be subject to fines and confinement in prison." Colorado, Kentucky, New Mexico, Ohio, Oklahoma, and Pennsylvania: "Any person who knowingly and with intent to defraud any insurance company or any other person, files an application for insurance or statement of claim containing any materially false information, or conceals for the purpose of misleading information concerning any fact material thereto, commits a fraudulent insurance act which is a crime and subjects such person to criminal and civil penalties." California: For your protection, California law requires the following notice: "Any person who knowingly presents a false or fraudulent claim for the payment of a loss is guilty of a crime and may be subject to fines and confinement in a state prison." California Reg. 789.8: The sale or liquidation of any asset in order to buy insurance, either life insurance or an annuity contract, may have tax consequences. Terminating any life insurance policy or annuity contract may have early withdrawal penalties or other costs or penalties, as well as tax consequences. You may wish to consult independent legal or financial advice before the sale or liquidation of any asset and before the purchase of any life insurance or annuity contract. Florida: "Any person who knowingly with intent to injure, defraud, or deceive any insurer files a statement of claim or an application containing any false, incomplete, or misleading information is guilty of a felony of the third degree. Maine, Tennessee, and Washington DC: "It is a crime to knowingly provide false, incomplete or misleading information to an insurance company for the purpose of defrauding the company. Penalties may include imprisonment, fines or denial of insurance benefits." New Jersey: "Any person who includes any false or misleading information on an application for an insurance policy is subject to criminal and civil penalties." Virginia: "A person who, with the intent to defraud or knowing that he is facilitating a fraud against an insurer, submits an application or files a claim containing a false or deceptive statement may have violated the state law." 14 SIGNATURES AND ACKNOWLEDGEMENTS (Please read carefully and sign below) By signing below, I acknowledge receipt of the Prospectus. I agree that, to the best of my knowledge and belief, all statements and answers in this form are complete and true and may be relied upon in determining whether to issue the applied for variable annuity. Only the Owner and ING USA Annuity and Life Insurance Company have the authority to modify this form. Variable Annuities and the underlying series shares or securities which fund them are not insured by the FDIC or any other agency. They are not deposits or other obligations of any bank and are not bank guaranteed. They are also subject to market fluctuation, investment risk and possible loss of principal invested. I understand that when based on the investment experience of the Separate Account Division, amounts invested in the variable separate account divisions may increase or decrease on any day and that no minimum value is guaranteed. The variable annuity applied for is in accord with my anticipated financial objectives. I understand that any amounts withdrawn from Fixed Annuity Payments will be subject to a Market Value Adjustment. My signature certifies, under penalty of perjury, that the taxpayer identification number provided is correct. Unless and until you are otherwise notified, I am not subject to backup withholding because: I am exempt; or I have not been notified that I am subject to backup withholdings resulting from failure to report all interest dividends; or I have been notified that I am no longer subject to backup withholding. (Strike out the preceding sentence if subject to backup withholding.) The IRS does not require my consent to any provision of this document other than the certifications required to avoid backup withholding. Owner Signature:________________________________________________________________ Signed at1 (City, State):_____________________________________Date:_____________ Joint Owner Signature (If applicable):__________________________________________ Signed at1 (City, State):_____________________________________Date:_____________ Annuitant Signature (If other than owner):______________________________________ Signed at1 (City, State):_____________________________________Date:_____________ 1If this Customer Data Form is being signed in a state other than the Owner's resident state, please indicate the reason in the special remarks section. If you have any questions on what is an acceptable reason, please refer to the Nexis Information Worksheet. GA-CDF-3002 Page 8 of 9 132770 10/21/2004 16 AGENT INFORMATION Do you have reason to believe that the contract applied for will replace any existing annuity or life insurance coverage? __Yes__No (If "Yes", return with this form a completed copy of the appropriate state replacement form(s), if applicable.) Compensation Alternative (Select one- please verify with your Broker/Dealer that the option you select is available.): __A __B __C __Check here if there are multiple agents on this contract. Split: for Agent #1___________%, Agent #2___________%, Agent #3___________% Please Note: Compensation will be split equally if no percentages are indicated. Partial percentages will be rounded up and Agent #1 will be given the highest percentage in the case of unequal percentages. Agent #1 will receive all correspondence regarding the policy. AGENT #1 Print Name:______________________________Signature:_____________________________ SSN:_____________________________________Agent Phone:___________________________ License #________________________________Broker Code:___________________________ Broker/Dealer Branch:___________________________________________________________ AGENT #2 Print Name:______________________________Signature:_____________________________ SSN:_____________________________________Agent Phone:___________________________ License #________________________________Broker Code:___________________________ Broker/Dealer Branch:___________________________________________________________ AGENT #3 Print Name:______________________________Signature:_____________________________ SSN:_____________________________________Agent Phone:___________________________ License #________________________________Broker Code:___________________________ Broker/Dealer Branch:___________________________________________________________ 17 SPECIAL REMARKS GA-CDF-3002 Page 9 of 9 132770 10/21/2004 EX-99.B9 8 opinionltrn4.txt OPINION LETTER ING JAMES SHUCHART Counsel September 8, 2004 Members of the Board of Directors ING USA Annuity and Life Insurance Company 1475 Dunwoody Drive West Chester, PA 19380-1478 Gentlemen: In my capacity as Counsel for ING USA Annuity and Life Insurance Company (the "Company"), I have examined the form of Registration Statement on Form N-4 to be filed by you with the Securities and Exchange Commission in connection with the registration under the Securities Act of 1933, as amended, of an indefinite number of units of interest in Separate Account B of the Company (the "Account"). I am familiar with the proceedings taken and proposed to be taken in connection with the authorization, issuance and sale of units. Based upon my examination and upon my knowledge of the corporate activities relating to the Account, it is my opinion that: (1) The Company was organized in accordance with the laws of the State of Iowa and is a duly authorized stock life insurance company under the laws of Iowa and the laws of those states in which the Company is admitted to do business; (2) The Account is a validly established separate investment account of the Company; (3) Under Iowa law, the portion of the assets to be held in the Account equals the reserve and other liabilities for variable benefits under variable annuity contracts to be issued by the Account, and such assets are not chargeable with liabilities arising out of any other business the Company conducts; (4) The units and the variable annuity contracts will, when issued and sold in the manner described in the registration statement, be legal and binding obligations of the Company and will be legally and validly issued, fully paid, and non-assessable. I hereby consent to the filing of this opinion as an exhibit to the registration statement and to the reference to my name under the heading "Legal Matters" in the prospectus contained in said registration statement. In giving this consent I do not thereby admit that I come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933 or the Rules and Regulations of the Securities and Exchange Commission thereunder. Sincerely, /s/James Shuchart - --------------------- James Shuchart 1475 Dunwoody Drive Tel: 610-425-3427 West Chester, PA 19380-1478 Fax: 610-425-3735 EX-99.B15 9 poa.txt POWER OF ATTORNEY POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, being duly elected Directors and/or Officers of ING USA Annuity and Life Insurance Company ("ING USA"), constitute and appoint, Linda E. Senker or James Shuchart, his or her true and lawful attorney-in-fact and agent with full power of substitution and resubstitution for him or her in his or her name, place and stead, in any and all capacities, to sign the following ING USA registration statements, and current amendments to registration statements, and to file the same, with all exhibits thereto, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and affirming all that said attorney-in-fact and agent, or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof: o ING USA Annuity and Life Insurance Company Separate Account B Initial Registration Statement on Form N-4 (File No. 333-_______; 811-5626) for registration of Contracts offered through Separate Account B. SIGNATURE TITLE DATE - --------- ----- ---- /s/KEITH GUBBAY - ----------------------- PRESIDENT AND DIRECTOR SEPTEMBER 3, 2004 KEITH GUBBAY (PRINCIPAL EXECUTIVE OFFICER) /s/DAVID A. WHEAT - ----------------------- DIRECTOR SEPTEMBER 7, 2004 DAVID A. WHEAT /s/THOMAS J. MCINERNEY - ----------------------- DIRECTOR SEPTEMBER 2, 2004 THOMAS J. MCINERNEY /s/KATHLEEN A. MURPHY - ----------------------- DIRECTOR SEPTEMBER 2, 2004 KATHLEEN A. MURPHY /s/JACQUES DE VAUCLEROY - ----------------------- DIRECTOR SEPTEMBER 3, 2004 JACQUES DE VAUCLEROY -----END PRIVACY-ENHANCED MESSAGE-----